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T R O U B L E D C O M P A N Y R E P O R T E R
Monday, May 24, 2021, Vol. 25, No. 143
Headlines
1 BIG RED: $710K Sale of Kansas City Property to Sunshine Approved
120 YORK: Wins Cash Collateral Access Thru June 22
2374 VILLAGE: Sale of Properties to Wells Fargo for $3.37M Approved
335 LAKE AVENUE: Court Approves Disclosures on Interim Basis
5 STAR PROPERTY: Cody Buying Winter Haven Property for $375K
5 STAR PROPERTY: Court Sets Hearing on $190K Asset Sale to Rivers
5 STAR PROPERTY: Court Sets Hearing on $375K Property Sale to Cody
5 STAR PROPERTY: Rivers Buying Winter Haven Property for $190K
511 GROUP: Plan Exclusivity Period Extended Until July 25
975 WALTON: Has Deal on Cash Collateral Use
AAA REAL ESTATE: Seeks to Hire Herron Hill as Legal Counsel
ADELPHIA COMMUNICATIONS: Founder Can't Vacate Fraud Conviction
AEROSTAR AIRPORT: Moody's Hikes Rating on $400MM Sec. Bonds to Ba1
AGD SYSTEMS: Asks Court to Extend Plan Exclusivity Thru August 17
AIMBRIDGE HOSPITALITY: Moody's Alters Outlook on B3 CFR to Stable
AIR FLIGHT: Wins Cash Collateral Access Thru August 12
AJRANC INSURANCE: Final Cash Collateral Hearing on May 25
ANTERO MIDSTREAM: S&P Upgrades ICR to 'BB-', Outlook Stable
ANTERO RESOURCES: S&P Upgrades ICR to 'BB-', Outlook Stable
APEG MAXEY: Wins Cash Collateral Access
APPLIED ENERGETICS: Incurs $1.1 Million Net Loss in First Quarter
ATKORE INC: S&P Assigns 'BB-' Issuer Credit Rating, Outlook Pos.
ATKORE INC: S&P Rates New $400MM Senior Unsecured Notes 'BB-'
BASIC ENERGY: Incurs $37.3 Million Net Loss in First Quarter
BAYOU INTERMEDIATE II: Fitch Gives Final BB+ Rating on $375MM Debt
BCP RENAISSANCE: S&P Alters Outlook to Positive, Affirms 'B' ICR
BETHLEHEM-CENTER SCHOOL: Moody's Lowers GOLT Ratings to B1
BOART LONGYEAR: S&P Downgrades ICR to 'D' on Restructuring
BRAZOS ELECTRIC: Wins Interim OK on DIP Loan, Cash Collateral Use
BRINKER INT'L: S&P Ups ICR to 'BB-' on Improving Performance
BUCKSKIN REALTY: Seeks to Hire Wayne Greenwald as Legal Counsel
BULLDOGGE FITNESS: Seeks to Tap Jay Ehrlich as Financial Advisor
C&D TECHNOLOGIES: S&P Affirms 'B-' ICR on Solid Cash Flow
CANWEL BUILDING: DBRS Hikes Issuer Rating to B(high)
CANWEL BUILDING: DBRS Lowers Senior Unsecured Notes Rating to B
CARLA'S PASTA: Seeks to Extend Plan Exclusivity Thru August 7
CARVANA CO: S&P Alters Outlook to Positive, Affirms 'CCC+' ICR
CBL & ASSOCIATES: Court Okays Start of Creditor Vote on Plan
CENTRALSQUARE TECH: Moody's Alters Outlook on Caa2 CFR to Stable
CES ENERGY: DBRS Confirms B(high) Issuer Rating
CHARTER COMMUNICATIONS: Moody's Rates New Sr. Secured Notes 'Ba1'
CLEAR CHANNEL: S&P Assigns 'CCC' Rating on Senior Unsecured Notes
COLLECTED GROUP: Cash Collateral Access, $9.2MM DIP Loan OK'd
COLLECTED GROUP: Harris County's Claim Entitled to Interest
COLLECTED GROUP: United States Says Plan Provisions Inequitable
COLLISION NETWORK: Seeks to Hire Dean Greer as Bankruptcy Attorney
CONDUENT INC: S&P Alters Outlook to Positive, Affirms 'B+' ICR
CORNUS MONTESSORI: $95.5K Sale of All Business Assets to S2 Okayed
CORONADO CAPITAL: Creditors Seek to Prohibit Cash Collateral Use
COULEE HILL: Gets OK to Hire SK Realty as Real Estate Broker
CRC BROADCASTING: Plan Hearing Continued to June 29
CRECHALE PROPERTIES: Seeks to Extend Plan Exclusivity Thru June 19
CUOCO STRUCTURAL: Seeks to Hire Charmoy & Charmoy as Legal Counsel
CUOCO STRUCTURAL: Seeks to Tap Innovative CPA Group as Accountant
DARMA LLC: Ameris Bank Seeks to Prohibit Use of Cash Collateral
DEA BROTHERS: Seeks to Pay 1st Lien Creditor, Continue Cash Access
DELEK LOGISTICS: Fitch Assigns FirstTime 'BB-' LT IDR, Outlook Neg.
DELEK LOGISTICS: S&P Assigns 'BB-' Rating on $400MM Unsecured Notes
DELUXE CORP: S&P Assigns 'B+' Issuer Credit Rating, Outlook Stable
DENTALCORP HEALTH: Moody's Puts B3 CFR Under Review for Upgrade
DETROIT WORLD: Bidding Procedures for Sale of Assets Withdrawn
DIAMOND HOLDING: Wins Cash Collateral Access Thru June 8
DIAMOND SPORTS: Sinclair Commences Formal Debt Creditor Talks
DIOCESE OF WINONA-ROCHESTER: Unsecureds to Get 100% w/o Interest
DIRECT DIESEL: Lisa Holder Named Subchapter V Trustee
DISCOVERY CHARTER: S&P Assigns 'BB+' Debt Rating
DO@KING PLOW ARTS: United Buying Atlanta Property for $3.2 Mil.
DT MIDSTREAM: S&P Rates New $2.1BB Senior Unsecured Notes 'BB+'
DURRANI MD: Plan Exclusivity Extended Until July 31
DYNOTEC INDUSTRIES: Seeks Cash Collateral Access
EBONY MEDIA: Seeks to Tap Okin Adams as New Bankruptcy Counsel
EFS COGEN: S&P Affirms 'BB-' Rating on Senior Secured Debt
EL CASTILLO RETIREMENT: Fitch Affirms 'BB+' IDR, Outlook Stable
EQM MIDSTREAM: Moody's Affirms Ba3 CFR, Outlook Negative
EUROPEAN FOREIGN: Wins Cash Collateral Access
EVO TRANSPORTATION: Delays Filing of First Quarter Form 10-Q
FINCO I: S&P Affirms 'BB' ICR on Strong Growth, Outlook Stable
FOCUS FINANCIAL: S&P Affirms 'BB-' ICR, Outlook Stable
GAINCO INC: Wins Cash Collateral Access on Interim Basis
GET WELL PHARMACY: Seeks Cash Collateral Access
GLOBAL INFRASTRUCTURE: S&P Assigns 'BB-' ICR, Outlook Stable
GREEN COUNTRY ENERGY: S&P Lowers ICR to 'CCC', Outlook Negative
GULFPORT ENERGY: Moody's Assigns B2 CFR on Bankruptcy Emergence
GULFPORT ENERGY: S&P Assigns 'B-' ICR, Outlook Stable
HANESBRANDS INC: S&P Affirmed 'BB' ICR, Outlook Negative
HASTINGS MASTER: Case Summary & 16 Unsecured Creditors
HELIUS MEDICAL: Incurs $3.4 Million Net Loss in First Quarter
HENRY FORD VILLAGE: Comerica Opposes Bankruptcy Sale Over PPP Rules
HICKIES INC: Midcap Funding to Hold Auction on May 25
HIGHLAND CAPITAL: Court Okays $1 Billion Claims Settlement With UBS
HILTON GRAND: S&P Rates New $675MM Senior Unsecured Notes 'B-'
HOMES BY KC: $360K Sale of Atlanta Property to Hutchinson Approved
HOSPITALITY INVESTORS: Unsecured Claims Unimpaired in Prepack Plan
ICAN BENEFIT: Committee Taps Shraiberg, Landau & Page as Counsel
IG INVESTMENTS: S&P Affirms 'B-' ICR on Good Performance
INTERTAPE POLYMER: S&P Affirms 'BB-' ICR, Outlook Stable
INVENERGY THERMAL: S&P Affirms 'BB' Debt Rating, Off Watch Neg.
INVO BIOSCIENCE: Incurs $2.5 Million Net Loss in First Quarter
J.S. CATES CONTRUCTION: Seeks Authorized Access to Cash Collateral
JACKSONVILLE ADVANCED: Seeks to Hire Parker & DuFresne as Counsel
JADE PROPERTY: Seeks Access to First Service Bank Cash Collateral
KEVIN WANG: Public Auction Set for June 16
KLAUSNER LUMBER: To Seek Plan Votes After Creditor Settlement
L&L WINGS: Committee Taps Thompson Hine as Special Counsel
L&L WINGS: Wins Cash Collateral Access Thru June 19
LATAM AIRLINES: Glenn Agre Tapped by Shareholders Group
LAURENTIAN BANK: DBRS Finalizes BB(high) Rating on Capital Notes
LAWRENCE GENERAL HOSPITAL: S&P Cuts Revenue Bonds Rating to 'B-'
LEGACY EDUCATION: Posts $253K Net Income in First Quarter
LITHIA MOTORS: Moody's Rates New $500MM Unsecured Notes 'Ba2'
LITHIA MOTORS: S&P Raises Senior Unsecured Notes Rating to 'BB+'
LJ RUBY: S&P Affirms 'B-' ICR on Free Cash Flow Generation
LOYE GRADING: Wins Cash Collateral Access Thru June 5
LS MOTORCARS: Wins Cash Collateral Access
LUMENTUM HOLDINGS: S&P Affirms 'BB-' ICR, Off CreditWatch Negative
MALLINCKRODT PLC: Claims Deadline Okayed Despite Opposition
MALLINCKRODT PLC: Drugmakers Group Slams Chapter 11 Disclosures
MALLINCKRODT PLC: Hospitals Say Plan Disclosures Inadequate
MALLINCKRODT PLC: Robbins, Sullivan Update on First Lien Group
MARTIN CONSTRUCTION: To Seek Plan Approval on June 29
MICRON DEVICES: Perryman's Bidding Procedures for Assets Denied
MIDLAND COGENERATION: Fitch Affirms BB- Rating on $741.3MM Notes
MISSOURI JACK: Wins October 14 Plan Exclusivity Extension
MOBITV INC: Court Approves $23M Sale to TiVo Corp.
MORTGAGE INVESTORS: Owner Hits Ch. 11 Bankruptcy Protection
MUELLER WATER: Moody's Rates New Senior Unsecured Notes 'Ba1'
MUELLER WATER: S&P Rates New $450MM Senior Unsecured Notes 'BB'
NALU'S GROUP: Has Until May 30 to File Combined Plan & Disclosures
NEW ACADEMY HOLDING: S&P Upgrades ICR to 'B+' on Debt Redemption
NEW RESIDENTIAL: S&P Alters Outlook to Stable, Affirms 'B' ICR
NEW YORK INN: Involuntary Chapter 11 Case Summary
NEXSTAR BROADCASTING: Moody's Hikes CFR to Ba3, Outlook Stable
NFP CORP: S&P Assigns 'B' Rating on $325MM Senior Secured Debt
OMNITRACS LLC: Polaris Acquisition No Impact on Moody's B3 CFR
ON MARINE: Court Extends Plan Exclusivity Thru July 2
ORCUTT RANCHO: Seeks to Hire Conway MacKenzie as Financial Advisor
PENN ENGINEERING: Moody's Affirms B1 CFR & Alters Outlook to Stable
PERFORMANCE FOOD: Core-Mark Deal No Impact Moody's Ba3 Rating
PG&E CORP: Creditors' Ch. 11 Interest Rate Ruling Challenge Fails
PHILIPPINE AIRLINES: Intends to Raise $500 Million for Ch.11 Plan
PIZZINI AND HANSEN: Seeks to Hire Krigel & Krigel as Legal Counsel
POLARIS NEWCO: Moody's Assigns First Time 'B3' Corp Family Rating
POLARIS PARENT: S&P Assigns 'B-' ICR on Announced Merger
POLYMER INSTRUMENTATION: Gets Cash Collateral Access Thru June 29
PORTOFINO TOWERS: Wins July 25 Plan Exclusivity Extension
PQ CORP: Moody's Rates New $900MM Sr. Secured Term Loan 'B1'
PQ CORP: S&P Affirms 'B+' Issuer Credit Rating, Outlook Stable
PREFERRED EQUIPMENT: Seeks Cash Collateral Access Thru Jul 15
PREGIS TOPCO: S&P Alters Outlook to Stable, Affirms 'B-' ICR
PREMIER DENTAL: Moody's Raises CFR to B3, Outlook Stable
PROQUEST LLC: Camelot Acquisition No Impact on Moody's 'B2' CFR
PURDUE PHARMA: Struggles in Resolving Disclosure Statement Issues
RELIANCE INTERMEDIATE: DBRS Confirms BB Issuer Rating, Trend Stable
REYNA'S AUTO SERVICE: Seeks to Hire Rothbloom Law Firm as Counsel
RICHMOND HILL: Seeks to Hire Direct Machinery as Broker
RYAN 1000 LLC: Seeks Court Approval to Use Cash Collateral
RYAN 8641 LLC: Seeks to Use Cash Collateral
SAGE ECOENTERPRISES: Taps GreerWalker as Financial Advisor
SANTA CLARITA: Unsecureds Will Receive 100% Under Plan
SHARPE CONTRACTORS: Selective Says Plan Not Feasible
SHELTON BROTHERS: Trustee Granted Extended Sale Objection Deadline
SHELTON BROTHERS: Trustee Seeks to Extend Bid Deadline for Assets
SMYRNA READY: Proposed Notes Offering No Impact on Moody's B1 CFR
SOUTHLAND ROYALTY: Bankruptcy Plan Okayed, Allowing $252-Mil. Sale
SPECTRUM GLOBAL: Incurs $10.1 Million Net Loss in First Quarter
SPLASH NEWS: Gets Cash Collateral Access on Final Basis
SQUARE INC: S&P Assigns 'BB' Issuer Credit Rating, Outlook Stable
SRS DISTRIBUTION: Moody's Gives B3 Rating on New Sr. Secured Debt
SRS DISTRIBUTION: S&P Downgrades ICR to 'B-', Outlook Stable
STA TRAVEL: Court Extends Plan Exclusivity Until August 2
STA VENTURES: Seeks Court Approval to Hire Financial Expert
STONEWAY CAPITAL: Dechert LLP Represents Mezzanine Lenders
SYNRGO INC: Seeks to Use UMB Bank's Cash Collateral
SYNRGO INC: UMB Bank Seeks Chapter 11 Trustee Appointment
TECT AEROSPACE: Clients Want Info Protection in Ch. 11 Sale Process
TENET HEALTHCARE: Moody's Rates New First Lien Notes Due 2029 'B1'
TENET HEALTHCARE: S&P Rates New $1.4BB 1st-Lien Sr. Sec. Notes 'B+'
TENTLOGIX INC: Plan Exclusivity Period Extended Until June 26
TGS HOSPITALITY: Gets OK to Hire GreerWalker as Financial Advisor
THUNDERBIRD GLOBAL: Case Summary & 6 Unsecured Creditors
TIGER OAK: Case Trustee Seeks Cash Collateral Access Thru July 31
TIMOTHY KYLE ELLIS: $5.5K Sale of 2003 Maxi-Load Scales Approved
TORRID LLC: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
TRANQUILITY GROUP: Seeks to Hire G & H Tax as Accountant
TRANQUILITY GROUP: Taps Judson Poppen as Special Counsel
UNDER ARMOUR: Moody's Affirms Ba3 CFR & Alters Outlook to Positive
UNIVAR SOLUTIONS: Moody's Rates Amended $1.1MM Secured Loan 'Ba2'
US REAL: Trustee Seeks to Modify Order Approving Sale Procedures
UTC LABORATORIES: Seeks to Hire Jones Walker as Legal Counsel
VAL'S FOOD: Unsec. Creditors to Get $800 Per Month Over 60 Months
VINCENT GALANO, JR: Selling Middletown Asset for $775K to Blackman
VIVA TEXAS: Taps Cindy Clarich of Remax Elite as Real Estate Agent
WASHINGTON PRIME: Fitch Lowers LongTerm IDR to 'RD'
WATKINS NURSERIES: Unsecureds to Get Share of Income for 6 Years
WEINSTEIN CO: 3rd Circuit Nixes Its Pre-Ch. 11 Profit Claim
WELLDYNERX LLC: Moody's Affirms B3 CFR, Outlook Stable
WESCO INTERNATIONAL: S&P Alters Outlook to Pos., Affirms 'BB-' ICR
WITCHEY ENTERPRISES: June 25 Hearing on Disclosure Statement
WOODFORD EXPRESS: S&P Raises ICR to 'B-', Outlook Positive
WORKHORSE GRADING: Seeks to Hire J.M. Cook as Legal Counsel
YELLOW PAGES: S&P Affirms 'B-' ICR on Debt Repayment
[] U.S. Trustee Challenges Chapter 11 Plan Exculpation Provisions
[^] BOND PRICING: For the Week from May 17 to 21, 2021
*********
1 BIG RED: $710K Sale of Kansas City Property to Sunshine Approved
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Judge Robert D. Berger of the U.S. Bankruptcy Court for the
District of Kansas authorized 1 Big Red, LLC's sale of the real
property and improvements located at 3901-27 Linwood Blvd., in
Kansas City, Missouri, to Sunshine Daily, LLC for $710,000, subject
to higher and better offers.
The Sale Agreement, as set forth in the Sale Motion, is approved in
its entirety.
The sale is free and clear of all Liens, with such Liens to attach
to the net proceeds of the sale.
Any approved administrative fees should be paid from the sale
proceeds with any liens attaching to the remaining sale proceeds,
subject to any rights and defenses of the Debtor and any other
parties in interest thereto.
The automatic stay pursuant to section 362 of the Bankruptcy Code
is modified to the extent necessary (i) to allow Sunshine Daily to
give the Debtor any notice provided for in the Sale Agreement and
(ii) to allow Sunshine Daily, the Debtor and any other person or
entity to take any and all actions permitted by the Sale Agreement
or the Order or as necessary to effectuate any provision of the
Sale Agreement or the Order or to consummate the transactions
contemplated by the Sale Agreement and the Order.
There is no just delay for the implementation of the Order and, for
all purposes, it will be a final order with respect to the sale of
the Property and other relief granted therein.
The real estate taxes, title insurance, and usual and regular
closing costs will be paid at the time of the Closing of the sale.
Creditor, Twin Properties, KC, LLC will receive the sum of $575,000
upon closing. Twin Properties will execute a Quit Claim deed at
the time of closing.
The Debtor will pay any balance owed to the United States Trustee
from the sale proceeds at the time of Closing of the sale.
Any excess proceeds will be held in the DIP bank account until
further Order of the Court.
The sale of the subject property and the Order will not operate as
a release of any claims of any parties thereto except for the
claims between the Debtor and Twin Properties.
Time is of the essence, the 14-day stays imposed by Rules 6004(h)
and 6006(d) of the Federal Rules of Bankruptcy Procedure are waived
with respect to the Order, and the Order will take effect
immediately upon its entry.
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.
The Debtor listed total assets at $2.5 million and $3,094,099 in
estimated liabilities.
The Debtor tapped Colin Gotham, Esq., at Evans & Mullinix, P.A. as
counsel.
The petition was signed by Sean Tarpenning, CEO.
120 YORK: Wins Cash Collateral Access Thru June 22
--------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Pennsylvania
has authorized 120 York, LLC to use cash collateral on an interim
basis in accordance with the budget, through June 22, 2021.
Prior to the Petition Date, Kinsley Construction, Inc. made a loan
to Debtor in the original principal sum of $15,912,000 pursuant to
and as evidenced by a Promissory Note dated August 14, 2013.
As security for the Loan, the Debtor granted to Kinsley an Open-End
Mortgage and Security Agreement dated August 14, 2013, on real
estate owned by the Debtor and located at 210 York Street, York,
PA.
The Mortgage included an assignment of and security interest in all
leases and all rentals due to the Debtor in connection with the
Real Estate. These rentals constitute Kinsley's cash collateral.
The outstanding principal amounts due to Kinsley on account of the
Loan as of the Petition Date was $8,541,796.76 and the Debtor is
obligated to pay Kinsley certain other amounts under the terms of
the Loan, including interest, attorneys' fees, costs, late charges
and other charges.
As adequate protection for the Debtor's use of Cash Collateral:
(a) The Debtor ratifies and confirms its grant to Kinsley,
effective as of the Petition Date, of first priority liens upon and
security interests in all of the Debtor's now existing and
hereafter acquired Cash Collateral. To the extent Cash Collateral
is utilized, Kinsley is granted a replacement lien in post-Petition
Cash Collateral; and
(b) Any Cash Collateral that is used by the Debtor and not
otherwise secured will constitute a cost and expense of
administration in the Chapter 11 case and will have a superpriority
status pursuant to section 364(c)(1) of the Bankruptcy Code and
thus will be paid ahead of all other costs and expenses of
administration including, but not limited to, those specified in
sections 503(b) or 507(a) of Bankruptcy Code, except that the
administrative costs and expenses of Kinsley will be pari passu
with allowed costs and expenses of professionals and fees owed to
the Office of the United States Trustee.
These events constitute Events of Default:
(a) The Debtor materially fails to keep, observe or perform
any of its agreements or undertakings under the Order;
(b) The Debtor furnishes or makes any material false,
inaccurate or incomplete representation, warranty, certificate,
report or summary in or under the Order;
(c) The Debtor suffers the appointment of a trustee; or
(d) The Debtor's Chapter 11 case is converted to a case under
Chapter 7 of the Bankruptcy Code.
The final hearing on the Use of Cash Collateral is scheduled for
June 22 at 9:30 a.m.
A copy of the order is available for free at https://bit.ly/3f5Hwfc
from PacerMonitor.com.
About 120 York, LLC
120 York, LLC is a corporation engaged in owning and managing real
estate in Central Pennsylvania.
120 York, LLC filed a Chapter 11 petition (Bankr. M.D. Pa. Case No.
21-00945) on April 27, 2021. As of the Petition Date, the Debtor
estimated between $10 million and $50 million in both assets and
liabilities. William Hynes, manager, signed the petition.
Judge Henry W. Van Eck oversees the case.
Cunningham, Chernicoff & Warshawsky, P.C., represents the Debtor as
counsel.
2374 VILLAGE: Sale of Properties to Wells Fargo for $3.37M Approved
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Judge Thomas P. Agresti of the U.S. Bankruptcy Court for the
Western District of Pennsylvania denied the proposed private sale
by 2374 Village Common Drive, LLC, and Joseph Martin Thomas, M.D,
to Joseph C. Kramer for $3.15 million, cash, subject to higher and
better offers of the following:
(a) Real estate and improvements located at 2374 Village
Common Drive, Erie, PA 16506 owned by 2374 Village Common Drive,
LLC, Tax Index No. 33-123-418.0-034.00; and,
(b) Real estate located at Lot 15 (2368) Village Common
Drive, Erie, PA 16506, Tax Index No. 33-123-418.0-034.01 owned by
Dr. Thomas.
The Court denied the Motion as a result of another interested
party, Wells Fargo Bank, N.A., a financial institution with a
mailing address c/of Steven Treadway, 1620 Roseville Parkway, 1st
Floor, Suite 100, MAC AI792-018, Roseville, CA 95661, making a
higher and better offer at the hearing on said sale by bidding-in a
portion of its secured claim against the property to be sold, and
the Motion for Private Sale was thus converted to a Public Auction
Sale. Wells Fargo Bank.
Service of the Notice of Hearing and Order setting hearing on said
Motion for private sale of real and personal property free and
divested of liens of the named Respondents, was effected on the
secured creditors whose liens are recited in said Motion for
private sale.
The sale by Special Warranty Deed of the Sale Property is confirmed
to Wells Fargo, for $3.37 million, free and divested of the liens
and claims, and, that the Movants are authorized to make, execute,
and deliver to the Purchaser the necessary deed and/or other
documents required to transfer title to the property purchased upon
compliance with the terms of sale.
Wells Fargo has designated the name and address of the following
entity which will be listed as the grantee or buyer on the Special
Warranty Deed: Redus Properties, Inc., 1 Independent Drive, 88th
Floor-Suite 810, Jacksonville, FL 32202.
The recited liens and claims are, transferred to the proceeds of
sale, if and to the extent they may be determined to be valid liens
against the sold property, and that the within decreed sale will be
free, clear, and divested of said liens and claims.
The sale of 2374 Village Common Drive, Erie, PA 16506, Tax Index
No. 33-123-418.0-034.00 owned by 2374 Village Common Drive, LLC at
the allocated purchase price of $3.17 million is made pursuant to
the confirmation of 2374 Village Common Drive, LLC's Chapter 11
Plan of Orderly Liquidation dated March 5, 2021, which was
confirmed by Order of Court dated April 28, 2021.
Therefore, the sale of the referenced parcel is exempt from
taxation under any laws imposing a stamp tax, state or local
transfer tax, or similar tax. If a timely objection is filed, then
the Court will hold a hearing and decide the Section 1146(a) stamp
tax issue de novo. If no such objection it timely filed, then the
exemptions provided for will be allowed and final.
The following expenses/costs will immediately be paid at the time
of closing. Failure of the Closing Agent to timely make and
forward the disbursements required by the Order will subject the
Closing Agent to monetary sanctions, including among other things,
a fine or the imposition of damages, after notice and hearing, for
failure to comply with the above terms of the Order. Except as to
the distribution specifically authorized, all remaining funds will
be held by the Counsel for the Movant pending further Order of the
Court after notice and hearing.
The sum of $3,170,000 is allocated as the purchase price for the
real estate located at 2374 Village Common Drive, Erie,
Pennsylvania owned by 2374 Village Common Drive LLC. Of that
amount, the following disbursements will be made:
1. The Purchaser will pay delinquent real estate taxes payable
to the Erie County Tax Claim Bureau in the approximate amount of
$588,881.94, plus interest at the rate of 9% per annum from March
31, 2021;
2. The Purchaser will pay current real estate taxes, due and
payable to the Millcreek Township Tax Collector pro-rated to the
date of closing;
3. The Purchaser will pay the court-approved commission
payable to Coldwell Banker Select Realtors in the amount of
$5,000;
4. The Purchaser will pay the costs of newspaper advertising
in the following amounts: Erie Times News: $175.10; Pittsburgh
Post-Gazette: $341.00; The Buffalo News: $494.00; and The Cleveland
Plain Dealer: $382.72, for a total of $1,392.82 will be reimbursed
to The Quinn Law Firm;
5. The Purchaser will pay the costs of legal journal
advertising in the amount of $105 will be reimbursed to the Quinn
Law Firm;
6. The Purchaser will pay the reimbursement to the Quinn Law
Firm of the filing fee for the Motion for Order Approving Sale of
Real Estate Free and Divested of Liens in the amount of $188;
7. The Purchaser will pay any and all municipal fees, as well
as any and all water and sewer charges, if applicable, will be paid
at the time of the closing.
8. The Debtors will pay the from the Purchaser's cash
collateral on hand with the Debtors sum of $100,000 for the
Administrative Carve-Out to the Quinn Law Firm, to be set aside and
held in its escrow account pending further agreement by the Debtors
and Purchaser, for the payment of Court-approved, administrative
expense claims for professional fees and expenses of the estates of
the Debtors related to the within sale in accordance with 11 U.S.C.
Section 506(c) surcharge, subject to the stipulation of the counsel
to reduce administrative claims for court-approved professional
fees by 35% and subject to further order of court regarding the
distribution of said $100,000 Administrative Carve-Out.
9. The closing agent who represents the Debtors at the time of
the real estate closing, which will be completed on an hourly basis
as counsel for a commercial seller, will be paid by the Debtors
pending further fee application(s) to be filed and approved by the
Court. In addition, all necessary overnight fees associated with
the closing will be reimbursed to the appropriate party.
10. All parties agree that $133,000 of the Purchaser's cash
collateral on hand with the Greater Erie Surgery Center, an
affiliated non-bankrupt entity, will be earmarked as a carve-out
from the within purchase price for the benefit of all estate
professionals in these related cases in the amount of $100,000
without prejudice to additional claims of the estate professionals
to the cash on hand held by the Debtors and their affiliates (as
the term "affiliates" is defined in the Bankruptcy Code at 11
U.S.C. Section 101(2)) and for the benefit of the U.S. Trustee in
the amount of $33,000 ($31,700 for 2374 Village Common Drive, LLC
at Case No. 21-10118-TPA and $1,300 for Dr. Joseph Martin Thomas at
Case No. 20-10334-TPA), in the event that it is determined that
separate order of court that the U.S. Trustee is entitled to a
disbursement from the credit bid amounts. Said $133,000 will be so
earmarked and held in escrow by the attorney for the Debtors
pending further order(s) of Court.
The sum of $200,000 is allocated as the purchase price for the real
estate located at Lot 15, Village Common Drive, Erie, Pennsylvania,
Tax Index No. 33-123-418.0-034.01 owned by Joseph Martin Thomas.
Of that amount, the following disbursements will be made:
11. The Purchaser will pay the delinquent real estate taxes
payable to the Erie County Tax Claim Bureau in the approximate
amount of $4,917.22, plus interest at the rate of 9% per annum from
March 31, 2021;
12. The Purchaser will pay the current real estate taxes, due
and payable to the Millcreek Township Tax Collector pro-rated to
the date of closing;
13. Transfer Taxes will be paid in accordance with the
findings set forth on the record at the hearing on the Motion for
Private Sale of Real Property Free and Divested of Liens. Debtor is
to pay one-half and the Purchaser is to pay one-half of the
transfer taxes due and owing, which equal 2% of the purchase price
or $2,000.
14. The Purchaser will pay the court-approved commission
payable to Coldwell Banker Select Realtors in the amount of
$12,000;
15. The Purchase will pay the reimbursement to the Quinn Law
Firm of the filing fee for the Motion for Order Approving Sale of
Real Estate Free and Divested of Liens in the amount of $188.
16. The Purchaser will pay any and all municipal fees, as well
as any and all water and sewer charges, if applicable, will be paid
at the time of the closing.
Within seven days of the date of the Order, the Movants will serve
a copy of the within Order on each Respondent (i.e. each party
against whom relief is sought) and its attorney of record, if any,
upon any attorney or party who answered the motion or appeared at
the hearing, the attorney for the Debtor, the Closing Agent, the
Purchaser, and the attorney for the Purchaser, if any, and file a
certificate of service.
Closing will occur no later than May 31, 2021. The Debtors and the
Purchaser will cooperate fully with each other in order to
facilitate a timely Closing and sign any and all other documents
and take such actions as reasonably necessary to carry out the
spirit and intent of the Sale.
Within seven days following closing, the Movants will file a Report
of Sale which will include a copy of the HUD-1 or other Settlement
Statement.
The Sale Confirmation Order survives any dismissal or conversion of
the within cases.
The 14-day period for filing a notice of appeal found in Fed. R.
Bank. Proc. 8002(a)(1) is waived.
About 2374 Village Common Drive
2374 Village Common Drive, LLC is a Pennsylvania limited liability
company, which operates its business at 2374 Village Common Drive,
Erie, Pa. It is a single asset real estate entity under 11 U.S.C
Sec. 101(51B).
2374 Village Common Drive owns the medical facility where
Tri-State
Pain Institute, LLC and Greater Erie Surgery Center, Inc. conduct
business.
On March 5, 2021, 2374 Village Common Drive sought protection
under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Penn. Case No.
21-10118). In the petition signed by Joseph Martin Thomas, M.D.,
sole member, the Debtor disclosed assets of between $1 million and
$10 million and liabilities of the same range.
Judge Thomas P. Agresti oversees the case.
Michael P. Kruszewski, Esq. is the Debtor's legal counsel.
335 LAKE AVENUE: Court Approves Disclosures on Interim Basis
------------------------------------------------------------
Judge Joseph G. Rosania, Jr., has entered an order approving on an
interim basis the Amended Disclosure Statement of 335 Lake Avenue,
LLC.
Ballots for accepting or rejecting the Plan be submitted, in
writing, by the holders of all claims or interests on or before
June 15, 2021.
An evidentiary hearing for final approval of the Disclosure
Statement and for consideration of confirmation of the Plan and
Objection thereto filed by U.S. Bank National Association on May
13, 2021is scheduled to commence on Tuesday, June 22, 2021 at 9:30
a.m., Courtroom B, will be conducted by Zoom video conference.
About 335 Lake Avenue
335 Lake Avenue, LLC is a single asset real estate (as defined in
11 U.S.C. Section 101(51B)).
On April 1, 2020, 335 Lake Avenue filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Colo.
Case No. 20-12378). James K. Daggs, Debtor's manager, signed the
petition. At the time of the filing, the Debtor disclosed total
assets of $10 million to $50 million. Judge Joseph G. Rosania Jr.,
oversees the case.
The Debtor has tapped Weinman & Associates, P.C. as its bankruptcy
counsel and Allen Vellone Wolf Helfrich & Factor, P.C., and Klein
Cote Edwards Citron, LLC, as its special counsel.
5 STAR PROPERTY: Cody Buying Winter Haven Property for $375K
------------------------------------------------------------
5 Star Property Group, Inc., asks the U.S. Bankruptcy Court for the
Middle District of Florida to authorize the sale of the real
property located at 4130 Country Club Road South, in Winter Haven,
Florida 33881, described as The Gates of Lake Region PB 100 PGS 25
& 26 Lot 31, to Shanell Cody for $375,000.
The Debtor is the owner of the Real Property. The Property is not
the Debtor's homestead.
On May 10, 2021, the Debtor executed an "As Is" Commercial Contract
for Sale and Purchase through which the Debtor intends to sell the
Real Property to the Purchaser for the sum of $375,000. The sale
of the property is presently set to close by May 20, 2021.
Upon information and belief, the only parties who may claim a lien
against the Real Property are: Raymond Rairigh, Sr., in the
approximate amount of $167,915.77; the Polk County Tax Collector in
the amount of $1,863.46; Roger & Jeanie Fitzpatrick in the
approximate amount of 30% of the net profits of any sale of the
Real Property; and Kari's Granite & Marble, LLC in the amount of
$5,387.72. All claims secured by the Real Property will be paid
the full amount of their allowed claims at the closing of the
sale.
The proposed sale of the Real Property is in the ordinary course of
business.
The Debtor also seeks authority from the Court to sell the Real
Property "as is" and "where is," free and clear of any potential
liens, with valid and enforceable liens attaching to the proceeds
of the sale. Taxes and ordinary closing costs, including broker's
fees, will be paid at closing. The net sale proceeds, after
payment of the secured claims and closing costs, will be held in
trust by the Debtor's counsel until further order of the Court
regarding the distribution of the net sale proceeds.
The Debtor requests that the 14-day stay required under Bankruptcy
Rule Section 6004(h) be waived, and that any order granting the
Motion is effective immediately upon entry.
A copy of the Contract is available at https://tinyurl.com/4khs9d5z
from PacerMonitor.com free of charge.
About 5 Star Property Group, Inc.
5 Star Property Group, Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
20-07801) on Oct. 20, 2020, listing under $1 million in both
assets
and liabilities. Buddy D. Ford, Esq. at BUDDY D. FORD, P.A.
represents the Debtor as counsel.
5 STAR PROPERTY: Court Sets Hearing on $190K Asset Sale to Rivers
-----------------------------------------------------------------
Judge Catherine Peek McEwen of the U.S. Bankruptcy Court for the
Middle District of Florida was set to convene a preliminary hearing
on May 20, 2021, at 1:30 p.m., to consider 5 Star Property Group,
Inc.'s sale of the real property is located at 2625 Avenue S NW, in
Winter Haven, Florida 33881, described as Inwood Unit3 PB 9 PG 7A
7B 7C S13/ 24 T28 R25 Lots 544 &545, to Joe Rivers for $190,000.
The Court may continue the matter upon announcement made in open
court without further notice.
Any party opposing the relief sought at this hearing must appear at
the hearing or any objections or defenses may be deemed waived.
Effective March 16, 2020, and continuing until further notice,
Judges in all Divisions will conduct all hearings by telephone.
Parties should arrange to appear telephonically for this hearing
through Court Call (866-582-6878).
About 5 Star Property Group, Inc.
5 Star Property Group, Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
20-07801) on Oct. 20, 2020, listing under $1 million in both
assets
and liabilities. Buddy D. Ford, Esq. at BUDDY D. FORD, P.A.
represents the Debtor as counsel.
5 STAR PROPERTY: Court Sets Hearing on $375K Property Sale to Cody
------------------------------------------------------------------
Judge Catherine Peek McEwen of the U.S. Bankruptcy Court for the
Middle District of Florida was set to convene a preliminary hearing
on May 20, 2021, at 1:30 p.m., to consider 5 Star Property Group,
Inc.'s sale of the real property located at 4130 Country Club Road
South, in Winter Haven, Florida 33881, described as The Gates of
Lake Region PB 100 PGS 25 & 26 Lot 31, to Shanell Cody for
$375,000.
The Court may continue the matter upon announcement made in open
court without further notice.
Any party opposing the relief sought at this hearing must appear at
the hearing or any objections or defenses may be deemed waived.
Effective March 16, 2020, and continuing until further notice,
Judges in all Divisions will conduct all hearings by telephone.
Parties should arrange to appear telephonically for this hearing
through Court Call (866-582-6878).
About 5 Star Property Group, Inc.
5 Star Property Group, Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
20-07801) on Oct. 20, 2020, listing under $1 million in both
assets
and liabilities. Buddy D. Ford, Esq. at BUDDY D. FORD, P.A.
represents the Debtor as counsel.
5 STAR PROPERTY: Rivers Buying Winter Haven Property for $190K
--------------------------------------------------------------
5 Star Property Group, Inc., asks the U.S. Bankruptcy Court for the
Middle District of Florida to authorize the sale of the real
property located at 2625 Avenue S NW, in Winter Haven, Florida
33881, described as Inwood Unit3 PB 9 PG 7A 7B 7C S13/ 24 T28 R25
Lots 544 &545, to Joe Rivers for $190,000.
The Debtor is the owner of the Real Property, which it listed on
Schedule A of its Petition. The Property is not the Debtor's
homestead.
On May 4, 2021, the Debtor executed an "As Is" Commercial Contract
for Sale and Purchase through which the Debtor intends to sell the
Real Property to the Purchaser for the sum of $190,000. The sale
of the property is presently set to close by May 31, 2021.
Upon information and belief, the only parties who may claim a lien
against the Real Property is DSRS, LLC, ("First Mortgager") in the
approximate amount of $28,000, Raymond Rairigh, Sr. ("Second
Mortgager") in the approximate amount of $134,340.88, and the Polk
County Tax Collector in the amount of $660.73. All claims secured
by the Real Property will be paid the full amount of their allowed
claims at the closing of the sale.
The proposed sale of the Real Property is in the ordinary course of
business.
The Debtor also seeks authority from the Court to sell the Real
Property "as is" and "where is," free and clear of any potential
liens, with valid and enforceable liens attaching to the proceeds
of the sale. Taxes and ordinary closing costs, including broker's
fees, will be paid at closing. The net sale proceeds, after
payment of the secured claims and closing costs, will beheld in
trust by the Debtor's counsel until further order of the Court
regarding the distribution of the net sale proceeds.
The Debtor requests that the 14-day stay required under Bankruptcy
Rule Section 6004(h) be waived, and that any order granting the
Motion is effective immediately upon entry.
A copy of the Contract is available at https://tinyurl.com/hw4wn2t4
from PacerMonitor.com free of charge.
About 5 Star Property Group, Inc.
5 Star Property Group, Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
20-07801) on Oct. 20, 2020, listing under $1 million in both
assets
and liabilities. Buddy D. Ford, Esq. at BUDDY D. FORD, P.A.
represents the Debtor as counsel.
511 GROUP: Plan Exclusivity Period Extended Until July 25
---------------------------------------------------------
At the behest of the 511 Group, LLC, Judge A. Jay Cristol of the
U.S. Bankruptcy Court for the Southern District of Florida extended
the periods in which the Debtor may file a Chapter 11 plan through
and including July 25, 2021, and to solicit acceptances through and
including September 25, 2021.
The additional time will allow the Debtor to resolve issues in
their case.
A copy of the Court's Extension Order is available at
https://bit.ly/33ZXVLR from PacerMonitor.com.
About 511 Group LLC
511 Group LLC, a Miami Beach, Fla.-based limited liability company,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
S.D. Fla. Case No. 20-21098) on October 12, 2020. In its petition,
the Debtor estimated both assets and liabilities to be between
$100,001 and $500,000.
Judge A. Jay Cristol presides over the case. Joel M. Aresty P.A. is
the Debtor's legal counsel.
975 WALTON: Has Deal on Cash Collateral Use
-------------------------------------------
975 Walton Bronx LLC asks the U.S. Bankruptcy Court for the Eastern
District of New York for authority to use cash collateral pursuant
to an agreed budget and provide adequate protection to lender
Walton Improvement Group LLC.
The Debtor's multi-family residential apartment building in Bronx,
New York, is subject to a first mortgage originally issued by
Investors Bank in the principal sum of $22.5 million. The mortgage
was obtained in connection with the Debtor's acquisition of the
Property in April 2015.
For a portion of 2020, the Debtor remained current with respect to
its Loan Obligations. The Debtor began a negotiated restructuring
with Investors Bank. The Bank, however, subsequently sold and
assigned, among other things, the mortgage note and loan to the
Lender on October 30, 2020 pursuant to the Transfer Documents.
Thereafter, the Lender commenced a foreclosure action on February
23, 2021, in the New York State Supreme Court, Bronx County, Index
No. 802465/2021E, which led to the Chapter 11 filing.
On August 25, 2020, a judgment was obtained against the Debtor by
Thor 975 Walton Avenue LLC in the sum of $2,600,290 relating to a
failed pre-petition contract of sale under which the deposit was
initially released to the Debtor, as the seller of the Property.
Ultimately, however, Thor, as the would-be buyer, prevailed in its
assertion that it was justified in terminating the contract of sale
and obtained a judgment on August 25, 2020, for the amount of
deposit previously released to the Debtor.
Pursuant to the underlying loan documents, among other things, the
Lender retains a first lien and security interest against the
Debtor's rents pursuant to an: (i) Absolute Assignment of Leases
and Rents dated April 1, 2020 between the Debtor and Investors; and
(ii) Absolute Assignment of Leases and Rents dated October 30, 2020
between Investors and the Lender. The judgment holder, Thor, has a
subordinate undersecured lien on the Property and no lien against
the rents.
The sole source of revenue to operate the Property derives from the
Debtor's collection of monthly rents from the residential and
commercial tenants. From the inception of the Chapter 11 case, the
Debtor has duly acknowledged that ongoing rent collections
constitute the Lender's Cash Collateral within the meaning of the
Bankruptcy Code. Thus, the Debtor entered into extensive
negotiations with the Lender after the Petition Date to obtain
consensual use of the Lender's Cash Collateral based on an
acceptable operating budget. In the interim, the Debtor only made
essential disbursements, primarily for insurance and wages, with
the Lender's consent for the Debtor to make such payments.
After weeks of negotiations, the Debtor and the Lender have agreed
upon the final terms of the proposed Cash Collateral Stipulation.
Fundamentally, the Cash Collateral Stipulation permits the Debtor's
use of the rents to operate the Property, based upon the agreed
Budget, which was also heavily negotiated. It contains customary
operating items such as payment of taxes, insurance, debt service,
wages, repairs and maintenance. The Budget also includes a
management fee of 4% to an insider of the Debtors to run the
Property and to handle all collections and reporting.
With a final deal with the Lender in place, the Debtor is moving to
obtain authority under Section 363 of the Bankruptcy Code for
approval of the Cash Collateral Stipulation to pay agreed expenses
to operate and maintain the Property, including monies to repair
apartments which fell into minor disrepair due to the Debtor's
inability to enter the apartments during the Covid-19 pandemic.
This current repair budget is built into the Budget, made part of
the Cash Collateral Stipulation.
The Budget provides for monthly expenses of approximately $100,000,
based on a range of approximately $88,000 to $173,000 during the
period March 2021 through and including February 2022 to account
for periodic payments, such as insurance. The Budget also provides
for additional payments of approximately $285,000 in July 2021 and
December 2021 for real estate taxes.
To adequately protect the Lender with respect to the use of Cash
Collateral, the Debtor commenced and will continue to make monthly
interest payments in the amount of $101,682, calculated at the
regular, non-default, rate in accordance with Section 362(d)(3).
The May Payment and the Post-Petition Service have been made. Upon
Court approval of the Cash Collateral Stipulation, the Debtor
acknowledges it is required to make the additional Adequate
Protection Payments contemplated in the Cash Collateral
Stipulation.
A copy of the motion is available for free at
https://bit.ly/3vc3m6p from PacerMonitor.com.
About 975 Walton Bronx
975 Walton Bronx, LLC is a New York limited liability company,
which primarily owns a multi-family residential apartment building
at 975 Walton Avenue, Bronx, N.Y. The property consists of 182
apartments and commercial space, including a cell tower.
975 Walton Bronx sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.Y. Case No. 21-40487) on Feb. 25,
2021. At the time of filing, the Debtor had between $10 million
and $50 million in both assets and liabilities. Judge Jil
Mazer-Marino oversees the case. Goldberg Weprin Finkel Goldstein,
LLP is the Debtor's legal counsel.
AAA REAL ESTATE: Seeks to Hire Herron Hill as Legal Counsel
-----------------------------------------------------------
AAA Real Estate Investment Services, LLC seeks approval from the
U.S. Bankruptcy Court for the Middle District of Florida to hire
Herron Hill Law Group, PLLC as its legal counsel.
The firm's services include:
a. advising the Debtor concerning the operation of its
business in compliance with Chapter 11 and orders of the court;
b. defending any causes of action on behalf of the Debtor;
c. preparing legal papers;
d. assisting in the preparation of a plan of reorganization
and disclosure statement; and
e. other services of a legal nature in the field of bankruptcy
law.
Kenneth Herron Jr., Esq., a partner at Herron Hill, disclosed in a
court filing that his firm is a disinterested person within the
meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Kenneth D Herron Jr., Esq.
Herron Hill Law Group, PLLC
135 W Central Blvd Ste 480
Orlando, FL 32801-2478
Office: 407-648-0058
Fax: 407-979-4438
Email: chip@herronhilllaw.com
About AAA Real Estate Investment Services
AAA Real Estate Investment Services, LLC sought protection for
relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla.
Case No. 21-02101) on May 5, 2021. At the time of the filing, the
Debtor had between $1 million and $10 million in both assets and
liabilities. Herron Hill Law Group, PLLC is the Debtor's legal
counsel.
ADELPHIA COMMUNICATIONS: Founder Can't Vacate Fraud Conviction
--------------------------------------------------------------
Law360 reports that the Second Circuit held Friday, May 21, 2021,
that Adelphia Communications Corp. founder John Rigas and his son
can't vacate their convictions for fraud, ruling that the alleged
withholding of government notes about some pretrial interviews
"does not reasonably undermine our confidence in the jury's
verdict.
"John and Timothy Rigas were convicted in 2004 for the fraud scheme
that drove Adelphia into bankruptcy and had appealed a district
court's ruling that denied their motions to vacate. The father and
son defendants claimed the withheld notes were exculpatory evidence
and were required to be handed over to the defense.
About Adelphia Communications
Based in Coudersport, Pennsylvania, Adelphia Communications
Corporation was once the fifth-biggest cable company. Adelphia
served customers in 30 states and Puerto Rico, and offered analog
and digital video services, Internet access and other advanced
services over its broadband networks.
Adelphia collapsed in 2002 after disclosing that founder John Rigas
and his family owed $2.3 billion in off-balance-sheet debt on bank
loans taken jointly with the company. Mr. Rigas was sentenced to
12 years in prison, while son Timothy 15 years.
Adelphia Communications and its more than 200 affiliates filed for
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 02-41729) on
June 25, 2002. Willkie Farr & Gallagher represented the Debtors in
their restructuring effort. PricewaterhouseCoopers served as the
Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman
LLP and Klee, Tuchin, Bogdanoff & Stern LLP represented the
Official Committee of Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas-Managed Entities, were
entities that were previously held or controlled by members of the
Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision LLC. The RME Debtors filed for Chapter 11 protection
(Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642) on March 31,
2006. Their cases were jointly administered under Adelphia
Communications and its debtor-affiliates' Chapter 11 cases.
The Bankruptcy Court confirmed the Debtors' Joint Chapter 11 Plan
of Reorganization on Jan. 5, 2007. The Plan became effective on
Feb. 13, 2007.
The Adelphia Recovery Trust, a Delaware Statutory Trust, was formed
pursuant to the Plan. The Trust holds certain litigation claims
transferred pursuant to the Plan against various third parties and
exists to prosecute the causes of action transferred to it for the
benefit of holders of Trust interests. Lawyers at Kasowitz,
Benson, Torres & Friedman, LLP (NYC), represent the Adelphia
Recovery Trust.
AEROSTAR AIRPORT: Moody's Hikes Rating on $400MM Sec. Bonds to Ba1
------------------------------------------------------------------
Moody's Investors Service upgraded the rating assigned to $400
million (original outstanding amount) of senior secured bonds
issued Aerostar Airport Holdings, LLC. to Ba1 from Ba2. The outlook
is stable.
RATINGS RATIONALE
Aerostar's rating upgrade to Ba1 from Ba2 incorporates the
airport's dominant market position as the largest airport and
gateway to San Juan, Puerto Rico, with strong credit fundamentals
that limit its exposure to the weak credit quality of the
Commonwealth of Puerto Rico (Ca negative). Supporting Aerostar's
credit quality is the demonstrated resiliency to external shocks
that have had material negative impacts on the island. Given
Aerostar's strong travel linkages with the US mainland and the lack
of travel alternatives, the consequences of Hurricane Maria in
2017, a 6.4 magnitude earthquake in January 2020, as well as the
ongoing COVID-19 pandemic have not been meaningful and short-lived
when compared to other infrastructure assets located in Puerto
Rico.
Aerostar has also outperformed most U.S. and Latin American
airports with a strong recovery of passengers in 2021 as the share
of US population getting vaccinated continues to rise. The COVID-19
outbreak and travel restrictions led to a traffic decline of close
to 50% in 2020 with respect to 2019. By the first quarter of 2021,
Aerostar traffic recovered to 77% of 2019 traffic against the same
period in 2019 and for the month of April, enplanements have
already surpassed 2019 levels.
Revenues are even more resilient than traffic in part due to the
Airport Use Agreement (AUA) with airlines that sets a revenue floor
for the airport regardless of actual enplanements. In 2020,
revenues practically remained flat against 2019 despite the
material loss of enplanements.
Aerostar recorded a funds from operations to debt ("FFO/Debt")
ratio of 18.2% as of December 2020, reflecting the airport's
moderate leverage, and cash interest coverage ("CIC") was 3.9x,
indicating that it is generating ample cash to maintain operations
and meet borrowing costs. Given the inflation indexed tariff
adjustments and amortizing profile of the debt, key financial
metrics should continue to improve over time. Aerostar's credit
quality is also underpinned by its strong liquidity position
including a 12-month Debt Service Reserve Account.
The stable outlook incorporates Moody's expectation that
enplanement levels will remain resilient to Puerto Rico's operating
environment, and that revenues will continue to grow as a result of
inflation-indexed tariffs.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's assessment that Aerostar is completely delinked to common
credit risks with Puerto Rico coupled with a solid traffic
performance and maintaining interest coverages above 3.5x and
FFO/Debt above 18% on a sustained basis would exert upward credit
pressure on the rating.
Downward pressure on the ratings would be triggered by slower
enplanement levels due or lower revenues that lead to cash interest
coverages below 2.0x and FFO/Debt below 10% on a sustained basis.
The principal methodology used in these ratings was Privately
Managed Airports and Related Issuers published in September 2017.
AGD SYSTEMS: Asks Court to Extend Plan Exclusivity Thru August 17
-----------------------------------------------------------------
Debtor AGD Systems Corporation requests the U.S. Bankruptcy Court
for the Southern District of Florida, West Palm Beach Division to
extend by 60 days the exclusive periods during which the Debtor may
file a plan of reorganization and to solicit acceptances of a plan,
through and including August 17, 2021, and October 18, 2021,
respectively.
The Debtor is a party to an adversary proceeding styled AGD SYSTEMS
CORPORATION vs. TEMPUS APPLIED SOLUTIONS, LLC, et al., Adv. Proc.
NO: 20-01352- MAM, which involves several aircraft described
therein, the outcome of which will inform the plan terms.
A continued hearing on a Motion for Judicial Settlement Conference
is scheduled for June 16, 2021, and the Debtor is in the process of
amending the Complaint. This hearing was continued from May 5,
2021, to allow the Debtor time to amend the Complaint. A pretrial
is also scheduled for June 16, 2021. A Motion to Dismiss has been
filed in the main case and that hearing is scheduled for June 2,
2021.
Given the Debtor's progress to date and the good cause exists,
Debtor's request for exclusivity periods extension is reasonable.
The Debtor is not seeking this extension to delay the
administration of the case and does not believe that any creditors
or parties in interest will be prejudiced by this extension.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3hCEaSN 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.
AIMBRIDGE HOSPITALITY: Moody's Alters Outlook on B3 CFR to Stable
-----------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Aimbridge
Hospitality Holdings, LLC including its B3 corporate family rating,
B3-PD probability of default rating and B3 senior secured bank
credit facility rating. At the same time, Moody's revised the
company's outlook to stable from negative.
"The revision of Aimbridge's outlook to stable reflects Moody's
expectation that the company's operations will benefit from the
strong growth in leisure travel this summer and it will be able to
reduce leverage to below 6.5x over the next two years," stated Pete
Trombetta, Moody's lodging analyst. The change in outlook to stable
also reflects that Aimbridge has sufficient liquidity to support
its operations over the next twelve to eighteen months as it
earnings recover from the impact of travel restrictions related to
the pandemic. Aimbridge's earnings suffered in 2020 as a majority
of its revenue is tied to the revenue per available room ("RevPAR")
of the hotels the company manages. While Aimbridge reports that its
RevPAR levels have exceeded peers over the last six months, these
levels were still more than 50% below 2019 levels. Leverage will
remain high over the next two years due to this earnings pressure
along with the $200 million in incremental debt raised in 2020 to
bolster its liquidity and the $500 million debt related to its 2019
acquisition of Interstate Hotels & Resorts.
Affirmations:
Issuer: Aimbridge Hospitality Holdings, LLC
Probability of Default Rating, Affirmed B3-PD
Corporate Family Rating, Affirmed B3
GTD Senior Secured Bank Credit Facility, Affirmed B3 (LGD3)
Outlook Actions:
Issuer: Aimbridge Hospitality Holdings, LLC
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Aimbridge's credit profile is constrained by its high debt/EBITDA
which will well exceed its downgrade factor of 6.5x over the next
two years given the material decline in earnings due to travel
restrictions related to the spread of COVID-19 (all metrics include
Moody's standard adjustments). Historically, Aimbridge's scale is
small in terms of revenue and earnings relative to other single B
rated Business and Consumer Services companies. Aimbridge's credit
profile benefits from its exposure to leisure travel which is
expected to see material year-over-year growth this summer as well
as its good diversification in terms of geography, brands, and
hotel owners. Under normal conditions the combined company will
benefit from strong free cash flow due in part to its minimal
capital expenditure requirements.
Aimbridge has adequate liquidity which supports its ability to get
through this period of material earnings pressure. The company had
$130 million of cash at the end of 2020 along with full
availability under its $120 million revolver due 2024. Moody's
expect the company's cash needs will exceed its cash inflow in the
first half of 2021 but improve in the second half. The company's
net first lien leverage covenant is only tested if 35% of its
revolver is drawn, Moody's do not expect the covenant will be
tested over the next 12 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if the recovery in lodging fundamentals
expected in the second half of 2021 stalls for any reason. Longer
term, ratings could be downgraded if debt/EBITDA does not recover
to below 6.5x or EBITA/interest expense is not sustained above
1.0x, or if the probability of default increases for any reason.
Any deterioration in liquidity would also lead to negative ratings
pressure. Ratings could be upgraded if debt/EBITDA sustained below
6.0x and EBITA/interest coverage is sustained above 1.5x.
Aimbridge Acquisition Co., Inc., through its subsidiaries Aimbridge
Hospitality Holdings, LLC and KIHR Holdings Inc., is the largest
third-party hotel operator, with over 1,275 properties and
approximately 183,000 rooms under management. Aimbridge's managed
properties are located in 49 states and 20 countries. The company
is majority owned by Advent International. The company is private
and does not file public financials.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
AIR FLIGHT: Wins Cash Collateral Access Thru August 12
------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Fort Lauderdale Division, has authorized Air Flight, Inc. to use
cash collateral on an interim basis through August 12, 2021.
The Debtor is authorized to use the cash collateral, with continued
monthly adequate protection payments to:
(a) First National Bank in the amount of $1,000; and
(b) The First State Bank in the amount of $250.
The Debtor will have a five-day grace period in the event of any
delinquent payments.
The Court says any liens in favor of the Banks including, without
limitation, the Adequate Protection Lien(s), will be subject to
carve-out for all fees due to the U.S. Trustee and/or Clerk of
Court and Debtor is authorized to pay the U.S. Trustee fees without
further order of the Court.
Hearing on the matter has been continued to August 12 at 10:30 a.m.
via Zoom video conference. Objections are due August 10.
A copy of the order and the Debtor's budget from March 21 to August
12 is available for free at https://bit.ly/3fG9jSN from
PacerMonitor.com.
The Debtor projects total income of $205,000 and total expenses of
$186,725 for the month of May; total income of $215,000 and total
expenses of $192,775 for the month of June; total income of
$230,000 and total expenses of $203,925 for the month of July; and
total income of $242,500 and total expenses of $211,350 for
August.
About Air Flight, Inc.
Air Flight, Inc. filed a Chapter 11 bankruptcy petition (Bankr.
S.D. Fla. Case No. 21-11039) on Feb. 2, 2021, disclosing under $1
million in both assets and liabilities.
Judge Peter D. Russin oversees the case.
The Debtor is represented by Van Horn Law Group, Inc.
AJRANC INSURANCE: Final Cash Collateral Hearing on May 25
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Judge Caryl E. Delano authorized AJRANC Insurance Agency, Inc., and
affiliates to use cash collateral on an interim basis, pending a
final hearing scheduled for May 25, 2021, at 1:30 p.m.
The Debtors are authorized to use Cash Collateral in accordance
with the budget, with a 10% variance. The Debtors are not
authorized to pay a car allowance to Anthony Borruso, their
president.
The Court says expenditures in excess of the variance or not on the
budget will not be deemed to be unauthorized use of cash
collateral, unless the recipient cannot establish that the expense
would be entitled to administrative expense priority if the
recipient had extended credit for the expenditure.
The lenders are granted, as adequate protection, replacement lien
in all categories and types of collateral in which they held a
security interest and lien as of the Petition Date to the same
extent, validity and priority that they held as of the Petition
Date. As further adequate protection to Iberia, AJRANC will make a
monthly interest only payment calculated at a per diem rate of
$91.07, with such payment commencing on May 10 and continuing on
the tenth day of each month, subject to parties' right to object to
the adequate protection payment within 14 days of the Order.
The Debtors are also directed to maintain insurance coverage for
the Collateral in accordance with the obligations under the loan
and security documents.
A copy of the interim order and the Debtor's budget is available
for free at https://bit.ly/2RxKNer from PacerMonitor.com.
About AJRANC Insurance Agency
AJRANC Insurance Agency, Inc., based in Lutz, Fla., filed a Chapter
11 petition (Bankr. M.D. Fla. Case No. 20-06493) on August 27,
2020. In the petition signed by Anthony L. Borruso, president, the
Debtor disclosed $1,869,283 in assets and $1,920,494 in
liabilities. STICHTER RIEDEL BLAIN & POSTLER, P.A., serves as
bankruptcy counsel to the Debtor.
Nine Family Circle Holdings, Inc. (Case No. 20-6494) and R.A.
Borruso, Inc. (Case No. 20-6495) also sought Chapter 11 protection.
The cases are jointly administered under AJRANC Insurance's case.
ANTERO MIDSTREAM: S&P Upgrades ICR to 'BB-', Outlook Stable
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S&P Global Ratings raised its issuer credit rating on Antero
Midstream Partners L.P. (AM) to 'BB-' from 'B'.
S&P said, "At the same time, we raised the issue-level rating on
AM's senior unsecured debt to 'BB-' from 'B'. The '3' recovery
rating is unchanged, indicating our expectation for meaningful
(50%-70%; rounded estimate: 50%) recovery in a default scenario.
"The stable outlook on AM reflects our stable outlook on AR, which
indicates our expectation that both entities will maintain adequate
liquidity. We expect AM's debt to EBITDA to remain between 3.5x and
4.0x in 2021.
"The upgrade reflects our upgrade of AR and AM's improved credit
fundamentals. AM derives nearly 100% of its revenue from its former
parent and the two entities are inherently linked. We upgraded AR
to reflect its continued success in addressing its liquidity risks
and--in particular--its once daunting debt maturity wall.
Additionally, AR has improved its financial results on stronger
natural gas and natural gas liquids (NGL) prices and its debt
repayment. We expect AR to continue to use its free cash flow to
reduce its total debt outstanding.
"The stable outlook on AM reflects our stable outlook on AR. We
anticipate the company will experience stable volumes over the next
few years even under most stress scenarios, which indicates that
its capital structure will remain sustainable. We forecast the
company's S&P Global Ratings-adjusted debt to EBITDA will remain
between 3.5x and 4.0x over the next few years while both entities
sustain adequate liquidity.
"We could take a negative rating action on AM if we take a negative
rating action on AR. We could lower our rating on AR if its funds
from operations (FFO) to debt approaches 20% with no clear path for
improvement. This would most likely occur if the company increases
its capital spending, natural gas and NGL prices are weaker than we
currently envision, or AR pursues more aggressive financial
policies than we expect. Separately, we could lower our rating on
AM if it does not refinance its revolving credit facility before it
becomes current in October 2021.
"We could raise our rating on AM if we raise our rating on AR and
expect AM to maintain credit metrics in line with our current
expectation for debt to EBITDA of less than 4x. We could upgrade AR
if it continues to improve its credit measures, including FFO to
debt maintained above 45%, and generates positive free cash flow on
a sustained basis. This could occur if AR continues to reduce its
overall debt using its free cash flow and its natural gas price and
NGL price realizations exceed our expectations."
ANTERO RESOURCES: S&P Upgrades ICR to 'BB-', Outlook Stable
-----------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Denver-based
independent natural gas, natural gas liquids (NGLs), and oil
exploration and production (E&P) company Antero Resources Corp. to
'BB-' from 'B'.
S&P is raising its rating on the unsecured notes to 'BB-' from
'B+', with a recovery rating of '3'. At the same time, S&P is
assigning out 'BB-' rating and '3' recovery rating to the new
unsecured notes due 2030.
The stable outlook reflects S&P's expectation that Antero will
maintain adequate liquidity, generate positive free cash flow that
will go toward reducing borrowings on its reserve-based lending
facility (RBL), and sustain funds from operations (FFO) to debt of
over 30%.
The upgrade reflects Antero Resources' continued success in
addressing liquidity risks and, in particular, a once daunting debt
maturity wall, supported by the current $500 million senior note
offering that will address its $500 million senior notes maturity
in 2023. This transaction underpins Antero's improved access to
capital markets, which had been a problem for much of 2020 in the
face of looming debt maturities through 2023, and its continual
improvement in its debt maturity profile, with its nearest senior
notes maturity its $590 million notes due 2025. In S&P Global
Ratings' view, Antero's continued free cash flow generation and
commitment to reducing borrowings on their credit facility combined
with continued access to the capital markets puts the company in a
much better position to negotiate the terms of its credit facility
when it negotiates with its lenders during its fall 2021
redetermination.
The upgrade also reflects Antero's much improved financial results,
supported by stronger natural gas and NGL prices and debt
repayment. S&P said, "We now expect funds from operations
(FFO)/debt to average above 30% and debt/EBITDA between 2x and 2.5x
under our base case assumptions. Improving free cash flow allowed
Antero to reduce its total debt levels by more than $430 million
during the first quarter of 2021. We expect Antero to continue to
use free cash flow to reduce total debt outstanding. Antero has
forecasted over $600 million in free cash flow in 2021, which we
expect it to use to reduce borrowings on its credit facility as
they target absolute debt levels of $2.0 billion and debt to EBITDA
of 2x." Furthermore, debt repayment combined with favorable hedges
should support improved financial performance despite the decline
in our price assumption for natural gas to $2.50 per million (mm)
Btu in 2022 and thereafter from $2.75 in 2021. However, financial
measures are on the weaker-end of the range when compared to
higher-rated peers and we adjust the ratings down by one-notch.
The rating is supported by the company's large production and
reserve base with expected production of 3.3 billion cubic feet
equivalent per day (bcfe/d) to 3.4 bcfe/d in 2021 and about 17.6
trillion cubic feet of reserves on Dec. 31, 2020. Additionally, the
company has a large exposure to improving NGL prices (about 40% of
revenues), which should support ongoing free cash flow.
S&P said, "The outlook is stable reflecting the company's ability
to address its near-term maturities, its improving free cash flow
profile and cost structure, and our expectation the company will be
able to amend and extend its RBL on favorable terms as we expect
free cash flow to go toward debt reduction. We expect improving
credit measures with FFO to debt averaging above 30% over the next
12 months, financial measures that we view as appropriate for the
rating.
"We could lower the rating if credit measures weakened such that
FFO to debt was approaching 20% with no clear path toward
improvement. This would most likely occur if the company increases
its capital spending or natural gas and NGL prices are weaker than
we currently envision, or Antero pursues more aggressive financial
policies than expected.
"We could raise the rating if the company continues to improve its
credit measures, including FFO to debt above 45% for a sustained
period and the company generates free cash flow on a sustained
basis. This could occur if Antero continues to reduce its overall
debt levels with free cash flow and natural gas price and NGL price
realizations exceed our expectations."
APEG MAXEY: Wins Cash Collateral Access
---------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, has authorized APEG Maxey, LP to use the cash
collateral of its secured lender, Specialty Credit Holdings, LLC,
on an interim basis in accordance with the budget, with a 10%
variance.
The Debtor does not have sufficient available sources of working
capital and financing to carry on the operation of the Property
without the use of Cash Collateral.
On September 26, 2016, the Secured Lender made a loan to the Debtor
in the original principal amount of $17,600,000.
The Loan is evidenced by, among other things: (i) a promissory note
dated September 26, 2016, which was made and signed by the Borrower
and delivered to the Secured Lender in the original principal
amount of $17,600,000, and which was thereafter amended and
restated pursuant to an Amended and Restated Note dated July 6,
2018, an Amended and Restated Note, dated September 20, 2018 and an
Amended and Restated Note, dated December 26, 2018 and (ii) a loan
agreement between the Debtor as borrower and the Lender, dated
September 26, 2016, which was amended pursuant to amendments to
loan agreement, dated July 6, 2018, September 20, 2018 and December
26, 2018.
The Lender's security interest in the Debtor's personal property
was properly perfected through the filing of a UCC-1 financing
statement with the Texas Security of State on September 28, 2016.
The Secured Lender asserts that the Debtor has been in default
under the Loan Documents since at least March 2019 when it failed
to pay the outstanding amounts due under the Loan by its maturity
date, and the Debtor contests the validity of such default.
The Secured Lender believes that, as of the Petition Date, the
total indebtedness due to the Lender under the Loan was at least
$24,832,299.97, exclusive of reserves held by the Lender.
As adequate protection of the Secured Lender's interests, and in
addition to all existing security interests and liens granted to or
for the benefit of Secured Lender in the Prepetition Collateral,
the Secured Lender is granted replacement security interests and
liens on all the Debtor's assets and property. The Replacement
Liens are deemed valid, binding, enforceable and perfected upon
entry of the Order and no further notice, filing, recording or
order will be required to validate or perfect the Replacement
Liens.
The Debtor will also make an adequate protection payment to the
Secured Lender in an amount equal to the amount of cash held by the
Debtor on the last day of the previous month minus $100,000.
As additional adequate protection, if and to the extent that the
Replacement Liens prove insufficient to adequately protect the
interests of the Secured Lender in the Collateral, then Secured
Lender will have a super-priority administrative claim against the
Debtor.
These events constitute Event of Default are:
(i) any violation or breach of any of the terms of this Cash
Collateral Order by the Debtor;
(ii) conversion of this Bankruptcy Case to one under Chapter 7
of the Bankruptcy Code;
(iii) the appointment under Bankruptcy Code section 1104 of a
trustee or an examiner, in the Case;
(iv) the dismissal of the Bankruptcy Case under Bankruptcy Code
section 1112;
(v) entry of an order under Bankruptcy Code section 305,
dismissing, staying, suspending or abstaining from hearing the
Bankruptcy Case;
(vi) the lifting of the automatic stay under section 362 of the
Bankruptcy Code with respect to the Debtor's interest in the
Property; or
(vii) the entry of any order modifying, reversing, revoking,
staying, rescinding, vacating, or amending the Order without the
prior express written consent of the Secured Lender.
A copy of the order and the Debtor's budget is available for free
at https://bit.ly/3fzWrNF from PacerMonitor.com.
The Debtor projects total expenses of $550,023.48 and net operating
income of $247,452.52 for April to July 2021.
About Apeg Maxey LP
Apeg Maxey LP is the owner of the real property and improvements
located at 666 Maxey Road, Houston, Texas 77013, which is an
apartment complex commonly known as the Verandas at North Shore
Apartments. Apeg Maxey LP filed a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Case No.
21-31246) on April 12, 2021. At the time of filing, the Debtor
disclosed $10 million to $50 million in both assets and
liabilities.
Judge Christopher Lopez oversees the case.
The Kraus Law Firm, PC serves as the Debtor's legal counsel.
Specialty Credit Holdings, LLC, as Secured Lender, is represented
by:
Bruce J. Zabarauskas, Esq.
THOMPSON & KNIGHT LLP
1722 Routh Street, Suite 1500
Dallas, TX 75201
Tel: (214) 969-2511
Fax: (214) 880-3105
E-mail: bruce.zabarauskas@tklaw.com
APPLIED ENERGETICS: Incurs $1.1 Million Net Loss in First Quarter
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Applied Energetics, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $1.09 million on zero revenue for the three months ended March
31, 2021, compared to a net loss of $1.27 million on $10,000 of
revenue for the three months ended March 31, 2020.
As of March 31, 2021, the Company had $5.75 million in total
assets, $2.61 million in total liabilities, and $3.14 million in
total stockholders' equity.
For the period ended March 31, 2021, the Company had negative cash
flows from operations of approximately $646,000 and may incur
additional future losses due to the reduction in government
contract activity. At March 31, 2021, the Company had total
current assets of approximately $4,559,000 and total current
liabilities of approximately $1,600,000 resulting in working
capital of approximately $2,959,000. At March 31, 2021, the
Company had cash of approximately $4,394,000.
During the three months ended March 31, 2021, the Company completed
the issuance of 7,056,250 total shares of its common stock at a
price of $0.32 per share, or $2,258,000 in the aggregate. Based on
the Company's current business plan, it believes its cash balance
as of the date of this filing will be sufficient to meet its
anticipated cash requirements for the next twelve months. However,
there can be no assurance that the current business plan will be
achievable. Such conditions raise substantial doubts about the
Company's ability to continue as a going concern for one year from
the date the financial statements are issued.
"The company's existence is dependent upon management's ability to
develop profitable operations. Management is devoting substantially
all of its efforts to developing its business and raising capital
and there can be no assurance that the company's efforts will be
successful. No assurance can be given that management's actions
will result in profitable operations or the resolution of its
liquidity problems. The accompanying consolidated financial
statements do not include any adjustments that might result should
the company be unable to continue as a going concern. The ongoing
COVID-19 pandemic contributes to this uncertainty," Applied
Energetics said.
"In order to improve the company's liquidity, the company's
management is actively pursuing additional equity financing through
discussions with investment bankers and private investors. There
can be no assurance that the company will be successful in its
effort to secure additional equity financing," Applied Energetics
said.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/879911/000121390021026838/f10q0321_appliedenergetics.htm
About Applied Energetics
Headquartered in Tucson, Arizona, Applied Energetics, Inc. --
www.aergs.com -- specializes in the development and manufacture of
advanced high-performance lasers, high voltage electronics,
advanced optical systems, and integrated guided energy systems for
prospective defense, aerospace, industrial, and scientific
customers worldwide.
Applied Energetics reported a net loss of $3.23 million for the
year ended Dec. 31, 2020, compared to a net loss of $5.56 million
for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company
had $4.63 million in total assets, $2.93 million in total
liabilities, and $1.70 million in total stockholders' equity.
Henderson, Nevada-based RBSM LLP, the Company's auditor since 2016,
issued a "going concern" qualification in its report dated April
12, 2021, citing that the company has suffered recurring losses
from operations, will require additional capital to fund its
current operating plan, and has stated that substantial doubt
exists about the company's ability to continue as a going concern.
ATKORE INC: S&P Assigns 'BB-' Issuer Credit Rating, Outlook Pos.
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issuer credit rating and
positive outlook to Atkore Inc. At the same time, S&P withdrew its
'BB-' issuer credit rating on Atkore International Inc.
Atkore's debt leverage will likely improve to below 1.5x in 2021
and potentially stay below 2.5x in 2022. S&P said, "This
incorporates our projection for about $650 million-$700 million
annually of adjusted EBITDA in 2021 and about $400 million to $450
million of adjusted EBITDA in 2022. The company has demonstrated
good capacity to generate a solid margin over its commodity input
costs, yielding several years of improving EBITDA and a
double-digit return on capital. The company ended fiscal 2020
(September year-end) with about $327 million of EBITDA. Our
expectations incorporate our assumption for hot rolled coil (HRC)
prices of at least $850 per ton for the remainder of 2021, which
could be boosted by the company's surge in pricing for product
availability on steady volumes in calendar year 2021. We assume
more normalized metal prices and pricing premiums in 2022.
Counterbalancing its good profitability, Atkore's revenue and cash
flows are sensitive to steel and copper price cycles, especially to
sharp and quick changes in these metal prices. "
The demand in Atkore's key end markets has improved with tight
supplies driving the rise in metal prices. Atkore is experiencing
strong demand for PVC electrical conduit and metal electrical
conduits in a supply-constrained market, which has supported higher
premiums resulting in a material increase in margins. Through the
second quarter 2021 (ended March 2021), the company's EBITDA margin
improved to about 25% compared with about 18% for the same period
last year. S&P expects these premiums will moderate in forecast
years as supply catches up to demand.
Despite the recent positive industry momentum, S&P notes that
Atkore still has considerable exposure to the cyclical construction
market and margin susceptibility to its premiums over volatile
metal prices remain key rating constraints. Atkore generates a
little more than two-thirds of its revenues directly from the
highly cyclical construction industry (majority nonresidential),
which could sharply cut demand during a prolonged downturn.
The company publicly states that it will prioritize cash to manage
leverage, invest in capital spending, pursue acquisitions, and for
moderate share repurchases. S&P's base case does not assume any
dividends, but it does note the company issued debt in 2018 to
complete the buy-out of the equity of its former private-equity
sponsor.
The positive outlook on Atkore reflects the potential for a higher
rating over the next 12 months if the company maintains its
financial policies and maintains leverage of less than 3x, even if
market conditions and prices return to more normalized levels.
S&P could revise the outlook on Atkore to stable over the next 12
months if:
-- S&P believes leverage will be sustained above 3x, potentially
as the result of more-aggressive financial policies or weakened
margins over volatile input costs; or
-- The company more aggressively pursues debt-financed
acquisitions or share repurchases.
S&P could raise the rating if Atkore's leverage remains below 3x in
2021, which would be its third consecutive year since the IPO below
that threshold.
S&P believes the company could maintain this leverage if:
-- Its pricing over volatile input costs holds through
extraordinary market conditions with supportive financial policy;
and
-- Adjusted EBITDA margins remain above 17%, even in more
normalized market conditions.
ATKORE INC: S&P Rates New $400MM Senior Unsecured Notes 'BB-'
-------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level rating and '4'
recovery rating to electrical products and safety and
infrastructure solutions company Atkore Inc. proposed $400 million
senior unsecured notes due 2031. The '4' recovery rating indicates
its expectation for average (30%-50%; rounded estimate: 30%)
recovery in the event of a payment default. The company plans to
use the proceeds from these proposed notes, together with the
proceeds from its recent term loan B financing, to fund the
repayment of its existing term loan facility (approximately $772
million outstanding as of March 26, 2021). S&P's ratings are based
on the preliminary terms and conditions of the proposed notes.
S&P's existing ratings on Atkore are unchanged.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P said, "We assigned our 'BB-' issue-level rating and '4'
recovery rating to Atkore's proposed $400 million senior unsecured
notes. The '4' recovery rating indicates our expectation for
average (30%-50%; rounded estimate: 30%) recovery in the event of a
payment default. The issuer of the notes is Atkore Inc. We recently
assigned our 'BB+' issue-level rating and '1' recovery rating to
the company's proposed $400 million term loan B due 2028. The '1'
recovery rating indicates our expectation for very high (90%-100%;
rounded estimate: 95%) recovery in the event of a payment
default."
-- S&P bases its assumptions on Atkore's proposed capital
structure, which includes the proceeds from the new proposed $400
million senior unsecured notes together with those from its recent
$400 million term loan B financing, which it will use to fund the
repayment of its existing term loan facility.
-- S&P assesses the company's recovery prospects on the basis of a
gross reorganization value of approximately $760 million, which
reflects about $138 million of emergence EBITDA and a 5.5x
multiple. The $138 million of emergence EBITDA incorporates its
recovery assumption for minimum capital expenditure (at 1.5% of
sales based on historical data), its standard 15% cyclicality
adjustment for issuers in the metals and mining downstream sector,
and an operational adjustment to reflect its low leverage relative
to its similarly rated peers.
-- The 5.5x multiple is in line with the multiples S&P uses for
other companies in the metals and mining downstream sector.
-- S&P said, "Our simulated default scenario contemplates a
prolonged, significant downturn in nonresidential construction that
leads to a material decline in Atkore's sales and pricing power.
Our recovery analysis assumes that, in a hypothetical default
scenario, its $325 million asset-based lending (ABL) revolving
facility would be 60% drawn at default."
Simulated default assumptions
-- Simulated year of default: Fiscal year 2025
-- Emergence EBITDA: $138 million
-- EBITDA multiple: 5.5x
-- Gross recovery value: $760 million
Simplified waterfall
-- Net recovery value after administrative expenses (5%): $720
million
-- Estimated priority claims and adjustments (ABL credit
facility): $190 million
-- Remaining recovery value: $515 million
-- Estimated first-lien term loan claim: $395 million
--Recovery expectations for first-lien term loan: 90%-100%
(rounded estimate: 95%)
-- Total value available to unsecured claims: $136 million
-- Total senior unsecured debt: $409 million
--Recovery expectations for unsecured notes: 30%-50% (rounded
estimate: 30%)
Note: S&P's estimated claim amounts include approximately six
months of accrued but unpaid interest.
BASIC ENERGY: Incurs $37.3 Million Net Loss in First Quarter
------------------------------------------------------------
Basic Energy Services, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $37.27 million on $94.35 million of revenues for the three
months ended March 31, 2021, compared to a net loss of $144.88
million on $128.40 million of revenues for the three months ended
March 31, 2020.
As of March 31, 2021, the Company had $331.10 million in total
assets, $548.95 million in total liabilities, $22 million in series
A participating preferred stock, and a total stockholders' deficit
of $239.85 million.
Historically, the Company's primary capital resources have been its
cash and cash equivalents, cash flows from its operations,
availability under its ABL Credit Facility, additional secured
indebtedness, proceeds from the sale of non-strategic assets, and
the ability to enter into finance leases. At March 31, 2021, the
Company's sources of liquidity included its cash and cash
equivalents of $4.9 million, the potential sale of additional
non-strategic assets, and potential additional secured
indebtedness.
As of March 31, 2021, the Company had no borrowings and $35.6
million of letters of credit outstanding under the ABL Credit
Facility. As of March 31, 2021, the Company had $11.2 million of
availability under the ABL Credit Facility, but the Company is
subject to borrowing restrictions.
In April 2021, the Company entered into a purchase and sale
agreement for the sale of certain non-core assets for a purchase
price of $6.6 million, not including the assumption of certain
capital leases and an earn-out payment of up to $1.0 million
payable one year after closing. The closing date is expected to
occur during the second quarter of 2021. In May 2021, the Company
completed a sale-leaseback transaction related to certain real
property in California.
Net cash provided by operating activities was $7.7 million in the
first quarter of 2021, compared to net cash used in operating
activities of $2.7 million in 2020. The $10.4 million increase was
primarily due to improved working capital management in 2021 and
transaction costs incurred during 2020 associated with the
Company's acquisition of C&J Well Services, Inc. ("CJWS").
Net cash provided by investing activities in the first quarter of
2021 was $5.1 million compared to net cash used in investing
activities of $24.7 million in 2020. This change was partially due
to a $5.3 million decrease in capital expenditures in 2021. The
Comany's cash provided by investing activities in 2021 was due to
proceeds from the sale of non-strategic assets. The Company's
cash used in investing activities in 2020 was due to cash paid to
purchase CJWS, which was partially offset by proceeds from the sale
of assets related to our discontinued operations.
Net cash used in financing activities was $2.4 million during the
first quarter of 2021, compared to net cash provided by financing
activities of $12.2 million in 2020. This change was partially due
to a $6.6 million decrease in payments on the Company's finance
leases in 2021. The Company's cash provided by financing
activities in 2020 was primarily due to net proceeds of $22.8
million received from the issuance of the Senior Secured Promissory
Note and borrowings from the ABL Credit Facility.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1109189/000110918921000047/bas-20210331.htm
About Basic Energy
Headquartered in Fort Worth, Texas, Basic Energy Services --
www.basices.com -- provides wellsite services essential to
maintaining production from the oil and gas wells within its
operating areas. The Company's operations are managed regionally
and are concentrated in major United States onshore oil-producing
regions located in Texas, California, New Mexico, Oklahoma,
Arkansas, Louisiana, Wyoming, North Dakota, Colorado and Montana.
Its operations are focused in prolific basins that have
historically exhibited strong drilling and production economics in
recent years as well as natural gas-focused shale plays
characterized by prolific reserves. Specifically, the Company has a
significant presence in the Permian Basin, Bakken, Los Angeles and
San Joaquin Basins, Eagle Ford, Haynesville and Powder River Basin.
The Company provides its services to a diverse group of over 2,000
oil and gas companies.
Basic Energy reported a net loss of $268.17 million for the year
ended Dec. 31, 2020, compared to a net loss of $181.90 million for
the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had
$349.07 million in total assets, $529.70 million in total
liabilities, $22 million in series A participating preferred stock,
and a total stockholders' deficit of $202.63 million.
Dallas, Texas-based KPMG, the Company's auditor since 1992, issued
a "going concern" qualification in its report dated March 31, 2021,
citing that the recent decline in the customers' demand for the
Company's services has had a material adverse impact on the
financial condition of the Company, resulting in recurring losses
from operations, a net capital deficiency, and liquidity
constraints that raise substantial doubt about its ability to
continue as a going concern.
BAYOU INTERMEDIATE II: Fitch Gives Final BB+ Rating on $375MM Debt
------------------------------------------------------------------
Fitch Ratings has assigned final ratings to the new senior secured
credit facilities of Bayou Intermediate II, LLC at 'BB+'/'RR1'. The
term loan proceeds will help fund the purchase of Cordis Corp. by
Hellman & Friedman from Cardinal Health, Inc. The ratings apply to
$375 million of debt.
Fitch maintains a Long-Term Issuer Default Rating (IDR) of 'BB-'
with a Stable Rating Outlook at Bayou TopCo, Inc. (Cordis Corp.)
and Bayou Intermediate II, LLC.
KEY RATING DRIVERS
Solid Business Post-Carveout: Cordis' carveout from Cardinal
Health, Inc. (CAH) will present a solid stand-alone interventional
cardiology and endovascular device business that will be further
supported by private equity sponsor, Hellman & Friedman (H&F).
Cordis maintains global brand recognition and physician preference
for its products. CAH also invested significantly in Cordis' global
commercial footprint and independent manufacturing capabilities
since its ownership starting in 2015.
Cordis' products are critical medical devices used by over 16,000
hospitals globally in minimally invasive procedures. These products
are physician preference items in mature product categories with
minimal disruption risk. Physician familiarity with the product is
important and switching is uncommon (92% annual retention), and
Cordis' brand and products are known worldwide for their quality
and ease of use.
Moderate Leverage Expected: Fitch forecasts Cordis' gross
debt/EBITDA at 5.5x pro forma for the $1 billion purchase by H&F
and anticipates leverage could decline to 3.6x upon synergy
realization from carveout execution by FY2023. Longer term, Fitch
expects that capital will be deployed for R&D investments and M&A
rather than voluntary debt pay down, likely resulting in leverage
being maintained at or below 4.5x.
H&F financed the deal with roughly 70% equity and Fitch believes
maintaining flexibility for investments will be of higher
importance than sponsor dividends. Fitch would revisit this
assumption should the sponsor's behavior lean more towards
shareholder friendly activities (e.g. upsizing of issuance absent
identified growth investments and payment of material dividends.
R&D, Investment Execution Necessary: Fitch views prior
underinvestment in R&D as one of the largest risks to Cordis'
long-term success and credit profile. The company plans to reinvest
roughly half of its cost savings from the carveout to its internal
R&D program. Fitch expects Cordis will augment the internal
investments with long-term capital deployment focusing on external
R&D investments and M&A.
Investment firm, Ajax Health, will be partners to H&F to create the
Cordis Accelerator. The Cordis Accelerator will be an independent
R&D engine that will develop and commercialize new, innovative
products through a strategic partnership structure. The Accelerator
will likely provide innovative opportunities in higher growth areas
where Cordis does not participate.
Stand-Up Execution in Focus: The 'BB-' IDR contemplates the
execution risk related to the carveout, which includes the
transition from CAH TSAs for finance, IT and supply chain functions
within 18 months following the close. Cordis has an experienced
management team, most of whom helped with the JNJ carveout and will
have H&F oversight and resources to build an independent
organization with a stronger internal R&D pipeline.
Cordis' manufacturing and inventory demand planning was invested in
heavily by CAH and will not need to be transitioned. The success of
standing up the carveout will be integral to maintaining
flexibility at the current rating.
EBITDA to Improve: Management has identified over $50 million of
cost savings over three years from optimizing quality, procurement,
manufacturing, supply chain, and other operational functions,
roughly half of which is expected to be realized in the first 18
months post-close. Fitch expects this will help increase EBITDA
margins to 11% by FY2023 from 8% at FY2020.
Cordis' diverse and stable revenue base is supported by over 4,000
SKUs and larger product categories include diagnostic catheters
(22% of 2020 COVID adjusted revenue), closure devices (20%),
guiding catheters (16%) and sheath introducers and stents (11%
each). The company maintains a global presence with 33% of revenue
from the US, 33% from APAC, 26% from EMEA, and 8% from LatAm and
Canada. China and LatAm represent larger growth opportunities for
the existing product portfolio, versus the mature US and EMEA
markets which are expected to provide relatively flat growth over
the forecast.
DERIVATION SUMMARY
Cordis has leading global market positions in the interventional
cardiology and endovascular device markets, but has a narrower
focus and weaker R&D pipeline versus its competitors. The company
is expected to operate with gross debt/EBITDA between 3.5x-4.5x.
Cordis' largest competitors include Boston Scientific Corp.
(BBB/Stable), which has larger scale and breadth, a focus in highly
innovative products, and a more conservative financial profile.
Fitch also considers the ratings of 'BB' range peers in its
analysis. Peers Jazz Pharmaceuticals plc (BB-/Stable) and Owens &
Minor, Inc. (BB-/Stable) have significantly larger scale than
Cordis, but have less revenue diversity versus competitors. These
companies operate with gross debt/EBITDA between 3.5x-4.5x and
3.0x-4.0x, respectively.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Cordis buyout closes by July 1, 2021 and is financed with $375
million first lien TL and $745 million H&F sponsor equity.
Roughly $25m of cost synergies are achieved during FY2022
FY2023, debt declines only by annual amortization, and
leverage declines to 3.6x by FYE2023.
-- Organic revenue in low single digits; FY2022 revenue growth
above average as surgical volumes return to normalized levels
post-lockdowns.
-- EBITDA margin starts to improve in FY2022 as cost synergies
are realized; half of the roughly $50m cost synergies are
realized in the first 18 months post-close. About half of
realized cost synergies are invested back, primarily in R&D,
resulting in low-teens EBITDA margins.
-- FCF shows as negative to breakeven in FY2022-2023 due to costs
to carveout and achieve synergies. Positive FCF returns by
FY2024.
-- No acquisitions or shareholder returns are included. Focus for
the first 18 months post-close will likely be on standing up
operations. Fitch expects acquisitions could become a part of
capital deployment longer term.
-- Total debt/EBITDA declines to 4.7x in FY2022, and 3.6x in
FY2023 as cost synergies are achieved.
-- CAH will retain full authority for lawsuits related to Cordis
OptEase and TrapEase IVC filters in the US and Canada, as well
as liability associated to these matters once Cordis is
acquired by H&F. Fitch assumes no cash outflows related to
these product liabilities.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Gross debt/EBITDA expected to sustain below 3.5x;
-- Operational strength and success standing up business that
results in (cash flow from operations - capex)/total debt
around or above 7.5%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Gross debt/EBITDA expected to sustain above 4.5x;
-- Integration issues, pressures to profitability or increased
expenses that result in (cash flow from operations –
capex)/total debt sustained below 6%;
-- Inability to successfully introduce new products to support
mid-single digit revenue growth over the long term.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Sufficient Post-Acquisition: H&F is allocating $100
million of cash to go to the balance sheet at close to help fund
carveout costs and costs to achieve cost savings. Cordis will also
have access to a $60 million committed first lien secured revolver
due 2026, which is expected to be undrawn at close.
Maturities Manageable: Maturities will only consist of annual
amortization of $3.5 million on the $350 million first lien term
loan due 2028, and the ECF sweep does not apply if first lien net
leverage is less than or equal to 4x. H&F capitalized the roughly
$1 billion deal with a solid amount of equity, reducing cash needs
for debt interest and required repayment. The company will only be
subject to a springing financial maintenance covenant of 8.3x first
lien net leverage if 35% or more of the revolver is drawn. Debt
incurrence and restricted payments covenants have a 4.75x first
lien net leverage test.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
BCP RENAISSANCE: S&P Alters Outlook to Positive, Affirms 'B' ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook on BCP Renaissance Parent
LLC to positive from stable. At the same time, S&P affirmed its 'B'
issuer credit rating on BCP and its 'B' issue-level rating on its
$1.2 billion outstanding senior secured term loan B. S&P's recovery
rating remains '3', indicating its expectation for meaningful
(50%-70%; rounded estimate: 60%) recovery in the event of a payment
default.
S&P said, "The positive outlook reflects our expectation that BCP
will continue to reduce its debt balance via the excess cash sweep
and maintain debt to EBITDA of below 9x trending toward 8.5x during
the next 12 months.
"Our 'B' issuer credit rating on BCP reflects our expectation of
debt to EBITDA in the 8.5x-9.0x range over the next 12 months,
supported by stable cash flows from Rover and significant debt
reduction through the company's cash flow sweep mechanism.
"Our rating is also based on the differentiated credit quality
between BCP and Rover. BCP owns a 32% interest in Rover and does
not have other substantive assets to service its $1.2 billion
outstanding term loan B due in 2024. Our assessment of the
company's credit profile incorporates its financial ratios, Rover's
cash flow stability, as well as the ability to influence Rover's
financial policy, and to liquidate investment in Rover to repay the
term loan. 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 BCP.
"We assess BCP's cash flow stability as a positive credit factor,
because we expect BCP to receive stable distributions supported by
Rover's 95% subscribed capacity with 15- to 20-year take-or-pay
contracts. Rover's average throughput was about 3 billion cubic
feet per day (Bcf/d) in 2020. The pipeline's average counterparty
credit quality has also improved notably over the past few months.
Weak demand and stressed commodity price environment in 2020
resulted in the multi-notch downgrades of Rover's shippers. As
prices stabilized toward the end of 2020 and drilling activity
improved, we raised our ratings of Rover's top counterparties,
namely Ascent Resources Utica Holdings LLC, Antero Resources Corp.,
and EQT Corp., and revised our outlooks to stable. While the
majority of the shippers are still speculative grade, counterparty
risk is partially mitigated by letters of credit that can provide
12-18 months of support if shippers fail to honor their contractual
obligations. Rover's cash distributions to BCP are further
supported by its stable operating expenses and minimal expected
maintenance capital expenditures over the coming years. We expect
distributions from Rover to decline in 2021 given our projections
of flat to moderately lower throughput volumes in Rover's systems
and flat rates.
"We assess BCP's financial metrics as negative due to our
expectation of debt to EBITDA above 8.5x and EBITDA interest
coverage ratio of about 2x in 2021. That said, the company's
leverage has improved to around 8x in 2020 from above 11x in 2019
due to an increase in distributions and significant debt reduction.
BCP repaid about $95 million on its outstanding senior secured term
loan B in 2020. Our assessment considers BCP's debt repayment via
the excess cash flow sweep arrangement and annual amortization, and
we expect leverage to improve to below 8.5x in 2022. Our EBITDA
assumptions for BCP incorporate the annual free cash flow it
receives from Rover with no construction costs and minimal
maintenance capital expenditures.
"We assess BCP's corporate governance and financial policy as
positive, which reflects its substantial governance rights over
Rover and ET Rover Pipeline LLC. BCP can veto changes to the
distribution policies of both subsidiaries. Both entities are also
required to distribute all of their free cash flow after
maintenance capital spending to BCP, Traverse, and Energy Transfer
Partners. Because Energy Transfer Partners is structured as a
master limited partnership, it relies on stable cash flows from
Rover to pay its distributions. As such, Rover has an incentive to
maintain consistent or growing dividends.
"Our view of BCP's ability to liquidate its investment in Rover is
negative, which reflects the lack of a deep market for Rover given
its private status.
"The positive outlook reflects our expectation that BCP will
continue to reduce its debt balance via the excess cash sweep and
maintain debt to EBITDA of below 9x trending towards 8.5x during
the next 12 months. Our outlook is also supported by BCP's ample
liquidity and distributions from Rover Pipeline underpinned by
take-or-pay contracts.
"We could revise our outlook to stable if we expected BCP to
maintain debt to EBITDA above 9x, which could happen due to lower
than anticipated excess cash sweep or a decline in distributions
from Rover Pipeline.
"We could raise our rating on BCP if the company maintains its
leverage below 9x trending to 8.5x, while reducing the term loan
balance via the mandatory amortization and excess cash sweep."
BETHLEHEM-CENTER SCHOOL: Moody's Lowers GOLT Ratings to B1
----------------------------------------------------------
Moody's Investors Service has downgraded Bethlehem-Center School
District, PA's issuer and general obligation limited tax (GOLT)
ratings to B1 from Ba1 and affirmed its outstanding enhanced state
aid intercept (fiscal agent) rating at A2. The district has $16.3
million of net direct debt outstanding. The outlook is negative.
RATINGS RATIONALE
The issuer rating was downgraded to B1 because the district
incurred its fourth straight year of deficit operations, leading to
deeply negative fund balance and a depleted cash position. The
district will have difficulty balancing its operations and
replenishing reserves over the next several years, even with
substantial federal stimulus incoming. The local economy is
severely challenged due to the complete departure of coal mining
operations on which it once depended. Governance is a key driver of
the downgrade because of the district's failure to prepare accurate
budgets. The recent deficits were driven by increasing
instructional costs that were routinely over budget. Moreover,
rising special education costs now account for 20% of district
revenue, which limits financial flexibility. The district is also
highly reliant on annual short-term cash flow borrowing, which has
grown incrementally as its deficit position has worsened. The cash
flow notes are secured by a first lien on the district's tax and
revenue receipts and the district's non-general funds are held with
the lender institution, First National Bank of Pennsylvania (P-2
short-term counterparty risk). Overall leverage is low.
The rating assigned to the district's underlying general obligation
limited tax (GOLT) bonds was downgraded to B1, equivalent to the
issuer rating. The absence of a distinction between the issuer and
GOLT ratings reflects Pennsylvania school districts' ability to
apply for exceptions to the cap on property tax increases in order
to cover debt service, the Commonwealth's history of granting such
exceptions, and the district's full faith and credit pledge
supporting all general obligation debt.
The A2 enhanced rating reflects Moody's current assessment of the
Pennsylvania School District Intercept Program, which provides that
state aid will be allocated to bondholders in the event the school
district cannot meet its scheduled debt service payments. The A2
enhanced rating reflects the presence of language in the bond
documents that requires the paying agent to trigger the state aid
intercept prior to default. As of audited 2020 financial
statements, Bethlehem-Center School District's state aid revenue
provides more than sum-sufficient debt service coverage.
RATING OUTLOOK
The negative outlook for the issuer and GOLT ratings reflects the
district's continued structural imbalance. The outlook also
reflects uncertainty regarding the district's budgeted projections
of lower instructional expenditures-its largest cost-because all
three of its labor agreements are expiring at fiscal 2021 year-end
and could result in higher costs.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
Structural financial balance and the elimination of cash flow
borrowing (issuer & GOLT)
Upgrade of the Pennsylvania School District State Aid Intercept
(fiscal agent) program (enhanced)
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
Continued operating deficits (issuer & GOLT)
Incremental increase in the amount of cash flow borrowing (issuer
& GOLT)
Downgrade of the Pennsylvania School District State Aid Intercept
(fiscal agent) program (enhanced)
Failure of state aid to provide sum-sufficient debt service
coverage (enhanced)
LEGAL SECURITY
The issuer rating reflects the district's ability to repay debt and
debt-like obligations without consideration of any pledge,
security, or structural features. The district's Series 2018 and
2019 bonds are backed by the district's full faith and credit
pledge to levy ad valorem taxes subject to the limits of
Pennsylvania Act 1, the "Taxpayer Relief Act." The enhanced (fiscal
agent) state aid intercept rating is secured by the district's
receipts of aid from the Commonwealth of Pennsylvania (Aa3
stable).
The district's tax and revenue anticipation note borrowing (not
rated) is secured by a first lien on the district's tax and revenue
receipts.
PROFILE
Bethlehem-Center School District is located in the southeast corner
of Washington County, PA (Aa2), approximately 28 miles southeast of
the City of Pittsburgh, PA (A1 stable). The district covers an area
of approximately 55 square miles which includes the boroughs of
Beallsville, Centerville, Deemston and Marianna and the Townships
of East Bethlehem and West Bethlehem. The district operates one
elementary school, one middle school and one high school and has an
enrollment of approximately 1,128 students.
METHODOLOGY
The principal methodology used in the underlying ratings was US
K-12 Public School Districts Methodology published in January 2021.
BOART LONGYEAR: S&P Downgrades ICR to 'D' on Restructuring
----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
drilling services provider and manufacturer Boart Longyear Ltd. to
'D' from 'CC'.
S&P said, "We also lowered our rating on the company's senior
secured debt to 'D' from 'CC' and our rating on the company's
senior unsecured debt to 'D' from 'C'. At the same time, we removed
the ratings from CreditWatch with negative implications, where we
placed them March 5, 2021.
"Our rating action reflects our view that a default on Boart
Longyear's obligation is a virtual certainty following the
restructuring support agreement reached with lenders and the
forbearance in place as part of the agreement." The company will
undertake a restructuring that will recapitalize substantially all
its debt. Under the agreement, upon completion of upcoming court
proceedings in Australia, the company will file for Chapter 15
bankruptcy in the United States to recognize the proposed
recapitalization of its debt. In addition, the company will change
its domicile to the U.S. from Australia.
As part of the restructuring agreement, the following debt
instruments will be converted to new common equity:
-- $354 million of term loan A and term loan B
-- $348 million of senior secured notes
-- $94 million of senior unsecured notes
The company has secured a $50 million bridge loan facility to
provide liquidity during these proceedings, which S&P expects to be
completed in late August. At close, Boart Longyear will have
approximately $200 million of debt outstanding.
BRAZOS ELECTRIC: Wins Interim OK on DIP Loan, Cash Collateral Use
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas has
authorized Brazos Electric Power Cooperative, Inc. to, among other
things, use cash collateral on an interim basis.
The Debtor is also permitted to obtain a new money revolving credit
facility in the aggregate principal amount of $350 million, with up
to $200 million available through a subfacility in the form of
standby letters of credit, and of which $150 million will be
available immediately upon entry of the Interim Order from JPMorgan
Chase Bank, N.A , as administrative agent for the DIP Facility and
collateral agent.
The Debtor has an immediate and critical need to obtain the DIP
Financing and use the DIP Collateral and Prepetition Collateral
(including Cash Collateral) in order to permit, among other things,
the orderly continuation of the operation of its business, to fund
collateral requirements for ERCOT and other parties, to make
payroll, to make capital expenditures, to satisfy other working
capital and operational needs and to fund expenses of the Case.
Before the Petition Date, the Debtor contracted certain credit
arrangements each with Federal Financing Bank, Bank of America
N.A., and MUFG Bank, Ltd. As of the Petition Date, the balance in
these pre-petition debts aggregate approximately $2.04 billion in
principal amount (excluding interest, obligations under various
hedging arrangements, letters of credit, and other charges).
On September 28, 2018, the Debtor entered into a Second Amended and
Restated Credit Agreement, dated as of September 28, 2018, among
the Debtor, Bank of America, N.A., as Administrative Agent, Swing
Line Lender, and L/C Issuer , and certain lenders party thereto
from time to time. Pursuant to the Prepetition Revolving Credit
Agreement, the Prepetition Revolving Lenders made commitments to
provide unsecured revolving loans and make letters of credit
available to the Debtor in an aggregate amount not to exceed
$500,000,000.
As of the Petition Date, the Debtor was liable to the Prepetition
Revolving Lenders pursuant to the Prepetition Revolving Credit
Agreement (i) in an aggregate principal amount of not less than (1)
$20,025,000 in respect of letters of credit issued on behalf of the
Debtor, of which, one letter of credit in the amount of $20,000,000
was drawn following the Petition Date and subsequently converted to
an L/C Borrowing under and as defined in the Prepetition Revolving
Credit Agreement, and (2) $479,975,000 in respect of Committed
Loans under and as defined in the Prepetition Revolving Credit
Agreement and (ii) accrued and unpaid interest, fees, expenses,
disbursements, charges, claims, indemnities and other costs and
obligations.
The Debtor is also party to a Fifth Amended and Restated Loan
Contract dated as of December 15, 2020, providing, pursuant to the
Rural Electrification Act of 1936, for the incurrence of
indebtedness and other obligations to, or guaranteed by, the U.S.,
acting by and through the Administrator of the Rural Utilities
Service of the United States Department of Agriculture.
As of the Petition Date, the Debtor was liable to the U.S. under
the RUS Debt Documents (i) in an aggregate principal amount of not
less than $1,809,613,068.11 plus (ii) accrued and unpaid interest,
fees, expenses, disbursements, charges, claims, indemnities and
other costs and obligations. Upon entry of the Final Order, $350
million in principal amount of RUS Secured Obligations, plus
accrued interest thereon, will be deemed the RUS Roll-Up Loans for
purposes of this Case and the Successor Cases.
As adequate protection for the Debtor's use of cash collateral, the
DIP Collateral Agent for the benefit of the DIP Secured Parties, is
granted valid, enforceable, non-avoidable and automatically
perfected liens pursuant to section 364(c)(2) and 364(c)(3) of the
Bankruptcy Code and pari passu and priming liens pursuant to
section 364(d) of the Bankruptcy Code on all prepetition and
postpetition property of the Debtor's estate.
The DIP Agent for the benefit of the DIP Secured Parties are
allowed superpriority administrative claims pursuant to section
364(c)(1) of the Bankruptcy Code in respect of all DIP Obligations,
subject to the Carve Out.
The Carve Out means the sum of (i) all fees required to be paid to
the Clerk of the Court and to the Office of the United States
Trustee under section 1930(a) of title 28 of the United States Code
plus interest at the statutory rate; (ii) all reasonable and
documented fees and expenses, in an aggregate amount not to exceed
$100,000, incurred by a trustee under section 726(b) of the
Bankruptcy Code; (iii) all reasonable and documented fees and
expenses, whether paid or unpaid to the extent allowed by the
Bankruptcy Court at any time, incurred by persons or firms retained
by the Debtor or retained by the Committee at any time before or on
the first business day following delivery by the DIP Agent of a
Carve Out Trigger Notice, whether allowed by the Court prior to or
after delivery of a Carve Out Trigger Notice; and (iv) Allowed
Professional Fees of Professional Persons in an aggregate amount
not to exceed $15 million incurred after the first business day
following delivery by the DIP Agent of the Carve Out Trigger
Notice.
The DIP Facility will mature on the earliest of:
a. the Scheduled Maturity Date;
b. June 17, 2021, if the Final DIP Order has not been
entered;
c. the consummation of the sale of all or substantially all
of the Debtor's assets under Section 363 of the Bankruptcy Code;
d. the date of substantial consummation of any Chapter 11
plan of reorganization; or
e. the acceleration of any DIP Loans and the termination of
any Revolving DIP Commitments as a result of a continuing event of
default under the DIP Credit Agreement.
A final hearing on the matter is scheduled for June 11 at 10 a.m.
A copy of the order is available for free at https://bit.ly/3u9O15d
from PacerMonitor.com.
About Brazos Electric Power Cooperative
Brazos Electric Power Cooperative Inc. is a 3,994-megawatt
transmission and generation cooperative which members' service
territory covers 68 counties from the Texas Panhandle to Houston.
It was organized in 1941 and the first cooperative formed in the
Lone Star state with the primary intent of generating and supplying
electrical power. At present, Brazos Electric is the largest
generation and transmission cooperative in the state and is the
wholesale power supplier for its 16 member-owner distribution
cooperatives and one municipal system.
Brazos Electric filed a voluntary petition for relief under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-0725)
on March 1, 2021. At the time of the filing, the Debtor disclosed
assets of between $1 billion and $10 billion and liabilities of the
same range.
Judge David R. Jones oversees the case.
The Debtor tapped Norton Rose Fulbright US, LLP as bankruptcy
counsel, Foley & Lardner LLP and Eversheds Sutherland US LLP as
special counsel, Collet & Associates LLC as investment banker, and
Berkeley Research Group, LLC as financial advisor. Stretto is the
claims and noticing agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtor's case on March 15, 2021. The
committee is represented by the law firms of Porter Hedges, LLP and
Kramer, Levin, Naftalis & Frankel, LLP. FTI Consulting, Inc. is the
committee's financial advisor.
BRINKER INT'L: S&P Ups ICR to 'BB-' on Improving Performance
------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on restaurant
company Brinker International Inc. to 'BB-' from 'B+' and its
issue-level rating on its senior unsecured notes due 2023 to 'B'
from 'B-'.
At the same time, S&P revised its recovery rating on the company's
senior notes due 2024 to '3' from '2'. S&P's 'BB-' issue-level
rating on the notes is unchanged.
The stable outlook reflects S&P's expectation that Brinker's credit
metrics will improve this year as it restores the health of its
balance sheet by expanding EBITDA and reducing its debt.
In S&P's view, the progress of the U.S.' COVID-19 vaccination drive
and the ongoing economic recovery will support an improvement in
the company's operating results.
S&P said, "We believe there is pent-up demand for out-of-home
dining among consumers and view the U.S. as being on the path to a
more normalized operating environment. The country has made
material headway toward vaccinating a significant portion of its
population, allowing states to ease their dining restrictions.
While capacity constraints are being lifted, the full recovery in
indoor dining sales will remain constrained until social distancing
guidelines are fully relaxed. Still, the pace of the recovery is
increasing and we expect the momentum in Brinker's operating
performance to accelerate this year. Comparable restaurant sales at
Chili's, the company's largest concept, turned positive in March
and rose by 10.1% month-to-date through April 21, 2021, relative to
the same period in 2019. We expect higher vaccination rates and
buoyant consumer confidence to support higher traffic volumes at
the company's restaurants.
"Additional sales channels, including off-premise and virtual
brands, will help Brinker expand its revenue base. Brinker's
primary virtual brand, It's Just Wings, which it launched in 2020,
recently introduced a pick-up option for customers that we believe
will enable it to exceed its $150 million sales target this fiscal
year. The chicken wing focused concept uses existing capacity in
Brinker's restaurants to enhance the sales productivity of its
units. Brinker is also testing a second virtual concept, Maggiano's
Italian Classics, which builds off the company's polished casual
Italian restaurant brand, Maggiano's Little Italy. Maggiano's
physical restaurants have underperformed throughout the pandemic
due, in part, to weakness across its banquet and catering business.
However, Maggiano's only provides approximately 10% of the group's
total revenue, and we believe its results will recover as the
economy continues to reopen."
Brinker's partnership with DoorDash benefited the company during
the industry's abrupt pivot to an off-premise model last year at
the onset of the pandemic. Specifically, off-premise sales, which
include delivery and to-go orders, accounted for 45% of Chili's
revenue during the most recent quarter. Brinker's off-premise sales
mix is near the highest in the industry and we expect this sales
channel to be a significant contributor to its top line going
forward due to continued consumer demand for the convenience of
off-premise ordering. That said, the restaurant industry is
currently contending with tight labor market conditions. Brinker's
ability to achieve higher sales volumes and leverage its digital
efficiencies will be key to offsetting its wage pressure, in S&P's
view.
S&P said, "Free cash flow generation is funding near term debt
reduction efforts, but we anticipate Brinker will resume returning
capital to its shareholders next fiscal year. Brinker's recovering
operating results and lower capital expenditures have enabled it to
generate FOCF of $206 million fiscal year to date and we forecast
it will generate about $260 million for the full fiscal year ending
June 2021. The company has repaid $182 million of revolver
borrowings year to date in its current fiscal year while
shareholder payments have been restricted. We expect Brinker will
further reduce its debt this quarter, causing its S&P Global
Ratings-adjusted leverage to approach 4x. We project the company
will generate FOCF of about $200 million in fiscal year 2022 as it
accelerates its capital spending on new restaurant development. We
believe Brinker will use a portion of this money to further reduce
its debt because it aims to deleverage below its 3.5x (6x rent
adjusted debt to EBITDAR) leverage target in fiscal year 2022. Our
base-case forecast assumes the company's adjusted leverage
strengthens to the high-3x area in fiscal year 2022 and it resumes
share repurchases during the year. Based on our updated
projections, we have revised our financial risk profile assessment
to 'Significant' from 'Aggressive'.
"We expect the highly competitive dynamics in the casual dining
industry to return, which will lead to some risks for the company.
The improvement in the sales of the chain full-service restaurant
industry in the U.S. was tepid over the five years leading up to
the coronavirus pandemic, rising at a 0.8% compounded annual growth
rate (CAGR) according to Euromonitor, as consumers shifted their
spending towards limited-service restaurants and alternative dining
options. Brinker's market share in the casual dining industry
remained relatively static during this time due to its roughly flat
unit and system-wide sales growth. We believe the company's value
focus and investments in digital and off-premise offerings have
bolstered its competitive offering and enabled it to expand its
market share more recently over the last year.
"Still, we expect the highly competitive dynamics of the casual
dining industry to return and anticipate the company's efforts to
maintain relevance in the mature and fiercely competitive bar and
grill and Italian categories will be a key focus of our assessment.
Relative to its rated peers, Brinker has less brand diversity
because it generates approximately 90% of its sales and operating
income from its Chili's banner. It also has a geographic
concentration because approximately 40% of its company-owned
restaurants are located in just three states: Texas, Florida, and
California. Brinker, which operates approximately 70% of its units,
is directly exposed to fluctuations in commodity prices, wage
inflation, and other restaurant-related operating cost pressures,
as well as capital investment requirements. We apply a negative
one-notch comparable rating analysis modifier to our anchor score
on Brinker to reflect these risks.
"The stable outlook on Brinker reflects our expectation that its
strengthening operating momentum will enable it to generate good
FOCF, which will support an improvement in its credit protection
metrics over the next 12 months."
S&P could lower its rating on Brinker if:
-- The positive trajectory in its operating performance and credit
metrics reverses;
-- The company experiences delays in refinancing its revolving
credit facility at reasonable terms; or
-- S&P expects its adjusted leverage to remain at or above 4.5x
either due to a slower recovery or a more aggressive financial
policy.
S&P could raise its rating on Brinker if:
-- It strengthens its performance across its concepts,
demonstrates sustained market share gains, and generates operating
metrics, including comparable restaurant sales and adjusted EBITDA
margins, that exceed our base-case forecast; and
-- S&P expects its adjusted leverage to remain below 3.5x.
BUCKSKIN REALTY: Seeks to Hire Wayne Greenwald as Legal Counsel
---------------------------------------------------------------
Buckskin Realty, Inc. seeks approval from the U.S. Bankruptcy Court
for the Eastern District of New York to employ Wayne Greenwald, PC
as its bankruptcy counsel.
Wayne Greenwald will render these legal services:
(a) assist the Debtor in administering its Chapter 11 case;
(b) make motions or take necessary actions under the
Bankruptcy Code;
(c) represent the Debtor in prosecuting adversary proceedings
to collect assets of the estate and such other actions as the
Debtor deems appropriate;
(d) take such steps as may be necessary for the Debtor to
marshal and protect the estate's assets;
(e) negotiate with the Debtor's creditors in formulating a
plan of reorganization;
(f) draft a plan of reorganization and seek confirmation of
the plan; and
(g) render such additional services as the Debtor may require
in this case.
The hourly rates of Wayne Greenwald's attorneys and staff are as
follows:
Partners $600
Counsel $550
Associates $150 - $400
Clerks and Paraprofessionals $75 - $150
In addition, the firm will seek reimbursement for all expenses
incurred.
The initial retainer fee is $500.
As disclosed in court filings, Wayne Greenwald is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached at:
Wayne M. Greenwald, Esq.
Wayne Greenwald, PC
475 Park Avenue South - 18th Floor
New York, NY 10016
Telephone: (212) 983-1922/(212) 739-7599
Fax: (212) 983-1965
About Buckskin Realty
Buckskin Realty, Inc. filed a voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.Y. Case No.
13-40083) on Jan. 8, 2013. At the time of the filing, the Debtor
disclosed $500,001 to $1 million in assets and $100,001 to $500,000
in liabilities. Judge Nancy Hershey Lord oversees the case. Wayne
Greenwald, PC serves as the Debtor's legal counsel in its Chapter
11 case initially handled by Palmieri and Castiglione, P.C.
BULLDOGGE FITNESS: Seeks to Tap Jay Ehrlich as Financial Advisor
----------------------------------------------------------------
Bulldogge Fitness Group, Inc. seeks approval from the U.S.
Bankruptcy Court for the Northern District of Illinois to employ
Jay Ehrlich, a financial advisor at Earl Corporate Advisors.
The Debtor needs a financial advisor to assist in marketing and
finding a buyer for its assets.
The Debtor agreed to pay Earl Corporate Advisors a transaction fee
equal to 3 percent of the portion of the consideration received at
closing that is less than $500,000 and 7 percent that is greater
than $500,000.
Earl Corporate Advisors will also receive a retainer of $10,000 and
reimburse for out-of-pocket expenses incurred.
Mr. Ehrlich disclosed in a court filing that he and his firm are
"disinterested persons" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Mr. Ehrlich can be reached at:
Jay Ehrlich
Earl Corporate Advisors
15125 N. Scottsdale Rd.
Scottsdale, AZ 85254
Telephone: (847) 922-2042
Email: jay@earlcorporateadvisory.com
About Bulldogge Fitness Group
Bulldogge Fitness Group, Inc., a Downers Grove, Ill.-based company
that operates a gymnasium and fitness center, sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No.
21-03336) on March 15, 2021. In the petition signed by Scott
Schroeder, president, the Debtor disclosed up to $50,000 in assets
and up to $10 million in liabilities.
Judge Timothy A. Barnes oversees the case.
The Debtor tapped Richard G. Larsen, Esq., at Springer Larsen
Greene, LLC, as legal counsel and Jay Ehrlich at Earl Corporate
Advisors as financial advisor.
C&D TECHNOLOGIES: S&P Affirms 'B-' ICR on Solid Cash Flow
---------------------------------------------------------
S&P Global Ratings revised its outlook on the company to positive
from negative and affirmed its 'B-' issuer credit rating.
The positive outlook reflects the successful execution of C&D's
turnaround strategy, which has enabled it to regain market share,
capture a larger portion of its customers' purchases, and reduce
its costs by improving its manufacturing efficiency. S&P believes
these operational improvements, along with the strong demand
momentum in its Motive segment, will lead it to increase its
revenue and further expand its margin over the next 12 months such
that its adjusted debt to EBITDA improves to between 6.0x and
6.5x.
The outlook revision follows the company's stronger-than-expected
operating performance supported by the resilient demand for golf
cart batteries and the successful execution of management's
turnaround plan. Despite the challenging operating environment, C&D
was able to limit the decline in its revenue to 5.9% while
increasing its earnings in 2020. After a brief slowdown in golf
markets at the onset of the pandemic, the company experienced
strong demand from major golf cart manufacturers. Golf remained
resilient throughout the pandemic due to elevated participation
rates, given the limited alternative entertainment and recreation
options, and the favorable income demographics of its participants.
Additionally, during the pandemic, some courses implemented
single-ridership requirements to comply with social distancing
restrictions, which led to greater wear and tear on their golf cart
fleets. The demand for golf cart batteries remained strong into the
first quarter and continues to outpace supply, increasing the
company's Motive backlog by about 4x relative to the prior year.
Over the next 12 months, C&D plans to invest in additional capacity
and launch its lithium product offering to meet the record demand
for its Motive products.
The company's newly appointed management team remained acutely
focused on process improvements during the year, which followed a
protracted period of market share losses due to product quality
issues, delivery delays, and higher costs. C&D's improved
performance enabled it to regain market share in its Stationary
business, capture a larger portion of its customers' purchases, and
reduce its costs by improving its manufacturing efficiency. In
2020, the company's S&P Global Ratings-adjusted EBITDA margin
improved by 500 basis points (bps) to 10.4%. Despite the decline in
its revenue, C&D was able to increase earnings through
pandemic-related cost-reduction actions, improved plant
performance, and a significant decrease in its business
optimization and restructuring costs. Although the company will
face material cost-inflation headwinds over the next 12 months, S&P
believes its improved manufacturing efficiency, the strong demand
in its Motive segment, and internal growth initiatives will lead to
an increase its revenue and further margin improvement, causing its
adjusted debt to EBITDA to decline to between 6.0x and 6.5x.
The combination of higher earnings, lower net working capital, and
reduced capital expenditure contributed to the company's positive
cash flow and improved liquidity. Throughout the pandemic, C&D
prudently managed its capital expenditure (capex) and working
capital to sustain its positive cash flow and preserve its adequate
liquidity. Specifically, the company reduced its capex to the
minimum level necessary to cover its preventative maintenance,
safety, and environmental-related costs. In addition, its ongoing
focus on working capital management improved its receivables
collection and led to a significant reduction in its inventory. As
such, C&D's reported free operating cash flow increased to $39.7
million during 2020. The company used this positive cash generation
to repay $33.4 million of borrowings under its asset-based lending
(ABL) facility and pay $4 million of required amortization on its
term loan, which reduced its S&P Global Ratings-adjusted debt to
EBITDA to 7.0x.
The positive outlook on C&D reflects the successful execution of
its turnaround strategy, which has enabled it to regain market
share, capture a larger portion of its customers' purchases, and
reduce its costs by improving its manufacturing efficiency. S&P
believes these operational improvements, along with the strong
demand momentum in its Motive segment, will lead it to increase its
revenue and further expand its margin over the next 12 months such
that its adjusted debt to EBITDA improves to between 6.0x and
6.5x.
S&P could raise its rating on C&D if:
-- It improves its leverage below 6.5x on a sustained basis; and
-- It generates consistent positive free cash flow and maintains
adequate liquidity.
S&P could revise its outlook on C&D to stable if it maintains
leverage of more than 6.5x. This could occur if:
-- It is unable to effectively offset the significant cost
headwinds and increased investment in its growth initiatives by
raising its pricing and improving its operating efficiency; or
-- It pursues large, debt-funded acquisitions or uses its cash
flow to fund a shareholder dividend.
CANWEL BUILDING: DBRS Hikes Issuer Rating to B(high)
----------------------------------------------------
DBRS Limited upgraded CanWel Building Materials Group Ltd.'s Issuer
Rating and Senior Unsecured Notes rating to B (high) from B and
confirmed the recovery rating for the Notes at RR4. All trends
remain Stable.
The rating upgrades reflect further strengthening of CanWel's
credit risk profile because of (1) continued momentum in CanWel's
earnings and operating cash flows during the fourth quarter ended
December 31, 2020 (Q4 2020), and Q1 2021, supported by a resilient
demand for home renovation products even during the usually quieter
winter season and strong pricing for construction material; and (2)
strengthening of CanWel's financial profile through an equity
offering of up to $86.25 million that has further accelerated the
rating upgrades. The Stable trends take into account the
cyclicality of the home improvement retail industry and the
possible moderation in earnings over the near to medium term from
the current surge levels. The rating upgrades are further supported
by DBRS Morningstar's view that, while there is still considerable
uncertainty around the economic outlook, home renovation and
remodel demand may continue to offset any impact on new
construction activities and support a relatively higher earnings
level even during this period of uncertainty. CanWel's ratings also
continue to be supported by its well-established market position,
diversified customer and supplier bases, and relatively high
barriers to entry. The ratings also continue to factor in the
significant cyclicality and seasonality associated with the
building materials industry, the intense competition, and the
Company's high dividend payouts.
On December 18, 2020, DBRS Morningstar confirmed CanWel's ratings
at B and changed the trend on the ratings to Stable from Negative,
reflecting its view that, while considerable uncertainty related to
the evolution of the Coronavirus Disease (COVID-19) pandemic and
its macroeconomic aftereffects remains, CanWel is in a position to
navigate the current environment within the context of the B rating
category without the need for meaningfully stringent
capital-conservative measures. DBRS Morningstar also noted that
should the Company's operating performance remain relatively stable
through this period, combined with prudent financial management
such that the lease-adjusted debt-to-EBITDA ratio is sustainable
between approximately 5.0 times (x) (at low inventory levels) and
approximately 6.0x (at peak inventory levels) on a normalized
basis, a further positive rating action could occur.
Since then, CanWel has continued to report significantly
stronger-than-expected operating results as net sales increased 37%
year over year (YOY) to just above $400 million in Q4 2020 and more
than 21% for the full year 2020 to $1.61 billion. Additionally, as
per the limited financial information released by CanWel on April
19, 2021, sales have continued to trend upward in 2021 and
increased materially by 59% YOY to $520 million during Q1 2021,
reflecting both volume and price increases because of heightened
demand for the Company's products. EBITDA margins have also
benefitted from the surge in sales and increased to 8.9% for F2020
from 6.5% in F2019 because of operating leverage gains and
increasing construction material pricing. Consequently, EBITDA grew
66% YOY to $143 million in 2020 and by an exceptional 253% YOY to
$60 million in Q1 2021.
In terms of financial profile, CanWel used its 2020 cash flow from
operations of $130 million, combined with cash flows from working
capital changes of $34 million and net of operating lease payments
of $24 million, to reduce the Company's revolving credit facility
by $90 million and for dividend payments of $42 million as capital
expenditures remained low at $3 million. As such, CanWel's key
credit metrics improved meaningfully YOY, with debt-to-EBITDA
decreasing to 2.5x at the end of 2020 from 5.1x at the end of 2019.
The limited Q1 2021 financial information released by CanWel on
April 19, 2021, does not include detailed balance sheet or cash
flow information.
The rating upgrades also take into account CanWel's April 21, 2021,
announcement that the Company will raise up to $86.25 million by
way of a bought deal equity offering (the Offering). The net
proceeds of the Offering will initially be used to reduce draws on
the Company's credit facility, which would further strengthen
CanWel's financial position. That said, DBRS Morningstar notes that
the Company has undertaken a series of acquisitions in the past and
may use the additional funds for future acquisitions and/or other
growth investments, which DBRS Morningstar has not currently
factored into its earnings forecasts.
Looking ahead, DBRS Morningstar expects the impacts of the
coronavirus pandemic (such as social distancing and reduced travel)
to remain prevalent in the near term, especially in Canada, which
should continue to provide a positive secular tailwind for the home
improvement sector through the peak construction season in 2021.
DBRS Morningstar believes earnings will moderate beyond 2021 but
still remain above prepandemic levels as a normalization in demand
for home improvement activities is offset by a broad resumption in
new construction activities. In terms of the Company's financial
profile, DBRS Morningstar forecasts CanWel's debt-to-EBITDA ratio
in F2021 and F2022 to remain between 3.0x to 4.0x on a normalized
basis as earnings moderate and the Company uses debt, along with
cash flow from operations, to fund growth investments and
shareholder returns, levels that are considered comfortable for the
B (high) rating category. Should CanWel's credit profile
deteriorate as a result of materially weaker-than-expected
operating performance and/or more aggressive financial management,
including any highly leveraged acquisition(s), the ratings could be
pressured.
Notes: All figures are in Canadian dollars unless otherwise noted.
CANWEL BUILDING: DBRS Lowers Senior Unsecured Notes Rating to B
---------------------------------------------------------------
DBRS Limited downgraded CanWel Building Materials Group Ltd.'s
Senior Unsecured Notes to B from B (high) and confirmed the Issuer
Rating at B (high). All trends are Stable. The downgrade of the
Notes reflects the addition of new Senior Unsecured Notes of up to
$300 million, due May 2026, which caused a downgrade to the
Recovery Rating to RR5 from RR4 and in turn led to a one-notch
downgrade on the Notes, in accordance with "DBRS Morningstar
Criteria: Recovery Ratings for Non-Investment-Grade Corporate
Issuers."
The confirmation of the Issuer Rating reflects DBRS Morningstar's
expectation that the Company will apply the net proceeds from the
New Notes to pay down the Company's outstanding debts under the
secured revolving loan facility or other indebtedness and, as such,
credit metrics immediately following the new issuance are not
expected to change.
The New Notes will rank equal in right of payment with any existing
and future senior unsecured indebtedness, senior in right of
payment to any future subordinated indebtedness, and effectively
junior to any existing and future secured indebtedness of the
Company, including indebtedness under the current revolving
facility, to the extent of the value of the assets securing such
indebtedness.
The obligations of the Company under the New Notes will be fully
and unconditionally guaranteed on a senior unsecured basis by each
of CanWel's restricted subsidiaries.
Notes: All figures are in Canadian dollars unless otherwise noted.
CARLA'S PASTA: Seeks to Extend Plan Exclusivity Thru August 7
-------------------------------------------------------------
Carla's Pasta, Inc. and its affiliates request the U.S. Bankruptcy
Court for the District of Connecticut, Hartford Division to extend
by 60 days the exclusive periods during which the Debtor may file a
plan from June 8, 2021, to August 7, 2021, and confirm a plan from
August 7, 2021, to October 6, 2021.
On February 18, 2021, the Office of the United States Trustee
appointed an Official Committee of Unsecured Creditors in Carla's
Pasta Chapter 11 Case.
The Debtors, along with their advisors and professionals, undertook
a thorough and sale process for a going concern sale of
substantially all of the Debtors' assets under section 363(b) of
the Bankruptcy Code, following a competitive auction, and Court
approval of the sale.
The Debtors successfully closed the Sale on April 30, 2021. Before
the entry of the Sale Order, the Debtors focused their efforts on
developing a robust process for the auction and sale of
substantially all of the Debtors' assets and on maintaining
operations of the business to preserve going concern value for the
purchaser.
With the Court's approval of the Sale Order, and the Debtors have
closed the Sale, the Debtors intend to focus their efforts on
transitioning the business operations to complete liquidation of
their assets, obtaining resolutions of ongoing disputes with key
stakeholders, and on confirming a chapter 11 plan.
The Chapter 11 Cases have been pending for approximately three
months. The Debtors anticipate that brief extensions will provide
them with sufficient time to complete the prosecution of a chapter
11 plan.
The Debtors are not seeking an extension of the Exclusive Periods
as a negotiation tactic, to artificially delay the conclusion of
these Chapter 11 Cases, or even hold creditors hostage to an
unsatisfactory plan proposal. On the contrary, the request is
intended to maintain a framework conducive to an orderly,
efficient, and cost-effective confirmation process. Also, it will
enable the Debtors to craft a plan without the distractions and
costs attendant to competing plans.
The Debtors have been paying and will continue to pay their
undisputed post-petition debts and have operated their business in
the ordinary course since the filing of Carla's Chapter 11 Case
until the closing of the Sale. Thus, no creditor or party in
interest is prejudiced by the relief requested.
No trustee or examiner has been appointed in these Chapter 11
Cases.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3wm8Ifs from Stretto.com.
About Carla's Pasta
Carla's Pasta was founded in 1978 by Carla Squatrito and is a
family-owned and operated business and is headquartered in South
Windsor, Connecticut. Carla's Pasta manufactures high-quality food
products including pasta sheets, tortellini, ravioli, and steam bag
meals for branded and private label retail, foodservice
distributors, and restaurant Carla's Pasta's stock is held by
members of the Squatrito family.
On December 31, 2016, Carla's Pasta acquired 100% of Suri Realty,
LLC's membership interests. Suri's business is limited to the
ownership of two adjoining parcels of real property with an address
of 50 Talbot Lane, South Windsor, Connecticut, and 280 Nutmeg Road,
South Windsor, Connecticut.
Carla's Pasta operates its business from approximately 150,000-sq.
ft. BRC+ certified production facility.
On October 29, 2020, an involuntary petition for relief under
Chapter 7 of the Bankruptcy Code was filed against Suri by the
Dennis Group, HJ Norris, LLC, Renaissance Builders, Inc., and Elm
Electrical, Inc. On December 17, 2020, the Court approved Suri's
request and converted the involuntary Chapter 7 case to a Chapter
11.
Carla's Pasta filed a Chapter 11 petition (Bankr. D. Conn. Case No.
21-20111) on February 8, 2021. The Debtor estimated assets of $10
million to $50 million and liabilities of $50 million to $100
million.
Judge James J. Tancredi presides over the case. The law firm of
Locke Lord LLP is the Debtors' counsel. Cowen & Co. is the Debtors'
investment banker. Sandeep Gupta of Nova Advisors is the Debtors'
CRO.
CARVANA CO: S&P Alters Outlook to Positive, Affirms 'CCC+' ICR
--------------------------------------------------------------
S&P Global Ratings revised its ratings outlook to positive from
stable and affirmed its 'CCC+' issuer credit rating on online
used-car retailer Carvana Co.
The positive outlook indicates that we could raise the ratings on
Carvana if the company continues to make progress in leveraging its
scale to improve margins such that it can achieve near breakeven
EBITDA while maintaining sufficient liquidity to pay for its cash
burn for at least 18 months.
Carvana has improved its liquidity position relative to a couple
years ago, strengthened margins, and is on a path to breakeven
EBITDA over the next year and a half. Carvana has raised liquidity
multiple times over the last couple years through both equity and
debt, including its recent issuance of $600 million of notes in
March 2021. S&P said, "Since 2020, the company has been able to
maintain liquidity that is sufficient to cover its negative free
cash flow for 18 months to two years, in our view, which is an
improvement over earlier years when its liquidity was sufficient
for roughly 12 months. Maintenance of this improved liquidity and
access to capital markets remain a key consideration for an upgrade
while the company generates such highly negative free cash flow.
While we expect Carvana's capital needs will increase in 2022 as
the company builds eight new inspection and reconditioning centers,
we also expect the EBITDA to improve during this time."
Carvana's margins have improved, with its gross profit per unit
(GPU) exceeding our expectations. The company is now showing
increased benefits from leveraging its selling, general, and
administrative (SG&A) spend. For a number of years, Carvana has
grown its GPU faster than S&P expected. The GPU has growth has come
from increased sourcing of cars from customers, faster turning
inventory, and increased profitability from selling the auto loans,
insurance, and other products that the company originates as an
auto retailer. However, Carvana still generates negative EBITDA as
it has invested aggressively in advertising, compensation costs,
and logistics network costs to grow its markets and deliver a
rapidly increasing number of units.
Recently though, the company's SG&A as a percent of revenue has
started to improve, falling toward the 17%-18% range from 20% over
the past couple years. S&P expects further improvements in SG&A
over the next couple years so that by the end of 2022, EBITDA
should be roughly breakeven or better, with positive EBITDA
forecast in 2023.
S&P said, "Competition is increasing in the online auto retail
space, but we think Carvana should benefit from being one of the
first companies selling a large number of cars online. As Carvana
has been able to gain a small share of a very large and fragmented
market, it is now the second-largest retailer of used cars in the
U.S. Online competitors like Shift and Vroom, as well as
traditional retailers like Penske, AutoNation, Lithia, and CarMax
are increasing their focus on the fast-growing online used-car
market. While we think the market is fragmented enough to allow a
number of players to grow, it could become more competitive to
capture the eyes and clicks of the subset of people who want to do
their entire car purchase online. However, we think that Carvana's
investments should start to pay off in terms of brand awareness and
larger scale that will increase its online offerings for potential
customers.
"The positive outlook indicates that we could raise the ratings on
Carvana if the company continues to make progress in leveraging its
scale to improve margins such that the company can achieve near
breakeven EBITDA while maintaining sufficient liquidity to pay for
its cash burn for at least 18 months.
"We could raise our rating on Carvana if EBITDA is near breakeven
and expected to improve further, and the company demonstrates a
path toward positive free cash flow after adjusting for growth
capex. This could occur if Carvana attains sufficient scale such
that its sales and marketing spending becomes more efficient on a
national scale, implying that the company's financial commitments
are more sustainable.
"We could revise the rating back to stable if Carvana's
profitability fails to improve toward breakeven or if the company's
liquidity and standing in the credit and equity markets decline
materially, such that the company would be unlikely to continue
financing its aggressive growth while burning cash."
CBL & ASSOCIATES: Court Okays Start of Creditor Vote on Plan
------------------------------------------------------------
Steven Church of Bloomberg News reports that mall operator CBL &
Associates Properties Inc. won court approval to seek creditor
support for its bankruptcy-exit plan, the next-to-last phase of the
company's reorganization. Should the exit plan win final court in
August 2021, CBL would be owned by unsecured bondholders, who would
get 89% of company stock plus new notes and $95 million in cash.
Bondholders and other unsecured creditors would recover about 56%
of what they are owed. Senior lenders will get cash and new debt
and should recover 100%, according to court documents.
Shareholders would get 11% of the new stock.
About CBL & Associates
CBL & Associates Properties, Inc. -- http://www.cblproperties.com/
-- is a self-managed, self-administered, fully integrated real
estate investment trust (REIT) that is engaged in the ownership,
development, acquisition, leasing, management and operation of
regional shopping malls, open-air and mixed-use centers, outlet
centers, associated centers, community centers, and office
properties.
CBL's portfolio is comprised of 107 properties totaling 66.7
million square feet across 26 states, including 65 high-quality
enclosed, outlet and open-air retail centers and 8 properties
managed for third parties. It seeks to continuously strengthen its
company and portfolio through active management, aggressive leasing
and profitable reinvestment in its properties.
CBL, CBL & Associates Limited Partnership and certain other related
entities filed voluntary petitions for reorganization under Chapter
11 of the U.S. Bankruptcy Code in Houston, Texas, on Nov. 1, 2020
(Bankr. S.D. Tex. Lead Case No. 20-35226).
At the time of the filing, the Debtors disclosed assets of between
$1 billion and $10 billion and liabilities of the same range.
The Debtors tapped Weil, Gotshal & Manges LLP as their legal
counsel, Moelis & Company as restructuring advisor and Berkeley
Research Group, LLC, as financial advisor. Epiq Corporate
Restructuring, LLC, is the claims agent.
The U.S. Trustee for Region 7 appointed a committee to represent
unsecured creditors in the Debtors' Chapter 11 cases. McDermott
Will & Emery LLP and AlixPartners, LLP, serve as the committee's
legal counsel and financial advisor, respectively.
CENTRALSQUARE TECH: Moody's Alters Outlook on Caa2 CFR to Stable
----------------------------------------------------------------
Moody's Investors Service changed the outlook for CentralSquare
Technologies, LLC ("CentralSquare", formerly known as SuperMoose
Borrower, LLC) to stable from negative on expected free cash flow
improvement as the impact of the coronavirus recession wanes.
Moody's also affirmed CentralSquare's Caa2 corporate family rating,
Caa2-PD probability of default rating, Caa1 instrument ratings on
the senior secured first lien credit facilities and Ca instrument
rating on the senior secured second lien credit facility.
The following rating actions were taken:
Affirmations:
Issuer: CentralSquare Technologies, LLC
Corporate Family Rating, Affirmed Caa2
Probability of Default Rating, Affirmed Caa2-PD
Senior Secured Bank 1st Lien Credit Facility, Affirmed Caa1
(LGD3)
Senior Secured Bank 2nd Lien Credit Facility, Affirmed Ca (LGD5)
Outlook Actions:
Issuer: CentralSquare Technologies, LLC
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
CentralSquare's ratings are constrained by its very high debt to
EBITDA, above 12x (as of December 31, 2020), negative free cash
flow to debt, and lower growth and profitability than anticipated
at the time of the company's formation in 2018. The stabilization
of the outlook anticipates that free cash flow, which improved but
remained negative in 2020, will continue to increase towards
break-even, as CentralSquare makes progress on the integration and
headwinds caused by the coronavirus pandemic wane. However, the
timeline to materially reduce leverage and generate positive free
cash flow is still uncertain and weighs on the credit. Liquidity
remains weak, the company's $125 million revolver is fully drawn
and CentralSquare relies on its unrestricted cash balance (roughly
$55 million as of December 2020) to cover the cash flow gap until
break-even is achieved. Aggressive financial policies, evidenced by
very high debt/EBITDA and the debt-funded acquisitions of Lucity in
4Q18 and Tellus in 2Q19 also weigh on the credit. Moody's considers
the public safety and administration enterprise resource planning
(ERP) software market mature and competitive, which limits growth
expectations. The new leadership team has been able to improve
margins and free cash flow in 2020 despite the challenges caused by
the coronavirus pandemic, but liquidity and operational risks
remain high.
The credit profile is supported by CentralSquare's recurring
revenue base, which generates over 70% of total revenue and
partially mitigates cyclical swings. Overall revenue declined 8% in
2020, as implementations were impacted by the pandemic and other
operational constraints, but growth is expected to resume in 2Q21.
High historical gross retention rates around 95% evidence sticky
product solutions that are deeply embedded in its customers'
workflows and operations, with an average customer tenure over 10
years. The company believes its customers face up to two years to
switch to a competitor's product. The customer base is diversified
mainly across small and medium public sector customers with low
concentration.
The stable outlook reflects the expectation for low single-digit
percentage organic revenue growth over the next 12 months as the
impact of the coronavirus recession wanes and operational
improvements support new implementations. Debt to EBITDA is
expected to remain very high, above 12x (Moody's adjusted excluding
deferred revenue and other add-backs). Free cash flow to debt will
approach break-even but will remain negative over the next 12
months, keeping liquidity risk high.
The Caa1 rating on the senior secured first lien revolver and term
loan reflects the Caa2-PD probability of default rating (PDR) and a
loss given default assessment of LGD3, reflecting their priority in
Moody's waterfall of claims at default, ahead of all other
obligations of the company. The credit facility is secured by a
first lien pledge of substantially all of the domestic assets of
the guarantor subsidiaries through secured upstream guarantees. The
Ca rating on the senior secured second lien term loan reflects the
Caa2-PD PDR and a loss given default assessment of LGD5, reflecting
the subordination to the first lien debt and the uncertain support
from unsecured obligations in a default scenario. The loan is
secured by a second lien pledge of substantially all of the
domestic assets of the guarantor subsidiaries through secured
upstream guarantees. The first lien revolver, first lien term loan
and second lien term loan mature in 2023, 2025 and 2026,
respectively.
Liquidity is considered weak. Despite the improving trend, Moody's
expects free cash flow will remain slightly negative over the next
12 months. The company will rely on its unrestricted cash balances
($55 million as of December 2020) to cover the free cash flow
deficit, given the $125 million revolving facility is fully drawn.
In the event of weaker than expected operational performance,
additional external liquidity may be needed to support a minimum
cash balance of approximately $10 million on the balance sheet. The
revolver includes a 8.2x first lien net leverage springing
financial covenant, which is currently in effect given the full
revolver draw. Moody's anticipates CentralSquare will remain in
compliance given the generous credit agreement EBITDA add-backs.
Moody's expects the timing of collections to result in a stronger
2H21, which will support free cash flow improvement towards the end
of the year. The first lien term loan amortizes 1% annually.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Moody's anticipates 1) debt to
EBITDA will remain under 8x; 2) liquidity improvement with free
cash flow expected to remain above break-even; and 3) revenue
growth and margin expansion, demonstrating progress on improving
operational efficiency.
Ratings could be downgraded if 1) liquidity deteriorates further
and the risk of default increases; 2) ongoing operational
challenges or increased competitive pressure result in lower than
anticipated revenue growth or profitability, adding uncertainty to
the company's deleveraging capacity or ability to sustain positive
free cash flow; 3) the economic recovery from the COVID-19
recession slows down, extending the expected timeline to return to
break-even free cash flow; or 4) aggressive financial policies and
debt-funded M&A contribute to incremental leverage.
CentralSquare is a software provider serving the specialized needs
of the small and medium-sized enterprise segment of North American
local governments, public safety agencies, universities, research
foundations and non-profits. The public safety segment provides
computer aided dispatch, records management, jail management and
justice systems to streamline communication between multiple
agencies; the public administration segment provides finance, human
resources, community development, work management and utility
billing systems to enable citizen engagement and local government
operations. The company was formed in 2018 as a combination of
TriTech, Superion and the public sector and healthcare business of
Aptean. It is controlled equally by private equity owners Bain and
Vista. The company generated $382 million of revenue in fiscal year
2020.
The principal methodology used in these ratings was Software
Industry published in August 2018.
CES ENERGY: DBRS Confirms B(high) Issuer Rating
-----------------------------------------------
DBRS Limited changed the trends on CES Energy Solutions Corp.'s
Issuer Rating and Senior Unsecured Notes rating to Stable from
Negative and confirmed all ratings at B (high). The recovery rating
on the Senior Notes remains unchanged at RR4. The ratings
confirmation and trend change are underpinned by (1) CES's leading
market position in Canada and its growing market position in the
United States, both of which have strengthened through the downturn
in 2020, and (2) DBRS Morningstar's better outlook for commodity
prices and its expectation that the Company's key credit metrics
will improve in 2021 and 2022 to support the ratings.
Activity levels in the North American oilfield services segment
plummeted in Q2 2020 as oil and gas (O&G) producers shut in
production and reduced drilling and completion activity in response
to lower commodity prices. As a result, CES's earnings and its
operating cashflow (OCF) in 2020 were materially lower despite the
cost reduction measures the Company undertook and the benefit it
obtained under the Canada Emergency Wage Subsidy program. However,
the Company still generated a free cash flow (FCF; i.e., OCF after
capital expenditures (capex) and dividends) surplus in 2020 as CES
reduced capex and suspended dividend payments in 2020. As expected,
the Company was able to monetize working capital, which, along with
the FCF surplus, was used to fully repay outstanding balances under
its revolving credit facilities. As a result, overall debt levels
at YE2020 declined materially compared with YE2019. Although
weaker, the Company's key credit metrics remain supportive of the
rating.
Based on DBRS Morningstar's base case crude oil and natural gas
price assumptions, activity levels, earnings, and OCF are expected
to improve in 2021 and 2022. However, activity levels are unlikely
to reach pre-pandemic levels as O&G producers focus on operating
within cashflow and deleveraging. DBRS Morningstar also expects
pricing for CES's services to remain under pressure. Nevertheless,
DBRS Morningstar expects the Company to generate a meaningful FCF
surplus through 2022, given its low capex requirements and
suspension of dividends. DBRS Morningstar expects overall
indebtedness to remain relatively flat and the key credit metrics
to improve over the next two years with the lease-adjusted
debt-to-cash flow ratio at or around 3.0 times (x) to 3.5x. DBRS
Morningstar believes CES has adequate liquidity and expects the
revolving credit facilities to be largely undrawn and the Company
to be in compliance with applicable financial covenants.
DBRS Morningstar may consider a positive rating action if the CES
continues to improve its market position and uses expected FCF
surpluses over the next two years to deleverage the balance sheet.
A meaningful reduction in indebtedness, including the Senior Notes
that mature in October 2024, would improve the Company's financial
risk profile. Conversely, DBRS Morningstar may consider a negative
rating action if activity levels and key credit metrics are
materially and consistently below DBRS Morningstar's expectations.
Notes: All figures are in Canadian dollars unless otherwise noted.
CHARTER COMMUNICATIONS: Moody's Rates New Sr. Secured Notes 'Ba1'
-----------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to senior secured
notes (maturing 2061) issued at Charter Communications Operating,
LLC (Charter or the Company), and Charter Communications Operating
Capital Corp. In conjunction with the transaction these borrowers
will also be issuing an add-on to existing 3.9% senior secured
notes due 2052 (rated Ba1), and CCO Holdings, LLC and CCO Holdings
Capital Corp. will issue an add-on to the existing 4.5% senior
unsecured notes due 2033 (rated B1). 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.
Assignments:
Issuer: Charter Communications Operating, LLC
Senior Secured Regular Bond/Debenture, Assigned Ba1 (LGD3)
Moody's views the transaction as credit neutral. Moody's expects
the terms and conditions of the newly issued obligations to be
materially the same as existing obligations of the same class.
Charter intends to use the net proceeds from the financing for
general corporate purposes, share repurchases, 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.
RATINGS RATIONALE
Charter Communications, Inc.'s (Charter) 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 31.4
million residential and commercial customers across 41 states,
generating approximately $48.9 billion in revenue (March 2021 LTM).
Strong and sustained broadband demand drives growth and
profitability, providing an operating hedge to 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 close to $6.9 billion
(Moody's adjusted, March 2021 LTM) 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 $86 billion,
Moody's adjusted at Q1 2021 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 very 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, LLC are the most junior claims and are rated
B1 (LGD5), with contractual and structural subordination to all
other obligations. Instrument ratings reflect the Ba2-PD PDR with a
mix of secured and unsecured debt, which Moody's expect will result
in 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 rise to near $90 billion, $52.5 billion,
and $20.5 billion, respectively by the end of 2022. Moody's project
EBITDA margins near 40%, producing free cash flows averaging 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.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's could 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 could also be conditional on maintaining very good
liquidity, a more conservative financial policy, and stable
operating performance.
Moody's could 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 could also consider a negative rating action if liquidity
deteriorated, financial policy implied higher credit risk, scale or
diversity was lower, 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
58.6 million primary service units (PSU's) including both
residential and commercial (and 2.7 million mobile lines). Across
its footprint, which spans 41 states, Charter serves 31.4 million
residential and commercial customers under the Spectrum brand,
making it the second largest U.S. cable operator. Revenue for the
last twelve months ended March 31, 2021 was approximately $48.9
billion.
CLEAR CHANNEL: S&P Assigns 'CCC' Rating on Senior Unsecured Notes
-----------------------------------------------------------------
S&P Global Ratings assigned its 'CCC' issue-level rating and '5'
recovery rating to Clear Channel Outdoor Holdings Inc.'s (CCOH)
proposed $1.05 billion senior unsecured notes due 2029. The '5'
recovery rating indicates its expectation for modest (10%-30%;
rounded estimate: 10%) recovery for lenders in the event of a
payment default. CCOH plans to use the proceeds from these proposed
notes to repay the outstanding balance on its 9.25% senior
unsecured notes due 2024 ($961.5 million outstanding). S&P's 'CCC+'
issuer credit rating and stable outlook on the company are
unchanged because the transaction will not materially improve its
interest burden or cash flow.
COLLECTED GROUP: Cash Collateral Access, $9.2MM DIP Loan OK'd
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
authorized the Collected Group, LLC and affiliates to, among other
things use cash collateral on a final basis in accordance with the
budget.
The Debtor is also authorized to obtain post-petition financing on
a superpriority basis under a delayed-draw term loan facility from
KKR Loan Administration Services LLC and other lenders party
thereto consisting of $6 million available upon entry of the
Interim Order and an additional $3.2 million available upon entry
of the Final Order.
The Debtors have a continuing critical need to obtain financing
pursuant to the DIP Facility and to continue to use the Prepetition
Collateral to, among other things, (i) pay the fees, costs, and
expenses incurred in connection with the Chapter 11 Cases, (ii)
fund any obligations benefitting from the Carve-Out, (iii) permit
the orderly continuation of the operation of their businesses, (iv)
maintain business relationships with customers, vendors, and
suppliers, (v) make payroll, and (vi) satisfy other working capital
and operational needs.
Pursuant to the Amended and Restated Credit Agreement, dated as of
May 15, 2015, among TCG, as borrower, and KKR Loan Administration
Services LLC, as administrative agent, and the lenders party
thereto, the Prepetition Lenders provided senior secured term loan
credit facilities to the Debtors.
As of the Petition Date, the aggregate principal amount of (i)
Initial Term A Loans outstanding is $85,087,573.55, (ii) Initial
Term B Subordinated Loans outstanding is $26,496,854.27, (iii)
Bridge Term Loans outstanding is $4,612,647.93, (iv) Delayed Draw
Term Loans outstanding is $19,425,492.42, (v) Eighth Amendment Term
Loans outstanding is $5,427,959.17, (vi) Twelfth Amendment Term
Loans outstanding is $3,000,000 and (vii) Thirteenth Amendment Term
Loans outstanding is $2,000,000. In total, as of the Petition Date,
the Debtors were indebted and jointly and severally liable to the
Prepetition Secured Parties in the aggregate principal amount
outstanding under the Prepetition Facility of $146,050,527.34.
In exchange for their consent to (i) the priming of the Prepetition
Liens by the DIP Liens, and (ii) the use of Cash Collateral to the
extent set forth in the Final Order, the Prepetition Secured
Parties will receive adequate protection to the extent of any
Diminution of their interests in the Prepetition Collateral, as
more fully set forth in the Final Order.
The Prepetition Agent will receive, for the benefit of the
Prepetition Secured Parties, continuing valid, binding, enforceable
and perfected postpetition replacement liens which will be subject
and subordinated only to the Carve-Out, DIP Liens, and Permitted
Liens.
The "Carve-Out" means these expenses: (i) all fees required to be
paid to the Clerk of the Court and to the U.S. Trustee pursuant to
28 U.S.C. section 1930(a); (ii) all reasonable fees and expenses
incurred by a trustee under section 726(b) of the Bankruptcy Code
in an amount not exceed $50,000, which will not be subject to the
Approved Budget or any other budget; (iii) to the extent allowed at
any time, whether by interim or final compensation order,
procedural order, or otherwise, all unpaid fees and expenses
incurred by persons or firms retained by the Debtors and unpaid
fees and expenses incurred by persons or firms retained by the
Committee pursuant to section 328 or 1103 of the Bankruptcy Code,
and (iv) Allowed Professional Fees not to exceed $1,000,000,
incurred after the first business day following delivery by the DIP
Agent of the Carve Out Trigger Notice.
As a condition to the DIP Facility and the use of Cash Collateral,
the Debtors have agreed to these milestones:
(a) no later than 39 calendar days after the entry of the Interim
Order, entry by the Court of the Final Order;
(b) no later than 50 calendar days after the Petition Date, the
confirmation of a Chapter 11 plan;
(c) no later than 65 calendar days after the Petition Date, the
effective date of a Chapter 11 plan;
For the avoidance of doubt, unless waived by the DIP Lenders in
their sole discretion, the failure of the Debtors to meet the
Milestones by the applicable specified deadlines set forth therefor
will constitute an Event of Default under the DIP Documents and the
Final Order.
A copy of the order is available at https://bit.ly/3yzddW8 from
Epiq Corporate Restructuring LLC, the claims agent.
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.
Paul, Weiss, Rifkind, Wharton & Garrison, LLP and Young Conaway
Stargatt & Taylor, LLP serve as the Debtors' legal counsel while
Miller Buckfire & Co., LLC and its affiliate, Stifel, Nicolaus &
Co., Inc., serve as financial advisor and investment banker. The
Debtors also tapped Berkeley Research Group, LLC and appointed the
firm's managing director, Evan Hengel, as their chief restructuring
officer. Epiq Corporate Restructuring LLC is the claims agent and
administrative advisor.
An official committee of unsecured creditors has been appointed in
the case and is represented by:
Lauren Schlussel, Esq.
Eric Wilson, Esq.
Jason Adams, Esq.
Kelley Drye & Warren LLP
3 World Trade Center
175 Greenwich Street
New York, NY 10007
E-mail: LSchlussel@KelleyDrye.com
EWilson@KelleyDrye.com
JAdams@KelleyDrye.com
KKR Loan Administration Services LLC, as DIP Agent, is represented
by:
Vincent Indelicato, Esq.
Megan Volin, Esq.
Proskauer Rose LLP
Eleven Times Square
New York, NY 10036
E-mail: vindelicato@proskauer.com
E-mail: mvolin@proskauer.com
- and -
Robert J. Dehney, Esq.
Andrew R. Remming, Esq.
Morris Nichols Arsht & Tunnell LLP
1201 North Market Street
Wilmington, DE 19899
E-mail: rdehney@morrisnichols.com
E-mail: aremming@morrisnichols.com
COLLECTED GROUP: Harris County's Claim Entitled to Interest
-----------------------------------------------------------
Harris County, a secured creditor, objects to Joint Prepackaged
Chapter 11 Plan of Reorganization for The Collected Group, LLC and
its Debtor Affiliates.
Harris County holds a secured claim in the amount of $35,820 for ad
valorem taxes for tax years 2019 through 2021 on the Debtors'
personal property. The property taxes were duly assessed in
accordance with the laws of the State of Texas and constitute a
valid, liquidated, secured claim against the Debtors' property
entitled to priority over other secured claims.
Harris County objects to the Plan on the basis that it fails to
specifically provide how its claim will be paid. The Plan should
not be confirmed unless and until it specifically provides for how
and when the claim will be paid.
Harris County asserts that the Plan fails to properly provide for
the payment of interest on Harris County's claim as required by 11
U.S.C. Sec. 506(b) and 1129. Harris County is entitled to interest
on the claim at the statutory rate of 12% per annum continuing
until such time as the claim is paid in full.
Counsel for Harris County:
LINEBARGER GOGGAN BLAIR & SAMPSON, LLP
JOHN P. DILLMAN
TARA L. GRUNDEMEIER
Post Office Box 3064
Houston, Texas 77253-3064
Tel: (713) 844-3478
Fax: (713) 844-3503
E-mail: john.dillman@lgbs.com
tara.grundemeier@lgbs.com
About The Collected Group
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 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.
Paul, Weiss, Rifkind, Wharton & Garrison, LLP and Young Conaway
Stargatt & Taylor, LLP serve as the Debtors' legal counsel while
Miller Buckfire & Co., LLC and its affiliate, Stifel, Nicolaus &
Co., Inc., serve as financial advisor and investment banker. The
Debtors also tapped Berkeley Research Group, LLC and appointed the
firm's managing director, Evan Hengel, as their chief restructuring
officer. Epiq Corporate Restructuring LLC is the claims agent and
administrative advisor.
COLLECTED GROUP: United States Says Plan Provisions Inequitable
---------------------------------------------------------------
The United States objects to the Disclosure Statement for the Joint
Prepackaged Chapter 11 Plan of Reorganization for The Collected
Group, LLC and its Debtor Affiliates.
The United States objects to the Plan because it has not been
afforded adequate notice to determine its interests in these
bankruptcies and to gauge the effect of the Plan on those
interests.
The United States also objects to an expedited Plan process where
general unsecured creditors are wiped out and the Debtors are
absolved of the responsibility to file Schedules and SOFAS and hold
a creditor meeting.
The United States claims that both the Disclosure Statement and the
Plan describe a confusing and contradictory claim treatment that,
against the backdrop of expedited bankruptcy proceedings, deprives
creditors of any meaningful opportunity to understand or
participate in the plan process.
The United States contends to the Plan to the extent that it does
not treat secured claims of the United States in accordance with
the Bankruptcy Code. The United States further objects to the Plan
to the extent it fails to provide for payment of interest and the
retention of federal liens.
The United States points out that the Plan fails to preserve the
setoff and recoupment rights of the United States. It asserts that
confirmation of a plan does not extinguish setoff claims when they
are timely asserted.
Finally, the United States objects to the Plan term that states
"rejection of any Executory Contract or Unexpired Lease pursuant to
the Plan or otherwise shall not constitute a termination of any
preexisting obligations owed to the Debtors or the Reorganized
Debtors, as applicable, under such Executory Contracts or Unexpired
Leases. " These Plan provisions are inequitable and prejudicial to
creditors.
About The 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.
Paul, Weiss, Rifkind, Wharton & Garrison, LLP and Young Conaway
Stargatt & Taylor, LLP serve as the Debtors' legal counsel while
Miller Buckfire & Co., LLC and its affiliate, Stifel, Nicolaus &
Co., Inc., serve as financial advisor and investment banker. The
Debtors also tapped Berkeley Research Group, LLC and appointed the
firm's managing director, Evan Hengel, as their chief restructuring
officer. Epiq Corporate Restructuring LLC is the claims agent and
administrative advisor.
COLLISION NETWORK: Seeks to Hire Dean Greer as Bankruptcy Attorney
------------------------------------------------------------------
Collision Network, Inc. seeks approval from the U.S. Bankruptcy
Court for the Western District of Texas to employ Dean Greer, Esq.,
an attorney practicing in San Antonio, Texas, to handle its Chapter
11 case.
Mr. Greer will render these legal services:
(a) advise the Debtor regarding its powers and duties in the
continued operation of its business and management of its
properties during bankruptcy;
(b) take actions to preserve and protect the Debtor's assets;
(c) prepare legal papers;
(d) assist the Debtor in the development, negotiation and
confirmation of a plan of reorganization and the preparation of a
disclosure statement; and
(e) perform other legal services.
Mr. Greer will be paid at his hourly rate of $300, plus
reimbursement of expenses incurred.
Yesenia Ramirez, the Debtor's president, paid Mr. Greer a retainer
of $6,717.
Mr. Greer 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:
Dean W. Greer, Esq.
Law Offices of Dean W. Greer
2929 Mossrock, Ste. 117
San Antonio, TX 78230
Telephone: (210) 342-7100
Facsimile: (210) 342-3633
Email: dean@dwgreerlaw.com
About Collision Network
Collision Network, Inc. filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No.
21-50515) on April 15, 2021, listing under $1 million in both
assets and liabilities. Yesenia Ramirez, president, signed the
petition. Judge Craig A. Gargotta oversees the case. Dean W. Greer,
Esq., serves as the Debtor's legal counsel.
CONDUENT INC: S&P Alters Outlook to Positive, Affirms 'B+' ICR
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S&P Global Ratings affirmed its 'B+' issuer credit ratings on
Florham Park, N.J.-based business process outsourcer, Conduent
Inc., and revised the outlook to positive from negative.
S&P also assigned its 'BB-' issue-level and '2' recovery ratings to
the proposed senior secured debt.
S&P said, "The positive outlook reflects our increasing confidence
for material cash flow improvement in 2021 and 2022 and Conduent's
better-than-expected operating performance in 2020.
"The positive outlook reflects our expectation for FOCF generation
to improve over the next 12-18 months. Conduent's reported FOCF
generation materially increased to approximately $22 million in
2020, following a deficit of $83 million in 2019. This improvement
was driven by cost-saving initiatives, efficiencies gained from
modernizing the company's IT infrastructure, a payroll tax deferral
related to the Coronavirus Aid, Relief, and Economic Security
(CARES) Act, declining restructuring costs, and disciplined
spending on growth-related capital expenditures. Despite our
expectation for a reversal of the cash flow benefit from the CARES
Act and normalization of growth-related capital expenditures, we
believe the benefit of cost-savings initiatives, operating leverage
from investments, and reduced restructuring expenses ($40
million-$45 million in 2021 from $67 million in 2020) will support
increased FOCF generation in 2021 and 2022. Our base case assumes
adjusted FOCF of $175 million-$210 million annually over the next
two years, and we believe there may be upside to our forecast as
the company continues to prioritize customer satisfaction, wins new
business, and gains efficiencies from investments."
The proposed refinancing extends Conduent's maturities and
eliminates near-term refinancing risk. The proposed transaction
will refinance the company's 2022 maturities and push the company's
nearest maturity to 2026, when its revolver and term loan A come
due. In addition, the new capital structure will reduce annual
contracted amortization payments by about $69.5 million, which will
provide greater financial flexibility.
S&P said, "Although Conduent's operating performance is improving,
we believe its turnaround strategy still carries execution risk
amid stiff industry competition. We believe Conduent's efforts to
stabilize revenue and increase cash flow generation are succeeding,
notwithstanding the significant headwind associated with the
pandemic in its commercial (52% of 2020 revenues) and
transportation (17.3%) segments. In 2021, we forecast modest
revenue declines, stemming from the lost California Medicaid
contract and reversal of the COVID-related uplift in the government
segment (about $150 million full-year impact) offset by a return to
pre-COVID volumes and significant growth in new business signed in
2020. In 2020, the total contract value of new business signings
was over $1.9 billion, nearly double 2019 levels. We believe this
provides some visibility into future growth and expect it will help
the company return to revenue growth in 2022."
Nevertheless, Conduent's multiyear restructuring program is
ongoing, and its efforts to further enhance and modernize products
and offerings to its customers face execution risks. If these
efforts do not lead to continued improvement in client retention
and new business signings, it may be difficult for the company to
return to revenue growth in 2022.
Conduent's operating performance and profitability have lagged
peers' over the past several years; however S&P continues to see
several advantages that may allow Conduent to improve. The company
has significant revenue scale to drive process efficiency; it
provides a range of domestic, nearshore, and offshore outsourcing
solutions; it is diversified with regard to clients, outsourcing
solutions, and sectors; and it has the capital to invest in new
digital and higher-value solutions. However, the company will need
to continue to execute its plan to improve its operating
performance and bring its technological capabilities more in line
with that of peers. Conduent's ability to grow sales and customer
satisfaction will be critical as it competes in a highly
competitive business process outsourcing (BPO) market against peers
such as Accenture, Alight Solutions, Teleperformance, and Verra
Mobility.
S&P said, "The positive outlook reflects improved operating
performance and our expectation that the company returns to
positive revenue growth in 2022. Under our base case, we expect
modest revenue declines in 2021 as legacy contracts roll off,
improving to low-single-digit-percentage area revenue growth in
2022 with healthy cash flow generation.
"We could raise the rating if the company demonstrates consistent
organic revenue and EBITDA growth through the successful execution
of its turnaround strategy, leading us to favorably reassess our
view of the business. We could also raise the rating, if the
company were to sustain FOCF to debt in the 10%-15% range.
"We could revise the outlook to stable if Conduent has
weaker-than-expected FOCF because of pricing pressure,
weaker-than-expected growth, or elevated investment requirements.
Such deterioration may indicate execution setbacks from its
turnaround strategy."
CORNUS MONTESSORI: $95.5K Sale of All Business Assets to S2 Okayed
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Judge Klinette H. Kindred of the U.S. Bankruptcy Court for the
Eastern District of Virginia authorized Cornus Montessori, LLC's
sale of substantially all of its business assets to S2 Ventures,
LLC for $95,500, pursuant to the terms and conditions of an Asset
Purchase Agreement, dated April 14, 2021.
The sale is free and clear of all liens, claims and encumbrances.
The Debtor is authorized to take all actions reasonably incident to
the consummation of the sale of assets approved, including, inter
alia, the execution of all required documents and the payment of
brokerage commission to Kian Vessy Real Estate Services, the broker
previously approved by the Court, and all such other customary
costs and expenses associated with the sale and transfer of assets.
About Cornus Montessori
Cornus Montessori, LLC, owner of a Montessori school and daycare
business in Chantilly, Va., sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Case No.
21-10213) on Feb. 11, 2021. At the time of the filing, the Debtor
was estimated to have assets of less than $50,000 and liabilities
of $100,001 to $500,000.
Judge Klinette H. Kindred oversees the case.
The Debtor tapped Roganmillerzimmerman, PLLC as its legal counsel
and JV Solutions, LLC (doing business as Verma CPA & Associates)
as
its accountant.
CORONADO CAPITAL: Creditors Seek to Prohibit Cash Collateral Use
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Aureliano Chaidez and Gloria Chaidez, holders of pre-petition
interest in certain assets of Coronado Capital Investment, Inc.,
asked the Bankruptcy Court to prohibit the Debtor from using cash
collateral.
The Movants assert a second lien on certain of the Debtor's real
property located in El Paso, Texas, which are approved and operated
as a residence and six apartments. The collateral is evidenced by
a promissory note and deed of trust in favor of the Movants. The
Debtor allegedly earns rental income at $750 monthly (on the
residence) and $570 monthly (on each of the six apartments).
The Movants assert that the Debtor owe them $64,796 as of April 5,
2021, and have accordingly filed a proof of claim in the Debtor's
case. The Movants complain that the Debtor appears to be using the
rents for general operating purposes and is not segregating them as
required by Section 363(c)(4) of the Bankruptcy Code.
For these reasons, the Movants ask the Court to:
* prohibit the Debtor from using the cash collateral pending
proper application with the Court;
* require the Debtor to submit a proper budget;
* provide adequate protection for their interest; and
* provide an accounting of the cash collateral from the date of
the Chapter 11 petition filing.
The Movants also assert that they are entitled to reimbursement for
reasonable and necessary attorney's fees, pursuant to the terms of
the promissory note and the deed of trust.
A copy of the motion is available for free at
https://bit.ly/3owdgNL from PacerMonitor.com.
About Coronado Capital Investment
Coronado Capital Investment, Inc. filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Texas
Case No. 21-30264) on April 5, 2021, listing under $1 million in
both assets and liabilities. Doug Rutter, principal and sole
shareholder, signed the petition. Judge H. Christopher Mott
oversees the case. Miranda & Maldonado, PC serves as the Debtor's
legal counsel.
COULEE HILL: Gets OK to Hire SK Realty as Real Estate Broker
------------------------------------------------------------
Coulee Hill Ranch, Inc. received approval from the U.S. Bankruptcy
Court for the District of Montana to employ SK Realty, LLC to
market its real property in Golden Valley County, Mo.
SK Realty will receive a 6 percent commission on the gross purchase
price.
As disclosed in court filings, SK Realty is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Steve Krutzfeldt
SK Realty, LLC
Billing, MT 59105
About Coulee Hill Ranch
Ryegate, Mont.-based Coulee Hill Ranch, Inc. sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. D. Mont. Case No.
21-10010) on Feb. 3, 2021. Anthony L. Zinne, vice president,
signed the petition. At the time of the filing, the Debtor had
between $1 million and $10 million in both assets and liabilities.
Judge Benjamin P. Hursh oversees the case. The Debtor tapped
Patten Peterman Bekkedahl and Green, PLLC as legal counsel and Ed
Satterfield as accountant.
CRC BROADCASTING: Plan Hearing Continued to June 29
---------------------------------------------------
Judge Paul Sala has entered an order granting the stipulated motion
and continuing the hearing on confirmation of the Amended Chapter
11 Plan of CRC Broadcasting Company to the 29th day of June 2021,
at 10:00 a.m. That Desert Financial Credit Union shall have until
7 calendar days prior to the Continued Hearing to file any
objection to the Plan's confirmation.
In the stipulated motion, the Debtor and secured creditor Desert
Financial Credit Union explained that they need an additional
continuance of the confirmation hearing for approximately 30 days
to 23 continue facilitating discussions between them on matters
related to confirmation.
About CRC Broadcasting Co.
CRC Broadcasting Company, Inc., a broadcast media company based in
Scottsdale, Ariz., filed a voluntary petition under Chapter 11 of
the Bankruptcy Code (Bankr. D. Ariz. Case No. 20-02349) on March 6,
2020, listing under $1 million in both assets and liabilities.
Affiliate CRC Media West, LLC also filed for Chapter 11 petition
(Bankr. D. Ariz. Case No. 20-02352) on March 6, 2020, listing under
$1 million in both assets and liabilities.
The cases are jointly administered. Judge Paul Sala oversees both
cases.
Allan D. NewDelman, Esq., at Allan D. NewDelman, P.C., is the
Debtors' legal counsel.
CRECHALE PROPERTIES: Seeks to Extend Plan Exclusivity Thru June 19
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Debtor Crechale Properties, LLC requests the U.S. Bankruptcy Court
for the Southern District of Mississippi to extend by 30 days the
exclusive periods during which the Debtor may file a Chapter 11
plan from May 21, 2021, to June 19, 2021, and solicit acceptances
from July 20, 2021, to August 18, 2021.
The primary reason the Debtor filed for bankruptcy was due to
reduced cash flow resulting from tenants refusing to pay rent and
the Debtor not having any recourse due to the moratorium on
evictions from the Center for Disease Control.
The Debtor has spent the majority of the time since the Petition
Date attempting to reconcile which properties are or will generate
revenue so that it may formulate a plan of reorganization. Further,
the Debtor has entered into an agreement with Citizens Bank on its
Motion for Relief from Automatic Stay for Abandonment and for
Alternative Relief whereby the Debtor has agreed to make certain
repairs to Citizens Bank's collateral at 30, 60, and 90-day
intervals.
The Debtor will not be able to evaluate whether to sell or retain
that property until the repairs have at least begun. Therefore,
cause exists for an extension of the 120-day and 180-day
exclusivity periods and the deadline for the Debtor to file its
disclosure statement and plan according to the Agreed Scheduling
Order.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3wldPg7 from PacerMonitor.com.
About Crechale Properties
Crechale Properties, LLC, is primarily engaged in the operation of
apartment buildings.
Crechale Properties filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Miss. Case No.
21-50079) on January 21, 2021. Elizabeth Crechale, the manager,
signed the petition. At the time of filing, the Debtor estimated $1
million to $10 million in assets and $10 million to $50 million in
liabilities.
Judge Katharine M. Samson presides over the case. Lentz & Little,
PA, serves as the Debtor's legal counsel.
CUOCO STRUCTURAL: Seeks to Hire Charmoy & Charmoy as Legal Counsel
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Cuoco Structural Engineers, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Connecticut to employ Charmoy
& Charmoy, LLC as its legal counsel.
The firm's services include:
(a) advising the Debtor regarding its powers and duties in the
continued operation of its business;
(b) preparing legal papers; and
(c) other legal services that are necessary in connection with
the Debtor's Chapter 11 case.
The Debtor agreed to pay Charmoy & Charmoy a retainer of $28,500.
The hourly rates of the firm's attorneys and staff are as follows:
Scott Charmoy $395
Sheila Charmoy $550
Paralegal $125
Scott Charmoy, Esq., a member of Charmoy & Charmoy, disclosed in a
court filing that his firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Scott M. Charmoy, Esq.
Charmoy & Charmoy, LLC
1465 Post Road East, Suite 100
Westport, CT 06880
Telephone: (203) 255-8100
Email: scottcharmoy@charmoy.com
About Cuoco Structural Engineers
Cuoco Structural Engineers, LLC filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Conn.
Case No. 21-50305) on May 5, 2021, reporting up to $1 million in
both assets and liabilities. Nicolangelo Cuoco, sole member, signed
the petition. Judge Julie A. Manning oversees the case. The Debtor
tapped Charmoy & Charmoy, LLC as legal counsel and The Innovative
CPA Group, LLC as accountant.
CUOCO STRUCTURAL: Seeks to Tap Innovative CPA Group as Accountant
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Cuoco Structural Engineers, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Connecticut to employ The
Innovative CPA Group, LLC as accountant.
The firm's services include:
(a) preparing and completing the Debtor's regular and
customary yearly tax returns and annual audit for the fiscal year;
(b) assisting in the preparation of monthly operating reports
and any other financial statements;
(c) assisting the Debtor in the preparation of any plan of
reorganization; and
(d) consulting with the Debtor and its attorneys on
accounting, tax and financial matters and providing such other
professional services as may be required.
The hourly rates of Innovative CPA Group's professionals are as
follows:
Jim LeFebvre $300
Cyndi Poppa $190
Miguel Barreto $140
The firm will also seek reimbursement for expenses incurred.
Jim LeFebvre, an accountant and partner at Innovative CPA Group,
disclosed in a court filing that his firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Jim LeFebvre, CPA
Innovative CPA Group, LLC
35 Nutmeg Drive, Suite M275
Trumbull, CT 06611
Telephone: (203) 489-0612/(203) 797-1555
Email: Jim@innovativecpagroup.com
About Cuoco Structural Engineers
Cuoco Structural Engineers, LLC filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Conn.
Case No. 21-50305) on May 5, 2021, reporting up to $1 million in
both assets and liabilities. Nicolangelo Cuoco, sole member, signed
the petition. Judge Julie A. Manning oversees the case. The Debtor
tapped Charmoy & Charmoy, LLC as legal counsel and The Innovative
CPA Group, LLC as accountant.
DARMA LLC: Ameris Bank Seeks to Prohibit Use of Cash Collateral
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Ameris Bank asked the U.S. Bankruptcy Court for the Middle District
of Georgia to prohibit Darma, LLC from using cash collateral.
Ameris asserted that, as of the Petition Date, it holds a claim
against the Debtor for $1,060,232 arising from pre-petition debts,
consisting of:
* a secured claim for $923,059 ($859,106 in principal; $57,740
in accrued interest; $5,095 in late fees and $1,119 in actual
attorney's fees incurred through March 31, 2021); and
* an unsecured claim for $137,173.
Ameris said interest continues to accrue on the outstanding
principal at the rate of $382 per diem, and the secured claim
continues to increase for the reasonable attorney's fees Ameris
incurs.
Ameris' claim is secured by (i) a Deed to Secured Debt, which
granted Ameris an interest in the Debtor's three properties in
Albany, Georgia, along with the rents and revenues generated
therefrom, and (ii) an Assignment of Leases and Rents, assigning
and transferring to Ameris an interest in all existing and future
leases, and all rents, issues and profits generated by the
Properties.
Ameris asserts that, pursuant to Section 363(a) of the Bankruptcy
Code, all rents, issues and profits received from the properties
constitute Ameris' cash collateral, which the Debtor may not use
without providing Ameris with adequate protection of its security
interest.
A copy of the motion is available for free at
https://bit.ly/33XeF6D from PacerMonitor.com.
Hearing on the motion is set for June 29, 2021 at 10 a.m.
Ameris Bank is represented by:
David A. Garland, Esq.
STEPHAN A. RAY, Esq.
MOORE, CLARKE, DuVALL & RODGERS, P.C.
Post Office Drawer 71727
Albany, GA 31708-1727
Telephone: 229-888-3338
Facsimile: 229-888-1191
Email: dgarland@mcdr-law.com
sray@mcdr-law.com
About Darma LLC
Darma, LLC filed a Chapter 11 petition (Bankr. M.D. Ga. Case No.
21-10254) in the United States Bankruptcy Court for the Middle
District of Georgia on May 3, 2021.
In the petition signed by John D. Hawkins, president, the Debtor
estimated assets between $1 million and $10 million, and
liabilities between $500,000 and $1 million. BOYER TERRY LLC is
the Debtors attorney.
Robert M. Matson is appointed as the Debtors Subchapter V Trustee.
DEA BROTHERS: Seeks to Pay 1st Lien Creditor, Continue Cash Access
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DEA Brothers Sisters, LLC asked the Bankruptcy Court to authorize
the continued use of cash collateral generated from its commercial
shopping center property located at 16502 S. Main St., Carson,
California, and to proceed with monthly payments for $5,125 to its
first lien creditor, Alejandro Hernandez, effective June 1, 2021.
The Debtor has made payments to Mr. Hernandez for April 2021 and
May 2021 at $4,056 monthly, which amount was established by a
tentative Court ruling -- computed based on the Debtor's estimated
gross monthly income at $10,400 less monthly expenses of $6,342.
The Debtor's valuation of the Carson property at $1.35 million, on
which Mr. Hernandez has lien, would support a monthly adequate
protection payment only to the first lien creditor as the balance
on the Debtor's loan to Mr. Hernandez is $1.745 million. This
valuation was based on the testimony of the Debtor's managing
member. Thereafter, the Debtor employed Mr. Roger Douglass, a
California Certified Real Estate Appraiser, to appraise the Carson
property, and his valuation established the property's fair market
value at $1.3 million.
Pursuant to Section 362(d)(3) of the Bankruptcy Code, the Debtor is
required to file an original Chapter 11 Plan and Disclosure
Statement or, in the alternative, commence making monthly payments
on the Carson property's secured interest at the contractual,
non-default rate of interest. The Debtor shall opt to make a
regular monthly payment to Mr. Hernandez based on the $1.3 million
fair market valuation and the contractual, non-default rate of
2.5%, or $5,125 monthly, on a pre-confirmation basis. The Debtor
also disclosed that it does not have sufficient information yet to
file an original Chapter 11 Plan and Disclosure Statement.
The Debtor further asked the Court to declare that it is not
legally obligated to make any monthly payments, prior to execution
of a confirmed Chapter 11 Plan, for:
* the bifurcated portion of the first lien loan, estimated at
$445,000;
* the Federal Tax Lien, at second position, estimated at
$288,981;
* the State Tax Lien at third position, estimated at $10,882;
and
* the property's purchase second loan in favor of Creditor A&G
Interprises, at fourth position, estimated at $275,000.
There is no equity to support the liens of other "secured
interests" pursuant to Section 362(d)(3)(B)(2) of the Bankruptcy
Code, the Debtor said.
A copy of the motion is available for free at
https://bit.ly/340auac from PacerMonitor.com.
Hearing on the motion will be on June 10, 2021 at 10:30 a.m., at
Courtroom 5A, 411 W Fourth St., Santa Ana, California.
About DEA Brothers Sisters
DEA Brothers Sisters, LLC is a Laguna Hills, Calif.-based company
that owns a strip shopping center located at 16502 S. Main St.,
Carson, Calif.
DEA Brothers Sisters sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Calif. Case No. 21-10608) on March 10,
2021. In the petition signed by Enayat Ali Jiwani, the sole
managing member, the Debtor disclosed between $1 million and $10
million in both assets and liabilities. Judge Erithe A. Smith
oversees the case. Financial Relief Legal Advocates, Inc. and
Osborn Plasse serve as the Debtor's legal counsel.
DELEK LOGISTICS: Fitch Assigns FirstTime 'BB-' LT IDR, Outlook Neg.
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Fitch Ratings has assigned a Long-Term Issuer Default Rating (IDR)
of 'BB-' to Delek Logistics Partners, LP (DKL), and a 'BB-'/'RR4'
(recovery of 31%-50%) rating to the proposed senior unsecured
notes. The notes are co-issued by Delek Logistics Finance Corp.
Fitch has reviewed preliminary documentation for the notes
offering; the assigned ratings assume there will be no material
variation from the draft provided.
The Rating Outlook is Negative.
The ratings reflect DKL's modest leverage, fairly stable cash flows
backed by some minimum volume commitments (MVC) from its sponsor,
and primary counterparty, Delek US Holdings, Inc (Delek Holdings;
NR) and its limited size and scale.
The Negative Outlook reflects the risk that the refining sector
demand profile may be challenged for an extended period of time. A
prolonged economic recovery or contraction may affect cash flows,
impairing Delek Holdings' financial profile and its ability to
support DKL. The Outlook may be revised to Stable if conditions
normalize, barring any material decline in Delek Holdings'
liquidity profile.
KEY RATING DRIVERS
Counterparty Exposure/Concentration Risk: DKL derives approximately
66%-68% of its revenues and roughly 89% of the contribution margins
(for 2020) directly or indirectly from its parent and sponsor,
Delek Holdings. Fitch expects Delek Holdings will remain the
partnership's largest customer in the near to intermediate term, as
DKL provides Delek Holdings with critical logistics assets that are
integrated with the sponsor's refining operations. Fitch typically
views midstream service providers like DKL with significant
single-counterparty concentration as having exposure to outsized
event risk, should there be business, operational or financial
issues at Delek Holdings whereby throughput volumes at DKL
facilities will be significantly reduced, adversely impacting cash
flows and distributions. Delek Holdings is under no contractual
obligation to supply additional volume beyond MVCs. In the absence
of expansion of the asset portfolio to service more third-party
customers, volume growth is dependent on Delek Holdings, and could
limit future growth of the partnership.
Modest Size and Scale: The partnership's assets and operations are
entirely focused in the Petroleum Administration for Defense
Districts 3 (PADD 3). Fitch views midstream service providers with
single-basin operational concentration and EBITDA at or around $300
million as having exposure to risks should there be any material
event or slowdown in the region's refining markets.
Cash Flow Assurances: The partnership's operations are underpinned
by long-term contracts with some minimum quarterly volume, revenue
or throughput commitments from Delek Holdings. The services are
provided at fixed fee (subject to changes in inflation-based
indices). These contracts limit DKL's commodity price sensitivity
and provide some volumetric downside protection. DKL, however, is
exposed to some volatility in commodity and refined products prices
where it takes ownership of the products, representing nearly 5% of
2020 EBITDA, but is limited primarily to the West Texas wholesale
marketing and terminalling segment of the business and is largely
hedged at all times.
Modest Leverage Provides Flexibility: DKL has low leverage and good
interest coverage relative to midstream peers. Fitch expects YE2021
leverage in the range of 3.4x-3.6x before trending down to
approximately 3.3X at YE2022, barring unforeseen events such as
increases in spending or acquisitions. Fitch believes leverage is
critical to DKL's credit profile due to the partnership's
concentrated customer exposure and presence in single geographic
region.
Corporate Family Relations: DKL is operationally and strategically
integral to Delek Holdings, as DKL provides the refinery with
critical midstream infrastructure. Delek Holdings holds 100% of the
general partner's and 80% of the limited partnership's interest in
DKL. As part of Delek Holdings strategy to grow the midstream
business, DKL's growth has been supported with drop down
transactions since inception. DKL has the right of first offer to
purchase certain logistics assets owned by Delek Holdings, should
the sponsor sell or transfer any asset. Given that Delek Holdings
directly benefits from the sustainable growth of DKL through its
ownership, Fitch believes that Delek Holdings will continue to
support DKL, although expects the sponsor to partially sell down a
portion of its stake in DKL in line with its stated intention to
evaluate monetization of the ownership.
Parent Subsidiary Linkage: The ratings recognize the support from
Delek Holdings. DKL is, however, rated on a standalone basis. Fitch
considers Delek Holdings to be stronger than DKL under Fitch's
Parent and Subsidiary Linkage criteria. DKL is consolidated into
Delek Holdings' consolidated financial statements and Delek
Holdings owns 80% of the limited partnership and also the
non-economic general partner that controls the master limited
partnership (MLP).
Legal ties are deemed to be weak since there are no guarantees from
Delek Holdings on DKL's debt, DKL's financing is separate and there
are no cross defaults between the two entities. Operational and
strategic ties are strong. The two entities also have shared
leadership with the senior management presiding over both Delek
Holdings and DKL, indicating common control and management.
Overall, Fitch views the linkage between the stronger parent and
weaker subsidiary as moderate.
Potential Conflict of Interest: DKL's parent company, Delek
Holdings, which owns and controls the general partner of the
partnership is required to act in good faith, but is not held to
the same level of fiduciary laws were DKL to be organized as a
standard C-Corp. As such, Delek Holdings plays an important role in
a wide variety of actions at DKL, which may have a bearing on the
credit quality of DKL, whether positive, negative or neutral.
ESG Relevance Factors: DKL has an Environmental, Social and
Governance (ESG) Relevance Score of '4' for Group Structure and
Governance as the issuer operates under a somewhat complex group
structure as a master limited partnership (MLP) where the general
partner is owned by Delek Holdings. This has a negative impact on
the credit profile and is relevant to the rating in conjunction
with other factors. The group structure score also reflects its
related party transactions with Delek Holdings.
DERIVATION SUMMARY
DKL's rating reflects support from long-term, fee-based contracts
that provide some protection through minimum volume and/or revenue
commitments. This is offset in part by DKL's limited size and
scale. The partnership's assets are integrated with the refinery
assets of Delek Holdings, which are focused entirely in PADD 3.
Fitch believes that the heavy dependence on Delek Holdings could
present significant event risk should there be an operating or
financial issue at the sponsor.
DKL's leverage is strong for its rating category. Fitch expects
DKL's leverage to be between 3.4x-3.6x at YE 2021, trending lower
in outer years. Scale and the significant exposure to Delek
Holdings are limiting factors to DKL's ratings.
DKL is rated below Holly Energy Partners L.P (HEP; BB+/Negative).
Like DKL, HEP's rating is supported by stable cash flows that are
largely MVCs from its investment-grade rated sponsor and largest
counterparty, Holly Frontier Corporation (HFC; BBB-/ Negative).
Fitch expects HEP's leverage to be in the range of 3.6x-4.0x at YE
2021. While DKL's leverage is lower than HEP, its rating is offset
by its smaller scale and weaker counterparty.
DKL is rated one notch higher than PBF Logistics LP (PBFX; B+/
Negative). PBFX is geographically more diversified than DKL and its
cash flows are also supported by MVCs from its affiliate PBF
Holding Company LLC (PBF; B+/Negative). Fitch expects YE 2021
leverage for PBFX to be between 3.2x-3.5x. While leverage metrics
of PBFX are similar to that of DKL, PBFX's rating is limited by
that of its primary counterparty, PBF Holding Company LLC.
KEY ASSUMPTIONS
-- Fitch price deck for West Texas Intermediate (WTI) oil price
of $55/bbl in 2021 and $50 thereafter;
-- Capacity utilization at Delek Holdings refineries trend toward
historical averages over forecast period;
-- Capex and distributions for 2021 in line with management
guidance;
-- Successful completion of the proposed $400 million of notes
offering;
-- Refinancing of 2023 revolving credit facilities with similar
terms;
-- No asset sales, drop downs from sponsor or equity issuance
assumed.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Increase in size and scale, indicated by EBITDA (Fitch
defined) above $300 million, in so far as any drop downs from
Delek Holdings are done in a pattern similar to that in the
past, while maintaining leverage (total debt with equity
credit/ operating EBITDA) at or below 3.0x and Distribution
Coverage above 1.0x on a sustained basis;
-- Favorable credit improvement from its largest counterparty;
-- As and when DKL demonstrates a move toward further insulation
from its reliance on Delek Holdings, such that third-party
contribution margin is at least 30% of total contribution
margin with credit metrics remaining within sensitivities,
Fitch may consider taking positive rating action.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Expected leverage (total debt with equity credit/operating
EBITDA) above 4.0X and/or Distribution Coverage below 1.0x on
a sustained basis;
-- Increase in capital spending beyond Fitch's expectation that
have negative consequences for credit profile (eg. if not
funded with a balance of debt and equity);
-- Material change to contractual arrangement or operating
practices with Delek Holdings that negatively affects DKL's
cash flow or earnings profile;
-- Meaningful deterioration in customer quality or an event that
has material negative effect on Delek Holdings credit profile
or operations, so long as Delek Holdings remains its
significant counterparty;
-- Reduced liquidity at DKL and/ or inability to refinance the
secured revolver due 2023 proactively.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Profile Improves with Proposed Issuance: DKL's liquidity
is somewhat limited in the near term. As of March 31, 2021, DKL had
approximately $126 million in available liquidity. Cash on the
balance sheet was $13.4 million. The partnership had $113 million
available under the $850 million senior secured revolver which
matures in September of 2023. DKL has the ability to increase the
credit facility to $1.0 billion subject to lenders consent. The
credit facility includes restrictions on total leverage, senior
leverage, and interest coverage which must remain below 5.25x
(5.50x for certain acquisitions), 3.75x (4.0x for certain
acquisitions), and above 2.0x, respectively. As of March 31, 2021,
DKL was in compliance with its covenants and Fitch expects them to
remain in compliance with their covenants through 2024, the
forecast period.
DKL also has $250 million in outstanding senior unsecured notes
maturing on May 15, 2025, which are co-issued by Delek Logistics
Finance Corp. The notes are guaranteed on a senior unsecured basis
by all subsidiaries of DKL. The proposed $400 million senior
unsecured notes are expected to be issued with substantially the
same terms as the existing notes. Proceeds from the issuance are
expected to be used to pay down some of the outstanding balance on
the revolver. The issuance is expected to improve liquidity. Growth
projects, such as drop downs, are the primary driver of external
funding needs.
DKL is a master limited partnership formed by Delek Holdings that
owns and operates logistics and marketing assets for crude oil,
intermediate and refined products primarily in support of the Delek
Holdings refineries in Texas, Tennessee and Arkansas.
ESG CONSIDERATIONS
Delek Logistics Partners, LP has an ESG Relevance Score of '4' for
Group Structure due to somewhat complex group structure where the
general partner is owned by Delek Holdings and there are related
party transactions, which has a negative impact on the credit
profile, and is relevant to the rating[s] in conjunction with other
factors.
Delek Logistics Partners, LP has an ESG Relevance Score of '4' for
Governance Structure due to ownership concentration, which has a
negative impact on the credit profile, and is relevant to the
rating[s] in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
DELEK LOGISTICS: S&P Assigns 'BB-' Rating on $400MM Unsecured Notes
-------------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level rating to master
limited partnership (MLP) Delek Logistics Partners L.P.'s $400
million offering of senior unsecured notes due 2028. The
partnership intends to use the net proceeds from the offering to
repay a portion of the outstanding borrowings under its revolving
credit facility. The recovery rating is '4', indicating its
expectation for average (30%-50%; rounded estimate: 40%) recovery
in the event of a payment default.
Delek Logistics Partners L.P. is an MLP that owns and operates
crude oil, intermediate and refined products pipelines and
transportation, storage, wholesale marketing, terminaling, and
offloading assets that were previously owned, operated, or held by
its parent, Delek US Holdings Inc., or acquired from unrelated
third parties.
Ratings List
NEW RATING
Delek Logistics Partners, LP
Delek Logistics Finance Corp.
Senior Unsecured
US$400 mil sr nts due 2028 BB-
Recovery Rating 4(40%)
DELUXE CORP: S&P Assigns 'B+' Issuer Credit Rating, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level and '6' recovery
ratings to Minnesota-based check printing and technology-enabled
solutions provider Deluxe Corp.'s proposed unsecured notes.
S&P said, "Our issuer credit rating on Deluxe reflects its
participation in the check printing business, which is experiencing
secular declines, and its noncheck-printing segments having
relatively small scale and competing against larger players in
competitive and fragmented industries. These challenges are
somewhat offset by good market share and solid 50% area EBITDA
margins in the check printing business, healthy cash flow
generation for the rating despite relatively high leverage pro
forma for the acquisition, which should allow the company to pay
down debt and reduce leverage below 5x over the next 12 months. We
view the proposed acquisition of merchant-acquirer FAPS as
favorable for the company's business profile as it reduces the
company's reliance on its check printing business and increases
cross-selling opportunities with its other businesses.
Nevertheless, FAPS' reliance on independent sales organizations for
sales makes it somewhat vulnerable to client churn and the
acquisition also exposes Deluxe to integration risks.
"Pricing and competitive gains should allow Deluxe to partially
offset commercial check issuance volume declines over the next
12-24 months. Pro forma for the FAPS acquisition, we expect the
Deluxe's Check business to contribute roughly 34% and 58% of the
company's revenue and EBITDA, respectively. We expect revenues from
the Check business to decline at a roughly 3%-5% rate on a run-rate
basis as alternative forms of payments continue to reduce check
volumes. Despite secular declines in the use of checks for
commerce, we expect Deluxe to use a combination of price increases,
technology-based customization, and market share gains to moderate
revenue declines, allowing it to maintain its EBITDA margins in the
high-40% area over the next 12-24 months. The company has exhibited
a good record of share gains with sizable new bank customer wins
over the last 12 months despite contraction in the economy and
check issuance resulting from the pandemic in 2020. Further, we
expect the company to continue to leverage cash flows generated
from the Checks segment to support growth investments in other
segments."
The FAPS acquisition increases the size of the Payments business
and creates opportunities for cross-selling, although it provides
limited cost efficiencies. Deluxe's payments business has been
growing in the 10%-15% area since 2019, driven by offerings that
include treasury management solutions, payroll, and disbursements
to enterprises and small and midsize businesses (SMBs). Meanwhile,
FAPS is a payment processor that serves SMB merchants in the U.S.
and its operating performance is largely tied to consumer spending
growth and continued conversion of cash-based transactions to
electronic-based transactions. The FAPS acquisition expands the
Payments business and diversifies the company's business mix away
from Checks, although Deluxe does not currently operate as a
payment processor, and would rely on organic growth at FAPS and
cross-selling of its various products to its client base to grow
revenues following the acquisition. Further, the acquisition
provides limited opportunity to cut redundant costs.
Notwithstanding, the company's One Deluxe go-to-market
strategy--which relies on its sales people to market its entire
portfolio of offerings to its customers, including roughly 4,000
financial institutions, core SMB base of nearly 4 million
customers, as well as approximately 140,000 FAPS
merchants--provides cross-selling opportunities and should support
longer-term revenue growth.
Deluxe participates in the highly competitive Promotional Solutions
and Cloud Solutions businesses. S&P views the marketing services
and Cloud Solutions industries as highly fragmented and competitive
because of limited barriers to entry. Deluxe's Promotional
Solutions business competes against commercial printers that offer
a broad variety of products at a larger scale. On the other hand,
the company's Cloud Solutions business competes against large data
providers and internet website hosting providers that have larger
scale with more advanced proprietary technologies. Furthermore, the
data-driven marketing solutions business has a pay-for-performance
business model, where the company assumes the responsibility to
attract and deliver high-quality leads to its clients that
ultimately convert into sales. Inability to deliver the required
leads to its clients may cause earnings volatility as clients would
typically look to revise pricing lower if performance is below
expectations. In addition, Deluxe's client base of SMBs are more
prone to business failures and merchant displacement by
competitors. These risks are somewhat offset by Deluxe's focus on
increasing customer wallet share by cross-selling products and
services to increase customer retention. Recent business wins such
as delivering integrated data-driven marketing with managed
marketing print and other related services to PNC Bank demonstrate
the early successes of this strategy.
S&P said, "We expect the company to prioritize debt repayment over
the next 12-24 months. Pro forma for the acquisition, Deluxe's
leverage will increase to 5.8x as of March 31, 2021. We expect its
leverage will decline to the mid-5x area by the end of 2021 and to
the mid-4x by year-end 2022 due, in part, to debt repayment until
the company reaches its publicly stated goal of 3x
management-adjusted leverage, which approximates 4x S&P Global
Ratings adjusted leverage. We expect EBITDA margin improvement in
fiscal 2021 as compared to fiscal 2020 to be driven primarily by
lower one-time restructuring expenses including consulting fees,
facility closures, software implementation, and restructuring
actions to right-size its cost base in response to the
COVID-19-driven recession. Further, we expect EBITDA growth from
the company's payments and promotional solutions businesses to
offset the declines in EBITDA from its Checks business. We expect
Deluxe to generate healthy discretionary cash flows (DCF) after
dividend payments for the rating, exceeding $100 million over the
next 12 months, which translates into DCF/debt ratio in the 6%-8%
range.
"The stable outlook reflects our view that the company will exhibit
steady operating performance, with growth in its payment processing
and other businesses offsetting declines in the company's check
printing business, and improving EBITDA margins as one-time and
restructuring costs moderate, causing its S&P Global Ratings
adjusted leverage to decline below the 5x area over the next 12
months."
S&P could lower its rating on Deluxe over the next 12 months if the
company sustains elevated leverage above 5x. This could occur if:
-- The company is unable to successfully integrate the acquisition
of FAPS, resulting in cost overruns or margin dilution; or
-- The combined company's organic growth and profitability fall
short of our expectations, likely due to increased competition and
increase in the rate of decline in the check printing business.
An upgrade is unlikely over the next 12 months. For an upgrade, S&P
would look for Deluxe to lower and sustain leverage below 4x.
Sustained overall revenue growth, including successful integration
of FAPS, improving EBITDA margins and reduced exposure to secular
declines in the check printing business would improve the company's
business position and further support an upgrade.
DENTALCORP HEALTH: Moody's Puts B3 CFR Under Review for Upgrade
---------------------------------------------------------------
Moody's Investors Service placed Dentalcorp Health Services ULC's
B3 corporate family rating, B3-PD probability of default rating, B2
senior secured rating on its first lien facilities and Caa2 senior
secured rating on its second lien facilities under review for
upgrade. The rating action follows dentalcorp Holdings Ltd.'s
announcement that is has filed for a proposed partial initial
public offering (IPO) of subordinate voting shares, which are
expected to total around $700 million. Proceeds, together with
around $150 million in a private placement and a new $900 million
term loan, will be used to repay dentalcorp's outstanding debt.
On Review for Upgrade:
Issuer: Dentalcorp Health Services ULC
Corporate Family Rating, Placed on Review for Upgrade, currently
B3
Probability of Default Rating, Placed on Review for Upgrade,
currently B3-PD
Senior Secured First Lien Term Loan, Placed on Review for Upgrade,
currently B2 (LGD3)
Senior Secured First Lien Delayed Draw Term Loan, Placed on Review
for Upgrade, currently B2 (LGD3)
Senior Secured First Lien Revolving Credit Facility, Placed on
Review for Upgrade, currently B2 (LGD3)
Senior Secured Second Lien Term Loan, Placed on Review for
Upgrade, currently Caa2 (LGD5)
Senior Secured Second Lien Delayed Draw Term Loan, Placed on
Review for Upgrade, currently Caa2 (LGD5)
Outlook Actions:
Issuer: Dentalcorp Health Services ULC
Outlook, Changed To Rating Under Review From Negative
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The credit positive announcement will lead to a meaningful
reduction in debt. The rating review will focus on dentalcorp's
leverage and capital structure following the transaction, financial
policies as a public company and the pace of the company's
acquisition strategy. Governance risks will be influenced by
factors such as retention of majority ownership and control of the
company by private equity sponsors, a lower financial leverage
profile and the evolution of dentalcorp's acquisition strategy.
Dentalcorp is a Toronto-based dental support organization (DSO)
which owns over 430 practices in Canada as of May 2021. Moody's
estimate dentalcorp's pro-forma annualized revenue was over C$1
billion for the twelve months ended December 2020.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
DETROIT WORLD: Bidding Procedures for Sale of Assets Withdrawn
--------------------------------------------------------------
Judge Mark A. Randon of the U.S. Bankruptcy Court for the Eastern
District of Michigan, Southern Division, issued an order
withdrawing Detroit World Outreach Church's proposed bidding
procedures in connection with the sale to Telegraph Properties,
LLC, for $500,000, subject to overbid, of the following real
property and related assets:
a. A portion of a parcel of land bearing tax parcel
identification number 79-049-99-001-000, located in the city of
Redford, Wayne County, including the building commonly known as
9562 Telegraph Road, Redford, MI 48239.
b. All rights, titles, and interests, if any, held by Debtor
in all improvements on, above, and below the land, if any.
The Debtor received a Purchase Agreement from the Stalking Horse to
purchase the Assets for $500,000. It intended for the Telegraph
Purchase Agreement to serve as the Stalking Horse Bid throughout
the proposed sale process.
The Debtor's Sale Motion is withdrawn without prejudice and the
hearing regarding the Debtor's Sale Motion set for May 17, 2021, at
2:00 p.m. is cancelled.
About Detroit World Outreach Church
Detroit World Outreach Church is a religious organization that
operates a Christian church. It sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. E.D. Mich. Case No. 21-40850)
on January 31, 2021. In the petition signed by Bishop CJ Andre,
president, the Debtor disclosed up to $10 million in both assets
and liabilities.
Judge Mark A. Randon oversees the case.
Kimberly Redd, Esq. at GREAT LAKES LEGAL GROUP PLLC is the
Debtor's
legal counsel.
DIAMOND HOLDING: Wins Cash Collateral Access Thru June 8
--------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of New York has
authorized Diamond Holding LLC to use cash collateral on an interim
basis and provide adequate protection through June 8, 2021.
The Debtor is directed to provide to Investors Bank, the Lender, a
budget for each month after June 2021 no later than one week prior
to the end of the preceding month. The Debtor's failure to provide
the Lender with a budget by this deadline and to obtain Lender's
consent to the budget prior to the end of the month preceding the
budgeted month will each constitute a Termination Event.
The Debtor is authorized to use the Lender's Cash Collateral only
for operating expenses provided for in the Budget approved by
Lender, pending a final hearing. Inclusion of professional fees
within any budget will not excuse any professional person from the
requirements set forth in Bankruptcy Code sections 327 through 331,
or imply the Lender's consent to the allowance of any such
professional fees or prejudice Lender's right to object to any
interim or final fee application.
A further hearing on the Cash Collateral Motion is set for June 8
at 3:00 p.m.
A copy of the order is available for free at https://bit.ly/3fpTZcG
from PacerMonitor.com.
About Diamond Holding, LLC
Diamond Holding, LLC is a single asset real estate rental company
with its principal place of business at 255-257 Evergreen Avenue,
Brooklyn, NY 11221. It sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. E.D. N.Y. Case No. 20-44219) on
December 9, 2020. In the petition signed by Martin Perl, member,
the Debtor disclosed up to $1 million in asset and up to $10
million in liabilities.
Judge Nancy Hershey Lord oversees the case.
Morris Fateha, Esq. is the Debtor's counsel.
DIAMOND SPORTS: Sinclair Commences Formal Debt Creditor Talks
-------------------------------------------------------------
Allison McNeely and Katherine Doherty of Bloomberg News report that
creditors to Sinclair Broadcast Group Inc.'s troubled sports
networks are signing non-disclosure agreements to prepare for
negotiations on easing the unit's $8 billion debt load, according
to people with knowledge of the matter.
The unit, Diamond Sports Group LLC, has invited creditors holding
its secured and unsecured debt to begin formal talks, during which
they would get private financial information and be restricted from
trading securities, said the people, who asked not to be identified
discussing confidential matters.
The negotiations follow proposals submitted by both groups in
recent months on how Diamond Sports could address its debt.
About Diamond Sports
Headquartered in Hunt Valley, Maryland, Diamond Sports Group, LLC,
was formed on March 11, 2019, and is the entity through which
Sinclair Broadcast Group, Inc., executed the acquisition of the
RSNs. Diamond owns and operates 22 RSNs that broadcast NBA, NHL
and MLB games on pay-TV platforms.
About Sinclair Broadcast Group
Sinclair Broadcast Group (NASDAQ: SBGI) is a diversified media
company and leading provider of local sports and news. The Company
owns and/or operates 23 regional sports network brands; owns,
operates and/or provides services to 191 television stations in 89
markets; is a leading local news provider in the country; owns
multiple national networks; and has TV stations affiliated with all
the major broadcast networks. Sinclair's content is delivered via
multiple platforms, including over-the-air, multi-channel video
program distributors, and digital platforms. On the Web:
http://www.sbgi.net/
DIOCESE OF WINONA-ROCHESTER: Unsecureds to Get 100% w/o Interest
----------------------------------------------------------------
The Diocese of Winona-Rochester and its Official Committee of
Unsecured Creditors submitted a First Amended Joint Chapter 11 Plan
of Reorganization and a corresponding Disclosure Statement..
The Plan is based on two settlements. One settlement is among the
Diocese, the Catholic Entities, and certain Settling Insurers and
amounts to $6,500,000. This settlement is evidenced by the
LMI/Interstate Settlement Agreement, which is subject to Bankruptcy
Court approval. In general terms, the LMI/Interstate Settlement
Agreement provides for (a) the buy back by certain Underwriters at
Lloyd's, London, and certain London Market Companies (as defined in
the LMI/Interstate Settlement Agreement) (collectively, "LMI") and
Interstate Fire & Casualty Company ("Interstate" and together with
LMI, "LMI/Interstate") of their policies from the Catholic Entities
and (b) injunctions which prohibit, among others, Tort Claimants
from suing LMI/Interstate. LMI/Interstate constitute "Settling
Insurers" under the Plan.
The second settlement is among the Diocese, certain Catholic
Entities, and the Committee and amounts to $13,560,000 (minus (i)
amounts paid by the Debtor for certain administrative expenses paid
after February 29, 2020 and (ii) counseling expenses for Tort
Claimants paid by the Debtor) to be paid within five days after the
Effective Date of the Plan (which payment shall constitute
substantial consummation of the Plan), plus an additional
$7,552,500 to be paid as soon as practical but in no event more
than 12 months after the Effective Date. $112,500 of the $7,552,500
payment will be contributed by the following Catholic Entities:
Lourdes High School of Rochester, Inc. a/k/a Lourdes Catholic High
School and Rochester Catholic Schools. All of the settlement
amounts will be payable to the Trust set up through the Plan and
Disclosure Statement process. The funds will be allocated pursuant
to the Trust Distribution Protocols.
The cash required to fund the Trust that will pay holders of Class
3 and 4B Claims, will come from (i) $13,560,000 of cash from the
Debtor (minus (A) amounts paid by the Debtor for certain
administrative expenses paid after February 29, 2020 and (B)
counseling expenses for Tort Claimants paid by the Debtor) to be
paid within five days after the Effective Date of the Plan (which
payment shall constitute substantial consummation of the Plan),
plus an additional $7,552,500 of cash from the Debtor and certain
Catholic Entities to be paid within 12 months after the Effective
Date, (ii) $6,500,000.00 of cash from LMI/Interstate, and (iii) the
Transferred Insurance Interests. The Debtor currently has
sufficient funds on hand to make the initial cash payment required
of it by the Plan, and the Plan provides the Debtor up to 12 months
to make the second cash payment of $7,552,500, which the Debtor
believes is sufficient time to raise such
funds via the sale or financing of certain assets and contributions
from certain non-Diocesan entity resources.
The Plan will treat claims as follows:
* Tort claims other than impaired unknown tort claims (Class
3). Class 3 Claims will be paid in accordance with the provisions
of the Trust and Trust Distribution Plan. Trust 3 is impaired.
* Impaired unknown tort claims (Class 4B). The Trust will make
distributions to the Class 4B Claimants, as provided by the Plan,
the Trust Agreement, and the Trust Distribution Plan, which will
represent the sole recovery available to Class 4B Claimants in
respect to any obligation owed by the Settling Insurers. Class 4B
is impaired. Class 4B is impaired.
* General Unsecured Claims (CLASS 5). Each holder of a Class 5
Claim will receive, directly from the Reorganized Debtor, payment
in full of such allowed Class 5 Claim, without interest, on the
Effective Date. Class 5 is impaired.
Attorneys for the Debtor:
Thomas R. Braun
Christopher W. Coon
RESTOVICH BRAUN & ASSOCIATES
117 East Center Street Rochester, MN 55904
Tel: (507) 216-8652
E-mail: thomas@restovichlaw.com
christopher@restovichlaw.com
Robert J. Diehl, Jr.
Brian R. Trumbauer
Jaimee L. Witten
BODMAN PLC
6th Floor at Ford Field 1901 St. Antoine Street
Detroit, Michigan 48226
Tel: (313) 259-7777
E-mail: rdiehl@bodmanlaw.com
btrumbauer@bodmanlaw.com
jwitten@bodmanlaw.com
Attorneys for the Creditors' Committee:
Robert T. Kugler
Edwin H. Caldie
Andrew J. Glasnovich
STINSON, LLP
50 South Sixth Street, Suite 2600
Minneapolis, MN 55402
Telephone: 612-335-1500
Facsimile: 612-335-1657
E-mail: robert.kugler@stinson.com
ed.caldie@stinson.com
drew.glasnovich@stinson.com
A copy of the Joint Disclosure Statement is available at
https://bit.ly/3f2Ih8R from PacerMonitor.com.
About Diocese of Winona-Rochester
The Diocese of Winona-Rochester was established on Nov. 26, 1889
when Pope Leo XIII issued the apostolic constitution which erected
the diocese, and set its geographical boundaries. The Diocese
encompasses the 20 southernmost counties of the state of Minnesota
and measures 12,282 square miles. The Diocese is home to 107
parishes, four high schools, 30 junior high, elementary or
preschools, and Immaculate Heart of Mary Seminary in Winona. The
Diocese of Winona-Rochester is headquartered at the Diocesan
Pastoral Center in Winona, Minnesota.
The Diocese of Winona-Rochester sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. D. Minn. Case No. 18-33707) on
Nov. 30, 2018. In the petition signed by Reverend Monsignor Thomas
P. Melvin, vicar general, the Debtor estimated $10 million to $50
million in assets and $1 million to $10 million in liabilities as
of the bankruptcy filing.
The case is assigned to Judge Robert J. Kressel.
Bodman PLC is the Debtor's bankruptcy counsel. Restovich Braun &
Associates, led by Christopher W. Coon, is the local counsel.
Burns Bowen Bair LLP is special insurance litigation counsel.
Alliance Management, LLC, is the financial consultant.
The U.S. Trustee for Region 12 on Dec. 19, 2018, appointed five
creditors to serve on the official committee of unsecured creditors
in the Chapter 11 case of Diocese of Winona-Rochester. The
Official Committee of Unsecured Creditors retained Stinson Leonard
Street LLP as its bankruptcy counsel.
DIRECT DIESEL: Lisa Holder Named Subchapter V Trustee
-----------------------------------------------------
Tracy Hope Davis, U.S. Trustee for Region 17, appointed Lisa Holder
as Subchapter V Trustee for Direct Diesel, Inc.
Pending appointment, Ms. Holder will be compensated at $300 per
hour for her service as Subchapter V Trustee, in addition to
reimbursement for related expenses incurred. Ms. Holder declared
that she is a disinterested person according to Section 101(14) of
the Bankruptcy Code.
Proposed Subchapter V Trustee:
Lisa Holder
3710 Earnhardt Drive
Bakersfield, CA 93306
Telephone: (661) 205-2385
Email: lholder@lnhpc.com
About Direct Diesel
Direct Diesel, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Calif. Case No. 21-20431) on Feb. 5,
2021. Direct Diesel President Andrew P. Kolonay signed the
petition.
At the time of filing, the Debtor had estimated assets of between
$100,000 and $500,000 and liabilities of between $1 million and $10
million.
On May 17, 2021, the Debtor refiled a Chapter 11 petition under
Subchapter V of the Bankruptcy Code (Bankr. E.D. Calif. Case No.
21-21811) after its case was closed on April 29, 2021.
Judge Christopher D. Jaime oversees the case.
Farsad Law Office, P.C. is the Debtor's legal counsel.
DISCOVERY CHARTER: S&P Assigns 'BB+' Debt Rating
-------------------------------------------------
S&P Global Ratings revised the outlook on its 'BB+' rating on
Philadelphia Authority for Industrial Development's project revenue
debt, issued for Discovery Charter School, Pa., to stable from
negative.
"The outlook revision to stable reflects our expectation of
continued stable financial metrics, with sustained margins expected
in fiscal 2021," said S&P Global Ratings credit analyst Beatriz
Peguero. S&P said, "We expect maximum annual debt service (MADS)
coverage to be sufficient for the rating, due in part to a
significant influx of Coronavirus Aid, Relief, and Economic
Security (CARES) Act funding expected to be received in fiscal 2021
and beyond. We expect Discovery's student enrollment and overall
healthy demand profile to remain constant, providing credit
stability."
Given the commonwealth's history of volatile funding, especially
during times of economic downturns, S&P believes the elevated
social risk related to health and safety and COVID-19 may have a
direct impact on the school. S&P has analyzed the school's
governance and environmental factors and believe them to be in line
with the sector.
S&P said, "We could raise the rating if the school's full-accrual
operating margins are sustained over a trend, MADS coverage and
liquidity are maintained on par with higher-rated peers, and
enrollment remains stable.
"We could lower the rating if Discovery's operations were to
deteriorate significantly or financial metrics were to decrease to
levels we no longer consider commensurate with the rating.
Furthermore, any additional enrollment or demand pressure could
potentially cause us to lower the rating."
DO@KING PLOW ARTS: United Buying Atlanta Property for $3.2 Mil.
---------------------------------------------------------------
DO@King Plow Arts Center, LLC, asks the U.S. Bankruptcy Court for
the Northern District of Georgia to authorize the private sale of
the remaining three parcels of real property located at 517 Jones
Avenue, in Atlanta, Georgia, to United Georgia Loans, LLC, for $3.2
million.
The Debtor owns the real property. The purpose of the case is to
allow for its orderly sale, preserve the Debtor's equity therein,
and pay creditors in full.
The real property is composed of five parcels, two of which, known
as the "Proposed Beltline Parcels," have already been sold pursuant
to the Court's Order dated April 21, 2020.
Previously the Court entered an Order approving the sale of the
remaining three parcels ("Property") to Maileg North America.
Unfortunately, the sale was unable to close because of an
intervening zoning change that disallowed the type of business that
Maileg planned to conduct. The parties attempted to acquire the
appropriate rezoning, but due to the Covid-19 pandemic the Fulton
County zoning board is experiencing a backlog and the rezoning
could not be completed in time to consummate the sale.
The Debtor has now negotiated an all-cash, "as-is" sale to a new
purchaser, United, with closing to occur in 60 days.
A number of creditors assert liens on the Property, including the
following: CenterState Bank; ACE (Acess Capital For Entrepreneurs);
Invest Atlanta; Sherwin Williams Co.; Stability Engineering;
Shields Engineering; AHA Consulting; Investa Services; Georgia
Department of Revenue; and Georgia Department of Labor.
The Debtor requests entry of an order authorizing the Debtor to
sell the Property to United on the terms set forth in the Purchase
Agreement, free and clear of liens, claims, and encumbrances, with
all liens or security interests of the Secured Creditors attaching
to the proceeds of the sale.
As shown in the Commercial Sales Agreement, the Debtor proposes to
sell the Property to United for $3.2 million. It submits that the
proposed purchase price amounts to fair market value for the
Property and is the same price that the Debtor was going to receive
from Maileg. It has determined that selling the Property pursuant
to the Purchase Agreement is in the best interests of the estate
and its creditors because such a sale will enable the Debtor to pay
all of its creditors and emerge from bankruptcy.
The Debtor and first priority lienholder CenterState Bank entered
into a consent order on the Debtor's previous Motion to Sell to
Maileg and CenterState Bank's Response thereto. The Debtor is
amenable to entering substantially the same consent order on the
Motion.
The Debtor requests that the order granting the Motion be effective
immediately by providing that the 14-day stay applicable under Rule
6004(h) of the Bankruptcy Rules be waived.
A copy of the Agreement is available at
https://tinyurl.com/yyukwr93 from PacerMonitor.com free of charge.
About DO@King Plow Arts Center
DO@King Plow Arts Center LLC is a commercial, performing and
visual
arts center in Atlanta.
DO@King Plow Arts Center sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ga. Case No. 20-60066) on Jan. 2,
2020. In the petition signed by Nacasha Leca Ruffin, authorized
representative, the Debtor was estimated to have $1 million to $10
million in both assets and liabilities. Judge Jeffery W. Cavender
oversees the case. William A. Rountree, Esq. at Rountree Leitman
&
Klein, LLC, is the Debtor's legal counsel.
DT MIDSTREAM: S&P Rates New $2.1BB Senior Unsecured Notes 'BB+'
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue-level rating and '3'
recovery rating to DT Midstream Inc's (DTM) $2.1 billion senior
unsecured notes. The offering will be under two tranches, due 2029
and 2031, respectively. The '3' recovery rating indicates its
expectation of meaningful (50%-70%; rounded estimate: 60%) recovery
in the event of a default.
The company will use proceeds from this issuance to repay
short-term borrowings due to DTE Energy Co. (BBB+/Stable/A-2).
The issuer credit rating on DTM is 'BB+' with a stable outlook.
DURRANI MD: Plan Exclusivity Extended Until July 31
---------------------------------------------------
Judge Christopher M. Lopez of the U.S. Bankruptcy Court for the
Southern District of Texas, Houston Division extended the periods
within which the Debtor Durrani, M.D. & Associates, PA, and Omar
Hayat Durrani, M.D. have the exclusive right to file a Plan of
Reorganization through and including July 31, 2021.
The Debtors will now have additional time to recover from the
pandemic, reorganize, and emerge successfully from Chapter 11.
A copy of the Court's Extension Order is available at
https://bit.ly/3wjGGRU from PacerMonitor.com.
About Durrani, M.D. & Associates
Durrani, M.D., & Associates, P.A. -- https://www.durranimd.com --
offers comprehensive treatment for disorders of the kidneys,
bladder, and male reproductive system as well as a focus on male
and female sexual health.
Durrani, M.D., & Associates filed a voluntary petition under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Case No.
19-35543) on November 13, 2020. The case is jointly administered
with that of Omar H. Durrani, M.D., president of Durrani, M.D., &
Associates.
At the time of the filing, Durrani, M.D., & Associates had
estimated assets of between $100,000 and $500,000 and liabilities
of between $1 million and $10 million.
Judge Christopher M. Lopez oversees the cases.
Durrani, M.D., & Associates and Mr. Durrani are both represented by
the Law Office of Margaret M. McClure. The Debtor tapped John F.
Coggin, CPA, as their CPA, Davis & Newsome, P.C. as special
litigation counsel, and Durrani, M.D., & Associates, P.A. as an
accountant.
DYNOTEC INDUSTRIES: Seeks Cash Collateral Access
------------------------------------------------
DynoTec Industries, Inc. asks the U.S. Bankruptcy Court for the
District of Arizona for authority to use cash collateral and
provide adequate protection through June 23, 2021, the date of the
final hearing.
The Debtor may have a more accurate picture of future cash flows at
the time of the final hearing on use of cash collateral, and, if
so, the Debtor will amend its cash collateral projections as
necessary.
The Debtor asserts that the use of cash collateral is essential to
its continued business operations and irreparable harm would result
if it is deprived of the ability to use such cash collateral on an
interim basis. Without immediate access to cash collateral, the
Debtor would be at serious risk of shutdown due to strained
liquidity.
The Debtor purchased torque converters, a key component of
automatic transmissions, from Transtar Industries, Inc. Starting in
2013, the Debtor alleges that approximately one-half of Transtar's
torque converters were defective. Over a period of 4 years,
hundreds of Transtar torque converters failed and frequently caused
major damage to other components in the automatic transmissions
requiring a complete replacement of the transmission. Because these
failures were under warranty, the Debtor either had to shut down
their business or at their own cost repair and replace the
transmissions that failed as a result of the defective Transtar
torque converters.
Based on the increased costs associated with the warranty repairs
from the defective Transtar torque converters, starting in 2013 the
Debtor began to fall behind in its Employment Tax deposits with the
Internal Revenue Service and the Minnesota Department of Revenue.
Beginning in 2018 the business had come through the worst of the
warranty issues associated with the defective Transtar torque
converters and since that time has been able to stay current with
its obligations to state and federal tax authorities. However, with
principal, penalties and interest, the Debtor currently owes the
IRS over $2,200,000 in employment tax deposits and related taxes.
The Debtor has been in litigation with Transtar since September
2020. The costs associated with that litigation are unsustainable.
In addition, the IRS has been increasingly demanding in their
collection efforts. The Debtor, after examining all of its options,
reluctantly decided that a Chapter 11 filing followed by a sale of
substantially all of its assets in a Section 363 sale represents
the best method of maximizing the amount payable to its creditors.
If the assets are sold to a buyer who will continue the business as
a going concern as Debtor hopes, this will also preserve the jobs
of all of the employees of the Debtor.
The creditors holding security interests in the Debtor's cash
collateral are New Market Bank, FC Marketplace, LLC A/K/A "Funding
Circle," and the United States Small Business Association.
New Market perfected its Security Collateral in the personal
property of the Debtor on June 5, 2017 via a UCC-1 filing with the
Minnesota Secretary of State, number 953012200022. The current
total of the amounts owed to New Market Bank is approximately
$141,082.15 for the equipment loan and $137,478.73 for the line of
credit. Current monthly payments to New Market for the equipment
loan are $3,648.60 and $4,236.24 for the line of credit. These
payments are being made by DynoTec Holdings. The Debtor pays
DynoTec Holdings an amount equal to the payments being made on the
New Market debt through lease payments. The Debtor believes that at
a going concern value New Market is oversecured based on the
collateral of the assets owned by the Debtor and the real estate
owned by Dyno Tech Holdings.
Funding Circle or its affiliates is owed approximately $119,000.
The Funding Circle Loan is amortized over 5 years, carries an
annual interest rate of 8.25% and has monthly payments of principal
and interest of $4,589.16 per month. Funding Circle and its
affiliates are secured by a blanket security agreement, a UCC-1
filing with the Minnesota Secretary of State on January 4, 2018 by
FC Funding, LLC, document number 992165700440, and a personal
guaranty of Timothy Lundquist.
The SBA is owed $78,600 under an Economic Injury Disaster Loan. The
loan was secured by a blanket security agreement executed on or
about July 20 2020 and perfected by a UCC-1 filing with the
Minnesota Secretary of State on July 20, 2020 document number
1168137303328, and a personal guaranty of Timothy Lundquist. The
Debtor believes that the SBA is undersecured.
At various times from 2017 forward, the Internal Revenue Service
and the State of Minnesota Department of Revenue have filed tax
liens with the Minnesota Secretary of State and the County Recorder
for Scott County Minnesota. Under the United States Tax Code, the
Federal tax liens prime certain cash collateral of the Debtor. The
total amount of the tax liens filed by the IRS is $1,577,939.53.
As of the date of the Motion, no creditor has consented to the use
of cash collateral.
As adequate protection, the Debtor proposes to grant the holders of
cash collateral a replacement lien in any new post-petition assets
generated by Debtor having the same dignity, priority and extent
as existed on the Petition Date.
A copy of the motion is available for free at
https://bit.ly/2S4jIiQ from PacerMonitor.com.
About DynoTec Industries, Inc.
DynoTec Industries, Inc. was founded in 2007 as a transmission
repair and refurbishing shop in Shakopee, Minnesota. DynoTec's 100%
owner is Timothy Lundquist. Typically, the business does from
between $2,000,000 and $3,000,000 in sales per year. The business
has grown and changed over the years and now primarily caters to
commercial clients.
DynoTec sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. D. Minn. Case No. 21-30803) on May 14, 2021. In the
petition signed by Timothy Lundquist, president, the Debtor
disclosed $1,285,850 in assets and $4,398,498 in liabilities.
Judge Kathleen H. Sanberg oversees the case.
SAPIENTIA LAW GROUP is the Debtor's counsel.
EBONY MEDIA: Seeks to Tap Okin Adams as New Bankruptcy Counsel
--------------------------------------------------------------
Ebony Media Operations, LLC and Ebony Media Holdings LLC seek
approval from the U.S. Bankruptcy Court for the Southern District
of Texas to employ Okin Adams LLP as their new legal counsel.
The firm's services include:
(a) advising the Debtors with respect to their rights, duties
and powers in the Chapter 11 cases;
(b) assisting the Debtors in their consultations relative to
the administration of the cases;
(c) assisting the Debtors in analyzing the claims of their
creditors and in negotiating with such creditors;
(d) assisting the Debtors in the analysis of and negotiations
with any third-party concerning matters relating to, among other
things, a sale of substantially all of their assets or the terms of
a plan of reorganization;
(e) representing the Debtors at all hearings and other
proceedings;
(f) reviewing and analyzing all applications, orders,
statements of operations and schedules filed with the bankruptcy
court and advising the Debtors as to their propriety;
(g) assisting the Debtors in preparing pleadings and
applications; and
(h) other legal services as may be required in these cases.
The hourly rates of Okin Adams' attorneys and staff are as
follows:
Christopher Adams $600
Other Lawyers $275 - $675
Paralegals and Other Support Staff $75 - $150
In addition, Okin Adams will seek reimbursement for expenses
incurred.
Christopher Adams, Esq., a partner at Okin Adams, disclosed in
court filings that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Christopher Adams, Esq.
Okin Adams LLP
1113 Vine St., Suite 240
Houston, TX 77002
Telephone: (713) 228-4100
Facsimile: (888) 865-2118
Email: cadams@okinadams.com
About Ebony Media
Ebony Media Holdings LLC, now known as Media Operations Liquidating
Company, is the publisher of Black cultural magazines Ebony and
Jet.
Creditors Parkview Capital Credit Inc. and David M. Abner &
Associates, Plum Studio filed involuntary Chapter 7 petitions
against Media Operations, and Ebony Media Holdings LLC, now known
as Media Holdings Liquidating Company, LLC (Bankr. S.D. Texas Case
Nos. 20-33665 and 20-33667) on July 23, 2020. The cases were
converted to cases under Chapter 11 of the Bankruptcy Code on Sept.
3, 2020.
The Hon. David R. Jones is the presiding judge.
The Debtors tapped Okin Adams LLP to replace Pendergraft & Simon,
LLP as their legal counsel; FTI Capital Advisors, LLC as investment
banker; Doeren Mayhew, PC as tax accountant; and Schwartz
Associates, LLC as appraiser.
EFS COGEN: S&P Affirms 'BB-' Rating on Senior Secured Debt
----------------------------------------------------------
S&P Global Ratings revised the outlook to negative from stable and
affirmed its 'BB-' project finance rating on EFS Cogen I LLC's
senior secured debt. The '2' recovery rating is unchanged.
EFS Cogen Holdings I LLC is a special-purpose, bankruptcy-remote
entity that owns two gas-fired, combined-cycle cogeneration
facilities at the Phillips 66 Bayway Refinery in Linden, N.J. The
assets are the 809 megawatt (MW) Linden 1-5 facility, completed in
May 1992, and the 165 MW Linden-6 facility, completed in January
2002. Linden 1-5 sells electricity on a merchant basis into the
NYISO market and also sells steam to Infineum USA L.P. and Phillips
66 under long-term contracts that expire in April 2032. Linden-6
provides power for the Bayway Refinery, selling up to 165 MW of
electricity to Philips 66. Any electricity Phillips 66 does not use
is sold on a merchant basis into the PJM market. Linden-6 also
sells 20 MW of electric capacity on a merchant basis into PJM.
Dual-fuel capabilities and access to natural gas via two interstate
pipelines (Transco and Texas Eastern) provide operational
flexibility and optionality.
Significant barriers to entry in NYISO Zone J because of high
replacement and development costs, as well as limited technology
choices due to environmental restrictions, have generally supported
higher energy and capacity pricing compared with other merchant
markets.
Contracted revenue stream from steam sales and electricity sold by
Linden-6 provide some cash flow visibility.
Merchant revenues remain the key source of cash flow generation,
representing the majority of total cash flows (including capacity
remuneration). These earnings are exposed to market forces in
NYISO, and the broader merchant power space.
Although it is not an immediate risk, in S&P's opinion, the project
is exposed to refinancing risk because it will not have sufficient
cash flow available for debt servicing and cash on hand to repay
debt outstanding at term loan B (TLB) maturity.
S&P said, "The negative outlook reflects our expectation of weaker
cash flows over the next 12 months, when we forecast DSCRs will be
in the range of 1.3x-1.4x based on our capacity price projections.
Although we expect DSCRs will improve as capacity prices recover
from current lows, we believe there is a one-in-three likelihood
that the pace or magnitude of this recovery might be weaker than
our expectations, which could result in DSCR dropping to below 1.3x
on a sustained basis, absent any mitigating factors.
"We would lower the rating if we expect the project's minimum DSCR
will fall below 1.3x on a sustained basis. This could result from
lower-than-expected capacity factors, weaker energy margins,
depressed capacity prices, and operational challenges such as
forced outages and lower plant availability. We could also consider
a negative rating action if the project's cash flow sweeps were
materially lower than in our forecast, which would ultimately lead
to the TLB balance exceeding $685 million at maturity, and
consequently a weaker minimum DSCR in the post-refinancing period.
"We would revise the outlook to stable if we see market
fundamentals in NYISO improve, or if we believe that the
probability of the project's DSCRs falling below 1.3x through the
debt life, including the post-refinancing period (2027-2035), was
remote. This could occur if capacity prices rebound at or above our
expectations, or if the project's financial performance is better
than in our forecast due to other factors, such as improved energy
margins or higher dispatch."
EL CASTILLO RETIREMENT: Fitch Affirms 'BB+' IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' Issuer Default Rating (IDR) to
El Castillo Retirement Residences, NM (El Castillo). Fitch has also
affirmed the 'BB+' ratings on the series 2012, 2019A, 2019B-1 and
2019B-2 bonds issued by the City of Santa Fe, NM on behalf of El
Castillo. The Rating Outlook is Stable.
SECURITY
A gross revenue pledge, a mortgage on the community and a debt
service reserve fund secure the 2012 2019A, 2019B-1 and 2019B-2
bonds.
ANALYTICAL CONCLUSION
The 'BB+' rating reflects the continued risks and weak debt and
capital related metrics caused by the 2019 issuance of debt to fund
construction of a new independent living community. El Castillo
issued $46 million of fixed rate debt in fiscal 2019 and $23
million of temporary debt to fund the project.
Fill-up risk is a rating concern, but it is somewhat mitigated by
limited competition and a solid level of presales, which require
residents to put down 10% of their entrance fee as a deposit. El
Castillo also has a solid waiting list of over 300 residents.
While severe weather, the coronavirus pandemic and various other
issues have caused some construction delays, the project is largely
on time. The Stable Outlook reflects Fitch's expectation that the
project will be completed on time and on budget and that fill-up
will align with management's projections. Fitch anticipated that
balance sheet metrics and debt service coverage will improve once
the project is completed and El Castillo pays down its temporary
debt.
KEY RATING DRIVERS
Revenue Defensibility: 'bbb'
Mid-Range Revenue Defensibility
El Castillo's ILU occupancy is strong as demonstrated by its high
96% occupancy over the last five years and a waitlist of 300 people
as of March 31, 2021. Assisted living occupancy (including memory
care) and skilled nursing (SNF) occupancy have been weak at 79% and
50%, respectively, over the last five years. While this could be a
concern, El Castillo's healthcare offerings and staffing levels are
structured to primarily support existing residents on campus, and
the community is not licensed for Medicare or Medicaid. This
removes governmental reimbursement risks as well as operational
challenges associated with consistently turning over Medicare
rehabilitation admissions.
Excess capacity at El Castillo's healthcare services also allows
the community to be well prepared to serve a larger resident base,
and Fitch expects improved census to provide stronger profitability
over the long term as the new residents move through the continuum
of care.
Operating Risk: 'bb'
Adequate Financial Performance
EL Castillo's operating ratio and net operating margin averaged a
weak 107% and 1% over the past five years. Conversely, consistently
strong ILU turnover has produced a strong NOM-adjusted of 25% over
the past five years. Given the strong demand for units and above
average occupancy Fitch expects that NOM-adjusted will remain at
historical levels as the new campus opens up.
Financial Profile: 'bb'
Sound Liquidity Offset By Weak Debt Metrics
Unrestricted cash and investments of about $17 million translates
into 632 days cash on hand and 23% of outstanding debt. Net
entrance fees have contributed to El Castillo's stable liquidity
position during the project, and Fitch expects leverage metrics to
improve as the project nears completion and temporary debt is paid
down. El Castillo's feasibility study shows cash to debt
strengthening to 44% and cushion ratio to 6.4x in fiscal 2024.
Fitch views the projections as reasonable given the practical
expectation of a 23-month fill period for the new units.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
No asymmetric risk considerations were relevant to the rating.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- A higher rating is unlikely over the Outlook period given
Fitch's expectation that balance sheet metrics will remain
constrained due to the impact of the 2019 debt issuance. Over
the longer-term a higher rating could be achieved if cash to
adjusted debt improves to sustained levels of over 50%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Delays related to the completion or fill up of the project
that results in cost overruns or a decline in demand for new
units;
-- A material decline in unrestricted reserves.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
El Castillo is a nonprofit corporation organized in 1969 that owns
and operates a single site life plan community with 116 ILU
apartments, 26 ALUs, 11 memory support units and 23 skilled nursing
beds (12 semi-private and 11 private) in downtown Santa Fe, NM. El
Castillo only offers a fully amortizing type-A residency agreement.
Total operating revenues in FY20 were $10.8 million.
REVENUE DEFENSIBILITY
El Castillo's long operating history, favorable location and
attractive pricing has led to consistent ILU occupancy and all
support its mid-range revenue defensibility. While El Castillo's
ALU and SNF occupancy is softer due in part to pandemic related
pressure, its ability to maintain high ILU occupancy and pre-sell
new units illustrate its sound demand characteristics.
El Castillo has a strong and positive reputation in its primary
market are and operates as the only life plan community in downtown
Santa Fe. The unique location is viewed positively as it not only
provides the benefit of being within walking distance from a wealth
of social, cultural and recreational activities, but also provides
the community with a large barrier to competitive threats as the
ability to acquire land is limited and any construction and
demolition in the area requires approval from the Santa Fe Historic
Districts Review Board.
The primary market area for El Castillo includes eight zip-codes
from which the community draws a majority (approximately 60%) of
its residents. The number of households over 65 and income eligible
(over $72,900) in the primary market area is estimated to be 9,875
in 2021, with expectations for modest growth thereafter. Entrance
fees for the community are reasonable as the weighted average
entrance fee for existing ILUs ($270k-$300k) and new ILUs ($455k)
is below the weighted average sales price of single-family homes in
the primary market area.
The community's favorable location and service area allows it to
draw high net worth residents as indicated by the high median net
worth and annual income of the current depositors that is well in
excess of the amounts required for admission. Overall, given the
limited competition in the service area and strong waiting list for
the community, Fitch views entrance fees as reasonable and expects
demand for El Castillo's services to remain sound even following
the completion of the expansion project.
OPERATING RISK
The community relies on entrance fees, which is typical for a
community that primarily offers a Type A non-refundable contract.
El Castillo's NOM-adjusted margin has been relatively stable over
the last five years, averaging 25%. Fitch attributes the steady
margin to steady demand for units and consistently high occupancy
rates. Despite pressure and disruptions from the pandemic, results
have remained in line with historical levels.
Although capital spending has been robust, averaging 418% over the
last five years, the average age of plant is high at 16 years.
Fitch toured the existing campus in 2019 and found the ILUs and
healthcare units to be attractive, especially given the consistent
renovation of turned over ILUs, combination of smaller ILUs to
create larger units and recent interior refresh of healthcare
service areas.
Since beginning operations in 1971, El Castillo has undergone
several renovation and expansion projects. In 1999, the community
expanded to add 19 ILUs in a newly constructed building, two ILUs
to an existing building and added the health center, which at the
time consisted of 16 ALUs and 27 skilled nursing beds. The most
recently executed project included 7 ALUs, 12 private nursing beds
and 11 memory support units. El Castillo issued debt in 2019 to
support the construction of a new independent living facility, to
be located in downtown Santa Fe, approximately half a mile away
from the existing campus. The new facility, called La Secoya, will
consists of 68 new ILUs, 143 underground parking spaces, common
areas and amenities. Though the new campus will only consist of
ILUs, residents will be offered fully-amortizing type-A resident
agreements that provide assisted living, memory support assisted
living and nursing services at the existing El Castillo campus.
The scale of the La Secoya is very large given it will increase the
number of ILUs offered by El Castillo by nearly 60%. A guaranteed
maximum price contract is in place, which protects El Castillo from
some potential cost overruns. To mitigate risk El Castillo is using
a national construction consulting firm that specializes in senior
living industry to monitor construction progress. 84% of the units
were pre-sold through March 31, 2021, and the project is expected
to be substantially completed by Jan. 10, 2022.
Due to the sizeable debt issuance in 2019 to support the expansion
projects, El Castillo's capital related metrics are weak. Based on
Fitch's calculations revenue only coverage has on average been blow
1x. Additionally, debt burden is very high at 44%, though Fitch
expects this to moderate considerably as the new units come online.
According to management, El Castillo is in compliance with its debt
service coverage ratio. El Castillo has a very strong history of
ILU turnover and conservative projections show the community
covering debt at 1.8x in 2024, the first full year after the
project has achieved stabilized occupancy at 95% when MADS is
projected to be measured.
FINANCIAL PROFILE
Fitch believes El Castillo's strong demand, solid liquidity and
steady operating performance provide a cushion to absorb a stressed
scenario. Fitch's stressed scenario incorporates both an investment
portfolio and cash flow stress that in line with current economic
conditions and expectation. El Castillo's investment portfolio
stress was moderate given its fairly conservative investment
allocation. Fitch assumed that the majority of bond funds will be
spent by in fiscal 2021 as the project is expected to open up
January 2022 and that routine capital expenditures will remain in
line or slightly lower than depreciation.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
EQM MIDSTREAM: Moody's Affirms Ba3 CFR, Outlook Negative
--------------------------------------------------------
Moody's Investors Service affirmed EQM Midstream Partners, LP's Ba3
Corporate Family Rating, its Ba3-PD Probability of Default Rating
and Ba3 unsecured notes rating. The Speculative Grade Liquidity
rating SGL-3 is unchanged. The rating outlook remains negative.
This action follows Equitrans Midstream Corporation's (ETRN,
unrated) May 2021 update on its Mountain Valley Pipeline (MVP)
project. ETRN now expects that Mountain Valley Pipeline, LLC (MVP
JV) will not have all the necessary waterbody and wetland crossing
approvals by the third quarter of 2021. As a result, the company is
now targeting a full in-service date for MVP during the summer of
2022 and a total project cost of $6.2 billion.
"MVP completion uncertainty continues to remain a drag on EQM's
credit profile, and that uncertainty also poses unique challenges
to EQM's contractual and legal disputes with its largest customer,
EQT Corporation, all contributing to the negative outlook,"
commented Sreedhar Kona, Moody's senior analyst. "However, EQT's
significantly improved credit strength has eased EQM's counterparty
risk, thereby providing an important offset to the continuing MVP
completion challenges."
Debt list:
Affirmations:
Issuer: EQM Midstream Partners, LP
Probability of Default Rating, Affirmed Ba3-PD
Corporate Family Rating, Affirmed Ba3
Senior Unsecured Notes, Affirmed Ba3 (LGD4)
Speculative Grade Liquidity Rating, Unchanged SGL-3
Outlook Actions:
Issuer: EQM Midstream Partners, LP
Outlook, Remains Negative
RATINGS RATIONALE
The affirmation of EQM's Ba3 CFR reflects EQM's substantial asset
and cash flow profile that provides the company with alternatives
to moderate its debt burden and financial leverage even without the
contribution of MVP's cash flow. EQM is supported by its close
proximity to high production volumes in the Marcellus Shale and the
critical nature of its pipelines for moving natural gas within the
region to long haul pipelines. In early 2020, EQM renegotiated the
majority of its Pennsylvania and West Virginia gathering contracts
with its anchor shipper EQT Corporation (EQT, Ba2 on review for
upgrade) to enter into a new 15-year gas gathering agreement with
longer-term and higher minimum volume commitments (MVCs). Even
without MVP's completion the contract provides for 3 Bcf per day of
MVC to EQM. With about 64% of EQM's 2020 revenues derived from EQT,
EQM's counterparty concentration risk benefits from EQT's improving
credit profile.
In addition to the increased stress on EQM's credit metrics, at
least through 2022, caused by higher debt-funded MVP capital
spending and delay in MVP's cash flow generation, the completion
uncertainty also introduces other risks to EQM vis-a-vis the
company's complex contractual and financial arrangements with EQT.
MVP's repeated completion delays demonstrate the ever-rising
complexities in new pipeline development including delays caused by
post-permit legal challenges and impact of the judicial process in
affecting the outcome of such projects.
EQM's negative outlook reflects the negative effect of MVP's
repeated delays and cost overruns on its credit metrics and the
risks that not completing the pipeline have on the company's
contractual arrangements and legal disputes with its anchor shipper
EQT.
EQM will have adequate liquidity, as reflected in its SGL-3 rating.
As of March 31, 2021, the company had $205 million of cash and
approximately $1.9 billion of availability under its $3 billion
unsecured revolving credit facility expiring in October 2023.
However, in April 2021, EQM amended its credit agreement to reduce
the commitments available under the credit facility to $2.25
billion, thereby reducing EQM's availability under the revolver to
$1.5 billion. EQM's capital spending through 2021 will include
modest capital contributions dedicated to its MVP project (as the
bulk of the remaining MVP capital spending is now likely to be
incurred in 2022) and other projects specific to EQM. EQM will fund
its liquidity needs through operating cash flow and revolver draws.
There is one financial covenant governing the credit facility -- a
maximum consolidated Debt/EBITDA ratio of 5.95x from June 30, 2021
to September 30, 2022, stepping down to 5.25x for the quarter
ending December 31, 2022 and to 5x thereafter.
EQM has a $2.25 billion revolving credit facility due October 2023
($485 million of outstanding borrowings as March 31, 2021), and
$6.5 billion of senior unsecured notes with staggered maturities,
as of March 31, 2021. EQM's revolver and senior notes are unsecured
and are pari passu. Accordingly, the senior notes are rated Ba3,
the same as the CFR.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
EQM's ratings could be downgraded if MVP's budget continues to rise
and if EQM's debt leverage approaches 6x and is likely to remain at
that level. EQM's ratings could also be downgraded if MVP is not
likely to be online in 2022 or if EQM's credit profile is
significantly weakened due to issues emanating from MVP or its
contracts with EQT.
An upgrade of EQM is unlikely given MVP's completion uncertainty.
EQM's ratings could be considered for an upgrade if MVP is
completed and the project's cash flow strengthens EQM's standalone
credit profile and the company's Debt/EBITDA approaches 5x. Given
the company's significant customer concentration, EQT's ratings
must be at least at Ba2 to consider an upgrade of EQM's ratings.
EQM Midstream Partners, LP is an indirect, wholly owned subsidiary
of Equitrans Midstream Corporation that owns and operates
interstate pipelines, gathering lines and water assets primarily
serving Marcellus Shale production.
The principal methodology used in these ratings was Midstream
Energy published in December 2018.
EUROPEAN FOREIGN: Wins Cash Collateral Access
---------------------------------------------
The U.S. Bankruptcy COurt for the Southern District of Florida,
West Palm Beach Division, has authorized European Foreign Domestic
Auto Repair Centre, Inc. Boca East to use the cash collateral of
Paradise Bank/U.S. Small Business Administration on a final basis.
The Debtor is permitted to use Cash Collateral in accordance with
its budget and spend Cash Collateral not to exceed 10% above the
amount shown in the Budget. Quarterly fees payable to the Office
of the U.S. Trustee will be paid and are permitted to exceed the
budgeted amount, and in such an event, will not be considered an
event of default.
As adequate protection for the use of Cash Collateral and for any
diminution in value of the Lender's prepetition collateral, the
Lender is granted a valid, perfected replacement lien upon, and
security interest in, to the extent and in the order of priority of
any valid lien pre-petition, all cash generated post-petition by
the Property.
Unless waived by the Lender in writing, the Debtor will immediately
cease using Cash
Collateral upon the occurrence of one of these events:
a. If a trustee is appointed in the Chapter 11 Case;
b. If the Debtor breaches any term or condition of the Order
or any of the Lender's loan documents, other than defaults existing
as of the Petition Date;
c. If the Case is converted to a case under Chapter 7 of the
Bankruptcy Code;
d. If the case is dismissed; or
e. If any violation or breach of any provision of the Order
occurs.
The post-petition liens and security interests granted to the
Lender will be valid and perfected, to the extent of the validity
and priority of the prepetition lien, post-petition 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.
A copy of the order and the Debtor's monthly budget is available
for free at https://bit.ly/3fFqB2j from PacerMonitor.com. The
Debtor projects $92,000 in total Income - net of sales tax, total
expenses of $88,585, and net operating income of $3,415.
About European Foreign Domestic Auto
Repair Centre and ASK Ventures
European Foreign Domestic Auto Repair Centre, Inc. is a company
that provides automotive repair and maintenance services. ASK
Ventures Inc. is a company primarily engaged in renting and leasing
real estate properties.
European Foreign Domestic and ASK Ventures sought Chapter 11
protection (Bankr. S.D. Fla. Case Nos. 19-22870 and 19-22872) on
Sept. 26, 2019. At the time of the filing, European Foreign
Domestic was estimated to have assets of at least $50,000 and
liabilities of between $1 million and $10 million. ASK Ventures
was estimated to have assets of between $1 million and $10 million
and liabilities of the same range.
Judge Erik P. Kimball oversees the cases. FurrCohen P.A. is the
Debtors' legal counsel.
EVO TRANSPORTATION: Delays Filing of First Quarter Form 10-Q
------------------------------------------------------------
EVO Transportation & Energy Services, Inc. filed a Form 12b-25 with
the Securities and Exchange Commission notifying the delay in the
filing of its Quarterly Report on Form 10-Q for the period ended
March 31 2021.
EVO Transportation was unable to file its Quarterly Report on Form
10-Q for the period ended March 31, 2021 within the prescribed time
period without unreasonable effort and expense because the Company
needs additional time to complete the presentation of certain
information in its financial statements and notes thereto.
Management anticipates significant changes in the Company's results
of operations from the three-month period ended March 31, 2020 to
the three-month period ended March 31, 2021, which is the period
covered by the subject report. The reasons for the significant
changes are: (a) the Company obtained a $10 million loan under the
Paycheck Protection Program of the Coronavirus Aid, Relief, and
Economic Security Act in the second quarter of 2020, (b) certain of
the Company's subsidiaries borrowed $17.033 million under the Main
Street Priority Loan Program authorized by Section 13(3) of the
Federal Reserve Act in the fourth quarter of 2020, (c) the Company
received settlement and contract adjustment payments of
approximately $28.4 million in the first quarter of 2021, and (d)
the Company entered into a settlement agreement in the first
quarter of 2021 with respect to a previously outstanding $3 million
convertible promissory note.
"Accordingly, we anticipate our financial statements for the
three-month period ended March 31, 2021 will reflect, among other
things, significant increases in total assets and liabilities. We
are unable to provide a quantitative estimate of these or other
amounts at this time because our financial statements remain
subject to ongoing review by management and our auditors," the
Company said.
The Company has not yet filed its Quarterly Report on Form 10-Q for
the period ended Sept. 30, 2019, its Annual Reports on Form 10-K
for the years ended Dec. 31, 2019 or Dec. 31, 2020, or its
Quarterly Reports on Form 10-Q for the periods ended March 31,
2020, June 30, 2020, or Sept. 30, 2020.
About EVO Transportation
Headquartered in Peoria, AZ, EVO Transportation & Energy Services,
Inc. is a transportation operator and next generation supplier for
the United States Postal Service (USPS). It offers flexible and
efficient solutions through a combination of diesel and CNG trucks
and tractors across 15 states. EVO Inc. also operates six
strategically located CNG refueling stations in Jurupa Valley, CA;
Lake Arlington, TX; Fort Worth, TX; Oak Creek, WI; Tolleson, AZ;
and San Antonio, TX that accommodate Class 8 trucks and trailers.
EVO Inc. has identified a compelling opportunity in an evolving
ecosystem of USPS transportation contractors, and the Company has
refocused its corporate strategy to leverage its footprint of CNG
stations and relationships with owner-operators to build a national
fleet of haulers and in turn drive additional CNG sales to its
company-owned stations.
Evo reported a net loss of $6.57 million in 2018 following a net
loss of $9.16 million in 2017.
Houston, Texas-based Marcum LLP, the Company's auditor since 2019,
issued a "going concern" qualification in its report dated May 29,
2019, citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
FINCO I: S&P Affirms 'BB' ICR on Strong Growth, Outlook Stable
--------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating on FinCo
I LLC (Fortress). The outlook remains stable. The recovery rating
remains at '3', denoting its expectation for meaningful (50%
rounded estimate) recovery in the event of a payment default.
S&P said, "We affirmed our rating on Fortress. However, we believe
the company's robust financial performance and growing cash
position warrant a reevaluation of the company's stand-alone credit
profile (SACP). With solid fundraising in 2020, higher average AUM
levels, and a cash position of just over $600 million, we forecast
leverage will be 3.0x-4.0x, on a weighted basis. Although we
believe cash could be used for seed investments or dividends, the
stronger balance sheet is a key driver to improving its financial
risk profile assessment."
Fortress' stand-alone credit profile--absent its relationship with
SoftBank--has improved. In S&P's view, Fortress' relationship to
SoftBank has not changed; Fortress remains moderately strategic to
SoftBank. Previously, this moderately strategic relationship has
resulted in a one-notch uplift from the SACP (i.e., to 'bb' from
'bb-') because of group support. Given Fortress' improved financial
position, and the closer relationship between the rating on
Fortress and that on its parent, the prior uplift does not
currently apply. However, the rating on SoftBank acts as a cap on
our issuer credit rating on Fortress because of SoftBank's
ownership and its ability to affect Fortress' financial policy. As
a result, Fortress' issuer credit rating is still capped at one
notch below the 'bb+' group credit profile.
As of Dec. 31, 2020, Fortress had approximately $53 billion in
assets under management. Investment performance remains strong, and
the firm had about $19 billion in dry powder.
The stable outlook reflects the view that Fortress' parent,
SoftBank, will maintain the current rating and outlook over the
next one to two years and that Fortress' net debt to EBITDA will be
between 3.0x-4.0x. Changes to S&P's ratings on SoftBank could
result in a rating action for Fortress, as could further
improvement in Fortress' financial position.
S&P said, "We could consider a downgrade of Fortress if we lower
the rating on SoftBank. Additionally, on a stand-alone basis, if
Fortress' leverage increases and remains above 5.0x, we could lower
the rating. We could also downgrade the company if its funds begin
to generate poor performance or the company has materially weaker
fundraising results.
"An upgrade would be predicated on an improvement in our rating on
SoftBank or additional deleveraging of Fortress' balance sheet. We
prioritize debt repayment over EBITDA growth, and if Fortress'
leverage is sustainably below 3.0x we could upgrade the company, as
long as SoftBank's credit rating does not deteriorate from current
levels."
FOCUS FINANCIAL: S&P Affirms 'BB-' ICR, Outlook Stable
------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' issuer credit rating on Focus
Financial Partners Inc. The outlook remains stable. S&P also
affirmed its 'BB-' issue rating on the first-lien term loan and
revolving credit facility issued by Focus Financial Partners LLC, a
subsidiary of Focus Financial Partners Inc. The recovery rating on
the first-lien facility remains '3', reflecting its expectation for
a meaningful (50%) recovery in the event of a payment default.
KKR & Co. Inc. and Stone Point Capital LLC, two financial sponsors
that acquired a significant ownership stake in Focus in 2017,
completed a secondary offering during the first quarter of 2021.
Following the partial sale of their stake, their combined ownership
is now less than 40% and, as a result, S&P has removed the
financial sponsorship cap on the company.
The stable outlook indicates that S&P expects the company will
operate with leverage, as calculated by S&P Global Ratings, of
4x-5x during the next 12 months and post a double-digit percentage
increase in revenues as a result of acquisitions completed during
2020 and 2021.
S&P could lower the ratings if Focus operates with debt to adjusted
EBITDA above 5.0x or if its business deteriorates significantly.
S&P could raise the ratings if the company operates with leverage
comfortably below 4x and the business continues to diversify while
retaining downside protection.
GAINCO INC: Wins Cash Collateral Access on Interim Basis
--------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Corpus Christi Division, has authorized Gainco, Inc., to use cash
collateral on an interim basis to avoid immediate and irreparable
harm to Debtor and its estate pending a final hearing.
The Court directed the Debtor to expend the temporary cash
collateral only pursuant to the terms of the current order and the
interim budget. The budget -- for the weeks commencing May 14,
2021 and May 31, 2021 -- projected $124,131.43 in total expenses.
The Debtor will at the end of every week, commencing on Friday of
the first full calendar week following the Petition Date, deliver
to the Subchapter V Trustee and Traditions Commercial Finance, LLC,
variance reports showing actual cash receipts and disbursements for
the immediately preceding week, noting therein all variances from
amounts set forth for such period(s) in the Interim Budget.
As additional adequate protection for alleged cash collateral used,
Yellowstone Capital LLC, Traditions Commercial Finance, LLC,
Payroll Funding Company LLC, CHTD Company, First Community Bank and
Affiliated Funding Corporation, alleged secured creditors who
asserted or assert a security interest in cash collateral are
granted a valid, perfected, and non-avoidable replacement lien and
security interest on all of the Debtor's accounts, receivables and
proceeds thereof to the extent acquired after the Petition Date.
The replacement liens will be in the same priority as existed on
the Petition Date. However, notwithstanding any provisions of the
Interim Order, the ad valorem tax liens currently held by San
Patricio County incident to any real property or tangible personal
property shall neither be primed by nor subordinated to any liens
granted.
A continued hearing on the use of cash collateral will be held on
June 1, 2021 at 1:30 p.m. It is anticipated that all persons will
appear telephonically and also may appear via video at this
hearing. Audio communication will be by use of the Court's regular
dial-in number. Video participation is available via GoToMeeting.
A copy of the Order is available for free at https://bit.ly/3hGm3vf
from PacerMonitor.com.
About Gainco, Inc.
Gainco, Inc. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-21122 on April 30,
2021. In the petition signed by Theresa Nix, president, the Debtor
disclosed up to $1 million in assets and up to $10 million in
liabilities.
Judge David R. Jones oversees the case.
The Law Offices of William B. Kingman, P.C. is the Debtor's
counsel.
GET WELL PHARMACY: Seeks Cash Collateral Access
-----------------------------------------------
Get Well Pharmacy of Tennessee, Inc. asks the U.S. Bankruptcy Court
for the Western District of Tennessee, Western Division, for
authority to use the cash collateral of AmerisourceBergen Drug
Corporation on an emergency basis and provide adequate protection.
The Debtor has an urgent and immediate need for cash to continue to
operate its business. The Debtor obtained a PPP loan recently and
will segregate those funds; the current balance of the PPP loan is
$26,134.88 (original loan amount $78,522). Absent authorization
from the Court to use the Cash Collateral, it will not be possible
to pay the ordinary expenses incurred in the management of its
properties. The Debtor's ability to maintain business relationships
with, among others, its vendors, is essential to the Debtor's
reorganization and the value of its Business.
AmerisourceBergen Drug Corporation holds valid perfected blanket
security interest in the Debtor's inventory, accounts receivable
and general intangibles owned by the Debtor. Broadway Advance,
LLC may have second priority security interest with Danny W.
Cordell's judgment lien being a third priority.
The Cash Collateral will be used by Debtor to pay expenses in
accordance with the Budget, up to amounts not to exceed 110% of the
amounts set forth in the Budget on a cumulative, aggregate rolling
basis measured monthly.
As Proposed Adequate Protection, Amerisource will receive
replacement continuing valid, binding, enforceable, non-avoidable,
and automatically perfected security interests and liens on any
proceeds generated by the Collateral post-petition. The Debtor will
also provide proof of insurance and maintain insurance on the
collateral. The Debtor will deliver to Amerisource's designated
representative a statement of actual income and expenses in a
format substantially conforming with that of the Budget no later
than the tenth of each month beginning June 10, 2021.
A copy of the motion and the Debtor's budget from May 22 to June
19, 2021 is available for free at https://bit.ly/3yEXAwq from
PacerMonitor.com.
The Debtor projects a total expenses of $792 and net loss of -$88
by the end of the week ending June 19.
About Get Well Pharmacy of Tennessee, Inc.
Get Well Pharmacy of Tennessee, Inc. sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Tenn. Case No.
21-21598) on May 13, 2021. In the petition signed by Rick Chambers,
president, the Debtor disclosed up to $500,000 in assets and up to
$1 million in liabilities.
Harris Shelton, PLLC is the Debtor's counsel.
GLOBAL INFRASTRUCTURE: S&P Assigns 'BB-' ICR, Outlook Stable
------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issuer credit rating to
Global Infrastructure Solutions Inc. (GISI), a U.S.-based
engineering and construction service provider.
S&P said, "At the same time, we assigned our 'BB-' issue-level
rating and '4' recovery rating to the company's proposed $400
million senior unsecured notes. The '4' recovery rating indicates
our expectation for average (30%-50; rounded estimate: 30%)
recovery in the event of a payment default.
"The stable outlook reflects our view that GISI will benefit from
its strong backlog and deliver a good operating performance over
the next 12 months. The outlook also incorporates our expectation
that its adjusted debt to EBITDA will remain below 4x.
"We anticipate the company's adjusted debt to EBITDA will remain
below 4x and forecast its funds from operations (FFO) to adjusted
debt will be more than 20% over the next 12 months.We anticipate
GISI will modestly increase its revenue this year as it benefits
from solid end-market demand and its strong backlog of $12.2
billion as of April 2021. In addition, we expect the company to
maintain relatively steady profitability with adjusted EBITDA
margins in the low-single-digit percent area. As such, we
anticipate that GISI will generate good cash flow and maintain an
adequate liquidity position over the next 12 months aided by its
low capital expenditure requirements. In our view, the company has
a generally disciplined financial policy with a modest level of
dividends and share repurchases that it has historically funded
with cash. We assume GISI will invest in organic growth and merger
and acquisition (M&A) opportunities.
"The stable outlook reflects our expectation that GISI will benefit
from its strong backlog over the next 12 months, which will enable
it to generate good cash flow and maintain adequate liquidity. We
expect the company's adjusted debt to EBITDA to remain below 4x.
"We could lower our ratings on GISI over the next 12 months if its
operating performance unexpectedly weakens such that its debt
leverage increases above 4x or its funds from operations (FFO) to
debt falls below 20%. Although not something we currently expect,
this could occur if it faces significant project delays or
unexpected margin erosion on its major contracts.
"We could raise our ratings on GISI over the next 12 months if it
demonstrates a strong operating performance such that it sustains
debt to EBITDA of less than 3x and FFO to debt of greater than 30%.
At the same time, we would expect the company to demonstrate
financial policies that are in line with a higher rating by
continuing to pursue disciplined M&A and shareholder return
strategies."
GREEN COUNTRY ENERGY: S&P Lowers ICR to 'CCC', Outlook Negative
---------------------------------------------------------------
S&P Global Ratings lowered its issue level rating on Green Country
Energy LLC's (GCE) $319 million senior secured notes to 'CCC' from
'CCC+', reflecting our view that the project will likely default
without an unforeseen positive development within the next 12
months. The '1' recovery rating is unchanged (90%-100%; rounded
estimate: 95%), indicating itsr expectation for very high recovery
in a default.
S&P's negative outlook reflects its view that in the absence of an
economically equivalent contract to cover 2022-2024, or any other
mitigating factor to offset the final payment deficit that it would
consider certain, the project is vulnerable to default.
GCE is a 795-megawatt (MW) natural-gas-fired combined cycle power
plant in Jenks, Okla. The project began operating in February 2002,
and it has a 20-year tolling agreement with Exelon Generation Co.
LLC (Exelon) ending February 2022. The project and its holding
company are bankruptcy-remote from parent J-Power USA Generation
L.P., a joint venture between John Hancock Life Insurance Co. and
J-Power North America Holdings Co. Ltd.
S&P said, "Under our base-case forecast, we do not expect the
project to have sufficient funds to cover the early mandatory
payment. The project has been using a mandatory cash trap fund to
set aside money to pay the early redemption payment. Our current
projections reflect a shortfall of approximately $14 million to
meet the payment, after accounting for the money in cash trap
account and the DSR funds. This is in-line but slightly above
management's projections. If a redemption payment deficit occurs
without an alternate liquidity source, the project will likely
default.
"We note that the 'CCC' rating for this project is driven more by
its unsustainable financial commitments, than by the probability of
default. This is because the parent has incentives to cover the
shortfall rather than lose the asset to lenders over a relatively
small sum. The sponsors are investing in maintenance in excess of
what would be required to operate the plant to the maturity date.
In our view, there is at least 10 years of additional life
remaining, suggesting that economic incentives could be sufficient
for the sponsors to avoid a default. Project sponsor J-Power USA
has a $25 million working capital facility at its disposal to cover
any mandatory redemption shortfall. At the same time, sponsors have
made no commitments to the project that it will do so, and our
rating doesn't assume any support in our forecast.
"Our re-contracting assumption is still pivotal. If it occurs, the
mandatory redemption would not apply, and the ratings would likely
be much stronger." But an early redemption requirement--which was
triggered under the project's bond indenture in February 2017 when
the project's power contract with Exelon was not renewed--in the
bond indenture effectively forces the project to generate enough
cash flows to pay for two years of annual debt service, on top of
the principal and interest due.
GCE has sought substitute power contracts, but none to date would
be sufficiently similar to the Exelon terms to avoid the early
redemption. Market conditions could allow the project to sign
additional contracts and avoid early redemption, but S&P views this
as less likely, reflected in our negative outlook. In November
2020, GCE signed a three-year power purchase agreement starting in
June 2022 at 240 MW, increasing to 440 MW for the following two
years. GCE's bond indenture allows for the redemption payment to be
lifted from the project only if its agreement with Exelon ending in
February 2022 is replaced with an economically equivalent contract.
Because the new power contract produces lower cash flows than the
Exelon agreement, the redemption payment remains.
The project's operational performance in 2020 and year to-date 2021
reflects high availability factors and limited forced outages. The
'CCC' rating on the project does not reflect any concern or issues
with the project's operational performance, which has improved
since 2019. The project's availability factor was strong at about
98% for full-year 2020 and year-to-date 2021. The forced outage
rate hours were 136 in 2020 compared with 145 in 2019 and 336 in
2018.
S&P said, "The negative outlook reflects our view that in the
absence of a contract to cancel the early mandatory redemption
payment of $54.7 million due in February 2022, the project is
vulnerable to default because it does not have sufficient liquidity
(without resorting to external liquidity such as equity or support
from parent) to meet the payment.
"We are likely to lower the rating by one notch to 'CCC-' in the
next three months (e.g., around six months prior to the early
mandatory payment due date), if there is no contract or another
mitigating factor in place to ensure that all of the outstanding
notes will be repaid.
"We do not expect a new contract in the next few months, therefore
we are unlikely to revise the outlook to stable before then.
However, we could raise the rating if the project extends the CSA,
enters into another contract with support from lenders, favorably
changes the terms and conditions of its agreements, or increases
the cushion in the DSR (which we view as unlikely, given capacity
payments are largely fixed and there are limited opportunities for
cost savings). In addition, the sponsor could try to mitigate the
shortfall, but we don't assume this will occur. In all cases,
minimum coverage would have to rise to above 1x."
GULFPORT ENERGY: Moody's Assigns B2 CFR on Bankruptcy Emergence
---------------------------------------------------------------
Moody's Investors Service assigned new ratings to Gulfport Energy
Corporation (Gulfport) including a B2 Corporate Family Rating, a
B2-PD Probability of Default Rating and a B3 rating to the $550
million senior unsecured notes issued by its subsidiary, Gulfport
Energy Operating Corporation. Moody's also assigned an SGL-3
Speculative Grade Liquidity rating. The outlook is stable.
These are initial ratings for the restructured Gulfport, following
its emergence from bankruptcy on May 17th 2021.
"Gulfport will benefit from reduced financial leverage after
eliminating about $1 billion in debt through the Chapter-11
bankruptcy process," said Elena Nadtotchi, Senior Vice President at
Moody's. "The company also improved its cost structure by
renegotiating certain fixed transportation contracts and will focus
on improving its capital efficiency and operating cash flow
generation to be able to continue to reduce debt and build a
greater level of financial flexibility."
Assignments:
Issuer: Gulfport Energy Corporation
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Speculative Grade Liquidity Rating, Assigned SGL-3
Issuer: Gulfport Energy Operating Corporation
Senior Unsecured Notes, Assigned B3 (LGD5)
Outlook Actions:
Issuer: Gulfport Energy Corporation
Outlook, Assigned Stable
RATINGS RATIONALE
Gulfport's B2 CFR recognizes the sizable reduction in debt achieved
as a result of the Chapter 11 bankruptcy process and reflects
Moody's expectation that the company will continue to reduce debt
and will build an appropriate level of financial flexibility for
the rating. The company managed to renegotiate certain fixed
transportation contracts and reduce its minimum volume commitments
to midstream companies as it scaled back its production. Assuming
limited growth, Moody's expects Gulfport's unit economics to remain
less competitive than the performance of its in-basin peers.
Gulfport's capacity to generate free cash flow, reduce debt and
reduce financial costs will depend on realizing higher natural gas
prices, and that will be supported by hedging in 2021. Gulfport's
focus will remain on improving its operational performance, raising
efficiency of capital reinvestment and on achieving consistent free
cash flow generation to support contracted debt repayments and
adequate liquidity.
With strategic focus shifting away from production growth, Gulfport
aims to reduce leverage and build financial flexibility, as well as
maintain compliance with relatively strict leverage covenants
agreed in its new bank facilities. The rating further incorporates
Gulfport's relatively modest size, as measured by its annual
production and proved developed reserves relative to other natural
gas focused peers, as well as high asset concentration.
Gulfport's senior unsecured notes are rated B3, one notch below B2
CFR, reflecting the large size and priority treatment of the senior
secured revolving credit facility and term loan. The notes are
issued by its direct wholly owned subsidiary, Gulfport Energy
Operating Corporation, are guaranteed by Gulfport and are also
guaranteed on an unsecured basis by the same operating subsidiaries
that guarantee the senior secured revolving credit facility and
term loan.
Moody's views Gulfport's liquidity as adequate, reflected by its
SGL-3 rating. As part of its bankruptcy exit financing, Gulfport
established a $1.5 billion exit facility, with elected commitment
of $580 million, comprised of a $400 million first lien
reserve-based lending (RBL) revolving credit facility and a $180
million amortizing first lien term loan. The term loan ranks pari
passu with the revolver and shares the same security package.
Gulfport will have limited liquidity available under the RBL upon
exit from the bankruptcy and will depend on free cash flow
generation to support its adequate liquidity.
The revolver and term loan mature in 2024 and are subject to a
maximum net debt to EBITDAX covenant of 3x, a maximum net senior
secured debt to EBITDAX ratio of 2x, and a current ratio covenant
requiring coverage of 1.0x. Moody's expects Gulfport to comply with
both covenants through middle of 2022. Gulfport's ability to
generate free cash flow and maintain comfortable compliance with
leverage covenants will depend on realizing higher natural gas
prices, which is supported by hedging in 2021, covering about 84%
of its projected production. The hedges will start to roll off in
early 2022, but Moody's expects the company to continue to use
hedges to manage commodity risk.
The stable outlook reflects the company's significant hedges in
2021 and the expectation that it will continue to proactively
manage its liquidity and debt repayments in the next 12 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Gulfport's B2 CFR could be upgraded if the company builds
appropriate level of financial flexibility as it accelerates debt
reduction and demonstrates the ability to fund its operations and
debt repayments from operating cash flow, while maintaining or
modestly growing production and reserves at competitive returns on
capital relative to peers. The company maintaining strong leverage
metrics relative to cash flow and on production volumes, with
debt/production below $4,000/boe and a leverage full cycle ratio
(LFCR) trending to 1.5x could be supportive of a ratings upgrade.
The ratings may be downgraded if Gulfport fails to fund operations
and capital reinvestment with operating cash flow, its LFCR remains
below 1x or if its liquidity position weakens.
Gulfport is a medium sized exploration and production company with
principal producing assets in the Utica Shale and SCOOP basins in
Oklahoma, and is headquartered in Oklahoma City, Oklahoma.
The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.
GULFPORT ENERGY: S&P Assigns 'B-' ICR, Outlook Stable
-----------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
Oklahoma-based oil and gas exploration and production (E&P) company
Gulfport Energy Corp.
S&P said, "We also assigned our 'B' issue-level and '2' recovery
ratings to the company's $550 million senior unsecured notes due
2026.
"The stable outlook reflects our expectation that Gulfport will
maintain strong financial measures and generate meaningful cash
flow for debt repayment, with debt leverage remaining below 2x and
funds from operations (FFO) to debt staying above 50% over the next
two years.
"We assigned a 'B-' issuer credit rating to Gulfport Energy.The
ratings on Gulfport reflect the company's small proved reserve and
production base (2.6 trillion cubic feet equivalent (tcfe) and
about 1 billion cubic feet equivalent (bcfe)/d, respectively) and
modest asset diversity provided by its two core areas the Utica
shale in Appalachia (about 75% of year-end 2020 proved reserves)
and the South Central Oklahoma Oil Province (SCOOP, about 25%) that
should help cushion regional pricing and regulatory challenges.
However, we note that Gulfport has a relatively short proved
developed reserve life, about 4 years, which will require
consistent reinvestment and reserve additions to maintain or
improve, following meaningful declines over the past two years. We
also factor our expectation that Gulfport will maintain strong
financial measures for the rating, supported by modest financial
policies that emphasize positive cash flow generation and
meaningful debt repayment over the next two years.
"We expect Gulfport to maintain modest financial policies.We expect
Gulfport to maintain modest financial policies that prioritize
balance sheet strength and liquidity over the next 12 to 18 months.
In addition to mandatory amortization of $15 million per quarter on
its $180 million term loan due May 2024, we expect Gulfport to use
excess cash flow to repay outstanding borrowings on its
reserve-based lending facility (RBL) due 2024. This both helps to
improve liquidity and maintain solid financial measures, including
FFO to debt above 50%, despite a decline in our price assumption
for Henry Hub natural gas beginning in 2022."
Ratings reflect Gulfport's smaller scale versus natural gas focused
peers. Gulfport's year-end 2020 proved reserves of 2.6 tcfe are
materially lower than gas-focused peers such as Comstock Resources,
Encino Acquisition Partners, and Aethon United, which all have
proved reserves of 4 tcfe or greater. S&P said, "We believe this
limits Gulfport's ability to achieve economies of scale relative to
larger peers. On the other hand, Gulfport does have some basin
diversity with about 65% of reserves and 75% production in the
Utica shale and the remainder in the South Central Oklahoma Oil
Province (SCOOP). We expect this would provide a measure of cushion
against negative pricing impacts or regulatory changes in any one
asset base. Nevertheless, we view the lack of scale and short
reserve life as significant factors and have lowered the anchor
score one notch as a result."
S&P said, "The stable outlook reflects our expectation that
Gulfport will maintain modest financial policies that support
meaningful free cash flow generation that it will use to repay debt
and improve liquidity. In addition to the $15 million quarterly
amortization on its term loan, we expect repayment of outstanding
RBL borrowings to be a focus. The outlook also incorporates our
assumption that debt to EBITDA will remain below 2x and FFO to debt
above 50%. We expect Gulfport to maintain strong financial measures
for the rating as an offset to its smaller scale and shorter proved
developed reserve life versus natural gas focused peers.
"We could lower ratings if FFO to debt approached 12% or liquidity
became constrained. Both scenarios likely occur due to Gulfport
pursing a more aggressive financial policy that likely favors
shareholder distributions over debt repayment, or a meaningful drop
in natural gas prices that limits cash flow in 2022 and beyond.
"We could raise ratings if Gulfport improves its reserve life and
increases scale closer to its natural gas focused peers, while
maintaining FFO to debt above 30%. This could occur if natural gas
prices remain favorable, and Gulfport is able to add reserves
through its drilling program. This also assumes Gulfport maintains
modest financial policies over the next 12 to 18 months, focusing
on balance sheet strength and liquidity prior to meaningful
shareholder returns."
HANESBRANDS INC: S&P Affirmed 'BB' ICR, Outlook Negative
--------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating on
U.S.-based Hanesbrands Inc., 'BBB-' issue-level rating on its
senior secured debt, and 'BB' issue-level rating on its senior
unsecured debt. The outlook remains negative.
The negative outlook indicates S&P could lower the ratings in the
next few quarters if the company does not execute its operating
strategy, restore profitability, and reduce leverage below 4x.
The negative outlook reflects the execution risk associated with
Hanesbrands' growth strategy and the possibility leverage remains
elevated in 2021 after rising significantly in 2020. The abrupt
store closures and lockdown measures as a result of the pandemic
sent a shock to apparel companies, which changed their product and
channel mixes to minimize lost sales volumes. As a vertically
integrated company, Hanesbrands turned to producing PPE to fill
demand created by the pandemic and keep its manufacturing
facilities running. It added $820 million of PPE sales primarily in
the second quarter of 2020, when most apparel companies suffered
drastic declines. However, as the pandemic progressed, more
competitors produced PPE, which saturated the market. Hanesbrands
incurred a $374 million charge to write down inventories in the
fourth quarter as growth prospects eroded. Additionally,
Hanesbrands announced its Full Potential plan and incurred an
additional $431 million of charges in the quarter. This resulted in
low-double-digit leverage as we include most of these charges in
our calculation of EBITDA.
S&P said, "We now forecast EBITDA will start to normalize in 2021
toward 2019 levels, which should restore leverage below 4x.
However, this will not rely solely on lapping the large costs
incurred in 2020. As the company loses PPE and European innerwear
sales in 2021, it must replace those sales with continued growth of
its revitalized Champion brand (low-double-digit percentage growth
expected) and a rebound in its U.S. innerwear business that was
declining in the low-single digits annually pre-pandemic.
Hanesbrands posted strong revenue growth of 15% in the first
quarter of 2021, continued growth will require additional marketing
support, including planned incremental marketing spending of $50
million this year. However, government stimulus spending may have
only temporarily lifted the first quarter, while rising inflation
could reduce disposable income. This includes prices for fuel,
food, and household products. Given these evolving economic risks,
we would like to see continued progress toward credit metric
restoration over the next few quarters."
Hanesbrands' plan for $300 million in growth capital investments
and to double its marketing spending to increase revenues and
market share would improve its overall product mix and
manufacturing execution, but that could weaken credit measures if
unsuccessful. Its scale and vertically integrated manufacturing
have been competitive advantages as the company distributes to
wholesale customers. Hanesbrands needs to adapt to changing
consumer preferences for more on-trend apparel in younger
generations who purchase online. To address this, Hanesbrands
recently laid out a plan to segment its manufacturing so it can be
more flexible to produce consumer-led innovations and supply the
direct-to-consumer (DTC) channel to reach the younger demographic.
Although not a complete manufacturing overhaul, it does involve
significant capital for automation and increase capacity to reduce
lead time and lower operating costs. It will also expand its U.S.
West Coast fulfillment center to reach customers more efficiently.
Speed to market is a competitive differentiator for the DTC channel
and younger consumers.
Additionally, Hanesbrands will raise its marketing spending to 4%
of sales from 2% by 2024 to reinvest in its brands and make them
more relevant with younger consumers. Its innerwear brands such as
Hanes and Maidenform skew toward an older demographic. Hanesbrands
believes there is a $1 billion revenue opportunity to capture in
the under-39 generations. S&P said, "Moreover, we believe the
company has recently revamped its Champion brand successfully. It
forecasts that Champion will be a $3 billion global brand by 2024,
expanding at a low-double-digit percentage. Hanesbrands promoted
Chief Digital Officer Cindy Miller, who will help build new data
capabilities to work toward adding $1.2 billion of incremental
revenue by 2024. Although we expect the company to self-fund these
projects as it generates over $500 million of cash flow from
operations, that still needs to be converted to higher sales to
increase EBITDA and margins in line with our base-case expectations
for a sustained high-teen percentage EBITDA margin. Moreover,
Hanesbrands will require increased working capital, which could
pressure free cash flow if sell-through is materially below
expectations. In short, if these investments do not yield their
targeted returns, leverage may not decline as we project."
The casualization trend will continue to support Champion's
growth.The activewear segment led by Champion and Hanes has been
the growth driver as innerwear, which accounts for about a third of
total sales has declined the past few years due to the challenging
U.S. retail environment, weak consumer traffic at retail locations,
lean inventory management by wholesale partners, and retail store
closures. S&P expects the casualization and health and fitness
trends to continue to support growth for activewear even as
consumers become more mobile outside of their homes as the pandemic
lingers. Hanesbrands plans to invest in Champion and diversify its
products into footwear, socks, and innerwear. It is allocating a
significant portion of its investment budget to continue Champion's
growth trajectory toward a $3 billion brand.
S&P said, "We don't expect mergers and acquisitions (M&A) in the
near term as the company's capital allocation remains internally
focused. Hanesbrands has a relatively new management team, also
announcing new CFO Michael Dastugue in May. Management reiterated
its financial goals to managing net leverage of 2x-3x. Given its
current plan to spend on investments in the company, we do not
expect M&A in the near-term. According to management's
calculations, the company is currently leveraged at 1x and will
repay debt until it reaches its target range. Once there, we expect
share repurchases absent M&A opportunities. We do not expect
Hanesbrands to raise debt to pursue M&A over the next 12-18 months,
and would view that as shift in financial policy.
"The negative outlook indicates we could lower the ratings in the
next 12 months if Hanesbrands does not execute its growth strategy
to reduce leverage below 4x."
S&P could lower ratings if Hanesbrands sustains leverage above 4x.
This could occur if it:
-- Cannot replace lost PPE sales with growth in its innerwear
business or continue to expand the Champion brand globally,
possibly because of lower demand as inflation reduces consumers'
purchasing power or increased competition that prevents a rebound
in revenue growth and reduces fixed cost absorption; or
-- The company adopts more aggressive financial policies,
including pursuing a debt-financed acquisition, share buyback, or
dividend before restoring credit measures to its target.
S&P could revise the outlook to stable if Hanesbrands restores its
credit metrics, including leverage below 4x over the next few
quarters. This could occur if the company:
-- Restores its innerwear segment to 2019 performance while
continuing to increase Champion sales in the double-digit
percentages: or
-- Makes progress toward restoring its adjusted EBITDA margin in
the high-teen percentages from the mid-single digits in 2020
(including restructuring costs).
HASTINGS MASTER: Case Summary & 16 Unsecured Creditors
------------------------------------------------------
Debtor: Hastings Master Tenant, LLC
d/b/a Hastings Landing
P.O. Box 551
Port Townsend, WA 98368
Chapter 11 Petition Date: May 20, 2021
Court: United States Bankruptcy Court
Western District of Washington
Case No.: 21-10996
Debtor's Counsel: Alan J. Wenokur, Esq.
WENOKUR RIORDAN PLLC
600 Stewart Street
Suite 1300
Seattle, WA 98101
Tel: 206-682-6224
Fax: 206-826-9009
Email: alan@wrlawgroup.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Heather Dudley-Nollette, co-manager.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/7X67HKA/Hastings_Master_Tenant_LLC__wawbke-21-10996__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 16 Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Ben and Erica Bauermeister Promissory Note $100,000
1239 Taylor St.
Port Townsend, WA 98368
2. City of Port Townsend $128
250 Madison Street #1
Port Townsend, WA 98368
3. Diane Baxter & Promissory Note $40,000
Garth Ware
4302 Holcomb Street
Port Townsend, WA 98368
4. GeoEngineers, Inc. $9,258
Attn: Robert Metcalfe
600 Dupont Street
Bellingham, WA 98225
5. Hingston Miller $1,095
Hingston, PLLC
20700 44th Ave W,
Suite 210
Lynnwood, WA 98036
6. Hodlik Construction $22,317
Attn: Rod Hodlik
1410 Maple Street
Port Townsend, WA 98368
7. Inn Properties, LLC $3,223
PO Box 927
Port Hadlock, WA 98339
8. KPFF, Inc. $46,318
1601 Fifth Avenue
Suite 1600
Seattle, WA 98101
9. McCullough Hil Leary, PS $44,883
701 Fifth Ave.
Suite 6600
Seattle, WA 98104
10. RMC Architects, PLLC $1,450
1223 Rainroad Ave.
Bellingham, WA 98225
11. Ryan, Swanson & $44,688
Cleveland PLLC
Attn: Kimberly Paul
1201 3rd Ave.
Suite 3400
Seattle, WA 98101
12. Sandman Savrann, PLLC $13,800
Attn: Account Processing
8541 SE 72nd Street
Mercer Island, WA 98040
13. Stephen Day Architecture $3,900
1326 5th Ave., Suite 654
Seattle, WA 98101
14. Swenson Say Faget $2,045
2124 3rd Ave., Suite 100
Seattle, WA 98121
15. Trevor Cole $3,000
641 Lexington Ave.
15th Floor
New York, NY 10022
16. Viking Fence Company, Inc. $621
3450 State Hwy 3
Bremerton, WA 98312
HELIUS MEDICAL: Incurs $3.4 Million Net Loss in First Quarter
-------------------------------------------------------------
Helius Medical Technologies, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $3.36 million on $84,000 of total operating revenue for
the three months ended March 31, 2021, compared to a net loss of
$4.76 million on $207,000 of total operating revenue for the three
months ended March 31, 2020.
As of March 31, 2021, the Company had $14.66 million in total
assets, $2.77 million in total liabilities, and $11.90 million in
total stockholders' equity.
"We made strong progress on our U.S. regulatory strategy during the
first quarter and were ultimately proud to secure U.S. marketing
authorization of our PoNS device for MS in March, approximately one
year since we first announced our strategic focus on pursuing this
indication," said Dane Andreeff, interim president and chief
executive officer of Helius. "Obtaining U.S. marketing
authorization is the most important milestone in our Company's
history, one that reflects both the safety and efficacy profile of
our innovative PoNS technology as well as the capabilities of our
regulatory and clinical affairs team. In addition to our
regulatory progress, we raised $11 million in net proceeds through
our February Public Offering and the exercise of warrants to
strengthen our balance sheet and support our operations while
continuing to control our discretionary expenses. In Canada, while
our commercialization efforts continued to be impacted by the
recent spike in COVID-19 cases and its effects on clinics and
patients, our commercial team expanded our network of authorized
PoNS clinics to a total of 33 locations as of March 31, 2021,
leaving us incrementally better positioned to drive adoption once
the environment normalizes."
Mr. Andreeff continued: "Looking ahead to the rest of the year, we
are intently focused on preparing to commercialize our PoNS
Treatment in the U.S., which we expect to begin in the first
quarter of 2022. As part of our U.S. pre-commercial activities, we
are securing our state distribution licenses, establishing the
dedicated team to lead our commercialization efforts and building
relationships to target and educate neurorehabilitation centers
focused on the treatment of MS patients. While we expect our
initial U.S. customers to be cash pay, we remain focused on working
with CMS to obtain Medicare coverage as part of our reimbursement
strategy. Given our rapid pace of progress in recent months, we
remain convinced that we are pursuing the most effective and
efficient strategy to facilitate the widespread adoption of our
PoNS technology, bring relief to patients in need and create value
for our shareholders."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1610853/000156459021028404/hsdt-10q_20210331.htm
About Helius Medical
Helius Medical Technologies -- http://www.heliusmedical.com-- is a
neurotech company focused on neurological wellness. Its purpose is
to develop, license or acquire non-invasive technologies targeted
at reducing symptoms of neurological disease or trauma.
Helius Medical reported a net loss of $14.13 million for the year
ended Dec. 31, 2020, compared to a net loss of $9.78 million for
the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had
$6.54 million in total assets, $2.67 million in total liabilities,
and $3.87 million in total stockholders' equity.
Philadelphia, Pennsylvania-based BDO USA, LLP issued a "going
concern" qualification in its report dated March 10, 2021, citing
that the Company has incurred substantial net losses since its
inception, has an accumulated deficit of $118.9 million as of Dec.
31, 2020 and the Company expects to incur further net losses in the
development of its business. These conditions raise substantial
doubt about its ability to continue as a going concern.
HENRY FORD VILLAGE: Comerica Opposes Bankruptcy Sale Over PPP Rules
-------------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that Comerica fights Henry
Ford's bankruptcy sale over PPP rules.
Bankrupt Henry Ford Village Inc. is facing lender Comerica Bank's
opposition to a planned $76.3 million asset sale, stemming from the
continuing care retirement community's alleged violation of rules
governing a pandemic relief loan program.
Michigan-based Henry Ford Village borrowed $2.7 million in Paycheck
Protection Program funds from Comerica last 2020 before filing for
bankruptcy.
But the company hasn't followed Small Business Administration
policy, which requires borrowers to place the loan amount in escrow
with the lender before they seek to sell more than half of their
assets, Comerica said Wednesday, May 19, 2021.
About Henry Ford Village
Henry Ford Village, Inc., is a non-profit, non-stock corporation
established to operate a continuing care retirement community
located at 15101 Ford Road, Dearborn, Mich. It provides senior
living services comprised of 853 independent living units, 96
assisted living units and 89 skilled nursing beds.
Henry Ford Village sought Chapter 11 protection (Bankr. E.D. Mich.
Case No. 20-51066) on Oct. 28, 2020. In the petition signed by CRO
Chad Shandler, Henry Ford Village was estimated to have $50 million
to $100 million in assets and $100 million to $500 million in
liabilities.
The Hon. Mark A. Randon is the case judge.
The Debtor has tapped Dykema Gossett PLLC as its legal counsel, and
FTI Consulting, Inc., as its financial advisor. Kurzman Carson
Consultants, LLC, is the claims agent.
HICKIES INC: Midcap Funding to Hold Auction on May 25
-----------------------------------------------------
Midcap Funding XVII Trust ("Lender") will conduct, through its
agent, Hilco Streambank ("Agent"), a public sale of all trade
fixtures and personal property including goods, inventory and
equipment, property, patents, trademarks, copyrights, software,
contract rights and all other property of Hickies Inc., and its
affiliates, free and clear of lender's lien and any subordinate
security interests.
Lender has a security interest in the Companies' property.
A public sale will be held via video conference on May 25, 2021, at
12:00 p.m. (ET). Bids were due May 20, 2021.
For additional information, contact:
Jordon Parker
Hilco Streambank
E-mail: jparker@hilcoglobal.com
Counsel for the lender:
Joel L. Perrell, Jr.
Miles & Stockbridge PC
100 Light Street
Baltimore, MD 21230
Tel: (410) 385-3762
Hickies Inc. -- https://www.hickies.com/ -- is a footwear
accessories company.
HIGHLAND CAPITAL: Court Okays $1 Billion Claims Settlement With UBS
-------------------------------------------------------------------
Daniel Gill of Bloomberg Law reports that bankrupt investment firm
Highland Capital Management LP won court approval of a settlement
with two divisions of UBS Group AG, resolving the Swiss bank’s $1
billion claim from a lawsuit.
The May 21, 2021 ruling will allow payouts to creditors under the
court-approved reorganization plan "much sooner rather than later
with such a large uncertain claim being resolved," said Judge
Stacey G. C. Jernigan of the U.S. Bankruptcy Court for the Northern
District of Texas at a virtual hearing.
The agreement gives UBS an allowed unsecured claim of $65 million,
plus a $60 million claim subordinated to general unsecured claims.
About Highland Capital Management
Highland Capital Management LP was founded by James Dondero and
Mark Okada in Dallas in 1993. Highland Capital is the world's
largest non-bank buyer of leveraged loans in 2007. It also manages
collateralized loan obligations. In March 2007, it raised $1
billion to buy distressed loans. Collateralized loan obligations
are created by bundling together loans and repackaging them into
new securities.
Highland Capital Management, L.P., sought Chapter 11 protection
(Bank. D. Del. Case No. 19-12239) on Oct. 16, 2019. Highland was
estimated to have $100 million to $500 million in assets and
liabilities as of the bankruptcy filing.
On Dec. 4, 2019, the case was transferred to the U.S. Bankruptcy
Court for the Northern District of Texas and was assigned a new
case number (Bank. N.D. Tex. Case No. 19-34054). Judge Stacey G. C.
Jernigan is the case judge.
The Debtor's counsel is James E, O'Neill, Esq., at Pachulski Stang
Ziehl & Jones LLP. Foley & Lardner LLP, is special Texas counsel.
Kurtzman Carson Consultants LLC is the claims and noticing agent.
Development Specialists Inc. CEO Bradley Sharp is the financial
adviser and restructuring officer.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Oct. 29, 2019. The committee tapped Sidley Austin LLP
as bankruptcy counsel; Young Conaway Stargatt & Taylor LLP as
co-counsel with Sidley Austin; and FTI Consulting, Inc., as
financial advisor.
HILTON GRAND: S&P Rates New $675MM Senior Unsecured Notes 'B-'
--------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating (two
notches below the expected 'B+' issuer credit rating) and '6'
recovery rating to Hilton Grand Vacations Inc.'s proposed $675
million senior unsecured notes due 2029 as part of its financing
plan to acquire Diamond Resorts International Inc. The '6' recovery
rating reflects negligible (0%-10%; rounded estimate: 0%) recovery
for lenders in the event of a default.
S&P said, "We expect the company to use issuance proceeds to
refinance existing debt. The borrower and co-borrower of the
proposed debt are Hilton Grand Vacations Borrower LLC and Hilton
Grand Vacations Borrower Inc. In our recovery analysis waterfall,
we assume the proposed $675 million notes will be pari passu with
Diamond's existing $591 million unsecured notes based on a
collateral agreement that will be put into place shortly after the
debt issuance."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- The issue-level rating on the company's proposed $1.3 billion
senior secured term loan is 'BB' with a '1' recovery rating. After
the acquisition closes in the summer of 2021, S&P plans to lower
its issue-level rating on the $800 million revolving credit
facility to 'BB', in line with our rating on the proposed term
loan.
-- The issue-level rating on the proposed $675 million senior
unsecured notes is 'B-' with a '6' recovery rating.
-- S&P assumes the pro forma capital structure will comprise about
$1.27 billion of senior unsecured notes, which includes the
proposed $675 million notes HGV will raise to complete the
transaction and the existing debt it will assume from Diamond. S&P
believes HGV's and Diamond's senior unsecured notes will be pari
passu through a collateral agreement.
-- S&P said, "Our simulated default scenario contemplates a
default by 2025 due to a severe economic downturn and tighter
consumer credit markets, as well as an overall decline in the
popularity of timeshare as a vacation alternative, which
substantially reduces the demand for HGV's products. A default
could also occur if the company experiences challenges in
integrating Diamond. We also assume a period of illiquidity in the
financial markets for timeshare securitizations and conduit
facilities."
-- S&P assumes a reorganization following the default and used a
6x emergence EBITDA multiple to value the company.
Simulated default assumptions
-- Year of default: 2025
-- Emergence EBITDA: $322 million
-- EBITDA multiple: 6x
-- Revolving credit facility: 85% drawn
Simplified waterfall
-- Net recovery value for waterfall after administrative expenses
(5%): $1.833 billion
-- Obligor/nonobligor valuation split: 95%/5%
-- Estimated senior secured debt claims: $1.97 billion
-- Value available for senior secured debt claims (including 65%
stock pledge from nonobligor group): $1.8 billion
--Recovery expectations: 90%-100% (rounded estimate: 90%)
-- Estimated unsecured debt and deficiency claims: $1.52 billion
-- Value available for senior unsecured debt claims: $32 million
--Recovery expectations: 0%-10% (rounded estimate: 0%)
Note: All debt amounts include six months of prepetition interest.
HOMES BY KC: $360K Sale of Atlanta Property to Hutchinson Approved
------------------------------------------------------------------
Judge James R. Sacca of the U.S. Bankruptcy Court for the Northern
District of Georgia authorized Homes by KC, LLC's sale of the real
property located at 1373 Benteen Way SE, in Atlanta, Georgia, to
Kristofer D. Hutchinson for $360,000.
The Purchase Agreement, including any amendments, supplements, and
modifications thereto, and all of the terms and conditions therein,
is approved.
The Debtor may sell the Property free and clear of all liens,
claims and encumbrance. Upon closing of the Sale, all liens,
claims, and encumbrances on the Property will attach to the
proceeds of the Sale.
The Debtor is authorized to take all actions necessary to close the
Sale and to comply with the Purchase Agreement.
Notwithstanding any rule to the contrary, the provisions of the
Order will be immediately effective and enforceable upon its entry.
About Homes By KC
Homes By KC, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ga. Case No. 20-63784) on March 2,
2020. At the time of the filing, the Debtor had between $100,001
and $500,000 in both assets and liabilities. Judge James R. Sacca
oversees the case. Rountree, Leitman & Klein, LLC is the Debtor's
legal counsel.
HOSPITALITY INVESTORS: Unsecured Claims Unimpaired in Prepack Plan
------------------------------------------------------------------
Hospitality Investors Trust, Inc., et al., submitted a Joint
Prepackaged Chapter 11 Plan and a Disclosure Statement.
The Debtors commenced their chapter 11 cases to implement financial
restructuring transactions that will eliminate the Debtors'
existing preferred equity interests and the related cash
distribution obligations. The transactions will also provide the
Debtors and Reorganized Debtors with $65 million in debtor in
possession financing to fund working capital needs and the
anticipated transaction fees and expenses, and a revolving $25
million credit facility upon the Effective Date to fund go-forward
working capital needs.
On May 19, 2021, the Debtors and Brookfield Strategic Real Estate
Partners II Hospitality REIT II LLC (the "Plan Sponsor"), as
holders of 100% of (a) preferred stock of HIT (the "Existing HIT
Preferred Interests") and (b) Class C Preferred Units of HITOP (the
"Existing HITOP Preferred Interests" and, with the Existing HIT
Preferred Interests, the "Existing Preferred Equity Interests")
intend to enter into a Restructuring Support Agreement that sets
forth the principal terms of the Restructuring Transactions and
requires the Plan Sponsor to support the Plan. The Debtors'
determination to enter into the Restructuring Support Agreement
remain subject to approval by its board of directors, which
approval is anticipated to be granted on May 19, 2021.
A lynchpin of the Restructuring Transactions and the Plan is a $65
million debtor-in-possession financing facility provided on a
secured basis to support critical working capital to the Company
and a post-Effective Date revolving secured credit facility in an
amount of $25 million (the "Exit Facility"). Each holder of a DIP
Claim will receive, in exchange for its Claim, its pro rata share,
together with the holders of Existing Preferred Equity Interests,
of 100% of the new equity interests of Reorganized HIT (the "New
HIT Common Equity Interests"). Similarly, each holder of Existing
Preferred Equity Interests shall receive, in exchange for its
Interest, its pro rata share, together with the holders of DIP
Claims, of 100% of the New HIT Common Equity Interests.
Additionally, 2% of Existing HITOP Preferred Interests shall be
canceled, and the holder of such Existing HITOP Preferred Interests
shall receive, in exchange for its Interests, its Pro Rata Share of
2% of New HITOP Interests. Existing HIT Common Equity Interests
will be discharged and cancelled on the Effective Date. Holders of
Allowed Existing HIT Common Equity Interests will receive one
contingent value right (a "CVR" and, collectively, the "CVRs") in
respect of each share of the Allowed Existing HIT Common Equity
Interests outstanding immediately prior to the Effective Date,
which CVRs shall mature five years from the Effective Date (subject
to a potential extension of two years at the sole discretion of
Reorganized HIT’s board of directors) or earlier upon the
occurrence of a Monetization Event (as defined in the CVR
Agreement).
Critically, the Restructuring Transactions and the Plan will not
impair any of the lenders, franchisors, or hotel management
companies to the Company's operating subsidiaries, none of which
are Debtors in the Chapter 11 cases, nor will the Company's
workforce, vendors, or other unsecured creditors be impaired under
the Plan.
The Plan will treat unsecured claims and interests as follows:
* Class 3 - General Unsecured Claims will recover 100% of their
claims and are unimpaired. Each Allowed General Unsecured Claim,
each holder of an Allowed General Unsecured Claim shall (i) have
its Allowed General Unsecured Claim reinstated, and paid in full,
on the later to occur of the Effective Date or when such Allowed
General Unsecured Claim becomes due in the ordinary course of the
Debtors' or Reorganized Debtors' business operations, or (ii) have
its Allowed General Unsecured Claim otherwise rendered unimpaired
pursuant to Section 1124 of the Bankruptcy Code.
* Class 5A - Existing HIT Preferred Interests will recover 0%.
On the Effective Date, all outstanding shares, units, and interests
(and rights, warrants, options, or other interests to acquire
shares and interests) of the Existing HIT Preferred Interests will
be extinguished in exchange for each holder's pro rata share,
together with the holders of DIP Claims and Class 5B Interests, of
100% of the New HIT Common Equity Interests issued on the Effective
Date.
* Class 5B - Existing HITOP Preferred Interests will recover 11%
to 62%. On the Effective Date, (x) 98% of the outstanding shares,
units, and interests of the Existing HITOP Preferred Interests will
be transferred to HIT in exchange for each holder's pro rata share,
together with the holders of DIP Claims and Class 5A Interests, of
100% of the New HIT Common Equity Interests issued on the Effective
and (y) 2% of the outstanding shares, units, and interests of the
Existing HITOP Preferred Interests will be canceled in exchange for
each holder's pro rata share of 2% of New HITOP Interests.
* Class 6 - Existing HIT Common Equity Interests will recover
0%. On the Effective Date, the Allowed Existing HIT Common Equity
Interests shall be canceled, extinguished and discharged in
exchange for each holder receiving one CVR in respect of each share
of the Allowed Existing HIT Common Equity Interests outstanding
immediately prior to the Effective Date and such holders shall be
automatically deemed to have accepted the terms of the CVR
Agreement and to be a party thereto, in each case in accordance
with the terms of the CVR Agreement.
All cash required for the payments to be made under the Plan will
be obtained from the Debtors' and the Reorganized Debtors'
operations, cash balances, including cash provided under the DIP
Facility, and the Exit Facility.
Proposed attorneys for the Debtors:
Jeff J. Marwil
Paul V. Possinger
Jordan E. Sazant
PROSKAUER ROSE LLP
70 West Madison, Suite 3800
Chicago, IL 60602
Telephone: (312) 962-3550
Facsimile: (312) 962-3551
Joshua A. Esses
PROSKAUER ROSE LLP
Eleven Times Square
New York, NY 10036
Telephone: (212) 969-3000
Facsimile: (212) 969-2900
Jeremy W. Ryan
R. Stephen McNeill
POTTER ANDERSON & CORROON LLP
1313 North Market Street
Wilmington, DE 19801
Telephone: (302) 984-6000
A copy of the Disclosure Statement for Joint Prepackaged Chapter 11
Plan is available at https://bit.ly/3v7wDiN from PacerMonitor.com.
About Hospitality Investors
Headquartered in New York, Hospitality Investors Trust, Inc. --
HTTP://www.HITREIT.com/ -- is a self-managed real estate investment
trust that invests primarily in premium-branded select-service
lodging properties in the United States. As of Dec. 31, 2020, the
Company owns or has an ownership interest in a total of 101 hotels,
with a total of 12,673 guestrooms in 29 states.
Hospitality Investors Trust Inc. and subsidiary Hospitality
Investors Trust Operating Partnership LP, sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-10831) on May 19, 2021.
In the petition signed by CEO and president Jonathan P. Mehlman,
Hospitality Investors Trust estimated total assets of
$1,701,867,000 as of March 31, 2021 and estimated total liabilities
$1,360,423,000 as of March 31, 2021.
The cases are handled by Honorable Judge Craig T. Goldblatt.
Jeff J. Marwil, Paul V. Possinger and Jordan E. Sazant of PROSKAUER
ROSE LLP, and Jeremy W. Ryan of POTTER ANDERSON & CORROON LLP serve
as the Debtors' attorneys. JEFFERIES LLC is the Debtors' financial
advisor. MORRISON & FOERSTER LLP serves as counsel to the
independent directors. EPIQ CORPORATE RESTRUCTURING, LLC serves as
claims agent.
ICAN BENEFIT: Committee Taps Shraiberg, Landau & Page as Counsel
----------------------------------------------------------------
The official committee of unsecured creditors appointed in the
Chapter 11 cases of iCan Benefit Group, LLC and iCan Holdings, LLC
seeks approval from the U.S. Bankruptcy Court for the Southern
District of Florida to employ Shraiberg, Landau & Page, PA as its
legal counsel.
The firm's services include:
(a) attending the committee's meetings;
(b) reviewing financial and operational information furnished
by the Debtors or the committee;
(c) assisting the committee in negotiations with the Debtors
and other parties-in-interest on any issue in these Chapter 11
cases;
(d) reviewing the Debtors' schedules, statement of financial
affairs, and business plan;
(e) advising the committee as to the ramification regarding
all of the Debtors' activities and motions before the bankruptcy
court;
(f) investigating and analyzing certain of the Debtors'
pre-bankruptcy conduct, transactions and transfers;
(g) providing the committee with legal advice in relation to
the Chapter 11 cases;
(h) preparing legal papers;
(i) representing the committee in all proceedings before the
bankruptcy court; and
(j) other legal services.
The hourly rates of the firm's attorneys and staff who will work in
this representation are as follows:
Bradley S. Shraiberg $600
Joshua Lanphear $350
Other Attorneys $350 - $600
Legal Assistants $275
In addition, the firm will seek reimbursement for expenses
incurred.
Bradley Shraiberg, Esq., a partner at Shraiberg, Landau & Page,
disclosed in a court filing that his firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Bradley S. Shraiberg, Esq.
Joshua Lanphear, Esq.
Shraiberg, Landau & Page, PA
2385 NW Executive Center Drive, Suite 300
Boca Raton, FL 33431
Telephone: (561) 443-0800
Facsimile: (561) 998-0047
Email: bss@slp.law
jlanphear@slp.law
About iCan Benefit Group
iCan Benefit Group, LLC -- https://icanbenefit.com -- is a licensed
insurance agency offering a variety of benefit programs and
insurance products from a number of licensed insurance companies.
iCan Benefit Group and its affiliate, iCan Holdings, LLC, sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 21-12567) on March 18, 2021. Stephen M. Tucker,
manager, signed the petitions. At the time of the filing, iCan
Benefit Group and iCan Holdings disclosed $10 million to $50
million and $1 million to $10 million in both assets and
liabilities, respectively. Judge Mindy A. Mora oversees the cases.
Agentis PLLC serves as the Debtors' legal counsel.
The U.S. Trustee for Region 21 appointed an official committee of
unsecured creditors on May 10, 2021. The committee tapped
Shraiberg, Landau & Page, PA as legal counsel.
IG INVESTMENTS: S&P Affirms 'B-' ICR on Good Performance
--------------------------------------------------------
S&P Global Ratings affirmed all of its existing ratings on
U.S.-based information technology (IT) staffing firm IG Investments
Holdings LLC (doing business as Insight Global), including its 'B-'
issuer credit rating. At the same time, S&P assigned its 'B-'
issue-level rating and '3' recovery ratings to the proposed
incremental term loan.
S&P said, "The stable outlook reflects our expectation that Insight
Global's credit metrics will modestly improve as it expands its
EBITDA but remain weak over the next 12 months. We expect continued
demand for flexible work and temporary staffing to enable the
company to increase its revenue by the high-teen percent area and
its EBITDA by the low-double-digit percent area while generating
positive free operating cash flow (FOCF) over the next 12 months.
"The proposed transaction supports our aggressive view of the
company's financial policy and our expectation that its leverage
will remain elevated. Insight Global has routinely issued
debt-financed dividends to its shareholders, which is a practice
that we expect it will continue over the longer term. That said,
the company did not issue a debt-financed dividend in 2020, which
caused its leverage to decline to 5.3x from 7.6x in 2019. We expect
its leverage to remain in the low-6x area over the next 12 months
before declining slightly to the high-5x area in 2022 absent an
additional debt-funded dividend. In our view, Insight Global will
rely on organic growth, rather than frequent debt-financed
acquisitions, to improve its EBITDA over our forecast period.
However, if the company is unable to maintain its historical growth
rates, we would expect it to pursue a debt paydown to right-size
its capital structure in lieu of issuing future dividends."
Insight Global competes in a highly fragmented industry, though its
size and niche verticals will likely allow it to maintain its bill
rates and EBITDA margins over the longer term. S&P said, "We
believe that the company will continue to benefit from its status
as one of the larger players in the niche and attractive IT and
finance/accounting staffing verticals. Specifically, we expect it
to maintain higher EBITDA margins than those of its general
staffing peers because the IT vertical has historically generated
strong, stable bill rates as more companies establish and maintain
larger IT spending budgets to enhance their digital offerings
across industries. While we do expect some of the traditional
travel and location costs to return to the industry as workers go
back to their physical offices following the extended period of
remote work necessitated by the COVID-19 pandemic, we continue to
believe that Insight Global will be able to maintain higher EBITDA
margins than its peers over time, partially due to higher revenue
from permanent placements than historic levels."
Insight Global's strong organic growth strategy will enable it to
generate sustained positive FOCF and support higher debt balances.
S&P said, "In 2020, the company outperformed our projections by
increasing its revenue and EDITBA by the mid-single-digit percent
area on strong demand for its IT staffing and consulting services,
as well as its good cost management and flexible cost structure
amid the remote work requirements stemming from the pandemic-driven
travel restrictions. While we do expect some margin compression
when workers begin migrating back to the office, we believe that
Insight Global will be able to continue to generate FOCF to debt in
the low-single-digit percent area despite its higher interest costs
due to the underlying strong demand for its services."
S&P said, "The stable outlook on Insight Global reflects our
expectation that it will support its substantial debt burden with a
healthy expansion in its revenue and EBITDA and positive FOCF
generation. We expect the company to report a strong operating
performance in 2021, with a double-digit percent rise in its
revenue and EBITDA, due to the recovery of the demand in its core
markets such that it ends the year with leverage in the the low-6x
area and adjusted FOCF to debt of about 3%.
"We could lower our rating on Insight Global if it pursues
additional debt-financed distributions or experiences a sharp
decline in its operating performance that causes it to sustain
negative FOCF or EBITDA interest coverage of less than 1.5x. This
could also occur because of increased competitive pressures or a
prolonged economic downturn that slows its growth prospects.
"Any upgrade would depend on Insight Global reducing its leverage
below 6x on a sustained basis and committing to a less aggressive
financial policy. We could also raise our rating if the company
materially diversifies its business while continuing to increase
its revenue and FOCF."
INTERTAPE POLYMER: S&P Affirms 'BB-' ICR, Outlook Stable
--------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' long-term issuer credit
rating on Intertape. At the same time, S&P Global Ratings assigned
its 'B+' issue-level rating and '5' recovery rating to the
company's proposed US$350 million senior unsecured notes.
The stable outlook reflects S&P's expectation that Intertape will
maintain adjusted debt to EBITDA at about 2.5x in 2021, with
generally stable margins and positive discretionary cash flow after
internal growth investments and dividends.
S&P said, "We expect Intertape to generate earnings and cash flow
about in line with our previous estimates in 2021, with potential
upside from continued strengthening of e-commerce. The company
generated adjusted debt to EBITDA of 2.5x in 2020, stronger than
our previous expectations in the high-2.0x area during a period of
accelerated growth in e-commerce. Demand for water-activated tape,
protective packaging, and films rose sharply following the onset of
the COVID-19 pandemic, amid a surge in online purchasing.
E-commerce revenue increased by over 40% last year, and more than
offset declines in industrial and transportation end markets. This
increase also contributed to improved profitability, with the
company's adjusted EBITDA margin at close to 17.0% in 2020 (up from
13.5% in 2019).
"We expect Intertape's e-commerce business will continue to expand
at an accelerated pace through the first half of 2021, with the
rate of growth slowing thereafter as vaccinations are widely
disseminated and consumers return to brick and mortar locations.
The company is planning to expand its e-commerce production
capacity in anticipation of continued demand growth. We believe
this business will support conservative metrics that are strong for
the rating over our forecast horizon. Nevertheless, although
e-commerce has been on a rapid growth trajectory over the past year
and we assume demand will continue to increase over the next two
years (albeit at a slower pace than in 2020), this trend is
relatively new and still evolving. As a result, we attribute a
degree of uncertainty to our long-term growth trend assumptions for
e-commerce.
"Operating results and credit measures have improved recently, but
we believe more time is required to contemplate upside to the
rating. Since 2016, Intertape has demonstrated a track record of
steady growth in EBITDA and we expect this to continue. Over this
period, cash flow and profitability were stable, including EBITDA
margins of 13%-14% before 2020. The increases in EBITDA and margins
in 2020 were key drivers of the improvement in the company's
leverage and coverage ratios. These results are clearly credit
positive, as is our stronger macroeconomic outlook that should
contribute to stronger packaging and tape demand (led by
above-average growth in e-commerce).
"However, our rating incorporates the potential for volatility in
leverage and margins. Intertape's adjusted debt-to-EBITDA ratio has
fluctuated over the past several years, from a low of 1.7x in 2015
to a peak of 4.0x in 2018. We estimate this measure will remain
conservative and strong for the rating in the mid-2x area over the
next two years. Nevertheless, a longer track record of leverage
near this level is likely required for a higher financial risk
assessment.
"In particular, the recovery in macroeconomic conditions is in the
early stages, and the recent spike in resin prices is
unprecedented. We have assumed much of the anticipated increase in
average resin prices will be a pass through but, in our view, it
remains a risk to margins. We estimate that, all else being equal,
a 200-basis-point drop in estimated EBITDA margins in 2021 would
lead to an increase in leverage of close to 0.5x. In addition, we
believe the company will remain acquisitive. Based mainly on the
planned increase in growth-related capital expenditures over the
next two years, we believe there will be reduced funding capacity
from cash on hand.
"Our rating also incorporates Intertape's established position in
the tape market segment. The company is the second-largest tape
producer in North America, albeit at a distant position behind The
3M Co. Intertape maintains strong market shares in its core product
end markets, primarily food packaging, manufacturing, and
e-commerce. The company's dominant share of the niche
water-activated tape market positions it to benefit from continued
growth in e-commerce. In addition, we believe Intertape's
comprehensive product bundle offering provides a competitive
advantage relative to that of smaller industry participants as well
as leading players in the packaging industry such as 3M, which does
not produce films or have a major presence in water-activated
tapes. These positive factors are partially offset by Intertape's
modest scale and limited geographic diversification relative to
those of global rated peers. In our view, this contributes to
heightened sensitivity to competitive pressures.
"The stable outlook reflects S&P Global Ratings' expectation that
Intertape's adjusted debt-to-EBITDA ratio will be in the mid-2x
area in 2021 and 2022. We expect the company will generate steady
improvement in earnings and cash flow, led by much stronger
macroeconomic conditions and favorable packaging demand
fundamentals. We also expect the company will generate relatively
stable margins, with positive free cash flow generation used mostly
toward dividends. Our base-case scenario incorporates small tuck-in
acquisitions but does not include any large debt-funded
acquisitions or share repurchases.
"We could raise the ratings over the next 12 months if we believe
Intertape will maintain adjusted debt to EBITDA well below 3x. We
could also raise the ratings if the company's EBITDA margins are
sustained near current levels or if we believe growth opportunities
have improved Intertape's operating breadth and competitive
advantage. This could result from continuing favorable demand
fundamentals for its tape products, the company's ability to
mitigate resin cost inflation with price increases, and continued
improvement in leverage.
"We could consider a downgrade if, over the next 12 months, we
expect the company's adjusted debt to EBITDA will trend toward 4x.
We believe this could occur if EBITDA and cash flow generation
weaken due to slower-than-expected economic growth in the U.S. that
constrains demand, increased input costs, or heightened market
competition. We could also lower the ratings if the company makes a
large debt-financed acquisition with poor prospects for
deleveraging."
INVENERGY THERMAL: S&P Affirms 'BB' Debt Rating, Off Watch Neg.
---------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' rating on Invenergy Thermal
Operating I LLC's (ITOI) debt and removed it from CreditWatch,
where S&P placed it with negative implications on March 1, 2021.
The outlook is stable.
S&P said, "The stable outlook reflects that we now view the risk of
a default as remote even though ITOI's negotiations with the HRCO
counterparty are not settled. Additionally, our outlook reflects
the HRCO counterparty's claim is not secured beyond a $7 million
letter of credit (LOC) and the claim is subordinated to the lien
placed by ITOI's lenders on Ector's assets. We continue to expect
an adequate operating and financial performance at ITOI with debt
service coverage ratios (DSCRs) of about 2x for the next 12
months."
ITOI owns a 2.68 gigawatt (GW; net capacity) portfolio of seven
operating gas-fired electric power plants, each in a different
North American Electric Reliability Corp. (NERC) region.
S&P said, "Our CreditWatch on ITOI reflected that its term loan B
could be exposed to an event of default and an accelerated
repayment if Ector's HRCO counterparty issued a notice of
non-payment after the standstill agreement ended (the standstill
was recently extended to May 24, 2021). We estimate Ector's
liability could be $300 million-$400 million stemming from its
inability to perform during the Texas storm in February that caused
many power plants to be unavailable. This liability compares with
ITOI's outstanding term loan B balance of $361 million (due Aug.
28, 2025)."
On April 28, 2021, ITOI's lenders signed an amendment to the credit
agreement. The amendment included a waiver that removed the
potential for an event of default to be called by ITOI's lenders,
which the counterparty of Ector's HRCO could have triggered if it
issued a notice of non-payment after the standstill agreement
ended. In particular, it waives any default or event of default
related to a potential Ector default or the termination of the HRCO
as a direct result of the company's default. It also included
language waiving an event of default if Ector's financial
statements include a going concern opinion because of potential
liabilities related to the severe winter storm in Texas.
Even though S&P viewed the counterparty's incentive to trigger an
event of default at Ector as low--given that the counterparty is
subordinated to ITOI's lenders and the proceeds of the Ector asset
sale would first be applied to ITOI's term loan B, which would
leave no residual value for the Ector counterparties--the
possibility still existed before the waiver.
Ector, one of ITOI's subsidiaries, is in a hedge (a HRCO),
which--while generally a way to mitigate its price exposure--can
produce a perfect storm wherein the company's credit quality rapid
deteriorates if market prices spike and its generation unit is
unable to perform. This is what occurred with Ector during the
severe winter storm in Texas when the power plant was unable to
receive natural gas to generate and dispatch electricity for 11
days.
In assessing the effects of the waiver on ITOI, S&P's key
considerations include:
-- Ector is the counterparty under the HRCO, not ITOI;
-- ITOI has not provided any guarantees under the HRCO. The sole
collateral available to the HRCO counterparty is a $7 million
LOC.;
-- The new waiver removed the possibility of an event of default
at ITOI if the HRCO counterparty is not paid;
-- ITOI's lenders have a first lien on Ector's physical assets, as
well as a pledge of equity (the former being much more important
than the latter);
-- S&P values Ector at about $300 per kilowatt. Considering the
generation capacity of the asset (330 MW), its valuation would be
about $100 million. If liquidated, the proceeds from the sale would
first be applied to prepay the term loan B (with an outstanding
amount of $361 million), which would not leave any residual value
for the HRCO offtaker.
ITOI indicated that it has not received an invoice from the hedge
counterparty and has entered into a standstill agreement, which it
extended until May 24. During this period, S&P understands that the
parties will continue to perform their respective obligations under
the HRCO agreement and will not assert any claim of a breach of
contract or default under the HRCO.
S&P said, "Our stable outlook reflects that we now view ITOI's
default risk as remote even though the negotiations with the HRCO
counterparty are not settled. Additionally, our outlook reflects
that the potential default's financial effect on ITOI is likely to
be minimal given that the HRCO's counterparty claim is not secured
beyond a $7 million LOC. In addition, its claim is subordinated to
the lien placed by ITOI's lenders on Ector's assets. We continue to
expect an adequate operating and financial performance at ITOI with
DSCRs of about 2x for the next 12 months.
"We could lower our rating if the settlement with the HRCO
materially exceeds our expectations and or significantly affects
ITOI's liquidity and cash flows."
S&P could lower its rating if a combination of the following
factors causes ITOI's minimum DSCR to decline to less than 1.75x on
a sustained basis:
-- Overall spark spreads across the portfolio weaken;
-- Nelson's capacity factors decline;
-- Grays Harbor is unable to realize its forecast energy margins
or any capacity revenue; or
-- The project experiences persistently weaker operations,
especially higher operating expenses at multiple plants.
While ITOI could support a higher rating if it improved its holding
company DSCR, our rating is constrained by its operating companies,
which have debt and could cross default with ITOI. Specifically,
the credit quality of Hardee and St. Clair caps S&P's rating on
ITOI's debt and both would have to materially improve their
performance to sufficiently elevate ITOI's credit profile for a
higher rating.
INVO BIOSCIENCE: Incurs $2.5 Million Net Loss in First Quarter
--------------------------------------------------------------
INVO Bioscience, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $2.45 million on $684,523 of total revenue for the three months
ended March 31, 2021, compared to a net loss of $1.44 million on
$258,571 of total revenue for the three months ended March 31,
2020.
The increase in net loss was due to increased operating expenses
and interest expense. Approximately $0.8 million of this increase
was related to non-cash debt amortization expense along with
approximately $0.2 million in startup costs related to joint
ventures.
As of March 31, 2021, the Company had $10.19 million in total
assets, $4.59 million in total liabilities, and $5.60 million in
total stockholders' equity. As of March 31, 2021, the Company had
approximately $8.4 million in cash compared to approximately $0.4
million on March 31, 2020.
Gross margin reported for the three months ended March 31, 2021 was
approximately 91% compared to approximately 88% for the three
months ended March 31, 2020.
Selling, general and administrative expenses for the three months
ended March 31, 2021 were approximately $2.1 million compared to
approximately $1.6 million for the three months ended March 31,
2020. The increase of approximately $0.5 million or 33% was
primarily the result of approximately $0.2 million in startup costs
related to clinic joint ventures as well as approximately $0.2
million in increased personnel and consulting expenses. The
Company incurred approximately $0.6 million of stock-based
compensation expense in the period.
The Company began to fund additional research and development
efforts in 2020 as part of its 5-day label expansion efforts, and
also submitted additional trademark and patent filings. R&D
expenses were $66,267 for the three months ended March 31, 2021
compared to $30,050 for the three months ended March 31, 2020.
Interest expense and financing fees were approximately $0.9 million
for the three months ended March 31, 2021, compared to
approximately $0.05 million for the three months ended March 31,
2020. The increase was primarily non-cash and due to an increase
in amortization of debt discount, debt issuance costs and interest
on the 2020 Convertible Notes.
The Company had working capital of approximately $7.7 million as of
March 31, 2021, compared to approximately $8.3 million as of Dec.
31, 2020. Cash used in operation for the first three months of
2021, was approximately $1.7 million, compared to approximately
$0.9 million for the first three months of 2020.
During 2020, the Company raised approximately $13.8 million in debt
and equity financings. During the first quarter 2021, the Company
converted approximately $1.2 million of outstanding debt to equity
and received approximately $370,000 of proceeds from option and
warrant exercises.
"Based on our current plan, we believe we have sufficient liquidity
for at least the next 12 months. To the extent additional funds
are necessary to meet our longer-term liquidity needs to execute
our business strategy, we may need to raise additional funding by
way of debt or equity financings or a combination of these
potential sources of funds, although we can provide no assurance
that these sources of funding will be available on reasonable
terms," INVO Bioscience said.
"Historically, our primary sources of liquidity have been from
equity or debt offerings and up-front distribution licensing fees.
Until we can generate a sufficient amount of cash from operations,
we may need to finance future cash needs through public or private
equity or debt offerings. Additional capital may not be available
on reasonable terms, if at all. If we are unable to raise
additional capital in sufficient amounts or on terms acceptable to
us, we may have to significantly scale back our operations or
delay, scale back or discontinue the continuing development of our
products. If we raise additional funds through the issuance of
additional debt or equity securities, it could result in dilution
to our existing stockholders and increased fixed payment
obligations, and these securities may have rights senior to those
of our common stock. If we incur indebtedness, we could become
subject to covenants that would restrict our operations, such as
limitations on our ability to incur additional debt, limitations on
our ability to acquire, sell or license intellectual property
rights and other operating restrictions that could adversely impact
our ability to conduct our business. Any of these events could
significantly harm our business, financial condition and
prospects," the Company said.
Management Discussion
"This was an exciting start to the year 2021 for INVO Bioscience as
we advanced our INVO Clinic strategy with the signing of our first
U.S.-based INVOcell exclusive facility in Birmingham, Alabama, the
signing of a partnership agreement to establish and operate a
center in Northern California, and the completion of our product
registration in Mexico. We expect these initial centers to become
operational in the second half of the year," commented Steve Shum,
chief executive officer of INVO Bioscience. "Throughout this year,
we have expanded our real-world experience data and positive
results with INVOcell, enhanced our online training tools,
materials, and capabilities and have experienced a substantial
increase in active training sessions for our international partners
and distributors. We believe the combination of strong
commercialization partnerships and company-owned clinics, both in
the U.S. and around the world, is key to expanding INVOcell's
adoption within the fertility industry."
"In addition to the progress made executing new commercialization
agreements, we have strengthened our marketing capabilities to
support the INVOcell-only centers and our growing number of
distribution partners. Meryle Lynn Chamberlain, a tenured women's
health and fertility solution marketing professional, joined us as
Director of Marketing in March 2021, while Rebecca Messina, current
Senior Advisor at McKinsey & Co. and former Global Chief Marketing
Officer at both Uber and Beam Suntory joined our board of directors
in April 2021. As we look to increase access to care and expand
fertility treatment across the globe, our market positioning and
overall strategies are more important than ever. The addition of
Meryle Lynn and Rebecca will substantially enhance our ability to
successfully accomplish these goals."
"As we look to the remainder of 2021, we have set a number of key
objectives, including the opening of our first company-owned
clinics in Mexico and the United States. Additionally, we will
seek to build our international revenues this year through our
growing list of international distribution partners as they finish
training, and we complete local product registration requirements.
Of note, we are extremely pleased to see the initial INVO
procedures performed recently in Spain and Malaysia, which reflects
the groundwork done by our team in these specific markets, which we
believe will help in further expanding the overall awareness of the
potential outside of the U.S. Finally, we are continuing to
advance our 5-day label expansion efforts with the FDA in the U.S.
market with a goal of completing this effort in 2021. It remains
our belief that there is strong global demand for fertility
services and INVOcell is well-positioned through our growing,
global footprint to play a key role in helping to turn the dream of
creating a family for millions of people around the world into a
reality through our accessible, efficient, and affordable fertility
treatment."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1417926/000149315221011838/form10q.htm
About INVO Bioscience
Sarasota, Florida-based INVO Bioscience, Inc. --
http://invobioscience.com-- is a medical device company focused on
creating simplified, lower-cost treatments for patients diagnosed
with infertility. The Company's solution, the INVO Procedure, is a
revolutionary in vivo method of vaginal incubation that offers
patients a more natural and intimate experience. Its lead product,
the INVOcell, is a patented medical device used in infertility
treatment and is considered an Assisted Reproductive Technology
(ART).
Invo Bioscience reported a net loss of $8.35 million in 2020, a net
loss of $2.16 million on $1.48 million in 2019, a net loss of $3.07
million in 2018, and a net loss of $702,163 in 2017. As of Dec.
31, 2020, the Company had $10.95 million in total assets, $5.20
million in total liabilities, and $5.74 million in total
stockholders' equity.
J.S. CATES CONTRUCTION: Seeks Authorized Access to Cash Collateral
------------------------------------------------------------------
J.S. Cates Construction, Inc. asked the Bankruptcy Court to
authorize use of cash collateral, on an interim, as well as on a
final basis, to fund the operational expenses incurred in the
ordinary course of its business.
The Debtor related that only CoreTrust Bank NA,
successor-in-interest to First Minnesota Bank, has an apparent lien
in the cash collateral asset among creditors with purported liens
on any of the Debtor's collateral. As of the Petition Date, the
Debtor owes CoreTrust $581,359 for loans extended pre-petition.
In consideration for the use of cash collateral, the Debtor
proposed to:
* grant CoreTrust a replacement lien or a security interest in
any new assets, materials, and accounts receivable, generated from
the use of cash collateral, with the same priority, dignity, and
validity of prepetition liens or security interests, to the extent
of diminution in the value of its cash collateral as of the
Petition Date;
* grant CoreTrust an additional replacement lien against the
Debtors real property to the extent that the replacement liens are
insufficient to protect CoreTrust against diminution of its cash
collateral;
* maintain insurance on all the property in which CoreTrust
claims a security interest;
* pay all post-petition federal and state taxes, including
timely deposit of payroll taxes;
* provide CoreTrust access during normal business hours for
inspection of their collateral and the Debtor's business records;
and
* deposit all cash proceeds and income into the DIP account.
As of the Petition, the Debtor has cash collateral assets valued at
approximately $847,974. The Debtor asserted that based on this
amount, CoreTrust is adequately protected. The Debtor projects
that the value of cash collateral as of the final hearing will be
approximately $854,600, and otherwise will, at all times, remain in
excess of its value on the Petition Date. The Debtor shall also be
able to operate, on a cash basis, and believes that it will be able
to obtain a confirmed plan and reorganization in a reasonable
period of time.
Moreover, CoreTrust has a mortgage of up to $100,000 on the
Debtor's real property with has an estimated value of $215,500,
leaving CoreTrust adequately protected on the mortgage. The real
property also has remaining equity of approximately $115,500 and
CoreTrust is protected by existing guarantees supporting the
loans.
A copy of the motion is available for free at
https://bit.ly/3ynmGzD from PacerMonitor.com.
Final hearing on the motion will be on June 9, 2021 at 10 a.m.
About J.S. Cates Construction
J.S. Cates Construction, Inc., f/d/b/a J.S. Cates Companies, filed
a Chapter 11 petition (Bankr. D. Minn. Case No. 21-40881) on May
17, 2021 in the U.S. Bankruptcy Court for the District of
Minnesota.
As of the Petition Date, the Debtor disclosed $1,153,474 in total
assets and $1,767,454 in estimated liabilities.
Judge Kathleen H. Sanberg is assigned to the case. LARKIN HOFFMAN
DALY & LINDGREN LTD is the Debtors counsel. The petition was
signed by Jeffrey S. Cates, president & CEO.
JACKSONVILLE ADVANCED: Seeks to Hire Parker & DuFresne as Counsel
-----------------------------------------------------------------
Jacksonville Advanced Machining, LLC seeks approval from the U.S.
Bankruptcy Court for the Middle District of Florida to hire Parker
& DuFresne, P.A. as its legal counsel.
The firm's services include:
a. advising the Debtor with respect to its powers and duties
under the Bankruptcy Code;
b. advising Debtor with respect to its responsibilities in
complying with the U.S. trustee's operating guidelines and
reporting requirements and with the local rules of the court;
c. preparing legal documents;
d. protecting the interest of the Debtor in all matters
pending before the court; and
e. representing the Debtor in negotiations with its creditors
and in the preparation of its disclosure statement and plan of
reorganization.
Parker & DuFresne will be paid at the rate of $300 per hour for
attorney's services and $125 per hour for paralegal services. The
firm received a retainer in the amount of $8,500.
Mr. DuFresne, Esq., at Parker & DuFresne, disclosed in a court
filing that his firm is "disinterested" as defined by Section
327(a) of the Bankruptcy Code.
The firm can be reached through:
Donald M. DuFresne, Esq.
Parker & DuFresne, P.A.
8777 San Jose Blvd., Suite 301
Jacksonville, FL 32217
Tel: (904) 733-7766
Fax: 904-733-2919
Email: dufresne@jaxlawcenter.com
About Jacksonville Advanced Machining
Jacksonville Advanced Machining, LLC, a Jacksonville, Fla.-based
manufacturer of precision machine components, sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
21-01149) on May 7, 2021. In the petition signed by Ramkumar
Devarajan, president, the Debtor disclosed up to $500,000 in assets
and up to $10 million in liabilities. Parker & DuFresne, P.A.
represents the Debtor as legal counsel.
JADE PROPERTY: Seeks Access to First Service Bank Cash Collateral
-----------------------------------------------------------------
Jade Property Holdings, LLC asks the U.S. Bankruptcy Court for the
Eastern District of Arkansas, Central Division, for authority to
use the cash collateral of First Service Bank on an interim and
final basis and provide adequate protection.
The Debtor owns post-petition rents and revalues generated by a
real property located in Arkansas. Pre-petition and consensually
the Debtor gave First Service Bank a Mortgage which contains an
Assignment of Rents assigning FSB the rents and revenues of the
Property pursuant to the Mortgage.
The Debtor's revenue from operations is cash collateral. FSB's
estimated claim for all the Debtor's indebtedness is at the time of
filing estimated to be $1,650,000.
The Debtor seeks authorization to continue using the cash
collateral pursuant to the Mortgage on both an interim and final
basis. Such use when authorized will remain in force and effect
until the confirmation of a subsequently proposed Plan of
Reorganization or Plan of Liquidation, or until the case is
converted to a case under Chapter 7, or is dismissed.
The Debtor proposes to provide FSB adequate protection in a monthly
amount of $4,325 representing the monthly interest payment for the
value of its secured claim determined on a pre-petition,
non-default interest rate. At the time of filing, FSB's claim is
estimated to be $1,650,000 representing the value of the Property
as of the Petition date. The adequate protection payment will
commence in July 2021 and continue monthly until the confirmation
of a subsequently proposed Plan of Reorganization, or until the
case is converted to a case under chapter 7, or is dismissed.
The Debtor proposes to account monthly for the collection and
expenditure of the cash collateral via the required monthly
operating reporting pursuant to the regulations of to the Office of
the United States Trustee.
A copy of the motion is available for free at
https://bit.ly/3wq9Ezs from PacerMonitor.com.
About JADE Property Holdings
JADE Property Holdings, LLC, with principal place of business at
14023 Rivercrest Drive, Little Rock, Arkansas, filed a petition
under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr.
E.D. Ark. Case No. 21-11249) on May 10, 2021. On the Petition
Date, the Debtor estimated between $1,000,000 and $10 million in
both assets and liabilities. The petition was signed by Jonathan
Dunkley, member.
Judge Richard Taylor oversees the case.
KEVIN WANG: Public Auction Set for June 16
------------------------------------------
IV - CVCF NEB I Trust ("secured party") will offer for sale at
public auction on June 16, 2021, at 10:00 (local New York Time)
certain personal property assets in which the secured party has
been granted a security interest by Kevin S. Wang ("Debtor"),
including certain limited liability company interests, and certain
rights and property related and appurtenant in (a) Operr Plaza LLC
and (b) Clean Air Car Service & Parking Branch Two LLC ("issuer").
The Debtor has represented and warranted that the collateral
includes 100% of the limited liability company interests in the
issuer.
The sale will be conducted virtually via online conference.
Instructions on how to become a qualified bidder and attend the
auction vial online are available at
https://hilcorealestate.com/properties-for-sale/listing or by
contacting Jonathan Cuticell of Hilco Real Estate LLC at (203)
516-8737 or e-mail at jcuticell@hilcoglobal.com
Qualified bidders will be required to post a $50,000 good faith
deposit before the bidding, which will be required to be increased
to 10% of the successful bid by the successful bidder within three
business days of the sale. Any prospective bidder must satisfy the
requirements to be a "qualified bidder" by no later than 10:00 a.m.
(local New York Time) on June 14, 2021.
KLAUSNER LUMBER: To Seek Plan Votes After Creditor Settlement
-------------------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that Klausner to Seek Ch.
11 plan votes after settling with creditors.
Klausner Lumber One LLC reached a global settlement with creditors
to resolve $180 million worth of claims, allowing the bankrupt
Florida sawmill to send its Chapter 11 plan for a vote.
The settlement, detailed in plan disclosures approved Thursday, May
20, 2021, includes resolution of $40 million in secured claims,
Klausner's attorney, Alison M. Ladd of Westerman Ball Ederer Miller
Zucker & Sharfstein LLP, said at a virtual hearing. The agreement
also contains mutual liability releases for all parties, she said.
The deal also settles Klausner's dispute with pre-bankruptcy lender
Florida Sawmills LP, which agreed to accept $19 million on a $76
million.
About Klausner Lumber One
Klausner Lumber One, LLC, is a privately-held company in the lumber
and plywood products manufacturing industry. It is 100% owned by
non-debtor Klausner Holding USA, Inc.
Klausner Lumber One sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Case No. 20-11033) on April 30,
2020. At the time of the filing, Debtor disclosed assets of between
$100 million and $500 million and liabilities of the same range.
Judge Karen B. Owens oversees the case.
The Debtor has tapped Westerman Ball Ederer Miller Zucker &
Sharfstein, LLP as its bankruptcy counsel; Morris, Nichols, Arsht &
Tunnell, LLP as local counsel; Asgaard Capital, LLC, as
restructuring advisor; and Cypress Holdings, LLC, as investment
banker.
The Office of the U.S. Trustee appointed a committee to represent
unsecured creditors in the Debtor's Chapter 11 case. The committee
tapped Foley & Lardner LLP and Faegre Drinker Biddle & Reath LLP as
its counsel.
L&L WINGS: Committee Taps Thompson Hine as Special Counsel
----------------------------------------------------------
The official committee of unsecured creditors appointed in the
Chapter 11 case of L&L Wings, Inc. received approval from the U.S.
Bankruptcy Court for the Southern District of New York to employ
Thompson Hine, LLP as special counsel.
The firm's services include:
(a) advising the committee, filing pleadings, and appearing at
hearings in matters related to TD Bank, NA, the Debtor's secured
creditor; and
(b) other legal services in connection with the Debtor's
Chapter 11 case.
The hourly rates of Thompson Hine's attorneys and staff are as
follows:
Lawyers $345 - $905
Paralegals $235
In addition, Thompson Hine will seek reimbursement for expenses
incurred.
The firm has not received any retainer from the Debtor, the
committee, or any other entity in this case.
Scott Lepene, Esq., a partner at Thompson Hine, disclosed in a
court filing that his firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
John H. Bae, Esq.
Thompson Hine LLP
335 Madison Avenue – 12th Floor
New York, NY 10017-4611
Telephone: (212) 344-5680
Facsimile: (212) 344-6101
Email: John.Bae@ThompsonHine.com
- and –
Scott B. Lepene, Esq.
Matthew J. Kerschner, Esq.
Thompson Hine LLP
3900 Key Center
127 Public Square
Cleveland, OH 44114-1291
Telephone: (216) 566-5500
Facsimile: (216) 566-5800
Email: Scott.Lepene@ThompsonHine.com
Matthew.Kerschner@ThompsonHine.com
About L&L Wings
L&L Wings, Inc. is a New York-based retailer of beachwear and beach
sundry items. It operates 26 stores throughout North Carolina,
South Carolina, Florida, Texas, and California.
L&L Wings sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. S.D.N.Y. Case No. 21-10795) on April 24, 2021. In the
petition signed by Ariel Levy, president, the Debtor disclosed up
to $50 million in assets and up to $100 million in liabilities.
Judge Shelley C. Chapman oversees the case.
The Debtor tapped Davidoff Hutcher & Citron LLP as legal counsel
and WebsterRogers LLP as accountant.
On May 7, 2021, the U.S. Trustee for Region 2 appointed an official
committee of unsecured creditors. Otterbourg P.C. and Thompson
Hine, LLP serve as the committee's bankruptcy counsel and special
counsel, respectively.
L&L WINGS: Wins Cash Collateral Access Thru June 19
---------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York has
authorized L&L Wings, Inc. to use the cash collateral of TD Bank,
N.A. on an interim basis in accordance with the budget through June
19, 2021.
The Debtor said it does not have sufficient available sources of
working capital and financing to carry on the operations of its
business without the use of Cash Collateral. The Debtor said its
ability to pay employees and operating costs is essential to its
continued viability. The Debtor's need to access Cash Collateral
is immediate.
The Court held that the Debtor's authority to use Cash Collateral
is limited to payment of the authorized expenses pursuant to the
budget, subject to a 15% variance on total operating disbursements
calculated on a cumulative basis, and for no other purpose without
the prior written consent of TD Bank or further order of the
Court.
The Debtor will immediately, and will continue to, segregate,
remit, and deposit all Cash Collateral in the Debtor's accounts,
possession, custody, or control, and which the Debtor may receive
in the future in separate post-petition bank accounts established
for the Debtor at TD Bank.
Unless extended further with the written consent of TD Bank, the
Debtor may only use Cash Collateral until the earliest to occur of:
(i) June 19, 2021; (ii) the entry of an order dismissing the Case,
(iii) the entry of an order converting the Case to a case under
Chapter 7; (iv) the entry of an order appointing a trustee or an
examiner with expanded powers with respect to the Debtor's estate;
(v) entry of an order reversing, vacating, or otherwise amending,
supplementing, or modifying the Order, (vi) entry of an order
granting relief from the automatic stay to any creditor (other than
TD Bank) holding or asserting a lien in the TD Prepetition
Collateral; (vii) the occurrence of an uncured monetary default
under any of the affiliate loans comprising the Guaranty
Obligations, provided there is less than a $500,000 equity cushion
in the subject property; or (viii) the Debtor's breach or failure
to comply with any term or provision of the Interim Order.
Notwithstanding any such termination, the rights and obligations of
the Debtor and the rights, claims, liens, priorities, and other
benefits and protections afforded to TD Bank under the Order will
remain unimpaired and unaffected by any such termination and will
survive any such termination.
As adequate protection for the Debtor's use of Cash Collateral, TD
Bank will have, and is granted, effective as of the Petition Date,
valid, binding, enforceable, and automatically perfected
post-petition liens that are co-extensive with the TD Prepetition
Liens without the necessity of the execution by the Debtor of
security agreements, control agreements, pledge agreements,
financing statements, mortgages, or other similar documents, on all
property.
The Replacement Liens are being given to the extent of any decrease
in value of the TD Prepetition Collateral or Cash Collateral. The
Replacement Liens will be effective and perfected as of the date of
the entry of the Interim Order and without the necessity of the
execution by the Debtor of any security agreement, pledge
agreement, financing statement or any other documents and will have
the same validity, priority, and enforceability as TD Bank's liens
and security interests in and on the TD Prepetition Collateral on
the Petition Date.
Notwithstanding the liens and security interests of TD Bank under
the Loan Documents, the TD Prepetition Collateral may be used by
the Debtor, if sufficient unencumbered funds are not available from
the Debtor's estates, to pay:
(a) the statutory fees of the United States Trustee pursuant
to 28 U.S.C. section 1930(a) and 31 U.S.C. Section 3717; and
(b) the allowed fees and expenses of any Chapter 7 trustee
under Bankruptcy Code section 726(b), including without limitation
the allowed fees and expenses of the Chapter 7 trustee's
professionals, in aggregate amount not to exceed $20,000. There
will be no Carve-Out obligations with respect to fees and expenses
incurred in connection with any challenge to the validity, extent,
priority, perfection and enforceability of the liens, mortgages and
security interests granted to TD Bank by the Debtor prior to the
Petition Date.
To the extent the Replacement Liens granted to TD Bank in the
Interim Order do not provide TD Bank with adequate protection of
its interests in the Cash Collateral, TD Bank will, pursuant to
Bankruptcy Section 507(b), have an allowed administrative expense
claim in the Case ahead of and senior to any and all other
administrative expense claims to the extent of any postpetition
Diminution in Value.
The telephonic hearing to consider entry of a Final Order is
scheduled for June 18 at 10 a.m.
A copy of the order is available for free at https://bit.ly/342ZzMX
from PacerMonitor.com.
About L&L Wings, Inc.
L&L Wings, Inc. is a retailer of beachwear and beach sundry items.
It operates 26 stores throughout North Carolina, South Carolina,
Florida, Texas, and California.
L&L Wings sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. S.D.N.Y. Case No. 21-10795) on April 24, 2021. In the
petition signed by Ariel Levy, president, the Debtor disclosed up
to $50 million in assets and up to $100 million in liabilities.
Judge Shelley C. Chapman oversees the case.
Davidoff Hutcher & Citron LLP is the Debtor's counsel.
LATAM AIRLINES: Glenn Agre Tapped by Shareholders Group
-------------------------------------------------------
Glenn Agre Bergman & Fuentes, LLP disclosed that managing partner
Andrew Glenn and partner Shai Schmidt have been retained as counsel
to the Ad Hoc Committee of Shareholders in the LATAM Airlines
Chapter 11 bankruptcy case. LATAM Airlines filed for Chapter 11
bankruptcy protection in May of 2020, after the coronavirus
pandemic halted air travel.
Most recently, Mr. Glenn led the team in an extremely rare
shareholder victory in the bankruptcy recovery of Hertz Global
Holdings Inc. In the matter, he represented the winning ad hoc
equity group, structuring a deal inclusive of a widely available
rights offering where shareholders -- who are notoriously last in
line -- will see 28% of reorganized equity. In addition, the deal
will allow Hertz to exit bankruptcy by the end of June.
About LATAM Airlines Group
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise. It is the largest passenger airline in South
America.
Before the onset of the COVID-19 pandemic, LATAM offered passenger
transport services to 145 different destinations in 26 countries,
including domestic flights in Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, and international services within Latin America
as well as to Europe, the United States, the Caribbean, Oceania,
Asia and Africa.
LATAM and its 28 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in
Chile, Peru, Colombia, Ecuador and the United States are part of
the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as
bankruptcy counsel, FTI Consulting as restructuring advisor, Lee
Brock Camargo Advogados as local Brazilian litigation counsel, and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. T he Boston Consulting Group, Inc., and The Boston
Consulting Group UK LLP serve as the Debtors' strategic advisors.
Prime Clerk LLC is the claims agent.
The official committee of unsecured creditors formed in the case
tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters
Jureller Southard & Stevens, LLP as conflicts counsel, UBS
Securities LLC as investment banker, and Conway MacKenzie, LLC as
financial advisor. Ferro Castro Neves Daltro & Gomide Advogados,
is the committee's Brazilian counsel.
The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as
counsel.
LAURENTIAN BANK: DBRS Finalizes BB(high) Rating on Capital Notes
----------------------------------------------------------------
DBRS Limited finalized its provisional rating of BB (high) with a
Stable trend on Laurentian Bank of Canada's (LBC) NVCC Additional
Tier 1 (AT1) Limited Recourse Capital Notes.
Following the review of final documentation associated with the
offering, DBRS Morningstar confirmed that the terms of the issuance
are consistent with those reviewed at the time the provisional
rating was assigned on April 30, 2021. For further details on the
provisional rating, please see the DBRS Morningstar press release
entitled "DBRS Morningstar Assigns Provisional Rating of BB (high),
Stable, to Laurentian Bank of Canada' NVCC Additional Tier 1 (AT1)
Limited Recourse Capital Notes."
LBC issued $125 million of Capital Notes on May 7, 2021. The
Capital Notes mature on June 15, 2081, and will have an initial
five-year fixed interest rate of 5.30%. DBRS Morningstar notes that
the Office of the Superintendent of Financial Institutions granted
Tier 1 capital treatment to the Capital Notes.
RATING DRIVERS
Over the longer term, a sustained improvement in the level of
earnings and operating efficiency and the strengthening of capital
buffers would result in an upgrade of ratings.
Conversely, material losses caused by operational difficulties as
the Bank implements various organizational projects, sustained
negative operating leverage, or significant losses in the loan
portfolio as a result of unforeseen weaknesses in the risk
management process would lead to a downgrade.
Notes: All figures are in Canadian dollars unless otherwise noted.
LAWRENCE GENERAL HOSPITAL: S&P Cuts Revenue Bonds Rating to 'B-'
----------------------------------------------------------------
S&P Global Ratings lowered its rating on Massachusetts Development
Finance Agency's revenue bonds issued for Lawrence General Hospital
(LGH) to 'B-' from 'B', and placed the rating on CreditWatch with
negative implications.
The CreditWatch placement reflects S&P's view that there is a
one-in-two chance it could lower the rating over the next 90 days.
"The downgrade reflects LGH's significantly weakened liquidity
position that, in our view, remains highly vulnerable," said S&P
Global Ratings credit analyst Anne Cosgrove.
The rating incorporates an adjustment for the highly vulnerable
liquidity position as well as the need for the organization to
obtain financial relief. In addition, this incorporates debt
service coverage that is negative as of March 31, 2021, and which
could lead to a potential event of default should it remain below
1.0x.
There are only 13 days' cash on hand for the obligated group as of
the interim period ended March 31, 2021, when excluding the $31
million Medicare accelerated payment, as per S&P's practice, and
which compares unfavorably to about 48 days as of Sept. 30, 2020.
In addition, the downgrade reflects LGH's continued significant
operating losses that have been exacerbated by the COVID-19
pandemic.
S&P expects to resolve the CreditWatch placement within the next 90
days and expect to have a management discussion during this time to
gain more information on the turnaround plan and any state and
other funding.
LEGACY EDUCATION: Posts $253K Net Income in First Quarter
---------------------------------------------------------
Legacy Education Alliance, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing
net income of $253,000 on $2.62 million of revenue for the three
months ended March 31, 2021, compared to net income of $3.03
million on $8.36 million of revenue for the three months ended
March 31, 2020.
As of March 31, 2021, the Company had $3.84 million in total
assets, $26.74 million in total liabilities, and a total
stockholders' deficit of $22.91 million.
The Company stated, "In general, we believe that our products and
services appeal to those who seek increased financial freedom. If
we experience a prolonged decline in demand for our products and
services, it could have a material adverse effect on our future
operating results."
"Historically, we have funded our working capital and capital
expenditures using cash and cash equivalents on hand. However,
given our decreased operating cash flows during the past two years
combined, it has been necessary for us to manage our cash position
to ensure the future viability of our business. Our cash flows are
subject to a number of risks and uncertainties, including, but not
limited to, earnings, favorable terms from our merchant processors,
seasonality, and fluctuations in foreign currency exchange rates."
"We continue to take steps to ensure our expenses are in line with
our projected cash sales and liquidity requirements for 2021 and
based upon current and anticipated levels of operations, we believe
cash and cash equivalents on hand will not be sufficient to fund
our expected financial obligations and anticipated liquidity
requirements for the fiscal year 2021. However, we are exploring
alternative sources of capital, but there can be no assurances any
such capital will be obtained. For the three months ended March
31, 2021, we had an accumulated deficit, a working capital deficit
and a negative cash flow from operating activities. These
circumstances raise substantial doubt as to our ability to continue
as a going concern. Our ability to continue as a going concern is
dependent upon our ability to generate profits by expanding current
operations as well as reducing our costs and increasing our
operating margins, and to sustain adequate working capital to
finance our operations. The failure to achieve the necessary levels
of profitability and cash flows would be detrimental to us."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1561880/000121390021026867/f10q0321_legacyeducation.htm
About Legacy Education
Headquartered in Cape Coral, Florida, Legacy Education Alliance,
Inc. -- http://www.legacyeducationalliance.com-- is a provider of
practical and value-based educational training on the topics of
personal finance, entrepreneurship, real estate investing
strategies and techniques.
Legacy Education Alliance reported a net income of $16.01 million
for the year ended Dec. 31, 2020, compared to a net income of $9.95
million for the year ended Dec. 31, 2019. As of Dec. 31, 2020,
Legacy Education had $6.34 million in total assets, $29.98 million
in total liabilities, and a total stockholders' deficit of $23.64
million.
MaloneBailey, LLP, in Houston, Texas, the Company's auditor since
2014, issued a "going concern" qualification in its report dated
April 9, 2021, citing that the Company has a net capital deficiency
and an accumulated deficit that raise substantial doubt about its
ability to continue as a going concern.
LITHIA MOTORS: Moody's Rates New $500MM Unsecured Notes 'Ba2'
-------------------------------------------------------------
Moody's Investors Service affirmed the Ba1 corporate family rating
of Lithia Motors, Inc's and changed the outlook to positive from
stable. Moody's also assigned a Ba2 rating to Lithia's proposed
$500 million senior unsecured note issuance.
"The change in outlook to positive reflects the strength of
Lithia's operating performance, as well as its balanced financial
strategy as reflected by heavier reliance on equity than debt to
finance its pending acquisitions. The newly-proposed $1 billion in
equity results in Lithia having raised over $1.6 billion in equity
to augment the $1.1 billion in new debt issuance since mid-2020,
proceeds from which are being used for acquisitions and other
growth initiatives," stated Moody's Vice President Charlie O'Shea.
"As a result of its strong execution during the pandemic, Lithia's
credit metrics are very solid, with debt/EBITDA of around 2.5 times
and EBIT/interest of around 11 times, both of which are superior to
Moody's upgrade triggers," continued O'Shea. "Going forward, and
given Lithia's publicly-stated goal of achieving $50 billion in
revenue by 2025, a critical factor is the prudent sourcing,
financing, and seamless integration of acquisitions."
Assignments:
Issuer: Lithia Motors, Inc.
Senior Unsecured Regular Bond/Debenture, Assigned Ba2 (LGD5)
Affirmations:
Issuer: Lithia Motors, Inc.
Probability of Default Rating, Affirmed Ba1-PD
Corporate Family Rating, Affirmed Ba1
Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 (LGD5)
Outlook Actions:
Issuer: Lithia Motors, Inc.
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
Lithia's Ba1 rating considers its strong credit metrics, its good
liquidity, meaningful scale, leading competitive position in its
chosen markets, and balanced financial strategy. A key rating
factor is Lithia's ability to continue to prudently source and
price its acquisitions, and to integrate them such that they are
quickly accretive. As has been demonstrated during the 2008-09
recession and the COVID-19 pandemic, Moody's expects Lithia to be
able to continue to flex its operations to largely ensure
maintenance of its current quantitative profile regardless of the
industry and economic environment. Another key rating factor is
Lithia's practice of raising meaningful amounts of equity to
support its aggressive acquisition plans.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The positive outlook reflects Moody's expectation that Lithia will
maintain good liquidity and manage its financial policy and
acquisition strategy to ensure that its credit metrics remain
strong even in the event of an economic downturn. An upgrade would
require the company to flawlessly source, price, and integrate any
future acquisitions, and to continue to maintain its conservative
financial strategy, particularly surrounding the balance between
debt and equity to fund its acquisitions such that debt/EBITDA is
maintained below 3 times and EBIT/Interest is sustained above 6
times while maintaing good liquidity. Ratings could be downgraded
if either via a deterioration in operating performance or financial
strategy decisions liquidity were to weaken or credit metrics
deteriorate such that debt/EBITDA was sustained above 4.5 times or
EBIT/Interest sustained below 4 times.
Lithia Motors, Inc., headquartered in Medford, OR, is a leading
auto retailer with 250 stores across 22 states. Annual revenues are
around $14 billion.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
LITHIA MOTORS: S&P Raises Senior Unsecured Notes Rating to 'BB+'
----------------------------------------------------------------
S&P Global Ratings raised its rating on Lithia Motors Inc.'s senior
unsecured notes to 'BB+' from 'BB' and revised its recovery rating
to '4', indicating expectations of average (30%-50%; rounded
estimate: 35%) recovery in a default, from '5'.
S&P said, "We are also assigning our 'BB+' issue rating and '4'
recovery rating to the proposed $500 million senior unsecured notes
due 2029. We affirmed our 'BB+' issuer credit rating on Lithia with
a stable outlook.
"The outlook reflects our view that the company's
weighted-debt-to-EBITDA ratio will stay below 3x and its free
operating cash flow (FOCF)-to-debt ratio remain above 15% over the
next 12 months."
Lithia plans to scale up its presence in the auto retailer market
substantially. The goal is to achieve $50 billion in revenue in
five years by growing the company's core business by 10% per year,
expanding its network with annual acquisitions of $3 billion-$5
billion and generate $9 billion (almost 20% of overall revenue)
through its e-commerce digital home solution, Driveway.
S&P sees the company's five-year plan as very aggressive, with
risks involved. One obvious challenge for Lithia would be
controlling its cost structure while growing so rapidly. Given the
rapid pace of acquisitions, there may be integration risks and
issues maintaining strong operating metrics. In addition, with high
used- and new-vehicle prices, the price to acquire dealerships has
likely increased.
Growth of Lithia's online offering Driveway could present near-term
risks, despite increasing national presence over the next five
years. S&P believes through this portal, Lithia can engage with its
customers and optimize revenue throughout the relationship,
especially in regions where it has a meager footprint. However, as
Driveway grows very quickly, it may necessitate higher spending on
advertising and logistics as it expands into new markets and it
takes time for those markets to become mature. Also, S&P thinks
there is a risk that vehicles sold online do not translate into as
much parts and service business following the sale if the online
customer is less attached to the physical dealership that sold the
car. Parts and service is the most profitable part of the
dealership business after finance and insurance.
Lithia's balanced funding strategy is supportive of credit quality.
The planned debt and equity issuance (similar to prior
transactions) will significantly increase liquidity and help Lithia
to fund future growth. The company is now seeking to issue $500
million in senior unsecured notes and make an equity offering of $1
billion.
The stable outlook on Lithia reflects S&P Global Ratings' view that
the company's weighted-debt-to-EBITDA ratio will stay below 3x and
its FOCF-to-debt ratio will remain above 15% over the next 12
months.
S&P said, "We could upgrade the company if it can continue its
rapid pace of acquisitions and online sales transformation while
maintaining its debt-to-EBITDA ratio comfortably below 3x and its
FOCF-to-debt ratio above 15%. This would mean the company has few
issues with integrating the acquired dealerships and costs for
growing its Driveway business do not significantly lower margins.
"We could lower the rating on Lithia Motors if we came to believe
that its FOCF-to-debt ratio would fall below 15% or its
debt-to-EBITDA ratio rise above our 3x on a sustained basis. This
could occur due to higher prices for acquisitions or
higher-than-expected costs to grow its online businesses."
LJ RUBY: S&P Affirms 'B-' ICR on Free Cash Flow Generation
----------------------------------------------------------
S&P Global Ratings revised the outlook on U.S.-based industrial
distributor LJ Ruby Holdings LLC to stable from negative and
affirmed all of its existing ratings on the company, including its
'B-' issuer credit rating.
S&P said, "The stable outlook reflects our expectation that LJ Ruby
will generate meaningful free operating cash flows in 2021 and
operating performance should benefit from improving demand across
the majority of its end markets, allowing the company to reduce S&P
Global Ratings-adjusted debt to EBITDA to the low-to-mid 5x area.
"We believe the company's operating performance and profitability
will improve in 2021, despite expecting slightly lower free
operating cash flow (FOCF) in 2021 than in 2020.LJ Ruby reduced its
working capital in 2020, which contributed to good free cash flow
generation of over $30 million. Over the next 12 months, we
forecast the company will need moderate working capital and
slightly higher growth capital expenditure (capex) to support
organic revenue growth as customers resume capital spending. We
expect strategic price increases coupled with productivity gains
(including benefits of permanent cost reductions) will more than
offset supply chain-related headwinds and lead to modest S&P Global
Ratings-adjusted EBITDA margin growth of about 50-100 basis points
in 2021, causing leverage to decline to the low-to-mid-5x area from
6.8x in 2020.
"Our base case reflects resilient performance in the company's food
and beverage and medical end markets in 2021 while volumes in most
of its other markets (e.g. machinery and paper manufacturing)
should return to some level of normalcy.Despite lingering concerns
over macroeconomic conditions in 2021, our U.S. GDP growth forecast
of about 6.5% suggests that demand for the company's products will
increase moderately in 2021. Although we still expect its
energy-related end markets (e.g. metals and mining) to lag the more
stable food and beverage and medical end markets, we forecast
high-single-digit revenue growth in 2021 as overall industrial
activity modestly improves and customers return to more normal
levels of maintenance, repair, and operations spending. In
addition, we believe LJ Ruby could pursue bolt-on acquisitions that
further support our expectation of positive revenue growth in
2021.
"The stable outlook reflects our view that demand for the company's
products will modestly increase as overall industrial activity
improves and that it will continue to generate meaningfully
positive FOCF. We expect LJ Ruby's adjusted debt to EBITDA to
improve toward the low-to-mid 5x area in 2021."
S&P could raise its rating on LJ Ruby if:
-- S&P Global Ratings-adjusted debt to EBITDA continued to trend
toward 5x and S&P believed margins would continue to improve with
no meaningful risk to operating performance from additional costs,
such as inflation, or more material drains on working capital than
currently anticipated; and
-- S&P believed that its management supported this improved level
of leverage, including potential acquisitions or shareholder
returns.
S&P could lower its rating on LJ Ruby if:
-- The company generated negative FOCF, which could result in
increased reliance on its asset-based lending (ABL) revolving
credit facility and reduced liquidity; or
-- Its S&P Global Rating-adjusted debt to EBITDA were meaningfully
worse than S&P expected such that S&P viewed its capital structure
as unsustainable over the forecast period.
LOYE GRADING: Wins Cash Collateral Access Thru June 5
-----------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of North
Carolina, Greensboro Division, has authorized Loye Grading & Tree
Service, Inc. to use cash collateral on an interim basis and
provide adequate protection.
The Debtor is authorized to use the cash collateral in the ordinary
course of the Debtor's business pursuant to the Budget, with a 10%
variance through the earliest of (i) the entry of a final order
authorizing the use of cash collateral, or (ii) the entry of a
further interim order authorizing the use of cash collateral, or
(iii) June 5, 2021 or (iv) the entry of an order denying or
modifying the use of cash collateral, or (v) the occurrence of a
Termination Event.
The Debtor requires the use of cash collateral to pay its
operational needs including the cost of maintaining the business,
payment of wages and salaries, purchase and use of inventory, and
other normal expenses incurred in the ordinary course of the
Debtor's business and as a result of the filing of the Chapter 11
proceeding.
As adequate protection for the Debtor's use of cash collateral, the
Secured Parties are granted a post-petition replacement lien in the
Debtor's post-petition property of the same kind which secured the
indebtedness of the Secured Parties pre-petition, with such liens
having the same validity, priority, and enforceability as the
Secured Parties had against the same kind of such collateral as of
the Petition Date.
The replacement liens are deemed perfected to the extent the
pre-petition liens and security interests were valid, perfected,
enforceable, and non-avoidable as of the Petition Date.
The Debtor is also directed to pay $1,000 to CIT Bank N.A. on or
before June 1.
As additional adequate protection, the Debtor will keep all of the
Debtor's personal property insured for no less than the amounts of
the pre-petition insurance.
As further adequate protection, the Secured Parties are allowed
super-priority administrative expense claim pursuant to Sections
503(b) and 507(a)(2) of the Bankruptcy Code to the extent of any
diminution in value of the Secured Parties' interest in the
prepetition collateral caused solely by the use of cash collateral
pursuant to the terms of the Order. The Secured Parties'
super-priority claim will have priority over all administrative
expense claims and unsecured claims against Debtor or its estate.
These events constitute Events of Default:
(i) The Debtor will fail to comply with any of the terms or
conditions of the Order;
(ii) The Debtor will use cash collateral other than as
authorized in the Order;
(iii) Cancellation or lapse of the Debtor's applicable insurance
coverage; or
(iv) Cessation of business operations by the Debtor.
A further hearing on the matter is scheduled for June 2 at 2 p.m.
via Video Conferencing.
A copy of the order and the Debtor's budget is available for free
at https://bit.ly/3oARMzo from PacerMonitor.com.
The Debtor projects $19,000 in ordinary income and total expenses
of $9,960 during the week of June 7 to 13.
About Loye Grading & Tree Service, Inc.
Loye Grading & Tree Service, Inc., established in June 1997,
contracts with the State of North Carolina in order to mow the
medians of highways in Rockingham County. It also provides
demolition services, tree services to municipalities, private
individuals and corporations, and grading and other construction
related services. The Company's president is Ricky W. Loye. His
wife Pamela is the majority shareholder.
Loye Grading sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D.N.C. Case No. 21-10257) on May 10,
2021. In the petition signed by Rickey W. Loye, president, the
Debtor disclosed up to $500,000 in both assets and liabilities.
Judge Benjamin A. Kahn oversees the case.
Dirk W. Siegmund, Esq., at IVEY, MCCLELLAN, GATTON & SIEGMUND
represents the Debtor as counsel.
LS MOTORCARS: Wins Cash Collateral Access
-----------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Texas,
Sherman Division, has authorized LS Motorcars, LLC to use cash
collateral on a final basis in accordance with the budget.
The Debtor has requested that it be allowed to use claimed or
potential cash collateral of Good Floor Loans LLC, NextGear
Capital, Inc., Dallas County and the Small Business Administration
to provide funds to be used solely for purposes set forth in the
interim budget.
Except for vehicles financed through NextGear, Good Floor's
collateral consists of vehicles financed by Good Floor and all
other personal property of the Debtor.
The court held that any Secured Creditor will hold possession of
all motor-vehicle Certificates of Title for any and all remaining
motor-vehicle inventory financed by that Secured Creditor or that
constitutes that Secured Creditor's applicable collateral,
including the Good Floor Collateral, located on the Debtor's lot or
in Debtor's possession, custody, control, or ownership as of the
bankruptcy filing date of March 26, 2021, including any Debtor
subsequently-acquired post-petition trade-in motor-vehicles.
The Secured Creditors are authorized to coordinate directly with
any funding source of the Debtor or auction and exchange original
Certificates of Title for the respective Secured Creditors'
Inventory for sale proceeds funding delivered directly to that
Secured Creditor, and the Secured Creditors further have authority
to endorse, on behalf of the Debtor, and deposit any checks or
drafts payable to the Debtor which are paid on account of the sale
of the respective Secured Creditor's collateral or the Debtor will
assign the checks or drafts payable to the Debtor to such Secured
Creditor. Upon the deposit and receipt any sales proceeds related
to the sale of the respective Secured Creditors' Inventory, the
Secured Creditor shall release the title to such vehicle
constituting part of the Secured Creditors' Inventory to such
funding source of Debtor or auction within two business days.
The Debtor is authorized to continue selling the Secured Creditors'
Inventory and other motor-vehicles, including vehicles covered
under the Good Floor Collateral, subject to the terms of the Final
Order. For any sale of the Secured Creditors' Inventory or Good
Floor Collateral as permitted and authorized, the Debtor will: (i)
pay the sales proceeds of such sold NextGear Inventory to NextGear
by ACH transaction, to be initiated by Debtor by sending an e-mail
authorization for such payment to ngc.risk-dram@coxautoinc.com, and
(ii) pay the sales proceeds of such sold Good Inventory or Good
Floor Collateral to Good.
The Debtor and its customers may solely drive any Secured
Creditor's Vehicles for purposes of test driving, which will not
exceed two hours. The Secured Creditor's Vehicle will be returned
to 309 West Avenue B, Garland, Texas 75040 after the two-hour
period has expired. Neither the Debtor nor the customers may use or
drive any Secured Creditor's Vehicle as an overnight loaner
vehicle. Each unsold Secured Creditor's Vehicle will be returned to
the Debtor's Lot before the close of business and remain on the
Debtor's Lot overnight under all circumstances.
If a Secured Creditor's Vehicle is moved to another location for
repairs, Debtor shall provide written notice to Secured Creditor
regarding the location of the vehicle for such repairs, and update
such Secured Creditor on the length of time needed for the repair,
if such Secured Vehicle is not returned to the Debtor's lot on the
same day.
As adequate protection to the Secured Creditors for the continued
use of their claimed cash collateral, the Secured Creditors are
granted replacement liens on post-petition accounts receivable and
cash as adequate protection, which replacement liens will be held
by the Secured Creditors in the same extent, validity, priority,
and value as they existed against all of the assets prior to the
petition date.
The replacement liens will secure an amount equal to the sum of the
aggregate diminution, if any, subsequent to the petition date, in
the value of the claimed cash collateral of the respective Secured
Creditors, provided the grant (i) will be subject to any prior
perfected liens, and (ii) the exercise and enforcement of this lien
remains subject to the Court's determination that a diminution has
occurred.
The Court directs the Debtor to file its plan no later than June
24, 2021. Failure to do so is a default under the Final Order.
A copy of the order is available for free at https://bit.ly/3yrhCdM
from PacerMonitor.com.
About LS Motorcars
LS Motorcars, LLC's business consists of the ownership and
operation of an automobile sales lot.
LS Motorcars sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Tex. Case No. 21-40441) on March 26,
2021. In the petition signed by Robert Morales, manager, the
Debtor disclosed up to $50,000 in assets and $1 million to $10
million in liabilities.
Judge Brenda T Rhoades oversees the case.
The Debtor tapped Eric A. Liepins, Esq., as legal counsel and Carlo
Ramirez as accountant.
LUMENTUM HOLDINGS: S&P Affirms 'BB-' ICR, Off CreditWatch Negative
------------------------------------------------------------------
S&P Global Ratings removed all its ratings on Lumentum Holdings
Inc. from CreditWatch, where S&P placed them with negative
implications on March 12, 2021. S&P affirmed the 'BB-' issuer
credit rating, and the 'BB-' issue-level rating on the company's
unsecured debt.
S&P said, "The stable outlook on Lumentum reflects our expectation
the company will continue to expand its lasers and consumer
businesses, maintain its strong cash position, and generate free
cash flow of greater than $400 million annually going forward.
"The outlook revision is driven by our expectation that Lumentum's
leverage will be maintained under 3x, despite the company reporting
a weaker-than-expected third quarter 2021. The company was affected
by delayed 5G deployments in China, lack of expansion of 3D sensing
into Android, and general telecommunication weakness. Nonetheless,
we expected Lumentum to generate greater than $400 million in free
cash flow annually going forward. Following Lumentum's failed bid
for Coherent, the company's board has decided the best use of
elevated cash is buying its own stock, authorizing a $700 million
share repurchase program over the next two years. Given strong
annual free cash flow generation and cash position of about $2
billion, Lumentum still has ample room to its downside trigger.
Following Coherent's termination of its merger agreement with
Lumentum, Lumentum has collected $218 million in fees from
Coherent.
"The stable outlook on Lumentum reflects our expectation that the
company will continue to expand its lasers and consumer businesses,
maintain its strong cash position, and generate positive free cash
flow of greater than $400 million annually.
"Although unlikely, we could lower our rating on Lumentum if the
company faces revenue and EBITDA declines causing leverage to
approach the 5x area.
"We could also lower the rating if the company uses its large cash
position to execute share buybacks such that its balance sheet cash
drops to under $500 million and it sustains leverage of more than
4x.
"We could consider upgrading Lumentum if it continues to improve
the scale and diversity of its business, while maintaining leverage
of less than 3x."
MALLINCKRODT PLC: Claims Deadline Okayed Despite Opposition
-----------------------------------------------------------
Law360 reports that a June 28, 2021 deadline for creditors of
bankrupt pharmaceutical company Mallinckrodt to file proofs of
claim against the company overcame objections from a group of
plaintiffs alleging price-fixing damages Thursday, May 20, 2021,
with a Delaware judge saying opposition to the debtor's proposed
noticing procedures was unfounded.
During a virtual hearing, Donald E. Haviland Jr. of Haviland
Hughes, representing a group of third-party payors alleging
Mallinckrodt overcharged for its Acthar gel products, said he was
worried the proposed bar date for administrative claims would not
give Acthat claimants enough time to get their claims filed.
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.
On April 20, 2021, the Debtors filed their Plan of Reorganization
and the Disclosure Statement related thereto. The Bankruptcy Court
will hold a hearing to consider approval of the Disclosure
Statement on May 26, 2021, at 1 p.m. (prevailing Eastern Time)
before the Honorable John T. Dorsey.
MALLINCKRODT PLC: Drugmakers Group Slams Chapter 11 Disclosures
---------------------------------------------------------------
Law360 reports that a group of makers and distributors of
Mallinckrodt PLC's opioids have asked a Delaware bankruptcy judge
to reject the company's Chapter 11 plan disclosures for lack of
clarity and because they would allow Mallinckrodt to pick and
choose its contractual obligations.
In a motion filed Thursday, May 20, 2021, the group of drug
distributors, manufacturers and pharmacy chains said the
disclosures are too vague about who is covered by its liability
releases and describe an "unconfirmable" plan that calls for
Mallinckrodt to assume their contracts while stripping out
indemnification requirements. The Ireland-based drugmaker and 65
affiliates filed for Chapter 11 in October 2020.
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.
On April 20, 2021, the Debtors filed their Plan of Reorganization
and the Disclosure Statement related thereto. The Bankruptcy Court
will hold a hearing to consider approval of the Disclosure
Statement on May 26, 2021, at 1 p.m. (prevailing Eastern Time)
before the Honorable John T. Dorsey.
MALLINCKRODT PLC: Hospitals Say Plan Disclosures Inadequate
-----------------------------------------------------------
The ad hoc group of hospitals ("Hospitals") submitted an objection
to Mallinckdrodt PLC's Disclosure Statement.
According to the objection, the Hospital Claimants are in Class 9,
Other Opioid Claims. The Disclosure Statement provides that Other
Opioid Claims will be channeled exclusively to the Opioid Trust.
The Disclosure Statement further provides that Other Opioid Claims
will be "resolved solely in accordance with the terms, provisions,
and procedures of the Opioid Trust Documents." No information is
provided as to what those terms, provisions, and procedures are.
Thus, the Hospitals assert that the Disclosure Statement does not
provide the Hospitals with adequate information sufficient to make
an informed decision on whether to accept or reject the Plan.
Counsel for the ad hoc group of hospitals:
Scott J. Leonhardt
THE ROSNER LAW GROUP LLC
824 N. Market Street, Suite 810
Wilmington, Delaware 19801
Tel: (302) 777-1111
E-mail: leonhardt@teamrosner.com
- and -
Michael G. Abelow
SHERRARD ROE VOIGT & HARBISON, PLC
150 3rd Avenue South, Suite 1100
Nashville, TN 37201
Tel: (615) 742-4532
Email: mabelow@srvhlaw.com
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.
On April 20, 2021, the Debtors filed their Plan of Reorganization
and the Disclosure Statement related thereto. The Bankruptcy Court
will hold a hearing to consider approval of the Disclosure
Statement on May 26, 2021, at 1 p.m. (prevailing Eastern Time)
before the Honorable John T. Dorsey.
MALLINCKRODT PLC: Robbins, Sullivan Update on First Lien Group
--------------------------------------------------------------
In the Chapter 11 cases of Mallinckrodt PLC, et al., the law firms
of Robbins, Russell, Englert, Orseck & Untereiner LLP and Sullivan
Hazeltine Allinson LLC submitted a first supplemental verified
statement under Rule 2019 of the Federal Rules of Bankruptcy
Procedure, to disclose an updated list of members and holdings of
the Ad Hoc First Lien Notes Group.
The Ad Hoc First Lien Notes Group formed by certain unaffiliated
holders of the Debtors' 10.000% first lien senior secured notes due
2025 issued under that certain Indenture dated as of April 7,
2020.
In or around November 2020, certain Members of the Ad Hoc First
Lien Notes Group engaged Counsel to represent the Ad Hoc First Lien
Notes Group in connection with the Members' holdings of the First
Lien Notes. From time to time thereafter, certain additional
Members have joined the Ad Hoc First Lien Notes Group.
On Nov. 17, 2020, Counsel filed the Verified Statement of Robbins,
Russell, Englert, Orseck, Untereiner & Sauber LLP and Sullivan
Hazeltine Allinson LLC Pursuant To Federal Rule of Bankruptcy
Procedure 2019.
Counsel submits this First Supplemental Verified Statement to
update the current membership of the Ad Hoc First Lien Notes Group
and the disclosable economic interests currently held by the
Members of the Ad Hoc First Lien Notes Group.
As of May 17, 2021, members of the Ad Hoc First Lien Notes Group
and their disclosable economic interests are:
Aurelius Capital Management, LP
535 Madison Avenue 31st Floor
New York, NY 10022
* First Lien Notes: $41,129,000
* $19,000,000 Revolving Credit Facility Obligations
* $52,667,499 2024 Term Loan Obligations
* $22,063,195 2025 Term Loan Obligations
* $11,673,000 Second Lien Notes Obligations
* $41,284,000 5.500% Senior Notes Obligations
* $32,200,000 5.625% Senior Notes Obligations
* $37,031,000 4.75% Unsecured Notes Obligations
* 1,058,335 Shares
Boundary Creek Advisors LP
100 Park Avenue 35th Floor
New York, NY 10017
* First Lien Notes: $11,000,000
Capital Research and Management Company
333 South Hope Street 50th Floor
Los Angeles, CA 90071
* First Lien Notes: $96,960,000
* $17,188,000 5.500% Senior Notes Obligations
* $3,096,000 5.625% Senior Notes Obligations
* $12,025,000 5.750% Senior Notes Obligations
CTC Alternative Strategies, Ltd.
425 S. Financial Pl. 4th Floor
Chicago, IL 60605
* First Lien Notes: $10,165,000
* $6,862,116 2024 Term Loan Obligations
* $10,000,000 2025 Term Loan Obligations
Moore Global Investments, LLC
11 Times Square
New York, NY 10036
* First Lien Notes: $17,750,000
* $28,825,000 2024 Term Loan Obligations
Third Point LLC
55 Hudson Yards 51st Fl
New York NY 10001
* First Lien Notes: $29,000,000
* $26,645,467 2024 Term Loan Obligations
* $29,280,000 5.500% Senior Notes Obligations
* $17,500,000 5.625% Senior Notes Obligations
* $30,872,000 5.750% Senior Notes Obligations
Two Seas Capital LP
32 Elm Place 3rd Floor
Rye, NY 10580
* First Lien Notes: $15,000,000
* $3,225,000 Second Lien Notes Obligations
VR Global Partners, L.P.
300 Park Avenue 16th Floor
NYC, NY 10022
* First Lien Notes: $28,750,000
Counsel to the Ad Hoc First Lien Notes Group can be reached at:
SULLIVAN HAZELTINE ALLINSON LLC
William D. Sullivan, Esq.
William A. Hazeltine, Esq.
919 North Market Street, Suite 420
Wilmington, DE 19801
Tel: (302) 428-8191
Fax: (302) 428-8195
Email: bsullivan@sha-llc.com
whazeltine@sha-llc.com
- and -
ROBBINS, RUSSELL, ENGLERT, ORSECK, UNTEREINER &
SAUBER LLP
Lawrence S. Robbins, Esq.
Michael L. Waldman, Esq.
Donald Burke, Esq.
Jason A. Shaffer, Esq.
2000 K Street, N.W., 4th Floor
Washington, DC 20006
Telephone: (202) 775-4500
Facsimile: (202) 775-4510
Email: lrobbins@robbinsrussell.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3fcBWHZ
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.
On April 20, 2021, the Debtors filed their Plan of Reorganization
and the Disclosure Statement related thereto. The Bankruptcy Court
will hold a hearing to consider approval of the Disclosure
Statement on May 26, 2021, at 1 p.m. (prevailing Eastern Time)
before the Honorable John T. Dorsey.
MARTIN CONSTRUCTION: To Seek Plan Approval on June 29
-----------------------------------------------------
Judge Jerry C. Oldshue will convene a hearing on Martin
Construction, Inc.'s Plan of Reorganization is set for Tuesday,
June 29, 2021, at 9:30 a.m. at Judge Oldshue's Courtroom 2 East,
113 St. Joseph Street, Mobile, AL 36602.
The Debtor's Motion to Conditionally Approve Disclosure Statement
and Solicit Acceptances and Rejections Based on the Conditionally
Approved Disclosure Statement is granted.
The Disclosure Statement filed on May 6, 2021, is conditionally
approved subject to final approval at the Plan Confirmation
Hearing.
Acceptances or rejections of the Plan thereto must be in writing
and must be received by the Debtor's attorney on or before Tuesday,
June 22, 2021.
Any and all objections to confirmation of the Plan must be filed
and served on or before Tuesday, June 22, 2021,
About Martin Construction
Martin Construction, Inc., a construction company in Atmore, Ala.,
filed its voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Ala. Case No. 20-11020) on April 1,
2020. Phillip Martin, the authorized representative, signed the
petition. At the time of filing, the Debtor disclosed $372,937 in
assets and $1,018,996 in liabilities. Judge Jerry C. Oldshue
oversees the case. Michael A. Fritz, Sr., Esq., at Fritz Law Firm,
LLC, represents Debtor as legal counsel.
MICRON DEVICES: Perryman's Bidding Procedures for Assets Denied
---------------------------------------------------------------
Judge Laurel M. Isicoff of the U.S. Bankruptcy Court for the
Southern District of Florida denied the bidding procedures proposed
by Interested Party Laura Perryman, in connection with the sale of
Micron Devices, LLC's assets, free and clear of all liens, claims,
and encumbrances.
Attorney Kefalinos is directed to serve a copy of the Order on
interested parties who do not receive service by CM/ECF, and file a
proof of such service within two business days from entry of the
Order.
About Micron Devices
Micron Devices, LLC, a Miami Beach, Fla.-based company that
manufactures medical equipment and supplies, filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code
(Bankr.
S.D. Fla. Case No. 20-23359) on Dec. 7, 2020. Laura Perryman,
manager, signed the petition. In the petition, the Debtor
disclosed total assets of $2,520,764 and total liabilities of
$6,254,656.
Judge Laurel M. Isicoff oversees the case.
Michael Gulisano, Esq., at Gulisano Law, PLLC serves as the
Debtor's legal counsel.
Tarek Kirk Kiem is the Subchapter V trustee appointed in the
Debtor's Chapter 11 case. The trustee is represented by Furr
Cohen, P.A.
MIDLAND COGENERATION: Fitch Affirms BB- Rating on $741.3MM Notes
----------------------------------------------------------------
Fitch Ratings has affirmed Midland Cogeneration Venture LP's (MCV)
$741.3 million secured notes ($327.8 million outstanding) at 'BB-'.
The Rating Outlook is Stable.
RATING RATIONALE
MCV's rating is supported by the contracted revenues under the
power purchase agreement (PPA) with Consumers Energy Company
(Consumers, A-/Stable) and steam and energy sales to Corteva
Agriscience Inc. (Corteva, A/Stable). The approved settlement
agreement with Consumers permanently sets the fixed energy rate
(FER) component of the PPA and results in a Fitch-calculated
average rating case debt service coverage ratio (DSCR) of 1.17x on
the basis of contracted-only revenues. This level of coverage
suggests elevated vulnerability to default risk, particularly in
the event of adverse changes in business or economic conditions
over time.
MCV's ability to generate merchant cash flows could provide
additional cash flow to support debt repayments resulting in an
average rating case DSCR of 1.28x. Its operational risk is moderate
with a strong long-term service agreement (LTSA) and significant
equipment redundancy, supporting the Stable Outlook. The unique
operational flexibility of MCV provides unusual resilience not
typical of most thermal plants.
KEY RATING DRIVERS
Significant Redundancy and Stable Operations (Operation Risk:
Midrange)
MCV self-performs operations, though planned O&M and major
maintenance costs are adequately covered under the LTSA with
investment grade manufacturer affiliate, General Electric Company
(GE, BBB/Stable) through final maturity. MCV benefits from a high
degree of equipment redundancy and excess capacity, which has
allowed for strong historical PPA availability in excess of 99% and
stable operations. Accelerated rotor replacements resulted in
higher forecasted capital expenditures. Previously, the rotor
replacements were planned to begin after debt maturity. The absence
of a dedicated O&M and major maintenance reserve is mitigated by
coverage provided under the LTSA, liquidity from the working
capital facility and issuer funded General Reserve and flexibility
in capital spend.
Some Fuel Supply Risk (Supply Risk: Midrange)
MCV has some supply risk as a result of its short-term fuel
contract with Shell Energy expiring two years before debt maturity.
However, the short-term nature of the fuel contract is partially
mitigated by an abundant supply of the resource and substitute fuel
suppliers, as well as MCV's track record of meeting fuel supply
requirements dating back to 1990. Potential price risk stemming
from contract replacement or renewal is mostly mitigated by
pass-through of fuel costs via MCV's off-take agreements, with any
remaining exposure hedged with forward contracts.
Contracted Revenues (Revenue Risk: Midrange)
On average, over 90% of MCV's revenues are contracted between
Consumers at roughly 80%, and Corteva at roughly 10%. Contracted
revenues are fixed-price with a broad indexation to costs, and risk
of performance penalties and PPA termination is limited. Cash flows
are moderately sensitive to dispatch levels as the margins
generated provide additional cash flow cushion for debt repayment.
Conventional Debt Structure (Debt Structure: Midrange)
MCV's debt structure consists of senior, fully amortizing,
fixed-rate debt. Bondholders benefit from a forward and backward
looking equity distribution test of 1.20x DSCR as well as leverage
limitations, which provide adequate liquidity. MCV also has a
six-month debt service reserve funded with a letter of credit.
Financial Profile
Fitch's DSCR calculation treats the General Reserve as an operating
expense rather than as a cost offsetting line item. Fitch
calculated a rating case average DSCR of 1.17x with a minimum of
1.10x based only on contracted cash flows. An additional rating
case scenario including projected merchant cash flows results in an
average DSCR of 1.28x, an 11-bp improvement. The rating case
profile is on the weaker end for the rating level but is moderated
by the demonstrated stable operating history, potential merchant
cash flow support, and operational flexibility to delay other
discretionary capital projects if needed. The resulting lower
coverages indicate an elevated vulnerability to default risk;
however, MCV's level of flexibility is unique and provides cushion
to withstand temporary periods of underperformance to support
continued servicing of the debt.
PEER GROUP
The rating is comparable to other thermal projects, which may have
slightly higher coverages but lack the level of operational
flexibility of MCV. Lea Power (BB+/Stable) has an average rating
case DSCR of 1.41x and minimum of 1.20x, but historically
experienced higher than forecasted operating expenses and lacks
equipment redundancy. Higher rated peers such as Orange Cogen
(A-/Stable) benefit from a stronger rating case DSCR profile
supported by fixed capacity payments alone as sufficient to cover
both operating costs and debt service with ample cushion
remaining.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Pre-funding of forecasted capital expenditures for the
remaining debt term exclusive of operating cash flow;
-- Projected Fitch-calculated rating case DSCR that is
consistently above 1.30x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Costs consistently exceeding Fitch's rating case forecasts;
-- Projected Fitch calculated rating case DSCR's persistently
falling below 1.15x based on contracted cash flows and 1.20x
when including merchant cash flows.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
TRANSACTION SUMMARY
MCV was formed in 1990 as a limited partnership to convert a
portion of an uncompleted Consumers nuclear power plant into a
1,633MW natural gas-fired, combined cycle, cogeneration facility.
The 2011 debt issuance ($560.0 million, $247.9 million outstanding)
refinanced the sponsors' term loans to acquire MCV in 2009, and the
additional, pari passu 2013 issuance ($181.3 million, $80.9 million
outstanding) monetizes incremental cash flows resulting from
several contract amendments that occurred between 2011 and 2013.
CREDIT UPDATE
MCV achieved a Fitch-calculated DSCR of 1.33x in 2020, landing in
between the Fitch base and rating case forecasts for the year.
Gross margin benefitted primarily from strong PPA and merchant
dispatch due to low natural gas prices, with the PPA capacity
factor reaching 50.1% for the year. In May 2020, the failure of two
dams on the Tittabawassee River caused severe flooding in Midland,
Michigan. The plant only suffered minor direct repair costs but the
facility's temporary shutdown resulted in $1.3 million of lost
revenue. Lower electric rates, steam deliveries, and reactive power
also negatively impacted gross margin in 2020 compared with
expectations.
Costs were slightly lower than budget thanks to lower maintenance
expenses, lower legal costs from the Consumers dispute resolved in
2020, and cancelled major maintenance and capex activities.
Somewhat offsetting these savings, expenses related to Unit 9
repairs and flood-related expenses added $2.1 million in costs.
The agreement MCV and Consumers reached in April 2020 was approved
by the Michigan Public Service Commission (MPSC) in March 2021. The
settlement agreement finally establishes an FER that is not subject
to change, providing price certainty, although at a lower level
than previously forecasted. In addition, management noted that the
terms of the gas transportation and storage were cheaper than MCV's
alternative and allow MCV to meet its PPA obligations.
Operating performance was strong in 2020 despite several incidents,
underlining the plants solid management and operating resilience.
Availability under the PPA contract was strong at 99.7% for the
year, in line with historical levels. The May 2020 flood only had
minimal impact on operations and costs ($0.4 million in damages and
$1.3 million in lost revenue). Unit 9 experienced two separate
issues, for which MCV has filed insurance claims and is liable for
$1 million in deductible per event. The unit was taken offline
between April 13 and May 10 following damaging to blades and vanes
caused by a liberated sight glass tube. The unit tripped again on
Nov. 3, 2020 after a liberated heat shield damaged blades and
vanes, and was returned to service on Nov. 25. Management has taken
action to prevent the issues from occurring at other units and
identify the root causes.
MCV has hedged 97% of its natural gas exposure for the remainder of
2021 and 2022, and 49% for 2023, a higher proportion than usual
given anticipated upward pressure on gas prices. MCV also
anticipates further cost savings from the anticipated finalization
of the reorganization to optimal staffing levels initiated last
year. The plant will undergo its seven-year all-plant outage this
year, for which $6.8 million have been budgeted.
FINANCIAL ANALYSIS
Fitch cases include updated gas price forecasts and corresponding
assumed dispatch rates, both generally lower than during last
year's review. No changes were made to stresses in Fitch's cases.
The cases already incorporated the assumption of the $6.12/MWh
fixed energy rate resulting from the 2020 agreement with Consumers.
The Fitch calculated DSCRs treat General Reserves as an operating
expense rather than a cost offsetting line item.
Fitch's base and rating case assume availability averaging 99%, a
SEPA load of 46 MW, a 30% reduction to projected ancillary and
arbitrage revenues, and exclusion of merchant and black start
sales. Fitch's base case assumes inflationary cost growth and a
heat rate in line with historical averages. Fitch's base case DSCRs
average 1.24x over 2022-2024 with a minimum of 1.15x.
Fitch's rating case assumes a 5% higher cost profile, a 1% increase
to the heat rate, and higher fuel prices. In Fitch's rating case,
DSCRs average 1.17x over 2022-2024 with a minimum of 1.10x. MCV has
a high level of equipment redundancy to withstand temporary
operational issues that may arise. Management indicates that one to
three gas turbines can be down at a time depending on the season
while still continuing to maintain 100% PPA availability.
Merchant capacity and energy cash flows provide on average an
additional coverage cushion of slightly more than 10 bps. The
merchant forecasts are based on Fitch's merchant base and low gas
and power price decks. Base case coverages average 1.36x with a
minimum of 1.28x when merchant revenues are included. Under rating
case, DSCR averages 1.28x with a minimum of 1.22x. Historically MCV
has shown the ability to generate merchant cash flow with
historical DSCRs from 2015-2020 averaging 1.37x. The resulting
coverages demonstrate the flexibility available to generate
additional cash flow cushion to support repayment of the debt.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
MISSOURI JACK: Wins October 14 Plan Exclusivity Extension
---------------------------------------------------------
Judge Barry S. Schermer of the U.S. Bankruptcy Court for the
Eastern District of Missouri, Eastern Division extended by 60 days
the periods, within which Missouri Jack, LLC and its affiliates
have the exclusive right to file a plan of reorganization to and
including October 14, 2021, and to solicit acceptances to December
13, 2021.
The granted extensions will give the Debtors sufficient time to
formulate and present their plans of reorganization. Also, the
extra time will help the Debtors to reach a consensus among their
various constituencies and formulate their plan and disclosure
statement.
A copy of the Court's Extension Order is available at
https://bit.ly/3oBVJ6M from PacerMonitor.com.
About Missouri Jack
Earth City, Missouri-based Missouri Jack LLC, Illinois Jack LLC,
and Conquest Foods, LLC are owners of 70 Jack-in-the-Box
restaurants in Missouri and Illinois.
Missouri Jack and its affiliates sought Chapter 11 protection
(Bankr. E.D. Mo. Case Nos. 21-40540 to 21-40542) on February 16,
2021. The petitions were signed by Navid Sharafatian of
Victorville, California, the manager of TNH Partners LLC.
Missouri Jack listed assets and liabilities of $10 million to $50
million while Illinois Jack and Conquest listed assets of $1
million to $10 million and liabilities of $10 million to $50
million.
Judge Barry S. Schermer oversees the cases. The Debtor tapped Leech
Tishman Fischaldo & Lampl, Inc. as lead bankruptcy counsel, Summers
Compton Wells, LLC as local counsel, and Reliable Companies serves
as the service agent.
MOBITV INC: Court Approves $23M Sale to TiVo Corp.
--------------------------------------------------
Law360 reports that a Delaware bankruptcy judge on Friday, May 21,
2021, signed off on video streaming service MobiTV Inc.'s $23
million going-concern sale to TiVo Corp. after being told the deal
was unopposed and had brought on a settlement between the company's
secured and unsecured creditors.
At a brief virtual hearing, U.S. Bankruptcy Judge Laurie Selber
Silverstein approved the sale of MobiTV's assets after counsel for
the company said that all objections to the sale had been resolved
and that news of the bid had been followed by a deal between the
unsecured creditors and lender Ally Bank over the distribution of
the proceeds.
About MobiTV Inc.
Founded in 2000, MobiTV is the first company to bring live and
on-demand television to mobile devices and is a leader in
application-based television and video delivery solutions. MobiTV
provides end-to-end internet protocol streaming television services
("IPTV") via a proprietary cloud-based, white-label application.
On March 1, 2021, MobiTV Inc. and MobiTV Service Corporation filed
for Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-10457).
MobiTV Inc. was estimated to have at least $10 million in assets
and $50 million to $100 million in liabilities as of the filing.
FTI Consulting, Inc. and FTI Capital Advisors LLC have been
retained as the Debtors' financial advisor and investment banker to
assist in negotiation of strategic options. Pachulski Stang Ziehl &
Jones LLP and Fenwick & West LLP serve as the Debtors' legal
counsel. Stretto is the claims agent, maintaining the page
https://cases.stretto.com/MobiTV
The U.S. Trustee for Regions 3 and 9 appointed an official
committee of unsecured creditors on March 15, 2021. The committee
tapped Fox Rothschild, LLP, and PricewaterhouseCoopers, LLP as its
legal counsel and financial advisor, respectively.
About Tivo Corp.
TiVo provides a broad set of cloud-based services, embedded
software solutions and intellectual property that bring
entertainment together for the watchers, creators and advertisers.
MORTGAGE INVESTORS: Owner Hits Ch. 11 Bankruptcy Protection
-----------------------------------------------------------
Luke Torrance of Tampa Bay Business Journal reports that Mortgage
Investors Corp., the company owned by entrepreneur and former Tampa
Bay Rowdies owner Bill Edwards, has filed for bankruptcy.
The Chapter 11 bankruptcy filing was sent to the U.S. Bankruptcy
Court for the Middle District of Florida on May 14, 2021. An
additional document listed assets of $148,533 and liabilities in
excess of $8 million. Almost all of the company's listed assets
came from intangibles, intellectual property or office furniture
and equipment; MIC listed just $1,453 in cash or cash equivalents.
The filing listed seven creditors, with the largest one being
Edwards himself at $7.5 million.
The attorney handling the case is Keith Fendrick of Holland &
Knight. Fendrick declined to comment on the case. Bill Edwards
also declined to comment on the bankruptcy.
Some bankruptcy attorneys suggested in 2020 that businesses would
hold off on filing for bankruptcy until the economy began to
recover from the Covid-19 pandemic, which may explain the timing of
the filing.
Mortgage Investors Corp. was a mortgage company founded in 1938 and
based in St. Petersburg that offered mortgage refinancing solutions
and serves military veterans in the state of Florida. Operations at
the company essentially ended in 2013, with Edwards citing an
ornery regulatory climate among other reasons for doing severely
curtailing the workforce. Several hundred MIC workers were laid off
that year. Earlier in 2013, Edwards had tried to sell MIC to
Tampa-based HomeBancorp but the deal fell apart, the Tampa Bay
Times reported.
The company ended a 13-year legal battle in 2019, when the U.S.
District Court dismissed a lawsuit that claimed the company had
overcharged veterans for home loan refinancing, although the judge
noted that the lawsuit was "rife with disputed issues of fact."
Locally, Bill Edwards is known for much more than his company.
He spent millions of dollars renovating the mixed-use retail
complex in downtown St. Petersburg now known as the Sundial, which
he purchased in 2011. He owned the Tampa Bay Rowdies soccer team
from 2013 to 2018, and spent $1.5 million on renovations to Al Lang
Stadium to make it more soccer-friendly. He also manages the
Mahaffey Theater under the Big3 Entertainment Group, the parent
company of several entertainment-related ventures Edwards
oversees.
About Mortgage Investors Corp.
Mortgage Investors Corp. is a St. Petersburg, Florida-based company
founded in 1938 and owned by entrepreneur and former Tampa Bay
Rowdies owner Bill Edwards. It offered mortgage refinancing
solutions and serves military veterans in the state of Florida.
Mortgage Investors Corp. sought Chapter 11 protection (Bankr. M.D.
Fla. Case No. 21-02521) on May 14, 2021.
MUELLER WATER: Moody's Rates New Senior Unsecured Notes 'Ba1'
-------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to Mueller Water
Products, Inc.'s proposed senior unsecured notes. Moody's expects
the terms and conditions of the proposed senior unsecured notes to
be similar to Mueller's existing senior unsecured notes due 2026.
Mueller's Ba1 Corporate Family Rating and Ba1-PD Probability of
Default Rating are not impacted by the proposed transaction. The
outlook is stable. The company's speculative grade liquidity rating
remains SGL-1.
Moody's views the proposed transaction as credit positive since
Mueller is extending its maturity profile in essentially a
leverage-neutral transaction. Proceeds from the proposed notes and
cash on hand will be used to redeem the company's $450 million
senior unsecured notes due 2026, at which time the Ba1 rating on
these notes will be withdrawn, and to pay the call premium and
related fees and expenses. In addition, interest savings could be
sizeable, conserving upwards of about $6.75 million per year in
cash interest payments.
The following ratings are affected by the action:
Assignments:
Issuer: Mueller Water Products, Inc.
Senior Unsecured Regular Bond/Debenture, Assigned Ba1 (LGD4)
RATINGS RATIONALE
Mueller's Ba1 CFR reflects Moody's expectation that the company
will benefit from expansion in the repair and replacement of
municipal water distribution and treatment systems market, which
accounts for 60% - 65% of the company's revenue. Moody's forecasts
ongoing strong operating performance with adjusted EBITDA margin
nearing 19.5% in fiscal year 2022 ending September 30 versus 18.8%
for LTM Q2 2021 (March 31, 2021). Moody's also projects that
Mueller will maintain solid credit metrics, such as adjusted free
cash flow-to-debt approaching 7% by late 2022. Although Moody's
anticipates good growth over the next two years for the US
homebuilding sector, from which Mueller earns about 25%-30% of its
revenue, this end market is very volatile and poses a meaningful
credit risk. Also, Mueller is a small company in terms of revenue,
limiting absolute levels of earnings and dictating that the company
maintain low fixed charges.
The stable outlook reflects Moody's expectation that Mueller will
uphold conservative financial policies, including reinvesting in
the business with additional capital expenditures, avoiding
transformative acquisitions and using available cash for share
repurchase. Very good liquidity and relatively inelastic demand for
water-related products further support the stable outlook.
Mueller's SGL-1 Speculative Grade Liquidity Rating reflects Moody's
expectation that Mueller will generate consistent free cash flow.
Significant cash on hand ($228 million at Q2 2021), ample revolver
availability and no near-term maturities further contribute to
Mueller's very good liquidity.
The Ba1 rating on Mueller's proposed senior unsecured notes, the
same rating as the Corporate Family Rating, results from their
position as the preponderance of debt in the company's capital
structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Factors that could lead to an upgrade:
- Debt-to-LTM EBITDA is sustained below 2.0x
- Free cash flow-to-debt is sustained above 12.5%
- EBITDA margin sustained above 22.0%
- Preservation of very good liquidity
- A capital structure that ensures maximum financial flexibility
- Maintain conservative financial policies
- Increasing scale and product diversity
Factors that could lead to a downgrade:
- Debt-to-LTM EBITDA is sustained above 3.0x
- EBITDA margin contracting towards 17.0%
- The company's liquidity deteriorates
The principal methodology used in this rating was Manufacturing
Methodology published in March 2020.
Mueller Water Products, Inc., headquartered in Atlanta, Georgia, is
a North American manufacturer of water infrastructure, flow control
and repair products for use in water distribution networks and
wastewater treatment facilities. Mueller also sells products for
gas distribution and pipe systems.
MUELLER WATER: S&P Rates New $450MM Senior Unsecured Notes 'BB'
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating and '3'
recovery rating to Atlanta-based Mueller Water Products Inc.'s
proposed $450 million senior unsecured notes due 2029. The '3'
recovery rating indicates our expectation for meaningful recovery
(50%-70%; rounded estimate: 60%) in the event of a default. The
company plans to use the proceeds from this issuance to repay its
existing unsecured notes.
S&P's 'BB' issuer credit rating and stable outlook on Mueller are
unchanged. Its ratings incorporate its view that the company will
maintain strong profitability and solid credit metrics because of
the favorable secular trends in the municipal utilities market,
which is somewhat offset by its smaller scale and high geographic
and customer concentrations. Mueller manufactures products used in
the transmission, distribution, and measurement of water. The
company's products include fire hydrants, valves, pipe repair
products, and meters used in water infrastructure, flow control,
and leak detection primarily in the U.S. and Canada.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- The '3' recovery rating on Mueller Water Products' senior
unsecured notes reflects our expectation for meaningful (50%-70%;
rounded estimate: 60%) recovery after satisfying unpaid priority
administrative expenses, asset-based lending (ABL) revolving credit
facility lenders, and capital lease claims.
-- S&P's simulated default scenario incorporates a payment default
occurring in 2026 due to an unexpected and significant decline in
residential construction that coincides with reduced municipal
spending on water infrastructure projects, as well as the inability
to refinance its capital structure.
-- S&P values the company on a going-concern basis. The gross
enterprise value of $422 million is based on emergence EBITDA of
$77 million and a valuation multiple of 5.5x (in line with the
multiples we use for similarly rated capital goods companies).
Simulated default assumptions
-- Simulated year of default: 2026
-- Implied enterprise value multiple: 5.5x
-- EBITDA at emergence: $77 million
-- LIBOR at default: 2.5%
-- Jurisdiction: U.S.
Simplified waterfall
-- Net enterprise value at default (after 5% administrative
costs): $401 Million
-- Valuation split (obligors/nonobligors): 90%/10%
-- ABL lenders' claims: $107 million
-- Total collateral value available to first-lien lenders: $279
million
-- Total value available to unsecured claims: $293 million
-- Senior unsecured debt and pari passu claims: $459 million
--Recovery expectations: 50%-70% (rounded estimate: 60%)
Note: All debt amounts include six months of prepetition interest.
NALU'S GROUP: Has Until May 30 to File Combined Plan & Disclosures
------------------------------------------------------------------
On May 12, 2021, the U.S. Bankruptcy Court for the Central District
of California conducted a status conference for debtor Nalu's
Group, Inc. On May 18, 2021, Judge Theodor C. Albert ordered
that:
* The Debtor must file a combined Plan and Disclosure
Statement on or before May 30, 2021, but no separate hearing on the
approval of a Disclosure Statement is required.
* The Plan and ballots are to be served on or before May 30,
2021.
* Ballots must be served on Debtor's counsel no later than
July 5, 2021.
* Plan confirmation brief and memorandum must be filed on or
before July 7, 2021.
* A ballot summary and copies of physical ballots cast are to
be filed by the Debtor on or before July 7, 2021.
* Plan confirmation hearing is set for July 14, 2021, at 10:00
a.m.
A full-text copy of the order dated May 18, 2021, is available at
https://bit.ly/3veJIGY from PacerMonitor.com at no charge.
Attorneys for the Debtor:
Michael Jones
Sara Tidd
M. Jones & Associates, PC
505 North Tustin Ave, Suite 105
Santa Ana, CA 92705
Telephone: (714) 795-2346
Facsimile: (888) 341-5213
Email: sara@mjonesoc.com
Nalu's Group, Inc., sought Chapter 11 protection (Bankr. C.D. Cal.
Case No. 21-10863) on April 1, 2021.
NEW ACADEMY HOLDING: S&P Upgrades ICR to 'B+' on Debt Redemption
----------------------------------------------------------------
S&P Global Ratings raised New Academy Holding Co.'s issuer-credit
rating to 'B+' from 'B' on improved credit measures and its
expectation for a less aggressive financial policy.
S&P said, "At the same time, we assigned a 'B+' issue-level rating
and '3' recovery rating to Academy's repriced term loan facility.
The '3' recovery rating reflects our expectation for a meaningful
recovery (50%-70%; rounded estimate: 55%) in a payment default or
bankruptcy."
The positive outlook reflects the potential for an upgrade over the
next 12 months if Academy demonstrates consistent performance and
S&P adjusted leverage remaining below 3x on sustained basis.
The upgrade reflects S&P's view of Academy's improved credit
metrics and financial policy. Academy recently stated that its
financial sponsors reduced their ownership position to about 32%
from 44% as of May 2021 and 55% as of the end of Jan. 2021, thus
mitigating the private equity firm's influence on financial policy.
The company is also exploring a contemplated redemption of $99
million in debt funded with cash generation and at the same time is
seeking a repricing of the secured term loan facility. In addition,
Academy's operating performance exceeded S&P's expectations last
year as consumers purchased sporting goods in increasing amounts.
Moreover, recent performance trends appear to have continued into
the first half of this year, as Academy reported significantly
stronger-than-projected first-quarter comparable store sales of
about 39%.
Following the planned redemption, Academy's funded financial
obligations will include $300 million in first-lien term loan debt
along with $400 million in pari passu secured notes both maturing
in 2027. Although the repayment is not significant relative to
total S&P Global Ratings-adjusted debt of around $2 billion, we
believe the action indicates the company's willingness to manage
its debt leverage with excess cash over time. S&P said, "In
addition, we think the repricing will result in a meaningful
reduction in the company's interest burden. The repricing and the
debt redemption (along with our updated performance projections)
leads us to revise our financial risk profile assessment to
significant from aggressive. This assessment also incorporates our
projection for S&P Global Ratings-adjusted leverage in the mid- to
high-2x range and funds from operations (FFO) as a percentage of
debt in the mid- to high-20% area."
Moreover, in combination with the recent equity sale reducing KKR's
(Kohlberg, Kravis, Roberts) ownership to below 40%, two affiliates
of KKR resigned from Academy's board of directors while an
independent replacement was appointed by the board. Following
shareholder approvals, the company's board will be comprised by a
majority of independent directors with six out of eight board
members defined as independent. In S&P's view, Academy is no longer
a financial sponsor-controlled company, and it has accordingly
revised our financial policy assessment to neutral from FS-5.
S&P said, "Following good performance in 2020, we expect continued
but moderating growth over the next 12 to 18 months. Academy's
operating performance recently benefited from its market position
as a value-oriented retailer along with increased customer traffic
and demand for sporting goods. Sales growth approached 18% last
year while S&P adjusted EBITDA increased more than 50% to $754
million. At the same time, S&P adjusted EBITDA margins improved 300
basis points to 13.3% in 2020, as Academy benefitted from sales
leverage, lean inventory levels, and cost-containment efforts. We
had expected sales growth around 12% and EBITDA growth around 20%
with S&P adjusted EBITDA margins approaching the 11% range.
"For 2021, we project moderating but continued growth with good
first-half performance that offsets normalizing results later this
year. Although we think Academy's performance benefitted from some
transitional events like government stimulus, we think company
initiatives also helped drive growth. This includes good inventory
management and promotional cadence along with in-store and
omni-channel investments. In addition, our expectations incorporate
the strong performance in the first half of the year, noting the
nearly 39% comparable store sales growth in the first quarter. We
think this growth mitigates slowing growth over the coming 12
months and expect sales and S&P adjusted EBITDA to increase at a
low- to mid-single rate this year.
"Academy participates in the highly competitive and mature sports
retailing industry and we believe it will maintain a limited market
position and remain predominantly a physical retailer.
"We view the company as a regional player, with stores primarily in
Texas and adjacent southern states. The company positions itself as
a value player and competes with significantly larger and
better-capitalized competitors, competitors focused on either the
mass market or whom provide specialized sports products. We think
this puts the company at a potentially long-term disadvantage, as
we think the sector is prone to product promotions and competitive
pricing along with changing customer habits. We also believe
sporting goods and related products remain a highly fragmented
sector with increasing competition from many players, including
larger specialty retailers such as Bass Pro, pure-play e-commerce
competitors such as Amazon, and big-box retailers such as Walmart.
"Moreover, we believe Academy and the sports retailing industry may
experience more volatile performance over the medium term, as the
positive demand generated during the pandemic normalizes. In
addition, we project Academy's digital sales penetration will
remain about 10% of its total sales despite its increased
investments in omni-channel capabilities, lower than many retailing
peers. We continue to view the company's as largely a
brick-and-mortar, regional retailer operator in a highly
competitive space. These factors, including near-term performance
uncertainty and a relative limited track record as a public
company, lead us to maintain our negative comparative ratings
analysis modifier.
"The positive ratings outlook reflects the potential for an upgrade
over the next 12 months if Academy demonstrates sustained
consistent performance gains, resulting in our expectations for
adjusted leverage remaining below 3x on sustained basis."
S&P could raise the rating on Academy if:
-- The company sustains good operating performance and
profitability as operations normalize over the next 12 months;
-- Under this scenario we would expect Academy to sustain adjusted
leverage below 3x and FFO to debt approaching 30%, supported by the
company's financial policy.
S&P could revise the outlook back to stable if:
-- The company meaningfully underperforms our base case,
potentially due to increased competition, inventory challenges,
strategy execution issues, or a significant normalization in
performance over the next 12 months.
-- The company shifts to a more aggressive financial policy
resulting in adjusted leverage that is sustained above 3x.
NEW RESIDENTIAL: S&P Alters Outlook to Stable, Affirms 'B' ICR
--------------------------------------------------------------
S&P Global Ratings revised its outlook on New Residential
Investment Corp. (NRZ) to stable from negative. S&P also affirmed
its long-term issuer credit rating at 'B' and unsecured debt rating
at 'B-'.
The outlook revision reflects NRZ's stable financial performance
during the second quarter of 2020. The company recently reported
net income of more than $300 million, driven by earnings growth in
mortgage originations and lower amortization of mortgage servicing
rights (MSRs). While the company effectively hedges fair value
changes in MSRs using its agency RMBS portfolio, S&P believes lower
amortization of MSRs as rates rise will continue to be a tailwind
for earnings for the remainder of the year.
In the first quarter of 2020, the company posted a net loss of $1.6
billion, driven by losses in its non-agency RMBS portfolio. As a
result, the company also sold most of its agency RMBS portfolio to
raise liquidity and reduce leverage. Compared with December 2019,
the company maintains relatively less risk in its asset mix.
Non-agency RMBS on balance sheet as of March 31, 2021, are just
over 3% of total assets, compared with 18% as of Dec. 31, 2019. The
company also has close to $1.2 billion in cash, compared with $690
million on Dec. 31, 2019, despite its balance sheet being 22%
smaller.
NRZ has also made progress on funding, increasing its use of term
debt, and decreasing its use of mark-to-market funding, outside of
funding for agency RMBS. S&P continues to view NRZ's reliance on
repurchase agreements as a weakness. Of its $19.5 billion in
repurchase finance as of March 31, 2021, $5.1 billion is used to
fund mortgage originations, while $13.6 billion was used to fund
Agency RMBS securities that were stable during 2020.
S&P said, "Overall, we view the Caliber Home Loans Inc. acquisition
as a credit neutral in the near-term. We do not believe the
acquisition will add much leverage to the company, as measured by
debt to ATE. We think growth in operating businesses is a credit
positive, particularly as it helps the company grow originations.
The combined company's ability to generate sufficient MSRs from
originations to offset run-off will be driven by the origination
volumes of NRZ post-acquisition and the competitive environment, in
our view. Additionally, there are potential operational risks from
combining Caliber's platform with its current servicing and
origination platforms that were primarily acquired form Ditech and
Shellpoint.
"Our ratings on NRZ's senior unsecured debt are one notch lower
than the issuer credit rating because priority debt significantly
exceeds 30% of adjusted assets.
"S&P Global Ratings' stable outlook on NRZ reflects our expectation
the company will continue to generate stable earnings and maintain
adequate liquidity. We expect leverage over the next 12 months will
be 4.0x-5.0x, as measured by debt to adjusted total equity (ATE).
"We believe upside to the rating is unlikely over the next year.
Upside to the rating would depend on the company maintaining
adequate liquidity and access to funding facilities while growing
operating businesses relative to its real estate portfolio
business.
"We could lower the rating over the next year if the company has
trouble renewing any of its funding facilities, or if margin calls
stress the company's liquidity, in our view. We could also lower
the rating if leverage rises, specifically if debt to ATE is above
5.0x and the company shifts into riskier assets, or if the company
increases its use of repurchase agreements to fund assets other
than agency RMBS and mortgage originations."
NEW YORK INN: Involuntary Chapter 11 Case Summary
-------------------------------------------------
Alleged Debtor: New York Inn Inc.
1904 E. Pioneer Pkwy
Arlington, TX 76010
Involuntary Chapter
11 Petition Date: May 21, 2021
Court: United States Bankruptcy Court
Northern District of Texas
Case Number: 21-30958
Judge: Hon. Michelle V. Larson
Petitioners' Counsel: Bill Rielly, Esq.
A full-text copy of the Involuntary Petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/VCWXDRA/New_York_Inn_Inc__txnbke-21-30958__0001.0.pdf?mcid=tGE4TAMA
Alleged creditors who signed the petition:
Petitioners Nature of Claim Claim Amount
----------- --------------- ------------
AP Interior Interior Design $200,000
5418 Anita St.
Dallas, TX 75206
Prateek Desai Loan $15,000
2019 Ruder St.
Dallas, TX 75212
Wajattat Ali Khan Loan $15,000
700 Kellogg St.
Houston, TX
NEXSTAR BROADCASTING: Moody's Hikes CFR to Ba3, Outlook Stable
--------------------------------------------------------------
Moody's Investors Service upgraded Nexstar Broadcasting, Inc.'s
corporate family rating to Ba3 from B1 and the company's
Probability of Default Rating to Ba3-PD from B1-PD. Concurrently
Moody's upgraded the rating on Nexstar's senior secured facilities
to Ba2 from Ba3 and the rating on the company's senior unsecured
notes to B2 from B3. The rating on Mission Broadcasting, Inc.'s
(Mission) senior secured facilities was also upgraded to Ba2 from
Ba3. Nexstar's speculative grade liquidity (SGL) rating of SGL-2 is
unchanged. The outlook is stable.
The upgrade reflects Moody's expectations that 2021 will see a
strong recovery in advertising demand on the back of the successful
US COVID-19 vaccination roll out. This, along with the company's
stated intention to voluntarily repay debt will lead to Nexstar
sustaining a Moody's adjusted leverage (on a two year average
basis) well below 4.5x in 2021 and 2022.
Upgrades:
Issuer: Nexstar Broadcasting, Inc.
Probability of Default Rating, Upgraded to Ba3-PD from B1-PD
Corporate Family Rating, Upgraded to Ba3 from B1
Senior Secured Bank Credit Facility, Upgraded to Ba2 (LGD2) from
Ba3 (LGD3)
Senior Unsecured Regular Bond/Debenture, Upgraded to B2 (LGD5)
from B3 (LGD5)
Upgrades:
Issuer: Mission Broadcasting, Inc.
Senior Secured Bank Credit Facility, Upgraded to Ba2 (LGD2) from
Ba3 (LGD3)
Outlook Actions:
Issuer: Nexstar Broadcasting, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Nexstar's Ba3 CFR reflects the company's large quasi-national
scale. Nexstar is currently the largest US local broadcaster with
196 TV stations in 114 markets across 38 U.S. states. The company
reaches approximately 39% of U.S. households (including UHF
discount), the maximum allowable reach under current FCC rules. In
2021, the company is expected to generate around half of its
revenue from retransmission fees which are contractual and expected
to grow by low double digit percentage in 2021. The company has
committed to applying some of its large free cash flow to
voluntarily debt repayment, which along with EBITDA growth will
lead to Moody's adjusted debt/EBITDA (on a two year average basis)
declining below 4.5x in 2021 and remaining at or around 4x in 2022.
The Ba3 also takes into account the company's strong free cash flow
ability, boosted in even years by political advertising spending.
Nexstar generated free cash flow of $979 million in 2020, despite
core TV advertising demand declining by more than 20%.
The Ba3 CFR also reflects Nexstar's historical tolerance for
elevated leverage at times of M&A although with the FCC cap
reached, there is little room for any further local broadcast
acquisition. The rating also reflects the structural pressures
faced by core TV advertising which is expected to decline by
mid-single digit as advertising budgets shift towards digital media
continues.
Given the lack of further large M&A opportunities in broadcast TV,
Moody's expects Nexstar to focus on growing its existing businesses
organically and apply a large part of its free cash flow to
shareholder returns through increased dividends and a newly
announced $1 billion share buyback program.
Moody's however expects Nexstar to continue to focus part of its
free cash flow to debt reduction in line with the company's track
record of maintaining a prudent financial policy.
In 2021, Moody's expects core advertising to continue improving to
pre-pandemic levels. In 2020, core TV ad spend improved
sequentially after an initial drop of more than 30% in the second
quarter of the year. In the longer term, Moody's expects continued
mid-single digit declines in TV advertising demand as the share of
budgets spent on digital media increases. Core advertising
represents around 40% of Nexstar's total revenue.
The majority of Nexstar's revenue are today derived from the
company's retransmission fees, paid on a per subscriber basis by
traditional MVPDs (cable and satellite pay-TV operators) and vMVPDs
(virtual MVPDs such as Sling TV, Hulu Live TV or YouTube TV). While
traditional MVPD cord cutting has accelerated due to the increase
of direct to consumer and over the top services (Hulu, Netflix
etc), Nexstar's subscriber attrition trends have been slowing down
to around 5% in Q1 2021 vs around 6% in the prior year as a result
of improved carriage on vMVPDs which started carrying the full
Nexstar slate in the past year. Absent any material change in cord
cutting trends, Nexstar has very strong visibility over
retransmission revenue through the end of 2022 as it has recently
renegotiated both its distribution and its big four network
affiliate fee contracts for the large majority of its subscribers.
During the pandemic, local TV viewership increased materially as
people sought local information from reliable sources and tuned in
their local news programs in numbers. While Nexstar's viewership
peaked in the summer of 2020 and has since declined, it remains
above pre-pandemic levels and enhances further the company's
position to both advertisers and pay-TV providers.
Nexstar's SGL-2 speculative grade liquidity (SGL) rating is
supported by a sizeable cash balance of about $340 million and
about $98 million of available capacity under the company's $425
million revolving credit facilities, as of March 31, 2021.
Nexstar's credit agreement contains a 4.25x first lien net leverage
maintenance covenant, and the company's covenant leverage was 2.14x
at March 2021. The company is expected to be well below this first
lien net leverage covenant over the next 12-18 months. The company
generates sizable free cash flow part of which Moody's expects will
be used to voluntarily reduce debt in the remainder of 2021 and in
2022.
The ratings for the debt instruments reflect the overall
probability of default of Nexstar, reflected in the Ba3-PD
probability of default rating (PDR), an average family loss given
default (LGD) rate of 50% and the priority ranking of the debt
instruments in the capital structure. The senior secured facilities
are rated Ba2 (LGD2) given their secured, priority claim on
material owned property and assets over the unsecured notes, rated
B2 (LGD5).
The stable outlook reflects Moody's expectations that Nexstar's
leverage (Moody's adjusted and on a two year average basis) will
remain well below 4.5x through 2021 and below 4x in 2022.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Further positive pressure on the ratings could develop should
Moody's adjusted leverage (on a two year average) improve to below
3.5x on a sustainable basis and should the company maintain Moody's
adjusted free cash flow to debt (on a two year average) above 10%.
Negative ratings pressure could develop should the company's
Moody's adjusted leverage (on a two year average) increase above
4.5x on a sustained basis or should the company's liquidity weaken
materially.
Based in Irving, Texas, Nexstar is the largest US television
broadcaster, owning, operating or providing sales and services to
196 television stations in 38 states, across 114 markets covering
39% of US television households (including the UHF discount). The
company operates in 38 of the top 50 markets and ranks #1 or #2 in
about 80% of its markets. In 2020, Nexstar reported revenue of $4.5
billion and EBITDA of $1.95 billion.
The principal methodology used in these ratings was Media Industry
published in June 2017.
NFP CORP: S&P Assigns 'B' Rating on $325MM Senior Secured Debt
--------------------------------------------------------------
S&P Global Ratings assigned its 'B' senior secured debt rating to
NFP Corp.'s (NFP) $325 million fixed-rate senior secured notes due
2028. The recovery rating is '3', indicating its expectation for
meaningful (65%) recovery of principal in the event of a default.
The new notes will have similar terms to NFP's existing $300 senior
secured notes due June 2025, which are to be redeemed with the
proceeds of this issuance. Total adjusted debt (excluding
payment-in-kind preferred equity), including the present value of
operating leases and an estimate for potential earn-out
liabilities, is roughly $4.12 billion, per S&P's calculations.
For the trailing 12 months ended March 31, NFP generated total
revenues of $1.65 billion and pro forma (PF) adjusted EBITDA of
$441.3 million, per our calculations. Including this issuance, PF
financial leverage is 10.7x (9.3x excluding preferred shares
treated as debt), reflecting sustained weakness relative to its run
rate expectations. This is primarily driven by the lag between
building liquidity and deploying it to fund acquisitions. S&P
believe its adjusted PF leverage calculation is likely to remain
above 8.0x (excluding preferred shares treated as debt) well into
2021, reinforcing its negative outlook and contributing to the risk
of a downgrade.
OMNITRACS LLC: Polaris Acquisition No Impact on Moody's B3 CFR
--------------------------------------------------------------
Moody's Investors Service says Polaris Newco LLC's (dba Solera)
acquisition of Omnitracs, LLC, Solera, LLC, and Ousland Holdings,
Inc. (DealerSocket) is credit positive for Omnitracs. Private
equity sponsor Vista Equity Partners (Vista), which owns Omnitracs,
Solera, LLC and DealerSocket, will remain the majority owner of the
pro forma entity. While Omnitracs' fleet management services and
customer base do not generally overlap with Solera's offerings,
cost efficiencies will be mostly linked to the benefit of a larger
corporate scale. Omnitracs is expected to be incorporated into a
new "Fleet Solutions" segment.
While Moody's views the announcement as a credit positive,
Omnitracs' B3 Corporate Family Rating and stable outlook are
unaffected at this time. The transaction is expected to close in
the second quarter of 2021. If the transaction closes as expected
with all of Omnitracs' debt paid off at closing, Moody's would
withdraw the ratings of Omnitracs.
Omnitracs, LLC, headquartered in Dallas, Texas, is a leading
provider of fleet management software and communications systems to
the trucking industry. The Omnitracs business was acquired by
private equity firm Vista Partners from QUALCOMM Inc. in November
2013.
ON MARINE: Court Extends Plan Exclusivity Thru July 2
-----------------------------------------------------
At the behest of Debtor ON Marine Services Company LLC, Chief Judge
Carlota M. Bohm of the U.S. Bankruptcy Court for the Western
District of Pennsylvania extended the periods in which the Debtor
may file a plan through and including July 2, 2021, and solicit
acceptances through and including September 2, 2021.
With the additional time, the Debtor will be able to address the
propriety of the Insurance Settlement Agreements and to ensure that
the parties have sufficient time to negotiate a consensual plan.
A copy of the Court's Extension Order is available at
https://bit.ly/3f52KKe from Epiq11.com.
About ON Marine Services Company
ON Marine Services Company is the continuation of the entity
formerly known as Oglebay Norton Company, as part of which the
Ferro Division operated as an unincorporated division. In 1999,
Oglebay Norton Company changed its name to ON Marine Services
Company and became a wholly-owned subsidiary of a newly formed
company known as Oglebay Norton Company, an Ohio corporation. The
Ferro Division and/or ON Marine manufactured and sold refractory
products for use exclusively in steelmaking. ON Marine Services
Company ceased all active business operations in 2010.
ON Marine Services Company filed for Chapter 11 bankruptcy
protection (Bankr. W.D. Pa. Case No. 20-20007) on January 2, 2020.
In its petition, the Debtor estimated $1 million to $10 million in
assets and $100,000 to $500,000 in liabilities. The petition was
signed by Kevin J. Whyte, senior vice president.
Chief Judge Carlota M. Bohm oversees the case. The Debtor is
represented by Paul M. Singer, Esq., at Reed Smith LLP and Legal
Analysis Systems, Inc. as its consultant. Epiq 11 is the claims
agent.
A committee of asbestos personal injury claimants has been
appointed in the Debtor's case. The asbestos committee is
represented by Caplin & Drysdale, Chartered.
ORCUTT RANCHO: Seeks to Hire Conway MacKenzie as Financial Advisor
------------------------------------------------------------------
Orcutt Rancho, LLC seeks approval from the U.S. Bankruptcy Court
for the Central District of California to employ Conway MacKenzie,
LLC as its financial advisor.
The firm's services include:
(a) evaluating the short-term cash flows and financing
requirements as it relates to the Debtor's planned Chapter 11
proceedings;
(b) assisting the Debtor in its planned Chapter 11
proceedings;
(c) assisting the Debtor in obtaining court approval for use
of cash collateral or other financing;
(d) assisting the Debtor with respect to its
bankruptcy-related claims management and reconciliation process;
(e) assisting the Debtor in the development of a plan of
reorganization;
(f) assisting management, where appropriate, in communications
and negotiations with other constituents critical to the successful
execution of the Debtor's bankruptcy proceedings;
(g) working with the Debtor, as appropriate, and its retained
investment banking professionals, to assess any offers made
pursuant to bankruptcy court-approved sale procedures; and
(h) other services the Debtor may deem appropriate and agreed
to by Conway MacKenzie.
The hourly rates of Conway MacKenzie's professionals are as
follows:
Managing Directors $710
Directors $510
Senior Associates $485
Administrative $200
In addition, Conway MacKenzie will seek reimbursement for all
expenses incurred.
Jeffrey Perea, a managing director at Conway MacKenzie, disclosed
in a court filing that his firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Jeffrey C. Perea
Conway MacKenzie, LLC
333 S. Hope St., Suite 3625
Los Angeles, CA 90071
Telephone: (213) 416-6205
Email: jeffrey.perea@conwaymackenzie.com
About Orcutt Rancho
Orcutt Rancho, LLC, a company engaged in activities related to real
estate, filed a voluntary petition for relief under Chapter 11 of
the Bankruptcy Code (Bankr. C.D. Cal. Case No. 21-10412) on Apr.
20, 2021. Gary Greenberg, managing member, signed the petition. At
the time of the filing, the Debtor disclosed $10 million to $50
million in both assets and liabilities. Judge Martin R. Barash
oversees the case. The Debtor tapped Fox Rothschild LLP as legal
counsel and Conway MacKenzie, LLC as financial advisor.
PENN ENGINEERING: Moody's Affirms B1 CFR & Alters Outlook to Stable
-------------------------------------------------------------------
Moody's Investors Service affirmed the B1 Corporate Family Rating
of Penn Engineering & Manufacturing Corp. (Penn) as well as the B1
rating on the senior secured first lien bank debt. Concurrently,
Moody's upgraded the Probability of Default Rating to B1-PD from
B2-PD and changed the outlook to stable from negative.
The change in outlook to stable reflects the company's meaningful
improvement in operating performance in recent quarters following
the sharp, but temporary, downturn in 2020 due to the coronavirus
pandemic. Additionally, Moody's expects that the company will
maintain good liquidity underscored by continued strong annual cash
flow.
The affirmation of the ratings is based on Moody's expectation that
the company will maintain debt/EBITDA at 4.5x or below and healthy
profit margins. This mitigates the company's moderate revenue scale
and exposure to cyclical industries, like automotive.
The upgrade of the PDR reflects Moody's expectation of a lower
probability of default stemming from the improving business outlook
and a lower likelihood of a covenant breach going forward.
The following rating actions were taken:
Affirmations:
Issuer: Penn Engineering & Manufacturing Corp.
Corporate Family Rating, Affirmed B1
Senior Secured Bank Credit Facility, Affirmed B1 (LGD3)
Upgrades:
Issuer: Penn Engineering & Manufacturing Corp.
Probability of Default Rating, upgraded to B1-PD, from B2-PD
Outlook Actions:
Issuer: Penn Engineering & Manufacturing Corp.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Penn's B1 CFR reflects its modest revenue scale ($648 million in
the last twelve months ended April 3, 2021) and exposure to
cyclical end markets such as automotive and electronics. At the
same time, the company benefits from its high margins stemming from
the high value-added nature of the company's specialty fasteners,
and strong cash generation. Penn sells its specialty fasteners to
diverse end markets ranging from automotive (comprising roughly 40%
of revenue) to industrial (approximately 60% of revenue).
Electronics, telecommunications and other end markets are included
within industrial. In addition to end-market diversity, the company
possesses a broad geographic footprint with 42% of revenue
generated in North America, approximately 24% in Europe and 34%
from Asia. Further, the company benefits from positive annual free
cash flow through economic cycles, brand strength reflected in high
EBITDA margins and well-established long-term customer
relationships. The B1 rating, however, is constrained by Moody's
expectation that the company will likely pursue dividends to its
owners which will lower cash balances and/or raise leverage.
The stable outlook reflects Moody's view that during the course of
2021, the company's end markets will continue to improve and
correlate with improved general industrial macroeconomic factors.
The company's good liquidity is characterized by healthy EBITDA
margins that translate to strong cash generation, good revolver
availability and headroom under the company's revolving credit
facility that is not expected to be triggered over the next 12 to
18 months. Moody's notes that the company's $125 million revolver
credit facility expires in June 2022.
From a corporate governance perspective, Moody's notes that the
company is majority-family owned, and as a result has employed
financial policies that are comparatively more conservative than
many sponsor-owned peers. Nonetheless, the company has paid
debt-financed dividends to the company's owners.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The company's ratings could be downgraded if margins meaningfully
deteriorate or free cash flow weakens. A material erosion in
liquidity or loss of a major customer could also drive negative
ratings pressure. More aggressive financial policies, including a
sizable debt-financed dividend such that debt/EBITDA exceeds 5.5x,
would also exert downward ratings pressure.
Conversely, ratings could be upgraded with improved scale, reduced
exposure to highly cyclical industries, and more conservative
financial policies. Quantitatively, ratings could be upgraded if
the company continues to generate strong cash flow and debt/EBITDA
improves to less than 3.5 times, on a sustained basis.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
Headquartered in Danboro, Pennsylvania, Penn Engineering &
Manufacturing Corp. is a manufacturer of high performance,
specialty fasteners used in a diversified range of industries. Penn
is a private company majority family-owned. For the last twelve
month period ended April 3, 2021, revenues approximated $650
million.
PERFORMANCE FOOD: Core-Mark Deal No Impact Moody's Ba3 Rating
-------------------------------------------------------------
Moody's Investors Service said that Performance Food Group, Inc.'s
("PFG", Ba3 negative) planned acquisition of Core-Mark Holding
Company, Inc. for an enterprise value of approximately $2.5
billion, an estimated 11.8x EBITDA multiple (based on LTM EBITDA
and excluding synergies), has no immediate impact on the credit
ratings. The transaction, which is expected to close by mid-2022,
will be funded with an approximately $1.07 billion equity, as well
as revolver borrowings and new senior unsecured notes.
In Moody's view, the acquisition is a long-term credit positive as
it is a good strategic fit, but it will initially increase leverage
and reduce liquidity. The transaction will make PFG a key player in
the convenience store segment, following the 2019 acquisition of
Eby-Brown. It will also increase PFG's scale by adding roughly $17
billion of revenue and $211 million adjusted EBITDA, and expand its
presence into complementary geographic regions including the
Western US, Southern US and Canada. Given the successful
integration of Reinhart, Moody's expects execution risk to be
modest.
Moody's estimates the transaction will initially increase leverage
to approximately 4.8-5.0x from 4.2x (Moody's-adjusted leverage
based on PFG's fiscal year 2021 guidance, Core-Mark's LTM March 31,
2021 results, and expected financing). Quantitatively, the ratings
could be downgraded should debt/EBITDA be sustained above 4.25
times or EBITA/interest expense falls below 2.75 times.
Nevertheless, Moody's expects PFG's earnings recovery to be solid
over the next 12-18 months as pandemic restrictions are lifted,
leading to deleveraging. The convenience store segment is likely to
maintain steady performance, following a solid 2020. Moody's
expects PFG to have good liquidity, despite the use of asset-based
revolver borrowings to fund part of the purchase consideration.
Performance Food Group, Inc., a wholly owned subsidiary of
Performance Food Group Company (PFGC) headquartered in Richmond,
Virginia, is a food distributor with annual revenues of
approximately $27 billion.
PG&E CORP: Creditors' Ch. 11 Interest Rate Ruling Challenge Fails
-----------------------------------------------------------------
Law360 reports that a California federal judge affirmed the ruling
of the bankruptcy judge that presided over the Chapter 11 case of
utility provider PG&E Corp. on Thursday, May 20, 2021, finding that
the lower court was correct in applying the federal interest rate
for post-petition interest on unsecured claims.
In a decision from U.S. District Court Judge Haywood S. Gilliam
Jr., the court said Ninth Circuit precedent supported the finding
of the bankruptcy court that unsecured claims are entitled only to
the federal judgment rate when calculating post-petition interest
owed by a debtor, even if the debtor is solvent.
About PG&E Corp.
PG&E Corporation (NYSE: PCG) -- http://www.pgecorp.com/-- is a
Fortune 200 energy-based holding company, headquartered in San
Francisco. It is the parent company of Pacific Gas and Electric
Company, an energy company that serves 16 million Californians
across a 70,000-square-mile service area in Northern and Central
California.
As of Sept. 30, 2018, the Debtors, on a consolidated basis, had
reported $71.4 billion in assets on a book value basis and $51.7
billion in liabilities on a book value basis.
PG&E Corp. and Pacific Gas employ approximately 24,000 regular
employees, approximately 20 of whom are employed by PG&E Corp. Of
Pacific Gas' regular employees, approximately 15,000 are covered
by collective bargaining agreements with local chapters of three
labor unions: (i) the International Brotherhood of Electrical
Workers; (ii) the Engineers and Scientists of California; and (iii)
the Service Employees International Union.
On Jan. 29, 2019, PG&E Corp. and its primary operating subsidiary,
Pacific Gas and Electric Company, filed voluntary Chapter 11
petitions (Bankr. N.D. Cal. Lead Case No. 19-30088).
PG&E Corporation and its regulated utility subsidiary, Pacific Gas
and Electric Company, said they are facing extraordinary challenges
relating to a series of catastrophic wildfires that occurred in
Northern California in 2017 and 2018. The utility said it faces an
estimated $30 billion in potential liability damages from
California's deadliest wildfires of 2017 and 2018.
Weil, Gotshal & Manges LLP and Cravath, Swaine & Moore LLP are
serving as PG&E's legal counsel, Lazard is serving as its
investment banker and AlixPartners, LLP is serving as the
restructuring advisor to PG&E. Prime Clerk LLC is the claims and
noticing agent.
In order to help support the Company through the reorganization
process, PG&E has appointed James A. Mesterharm, a managing
director at AlixPartners, LLP, and an authorized representative of
AP Services, LLC, to serve as Chief Restructuring Officer. In
addition, PG&E appointed John Boken also a Managing Director at
AlixPartners and an authorized representative of APS, to serve as
Deputy Chief Restructuring Officer. Mr. Mesterharm, Mr. Boken and
their colleagues at AlixPartners will continue to assist PG&E with
the reorganization process and related activities. Morrison &
Foerster LLP, as special regulatory counsel. Munger Tolles & Olson
LLP, as special counsel.
The Office of the U.S. Trustee appointed an official committee of
creditors on Feb. 12, 2019. The Committee retained Milbank LLP as
counsel; FTI Consulting, Inc., as financial advisor; Centerview
Partners LLC as investment banker; and Epiq Corporate
Restructuring, LLC as claims and noticing agent.
On Feb. 15, 2019, the U.S. trustee appointed an official committee
of tort claimants. The tort claimants' committee is represented by
Baker & Hostetler LLP.
PG&E Corporation and Pacific Gas and Electric Company announced
July 1, 2020, that PG&E has emerged from Chapter 11, successfully
completing its restructuring process and implementing PG&E's Plan
of Reorganization that was confirmed by the Bankruptcy Court on
June 20, 2020.
PHILIPPINE AIRLINES: Intends to Raise $500 Million for Ch.11 Plan
-----------------------------------------------------------------
Clarissa Batino and Cecilia Yap of Bloomberg News report that
Philippine Airlines Inc. is in talks to raise about $500 million
from shareholders and banks to boost its capital as part of a
Chapter 11 restructuring plan that it's considering to file in the
U.S., according to people familiar with the matter.
Billionaire Lucio Tan who controls the carrier, Asia's oldest,
would put up half the cash while the remaining $250 million would
come from a loan from local banks, people said, asking not to be
identified as the information is private. The carrier is in talks
with lessors about reducing its fleet size, according to people
familiar with the matter.
About Philippine Airlines
Philippine Airlines -- http://www.philippineairlines.com/-- is the
Philippines' national airline. It was the first airline in Asia and
the oldest of those currently in operation. With its corporate
headquarters in Makati City, Philippine Airlines flies both
domestic and international flights. First taking off in 1941, the
carrier has grown into a fleet of about 40 aircraft (including five
Boeing 747-400s) flying to more than 20 domestic points and about
30 foreign destinations.
Citing data from Cirium, online aviation news and information
website FlightGlobal reported that PAL was seeking a restructuring
agreement with creditors ahead of filing Chapter 11 proceedings
potentially by the end of May.
PAL had some $5 billion in total liabilities, including its
outstanding obligations to foreign aircraft suppliers. Nineteen
lessors are exposed to PAL to the tune of 49 aircraft, Cirium data
shows.
According to reports, Norton Rose Fulbright is the airline's
counsel on the restructuring, and Seabury Capital has been hired as
a restructuring adviser.
PIZZINI AND HANSEN: Seeks to Hire Krigel & Krigel as Legal Counsel
------------------------------------------------------------------
Pizzini and Hansen, Inc. seeks approval from the U.S. Bankruptcy
Court for the District of Kansas to employ Krigel & Krigel, PC as
its legal counsel.
The firm will render these legal services:
(a) advise the Debtor regarding its powers and duties in the
continued management and operation of its business;
(b) attend meetings and negotiate with representatives of
creditors and other parties-in-interest;
(c) take all necessary action to protect and preserve the
estate;
(d) prepare legal papers;
(e) negotiate and prosecute on the Debtor's behalf all
agreements and/or documents necessary to obtain confirmation of its
plan of reorganization;
(f) appear before this bankruptcy court and the United States
Trustee; and
(g) perform all other necessary legal services in connection
with this Chapter 11 proceeding.
The hourly rates of the firm's attorneys and staff are as follows:
Sanford P. Krigel $350
Erlene W. Krigel $275
Paul Hentzen $275
Ivan L. Nugent $275
SJ Moore $275
Karen Rosenberg $225
Dana Wilders $225
Lara Pabst $225
Christopher Smith $225
Olivia C. Dobard $200
Benjamin P. Varenhorst $200
Legal Assistants and Paralegals $75
In addition, the firm will seek reimbursement for expenses
incurred.
Erlene Krigel, Esq., an attorney at Krigel & Krigel, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Erlene W. Krigel, Esq.
Krigel & Krigel, PC
4520 Main Street, Suite 700
Kansas City, MO 64111
Telephone: (816) 756-5800
Facsimile: (816) 756-1999
Email: ekrigel@krigelandkrigel.com
About Pizzini and Hansen
Pizzini and Hansen, Inc. filed a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Kan. Case No.
21-20528) on May 12, 2021, reporting up to $1 million in both
assets and liabilities. Judge Dale L. Somers oversees the case.
Krigel & Krigel, PC, led by Erlene W. Krigel, Esq., serves as the
Debtor's legal counsel.
POLARIS NEWCO: Moody's Assigns First Time 'B3' Corp Family Rating
-----------------------------------------------------------------
Moody's Investors Service assigned a first-time B3 Corporate Family
Rating and B3-PD Probability of Default Rating to Polaris Newco,
LLC ("Polaris", dba "Solera", "the company") in connection with the
proposed acquisition by Solera Global Holding Corp. of Omnitracs
Topco LLC ("Omnitracs") and Ousland Holdings, Inc.
("DealerSocket"). Moody's also assigned a B2 instrument rating to
the new $5.2 billion multicurrency first lien senior secured term
loan and a Ba3 instrument rating to the new superpriority senior
secured $500 million revolver. The outlook is stable.
The combination of Solera, Omnitracs and DealerSocket, all three
entities owned by private equity sponsor Vista Equity Partners
("Vista"), along with the acquisition of a smaller target in the
fleet solutions segment, will be financed with the issuance of 1) a
new $5.2 billion multicurrency 7-year first lien senior secured
term loan; and 2) a new $2.5 billion 8-year multicurrency second
lien senior secured term loan (unrated). The pro forma capital
structure will also include a new 5-year superpriority $500 million
revolving credit facility, which is expected to remain undrawn at
closing. Proceeds from the new debt facilities, along with cash on
hand, will be used to 1) repay all existing debt at Solera,
Omnitracs and DealerSocket; 2) pay down Solera's $1.9 billion
preferred equity consideration (including prefunded DRD payment);
3) finance the acquisition of a small provider of fleet solutions;
and 4) pay transaction fees. All existing ratings for Solera LLC
and Omnitracs LLC will be withdrawn upon repayment of the debt when
the transaction closes.
Assignments:
Issuer: Polaris Newco, LLC
Probability of Default Rating, Assigned B3-PD
Corporate Family Rating, Assigned B3
Senior Secured 1st Lien Term Loan B, Assigned B2 (LGD3)
Senior Secured Multicurrency Revolving Credit Facility, Assigned
Ba3 (LGD1)
Outlook Actions:
Issuer: Polaris Newco, LLC
Outlook, Assigned Stable
RATINGS RATIONALE
The B3 corporate family rating reflects Polaris' (dba Solera)
heightened leverage after the proposed combination with Omnitracs
and DealerSocket. The transaction will refinance the legacy capital
structures, including the repayment of Solera's roughly $1.9
billion of preferred equity with new debt. Solera's Moody's
adjusted leverage will increase from 7.5x as of December 2020 to
roughly 9.6x, pro forma as of FY21 (ending March 2021), excluding
unrealized cost savings. Including management's roughly $230
million cost reduction expectations, pro forma leverage diminishes
to 7.5x. Moody's expects Solera's financial strategy, a key
governance consideration under Moody's ESG framework, will sustain
aggressive financial policies over time, with high debt/EBITDA
levels. The valuation of the assets (all owned by Vista) has not
been disclosed. Per the company, the enterprise values were
negotiated by independent investors across all three businesses,
including the investors who had approval rights at Solera, and were
supported by an independent third-party valuation. The proposed
cost initiatives imply a pro forma EBITDA margin around 48%, versus
38% at closing (Moody's adjusted). While the savings target is
ambitious considering Vista acquired the three main assets (Solera,
Omnitracs and DealerSocket) over five years ago, the sponsor has a
strong track-record improving profitability for its portfolio
companies.
Moody's views DealerSocket-Auto/Mate as complementary to Solera's
former CRM segment (renamed "Vehicle Solutions"), with
cross-selling opportunities among the dealer client base, but the
asset has seen revenue declines in recent years and faces strong
competition in the US from market leaders CDK Global, Inc. (Ba1
stable) and Reynolds & Reynolds (unrated). Omnitracs' fleet
management services and customer base do not generally overlap with
Solera's previous offerings and cost efficiencies will be mostly
linked to the benefit of a larger corporate scale. Solera will
incorporate Omnitracs into a new "Fleet Solutions" segment.
Integration risks will be elevated over the next 12-24 months as
Solera optimizes the combined workforce and consolidates systems
and processes to achieve its cost expectations.
The COVID-19 pandemic has caused a reduction in miles driven, a key
driver of vehicle claims, which along with delays in IT spend have
led to revenue declines in FY21 for all three entities. While a
recovery is underway and Moody's anticipate a return to growth in
FY22, slower than expected vaccination roll outs across Solera's
markets, or the appearance of aggressive strains of the virus,
could pressure growth and limit deleveraging.
The credit profile is supported by Solera's large scale and limited
cyclical exposure, with 60% of its $2.2 billion in pro forma annual
revenue generated by recurring subscriptions. The company also
benefits from high EBITDA margins, around 38% pro forma at closing
(Moody's adjusted, excluding unrealized cost savings that could
lead to sizeable margin expansion). Solera has a diversified
geographical footprint, with presence in over 90 countries. The
company's proprietary databases create barriers to entry,
especially in less penetrated markets outside of the US where
Solera is a leading provider. Over the years, Solera has expanded
its product offerings, with an increasing percentage of revenue
from segments outside of the historical auto physical damage
("APD") claims-servicing business. The combination with
DealerSocket and Omnitracs provides further product diversification
with additional dealer management system ("DMS")/CRM offerings and
a new fleet solutions segment.
The stable outlook reflects the expectation that revenue will grow
in the mid single-digit percentage range or above over the next 12
months, as transactional volumes continue to recover from the
impact of COVID-19 and the company benefits from new products and
cross-selling efforts across its extended client base. Cost
reduction initiatives and incremental scale will benefit pro forma
EBITDA margin, which is expected to expand above 40%. Leverage is
anticipated to decline towards 8.5x, while FCF/debt will remain
below 3% (all metrics Moody's adjusted), constrained by initial
restructuring costs. Transactional volumes will rely on the timing
of the recovery from depressed levels caused by the pandemic, which
remains uncertain. Over the next 12 months, Moody's expects miles
driven will remain 10%-20% below levels preceding the virus
outbreak.
Liquidity is considered adequate given Solera's estimated pro forma
$355 million in cash and equivalents at closing (before expected
DRD payments) and $500 million of available capacity under its new
$500 million revolving credit facility due 2026. Free cash flow to
debt is expected to remain under 3% (Moody's adjusted) over the
next 12 months, with high initial integration costs. Moody's
expects existing cash levels and revolver capacity will support
unexpected liquidity needs. The revolver (only) is subject to a
maximum springing first lien net total leverage ratio of 7.0x,
which is only applicable if the drawn amount exceeds 35% of the
revolving capacity. Moody's expect the company, in the event the
covenant is applicable, to be within its limit. Required
amortization on the first lien term loan is 1% per annum.
The ratings for the individual debt instruments incorporate
Solera's overall probability of default, reflected in the B3-PD
probability of default rating, and the loss given default ("LGD")
assessments for individual instruments. The $5.2 billion
multicurrency first lien senior secured term loan due 2028 is rated
B2 with a loss given default assessment of LGD3. This reflects the
priority of claim and recovery prospects for the first lien debt
holders, which are behind the new $500 million superpriority
revolving credit facility due 2026, rated Ba3 with a loss given
default assessment of LGD1, but ahead of second lien lenders. The
$2.5 billion multicurrency second lien term loan due 2029 is
unrated. The notch differentials for the debt instruments relative
to the B3 corporate family rating ("CFR") reflect the relative
allocation and priority of claims in the capital structure.
Preliminary terms in the first lien credit agreement contain
provisions for incremental first lien capacity up to 1) the greater
of $300 million, plus 2) additional amounts subject to pro forma
first lien net leverage of 3.25x, if pari passu secured with the
first lien. Aggregate superpriority loans, which rank ahead of
first lien term loan lenders, are limited to a maximum total of
$750 million and can only be revolving tranches. No incremental
first lien term loans may be incurred with an earlier maturity than
the first lien term loan. No incremental superpriority revolving
loans may be incurred with an earlier maturity date than the
superpriority revolver. Various incremental debt baskets are
permitted for junior and unsecured instruments.
Only wholly-owned restricted subsidiaries must provide guarantees;
partial dividend of ownership interest or subsidiaries deemed
unrestricted could jeopardize guarantees with no explicit
protective provisions limiting such guarantee releases. The credit
agreement permits the transfer of assets to unrestricted
subsidiaries, subject to carve-out capacities, with no explicit
assets subject to "blocker" protections. There are no express
protective provisions prohibiting an up-tiering transaction.
The proposed terms and the final terms of the credit agreement can
be materially different.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded (all metrics Moody's adjusted) if
1) debt-to-EBITDA is expected to be sustained above 8.0x due to
lower than anticipated cost savings from the combination of Solera,
Omnitracs and DealerSocket, or other factors; 2) organic revenue
growth decreases below low single-digits on a constant currency
basis, suggesting increased competitive pressure or shrinking
demand; 3) free cash flow approaches break-even or is expected to
be negative for a sustained period; or 4) liquidity deteriorates.
The ratings could be upgraded (all metrics Moody's adjusted) if 1)
debt-to-EBITDA is expected to be sustained below 7.0x; 2) organic
revenue grows in the mid single-digit range or above; 3) free cash
flow to debt metrics remain above 4%; and 4) the company sustains
healthy liquidity.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Polaris (dba "Solera") is a global provider of information services
and software to the automotive and fleet industries. Customers
include automobile and property insurance companies, collision
repair and maintenance service facilities, auto dealers, fleet
operators and other. The company was formed as the combination of
Solera LLC, Omnitracs LLC and DealerSocket LLC, which is expected
to close in 1H21. Private equity sponsor Vista Equity Partners
("Vista") will remain the majority owner of the pro forma entity.
Vista acquired Solera LLC in 2016, Omnitracs LLC in 2013 and
DealerSocket LLC in 2014. The pro forma company will operate four
different segments: Vehicle Solutions, Vehicle Claims, Vehicle
Repair and Fleet Solutions. Revenue for the fiscal year ending
March 2021 was approximately $2.2 billion.
POLARIS PARENT: S&P Assigns 'B-' ICR on Announced Merger
--------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
Polaris Parent LLC.
S&P said, "We also assigned our 'B-' issue-level rating to Polaris
Newco LLC's, a direct subsidiary of Polaris Parent LLC, proposed
first-lien senior secured term loans that includes a $3.38 billion
seven-year loan, $1.44 billion equivalent euro-denominated
seven-year term loan (1.2 billion euros), and a $415 million
equivalent pound sterling-denominated seven-year term loan (300
million pounds). The recovery rating is '3'.
"The stable outlook reflects our expectation for the company to
grow revenues in at least the low-single-digit percentage range
over the next year, driven by an improving macroeconomic
environment, leading to an increase in claims-related revenues. We
also expect the integration of Omnitracs and DealerSocket to result
in cost synergies."
The merger with Omnitracs and DealerSocket improves Solera's scale
and scope, but the overall assessment of business risk remains
unchanged. Solera's annual revenues will improve by about $700
million, to $2.2 billion with the combination of Omnitracs and
DealerSocket. S&P said, "This compares favorably against many other
sponsor-owned software and services credits we rate, many of which
have annual revenues of less than $1 billion. We view the quality
of Solera's revenues to be high; 93% of revenues are reoccurring
either through subscriptions or predictable transactional revenue
streams. Sustainability of revenues is also supported by our view
of Solera as a market leader for claims management and repair
solutions with either no. 1 or 2 market positions in the U.S. and
Europe. Despite these positive factors we have not revised our
business risk assessment. All three businesses (Solera, Omnitracs,
and DealerSocket) incurred mid- to high-single-digit revenue
declines in fiscal 2021 during the pandemic, highlighting the
similar end markets to which they are exposed. We also note Solera
faces formidable competition against similar sized to larger
companies in the dealer management space, such as CDK Global and
Reynolds & Reynolds. Our current business risk assessment for
Solera is already one notch higher than some of its sponsor-owned
peers, such as CCC Information Services Inc. and Mitchell
International, both of which have smaller scales and lower margins
than Solera. CCC primarily participates in the U.S. market and
focuses on claims and repair solutions, while Solera also has other
services and participates in the European markets. Mitchell's
overlap with Solera has lessened over the last decade as it has
made acquisitions and shifted some focus to casualty claims,
workers compensation, and prescription drugs services, while Solera
has maintained its focus on vehicle solutions and claims."
S&P said, "We expect revenue recovery during this fiscal year.In
2020, during the COVID-19 pandemic and a high degree of
macroeconomic uncertainty, the pro forma business lost no major
insurance customers and ended the year with revenues down only
about 5%. We expect revenues to resume growth in 2021 against an
easier 2020 comparison period now that many COVID-19 travel
restrictions are easing. The addition of DealerSocket (about 10% of
pro forma revenues) will bring more cross-selling opportunities of
dealer management systems, CRM, and marketing solutions across
Solera's large customer base of vehicle dealers. We view revenue
synergies with Omnitracs to be limited but expect Omnitracs to grow
at a higher rate than the overall business as fleets add more
technology."
Margins at the acquired businesses are lower than Solera as a
standalone entity and required investments to pursue further
revenue growth may pressure its overall margin profile. The
addition of Omnitracs (reported fiscal 2021 EBITDA margin of 22%)
and DealerSocket (9%) will provide initial margin headwinds as
Solera's standalone EBITDA margins were in the mid-40% range during
the last fiscal year. Through a mixture of back-office synergies
with standalone Solera, better performance at DealerSocket, and
picking up business improvement initiatives which Omnitracs started
about a year ago, Solera's management hopes to improve these
businesses to the mid-30% range. S&P said, "We see execution risks
related to these initiatives as Solera does not have recent
experience integrating large acquisitions. We also note that
management has targeted a higher revenue growth for future years
than how the company has performed in the recent past." This may
lead to more investments in sales and marketing and research and
development, which could depress margins by a few basis points.
S&P said, "We note that the standalone Solera business has
undergone a transformative cost-restructuring plan over the last 18
months, which has helped bolster its EBITDA margins. Solera has
rationalized its product portfolio, consolidated its product and
engineering and procurement functions, and lowered its IT services
footprint. While 95% of the planned cost savings have already been
executed, we will monitor the sustainability of the new cost
structure. Execution risks could arise if customer service levels
decline as a result of some of the cost takeouts (we note that to
date management has not reported any service declines). We expect
the standalone Solera company to report EBITDA margins in the
mid-40% range for fiscal 2021 (ended March 2021), a drastic
improvement from the low-30% in fiscal 2020 and fiscal 2019. We
believe Solera's standalone margins may compress slightly as
management reinvests in the business to support future growth. In
the vehicle claims business (30% of pro forma revenue), we note
that it is hard to scale customer facing applications across
geographies as every region has different standards and needs. We
believe this is why some of Solera's peers, like CCC, have not
expanded into Europe.
"Despite high leverage, Solera should maintain positive free
operating cash flows (FOCF) and sufficient liquidity. Solera's
higher debt balance (to $7.7 billion of funded debt from $4.4
billion) will increase annual cash interest expense to the low- to
mid-$300 million range. We note that the pro forma company
generated about $800 million of reported EBITDA in fiscal 2021,
providing good starting interest coverage in the mid-2x range. We
expect Solera to generate FOCF to debt in the low- to
mid-single-digit percentages over the next few years as it
continues to have a good flow conversion from EBITDA to free cash
flow (we expect capex needs to be moderate at 4% to 5% of sales).
This level of cash flow, coupled with $361 million of cash at the
start of the transaction with an undrawn $500 million revolver,
provides Solera with sufficient liquidity and the ability to build
up its cash balance over time even after its $52 million of annual
debt amortization. We also expect Solera to reduce leverage to the
low-9x area a year after transaction close primarily through
continued earnings growth.
"The stable outlook on Solera reflects our expectations for the
company to resume revenue growth in fiscal 2022 (started April
2021) with an improving macroeconomic environment benefiting
claims-related revenues. We expect the merger integration to
progress according to plan, and for the combined company to achieve
EBITDA margins in the high-30% area."
S&P could lower its rating on Solera if:
-- The decline in its transaction-based revenue is steeper than
anticipated, causing weaker-than-expected performance and leading
to negative free operating cash flow (FOCF) generation or weaker
liquidity.
-- The company does not reduce leverage from its high starting
level and weakening FOCF leads us to believe that its capital
structure is unsustainable. This could be caused by prolonged
revenue declines and margin pressures or key customer losses and
business disruptions related to management's global restructuring
or integration efforts.
While unlikely over the next year given the elevated starting
leverage, S&P could raise the rating if:
-- Leverage remains lower than 8x and FOCF to debt consistently
higher than 5%; and
-- Revenue expands as the company gains market share.
POLYMER INSTRUMENTATION: Gets Cash Collateral Access Thru June 29
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Pennsylvania
has authorized Polymer Instrumentation & Consulting Services, Ltd.
to use cash collateral on an interim basis until June 29, 2021, the
date of the final hearing.
The Debtor is authorized to use cash collateral to pay quarterly
fees to the Office of the U.S. Trustee.
Fulton Bank, which is believed to hold a first priority security
interest in most of the Debtor's personal property, is granted a
replacement lien in the Debtor's postpetition cash collateral
consisting of inventory, receivables, cash and the proceeds
thereof, and in all assets of the Debtor to which the Bank has a
lien and security interest pre-Petition. The lien will be perfected
and effective without any further recordation action and will
survive conversion of the case or appointment of a Trustee in the
case. In the event that post-Petition Cash Collateral is
insufficient to provide an amount equal to such diminution, then
the Bank will have a super priority status pursuant to Bankruptcy
Code Section 364(c)(1) and have an administrative claim having
priority over all other administrative claims, including those set
forth in Bankruptcy Code Sections 503(b) or 507(a) except for
amounts owed for fees to professionals in the case and fees to the
U.S. Trustee's Office, which fees will be pari passu with the
Bank's administrative claim.
The Debtor will pay to Fulton Bank monthly adequate protection
payments of interest at the annual rate of 6% of the unpaid
principal balance of the Debtor's loan with Fulton Bank.
A copy of the order is available for free at https://bit.ly/2RFSsaq
from PacerMonitor.com.
About Polymer Instrumentation
& Consulting Services, Ltd.
Polymer Instrumentation & Consulting Services, Ltd., d/b/a
Polymics, filed a Chapter 11 petition (Bankr. M.D. Pa. Case No.
21-01056) in the U.S. Bankruptcy Court for the Middle District of
Pennsylvania on May 10, 2021.
In the petition signed by Tim T. Hsu, president, the Debtor
estimated both assets and liabilities between $1 million and $10
million. CUNNINGHAM, CHERNICOFF & WARSHAWKY, P.C., represents the
Debtor as counsel. Judge Henry W. Van Eck is assigned to the
case.
PORTOFINO TOWERS: Wins July 25 Plan Exclusivity Extension
---------------------------------------------------------
Judge A. Jay Cristol of the U.S. Bankruptcy Court for the Southern
District of Florida extended the periods, within which Debtor
Portofino Towers 1002 LLC has the exclusive right to file a plan of
reorganization and to solicit acceptances to July 25, 2021, and
September 25, 2021, respectively.
The additional time will allow the Debtor to resolve issues in
their case.
A copy of the Court's Extension Order is available at
https://bit.ly/2RB7TAT from PacerMonitor.com.
About Portofino Towers 1002 LLC
Portofino Towers 1002 LLC owns a condo at 300 S Pointe Dr. Unit
1002, Miami Beach FL 33139.
Portofino Towers 1002 LLC filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
20-20446) on September 27, 2020. The petition was signed by Laurent
Benzaquen, authorized member (AMBR). At the time of filing, the
Debtor estimated $1 million to $10 million in assets and
liabilities.
The cases are assigned to Judge A. Jay Cristol. Joel M. Aresty,
Esq. at JOEL M. ARESTY P.A. represents the Debtor as counsel.
Until further notice, the United States Trustee said it will not
appoint a committee of creditors according to 11 U.S.C. Section
1102.
PQ CORP: Moody's Rates New $900MM Sr. Secured Term Loan 'B1'
------------------------------------------------------------
Moody's Investors Service has assigned a B1 rating to PQ
Corporation's proposed $900 million senior secured term loan. PQ
will apply the proceeds to redeem $440 million of the approximately
$672 million outstanding first lien term loan due 2027 and repay
the entire $460 million outstanding incremental first lien term
loan due 2027. Moody's expects to withdraw the B1 rating on the
incremental first lien term loan upon closing. Moody's also
affirmed the B1 Corporate Family Rating, the B1-PD Probability of
Default Rating, B1 rating on the remaining first lien term loan and
the B3 rating on the senior unsecured notes. The SGL-2 Speculative
Grade Liquidity rating remains unchanged. The outlook is stable.
The assigned rating is subject to the transaction closing as
proposed and receipt and review of the final documentation.
"The affirmation considers the proposed transaction as contemplated
and subsequent debt repayment once the Performance Chemicals
proceeds are received that will result in pro forma leverage that
is appropriate for the current B1 rating," said Domenick R. Fumai,
Vice President and lead analyst for PQ Corporation.
Assignments:
Issuer: PQ Corporation
Senior Secured Term Loan B, Assigned B1 (LGD3)
Affirmations:
Issuer: PQ Corporation
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Senior Secured Bank Term Loan B, Affirmed B1 (LGD3)
Senior Secured Bank Term Loan B1, Affirmed B1 (LGD3)
Senior Unsecured Regular Bond/Debenture, Affirmed B3 (LGD6 from
LGD5)
Outlook Actions:
Issuer: PQ Corporation
Outlook, Remains Stable
RATINGS RATIONALE
The rating affirmation reflects expectations that PQ Corporation's
revised capital structure, credit metrics and business profile will
continue to be supportive of the B1 rating. PQ is in the process of
divesting non-core businesses, substantially reducing its size and
diversity, and focusing on catalysts and sulfuric acid, which are
higher margin and have higher intrinsic growth rates. As part of
this process, PQ is revising its capital structure. Proceeds from
the proposed $900 million term loan will redeem $440 million of the
$672 million outstanding term loan due 2027 and repay the entire
$460 million outstanding incremental term loan due 2027. Following
the closing of the sale of PQ's Performance Chemicals segment, the
company will apply a portion of the estimated $995 million in
proceeds to repay the remaining outstanding $231 million term loan
due 2027 and redeem the entire $295 million outstanding 5.75%
senior unsecured notes due 2025. PQ has also indicated it will use
the proceeds from the sale to pay a special dividend of $2.50-$3.25
per share. Once the sale is completed, PQ Corporation will change
its name to ecovyst Inc.
PQ's B1 rating is supported by leading market positions in Refining
Services, which includes sulfuric acid regeneration and virgin
sulfuric acid production, and Catalysts Technologies, a provider of
catalysts used in the growing polyethylene and fuel and emission
control industries. The rating further benefits from long-term
take-or-pay contracts within Refining Services that provide future
revenue and earnings visibility and cost pass-through mechanisms in
a majority of contracts that insulate the company from raw material
price fluctuations. PQ also enjoys good free cash flow generation.
The rating is constrained by the company's continued elevated
leverage post the divestiture of Performance Chemicals. Moody's
projects pro forma leverage (Debt/EBITDA) of approximately mid-5x,
including Moody's standard adjustments, in FY 2021 and to improve
towards 5.0x in FY 2022. PQ's rating also considers its small scale
following the sale of Performance Materials and Performance
Chemicals and reduced business and geographic diversity. Moreover,
the business profile is offset by exposure to several economically
sensitive end markets such as refining, autos, and construction.
Despite the recent secondary offering of 12.5 million shares of
common stock by CCMP and INEOS, which reduced sponsor ownership to
approximately 38% and 20%, respectively, significant ownership
concentration by private equity remains a limiting factor to PQ's
rating. Following the two special dividend distributions, Moody's
believes capital allocation is also now more balanced towards both
debt repayment and shareholder distributions.
The SGL-2 Speculative Grade Liquidity rating (SGL) reflects good
liquidity to support operations. As of March 31, 2021, PQ had
approximately roughly $55 million of cash on the balance sheet and
$106 million available under its ABL facility. The ABL has a
springing financial maintenance covenant - the only financial
maintenance covenant. There are no financial covenants under the
term loan. Subsequent to the sale of the Performance Chemicals
business, the cash balance is expected to be over $100 million,
which will compensate for the expected reduction in the ABL to
roughly $100 million.
PQ's debt capital is comprised of an unrated $250 million ABL, a
$947.5 million first lien senior secured term loan B maturing
February 2027 ($672 million outstanding), $650 million first lien
senior secured term loan ($460 million outstanding) and $295
million of senior unsecured notes maturing in 2025. The assigned B1
rating to the proposed $900 million first lien term loan and
remaining $231 million first lien term loan, the same as the CFR,
reflects the preponderance of secured debt in the capital structure
with a relatively small amount of unsecured debt to absorb
potential losses in the event of a default. Moody's expects to
withdraw the existing B1 rating on the incremental term loan upon
closing of the financing. The B3 rating on the senior unsecured
notes reflects their subordinated position to the secured first
lien term loans. Pro forma for the transaction, PQ will have the
$900 million proposed first lien term loan, $231 million remaining
under the existing incremental first lien term loan and $295
million of senior unsecured notes. After the closing of the
Performance Chemicals sale, the capital structure is expected to
solely consist of the $900 million new first lien term loan.
The stable outlook assumes that longer-term, a combination of
modest EBITDA growth and continued free cash flow generation will
enable the company to maintain retained cash flow-to-debt in excess
of 10% (RCF/Debt) and generate at least $40 million of free cash
flow before the special dividend in 2021. The outlook also
incorporates expectations for limited bolt-on debt-financed
acquisitions and adherence to conservative financial policies.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the rating with expectations for sustained
adjusted financial leverage below 4.0x and retained cash
flow-to-debt sustained above 15%, and demonstration of organic
growth to mitigate potential shareholder friendly actions. Moody's
would also need to see revenue growth towards $800 million
excluding the Zeolyst JV sales and increased business diversity
before considering an upgrade. Moody's could downgrade the rating
with expectations for sustained adjusted financial leverage above
5.5x, negative free cash flow or retained cash flow-to-debt below
10%, a change in financial policies, including a large
debt-financed acquisition, could also have negative rating
implications.
ESG CONSIDERATIONS
Moody's considers environmental, social and governance
considerations in PQ's rating. Environmental risks for PQ are
considered moderate as a specialty chemical company. In particular,
many of their products help companies adhere to emissions standards
or provide services that promote sustainability for their
customers. Although the board has a majority of independent
directors, PQ's governance is viewed as weak for a public company
as CCMP and INEOS own the majority of the shares and, therefore,
control the appointment of directors. Until CCMP and INEOS reduce
their ownership of PQ below 30% and all directors associated with
these firms are removed from the board, this issue will slow any
improvement in the company's rating.
The principal methodology used in these ratings was Chemical
Industry published in March 2019.
Headquartered in Malvern, PA, PQ Corporation, the indirect
wholly-owned subsidiary of PQ Group Holdings Inc., is a leading
provider of regenerated and virgin sulfuric acid, silica catalysts
and technologies. The company operates in two segments: Ecoservices
and Catalyst Technologies, which includes the Zeolyst Joint
Venture. CCMP Capital Advisors, LP (CCMP) purchased a stake in the
company in late 2014 and holds a 38% interest in the company. INEOS
Ltd. is the other significant owner with a 20% stake and the
remainder is publicly held. PQ began trading as a public company in
September 2017 and reported pro forma sales of $496 million in the
fiscal year-ended December 31, 2020.
PQ CORP: S&P Affirms 'B+' Issuer Credit Rating, Outlook Stable
--------------------------------------------------------------
S&P Global Ratings affirmed all its ratings on PQ Corp, including
its 'B+' issuer credit rating, 'BB-' issue-level rating on its
secured debt, and 'B' issue-level rating on its unsecured notes.
S&P intends to withdraw the ratings on the company's incremental
term loan once it is fully repaid. Additionally, S&P will revisit
all ratings once the sale of the Performance Chemicals business is
completed.
S&P said, "We assigned our 'BB-' issue-level rating and '2'
recovery rating to the company's proposed term loan. The '2'
recovery rating indicates our expectation of substantial (70%-90%;
rounded estimate: 85%) recovery in the event of a payment default.
We based our ratings on the loan's preliminary terms and
conditions.
"The stable outlook reflects our expectation that the company's
credit measures will remain appropriate for the current rating,
including S&P Global Ratings' adjusted debt to EBITDA above 4x.
PQ has announced that it plans to issue a new $900 million term
loan B (TLB) maturing in 2028. The company will use the proceeds to
redeem all of its $460 million outstanding balance under the
incremental term loan that it issued in June 2020. In addition, it
will repay a portion of its original term loan B (approximately
$440 million) with the remainder of the proceeds. The current term
loan balances reflect a partial repayment late in 2020 with
proceeds from the sale of PQ's Performance Materials business,
which closed in December 2020.
S&P said, "The affirmation reflects our view that the refinancing
transaction is neutral for leverage. Additionally, we expect the
company will maintain ample liquidity and prudent financial
policies, including sustaining an S&P-adjusted debt-to-EBITDA ratio
above 4.0x. In addition, we expect PQ will continue to generate
positive free cash flow, with a target to reduce its leverage by
half a turn per year after 2021."
Additionally, following the successful sale of its Performance
Materials business in late 2020, the company expects to close the
sale of its Performance Chemicals business later in 2021, and
rebrand at that time to ecovyst. S&P plans to revisit all ratings
once the sale of that business closes.
S&P said, "The stable outlook indicates our expectation that PQ
will continue to reduce its leverage using its free cash flow and
maintain a weighted-average funds from operations (FFO)-to-debt
ratio of around 12% and S&P Global Ratings' adjusted debt to EBITDA
of around 4x over the next 12 months, supported by a macroeconomic
recovery. We expect PQ to focus on closing the sale of its
Performance Chemicals business in the third quarter of 2021 and
under our base-case scenario for PQ we do not assume any
significant debt-funded acquisitions.
"We could consider a negative rating action over the next 12 months
if PQ were to pursue any large debt-funded acquisitions or
shareholder rewards. We could also lower the ratings if FFO to debt
were to fall below 12% and if debt to EBITDA were to exceed 5x on a
sustained basis, this could occur if margins were to deteriorate by
500 basis points (bps) as the result of weakened product mix.
Additionally, we could lower ratings if liquidity sources were to
drop below 1.2x its uses. Also, if the company is unable to offset
the loss of diversity from the sale of Performance Chemicals with
reduced debt leverage we could take a negative rating action.
"We could consider a positive rating action in the next 12 months
if PQ's financial risk profile improves such that debt to EBITDA
falls below 4x and FFO/debt is sustained greater than 20% in
addition to our view of the business not being materially weaker
than historically. As PQ has already closed the deal of selling off
its Performance Materials business, we plan to review the new
business and its product offerings once the sale of Performance
Chemicals is completed."
PREFERRED EQUIPMENT: Seeks Cash Collateral Access Thru Jul 15
-------------------------------------------------------------
Preferred Equipment Resource, LLC asks the U.S. Bankruptcy Court
for the District of Rhode Island for authority to use the cash
collateral of TD Bank, N.A., on an interim basis through July 15,
2021, and provide continued adequate protection.
The Debtor needs to use the Secured Creditor's cash collateral to
continue its business operations.
The Debtor is indebted to TD Bank, N.A. pursuant an Evergreen
Revolving Line of Credit. TD holds a security interest in the
Debtor's cash collateral which appears to be in a first position
priority based upon UCC-1 financing statement that was renewed on
February 7, 2018, with the Rhode Island Secretary of State. TD's
security interest is in the cash collateral generated from any and
all personal property related to accounts, equipment, inventory,
and general intangibles pursuant to said UCC-1 financing
statement.
The balance due under the LOC as of May 6, 2021, is $308,000.
TD is entitled to adequate protection of a postpetition rollover
replacement lien against the same collateral to the same extent,
priority and validity of its pre-petition lien in an amount equal
to the diminution in value of the prepetition collateral.
These events constitute Events of Default:
a. An application will be filed by the Debtor for approval to
incur debt to third parties, other than unsecured credit in the
ordinary course of business, and an order will be entered
authorizing such application;
b. Failure to perform the Adequate Protection Obligations; or
c. The material or significant loss, theft, damage, or
destruction of any Prepetition Collateral unless fully covered by
insurance.
TD may waive in writing any Event of Default.
A copy of the motion is available for free at
https://bit.ly/3fyhQak from PacerMonitor.com.
About Preferred Equipment Resource
Preferred Equipment Resource, LLC filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D.R.I. Case
No. 21-10308) on April 16, 2021, listing $100,001 to $500,000 in
assets and $500,001 to $1 million in liabilities.
Judge Diane Finkle oversees the case.
Peter M. Iascone & Associates, Ltd. serves as the Debtor's legal
counsel.
PREGIS TOPCO: 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 Deerfield, Ill.-based
protective packaging and equipment systems manufacturer Pregis
TopCo Corp. S&P also affirmed its 'B-' ratings on the company's
first-lien credit facilities. S&P's '3' recovery rating on the
first-lien term loan and revolving facility is unchanged.
S&P said, "The stable outlook reflects our expectation that
favorable demand conditions and growth investments will support
revenue growth and earnings improvement, leading to improved credit
measures at just over 6x at the end of fiscal 2021 from mid-7x at
the end of fiscal 2020.
"We anticipate strong operating performance over the next 12-24
months as the company continues to advance its capital investments
in strategic initiatives and at the same time witnesses sequential
improvement in its industrial end markets. Pregis ended fiscal 2020
strongly with its revenues increasing close to 9% and S&P Global
Ratings' adjusted EBTDA margins improving by roughly 400 basis
points year-over-year. Its strong operating performance during the
year was largely attributable to secular shift away from
brick-and-mortar retail and toward e-commerce during the pandemic,
which enabled Pregis to benefit from expansion in its systems
installed base. We believe Pregis will continue to accelerate and
invest heavily in its expansion plans to further build on momentum
from 2020 and drive revenue growth and earnings improvement over
the next 12-24 months. Furthermore, the company's operating
performance will continue to benefit from sequential recovery in
its industrial end markets as the global economy recovers from the
pandemic.
"Despite expectations of negative free cash flow in 2021, we expect
the company's liquidity position to remain adequate to meet any
short-term capital requirements. We expect significant capital
investments to result in moderately negative free cash flow during
fiscal 2021, though we believe these investments will have a quick
turnaround time with average payback period of less than two years.
In addition, we anticipate the company's liquidity position to
remain adequate; Pregis had roughly $166 million ($26 million of
cash balance and $140 million of revolver availability net of
letters of credit) of liquidity sources available at the end of the
first quarter of 2021 to meet its short-term capital requirements.
Our base-case forecast also assumes negative free cash flow in 2021
due to the material expansion of its capital expenditure (capex)
coupled with an increase in its working capital, which could
further reduce its liquidity in the short term, however, we believe
the company has adequate liquidity with withstand the short-term
negative free cash flow. Furthermore, company has no near-term debt
maturities. Its nearest maturity is in 2024, when its $145 million
revolving credit facility matures.
"The stable outlook reflects our expectation for the company's
leverage to improve toward the 6x area in 2021, from 7.5x at the
end of 2020, because we anticipate that healthy demand for
e-commerce packaging, a recovery in its industrial demand, and cost
savings will increase its profitability and revenue over the next
year."
S&P could lower its ratings on Pregis if:
-- S&P believes the company will generate negative free operating
cash flow (FOCF) with limited prospects for positive cash flow and
its liquidity position weakens. S&P anticipates negative cash flow
could also lead it to increasingly rely on its revolver, which
would subject the company to financial maintenance covenants and
reduce its cushion under these covenants;
-- The increased investments to expand its capacity do not
translate into the expected improvement in its EBITDA and
profitability; or
-- S&P deems its capital structure to be unsustainable due to high
leverage.
S&P could raise its rating on Pregis if:
-- S&P believes its free cash flow will adequately cover its debt
service requirements and capex;
-- The increased capacity translates into rising EBITDA and
profitability that support positive free cash flow; and
-- S&P anticipates an improvement in its debt leverage in line
with its current base-case forecast.
PREMIER DENTAL: Moody's Raises CFR to B3, Outlook Stable
--------------------------------------------------------
Moody's Investors Service upgraded Premier Dental Services, Inc.'s
(dba Western Dental) Corporate Family Rating to B3 from Caa1, the
Probability of Default Rating to B3-PD from Caa1-PD, and the senior
secured bank credit facilities to B3 from Caa1. The outlook remains
stable.
The upgrade reflects Western Dental's return of patient volumes to
near pre-pandemic levels, improved operating margins and reduced
debt/EBITDA to around 7.6x for the twelve months ended March 31,
2021. At the same time, Western Dental has improved liquidity with
about $82 million cash balance as of March 31, 2021, and an undrawn
$35 million revolver (as of April 2021). The Company did not take
any funds from the PPP nor did it receive any funding through the
CARES Act Provider Relief Fund.
The stable outlook reflects Moody's expectation that this level of
leverage, along with the company's ability to reduce variable costs
and growth capital expenditures if necessary, position the company
well. Additionally, Western Dental's more stringent underwriting
standards and focus on upfront collections, should allow Western
Dental to further improve free cash flow and de-risk earnings
volatility.
Ratings Upgraded:
Issuer: Premier Dental Services, Inc.
Corporate Family Rating, Upgraded to B3 from Caa1
Probability of Default Rating, Upgraded to B3-PD, from Caa1-PD
Senior Secured 1st Lien Bank Credit Facilities, Upgraded to B3
(LGD3), from Caa1 (LGD3)
Outlook Actions:
Issuer: Premier Dental Services, Inc.
Outlook, remains Stable
RATINGS RATIONALE
Premier Dental Services, Inc.'s (dba Western Dental) B3 Corporate
Family Rating reflects the company's very high geographic
concentration in California, with about 82% of revenue. The rating
also reflects risks related to Western Dental's captive financing
program, as a significant portion of Western Dental's clients use
financing to pay for dental services, and the risk can rise as a
result of rising unemployment levels. Leverage is high at around
7.6 times but expected to improve with the return of patient
volumes and more stringent underwriting standards that should also
result in better free cash flow generation. Moreover, the rating is
supported by the company's established market position in
California and favorable industry dynamics. Further, the rating is
supported by its adequate liquidity.
Western Dental has an adequate liquidity profile based on its
improved cash balances of about $82 million cash balance as of
March 31, 2021, and an undrawn $35 million revolver (as of April
2021). Moody's expects free cash flow to be modestly positive in
2021 due to improved volumes, reduced variable costs and Western
Dental's more stringent underwriting standards and focus on upfront
collections.
Moody's considers coronavirus to be a social risk given the risk to
human health and safety. Aside from coronavirus, Western Dental
faces other social risks such as the rising concerns around the
access and affordability of healthcare services. However, Moody's
does not consider the DSOs to face the same level of social risk as
many other healthcare providers. Further, Moody's understand that
many of Western Dental's patients are charged interest on their
installment plans, which can raise longer-term social risk given
the growing focus on the affordability of healthcare. From a
governance perspective, Moody's expects Western Dental's financial
policies to remain aggressive due to its private equity ownership.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Western Dental's liquidity
weakens, sustains leverage above 6.0 times or fails to improve
operating results.
The ratings could be upgraded if Western Dental materially
increases in scale and geographic diversity; follows a disciplined
financial policy, increasing free cash flow, with adjusted debt to
EBITDA maintained at or below 4.5 times.
Western Dental provides full service general, specialty and
orthodontic dentistry services and is the largest provider of
dentistry services in the State of California. The company directly
employs the majority of its dentists. The company is owned by New
Mountain Capital and generated revenues of around $577 million for
LTM March 31, 2021.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
PROQUEST LLC: Camelot Acquisition No Impact on Moody's 'B2' CFR
---------------------------------------------------------------
Moody's Investors Service says Camelot UK Holdco Limited's (d/b/a
Clarivate) acquisition of ProQuest LLC is credit positive for
ProQuest. On May 17, Clarivate announced a definitive agreement to
acquire ProQuest for $5.3 billion comprised of $4 billion in cash
and $1.3 billion of equity. Benefits of the transaction for
ProQuest include an expanded global reach of its software, data,
and analytics offerings that will materially complement Clarivate's
Research Intelligence Cloud offering and cost efficiencies linked
to the benefit of a larger corporate scale. ProQuest generated
about $250 million of company-adjusted EBITDA for FYE2020, valuing
the deal at a 21.2x EBITDA multiple and around a 15x EBITDA
multiple when including at least $100 million of cost synergies
expected to be realized within 15 to 18 months of transaction
close.
While Moody's views the announcement as a credit positive,
ProQuest's B2 Corporate Family Rating and stable outlook are
unaffected at this time. The transaction is expected to close in
the third quarter of 2021. If the transaction closes as expected
with all of ProQuest's debt paid off at closing, Moody's would
withdraw the ratings of ProQuest.
Headquartered in Ann Arbor, Michigan, ProQuest LLC aggregates,
creates, and distributes academic and news content and software
solutions serving academic, corporate and public libraries
worldwide. The company's ownership consists of Cambridge
Information Group, Inc. (majority shareholder), Atairos and Goldman
Sachs. Revenue for the last twelve months ended March 31, 2021 was
$872 million.
With principal offices in Philadelphia, PA, Camelot UK Holdco
Limited provides comprehensive intellectual property and scientific
information, decision support tools and services that enable
academia, corporations, governments and the legal community to
discover, protect and commercialize content, ideas and brands.
Revenue for the last twelve months ended March 31, 2021 was
approximately $1.4 billion.
PURDUE PHARMA: Struggles in Resolving Disclosure Statement Issues
-----------------------------------------------------------------
Jeremy Hill of Bloomberg News reports that Purdue Pharma struggles
to resolve disclosure statement issues.
Purdue Pharma LP is still working to address "a complex penumbra of
intercreditor issues" ahead of a key hearing on an outline of its
bankruptcy plan, Marshall Huebner of Davis Polk & Wardwell said on
behalf on the OxyContin maker in a Thursday, May 20, 2021,
hearing.
Huebner didn't specify outstanding issues, but said Purdue may not
be ready to seek approval of its disclosure statement at a hearing
now scheduled for the last week of May 2021.
"This would be just a terrible, terrible shame," Huebner said, as
it would likely delay efforts to seek approval of the opioid
settlement plan itself in August 2021.
About Purdue Pharma LP
Purdue Pharma L.P. and its subsidiaries --
http://www.purduepharma.com/-- develop and provide prescription
medicines and consumer products that meet the evolving needs of
healthcare professionals, patients, consumers and caregivers.
Purdue's subsidiaries include Adlon Therapeutics L.P., focused on
treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and
related disorders; Avrio Health L.P., a consumer health products
company that champions an improved quality of life for people in
the United States through the reimagining of innovative product
solutions; Imbrium Therapeutics L.P., established to further
advance the emerging portfolio and develop the pipeline in the
areas of CNS, non-opioid pain medicines, and select oncology
through internal research, strategic collaborations and
partnerships; and Greenfield Bioventures L.P., an investment
vehicle focused on value-inflection in early stages of clinical
development.
Opioid makers in the U.S. are facing pressure from a crackdown on
the addictive drug in the wake of the opioid crisis and as state
attorneys general file lawsuits against manufacturers. More than
2,000 states, counties, municipalities and Native American
governments have sued Purdue Pharma and other pharmaceutical
companies for their role in the opioid crisis in the U.S., which
has contributed to the more than 700,000 drug overdose deaths in
the U.S. since 1999.
OxyContin, Purdue Pharma's most prominent pain medication, has been
the target of over 2,600 civil actions pending in various state and
federal courts and other fora across the United States and its
territories.
On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
19-23649), after reaching terms of a preliminary agreement for
settling the massive opioid litigation facing the Company.
The Company's consolidated balance sheet at Aug. 31, 2019, showed
$1.972 billion in assets and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain, in White Plains, New York, has
been assigned to oversee Purdue's Chapter 11 case.
Davis Polk & Wardwell LLP and Dechert LLP are serving as legal
counsel to Purdue. PJT Partners is serving as investment banker,
and AlixPartners is serving as financial advisor. Prime Clerk LLC
is the claims agent.
RELIANCE INTERMEDIATE: DBRS Confirms BB Issuer Rating, Trend Stable
-------------------------------------------------------------------
DBRS Limited confirmed the Issuer Rating of Reliance Intermediate
Holdings LP at BB with a Stable trend. The rating is notched down
from HoldCo's operating subsidiary, Reliance LP (OpCo; rated BBB
(low) with a Stable trend by DBRS Morningstar), reflecting (1)
structural subordination of debt at HoldCo relative to OpCo, (2)
the relatively high level of leverage at HoldCo, and (3) reliance
on a single operating subsidiary for cash distributions.
HoldCo fully repaid the Senior Notes due in 2023 using part of the
proceeds from the issuance of the 2027 Reliance LP Notes in August
2020 and from three individual Senior Secured Term Loan Credit
Facilities (the Term Loans) in June 2020. The Term Loans rank pari
passu in right of payment with all of HoldCo's present and future
other secured and unsubordinated indebtedness, and are not rated by
DBRS Morningstar.
HoldCo and OpCo's operations continued with steady growth in 2020,
the third full year following the acquisition by Cheung Kong Asset
Holdings Limited, despite the Coronavirus Disease (COVID-19)
pandemic. The Company's earnings and cash flows both increased in
the year, resulting in a strengthening of the key financial
metrics. OpCo's financial risk assessment improved marginally in
2020, with the cash flow-to-debt and debt-to-EBITDA ratios
improving slightly, while EBITDA interest coverage ratios improved
more significantly, benefiting from solid growth in the rental
base. DBRS Morningstar notes that OpCo's debt-to-EBITDA ratio was
3.29 times (x) at the end of 2020. DBRS Morningstar further notes
that, as the rating of HoldCo is based on the structural
subordination to OpCo, any changes to OpCo's rating would translate
to a change in HoldCo's rating. DBRS Morningstar may take a
positive rating action for the Company, distinct from OpCo, if the
nonconsolidated debt-to-capital ratio is reduced to around 20%
(45.4% at December 31, 2020, down from 55.0% at December 31, 2019).
Conversely, DBRS Morningstar may take a negative rating action if
there is material incremental debt at the HoldCo level. DBRS
Morningstar's criteria guidelines provide for more than a one-notch
differential if HoldCo's nonconsolidated debt leverage is above
30%.
DBRS Morningstar notes that the Company has been only modestly
affected by the coronavirus pandemic because OpCo's business is
considered essential (per government guidelines), rather than
discretionary, and has been relatively insulated from economic
cycles. Operationally, OpCo has implemented strict procedures for
their technician field teams, with rigorous sanitation, as well as
providing gloves, masks, hand sanitizer, wipes, and disposable
booties. Additionally, OpCo instituted prescreening questions
before doing maintenance to ensure a safe environment for its
customers and staff.
DBRS Morningstar acknowledges that cash flow from OpCo to HoldCo
could be restricted as a result of tight covenants on debt at OpCo.
OpCo is restricted from declaring or distributing to its parent
unless the senior adjusted EBITDA-to-interest ratio is greater than
1.5x (5.6x for 2020). If this requirement is not met, OpCo may
still make payments to service HoldCo interest amounts provided
that the senior adjusted EBITDA-to-interest ratio exceeds 1.2x
(4.0x for 2020). DBRS Morningstar notes that this restriction is no
longer included in the Indenture for new debt issued from 2019
onwards; however, as OpCo's EBITDA interest coverage has been
consistently above 4.0x, DBRS Morningstar does not anticipate that
these restrictions will be triggered in the foreseeable future.
Notes: All figures are in Canadian dollars unless otherwise noted.
REYNA'S AUTO SERVICE: Seeks to Hire Rothbloom Law Firm as Counsel
-----------------------------------------------------------------
Reyna's Auto Service, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Georgia to hire The Rothbloom
Law Firm as its bankruptcy counsel.
The firm's services include:
(a) preparing pleadings and applications;
(b) conducting examinations;
(c) advising the Debtor of its rights, duties and obligations
under the Bankruptcy Code;
(d) consulting with and representing the Debtor with respect
to the preparation of a plan of reorganization and disclosure
statement;
(e) representing the Debtor in contested matters and adversary
proceedings; and
(f) representing the Debtor in other matters incidental to the
administration of its estate and business.
The firm will be paid at these rates:
Howard D. Rothbloom $350 per hour
Paralegal $150 per hour
Rothbloom received a retainer in the amount of $5,000.
As disclosed in court filings, Rothbloom does not represent
interests adverse to the Debtor in the matters upon which the firm
is to be engaged.
The firm can be reached through:
Howard D. Rothbloom, Esq.
The Rothbloom Law Firm
309 E. Paces Ferry Road, NE, Suite 400
Atlanta, GA 30305
Phone: 770-792-3636
Email: howard@rothbloom.com
About Reyna's Auto Service
Reyna's Auto Service, LLC sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No.
20-72021) on Nov. 24, 2020, listing under $1 million in both assets
and liabilities. Howard D. Rothbloom, Esq., at The Rothbloom Law
Firm, serves as the Debtor's legal counsel.
RICHMOND HILL: Seeks to Hire Direct Machinery as Broker
-------------------------------------------------------
Richmond Hill Laundry, Inc. seeks approval from the U.S. Bankruptcy
Court for the Eastern District of New York to hire Direct Machinery
Sales Corporation to assist with the sale of its equipment.
The firm will receive a commission of 30 percent of the total sale
proceeds.
As disclosed in court filings, Direct Machinery is a "disinterested
party" within the meaning of Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
Ronald Hirsch
Direct Machinery Sales Corporation
50 Commerce Pl
Hicksville, NY 11801
Phone: +1 516-938-4300
About Richmond Hill Laundry
Richmond Hill Laundry, Inc., a Richmond Hill, N.Y.-based
corporation, sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D.N.Y. Case No. 20-42918) on Aug. 10, 2020. Eric
Ng, president of Richmond Hill Laundry, signed the petition. In
the petition, the Debtor disclosed total assets of up to $50,000
and total liabilities of up to $500,000. Judge Elizabeth S. Stong
oversees the case. Berger, Fischoff, Shumer, Wexler, Goodman, LLP
is the Debtor's legal counsel.
RYAN 1000 LLC: Seeks Court Approval to Use Cash Collateral
----------------------------------------------------------
Ryan 1000, LLC asked the Bankruptcy Court to authorize its use of
cash collateral absent which, the Debtor asserts it would suffer
irreparable harm.
Waterstone Bank, SSB and the City of Milwaukee each hold an
interest in the cash collateral -- Waterstone, on account of a
pre-petition loan it extended to the Debtor, collateralized by
certain of the Debtors asset, and Milwaukee City, on account of
unpaid real estate taxes that has accrued on the collateralized
property.
The Debtor has defaulted on the loan and thereafter a foreclosure
of mortgage action was commenced in the state court of Milwaukee
with respect to the collateral. Waterstone was later granted a
judgment of foreclosure. The Sheriffs sale of the collateral that
was scheduled on March 15, 2021 was stayed by the filing of the
Debtor's case. Waterstone has filed a fully secured claim of
$208,702 and Milwaukee City also a fully secured claim for $39,005
against the Debtor.
The Debtor related that its assets, consisting of real property and
equipment aggregate $505,000, which amount could more than
adequately protect the creditors' interest in the cash collateral.
As adequate protection for the creditors' interest, the Debtor
proposed to grant Waterstone and Milwaukee City, on an interim
basis, a replacement lien of the same priority, to the same extent
and in the same collateral as the creditors had before the Petition
Date. Upon final approval of the cash collateral request, however,
Waterstone and Milwaukee City will retain their lien on the real
property and equipment.
The Debtor asked the Court to grant the request on an interim and
final basis. A copy of the motion is available for free at
https://bit.ly/3v3vSqJ from PacerMonitor.com.
About Ryan 1000, LLC
Ryan 1000, LLC, a single asset real estate company based in
Milwaukee, Wisconsin, filed a petition under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Wisc. Case No.
21-21326) on March 15, 2021, listing up to $50,000 in both assets
and liabilities. The petition was signed by David Ryan, sole
shareholder.
STROUSE LAW OFFICES represents the Debtor as counsel.
The firm can be reached through:
Paul A. Strouse, Esq.
STROUSE LAW OFFICES
413 North 2nd Street, Suite No. 150
Milwaukee, WI 53203
Telephone: 414-320-0820
Email: Strouselawoffices@gmail.com
RYAN 8641 LLC: Seeks to Use Cash Collateral
-------------------------------------------
Ryan 8641, LLC asked the Bankruptcy Court to authorize use of cash
collateral on an interim and final basis. Waterstone Bank, SSB and
the City of Milwaukee may have an interest in the cash collateral.
Before the Petition Date, the Debtor obtained a loan from
Waterstone Bank for $136,000, in consideration for which Waterstone
holds a perfected security interest in the Debtor's collateral,
evidenced by a mortgage note duly executed by the Debtor.
The City of Milwaukee holds a statutory lien on the subject
collateral for unpaid real estate taxes.
The Debtor was in default on the loan so that on September 16,
2019, an action to foreclose the mortgage was commenced in the
state court for Milwaukee County (Case No. 2019CV007101). A
judgment of foreclosure was granted Waterstone on January 15, 2021
but the Sheriffs sale of the collateral that was scheduled for
March 15, 2021 was stayed due to the filing of the Debtor's Chapter
11 case.
As of the Petition Date, the Debtor has $278,362 in assets
consisting of real property, automobile, cash in deposit, and
equipment. The Debtor owes $140,867 on the Waterstone loan, and
$13,855 to the City of Milwaukee. Accordingly, the assets are more
than adequate to protect the debt, the Debtor pointed out.
The Debtor proposed to provide each of Waterstone and Milwaukee
City replacement lien of the same priority, to the same extent and
in the same collateral as the creditors had pre-petition. However,
upon final approval of the cash collateral request, the creditors
will retain their lien on the Debtor's assets valued at $278,362.
The Debtor asserts that it needs cash in order to operate its
business or it will suffer irreparable harm. A copy of the motion
is available for free at https://bit.ly/3bH8rvL from
PacerMonitor.com.
About Ryan 8641, LLC
Ryan 8641, LLC is a single asset real estate company, which owns,
manages and leases a residential apartment complex in Milwaukee,
Wisconsin. The Debtor filed a petition under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Wisc. Case No.
21-21327) on March 15, 2021, listing at least $50,000 in both
assets and liabilities. The petition was signed by David Ryan,
sole shareholder.
Judge Beth E. Hanan is assigned to the case. STROUSE LAW OFFICES
is the Debtor's counsel.
The firm can be reached through:
Paul A. Strouse, Esq.
STROUSE LAW OFFICES
413 North 2nd Street, Suite No. 150
Milwaukee, WI 53203
Telephone: 414-320-0820
Email: Strouselawoffices@gmail.com
SAGE ECOENTERPRISES: Taps GreerWalker as Financial Advisor
----------------------------------------------------------
Sage EcoEnterprises, LLC received approval from the U.S. Bankruptcy
Court for the Western District of North Carolina to hire
GreerWalker, LLP to provide financial advisory services in
connection with its Chapter 11 case.
The firm will be paid as follows:
William A. Barbee $510 per hour
Consultants $100 - $575 per hour
As disclosed in court filings, GreerWalker is a "disinterested
person" as that phrase is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
William A. Barbee
GreerWalker LLP
227 West Trade Street, Suite 1100
Charlotte, NC 28202
Phone: +1 704-377-0239
Email: greerwalker@greerwalker.com
About Sage Ecoenterprises
Asheville, N.C.-based Sage EcoEnterprises, LLC is a privately held
company that owns and operates restaurants. It conducts business
under the name Green Sage Cafe.
Sage EcoEnterprises filed a Chapter 11 petition (Bankr. W.D.N.C.
Case No. 21-10072) on April 20, 2021. In the petition signed by
James R. Talley, member manager, the Debtor reported $1,155,799 in
total assets and $1,550,628 in total liabilities. Judge George R.
Hodges oversees the case.
Moon Wright & Houston, PLLC and GreerWalker, LLP serve as the
Debtor's legal counsel and financial advisor, respectively.
SANTA CLARITA: Unsecureds Will Receive 100% Under Plan
------------------------------------------------------
Santa Clarita, LLC, submitted a Second Amended Disclosure Statement
for its Chapter 11 Plan of Reorganization.
On or about the Plan Effective Date, the Debtor will sell the
Property to Prologis, Inc. pursuant to the Property Purchase-Sale
Agreement and 11 U.S.C. Sec. 363(b), (f), (m) and 1123(a)(5) on the
terms set forth in the Purchase and Sale Agreement and Joint Escrow
Instructions. Pursuant to such Property Purchase-Sale Agreement,
the Debtor shall sell the Property to Prologis for $286 million,
payable in cash, at closing. The Debtor will utilize the Property
Sale Proceeds to make all payments due under the Plan. From Feb.
8, 2021, the date the Prologis LOI was executed, to the present,
Prologis and the Debtor have been actively negotiating the Property
Purchase-Sale Agreement. To that end, the Property Purchase-Sale
Agreement was subject to arm's-length negotiations between Prologis
and the Debtor.
Class 10 General Unsecured Claims will receive 100% of their
claims. Each Holder of a General Unsecured Claim, as determined by
the Debtor or the Reorganized Debtor, as applicable, will receive
either (1) payment in full in Cash on the later of: (a) the Plan
Effective Date; (b) the date the General Unsecured Claim becomes an
Allowed General Unsecured Claim, in an amount equal to the amount
of its Allowed Priority Claim, or (c) the date such payment is due
in the ordinary course of business in accordance with the terms and
conditions of the particular transaction giving rise to such
General Unsecured Claim, or (2) such other treatment agreed to by
the Holder of such Allowed Priority Claim and the Debtor or the
Reorganized Debtor, as applicable.
Attorneys for the Debtor:
Christopher H. Bayley
James G. Florentine
Molly J. Kjartanson
SNELL & WILMER L.L.P.
One Arizona Center
400 E. Van Buren St., Ste. 1900
Phoenix, AZ 85004-2202
Telephone: (602) 382-6000
A copy of the Second Amended Disclosure Statement for Chapter 11
Plan of Reorganization is available at https://bit.ly/3hJo5dO from
PacerMonitor.com.
About Santa Clarita
Santa Clarita, LLC, was formed in 1998 by Remediation Financial,
Inc. ("RFI") for the sole purpose of acquiring a real property
consisting of approximately 972 acres of undeveloped land generally
located at 22116 Soledad Canyon Road, Santa Clarita, California
(the "Property"). The Debtor purchased the Property from Whittaker
Corporation. Whittaker used the Property to manufacture munitions
and related items for the U.S. Department of Defense (the "DOD").
The soil and groundwater on the Property suffered environmental
contamination thus the property required remediation before the
Property could be developed.
On or about January 2019, the controlling interest in RFI was
acquired by Glask Development, LLC. Glask Development, LLC has
two members, K&D Real Estate Consulting, LLC and Gracie Gold
Development, LLC. The Debtor's sole member and manager is RFI.
Santa Clarita filed a voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 20-12402) on
Nov. 12, 2020. The petition was signed by David W. Lunn, chief
executive officer of Remediation Financial, Inc., manager of the
Debtor. At the time of filing, the Debtor estimated $100 million
to $500 million in assets and $500 million to $1 billion in
liabilities. Judge Madeleine C. Wanslee oversees the case. Thomas
H. Allen, Esq., at Allen Barnes & Jones, PLC, is the Debtor's legal
counsel.
SHARPE CONTRACTORS: Selective Says Plan Not Feasible
----------------------------------------------------
Selective Insurance Company objects to the Amended Disclosure
Statement and to the Amended Plan of Reorganization filed by Sharpe
Contractors, LLC.
Selective asserts that the Amended disclosure statement should not
be approved because the Amended Disclosure Statement and Plan fail
to recognize Selective's priority, secured right to bonded contract
funds. The Plan seeks to impair Selective's priority, secured
rights in and to Bonded Contract Funds by treating Selective's
entire claim as unsecured. To the contrary, Selective has a
priority right to Bonded Contract Funds that is not recognized in
the Amended Plan. Selective's priority right to Bonded Contract
Funds is superior to any claim by the Debtor, the estate and any
other creditor of the Debtor pursuant to Selective's rights of
legal and equitable subrogation.
Selective also objects to the non-debtor release in the Amended
Plan. The Amended Disclosure Statement describes an Amended Plan
that cannot be confirmed, as Section 8.4 of the Plan contains an
improper non-debtor release that deprives Selective of its rights
against a non-debtor. Section 1129(a)(1) requires that "[t]he plan
complies with the applicable provisions of this title." Here, the
Plan violates sections 105(a) and 524(e) by proposing a third party
release of Shane Sharpe's personal guaranty obligations to
Selective. The Plan also is not proposed in good faith and fails
to comply with 11 U.S.C. Sec. 1129(a)(3).
Selective points out the Amended Plan is not feasible. The
Debtor's capital structure and financial projections are grossly
inadequate for it to make the payments to Bank of America set forth
in the Plan. Similarly, the Debtor has not shown that Shane Sharpe
will be able to make the $800,000.00 payment to unsecured creditors
provided under the Amended Plan, especially if the Debtor cannot
fund his substantial salary or Shane Sharp is unable to sell his
home with sufficient net proceeds to make the Amended Pan workable.
The Amended Plan described in the Amended Disclosure Statement does
not identify any new work obtained by the Debtor post-petition or
any plan to obtain new work. Simply put, the Debtor has not shown
that it has any realistic chance of consummating the Plan.
Attorneys for Selective Insurance Company of America:
E.A. "Seth" Mills, Esq.
Brent J. Beaver, Esq.
MILLS PASKERT DIVERS
1201 West Peachtree Street, Suite 2610
Atlanta, Georgia 30309
Tel: (404) 870-8200
Fax: (404) 870-3080
E-mail: smills@mpdlegal.com
bbeaver@mpdlegal.com
Alberta L. Adams
100 North Tampa Street, Suite3700
Tampa, Florida 33602
Telephone: (813) 229-3500
Facsimile: (813) 229-3502
E-mail: aadams@mpdlegal.com
About Sharpe Contractors
Sharpe Contractors, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. N.D. Ga. Case No. Case 20-72638) on Dec. 14, 2020. At the
time of filing, the Debtor estimated 100,001 to $500,000 in assets
and $1,000,001 to $10 million in liabilities. The Debtor hired
Wiggam & Greer, LLC, as counsel, and Simmons & Jamieson, CPA as
accountant.
SHELTON BROTHERS: Trustee Granted Extended Sale Objection Deadline
------------------------------------------------------------------
Judge Elizabeth D. Katz of the U.S. Bankruptcy Court for the
District of Massachusetts granted in part the request of Subchapter
V Trustee, Steven Weiss, to extend the deadline for filing
objections or higher offers to Shelton Brothers, Inc.'s private
sale of substantially all assets of Progressive Distribution, LLC,
to Michael Merrifield, or his nominee for $400,000, subject to
overbid, to May 19, 2021, at noon, and that the hearing on the Sale
Motion continued to May 20, 2021.
The hearing on the Debtor's Motion to Sell set for May 14, 2021,
was continued to May 20, 2021, at 12:30 p.m. The continued hearing
will be conducted telephonically; parties may participate by
dialing 888-363-4734, and entering access code 496 4809 when
prompted.
The deadline for the Subchapter V Trustee and the U.S. Trustee to
file an objection was extended to May 19, 2021, at 12:00 p.m.
About Shelton Brothers, Inc.
Shelton Brothers, Inc. is a beer importing and distributing
company
located in Belchertown, Mass. Shelton Brothers filed a voluntary
petition under the provisions of Chapter 11 of the Bankruptcy Code
(Bankr. D. Mass. Case No. 20-30606) on Dec. 18, 2020. In the
petition signed by Daniel W. Shelton, president, the Debtor
disclosed between $1 million to $10 million in both assets and
liabilities.
Judge Elizabeth D. Katz oversees the case.
Andrea M. O'Connor, Esq., at Fitzgerald Attorneys at Law, P.C.,
represents the Debtor as counsel.
SHELTON BROTHERS: Trustee Seeks to Extend Bid Deadline for Assets
-----------------------------------------------------------------
Subchapter V Trustee, Steven Weiss, asks the U.S. Bankruptcy Court
for the District of Massachusetts to extend the deadline for filing
objections or higher offers to Shelton Brothers, Inc.'s private
sale of substantially all assets of Progressive Distribution, LLC,
to Michael Merrifield, or his nominee for $400,000, subject to
overbid, to May 19, 2021 at noon, and that the hearing on the Sale
Motion be continued to May 20, 2021.
The Debtor filed the Sale Motion on April 20, 2021. It seeks
authority to sell its interests in Progressive.
Pursuant to a notice issued by the Court, the deadline for filing
objections or higher offers is May 12, 2021, and the hearing on the
Sale Motion is scheduled for May 14, 2021.
On May 5, 2021, the Court entered an order expanding the Trustee's
authority and ordering him to conduct an investigation. The
Trustee has commenced investigating a number of matters relevant to
the Debtor's Chapter 11 case, including the value of its interest
in Progressive.
That evaluation is not complete, and requires further evaluation,
for a number of reasons. First, it is to an insider, i.e.,
Progressive's current manager. Second, the sale terms include a
provision that approximately $250,000 owed by Progressive to the
Debtor will be waived; to the extent the Debtor is waiving this
sum, the net recovery to the estate would be only $150,000. Third,
the Trustee has not received complete responses to some of his
inquiries regarding the sale. The Trustee also has reason to
believe that Progressive may have materially more value than the
proposed sale price.
The Trustee therefore believes that it would be appropriate for the
hearing on the Sale Motion to be continued for six days, to May 20,
2021 (when there are other matters in the case scheduled for
hearing), and that the deadline for the submission of objections or
higher offers be extended to May 19, 2021 at 12:00 p.m.
About Shelton Brothers, Inc.
Shelton Brothers, Inc. is a beer importing and distributing
company
located in Belchertown, Mass. Shelton Brothers filed a voluntary
petition under the provisions of Chapter 11 of the Bankruptcy Code
(Bankr. D. Mass. Case No. 20-30606) on Dec. 18, 2020. In the
petition signed by Daniel W. Shelton, president, the Debtor
disclosed between $1 million to $10 million in both assets and
liabilities.
Judge Elizabeth D. Katz oversees the case.
Andrea M. O'Connor, Esq., at Fitzgerald Attorneys at Law, P.C.,
represents the Debtor as counsel.
SMYRNA READY: Proposed Notes Offering No Impact on Moody's B1 CFR
-----------------------------------------------------------------
Moody's Investors Service said the proposed issuance of $270
million in additional senior secured notes due 2028 by Smyrna Ready
Mix Concrete, LLC, has no impact on Smyrna's ratings, including the
B1 Corporate Family Rating and the B1 rating on the company's
notes. The stable outlook is also unchanged.
The proceeds from the proposed offering will be used primarily to
fund pending acquisitions. Pro forma for the proposed financing and
the bolt-on acquisitions, Moody's projects Smyrna's leverage will
be 3.7x at December 31, 2021 (including Moody's adjustments). The
$270 million in additional senior secured notes will be fungible
with the existing senior secured notes.
"By adding scale and diversifying revenue sources while remaining
financially disciplined, Smyrna continues to strengthen its
competitive profile and enhance its operating flexibility." said
Emile El Nems, a Moody's VP-Senior Analyst.
Smyrna's B1 Corporate Family Rating reflects the company's market
position as a one of the leading regional producers of construction
materials in Tennessee, Florida, Georgia and Kentucky, its
vertically integrated asset base and broad customer base. In
addition, Moody's credit rating is supported by the company's
strong EBITDA margins and commitment to maintain modest leverage
and good liquidity. At the same time, Moody's rating takes into
consideration the company's vulnerability to cyclical end markets,
the competitive nature of its ready-mix concrete business, and
material revenue exposure to Tennessee and Florida.
The stable outlook reflects Moody's expectation that Smyrna will
steadily grow revenue organically, maintain a good operating
performance, generate solid free cash flow, and remain committed to
maintaining a modest leverage. This is largely driven by Moody's
view that the US economy will improve sequentially and remain
supportive of the company's underlying growth drivers.
Moody's expects Smyrna to maintain good liquidity over the next
12-18 months. Pro forma for the transaction, Smyrna's liquidity
position is supported by approximately $23 million of cash, a $100
million asset based revolving credit facility (unrated), under
which Moody's expects $70 million will remain available, and
Moody's expectation that the company will generate more than $100
million in free cash flow in 2021. The asset based revolving credit
facility, which expires in 2025, is governed by a springing
fixed-charge coverage ratio of 1.0x, that comes into effect if
availability under the asset based revolving credit facility is
less than 10% of the total revolver availability.
Smyrna Ready Mix Concrete, LLC is a manufacturer and retailer of
ready-mixed concrete in Tennessee, Florida, Kentucky, Ohio,
Indiana, Texas, Georgia, Alabama, Arkansas, Michigan, South
Carolina and Virginia. The company operates within two primary
segments: (i) ready-mixed concrete, which accounts for 95% of
revenue, and (ii) aggregate products.
Pro forma for recent and planned acquisitions, revenue for the last
twelve months ending March 31, 2021, would have been approximately
$1.4 billion.
SOUTHLAND ROYALTY: Bankruptcy Plan Okayed, Allowing $252-Mil. Sale
------------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that natural gas driller
Southland Royalty Co. LLC received court approval of its bankruptcy
wind-down plan, largely overcoming a challenge from royalty owners
who sought a $3 million set-aside to satisfy their claims.
The plan, approved Thursday, centers around a sale of the business
to Williams Companies Inc. affiliate Wamsutter E&P LLC for $148
million in cash and assumption of more than $100 million in
liabilities. Proceeds will partially repay pre-bankruptcy lenders
and general unsecured creditors.
Lenders, led by Citibank NA, are projected to recover between 7.6%
and 10.6% on about $485 million in claims.
About Southland Royalty
Southland Royalty Company LLC -- http://www.southlandroyaltyco.com/
-- is a privately held independent exploration and production
company engaged in the acquisition and development of hydrocarbons.
Headquartered in Fort Worth, Southland Royalty Company conducts its
business across four states, with the majority of operations in
Wyoming and New Mexico. Southland Royalty Company was formed
principally to produce and extract hydrocarbons in the Wamsutter
field of the Green River Basin and in the San Juan Basin.
Southland Royalty Company sought Chapter 11 protection (Bankr. D.
Del. Case No. 20-10158) on Jan. 27, 2020. In the petition signed
by CRO Frank A. Pometti, the Debtor was estimated to have $100
million to $500 million in assets and $500 million to $1 billion in
liabilities.
The Debtor tapped Shearman & Sterling LLP as bankruptcy counsel;
Young Conaway Stargatt & Taylor, LLP as Delaware counsel; AP
Services, LLC as interim management services provider; PJT Partners
Inc. as investment banker; and Epiq Corporate Restructuring, LLC as
claims and noticing agent.
SPECTRUM GLOBAL: Incurs $10.1 Million Net Loss in First Quarter
---------------------------------------------------------------
Spectrum Global Solutions, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss attributable to the company of $10.09 million on $4.07
million of revenue for the three months ended March 31, 2021,
compared to a net loss attributable to the company of $3.53 million
on $5.22 million of revenue for the three months ended March 31,
2020.
As of March 31, 2021, the Company had $6.38 million in total
assets, $22.17 million in total liabilities, $1.02 million in total
mezzanine equity, and a total stockholders' deficit of $16.81
million.
As of March 31, 2021, the Company's total current assets were
$5,313,336 and its total current liabilities were $12,922,209,
resulting in a working capital deficit of $7,608,873, compared to a
working capital deficit of $6,115,451 as of Dec 31, 2020.
The Company stated, "We suffered recurring losses from operations.
The continuation of our company is dependent upon our company
attaining and maintaining profitable operations and raising
additional capital as needed. In this regard, we have historically
raised additional capital through equity offerings and loan
transactions."
For the three months ended March 31, 2021, cash and restricted cash
increased $2,415,457, compared to a decrease in cash and restricted
cash of $340,514 for the same period of 2020. The increase was
primarily related to the cash provided by financing activities of
$2,382,897 during the three months ended March 31, 2021. Of that
amount, $2,000,000 related to a new CARES Act Loan obtained by
ADEX. These funds are included in restricted cash on the unaudited
condensed consolidated balance sheet as of March 31, 2021.
"In order to improve our liquidity, we intend to pursue additional
equity financing from private placement sales of our equity
securities or shareholders' loans. Issuances of additional shares
will result in dilution to our existing shareholders. There is no
assurance that we will be successful in completing any further
private placement financings. If we are unable to achieve the
necessary additional financing, then we plan to reduce the amounts
that we spend on our business activities and administrative
expenses in order to preserve our liquidity," the Company added.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1413891/000121390021026988/f10q0321_spectrum.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.
Spectrum Global reported a net loss attributable to the company of
$17.71 million for the year ended Dec. 31, 2020, compared to a net
loss attributable to the company of $5.83 million 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.
SPLASH NEWS: Gets Cash Collateral Access on Final Basis
-------------------------------------------------------
The U.S. Bankruptcy Court for the District of Nevada has authorized
Splash News and Picture Agency, LLC to use cash collateral on a
final basis in accordance with the approved budget which has been
mutually agreed to by the Debtor and its secured creditor, Deasil
Limited.
The Debtor is permitted to vary from the Budget by up to 5% in any
given month, but under no circumstances will the Debtor be
permitted to vary by more than 5% of the Budget for any given month
unless it has obtained prior written consent by Deasil. Prior to
the conclusion of the time period covered by the Budget, Deasil and
the Debtor will negotiate a supplemental budget to cover the next
two-month period which must be mutually agreed to in writing by
Deasil and the Debtor.
As adequate protection for the use of Cash Collateral and the other
assets that comprise its collateral but subject and limited to the
Carve-Out, Deasil is granted a replacement lien of the same
validity, priority and extent as its pre-petition lien on the
post-petition after-acquired assets of the Debtor.
Any and all liens granted to Deasil under the Order will be deemed
valid, binding, enforceable and perfected upon entry of the Order.
Deasil will not be required to file any UCC-1 financing statement
or any similar document or take any other action in order to
validate the perfection of its liens.
The parties stipulate that Deasil held a duly perfected first lien
on all of the Debtor's assets as of the Petition Date. The
stipulation is only binding upon Deasil and the Debtor. Any other
party in interest will have 30 days from the conclusion of the
section 341 meeting of creditors to object to the prior perfected
security interests of Deasil upon the prepetition assets of the
Debtor. The 30-day limitation set forth in the preceding sentence
will not apply to any entity that asserts it has a previously
perfected lien that takes priority over Deasil's liens.
Unless otherwise provided in the Order, the terms and conditions
relating to the liens and priorities granted to Deasil will be
binding upon the Debtor, its creditors, and other parties in
interest and all successors in interest thereof including, without
limitation, any trustee that is or may be appointed in the case or
any trustee in a case under any other chapter of the Bankruptcy
Code into which the case may be converted. The binding effect is an
integral part of the agreement included in the Order.
The Debtor grants the following as additional adequate protection
to Deasil:
a. On a monthly basis the Debtor will provide to Deasil a
report for the prior month comparing the Budget to actual results
and such report will be due on the same date that the Debtor's
monthly operating report is due;
b. The Debtor will provide Deasil, upon request, with such
other financial reports and/or information as Deasil may request
from time to time;
c. The Debtor will not pay any pre-petition obligations
without prior Court approval; and
d. The Debtor will timely pay all post-petition income,
payroll, ad valorem, sales and use taxes, and will provide copies
of all tax deposit receipts upon request.
The replacement liens granted will be subject and subordinate only
to the carve-out, which consists of (i) the allowed professional
fees and expenses of professionals or professional firms retained
by the Debtor to be paid as ordered by the Bankruptcy Court and
only to the extent so ordered; (ii) the allowed professional fees
and expenses of the Sub-Chapter V trustee appointed in the case;
and (iii) the payment of any fees that may be required to be paid
to the Clerk of the Court or to the U.S. Trustee under 28 U.S.C.
section 1930 plus interest pursuant to 31 U.S.C. section 3717.
The Debtor's authority to use Cash Collateral will terminate
without further Court action upon the earliest to occur of:
a. The time period covered by the Budget (or any supplemental
budget) expires and the Debtor and Deasil have not reached a
written agreement on a supplemental budget for the next two-month
period.
b. The Debtor's use of Cash Collateral exceeds the Budget by
more than 5% without Debtor first obtaining prior written consent
of Deasil to exceed such budget;
c. The entry of an order pursuant to section 363 of the
Bankruptcy Code approving the sale of substantially all of the
Debtor' assets;
d. The effective date of any plan of reorganization or plan of
liquidation for the Debtor;
e. Conversion of the Debtor's case to any other Chapter of the
Bankruptcy Code;
f. Dismissal of the Debtor's bankruptcy case;
g. Entry of any order pursuant to section 364 of the
Bankruptcy Code authorizing the Debtor to obtain credit with a
higher priority than the liens held by or granted to Deasil;
h. The automatic stay is lifted as to any other party in order
to permit foreclosure on pre-petition or post-petition collateral
in which Deasil holds a first priority lien;
i. Failure by the Debtor to pay any post-petition obligations
as they come due; or
j. Failure of the Debtor to abide by the terms of the Order.
On the Termination Date, in addition to those other remedies
available to Deasil under any other orders of the Court, the Debtor
will cease all use of Cash Collateral, the Debtor will not disburse
any funds for any reason without order of the Court, the Debtor
will otherwise comply with the Order and all accounts receivable,
checks and proceeds will be forthwith remitted to Deasil.
Notwithstanding the occurrence of the Termination Date or anything
to the contrary, the rights and obligations of the Debtor and the
rights, claims, security interests, liens and priorities of Deasil
with respect to all transactions which occurred prior to the
occurrence of such termination will remain unimpaired and
unaffected by any such termination, will survive any such
termination, and will be binding upon any and all
successors-in-interest to the Debtor, including any bankruptcy
trustee.
A copy of the order and the Debtor's budget is available for free
at https://bit.ly/3bIgmce from PacerMonitor.com. The Debtor
projects total receipts of $1,250,657 and total expenses of
$1,037,864 for the period from the week of March 24 through the
week of July 26, 2021.
About Splash News & Picture Agency
Splash News & Picture Agency, LLC is a privately held company in
the image licensing and stock photography business. It is a
wholly-owned subsidiary of Splash News and Picture Agency Holdings,
Inc.
Splash News & Picture Agency filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Case
No. 21-11377) on March 23, 2021. Emma Curzon, president, signed
the petition. In the petition, the Debtor disclosed $706,911 in
assets and $2,803,140 in liabilities.
Judge August B. Landis oversees the case.
The Debtor tapped Husch Blackwell LLP as its bankruptcy counsel,
Atkinson Law Associates Ltd. as local counsel, and Pinsent Masons,
LLP as special counsel.
SQUARE INC: S&P Assigns 'BB' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issuer credit rating to
Square, Inc. The outlook is stable. S&P also assigned its 'BB'
rating to Square's proposed $2 billion senior unsecured notes. The
recovery rating on the senior unsecured notes is '4', indicating
its expectation for an average recovery (35%) in a default
scenario.
San Francisco-based Square, Inc. is a financial services and
digital payment company. The seller ecosystem (70% of 2020 total
S&P adjusted net revenue and 55% of total gross profit) is best
known for its point of sale technology that allows merchants to
accept electronic payments and manage their businesses
(inventories, sales, payroll, etc). The Cash App Ecosystem (30% of
2020 total adjusted net revenue and 45% of total gross profit)
offers financial products and services to help individuals manage
their money (including, but not limited to transfer, investment and
spending).
S&P said, "We base our ratings on Square's low leverage, strong
liquidity, and growing market position within an industry with a
large market opportunity. However, the ratings are limited by
uncertainty over how the company could deploy its bolstered cash
balances, the company's below average EBITDA margins (including
meaningful addbacks to adjusted EBITDA), and its size relative to
much larger incumbents (as an example, S&P Global Ratings adjusted
net revenue for Square is more than four times lower than for peer
PayPal). Our ratings also consider the potential for operating risk
associated with the company's growing list of financial regulators
and with the company's growing loan book and bitcoin investments.
"We expect Square to operate with net debt to EBITDA of 1.0x and
2.0x and EBITDA coverage of interest expense of 6x and 10x.
However, Square does not have a stated leverage tolerance or a
record operating with its current capital structure. We expect
proforma cash balances will be more than $5.0 billion following the
unsecured issuance, from just $1.0 billion at the end of 2019. Over
time, we think net debt to EBITDA could rise either because of
acquisitions or capital spending, but will remain comfortably below
2.0x, and naturally de-leverage over time through EBITDA growth and
surplus cash retention.
"The stable outlook reflects S&P Global Ratings' expectation that
over the next 12 months Square will operate with net debt of 1.0x
and 2.0x, and EBITDA-to-interest above 6x, while maintaining a
strong liquidity position. The stable outlook also reflects our
expectation that the company will have solid growth within both its
seller and cash app ecosystems, and will successfully manage its
small, but growing, direct lending and bitcoin exposures.
"We could lower our ratings on Square over the next year if the
company were to pursue a large cash or debt financed acquisition or
if operating performance were to unexpectedly deteriorate,
especially if we expect net debt to EBITDA to rise above 2.0x or
EBITDA coverage of interest to fall below 6x on a sustained basis.
We could also lower the rating if the company faced regulatory
enforcement actions, substantial monetary penalties, or curtailment
of business practices.
"An upgrade is unlikely over the next 12 months. Over time, we
could raise the rating if Square establishes a track record of
maintaining net debt to EBITDA below 1.5x, improves its profit
margin, and becomes a larger player within the commercial and
mobile payment sectors."
SRS DISTRIBUTION: Moody's Gives B3 Rating on New Sr. Secured Debt
-----------------------------------------------------------------
Moody's Investors Service affirmed SRS Distribution Inc.'s B3
Corporate Family Rating and B3-PD Probability of Default Rating.
Moody's also assigned a B3 rating to the company's proposed senior
secured debt consisting of a term loan and notes. Moody's expects
the terms and conditions of the proposed senior secured term loan
to be similar to SRS' existing senior secured term loan maturing
2025. In addition Moody's assigned a Caa2 rating to SRS' proposed
senior unsecured notes, which Moody's expects will have similar
terms and conditions of the company's existing senior unsecured
notes due 2026. The outlook is stable.
Proceeds from the new term loan and notes issuances will be used to
fund a dividend to equity holders and to pay off SRS' existing
senior secured term loan maturing 2025 and to redeem the company's
$350 million senior unsecured notes due 2026 at which time the
rating on each of these debt instruments will be withdrawn. The
balance of proceeds will be used to term out some revolver
borrowings, put cash on the balance sheet and pay related fees and
expenses.
The affirmation of SRS' B3 CFR follows the aggressive financial
strategy pursued by Leonard Green & Partners, L.P. (Leonard Green),
the majority owner of SRS. SRS is paying a very sizeable debt
financed dividend to Leonard Green and the other owners of SRS.
Leonard Green's portion of the proposed dividend of about $1.1
billion is approximately 50% of its original equity investment made
in May 2018. Additionally, the total dividend represents several
years of future free cash flow and multiple years of adjusted
EBITDA. Balance sheet debt is increasing by about 60% to $3.5
billion from $2.2 billion at Q1 2021 (January 31, 2021), resulting
in SRS remaining highly leveraged. Moody's projects adjusted
debt-to-LTM EBITDA worsening to 6.3x in fiscal year 2022 ending
October 31 due to the debt transaction versus 4.9x at Q1 2021.
Fixed charges including cash interest, term loan amortization and
operating lease and equipment finance payments will approach $300
million per year, significantly reducing financial flexibility.
The stable outlook reflects Moody's expectation that SRS will
benefit from inelastic demand for roofing products, SRS' primary
source of revenue, and positive end market dynamics that supports
growth. These factors and good liquidity further support the stable
outlook.
The following ratings are affected by the action:
Affirmations:
Issuer: SRS Distribution Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Assignments:
Issuer: SRS Distribution Inc.
Senior Secured Bank Credit Facility, Assigned B3 (LGD3)
Senior Secured Regular Bond/Debenture, Assigned B3 (LGD3)
Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD5)
Outlook Actions:
Issuer: SRS Distribution Inc.
Outlook, Remains Stable
RATINGS RATIONALE
SRS' B3 CFR reflects Moody's expectation that SRS will remain
highly leveraged over the next eighteen months. Moody's forecasts
adjusted free cash flow-to-debt will be only modestly positive in
fiscal year 2022. At the same time SRS faces strong competition.
Providing an offset to SRS' leveraged capital structure is good
profitability. Moody's forecasts an adjusted EBITDA margin in the
range of 10% - 12.5% over the next eighteen months, which is a key
financial strength of the company. Profitability will benefit from
higher volumes from growth in demand for residential roofing repair
and replacement. Moody's projects revenue will approach $5.6
billion by late 2022. Moody's also calculates interest coverage,
measured as adjusted EBITA-to-interest expense remaining above
2.0x. Good liquidity characterized by free cash flow despite high
interest payments, sufficient revolver availability and no
maturities until 2026 further support SRS' credit profile.
The B3 ratings on SRS' proposed senior secured term loan and 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 Caa2 rating on the company's proposed senior unsecured notes,
two notches below the Corporate Family Rating, results from their
subordination to SRS' considerable amount of secured debt.
The senior secured term loan is expected to contain certain
covenant flexibility for transactions that can adversely affect
creditors. Notable terms include the ability to incur incremental
indebtedness up to the greater of $545 million and 100% of LTM
consolidated EBITDA, plus unused amounts under the general debt
basket, plus additional amounts so long as first lien net leverage
ratio does not exceed 5.50x for pari passu indebtedness. Amounts
(i) up to the greater of $272.5 million at closing and 50% of LTM
consolidated EBITDA, (ii) incurred under the ratio incremental
amount, and (iii) incurred in connection with an acquisition may be
incurred with an earlier maturity date than the initial term loan.
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 does not provide any limitations on
up-tiering transactions. These proposed terms and the final terms
of the credit agreement may be materially different.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade:
- Debt-to-LTM EBITDA trending towards 5.0x
- Preservation of good liquidity
Factors that could lead to a downgrade:
- Debt-to-LTM EBITDA sustained above 6.5x
- EBITA-to-interest expense trending towards 1.0x
- Deterioration in liquidity profile
- Excessive usage of the revolving credit facility
- Aggressive acquisition or equity holder return activity
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
SRS Distribution Inc., headquartered in McKinney, Texas, is a
national distributor of primarily roofing supplies and related
building materials throughout the United States. Leonard Green &
Partners, L.P., through its affiliates, is majority owner of SRS.
Berkshire Partners LLC, through its affiliates, is the next largest
owner of SRS followed by management and employees.
SRS DISTRIBUTION: S&P Downgrades ICR to 'B-', Outlook Stable
------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on McKinney,
Texas-based roofing and building products distributor SRS
Distribution Inc. to 'B-' from 'B'. Its outlook is stable.
S&P said, "Also, we assigned our 'B-' issue-level ratings to the
proposed $2.04 billion term loan B and $650 million senior secured
notes, and our 'CCC' issue-level rating to the proposed $600
million senior unsecured notes.
"The stable outlook indicates our view that S&P Global
Ratings-adjusted leverage will remain about 7x-8x with EBITDA
interest coverage above 2.5x-3x for the next 12 months on the back
of steady demand for residential roofing products and exterior
building materials."
The proposed $1.125 billion dividend recapitalization fundamentally
weakens creditors' positions with no offsetting EBITDA. The
proposed capital structure pressures already high S&P Global
Ratings-adjusted leverage of 7x-8x from prior expectations of about
5-6x. S&P's view reflects the company's aggressive financial
policies, as the proposed debt-financed dividend distribution will
heighten credit risk before the realization of any synergies or
incremental cash flows from positive end-market trends and recent
acquisitions. As part of the transaction, SRS will issue a $2.04
billion term loan B, $650 million senior secured notes, and $600
million senior unsecured notes. S&P believes the debt-financed
dividend will keep adjusted leverage in the 7x-8x range through the
end of 2021, commensurate with a 'B-' rating.
Strong organic growth, combined with the integration of the recent
acquisitions, should drive the company's performance in 2021. S&P
said, "We continue to expect SRS to benefit from positive trends in
the residential construction and repair and remodeling end markets
through 2021. Coupled with incremental earnings from bolt-on
acquisitions completed in 2020 and 2021, we believe the company's
revenue and EBITDA will continue to expand this year. As input cost
inflation picks up, passing through higher costs would be
instrumental for operating performance and the resulting credit
metrics. We expect margins to face some downside pressure in 2021
from rising input costs, particularly crude oil-based products
(which are expected to rebound from the lows of 2020) and overhead
costs of labor and freight. Nonetheless, we expect EBITDA of $475
million-$500 million in 2021 and 2022, up from under $450 million
in 2020 and well above the roughly $350 million in 2019, from good
market conditions that could offset increased debt. Additionally,
adjusted ebitda margins have been steady at about 11% annually in
2015-2020 (except 2018), and we expect that to hold in 2021-2022.
We do believe credit pressure could drop S&P Global
Ratings-adjusted EBITDA margins well below 10%. SRS has
historically enjoyed higher-than-average EBITDA margins for a
building materials distributor largely because of its scale,
purchasing power, and the synergies it derives from acquisitions."
Majority ownership of SRS by private equity firm Leonard Green &
Partners L.P. and Berkshire Partners LLC remains a limiting factor
to our rating. SRS has a history of operating with high leverage as
it actively uses debt to finance its acquisitions. S&P imputes
higher risk in our financial policy considerations for financial
sponsor-owned companies given their predilection for debt-financed
transactions, including acquisitions and dividends.
The stable outlook indicates S&P's view that total leverage
(including leases) will remain above 7x-8x with EBITDA interest
coverage of 2.5x-3x for the next 12 months. This is on the back of
steady demand for residential roofing products and exterior
building materials products.
S&P could lower its rating on SRS over the next 12 months if:
-- Lower-than-expected S&P Global Ratings-adjusted EBITDA margins
well below 10% result in adjusted leverage sustained above 9x or
EBITDA interest coverage trending toward 2x. This could occur if
demand slows or inflation that cannot be passed on is higher than
expected and higher prices compress margins;
-- The company maintains an aggressive financial policy, such as
pursuing large debt-funded acquisitions, causing adjusted leverage
to stay about 9x on a sustained basis; or
-- S&P believes its financial commitments appear unsustainable in
the long term and it would depend upon favorable business,
financial, and economic conditions to meet its financial
commitments.
Although unlikely over the next twelve months, S&P could raise the
rating over the next 12 months if:
-- The company's EBITDA improves such that adjusted leverage is
5x-6x; and
-- It commits to maintain this leverage.
STA TRAVEL: Court Extends Plan Exclusivity Until August 2
---------------------------------------------------------
At the behest of Debtor STA Travel, Inc., Judge Brendan L. Shannon
of the U.S. Bankruptcy Court for the District of Delaware extended
the period in which the Debtor may file a Plan of Reorganization
through and including August 2, 2021.
As of the Petition Date, the Debtor has elected to proceed as a
debtor under subchapter V of chapter 11 because it has liquidated,
non-contingent debt in an amount less than $7.5 million.
On March 4, 2021, the Office of the United States Trustee appointed
David M. Klauder as the subchapter V trustee in the Debtor's case.
According to the Court's Order Setting Proof of Claim Bar Dates in
All Cases Under Subchapter V of Chapter 11, dated September 14,
2020, the general bar date, in this case, was on May 3, 2021. The
governmental bar date is August 30, 2021.
The Debtor and First Data Merchant Services Corporation (the
Servicer), apparently as successor to Citicorp Payment Services,
Inc., are party to a Merchant Services Agreement dated May 18, 2005
(the "Contract"). The Servicer owns no less than $933,846 (the
"Reserve") that belongs to the Debtor's estate, and despite the
Debtor's demands, has refused to turn over the Reserve to the
Debtor.
On April 13, 2021, Servicer filed its Motion of First Data Merchant
Services Corporation for Relief from the Automatic Stay to Apply
its Right of Recoupment or Setoff (the "First Data Motion").
On May 4, 2021, the Debtor filed its objection to the First Data
Motion. The First Data Motion is scheduled to be heard on May 19,
2021, at the same omnibus hearing as the Motion. The Debtor
incorporates by reference the factual recitations and argument
outlined in the Debtor Objection, to the extent such facts and
argument apply to the Motion.
The request for extension is not because of any dilatory conduct of
the Debtor. The dispute with the Servicer did not arise until more
than a month after the Petition Date, and the earliest date
available for a hearing on the First Data Motion was the omnibus
hearing scheduled for May 19, 2021. That hearing is less than two
weeks before the deadline to file a plan, scheduled on June 1,
2021. Moreover, the Debtor and the Servicer have remained in
communication regarding a potential resolution of the First Data
Motion.
The Debtor otherwise is making significant progress towards
formulating a plan. Among other things, it has rejected various
leases and executory contracts, creating conditions for fixing
claims arising out of such rejections in advance of the proof of
claims bar date. The Debtor also has made progress and engaged a
real estate advisor who actively is marketing the Debtor's former
storefront location in New York City.
But for the uncertainty surrounding the First Data Motion, the
Debtor would be well situated to file a detailed plan with
information adequate to enable creditors to make an informed
decision as to how to vote on the plan. Accordingly, the need for
the relief sought in the Motion "is attributable to circumstances
for which the debtor should not justly be held accountable."
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3hJQY9R from Omniagentsolutions.com.
A copy of the Court's Extension Order is available at
https://bit.ly/3wc7NhM from Omniagentsolutions.com.
About STA Travel
STA Travel Inc., the U.S. unit of Switzerland-based STA Travel
Holding AG, operates as a travel company. It operated a storefront
location at 722 Broadway, N.Y.
On March 3, 2021, STA Travel filed a petition under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No.
21-10511). STA Travel had between $1 million and $10 million in
both assets and liabilities as of the bankruptcy filing.
Judge Brendan L. Shannon is the case judge. The Debtor tapped Cozen
O'Connor as its legal counsel and CBRE, Inc. as its real estate
advisor. Omni Agent Solutions is the claims agent.
STA VENTURES: Seeks Court Approval to Hire Financial Expert
-----------------------------------------------------------
STA Ventures, LLC seeks approval from the U.S. Bankruptcy Court for
the Northern District of Georgia to employ
Richard Gaudet, a financial expert and partner at GGG Partners,
LLC.
Mr. Gaudet's services include:
(a) consulting with the Debtor and its legal counsel on
matters pertaining to the feasibility of its Chapter 11 plan;
(b) consulting with the Debtor and its legal counsel regarding
cram down interest rates;
(c) providing an expert report and testimony on cram down
interest rates under Section 1129(b)(2)(A) regarding Bay Point
Capital's Class 4 claim; and
(d) if requested by the Debtor, providing an expert report and
testimony regarding feasibility of its Chapter 11 plan of
reorganization prior to confirmation.
Mr. Gaudet will be paid a flat fee of $6,000 for the preparation of
the expert opinion report and an hourly fee of $390 for consulting
services, preparation of deposition and hearing testimony, and
attendance at depositions or court hearings.
In court filings, Mr. Gaudet disclosed that his firm is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Richard B. Gaudet
GGG Partners, LLC
3155 Roswell Rd NE, Suite 120
Atlanta, GA 30305
Office: (404) 256-0003
Mobile: (404) 680-7032
Email: rgaudet@gggmgt.com
About STA Ventures
Roswell, Ga.-based STA Ventures, LLC filed a Chapter 11 bankruptcy
petition (Bankr. N.D. Ga. Case No. 20-66843) on June 1, 2020. In
the petition signed by Stephen T. Allen, managing member, the
Debtor disclosed assets of $1 million to $10 million and
liabilities of the same range. Judge Sage M. Sigler oversees the
case. The Debtor tapped Chamberlain, Hrdlicka, White, Williams &
Aughtry as legal counsel and Magaro & Conine, CPA as accountant.
STONEWAY CAPITAL: Dechert LLP Represents Mezzanine Lenders
----------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Dechert LLP submitted a verified statement to
disclose that it is representing the Mezzanine Lenders in the
Chapter 11 cases of Stoneway Capital Ltd., et al.
On or about Feb. 1, 2020, the Mezzanine Lenders retained Dechert
LLP to represent them in their capacities as holders of mezzanine
term loans advanced under that certain amended and restated loan
agreement, dated as of Feb. 22, 2018, by and among non-Debtor GRM
Energy Investment Limited, as borrower, the Mezzanine Lenders, as
lenders, and Cortland Capital Market Services LLC, as collateral
agent. The Borrower's obligations under the Mezzanine Loan
Agreement are (a) guaranteed by Stoneway Capital Ltd., Stoneway
Group LP and Stoneway Power Generation Inc., each a Debtor in these
chapter 11 cases, and (b) secured, among other things, by a pledge
over the shares in the Borrower pursuant to an equitable mortgage
over shares granted by Stoneway Energy Generation Ltd., the
original parent of the Borrower, dated June 1, 2018, to the
Mezzanine Collateral Agent. The Borrower owns 100% of the equity
interests in Stoneway Capital Ltd., and 99.65% of the equity
interests in Stoneway Group LP, as a limited partner.
On March 2, 2020, notices of commencement of voluntary cases under
concursos preventivos for certain of the Borrower's affiliates
appeared on the public court docket in Argentina. Although the
Concurso Filings subsequently were withdrawn, such filings gave
rise to an automatic acceleration of all amounts owing under the
Mezzanine Loan Agreement. In response, the Mezzanine Lenders,
among other things, directed the Mezzanine Collateral Agent to
exercise its enforcement rights under the Mezzanine Parent Pledge.
In accordance with the Enforcement Directions and the Mezzanine
Parent Pledge, in March 2020, the Mezzanine Collateral Agent (a)
exercised the Original Parent's voting rights to replace the boards
of certain of the Borrower's direct and indirect subsidiaries and
(b) transferred the Shares to GRM SPV LLC, a nominee of the
Mezzanine Collateral Agent. As a result, as of the date hereof, the
Current Parent is the registered holder of the Shares.
On Sept. 21, 2020, the Mezzanine Lenders entered into that certain
framework agreement by and between the Mezzanine Lenders, on the
one hand, and Integra Capital Energy Generation LLP, on the other
hand. Integra owns, directly or indirectly, 100% of all of the
outstanding equity interests in the Original Parent. Under the
Framework Agreement, the Mezzanine Lenders have agreed, upon the
satisfaction of certain conditions, to convert their loan positions
under the Mezzanine Loan Agreement into (a) 50% of the Shares (with
Integra being allocated the remaining 50% of the Shares) and (b)
100% of preferred shares to be newly-issued by the Borrower. The
Debt-for-Equity Conversion has yet to occur.
As of May 19, 2021, each Mezzanine Lender and their disclosable
economic interests are:
Mezzanine Loan Amount
---------------------
Gramercy Energy Secured Holdings II LLC $223,353,295.24
20 Dayton Avenue
Greenwich, CT 06830
Gemcorp Fund I Limited $38,365,106.13
1 New Burlington Place
London, W1S 2HR
United Kingdom
Gemcorp Multi Strategy $14,814,250.15
Master Fund SICAV SCS
1 New Burlington Place
London, W1S 2HR
United Kingdom
Counsel to the Mezzanine Lenders can be reached at:
DECHERT LLP
Solomon J. Noh, Esq.
160 Queen Victoria Street
London, UK EC4V 4QQ
Tel: +44 20 7184 7337
Fax: +44 20 7184 7001
E-mail: solomon.noh@dechert.com
- and -
Stephen M. Wolpert, Esq.
1095 Avenue of the Americas
New York, NY 10036-6797
E-mail: stephen.wolpert@dechert.com
Tel: +1 212 698 3500
Fax: +1 212 698 3599
A copy of the Rule 2019 filing is available at
https://bit.ly/3v7oPgZ at no extra charge.
About Stoneway Capital Corp.
Stoneway Capital Corporation is a limited corporation incorporated
in New Brunswick, Canada, formed for the purpose of owning and
operating, through its Argentine subsidiaries, power generation
projects that will provide electricity to the wholesale electricity
markets in Argentina. The Argentine subsidiaries operate four
power-generating plants in Argentina that provide electricity to
the wholesale electricity market in Argentina.
Stoneway is 100% owned by GRM Energy Investment Limited.
On Oct. 8, 2020, the Company commenced proceedings under the Canada
Business Corporations Act (the "CBCA"). The Debtors were well on
the way toward closing the consensual restructuring when on Dec. 4,
2020, the Argentine Supreme Court issued a decision in an ongoing
noise discharge dispute involving one of the Generation Facilities
located in Pilar, Argentina. The Argentine Supreme Court Decision
created significant uncertainty as it overturned a decision of the
federal appeals court in San Martin, Buenos Aires.
As a result of the looming expiration of the informal standstill
arrangement, the Debtors commenced chapter 11 cases in the U.S. in
order to put the automatic stay in place, maintain the status quo
pending resolution of the various issues in Argentina, and ensure
that neither the Indenture Trustee nor the Argentine Trustee takes
any action that could be detrimental or value destructive to the
Company.
Stoneway Capital Ltd. and five related entities, including Stoneway
Capital Corp., sought Chapter 11 bankruptcy protection (Bankr.
S.D.N.Y. Case No. 21-10646) on April 7, 2021. Stoneway estimated
liabilities of $1 billion to $10 billion and assets of $500 million
to $1 billion.
Shearman & Sterling LLP is the Debtors' counsel. Prime Clerk LLC
is the claims agent.
SYNRGO INC: Seeks to Use UMB Bank's Cash Collateral
---------------------------------------------------
Synrgo, Inc. and UMB Bank, as successor-in-interest to Marquette
Commercial Finance, are parties to a pre-petition financing
agreement pursuant to which UMB advances cash to the Debtor equal
to a certain percentage (generally at approximately 85%) of each
qualified account assigned to UMB.
On May 14, 2021, UMB refused to fund the daily advance required to
pay the recording charges the Debtor owed to the county recorders,
who in turn refused to record the thousands of mortgages and other
land record filings queued up to record on that date. The Debtor
has attempted to reach an accommodation with UMB to resolve this
crisis but to no avail. The flow of funds into UMB's accounts, via
direct customer transfers, constitutes approximately 75% to 80% of
the Debtor's cash flow.
Accordingly, the Debtor asked the Bankruptcy Court to enter an
order:
* directing all parties holding or owing funds to the Debtor to
immediately remit these funds to the Debtor;
* directing UMB Bank to remit to the Debtor, by wire transfer or
ACH transfer (within three hours after the entry of an order
approving the current motion), all funds in UMB's possession that
it received from the Debtor's customers, or on account of services
provided by the Debtor, pre-petition;
* directing UMB to transfer to the Debtor, via a daily wire or
ACH transfer, all funds received from the Debtor's customers, or on
account of services the Debtor provided after the Petition Date;
* authorizing the Debtor's use of cash collateral, on an interim
basis;
* granting creditors (who hold valid, duly perfected liens
against the cash collateral) temporary replacement liens on the
property of the Debtor's estate up to the principal balance of the
cash collateral the Debtor expended after the Petition Date; and
* authorizing the Debtor to retain its pre-petition bank
accounts for 30 days and to make payments therefrom pursuant to its
budget.
"Unless the Debtor can obtain immediate access to this source of
funds, its entire customer base will be lost, and 300 employees
will lose their jobs," Sean A. O'Keefe, Esq., the debtor's counsel
at OKEEFE & ASSOCIATES LAW CORPORATION, PC, said. Accordingly,
absent immediate use of all cash constituting cash collateral to
pay the its expenses, the Debtor could cease operation, he added.
The Debtor assured the Court that it is generating substantial
positive EBITDA from operations so that at least one replacement
dollar is being generated for every dollar expended on critical
operational needs. UMB will remain adequately protected if the
requested relief will be granted by the Court, the Debtor
emphasized.
A copy of the motion is available for free at
https://bit.ly/3wk6mxU from PacerMonitor.com.
About Synrgo, Inc.
Synrgo, Inc. -- https://synrgo.com -- is a provider of real estate
document recording and post-closing services. The Debtor sought
Chapter 11 protection (Bankr. C.D. Cal. Case No. 21-11264) on May
18, 2021 in the United States Bankruptcy Court for the Central
District of California.
As of the Petition Date, the Debtor estimated up to $50,000 in
assets and between $100 million and $500 million in liabilities.
The petition was signed by Karl Klessig, chairman and sole Board
member.
OKEEFE & ASSOCIATES LAW CORPORATION, PC represents the Debtor as
counsel. Judge Erithe A. Smith oversees the case.
SYNRGO INC: UMB Bank Seeks Chapter 11 Trustee Appointment
---------------------------------------------------------
UMB Bank, N.A., as successor by merger to Marquette Transportation
Finance, LLC, asked the U.S. Bankruptcy Court for the Central
District of California to direct the appointment of a Chapter 11
trustee for Synrgo, Inc., asserting that the Debtor's conduct
justifies the immediate appointment of a Chapter 11 trustee.
UMB told the Court that as of May 12, 2021, the Debtor's accounts
receivable exceeded $50 million. Within 24 hours, however, UMB
said the Debtor's president and accounting staff revealed that the
Debtor had actually been collecting accounts directly from
customers, diverting collections to still undisclosed accounts
without remitting any payments to UMB, and continuing to report
those accounts as outstanding accounts receivable to inflate the
Debtor's borrowing availability.
According to UMB:
* the Debtor's president admitted that the Debtor has falsified
its books and records, maintaining two sets of financial records to
conceal massive losses over a period of several years while
reporting otherwise to UMB in order to continue receiving funds;
* the Debtor is insolvent -- and has been for years -- and only
remained in operation for so long as a result of its deceitful
conduct toward UMB.
UMB asserts a blanket lien on substantially all of Debtor's
personal property assets, on account of over $36 million in loans
UMB extended to the Debtor. UMB said it aims to recover the
Debtor's assets with the appointment of a Chapter 11 Trustee, as
well as prevent irreparable harm to the Debtor's creditors.
A copy of the motion is available for free at
https://bit.ly/3uko9DO from PacerMonitor.com.
The motion will be heard by the Honorable Erithe A. Smith at the
Superior Court of the State of California on May 27, 2021 at 2 p.m.
(P.T.) at the Ronald Reagan Federal Building, Courtroom 5A, 411
West Fourth Street, Santa Ana, California.
Counsel for UMB Bank, N.A., as successor by merger to Marquette
Transportation Finance, LLC:
H. Mark Mersel, Esq.
Olivia J. Scott, Esq.
BRYAN CAVE LEIGHTON PAISNER LLP
1920 Main Street, Suite 1000
Irvine, CA 92614-7276
Telephone: (949) 223-7000
Facsimile: (949) 223-7100
E-Mail: mark.mersel@bclplaw.com
olivia.scott3@bclplaw.com
About Synrgo, Inc.
Synrgo, Inc. -- https://synrgo.com -- is a provider of real estate
document recording and post-closing services. The Debtor sought
Chapter 11 protection (Bankr. C.D. Cal. Case No. 21-11264) on May
18, 2021 in the United States Bankruptcy Court for the Central
District of California.
As of the Petition Date, the Debtor estimated up to $50,000 in
assets and between $100 million and $500 million in liabilities.
The petition was signed by Karl Klessig, chairman and sole Board
member.
OKEEFE & ASSOCIATES LAW CORPORATION, PC represents the Debtor as
counsel. Judge Erithe A. Smith oversees the case.
TECT AEROSPACE: Clients Want Info Protection in Ch. 11 Sale Process
-------------------------------------------------------------------
hLaw360 reports that a customer of bankrupt aerospace equipment
supplier TECT Aerospace Group Holdings Inc. told a Delaware judge
late Thursday, May 20, 2021, that it wants its confidential
information and the technical details for its aircraft protected as
the debtor looks to sell its assets.
Textron Aviation Inc. filed a limited objection to the proposed
bidding procedures of TECT Aerospace, saying it doesn't oppose a
Chapter 11 asset sale, but wants to ensure that information about
the terms of its supply contracts with the debtors as well as
technical drawings of its aircraft aren't shared with competitors
looking to acquire the debtor.
About TECT Aerospace
TECT Aerospace Group Holdings, Inc. and its affiliates manufacture
high precision components and assemblies for the aerospace
industry, specializing in complex structural and mechanical
assemblies, and machined components for a variety of aerospace
applications. TECT produces assemblies and parts used in flight
controls, fuselage or interior structures, doors, wings, landing
gear, and cockpits.
TECT Aerospace Group Holdings operates manufacturing facilities in
Everett, Wash., and Park City and Wellington, Kansas and their
corporate headquarters is located in Wichita, Kan. TECT currently
employs approximately 400 individuals nationwide. TECT and its
affiliates are privately held companies owned by Glass Holdings,
LLC and related Glass-owned or Glass controlled entities.
On April 6, 2021, TECT Aerospace Group Holdings and six affiliates
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
21-10670). TECT Aerospace Group Holdings estimated assets of $50
million to $100 million and liabilities of $100 million to $500
million as of the bankruptcy filing.
The Debtors tapped Richards, Layton & Finger P.A. as legal counsel,
Winter Harbor LLC as restructuring advisor, and Imperial Capital
LLC as investment banker. Kurtzman Carson Consultants LLC is the
claims agent.
The Boeing Company, as DIP agent, is represented by Alan D. Smith,
Esq., at Perkins Coie LLP, and Kenneth J. Enos, Esq., at Young
Conaway Stargatt & Taylor, LLP.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee of unsecured creditors on April 20, 2021. The committee
tapped Kilpatrick Townsend & Stockton, LLP and Womble Bond
Dickinson (US) LLP as legal counsel, and Province, LLC as financial
advisor.
TENET HEALTHCARE: Moody's Rates New First Lien Notes Due 2029 'B1'
------------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Tenet Healthcare
Corporation's new senior secured first lien notes due 2029. There
is no change to the B2 Corporate Family Rating, B2-PD Probability
of Default Rating, B1 senior secured first lien ratings, B1 senior
secured second lien ratings, and Caa1 senior unsecured ratings for
Tenet. There is also no change to the Speculative Grade Liquidity
Rating of SGL-2. The outlook is stable.
Moody's expects that Tenet will use proceeds from the new senior
secured first lien notes, along with existing cash, to fund the
refinancing of roughly $1.4 billion of senior secured second lien
notes that come due in May 2025 and associated redemption premiums,
fees, and expenses.
Moody's views this transaction as being modestly credit positive,
as it will generate $10-15 million of annualized interest savings
and further extend Tenet's maturity profile.
Ratings assigned:
Tenet Healthcare Corporation
Senior secured first lien notes due 2029 at B1 (LGD3)
RATINGS RATIONALE
Tenet's B2 Corporate Family Rating is primarily constrained by the
company's high financial leverage, with debt/EBITDA of
approximately 5.7 times at December 31, 2020. Moreover, Tenet's
free cash flow after minority interest payments, though improving,
remains modest relative to debt. The rating is also constrained by
the company's significant capital requirements and the need to
begin addressing the accelerated Medicare payments over the April
2021-September 2022 timeframe. While volumes are generally
approaching pre-COVID-19 pandemic levels in Tenet's ASCs and
hospitals, the pace at which lower acuity emergency room visits
return remains less certain. The rating is supported by Tenet's
significant scale and good diversity. The company is well
diversified by state and payor. Tenet's ambulatory surgery and
revenue cycle management businesses add business diversity. The
ambulatory surgery business in particular will benefit from
longer-term trends that favor services being done on an outpatient
basis. Tenet's revenue cycle management business, Conifer, is
expected to be spun-off in 2022, which will provide an opportunity
for deleveraging, depending on the final allocation of debt to
Conifer. Finally, Tenet's liquidity has been significantly helped
by substantial government aid received by hospitals.
The stable outlook reflects Moody's view that Tenet's liquidity
will be strong enough to mitigate near-term headwinds. It also
reflects Moody's view that demand for Tenet's services will
ultimately return to pre-pandemic levels.
With respect to governance, Tenet has generally exhibited
aggressive financial policies, marked by persistently high
financial leverage. As a for-profit hospital operator, Tenet also
faces high social risk. Beyond COVID-19, the affordability and
price transparency of hospitals and the practice of balance billing
have garnered substantial social and political attention.
Additionally, hospitals rely on Medicare and Medicaid for a
substantial portion of reimbursement. Any changes to reimbursement
to Medicare or Medicaid directly impacts hospital revenue and
profitability.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Tenet's ratings could be downgraded if the company faces
operational challenges or fails to achieve its planned cost
savings. Further, the divestiture of Conifer without debt
repayment, or the pursuit of share repurchases or shareholder
distributions could result in a downgrade. More specifically, the
ratings could be downgraded if debt/EBITDA is expected to be
sustained above 6.5 times.
The ratings could be upgraded if Tenet can realize the benefits
from its recent cost and operating initiatives, including increased
profit margins. Further, the ratings could be upgraded if the
company realizes improved cash flow and interest coverage metrics.
If Moody's expects debt/EBITDA to be sustained below 5.5 times, the
ratings could be upgraded.
The principal methodology used in this rating was Business and
Consumer Service Industry published in October 2016.
Tenet, headquartered in Dallas, Texas, is one of the largest
healthcare providers by revenue in the US. The company operates 65
hospitals, 24 surgical specialty hospitals and more than 500
outpatient surgical centers in the US. Tenet also owns a
revenue-cycle management business, called Conifer. Revenues for the
last twelve months ended March 31, 2021 were approximately $18
billion.
TENET HEALTHCARE: S&P Rates New $1.4BB 1st-Lien Sr. Sec. Notes 'B+'
-------------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue-level rating and '2'
recovery rating to Tenet Healthcare Corp.'s proposed $1.4 billion
first-lien senior secured notes due March 2029. S&P expects the
company to use the proceeds from these notes to repay its
outstanding second-lien debt due 2025.
S&P said, "At the same time, we lowered our issue-level rating on
Tenet's existing first-lien debt to 'B+' from 'BB-' and revised our
recovery rating to '2' from '1'. We lowered our issue rating to
reflect the weaker recovery prospects for the company's first-lien
lenders due to the increase in the total amount of first-lien debt
in its capital structure. The '2' recovery rating indicates our
expectation for substantial (70%-90%; rounded estimate: 75%)
recovery in the event of a payment default."
All of S&P's other ratings on Tenet, including its 'B' issuer
credit rating, are unchanged.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- Tenet's capital structure comprises a $1.9 billion asset-based
lending (ABL) revolver, $8.8 billion of senior secured debt, $1.5
billion of second-lien debt, and $4.7 billion of unsecured debt.
-- S&P has valued the company on a going-concern basis using a
6.0x multiple of its projected emergence EBITDA (which excludes the
physician partners' minority interest). This is consistent with its
treatment of other large, well-diversified hospital operators.
-- S&P estimates that for the company to default its EBITDA would
need to decline significantly, most likely due to a decrease in
reimbursement rates or the loss of key contracts because of local
market competition.
Simulated default assumptions
-- Simulated year of default: 2024
-- EBITDA at emergence: $1.28 billion
-- EBITDA multiple: 6.0x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $8.0
billion
-- Valuation split (obligors/nonobligors): 100%/0%
-- Priority claims: $1.183 billion
-- Collateral value available to senior secured lenders: $6.841
billion
-- Senior secured debt: $8.987 billion
--Recovery expectations: 70%-90% (rounded estimate: 75%)
-- Collateral value available to second-lien lenders: $0 million
-- Second-lien debt: $1.547 billion
--Recovery expectations: 0%-10% (rounded estimate: 0%)
-- Collateral value available to unsecured lenders: $0
-- Senior unsecured debt: $4.886 billion
--Recovery expectations: 0%-10% (rounded estimate: 0%)
Note: All debt amounts include six months of prepetition interest.
Collateral value equals asset pledge from obligors after priority
claims plus equity pledge from nonobligors after nonobligor debt.
TENTLOGIX INC: Plan Exclusivity Period Extended Until June 26
-------------------------------------------------------------
At the behest of Debtor Tentlogix Inc., 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 26, 2021,
and to obtain acceptances through and including September 23,
2021.
The Debtor will use the additional time to review the claims,
prepare projections and determine plan treatment. Since this
business has been severely impacted by COVID-19, the Debtor is
taking extra care in preparing the projections in this case.
It is unclear at this time what further effects the COVID-19 virus
will have on the Debtor's future business operations. However, for
the Debtor, the extra time will allow them to adequately assess the
event industry post-COVID in preparing its projections.
The Debtor's progress to date and the current status of all
post-petition payables. The Court's Extension Order is without
prejudice to the right of the Debtor to seek further extensions of
time to file a plan of reorganization and without prejudice to all
rights of parties in interest should the Debtor request any further
extensions.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3hMxLnQ from PacerMonitor.com.
A copy of the Court's Extension Order is available at
https://bit.ly/3tYx51b from PacerMonitor.com.
About Tentlogix Inc.
Tentlogix Inc. filed for Chapter 11 bankruptcy protection (Bankr.
S.D. Fla. Case No. 20-22971) on November 27, 2020. Gary Hendry,
chief executive officer, signed the petition.
At the time of the filing, the Debtor disclosed $3,135,866 in
assets and $10,689,420 in liabilities.
Judge Mindy A. Mora oversees the case.
The Debtor tapped Kelley, Fulton & Kaplan, P.L. as its legal
counsel and Carr Riggs & Ingram as its accountant.
TGS HOSPITALITY: Gets OK to Hire GreerWalker as Financial Advisor
-----------------------------------------------------------------
TGS Hospitality, LLC received approval from the U.S. Bankruptcy
Court for the Western District of North Carolina to hire
GreerWalker, LLP to provide financial advisory services in
connection with its Chapter 11 case.
The firm will be paid as follows:
William A. Barbee $510 per hour
Consultants $100 - $575 per hour
As disclosed in court filings, GreerWalker is a "disinterested
person" as that phrase is defined in Section 101(14) of the
Bankruptcy Code, .
The firm can be reached through:
William A. Barbee
GreerWalker LLP
227 West Trade Street, Suite 1100
Charlotte, NC 28202
Phone: +1 704-377-0239
Email: greerwalker@greerwalker.com
About TGS Hospitality
TGS Hospitality, LLC is a company that operates a restaurant in
Asheville, N.C.
TGS Hospitality filed a petition under Subchapter V of Chapter 11
(Bankr. W.D.N.C. Case No. 21-10073) on April 20, 2021. In the
petition signed by James R. Talley, member manager, the Debtor
disclosed total assets of $177,270 and total liabilities of
$1,043,155. Judge George R. Hodges oversees the case.
Moon Wright & Houston, PLLC and GreerWalker, LLP serve as the
Debtor's legal counsel and financial advisor, respectively.
THUNDERBIRD GLOBAL: Case Summary & 6 Unsecured Creditors
--------------------------------------------------------
Debtor: Thunderbird Global Development LLC
8777 E Via De Ventura Ste 335
Scottsdale, AZ 85258
Chapter 11 Petition Date: May 20, 2021
Court: United States Bankruptcy Court
District of Arizona
Case No.: 21-03962
Judge: Hon. Paul Sala
Debtor's Counsel: Adam Hauf, Esq.
HAUF LAW PLC
8102 N. 23rd Ave. E
Phoenix, AZ 85021
Tel: (623) 693-0742
E-mail: adam@hauflaw.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Christopher E. Banik, managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's six unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/F7VCLRQ/THUNDERBIRD_GLOBAL_DEVELOPMENT__azbke-21-03962__0001.0.pdf?mcid=tGE4TAMA
TIGER OAK: Case Trustee Seeks Cash Collateral Access Thru July 31
-----------------------------------------------------------------
Edwin H. Caldie, Chapter 11 Trustee for Tiger Oak Media,
Incorporated, asked the Bankruptcy Court to authorize the use of
cash collateral through July 31, 2021. The Chapter 11 Trustee also
asked the Court to approve a stipulation it entered into, on behalf
of the Debtor, with Choice Financial Group, and the Official
Committee of Unsecured Creditors with respect to the use of cash
collateral.
The Debtor owes Choice Financial under two loans, which the Debtor
contracted for itself with Choice Financial: $535,911 in principal
amount on Loan No. 16623, and $850,000 on Loan No. 16624. The
Debtor also contracted a pre-petition Commercial Guaranty pursuant
to which the Debtor guaranteed the payment and performance of all
obligations of Lazzari + Santori Partners, LLC to Choice Financial.
As of the Petition Date, the Debtor owed Choice Financial an
aggregate of (i) $1,173,251, on the two loans, plus interest,
attorney's fees, costs, and expenses, and (ii) $984,639 on account
of the guaranty.
The Loans are subject to various loan and security documents,
whereby the Debtor granted Choice Financial a first-priority
security interest in its assets. Choice Financial perfected its
first-priority security interest in the Debtor's assets by filing
UCC financing statements. The Debtor had been making monthly
payments on its loans to Choice Financial pre-petition.
After the Petition Date, the Court has since approved three
stipulations between Choice and the Trustee for the use of cash
collateral. In the third stipulations entered February 9, 2021,
the Trustee acknowledged certain aspects of Choice Financial's
claims and liens, subject to a window to challenge the amount,
validity, extent, perfection, or priority of Choice Financial's
claims and liens. The Trustee was granted 60 days to assert said
challenge.
The Trustee and Official Committee of Unsecured Creditors also
acknowledged certain aspects of Choice Financial's claims and liens
related to the guaranty, subject to a window to challenge the
amount, validity, extent, perfection, or priority of Choice
Financial's claims and liens. The Trustee and Committee were
granted 60 days to assert the Guaranty Challenge.
After the Court's approval of the third stipulation, Choice
Financial exercised remedies against certain collateral pledged by
third-parties, and has applied the proceeds to satisfy all of
Choices non-Guaranty related claims. The Court thereafter approved
a fourth stipulation, and entered an order relating to an agreement
among the Trustee, Choice Financial, and the Committee extending
the Challenge Period and the Guaranty Challenge Period through June
30, 2021.
The Trustee and Choice Financial now enter into a fifth stipulation
governing the interim use of cash collateral, with these terms:
* The Trustee is authorized to use Choice Financial's cash
collateral, according to the budget, through and including July 31,
2021;
* Pending an order approving the fifth stipulation, Choice
Financial agrees to the Trustee's continued use of the cash
collateral from June 1, 2021 through the earlier of the date the
Court enters an order on the fifth stipulation, or June 10, 2021;
* During the term of the fifth stipulation, the Trustee will not
make payments to Choice Financial and the latter shall not divert
any funds from any accounts held by the Debtor without further
Court order;
* Choice Financial, the Committee, and the Trustee agree that
the Challenge Period (only as to the Trustee) and Guaranty
Challenge Period (as to the Trustee and the Committee) shall be
extended through July 31, 2021.
Accordingly, the Trustee asked the Court to approve the fifth
stipulation, a copy of which is available at https://bit.ly/33YvHkD
from PacerMonitor.com.
Hearing on the motion is set for June 9, 2021 at 9:30 a.m., by
telephone. Responses to the motion are due by June 4.
The Official Committee of Unsecured Creditors is represented by:
Jeffrey D. Klobucar, Esq.
BASSFORD REMELE, P.A.
100 South Fifth Street, Suite 1500
Minneapolis, MN 55402
Telephone: (612) 333-3000
Email: jklobucar@bassford.com
About Tiger Oak Media
Tiger Oak Media, Incorporated, is a regional and national publisher
of books, magazines, media and events that appeal to targeted
audiences.
Tiger Oak Media sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Minn. Case No. 19-43029) on Oct. 7,
2019. In the petition signed by its CEO Craig Bednar, the Debtor
was estimated to have assets of less than $50,000 and liabilities
of less than $10 million.
The Hon. Michael E. Ridgway is the case judge.
The Debtor tapped Steven Nosek, Esq. and Yvonne Doose, Esq., as
bankruptcy attorneys; Lurie, LLP as accountant; and Integrated
Consulting Services, LLC as financial consultant.
The U.S. Trustee for Region 12 appointed creditors to serve on the
official committee of unsecured creditors on Oct. 22, 2019. The
committee tapped Bassford Remele, P.A., as its legal counsel, and
Platinum Management, LLC as its financial advisor.
Edwin H. Caldie, as Chapter 11 Trustee, is represented by:
Andrew J. Glasnovich, Esq.
STINSON LLP
50 South Sixth Street, Suite 2600
Minneapolis, MN 55402
Phone: (612) 335-1500
Email: drew.glasnovitch@stinson.com
Choice Financial Group, as Lender, is represented by:
Christopher Camardello, Esq.
MANTY & ASSOCIATES, P.A.
150 South Fifth Street Ste. 3125
Minneapolis, MN 55402
Phone: (612) 465-0349
Email: chris@mantylaw.com
TIMOTHY KYLE ELLIS: $5.5K Sale of 2003 Maxi-Load Scales Approved
----------------------------------------------------------------
Judge Joseph N. Callaway of the U.S. Bankruptcy Court for the
Eastern District of North Carolina authorized the private sale
proposed by Timothy Kyle Ellis and Melody Roxann Ellis of their
2003 Maxi-Load Scales, Serial No. 261, which includes the
associated monitor and battery charger, to Sheppard Logging &
Timber, LLC, for $5,500.
The Property will be sold free and clear of the following liens and
other interests:
a. Any and all property taxes due and owing to any City,
County, or municipal corporation, including the Columbus County Tax
Collector and the Town of Delco;
b. Any and all liens of Allegheny Resources, LLC based upon
UCC financing statement filed with the North Carolina Secretary of
State; and
c. Any and all remaining interests, liens, encumbrances,
rights and claims asserted against the Property.
The liens and other interests will attach to the proceeds of sale.
The Buyer will not have any liability for, nor will the Buyer in
any manner be responsible for any liabilities or obligations of the
Debtors, whether in rem claims or in personam claims.
The Buyer will pay the purchase price to counsel for the Debtor,
which will then disburse the sales proceeds according to priorities
of the Bankruptcy Code or, if necessary, further Order of the
Court.
The Chapter 11 case is In re Timothy Kyle Ellis And Melody Roxann
Ellis (Bankr. E.D.N.C. Case No. 20-03833-5-JNC).
TORRID LLC: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to
U.S.-based plus-size women's direct-to-consumer apparel brand
Torrid LLC. At the same time, S&P assigned a 'B' issue-level rating
and '3' recovery rating to the company's proposed term loan.
The stable outlook reflects S&P's expectation for improving
profitability translating into EBITDA growth and good free
operating cash flow (FOCF), reducing debt to EBITDA to around 3x in
2022.
S&P said, "Our rating reflects, among other risks, the aggressive
nature of the financial sponsor's approach, which includes this
large dividend on the heels of a weaker 2020 operating year amid
the COVID-19 pandemic. In 2020 Torrid's sales declined by 6%.
Prolonged store closures had a negative impact on performance with
sales down almost 40% in the first quarter. Stores were temporarily
closed in mid-March and fully open again by August. Torrid's
performance through 2020, though weaker than historical trends, was
on the better end compared to other apparel retailers. We attribute
this to its niche positioning in plus-size apparel, which as a
traditionally underserved market, lacks many options for customers.
Torrid also shifted product strategy to a focus on casual clothing
as consumer preferences changed. The company also took measures to
preserve cash flow by managing costs, delaying capital
expenditures, and deferring rent payments.
"However, with roughly $1 billion in sales, Torrid is, in our view,
a small player in the highly fragmented and competitive industry.
The plus-size apparel industry, whose sales we estimate to be $85
billion, has expanded in recent years. Approximately, 70% of U.S.
women are plus-size, but there are still limited options and few
dedicated plus-size retailers. That said, we expect increased
competition as more retailers enter the market, some of which are
larger and more well capitalized, posing a risk to Torrid."
Torrid was previously owned by Hot Topic Inc. and spun off in 2015.
Torrid has a solid track record of revenue growth and stable
profitability, with 2020 being an exception. From 2015-2019,
Torrid's revenue compound annual growth rate was 23%, a rate higher
than peers'. S&P believes Torrid is well positioned as a brand
solely focused on plus-size apparel and differentiates itself
through a focus on fit, a customer priority. This has allowed
Torrid to build strong loyalty, tripling its customer base from
roughly 1 million in 2013 to 3 million in 2020. Torrid has a
growing store base with 608 stores located across the U.S. and
Canada. The company's expansion plans of 25–30 new stores a year
will further increase size and scale of the company.
Torrid's strong momentum in e-commerce led to resilient performance
through the COVID-19 pandemic. With over 60% of its stores located
in malls, Torrid was impaired by mandated closures at the onset of
the pandemic. However, Torrid mitigated the impact with strong
expansion in its e-commerce channel. Torrid recovered quickly in
the second half of the year and delivered positive comparable
sales. Torrid had solid e-commerce penetration before the pandemic,
at 48% of sales. This positioned Torrid well as shopping pivoted
online. Torrid also invested in its omnichannel capabilities,
offering online purchases for pick-up in the store or curbside.
This further drove e-commerce penetration to 70% in 2020.
S&P said, "We expect improved operating performance in 2021 as
consumer confidence returns and pressures from the pandemic
subside. Though e-commerce helped offset challenges, margins were
compressed in 2020 from the heavily promotional environment in
apparel. We anticipate merchandising margin in 2021 will normalize
towards 2019 levels and we forecast improvement in S&P Global
Ratings-adjusted margins to the 17% area for 2021. We expect
continued improved pricing, promotional strategy, and leveraging of
fixed costs to ease margin pressure.
"We forecast revenue growth from the recovery of retail operations,
as more people are vaccinated and consumer confidence returns, and
expansion of Torrid's store base. Stores are critical entry points
for the brand and serve as the main way to capture new customers.
We expect expansion efforts will lead to further brand awareness
and customer growth.
"We expect Torrid's S&P Global Ratings-adjusted leverage in the mid
to low-3x area in 2021 before declining to around 3x in 2022. We
anticipate the company will deleverage through EBITDA growth,
primarily due to improving gross margin. Although we forecast
credit measures will improve over the next two years on earnings
improvement, controlling ownership by financial sponsor Sycamore
Partners limits our assessment of financial risk. We believe the
sponsors could pursue a more-aggressive financial policy in the
future, evidenced by the current transaction's sizable dividend. We
do not incorporate a potential IPO into our forecast, and we are
not confident that proceeds would be used to deleverage. In the
event of an IPO, we expect Sycamore to maintain a controlling stake
in Torrid and an aggressive financial policy, with an appetite for
dividends. Credit metrics would likely weaken further if the
company pursued meaningful debt-financed dividends.
"The stable outlook reflects our expectation for improving
profitability translating into EBITDA growth and good FOCF,
reducing debt to EBITDA around 3x in 2022."
S&P could lower the rating if:
-- Lower-than-expected earnings sustain leverage above 6x. Such a
scenario could come from increased competitive pressure; or
-- The company shifts toward more-aggressive financial policies,
including shareholder-friendly activities such as dividends.
S&P would consider an upgrade if:
-- Torrid's expansion initiatives are successful and it
meaningfully increases market presence, strengthening its business
profile with sustained growth and profitability; or
-- S&P view the company's financial policy as less aggressive
demonstrated by a track record of debt/EBITDA sustained below 5x
and it views the risk of releveraging above 5x as unlikely.
TRANQUILITY GROUP: Seeks to Hire G & H Tax as Accountant
--------------------------------------------------------
Tranquility Group, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Missouri to hire G & H Tax &
Accounting.
The Debtor needs an accountant to prepare its 2020 tax returns and
other financial reports.
As disclosed in court filings, G & H does not represent or hold any
interest adverse to the Debtor's bankruptcy estate.
The firm can be reached through:
Jack R. Gregory
G & H Tax & Accounting
1226 W Battlefield
Springfield MO 65807
Phone:(417) 882-2975
Fax: (417) 882 -2971
Email: gandhtaxservice@gmail.com
About Tranquility Group
Tranquility Group, LLC is a Ridgedale, Mo.-based company that owns
a vacation destination offering tree houses, log cabins, and
bungalows.
Tranquility Group filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Mo. Case No.
21-60120) on Feb. 26, 2021. Michael R. Hyams, chief operating
officer and partner, signed the petition. At the time of the
filing, the Debtor had between $1 million and $10 million in both
assets and liabilities.
Judge Cynthia A. Norton oversees the case.
The Debtor tapped Berman, DeLeve, Kuchan & Chapman, LLC as
bankruptcy counsel; G & H Tax & Accounting as accountant; and
Judson Poppen, Esq., a practicing attorney in Springfield, Mo., as
special counsel.
TRANQUILITY GROUP: Taps Judson Poppen as Special Counsel
--------------------------------------------------------
Tranquility Group, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Missouri to hire Judson Poppen,
Esq., a practicing attorney in Springfield, Mo., as its special
counsel.
Mr. Poppen will be representing the Debtor in pending litigation
against Municipal Land Company, LLC (Case #2046-CC00029).
The Debtor will pay the attorney at the rate of $240 per hour.
Mr. Poppen disclosed in a court filing that he does not have an
interest materially adverse to the interest of the Debtor's estate,
creditors or equity security holders.
The firm can be reached through:
Judson B. Poppen, Esq.
Neale & Newman LLP
2144 E Republic Rd Suite F-302
Springfield, MO 65804
Phone: +1 417-882-9090
Phone: (417) 882-9090
Fax: (417) 882-2529
About Tranquility Group
Tranquility Group, LLC is a Ridgedale, Mo.-based company that owns
a vacation destination offering tree houses, log cabins, and
bungalows.
Tranquility Group filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Mo. Case No.
21-60120) on Feb. 26, 2021. Michael R. Hyams, chief operating
officer and partner, signed the petition. At the time of the
filing, the Debtor had between $1 million and $10 million in both
assets and liabilities.
Judge Cynthia A. Norton oversees the case.
The Debtor tapped Berman, DeLeve, Kuchan & Chapman, LLC as
bankruptcy counsel; G & H Tax & Accounting as accountant; and
Judson Poppen, Esq., a practicing attorney in Springfield, Mo., as
special counsel.
UNDER ARMOUR: Moody's Affirms Ba3 CFR & Alters Outlook to Positive
------------------------------------------------------------------
Moody's Investors Service changed Under Armour, Inc.'s outlook to
positive from negative. At the same time, Moody's affirmed Under
Armour's corporate family rating at Ba3, probability of default
rating at Ba3-PD, and unsecured notes at B1. The company's
speculative grade liquidity rating was upgraded to SGL-1 from
SGL-2.
"The affirmations and positive outlook reflect Under Armour's
improved operating performance and credit metrics as well as very
good liquidity," stated Mike Zuccaro, Moody's Vice President.
"Prior to the onset of coronavirus, the company was facing
significant challenges reinvigorating revenue growth in North
America, its largest market. The company has taken significant
action to improve brand health and quality of sales and
profitability, particularly in North America, its largest and most
challenged market over the past few years. These efforts should
lead to sustained margin improvement, positive free cash flow and
improved credit metrics as sales growth recovers."
The upgrade in its speculative grade liquidity rating to SGL-1 from
SGL-2 reflects Moody's expectation for very good liquidity,
supported by $1.35 billion of unrestricted cash on the balance
sheet as of March 31, 2021, full availability under its unrated
$1.1 billion revolver, positive free cash flow and ample covenant
headroom.
Upgrades:
Issuer: Under Armour, Inc.
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Affirmations:
Issuer: Under Armour, Inc.
Probability of Default Rating, Affirmed Ba3-PD
Corporate Family Rating, Affirmed Ba3
Senior Unsecured Regular Bond/Debenture, Affirmed B1 (LGD4 from
LGD5)
Outlook Actions:
Issuer: Under Armour, Inc.
Outlook, Changed To Positive From Negative
RATINGS RATIONALE
Under Armour's Ba3 CFR reflects its well-known brand and solid
competitive position as a leading developer, marketer and
distributor of branded performance apparel, footwear and
accessories in the U.S. and internationally. Also considered are
the company's track record of innovation and Moody's positive view
of the global sports apparel market, which provides credible longer
term organic growth opportunities, particularly in international
markets where the company is significantly under penetrated. The
rating is supported by governance considerations including a
conservative financial strategy that focuses on debt reduction and
maintaining moderate financial leverage.
Under Armour is constrained by its reliance on a single brand and
limited geographic reach which expose the company to economic
cyclicality and inherent changes in consumer preferences in a
concentrated region. This is evidenced by recent challenges in its
largest market, North America. Under Armour has taken significant
action over the past three years to improve its overall profit
margins, balance sheet and cash flow. While operating margins
remain weak, Moody's expects improvement over time as turnaround
efforts have begun to have a positive effect.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The positive outlook reflects Moody's view that continued sales
recovery and stronger profitability will result in sustained
improvement in credit metrics and continued very good liquidity.
An upgrade would require sustained improvement in operating
performance, including sustained growth in its key North American
market and a stronger consolidated operating margins, as well as
maintenance of very good liquidity. Key metrics include operating
margins sustained in the mid-to-high single digit range,
debt/EBITDA below 4.0x and EBITA/interest above 3.0x.
Ratings could be downgraded should operating performance trends or
liquidity deteriorate, or if financial policies turn aggressive
such as through returns to shareholders. Quantitative metrics
include debt/EBITDA sustained above 4.5x or EBITA/interest below
2.25x.
Headquartered in Baltimore, Maryland, Under Armour, Inc. is a
designer, developer, marketer and distributor of footwear, apparel,
equipment and accessories for a wide variety of sports and fitness
activities. Revenue for the twelve months ended March 31, 2021
exceeded $4.8 billion.
The principal methodology used in these ratings was Apparel
Methodology published in October 2019.
UNIVAR SOLUTIONS: Moody's Rates Amended $1.1MM Secured Loan 'Ba2'
-----------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Univar Solutions
Inc.'s new amended and extended $1,100 million senior secured term
loan B-6 due 2028. Proceeds from the new TLs, along with additional
drawings under the NA ABL facility, are expected to be used to
repay $1,264 million outstanding under the existing remaining
senior secured term loans B-3 due 2024, and to finance fees and
expenses. The outlook on the ratings is stable. The Speculative
Grade Liquidity Rating is SGL-2.
"The new TLs will lower the company's interest expense and extend
the maturity profile," according to Joseph Princiotta, Moody's SVP
and senior analyst covering Univar Solutions. "The company's
metrics have strengthened and are expected to improve further as
EBITDA benefits from recovery in business activity in key end
markets and as debt is reduced further in 2021," Princiotta added.
Assignments:
Issuer: Univar Solutions Inc.
Senior Secured Bank Credit Facility, Assigned Ba2 (LGD4)
RATINGS RATIONALE
Moody's upgraded the ratings of Univar Solutions in April 2021;
including the CFR, Probability of Default, and secured term loan
ratings to Ba2 from Ba3 and the senior unsecured notes to B1 from
B2. The upgrades reflect improving operating performance,
strengthening metrics supported by divestitures and debt reduction,
portfolio streamlining, and cost reduction efforts since the
acquisition of Nexeo Solutions, LLC (Nexeo Solutions) roughly two
years ago.
Since the $1.8 billion acquisition of Nexeo Solutions and the
subsequent divestiture of Nexeo Plastics for $667 million, Univar
Solutions has reduced costs and streamlined its portfolio and is
using the proceeds from asset sales to reduce debt and improve
metrics. The company reports to have reduced costs by $83 million
through March 31st of the total $120 million Nexeo-related synergy
target, with the balance expected to be achieved by year end 2021.
Synergy costs of $225 million, offset by $100 million in expected
real estate sales proceeds, remain on track with the final roughly
$70 million left to be spent this year.
As part of its Streamline 2022 (S22) program, the company has
announced it expects to achieve divestitures totaling roughly $240
million, which together with free cash flow will be used to reduce
net debt by $400 million in 2021, helping to improve net leverage
below 2.8x by year end (which roughly corresponds to Moody's gross
adjusted leverage of 3.5x). Univar Solutions expects to achieve an
adjusted EBITDA margin of 9.0% on a run rate basis by the end of
2022, supported by further cost reduction and economies from volume
growth as volumes in key industrial, chemical and energy end
markets continue to recover. Once Univar Solutions achieves its
leverage and margin goals we expect the priority use of cash flow
to shift to bolt-on acquisitions and to be returned to
shareholders.
Univar Solutions' credit profile is supported by leading market
share in North America, large market share in Europe and the rest
of the world, operational diversity and scale providing a strong
competitive position. Moreover, the combination of Univar with
Nexeo Solutions created a global leading distribution company with
$8.3 billion in revenues for the December 31, 2020 period. The
transaction continues to be viewed as a good strategic fit with
business profile benefits, improved operational scale and
footprint, enhanced market positions in specialty chemicals and
ingredients, and realized and prospective acquisition synergies and
IT upgrades, which were among Nexeo's strengths.
Offsetting factors to Univar Solutions' credit profile include
challenges to organic topline and margin growth beyond the robust
recovery that's taking place this year, and a historically active
bolt-on acquisition strategy that may occasionally stress leverage.
Margins are inherently modest in the distribution sector but Univar
Solutions shows good potential to achieve the 9% target putting it
in line with other leaders in the industry.
ESG CONSIDERATIONS
Environmental, social and governance factors are relevant to Univar
Solutions' credit quality, but the company is less exposed to
future environmental risks typical for commodity chemical companies
as chemical distributors do not use or manufacture hazardous and
potentially toxic intermediates or finished products. However,
legacy exposure to environmental sites is high for a distribution
company, with environmental reserves associated with 107 currently
or formerly owned or operated sites and 20 non-owned sites of $79.6
million at December 31, 2020. Environmental payments were $16.1
million in 2020, roughly unchanged compared to 2019 and not
expected to be a meaningful drain on annual cash flow.
Social risks are not serious but include asbestos related lawsuits
stemming from a 1986 transaction wherein Univar Solutions acquired
McKesson Chemicals Company, providing indemnification related to
asbestos and other exposures. Asbestos cases peaked at about 16,000
cases in Mississippi, but no new cases have been filed in the last
10 years, and about 180 cases in 12 other states. The company has
not recorded a reserve for asbestos liabilities.
Governance considerations and financial policy decisions are
important to the ratings. As a publicly traded company Univar
Solutions has transparent and disciplined governance and financial
policies, as evident by the use of equity in the financing of the
Nexeo acquisition, the use of proceeds from the Nexeo plastics
divestiture to reduce debt; and its public commitment to reducing
debt and achieve reasonable leverage targets.
Univar Solutions' SGL-2 speculative grade liquidity rating reflects
its good liquidity as of March 31st, 2021, supported by $141
million of balance sheet cash and about $692 million of
availability under the company's ABL credit facilities. Pro forma
for the transaction usage under the revolver is expected to
increase to $363 million from $185 million, with balance sheet cash
unchanged at $141 million.
Univar Solutions will have positive free cash flow in 2021 and
together with proceeds from asset sales are expected to support the
company's $400 million net debt reduction target. The ABL and term
loans do not contain financial maintenance covenants; the ABL has a
debt incurrence test if availability falls below 10%. The new term
loans B and existing term loans B-5 are secured by a first priority
lien on all tangible and intangible assets and a second priority
lien on working capital.
The stable outlook assumes that Univar Solutions will continue to
deliver synergies through integration, use proceeds from asset
sales to reduce net debt by an additional $400 million this year,
and make further progress with SAP migration outside the US. The
stable outlook also anticipates that Univar Solutions will achieve
or exceed its leverage target of 2.8x by year end (on a net,
unadjusted basis, which currently corresponds to about 3.5x on a
Moody's gross adjusted basis).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would be unlikely to consider an upgrade given the
company's current financial policies and net leverage target of
3.0x (gross adjusted leverage of 3.7x) and the company's intent to
resume M&A activity and shareholder renumeration once its leverage
target is achieved. However, Moody's would consider an upgrade if
policies become more conservative and gross adjusted leverage were
to decline towards 3.0x and retained cash flow to debt were to rise
above 20%, both on a sustained basis. Moody's would consider a
downgrade if EBITDA margins were to trend negatively or if gross
adjusted leverage were to rise above 4.0x on a sustained basis, or
if free cash flow or liquidity were to materially decline.
Univar Solutions Inc. is one of the largest global chemical and
ingredient distributors and providers of related services,
operating hundreds of distribution facilities to service a diverse
set of customers end markets in the US, Canada, Europe, the Middle
East, Latin America and the Asia Pacific region. Univar Solutions'
top 10 customers account for roughly 6% of sales, while its top 20
suppliers represent roughly 40% of its total chemical expenditures.
For the 12 months ended December 31, 2020, the publicly-traded
company generated approximately $8.3 billion in revenue.
The principal methodology used in these ratings was Chemical
Industry published in March 2019.
US REAL: Trustee Seeks to Modify Order Approving Sale Procedures
----------------------------------------------------------------
Eric Johnson, the trustee appointed in the Chapter 11 cases of US
Real Estate Equity Builder, LLC and US Real Estate Equity Builder
Dayton, LLC, asks the U.S. Bankruptcy Court for the District of
Kansas to modify the order granting his bidding procedures in
connection with the sale of the following:
a. Debtor USREEB's real property located at 5342 Clark Drive,
in Roeland Park, Kansas;
b. Debtor USREEB's real property located at 4740 Roanoke Pkwy
#901, in Kansas City, Missouri;
c. Debtor USREEB's real property located at 440 East 63rd
Street, in Kansas City, Missouri; and
d. Debtor USREEB's real property located at 3200 W. 121st
Terr, in Leawood, Kansas.
On April 6, 2021, the Court entered the Sale Procedures Order.
Under the Sale Order, the Trustee proposed to sell substantially
all of the real property owned by the Debtors.
The auction for the USREEB Dayton properties concluded on April 29,
2021, and the Court approved those sales at the hearing held on May
6, 2021.
Under the Amended Sale Motion and as approved in the Sales
Procedure Order, the auction of the following USREEB properties is
currently set for May 27, 2021:
a. Debtor USREEB: PS Funding, Inc. - 5342 Clark Drive,
Roeland Park, Kansas,
b. Debtor USREEB: PS Funding, Inc. - 4740 Roanoke Pkwy #901,
Kansas City, Missouri,
c. Debtor USREEB: PS Funding, Inc. - 440 East 63rd Street,
Kansas City, Missouri, and
d. Debtor USREEB: Anchor Loans, LP - 3200 W. 121st Terr,
Leawood, Kansas.
On April 5, 2021, the Court entered an Order authorizing the
Trustee to employ Mayo Auction and Realty as the auctioneer and/or
broker for the USREEB Auction Property.
In preparing for the auction and marketing of the USREEB Auction
Property, the Trustee has discovered a number of issues that have
affected his ability to market the USREEB Auction Property, or may
affect the sales prices of the USREEB Auction Property.
First, as briefly raised in his testimony on May 6, 2021, the
Trustee has learned that there are potential lease issues that
could affect the sales price of certain of the USREEB Auction
Property.
Second, the Trustee discovered that the prior listing agent, USREEB
Realty Pros, still had the property located at 4740 Roanoke Parkway
#901, Kansas City, Missouri ("Roanoke Property") listed on the MLS.
The Trustee contacted the prior listing agent and has requested
their cooperation in removing the current Roanoke Property listing,
which they have indicated an agreement to do. This will allow Mayo
to then post the Roanoke Property on MLS. While this property has
been previously marketed, the Trustee believes that further
marketing of the same may benefit the ultimate sale price.
Finally, due to the commercial nature of 440 E. 63rd Street, Kansas
City, Missouri and following consultation with Mayo, the Trustee
believes a longer and more traditional listing of such property,
may generate a greater return for the estate.
Based on the foregoing, the Trustee requests additional time to
resolve the issues with the USREEB Auction Property and to do
further marketing of the same. After consultation with Mayo, the
Trustee proposes July 8, 2021 for the proposed auction date.
The Trustee respectfully requests that the Court modifies the Sale
Order as follows:
Current Deadline Requested Extension
USREEB Auction May 27, 2021 July 8, 2021
USREEB Sale Hearing June 1, 2021 July 29, 2021
Objection Deadline at 5:00 p.m. at 5:00 p.m.
USREEB Witness and June 2, 2021 Aug. 3, 2021
Exhibit List Deadline at 12:00 p.m. at 12:00 p.m.
USREEB Sale Hearing June 3, 2021 Aug. 5, 2021
at 1:00 p.m. at 1:00 p.m.
The Trustee also requests that, to the extent necessary, the Sale
Order be modified to remove the property located at 440 E. 63rd
Street, Kansas City, Missouri from the USREEB Auction to allow for
a traditional listing of the property.
The Trustee has consulted with the first lienholders for the USREEB
Auction Property regarding the proposed modifications, and they
have not yet consented to the modifications. He has also discussed
with the Creditors’ Committee Counsel about the proposed
scheduling change.
About US Real Estate Equity Builder
US Real Estate Equity Builder LLC is primarily engaged in renting
and leasing real estate properties.
US Real Estate Equity Builder and its affiliate, US Real Estate
Equity Builder Dayton, LLC, filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Kan. Lead Case
No. 20-21358) on Oct. 2, 2020. Judge Robert D. Berger oversees
the
cases.
At the time of the filing, US Real Estate Equity Builder disclosed
$5,281,000 in assets and $13,985,020 in liabilities. US Real
Estate
Equity Builder Dayton disclosed between $1 million and $10 million
in both assets and liabilities.
George J. Thomas, Esq., at Phillips & Thomas LLC, is the Debtors'
legal counsel.
The Office of the U.S. Trustee appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
The committee is represented by Sader Law Firm.
Eric L. Johnson, the court-appointed Chapter 11 trustee, is
represented by Spencer Fane LLP.
UTC LABORATORIES: Seeks to Hire Jones Walker as Legal Counsel
-------------------------------------------------------------
UTC Laboratories, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of Louisiana to employ Jones Walker LLP as
its legal counsel.
Jones Walker will render these legal services:
(a) advise the Debtor regarding its rights, powers and
duties;
(b) prepare and pursue confirmation of a plan of liquidation
and approval of a disclosure statement;
(c) prepare legal documents;
(d) advise the Debtor and prepare responses to legal
documents;
(e) appear in bankruptcy court to protect the interest of the
Debtor;
(f) advise the Debtor and assist in the negotiation and
documentation of financing agreements, cash collateral orders and
related transactions;
(g) assist the Debtor in reviewing, estimating and resolving
claims asserted against the Debtor's estate;
(h) commence and conduct litigation to assert rights held by
the Debtor, protect assets of the Debtor's Chapter 11 estate or
otherwise further the goal of completing its successful
liquidation; and
(i) provide other legal services for the Debtor which may be
necessary and proper in this Subchapter V case.
The firm's hourly rates for primary attorneys who will work on this
matter are as follows:
Laura F. Ashley $375
Caroline V. McCaffrey $250
In addition, Jones Walker will seek reimbursement for expenses
incurred.
Laura Ashley, Esq., a partner at Jones Walker, disclosed in a court
filing that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Caroline V. McCaffrey, Esq.
Laura F. Ashley, Esq.
Jones Walker LLP
201 St. Charles Avenue, 51st Floor
New Orleans, LA 70170
Telephone: (504) 582-8760
Facsimile: (504) 589-8760
Email: cmccaffrey@joneswalker.com
lashley@joneswalker.com
About UTC Laboratories
UTC Laboratories, LLC, a New Orleans, La.-based company that
operates medical and diagnostic laboratories, filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
E.D. La. Case No. 21-10609) on May 3, 2021. Barry Griffith,
manager, signed the petition. At the time of the filing, the Debtor
disclosed $10 million to $50 million in assets and $1 million to
$10 million in liabilities. Judge Meredith S. Grabill oversees the
case. Jones Walker LLP serves as the Debtor's legal counsel.
VAL'S FOOD: Unsec. Creditors to Get $800 Per Month Over 60 Months
-----------------------------------------------------------------
Val's Food with a Twist, LLC, filed with the U.S. Bankruptcy Court
for the Northern District of Texas a Plan Combined with Disclosure
Statement dated May 16, 2021.
The Plan provides for the Debtor to make monthly payments directly
to creditors to satisfy the secured and priority claims against the
Debtor under either the relevant contractual or statutory
requirements. In addition to the secured and priority claims, the
Debtor will create a creditors' pool into which it shall pay $800
over 60 months, resulting in a creditor fund of $48,000 from which
to pay unsecured claims.
All Claims and Interests classified under the Plan will be treated
and paid as follows:
* Class 1 consists of LiftFund, Inc. Claim. The Class 1 Claim
is impaired. The Debtor will resume regular contractual payments
to Creditor in the amount of $983.09 commencing on the Effective
Date and continuing on the same day of each month thereafter until
the outstanding balance owed on Creditor's Secured Claim is paid in
full. Creditor will apply the contractual payments to its debt
consistent with the terms of the prepetition loan documents and
applicable law.
* Class 2 consists of the Secured Claim of Chrysler Capital.
The Class 2 Claim is impaired. The Debtor will resume regular
contractual payments to Creditor in the amount of $460.08
commencing on the Effective Date and continuing on the same day of
each month thereafter until the outstanding balance owed on
Creditor's Secured Claim is paid in full. Creditor shall apply the
contractual payments to its debt consistent with the terms of the
pre-petition loan documents and applicable law.
* Class 3 consists of the Secured Claims of Dallas County.
The Class 3 Claims will be paid in full with interest at the rate
of 12% per annum within 12 months of the Effective Date. The Class
3 Creditor will retain its lien to secure its Claim until paid in
full under this Plan. Class 3 Claim is impaired and is entitled to
vote on the Plan.
* Class 4 consists of Unsecured Creditors. The Class 4 claims
of unsecured creditors are impaired. General Unsecured shall share
pro rata in the Unsecured Creditors' Pool. The Debtor will make 60
monthly payments commencing on the Effective Date of $800 each
month into the Unsecured Creditors' Pool.
* Class 5 consists of Equity Interest. The Class 5 Claim will
retain its membership interest in the Debtor. Class 5 will not be
entitled to a distribution until all administrative claims and
those claims in Class 1-4 have been satisfied pursuant to the terms
of the Plan.
Valery Jean-Bart shall continue as the President of the Reorganized
Debtor and manager of operations of the business. The Debtor
projects approximately $40,000 of cash will be available on the
date of the Confirmation Hearing. The Debtor will fund payments to
the Class 1, Class 2, Class 3 and Class 4 as well as priority
claimants and the Creditor's Pool out of future operations.
A full-text copy of the Disclosure Statement dated May 16, 2021, is
available at https://bit.ly/3yp4gi9 from PacerMonitor.com at no
charge.
Attorneys for Debtor:
QUILLING, SELANDER, LOWNDS, WINSLETT & MOSER, P.C.
2001 Bryan Street, Suite 1800
Dallas, Texas 75201
Tel: (214) 880-1805
Fax: (214) 871-2111
E-mail: John Paul Stanford
About Val's Food with a Twist
d/b/a dba Val's Cheesecake
Val's Food with a Twist, LLC sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 20-31965) on
July 20, 2020. The case is assigned to Judge Stacey G. Jernigan.
John Paul Stanford, Esq., at Quilling, Selander, Lownds, Winslett &
Moser, P.C., is the Debtor's counsel.
VINCENT GALANO, JR: Selling Middletown Asset for $775K to Blackman
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Vincent Galano, Jr., filed with the U.S. Bankruptcy Court for the
District of New Jersey a notice of his proposed sale of real
property located at 15 Lafayette Court, in Middletown, New Jersey,
to Mia Blackman and Victor Scalici for $775,000 subject to due
diligence and a financing contingency and subject to higher and
better offers.
A hearing on the Motion is set for June 15, 2021, at 10:00 a.m.
Any responsive pleadings will be filed no later than seven days
prior to the scheduled hearing, or as otherwise directed by the
Court.
In the event that no objection or other responsive pleading is
filed to the Motion, the Motion will be deemed uncontested on the
return date and the relief sought may be granted in the Court's
discretion.
The Middletown Property is owned jointly by the Debtor and his wife
Wendy Galano. The Middletown Property is a single-family home.
The Middletown Property is encumbered by two mortgages. The first
mortgage was held by Wells Fargo Bank in the approximate
outstanding balance of $512,000 plus interest and charges. The
Wells Fargo Mortgage was transferred to Specialized Loan Servicing
LLC and a Notice of Transfer of Claim Other Than for Security was
filed on March 24, 2021. The second mortgage is held by Holiday
Prime Capital II LLC in the stated amount of approximately $38
million.
The Plan filed by the Debtor states that the Middletown Property
will be sold. Wendy Galano consents to the sale of the Middletown
Property and pursuant to a Settlement Agreement entered into
between the Debtor, Wendy, Holiday Prime Capital II LLC and others
which was approved on the record by the Court at a hearing held on
March 18, 2021 subject to conditions, Wendy has agreed to
contribute her share of the net closing proceeds to the bankruptcy
estate.
Holiday Prime Capital II LLC agreed pursuant to the Settlement to
release and discharge its mortgage from the Middletown Property at
or before the closing of the sale. The net proceeds of sale after
payment of the closing costs including the real estate commission
payable to RE/MAX Gateway in the amount of 6% of the purchase price
are to be released to the attorney trust account of counsel for the
Debtor to be held pending the further order of the Court.
The Debtor listed the Middletown Property for sale with RE/MAX
Gateway, a licensed realtor located in Ocean Grove, New Jersey.
The Middletown Property was listed at $750,000 at the
recommendation of the realtor.
The realtor introduced the Middletown Property to the Buyers,
residents of Manhattan. The Purchasers submitted a bid of $775,000
subject to due diligence and a financing contingency. The Debtor
and Wendy accepted the offer subject to Bankruptcy Court approval.
The parties have entered into a contract for the sale and purchase
of the Middletown Property subject to approval of the Bankruptcy
Court and subject to higher and better offers.
Based upon the foregoing, the Debtor through his counsel requests
that the sale to the Purchasers be approved pursuant to Code
section 363(b) and (f) and that the sale be free and clear of liens
claims and encumbrances with all allowed liens claims and
encumbrances to attach to the proceeds of sale. As set forth in
the Settlement Agreement the mortgage lien held by Holiday Prime
Capital II LLC will not attach to the proceeds of sale but will be
discharged of record at or before the closing.
Vincent Galano, Jr. sought Chapter 11 protection (Bankr. D.N.J.
Case No. 20-18344) on July 7, 2020. The Debtor tapped David L.
Bruck, Esq., at Greenbaum, Rowe, Smith & Davis LLP as counsel.
VIVA TEXAS: Taps Cindy Clarich of Remax Elite as Real Estate Agent
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Viva Texas Cruises, Inc. seeks approval from the U.S. Bankruptcy
Court for the Southern District of Texas to employ Cindy Clarich, a
licensed real estate agent at Remax Elite, to assist in selling its
property located at 2150 State Highway 361, Aransas Pass, Texas.
Ms. Clarich will receive a commission of 5 percent of the purchase
price upon the consummation of the sale.
Ms. Clarich 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 realtor can be reached at:
Cindy Clarich
Remax Elite
1902 Morgan Ave.
Corpus Christi, TX 78404-3554
Telephone: (512) 415-2915
About Viva Texas Cruises
Viva Texas Cruises, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-21128) on May 3,
2021. Vidal Conde, director, signed the petition. At the time of
the filing, the Debtor had between $1 million and $10 million in
assets and between $100,000 to $500,000 in liabilities. Judge David
Jones oversees the case. The Debtor tapped Adelita Cavada Law as
legal counsel.
WASHINGTON PRIME: Fitch Lowers LongTerm IDR to 'RD'
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Fitch Ratings has downgraded the Long-Term Issuer Default Rating
(IDR) of Washington Prime Group, Inc. and Washington Prime Group,
LP (collectively WPG) to 'RD' from 'C'. Fitch has affirmed the
senior secured revolver and term loans to 'CCC-'/'RR2' and the
senior unsecured notes at 'C'/'RR4'.
The downgrade of WPG's IDR to 'RD' reflects the multiple extensions
of the initial forbearance agreement that followed the March 16,
2021 expiration of the 30-day grace period that resulted from a
missed interest payment on Feb. 15, 2021. Fitch believes that the
only resolution of the company's capital structure is through a
near-term restructuring event or a potential bankruptcy filing.
The company continues to negotiate with its lenders and has
indicated that a Chapter 11 bankruptcy filing is possible. In that
case, the agency is likely to downgrade WPG's IDR to 'D' before
assigning new ratings to reflect the post reorganization capital
structure and business profile.
KEY RATING DRIVERS
Missed Interest Payment, Multiple Forbearance Extensions: On Feb.
15, 2021, WPG deferred the approximately $23.2 million semi-annual
interest payment on the senior notes and commenced a 30-day grace
period under the terms of the indenture, with an aim towards
negotiating a restructuring in with key stakeholders.
On March 16, 2021, the company entered into forbearance agreements
with certain of its senior notes holders and lenders under its
corporate credit facilities whereby, among other things, the
forbearing parties agreed not to exercise any rights and remedies
available to them under the indenture governing the senior notes or
applicable credit agreement, as applicable, related to the missed
interest payment or certain other defaults (in the case of the
credit agreements) until the earlier of March 31, 2021. The company
failed to reach a resolution in negotiations by March 31 and has
entered into additional extension periods, which have extended the
forbearance periods to May 26, 2021.
Moreover, WPG subsequently amended each applicable forbearance
agreement to incorporate the company's expectations that it will
experience a default or event of default related to the maintenance
of its total unencumbered assets compared to total unsecured debt
as set forth in the indenture governing the senior notes and
related to the maintenance of total adjusted debt compared to
capitalization value and total unsecured debt to unencumbered
capitalization value.
Eroding Cash Flows: Fitch expects WPG's operating performance to
deteriorate further in the near term. Operating performance has
been diminished by negative retailer trends, specifically
department store anchor closures and bankruptcies within the
company's mall portfolio that have induced incremental occupancy
and rental income losses through co-tenancy clauses.
Ending occupancy for the Tier 1 and open-air properties (roughly
90% of total NOI) decreased to 90.8% at March 31, 2021 from 93.3% a
year earlier. Average base minimum rent per square foot for the
core portfolio decreased 3.6% yoy for the quarter ended March 31,
2021. Comparable NOI for the Tier 1 and open-air properties
decreased 17.4% in the first quarter of 2021 when compared to the
first quarter of 2020, including comparable NOI declines of 20.1%
for Tier 1 properties and 12.2% for open-air properties. The
declines were driven by pandemic related tenant weakness, higher
bad debt reserves and rent abatements, as well as impact of 2020
bankruptcies and lost rent from lower occupancy when compared to
the first quarter of 2020.
Weak Relative Capital Access: WPG's access to capital has been
limited to its revolving bank credit facility, which was
effectively fully drawn during 1Q20. Fitch believed the company's
open-air unencumbered pool had material value, but the pool
remaining after the waiver is unlikely to garner significant
interest from third-party capital. Fitch does not expect lenders to
have a significant appetite for retail real estate that does not
have a significant grocer component or other essential use.
Recovery Ratings: Fitch's recovery analysis assumes WPG would be
considered a going concern in bankruptcy and the company would be
reorganized rather than liquidated. Fitch determines a
post-reorganization NOI produced by the following three segments of
operating real estate to determine the recoverable value
attributable to the associated debt obligations: NOI encumbered by
75% of credit facility and term loans; asset-level encumbered NOI
(mortgage debt); remaining unencumbered NOI (25% of credit
facility, unsecured bond and deficiency claims). Claims for the 3
categories would total $1.0 billion, $1.1 billion, and $1.4
billion, respectively.
Stressed capitalization rates are individually applied to the
post-reorganization NOI produced by each assets type (Tier I malls,
Tier II/noncore malls, open air) to determine the estimated
recoverable value of each segment of the operating real estate
portfolio. Fitch assumes a post-reorganization property-level NOI
of $240 million, compared to $310 million previously, reflecting
recent and potential further declines that are not assumed to be
remedied via a restructuring. Fitch has assumed a blended 14% cap
rate versus 16% previously reflecting incremental data from recent
restructurings and moving closer towards current market values
given the potential default/restructuring is more imminent.
Including construction-in-progress and equity investments in
unconsolidated entities at 25% of book value ($115 million),
results in an estimated gross recoverable value of $1.9 billion.
The distribution of value yields a recovery ranked in the 'RR2'
category for the senior secured revolver and term loans based on
Fitch's expectation of recovery for the obligations in the 71%-90%
range, the 'RR4' category for the senior unsecured bonds based on
recovery in the 31%-50% range, and the 'RR6' category for the
preferred stock based on recovery in the 0%-10% range. Under
Fitch's Recovery Criteria, these recoveries result in notching two
levels above the IDR for the secured revolver and term loans to
'CCC-', and notching level with the IDR at 'C' for the unsecured
bond and preferred stock.
DERIVATION SUMMARY
WPG's IDR of 'RD' reflects the multiple extensions of the initial
forbearance agreement that followed the March 16, 2021 expiration
of the 30-day grace period that resulted from a missed interest
payment on Feb. 15, 2021. Fitch believes that the only resolution
of the company's capital structure is through a near-term
restructuring event or a potential bankruptcy filing.
Fitch links and synchronizes the IDRs of the parent REIT and
subsidiary operating partnership due to the subsidiary's stronger
credit profile as direct owner of the real estate portfolio and
strong legal and operational ties between the two entities.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Further occupancy loss through 2022 due to activation of co
tenancy clauses and continued challenges in the retail sector,
stabilizing in 2023-2024;--Mortgage refinancing requires
partial principal reduction or additional contingencies in
many cases as lending continues to retreat from the mall
property type.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch does not expect any near-term improvement in the rating.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Negative rating action to 'D' would be taken if WPG lenders
declare an event of default related to the company's missed
interest payment and covenant breaches, accelerating the
company's debt and resulting in a bankruptcy filing.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Fitch estimates WPG's liquidity sources are insufficient to covers
its uses through fiscal 2022. The company has no amounts available
on its revolver and cash flow deterioration has pressured operating
cash retention.
Fitch defines liquidity coverage as sources of liquidity divided by
uses of liquidity. Sources include unrestricted cash, availability
under unsecured revolving credit facilities and retained cash flow
from operating activities after dividends. Uses include pro rata
debt maturities, expected recurring capex and forecasted
(re)development costs.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
WATKINS NURSERIES: Unsecureds to Get Share of Income for 6 Years
----------------------------------------------------------------
Watkins Nurseries, Inc., et al. submitted a Joint Amended
Disclosure Statement explaining its Chapter 11 Plan.
Class 11 General Unsecured Claims will each receive its pro rata
share of the GUC Designation on each distribution date commencing
the next distribution date following payment in full of all allowed
priority claims until the value of (a) such Allowed Unsecured
Claims have been paid in full, or (b) the sixth Distribution Date.
The Debtors shall have the right to prepay any Allowed Claim in
Class 11 without penalty. Class 11 is impaired under the Plan
GUC Designation means annual net income for operations, less
reasonable overhead, reasonable operational costs, the Operational
Reserve, and Senior Plan Payments.
The Reorganized Debtors will continue to operate their businesses
through Watkins Nursery as the operating entity and Watkins Amelia
as a land holding entity. VRR shall be merged into WNI. The
Reorganized Debtors will use $175,000 of the Surplus Equipment
Proceeds as operating capital. Pursuant to 11 U.S.C. § 347,
Unclaimed Funds shall become property of the respective Watkins
Entity.
Counsel to the Watkins Entities:
Tavenner & Beran, PLC
20 North Eighth Street, Second Floor
Richmond, VA 23219
Tel: (804) 783-8300
Fax: (804) 783-0178
A copy of the Joint Amended Disclosure Statement is available at
https://bit.ly/2Sc0eci from PacerMonitor.com.
About Watkins Nurseries
Watkins Nurseries, Inc. -- http://www.watkinsnurseries.com/-- is a
wholesale and retail tree nursery, plant center, and landscape
design firm established in 1876. It specializes in field-grown
trees and shrubs that it produces on over 500 acres of farmland.
Virginias Resources Recycled, LLC -- http://www.vrrllc.com/-- is a
commercial and residential land clearing, grinding, grubbing and
logging company located in Central, Virginia.
Watkins-Amelia, LLC, is engaged in activities related to real
estate.
Watkins Nurseries, Virginias Resources and Watkins-Amelia sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va.
Lead Case No. 20-30890) on Feb. 19, 2020. At the time of the
filing, each Debtor disclosed assets of between $1 million and $10
million and liabilities of the same range.
Paula S. Beran, Esq., at Tavenner & Beran, PLC, is the Debtor's
legal counsel.
WEINSTEIN CO: 3rd Circuit Nixes Its Pre-Ch. 11 Profit Claim
-----------------------------------------------------------
Law360 reports that a Third Circuit Court of Appeals panel found
Friday, May 21, 2021, that a film production contract between a
producer and The Weinstein Co. is not an executory contract,
upholding two lower court rulings that the buyer of the former
debtor's assets isn't on the hook for $400,000 in pre-bankruptcy
obligations.
In an opinion authored by U.S. Circuit Court Judge Thomas L. Ambro,
the panel said that Spyglass Media Group LLC doesn't have to pay
Bruce Cohen — a producer of the Oscar-winning film "Silver
Linings Playbook" — for his share of the profits that accrued
before The Weinstein Co. filed for bankruptcy.
About The Weinstein Company
The Weinstein Company (TWC) -- http://www.WeinsteinCo.com/-- is a
multimedia production and distribution company launched in 2005 in
New York by Bob and Harvey Weinstein, the brothers who founded
Miramax Films in 1979. TWC also encompasses Dimension Films, the
genre label founded in 1993 by Bob Weinstein. During Harvey and
Bob's tenure at Miramax and TWC, they have received 341 Oscar
nominations and won 81 Academy Awards.
TWC dismissed Harvey Weinstein in October 2017, after dozens of
women came forward to accuse him of sexual harassment, assault or
rape.
The Weinstein Company Holdings LLC and 54 affiliates sought Chapter
11 protection (Bankr. D. Del. Lead Case No. 18-10601) on March 19,
2018, after reaching a deal to sell all assets to Lantern Asset
Management for $310 million.
The Weinstein Company Holdings estimated $500 million to $1 billion
in assets and $500 million to $1 billion in liabilities.
The Hon. Mary F. Walrath is the case judge.
Cravath, Swaine & Moore LLP is the Debtors' bankruptcy counsel,
with the engagement led by Paul H. Zumbro, George E. Zobitz, and
Karin A. DeMasi, in New York.
Richards, Layton & Finger, P.A., is the local counsel, with the
engagement headed by Mark D. Collins, Paul N. Heath, Zachary I.
Shapiro, Brett M. Haywood, and David T. Queroli, in Wilmington,
Delaware.
The Debtors also tapped FTI Consulting, Inc., as restructuring
advisor; Moelis & Company LLC as investment banker; and Epiq
Bankruptcy Solutions, LLC as claims and noticing agent.
The official committee of unsecured creditors retained Pachulski
Stang Ziehl & Jones, LLP as its legal counsel, and Berkeley
Research Group, LLC, as its financial advisor.
WELLDYNERX LLC: Moody's Affirms B3 CFR, Outlook Stable
------------------------------------------------------
Moody's Investors Service affirmed the ratings of WellDyneRx, LLC
("WellDyne") including the B3 Corporate Family Rating, the B3-PD
Probability of Default Rating, and the B2 senior secured rating.
The outlook remains unchanged at stable. The co-borrowers under the
credit facility are U.S. Specialty Care, LLC, Clearview
Procurement, LLC and WellCard, LLC.
The affirmation reflects stabilization of operating performance
over the past several quarters, which Moody's anticipates will
continue. This follows earlier challenges with WellDyne's former
rebate aggregator that reduced the company's operating margins and
increased its financial leverage. WellDyne faces refinancing risk
based on the August 2022 maturity of its term loan, but Moody's
anticipates successful refinancing reflecting its operating
stability.
Ratings affirmed:
WellDyneRx, LLC
Corporate Family Rating, B3
Probability of Default Rating, B3-PD
WellDyneRx, LLC and co-borrowers:
Senior Secured 1st Lien First Lien Revolver, B2 (LGD3)
Senior Secured 1st Lien First Lien Term Loan, B2 (LGD3)
Outlook actions
Outlook remains stable.
RATINGS RATIONALE
WellDyne's B3 Corporate Family Rating is constrained by the
company's small market share compared to national pharmacy benefit
managers (PBMs), several of which have merged with large health
insurers creating formidable healthcare enterprises. The PBM
industry faces event risk related to proposals to reduce US drug
prices. The credit profile also reflects high, albeit declining
financial leverage, with debt/EBITDA above 8x on Moody's basis.
Profits faced significant contraction due to challenges in
collections from a rebate aggregator. The company has switched
rebate aggregators, and Moody's does not anticipate another
earnings step-down. The credit profile also includes refinancing
risk in light of the August 2022 term loan maturity.
Tempering these risks, WellDyne's independent business model with
in-house capabilities including mail order appeals to many clients.
Customer diversity is good, and solid free cash flow will support
steady debt reduction. Moody's anticipates debt/EBITDA declining
towards 6x over the next 18 months. The company is steadily
expanding its service offering into adjacent areas, providing new
growth platforms.
Moody's anticipates that WellDyne's liquidity profile will be
adequate over the next 12 to 18 months, assuming refinancing occurs
prior to the term loan becoming current in August 2021 due to its
August 2022 maturity date. The revolver is already current, with an
expiration date in February 2022, but the company has not
historically used the revolver, even during the challenges related
to the former rebate aggregator. Moody's expects the company to
have positive free cash flow on an annual basis and to maintain
modest cash balances, which totaled $56.1 million as of March 31,
2021. The revolver is subject to a springing net leverage covenant
(net first lien debt/EBITDA below 6.0x) when 35% of the revolver
(including letters of credit) is drawn. Moody's expects the company
to maintain good covenant cushion over the next 12 months.
ESG risk factors include social risks social risks related to
potential for changes in the US healthcare market, driven by a
combination of legislative and regulatory factors that in turn are
driving industry consolidation. It remains unclear the type of
healthcare insurance and PBM financial model that will most
effectively meet clients' needs. Among governance considerations,
WellDyne's private equity ownership poses risks with respect to
financial policies including high leverage.
The stable rating outlook reflects Moody's belief that rebate
collection challenges have eased and that steady operating
performance will continue, facilitating capital structure
refinancing.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include growth in the
customer base, rising operating earnings, reduced exposure to drug
pricing policy risks, and debt/EBITDA sustained below 5.0 times.
Factors that could lead to a downgrade include weak liquidity
including unforeseen refinancing challenges, significant customer
losses, deterioration in operating performance, or debt/EBITDA
sustained above 6.0x.
WellDyneRx, LLC and its co-borrowers are the borrowing entities for
WellDyneRx, a privately owned independent PBM headquartered in
Lakeland, Florida. The company operates three main business
segments -- commercial/consumer PBM, a mail order and specialty
pharmacy, as well as a discount card business. The company is owned
by the Carlyle Group.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
WESCO INTERNATIONAL: S&P Alters Outlook to Pos., Affirms 'BB-' ICR
------------------------------------------------------------------
S&P Global Ratings affirmed all its ratings, including its 'BB-'
issuer credit rating on Pittsburgh-based industrial distributor
WESCO International Inc and its subsidiary WESCO Distribution Inc.,
and revised the rating outlook to positive from stable.
The positive outlook reflects the potential for an upgrade if WESCO
continues its performance momentum and generates solid free cash
flow, enabling it to reduce its S&P Global Ratings' adjusted
leverage below 5x over the next 12 months.
S&P said, "We expect a recovery in most of WESCO's end markets will
support continued deleveraging over the next 12 months. After a
roughly 7% pro forma revenue decline in 2020, the company's
revenues returned to pre-pandemic levels in the first quarter of
2021. A growing backlog, along with positive macroeconomic
indicators, suggests a recovery in most of the company's end
markets is underway. We expect industrial activity to improve this
year, which will drive increased maintenance, repair, and
operations spending. In addition, the company's communications and
security end markets should benefit from trends of remote
connectivity, data center expansion, and increased need for
bandwidth. We expect the company's utility market, which is less
cyclical, to exhibit modest steady growth."
Adjusted EBITDA margins should grow over the next 12 months as
WESCO continues its gross margin improvement program and achieves
sales and cost synergies from the Anixter merger, but there could
be supply chain headwinds. WESCO is striving to improve its gross
margins, particularly at its legacy operations, through value-based
pricing, and has expanded its reported gross margin by 50 basis
points (bps) in the first quarter of 2021 on flat year-over-year
sales. S&P said, "Although we expect the company will generally be
able to offset cost inflation and further expand its gross margins,
we believe supply chain disruptions could cause headwinds for WESCO
through the end of the year. The company has executed well on its
cost synergy plan, and we believe it is on track to meet or exceed
its 2023 target of $250 million in synergies, though any increased
synergies could come with higher upfront costs."
S&P said, "We believe the company will continue to generate good
free cash flow, and that its cash deployment priorities will favor
debt repayment until the company returns to its target leverage
range. WESCO's strong S&P Global Ratings' adjusted free cash flow
generation of about $500 million in 2020 demonstrated its ability
to release working capital in a downturn and allowed the company to
reduce its gross debt by about $500 million since closing the
Anixter merger. We estimate that WESCO will reduce leverage to its
target range of 2x-3.5x net debt to EBITDA (and reduce its adjusted
leverage to below 4x) in 2023. Until then, we expect the company
will use the vast majority of free cash flow, after capital
expenditures, to pay its preferred dividend and repay debt.
The positive outlook reflects the potential that we could raise our
rating on WESCO if it continues to grow its EBITDA and generate
solid free cash flow such that it reduces its S&P Global Ratings'
adjusted debt to EBITDA to below 5x, which we forecast to occur in
the first half of 2022. S&P also expects that WESCO's financial
policy, with a near-term focus on debt repayment, will remain
supportive of deleveraging over the next 12 months.
S&P could raise its rating if WESCO reduces its S&P Global Ratings'
adjusted debt leverage below 5x. This could occur if:
-- Economic activity continues to recover at a brisk pace and the
company is able to manage the potential impact of cost inflation;
-- The company continues to achieve targeted synergies;
-- WESCO continues to use its free cash flow to pay down debt;
and
-- Financial policy remains supportive of maintaining leverage
below 5x.
S&P could revise our outlook to stable over the next 12 months if
it expects S&P Global Ratings' adjusted leverage to remain above
5x. This could occur if:
-- End-market demand recovery stalls;
-- Supply chain disruptions, higher-than-expected integration
costs or lingering merger-related expenses pressure margins; or
-- The company undertakes financial policy decisions, such as
acquisition or share repurchase activity, that delay deleveraging.
WITCHEY ENTERPRISES: June 25 Hearing on Disclosure Statement
------------------------------------------------------------
Judge Patricia M. Mayer will convene a hearing to consider approval
of the Amended Disclosure Statement of Witchey Enterprises, Inc.,
at Max Rosenn US Courthouse, Courtroom 2, 197 South Main Street,
Wilkes−Barre, PA 18701 on June 25, 2021 at 10:00 a.m.
June 21, 2021, is fixed as the last day for filing and serving
written objections to the Amended Disclosure Statement.
About Witchey Enterprises
Witchey Enterprises, Inc., a Wilkes-Barre, Pa.-based provider of
courier and express delivery services, filed a Chapter 11 petition
(Bankr. M.D. Pa. Case No. 19-00645) on Feb. 14, 2019. Louis
Witchey, president, signed the petition. At the time of filing,
the Debtor had between $1 million and $10 million in both assets
and liabilities. Judge Patricia M. Mayer oversees the case. The
Debtor tapped Andrew Joseph Katsock, III, Esq., as legal counsel
and David L. Haldeman as accountant.
WOODFORD EXPRESS: S&P Raises ICR to 'B-', Outlook Positive
----------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.-based
midstream company Woodford Express LLC to 'B-' from 'CCC+'. The
outlook is positive.
At the same time, S&P raised the issue-level rating on Woodford's
senior secured notes to 'B-' from 'CCC+'. Its '3' recovery rating
on its senior secured notes is unchanged, indicating its
expectation for meaningful (50%-70%; rounded estimate: 65%)
recovery in the event of a payment default.
The positive outlook on Woodford reflects S&P's expectation that
the company will remain free cash flow positive and continue to pay
down debt.
S&P said, "The upgrade reflects our view of the reduced
counterparty risk. We expect that Woodford will remain a key
midstream partner for Gulfport following Gulfport's emergence from
bankruptcy. Gulfport's reorganization plan was confirmed on April
27, 2021 and none of Woodford's contracts with Gulfport were
rejected. We believe that Gulfport's emergence from bankruptcy and
continued investment in the South Central Oklahoma Oil Province
(SCOOP) will benefit Woodford's volumes. We also expect that
Woodford will continue to remain free cash flow positive and
generate free operating cash flow between $20 million and $40
million in the next 12 months especially under the current
favorable commodity price environment.
"Woodford's small size and scope increases its volumetric risk.
While we expect Gulfport's emergence from bankruptcy to benefit
Woodford, we recognize that Woodford's growth depends on Gulfport
with 70% of its revenues coming from Gulfport. Gulfport has one rig
operating in the SCOOP and its decisions to increase its investment
and rigs in this area or reduce operations have a significant
impact on Woodford's performance. Furthermore, Woodford's small
scale and focus in the SCOOP means that it is more susceptible to
changes in commodity prices. While Woodford's contracts have a
weighted average remaining life of 15 years, the majority of
Woodford's revenues in 2021 relate to fixed fee contracts. This
exposure increases Woodfood's risk to volume declines if any of its
producers reduce their drilling activity.
"We expect Woodford to prioritize debt reduction. Woodford ended
2020 with adjusted debt to EBITDA of 5.8x. Given our expectation of
$20 million to $40 million of free operating cash flow in 2021, we
believe that Woodford has a lot of flexibility around its use of
cash especially since it has minimal capex needs and no major
growth projects planned. In the first quarter of 2021, Woodford
paid down $11 million of debt, which includes the $0.9 million of
mandatory amortization. We expect adjusted debt to EBITDA will
decline below 5.0x in the next 12 months and view further debt
repayments as credit positive.
"The positive outlook on Woodford reflects our expectation that the
company will remain cash flow positive and continue to pay down
debt. We expect debt to EBITDA to decline below 5.0x in the next 12
months.
"We could raise our ratings if the company maintains debt to EBITDA
below 5.0x on a sustained basis as it continues to grow and volume
throughput increase.
"We could consider revising the outlook to stable if we expect debt
to EBITDA to stay above 5.0x on a sustained basis, which would
likely be due to lower-than-expected volumes and EBITDA or
increased reliance on debt to finance capital spending."
WORKHORSE GRADING: Seeks to Hire J.M. Cook as Legal Counsel
-----------------------------------------------------------
Workhorse Grading and Construction, Inc. seeks approval from the
U.S. Bankruptcy Court for the Eastern District of North Carolina to
hire J.M. Cook, P.A. as its legal counsel.
The firm's services include:
(a) preparing a plan of reorganization and other legal papers
necessary to administer the Debtor's Chapter 11 case;
(b) assisting the Debtor in evaluating the legal basis for,
and effect of, the various pleadings that will be filed in its
case;
(c) assisting the Debtor in preparing its monthly operating
reports, and evaluating and negotiating the Debtor's or any other
party's plan of reorganization and disclosure statement;
(e) prosecuting all necessary legal actions or proceedings on
behalf of the Debtor; and
(f) perform all necessary legal services in connection with
the Debtor's reorganization, including court appearances, research,
opinions and consultations on reorganization options, direction and
strategy.
The firm will be paid at the rate of $300 an hour for attorney's
services and $75 an hour for paralegal work. It received a
retainer in the amount of $2,000.
J.M. Cook, Esq., the firm's attorney who will be handling the case,
disclosed in a court filing that he does not represent interests
adverse to the Debtor and is bankruptcy the estate.
Mr. Cook can be reached at:
J.M. Cook, Esq.
J.M. Cook, P.A.
5886 Faringdon Place, Suite 100
Raleigh, NC 27609
Tel: 919-675-2411
Fax: 919-882-1719
Email: J.M.Cook@jmcookesq.com
About Workhorse Grading and Construction
Workhorse Grading and Construction, Inc. operates a logging
operation clearing trees and selling the timber on a cash and carry
basis.
Workhorse Grading sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.C. Case No. 21-01078) on May 7, 2021.
In the petition signed by Wayland J. Plyler, president, the Debtor
disclosed up to $10 million in both assets and liabilities. Judge
David M. Warren oversees the case. J.M. Cook, P.A. is the Debtor's
legal counsel.
YELLOW PAGES: S&P Affirms 'B-' ICR on Debt Repayment
----------------------------------------------------
S&P Global Ratings revised the outlook to positive from stable and
affirmed its 'B-' issuer credit rating on Yellow Pages Ltd. At the
same time, S&P Global Ratings affirmed its 'B' issue-level rating,
with a '2' recovery rating, on the company's senior subordinated
debentures.
The positive outlook reflects Yellow Pages' improved financial
flexibility, which should allow the company to focus on containing
customer attrition and increasing topline growth to offset
declining revenue from existing operations.
The positive outlook reflects greater financial flexibility
following debt repayment, allowing the company to focus on growth
opportunities. On April 23, Yellow Pages announced plans to repay
its outstanding debentures (C$107 million) in full on May 31. S&P
said, "We view positively the company's commitment to using its
free cash flows for permanent debt reduction. Nevertheless, post
the debt repayment, we would continue to consider operating leases
and pension liabilities as debt but expect Yellow Pages'
debt-to-EBITDA ratio will improve to below 2x in 2021. With the
reduced balance-sheet debt, we anticipate management will focus on
the company's growth strategy. Furthermore, we expect Yellow Pages
will continue to generate positive free operating cash flows of
about C$75 million-C$80 million over the next 12 months through its
ongoing aggressive cost management strategy. As announced on May
13, 2021, Yellow Pages will continue to return a portion of excess
free cash to shareholders in the form of dividends and share
repurchases under its normal-course issuer bid program. Our
positive outlook also incorporates our expectation that the company
will maintain a balance between its shareholder returns and need
for growth investments."
Ongoing revenue erosion in both the print and digital segments
constrains the ratings. Because Yellow Pages continues to lose
customers in both its print and digital segments, total revenues
declined by 17% on a year-over-year basis as of first-quarter 2021.
S&P said, "However, we note that customer losses have moderated
over the past few quarters. The company has also been able to
maintain steady average revenue per customer even amid the COVID-19
pandemic. However, given the intensifying competition, particularly
from dominant players such as Google and Facebook, along with a
shifting product mix toward lower-margin offerings coupled with the
secular attrition of print, we believe a material revenue
turnaround could prove challenging in the near term and take some
time. Therefore, we expect Yellow Pages' consolidated revenues
could continue drop in 14%-15% area and for S&P Global Ratings'
adjusted EBITDA margins to remain in the 30% area reflecting fewer
opportunities to cut costs as well as some investment to spur
growth."
The positive outlook reflects Yellow Pages' improved financial
flexibility, which should allow the company to focus on containing
customer attrition and pursue growth opportunities to offset
declining revenues from existing operations.
S&P said, "We could raise the ratings over next 12 months if Yellow
Pages demonstrates a revenue turnaround such that it stabilizes its
digital segment revenues in particular. In addition, we would
expect the company will preserve liquidity and maintain a balance
between its financial policies with respect to shareholder returns
and reinvestments for revenue growth.
"We could revise the outlook to stable if declines in digital
revenue accelerate (from the current 16% area), reflecting poor
execution on Yellow Pages' growth strategy, contributing to
significant declines in EBITDA and free cash flow."
[] U.S. Trustee Challenges Chapter 11 Plan Exculpation Provisions
-----------------------------------------------------------------
Paul Weiss Rifkind Wharton & Garrison LLP wrote an article on
Lexology titled "United States Trustee Challenges Exculpation
Provisions in Chapter 11 Plans."
Chapter 11 plans commonly protect a debtor's key stakeholders that
participate in the chapter 11 process from claims arising in
connection with the bankruptcy case. The Office of the United
States Trustee (the "US Trustee"), the branch of the Department of
Justice tasked with monitoring bankruptcy cases, has recently taken
aim at limiting the use and scope of these "exculpation" provisions
in large restructuring cases across the country.
Background and Standards
In chapter 11 cases, exculpation clauses are often approved in the
ordinary course as an exercise of the Debtor's business judgment.
These provisions are customarily limited to specific claims that
could arise in connection with the chapter 11 case, including plan
negotiation and implementation. Liabilities arising from gross
negligence, fraud and willful misconduct are typically carved-out
of plan exculpation provisions.[1] Exculpation provisions are also
typically limited to key parties in the plan formulation process,
such as the debtors, any official committee, certain lenders or
security holders, and their related parties. In practice,
exculpation provisions create a higher standard of liability for
any claims against exculpated parties that relate to their
participation in the chapter 11 case. These provisions are
intended to induce important stakeholders to take an active role in
the plan formulation process in order to maximize value and
efficiencies in a debtor's chapter 11 case.
However, in Pacific Lumber, the Fifth Circuit Court of Appeals held
that section 524(e) of the Bankruptcy Code precluded the
exculpation and third party releases in that case.[2] Section
524(e) of the Bankruptcy Code provides that, except for certain
inapplicable exceptions, the "discharge of a debt . . . [in a
chapter 11 proceeding] does not affect the liability of any other
entity on . . . such debt." The Fifth Circuit interpreted this
section as prohibiting the effective release of claims against
non-debtor exculpated parties. It therefore struck the exculpation
provision at issue, retaining only a narrow exculpation for the
official unsecured creditors' committee and its members which the
Court regarded as statutorily empowered to act for the benefit of
the debtors and their estates, and thus, as warranting qualified
immunity for actions taken within the scope of such duties.[3]
Following Pacific Lumber, the Ninth Circuit in Blixseth[4]
distinguished the Fifth Circuit's rationale. Referencing Pacific
Lumber, the Ninth Circuit noted that section 524(e) of the
Bankruptcy Code does not bar a customary exculpation (i.e., one
limited to separate claims arising for acts or omissions in
connection with the chapter 11 cases and the filing and
solicitation of the plan). The court further held that a typical
exculpation provision does not implicate section 524(e) of the
Bankruptcy Code at all, because it only applies to claims arising
from the bankruptcy proceeding itself and does not impermissibly
absolve a co-debtor or guarantor's liability on a discharged
debt.[5]
US Trustee Objections to Exculpation Provisions
Recently, the US Trustee has been objecting in jurisdictions across
the country to plan exculpation provisions, arguing, among other
things,[6] that only a statutory committee and its members may be
exculpated under Pacific Lumber.
In response, many debtors[7] have argued that standard exculpation
provisions are properly included in chapter 11 plans as a matter of
the debtor's business judgment to ensure that necessary parties,
including parties other than the committee and its members,
participate in the formulation of a debtor's chapter 11 plan.[8]
Bankruptcy courts have generally agreed with these debtors and have
overruled the US Trustee objections, noting that exculpation
clauses appropriately cover prepetition and postpetition acts by
key stakeholders that directly relate to the bankruptcy case.[9]
Many of these courts acknowledge that exculpated parties, including
non-estate fiduciaries, add value to the restructuring process and
that plan exculpation provisions properly encourage them to do
so.[10]
Conclusion
Given the US Trustee's recent concerted nationwide policy drive
against plan exculpation clauses, we expect more decisions on this
issue soon. The continued evolution of exculpation provisions is
an important trend worth following given their critical, customary
and common-sense use in plans, coupled with their effectiveness in
encouraging stakeholder participation in the chapter 11 process.
[^] BOND PRICING: For the Week from May 17 to 21, 2021
------------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
Acorda Therapeutics Inc ACOR 1.750 97.750 6/15/2021
BPZ Resources Inc BPZR 6.500 3.017 3/1/2049
Basic Energy Services Inc BASX 10.750 20.188 10/15/2023
Basic Energy Services Inc BASX 10.750 20.188 10/15/2023
Briggs & Stratton Corp BGG 6.875 8.320 12/15/2020
Buffalo Thunder
Development Authority BUFLO 11.000 50.000 12/9/2022
Chinos Holdings Inc CNOHLD 7.000 0.332 N/A
Chinos Holdings Inc CNOHLD 7.000 0.332 N/A
Dean Foods Co DF 6.500 2.000 3/15/2023
Dean Foods Co DF 6.500 1.100 3/15/2023
Delta Air Lines 2007-1
Class A Pass
Through Trust DAL 6.821 106.770 8/10/2022
Energy Conversion Devices ENER 3.000 7.875 6/15/2013
Energy Future Competitive
Holdings Co LLC TXU 0.947 0.072 1/30/2037
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 32.996 7/15/2023
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 33.396 7/15/2023
Federal Home Loan Mortgage FHLMC 0.300 99.712 8/26/2022
Federal National
Mortgage Association FNMA 0.750 99.551 5/27/2025
Federal National
Mortgage Association FNMA 0.340 99.869 8/25/2023
Fleetwood Enterprises Inc FLTW 14.000 3.557 12/15/2011
GNC Holdings Inc GNC 1.500 1.250 8/15/2020
GTT Communications Inc GTT 7.875 10.605 12/31/2024
GTT Communications Inc GTT 7.875 13.085 12/31/2024
Goodman Networks Inc GOODNT 8.000 39.362 5/11/2022
High Ridge Brands Co HIRIDG 8.875 1.010 3/15/2025
High Ridge Brands Co HIRIDG 8.875 1.010 3/15/2025
Hornbeck Offshore Services HOSS 5.000 0.582 3/1/2021
Liberty Media Corp LMCA 2.250 48.628 9/30/2046
MAI Holdings Inc MAIHLD 9.500 15.899 6/1/2023
MAI Holdings Inc MAIHLD 9.500 15.899 6/1/2023
MAI Holdings Inc MAIHLD 9.500 15.899 6/1/2023
MBIA Insurance Corp MBI 11.444 18.000 1/15/2033
MBIA Insurance Corp MBI 11.444 17.863 1/15/2033
MF Global Holdings Ltd MF 9.000 15.625 6/20/2038
MF Global Holdings Ltd MF 6.750 15.625 8/8/2016
Mashantucket Western
Pequot Tribe MASHTU 7.350 16.500 7/1/2026
NFP Corp NFP 7.000 109.488 5/15/2025
NFP Corp NFP 7.000 108.677 5/15/2025
Navajo Transitional Energy NVJOTE 9.000 65.000 10/24/2024
Nine Energy Service Inc NINE 8.750 41.525 11/1/2023
Nine Energy Service Inc NINE 8.750 41.967 11/1/2023
Nine Energy Service Inc NINE 8.750 41.347 11/1/2023
OMX Timber Finance
Investments II LLC OMX 5.540 0.888 1/29/2020
Optimas OE Solutions
Holding LLC / Optimas OE
Solutions Inc OPTOES 8.625 90.494 6/1/2021
Optimas OE Solutions
Holding LLC / Optimas OE
Solutions Inc OPTOES 8.625 90.494 6/1/2021
Par Pacific Holdings Inc PARR 5.000 100.750 6/15/2021
Renco Metals Inc RENCO 11.500 24.875 7/1/2003
Revlon Consumer Products REV 6.250 34.721 8/1/2024
Rolta LLC RLTAIN 10.750 1.665 5/16/2018
Sears Holdings Corp SHLD 8.000 3.470 12/15/2019
Sears Holdings Corp SHLD 6.625 2.465 10/15/2018
Sears Holdings Corp SHLD 6.625 2.465 10/15/2018
Sears Roebuck Acceptance SHLD 7.500 0.254 10/15/2027
Sears Roebuck Acceptance SHLD 6.500 0.726 12/1/2028
Sempra Texas Holdings Corp TXU 5.550 13.500 11/15/2014
TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019
Transworld Systems Inc TSIACQ 9.500 31.875 8/15/2021
Triumph Group Inc TGI 8.875 110.588 6/1/2024
Voyager Aviation Holdings
LLC / Voyager Finance Co VAHLLC 9.000 40.520 8/15/2021
Voyager Aviation Holdings
LLC / Voyager Finance Co VAHLLC 9.000 54.000 8/15/2021
*********
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
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