/raid1/www/Hosts/bankrupt/TCR_Public/210616.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, June 16, 2021, Vol. 25, No. 166
Headlines
1011778 BC: Moody's Alters Outlook on Ba3 CFR to Stable
120 YORK: U.S. Trustee Unable to Appoint Committee
ADMIRAL PROPERTY: July 8 Disclosure Statement Hearing Set
ADVANCED MEDIA: August 10 Plan Confirmation Hearing Set
ADVANTAGE SPORTS: Seeks to Hires Sander & Company as Accountant
ADVAXIS INC: Incurs $5.1 Million Net Loss in Second Quarter
AEMETIS INC: Signs $200M Deal With Murex for Low Carbon Biofuels
AFFILIATED FOODS: Bankruptcy Ends After 12 Years
ALEX AND ANI: June 18 Deadline Set for Panel Questionnaires
AMSTERDAM HOUSE: Case Summary & 30 Largest Unsecured Creditors
ANTECO PHARMA: U.S. Trustee Unable to Appoint Committee
ARMATA PHARMACEUTICALS: All 3 Proposals Passed at Annual Meeting
ARTERA SERVICES: Moody's Rates New $775MM Incremental Loan 'B3'
ARTERA SERVICES: S&P Affirms 'B-' Rating on First-Lien Term Loan
ASCENT RESOURCES: Moody's Rates New $350MM Unsecured Notes 'Caa1'
B-LINE CARRIERS: Regions Bank Seeks to Bar Use of Cash Collateral
BALL METALPACK: S&P Alters Outlook to Stable, Affirms 'B-' ICR
BEAZER HOMES: S&P Upgrades ICR to 'B', Outlook Positive
BRICK HOUSE: Bid to Reject Vesna REPC Denied
BRIDGEVIEW VILLAGE: Fitch Affirms 'BB+' Issuer Default Rating
BROOKLYN IMMUNOTHERAPEUTICS: Signs LOI to Acquire Novellus
BYRD FAMILY: Sale of Lebanon Property to Tennessee Donuts Approved
CAMELOT UK: S&P Assigns 'B' Rating on New $1BB Sr. Secured Notes
CANTERA COURT: $129K Sale of Laredo Property to Mendez Approved
CAREERBUILDER LLC: S&P Lowers ICR to 'B-' on Pressured Performance
CARIBBEAN MOTEL: Case Summary & 7 Unsecured Creditors
COINSEED INC: New York AG Secures Appointment of Court Receiver
COLDWATER DEV'T: Selling Santa Monica Mountains Property for $33.5M
COMMUNITY INTERVENTION: Cash Access Thru August 31 OK'd
COMSTOCK RESOURCES: Fitch Affirms 'B' IDR, Outlook Positive
CONCISE INC: July 28 Plan Confirmation Hearing Set
CT TECHNOLOGIES: Moody's Puts B3 CFR Under Review for Upgrade
DARREN B. MCCORMICK: Foreign Reps' St. Petersburg Asset Sale OK'd
DAVIDSTEA INC: Creditors Approve CCAA Plan of Arrangement
DAVIDSTEA INC: Creditors Okay Restructuring Plan under CCAA
DIVERSIFIED CONSULTANTS: Court Narrows Claims in Autodial Suit
DTI HOLDCO: Moody's Upgrades CFR to Caa1, Outlook Stable
DURRIDGE COMPANY: Cash Access Thru Sept. 13 OK'd
E2OPEN LLC: Moody's Affirms B2 CFR Following BluJay Acquisition
EKSO BIONICS: All Three Proposals Approved at Annual Meeting
ELECTRO SALES: Seeks Interim Court Nod to Use Cash Collateral
EMINENT CYCLES: Wins Cash Collateral Access Until September
ENERGIZER HOLDINGS: Moody's Rates New EUR650MM Unsecured Notes 'B2'
ENGINEERED PROPULSION: GA-ASI Buying All Assets for $2.7 Million
FLYNN RESTAURANT: Moody's Alters Outlook on B3 CFR to Stable
FOREVER 21 INC: Bankruptcy Plan Can Give Creditors Small Recovery
FORTRESS TRNSP: Moody's Affirms Ba3 CFR Amid Transtar Acquisition
FUTURUM COMMUNICATIONS: U.S. Trustee Unable to Appoint Committee
GIBSON BRANDS: KKR Tells Rival That It Owns Firm Until Debt Repaid
GIRARDI KEESE: Dordick Buying Bldg. 1 Personal Property for $50K
GREENKARMA LLC: Obtains Permission to Use Cash Collateral
GTT COMMUNICATIONS: Amends Infra Sale Agreement With Cube Telecom
HDT HOLDCO: Moody's Assigns B1 CFR, Outlook Stable
HDT HOLDCO: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
HEALTHIER CHOICES: Expects to Raise $27-Mil. From Rights Offering
HEARTLAND DENTAL: Moody's Rates New $870MM Incremental Loan 'B2'
HEARTLAND DENTAL: S&P Rates New Incremental 1st-Lien Term Loan B-
HELIUS MEDICAL: Removes Interim Tag from President Andreeff's Title
HERITAGE CHRISTIAN: Court OKs Third Stipulation on Cash Collateral
HERTZ CORP: Third Amended Joint Plan Confirmed by Judge
HERTZ GLOBAL: Bankruptcy Court Confirms Plan of Reorganization
HOSPITALITY INVESTORS: Wins Final OK on $65MM DIP Loan, Cash Use
IDEANOMICS INC: Completes Acquisition of US Hybrid
IDEANOMICS INC: Signs Standby Equity Distribution Deal With YA II
J.S. CATES: Obtains Final OK on Cash Access Thru August 20
JACOBS TOWING: Seeks Authority to Use SBA Cash Collateral
JAGUAR HEALTH: Further Adjourns Annual Meeting Until July 9
JERRY BATTEH: $175K Jacksonville Property Sale to Niermann Denied
JERRY BATTEH: $180K Jacksonville Property Sale to Niermann Denied
JFAL HOLDING: U.S. Trustee Unable to Appoint Committee
KATERRA INC: Backers Vow to Push Project Ahead Despite Ch.11 Filing
KIMBALL HILL: Court Rejects Bid for Supplemental Damages v. F&D
KK FIT: Court OKs Cash Collateral Stipulation with Lender
KLX ENERGY: Signs $50M Equity Distribution Deal With Piper Sandler
LADDER CAPITAL: Fitch Affirms 'BB+' IDRs & Alters Outlook to Stable
LADDER CAPITAL: Moody's Affirms Ba1 CFR & Alters Outlook to Stable
LEBSOCK 200: U.S. Trustee Unable to Appoint Committee
LOMPA RANCH: Expects Sale Plan to Pay 100% to Unsecured Creditors
MALLINCKRODT PLC: Creditors' Committee Question Ch. 11 Drug Process
MAYFLOWER RETIREMENT: Fitch Rates $59.245MM Revenue Bonds 'BB+'
MIC GLEN: Moody's Assigns B3 CFR Following K-Mac Acquisition
MIC GLEN: S&P Assigns 'B-' Issuer Credit Rating, Outlook Stable
MICHAEL KORS: Moody's Affirms Ba1 CFR & Alters Outlook to Stable
MOUNTAIN PROVINCE: Sells C$64.5M Worth of Diamond in Second Quarter
MTE HOLDINGS: Wins Final Court OK on Additional Spending
NATIONAL VISION: Moody's Upgrades CFR to Ba2, Outlook Stable
NEW CONCEPTS: Case Summary & 13 Unsecured Creditors
NEW VISION: Case Summary & 20 Largest Unsecured Creditors
NN INC: Names Mike Felcher as Chief Financial Officer
NUVERRA ENVIRONMENTAL: Unit's $4-Mil. PPP Loan Fully Forgiven
PARK PLACE: July 28 Amended Plan Confirmation Hearing Set
PHILIPPINE AIRLINES: Still Mulling Prearranged Chapter 11
PINK MONKEY: Seeks to Hire Bottom Line Solutions as Accountant
PLAMEX INVESTMENT: Seeks to Hire NAI Capital as Real Estate Broker
PREFERRED EQUIPMENT: May Use TD Bank Cash Collateral Thru July 15
PREGIS TOPCO: $67.5MM Term Loan Add-on No Impact on Moody's B3 CFR
PS ON TAP: Seeks Approval to Hire Lewis Brisbois as Labor Counsel
PURDUE PHARMA: Hits Back Ch. 11 Examiner Motion of Creditor
RGN-GROUP: Regus Units File Restructuring Plan to Keep 98 Locations
RLJ LODGING: Moody's Assigns First Time Ba3 Corp Family Rating
RLJ LODGING: S&P Assigns 'B+' Issuer Credit Rating, Outlook Neg.
ROMANS HOUSE: Trustee Seeks to Hire Hart & Hallman as Counsel
SM ENERGY: Fitch Rates Proposed 7-Year Unsec. Notes 'B'
SM ENERGY: Moody's Upgrades CFR to B2 on Improving Debt Leverage
SM ENERGY: Registers 3.6 Million Common Shares
SOAS LLC: Wins Cash Collateral Access Thru July 31
SPHERATURE INVESTMENTS: Wins Cash Collateral Access Thru July 10
ST. JOSEPH ENERGY: S&P Affirms 'BB-' Rating on Sec. Term Loan B
TECT AEROSPACE: To Sell WA Manufacturing Facility to Pay Debt
TEGNA INC: S&P Hikes ICR to 'BB' on Continued Advertising Recovery
TPC GROUP: Fitch Affirms 'B-' LongTerm IDR, Outlook Negative
TRILOGY INTERNATIONAL: 98.9% of Existing Notes Validly Tendered
TRILOGY INTERNATIONAL: Fitch Affirms 'CCC+' LongTerm IDR
U.S. GLOVE: Avoidance Suit vs. Jacobs Goes to Trial
VALLEY FARM: Secures Continued Cash Access Through Aug. 10
VERTEX ENERGY: Reports Unregistered Sales of Equity Securities
WASHINGTON PRIME: Vinson, Wachtell Represent Term Lenders
WHITE STALLION ENERGY: June 23 Auction of Substantially All Assets
WOODBRIDGE HOSPITALITY: Seeks OK on Cash Accord with Lender
ZUCA PROPERTIES: July 22 Plan & Disclosure Hearing Set
ZUCA PROPERTIES: Unsecureds to get Pro Rata of Available Cash
[*] Commercial Chapter 11 Filings Down 14% in May 2021
*********
1011778 BC: Moody's Alters Outlook on Ba3 CFR to Stable
-------------------------------------------------------
Moody's Investors Service affirmed 1011778 B.C. Unlimited Liability
Co.'s Ba3 corporate family rating, Ba3-PD probability of default
rating, Ba2 senior secured first lien bank credit facility ratings,
Ba2 senior secured first lien note ratings, and B2 secured second
lien notes rating. Moody's also affirmed Tim Hortons Inc.'s (Tim's)
B1 senior unsecured legacy notes. In addition, Moody's upgraded the
speculative grade liquidity rating to SGL-1 from SGL-2 and changed
the outlook to stable from negative.
"The affirmation and change in outlook to stable from negative
reflects the steady improvement in 1011778 B.C.'s operating
performance that has resulted in earnings and cash flow growth
despite continued government restrictions in certain jurisdictions
as a result of the pandemic." stated Bill Fahy, Moody's Senior
Credit Officer. Given the off-premise focused business model of the
company's various brands its operating performance was not as
materially impacted as most in the restaurant industry as a result
of the pandemic. "The ratings and outlook also anticipate that
operating performance will continue to improve due in part to same
store sales lapping historic lows and consumers increasing their
spend on food-away from home as government restrictions continue to
lessen." Fahy added. The upgrade to SGL-1 represents 1011778 B.C.
very good liquidity supported by $1.6 billion of cash, positive
free cash flow even after it sizable dividend and its $1.0 billion
revolving credit facility.
Affirmations:
Issuer: 1011778 B.C. Unltd Liability Co.
Corporate Family Rating, Affirmed Ba3
Probability of Default Rating, Affirmed Ba3-PD
Senior Secured First LienTerm Loan, Affirmed Ba2 (LGD3)
Senior Secured First Lien Revolving Credit Facility, Affirmed Ba2
(LGD3)
Senior Secured First Lien Regular Bond/Debenture, Affirmed Ba2
(LGD3)
Senior Secured Second Lien Regular Bond/Debenture, Affirmed B2
(LGD5)
Issuer: Tim Hortons Inc.
Senior Unsecured Regular Bond/Debenture, Affirmed B1 (LGD5)
Upgrades:
Issuer: 1011778 B.C. Unltd Liability Co.
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Outlook Actions:
Issuer: 1011778 B.C. Unltd Liability Co.
Outlook, Changed To Stable From Negative
Issuer: Tim Hortons Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
1011778 B.C.'s Ba3 CFR benefits from its brand recognition and
meaningful scale in terms of systemwide units of its three
restaurant concepts, Burger King, Popeyes and Tim Hortons. The
company's franchised focused business model provides more stability
to earnings and cash flow. In addition, 1011778 B.C.'s diversified
day part and food offerings and very good liquidity are also credit
positive. 1011778 B.C. is constrained by its relatively high
leverage and modest retained cash flow to debt, as well as the high
level of promotional activities by competitors and a value focused
consumer that will continue to pressure same store operating
performance.
The restaurant sector has been one of the sectors most
significantly affected by the coronavirus outbreak given its
exposure to widespread location restrictions and closures as well
as its sensitivity to consumer demand and sentiment. Moody's regard
the coronavirus outbreak as a social risk under Moody's ESG
framework, given the substantial implications for public health and
safety.
Corporate governance is a key credit consideration for 1011778 B.C.
particularly its financial strategies given its high leverage. In
addition, 3G Restaurant Brands Holdings LP, an affiliate of private
investment firm 3G Capital Partners, Ltd owns approximately 31% of
the combined voting power of 1011778 B.C.'s parent company
Restaurant Brands. However, 1011778 B.C. does have a diversified
board of directors.
Restaurants by their nature and relationship with sourcing food and
packaging, as well as an extensive labor force and constant
consumer interaction are deeply entwined with sustainability,
social and environmental concerns. While these factors may not
directly impact the credit, they can impact brand image and
consumers view of the brands overall.
The stable outlook reflects Moody's view that same store sales will
continue to improve and help drive a steady increase in earnings,
credit metrics and liquidity as government restrictions continue to
lessen. The stable outlook also anticipates that the company
follows a balanced financial policy towards dividends and share
repurchases and maintains very good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could result in an upgrade include a sustained
strengthening of debt protection metrics with debt to EBITDA of
around 5.0 times and maintaining EBIT coverage of interest of
around 3.0 times. A higher rating would also require the company's
commitment to preserving credit metrics during periods of operating
difficulties and to maintain very good liquidity.
Factors that could result in a downgrade include a sustained
deterioration in credit metrics despite a lifting of restrictions
on restaurants and a subsequent recovery in earnings and liquidity
with debt to EBITDA above 5.75 times or EBIT to interest under 2.5
times on a sustained basis.
1011778 B.C. Unlimited Liability Company, owns, operates and
franchises about 18,691 Burger King hamburger quick service
restaurants, 4,987 Tim Hortons restaurants and over 3,495 Popeyes
restaurants. Annual revenues are around $5 billion, although
systemwide sales are around $31 billion. 3G Restaurant Brands
Holdings LP, owns approximately 31% of the combined voting power
with respect to RBI and is affiliated with private investment firm
3G Capital Partners, Ltd.
The principal methodology used in these ratings was Restaurant
Industry published in January 2018.
120 YORK: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------
The U.S. Trustee for Region 3 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of 120 York, LLC.
About 120 York LLC
York, Pa.-based 120 York, LLC is a corporation engaged in owning
and managing real estate in Central Pennsylvania.
120 York filed a Chapter 11 petition (Bankr. M.D. Pa. Case No.
21-00945) on April 27, 2021. At the time of the filing, the Debtor
had 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 legal counsel.
ADMIRAL PROPERTY: July 8 Disclosure Statement Hearing Set
---------------------------------------------------------
On June 8, 2021, Admiral Property Group LLC, filed with the U.S.
Bankruptcy Court for the Eastern District of New York an Amended
Plan of Liquidation and Amended Disclosure Statement.
On June 10, 2021, Judge Nancy Hershey Lord ordered that:
* July 6, 2021, at 11:30 a.m. at the United States Bankruptcy
Court, 271-C Cadman Plaza East, Brooklyn, New York 11201 is the
telephonic hearing to consider the entry of an Order approving the
Disclosure Statement.
* July 1, 2021, is fixed as the last day to file any
objections to the Disclosure Statement.
A copy of the order dated June 10, 2021, is available at
https://bit.ly/3cH3Quc from PacerMonitor.com at no charge.
Attorneys for Admiral Property:
Fred S. Kantrow, Esq.
The Kantrow Law Group, PLLC
6901 Jericho Turnpike, Suite 230
Syosset, NY 11791
Phone: 516 703 3672
E-mail: fkantrow@thekantrowlawgroup.com
About Admiral Property Group
Admiral Property Group, LLC is a single asset real estate debtor
(as defined in 11 U.S.C. Section 101(51B)).
On July 31, 2020, an involuntary petition was filed against Admiral
Property Group by Metro Mechanical LLC, N&K Plumbing and Heating
Corp, and Borowide Electrical Contractors (Bankr. E.D.N.Y. Case No.
20-42826). The petitioning creditors are represented by Joel
Shafferman, Esq., at Shafferman & Feldman, LLP. Judge Nancy
Hershey Lord oversees the Debtor's Chapter 11 case. The Kantrow Law
Group, PLLC serves as the Debtor's legal counsel in its bankruptcy
case.
ADVANCED MEDIA: August 10 Plan Confirmation Hearing Set
-------------------------------------------------------
On June 3, 2021, the U.S. Bankruptcy Court for the Central District
of California conducted a hearing to consider the amended motion of
Debtor Advanced Media Networks, LLC to obtain approval of its
Chapter 11 Amended Disclosure Statement describing Amended Chapter
11 Plan of Reorganization.
On June 10, 2021, Judge Deborah J. Saltzman granted the motion and
the amended disclosure statement of the Debtor is approved, with
the following modifications:
* The Amended Disclosure Statement and amended plan are
interlineated to include the clarifications set forth in the
Comments of Debtor re its Amended Motion to Obtain Approval of its
Chapter 11 Amended Disclosure Statement Describing its Amended
Chapter 11 Plan of Reorganization;
* Aug. 10, 2021, at 11:30 a.m. is the hearing on confirmation
of the Debtor's amended chapter 11 plan.
* July 27, 2021, is fixed as the deadline for creditors and
equity security holders to return a ballot voting for or against
the Debtor's amended plan.
* July 27, 2021, is the deadline to file and serve written
opposition to the Debtor's amended plan.
* Aug. 3, 2021, is the deadline to file any memorandum of
points and authorities or other papers in support of confirmation
of the Debtor's amended plan, including any reply to any timely
filed and served objection.
A copy of the order dated June 10, 2021, is available at
https://bit.ly/3cJqX7f from PacerMonitor.com at no charge.
About Advanced Media Networks
Advanced Media Networks, LLC, provides commercial video
conferencing services and a proprietary mobile telecomputer network
for film and television services.
Advanced Media Networks sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Case No. 19-10846) on May 6,
2019. At the time of the filing, Debtor was estimated to have
assets of between $1 million and $10 million and liabilities of the
same range. Judge Deborah J. Saltzman oversees the case. Steinberg
Nutter & Brent, Law Corporation, is Debtor's legal counsel.
ADVANTAGE SPORTS: Seeks to Hires Sander & Company as Accountant
---------------------------------------------------------------
Advantage Sports, Inc. and Advantage Sports Complex, LLC seek
approval from the U.S. Bankruptcy Court for the Eastern District of
Texas to employ Sanders & Company, LLC as their accountant.
The fees charged by the firm are set at a level designed to fairly
compensate for its work.
The firm does not hold or represent any interest adverse to the
Debtors' estates, and is a "disinterested person" as that phrase is
defined in Sec. 101(14) of the Bankruptcy Code, according to court
filings.
The firm can be reached through:
Steve Sanders
Sanders & Company LLC
3710 Rawlins St # 1210
Dallas, TX 75219
Phone: +1 972-404-1636
About Advantage Sports
Advantage Sports, Inc. owns and operates a multipurpose athletic
facility located in Carrollton, Texas.
Advantage Sports and Advantage Sports Complex, LLC sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D.
Tex. Lead Case No. 20-40667) on March 2, 2020. John W. Sample,
manager, signed the petitions. At the time of filing, the Debtors
had between $10 million and $50 million in both assets and
liabilities.
Judge Brenda T. Rhoades oversees the cases.
Spector & Cox, PLLC and Sanders & Company, LLC serve as the
Debtors' legal counsel and accountant, respectively.
ADVAXIS INC: Incurs $5.1 Million Net Loss in Second Quarter
-----------------------------------------------------------
Advaxis, Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing a net loss of $5.11
million on $1.38 million of revenue for the three months ended
April 30, 2021, compared to a net loss of $6.32 million on $250,000
of revenue for the three months ended April 30, 2020.
For the six months ended April 30, 2021, the Company reported a net
loss of $9.08 million on $2.99 million of revenue compared to a net
loss of $14.18 million on $253,000 of revenue for the six months
ended April 30, 2020.
As of April 30, 2021, the Company had $55.77 million in total
assets, $8.22 million in total liabilities, and $47.55 million in
total stockholders' equity.
The Company stated, "Similar to other development stage
biotechnology companies, the Company's products that are being
developed have not generated significant revenue. As a result, the
Company has suffered recurring losses and requires significant cash
resources to execute its business plans. These losses are expected
to continue for the foreseeable future."
Research and development expenses for the second quarter of fiscal
year 2021 were $4.34 million, compared with $3.92 for the second
quarter of fiscal year 2020. The increase of $0.42 million was
primarily attributable to winding down some legacy studies and
losses on disposal of research-related property and equipment in
connection with the termination of the office lease at the
Company's former location.
General and administrative expenses for the three months ended
April 30, 2021 were at $3.35 million, compared to $2.65 million in
the same three-month period in fiscal 2020. The increase of $0.7
million primarily relates to increases in sub-license fees and
legal fees, amounts paid in settlement of shareholder demand
letters and losses on disposal of other property and equipment in
connection with the termination of the Company's office lease at
its former location.
As of April 30, 2021, the Company had approximately $48.1 million
in cash and cash equivalents. The Company believes this is
sufficient capital to fund its obligations, as they become due, in
the ordinary course of business into the 3rd fiscal quarter of
2023.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1100397/000149315221014308/form10-q.htm
About Advaxis Inc.
Advaxis, Inc. -- http://www.advaxis.com-- is a clinical-stage
biotechnology company focused on the development and
commercialization of proprietary Lm-based antigen delivery
products. These immunotherapies are based on a platform technology
that utilizes live attenuated Listeria monocytogenes (Lm)
bioengineered to secrete antigen/adjuvant fusion proteins. These
Lm-based strains are believed to be a significant advancement in
immunotherapy as they integrate multiple functions into a single
immunotherapy and are designed to access and direct antigen
presenting cells to stimulate anti-tumor T cell immunity, activate
the immune system with the equivalent of multiple adjuvants, and
simultaneously reduce tumor protection in the tumor
microenvironment to enable T cells to eliminate tumors.
Advaxis reported a net loss of $26.47 million for the year ended
Oct. 31, 2020, a net loss of $16.61 million for the year ended Oct.
31, 2019, and a net loss of $66.51 million for the year ended Oct.
31, 2018. As of Jan. 31, 2021, the Company had $45.95 million in
total assets, $8.37 million in total liabilities, and $37.57
million in total stockholders' equity.
AEMETIS INC: Signs $200M Deal With Murex for Low Carbon Biofuels
----------------------------------------------------------------
Aemetis, Inc. signed a biofuels offtake agreement with
international renewable fuels supplier Murex, LLC for an estimated
$200 million of low carbon biofuels to be delivered during 2021 to
2023.
Founded 30 years ago and based in Plano, Texas, Murex is a
renewable fuels terminal, marketing, logistics, and supply company
with operations and assets throughout North America. The terms of
the agreement provide that the fuel and the related Low Carbon Fuel
Standard and Renewable Fuel Standard Credits will be sold at a
fixed discount to the market price at the time of delivery.
"By deploying exciting new technologies to significantly reduce the
carbon intensity of traditional renewable fuels, Aemetis has
demonstrated its expertise in the management of complex projects to
meet the high standards required by California regulators and
customers," said Robert Wright, president of Murex, LLC. "Murex is
uniquely positioned to maximize the value of these low carbon fuels
through our extensive railcar and terminal network, including
access to markets beyond California as low carbon fuel standard
regulations are adopted in other states and countries."
"As we implement significant energy efficiency upgrades to our
Keyes, California biorefinery, Aemetis is excited to partner with
Murex, a world-class organization with deep expertise and global
reach in the renewable fuels sector," said Andy Foster, President
of Aemetis Advanced Fuels, a wholly-owned subsidiary of Aemetis,
Inc. "By converting our Keyes plant to utilize solar and other low
or below zero carbon intensity energy sources instead of high
carbon intensity petroleum natural gas, we will produce lower CI
renewable fuel and significantly reduce the carbon footprint of our
biorefinery. The solar microgrid with battery storage will help
power the Mitsubishi ZEBREX Membrane Dehydration System, a
mechanical vapor recompression system, and allow additional energy
efficiency upgrades," added Foster.
"Our goal is to eliminate the use of petroleum natural gas in our
plant as these upgrade projects are completed over the next 12
months," said Eric McAfee, Chairman and CEO of Aemetis. "Once our
Keyes plant is converted from utilizing petroleum natural gas to
renewable electricity, coupled with negative carbon intensity dairy
RNG and carbon sequestration, the plant may produce the lowest
carbon intensity ethanol in the world. The Murex team will play a
key role in our strategy to expand market reach and diversification
for our low carbon intensity ethanol," noted McAfee.
The Aemetis plant upgrades are supported by $16.7 million of grants
from the California Energy Commission and Pacific Gas & Electric
Company.
About Aemetis
Headquartered in Cupertino, California, Aemetis --
http://www.aemetis.com-- is an international renewable natural
gas, renewable fuels and byproducts company focused on the
acquisition, development and commercialization of innovative
technologies that replace traditional petroleum-based products.
The Company operates in two reportable geographic segments: "North
America" and "India."
Aemetis reported a net loss of $36.66 million for the year ended
Dec. 31, 2020, compared to a net loss of $39.48 million for the
year ended Dec. 31, 2019. As of March 31, 2021, the Company had
$143.73 million in total assets, $66.37 million in total current
liabilities, $215.73 million in total long term liabilities, and a
total stockholders' deficit of $138.37 million.
AFFILIATED FOODS: Bankruptcy Ends After 12 Years
------------------------------------------------
John Magsam of Arkansas Online reports that the bankruptcy case of
Little Rock-based wholesale food company Affiliated Foods Southwest
that began more than 12 years ago has closed, according to court
documents.
In early March, Richard Cox, chapter 7 trustee, submitted his final
account and distribution report to Judge Richard D. Taylor, which
showed $20.9 million in claims abandoned and $91.89 million in
claims discharged without payment.
The trustee distributed $12.91 million from the bankruptcy estate,
with $7.35 million going to creditors and $5.56 million for
administrative expenses, according to the documents. Of the claims
paid, $1.23 million were to secured creditors, $2.28 million went
to priority unsecured claims and $3.84 million went to general
unsecured claims, according to the report.
The company initially filed for Chapter 11 in an attempt to
reorganize its debts and then shifted to Chapter 7 to liquidate the
company's holdings. Court documents showed the bankruptcy case was
closed Wednesday.
In May of 2009, Affiliated Foods Southwest filed for bankruptcy
protection in U.S. Bankruptcy Court for the Eastern District of
Arkansas, Central Division, after more than 50 years in business.
The company stopped operations in July of that year and about 1,800
workers with the Affiliated Foods and its associated companies,
lost their jobs.
Affiliated Foods Southwest was a wholesale food distribution
company that provided products, services and technology for
independently owned grocery stores and chains in Arkansas, Texas,
Louisiana, Mississippi, Oklahoma and Tennessee.
The bankruptcy included $34 million held by more than 600 employees
or members of the cooperative, according to earlier reporting by
the Arkansas Democrat-Gazette. The investment plans, known as
certificates of indebtedness, represented more than half of the $62
million of the company's unsecured debt. The certificates were a
form of loan made to the company for operating capital.
A former chief executive officer of Affiliated Foods Southwest
served federal prison time for a check kiting scheme involving the
company as did the company's former chief financial officer.
About Affiliated Foods Southwest
Little Rock, Arkansas-based Affiliated Foods Southwest, Inc., and
its affiliates, including Shur-Valu Stamps, Inc., filed for Chapter
11 bankruptcy (Bankr. E.D. Ark. Case No. 09-13178) on May 5, 2009.
W. Michael Reif, Esq., at Dover Dixon Horne, represented the
Debtors in their restructuring efforts. The Debtors estimated
assets between $10 million and $50 million and debts between $100
million and $500 million.
Rather than proceed with a disclosure statement and plan of
reorganization, both Affiliated Foods and ShurValu engaged in an
orderly liquidation followed by conversion to Chapter 7 on August
13, 2009. M. Randy Rice became the Chapter 7 trustee in the
ShurValu matter. Mr. Rice, as the trustee in the ShurValu case,
later chose to put the wholly-owned subsidiary -- Supermarket
Investors, Inc. -- into a separate Chapter 7 on October 13, 2009.
The court thereafter appointed Mr. Rice as the trustee in the SII
proceeding.
Richard Cox was named the Chapter 7 bankruptcy trustee for
Affiliated Foods Southwest Inc.
ALEX AND ANI: June 18 Deadline Set for Panel Questionnaires
-----------------------------------------------------------
The United States Trustee is soliciting members for an unsecured
creditors committee in the bankruptcy case of Alex and Ani, LLC.
If a party wishes to be considered for membership on any official
committee that is appointed, it must complete a questionnaire
available at https://bit.ly/2TAO9Of and return it to
David.L.Buchbinder@usdoj.gov at the Office of the United States
Trustee so that it is received no later than 4:00 p.m., on June 18,
2021.
If the U.S. Trustee receives sufficient creditor interest in the
solicitation, it may schedule a meeting or telephone conference for
the purpose of forming a committee.
About Alex and Ani LLC
Founded in 2004 by Carolyn Rafaelian, Alex and Ani --
http://www.alexandani.com/-- has become a premier jewelry brand,
quickly gaining popularity because of the novel and customizable
nature of its signature expandable wire bracelet. Alex and Ani has
been headquartered in East Greenwich, Rhode Island since 2014.
Since opening its first retail store in Newport, Rhode Island in
2009, Alex and Ani has expanded to over 100 retail store locations
across the United States, Canada, and Puerto Rico.
Alex and Ani LLC and its affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 21-10918) on June 9, 2021. In its
petition, Alex and Ani listed assets and liabilities of $100
million to $500 million each.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Klehr Harrison Harvey Branzburg LLP as local bankruptcy
counsel; and Portage Point Partners, LLC, as financial advisors and
investment bankers. Kurtzman Carson Consultants LLC is the notice
and claims agent.
AMSTERDAM HOUSE: Case Summary & 30 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Amsterdam House Continuing Care Retirement Community, Inc.
300 E. Overlook
Port Washington, NY 11050
Business Description: The Debtor, d/b/a The Amsterdam at
Harborside, operates Nassau County's first
and only continuing care retirement
community licensed under Article 46 of the
New York Public Health Law, which provides
residents with independent living units,
enriched housing and memory support
services, comprehensive licensed skilled
nursing care, and related health, social,
and quality of life programs and services.
Chapter 11 Petition Date: June 14, 2021
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 21-71095
Judge: Hon. Louis A. Scarcella
Debtor's Counsel: Thomas R. Califano, Esq.
SIDLEY AUSTIN LLP
787 Seventh Ave
New York, NY 10019
Tel: (212) 839-5300
E-mail: tom.califano@sidley.com
Debtor's
Investment
Banker: RBC CAPITAL MARKETS, LLC
Debtor's
Claims &
Noticing
Agent: KURTZMAN CARSON CONSULTANTS LLC
Estimated Assets: $100 million to $500 million
Estimated Liabilities: $100 million to $500 million
The petition was signed by James Davis, president and chief
executive officer.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/J5SMNJQ/Amsterdam_House_Continuing_Care__nyebke-21-71095__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Resident #10026 Entrance Fee $1,364,632
Liability
2. Resident #10014 Entrace Fee $1,360,333
Liability
3. Resident #10003 Entrace Fee $1,285,200
Liability
4. Resident #10005 Entrance Fee $1,240,359
Liability
5. United States Small Business Paycheck $1,156,304
Administration Protection
409 3rd Street SW Program Loan
Washington, DC 20416
6. Resident #10017 Entrance Fee $1,133,481
Liability
7. Resident #10009 Entrance Fee $1,094,752
Liability
8. Resident #10015 Entrance Fee $1,075,612
Liability
9. Resident #10016 Entrance Fee $1,061,650
Liability
10. Resident #10021 Entrance Fee $1,055,237
Liability
11. Resident #10008 Pending Refund $1,048,728
to Former
Resident
12. Resident #10020 Entrance Fee $1,023,779
Liability
13. Resident #10019 Pending Refund $1,016,592
to Former
Resident
14. Resident #10023 Entrance Fee $1,015,987
Liability
15. Resident #10004 Entrance Fee $1,003,666
Liability
16. Resident #10007 Pending Refund $1,003,468
to Former
Resident
17. Resident #10012 Entrance Fee $988,631
Liability
18. Resident #10010 Entrance Fee $950,300
Liability
19. Resident #10027 Entrance Fee $941,615
Liability
20. Resident #10024 Pending Refund $938,669
to Former
Resident
21. Resident #10013 Entrance $918,355
Fee Liability
22. Resident #10028 Pending Refund $918,247
to Former
Resident
23. Resident #10018 Entrance $917,643
Fee Liability
24. Resident #10022 Entrance Fee $904,369
Liability
25. Resident #10000 Entrance Fee $902,116
Liability
26. Resident #10025 Entrance Fee $883,709
Liability
27. Resident #10002 Entrance Fee $883,709
Liability
28. Resident #10011 Entrance Fee $878,137
Liability
29. Resident #10006 Entrance Fee $869,567
Liability
30. Resident #10001 Entrance Fee $855,212
Liability
ANTECO PHARMA: U.S. Trustee Unable to Appoint Committee
-------------------------------------------------------
The U.S. Trustee for Region 11 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Anteco Pharma, LLC.
About Anteco Pharma
Anteco Pharma, LLC is a Waunakee, Wis.-based company specializing
in freeze drying and related processing of pharmaceutical
intermediates, medical devices, specialty food and nutritional
ingredients.
Anteco Pharma filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. W.D. Wis. Case No. 221-11012) on
May 7, 2021. Howard R. Teeter, authorized member, signed the
petition. At the time of the filing, the Debtor disclosed total
assets of up to $10 million and total liabilities of up to $1
million. Judge Catherine J. Furay oversees the case. Krekeler
Strother, S.C. serves as the Debtor's legal counsel.
ARMATA PHARMACEUTICALS: All 3 Proposals Passed at Annual Meeting
----------------------------------------------------------------
Armata Pharmaceuticals, Inc. held its annual meeting of
stockholders at its headquarters in Marina del Rey, California, at
which the stockholders:
(1) elected Jules Haimovitz, Odysseas D. Kostas, M.D., Robin C.
Kramer, Joseph M. Patti, Ph.D., Todd R. Patrick, Todd C.
Peterson, Ph.D., and Sarah J. Schlesinger, M.D. as directors
to serve for a one-year term expiring at the 2022 Annual
Meeting of Shareholders;
(2) approved, on an advisory, non-binding basis, the Company's
executive officer compensation; and
(3) ratified the appointment of Ernst & Young LLP as the
Company's
independent registered public accounting firm for the fiscal
year ending Dec. 31, 2021.
On June 7, 2021, the Company's board of directors elected Mr.
Haimovitz as the Company's new Chairman of the Board, replacing
Richard J. Bastiani, who served as the Chairman of the Board until
the Annual Meeting at which he did not stand for re-election as a
director of the Company.
Two of the nominees to the Company's board of directors, Mr.
Haimovitz and Dr. Kostas, were nominated by Innoviva, Inc. and
Innoviva Strategic Opportunities, LLC, pursuant to the terms of the
Amended and Restated Investor Rights Agreement, dated as of Jan.
26, 2021, by and among the Company and Innoviva, Inc.
In addition, pursuant to the Voting Agreement, dated as of Jan. 26,
2021, by and among the Company and Innoviva, Innoviva agreed not to
vote or take any action by written consent with respect to shares
of common stock held by Innoviva or any of its subsidiaries which
represent, in the aggregate, more than 49.5% of the total number of
shares of common stock issued and outstanding as of any given
record date for voting on the matters related to the election of
directors or removal of directors from the Company's board of
directors presented at any meeting of the our stockholders (or any
adjournment or postponement thereof) or for their action by written
consent. Accordingly, the Excess Shares were not voted by Innoviva
with respect to the election of directors at the 2021 Annual
Meeting.
About Armata Pharmaceuticals
Marina del Rey, CA-based Armata is a clinical-stage biotechnology
company focused on the development of pathogen-specific
bacteriophage therapeutics for the treatment of
antibiotic-resistant and difficult-to-treat bacterial infections
using its proprietary bacteriophage-based technology. Armata is
developing and advancing a broad pipeline of natural and synthetic
phage candidates, including clinical candidates for Pseudomonas
aeruginosa, Staphylococcus aureus, and other pathogens. In
addition, in collaboration with Merck, known as MSD outside of the
United States and Canada, Armata is developing proprietary
synthetic phage candidates to target an undisclosed infectious
disease agent. Armata is committed to advancing phage with drug
development expertise that spans bench to clinic including in-house
phage specific GMP manufacturing.
Armata reported a net loss of $22.18 million for the year ended
Dec. 31, 2020, compared to a net loss of $19.48 million for the
year ended Dec. 31, 2019. As of March 31, 2021, the Company had
$52.84 million in total assets, $18.83 million in total
liabilities, and $34.01 million in total stockholders' equity.
ARTERA SERVICES: Moody's Rates New $775MM Incremental Loan 'B3'
---------------------------------------------------------------
Moody's Investors Service has assigned a B3 rating to Artera
Services, LLC's proposed $775 million incremental first lien term
loan. The company plans to use the term loan proceeds to fund the
acquisition of Feeney Utility Services Group and K.R. Swerdfeger
("KRS").
Artera's B3 Corporate Family Rating, B3-PD Probability of Default
Rating, B3 senior secured first-lien revolver and term loan ratings
and the Caa2 rating on its senior secured second-lien term loan
remain unchanged by this incremental debt issuance. The ratings
outlook remains stable.
"Artera's higher debt leverage after the acquisition of Feeney and
KRS will be mitigated by an improvement in its business profile
with a larger customer base, broader geographic presence and market
share gains in the outsourced maintenance, repair and upgrade work
for natural gas distribution. Moody's expect the company to keep
credit metrics commensurate with the rating requirements over
time," says Jiming Zou, Moody's Vice President and lead analyst for
Artera.
Rating Assignment:
Artera Services, LLC
Incremental Senior Secured 1st Lien Term Loan, Assigned B3 (LGD4)
Adjustments:
Issuer: Artera Services, LLC
LGD Senior Secured 1st Lien Bank Credit Facility, Adjusted to
(LGD4) from (LGD3)
LGD Senior Secured 2nd Lien Bank Credit Facility, Adjusted to
(LGD6) from (LGD5)
RATINGS RATIONALE
The acquisition of Feeney and KRS will further expand Artera's
business scale, strengthen its market position in natural gas
pipeline's maintenance and repair projects in the northeastern US,
broaden its geographic reach into the West through Colorado and New
Mexico and generate cost savings with its legacy business. The
larger business scale and broader customer exposure will help lower
its exposure to large projects and reduce earnings volatility.
Similar to Artera's legacy businesses, Feeney and KRS draw the
majority of their revenues from maintenance, repair and upgrade
projects that are recurring in nature. The stronger business
profile helps mitigate the increase in Artera's adjusted debt
leverage to about 6 times on a pro-forma basis from low 5 times at
the end of 2020.
Artera's B3 CFR continues to reflect its high debt leverage,
expedited business expansions with execution risks and limited end
market diversity given it focuses on maintenance, repair and
upgrade services to gas and electric utilities. This work is
typically covered by master service agreements and blanket
contracts, but work order releases can fluctuate and exogenous
factors such as weather can delay project completion, leading to
periodic inefficiencies in labor and asset utilization and margin
compression. Business risks include project safety and service
quality, which will affect customer retention and operating
results, as evidenced in earnings decline in 2018 and 2019 due to
customer losses in the electric business, which was subsequently
restructured. The accelerated acquisitions under the ownership of
CD&R entail execution risks due to the volatile performance of
acquired companies and Artera's business realignment plans to meet
its growth and savings targets. Artera completed several sizable
acquisitions, including MVerge and Otis in 2020, and more than
doubled its revenues base in the past 15 months.
Artera's credit profile is supported by the favorable industry
fundamentals as utilities focus on replacing aging infrastructure
and outsourcing engineering and construction services to third
parties. The recurring maintenance, repair and upgrade services for
gas and electric distribution networks account for almost three
quarters of Artera's projects. Exposure to risky large or
fixed-price projects are about a quarter of its revenues. The
pandemic had a limited impact on Artera's 2020 operating and
financial performance, as its business remained largely operational
given its customer base and the recurring and nondiscretionary
nature of its services.
Artera's good liquidity profile is supported by total liquidity of
$710 million at the end of March 2021, including a cash balance of
$210 million and $500 million availability under the revolving
credit facility and accounts receivable securitization facility.
The stable rating outlook reflects that improved macroeconomic
conditions, recurring maintenance services and the expected
business synergies will support Artera's operating performance and
credit metrics for the next 12 to 18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Artera's ratings could be downgraded if its operating performance
remains weak or debt financed acquisitions or shareholder dividends
result in funds from operations (cash flow from operations before
working capital changes) being sustained below 10% of outstanding
debt and its leverage ratio remaining above 6.0x. A deterioration
in its liquidity profile could also result in a downgrade.
Artera's ratings could experience upward pressure if the company
maintains robust profit margins, generates funds from operations
(cash flow from operations before working capital changes) in
excess of 15% of outstanding debt, produces consistent free cash
flow, and sustains a leverage ratio below 5.0x.
Headquartered in Atlanta, Georgia, Artera Services, LLC is an
independent provider of repair, maintenance, replacement, and
installation services to the distribution and small transmission
segment of the utility industry. The Company operates primarily in
the East, South, Southwest, and Midwest regions of the United
States. Its customers are natural gas and electric utilities and
midstream operators. The company generated pro forma revenues of
about $2.7 billion in 2020. Clayton, Dublier & Rice ("CD&R")
acquired the majority ownership of the company in 2018.
The principal methodology used in this rating was Construction
Industry published in March 2017.
ARTERA SERVICES: S&P Affirms 'B-' Rating on First-Lien Term Loan
----------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on Artera
Services LLC, a U.S.-based gas and electric utility service
provider.
S&P said, "At the same time, we affirmed our 'B-' rating on the
company's total first-lien term debt, $260 revolving line of
credit, and $987 million senior secured notes. We revised the
recovery rating to '3' from '4', indicating our expectation of
meaningful (50%-70%; rounded estimate: 50%) recovery in the event
of a default. In addition, we affirmed our 'CCC' rating on the
company's $135 million second-lien term loan.
"We assume pro forma for the transaction, debt to EBITDA will
increase somewhat compared to our previous forecast. Pro forma for
the acquisition, we anticipate adjusted debt to EBITDA around 6.5x,
higher than our previous expectations, although improved from 2020
debt leverage levels. We expect operating performance will improve
driven by the addition of high margin maintenance, replacement, and
other nondiscretionary or generally recurring work from the target
companies. Mandates to maintain utility infrastructure in the U.S.
underpins 2021 demand. On a pro forma basis, regulated utility
customers account for 74% of revenue. We expect high margin
maintenance, repair, and upgrade (MRU) work and the full benefit of
recent acquisitions will maintain EBITDA margins in the mid- to
high-teens percent area over the next few years.
"We anticipate positive free operating cash flow (FOCF) improving
through 2022, driven by EBITDA margin expansion.Additionally, we
assume the company benefits from a variable cost structure, driven
by its direct labor workforce, which provides the ability to adjust
its cost structure based on customer demand. The company should be
able to reduce capital spending, if necessary, based on fleet
utilization and age, along with customer volumes. Overall, we
expect FOCF to debt will approach 5% in the next two years.
The rating on Artera reflects its position in the highly fragmented
and competitive utility services industry. Artera's recent and
proposed acquisitions expand the company's geographic footprint and
coverage network throughout the U.S. However, S&P views its
geographic reach as limited compared with larger global industry
peers, as its focus is on providing gas distribution, gas
transmission, and electric services in the U.S. Its revenues are
largely derived from a limited number of large public utilities
entities, although no single customer represents more than 5% of
revenue. Overall, it believes demand in the company's end markets
will remain strong, reflecting the need for safe and reliable
infrastructure of utilities in the U.S.
S&P said, "The stable outlook reflects our expectation that EBITDA
margins will improve pro forma for the transaction and that demand
for the company's MRU work will remain stable over the next 12
months. We expect debt to EBITDA around 6.5x in 2021 and positive
FOCF to debt.
"We could lower the ratings within the next 12 months if
weaker-than-expected operating performance results in sustained
negative FOCF or strained liquidity. This could occur if
profitability declines, leading to substantial negative cash flow.
Alternatively, we could lower the ratings if we come to believe
that Artera depends on favorable business, financial, and economic
conditions to meet its financial commitments. We could also do so
if we view the company's financial commitments as unsustainable in
the long term, even though it may not face a credit or payment
crisis within the next 12 months.
"We could raise our rating on Artera during the next 12 months if
the company performs above expectations such that its debt leverage
declines below 6x and the company maintains FOCF to total adjusted
debt approaching 5% on a sustained basis. We believe this could
occur if the company maintains improved EBITDA margins."
ASCENT RESOURCES: Moody's Rates New $350MM Unsecured Notes 'Caa1'
-----------------------------------------------------------------
Moody's Investors Service assigned a Caa1 rating to Ascent
Resources Utica Holdings, LLC's proposed $350 million senior
unsecured notes. Ascent's other ratings including its B2 Corporate
Family Rating and positive outlook are unchanged.
The proceeds from the proposed notes offering will be used to
partially repay the outstanding borrowings under the company's
borrowing base revolving credit facility.
Assignments:
Issuer: Ascent Resources Utica Holdings, LLC
Senior Unsecured Notes, Assigned Caa1 (LGD5)
RATINGS RATIONALE
Ascent's debt load is unchanged due to this transaction and hence
the transaction is deemed credit neutral; however, this will
increase Ascent's long-term debt. The proposed unsecured notes are
rated Caa1 consistent with the existing notes rating of Caa1, two
notches below the CFR, owing to the priority claim of the revolver
and the second lien term loan to the company's assets ahead of the
notes. Ascent's second lien term loan is rated B3, one notch below
the CFR reflecting the significant size and priority ranking of the
company's $1.85 billion borrowing base senior secured revolving
credit facility due April 2024 ($888 million outstanding as of
March 31, 2021).
Ascent's B2 CFR reflects the company's high debt burden which makes
its credit profile vulnerable to prolonged periods of weak natural
gas prices. The company's natural gas weighted production profile
yields lower cash margins than an oil-weighted production base on
an equivalent unit of production, notwithstanding the company's
good capital efficiency. Ascent is also constrained by its single
basin focus in the Utica Shale and significant firm transportation
(FT) commitments that, while providing flow assurance, could prove
burdensome if the company's production drops. Ascent's production
meets its FT requirements and will continue to meet them at current
production levels.
Ascent benefits from a significant reserves base in the highly
productive, low-cost Utica Shale and a comprehensive hedging
program that should provide meaningful protection to debt service
and its drilling program through 2022. The company increased its
commodity hedge position, taking advantage of the recovery in
natural gas prices, which provides good visibility to company's
cash flow through 2021 and to some extent through 2022 as well.
Ascent demonstrates competitive metrics and capital efficiency in
comparison to its Appalachian peers.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ascent's ratings could be upgraded if the company achieves
substantial debt reduction improving its ability to maintain
production and credit metrics through periods of weaker gas prices,
and simplifies its capital structure. The company must generate
significant free cash flow and sustain its retained cash flow (RCF)
to debt ratio above 30%.
Ascent's ratings could be downgraded if the company is unable to
achieve consistent free cash flow generation and debt reduction or
if natural gas fundamentals deteriorate significantly. Ratings
could be downgraded if its RCF/debt ratio falls below 20%. A
weakening of liquidity could also pressure the ratings.
The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.
Based in Oklahoma City, Oklahoma, Ascent Resources Utica Holdings,
LLC is a private independent E&P company with operations in the
Utica Shale in Eastern Ohio.
B-LINE CARRIERS: Regions Bank Seeks to Bar Use of Cash Collateral
-----------------------------------------------------------------
Regions Bank, N.A. asked the Bankruptcy Court to prohibit B-Line
Carriers, Inc. from using cash collateral.
Noel R. Boeke, Esq., at Holland & Knight LLP, counsel for Regions
Bank, related that pursuant to the Court's April 30, 2021 order,
the Debtor is required to pay Regions Bank $10,000 on May 22 as
adequate protection. The Debtor requested to make the payment on
May 29. Regions Bank said the Debtor still has not paid the
adequate protection due to the Bank for the month of May 2021, and
has been consistently late in making previous payments to the
Bank.
Accordingly, Regions Bank asked the Court to:
* prohibit the Debtor from using cash collateral;
* instruct the Debtor to segregate Regions Bank's cash
collateral;
* grant Regions Bank adequate protection, including liens on the
assets of the Debtor that do not currently constitute Regions
Bank's collateral.
A copy of the motion is available for free at
https://bit.ly/3vil4V2 from PacerMonitor.com.
About B-Line Carriers
B-Line Carriers, Inc., a full-service petroleum transportation
company, filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 20-06034) on
August 7, 2020. The petition was signed by Jason L. Baldree,
president. At the time of filing, the Debtor estimated $1 million
to $10 million in both assets and liabilities.
Judge Caryl E. Delano oversees the case.
Amy Denton Harris, Esq., at Stichter, Riedel, Blain & Postler,
P.A., is serving as the Debtor's counsel. On Jan. 5, 2021, the
Court appointed Moecker Auctions, Inc. as Auctioneer.
Regions Bank N.A. is represented by:
Noel R. Boeke, Esq.
Holland & Knight LLP
100 North Tampa Street, Suite 4100
Tampa, FL 33602
Telephone: (813) 227-8500
Facsimile: (813) 229-0134
Email: noel.boeke@hklaw.com
BALL METALPACK: S&P Alters Outlook to Stable, Affirms 'B-' ICR
--------------------------------------------------------------
S&P Global Ratings revised its outlook on food- and aerosol-focused
metal beverage packaging company Ball Metalpack Finco LLC (BMP) to
stable from negative and affirmed its 'B-' issuer credit rating.
S&P said, "At the same time, we affirmed our 'B-' issue-level
rating on the company's senior secured first-lien term loan. The
'3' recovery rating is unchanged, indicating our expectation for
meaningful (50%-70%; rounded estimate: 50%) recovery of principal
in the event of a payment default.
"We also affirmed our 'CCC' issue-level rating on the company's
senior secured second-lien term loan. The '6' recovery rating is
unchanged, indicating our expectation for negligible (0%-10%;
rounded estimate: 0%) recovery of principal in the event of a
payment default."
The company remains highly leveraged but has made significant
progress in strengthening credit measures.Through solid earnings
growth and the absence of previously incurred costs, Ball Metalpack
has reduced its adjusted debt to EBITDA ratio to 8.7x as of March
31, 2021 from 12.7x in the same quarter the previous year. The
company's adjusted debt balance is also about $33 million lower
than it was because borrowings under the company's asset-based
lending (ABL) revolving credit facility were down to just over $100
million from $139 million in March 2020. Annualizing the company's
March 2021 quarter's earnings performance would imply debt leverage
of 7.2x by year-end. The company remains highly leveraged, but
given continued solid demand for its products, its ability to pass
through high raw material costs, and good operational execution,
S&P sees the company being able to maintain its leverage within the
6.5x-7.5x range.
Volumes have been healthy, but may slow as the year progresses.The
company has enjoyed very healthy revenue growth through the
pandemic, with quarterly sales up 20%, 11%, and 37% in each of the
quarters ended June, September, and December, respectively. Revenue
in the quarter ended March 2021 was up 16%. Much of this growth has
come from the company's ability to secure raw materials and
increase its market share, yielding additional volumes. In the most
recent quarter, the company experienced 20% volume growth, with
food can volumes up 4% and aerosol can volumes up 16%. In
comparison, the company estimates that the overall industry's
volumes in those segments were up 9% and 2%, respectively. S&P
doesn't believe the company's recent high-pace of growth is
sustainable and that its sales growth will slow (particularly in
aerosol) toward the back half of the year. However, the drop-off in
organic sales will be partially offset by certain new production
lines being fully commercialized by the third quarter, and we
anticipate the company posting revenue growth of 8% in 2021.
Free cash flow has turned positive.Trailing free cash flow was $14
million as of March 31, 2021, up from negative $63 million at the
end of the previous year's first quarter. The company saw more
meaningful levels of cash generation in June and December.
First-quarter cash generation is seasonally soft, and was negative
$14 million this year, but that represents a roughly $12 million
improvement from a year ago. As the company winds down capital
spending on its production lines, S&P sees capital spending
dropping to roughly $30 million this year and $15 million in 2022.
This would be a significant reduction from the roughly $50 million
spent in 2020 and would spur continued--and more meaningful--free
cash flow generation.
Liquidity is likely to remain adequate despite return of capital to
shareholders.The company's owners (financial sponsor Platinum
Equity owns 51% of the voting shares and Ball Corp. owns 49%)
contributed $30 million of additional equity in early 2020 to
support working capital needs, and we anticipate Ball Metalpack
returning capital to shareholders this year. However, despite the
anticipated repayment of the equity injection (roughly $24 million
of which to occur in the fourth quarter), S&P sees the company's
liquidity remaining adequate. The company's $11 million of cash as
of March 31, 2021, $61 million of availability on its ABL, and Fund
from operations (FFO) should be sufficient to fund its liquidity
needs.
The stable outlook reflects S&P's view that Ball Metalpack's
operating performance and financial policies will allow it to keep
its adjusted debt leverage under 7.5x.
S&P could raise its ratings on Ball Metalpack over the next 12
months if:
-- The conditions in its end markets were strong while the company
held or strengthened its market share and saw successful
operational execution; and
-- Its financial policies were such that we expected its adjusted
debt leverage to ease to below 6.5x and remain there.
S&P could lower its ratings on Ball Metalpack over the next 12
months if:
-- Its operating results unexpectedly weakened to the point that
the capital structure became unsustainable;
-- Its liquidity became constrained due to a cash flow deficit;
or
-- S&P believed there were increased risk for a covenant breach on
the ABL's springing fixed-charge covenant.
BEAZER HOMES: S&P Upgrades ICR to 'B', Outlook Positive
-------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.
homebuilder Beazer Homes USA Inc. to 'B' from 'B-' and S&P also
raised its issue-level rating on the company's debt by one notch to
'B'.
The outlook is positive, an indication that S&P could raise the
rating to 'B+' if debt to EBITDA fell sustainably below 4x over the
next 12 months, amid profit improvements steadying at a slower pace
and debt trending only modestly higher.
Beazer's strengthening profit trends have thus far required only
modest incremental investment. S&P's forecast for EBITDA margin
exceeding 11% in fiscal 2021 (September) suggests more than a
200-basis-point (bp) improvement from last year. Yet, thus far,
higher profits have resulted from comparatively modest spending on
land. Indeed, despite a more than 20% decline in communities in the
past 12-18 months, and relatively unchanged inventory levels,
EBITDA is 30%-40% higher over these same time periods.
Recent expansion implies manageable increases in the size of its
balance sheet. S&P said, "We do think community counts will begin
to rise to start the spring selling season in early 2022, as
renewed land and development outlays meet solid demand while
adjusting to past spending shortfalls. Still, we anticipate the
renewed outlays will result in free cash flow (discretionary cash
flow) deficits of $100 million-$200 million in fiscals 2021 and
2022. Even as we forecast the company to boost community counts to
satisfy strong home-buying demand, we expect minimal draws on its
$250 million revolver and that balance-sheet cash will stay above
$100 million."
Beazer's increasingly conservative management team appears
sensitive to a cycle turn. The company has shown the ability to
pull back on land acquisition during relatively recent periods of
uncertainty. Indeed, the company curtailed land acquisition in late
2018--amid a spike in mortgage rates--and during spring 2020--amid
the COVID-19 pandemic. Although S&P does not forecast any material
declines in broader demand, it thinks the company is intent on
maintaining its improved credit profile throughout the housing
cycle.
S&P said, "The positive outlook reflects our view that Beazer will
maintain debt to EBITDA at just over 4x and that debt to capital
will trend below 60% over the coming 12 months. We expect inventory
spending that's required to meet firm ongoing demand will be funded
via operating cash flows (OCF) approaching $100 million and
existing cash balances of more than $350 million.
"We could raise our rating on Beazer if debt to EBITDA were to
sustainably decline into the 3x-4x range. The mostly likely way
this could be achieved is for debt to fall to about $1 billion and
for EBITDA to remain in the $250 million-$300 million range that we
forecast.
"We could revise the outlook to stable if debt to EBITDA were to
move toward 5x over the next year. For this to occur, the company
would have to either undergo an unexpected decline in profits or
undertake a share repurchase or acquisition requiring more than
$100 million in new borrowings."
BRICK HOUSE: Bid to Reject Vesna REPC Denied
--------------------------------------------
Brick House Properties, LLC cannot reject a real estate purcahse
contract with Vesna Capital, LLC, because the REPC is not an
executory contract that can be rejected under 11 U.S.C. Section
365, Utah Bankruptcy Judge Kevin R. Anderson has ruled.
The Debtor is an LLC, and its sole member is Emily Aune. The Debtor
is the titled owner of approximately 3.25 acres of desirable real
property located in the growing community of Riverton, Utah -- a
suburb of Salt Lake City. The Farm Property consists of a historic
farmhouse, a barn, a building used for a Montessori School, and
about 1.4 acres of pastureland. The Farm Property is subject to a
trust deed in favor of Zions Bank in the original amount of $1.181
million and with a balance of $784,098 as of the petition date.
Pursuant to an "Evaluation Report" prepared for Zions Bank, the
Farm Property had a value of $1.15 million as of March 2017. An
updated Evaluation Report lists the Farm Property with a value of
$1.59 million as of December 2020,11 which is an increase of
$440,000. Based on the updated value, less the Zions Bank and
property tax claims, the Court estimates for purposes of this
motion that the Farm Property has equity of approximately
$788,500.
On August 3, 2016, the Debtor and Vesna entered into the REPC to
sell 1.005 acres of the pastureland for $250,000. Vesna intended to
subdivide the land into two residential building lots. Addendum
No. 1 to the REPC provides that the deadline to close the sale
"shall be 10 days after receiving Riverton City Approval of the
Subdivision and Recordation of the Subdivided property." The REPC
also contains a provision giving the purchaser the right to waive
clear title as to Zions Bank's lien, and Vesna testified that it is
willing to close on the sale even if Zions Bank does not release
its lien on the Lots.
Ms. Aune, as the Debtor's principal, asserts that she did not fully
understand or realize the consequence of some of the terms of the
REPC (e.g., that it would take years for Vesna to obtain
subdivision approval for the Lots or that Vesna would use a related
entity to provide title services). However, Ms. Aune signed the
contract and its addendums on behalf of the Debtor, and there was
no evidence of coercion or misrepresentation. The Debtor also
asserts that Vesna has not paid the costs to run a gas line to the
Montessori school; however, the addendum provides no deadline for
when that is to occur, and there was no evidence that Vesna has
refused to pay these costs. The Debtor also asserts that Vesna has
failed to pay for utility hook-ups to Farm Property buildings;
however, the REPC states that it is "in [Vesna's] discretion to
complete [this] work within 12 mos of settlement."
Upon execution of the REPC, Vesna immediately moved forward with
obtaining Riverton City's approval of its proposed subdivision, but
disputes arose between the parties. Ultimately, Vesna commenced an
action in the Third Judicial District Court for Salt Lake County,
State of Utah, Case No. 180906834 asserting claims for breach of
the REPC, breach of the implied covenant of good faith and fair
dealing, injunctive relief, and unjust enrichment. As to the claim
for breach of contract, Vesna requested both specific performance
and damages. Vesna filed a motion for summary judgment. The Debtor
responded with a motion for judgment on the pleadings and a motion
to amend its answer to assert the REPC was void due to mistake or
illegality -- specifically, that it violated Riverton City's
building code.
The State Court entered its decision on October 11, 2019, finding
that the REPC was valid, that Vesna had fully performed to the
extent it could, and that the Debtor had breached the REPC by
interfering with Vesna's ability to obtain approval of its
subdivision. The State Court also denied the Debtor's request to
void the REPC because any violation of Riverton City's code could
be resolved through a variance. As a result, the State Court
ordered specific performance, but it was limited to the Debtor
obtaining a variance from Riverton City or giving a power of
attorney to Vesna to obtain the variance required for approval of
the subdivision.
As a result of the Specific Performance Order, the parties moved
forward with efforts to resolve the variance issue involving the
width of driveway access to the Farm Property. But Vesna alleges
the Debtor was uncooperative in obtaining approval of the
subdivision. After some haggling with Riverton City, the variance
issue was resolved in early 2020. However, when the COVID pandemic
began, it was difficult, and sometimes impossible, for Vesna to
move forward with obtaining the approvals and holographic
signatures required for the subdivision plat. Despite these
challenges, Vesna was able to secure all but one of the required
signatures for plat approval before the Debtor filed for bankruptcy
on October 21, 2020.
Since execution of the REPC, Vesna has expended time and resources
seeking approval of its subdivision and to close on the Lots.
Specifically, Vesna has $250,000 set aside to pay the purchase
price; it has bonded at least $80,000 with the sewer district; and
it has incurred thousands in attorneys' fees, payroll, and
engineering and plat drawing costs. With all the time and resources
already devoted to obtaining approval of the subdivision Lots,
Vesna testified that it could close on the sale within 60 days --
so long as prior city approvals had not lapsed due to the delay
from the Debtor's bankruptcy filing.
Due to the COVID pandemic in 2020, the Montessori school
experienced a 50%-60% decline in enrollment that had a negative
impact on the Debtor's cash flow. While the Debtor was current on
its mortgage payments as of the petition date, it was in default
under the mortgage in that its EBITDA (earnings before interest,
taxes, depreciation, and amortization) had fallen below the
required level.
The filed and scheduled unsecured claims in this case total
$286,930.65. However, 94% (or $269,620) of the unsecured claims
are insider claims of Ms. Aune and her husband. Excluding these
insider claims, the pool of claims in this case consists of the
following: (1) non-priority unsecured claims of $17,310; (2)
property taxes of $17,320; and (3) the Zions Bank mortgage claim of
$784,098.
A copy of the Court's June 11, 2021 Memorandum Decision is
available at:
https://www.leagle.com/decision/inbco20210614675
About Brick House Properties, LLC
Brick House Properties, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. D. Utah Case No. 20-26250) on Oct. 21, 2020, estimating
under $1 million in both assets and liabilities.
Brick House Properties owns two parcels of real property in
Riverton, Utah. It leases portions of the property to four related
persons and entities: (i) Our Journey School LLC (the
"Pre-Elementary School"); (ii) Our Journey, Inc. (the "Elementary
School"); (iii) Hidden Valais Ranch LLC (the "Farm"); and (iv)
Emily and Josh Aune.
Emily Aune is the sole member of the Debtor and is also the sole
member and owner of the Farm. She is a 90% owner in the
Pre-Elementary School. The Elementary School is a 501(3)(c)
non-profit and is managed by a board of which Emily and Josh are
members.
Judge Kevin Anderson oversees the case. The Debtor is represented
by Cohne Kinghorn, P.C. as counsel.
BRIDGEVIEW VILLAGE: Fitch Affirms 'BB+' Issuer Default Rating
-------------------------------------------------------------
Fitch Ratings has affirmed the rating on the following Bridgeview
Finance Corporation, IL (the corporation) bonds at 'BBB+':
-- $27.2 million sales tax securitized bonds series 2017A;
-- $20.3 million sales tax securitized bonds series 2017B.
In addition, Fitch has affirmed the following Village of
Bridgeview, IL (the village) General Obligations (GO) at 'BB+':
-- $24 million GO bonds series 2013A;
-- $27.5 million GO refunding bonds series 2014A;
-- Issuer Default Rating (IDR).
The Rating Outlook is Stable.
SECURITY
The GO bonds are a general obligation of the village, payable from
an ad valorem tax on all taxable property without limitation as to
rate or amount.
ANALYTICAL CONCLUSION
The 'BB+' rating reflects the village's very high long-term
liability burden, expectations for stagnant revenue growth, limited
expenditure flexibility, and adequate gap-closing capacity. The
village has a high degree of independent legal ability to raise
operating revenues due to its home rule status. The village's
reserves have increased with non-recurring revenue sources, but
financial operations continue to be structurally imbalanced. Fitch
considers the village's tax base concentration to be an asymmetric
risk.
DEDICATED TAX ANALYTICAL CONCLUSION
The 'BBB+' rating on the corporation' sales tax securitized bonds
is based on a dedicated tax bond analysis, a bond structure
involving a perfected first lien security interest in the sales tax
revenues, and a legal structure that meets Fitch's criteria for
rating the bonds as a true sale of assets. The structural features
of the bonds allow the rating to be up to six notches above the
village's IDR. The rating reflects expectations for stagnant
revenue growth, strong resilience to economic declines, and a
highly concentrated revenue base, which Fitch considers to be an
asymmetric risk.
ECONOMIC RESOURCE BASE
Bridgeview is located 13 miles southwest of downtown Chicago and
has an estimated population of around 16,000. Residential
properties make up less than half of the tax base.
KEY RATING DRIVERS
Revenue Framework: 'a'
Fitch expects that general fund revenue growth will be below the
rate of inflation. The village has ample independent legal ability
to increase revenues as a home rule municipality.
Expenditure Framework: 'bbb'
The natural pace of expenditure growth is expected to be above that
of revenue growth, and the village has limited ability to adjust
expenditures due to its high carrying costs.
Long-Term Liability Burden: 'bbb'
The village's long-term liability burden, including the net pension
liability and overall debt, is high relative to the resource base.
Operating Performance: 'bbb'
Fitch believes that the village has adequate gap-closing capacity
and that operations could become stressed in a downturn. The
village has made budget management decisions in the past that have
increased fixed carrying costs and the long-term liability burden,
including issuing GO bonds for construction of the SeatGeek
Stadium, which was home to the Chicago Fire of Major League Soccer
until 2019.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
For the IDR and GO bonds:
-- Continued trajectory of declines in the very high long-term
liability burden;
-- Improvements in expenditure flexibility due to a reduction in
fixed carrying costs;
-- Maintenance of improved reserves generated through not
recurring sources through the economic cycle.
For the finance corporation bonds:
-- Improvement in debt service coverage by sales tax revenues
that leads to a significantly stronger assessment of
resilience to revenue declines.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
For the IDR and GO bonds:
-- Sustained declines in revenues that weakened Fitch's
assessment of growth prospects for revenues;
-- Inability to continue to make progress towards structurally
balanced budgets that leads to erosion of the reserve levels
to a level that no longer supports Fitch's current financial
resilience assessment.
For the finance corporation bonds:
-- Large and sustained sales tax revenue declines, beyond the
range of Fitch's expectations.
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.
CURRENT DEVELOPMENTS
The Fire terminated its lease to play at the stadium in 2019 after
13 years. This left the village with around $250 million in debt
remaining including the stadium bonds and $60 million in lease
termination payments through 2037. The 2019 upfront payment of $10
million provided the village with a large cushion against potential
revenue declines as well as some breathing room to gradually
increase its property tax levy and reduce expenditures as it
manages towards structural budgetary balance. Management has made
strides towards this, by increasing the levy by $500,000 per year
in both 2020 and 2021 and reducing expenditures by around $900,000
annually over that time.
In 2020, the village saw very small revenue declines, with sales
tax declining by around 1.5% (the village receives the residual
amount after the corporation pays debt service). Management
estimates that 2020 finished with total reserves of $17.1 million
(69% of spending), $4 million of which is to be used for capital
expenditures on the stadium in 2021 as per the agreement with the
Chicago Fire. Operations were supported by $2 million of
non-recurring land sale revenue in addition to the Fire payment.
In 2021, the village has budgeted another land sale of $800,000 to
support operations. The village anticipates receiving almost $2
million in ARP funds and is waiting for guidance on potential uses
of those funds. Management also budgeted the receipt of the annual
$3.6 million payment from the Fire and $6.7 million in residual
from the corporation. The budget anticipates finishing the year
with reserves of $12 million (around 50% of expenditures) after the
use of the $4 million for stadium capital expenditures.
CREDIT PROFILE
Under the agreement between the village and the Fire, the village
received $10 million upfront in 2019 and will receive another $3.6
million per year in 2020 through calendar 2033, $2.6 million in
calendar 2034, and annual installments of $558,823 in 2035-2037.
The Fire has also paid the village $5 million for construction and
maintenance of stadium facilities ($1 million in 2019 and $4
million in 2020) and will guarantee half of the $7.5 million naming
rights revenue should the naming rights agreement be terminated by
SeatGeek.
Assuming the team is able to perform under the agreement, this
infusion of revenue may allow the village to delay future tax levy
increases to replace sales tax revenues diverted for the
corporation's debt service on the stadium, but a structural
imbalance in future years remains. In the best-case scenario, the
village will still likely have to generate additional revenue in
the medium term to resolve that budgetary gap due to ascending debt
service payments and increased pension contributions.
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.
BROOKLYN IMMUNOTHERAPEUTICS: Signs LOI to Acquire Novellus
----------------------------------------------------------
Brooklyn Immunotherapeutics, Inc. had entered into a non-binding
letter of intent to acquire Novellus Therapeutics Limited, a
privately held company that is based in Cambridge, Massachusetts,
that develops next-generation engineered mesenchymal stem cell
therapies using patented mRNA cell reprogramming and gene editing
technologies licensed from Factor Bioscience Limited.
The letter of intent, which the Company entered into with Novellus
on June 13, 2021, proposes that the Company would acquire all of
the outstanding equity of Novellus or its parent entity in exchange
for consideration valued at $125.0 million, of which $17.4 million
would be paid in cash and $107.6 million would be paid by issuance
of shares of common stock. In the letter of intent, the Company
and Novellus expressed their intent to seek to close the
transaction by July 15, 2021.
The terms of the letter of intent with respect to the proposed
transaction -- including the parties' obligations to proceed with
the transaction, the structure and timing of the transaction, and
the consideration we would pay in the transaction -- are not
binding upon the parties. Either party may determine not to
proceed with the transaction at any time in its discretion. The
completion of the transaction is subject to a number of conditions,
including completion of mutually satisfactory due diligence,
execution of a definitive agreement and satisfaction of the
conditions contained therein, and receipt of all required
corporate, regulatory and other third-party approvals. No
assurances can be made that the Company will successfully negotiate
and enter into a definitive agreement or that the proposed
transaction will be closed on the terms or timeframe contemplated
by the letter of intent, or at all.
The Company's wholly owned subsidiary Brooklyn ImmunoTherapeutics
LLC is party to an exclusive license agreement dated April 26, 2021
with Factor Bioscience Limited and Novellus Therapeutics Limited,
under which Brooklyn ImmunoTherapeutics LLC acquired an exclusive
worldwide license to develop and commercialize certain cell-based
therapies to treat cancer and rare blood disorders, including
sickle cell disease, based on patented technology and know-how.
About Brooklyn ImmunoTherapeutics
Brooklyn (formerly NTN Buzztime, Inc.) is focused on exploring the
role that cytokine-based therapy can have in treating patients with
cancer, both as a single agent and in combination with other
anti-cancer therapies. The company is also exploring opportunities
to advance therapies using leading edge gene editing/cell therapy
technology through its option agreement with Factor
Bioscience/Novellus. Brooklyn's most advanced program is studying
the safety and efficacy of IRX-2 in patients with head and neck
cancer. In a Phase 2A clinical trial in head and neck cancer, IRX-2
demonstrated an overall survival benefit. Additional studies are
either underway or planned in other solid tumor cancer
indications.
NTN Buzztime reported a net loss of $4.41 million for the year
ended Dec. 31, 2020, compared to a net loss of $2.05 million for
the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had
$3.74 million in total assets, $2.89 million in total liabilities,
and $851,000 in total shareholders' equity.
San Diego, California-based Baker Tilly US, LLP, the Company's
auditor since 2013, issued a "going concern" qualification in its
report dated March 11, 2021, citing that the Company incurred a
significant net loss for the year ended Dec. 31, 2020 and as of
Dec. 31, 2020 had a negative working capital balance, and does not
expect to have sufficient cash or working capital resources to fund
operations for the twelve-month period subsequent to the issuance
date of these financial statements. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
BYRD FAMILY: Sale of Lebanon Property to Tennessee Donuts Approved
------------------------------------------------------------------
Judge Randal S. Mashburn of the U.S. Bankruptcy Court for the
Middle District of Tennessee authorized Byrd Family Properties'
sale of the real property at 350 Hwy 109 N., in Lebanon, Tennessee,
to Tennessee Donuts Realty, LLC, free and clear of liens, claims,
and encumbrances.
The Debtor will use the proceeds from the sale of the Property to
pay at closing (i) the lien of Liberty State Bank; (ii) any other
claims that constitute liens on the Property; and (iii) allowed
commissions to the Brokers.
Notwithstanding Bankruptcy Rule 6004(h), and as specifically
requested in the Motion, the Order will take effect immediately
upon entry.
The Court further finds that the proposed method of conducting the
sale is reasonable, appropriate, and designed to ensure fairness.
Therefore, the sale is entitled to the protections afforded by 11
U.S.C. Section 363(m).
About Byrd Family Properties
Based in Franklin, Tenn., Byrd Family Properties sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Tenn. Case
No.
20-03017) on July 19, 2020, listing under $1 million in both
assets
and liabilities. Judge Randal S. Mashburn oversees the case.
Denis Graham (Gray) Waldron, Esq., at Dunham Hildebrand, PLLC,
represents Debtor as legal counsel. Timothy Stone is the
Subchapter V trustee in Debtor's bankruptcy case.
CAMELOT UK: S&P Assigns 'B' Rating on New $1BB Sr. Secured Notes
----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '3'
recovery rating to Camelot UK Holdco Ltd.'s (doing business as
Clarivate) proposed $1 billion senior secured notes due 2028.
At the same time, S&P assigned its 'CCC+' issue-level rating and
'6' recovery rating to the company's proposed $1 billion senior
unsecured notes due 2029.
Clarivate plans to use the $2 billion of proceeds from these new
notes to partially finance its proposed $5.3 billion acquisition of
ProQuest LLC. The company will also fund the transaction with its
common shares, a new primary equity offering, and new mandatory
convertible preferred shares.
S&P believes the addition of this unsecured debt to Clarivate's
capital structure would be incrementally beneficial for its secured
lenders in a hypothetical default scenario, which lead it to
forecast meaningful (50%-70%; rounded estimate: 60%) recovery for
the secured debt.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P's simulated default scenario assumes a payment default
occurring in 2024 due to a confluence of factors, including
financial strain from high leverage, increased price competition,
or product innovation from existing or new competitors that lowers
its renewal rates; a data integrity failure that hurts the
company's brand and reputation; or a weaker operating performance
due to operational missteps.
-- S&P believes Clarivate's lenders would pursue a reorganization
rather than a liquidation in a hypothetical default due to its
curated proprietary databases, established customer relationships,
and high proportion of subscription-based revenue.
-- Pro forma for the proposed transactions, Clarivate's pari passu
senior secured debt comprises a $250 million revolving credit
facility due in 2024, a $1.3 billion term loan B due in 2026, a
$1.6 billion incremental term loan B due in 2026, $700 million of
notes due in 2026, and $1.0 billion of notes due 2028. Its
unsecured debt comprises $1.0 billion of notes due 2029.
Camelot Finance S.A. and the U.S. borrowers--subsidiaries of
Clarivate--are the borrowers of the senior secured revolver, term
loans, and notes due 2026. Clarivate Science Holding Corp., a
subsidiary of Clarivate, is the issuer of the secured notes due
2028 and the unsecured notes due 2029. The secured debt is secured
on a first-priority basis by the borrowers' and guarantors' capital
stock and tangible and intangible assets. We estimate that the
guarantor subsidiaries account for roughly 80% of the company's
EBITDA in our analysis. Our analysis assumes any bankruptcy
proceedings would take place in the U.S. and not include, or be
influenced by, foreign jurisdictions or regimes.
Other default assumptions include an 85% draw on the revolving
credit facility, LIBOR is 2.5%, and all debt amounts include six
months of prepetition interest.
Simulated default assumptions
-- Year of default: 2024
-- EBITDA at emergence: About $495 million
-- Implied enterprise value multiple: 6.5x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): About
$3.1 billion
-- Estimated senior secured debt claims: About $4.8 billion
--Recovery expectations: 50%-70% (rounded estimate: 60%)
-- Estimated senior unsecured debt claims: About $1 billion
--Recovery expectations: 0%-10% (rounded estimate: 5%)
Ratings List
NEW RATINGS
CLARIVATE SCIENCE HOLDINGS CORP.
Senior Secured
US$1 bil nts due 2028 B
Recovery Rating 3(60%)
Senior Unsecured
US$1 bil sr nts due 2029 CCC+
Recovery Rating 6(5%)
ISSUE-LEVEL RATINGS AFFIRMED; RECOVERY EXPECTATIONS REVISED
TO FROM
CAMELOT FINANCE S.A.
Senior Secured B B
Recovery Rating 3(60%) 3(55%)
CANTERA COURT: $129K Sale of Laredo Property to Mendez Approved
---------------------------------------------------------------
Judge David R. Jones of the U.S. Bankruptcy Court for the Southern
District of Texas authorized Cantera Court Complex, Inc.'s sale of
the real property located at 127 Alfonso Ornelas, in Laredo, Texas
78046, more specifically described as The Surface Estate Only in
and to Lot Two (2), Block Three (3), Santa Rita Subdivision, Phase
XIV "La Isla De Los Jueces," situated in the City of Laredo, Webb
County, Texas, according to plat thereof recorded in Volume 26,
Page 57, Plat Records of Webb County, Texas, to Eric Mendez, Jr.,
for $129,000.
The sale is free and clear of all liens, claims, charges,
encumbrances and other interests of any kind or character, with all
valid liens, if any, to attach to the net sales proceeds, subject
to the Trustee's avoidance powers, to the extent necessary.
The sale is made "as is, where is" with no representations or
warranties of any kind.
The Debtor is further authorized to pay at closing (i) all ad
valorem taxes on the Property, (ii) the Seller's portion of all
normal and customary closing costs and fees as itemized on the
Closing Disclosure attached as Exhibit B to the Motion.
The transaction is closed and funded, with net proceeds remitted to
the Debtor at 10508 Reposado Drive, Laredo, Texas 78045.
The Debtor is authorized to execute all instruments and documents
and to perform all other actions necessary to consummate the
transaction contemplated under the Motion and the Order.
The Debtor is authorized to remit the net proceeds to the secured
creditor Falcon International Bank in partial satisfaction of its
Loans to the Debtor.
The 14-day stay requirements of Bankruptcy Rule 6004(h) are
waived.
Notwithstanding anything to the contrary contained in the Sale
Motion or the related Sale Contract, the Buyer will take the
Property subject to ad valorem tax liens which secured payment of
the 2021 ad valorem taxes assessed or to be assessed against the
Property, and these liens will remain until the 2021 taxes are paid
in full.
About Cantera Court Complex
Cantera Court Complex, Inc. is the owner and operator of Cantera
Court Complex, one of the premier multi-tenant retail centers in
Laredo, Texas. It also owns six residential properties doing
business as BMW Creative Homes that are under contracts for deed.
Cantera Court Complex sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D. Texas Case No. 21-50044) on
April
30, 2021. In the petition signed by Eric Lee Benavides, director,
the Debtor disclosed up to $10 million in both assets and
liabilities. Catherine S. Curtis, Esq., at Pulman, Cappuccio &
Pullen, LLP, is the Debtor's legal counsel.
Falcon International Bank, as lender, is represented by Richard E.
Haynes III, Esq., at Trevino Haynes, PLLC.
CAREERBUILDER LLC: S&P Lowers ICR to 'B-' on Pressured Performance
------------------------------------------------------------------
S&P Global Ratings lowered its issuer credit to 'B-' from 'B' and
its issue-level ratings on U.S.-based human capital solutions
provider CareerBuilder LLC to 'B' from 'B+'. The recovery rating on
its senior secured debt remains '2'.
S&P said, "The negative outlook reflects our view that leverage
will remain high over the next 12 months due to ongoing pressure
from the COVID-19 pandemic and migration toward subscriptions.
"The downgrade to 'B-' reflects our expectation that credit metrics
recovery will take longer than initially expected and that leverage
will likely remain above our 5x threshold until 2022. The downgrade
reflects our expectations that CareerBuilder will see the most
COVID-19 negative impact in 2021 financials due to a lower contract
renewal rate in the second half of 2020 and the first quarter of
2021." Most of the company's revenue for any given year is
contracted by March, so there was no significant impact from the
pandemic in 2020 as revenue was already locked in. Nevertheless,
the impact will be significant in 2021 as many employers didn't
renew their contracts after the pandemic hit and didn't anticipate
significant hiring needs.
CareerBuilder also faces challenges related to the rollout of its
go-to-market strategy and attempts to convert customers into annual
subscribers of one or more services. S&P said, "We believe benefits
from the sales force training for the strategy could take longer
than expected in the ongoing pandemic. We believe these challenges
will make EBITDA more volatile."
Leverage will likely increase significantly as EBITDA will be
slightly negative to break-even for the full year 2021 and remain
high because of the COVID-19 pandemic, product investments, and
operating challenges. The pandemic impact on the labor market,
combined with high one-time transaction costs, resulted in
substantially lower EBITDA and cash flow in 2020 than previously
forecast. S&P said, "Further, we now expect slightly negative to
break-even EBITDA and negative cash flow because of less contract
renewal in 2020, leading to a very high leverage. We expect
leverage will begin to improve in 2022 due to lower restructuring
charges, execution of the go-to-market strategy, a better operating
environment, and lower investments. Also, we now believe
CareerBuilder's somewhat sizable cash balances relative to debt
outstanding will decline and become less of a cushion for
meaningful deleveraging if needed before refinancing debt that
matures in July 2023. The company will use the cash to fund ongoing
cash flow deficits and increased business investments for growth.
Still, we expect free operating cash flow (FOCF) to debt will begin
to recover in 2022 from deficits in 2020 and 2021."
Secular declines affecting job postings will limit revenue growth
during the economic recovery. A significant amount of
CareerBuilder's talent acquisition business consists of job
postings. S&P said, "As a result, we expect revenue will remain
pressured over the next 12 months as declines associated with its
traditional talent acquisition revenue partially offsets expected
economic growth. Although the company reported improving
replacement rates in the latter half of 2020, we expect revenue to
decline in 2021. Transactional talent acquisition revenue decline
is only partially offset by growth in subscription-based and
software revenue."
CareerBuilder's adjusted EBITDA margin will improve in 2021 due to
divesting lower-margin segments and expense reductions.
Low-double-digit percentage adjusted EBITDA margin in 2020 was
marred by revenue declines and transaction/restructuring costs. We
expect it will decline further in 2021 due to expected steep
revenue decline and higher operating costs. S&P expects EBITDA
margin will benefit from a more efficient sales force, lower
investments, and higher subscription revenue over time. The
company's divesting of lower-margin businesses such as
CareerBuilder Employment Screening (CBES) and Textkernal will
likely increase gross margin over the long term. At the same time,
lower general and one-time costs will boost operating margins as
the core business recovers.
The negative outlook reflects S&P's view that leverage will remain
above 5x over the next 12 months due to ongoing pressure from the
COVID-19 pandemic, go-to-market strategy, and migration toward
subscriptions. Nevertheless, we expect CareerBuilder will maintain
adequate liquidity with significant cash on its balance sheet to
support the strategy.
S&P could lower the rating if:
-- S&P becomes convinced the capital structure is unsustainable
and believe the company could face difficulty refinancing its debt
due in 2023.
-- A combination of increased competitive pressures in the
company's job advertising segment and lower growth in its other
businesses keep FOCF significantly negative, depleting surplus
cash.
-- If the company adopts a more aggressive financial policy and
cash balances are depleted due to dividends or acquisitions.
S&P could raise the rating if:
-- The company successfully executes its go-to-market strategy,
which translates into healthy organic revenue growth and EBITDA
margins in the mid-20% area.
-- S&P expects leverage to decline and remain under 5x.
-- The company makes progress toward refinancing its credit
facility due in 2023.
CARIBBEAN MOTEL: Case Summary & 7 Unsecured Creditors
-----------------------------------------------------
Debtor: Caribbean Motel Corporation
DBA Hotel Caribbean
Carretera 114
Km 4.6
Barrio Guanajibo
Cabo Rojo, PR 00623
Business Description: Caribbean Motel Corporation operates in the
traveler accommodation industry. The Debtor
is the owner of fee simple title to a land
located at Guanajibo Ward, Cabo Rojo, PR
with real properties used as motel.
Chapter 11 Petition Date: June 15, 2021
Court: United States Bankruptcy Court
District of Puerto Rico
Case No.: 21-01831
Debtor's Counsel: Wigberto Lugo Mender, Esq.
LUGO MENDER GROUP, LLC
100 Carr 165 Suite 501
Guaynabo, PR 00968-8052
Tel: (787) 707-0404
Email: wlugo@lugomender.com
Total Assets: $683,781
Total Liabilities: $2,399,246
The petition was signed by Margaro Rivera Guzman, president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's seven unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/4SGJCCY/Caribbean_Motel_Corporation__prbke-21-01831__0001.0.pdf?mcid=tGE4TAMA
COINSEED INC: New York AG Secures Appointment of Court Receiver
---------------------------------------------------------------
New York Attorney General Letitia James has secured a court order
that continues a mandated pause on the illegal and fraudulent
operations of the cryptocurrency trading platform Coinseed, Inc.
and puts in place a receiver to ensure the protection of investors'
money going forward. In February, Attorney General James filed a
lawsuit against Coinseed, as well as founder and Chief Executive
Officer (CEO) Delgerdalai Davaasambuu, -- but, in the months since
the suit was filed, Coinseed and its CEO not only continued their
fraud, but commenced additional fraudulent conduct by trading in
investors' accounts without permission and then blocking investors
from accessing those accounts. On June 4, the New York County State
Supreme Court issued an order that grants a motion -- filed last
month by Attorney General James -- and appoints Michelle Gitlitz,
the global head of Crowell & Moring LLP's Blockchain and Digital
Assets practice, as a court-appointed receiver with special powers
to safeguard investments already made on the trading platform. A
previously issued temporary restraining order continues to block
Coinseed and its CEO from making any further unauthorized trades.
"When platforms operating illegally in New York seek to trade on
investors' money, we will use every tool at our disposal to stop
their unlawful actions," said Attorney General James. "This order
appoints a court-appointed receiver before any other investments
are squandered by Coinseed and its CEO. We will not allow rogue
operators to hold innocent investors' funds hostage, while they
deplete accounts and transfer virtual currency to an offshore,
unregulated trading platform. We will continue fighting for the
thousands of investors defrauded by Coinseed."
In the first three months after Attorney General James filed her
lawsuit, the Office of the Attorney General received more than 170
complaints from investors who were concerned about protecting their
assets due to Coinseed's fraudulent conduct.
The June 4 motion appoints a receiver to oversee all assets traded
through Coinseed in an effort to safeguard investments as Attorney
General James' lawsuit proceeds.
The matter is being handled by Assistant Attorneys General Brian M.
Whitehurst and Amita Singh of the Investor Protection Bureau, under
the supervision of Bureau Chief Peter Pope and Deputy Bureau Chief
Shamiso Maswoswe. The Investor Protection Bureau is a part of the
Division for Economic Justice, which is overseen by Chief Deputy
Attorney General Chris D'Angelo and First Deputy Attorney General
Jennifer Levy.
COLDWATER DEV'T: Selling Santa Monica Mountains Property for $33.5M
-------------------------------------------------------------------
Coldwater Development, LLC, and its affiliates ask the U.S.
Bankruptcy Court for the Central District of California to
authorize the bidding procedures in connection with the sale of the
real property identified as Assessor's Parcel Numbers 4387-021-018
and 4387-021-019 to Pacific Green Vista, LLC, for $33.5 million
cash pursuant to the terms and conditions of the Purchase and Sale
Agreement, subject to overbid.
A hearing on the Motion is set for July 14, 2021, at 11:00 a.m.
Objections, if any, must be filed no later than 14 days before the
hearing on the Motion.
The Coldwater Debtor owns two unimproved, vacant lots located in
the Santa Monica Mountains above Beverly Hills that are greatly
desired for their unobstructed views and prime location in the
Santa Monica Mountains. The two lots are adjacent to the four lots
owned by Debtor Lydda Lud, LLC. Prior to filing for chapter 11
bankruptcy relief, the Debtors were in discussions with interested
lenders to address Give Back LLC's loan and believed there was
sufficient equity in the six lots to refinance the properties and
pay off Give Back. Accordingly, on Jan. 15, 2021, the Debtors
filed their voluntary petitions under chapter 11 of title 11 of the
U.S. Code.
The Debtors collectively have undisputed unsecured debt in the
total amount of $2,219,836 that is scheduled in their Schedule E/F.
As to secured debt, the Coldwater Debtor does not dispute the
proof of claim filed by the Los Angeles tax collect that asserts a
tax lien for property taxes in the approximate amount of
$510,495.52.
Last minute, shortly before and on April 30, 2021 (the deadline for
general creditors to file claims), the following two claimants
filed proofs of claims for unsecured debts that are not collectible
against the Debtors:
a. Ral Design and Management Inc. filed Claim No. 3-1 in
Coldwater's case for an unsecured claim of $259,727.45. The
purported basis for this claim is to collect on an unpaid
settlement owed by the Coldwater Debtor's principal, Mohamed Hadid.
Mr. Hadid was current on the settlement payments, and following a
material breach by the claimant counterparty of the settlement
agreement, the Coldwater Debtor was relieved of any obligations to
make further settlement payments to the claimant.
b. First Credit Bank filed Claim No. 2-1 in Lydda's case and
Claim No. 4-1 in Coldwater's case for an unsecured claim of
$26,226,840.07. The purported basis for this claim is to collect
on a guaranty signed by Mr. Hadid for a loan that was issued to 901
Strada, LLC -- Mr. Hadid's separate real estate holding entity that
is unrelated to either one of the Debtors.
Also, on April 30, 2021, Lincoln Resorts filed Claim No. 3-1 and
Claim No. 5-1 in Lydda's and Coldwater's cases, respectively, for
claim of $36,110,839.84 that is purportedly secured by a lien on
real property. The alleged basis for this claim is to collect on a
judgment that was entered against Mr. Hadid, among others, but was
notably not entered against either of the Debtors. The claimant
has not provided documentary support verifying that it holds a
judgment lien against the Property. In fact, the most recent
preliminary title report does not show that this claimant holds a
properly attached judgment lien against the Property.2 The Debtors
dispute the validity and amount of Lincoln Resorts’ claims and
will move to disallow said claims in their entirety.
As to the other disputed secured claims, Give Back filed proofs of
claim in both Debtors' estates for the secured claim amount of
$30,293,058.56. The Debtors also discovered that Shahbaz Law Group
recorded an abstract judgment on the Property. The Debtors dispute
the amounts of the liens held by Give Back and Shahbaz Law Group
and will reserve sufficient funds from the sale proceeds to pay
Give Back and Shahbaz Law Group in full pending clarification from
the Court on the allowed amounts of Give Back's and Shahbaz Law
Group's claims.
The Coldwater Debtor has diligently marketed the Property to
several parties, who were interested in purchasing the lots or
refinancing. After receiving a number of offers from interested
lenders and buyers, the Coldwater Debtor and the Proposed Buyer
entered into a PSA on May 28, 2021, which, among other things,
provides that the Proposed Buyer has agreed to purchase the two
properties for $33.5 million on an "as is, where is" basis, free
and clear of liens, claims, interests, and encumbrances. The Sale
is in the best interests of the estate as the proceeds will allow
the Coldwater Debtor to pay off all of its undisputed secured debt.
The Proposed Buyer has wired $1.5 million as a deposit for the Sale
to the escrow company. The Proposed Buyer has waived all
contingencies, except as otherwise set forth in the PSA. The
Proposed Buyer requested sufficient time to obtain the appropriate
land surveys/environmental clearances and to review the applicable
court decisions concerning the easement dispute over the Property.
The Proposed Buyer has until July 9, 2021 to complete all due
diligence on the Property.
In an effort to ensure that maximum value is obtained for the
Property, the Coldwater Debtor is first seeking approval of the
Bidding Procedures outlined in the Motion. It believes that an
auction of the Property conducted in accordance with the Bidding
Procedures will maximize the value of the Property. As a result,
the Coldwater Debtor respectfully submits that the Court's approval
of the Bidding Procedures is essential and in the best interest of
the estate and the creditor body.
Upon approval of the Bidding Procedures, the Coldwater Debtor will
conduct the Auction, to be held concurrently with the hearing to
approve the sale. At the Sale Hearing, the Coldwater Debtor will
ask the Court to approve the Sale of the Property to either the
Proposed Buyer or the Successful Bidder(s).
The salient terms of the Bidding Procedures are:
a. Bid Deadline: July 7, 2021, by 5:00 p.m. (PST)
b. Initial Bid: $33.6 million cash
c. Deposit: $1.5 million
d. Auction: After all Qualified Bids have been received, the
Coldwater Debtor will conduct an Auction for the Property. The
Coldwater Debtor requests that if the Auction is to occur, that the
Auction take place at the United States Bankruptcy Court, Central
District of California, Los Angeles Division, Courtroom 1568, 255
E. Temple St., Los Angeles, CA 90012 on July 14, 2021, at 11:00
a.m. (PST), or at such other date and time as ordered by the Court.
e. Bid Increments: $50,000
f. In the event that the secured creditor of the Debtors, Give
Back LLC submits a Qualified Bid, Give Back will be permitted to
offset the amount of its allowed secured claim against the purchase
price of the Coldwater Property pursuant to Section 363(k) of the
Bankruptcy Code.
The Coldwater Debtor requests that the Courts approve the Sale of
the Property to the Proposed Buyer or Successful Bidder free and
clear of all lien, claims, interests, and encumbrances, with such
liens and interests, to the extent allowed, attaching to the Sale
proceeds.
The Coldwater Debtor requests that the Court waives Bankruptcy Rule
6004(h). A waiver of Rule 6004(h) will permit the Coldwater Debtor
to immediately realize the value of the Property for the benefit of
the estate and its creditors and should, therefore, be granted.
A copy of the PSA and the Bidding Procedures is available at
https://tinyurl.com/3xwdkbfp from PacerMonitor.com free of charge.
About Coldwater Development
Los Angeles-based Coldwater Development LLC and its affiliates
filed Chapter 11 petitions (Bankr. C.D. Calif. Lead Case No.
21-10335) on Jan. 15, 2021. In its petition, the Debtor estimated
$50 million to $100 million in assets and $10 million to $50
million in liabilities. Mohamed Hadid, member, signed the
petition.
Judge Vincent P. Zurzolo presides over the case. Arent Fox LLP,
serves as the Debtor's bankruptcy counsel.
COMMUNITY INTERVENTION: Cash Access Thru August 31 OK'd
-------------------------------------------------------
Judge Elizabeth D. Katz extended the termination date by which
Community Intervention Services, Inc. is authorized to use cash
collateral pursuant to the final cash collateral order, through
August 31, 2021.
Judge Katz also approved the budget effective the week ending June
12, 2021, as the budget for purposes of the final cash collateral
order. The budget provided for weekly disbursements, as follows:
$115,000 for the week ending June 12, 2021;
$91,000 for the week ending June 19, 2021;
$1,135,000 for the week ending June 26, 2021;
$68,000 for the week ending July 3, 2021;
$205,000 for the week ending July 10, 2021;
$38,000 for the week ending July 17, 2021;
$206,000 for the week ending July 24, 2021;
$1,580,000 for the week ending July 31, 2021;
$173,000 for the week ending August 7, 2021;
$10,000 for the week ending August 14, 2021;
$154,000 for the week ending August 21, 2021;
$661,000 for the week ending August 28, 2021; and
$5,000 for the week ending September 4, 2021.
A copy of the order is available for free at https://bit.ly/3zpnwME
from PacerMonitor.com.
The Debtor sought the August 31 extension expecting its Plan to
have become effective by that date, a prior report by the Troubled
Company Reporter disclosed.
About Community Intervention
Services, Inc.
Community Intervention Services, Inc. sought Chapter 11 protection
(Bankr. D. Mass. Case No. 21-40002). The case is being jointly
administered with the bankruptcy cases of its affiliates Community
Intervention Services Holdings, Inc.; Futures Behavior Therapy
Center, LLC; and South Bay Mental Health Center, Inc.
On the Petition Date, the Debtor estimated between $50,000,001 and
$100,000,000 in assets and between $100,000,001 and $500,000,000 in
liabilities.
Casner & Edwards, LLP is the Debtors' counsel. Judge Elizabeth D.
Katz oversees the case.
COMSTOCK RESOURCES: Fitch Affirms 'B' IDR, Outlook Positive
-----------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Rating of Comstock
Resources, Inc. at 'B'. Fitch has also affirmed Comstock's senior
unsecured notes at 'B+'/'RR3'. The Rating Outlook remains
Positive.
Comstock's rating reflects the company's position as the largest
producer of natural gas in the Haynesville Shale Basin, its
industry low operating and drilling cost structure, the company's
ability to generate positive FCF under base and strip pricing
assumptions, relatively low differentials due to its proximity to
the Henry Hub and its deep drilling inventory. Comstock also
materially enhanced its liquidity by reducing revolver borrowings
and extending debt maturities. This is offset by the company's
modestly higher leverage and less robust hedging program relative
to its peers.
The Positive Outlook reflects Fitch's expectation of positive FCF,
which would be applied to reduce debt and lead to improved credit
metrics over the next 12-18 months.
KEY RATING DRIVERS
Low-Cost Operator: Comstock has one of the lowest operating cost
structures among its natural gas peers due to its low lease
operating costs and gathering and transportation costs. Margins are
similar to some of the best Permian oil-based operators, as
Comstock's proximity to Henry Hub allows the company to achieve
minimal differentials and premium pricing for its natural gas.
Fitch expects Comstock to further reduce price differentials as new
pipelines that provide direct access to the Gulf Coast come online
through 2022. Drilling costs also declined over time as the company
achieved scale through acquisitions. Fitch anticipates further
drilling cost reductions in the current low commodity price
environment.
Improving Liquidity: Comstock has reduced borrowings under its $1.4
billion revolver to $550 million at 1Q21 from $1.25 billion as of
4Q20 through a senior unsecured note issuance. Further reductions
are expected in 2021 through the application of FCF. The revolver
is due in 2024 and the remaining balance should be serviced through
FCF. The next material bond maturity is not until 2025. Although
Comstock currently has access to debt capital markets, Fitch notes
access for most 'B' energy issuers was limited during periods of
low commodity prices.
Largest Haynesville Producer: Following the acquisition of Covey
Park Energy LLC in 2019, Comstock is now the largest producer in
the Haynesville Shale Basin. The scale provides for significantly
lower operating, gathering and transportation, and drilling costs.
The Haynesville is located close to the Henry Hub and other major
natural gas buyers, which provides for lower differentials and
higher realized gas prices. Comstock has approximately 1,930 net
drilling locations in the Haynesville, with 73% of the locations
with laterals greater than 5,000 feet. Approximately 93% of the
acreage is held by production, and the company operates 91% of its
position. Despite the scale, Comstock is exposed to single-basin
risk.
FCF Despite Low Prices: Fitch believes Comstock can generate FCF in
its base and strip case scenarios, which reflect historically low
commodity prices, given its low operating and drilling cost
structure. The company operates five rigs with expected capex in
the $510 million-$550 million range, leading to low single-digit
growth over the next several years. The certainty of FCF over the
next two years is enhanced by the company's hedging program.
Solid Hedging Program: Comstock aims to hedge approximately 50%-60%
of its forward 12-month gas production. The company hedged
approximately 69% of its 2021 expected production at an average
price of $2.51.
Preferred No Equity Credit: Fitch does not apply its "Corporate
Hybrids Treatment and Notching Criteria," as the new preferred
stock will be held by existing equity investors or affiliates.
Fitch instead uses its "Corporate Rating Criteria" on applying
equity credit for shareholder and affiliated loans. The Series B
preferred stock contains a provision for a mandatory cash
redemption upon a change of control. As a result, Fitch is not
allowing equity credit for the preferred stock.
DERIVATION SUMMARY
Fitch estimates Comstock's debt/EBITDA at 3.7x as March 31, 2021,
declining to less than 3.0x by the end of 2021. This is at the high
range of other 'B' and 'BB' natural gas producers over the same
rating horizon, which should reach 2.0x-2.5x by the end of 2021.
This is offset by solid liquidity, lack of near-term maturities and
a low-cost structure relative to its peers.
Comstock's 1Q21 production of 1,281 million cubic feet equivalent
per day (mmcfed) is above Vine Energy, Inc. (B/Stable; 658mmcfed),
but below Ascent Resources Utica Holdings, LLC (B/Stable;
1,792mmcfed) and CNX Resources Corporation (BB/Positive;
1,545mmcfed). The company's proved reserves of 5.6 trillion cubic
feet equivalent (Tcfe) are also below the same peers. Comstock's
2020 Fitch-calculated unhedged netback of $0.77/thousand cubic feet
equivalent (mcfe) was among the highest among its peers, including
Ascent ($0.39/mcfe), CNX ($0.55/mcfe), Vine (0.63/mcfe),
Southwestern Energy Company (BB/Stable; $0.30/mcfe) and EQT
Corporation (BB+/Stable; $0.36/mcfe). Fitch expects further
improvement to Comstock's netbacks to come from reduced interest
costs as the company reduces debt and refinances high-cost notes.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Base case West Texas Intermediate oil prices of $55/barrel
(bbl) in 2021 and a long-term price of $50/bbl;
-- Base case Henry Hub natural gas price of $2.75/mcf in 2021 and
long-term price of $2.45/mcf;
-- Production growth of 9% in 2021 and low single-digit growth
throughout the forecast period;
-- Capex of $564 million in 2021, increasing to approximately
$600 million for the remainder of the forecast period;
-- No incremental acquisitions, divestitures or equity issuance.
Any FCF is assumed to be used to reduce debt.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Executable plan to enhance liquidity greater than $500 million
through application of FCF, asset sales or equity to reduce
the revolver;
-- Demonstrated execution of generating positive FCF;
-- FFO increasing to over $850 million;
-- Midcycle gross debt/EBITDA below 2.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A change in terms of financial policy that is debtholder
unfriendly, including not applying a material portion of FCF
to debt reduction;
-- Inability to enhance liquidity over next 12-18 months;
-- Midcycle gross debt/EBITDA greater than 3.5x;
-- Material reduction in the borrowing base that further limits
liquidity.
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
Improving Liquidity and Runway: Comstock had $77 million of cash on
hand and availability under its $1.4 billion revolver of $850
million as of March 31, 2021. Fitch anticipates the company will
generate positive FCF over the next several years, with proceeds
used to further reduce the revolver. Comstock's next maturity is
the revolver in 2024, followed by two senior note maturities in
2025 ($244 million) and 2026 ($873 million).
The revolver has two financial covenants: a leverage ratio of less
than 4.0:1.0 and a current ratio of at least 1.0:1.0. The company
complied with both as of March 31, 2021.
Although Comstock has been acquisitive, the financing structure of
the acquisitions has been conservative, with strong equity
components to lighten the debt load. Access to debt capital markets
have greatly improved over the past 12 months. Fitch does not
expect the company to require access absent any unexpected
acquisition, except for voluntarily refinancing its 2025 (currently
callable) and 2026 notes (callable August 2021).
ISSUER PROFILE
Comstock is an independent exploration and production company that
operates in the Haynesville (95% of reserves as of Dec. 31, 2020),
Bakken (2%) and Eagle Ford/other (3%). The company has proved
reserves of 5.6Tcfe. Production for 1Q21 was 1,281mmcfed, 98% of
which was gas and 2% was oil.
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.
CONCISE INC: July 28 Plan Confirmation Hearing Set
--------------------------------------------------
On June 9, 2021, debtor Concise, Inc., filed with the U.S.
Bankruptcy Court for the District of Columbia a Second Amended
Disclosure Statement and Plan.
On June 10, 2021, Judge Elizabeth L. Gunn approved the Second
Amended Disclosure Statement and ordered that:
* July 28, 2021, at 11:00 am by videoconference is the hearing
on confirmation of the Debtor's plan of reorganization.
* July 21, 2021, is fixed as the last day for filing and
serving written objections to confirmation of the Amended Plan.
* July 21, 2021, is the deadline for submitting written
acceptances or rejections of the Debtor's plan of reorganization.
A copy of the order dated June 10, 2021, is available at
https://bit.ly/3wtPBAA from PacerMonitor.com at no charge.
Attorneys for the Debtor:
Michael G. Wolff, Esq.
Jeffrey M. Orenstein, Esq.
Wolff & Orenstein, LLC
15245 Shady Grove Road, 465-N
Rockville, MD 20850
Tel: 301-250-7232
About Concise Inc.
Concise, Inc. (dba - CNS) was founded in 2003, as a turnkey
in-building Distributed Antenna System Integrator (DAS). The
Company offers wireless, infrastructure cabling, cyber|cloud
services, IT telecommunications, managed security, and engineering
design services. Visit https://www.conciseinc.com for more
information.
Concise, Inc., filed a voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. D. Colo. Case No. 19-00079) on
Jan. 31, 2019. In the petition signed by David Johnson, chief
executive officer, the Debtor disclosed $51,715 in total assets and
$3,556,125 in total liabilities. Judge Martin S. Teel, Jr.
presides over the case. Jeffrey M. Orenstein, Esq. at Wolff &
Orenstein, LLC represents the Debtor.
CT TECHNOLOGIES: Moody's Puts B3 CFR Under Review for Upgrade
-------------------------------------------------------------
Moody's Investors Service placed the ratings for CT Technologies
Intermediate Holdings, Inc. ("Ciox Health"), including its B3
Corporate Family Rating, on review for upgrade. The rating outlook
was changed to ratings under review from positive. This action
follows the company's announcement that the company entered into a
definitive merger agreement with Datavant, Inc., a developer of a
healthcare data platform dedicated to assisting in protecting,
matching, and sharing health data.
The combined company, to be named Datavant, will become a
significantly larger and more diversified service provider of
healthcare information services and technology solutions to
hospitals, health systems, physician practices and authorized
recipients of protected health records in the United States.
On Review for Upgrade:
Issuer: CT Technologies Intermediate Holdings, Inc.
Corporate Family Rating, Placed on Review for Upgrade, currently
B3
Probability of Default Rating, Placed on Review for Upgrade,
currently B3-PD
Senior Secured Bank Credit Facility, Placed on Review for Upgrade,
currently B3 (LGD3)
Outlook Actions:
Issuer: CT Technologies Intermediate Holdings, Inc.
Outlook, Changed To Rating Under Review From Positive
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Ciox Health's B3 Corporate Family Rating (under review for upgrade)
reflects the company's narrow business focus providing medical
information exchange management and retrieval services to US
healthcare providers and insurance carriers. Legal risks associated
with the release of protected health information and potential
changes within the regulatory environment also present risks to
profitability. However, the rating is supported by Ciox Health's
leading position in managing and sharing health information, an
industry with favorable growth characteristics. Additionally,
multi-year contracts with a large number of US hospitals, and high
contract renewal rates in the mid-90% range, lend visibility and
predictability to revenues.
The rating review will focus on the potential benefits of the
combined firm's larger scale, more diversified service offering of
clinical data across the healthcare ecosystem, and the
opportunities for synergies. The review will also focus on the
growth strategy and financial profile following the transaction,
including capital structure, financial leverage, financial policies
and liquidity.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Ciox Health, headquartered in Alpharetta, GA, is a large provider
of healthcare information services and technology solutions to
hospitals, health systems, physician practices and authorized
recipients of protected health records in the United States. The
company offers two main service lines: Providers Solutions helps
providers manage the sharing of patient's health information and
data. Payers Solutions helps payers and other volume requestors
(such as insurance companies) obtain medical information. Recently
the company has added a life sciences business segment, through
which it aggregates and analyzes real world data ("RWD") across a
variety of research and commercial uses. Affiliates of New Mountain
Capital, LLC purchased Ciox Health in November 2014. For the twelve
months ended March 31, 2021, the company generated revenues of
approximately $648 million.
DARREN B. MCCORMICK: Foreign Reps' St. Petersburg Asset Sale OK'd
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Judge Catherine Peek McEwen of the U.S. Bankruptcy Court for the
Middle District of Florida authorized Colin Diss and Nicholas Wood,
the Joint Trustees of the bankruptcy estate of Darren Bernard
McCormick, to sell the real property located at 193 Banyan Bay
Drive, St. Petersburg, Florida, to Gerard Burt Douglas and Margaret
Christine Douglas, as trustees of the Douglas Family Trust.
The Property's legal description is Lot 43, Banyan Bay at Rutland,
according to the plat thereof, as recorded in Plat Book 128, Pages
87 through 90, inclusive, Public Records of Pinellas County,
Florida.
The sale is free and clear of liens, claims and encumbrances with
such claims to attach to the proceeds of such sale.
The Foreign Representatives are authorized to enter into the
proposed Purchase Agreement with the Buyer and execute any and all
deeds and other documents necessary to effectuate the closing of
such sale and the transfer of the 193 Banyan Property to the Buyer
as contemplated therein.
Upon closing of the Purchase Agreement, the Buyers will be entitled
to the protections under 11 U.S.C. Section 363(m), and receive the
193 Banyan Property free and clear of all liens, claims,
encumbrances and interests.
The stay imposed under Bankruptcy Rule 6004(h) is waived so that
the Order is effective immediately, and the Foreign Representatives
can effectuate the closing of the Purchase Agreement as soon as
possible.
Darren Bernard McCormick sought Chapter 11 protection (Bankr. M.D.
Fla. Case No. 19-10768) on Nov. 12, 2019. The Debtor tapped eyza
F. Blanco, Esq., at Sequor Law, P.A. as counsel.
DAVIDSTEA INC: Creditors Approve CCAA Plan of Arrangement
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DAVIDsTEA Inc., a leading tea merchant in North America, on June 11
disclosed that its Plan of Arrangement under the Companies'
Creditors Arrangement Act ("CCAA") was approved today by the
requisite majorities of creditors of DAVIDsTEA and of DAVIDsTEA
(USA) Inc., its wholly-owned U.S. subsidiary, respectively.
DAVIDsTEA will seek a sanction order for the Plan of Arrangement
from the Quebec Superior Court at a hearing scheduled for June 16,
2021. If the sanction order is granted, DAVIDsTEA and DAVIDsTEA
(USA) Inc. will seek recognition of the sanction order from the
United States Bankruptcy Court for the District of Delaware under
Chapter 15 of the United States Bankruptcy Code at a hearing
scheduled for June 17, 2021.
"We are very pleased that the CCAA process is nearing completion
and again express our appreciation to our creditors for their
understanding", said Herschel Segal, DAVIDsTEA's Chairman and
Founder.
As previously announced, the Plan of Arrangement provides that
DAVIDsTEA will distribute an aggregate amount of approximately CDN
$18.0 million to its creditors and those of DAVIDsTEA (USA) Inc. in
full and final settlement of all claims affected by the Plan of
Arrangement.
PricewaterhouseCoopers is acting as Court-appointed Monitor in the
CCAA proceedings. All documents relating to the CCAA proceedings,
including the Plan of Arrangement, are available at
www.pwc.com/ca/davidstea. The Company will continue to provide
updates throughout the CCAA restructuring process as events
warrant.
DAVIDsTEA can provide no assurance that it will obtain a sanction
order for the Plan of Arrangement from the Quebec Superior Court or
that the sanction order, if any, will be recognized by the United
States Bankruptcy Court for the District of Delaware.
About DAVIDsTEA
DAVIDsTEA (Nasdaq:DTEA) is a leading branded retailer and growing
mass wholesaler of specialty tea, offering a differentiated
selection of proprietary loose-leaf teas, pre-packaged teas, tea
sachets and tea-related gifts and accessories on our e-commerce
platform at http://www.davidstea.com/and through 18 Company-owned
and operated retail stores in Canada. A selection of DAVIDsTEA
products is also available in more than 2,500 grocery stores and
pharmacies across Canada. The Company is headquartered in
Montreal, Canada.
DAVIDSTEA INC: Creditors Okay Restructuring Plan under CCAA
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DAVIDsTEA Inc. (Nasdaq:DTEA), a leading tea merchant in North
America, announced that its Plan of Arrangement under the
Companies' Creditors Arrangement Act was approved June 11, 2021, by
the requisite majorities of creditors of DAVIDsTEA and of DAVIDsTEA
(USA) Inc., its wholly-owned U.S. subsidiary, respectively.
DAVIDsTEA will seek a sanction order for the Plan of Arrangement
from the Québec Superior Court at a hearing scheduled for June 16,
2021. If the sanction order is granted, DAVIDsTEA and DAVIDsTEA
(USA) Inc. will seek recognition of the sanction order from the
United States Bankruptcy Court for the District of Delaware under
Chapter 15 of the United States Bankruptcy Code at a hearing
scheduled for June 17, 2021.
"We are very pleased that the CCAA process is nearing completion
and again express our appreciation to our creditors for their
understanding", said Herschel Segal, DAVIDsTEA's Chairman and
Founder.
As previously announced, the Plan of Arrangement provides that
DAVIDsTEA will distribute an aggregate amount of approximately CDN
$18.0 million to its creditors and those of DAVIDsTEA (USA) Inc. in
full and final settlement of all claims affected by the Plan of
Arrangement.
PricewaterhouseCoopers is acting as Court-appointed Monitor in the
CCAA proceedings. All documents relating to the CCAA proceedings,
including the Plan of Arrangement, are available at
www.pwc.com/ca/davidstea. The Company will continue to provide
updates throughout the CCAA restructuring process as events
warrant.
DAVIDsTEA can provide no assurance that it will obtain a sanction
order for the Plan of Arrangement from the Québec Superior Court
or that the sanction order, if any, will be recognized by the
United States Bankruptcy Court for the District of Delaware.
About DAVIDsTEA
DAVIDsTEA (Nasdaq:DTEA) is a leading branded retailer and growing
mass wholesaler of specialty tea, offering a differentiated
selection of proprietary loose-leaf teas, pre-packaged teas, tea
sachets and tea-related gifts and accessories on our e-commerce
platform at http://www.davidstea.com/and through 18 Company-owned
and operated retail stores in Canada. A selection of DAVIDsTEA
products is also available in more than 2,500 grocery stores and
pharmacies across Canada. The Company is headquartered in Montreal,
Canada.
DIVERSIFIED CONSULTANTS: Court Narrows Claims in Autodial Suit
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In the case, Ashok Arora, Plaintiff, v. Diversified Consultants,
Inc., et. al., Defendants, No. 20 C 4113 (N.D. Ill.), Plaintiff
alleges that since approximately 2010 he has received a series of
wrong-number calls on his cell phone by collection agencies.
Plaintiff contends that the Defendants made or facilitated these
wrong-number calls via autodial calls. Defendant T-Mobile USA, Inc.
moves for dismissal of Plaintiff's First Amended Complaint, or in
the alternative to transfer venue. According to District Judge
Jorge L. Alonso, T-Mobile's motion to dismiss is granted in part
and denied in part. Defendant's motion to dismiss based on a lack
of subject-matter jurisdiction is denied. Defendant's motion to
dismiss based on a failure to state a claim is granted. The Court
dismisses Counts 11 and 12 without prejudice. Defendant's motion to
transfer is denied. The claims against Diversified Consultants,
Inc. (Counts 1, 2, and 3) are stayed. This case is set for an
initial status hearing on June 23, 2021 at 9:30 a.m. The parties
are directed to file a joint initial status report in accordance
with the Court's standing order by June 21.
On September 15, 2020, the bankruptcy court entered an order that,
among other things, enjoined any person from pursuing a claim under
the TCPA or Federal Debt Collections Practices Act in any other
forum, and instead relegated those parties to filing a general
unsecured claim in the pending bankruptcy action. Plaintiff filed
an unsecured claim in the DCI bankruptcy proceeding on November 13,
2020, for an amount of $33,000.
A copy of the Court's June 11, 2021 Memorandum Opinion and Order is
available at:
https://www.leagle.com/decision/infdco20210614c88
About Diversified Consultants
Diversified Consultants, Inc., a Jacksonville, Fla.-based company
that provided claims collection services, sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
20-01311) on Apr. 17, 2020. The petition was signed by Nicole
Zehnder Smith, Debtor's secretary, treasurer and director. At the
time of the filing, the Debtor disclosed estimated assets of $1
million to $10 million and estimated liabilities of $10 million to
$50 million. Judge Cynthia C. Jackson oversees the case. The
Debtor tapped Thames Markey & Heekin, P.A. as its bankruptcy
counsel.
On June 17, 2020, the DCI bankruptcy was converted from a Chapter
11 reorganization to a Chapter 7 liquidation bankruptcy.
DTI HOLDCO: Moody's Upgrades CFR to Caa1, Outlook Stable
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Moody's Investors Service upgraded DTI Holdco, Inc.'s (dba "Epiq
Global" or "Epiq") Corporate Family Rating to Caa1 from Caa2,
Probability of Default Rating to Caa1-PD from Caa2-PD and senior
secured credit facility (including revolving credit facility and
term loan) rating to Caa1 from Caa2. The outlook is stable.
RATINGS RATIONALE
The upgrade reflects Moody's expectations for a gradual but
accelerating recovery in demand for outsourced legal solutions over
the course of 2021. Epiq has demonstrated sequential revenue and
earnings growth over the last several quarters, leading to a
meaningful reduction in financial leverage and improved liquidity
profile. Moody's anticipates that the company's debt-to-EBITDA will
decline to below 7.0x over the next 12-18 months and that Epiq will
maintain adequate liquidity over the same period.
The Caa1 CFR reflects Epiq's very high debt-to-EBITDA leverage,
estimated at 10.6x (Moody's adjusted and expensing all capitalized
software development costs) as of March 31, 2021 and Moody's view
that the company's capital structure remains unsustainable,
particularly due to the looming maturities of the revolver in 2022
and term loan in 2023. Epiq operates in an intensely competitive
and fragmented eDiscovery market with modest customer
concentration. The event driven nature of the company's business
segments creates short term earnings and working capital volatility
that limits revenue visibility. The company is also exposed to
event risks under private equity ownership.
Moody's expects Epiq's debt-to-EBITDA leverage to decline below
7.0x over the next 12-18 months, driven by sustained growth in
sales bookings as new products continue to rollout, while also
capitalizing on international growth. The credit profile benefits
from Epiq's global presence in the eDiscovery market and the
diversification of its service lines. The favorable macro industry
dynamics for the eDiscovery market driven by exponential growth of
data created and stored, the potential for regulatory changes in
the US and anticipated pandemic-related litigation support Moody's
expectation for stable organic topline growth in a low-to-mid
single digit percentage range over the next two years.
Moody's expects Epiq to maintain an adequate liquidity profile over
the next 12-15 months. Sources of liquidity consist of
approximately $35.5 million of unrestricted cash at March 31, 2021
and expectation for the company to generate $20-25 million in free
cash flow (before $11.8 million in annual mandatory term loan
amortization) over the next 12 months. Moody's expects Epiq will
receive its final business interruption insurance payment from the
2020 ransomware attack by the end of June. In April, the company
obtained $25 million of funding through an unsecured note from its
financial sponsor to cover working capital deficits; the note is
expected to be repaid by the end of 2021.
The company's $75 million revolving credit facility has
approximately $60 million outstanding and will expire in September
2022. There are no financial maintenance covenants under the first
lien term loan but the revolver has a springing financial covenant
of first lien net leverage of 8.0x, with step-downs towards 7.5x
through December 31, 2021 when drawn 30%. The company's reported
first lien net leverage ratio was approximately 6.7x as of March
31, 2021. Moody's expects the company will maintain a modest
cushion to the covenant. Along with the springing financial
maintenance covenant, Epiq must also maintain a minimum of $25
million in liquidity between available revolver capacity and
balance sheet cash. Given current revolver drawings, maintaining
compliance with the liquidity covenant could be at risk if Epiq is
unable to collect the remaining payments from its insurance carrier
on a timely basis. Moody's also notes the potential for financial
sponsor support could alleviate the near term liquidity stress.
The upgrade of the senior secured credit facility rating to Caa1
from Caa2 reflects the upgrade of the PDR to Caa1-PD from Caa2-PD
and a loss given default assessment of LGD3. The credit facility is
secured by all assets of the borrower and is guaranteed on a
secured basis by its direct parent and all of the company's
material operating subsidiaries.
The stable outlook reflects Moody's expectation that the company
will maintain adequate liquidity over the next 12-15 months,
including positive free cash flow generation and reducing reliance
on its revolving credit facility. The outlook also assumes the
company will de-lever to below 7.0x over the next 12-18 months and
will make progress in addressing its capital structure in advance
of 2022-2023 debt maturities.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Epiq's liquidity does not
improve because of weaker than expected operating performance, the
remaining insurance payment is delayed, the company is unable to
address its capital structure on commercially viable terms or if
the probability of default increases for any other reason.
The ratings could be upgraded if the company puts in place a more
tenable capital structure, demonstrates sustained growth in revenue
and earnings and meaningfully improves liquidity. Quantitatively,
the ratings could be upgraded if the company's debt-to-EBITDA
(Moody's adjusted) is sustained below 7.0x.
Issuer: DTI Holdco, Inc.
Corporate Family Rating, Upgraded to Caa1 from Caa2
Probability of Default Rating, Upgraded to Caa1-PD from Caa2-PD
Senior Secured First Lien Bank Credit Facility, Upgraded to Caa1
(LGD3) from Caa2 (LGD3)
Outlook, Remains Stable
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Headquartered in New York, NY, DTI is a global provider of legal
service solutions, namely litigation and administrative support
services for corporations and law firms in North America, Europe,
Asia and Australia. DTI is majority owned by an investor group
controlled by OMERS Private Equity, Inc., Harvest Partners, L.P.,
and management. The company generated annual revenue of
approximately $980 million as of March 31, 2021.
DURRIDGE COMPANY: Cash Access Thru Sept. 13 OK'd
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Durridge Company Inc. has filed its Plan of Reorganization for
Small Business Debtor under Subchapter V on April 21, 2021, which
the Court has scheduled for confirmation at a hearing set for July
13, 2021.
The Plan contains projections for operations from April 2021
through confirmation of the Plan, and the Debtor, with the assent
of its creditor, Enterprise Bank & Trust Company, has provided the
Plan Projections in lieu of a Second Supplemental 13-week budget,
which shall be used in connection the authorizations entered by the
Court.
The Debtor has agreed to use cash and cash collateral pursuant to
the Plan Projections (at no greater deviation than 10% in aggregate
disbursements in the budget) for the operation of the business in
the ordinary course, pending confirmation of the Plan of
Reorganization or through September 13, 2021. The Debtor is
required to provide adequate protection to Enterprise Bank with
respect to the Debtor's use of cash collateral and for any decline
in value of the interest of Enterprise Bank's in its collateral,
pursuant to the Plan Projection.
Accordingly, Judge Christopher J. Panos authorized the Debtor, on a
final basis, to use (i) cash collateral to meet and satisfy its
ongoing business and operational and administrative expenses, as
well as (ii) certain restricted cash (the PPP funds), pursuant to
the Plan Projections.
As adequate protection to the interests of the Debtor's secured
creditors, each of the secured creditors is granted a valid and
perfected replacement security interest in, and lien on the
collateral which adequate protection liens shall be replacement
liens on the post-petition Collateral to the same extent, validity,
perfection, enforceability and priority as its lien on the Debtor's
pre-petition assets.
Nothing in the final order shall adversely affect any right of any
party in interest to challenge the amount, validity, perfection,
priority, extent or enforceability of any liens granted prior to
the Petition Date or granted to the secured creditors in the
current order, provided that any challenge shall take place within
60 days of the entry of the current order.
A copy of the order is available for free at https://bit.ly/3vduBgh
from PacerMonitor.com.
The Court will convene a further hearing on the matter on September
9, 2021 at 11 a.m. by telephone. Objections are due by 4:30 p.m. on
September 7.
About Durridge Company Inc.
Billerica, Massachusetts-based Durridge Company Inc. is a Delaware
corporation organized on April 11, 2016 under the name of Sensory
Acquisition Company. The name was changed on that date to Durridge
Company Inc. and is registered to do business in Massachusetts.
Durridge is a provider of professional radon detection equipment
and provides services including radon detection solutions for
businesses, universities, and governments worldwide. Durridge also
provides a wide range of accessories for their proprietary
technology known as RAD7, as well as software for performing
sophisticated radon data analysis, and expert calibration and
maintenance services.
Durridge sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. D. Mass. Case No. 21-40187) on March 15, 2021. In the
petition signed by Wendell Clough, president, the Debtor disclosed
$354,112 in assets and $2,182,277 in liabilities.
The Honorable Christopher J. Panos is the case judge.
Nina M. Parker, Esq. at Parker & Associates LLC represents the
Debtor as counsel.
E2OPEN LLC: Moody's Affirms B2 CFR Following BluJay Acquisition
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Moody's Investors Service affirmed E2open, LLC's B2 Corporate
Family Rating and B2-PD Probability of Default Rating following its
proposed acquisition of BluJay Solutions. Concurrently, Moody's
affirmed E2open's B2 debt instrument rating on its $905 million
first lien term loan due February 2028 and its $105 million first
lien revolving credit facility due February 2026. The company's
Speculative Grade Liquidity rating remains SGL-2. The outlook
remains stable.
The rating affirmation follows E2open's financing plans for the
proposed acquisition of BluJay. The transaction, which is valued at
approximately $1,700 million, will be funded through an incremental
$380 million first lien term loan upsize, $300 million of new
Private Investment In Public Equity ("PIPE") equity from
institutional investors including Neuberger Berman, The WindAcre
Partnership, Eminence Capital and XN, approximately $925 million of
rollover equity of BluJay's existing shareholders, and $150 million
of cash from the balance sheet. The revolving credit facility will
also be upsized to $105 million from $75 million, but will remain
undrawn at close. Ownership in the pro forma entity will be split
between existing E2open shareholders (-69%), BluJay shareholders
(-22%), and new PIPE shareholders (-9%).
Moody's views this transaction as leveraging and expects closing
debt/EBITDA will be high at 6.3x (inclusive of Moody's standard
adjustments and excluding planned cost savings), up from 5.6x for
standalone E2open for FY 2021. Moody's expects the Moody's projects
debt/EBITDA will approach 5.2x over the next 12-18 months, due in
part to the realization of $20 million cost savings and high-single
digit revenue growth in FY 2022 followed by sustained mid-single
digit percent revenue growth thereafter.
Moody's views the combination of E2open and BluJay as a credit
positive. BluJay's software application portfolio is complimentary
to E2open's existing supply chain software platform; increasing the
depth and breadth of its existing Global Trade and Logistics
segments by adding up to 50,000 unique network participants and
solutions aimed at over-the-road carriers and freight forwarders.
By merging E2open's legacy ocean freight and manufacturer focused
solutions with BluJay's land and air solutions, the combined entity
will offer supply chain software solutions to all logistic
ecosystem participants.
Affirmations:
Issuer: E2open, LLC
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Secured First Lien Bank Credit Facility, Affirmed B2
(LGD3)
Outlook Actions:
Issuer: E2open, LLC
Outlook, Remains Stable
RATINGS RATIONALE
E2open's B2 CFR reflects its high leverage, with closing
debt/EBITDA of 6.3x, and rapid growth through acquisitions, offset
by the company's leading position in many aspects of the supply
chain management software industry. In addition, E2 generates a
significant portion of its revenue through subscriptions (82% of
pro forma revenue at close), which are typically made up of
multi-year contracts with large enterprise customers and provide
good stability and visibility into future revenue growth. Given the
company's acquisitive history, Moody's believes E2 will continue
making opportunistic debt-funded acquisitions to bolster its
product and technology offerings.
E2 has good liquidity, as represented by its SGL-2 liquidity
rating. Pro forma for the transaction, Moody's expects E2 will have
about $40 million of cash on the balance and will have full access
to its $105 million revolving credit facility. Moody's anticipates
that E2 will generate free cash flow in the $125 million range over
the next 12-18 months. Access to its $105 million revolving credit
facility will be governed by a springing first lien leverage ratio
that only tests when 35% of the commitment is outstanding. Moody's
does not anticipate the covenant will impede E2's ability to draw
on the revolver over the next 12-18 months.
The stable outlook reflects Moody's expectation that E2 will
achieve high-single digit revenue growth through FY 2022 and
sustain mid-single digit percent revenue growth thereafter, with
debt/EBITDA approaching 5.2x over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider an upgrade if leverage is sustained below 5x
and free cash flow-to-debt is sustained above 10%.
Moody's would consider a downgrade if leverage is sustained over 7x
or free cash flow-to-debt is less than 5% on another than a
temporary basis.
ESG CONSIDERATIONS
As a software company, E2's exposure to environmental risk is
considered low. Social risks are considered low to moderate, in
line with the software sector. Broadly, the main credit risks
stemming from social issues are linked to data security, diversity
in the workplace and access to highly skilled workers. Moody's
views the company's public commitment to a net leverage target of
3.0 - 4.0x and use of equity to fund acquisitions to be evidence of
a more conservative financial policy.
E2open (NYSE: ETWO) is a cloud software platform that offers
applications and network services to over 6,900 customers. The
company's software combines networks, data and applications to
provide an integrated platform that allows customers to optimize
supply chain across channel shaping, demand sensing, business
planning, logistics, global trade, manufacturing and supply
management. Pro forma revenue for the last twelve months ended
February 2021 was approximately $514 million.
The principal methodology used in these ratings was Software
Industry published in August 2018.
EKSO BIONICS: All Three Proposals Approved at Annual Meeting
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Ekso Bionics Holdings, Inc. held its 2021 annual meeting of
stockholders at which the stockholders:
(1) elected Steven Sherman, Jack Peurach, Charles Li, Ph. D,
Stanley Stern, Mary Ann Cloyd, and Rhonda A. Wallen as
directors rs to serve until the annual meeting of
stockholders to be held in 2022 and until their respective
successors are elected and qualified, or until his or her
earlier death, resignation or removal;
(2) approved, on an advisory vote, the compensation of the
Company's named executive officers; and
(3) ratified the appointment of OUM & Co., LLP as the Company's
independent auditors for the year ending Dec. 31, 2021.
About Ekso Bionics
Ekso Bionics -- http://www.eksobionics.com-- is a developer of
exoskeleton solutions that amplify human potential by supporting or
enhancing strength, endurance and mobility across medical and
industrial applications. Founded in 2005, the Company continues to
build upon its expertise to design some of the most cutting-edge,
innovative wearable robots available on the market. The Company is
headquartered in the Bay Area and is listed on the Nasdaq
CapitalMarket under the symbol EKSO.
Ekso Bionics reported a net loss of $15.83 million for the year
ended Dec. 31, 2020, compared to a net loss of $12.13 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $56.50 million in total assets, $15.53 million in total
liabilities, and $40.97 million in total stockholders' equity.
ELECTRO SALES: Seeks Interim Court Nod to Use Cash Collateral
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Electro Sales & Service, Inc. seeks interim approval from the
Bankruptcy Court to use cash collateral in order to continue
operating its business as debtor-in-possession. The Debtor
requires the use of cash collateral in order to meet its utility
expenses, insurance, property taxes, and other normal expenses that
need to be paid. The Debtor has no other funds with which to pay
such expenses.
Tibor Ritter P.S.P. is a secured creditor claiming a lien for
$370,000 on the Debtor's rental income and the cash proceeds from
its property rental business. The cash and funds on account may
constitute Tibor Ritter's cash collateral. San Pedro Real Estate,
LLC has a lien on cash collateral, secondary to the lien of Tibor
Ritter.
As adequate protection to Tibor Ritter, the Debtor proposes to:
* grant a replacement lien to the same extent, priority and
validity as its pre-petition lien;
* maintain insurance coverage on the property generating the
cash collateral; and
* make regular monthly adequate protection payments of $2,500 on
its debts to Tibor Ritter.
A copy of the motion is available for free at
https://bit.ly/2So0tBw from PacerMonitor.com.
About Electro Sales & Service
Electro Sales & Service filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Texas Case No.
21-50546) on May 3, 2021. 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 Ronald B. King oversees the case. David T.
Cain, Esq., represents the Debtor as legal counsel.
EMINENT CYCLES: Wins Cash Collateral Access Until September
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of California
has authorized Eminent Cycles, LLC to use cash collateral on an
interim and continuing basis in accordance with the budget for up
to four months from the hearing date of May 17, 2021 or until plan
confirmation.
At the hearing on May 17, 2021, the U.S. Trustee did not express
any concern or dissatisfaction with the Debtor's declaration or
expense breakdown. The Court granted the motion and ordered the
Debtor to submit a proposed order after circulating the order with
the U.S. Trustee's office.
A copy of the order and the Debtor's 2021 Monthly Spending Forecast
is available for free at https://bit.ly/2SoB0b9 from
PacerMonitor.com.
The Debtor projects total income of $943,023 and total expenses of
$380,232 for the remaining three quarters of 2021.
About Eminent Cycles, LLC
Eminent Cycles, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Cal. Case No. 21-01006) on March 16,
2021. In the petition signed by Jeffrey Soncrant, chief executive
officer, the Debtor disclosed up to $500,000 in assets and up to $1
million in liabilities.
Judge Christopher B Latham oversees the case.
Ajay Gupta at Gupta Evans and Associates, PC is the Debtor's
counsel.
ENERGIZER HOLDINGS: Moody's Rates New EUR650MM Unsecured Notes 'B2'
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Moody's Investors Service assigned a B2 rating to Energizer
Holdings, Inc.'s ("Energizer") proposed EUR650 million senior
unsecured notes. The company's B1 Corporate Family Rating, B1-PD
Probability of Default Rating, Ba1 rated senior secured bank credit
facility, and B2 rated senior unsecured notes are unchanged.
Energizer's SGL-1 Speculative-Grade Liquidity rating also remains
unchanged and the outlook remains stable. The Euro bonds will be
issued by Energizer Gamma Acquisition B.V., a wholly owned
subsidiary of Energizer. The Euro bonds will benefit from a
guaranty from the parent company, Energizer Holdings, Inc., and
have equal rank in payment with all of the company's existing and
future senior debt.
Proceeds from the proposed EUR650 million senior unsecured notes
(approximately $763 million USD equivalent) along with cash from
the balance sheet will be used to refinance the existing senior
unsecured Euro notes due 2026, including a call premium of
approximately $18 million, and to pay fees and expenses. The
proposed debt issuance is credit positive because it pushes out
Energizer's weighted average maturity profile. The existing ratings
are not affected because the transaction is leverage neutral.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: Energizer Gamma Acquisition B.V.
GTD Senior Unsecured Global Notes, Assigned B2 (LGD5)
LGD Adjustments:
Issuer: Energizer Gamma Acquisition B.V.
Senior Unsecured Regular Bond/Debenture LGD Adjusted to (LGD5)
from (LGD4)
Issuer: Energizer Holdings, Inc.
Senior Unsecured Regular Bond/Debenture LGD Adjusted to (LGD5)
from (LGD4)
RATINGS RATIONALE
Energizer's B1 CFR reflects its concentration in the declining
battery category that is facing a slow secular decline as consumer
products are increasingly evolving toward rechargeable
technologies. The ratings also reflect high event risk as Energizer
has chosen to expand outside of the battery business -- through
debt financed acquisitions -- into totally unrelated businesses.
The company's high financial leverage, with debt to EBITDA at about
5.5x for the twelve months ended March 31, 2021, also limits
financial flexibility to invest and sustain the dividend. Moody's
expects debt to EBITDA to improve to about 5.1x over the next 12 to
18 months through a combination of earnings growth, boosted by cost
and operational synergies, and debt repayment. However, leverage
could well increase again should Energizer pursue additional
debt-financed acquisitions. Energizer's ratings are supported by
its leading market position in the single use and specialized
battery market, portfolio of well-known brands in the battery and
consumer car maintenance segments, and solid operating cash flow.
Energizer's organic revenue growth was 8.7% for the twelve months
ended March 31, 2021 driven by distribution gains and increased
demand due to the impact of the coronavirus. Moody's expects demand
for the company's battery business (77% of sales) and auto business
(18%) to remain favorable over the next 12 months. The elevated
demand for batteries reflects a continued high number of consumers
working from home as a result of the pandemic. Moody's expects
Energizer's organic revenue growth to be around 0%-3% over the next
year supported by volume gains and a slight pick-up in developed
markets growth. That said, the company's profitability was
negatively impacted by higher coronavirus related costs related to
its workforce and higher sales of lower margin products in certain
geographies. These factors reduced the EBITDA margin by about 50
basis points to 21.4% in fiscal year 2020. However, for the twelve
months ended March 31, 2021, Energizer's EBITDA margin has returned
to a pre-coronavirus level of 21.9%. Moody's expects the EBITDA
margin to remain relatively stable over the next 12 -18 months
reflecting continued cost reduction initiatives and productivity
improvements. While Energizer continues to generate good free cash
flow of about $150-$200 million per annum, the company's continued
share buy-backs at a time when its profitability has been weaker
than expected is aggressive.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS:
In terms of Environmental, Social and Governance (ESG)
considerations, the most important factor for Energizer's ratings
are governance considerations related to its financial policies and
environmental risk. Moody's views Energizer's financial policies as
aggressive given its debt financed acquisition of Spectrum into
totally unrelated businesses. Energizer faces environmental risk
from the disposal and recycling of batteries.
The coronavirus outbreak and the government measures put in place
to contain it continue to disrupt economies and credit markets
across sectors and regions. Although an economic recovery is
underway, it is tenuous, and its continuation will be closely tied
to containment of the virus. As a result, there is uncertainty
around Moody's forecasts. Moody's regard the coronavirus outbreak
as a social risk under Moody's ESG framework, given the substantial
implications for public health and safety.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The stable outlook reflects Moody's expectation that Energizer's
high financial leverage will improve over the next 12 to 18 months
through EBITDA growth and debt repayment. Moody's also assumes that
Energizer's very good liquidity will provide flexibility to
integrate acquisitions and to repay debt.
The ratings could be downgraded if Energizer experiences
significant operational disruption. Further, the ratings could be
downgraded if the company's financial policies become increasingly
aggressive, including additional debt funded acquisitions or
shareholder returns. Moody's could also downgrade the ratings if
the company's liquidity deteriorates or if debt to EBITDA is
sustained above 5.5x.
Moody's could upgrade the ratings if Energizer consistently
generates organic revenue growth, maintains a stable to higher
margin and improves credit metrics. Debt/EBITDA would need to be
sustained below 4.5x before Moody's would consider an upgrade.
The principal methodology used in this rating was Consumer Packaged
Goods Methodology published in February 2020.
Energizer Holding, Inc. manufactures and markets batteries,
lighting products, car fragrance and appearance, and engine
additives around the world. The product portfolio includes
household batteries, specialty batteries, portable lighting
equipment and various car fragrance dispensing systems. Some key
brands include Energizer, Eveready, Rayovac, STP, and ArmorAll. The
publicly-traded company generates roughly $2.9 billion in annual
revenues.
ENGINEERED PROPULSION: GA-ASI Buying All Assets for $2.7 Million
----------------------------------------------------------------
Engineered Propulsion Systems, Inc., asks the U.S. Bankruptcy Court
for the Western District of Wisconsin to authorize the sale of
substantially all assets to General Atomics Aeronautical Systems,
Inc. ("GA-ASI") for $2,687,409.
The Debtor files the Motion in the wake of its previously-approved
purchaser (and DIP financer) having terminated both the agreement
to purchase and the agreement to provide post-petition financing.
Now with a willing buyer, the Debtor has the opportunity for one
last value-maximizing transaction and to avoid an impending and
value-destructive collapse of the success it has achieved thus far
in the Chapter 11 Case. For the reasons set forth, the Debtor
requests entry of an order ("GA-ASI Sale Order") authorizing the
Debtor to enter into the Asset Purchase Agreement, dated as of June
1, 2021.
On April 30, 2021, the Debtor received an offer from GA-ASI to
acquire assets from it. The Debtor swiftly entered into
negotiations with GA-ASI, and received an amended offer which the
Debtor and GA-ASI memorialized in an Asset Purchase Agreement dated
as of June 1, 2021 (as may be amended, modified and/or supplemented
from time to time.
The Debtor proposes to sell the substantial majority of its
tangible and intangible assets, as more particularly described in
the APA.
The terms of the sale under the APA may be summarized as follows:
a. Assets: The Property consists of the substantial majority
of the Debtor's assets, whether tangible or intangible; whether
choate or inchoate; and whether present or future, except as noted
in the APA. There are no material assets exempted from the
foregoing list.
b. Liabilities: Other than the satisfaction of the Debtor's
obligations to certain equipment finance lenders, GA-ASI is not
assuming any debts, obligations or other liabilities of the Debtor
pursuant to the APA.
c. Assumption and Assignment of Executory Contracts: By
separate motion, the Debtor may seek authority to assume and assign
certain specified executory contracts and unexpired leases to
GA-ASI.
d. GA-ASI Sale Order: The APA provides that the GA-ASI Sale
Order must be acceptable to GA-ASI in all respects in its sole and
absolute discretion.
e. Free and Clear: The APA provides that the GA-ASI Sale
Order must provide for GA-ASI to acquire the Debtor's assets free
and clear of all liens, claims, encumbrances and other interests of
any other party.
f. Purchase Price: The aggregate purchase price of $2,687,409
is comprised of the following:
i. cash equal to $1,034,399, a portion of which will be
paid by GA-ASI to the Debtor prior to Closing in the form of one or
more deposits in such amounts and on such dates to be reasonably
agreed between GA-ASI and the Debtor, and with the remainder to be
paid at Closing; and
ii. the satisfaction at Closing of the sum due to the
three secured equipment lenders (estimated at $1,653,010) of the
Debtor's obligations (provided, however, that to the extent the
Debtor’s obligations to the three secured equipment lenders as of
the Closing are less than $1,653,010, then the difference between
$1,653,010 and such lesser amount will be credited against the
Purchase Price and any amounts otherwise payable by GA-ASI at the
Closing and provided, however, that to the extent the Debtor's
obligations to the three secured equipment lenders as of the
Closing is more than $1,653,010, then the difference between
$1,653,010 and such larger amount will increase the Purchase Price
payable by GA-ASI as set forth in APA section 2.2 (a)1. and 2.
g. Closing: Customary for transactions of this type,
including an outside date for consummation of the sale transaction
of no later than July 15, 2021.
The Debtor respectfully asserts that the sale price and procedures
are reasonable and fair. It has been a debtor for nearly a year
and, after a complicated sale process to the Stalking Horse, the
value-maximizing sale was terminated due to no fault of the
Debtor's.
GA-ASI is the only party willing to acquire the Debtor's assets.
There are no other potential bidders and no viable alternative for
the Debtor other than consummation of the sale to GA-ASI.
Approval of the sale will provide the Debtor with just enough
liquidity to conclude this case in an orderly fashion. Absent the
relief requested in this Motion, the Debtor faces almost certain
administrative insolvency and a conversion to Chapter 7.
Based on the specific circumstances of this Chapter 11 Case, the
fair and reasonable purchase price to be paid by GA-ASI, and the
arms'-length, good-faith negotiations that have animated the
Debtor's dealings with GA-ASI, the Debtor submits that there is
ample justification for entry of the GA-ASI Sale Order.
The Debtor also respectfully requests that the Court waives the
stay imposed by Bankruptcy Rule 6004(h) as the exigent nature of
the relief sought justifies immediate relief.
A copy of the Agreement is available at
https://tinyurl.com/yxv84286 from PacerMonitor.com free of charge.
About Engineered Propulsion Systems
Engineered Propulsion Systems, Inc., a manufacturer of aircraft
engines and engine parts in New Richmond, Wis., filed a Chapter 11
petition (Bankr. W.D. Wis. Case No. 20-11957) on July 29, 2020.
Engineered Propulsion President Michael Fuchs signed the petition.
At the time of the filing, the Debtor was estimated to have $100
million to $500 million in assets and $10 million to $50 million
in
liabilities.
Judge G. Michael Halfenger oversees the case.
The Debtor tapped Steinhilber Swanson, LLP as bankruptcy counsel;
Jarchow Law, LLC as its general corporate counsel; and Peters,
Revnew, Kappenman & Anderson, P.A. as labor counsel. Simma,
Flottemesch & Orenstein, Ltd., is the Debtor's accountant.
FLYNN RESTAURANT: Moody's Alters Outlook on B3 CFR to Stable
------------------------------------------------------------
Moody's Investors Service affirmed Flynn Restaurant Group LP's B3
corporate family rating, B3-PD probability of default rating, B2
1st lien secured bank facility rating and Caa2 2nd lien secured
bank facility rating. The outlook was changed to stable from
negative.
"The affirmation and change in outlook to stable from negative
reflects the steady improvement in operating performance of Flynn's
restricted group that has resulted in earnings and cash flow growth
despite continued government restrictions in certain jurisdictions
as a result of the pandemic," stated Bill Fahy, Moody's Senior
Credit Officer. Given the off-premise focused business model of its
Arby's and Taco Bell restaurants Flynn's restricted group operating
performance was not as materially impacted as most in the
restaurant industry as a result of the pandemic. "The ratings and
outlook also anticipate that operating performance will continue to
improve, particularly at Panera due in part to same store sales
lapping historic lows and as consumers increase their spend on
food-away from home as government restrictions continue to be
scaled back," Fahy added.
Affirmations:
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Gtd Senior Secured First Lien Term Loan, Affirmed B2 (LGD3)
Gtd Senior Secured First Lien Revolving Credit Facility, Affirmed
B2 (LGD3)
Gtd Senior Secured Second Lien Term Loan, Affirmed Caa2 (LGD5)
Outlook Actions:
Issuer: Flynn Restaurant Group LP
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Flynn's B3 CFR reflects its high leverage, elevated capital
expenditure requirements to fund remodel and growth initiatives,
and the acquisitive nature of the company. The rating is supported
by the strength, scale, diversification, and high level of
awareness that the Taco Bell, Panera Bread and Arby's brands
provide. The rating is further supported by the company's good
liquidity and expectation that credit metrics will improve as
government restrictions continue to be scaled back.
The restaurant sector has been one of the sectors most
significantly affected by the coronavirus outbreak given its
exposure to widespread location restrictions and closures as well
as its sensitivity to consumer demand and sentiment. Moody's regard
the coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Flynn's private ownership is a rating factor given the potential
implications from both a capital structure and operating
perspective. Financial policies are always a key concern of
privately-owned companies with regards to the potential for higher
leverage, extractions of cash flow via dividends, or more
aggressive growth strategies.
Restaurants by their nature and relationship with sourcing food and
packaging, as well as an extensive labor force and constant
consumer interaction are deeply entwined with sustainability,
social and environmental concerns. While these factors may not
directly impact the credit, they could impact brand image and
consumers view of the brands overall.
The stable outlook reflects Moody's view that same store sales will
remain positive and help drive a steady improvement in earnings,
credit metrics and liquidity despite ongoing government
restrictions in certain states.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could result in an upgrade include a sustained
improvement in operating performance, liquidity and credit metrics
including debt to EBITDA migrating towards 5.5 times and EBIT
coverage of gross interest of over 1.5 and good liquidity.
Factors that could result in a downgrade include credit metrics
remained weak despite a lifting of restrictions on restaurants and
a subsequent recovery in earnings and liquidity. Specifically,
ratings could be downgraded in the event debt to EBITDA was over
7.0 times or EBIT to interest coverage was below 1.1 times on a
sustained basis or if liquidity deteriorated for any reason.
Flynn Restaurant Group LP, headquartered in San Francisco,
California, owns and operates 280 Taco Bells, 133 Panera Breads,
366 Arby's, 444 Applebee's, 937 Pizza Huts and 194 Wendy's
franchised restaurants throughout the US as of March 28, 2021. The
Applebee's, Wendy's and Pizza Hut restaurants are excluded from the
credit group, which includes the Pan American Group (Panera), Bell
American Group (Taco Bell), and RB American Group (Arby's)
subsidiaries. Flynn's revenue was approximately $2.0 billion on a
consolidated basis and $1.1 billion for the credit group for the
TTM period ending March 28, 2021. Flynn is owned by Ontario
Teachers' Pension Plan, Flynn management, and Main Post Partners.
The principal methodology used in these ratings was Restaurant
Industry published in January 2018.
FOREVER 21 INC: Bankruptcy Plan Can Give Creditors Small Recovery
-----------------------------------------------------------------
Daniel Gill of Bloomberg Law reports that Forever 21's remaining
creditors would recover less than 1% of claims totaling more than
$900 million under the latest Chapter 11 plan from the bankrupt
retailer.
The amended plan, filed June 11, 2021, incorporates a
court-approved settlement that would pay primarily post-bankruptcy
vendors and suppliers about 11% of their claims. The remaining
portion of their claims -- amounting to about $400 million -- would
be treated as unsecured claims with a recovery of less than 1%.
Other unsecured creditors, which hold claims of about $500 million,
also would recover less than 1%, according to the company's
disclosure statement.
About Forever 21
Founded in 1984 by South Korean husband and wife team Do Won Chang
and Jin Sook Chang and headquartered in Los Angeles, Calif.,
Forever 21, Inc. -- http://www.forever21.com/-- is a fast-fashion
retailer of women's, men's and kids clothing and accessories and is
known for offering the hottest, most current fashion trends at a
great value to consumers. Forever 21 delivers a curated assortment
of new merchandise brought in daily.
Forever 21, Inc. and seven of its U.S. subsidiaries each filed a
voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code (Bankr. D. Del. Lead Case No. 19-12122) on Sept.
29, 2019. According to the petition, Forever 21 has estimated
liabilities on a consolidated basis of between $1 billion and $10
billion against assets of the same range.
As of the bankruptcy filing, the Debtors operated 534 stores under
the Forever 21 brand in the U.S. and 15 stores under beauty and
wellness brand, Riley Rose.
The Debtors tapped Kirkland & Ellis LLP as legal advisor; Alvarez &
Marsal as restructuring advisor; and Lazard as investment banker;
and Pachulski Stang Ziehl & Jones LLP as local bankruptcy counsel.
Prime Clerk is the claims agent.
Andrew Vara, acting U.S. trustee for Region 3, appointed a
committee of unsecured creditors on Oct. 11, 2019. The committee
is represented by Kramer Levin Naftalis & Frankel LLP and Saul
Ewing Arnstein & Lehr LLP.
Counsel to the administrative agent under the Debtors' prepetition
revolving credit facility and the Debtors' DIP ABL financing
facility are Morgan, Lewis & Bockius LLP and Richards, Layton &
Finger, PA.
Counsel to the administrative agent under the Debtors' DIP term
loan facility is Schulte Roth & Zabel LLP.
* * *
In February 2020, the company was purchased by a consortium that
includes Authentic Brands Group, Simon Property Group and
Brookfield Property Partners for $81.1 million. As part of the
deal, ABG and Simon will each own 37.5% of the fast-fashion
retailer, while Brookfield controls the remaining 25% of Forever
21's operating and intellectual property businesses.
FORTRESS TRNSP: Moody's Affirms Ba3 CFR Amid Transtar Acquisition
-----------------------------------------------------------------
Moody's Investors Service affirmed Fortress Trnsp & Infrastructure
Investors LLC's (FTAI) corporate family rating and long-term senior
unsecured rating at Ba3. The rating outlook remains stable.
This rating action follows the company's announcement that it will
acquire Transtar, a wholly-owned subsidiary of U.S. Steel
Corporation, for a purchase price of $650 million, including fees
and expenses. The transaction will be financed with a bridge loan
facility at closing, after which FTAI will seek to raise a
combination of debt and equity to refinance it. Moody's expects
that the majority of the bridge refinancing will consist of debt.
"This acquisition carries risks associated with a large customer
concentration and exposes FTAI to volatile steel demand," says Inna
Bodeck, Vice President Senior Analyst with Moody's.
"Nonetheless, we expect that the company's good liquidity and
annual revenue and earnings growth from its aviation business
associated with our expectations of a strong global air travel
recovery, albeit uneven, supports the current rating."
Affirmations:
Issuer: Fortress Trnsp & Infrastructure Investors LLC
Corporate Family Rating, Affirmed Ba3
Senior Unsecured Regular Bond/Debenture, Affirmed Ba3
Outlook Actions:
Issuer: Fortress Trnsp & Infrastructure Investors LLC
Outlook, Remains Stable
RATINGS RATIONALE
FTAI's Ba3 CFR and long-term senior unsecured rating reflect the
benefits to creditors from its profitable aviation franchise, which
Moody's expects will benefit both from a strong, though uneven,
global air travel recovery as well as from FTAI's recent
investments and partnerships in the business. Moody's expects
steady increases in air travel in 2021 reaching about 50% of 2019
volumes, accelerating through 2022. FTAI is well positioned to
benefit from the air travel recovery, supported by improving demand
for the current generation of narrow-body aircraft, such as the
Boeing 737 and Airbus A320 family of aircraft, as well as the
engines that power these models, which is a focus of FTAI's
investment strategy in the sector. Additionally, the company's most
recent investments and partnerships with Lockheed Martin
Corporation (Lockheed Martin, A3 stable) and with AAR (NYSE:AIR), a
global aerospace and defense aftermarket solutions company, should
also contribute to earnings expansion.
Moody's believes that the Transtar acquisition exposes FTAI more to
earnings volatility from the steel demand given that the contract
to provide transportation services to US Steel (which includes
guarantees of volume and price) expires in five years and because
the transaction increases FTAI's customer concentrations. This
acquisition will increase FTAI's customer concentrations, with U.S.
Steel Corporation comprising approximately 24% of trailing-12
months' proforma EBITDA through March 2021. FTAI's proforma
Moody's-adjusted debt-to-EBITDA leverage of approximately 11.0x
remains relatively high at closing, albeit slightly improved due to
Transtar's good profitability. Moody's expects, however, that
leverage will decline to the low 7x range by the end of 2021,
supported primarily by a steady recovery in global air travel
volumes.
FTAI's good liquidity position is supported by the availability
under its $250 million revolving facility as well as cash on the
balance sheet and sufficient unencumbered assets. Additionally, the
company has limited debt maturities over the next few years.
The stable outlook reflects Moody's expectation that FTAI will
return to growth within its aviation leasing business segment while
maintaining EBITDA margin broadly in line with the pre-COVID-19
levels as well as sustained positive earnings and free cash flow
within its infrastructure business, including the Jefferson
Terminal facility. The stable outlook also incorporates Moody's
expectation that earnings from the new investment will be sustained
at least at 2020 levels over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
FTAI's ratings could be upgraded if the company reaches greater
scale while maintaining good margins and reducing its debt to
EBITDA leverage to less than 4.5x. The rating could also be
upgraded if Moody's believes that the Jefferson Terminal will
sustain positive EBITDA adequate to service project financing,
thereby reducing the contingent reliance on FTAI's leasing
businesses.
The ratings could be downgraded if the company's profitability
prospects deteriorate materially, if its capital or liquidity
profile weaken as a result of debt-financed acquisitions or
shareholder dividends, or if the company loses a material customer
or suffers a business disruption that weakens its financial
prospects. Moody's could downgrade FTAI if its debt to EBITDA
leverage is sustained above 5.5x as a result of any of the
aforementioned events.
Fortress Trnsp & Infrastructure Investors LLC (FTAI) is an investor
in infrastructure and equipment in the transportation sector with
total assets of $3.6 billion as of March 31, 2021. FTAI was formed
in 2011 and launched an IPO in 2015, resulting in approximately 99%
public ownership with remaining ownership interests held by
affiliates of Fortress Investment Group LLC (Fortress). FTAI is
externally managed by FIG, LLC, also a Fortress affiliate.
The methodologies used in these ratings were Finance Companies
Methodology published in November 2019.
FUTURUM COMMUNICATIONS: U.S. Trustee Unable to Appoint Committee
----------------------------------------------------------------
The U.S. Trustee for Region 19 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Futurum Communications Corporation.
About Futurum Communications Corporation
Futurum Communications Corporation -- https://forethought.net –-
is an independent locally owned internet, cloud and communications
service provider with offices in Denver, Grand Junction and
Durango, offering a portfolio of enterprise-level cloud hosting,
colocation, Internet, voice and data solutions.
Futurum Communications sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Colo. Case No. 21-11331) on March 21,
2021. Jawaid Bazyar, president, signed the petition. In the
petition, the Debtor disclosed assets of between $1 million and $10
million and liabilities of the same range.
Judge Kimberley H. Tyson oversees the case.
The Debtor tapped Onsager Fletcher Johnson, LLC as its legal
counsel and Cook Forensics, LLC as its accountant.
GIBSON BRANDS: KKR Tells Rival That It Owns Firm Until Debt Repaid
------------------------------------------------------------------
Steven Church of Bloomberg News reports that at least one bidder is
looking to challenge KKR & Co.'s efforts to take control of
bankrupt guitar maker Gibson Brands Inc., but the private equity
firm warned rivals that they have to pay off at least $375 million
of the company's debt first.
The unidentified potential buyer surfaced Wednesday during a court
hearing to complain that KKR and allied noteholders wield too much
influence over Gibson's reorganization process. In response, the
noteholders insisted that their senior debt gives them control of
Gibson's future.
About Gibson Brands
Founded in 1894 and headquartered in Nashville, Tennessee, Gibson
Brands, Inc. -- http://www.gibson.com/-- and its subsidiaries
design and manufacture guitars and other fretted instruments.
Gibson's brands include the Les Paul, SG, Flying V, Explorer, J-45,
Hummingbird, and ES-335, among others.
Gibson Brands, Inc. and 11 affiliates commenced Chapter 11 cases
(Bankr. D. Del. Lead Case No. 18-11025) on May 1, 2018. In the
petition signed by CEO Henry E. Juszkiewicz, Gibson Brands
estimated $100 million to $500 million in assets and liabilities.
The Hon. Christopher S. Sontchi presided over the cases.
The Debtors tapped Goodwin Procter LLP as their lead counsel;
Pepper Hamilton LLP as Delaware and conflicts counsel; Alvarez &
Marsal North America, LLC as restructuring advisor; Brian J. Fox,
managing director of Alvarez & Marsal North America LLC, as chief
restructuring officer; Jefferies LLC as investment banker; and
Prime Clerk LLC as claims and noticing agent.
* * *
Gibson won approval of its Reorganization Plan on Oct. 2, 2018, and
thereafter emerged from Chapter 11 bankruptcy.
GIRARDI KEESE: Dordick Buying Bldg. 1 Personal Property for $50K
----------------------------------------------------------------
Elissa D. Miller, the Chapter 7 trustee for the bankruptcy estate
of Girardi Keese, asks the U.S. Bankruptcy Court for the Central
District of California to authorize the sale of items of personal
property located at 1122 Wilshire Boulevard, in Los Angeles,
California, one of the buildings previously occupied by the Debtor,
to Dordick Law Corp. for $50,000.
For over 20 years, the Debtor operated out of two buildings located
in Los Angeles, California. One building is located at 1122
Wilshire Boulevard, in Los Angeles, California ("Building 1"), and
the other is located at 1126 Wilshire Boulevard, in Los Angeles,
California ("Building 2"). The Estate has continued to occupy both
buildings post-bankruptcy. The Debtor is not on record title on
either building.
The building is currently in escrow to be sold, and the Buyer is
interested in purchasing the furniture and certain other items of
personal property located in the building for $50,000. Based on
proposals received from multiple auctioneers, the Trustee believes
the proposed sale price is fair and reasonable.
Accordingly, the Trustee and the Buyer have entered into an
agreement which details the terms of the proposed sale. The Motion
seeks approval of the terms of the agreement and of the sale of the
personal property.
Building 1 is currently in escrow to be sold to the Buyer. The
Buyer is interested in purchasing much of the personal property
located in Building 1 for $50,000. The property includes, but is
not limited to, furniture, shelving, partitions, one Blind Justice
Bronze statue, and other miscellaneous personal property.
Specifically excluded from the proposed sale are the Debtor's phone
system and phones. The Assets are more particularly described in
an Asset Purchase Agreement executed by the Trustee and the Buyer
and the accompanying Schedule 2.1.
The Trustee will sell, assign, and transfer to the Buyer all of the
Estate's right, title and interest in the Assets located in
Building 1 on an as-is where-is basis and without any
representations or warranties, express or implied. The sale is
free and clear of all liens, claims, encumbrances, and other
interests. Any liens, claims, encumbrances, or other interests of
the Debtor's creditors will attach only to the proceeds of the
sale.
The Trustee has received multiple proposals from auctioneers which
estimate the combined gross auction sale proceeds of the personal
property located in both Building 1 and Building 2. One of the
proposals specifically values the gross auction sale proceeds for
the Assets at $55,000, which would be further reduced by auction
costs. The sale of Assets as proposed in the Agreement avoids the
Trustee having to incur auction costs and other costs moving the
Assets from Building 1 to Building 2. The Trustee believes that
the $50,000 proposed sale price is fair, reasonable and in line
with the auctioneers' estimates.
A copy of the Agreement is available at
https://tinyurl.com/sp95tfwn from PacerMonitor.com free of charge.
Counsel for Trustee:
Lei Lei Wang Ekvall, Esq. (lekvall@swelawfirm.com)
Philip E. Strok, Esq. (pstrok@swelawfirm.com)
Timothy W. Evanston, Esq. (tevanston@swelawfirm.com)
SMILEY WANG-EKVALL, LLP
3200 Park Center Drive, Suite 250
Costa Mesa, CA 92626
Telephone: (714) 445-1000
Facsimile: (714) 445-1002
The bankruptcy case is In re: Girardi Keese, (Bankr. C.D. Cal. Case
No. 2:20-bk-21022-BR). Elissa D. Miller serves as the chapter 7
trustee for the bankruptcy estate.
GREENKARMA LLC: Obtains Permission to Use Cash Collateral
---------------------------------------------------------
Judge Stacey L. Miesel authorized GreenKarma, LLC to use the cash
collateral to pay for necessary operating expenses of the Debtor's
business, pursuant to the approved budget.
The Court ruled that, as adequate protection to Swift Financial,
LLC's interest, Swift Financial, to the extent that its cash
collateral is used by the Debtor, is granted a valid and perfected
replacement security interest and lien in the Debtor's postpetition
collateral and proceeds thereof, to the extent and with the same
priority which Swift Financial held in the Debtor's prepetition
collateral. The Debtor will pay also Swift Financial $500 monthly,
on or before the 25th of each month, as adequate protection to be
applied to its debt to Swift.
The Debtor owed Swift Financial, as servicing agent for WebBank,
$87,697 as of the Petition Date for principal and interest under a
prepetition business loan. The Debtor's obligation to Swift
Financial is secured by a continuing, first priority security
interest and lien on all of the Debtor's present and future
accounts, receivables, chattel paper, deposit accounts, personal
property, assets and fixtures, general intangibles, instruments,
equipment and inventory. Swift Financial has agreed to the
Debtor's use of the cash collateral.
A hearing on the Debtor's cash collateral motion is scheduled for
July 6, 2021 at 11 a.m. Objections must be filed and served by 5
p.m. on June 29.
A copy of the consent order is available for free at
https://bit.ly/3cFs0VI from PacerMonitor.com.
About GreenKarma, LLC
GreenKarma, LLC, d/b/a Baby Mantra, filed a petition under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D.N.J.
Case No. 21-11823) on March 5, 2021 in the U.S. Bankruptcy Court
for the District of New Jersey.
As of the Petition Date, the Debtor estimated up to $50,000 in
assets and between $500,000 to $1 million in liabilities. The
petition was signed by Nupoor Patel, managing member of
Continential Brands LLC. Judge Stacey L. Meisel is assigned to the
case. Scura, Wigfield, Heyer, Stevens & Cammarota, LLP represents
the Debtor as counsel.
Counsel for Swift Financial, LLC, as servicing agent for WebBank:
Sergio I. Scuteri, Esq.
CAPEHART & SCATCHARD, P.A.
8000 Midlantic Dr., Ste. 300S
P.O. Box 5016
Mt. Laurel, NJ 08054-5016
Telephone: 856-914-2046
Email: sscuteri@capehart.com
GTT COMMUNICATIONS: Amends Infra Sale Agreement With Cube Telecom
-----------------------------------------------------------------
GTT Communications, Inc., together with its subsidiaries GTT
Holdings Limited, Global Telecom and Technology Holdings Ireland
Limited, Hibernia NGS Limited and GTT Americas, LLC (the "Sellers")
and Cube Telecom Europe Bidco Limited (the "Buyer") have entered
into the Project Apollo – Share Purchase Agreement Letter (the
"SPA Letter Amendment"), which includes a conformed version of the
Sale and Purchase Agreement ("Infrastructure SPA"), reflecting
amendments to the agreement.
As previously disclosed, on Oct. 16, 2020, the Sellers and the
Buyer entered into the Sale and Purchase Agreement with respect to
GTT Communications' pending infrastructure sale transaction. On
Feb. 15, 2021, the Sellers and the Buyer entered into the Project
Apollo - KPMG VDD Reports Deadline Extension Letter, which amended
the Infrastructure SPA in relation to the requirement of the
Sellers to deliver the VDD Reports to the Buyer.
The SPA Letter Amendment amends certain termination rights in favor
of the Buyer as follows:
* removes the termination events relating to an insolvency event
and related items;
* amends the automatic termination events with respect to events
of default under that certain Indenture, dated as of Dec. 22,
2016, by and between the Company, as successor by merger to
GTT
Escrow Corporation, and Wilmington Trust, National
Association,
as Trustee, and that certain Credit Agreement, dated as of
May 31, 2018, by and among the Company and GTT Communications
B.V., as borrowers, KeyBank National Association, as
administrative agent and letter of credit issuer, and the
lenders and other financial institutions party thereto from
time to time, such that the Infrastructure SPA will not
automatically terminate if (i) an event of default occurs
under
the Credit Agreement and Lenders holding at least a majority
of
the outstanding loans and revolving commitments under the
Credit Agreement and Lenders holding at least a majority of
the
outstanding revolving commitments under the Credit Agreement
agree to waive or forbear from exercising remedies under the
Credit Agreement with respect to such event of default within
five business days or have not taken any affirmative action to
exercise remedies under the Credit Agreement with respect to
such event of default, (ii) an event of default occurs under
the Indenture and requisite beneficial owners of the
Company's
outstanding 7.875% Senior Notes due 2024 issued under the
Indenture agree to waive or forbear from exercising remedies
under the Indenture with respect to such event of default
within five business days or have not taken any affirmative
action to exercise remedies under the Indenture with respect
to
such event of default, (iii) the Sellers, or any member of the
Sellers' group, make a filing under chapter 11 of title 11 of
the United States Code within five business days of any such
events of default or (iv) the applicable event of default
arises solely in connection with the pursuit or satisfaction
of
the Sale Transaction or as a result of the commencement of a
Chapter 11 Case;
* provides an additional automatic termination event if any
Seller and/or member of the Sellers' group enters into a
restructuring support agreement other than (i) an Acceptable
RSA, (ii) a plan support agreement that supports and is
consistent with the Infrastructure SPA, provides for the
payment of the Buyer's reasonable and documented expenses in
connection with any restructuring (including in connection
with
any Chapter 11 Case) up to $5 million in the event that the
Infrastructure SPA is terminated for any reason other than a
breach by Buyer of any of its material obligations under the
Infrastructure SPA and the Break-Up Fee and does not
otherwise
materially or adversely affect the consummation of the Sale
Transaction or the rights of the Buyer under the
Infrastructure
SPA or related transaction documents or (iii) a restructuring
support agreement to which the Buyer is a party;
* provides an additional automatic termination event if the
Sellers file a Chapter 11 Case and the Sellers fail to achieve
the applicable milestone dates in connection with the filing
of
an Acceptable Sale Motion or obtaining the Sale Protection
Order or an Acceptable Sale Order, subject to potential
extensions; and
* provides an additional automatic termination event if an
Acceptable RSA terminates with respect to the Buyer (other
than
as a result of a breach by the Buyer); provided that this
termination event will not apply if (i) the applicable
bankruptcy court has entered an Acceptable Sale Order prior to
such termination or (ii) the Sellers are using all reasonable
efforts to satisfy the Sale Condition at the time such
Acceptable RSA is terminated.
The SPA Letter Amendment adds the following conditions to the
completion of the Sale Transaction:
* if the Sellers do not commence a Chapter 11 Case prior to the
completion date, (i) the Buyer, (ii) the Sellers, (iii)
holders
of greater than 66.67% of the Notes, (iv) Lenders holding
greater than 66.67% of the obligations outstanding under the
Credit Agreement and (v) subject to certain exceptions,
lenders
holding greater than 66.67% of the obligations outstanding
under that that certain Priming Facility Credit Agreement,
among the Company, GTT B.V., the lenders party thereto and
Delaware Trust Company, as administrative agent shall have
shall have entered into a restructuring support agreement that
provides for (a) the assumption of the Infrastructure SPA and
ancillary agreements, (b) provides releases in favor of the
Buyer and its group in the form set forth in the
Infrastructure
SPA and (c) provides for the payment of the Buyer's
Restructuring Expenses and the Break-Up Fee on the terms and
conditions set forth in the Infrastructure SPA;
* in the event that any of the Sellers file a Chapter 11 Case
prior to the completion date, the Sellers are required to: (i)
file a motion seeking entry of an order approving the Sale
Transaction with the bankruptcy court within three days of
such
filing; (ii) obtain an order approving the provisions of the
Infrastructure SPA relating to payment of the Buyer's
Restructuring Expenses and the Break-Up Fee from the
bankruptcy
court within 21 days of such filing; and (iii) obtain an
Acceptable Sale Order from the bankruptcy court providing for,
among other things, the approval of the Sale Transaction as
contemplated by the Infrastructure SPA, prior to the later of
(a) 45 days after the commencement of the Chapter 11 Case and
(b) 20 days following the satisfaction or waiver of all
completion conditions other than regulatory conditions; and
* in the event that any of the Sellers file a Chapter 11 Case
prior to the completion date, any incremental financing
agreement that the Sellers enter into prior to the completion
date for purposes of financing an in-court reorganization
shall
be on terms and conditions not inconsistent with the
Infrastructure SPA and the Acceptable RSA, the Acceptable PSA,
or the Acceptable Sale Order, as applicable.
In addition, the SPA Letter Amendment provides that the Sellers
shall (i) pay the Buyer a break-up fee equal to three percent of
the aggregate base purchase price ($60,600,000) in the event that
the Infrastructure SPA is terminated in certain circumstances, with
such fee to be payable within five business days of the Sellers
consummating certain alternative transactions or plans of
reorganization and (ii) reimburse the Buyer for the Buyer's
Restructuring Expenses, up to a cap of $5 million, in the event
that the Infrastructure SPA is terminated for any reason other than
a breach by the Buyer of any of its material obligations
thereunder.
In addition to the foregoing, the SPA Letter Amendment also, among
other things, (i) amends the conditions to the release of the first
$37.5 million of the $75.0 million holdback such that in the event
that a Chapter 11 Case has been commenced prior to the date on
which any adjustment to the purchase price has been paid, such
release will take place no earlier than following the issuance of a
bankruptcy court order confirming a plan of reorganization in the
Chapter 11 Case; (ii) adds post-completion obligations of the Buyer
to use reasonable efforts to obtain letters of credit from the
Group's third party finance providers in order to cause the release
of collateralized cash under existing letters of credit and return
such released amounts to the Sellers net of reasonably incurred
costs in connection with such releases and net of the amount of any
cash collaterals required to be provided by the Buyer in connection
with such new letters of credit; (iii) provides that specified tax
filings not completed prior to completion will be completed
post-completion and the Sellers will indemnify the Buyer and
provide any required cooperation and information in respect of
these tax filings; and (iv) makes other technical changes to
provide that the filing of a Chapter 11 Case will not cause a
breach under the Infrastructure SPA.
The Company continues to work expeditiously towards consummating
the Sale Transaction. In addition to continuing its efforts to
obtain necessary governmental and third party consents and
approvals and otherwise satisfy the conditions to closing under the
Infrastructure SPA, the Company has made substantial progress
implementing the corporate reorganization contemplated in
connection with the Sale Transaction and is continuing to take
steps to separate the infrastructure assets that are the subject of
the Infrastructure SPA from the rest of the Company's business.
The Sale Transaction is currently expected to close during the
summer of 2021.
About GTT
Headquartered in McLean, Virginia, GTT Communications, Inc. --
www.gtt.net -- owns and operates a global Tier 1 internet network
and provides a comprehensive suite of cloud networking services.
* * *
As reported by the TCR on March 1, 2021, S&P Global Ratings lowered
all of its ratings on U.S.-based internet protocol network operator
GTT Communications Inc. by one notch, including its issuer credit
rating, to 'CCC-' from 'CCC', to reflect the increased likelihood
of a default or distressed exchange over the next six months.
In December 2020, Moody's Investors Service downgraded GTT
Communications, Inc's corporate family rating to Caa2 from B3. The
downgrade reflects the continued delays in the company reaching an
agreement with its lenders over a long-term cure of its reporting
requirements which GTT is in breach of due to recently discovered
accounting issues which have led to the company being unable to
file its Q2 and Q3 financial reports.
HDT HOLDCO: Moody's Assigns B1 CFR, Outlook Stable
--------------------------------------------------
Moody's Investors Service has assigned initial ratings to HDT
Holdco, Inc. Moody's assigned a B1 Corporate Family Rating, a B1-PD
Probability of Default Rating, and a B1 rating to the senior
secured credit facilities. Proceeds from the credit facilities,
along with equity proceeds will be used to fund the acquisition of
HDT by Nexus Capital Management. The rating outlook is stable.
RATINGS RATIONALE
The B1 CFR reflects HDT's modest scale and the company's reliance
on a limited number of customers and contracts that heightens the
need for strong execution. Moody's views HDT as being vulnerable to
cuts in defense spending given its heavy reliance on defense and
government customers. Future reductions in defense budgets could
materially pressure the company's credit profile, although Moody's
does not expect any such reductions over the near term.
The B1 is supported by the company's good revenue visibility that
Moody's expects will support a stable operating profile. HDT has
good competitive standing within expeditionary markets, underpinned
by sole-sourced and incumbency positions on many of its contracts.
Well-established relationships with government and defense
customers, a healthy backlog, and Moody's expectations of stable
defense spending, provide additional support to HDT.
HDT has achieved significant operational improvements over the last
few years. A combination of cost saving initiatives, a greater
focus on pricing, and contract renegotiations have resulted in a
marked increase in margins and cash generation. Moody's believes
these improvements are sustainable and that additional
opportunities for margin enhancement exist, particularly around
supply chain management and the in-sourcing of certain work. That
said, the aforementioned improvements in operating performance are
recent and HDT has a limited track record sustaining these higher
margins and levels of cash generation. Moody's expects HDT to take
a balanced approach to financial risk with adjusted debt-to-EBITDA
of around 4.5x or lower.
Moody's views governance risk as material given the private-equity
ownership of HDT. That said, Moody's anticipates a balanced
approach to financial risk and observes that pro forma leverage of
4.5x is relatively modest for private equity ownership.
Environmental and social considerations are not material and HDT
has no meaningful environmental liabilities.
The stable outlook reflects Moody's expectations of a steady
operating profile with positive free cash flow and debt-to-EBITDA
of around 4.5x or lower.
Moody's expects HDT to maintain good liquidity over the next 12 to
18 months. Cash will be around $20 million at the close of the
transaction and Moody's expects healthy levels of cash generation
going forward, with FCF-to-Debt at least in the mid-single digits
in 2021 and 2022. Amortization on term debt is minimal at 1% or $3
million per annum and HDT has no near-term principal obligations.
External liquidity is provided by a $40 million revolving credit
facility. The revolver contains a springing maximum first lien net
leverage ratio of 6x (35% cushion to closing leverage) that comes
into effect when usage exceeds 35%. The term loan is not expected
to contain any financial covenants.
The proposed new credit facilities provide covenant flexibility for
transactions that could adversely affect creditors, including
incremental debt capacity up to the sum of the greater of $68
million and 100% of Consolidated EBITDA, plus an unlimited amount
subject to closing date first lien net leverage ratio (if pari
passu secured). No portion of the incremental may be incurred with
an earlier maturity than the initial term loans. Subsidiaries are
only required to provide guarantees if wholly-owned, raising the
risk that a sale or disposition of partial equity interests could
trigger a guarantee release, with no explicit protective provisions
limiting such guarantee releases.
The credit agreement permits the transfer of assets to unrestricted
subsidiaries, up to the carve-out capacity, subject to "blocker"
provisions which prohibit the transfer of any intellectual property
that is material to the company and its restricted subsidiaries or
Holdco. The credit agreement provides some limitations on
up-tiering transactions, including the requirement that directly
and adversely affected lenders consent to amendments (i)
subordinating the obligations in right of payment or lien priority
to any other indebtedness; and (ii) to pro rata payments or sharing
of payments or the "waterfall" provisions.
The $320 million senior secured credit facility represents the
entirety of the company's funded debt structure and, as a result,
is rated consistent with the B1 corporate family rating. The bank
credit facilities are comprised of a $40 million senior secured
revolver due 2026 and a $280 million senior secured term loan due
2027. The credit facilities benefit from an upstream subsidiary
guarantee from each direct and indirectly wholly-owned U.S.
subsidiary of the borrower, subject to certain exclusions, and are
secured by a perfected first lien on substantially all tangible and
intangible assets of the borrower and each guarantor.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given HDT's modest size, Moody's does not anticipate any upward
rating pressure at this time. That said, over time ratings could be
upgraded with a meaningful increase in scale and if EBITDA margins
were sustained around 20%. Debt/EBITDA sustained below 3.5x with
FCF-to-debt in excess of 10% would also support an upgrade. The
ratings could be downgraded if liquidity were to weaken, if
debt-to-EBITDA was sustained above 4.5x or if HDT is unable to
maintain EBITDA margins at least in the mid-teens.
Assignments:
Issuer: HDT Holdco, Inc.
Corporate Family Rating, Assigned B1
Probability of Default Rating, Assigned B1-PD
Senior Secured Credit Facility, Assigned B1 (LGD3)
Outlook Actions:
Issuer: HDT Holdco, Inc.
Outlook, Assigned Stable
HDT Holdco, Inc. ("HDT") is a leading provider of expeditionary
solutions serving defense and government customers. Products
include expeditionary shelters and accessories, environmental
control units, power generators and management systems, specialty
vehicles, robotics, and other technical products. The company is
owned by entities of Nexus Capital Management.
The principal methodology used in these ratings was Aerospace and
Defense Methodology published in July 2020.
HDT HOLDCO: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to HDT
HoldCo Inc. (which does business as HDT Global). The outlook is
stable.
S&P said, "At the same time, we assigned our 'B' issue-level and
'3' recovery ratings to the company's proposed $40 million
revolving credit facility due 2026 and $280 million term loan B due
2027.
"The stable outlook reflects our expectation that credit metrics
will remain appropriate for the current rating, though there is
some uncertainty around the company's financial policy."
Nexus Capital Management L.P. is acquiring HDT HoldCo Inc. (which
does business as HDT Global) using a combination of debt and
equity. The initial borrower will be Highlander Merger Sub Inc.,
which will be merged with CB HDT Holdings Inc. at the close of the
acquisition and then be renamed HDT HoldCo Inc. HDT is issuing a
$40 million revolver due 2026 (expected to be undrawn at close), a
$280 million term loan B due 2027, and sponsor-contributed equity
to fund the the transaction, including transaction fees, and put
$20 million of cash on the balance sheet. S&P said, "We expect debt
to EBITDA to be in the mid-4x range in fiscal 2022 (fiscal year-end
June 30, 2022), due to the relatively large amount of sponsor
equity, and to improve further in fiscal 2023. However, we are
uncertain of financial sponsor, Nexus Capital's plans for future
acquisitions and dividends, which could result in leverage
remaining weaker than our forecast."
Leading positions in niche markets are offset by small size, a
narrow scope of products, and limited barriers to entry.HDT has
leading positions in the niche markets of tactical shelters and
environmental control and power (EC&P) units. S&P said, "With about
$430 million in revenues, it is one of the smaller aerospace and
defense companies we rate. The company has long-standing
relationships with customers, but we feel there is not much to stop
competitors from taking business. Also, we expect spending
priorities to change as the U.S. military shifts from the Middle
East to near-peer adversaries, although the company does not have
much exposure to U.S. operations in the Middle East." This will
likely benefit the Navy and Air Force at the expense of the Army,
which is the company's largest customer.
S&P said, "We expect adjusted EBITDA margins to remain relatively
stable over the forecast.HDT has been successful in completing some
cost-saving actions and improving pricing. The company believes it
can further strengthen margins with additional operational
improvements and by reducing spending on materials. However, we
expect margins will remain stable in the 15.5% to 17.5% range in
2022 and 2023.
"HDT will likely maintain adequate liquidity.Pro forma for the
close of the transaction, we expect the company to have $20 million
of cash on hand and an undrawn $40 million revolver. We expect the
company to generate modest positive free cash flow over the course
of the forecast, which will likely be used for bolt-on
acquisitions. The company has minimal annual debt amortization and
capital spending needs.
"The stable outlook on HDT reflects our expectation that the
company's credit metric will remain appropriate for the current
rating as margins improve and the company generates positive free
cash flow, though uncertainty around financial policy under new
ownership remains. We expect debt to EBITDA in the mid-4x range in
2022."
S&P could raise its ratings on HDT over the next 12 months if debt
to EBITDA is below 5x and S&P expects it to remain there. This
could occur if:
-- The company performs as expected; and
-- The sponsor commits to maintaining a conservative financial
policy despite possible acquisitions and dividends.
S&P could lower its ratings on HDT over the next 12 months if debt
to EBITDA increases above 7x and we do not expect improvement. This
could occur if:
-- Demand declines due to changes in defense spending;
-- Margins deteriorate due to lower volumes or pricing issues;
and
-- The company undertakes an aggressive financial policy.
HEALTHIER CHOICES: Expects to Raise $27-Mil. From Rights Offering
-----------------------------------------------------------------
Healthier Choices Management Corp. announced the expiration of the
Company's rights offering. The subscription period for its
previously announced rights offering of shares of common stock at
an actual subscription price of $0.0010 per share, which represents
a 25% discount to the 5-day VWAP ending on the expiration date,
expired on June 10, 2021, and these rights are no longer
exercisable.
The subscription rights exercised totaled approximately 27 billion
shares of common stock. Preliminary estimates indicate that the
Company will be raising gross proceeds of approximately $27 million
from the Offering. The results of the Offering and HCMC's
estimates regarding the aggregate gross proceeds of the Offering to
be received by HCMC are subject to finalization and verification by
its subscription agent.
Closing of the Rights Offering is subject to satisfaction or waiver
of all conditions to closing. Upon the closing, the subscription
agent will distribute, by way of direct registration in book-entry
form or through the facilities of DTC, as applicable, shares of
common stock to holders of rights who have validly exercised their
rights and paid the subscription price in full. No physical stock
certificates will be issued to such holders. While the shares sold
in the offering will be released by HCMC's transfer agent to actual
record date holders, the allocation of shares to participating
rights holders' accounts will be the responsibility of their
individual brokers, nominees or online trading platforms.
Participating rights holders should contact their brokers, nominees
or online trading platforms for verification of receipt of shares
they were issued pursuant to the rights offering.
Maxim Group LLC acted as Dealer-Manager for the Offering. Counsel
for HCMC was Cozen O'Connor and counsel for Maxim Group was
Ellenoff Grossman & Schole LLP.
Jeffrey Holman, the CEO of HCMC stated, "We chose to raise capital
through a rights offering in order to provide all stockholders with
the opportunity and the flexibility to participate according to
their pro rata share of ownership in HCMC. I truly appreciate each
stockholder who chose to participate for the confidence that you
placed in Team HCMC. This offering allows us to pursue various
courses to increase stockholder value, including protection of our
intellectual property rights through litigation and other methods,
funding future research and development for both our intellectual
property suite and products, and funding for growth initiatives."
The Company's registration statement on Form S-1 was declared
effective by the U.S. Securities and Exchange Commission (SEC) on
May 19, 2021. The prospectus relating to and describing the terms
of the Offering has been filed with the SEC as a part of the
registration statement and is available on the SEC's website at
http://www.sec.gov.
About Healthier Choices
Headquartered in Hollywood, Florida, Healthier Choices Management
Corp. -- http://www.healthiercmc.com-- is a holding company
focused on providing consumers with healthier daily choices with
respect to nutrition and other lifestyle alternatives.
Healthier Choices reported a net loss of $3.72 million for the year
ended Dec. 31, 2020, compared to a net loss of $2.80 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $13.99 million in total assets, $5.94 million in total
liabilities, and $8.05 million in total stockholders' equity.
HEARTLAND DENTAL: Moody's Rates New $870MM Incremental Loan 'B2'
----------------------------------------------------------------
Moody's Investors Service assigned a B2 to the new $870 million
Senior Secured Incremental first lien term loan of HEARTLAND
DENTAL, LLC. There is no change to Heartland Dental's existing
ratings, including its B3 Corporate Family Rating, B3-PD
Probability of Default Rating, B2 first lien senior secured debt
and the Caa2 rating on its unsecured notes. The outlook is
unchanged at stable.
Proceeds from the new $870 million incremental senior secured first
lien term loan will be used to fund the acquisition of American
Dental Partners, Inc. ("American Dental", B3 Negative) for a
purchase price of $660 million, refinance $150 million of
higher-cost existing first lien debt and add $60 million cash to
the balance sheet. American Dental Partners, Inc. provides
management services to affiliate dental centers, which are
primarily focused on general dentistry and hygiene, with a growing
focus on aesthetic segments (orthodontics, endodontics,
periodontics). Heartland anticipates the acquisition will close in
the second quarter 2021.
While the acquisition of American Dental is strategically sensible,
it is credit negative as pro forma leverage will rise to the
mid-7.0x range (excluding synergies). Moody's expects that leverage
will decline to the 7.0x range by the end of 2021 driven by the
realization of synergies and continued recovery from the pandemic
impact in 2020. Moody's expects Heartland will use the incremental
liquidity provided by the transaction to fund future acquisitions
or new offices
Ratings assigned:
HEARTLAND DENTAL, LLC
Gtd Sr Sec Incremental 1st lien Term Loan, B2 (LGD3)
RATINGS RATIONALE
Heartland's B3 Corporate Family Rating reflects its high
debt/EBITDA and negative free cash flow in light of its aggressive
growth strategy. The rating is supported by the company's position
as one of the largest dental support organization (DSO) in the US,
favorable industry dynamics and good geographic diversity.
Additionally, Heartland has some ability to improve cash flow and
liquidity by reducing new office openings and new dentist
affiliation investments.
Moody's expects Heartland to maintain good liquidity over the next
12-18 months. The company has historically had negative free cash
flow due to growth and acquisition spending. Moody's believes that
free cash flow will be positive in 2021 due to improved operating
performance and the addition of American Dental, which generates
positive free cash flow. Liquidity is supported by the company's
$357 million cash balance as pro forma March, 31, 2021, and an
undrawn $135 million revolver. There are no financial maintenance
covenants on the term loans.
The stable outlook is supported by a favorable industry outlook and
Heartland's good operating and acquisition track record. The stable
outlook also incorporates Moody's expectation that Heartland will
continue to be aggressive with its growth strategy, but that it
will maintain good liquidity and could reduce discretionary
spending should it face an operating set-back.
Moody's considers coronavirus to be a social risk given the risk to
human health and safety. Aside from coronavirus, Heartland 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 dental service companies to face the same
level of social risk as many other healthcare providers. Heartland
Dental, in particular, generates most of its revenues from
commercial insurance which Moody's views favorably.
From a governance perspective, Moody's views Heartland's growth
strategy to be extremely aggressive given its history of
debt-funded acquisitions and high leverage. Heartland has added
over 200 offices since its acquisition by KKR in March 2018, either
through acquisition or opening new dental offices. While there is
execution risk to rapid growth, acquisitions and new store openings
have generally been executed successfully. Owner dentists and the
equity sponsor contributed about $122 million dollars in August
2020 through an equity raise, a credit positive.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be downgraded if the company's earnings weaken or
financial leverage increases. Failure to integrate American Dental
successfully, pursuit of an overly aggressive expansion strategy or
deterioration in Heartland's cash flow or liquidity could also
result in a ratings downgrade.
The ratings could be upgraded if Heartland adopts less aggressive
financial policies and reduces debt to EBITDA below 6.0 times.
Additionally, the company would have to materially improve free
cash flow.
Heartland provides support staff and comprehensive business support
functions under administrative service agreements to its affiliated
dental offices, organized as professional corporations. Heartland
currently operates more than 1,400 offices across 38 states.
Heartland is majority-owned by KKR, and Ontario Teachers' Pension
Plan Board maintains partial ownership. The company generated about
$1.6 billion in net patient service revenue as of March 31, 2021.
The principal methodology used in this rating was Business and
Consumer Service Industry published in October 2016.
HEARTLAND DENTAL: S&P Rates New Incremental 1st-Lien Term Loan B-
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating and '3'
recovery rating to Heartland Dental LLC's proposed $870 million
incremental first-lien term loan. The '3' recovery rating indicates
its expectation for meaningful (50%-70%; rounded estimate: 50%)
recovery in the event of a payment default.
The company plans to use the proceeds from this term loan to fund
its $660 million acquisition of American Dental and refinance its
existing 2019 term loan (totaling about $150 million) at a slightly
lower interest rate. S&P said, "We expect Heartland to use the
remainder of the proceeds to pay about $20 million of transaction
fees and add about $40 million of cash to its balance sheet. This
transaction is a revision of the company's previously proposed $660
million incremental term loan issuance to fund the American Dental
acquisition. While the changes will add an additional $60 million
to Heartland's overall debt load, we do not view this increase as
material. Therefore, all of our other ratings on the company and
its debt remain unchanged."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- Heartland's proposed capital structure comprises a $135 million
revolver, a $1 billion first-lien term loan, a $150 million
first-lien delayed-draw term loan (assumed 100% drawn at default),
a $200 million first-lien incremental term loan (2020 term loan), a
$870 million first-lien incremental term loan (2021 term loan), and
$310 million of senior unsecured notes.
-- S&P has valued the company on a going-concern basis using a 5x
multiple of its projected emergence EBITDA of $251 million.
-- S&P's simulated default scenario assumes a default occurring in
2023 due to increased competition and a decline in third-party
reimbursement rates.
Simulated default assumptions
-- Simulated year of default: 2023
-- Implied enterprise value multiple: 5.0x
-- EBITDA at default: $251 million
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $1,196
million
-- Collateral value available to secured debt: $1,196 million
-- First-lien secured debt: $2,341 million
--Recovery expectations: 50%-70% (rounded estimate: 50%)
-- Collateral value available to senior unsecured debt: $0
-- Senior unsecured debt: $323 million
--Recovery expectations: 0%-10% (rounded estimate: 0%)
Note: All debt amounts include six months of prepetition interest.
HELIUS MEDICAL: Removes Interim Tag from President Andreeff's Title
-------------------------------------------------------------------
Helius Medical Technologies, Inc. has appointed Dane C. Andreeff as
president and chief executive officer of the Company. In addition,
Jeffrey S. Mathiesen was appointed as chief financial officer and
treasurer of the Company. Joyce LaViscount will continue to serve
as the Company's chief operating officer.
Mr. Andreeff has served as Helius' interim president and chief
executive officer since August 2020 and as a member of the
Company's Board of Directors since August 2017. Mr. Mathiesen
served as a member of Helius' Board of Directors and Chair of the
Company's Audit Committee from June 2020 to June 2021.
"After significant evaluation and deliberation, my fellow board
members and I are very pleased to announce the appointment of Dane
and Jeff to the executive leadership team," said Blane Walter,
Chairman of the Board of Directors of Helius. "Dane and Jeff
possess an important combination of strong leadership skills and
extensive experience in managing companies and guiding their
strategic development, making them ideal candidates to lead Helius
as we enter the next stage of growth and development as an
organization." Mr. Walter continued: "In addition to these
qualities, Dane and Jeff are highly skilled financial executives
with more than 20 years of senior-level financial leadership
experience, are well-versed in our business and its strategic
priorities, and have demonstrated their strategic expertise and
insight through their prior roles at Helius. We look forward to
their future contributions as members of our executive leadership
team."
"As a strong believer in both the PoNSTM technology and its ability
to improve the lives of patients, as well as the capabilities and
commitment of our organization to facilitating its availability and
adoption, I am excited to assume the role of President and Chief
Executive Officer," said Mr. Andreeff. "Looking ahead, I remain
committed to building upon the recent progress made during the last
year, and delivering strong, strategic and operational execution
for the benefit of patients, providers, payors, and shareholders."
"It is a great pleasure to join the Helius executive leadership
team at such an exciting and important point in the Company's
history," said Mr. Mathiesen. "I look forward to contributing to
Helius' success as we position the Company for growth during this
crucial next phase."
Mr. Andreeff serves as the general partner and portfolio manager at
Maple Leaf Partners, LP, which owns approximately 5% of Helius'
outstanding Class A common stock. Maple Leaf Partners, LP is a
hedge fund founded by Mr. Andreeff, where he has been employed
since 1996. In 2003, the fund was seeded by Julian Robertson's
Tiger Management and later grew to over $2 billion in assets under
management.
Mr. Andreeff has served as a member of the Board of Directors of
HDL Therapeutics, Inc., a privately held medical technology and
device company focused on infusing plasma with preβ-HDL for the
treatment of multiple cardiovascular indications, since 2012, and
Myocardial Solutions, Ltd., a privately held medical technology
company with an FDA-cleared cardiac MRI software known as MyoStrain
that provides a 10-minute test for detecting heart dysfunction in
multiple cardiovascular indications - including cardiotoxicity in
cancer treatment, since 2016.
Mr. Andreeff received his Bachelor's degree in Economics from the
University of Texas at Arlington in 1989 and his Master's degree in
Economics from the University of Texas at Arlington in 1991.
Mr. Mathiesen has nearly 30 years of experience as chief financial
officer of growth oriented, technology-based companies across a
wide range of industries including biopharmaceutical and medical
device companies. His experience includes three initial public
offerings on Nasdaq, new product launches and multiple M&A
transactions. Mr. Mathiesen previously served as chief financial
officer of Gemphire Therapeutics Inc., a publicly traded,
clinical-stage biopharmaceutical company, and as chief financial
officer of Sunshine Heart, Inc., a publicly traded, early-stage
medical device company.
Mr. Mathiesen currently serves as director and Audit Committee
Chair of NeuroOne Medical Technologies Corporation, a
publicly-traded medical technology company providing
neuromodulation continuous EEG monitoring and treatment solutions
for patients suffering from epilepsy and other nerve related
disorders, and as Lead Independent Director and Audit Committee
Chair of Panbela Therapeutics, Inc., a publicly-traded,
clinical-stage biopharmaceutical company developing therapies for
pancreatic diseases.
Mr. Mathiesen began his career at Deloitte & Touche LLP in 1983.
He received a B.S. in Accounting from the University of South
Dakota and is also a Certified Public Accountant.
On June 14, 2021, the Company entered into an Employment Agreement
with each of Mr. Andreeff and Mr. Mathiesen.
The Employment Agreements have an initial term of three years
beginning on June 14, 2021 and automatically renew for an
additional one year period at the end of the Initial Term and each
anniversary thereafter provided that at least 90 days prior to the
expiration of the Initial Term or any renewal term the Board does
not notify Mr. Andreeff or Mr. Mathiesen of its intention not to
renew.
The Employment Agreements entitle Mr. Andreeff and Mr. Mathiesen
to, among other benefits, the following compensation:
* An annual base salary of $350,000 and $335,000, respectively,
reviewed at least annually;
* An annual cash bonus in an amount of up to 50% and up to 40%,
respectively, of annual base salary, and the Company may elect
to pay up to 50% or 70%, respectively, of any earned annual
bonus in shares of the Company's Class A Common Stock in lieu
of cash, as a fully vested stock award;
* Participation in equity-based long-term incentive compensation
plans generally available to senior executive officers of the
Company;
* Participation in welfare benefit plans, practices, policies
and
programs (including, without limitation, medical,
prescription,
dental, disability, employee life, group life, accidental
death
and travel accident insurance plans and programs) made
available to other senior executive officers of the Company;
* Prompt reimbursement for all reasonable expenses in accordance
with the plans, practices, policies and programs of the
Company; and
* 20 days of paid vacation, to be taken in accordance with the
Company's policies and practices.
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 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.
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.
HERITAGE CHRISTIAN: Court OKs Third Stipulation on Cash Collateral
------------------------------------------------------------------
Judge Russ Kendig approved a third stipulation extending the
authority of Heritage Christian Schools of Ohio, Inc. to use the
cash collateral of Heritage Canton, LLC. The Court, previously,
has entered a first stipulation order and a second stipulation
order extending the Debtor's authority to use the cash collateral,
after Heritage Canton objected to the Debtor's request, and after
the Court granted the Debtor's request pursuant to an amended
interim order.
A copy of the third stipulation order is available for free at
https://bit.ly/3vnea0F
A continued hearing on the motion is set for July 13, 2021 at 2
p.m. (Eastern Time). Objections must be filed no later than 5 p.m.
on July 9.
About Heritage Christian Schools of Ohio, Inc.
Heritage Christian Schools of Ohio, Inc. --
https://heritagechristianschool.org/ -- is a tax-exempt private
Christian school located in Canton, Ohio.
Heritage Christian Schools of Ohio Inc. filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
N.D. Ohio Case No. 21-60124) on Feb. 2, 2021. The petition was
signed by Sharla Elton, superintendent. At the time of filing, the
Debtor estimated $1,206,968 in assets and $626,431 in liabilities.
Judge Russ Kendig presides over the case.
Anthony J. DeGirolamo, Esq. represents the Debtor as counsel.
Fredric P. Schwieg is the Subchapter V Trustee.
Heritage Canton, LLC, as lender is represented by Matthew R.
Duncan, Esq., at Brennan Manna & Diamond.
HERTZ CORP: Third Amended Joint Plan Confirmed by Judge
-------------------------------------------------------
Judge Mary F. Walrath has entered an order confirming the Second
Modified Third Amended Joint Chapter 11 Plan of Reorganization of
The Hertz Corporation and its Debtor Affiliates.
The Plan was solicited in good faith and in compliance with
applicable provisions of the Bankruptcy Code, Bankruptcy Rules,
Disclosure Statement Order, and Supplemental Disclosure Statement
Order.
The Plan is the result of extensive, good faith, arm's length
negotiations among the Debtors and their principal constituencies.
The Restructuring Transactions are proposed in good faith, are in
the best interests of the estate and maximize value for all
stakeholders.
The scope of the Third-Party Releases is appropriately tailored
under the facts and circumstances of the Chapter 11 Cases, and
parties received due and adequate notice of the Third-Party
Releases. Among other things, the Plan provides appropriate and
specific disclosure with respect to the claims and Causes of Action
that are subject to the Third-Party Releases, and no other
disclosure is necessary.
On the Effective Date, pursuant to Article III.B.7(b)(ii) and
Article XII.E of the Plan, the 7.000% Unsecured Promissory Notes
Claims shall receive payment in full in Cash in the amount of
$28,274,393.81 plus interest on such amount from the Petition Date
to the Effective Date at the Federal Judgment Rate plus the
reasonable and documented 7.000% Unsecured Promissory Notes
Trustee's Fees incurred prior to and as of the Effective Date.
About Hertz Corp.
Hertz Corp. and its subsidiaries -- http://www.hertz.com/--
operate a worldwide vehicle rental business under the Hertz,
Dollar, and Thrifty brands, with car rental locations in North
America, Europe, Latin America, Africa, Asia, Australia, the
Caribbean, the Middle East, and New Zealand. They also operate a
vehicle leasing and fleet management solutions business.
On May 22, 2020, The Hertz Corporation and certain of its U.S. and
Canadian subsidiaries and affiliates filed voluntary petitions for
reorganization under Chapter 11 in the U.S. Bankruptcy Court for
the District of Delaware (Bankr. D. Del. Case No. 20-11218).
Judge Mary F. Walrath oversees the cases.
The Debtors have tapped White & Case LLP as their bankruptcy
counsel, Richards, Layton & Finger, P.A., as local counsel, Moelis
& Co. as investment banker, and FTI Consulting as financial
advisor. The Debtors also retained the services of Boston
Consulting Group to assist the Debtors in the development of their
business plan. Prime Clerk LLC is the claims agent.
The U.S. Trustee for Regions 3 and 9 appointed a Committee to
represent unsecured creditors in Debtors' Chapter 11 cases. The
Committee has tapped Kramer Levin Naftalis & Frankel LLP as its
bankruptcy counsel, Benesch Friedlander Coplan & Aronoff LLP as
Delaware counsel, UBS Securities LLC as investment banker, and
Berkeley Research Group, LLC, as financial advisor. Ernst & Young
LLP provides audit and tax services to the Committee.
HERTZ GLOBAL: Bankruptcy Court Confirms Plan of Reorganization
--------------------------------------------------------------
Hertz Global Holdings, Inc., on June 10 disclosed that the
Bankruptcy Court confirmed the Company's Plan of Reorganization
(the "Plan"). The Plan unimpairs all classes of creditors (who are
legally deemed to have accepted it) and was approved by more than
97% of voting shareholders. The Court's approval clears the way
for Hertz to emerge from Chapter 11 by the end of June 2021.
As a result of its restructuring efforts, Hertz will emerge from
Chapter 11 with a substantially stronger balance sheet and greater
financial flexibility than it had prior to the onset of the
COVID-19 pandemic, which forced Hertz to file for Chapter 11 relief
in May 2020. Hertz's Plan will eliminate over $5 billion of debt,
including all of Hertz Europe's corporate debt, and will provide
more than $2.2 billion of global liquidity to the reorganized
Company. Hertz also will emerge with (i) a new $2.8 billion exit
credit facility consisting of at least $1.3 billion of term loans
and a revolving loan facility, and (ii) an approximately $7 billion
of asset-backed vehicle financing facility, each on favorable
terms. The Plan provides for the payment in cash in full to all
creditors and for existing shareholders to receive more than $1
billion of value.
Paul Stone, Hertz's President and Chief Executive Officer, said:
"With the Court's approval of our Plan today and a committed new
investor group, we are poised to exit Chapter 11 by the end of this
month as a well-capitalized and even more competitive company, with
the flexibility and resources to pursue exciting new growth
opportunities. I want to thank our employees and teams around the
world for their hard work, which has enabled us to continue taking
great care of our customers. As the demand for rental cars
continues to rise, we look forward to helping our customers travel
confidently and safely as they get back out on the road, and to
successfully building on Hertz's more than 100-year history of
quality service as one of the world's best known brands."
For Court documents or filings, please visit
https://restructuring.primeclerk.com/hertz or call (877) 428-4661
or (929) 955-3421. White & Case LLP is serving as legal advisor,
Moelis & Co. is serving as investment banker, and FTI Consulting is
serving as financial advisor.
About Hertz Global Holdings
Hertz Corp. and its subsidiaries (OTCPK:HTZGQ) --
http://www.hertz.com/-- operate a worldwide vehicle rental
business under the Hertz, Dollar, and Thrifty brands, with car
rental locations in North America, Europe, Latin America, Africa,
Asia, Australia, the Caribbean, the Middle East, and New Zealand.
The Company also operates a vehicle leasing and fleet management
solutions business.
On May 22, 2020, The Hertz Corporation and certain of its U.S. and
Canadian subsidiaries and affiliates filed voluntary petitions for
reorganization under Chapter 11 in the U.S. Bankruptcy Court
(Bankr. D. Del. Case No. 20-11218).
The Hon. Mary F. Walrath is the presiding judge.
White & Case LLP is serving as legal advisor, Moelis & Co. is
serving as investment banker, and FTI Consulting is serving as
financial advisor. Richards, Layton & Finger, P.A., is the local
counsel.
Prime Clerk LLC is the claims agent, maintaining the page
https://restructuring.primeclerk.com/hertz
HOSPITALITY INVESTORS: Wins Final OK on $65MM DIP Loan, Cash Use
----------------------------------------------------------------
Judge Craig T. Goldblatt authorized Hospitality Investors Trust
Inc. and subsidiary Hospitality Investors Trust Operating
Partnership LP, on a final basis, to:
-- incur up to $65,000,000 in principal amount of DIP loans,
inclusive of the amount authorized under the Interim Order; and
-- use cash collateral prior to the termination date.
Trimont Real Estate Advisors, LLC is the Administrative Agent and
Collateral Agent; and Brookfield Strategic Real Estate Partners II
Hospitality REIT II LLC is the initial lender under the DIP
Facility. Up to $30,000,000 of the Loan was made available
immediately upon entry of the Interim Order.
Pursuant to the Final Order, the Court ruled that:
a. To secure the DIP Obligations, the DIP Agent is granted for
the benefit of the DIP Secured Parties (i) a perfected
first-priority lien on the DIP Collateral to the extent that such
DIP Collateral was not subject to Permitted Priority Liens; and
(ii) a perfected lien on the DIP Collateral junior to any Permitted
Priority Liens on such DIP Collateral, in each case subject to the
Carve-Out;
b. The DIP Liens shall attach to all of the property, assets or
interests in property or assets of each Debtor, and all property of
the estate;
c. The DIP Agent, for the benefit of the DIP Secured Parties, is
granted an allowed superpriority administrative expense claim for
all DIP Obligations, having priority over all other claims against
the Debtors.
d. The DIP Liens and the DIP Superpriority Claim shall be
subject and subordinate only to prior payment of:
* fees payable to the United States Trustee or to the Clerk of
the Court;
* all reasonable fees and expenses up to $25,000 incurred by a
trustee under Section 726(b) of the Bankruptcy Code;
* unpaid professional fees and expenses payable to any
Professional Person that are incurred or accrued prior to the date
on which the DIP Agent provides written notice to the Debtors and
the Creditors' Committee (if any) of the occurrence of either an
Event of Default or the Termination Date, but solely if such
Professional Fees are ultimately allowed by the Court and have been
provided for in the DIP Budget; and
* unpaid Debtors' Professional Fees and Creditors' Committee's
Professional Fees, in each case incurred or accrued on or after the
Carve-Out Effective Date in an aggregate amount of up to $250,000,
to the extent allowed.
With respect to the Carve-out, the Court ruled that:
e. Prior to the Carve-Out Effective Date the Debtors shall
establish and fund an account for purposes of funding the Carve
Out;
f. Commencing upon the first Tuesday after the Closing Date, the
Debtors shall deposit in the Professional Fee Trust Account an
amount equal to the aggregate amount sufficient to pay the
Professional Fees in the amount projected in the DIP Budget for
such week;
g. Prior to the Carve-Out Effective Date, to the extent that
there are insufficient funds in the Debtors' operating accounts,
the Debtors shall be permitted to borrow under the DIP Credit
Agreement to fund the Professional Fee Trust Weekly Amounts subject
to the terms of the Final Order and the DIP Credit Agreement;
h. The Debtors shall pay all Professional Fees allowed by the
Court first from the Professional Fee Trust Account, excluding
restructuring, sale, financing, or other success fees;
i. The Professional Fee Trust Account shall be maintained, and
the funds therein shall be held in trust, and shall not be subject
to any cash sweep and/or foreclosure provisions in the DIP Loan
Documents, notwithstanding any provision to the contrary in the DIP
Loan Documents.
No Debtor shall object to any DIP Lender credit bidding up to the
full amount of its outstanding DIP Obligations.
A copy of the final order is available for free at
https://bit.ly/35eqgPh from Epiq Corporate Restructuring, claims
agent.
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, Esq., Paul V. Possinger, Esq., and Jordan E.
Sazant, Esq., at Proskauer Rose LLP; and Jeremy W. Ryan, Esq., at
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.
DIP Lender, Brookfield Strategic Real Estate Partners II
Hospitality REIT II LLC, is represented by Cleary Gottlieb Steen &
Hamilton LLP and Young Conaway Stargatt & Taylor, LLP.
DIP Agent, Trimont Real Estate Advisors, LLC, is represented by
Thompson & Knight LLP.
IDEANOMICS INC: Completes Acquisition of US Hybrid
--------------------------------------------------
Ideanomics has completed its previously reported May 12, 2021,
definitive agreement to acquire 100 percent of privately held US
Hybrid, a manufacturer and distributor of electric powertrain
components and fuel cell engines for medium and heavy-duty
commercial fleet applications. The completed acquisition is
another critical milestone in Ideanomics' mission to reduce
commercial fleet greenhouse gas emissions through advanced EV
technologies and forward-thinking partnerships.
Ideanomics simultaneously announced that US Hybrid has received
orders from partner Global Environment Products (GEP) for a fleet
of all-electric street sweepers expected to deploy in multiple
cities in the US and globally.
Global Environment Products is a manufacturer of specialized,
purpose-built, heavy-duty, and reliable Street Cleaning Equipment.
Headquartered in San Bernardino, CA, GEP believes in reliable,
affordable, and innovative products.
* The current order for the GEP street sweepers is anticipated
to
deliver more than a million dollars in revenue to US Hybrid in
the balance of CY 2021. This extends an existing partnership
between GEP and US Hybrid, who have delivered many clean
street
sweepers to customers in the US and Japan.
* Each new all-electric street sweeper will save an estimated 89
metric tons of carbon emissions over the lifetime of the
vehicle, or the equivalent of taking 19 cars off the road for
one year.
* The new, all-electric US Hybrid and GEP street sweeper feature
one 120-kW traction motor along with lithium-ion batteries
that
are charged via an AC 20kW, SAE J1772-compliant charging
system.
"We are pleased to join forces with Ideanomics and their
subsidiaries, and to announce this significant order from the GEP,"
said Dr. Gordon Abas Goodarzi, Ph.D., PE, CEO of US Hybrid.
"Ideanomics has emerged as a true powerhouse in the commercial EV
sector with a synergistic ecosystem of technologies and solutions
that covers the entire value chain of electrification. We look
forward to leveraging that strength going forward."
"We welcome Dr. Goodarzi and his entire team to Ideanomics and are
confident they will bring tremendous knowledge, innovation, and
value to the company in addition to their synergistic alignment
with many of our existing subsidiary brands," said Alf Poor,
Ideanomics CEO. "The deal announcement is the first of many
important customers wins we anticipate going forward. I look
forward to the accelerated commercialization and innovation US
Hybrid will bring to Ideanomics' ecosystem. It will benefit
businesses, communities around the world, and more importantly our
planet."
About Ideanomics
Ideanomics is a global company focused on the convergence of
financial services and industries experiencing technological
disruption. Its Mobile Energy Global (MEG) division is a service
provider which facilitates the adoption of electric vehicles by
commercial fleet operators through offering vehicle procurement,
finance and leasing, and energy management solutions under its
innovative sales to financing to charging (S2F2C) business model.
Ideanomics Capital is focused on disruptive fintech solutions and
services across the financial services industry. Together, MEG and
Ideanomics Capital provide their global customers and partners with
leading technologies and services designed to improve transparency,
efficiency, and accountability, and its shareholders with the
opportunity to participate in high-potential, growth industries.
The Company is headquartered in New York, NY, with operations in
the U.S., China, Ukraine, and Malaysia.
Ideanomics reported a net loss of $106.04 million for the year
ended Dec. 31, 2020, compared to a net loss of $96.83 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $569.90 million in total assets, $140.37 million in total
liabilities, $1.26 million in convertible preferred stock, $7.6
million in redeemable non-controlling interest, and $420.67 million
in total equity.
IDEANOMICS INC: Signs Standby Equity Distribution Deal With YA II
-----------------------------------------------------------------
Ideanomics, Inc. entered into a standby equity distribution
agreement with YA II PN, Ltd. The Company will be able to sell up
to 80,396,000 shares of its common stock at the Company's request
any time during the 36 months following the date of the SEDA's
entrance into force. The shares would be purchased at (i) 95% of
the Market Price if the applicable pricing period is two
consecutive trading days or (ii) 96% of the Market Price if the
applicable pricing period is five consecutive trading days, and, in
each case, would be subject to certain limitations, including that
YA could not purchase any shares that would result in it owning
more than 4.99% of the Company's common stock. "Market Price"
shall mean the lowest daily VWAP of the Company's common stock
during the two or five consecutive trading days, as applicable,
commencing on the trading day following the date the Company
submits an advance notice to YA. "VWAP" means, for any trading day,
the daily volume weighted average price of the Company's common
stock for such date on the principal market as reported by
Bloomberg L.P. during regular trading hours.
Pursuant to the SEDA, the Company is required to register all
shares which YA may acquire. The Company shall file with the
Securities and Exchange Commission a prospectus supplement to the
Company's prospectus, dated Jan. 19, 2021, filed as part of the
Company's effective shelf registration statement on Form S-3ASR,
File No. 333- 253061, registering all of the shares of Common Stock
that are to be offered and sold to YA pursuant to the SEDA.
Pursuant to the SEDA, the Company shall use the net proceeds from
any sale of the shares for working capital purposes, including for
general working capital purposes, which may include the repayment
of outstanding debt and investment and acquisition activities.
There are no other restrictions on future financing transactions.
The SEDA does not contain any right of first refusal, participation
rights, penalties or liquidated damages. The Company did not pay
any additional amounts to reimburse or otherwise compensate YA in
connection with the transaction.
YA has agreed that neither it nor any of its affiliates shall
engage in any short-selling or hedging of its common stock during
any time prior to the public disclosure of the SEDA.
About Ideanomics
Ideanomics is a global company focused on the convergence of
financial services and industries experiencing technological
disruption. Its Mobile Energy Global (MEG) division is a service
provider which facilitates the adoption of electric vehicles by
commercial fleet operators through offering vehicle procurement,
finance and leasing, and energy management solutions under its
innovative sales to financing to charging (S2F2C) business model.
Ideanomics Capital is focused on disruptive fintech solutions and
services across the financial services industry. Together, MEG and
Ideanomics Capital provide their global customers and partners with
leading technologies and services designed to improve transparency,
efficiency, and accountability, and its shareholders with the
opportunity to participate in high-potential, growth industries.
The Company is headquartered in New York, NY, with operations in
the U.S., China, Ukraine, and Malaysia.
Ideanomics reported a net loss of $106.04 million for the year
ended Dec. 31, 2020, compared to a net loss of $96.83 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $569.90 million in total assets, $140.37 million in total
liabilities, $1.26 million in convertible preferred stock, $7.6
million in redeemable non-controlling interest, and $420.67 million
in total equity.
J.S. CATES: Obtains Final OK on Cash Access Thru August 20
----------------------------------------------------------
Judge Kathleen H. Sanberg approved the stipulation between J.S.
Cates Construction, Inc. and its lender, CorTrust Bank, N.A.,
thereby authorizing the Debtor to use cash collateral through
August 20, 2021, on a final basis to pay for reasonable and
necessary expenses incurred in the ordinary course of the Debtor's
business, pursuant to the budget.
Judge Sanberg specified that the Debtor's expenses during the
designated months shall not exceed $64,286 for June 2021; $96,789
for July 2021; and $104,486 for August 2021.
As adequate protection for any use or diminution in the value of
CorTrust's interests in the prepetition collateral and the Debtor's
use of dash collateral:
a. the Debtor shall grant CorTrust valid and perfected
replacement security interests on all of its postpetition assets,
excluding causes of action arising under Chapter 5 of the
Bankruptcy Code and the Debtor's 2020 Ford Super-Duty F350;
b. the Debtor shall grant CorTrust a replacement lien on the
Debtor's Property in secondary position to the Debtor's mortgage to
the extent of the diminution in value of CorTrust's interest in
prepetition collateral not otherwise protected by replacement liens
granted in the adequate protection collateral; and
c. the Debtor shall pay CorTrust $3,000 monthly under the
prepetition CorTrust loans.
A copy of the final order is available for free at
https://bit.ly/3zp4VAD from PacerMonitor.com.
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. In the petition signed by Jeffrey S. Cates, president &
CEO, 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 Debtor's
counsel.
JACOBS TOWING: Seeks Authority to Use SBA Cash Collateral
---------------------------------------------------------
Jacobs Towing, LLC, d/b/a B & R Wrecker, asked the Bankruptcy Court
to authorize the use of cash collateral to pay the amounts due and
owing in the ordinary course of its business after the Petition
Date.
The Debtor disclosed that it owed the U.S. Small Business
Administration $150,000 under a prepetition financing agreement,
secured by SBA's interest in the Debtor's inventory; equipment;
instruments, including promissory notes; chattel paper; documents;
letters of credit rights; deposit accounts; accounts, including
health-care insurance receivables and credit card receivables,
among others. SBA is properly perfected through a UCC-1 Financing
Statement with the Alabama Secretary of State.
The Debtor related that while the SBA has not authorized the
Debtor's use of postpetition cash collateral, the SBA is
oversecured on account of the value of the Debtor's assets at
$1,084,195. The Debtor averred that creditors will not be
prejudiced by the request because the sought-after relief is
necessary to protect and preserve the Debtor's assets for the
benefit of the estate and the creditors and preserve the going
concern value of the Debtor's business.
A copy of the motion is available for free at
https://bit.ly/3vjgru2 from PacerMonitor.com.
About Jacobs Towing
Jacobs Towing, LLC, d/ba/ B &R Wrecker & Recovery in Troy, Alabama,
filed a Chapter 11 petition (Bankr. M.D. Ala. Case No. 21-31004) on
June 10, 2021. On the Petition Date, the Debtor estimated between
$1,000,001 and $10,000,000 in both assets and liabilities. Donnie
L. Jacobs, member, signed the petition. Espy Metcalf & Espy PC
represents the Debtor as counsel.
The firm may be reached through:
J. Kaz Espy, Esq.
Espy Metcalf & Espy P.C.
P.O. Drawer 6504
Dothan, AL 36302-6504
Telephone: (334)793-6288
Email: lynnia@espymetcalf.com
JAGUAR HEALTH: Further Adjourns Annual Meeting Until July 9
-----------------------------------------------------------
Jaguar Health, Inc. has adjourned its Annual Meeting of
Stockholders held on May 13, 2021 for a second time due to a lack
of quorum. The adjourned meeting will be held at 8:30 a.m. Pacific
Standard Time/11:30 a.m. Eastern Standard Time on Friday, July 9,
2021, at the offices of the Company at 200 Pine Street, Suite 400,
San Francisco, CA 94104. The record date for determining
stockholders eligible to vote at the Annual Meeting will remain the
close of business on April 12, 2021. Stockholders have thus far
strongly supported the proposals.
No action is required by any stockholder who has previously
delivered a proxy and who does not wish to revoke or change that
proxy.
"We currently have less than 0.1% of our total authorized shares of
Common Stock available for future issuance, taking into account
shares issued and outstanding and shares reserved for issuance upon
exercise of outstanding warrants, existing equity incentive awards,
and under our stock incentive plan and inducement award plans. The
Board believes that approval of Proposal 3 - the proposed increase
in the number of authorized shares of Common Stock - will benefit
us by providing flexibility in responding to future business
opportunities as the Board may deem in the best interest of
shareholders, from time to time; and also, if deemed in the best
interest of shareholders by the Board, to raise additional capital
from time to time to execute our business plans," said Lisa Conte,
Jaguar's president and CEO.
"We encourage all eligible stockholders who have not yet voted
their shares – or provided voting instructions to their broker or
other record holder – to do so prior to the Annual Meeting, as
your participation is important. See below under 'How to Vote' for
instructions on how to vote if you have not already voted, or if
you would like to change your votes," said Conte. "Jaguar's Board
of Directors recommends a vote "FOR" the presented proposals.
Based on a preliminary review of the votes cast, over 76% have
voted in favor of Proposal 3 ("Approving an amendment to the
Company's Third Amended and Restated Certificate of Incorporation,
as amended (the "COI"), to increase the number of authorized shares
of Common Stock from 150,000,000 shares to 290,000,000 shares.").
Approximately an additional 6% of the Company's eligible common
stock outstanding needs to be voted to reach quorum."
How to Vote
Stockholders of record as of the close of business on April 12,
2021 may vote by internet at http://www.voteproxy.com,or by
telephone at 800-776-9437 (this voting phone number is operational
24x7), or by returning a properly executed proxy card.
Stockholders who hold shares of Jaguar stock in street name may
vote through their broker. Street name stockholders requiring
assistance with voting their shares are encouraged to contact
Jaguar's proxy solicitation firm, Georgeson, at 866-821-0284,
Monday to Friday from 9:00 AM – 11:00 PM US Eastern Standard
Time, and Saturday from 12:00 PM-6:00 PM US Eastern Standard Time.
Georgeson's call center is not staffed on Sundays.
No changes have been made to the proposals to be voted on by
stockholders at the Annual Meeting. The Company's Proxy Statement
and any other materials filed by the Company with the SEC can be
obtained free of charge at the SEC's website at www.sec.gov.
About Jaguar Health
Jaguar Health, Inc. -- http://www.jaguar.health-- is a commercial
stage pharmaceuticals company focused on developing novel,
sustainably derived gastrointestinal products on a global basis.
The Company's wholly owned subsidiary, Napo Pharmaceuticals, Inc.,
focuses on developing and commercializing proprietary human
gastrointestinal pharmaceuticals for the global marketplace from
plants used traditionally in rainforest areas. Its Mytesi
(crofelemer) product is approved by the U.S. FDA for the
symptomatic relief of noninfectious diarrhea in adults with
HIV/AIDS on antiretroviral therapy.
Jaguar Health reported a net loss and comprehensive loss of $33.81
million for the year ended Dec. 31, 2020, compared to a net loss
and comprehensive loss of $38.54 million for the year ended Dec.
31, 2019. As of March 31, 2021, the Company had $68.71 million in
total assets, $36.82 million in total liabilities, and $31.89
million in total stockholders' equity.
JERRY BATTEH: $175K Jacksonville Property Sale to Niermann Denied
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Judge Jerry A. Funk of the U.S. Bankruptcy Court for the Middle
District of Florida denied Jerry Batteh's sale of the property
located at 2134 Lou Drive West, in Jacksonville, Florida 32216,
more particularly described as Lot 19, Block 21, San Souci Section
Ten, according to the plat thereof as recorded in Plat Book 27,
page 88, of the current public records of Duval County, Florida, to
Dawn Niermann for $175,000.
After review, the Court determines that the motion is deficient as
follows: Service upon the Parties in Interest List, defined by
Local Rule 1007-2 a current mailing matrix obtained from the Clerk
of Court is not indicated.
Accordingly, the motion is denied to allow the Movant to file an
amended motion.
The Clerk's Office is directed to serve a copy of the Order on
interested parties.
About Jerry Batteh
Jerry Batteh sought Chapter 11 protection (Bankr. M.D. Fla. Case
No. 11-05260) on July 18, 2011. Edward P. Jackson, Esq., in
Jacksonville, Florida, serves as counsel to the Debtor.
The Debtor's Chapter 11 Plan was confirmed by order dated March
26,
2014.
JERRY BATTEH: $180K Jacksonville Property Sale to Niermann Denied
-----------------------------------------------------------------
Judge Jerry A. Funk of the U.S. Bankruptcy Court for the Middle
District of Florida denied Jerry Batteh's sale of the property
located at 3728 Rogero Road, in Jacksonville, Florida 32277, more
particularly described as Lot 109, Fort Caroline Club Estates, Unit
No. 1-A, according to the plat thereof as recorded in Plat Book 29,
page 42, public records of Duval County, Florida, to Dawn Niermann
for $180,000.
After review, the Court determines that the motion is deficient as
follows: Service upon the Parties in Interest List, defined by
Local Rule 1007-2 a current mailing matrix obtained from the Clerk
of Court is not indicated.
Accordingly, the motion is denied to allow the Movant to file an
amended motion.
The Clerk's Office is directed to serve a copy of the Order on
interested parties.
About Jerry Batteh
Jerry Batteh sought Chapter 11 protection (Bankr. M.D. Fla. Case
No. 11-05260) on July 18, 2011. Edward P. Jackson, Esq., in
Jacksonville, Florida, serves as counsel to the Debtor.
The Debtor's Chapter 11 Plan was confirmed by order dated March
26,
2014.
JFAL HOLDING: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------
The U.S. Trustee for Region 6 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of JFAL Holding Company, LLC.
About JFAL Holding Company
JFAL Holding Company, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Texas Case No. 21-30285) on April 8,
2021. At the time of the filing, the Debtor had between $1 million
and $10 million in both assets and liabilities. Judge H.
Christopher Mott oversees the case. Weycer Kaplan Pulaski & Zuber
P.C. is the Debtor's legal counsel.
KATERRA INC: Backers Vow to Push Project Ahead Despite Ch.11 Filing
-------------------------------------------------------------------
The Austin Business Journal reports that work on a high-rise hotel
currently under construction in downtown Austin will go forward
despite the project's general contractor filing for Chapter 11
bankruptcy protection.
According to the Journal, Nelsen Partners, part of the development
team for the 31-story, 246-room Hyatt Centric, confirmed the
project will go forward as planned despite the bankruptcy filing.
Katerra Inc. filed June 6, 2021 for Chapter 11 protection in the
U.S. Bankruptcy Court for the Southern District of Texas.
Brad Nelsen, president of Nelsen Partners, said a new general
contractor is aboard and has retained all subcontractors, employees
and teams. Nelsen declined to reveal the name of the general
contractor but noted the development team filed new paperwork with
Austin City Hall on June 10. He added work is going on in earnest.
There is no indication the project will be delayed because of the
bankruptcy filing and general contractor transition.
The shell of the Hyatt Centric, located on one of the most
prominent corners of downtown at Congress Avenue and Eighth Street,
is already complete.
Katerra teamed with Nelsen Partners, McWhinney and Hyatt Hotels
Corp. to develop Austin’s first Hyatt Centric hotel. Construction
began in early 2020, prior to the start of the pandemic, and was
expected to be finished later this year.
Travis County records show McWhinney Real Estate Services as the
property owner at 721 Congress Ave. through MH HCAustin LLC.
Chapter 11 filing
Katerra — a prefab construction startup that was backed by
SoftBank — reportedly has secured $35 million in commitments
through debtor-in-possession financing to help fund operations
through the Chapter 11 process.
Court filings show Katerra’s operations generated about $1.75
billion of revenue for the year ending 2020. But the general
contractor will be consolidating its U.S. operations and
liquidating some of its assets.
An announcement posted on Katerra's website stated the company will
be "demobilizing ... many of its U.S. projects."
"The rapid deterioration of the company's financial position is the
result of the macroeconomic effects of the COVID-19 pandemic on the
construction industry, inability to procure bonding for
construction projects following the unexpected insolvency
proceedings of Katerra's former lender, and unsuccessful attempts
to secure additional capital and business," the Katerra statement
continued.
In court filings, Katerra blamed Covid-19 and financing problems
with a lender as reasons for bankruptcy, Silicon Valley Business
Journal reported. The company has raised more than $2 billion since
it was founded in 2015.
In the bankruptcy filings, Katerra said it had $1 billion to $10
billion in liabilities and $500 million to $1 billion is assets.
Thousands of employees were expected to lose their jobs.
The next hearing in bankruptcy court is set for July 12, 2021.
Katerra recently relocated its headquarters from the San Francisco
Bay Area to Houston.
About Katerra Inc.
Based in Menlo Park, California, Katerra is a Japanese-funded,
American technology-driven offsite construction company. It was
founded in 2015 by Michael Marks, former CEO of Flextronics and
former Tesla interim CEO, along with Fritz Wolff, the executive
chairman of The Wolff Co.
Katerra offers technology-driven design, manufacturing, and
assembly solution for bathroom pods, door and window, furniture,
and modular utility systems.
Katerra Inc. and its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 21-31861) on June 6, 2021. In its
petition, Katerra estimated liabilities of between $1 billion and
$10 billion and estimated assets of between $500 million and $1
billion.
The Debtors tapped Kirkland & Ellis LLP as counsel; Jackson Walker
LLP as co-bankruptcy counsel; Houlihan Lokey Capital, Inc., as
investment banker; and Alvarez & Marsal North America, LLC, as
financial and restructuring advisor. Prime Clerk LLC is the claims
and noticing agent.
KIMBALL HILL: Court Rejects Bid for Supplemental Damages v. F&D
---------------------------------------------------------------
Bankruptcy Judge Timothy A. Barnes denied the request of TRG
Venture Two, LLC for supplemental damages against Fidelity and
Deposit Company of Maryland.
TRG filed its Supplemental Damages Motion in light of the
bankruptcy court's Memorandum Decision and Order wherein the court
considered the District Court for the Northern District of
Illinois' questions on remand and, for the reasons set forth in the
Decision on Remand, found that F&D's conduct continued to be
sanctionable even when considered in light the recent United States
Supreme Court decision in Taggart v. Lorenzen, 139 S.Ct. 1795
(2019). After the Decision on Remand but before F&D's renewed
appeal thereof divested the bankruptcy court of jurisdiction, TRG
filed the Supplemental Damages Motion seeking further damages as a
result of alleged continuing conduct by F&D.
The bankruptcy court held that, while it has jurisdiction to hear
the Supplemental Damages Motion, the request is improvident in
light of the pending, second appeal and uncertain application of
the court's earlier stay pending appeal and related bond. TRG has
failed to convince the court that an award of supplemental damages
is appropriate at this time.
In Kimball Hill, Inc.'s 2008 bankruptcy case, the court found that
F&D's actions on interpleading TRG, the successive owner to certain
assets of the bankruptcy estate, into state court actions wherein
F&D asserted claims that had been treated in, released and enjoined
by the Debtors' Plan, had violated the terms of the court's
Confirmation Order and the Release and Plan Injunction contained in
the Plan and the Confirmation Order. The court later determined and
awarded damages as a remedial contempt sanction.
A copy of the Court's June 10, 2021 Memorandum Decision is
available at:
https://www.leagle.com/decision/inbco20210611534
About Kimball Hill
Headquartered in Rolling Meadow, Illinois, Kimball Hill Inc. --
http://www.kimballhillhomes.com/-- was one of the largest
privately owned homebuilders and one of the 30 largest homebuilders
in the United States, as measured by home deliveries and revenues,
before filing for bankruptcy in 2008. The company operated within
12 markets, including, among others, Chicago, Dallas, Fort Worth,
Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida,
the Midwest, Nevada, the Pacific Coast and Texas.
Kimball Hill, Inc., and 29 of its affiliates filed for Chapter 11
protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No.
08-10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP,
represented the Debtors in their restructuring efforts. The
Debtors' consolidated financial condition as of Dec. 31, 2007,
reflected total assets of $795,473,000 and total debts
$631,867,000.
Kimball Hill filed a Chapter 11 plan of liquidation on Dec. 2,
2008, which provides for the winding down of the Debtors' business
through a liquidation trust. With the support of the official
committee of unsecured creditors and the company's senior lenders
(estimated to recover 37% to 48% of their claims), the plan was
confirmed on March 12, 2009, and took effect 12 days later. U.S.
Bank National Association was appointed as trustee for the
Liquidation Trust.
KK FIT: Court OKs Cash Collateral Stipulation with Lender
---------------------------------------------------------
KK Fit, Inc. and its debtor-affiliates entered into a stipulation
with PeoplesBank, A Codorous Valley Company, pending a confirmation
hearing on the Debtors' proposed reorganization plan. The Debtors
seek to use the cash on hand as of the Petition Date and proceeds
and collections of the pre-petition collateral to meet their
post-petition funding requirements in the operation of their
businesses.
Subject to the Court's approval of the Stipulation, PeoplesBank
agrees to the Debtors' use of cash collateral through August 31,
2021.
As of the Petition Date, the Debtors owe the Lender these pay-off
balances under three commercial loans:
a. $2,589,402 pursuant to a commercial term loan for $3,200,000
to each of the Debtors;
b. $1,399,010 pursuant to a commercial mortgage loan to each of
the Debtors for $1,550,000; and
c. $829,563 pursuant to a commercial term loan to Debtor K.K.
Fit York, Inc. for $700,000.
The pay-off balances include unpaid principal, accrued interest,
late and other charges and the Lender's attorneys' fees and
expenses. Each of the Loans is secured by a valid and perfected
security interest in all of the Debtors' personal property assets.
The Stipulation further provides that:
* The Debtors agree to use cash collateral only according to the
budgets, and agree not to use the cash collateral to pay
pre-petition debts to vendors, shareholders, officers or any other
pre-petition debt junior in priority to the Lender, except as
permitted by Court order.
* The Debtors shall pay the Lender $15,000, on or before each of
June 25, July 25 and August 25, 2021, as partial adequate
protection to the Lender's interests in the collateral and for the
Debtors' use of cash collateral, pending confirmation of a plan in
the Debtors' cases. PeoplesBank shall apply all such payments to
accrued and unpaid interest on the Loans in such order and
proportion as the Lender may determine in its sole discretion.
* The Debtors shall pay all post-petition federal and state
taxes including, income, employment and sales taxes. Debtors shall
timely file all postpetition federal and state income tax returns.
* The Debtors shall grant the Lender replacement liens and
security interests in all of the Debtors' postpetition assets to
the extent the liens existed and in such priority as existed
pre-petition, as adequate protection for the Debtors' obligations
to the Lender and for the use of the Cash Collateral.
The Debtors' budgets provided for these total expenses:
June 2021 July 2021 August 2021
--------- --------- -----------
KK Fit, Inc. $126,072 $126,092 $126,092
KK Fit York Inc. $56,211 $56,621 $56,731
KK Fit South York Inc. $61,930 $59,330 $58,230
KK Fit Hershey Inc. $61,514 $63,314 $64,614
KK Fit III Inc.
(Whitehall) $37,602 $37,552 $37,852
KWK Inc. (Exeter) $36,434 $36,567 $36,776
KK Fit WYO Inc. $42,114 $42,014 $43,114
A copy of the stipulation is available for free at
https://bit.ly/35gt3r2 from PacerMonitor.com.
Court Approves Stipulation
Judge Henry W. Van Eck approved the stipulation, thereby
authorizing the Debtors' use of cash collateral through August 31,
2021. A copy of the order is available at https://bit.ly/3gvGg4y
from PacerMonitor.com at no charge.
The Court will continue the hearing on the cash collateral motion
at 9:30 a.m. on August 31, 2021.
About KK Fit Inc.
KK Fit, Inc., formerly known as Gold's Gym, and its affiliates
filed Chapter 11 petitions (Bankr. M.D. Pa. Lead Case No. 21-01035)
on May 7, 2021. KK Fit President Kurt Krieger signed the
petitions. At the time of the filing, KK Fit had total assets of
between $100,000 and $500,000, and total liabilities of between $1
million and $10 million.
Judge Henry W. Van Eck oversees the cases.
Cunningham, Chernicoff & Warshawsky, P.C. and Stutz Arment, LLP
serve as the Debtors' legal counsel and accountant, respectively.
PeoplesBank, A Codorous Valley Company is represented by:
Robert W. Pontz, Esquire
Brubaker Connaughton Goss & Lucarelli LLC
480 New Holland Avenue, Suite 6205
Lancaster, PA 17602
E-mail: bobp@bcgl-law.com
KLX ENERGY: Signs $50M Equity Distribution Deal With Piper Sandler
------------------------------------------------------------------
KLX Energy Services Holdings, Inc. entered into an equity
distribution agreement with Piper Sandler & Co., as sales agent,
pursuant to which the Company may sell from time to time its common
stock, par value $0.01 per share, having an aggregate offering
price of up to $50,000,000.
Any Common Stock offered and sold in the Offering will be issued
pursuant to the Company's shelf registration statement on Form S-3
(Registration No. 333-256149) filed with the U.S. Securities and
Exchange Commission on May 14, 2021 and declared effective on
June 11, 2021, the prospectus supplement relating to the Offering
filed with the SEC on June 14, 2021 and any applicable additional
prospectus supplements related to the Offering that form a part of
the Registration Statement. Sales of Common Stock, if any, under
the Agreement may be made in any transactions that are deemed to be
"at the market offerings" as defined in Rule 415 under the
Securities Act of 1933, as amended.
The Agreement contains customary representations, warranties and
agreements by the Company, indemnification obligations of the
Company and the Agent, including for liabilities under the
Securities Act, other obligations of the parties and termination
provisions. Under the terms of the Agreement, the Company will pay
the Agent a commission equal to 3% of the gross sales price of the
Common Stock sold.
The Company plans to use the net proceeds from the Offering, after
deducting the Agent's commissions and the Company's offering
expenses, for general corporate purposes, which may include, among
other things, paying or refinancing all or a portion of the
Company's then-outstanding indebtedness, and funding acquisitions,
capital expenditures and working capital.
About KLX Energy
Headquartered in Wellington, Florida, KLX Energy Services Holdings,
Inc. is a provider of diversified oilfield services to leading
onshore oil and natural gas exploration and production companies
operating in both conventional and unconventional plays in all of
the active major basins throughout the United States. The Company
delivers mission critical oilfield services focused on drilling,
completion, intervention and production activities for the most
technically demanding wells from over 60 service facilities located
in the United States. KLXE's complementary suite of proprietary
products and specialized services is supported by technically
skilled personnel and a broad portfolio of innovative in-house
research and development, manufacturing, repair and maintenance
capabilities.
KLX Energy reported a net loss of $332.2 million for the year ended
Jan. 31, 2021, compared to a net loss of $96.4 million for the year
ended Jan. 31, 2020. As of April 30, 2021, the Company had $337
million in total assets, $88.9 million in total current
liabilities, $244.1 million in long-term debt, $3.9 million in
long-term capital lease obligations, $4.3 million in other
non-current liabilities, and a total stockholders' deficit of $4.2
million.
* * *
As reported by the TCR on Feb. 23, 2021, Moody's Investors Service
completed a periodic review of the ratings of KLX Energy Services
Holdings, Inc. and other ratings that are associated with the same
analytical unit. KLX Energy Services Holdings, Inc.'s (KLXE) Caa1
Corporate Family Rating reflects the company's relatively small
scale while providing a range of well completion, intervention,
drilling and production services in a highly cyclical industry.
In April 2020, S&P Global Ratings lowered its issuer credit rating
on KLX Energy Services Holdings Inc., a U.S.-based provider of
onshore oilfield services and equipment, to 'CCC+' from 'B-'.
"Demand for onshore U.S. oilfield services collapsed along with oil
prices. The recent fall in oil prices has led many E&P companies
to announce material cuts to capital spending plans, leading us to
reduce our demand expectations for the oilfield services sector.
We now expect oilfield services demand could decline by about 30%
in the U.S. in 2020, with further downside risk if the current weak
price environment remains for a prolonged period," S&P said.
LADDER CAPITAL: Fitch Affirms 'BB+' IDRs & Alters Outlook to Stable
-------------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDRs) and senior unsecured debt ratings of Ladder Capital Finance
Holdings LLLP and Ladder Capital Finance Corporation, subsidiaries
of Ladder Capital Corporation (collectively, Ladder), at 'BB+'. The
Rating Outlook has been revised to Stable from Negative.
Concurrently, Fitch has assigned an expected rating of 'BB+ (EXP)'
to Ladder's announced issuance of $650 million of new senior
unsecured notes due 2029. Fitch does not expect the issuance to
have a material impact on the firm's leverage, as proceeds from the
new unsecured notes issuance along with existing cash are expected
to be used toward the reduction of other debt, which may include
the redemption of $465.9 million unsecured notes maturing in March
2022.
KEY RATING DRIVERS
The Rating Outlook revision reflects the decline in adjusted
leverage, which was within the firm's targeted range of 2.0x-3.0x
at March 31, 2021 at 2.3x, and the significant improvement in
Ladder's liquidity profile in recent quarters, as unrestricted cash
stood at $1.3 billion at the end of 1Q21, or 24.2% of total assets,
compared with 4.9% of total assets at 1Q20. Ladder's cash position
is expected to decline as loan originations accelerate over the
remainder of this year, but Fitch believes Ladder's solid liquidity
and higher unsecured funding mix should provide the firm with
sufficient operating flexibility to maintain leverage within its
targeted range and address its debt obligations over the Outlook
horizon.
The rating affirmations reflect Ladder's established platform as a
commercial real estate (CRE) lender and investor; strong credit
track record to date; internal management structure; solid
liquidity; improved funding flexibility given the increase in
unsecured debt as a proportion of total debt over the past year;
and the declining proportion of secured financing subject to
mark-to-market provisions. Fitch believes there is a strong
alignment of interests between management and shareholders, as
evidenced by management and directors owning over 10% of equity in
the company.
Rating constraints include Ladder's focus on the CRE market, which
exhibits volatility through the credit cycle and could continue to
be negatively affected by structural shifts caused by the pandemic;
a meaningful, albeit declining, proportion of secured debt funding;
consistent earnings coverage of the common dividend; potential for
margin calls on secured repurchase facilities should collateral
values decline; and reliance on wholesale funding.
Following the emergence of the pandemic last year, management
paused new investments and focused on deleveraging its balance
sheet, increasing liquidity and addressing higher risk credits. As
loan repayments accelerated, Ladder substantially increased its
liquidity while reducing overall debt by $1.9 billion, or 34%, over
the 12 months ended March 31, 2021. As a result of the sharp
decline in mark-to-market debt, Ladder's percentage of unsecured
debt funding increased to 45.7% of total debt from 24% at YE 2019.
Fitch would view continued increases in Ladder's unsecured funding
mix favorably, particularly if it results in reduced exposure to
debt that is subject to margin calls.
Ladder's leverage, defined by Fitch as total debt to tangible
equity, was 2.6x at March 31, 2021, down significantly from 4.1x at
March 31, 2020. Ladder seeks to manage its adjusted leverage ratio,
as measured by debt to equity and excluding any nonrecourse
borrowings related to securitizations, within 2.0x-3.0x. On this
basis, Ladder's leverage was 2.3x at 1Q21 and 1.4x net of cash.
Ladder had approximately $233.2 million of nonrecourse
collateralized loan obligation (CLO) debt outstanding as of March
31, 2021, which Fitch excludes when calculating its adjusted
leverage ratio. However, Fitch views CLO debt as a funding source
for one of Ladder's core businesses, and primarily evaluates
leverage on a consolidated basis.
From inception in October 2008 through March 31, 2021, Ladder
originated $25.9 billion of CRE loans and incurred losses
representing less than 0.1% of total loans originated, which Fitch
believes demonstrates strong execution to date. Ladder had three
loans classified as impaired at 1Q21, totaling $71.1 million
(principal balance) and representing 3.5% of Ladder's total loan
portfolio, based on outstanding face amount. While this is nearly
twice the dollar amount of impaired loans pre-pandemic, Fitch views
it as manageable. Ladder's rent collections remained strong in
1Q21, with 99% of loan debt service received and 100% of rental
income received. Fitch believes Ladder's granular portfolio and
conservative underwriting that focuses on underlying collateral
values should mitigate the potential for higher credit losses
resulting from the effects of the pandemic.
TTM distributable earnings to average assets for the quarter ended
March 31, 2021 was 0.6%, down sharply from 1.1% in 2020 and 2.9% in
2019. The decline in distributable earnings was largely driven by
the asset mix shift from loans and securities toward cash, the
decline in market interest rates, an increase in the provision for
loan losses and lower income from sales of loans. Following
improved macroeconomic visibility, Ladder resumed new originations
in 1Q21. Ladder originated approximately $340 million of new loans
YTD June 1, 2021, and had a pipeline of approximately $865 million
of new loans under application as of the same date. Fitch expects
Ladder's loan growth (net of repayments) to accelerate over the
remainder of 2021 and be funded primarily using its excess cash
position, which should be accretive to its earnings.
Ladder's liquidity position remains constrained by its REIT tax
election, as REITs must generally distribute at least 90% of their
net taxable income, excluding capital gains, to shareholders each
year. Ladder reduced its dividend to $0.20 per share of class A
common stock beginning in 2Q20 from $0.34 per share, which Fitch
views as prudent given heightened CRE market uncertainty. Despite
cutting its dividend by over 40%, Ladder's earnings did not cover
its dividend over the past four quarters, and it may take several
more quarters for earnings to exceed its dividend, which could put
modest upward pressure on leverage. Longer term, Fitch expects
Ladder to manage its dividend at a level that reflects the earnings
power of the portfolio and would view the firm underearning its
dividend for a sustained period negatively.
The expected rating assigned to the new senior unsecured debt is
equalized with the ratings assigned to Ladder's existing senior
unsecured debt, as the new notes rank equally in the capital
structure. The equalization of the senior unsecured debt rating
with Ladder's IDR reflects the availability of unencumbered assets,
suggesting average recovery prospects for debtholders under a
stressed scenario.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Positive rating momentum could be driven by a sustained
increase in the proportion of unsecured debt at or above 50%
of total debt, accompanied by a sustained reduction in shorter
term, secured repurchase facilities and other debt subject to
margin calls;
-- Improved earnings and dividend coverage metrics, a
demonstrated ability to maintain leverage within the targeted
range through market cycles;
-- Maintenance of sufficient liquidity and unencumbered assets in
excess of the amount required under the covenant; and
continued stable credit performance.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A sustained increase in adjusted leverage above 3.0x and/or an
inability to manage leverage at a level that provides
sufficient cushion to covenants;
-- An inability to maintain sufficient liquidity relative to
near-term debt maturities, unfunded commitments to portfolio
companies and/or the potential for margin calls;
-- An inability to maintain unencumbered assets at a level that
provides sufficient cushion to the covenant;
-- A material increase in credit losses, weak distributable
earnings coverage of the dividend on a sustained basis, and/or
a sustained reduction in the proportion of unsecured debt
funding below 35%.
The expected and existing unsecured debt ratings are sensitive to
changes to Ladder's IDR and the level of unencumbered balance sheet
assets relative to outstanding debt. An increase in secured debt
and/or a sustained decline in the level of unencumbered assets,
which weakens recovery prospects on the senior unsecured debt,
could result in the unsecured debt ratings being notched down from
the IDR.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
SUMMARY OF FINANCIAL ADJUSTMENTS
CRITERIA VARIATION
In Fitch's "Non-Bank Financial Institutions Rating Criteria," the
distributable earnings and profitability benchmark ratio for
balance-sheet-intensive finance and leasing companies is pretax
income to average assets. Fitch believes distributable earnings, as
defined by Ladder, is a more useful measure of earnings performance
than reported pretax income, because distributable earnings
excludes certain noncash expenses and unrecognized results and
eliminates timing differences related to securitization gains and
changes in the values of assets and derivatives. Therefore, the
primary earnings and profitability benchmark used in this analysis
is distributable earnings to average assets.
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.
LADDER CAPITAL: Moody's Affirms Ba1 CFR & Alters Outlook to Stable
------------------------------------------------------------------
Moody's Investors Service has affirmed the Ba1 corporate family
rating of Ladder Capital Corp and the Ba2 senior unsecured ratings
of Ladder Capital Finance Holdings LLLP (collectively referred to
as Ladder), and revised their outlooks to stable from negative.
Moody's has also assigned a Ba2 rating to Ladder Capital Finance
Holdings LLLP's proposed backed senior unsecured notes due 2029.
The rating action reflects Moody's assessment of Ladder's asset
quality performance during the coronavirus pandemic-induced
downturn in the commercial real estate (CRE) sector, and its
expectations that over the next 12-18 months, Ladder's
profitability will continue to improve and its asset quality and
leverage will remain stable.
Issuer: Ladder Capital Corp
Corporate Family Rating, Affirmed Ba1
Outlook, Changed to Stable from Negative
Issuer: Ladder Capital Finance Holdings LLLP
Senior Unsecured Regular Bond/Debenture, Affirmed Ba2
Backed Senior Unsecured Regular Bond/Debenture, Affirmed Ba2
Backed Senior Unsecured Regular Bond/Debenture, Assigned Ba2
Outlook, Changed to Stable from Negative
RATINGS RATIONALE
Ladder's Ba1 long-term corporate family rating reflects the
company's strong and consistent financial performance, including
high-quality CRE assets, a history of good profitability since
inception in 2008, moderate leverage and increasing funding
diversification. Ladder has demonstrated strong credit results,
having recorded minimal credit losses in its loan portfolio since
inception. Ladder's ratings also take into consideration the
company's business concentration in the CRE sector and the
relatively high proportion of secured funding in its debt capital
structure, despite the recent decline largely driven by the
company's senior unsecured debt issuances.
Ladder maintains strong liquidity, and effectively managed the
liquidity risk associated with its repurchase facilities in 2020 as
CRE valuations came under pressure due to the coronavirus pandemic.
Ladder expanded its liquidity by halting new originations,
bolstering collateral positions in funding facilities, raising cash
through loan payoffs and loan and securities sales, and reducing
its dividend. Ladder also improved its funding mix since the onset
of the pandemic by replacing near-term maturing mark-to-market
financing with non-recourse, non-mark-to-market debt; reducing
total securities financing; and paying down Federal Home Loan Bank
borrowings.
The Ba2 rating assigned to the proposed notes due in 2029 is based
on Ladder's ba1 standalone assessment, the priority and proportion
of the notes in Ladder's debt capital structure, and the strength
of the notes' asset coverage. Terms of the notes are consistent
with those of Ladder's existing senior unsecured notes. Proceeds of
the transaction will be used for general corporate purposes, which
may include funding new loans, investments in core businesses and
repayments of debt.
Moody's has revised Ladder's outlook to stable from negative based
on the resilience of the company's loan portfolio during the
coronavirus pandemic-induced CRE downturn, and its expectations
that profitability will improve and asset quality and leverage will
remain stable over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ladder's ratings could be upgraded if the company: 1) improves its
funding diversification, reducing further its reliance on secured
debt, as evidenced by a secured debt to gross tangible assets ratio
of 30% or lower; 2) improves its liquidity runway by further
lengthening its debt maturities; 3) continues to demonstrate
predictable earnings and asset quality over a sustained period; and
4) further solidifies its franchise positioning.
Ladder's ratings could be downgraded if the company: 1) experiences
a material deterioration in asset quality; 2) sustains an increase
in leverage (debt/total equity) above 3.0x; 3) encounters liquidity
challenges; 4) profitability prospects decline materially; or 5)
increases its reliance on secured debt, as evidenced by a secured
debt to gross tangible assets ratio of 45% or higher.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
LEBSOCK 200: U.S. Trustee Unable to Appoint Committee
-----------------------------------------------------
The U.S. Trustee for Region 19 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Lebsock 200 Hays, LLC.
About Lebsock 200 Hays
Sterling, Colo.-based Lebsock 200 Hays, LLC is primarily engaged in
renting and leasing real estate properties.
Lebsock 200 Hays filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No.
21-12385) on May 4, 2021. David W. Lebsock, manager, signed the
petition. At the time of the filing, the Debtor had between $1
million and $10 million in both assets and liabilities. Moye
White, LLP serves as the Debtor's legal counsel.
LOMPA RANCH: Expects Sale Plan to Pay 100% to Unsecured Creditors
-----------------------------------------------------------------
Lompa Ranch East Hills, LLC, filed with the U.S. Bankruptcy Court
for the District of Nevada a Disclosure Statement describing
Chapter 11 Plan dated June 10, 2021.
Debtor holds the real property, which consisted of 2 parcels, APN#s
0101-741-01 and 010-041-83, consisting of 17.16 acres. The Property
has a collective market value of approximately $5,500,000. The
Debtor plans to satisfy current secured and tax obligations through
the marketing and sale of the Property.
If a sale could be completed for an amount near to the estimation
and appraised value of the Property, the estate would realize
sufficient funds to meet 100% of the creditor claims, including the
secured claims and property taxes. The Property is currently no
producing any significant income.
The Debtor will bring any proposed sale of the Property before the
Bankruptcy Court to approve the sale which authorizes a court to
complete the sale of property interests of non-debtor parties.
These efforts to conduct a sale of the Property are to be done in
order to protect and recover the maximum recovery for the investors
while satisfying creditor claims in full. Subsequent to payment in
full of all administrative and unsecured creditor claims, remaining
sales proceeds will be distributed to the investors as a return of
investment.
The Plan will treat claims as follows:
* Class 1 claims consist of claims of CP Debt LLC secured by
the Debtor's Property. The prepetition secured claim of the CP Debt
LLC will be paid in full with all appropriate costs, fees, charges
and interest upon the sale of the Property, pursuant to the order
of the Court approving the sale.
* Class 1b consists of the other claims secured by Debtor's
real property, including junior liens to Class 1a and property
taxes. Debtor agrees to allow approved secured claims to be paid
from the proceeds of the sale of the Property within 60 months of
the Effective Date.
* Class 2 Priority Unsecured Claims are claims that are
referred to in Section 507 (a)(1), (4), (5), (6), and (7) of the
Bankruptcy Code. The Bankruptcy Code requires each claim holder to
receive cash on the effective date of the Plan equal to the allowed
amount of such claim. There is currently $56,456.12 in Class 2
claims in this case.
* Class 3 claims consist of capital investments made by the
investing beneficiaries of the limited liability company to satisfy
administrative and operating costs and other unsecured creditors.
The general unsecured claims amount to approximately $1,218,386,
the claims consist of insider affiliated status. After payment of
the Class 1-4 claims, the general unsecured creditor claims will be
paid 100% of their allowed claim.
* Class 5 consists of equity holding members of the Debtor.
Class 5 will receive a pro rata distribution of sale proceeds after
Classes 1-3 have been paid in full and all administrative allowed
claims have been paid in full.
The Debtor will implement its Plan by having Debtor serve as the
Plan Agent for payment of Claims pursuant to the Plan. The Plan
Agent will make the plan payments from the revenue that is
generated from the sale of Debtor assets in whole or in part and
the annual income of $0. The real property value held by the estate
is estimated at $5,500,000. The sales costs and other expenses of
sale will be paid from the proceeds of sale at the time of closing.
The expected net revenue from the sale of the Property is
anticipated to be sufficient to pay all allowed claims 100%.
A full-text copy of the Disclosure Statement dated June 10, 2021,
is available at https://bit.ly/3iHOcme from PacerMonitor.com at no
charge.
Attorney for Debtor:
Timothy P. Thomas, Esq.
Law Office of Timothy P. Thomas, LLC
1771 E. Flamingo Rd. Ste. 212-B
Las Vegas, NV 89119
Tel: (702) 227-0011
Fax: (702) 227-0334
Email: tthomas@tthomaslaw.com
About Lompa Ranch East Hills
Lompa Ranch East Hills, LLC, a Las Vegas-based company engaged in
activities related to real estate, filed a petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Case No.
21-11161) on March 11, 2018. Jaimee Yoshizawa, manager, signed the
petition. At the time of the filing, the Debtor disclosed $1
million to $10 million in assets and $1 million to $10 million in
liabilities. Judge Natalie M. Cox oversees the case. Law Office
of Timothy P. Thomas, LLC represents the Debtor as legal counsel.
MALLINCKRODT PLC: Creditors' Committee Question Ch. 11 Drug Process
-------------------------------------------------------------------
Law360 reports that the official committee of unsecured creditors
in the Chapter 11 case of drugmaker Mallinckrodt PLC objected on
Friday, June 11, 2021, to the company's proposed sale of a
development-stage pharmaceutical, saying the company didn't run an
adequate marketing process and is seeking to sell the asset at too
low of a price.
In the filing, the committee said Mallinckrodt's proposal to sell
the assets related to VTS-270, a drug in late-stage clinical trials
for the treatment of a rare neurodegenerative disease, came after a
limited marketing process conducted by the debtor's employees and
not by an investment banker.
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.
MAYFLOWER RETIREMENT: Fitch Rates $59.245MM Revenue Bonds 'BB+'
---------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' rating to the following Florida
Development Finance Corporation bonds expected to be issued on
behalf of the Mayflower Retirement Center (Mayflower):
-- $59,245,000 Revenue Bonds (The Mayflower Retirement Community
Project), Series 2021A.
Fitch has also assigned a 'BB+' Issuer Default Rating to Mayflower
and has affirmed the following parity debt issued on behalf of the
Mayflower at 'BB+':
-- $59,045,000 Florida Development Finance Corporation Senior
Living Revenue Bonds (The Mayflower Project), Series 2020A;
-- $16,355,000 million Orange County Healthcare Facilities
Authority Health Care Facilities Revenue Refunding Bonds
(Mayflower Retirement Center, Inc. Project) Series 2012.
The Rating Outlook is Stable.
The 2021A bonds will be issued as fixed rate. Bond proceeds will be
used to partially fund the construction of an independent living
(IL) expansion, refinance the Series 2012 bonds, fund a debt
service reserve fund, and pay for capitalized interest and the cost
of issuance. Approximately $26.5 million in short-term nontaxable
bonds, which Fitch is not rating, are also expected to be issued
around the same time as the 2021A bonds. Those bonds will be a
private placement with a bank, also fund the IL expansion, and be
paid down with initial entrance fees from the IL expansion. Maximum
annual debt service (MADS) is expected to increase to approximately
$7.5 million from $4.8 million. The bonds are expected to price via
negotiation the week of July 19.
SECURITY
The bonds are secured by a gross revenue pledge of obligated group
and a mortgage on certain property. A fully funded debt service
reserve fund provides additional bondholder security.
ANALYTICAL CONCLUSION
The 'BB+' rating reflects the Mayflower's steady market position as
single site life care community (LPC) provider, operating in a good
service area, and historically modest financial profile,
characterized by slightly elevated operating ratios (averaging 105%
in the four years leading up to 2020) and thinner net operating
margin (NOM) -- adjusted metrics that are typical for a Type 'A'
lifecare community.
The 'BB+' also reflects the Mayflower's stressed financial profile
due to two sizable debt issuances in the past year in support a
campus repositioning project. The Mayflower is building a new
skilled nursing and memory center, which is funded by proceeds from
the late 2020 debt issuance (that project is underway), and a
50-unit IL apartment expansion, Bristol Landing at the Mayflower,
to be funded by the current debt issuance, including approximately
$26.5 million in short-term debt that will be paid down through
initial entrance fees.
The Mayflower is moving forward with the IL expansion with
approximately 60% of the units pre-sold, which is below Fitch's
general expectation of 70% pre-sales for IL expansions. However,
the velocity of pre-sales has recently been strong, with three
units pre-sold in February, three in March and four more in April.
Fitch also notes that 22 of the 25 largest units (1,922 sq. ft. to
2,215 sq. ft.), which are also the highest priced units, have been
pre-sold. As the Mayflower's campus continues to open from the
pandemic and project construction progresses, Fitch believes the
Mayflower should be able to pre-sell additional expansion
apartments. Management reports the easing of a pandemic-related
reluctance among certain potential residents, especially as
regional positivity rates have dropped and the vaccine has become
more prevalent -- 98% of the Mayflower's residents are currently
vaccinated.
Fitch's forward look shows the Mayflower's financial profile
remaining consistent with a non-investment-grade credit as the
repositioning project progresses. The skilled nursing and memory
care should be built and filled by the end of 2023. Fill-up for the
IL expansion units is not expected to begin until early-to-mid
2023, with occupancy stabilizing in 2024. Fiscal 2025 is the first
full year of project stabilization and the first year that the
Mayflower will be tested on the $7.5 million maximum annual debt
service (MADS). Metrics are expected to be consistent with the
higher end of the non-investment-grade category in this first year
of project stabilization.
KEY RATING DRIVERS
Revenue Defensibility: 'bbb'
Good Market Position in a Competitive Service Area
The midrange revenue defensibility reflects the Mayflower's market
position as a single site LPC operating in a competitive service
area that has numerous competitors both from full continuum of care
providers and providers who offer select continuum of care
services, such as standalone AL providers. The competitive service
area is balanced by a steady demand for services at the Mayflower,
its good reputation in the community (reputation was a main factor
in choosing the Mayflower among IL expansion depositors surveyed),
a demographically strong service area with good growth and wealth
indicators, and pricing consonant with area housing prices and
resident wealth.
Operating Risk: 'bbb'
Major Capital Project; Adequate Operating Performance
The Mayflower's midrange operating risk assessment is supported by
a steady operating performance, albeit slightly thinner for a Type
'A' facility, and high levels of recent capital spending. The
Mayflower has begun a major campus repositioning project, which is
temporarily pressuring Mayflower's capital-related metrics;
however, once IL expansion apartments begin to fill (the apartments
are expected to be available for occupancy in 2023) and occupancy
stabilizes, Fitch expects these metrics to improve, as it benefits
from the additional IL revenues and its elevated debt position
begins to moderate.
Financial Profile: 'bb'
Financial Profile Consistent with Rating Through Moderate Stress
Given the Mayflower's midrange revenue defensibility and midrange
operating risk assessments and Fitch's forward-looking scenario
analysis, Fitch expects the Mayflower's key leverage metrics to
remain consistent with the rating level through a moderate stress,
as the Mayflower progresses on its campus repositioning project.
The debt associated with the project is stressing the Mayflower's
leverage metrics; however, its debt position should moderate once
occupancy in the new IL units stabilizes, and the short-term
construction debt is paid down.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
No asymmetric risks informed the rating assessment.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Improved financial profile post-project stabilization such
that cash to adjusted to debt is expected to stabilize above
40% and MADS coverage is consistently above 1.7x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Weakening in the financial profile such that cash to adjusted
falls below 25% and the Mayflower fails to cover its lower
actual debt service during the campus repositioning project's
construction and fill up period;
-- Weaker than expected cash to adjusted debt and MADS coverage
post-project stabilization;
-- Projected related challenges, such as construction delays,
slow fill-up, or cost overruns that threaten to weaken the
financial profile and the ability for the Mayflower to paydown
the short-term debt and cover MADS.
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.
Mayflower is a type-A Life Plan Community located on approximately
30 acres in Winter Park, Florida. The campus currently consists of
248 IL units (28 villas and 220 apartments), 31 assisted living
units (all private, with 15 utilized as memory care units), and 60
skilled nursing beds (26 semi-private and eight private). Mayflower
generated $27.4 million in total operating revenue in the fiscal
year ended Dec. 31, 2020.
REVENUE DEFENSIBILITY
IL occupancy is consistent with the midrange revenue defensibility
assessment, with IL occupancy at approximately 90% over the four
years leading up to 2020. IL occupancy dropped to 85% in 2020;
however, that drop was driven by the pandemic and Fitch expects
that figure to improve over the next year. The recently strong
velocity in pre-sales for the expansion project provide an
indication of an uptick in IL demand. As of April 30, 2020, the
Mayflower had 104 members on its waitlist. Sixty seven (67) of
those members have put down a $2,000 deposit, have access to some
campus activities, and are on a general trajectory to move in
within six to eight years. Twenty seven (27) of those members have
put down a 10% deposit, have additional access to the campus,
including access to the Mayflower's primary care physicians, and
are on a general trajectory to move in within five years.
Skilled nursing, which has historically been around 90% dropped in
2020 and Fitch expects that to improve. The AL census has been
lower in recent years (it was 81% in 2019 and 82% in 2020), due to
increased competition in the area and the pandemic in 2020. The AL
component of the repositioning project should give the Mayflower a
more competitive product in the marketplace. Fitch notes that the
Mayflower's management reported that recently there has been an
increase in the demand for AL within its current stock of units.
Overall the midrange revenue defensibility reflects the highly
competitive greater Orlando service area, in terms of other
continuum of care providers and the additional competition from
providers of individual continuum service lines, such as standalone
AL providers. The competitive service area is balanced by the
Mayflower's reputation in the community and its location in Winter
Park, a desirable suburb of Orlando, with stronger wealth
demographics than Orange County, within which both Orlando and
Winter Park are located. Orange County's population grew by 8.7%
over the last five years. The 65 and over population was
approximately 12.3% of the population in 2019 and is expected to
continue to see growth over the medium term, which supports the
expectation for continued demand for senior living housing and
healthcare. There are a number of full continuum of care
competitors in the service area, including Presbyterian Retirement
Communities (OG rated A-/Under Criteria Observation), which has
three campuses in the market area. There are also a handful of
rental communities that provide a mix of independent living and
healthcare services, but these are not considered to be direct
competition for the Mayflower, as they do not offer the full
continuum of care or a lifecare contract.
Weighted average entrance fees for a traditional contract in the
existing IL apartments are $286 thousand and in the existing villas
are $455 thousand (as of Jan. 1, 2020). The weighted average for
the 50 IL expansion apartments is $615 thousand. Fitch views the
Mayflower's pricing as consistent with the midrange revenue
defensibility assessment as the standard contract entrance fee
averages are within the range of median home values in the PSA and
the Mayflower has mostly pre-sold the largest and most expensive
expansion units, with the average net worth of the prospective IL
expansion residents comfortably above the average weighted entrance
fee. The entrance fees pricing, resident net worth, and the
Mayflower's ability to consistently increase entrance fees and
monthly service fees rates indicate a modest amount of rate
flexibility.
OPERATING RISK
The Mayflower offers a Type-A contract, which requires an upfront
entrance fee and ongoing monthly fees. Under the lifecare contract,
residents pay the same monthly fees regardless of the level of care
needed, which shifts the healthcare burden to the Mayflower. Fitch
views the operating flexibility of a Type-A facility to be more
limited due to this healthcare liability risk.
Overall the Mayflower's operating profile is assessed as midrange
when considering its Type-A contract type and historical operating
metrics. The operating ratio and NOM-adjusted averaged 102% and 21%
between FY2016 and FY2020. Despite marketing and census pressures
brought on by the pandemic, operating metrics were good in 2020
supported by good cost management and approximately $3.5 million in
government relief funding. Fitch expects 2021 to be a transition
year operationally, as the capital project progresses, net entrance
fee receipts have a recovery year, and the Mayflower rebuilds its
census levels across the continuum of care to pre-coronavirus
levels, without the material levels of government relief that
helped the financial performance in 2020. After that, Fitch expects
operations to return closer to historical levels, with operations
improving once all the campus repositioning projects are completed
and stabilized, which is not expected to happen until 2025. A new
CFO, Candy Bowling, started at the Mayflower in May 2020. Fitch has
worked with the CFO in one of her prior positions and views her
experience and arrival at the Mayflower positively. The Mayflower
management also reports a new health center administrator started
recently and that he has added a measure of rigor to the skilled
nursing operations.
Capex has been good at the Mayflower over the last four year
averaging 111.6% of depreciation over this time, with an average of
plant of 13.8 years consistent with a midrange assessment. Capex
will stay elevated over the next three years as the repositioning
project is completed. The first phase of project includes the
construction of a new health care center comprised of 24 private
memory care suites and 60 private skilled nursing rooms. Phase one
has started and is being funded by the debt issuance in late 2020.
The second phase of the project includes the building of 50 new IL
apartments, a clubhouse that will provide dining and social spaces,
and the renovation of the current skilled nursing space into 21 AL
units. Fitch views the projects positively, believing that they
will serve to strengthen the Mayflower's market position, across
all of its major service lines, especially the addition of an all
private memory care unit, a newly opened private skilled nursing
units, the introduction of larger IL apartments, and a new
clubhouse at the center of campus.
The debt associated with campus repositioning project has stressed
the Mayflower's capital related metrics, with pro-forma MADS of
$7.5 million, equating to an elevated 27.5% of 2020 revenues.
Capital metrics are expected to moderate after the Mayflower pays
down approximately $26.5 million in short-term debt related to the
project with initial entrances fees and revenue from the projects
come online and begin to be accretive to the Mayflower's overall
revenue growth and operating performance. The Mayflower will not be
tested on the $7.5 million MADS figure until 2025. Coverage of
covenanted debt service -- $1.2 million in 2021, 2022 and 2022 and
then $4.8 million in 2024 -- is expected to remain good for the
rating level.
FINANCIAL PROFILE
Given the Mayflower's midrange revenue defensibility and operating
risk assessments and Fitch's forward-looking scenario analysis,
Fitch expects key leverage metrics to remain consistent with the
current financial profile, throughout the current economic and
business cycle. A pro forma analysis of the 2021 debt shows the
Mayflower having approximately $145.5 million of debt outstanding
(inclusive of $26.5 million in short term debt). The Mayflower has
no debt equivalents. At year-end 2020, the Mayflower had
approximately $39.5 million of unrestricted cash and investments
(inclusive of debt service reserve funds). Days Cash on Hand (DCOH)
was 639 days at the end of 2020.
Fitch's baseline scenario, which is a reasonable forward look of
financial performance over the next five years given current
economic expectations, shows the Mayflower maintaining operating
and financial metrics that are largely consistent with historical
levels of performance as the campus repositioning project is
completed. Capital spending is expected to be above depreciation
through fiscal 2022, and return to normal levels after that. As
part of the forward look, Fitch assumes an economic stress (to
reflect financial market volatility), which is specific to the
Mayflower's asset allocation. Despite the stress, the Mayflower's
cash-to-adjusted debt levels recover to levels above 30%, which is
consistent with rating level, as the Mayflower builds and completes
the campus repositioning project and absorbs the new debt. Debt
service coverage remains consistent with current levels and DCOH
remains well above 200 days throughout the stress scenario.
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.
MIC GLEN: Moody's Assigns B3 CFR Following K-Mac Acquisition
------------------------------------------------------------
Moody's Investors Service assigned a B3 corporate family rating to
MIC Glen LLC, the proposed acquirer of Taco Bell franchisee, K-Mac
Holdings Corp. Moody's also assigned to the Company a B3-PD
probability of default rating, a B2 rating on its proposed $540
million first lien secured credit facilities consisting of a $60
million revolver and $480 million term loan, and a Caa2 rating on
its proposed $105 million second lien term loan. The outlook is
positive.
Proceeds from the proposed credit facilities and about $400 million
of common equity contributed by funds affiliated with Mubadala
Capital and current management will be used to fund the acquisition
of K-Mac Holdings Corp. and subsidiaries. The ratings are subject
to final documentation and the transaction closing as proposed. The
ratings of predecessor company, K-Mac Holdings Corp. are unaffected
and will be withdrawn upon closing of the transaction and repayment
of existing debt.
The B3 CFR reflects governance considerations, particularly
aggressive financial strategies related to private equity
ownership, as reflected in the increased debt and financial
leverage pro forma for the transaction. Pro forma lease-adjusted
leverage will increase to around 5.8x from 4.9x for the period
ended March 2021.
The positive outlook reflects Moody's expectation for continued
solid operating performance, as well as the potential for
significant improvement in credit metrics through both earnings
growth and debt reduction over and above mandatory amortization.
The outlook also incorporates Moody's view that the Company will
maintain good liquidity and new restaurant additions will be at a
measured pace.
Assignments:
Issuer: MIC Glen LLC
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured First Lien Term Loan, Assigned B2 (LGD3)
Senior Secured First Lien Revolving Credit Facility, Assigned B2
(LGD3)
Senior Secured Second Lien Term Loan, Assigned Caa2 (LGD6)
Outlook Actions:
Issuer: MIC Glen LLC
Outlook, Assigned Positive
RATINGS RATIONALE
MIC Glen's B3 CFR is constrained by governance considerations
including its high pro foma financial leverage related to its
private equity ownership. At around 5.8x, proforma adjusted
leverage is high relative to the Company's modest size and scale
measured by total number of restaurants and revenue. The Company is
also constrained by its concentration in predominantly one brand,
and geographic concentration in the south central region of the US,
notably Oklahoma, Arkansas and Missouri. The rating is supported by
the strength, value proposition, and high level of awareness of the
Taco Bell brand which has helped drive a solid track record of same
store sales growth. Liquidity is good, supported by Moody's
expectation for solid positive free cash flow, ample excess
revolver availability and covenant cushion.
The Company's private ownership is a rating factor given the
potential implications from both a capital structure and operating
perspective. Financial policies are always a key concern of
privately-owned companies with regards to the potential for higher
leverage, extractions of cash flow via dividends, or more
aggressive growth strategies.
Restaurants are deeply entwined with sustainability, social and
environmental concerns given their operating model with regards to
sourcing food and packaging, as well as having an extensive labor
force and constant consumer interaction. While these may not
directly impact the credit, these factors could impact brand image
and result in a more positive view of the brand overall.
As proposed, the new first and second lien credit facilities are
expected to provide covenant flexibility that if utilized could
negatively impact creditors. Notable terms include the following:
Incremental debt capacity up to the greater of $100 million and
100% of trailing four quarter EBITDA plus unlimited amounts subject
to a first lien net leverage ratio of 4.5x (for pari passu first
lien debt) and a secured net leverage ratio that does not exceed
5.5x (for debt secured on a junior basis to the first lien term
loan). Amounts up to the greater of $25 million and 25% of trailing
twelve month EBITDA may be incurred with a shorter weighted average
life to maturity date than the initial term loans.
The credit facilities contain provisions allowing the transfer of
assets to unrestricted subsidiaries subject to a blocker provision
which prohibits the transfer of more than 5% of consolidated total
assets or trailing twelve month EBTDA in the aggregate at the time
of each such designation.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees subject to
protective provisions which only permit guarantee releases if such
transfer is done for bona-fide business purposes and not for the
primary purpose of effecting a release from such guarantee to evade
creditors.
The credit agreement provides some limitations on up-tiering
transactions, including the requirement that each directly affected
lender consents to (i) changes that modify the waterfall and (ii)
changes that modify the pro rata sharing provisions.
The proposed terms and the final terms of the credit agreement may
be materially different.
The B2 ratings assigned to the proposed $60 million first lien
revolving credit facility and $480 million first lien term loan
reflect the support from the significant amount of junior ranking
debt and non-debt liabilities to these facilities, including the
second lien term loan. The Caa2 rating on the proposed $105 million
second lien senior secured term loan reflects its junior position
to the significant amount of first lien senior secured bank debt.
The facilities are secured by substantially all assets of the
borrower and the guarantors.
The proposed first lien term loan is expected to have no financial
maintenance covenants while the proposed revolving credit facility
will contain a springing maximum first lien leverage ratio that
will be tested when the revolver is more than 35% drawn.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could result in an upgrade include sustained
improvement in credit metrics, and increased size, scale, and
geographic diversification. An upgrade would also require adherence
to more conservative financial policies, including a demonstrated
willingness to achieve and maintain stronger credit metrics.
Specific metrics include debt to EBITDA sustained under 5.5 times
and EBIT coverage of interest expense over 1.75 times.
A downgrade could occur if operating performance sustainably
weakens or if financial strategies become more aggressive, such as
through debt financed dividends. Specific metrics include
Debt/EBITDA sustained above 6.25x or EBIT to interest falling below
1.25x.
MIC Glen LLC is an entity created to acquire K-Mac Holdings Inc.,
which owns and operates approximately over 300 Taco Bell
restaurants throughout the south central region of the US. Revenue
for the year ended December 2020 was approximately $473 million.
MIC Glen will be majority owned by affiliates of private equity
firm Mubadala Capital.
The principal methodology used in these ratings was Restaurant
Industry published in January 2018.
MIC GLEN: S&P Assigns 'B-' Issuer Credit Rating, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to Taco
Bell franchisee MIC Glen LLC, which will be the borrowing entity.
When the transaction closes, S&P plans to withdraw the ratings on
U.S. based K-Mac Holdings Corp., the borrower under the current
debt facilities.
S&P also assigned a 'B-' issue-level rating and a '3' recovery
rating to the company's proposed first-lien facilities and a 'CCC'
issue-level rating and a '6' recovery to the company's proposed
second-lien term loan facility.
U.S. based K-Mac Holdings Corp. entered into a definitive agreement
under which Mubadala Capital will acquire the company with equity
and debt.
The 'B-' issuer credit rating reflects MIC Glen's high leverage,
sustained at about 6x. The acquisition will lead to funded debt of
$585 million, a 30% increase from pre transaction levels. This
leads to S&P Global Ratings-adjusted leverage increasing to about
6x on a pro forma basis, from about 5x at year-end 2020. S&P said,
"We expect MIC Glen's financial policies to remain aggressive under
its new private equity sponsor Mubadala Capital. We anticipate it
could use cash flows and/or future debt issuances to fund its
growth strategy and shareholder returns. We forecast leverage
sustained around 6x, reflecting stable operating performance and
higher debt levels."
The company has had good operating performance through the pandemic
and into 2021. First-quarter (ended March 31, 2021) results
demonstrated good performance, with a 8% increase over the prior
year and same-store sales up by 7%, despite being affected by the
winter storm in southern states and temporary store closures. The
improvement in sales is driven by increased average check sizes
from more kiosk and mobile app use, as customers order more food,
try new items, and customize orders. S&P said, "We believe these
trends will continue through 2021. We expect MIC Glen's sales to
grow 7%-9%, reflecting same-store sales growth, new store
development, and store remodels."
S&P said, "We expect moderate margin deterioration in 2021. The
company benefited from a higher mix of drive-thru and takeout
business and reduced operating hours in 2020 as its restaurants
were temporarily closed to dine-in service. We expect a gradual
decline in EBITDA margins, normalizing toward pre-pandemic cost
structure. We forecast a 250-basis point decline in S&P Global
Ratings-adjusted EBITDA margins in 2021 to the 24% area as dining
rooms reopen, normal operating hours resume with breakfast set to
return, and commodity prices rise."
In addition, as a restaurant operator, MIC Glen is susceptible to
commodity price fluctuations and wage inflation. Although the
company has offset cost increases by adjusting menu pricing, this
could further pressure margins in the next 12 – 24 months.
S&P said, "Despite the company's good brand positioning, our
business risk assessment reflects the company's geographic
concentration and limited concept diversity. MIC Glen is
well-positioned as the second largest Taco Bell franchisee with
more than 300 restaurants, and a relative consistent track record
of operating performance. However, the company's high regional
concentration in the South and Southeast increases regional
economic risk. We also view the company as having limited concept
diversity because it operates a single brand. Accordingly, we apply
a negative comparative ratings modifier, as we believe it captures
MIC Glen's wholistic standing in relation to 'B' rated peers.
"The stable outlook reflects our expectation for steady operating
performance over the next 12 months, with adjusted leverage
sustained at about 6x, and good free operating cash flow
generation.
"We could lower the rating if operating performance is
substantially below our expectations, driven by declining
same-store sales or margin contraction because of elevated
commodity prices or labor costs. Under this scenario, liquidity
would become constrained, ultimately pressuring the company's
ability to service its debt obligations and leading us to believe
the company's capital structure is unsustainable."
S&P could raise the rating if:
-- The company strengthens its competitive standing through
meaningfully broadening its scale, geographic and brand diversity;
and
-- Leverage is sustained below 6x. Under this scenario, S&P would
also have to believe the company has adopted a less-aggressive
financial policy and is unlikely to increase leverage above 6x.
MICHAEL KORS: Moody's Affirms Ba1 CFR & Alters Outlook to Stable
----------------------------------------------------------------
Moody's Investors Service affirmed all Michael Kors (USA), Inc.'s
ratings including its Ba1 corporate family rating, Ba1 issuer
rating, Ba1-PD probability of default rating, and Ba2 senior
unsecured rating. Michael Kors' speculative grade liquidity rating
was upgraded to SGL-1 from SGL-2. The outlook was changed to stable
from negative.
"The stable outlook reflects Michael Kors' ability to manage its
liquidity and operations to return credit metrics to levels
indicative of its Ba1 rating", stated Senior Vice President,
Christina Boni. "Luxury accessories demand has proven resilient
demonstrating improvement in both the US and China offsetting
continued weakness in Europe. The upgrade of its speculative grade
liquidity rating to SGL-1 from SGL-2 reflects its positive free
cash flow generation and its undrawn $1 billion revolver", Boni
added.
Affirmations:
Issuer: Michael Kors (USA), Inc.
Issuer Rating, Affirmed Ba1
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 (LGD5)
Upgrades:
Issuer: Michael Kors (USA), Inc.
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Outlook Actions:
Issuer: Michael Kors (USA), Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Michael Kors (USA), Inc. Ba1 CFR reflects its ownership of
well-known brands of Michael Kors, Versace, and Jimmy Choo and
their solid market position in the US and Western European women's
accessible luxury accessories markets. The company with $4.1
billion of FY 2021 revenue, also has a growing focus on the
Asia-Pacific region and very good liquidity. Leverage, which is
currently 3.3x, is expected to continue to improve as the luxury
sector benefits from a healthy consumer and the further reopening
of its markets. Nonetheless, Michael Kors' rating is constrained by
its narrow product mix and history of variable operating
performance. The company is focused on positioning the Michael Kors
brand toward a higher quality sales mix and improving profitability
at Versace and Jimmy Choo.
The stable outlook reflects Michael Kors' ability to maintain
healthy operating margins coupled with the resilience of spending
on luxury accessories during COVID-19, which has enabled the
company to return to historical profitability levels. The stable
outlook also assumes a balanced financial policy.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if Michael Kors has sustained positive
operating income growth with consistent performance at all of its
brands and improved margins at Versace and Jimmy Choo while
maintaining a conservative financial policy with a clearly
articulated financial strategy and excellent liquidity.
Quantitative metrics include debt/EBITDA sustained below 2.5 times
and interest coverage above 5.5 times while maintaining an
unsecured capital structure.
Ratings could be downgraded to the extent organic sales growth and
operating income growth do not return to more stabilized levels or
liquidity deteriorates. Ratings could also be downgraded if
financial policies were to become more aggressive, such as
acquisitions or share repurchases that are debt financed.
Quantitative metrics include debt/ EBITDA sustained above 3.5 times
or EBIT/interest below 4.5 times.
Michael Kors (USA), Inc. is a wholly owned subsidiary of Capri
Holdings Limited, a global fashion luxury group. Its portfolio
consists of iconic brands, which include Michael Kors, Versace and
Jimmy Choo. Its brands cover the full spectrum of fashion luxury
categories including women's and men's accessories, footwear and
ready-to-wear as well as wearable technology, watches, jewelry,
eyewear and a full line of fragrance products.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
MOUNTAIN PROVINCE: Sells C$64.5M Worth of Diamond in Second Quarter
-------------------------------------------------------------------
Mountain Province Diamonds Inc. announced the results of its second
quarter diamond sales and the Company's upside share of profits
from the Diamond Sales Agreement with Dunebridge dated June 11,
2020.
The Company reported the completion of its sales for the quarter,
with 718,549 carats sold for total proceeds of C$64.5 million
(US$52.6 million), resulting in an average value of $90 per carat
(US$73 per carat). This Q2/21 sales result represents a 3%
increase in US$ terms relative to the 603,000 carats sold for
C$54.2 million (US$42.7 million) in Q1/21 at (US$71 per carat).
The mix of diamonds sold varied across the quarters and on a direct
comparison basis, second quarter market prices are approximately
18% higher than those achieved in the first quarter.
Demand in the rough diamond market is robust, supported by polished
diamond price increases and buoyant jewelry retail sales in the US
and China. At the Company's most recent sale held over the past
two weeks in Antwerp, Belgium, the Company saw high demand and
increased customer interest across all rough diamond categories.
In addition to the Company's sales, in Q2/21 Dunebridge also
completed the sale of all diamonds purchased from the Company in
2020. After fees and expenses the Company received C$10.4 million
(C$7/carat) this week being its total share of the value uplift.
The Company believes this further confirms the growing demand and
pricing trends in the natural rough diamond market.
The improved cash in-flow from Dunebridge has resulted in the
Company reducing the planned US$10M draw on the final tranche of
the Dunebridge term facility, down to US$8M. The lower draw on the
second tranche will result in lower fees as well as a lower
interest expense.
Mountain Province President and CEO Stuart Brown commented:
"This is an excellent result for the Company. Producers are
reporting strong demand and higher diamond prices at their sales
which we have also seen with our latest offering. This is
additionally supported by the results from the Dunebridge sales.
We remain optimistic that as the global economy continues to
recover that the current positive pricing and demand momentum
throughout the diamond industry will continue and translate into
improved margins for the Company."
About Mountain Province
Mountain Province is a Canadian-based resource company listed on
the Toronto Stock Exchange under the symbol 'MPVD'. The Company's
registered office and its principal place of business is 161 Bay
Street, Suite 1410, P.O. Box 216, Toronto, ON, Canada, M5J 2S1. The
Company, through its wholly owned subsidiaries 2435572 Ontario Inc.
and 2435386 Ontario Inc., holds a 49% interest in the Gahcho Kue
diamond mine, located in the Northwest Territories of Canada. De
Beers Canada Inc. holds the remaining 51% interest. The Joint
Arrangement between the Company and De Beers is governed by the
2009 amended and restated Joint Venture Agreement. The Company's
primary assets are its aforementioned 49% interest in the GK Mine
and 100% owned Kennady North Project.
Mountain Province reported a net loss of C$263.43 million for the
year ended Dec. 31, 2020, compared to a net loss of C$128.76
million for the year ended Dec. 31, 2019. As of Dec. 31, 2020,
the Company had C$595.33 million in total assets, C$75.73 million
in current liabilities, C$374.71 million in secured notes payable,
C$750,000 in lease liabilities, C$70.44 million in decommissioning
and restoration liability, and C$73.70 million in total
shareholders' equity.
Toronto, Canada-based KPMG LLP, the Company's auditor since 1999,
issued a "going concern" qualification in its report dated March
29, 2021, citing that the Company has suffered recurring losses
from operations that raises substantial doubt about its ability to
continue as a going concern.
MTE HOLDINGS: Wins Final Court OK on Additional Spending
--------------------------------------------------------
Judge Craig T. Goldblatt authorized MTE Holdings, LLC and its
debtor-affiliates to use cash collateral to pay:
* $250,000 to the Debtors' prepetition secured parties -- in
addition to the adequate protection already provided by the final
cash collateral order -- beginning the week after the entry of the
final order, and for every week up to and including the week of the
Effective Date for the Debtors' Plan; and
* $30,000 in additional completion expenses, pursuant to the
Final Alysheba CapEx Budget.
The additional adequate protection payments shall remain subject to
the Carve-out.
A copy of the order is available for free at https://bit.ly/3wvWi56
from Stretto, claims agent.
About MTE Holdings, LLC, et al.
MTE Holdings, LLC and its debtor-affiliates are privately held
companies in the oil and gas extraction business.
MTE Holdings sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Case No. 19-12269) on October 22, 2019.
On October 23, 2019, affiliates MTE Partners LLC (Bankr. D. Del.
Case No. 19-12272) and Olam Energy Resources I LLC (Bankr. D. Del.
19-12273) filed voluntary petitions under Chapter 11.
On November 8, 2019, these debtor-affiliates filed Chapter 11
petitions: MDC Energy LLC d/b/a MDC Texas Energy LLC (Bankr. D.
Del. Case No. 19-12385); MDC Reeves Energy LLC (Bankr. D. Del. Case
No. 19-12388); MDC Texas Operator LLC (Bankr. D. Del. Case No.
19-12387); and Ward I, LLC (Bankr. D. Del. Case No. 19-12386).
The Debtors' cases are jointly administered under MTE Holdings,
LLC's case.
Debtors MTE Holdings, LLC; MTE Partners LLC; and Olam Energy
Resources I LLC disclosed $10 billion to $50 billion in estimated
assets and $100 million to $500 million in estimated liabilities.
Debtors MDC Energy LLC, dba MDC Texas Energy LLC and MDC Reeves
Energy LLC disclosed $1 billion to $10 billion in estimated assets
and $100 million to $500 million in estimated liabilities.
Debtors MDC Texas Operator LLC and Ward I, LLC disclosed under
$50,000 in estimated assets and liabilities.
The petitions were signed by Mark A. Siffin, as authorized
representative.
Judge Karen B. Owens was originally assigned to the case before
Judge Christopher S. Sontchi took over.
The Debtors tapped Kasowitz Benson Torres LLP as bankruptcy
counsel; Morris, Nichols, Arsht & Tunnell, LLP as local counsel;
Greenhill & Co., LLC, as financial advisor and investment banker;
Ankura Consulting LLC, as a chief restructuring officer; and
Stretto as claims and noticing agent.
NATIONAL VISION: Moody's Upgrades CFR to Ba2, Outlook Stable
------------------------------------------------------------
Moody's Investors Service upgraded National Vision, Inc.'s
(National Vision or NVI) ratings, including the corporate family
rating to Ba2 from Ba3, probability of default rating to Ba2-PD
from Ba3-PD, and senior secured bank credit facility rating to Ba1
from Ba2. The speculative grade liquidity rating remains SGL-1 and
the outlook remains stable.
The upgrades reflect governance considerations, specifically NVI's
repayment of $117 million of its term loan balance, which improves
leverage to 3.2x from 3.6x (Moody's-adjusted, as of April 3,
2021).The upgrades also reflect Moody's expectation that NVI's
operating performance will remain solid even as it cycles through
the impact of pent-up demand and stimulus checks.
Moody's took the following rating actions for National Vision,
Inc.:
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD
Gtd Senior Secured First Lien Revolving Credit Facility, Upgraded
to Ba1 (LGD2) from Ba2 (LGD2)
Gtd Senior Secured Term Loan, Upgraded to Ba1 (LGD2) from Ba2
(LGD2)
Outlook, Remains Stable
RATINGS RATIONALE
National Vision's Ba2 CFR benefits from the company's operations in
the stable and growing optical retail industry and its position as
a value player, which further supports the recession-resilient
nature of the business. Moody's expects NVI to continue to gain
share from independent optometrists, due to its store expansion,
attractive value proposition, ongoing investments in labs and
technology, and growing vision insurance coverage. The company has
executed well on its growth strategy, as demonstrated in its track
record of consistent comparable sales and EBITDA growth for 17
years prior to the coronavirus pandemic. These factors, as well as
government stimulus payments, drove a rapid recovery from the
coronavirus-driven store closures and deleveraging to roughly in
line with pre-pandemic levels even prior to the June 2021 debt
repayment. Moody's expects credit metrics to improve modestly over
the next 12-18 months from current pro-forma levels of 3.2x
debt/EBITDA and an estimated 3.8x EBIT/interest expense
(Moody's-adjusted, as of April 3, 2021). In addition, the rating
incorporates governance considerations, specifically the company's
financial strategy, which aims to balance the use of cash flow for
store expansion with the maintenance of a moderate leverage ratio.
NVI's very good liquidity also supports its credit profile.
At the same time, ratings are constrained by NVI's small scale
compared to similarly rated retail peers, as well as its narrow
product focus and supplier and customer concentration. In addition,
the long-term customer shift to e-commerce across retail could
increase competitive pressure and investment needs over time in the
value eyeglass retail segment, which has been relatively resistant
to online growth. As a retailer, National Vision needs to make
ongoing investments in social and environmental factors including
responsible sourcing, product and supply sustainability, privacy
and data protection.
The stable outlook reflects Moody's expectation for continued
earnings growth and very good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if revenue scale materially
increases, while the company continues to demonstrate consistent
earnings growth and very good liquidity. An upgrade would require
financial strategies that sustain debt/EBITDA below 3.0 times and
EBIT/interest expense above 4.0 times.
The ratings could be downgraded if operating performance or
liquidity weakens, or if the company engages in debt-funded
acquisitions or shareholder distributions. Quantitatively, the
ratings could be downgraded if debt/EBITDA is sustained above 4.0
times or EBIT/interest expense below 3.0 times.
National Vision, Inc. (National Vision, NASDAQ: EYE), headquartered
in Duluth, Georgia, is a US optical retailer offering value-priced
eyeglasses, contact lenses and eye exams. The company operates over
1,200 locations, including its own retail chains of America's Best
Contacts and Eyeglasses and Eyeglass World, as well as at host
stores at Wal-Mart, Fred Meyer and US military bases. National
Vision also sells contacts online. Revenues for the twelve months
ended April 3, 2021 were approximately $1.8 billion.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
NEW CONCEPTS: Case Summary & 13 Unsecured Creditors
---------------------------------------------------
Debtor: New Concepts Distributors Int'l, LLC
2315 NW 107th Avenue
Ste 1B5-1B6
Miami, FL 33172-2113
Business Description: New Concepts Distributors is part of the
apparel manufacturing industry.
Chapter 11 Petition Date: June 15, 2021
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 21-15831
Judge: Hon. Robert A. Mark
Debtor's Counsel: Patrick S. Scott, Esq.
GRAYROBINSON, P.A.
401 E. Las Olas Blvd
Ste. 1000
Fort Lauderdale, FL 33301
Tel: 954-761-8111
E-mail: patrick.scott@gray-robinson.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Janice Santiago, manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 13 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/JJOQURI/New_Concepts_Distributors_Intl__flsbke-21-15831__0001.0.pdf?mcid=tGE4TAMA
NEW VISION: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: New Vision Full Gospel Baptist Church
209 4th Ave
East Orange, NJ 07017
Business Description: The Debtor is a tax-exempt religious
organization.
Chapter 11 Petition Date: June 15, 2021
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 21-14903
Debtor's Counsel: David L. Stevens, Esq.
SCURA, WIGFIELD, HEYER, STEVENS & CAMMAROTA, LLP
1599 Hamburg Turnpike
Wayne, NJ 07470
Tel: 973-696-8391
E-mail: ecfbkfilings@scuramealey.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Victor Agee, senior
pastor/superintendent.
A full-text copy of the petition containing, among other items, a
list of the Debtor's four unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/JW4EDZA/New_Vision_Full_Gospel_Baptist__njbke-21-14903__0001.0.pdf?mcid=tGE4TAMA
NN INC: Names Mike Felcher as Chief Financial Officer
-----------------------------------------------------
NN, Inc. has named Mike Felcher as senior vice president and chief
financial officer effective July 1, 2021. Mr. Felcher will be
assuming the CFO role from Tom DeByle, who will be retiring from
his current role but will remain with the Company until June 30,
2021, to ensure a smooth transition.
"We want to thank Tom for his significant contributions to the
transformation of NN and wish him well in retirement. In just two
short years, he helped us through the deleveraging event that led
to the divestment of the Life Sciences business, played a critical
role in finalizing our recent refinancing, and led the remediation
of our material weaknesses," commented Warren Veltman, NN president
and chief executive officer. "As Mike transitions into his new
role, we have confidence in his ability to leverage the breadth of
his prior experience, as well as the knowledge of our company
gained during his tenure with NN as our Chief Accounting Officer."
Thomas Wilson, NN Audit Committee Chairman, added, "We would like
to thank Tom for his invaluable leadership since joining the
Company and wish him well in retirement. His efforts over the past
two years have helped position us for future growth and success."
Tom DeByle, NN's outgoing chief financial officer, said, "I am
extremely proud of our team's focus and successful accomplishments
since joining the Company in 2019. Collectively, we transitioned
NN's business, while establishing a strong financial foundation to
support the Company's long-term growth. Additionally, I want to
express my confidence in Mike as my successor and overall leader
within the organization. Our close working relationship will
enable a seamless transition as he assumes the CFO role."
Mr. Felcher added, "I am excited to extend Tom's record of
successful leadership within NN's finance team, and I look forward
to working with Warren to execute on our strategic growth and
financial objectives to accomplish our 2025 revenue and margin
goals."
Mr. Felcher has served as NN's chief accounting officer since June
2018. Prior to joining the Company, he served as the vice
president, North America chief financial officer for JELD-WEN,
Inc., a publicly held, global manufacturer of doors and windows,
from 2013 to 2017. Before assuming his role at JELD-WEN, Inc., Mr.
Felcher served as a Director of Finance for United Technologies
Corp. following its acquisition of Goodrich Corporation in 2012.
He also previously served in a variety of finance roles at Goodrich
and began his career at PricewaterhouseCoopers in Boston. Mr.
Felcher is a licensed CPA and holds a Bachelor of Science,
Accountancy from Bentley University and a Master of Business
Administration from Wake Forest University.
In connection with Mr. Felcher's appointment, Mr. Felcher's annual
base salary was increased to $355,000, and he received a one-time
grant of restricted stock in the amount of $50,000. In addition,
Mr. Felcher will now be eligible to receive (i) an annual incentive
award based on a target amount of 50% of his annual base salary
under the Company's Executive Incentive Compensation Program, and
(ii) long-term incentive awards based on a target amount of 85% of
his annual base salary under the Company's Long-Term Incentive
Program. Mr. Felcher's long-term incentive compensation will be
divided equally among performance stock units that vest based on
the Company's total shareholder return, performance stock units
that vest based on the Company's return on invested capital and
restricted stock awards, which will vest over a three-year period
from the time of grant.
About NN Inc.
NN, Inc. -- www.nninc.com -- is a global diversified industrial
company that combines advanced engineering and production
capabilities with in-depth materials science expertise to design
and manufacture high-precision components and assemblies primarily
for the electrical, automotive, general industrial, aerospace and
defense, and medical markets. The Company has 32 facilities in
North America, Europe, South America, and China.
NN, Inc. reported a net loss of $100.59 million for the year ended
Dec. 31, 2020, compared to a net loss of $46.74 million for the
year ended Dec. 31, 2019. As of March 31, 2021, the Company had
$622.32 million in total assets, $340.70 million in total
liabilities, $46.86 million in Series D perpetual preferred stock,
and $234.75 million in total stockholders' equity.
NUVERRA ENVIRONMENTAL: Unit's $4-Mil. PPP Loan Fully Forgiven
-------------------------------------------------------------
Nuverra Environmental Solutions, Inc. received notification from
First International Bank & Trust that the U.S. Small Business
Administration had approved Badlands Power Fuels, LLC's application
for forgiveness of the entire PPP loan balance effective June 10,
2021 and that the SBA had remitted to the lender payment in full of
all outstanding principal and interest under the PPP loan.
BPF, a direct wholly-owned subsidiary of Nuverra Environmental,
received proceeds of a loan from First International Bank & Trust
in the principal amount of $4.0 million, pursuant to the Paycheck
Protection Program, which was established under the U.S.
government's Coronavirus Aid, Relief, and Economic Security Act and
is administered by the U.S. Small Business Administration.
About Nuverra
Nuverra Environmental Solutions, Inc. provides water logistics and
oilfield services to customers focused on the development and
ongoing production of oil and natural gas from shale formations in
the United States. Its services include the delivery, collection,
and disposal of solid and liquid materials that are used in and
generated by the drilling, completion, and ongoing production of
shale oil and natural gas. The Company provides a suite of
solutions to customers who demand safety, environmental compliance
and accountability from their service providers.
Nuverra Environmental reported a net loss of $44.14 million for the
year ended Dec. 31, 2020, compared to a net loss of $54.94 million
for the year ended Dec. 31, 2019. As of March 31, 2021, the
Company had $184 million in total assets, $59.40 million in total
liabilities, and $124.6 million in total shareholders' equity.
PARK PLACE: July 28 Amended Plan Confirmation Hearing Set
---------------------------------------------------------
On Feb. 26, 2021, the Trustee filed with the U.S. Bankruptcy Court
for the Southern District of West Virginia an Amended Chapter 11
Plan of Reorganization and Amended Disclosure Statement.
On June 10, 2021, Judge B. McKay Mignault approved the Amended
Disclosure Statement and ordered that:
* July 28, 2021, at 1:30 p.m. before the United States
Bankruptcy Court for the Southern District of West Virginia is the
hearing on confirmation of the Amended Chapter 11 Plan.
* July 14, 2021, at 4:00 p.m. is fixed as the last day to
submit original ballots accepting or rejecting the Amended Chapter
11 Plan.
* July 14, 2021, is fixed as the last day to file any
objection to confirmation of the Amended Chapter 11 Plan.
* July 21, 2021, at 4:00 p.m. is fixed as the last day for the
Debtor to file a certification and summary report of ballots
received, reflecting all votes by class, number of claims, and
amount of claim.
A copy of the order dated June 10, 2021, is available at
https://bit.ly/3xpyArg from PacerMonitor.com at no charge.
Attorney for the Chapter 11 Trustee:
Sarah C. Ellis
Steptoe & Johnson PLLC
PO Box 1588
Charleston, West Virginia 25326
Tel: (304) 353-8000
E-mail: Sarah.ellis@steptoe-johnson.com
About Park Place Properties
Park Place Properties, LLC, a single-member LLC founded in 1997 by
John C. Spence, owns the Properties that consist of the Park Place
Apartments; the Park Place Office; and the Flower Shop. The Flower
Shop Property located at 3208-3210 Piedmont Road, in Huntington,
West Virginia.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. W.Va. Case No. 19-30186) on April 30, 2019. At
the time of the filing, the Debtor was estimated to have assets of
less than $50,000 and liabilities of less than $1 million. Judge
Frank W. Volk oversees the case.
Caldwell & Riffee is the Debtor's bankruptcy counsel.
Robert L. Nistendirk was appointed as the Debtor's Chapter 11
trustee. The Trustee is represented by Steptoe & Johnson PLLC.
PHILIPPINE AIRLINES: Still Mulling Prearranged Chapter 11
---------------------------------------------------------
Philippine Airlines did not file for Chapter 11 at the end of May
2021 as it had suggested to its lessors, but the carrier is still
working towards a prearranged insolvency in the USA, three of its
lessors tell Cirium, FlightGlobal reported.
According to FlightGlobal, lessors were unsurprised that the
airline did not file for bankruptcy protection by the end of May
2021, having expected the soft deadline to slip.
"They [have now] guided that it would be [in] June. It should be
very soon, is what we are understanding. We are expecting it to be
first half of the month," says one of the three lessors.
According to that and a second lessor, the airline is targeting to
raise debtor-in-possession (DIP) financing of $505 million. Cirium
on May 25, 2021 reported a rounded figure of $500 million.
The second lessor adds that the $505 million would be broken down
into $250 million of debt and $255 million of convertible debt.
The carrier is also seeking exit financing of about $150 million,
the first and second lessor say, although the final figure is
subject to change.
They add that PAL has indicated to lessors that most of the DIP
financing has been earmarked as ready.
The second lessor says: "It's just [about] waiting for the filing
just to make sure that things are going the right way before they
release the money."
Neither lessor has been informed yet about the source of the
financing, with the first lessor saying they had only been told the
airline had "earmarked a lot of it".
In recent public statements, PAL has emphasised that it is
considering multiple options for its restructuring.
"As of the moment, there is no definite option that has been
officially approved," it says in a 12 May filing to the Philippine
Stock Exchange (PSE).
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.
PINK MONKEY: Seeks to Hire Bottom Line Solutions as Accountant
--------------------------------------------------------------
Pink Monkey, Inc. seeks approval from the U.S. Bankruptcy Court for
the District of Colorado to hire Bottom Line Solutions, Inc. as its
accountant.
The Debtor requires an accountant to prepare tax returns,
tax-related documents and bankruptcy schedules, and to provide
other accounting-related services.
Brian Daly, the firm's accountant who will be providing the
services, will charge a flat fee of $890 to prepare and file the
Debtor's 2020 federal and state tax returns.
Mr. Daly 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:
Brian Daly, CPA
Bottom Line Solutions, Inc.
55 Gentry Drive
Hawthorn Woods IL 60047
Phone: (847) 726-2692
Fax: (847) 726-2693
About Pink Monkey Inc.
Pink Monkey, Inc. -- https://pinkmonkeystudio.com -- is a custom
fabrication, special event design, and production company based in
Silt, Colo.
Pink Monkey filed a Chapter 11 petition (Bankr. D. Colo. Case No.
21-12195) on April 27, 2021. In the petition signed by Nathan Cox,
president and co-owner, the Debtor reported $282,117 in total
assets and $1,397,703 in total liabilities. Judge Elizabeth E.
Brown oversees the case. Wadsworth Garber Warner Conrardy, P.C.
and Bottom Line Solutions, Inc. serve as the Debtor's legal counsel
and accountant, respectively.
PLAMEX INVESTMENT: Seeks to Hire NAI Capital as Real Estate Broker
------------------------------------------------------------------
Plamex Investment, LLC and 3100 E. Imperial Investment, LLC seek
approval from the U.S. Bankruptcy Court for the Central District of
California to employ as their real estate broker.
The firm's services include:
a. identifying potential buyers and investors using NAI
Capital's worldwide network;
b. assisting the Debtors to expeditiously formulate and
implement a strategy for soliciting interest from potential buyers
and investors, including by developing and implementing procedures
and a timetable for marketing their property for sale or
investment;
c. introducing the Debtors to potential buyers and investors
and coordinating due diligence investigations;
d. assisting the Debtors to evaluate proposals from interested
parties, formulating negotiation strategies, and assisting in
negotiations and closing of a sale or investment; and
e. participating in hearings before the bankruptcy court with
respect to the matters upon which NAI Capital has provided services
or advice, including providing testimony.
NAI Capital will get a 1 percent commission on the sales price.
As disclosed in court filings,NAI Capital is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Chris Jackson
NAI Capital Commercial, Inc.
15821 Ventura Boulevard Suite 320
Encino, CA 91436
Tel: +1 818 905 2400
Fax: +1 818 905 2425
About Plamex Investment
Buena Park, Calif.-based Plamex Investment, LLC and its affiliate,
3100 E. Imperial Investment, LLC, sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Lead Case No.
21-10958) on April 14, 2021. Donald Chae, designated officer,
signed the petitions. Judge Erithe A. Smith oversees the cases.
At the time of the filing, Plamex Investment disclosed assets of
between $100 million and $500 million and liabilities of the same
range. 3100 E. Imperial Investment had between $10 million and $50
million in both assets and liabilities.
Levene, Neale, Bender, Yoo & Brill LLP serves as the Debtors' legal
counsel.
PREFERRED EQUIPMENT: May Use TD Bank Cash Collateral Thru July 15
-----------------------------------------------------------------
Judge Diane Finkle authorized Preferred Equipment Resource, LLC to
use cash collateral from June 9 through July 15, 2021, pursuant to
the terms of a stipulation with TD Bank, N.A.
The Court ruled that, as condition to using the cash collateral,
the Debtor shall grant TD Bank a post-petition replacement lien as
adequate protection of its interest, to the extent said interest is
valid and enforceable and to the extent of any diminution in value
that may result from the Debtor's use of cash collateral.
The Court further ruled that the Debtor's authority to use the cash
collateral shall cease if either of these instances occur:
* The cumulative value of cash, inventory, and accounts
receivable, as adjusted per the terms of the interim order, fall
below the value on the Petition Date; or
* Any one category of cash, inventory, or accounts receivable, as
adjusted, falls below 15% of its value as of the Petition Date and
the diminution in value sustains for a three-day period.
In connection therewith, the parties have agreed to this valuation
of cash, inventory and accounts receivable for purposes of the
interim order:
a. Cash on hand shall be valued at 100%;
b. Accounts Receivable shall be valued as follows:
* 80% for any receivables which are currently due or otherwise
less than 30 days outstanding;
* 75% for any payments 31 to 60 days outstanding;
* 75% for any payments 61 to 90 days outstanding; and
* 0% for any receivables more than 91 days outstanding.
c. Inventory shall be valued at 50% of costs.
The Court also ruled that the Debtor shall, on a weekly basis,
provide TD Bank, Subchapter V Trustee Joseph M. Diorio, and the
United States Trustee reports regarding TD Bank's collateral
position based on the agreed upon valuation.
A copy of the consent order is available for free at
https://bit.ly/3grUljr from PacerMonitor.com.
A copy of the analysis on the valuation of the Debtor's cash,
accounts receivable and inventory (according to the agreed upon
adjustments) is available for free at https://bit.ly/3cErK9B from
PacerMonitor.com.
A copy of the Debtor's budget-actual cash analysis from week ending
April 24, 2021 is available for free at https://bit.ly/3pYSjvP 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.
Peter M. Iascone & Associates, Ltd. and Lucier CPA, Inc. serve as
the Debtor's legal counsel and accountant, respectively. Joseph M.
DiOrio is the Debtor's Subchapter V Trustee.
Counsel for TD Bank, N.A.:
Christopher J. Fragomeni, Esq.
Savage Law Partners, LLP
39 Pike Street
Providence, RI 02903
Telephone: (401) 238-8500
Facsimile: (401) 648-6748
Email: chris@savagelawpartners.com
PREGIS TOPCO: $67.5MM Term Loan Add-on No Impact on Moody's B3 CFR
------------------------------------------------------------------
Moody's Investors Service said that Pregis TopCo LLC's B3 Corporate
Family Rating and B3-PD Probability of Default Rating are not
affected by the proposed $67.5 million add-on to the company's
first lien term loan, which is rated B2. The $67.5 million add-on
is fungible with the existing $232.5 million term loan. Proceeds
from the add-on will be used to fund high-return capital
expenditure opportunities. The outlook remains stable.
Moody's initially views the term loan add-on as negative, as it
results in an increase in leverage and term loan amortization.
However, these additional investment opportunities funded by te
incremental borrowing will result in EBITDA growth over time if
successfully implemented. These investments are expected to improve
the company's end market profile into the high growth e-commerce
sector.
Pregis' B3 CFR reflects high leverage. Moody's projects pro forma
adjusted debt-to-LTM EBITDA (including Moody's adjustments) to
increase slightly to 7.0x by year end 2021. Through revenue and
EBITDA growth, Moody's forecasts debt-to-EBITDA to approach 5.5x in
2022. Pregis is expected to continue to generate free cash flow
that can be allocated to bolt-on acquisitions and debt reduction.
The stable outlook reflects the expectation Pregis will continue to
effectively execute its operating plans, reduce leverage through
EBITDA growth, and allocate free cash flow to debt reduction.
Pregis TopCo, LLC is a manufacturer of protective packaging
materials and equipment. Based in Deerfield, Illinois, the company
produces sheet foam, bubble wrap, engineered foam, adhesive films
for automotive, consumer products, electronics, furniture,
housing/construction industries in its manufactured product
segment. Pregis also sells packaging equipment that uses its
packaging materials. The company has 14 manufacturing plants in
North America and primarily focuses on the North American market.
The primary raw material used is polyethylene resin (approximately
5% of sales are from paper products). Warburg Pincus has been the
primary equity owner of the company since August 2019.
PS ON TAP: Seeks Approval to Hire Lewis Brisbois as Labor Counsel
-----------------------------------------------------------------
PS On Tap, LLC and its affiliates seek approval from the U.S.
Bankruptcy Court for the Central District of California to hire
Lewis Brisbois Bisgaard & Smith, LLP as labor counsel.
The firm's services include:
a. providing legal advice with regard to employment and labor
counseling and litigation matters;
b. responding to any statutory demands for employee records;
c. defending the Debtors against any claims and lawsuits
pertaining to employment and labor disputes, including complaints
filed with the Labor Commissioner and other administrative
entities; and
d. defending the Debtors against any pending lawsuits
pertaining to personal injury, general litigation and ADA claims.
The firm's hourly rates are as follows:
Alexander J. Harwin $295 per hour
Joshua D. Carlon $295 per hour
Principals and Staff $90 to $295 per hour
Alexander Harwin, Esq., a partner at Lewis Brisbois Bisgaard &
Smith, 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:
Alexander J. Harwin, Esq.
633 West 5th Street, Suite 4000
Los Angeles, CA 90071
Tel: 213-680-5055
Fax: 213-250-7900
Email: Alexander.Harwin@lewisbrisbois.com
About PS On Tap LLC
PS On Tap, LLC and its affiliates have owned and operated a chain
of restaurants featuring upscale casual and fine dining experiences
under three unique concepts: a luxury steakhouse reminiscent of the
American grills in the 1930's and 1940's operating under the name
The Grill on the Alley; a family-friendly grill operating under the
name Daily Grill Restaurant & Bar; and a school-themed Gastropub
operating under the name Public School on Tap. The Debtors'
restaurants are located primarily in Southern California with
additional restaurants located throughout other major cities in the
United States.
PS On Tap and its affiliates filed their voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Calif.
Lead Case No. 21-10757) on April 28, 2021. At the time of the
filing, the Debtors had between $10 million and $50 million in both
assets and liabilities. Judge Martin R. Barash presides over the
cases.
Freeman, Freeman & Smiley LLP, Lewis Brisbois Bisgaard & Smith LLP
and Grigorian & Associates Inc. serve as the Debtors' bankruptcy
counsel, labor counsel and accountant, respectively.
PURDUE PHARMA: Hits Back Ch. 11 Examiner Motion of Creditor
-----------------------------------------------------------
Law360 reports that bankrupt OxyContin maker Purdue Pharma LP
attacked a creditor's motion seeking the appointment of a Chapter
11 examiner, telling a New York judge that the creditor's arguments
that the debtor's owners steamrolled the company into accepting a
$4.5 billion settlement are baseless and would threaten the
debtor's proposed Chapter 11.
In the opposition filed Sunday, June 13, 2021, Purdue discounted
the position of creditor Peter W. Jackson, saying the settlement
with the Sackler family that underpins the debtor's proposed
Chapter 11 plan is the result of months of negotiations among
Purdue, the Sacklers, unsecured creditors, state attorneys general
local government entities and contingent litigation.
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.
RGN-GROUP: Regus Units File Restructuring Plan to Keep 98 Locations
-------------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that co-working space provider
Regus Corp.'s bankrupt subsidiaries filed a reorganization plan to
resume operating a vast majority of their locations in the U.S.
As they emerge from bankruptcy, the debtors -- RGN-Group Holdings
LLC and affiliates -- plan to use $168.4 million in parent-provided
exit financing to reorganize and keep open 98 of the bankrupt
locations. Eight will be liquidated.
The moves will help deliver a "value-maximizing outcome" to
creditors of its office spaces, according to plan documents filed
June 11, 2021 with the U.S. Bankruptcy Court for the District of
Delaware.
About Regus Corp.
Headquartered in Chertsey, UK, Regus Group Plc was founded by the
current CEO Mark Dixon in 1989 and is the world's largest provider
of serviced offices and videoconferencing facilities. Following the
acquisition of HQ Global Workplaces in 2004, it runs a network of
approximately 80,000 workstations in 55 countries around the
world.
RGN-Group Holdings, LLC and its affiliates are primarily engaged in
renting and leasing real estate properties in the U.S.
On Aug. 17, 2020, RGN-Group Holdings and other U.S. affiliates of
Regus Group sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Lead Case No. 20-11961). At the time of the
filing, RGN-Group Holdings disclosed total assets of $1,005,956,000
and total liabilities of $946,016,000.
Judge Brendan Linehan Shannon oversees the cases.
The Debtors have tapped Faegre Drinker Biddle & Reath LLP as their
bankruptcy counsel, Alixpartners as financial advisor, Duff &
Phelps LLC as restructuring advisor, and Epiq Corporate
Restructuring LLC as claims and noticing agent.
RLJ LODGING: Moody's Assigns First Time Ba3 Corp Family Rating
--------------------------------------------------------------
Moody's Investors Service has assigned first-time ratings to RLJ
Lodging Trust, L.P., the operating subsidiary of RLJ Lodging Trust,
including a Ba3 Corporate Family Rating. In the same rating action,
Moody's also assigned a Ba3 rating to the company's proposed
offering of $400 million senior secured notes due 2026, which are
currently being marketed. The notes will be guaranteed by the
company and certain subsidiaries of the operating partnership that
guarantee the senior credit facilities. The REIT intends to use the
proceeds of the offering to partially repay outstanding near-term
maturity indebtedness under RLJ's credit facilities, partially
repay its outstanding secured mortgage indebtedness, and for
general corporate purposes. In the same rating action, Moody's
assigned a speculative grade liquidity rating of SGL-3 to the
company. The rating outlook is stable.
Absent a reversal in the new infection rate trends or a return of
government issued "stay-at-home" mandates or lockdowns, the stable
outlook reflects Moody's expectation that RLJ's earnings and
operating cash flows will improve over the next twelve to eighteen
months as the fundamentals for the select-service and leisure hotel
segment recover, driven by higher US vaccinations rates, pent-up
demand for domestic transient travel, and international travel
restrictions remaining in place.
The following ratings were assigned:
Issuer: RLJ Lodging Trust, L.P.
Corporate Family Rating at Ba3
Gtd Senior Secured Debt Rating at Ba3
Speculative Grade Liquidity Rating at SGL-3
Outlook Action:
Issuer: RLJ Lodging Trust, L.P.
Stable Outlook assigned
RATINGS RATIONALE
RLJ's Ba3 credit profile benefits from its platform as the fourth
largest US hotel REIT with $5.3 billion in total assets and its
high-quality portfolio of 102 premium-branded, focused-service and
compact full-service hotels, comprising approximately 22,600 rooms.
The REIT owns and invests in smaller,
upper-scale/upscale-designated hotels that cater to leisure and
transient-oriented demand. Management considers these types of
hotels to be less operating and capital intensive compared to the
bigger, large group-oriented, traditional full-service hotels. The
portfolio benefits from its granularity and geographical
diversification across the major high demand/high barrier-to-entry,
urban and dense suburban markets that attract demand from business,
group and leisure travelers. Moody's expects that the U.S.
leisure/transient-oriented lodging segment will experience a
quicker and stronger recovery in 2021, compared to traditional
full-service hotels.
The global hospitality sector was adversely affected by temporary
closures, lockdowns, and travel restrictions arising from public
health concerns related to the COVID-19 (coronavirus) pandemic.
However, the lodging sector has been gradually rebounding as the
pandemic eases and consumer demand/activity continues to
accelerate. Consequently, the REIT's operating performance has been
improving on a quarterly sequential basis since the second quarter
of 2020. Although still materially below 2019 operating/financial
levels, RLJ's occupancy rates and revenue per available room
(RevPAR) have risen, producing positive EBITDA growth in the first
quarter of 2021 -- the first time since the pandemic's onset. In
April 2021, the open portfolio's occupancy rate and average daily
rate accelerated to approximately 59% and $133.60, resulting in a
RevPAR growth of 13% to $78.93 from the prior month. For its open
portfolio, the weekly occupancy rate averaged approximately 61% in
the last two weeks of May and has overall outpaced or moved in step
with the total US average occupancy rate since the beginning of
2021. Catalysts behind the operating improvement include the
loosening of domestic travel restrictions, management's reopenings
of nearly all its hotels, management's tight cost-control measures
in conjunction with pent-up travel demand and rapid vaccination
rollouts. With the increase in travel and room demand since the
beginning of the year through the end of May 2021, Moody's expect
these positive growth trends to continue, while recognizing the
seasonality of the lodging business. The REIT's credit profile also
considers the company's deep and veteran management team with
hospitality-specific expertise, which Moody's believe should help
the company navigate through the still challenging operating
environment, as well as management's prudent financial policy.
These credit positives are partially offset by RLJ's weakened
earnings as a result of the pandemic, with elevated leverage and
secured debt levels for the rating category. Although the REIT has
maintained stable effective leverage, its operating leverage (net
debt to EBITDA) for the trailing 12-month period ending on March
31, 2021 continues to be severely affected by the pandemic. As a
result of the company's amendment of its corporate credit
facilities in June 2020 and subsequent amendment and extension in
December of the same year, the company's unencumbered asset pool
declined to 29% of gross assets from 63% (Moody's adjusted) and the
secured debt to gross assets rose to 37% from 14% after a
significant portion of its unencumbered assets were pledged as
collateral to the existing credit facilities, constraining the
company's ratings and financial flexibility. Considering recent
asset sales, the unencumbered asset pool and secured debt as a
percentage of gross assets were 27% and 35%, respectively, at first
quarter-end 2021. The ratings also reflect the company's brand
concentration with Marriott International, Inc., Hilton Hotels, and
Hyatt Hotels Corporation, representing approximately 83% of the
total 2019 EBITDA. However, Moody's recognize these brands have
strong global consumer recognition and robust guest loyalty
programs, and are considered as the premier hotel franchisors.
Additionally, the inherent cyclicality and volatility of the
lodging sector, driven by its sensitivity to consumer demand and
sentiment, is a material credit negative relative to the broader
spectrum of rated REIT issuers. Moody's notes, however, that 98% of
the REIT's consolidated portfolio is currently open and operating
as of early June 2021. RLJ's pro forma liquidity position (SGL-3)
is considered adequate, supported by $648 million in cash on hand,
and $400 million available on its $600 million revolving credit
facility ("the revolver"), as of first quarter-end 2021. The
revolver matures in May 2024 with a one-year extension option. In
March 2020, management drew down $400 million from the revolver as
a precautionary step to increase its liquidity position and
preserve financial flexibility. But subsequently, the company
repaid $200 million in March 2021.
RLJ's new senior secured note offering will strengthen the REIT's
financial flexibility by adding some duration to it debt maturity
schedule and widening its access to capital. Pro forma for the
transaction and the company's exercise of its debt extension
options, its nearest debt maturities are approximately $457 million
(19% of its total debt) in 2023. Concurrent with the transaction,
RLJ will also amend again its existing $1.8 billion corporate
credit facilities, which is partially backed by the same
subsidiaries and assets that provide collateral for the new senior
secured notes. Upon its initial amendment, RLJ obtained temporary
waivers for all credit facility financial covenant tests through
the first quarter of 2021. That said, the REIT's unencumbered asset
pool will remain low and secured debt levels elevated until the
company meets key financial conditions per the credit agreement,
allowing the equity pledges to burn off.
Absent a reversal in the new infections rate trends or a return of
government issued "stay-at-home" mandates or lockdowns, the stable
outlook reflects Moody's expectation that RLJ's earnings and
operating cash flows will improve over the next twelve to eighteen
months as the fundamentals for the select-service and leisure
segment improve, driven by higher US vaccinations rates, pent-up
demand for domestic transient travel, and international travel
restrictions remaining in place. The stable outlook also reflects
the stronger prospects for a recovery, as job growth continues,
asset values increase, and consumer discretionary spending rises as
the public health crisis subsides.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward rating momentum would be predicated upon the following
criteria on a sustained basis: 1) total debt to gross assets
approaching 35%; 2) net debt to EBITDA below 5.0x; 2) secured debt
below 15% of gross assets; 3) fixed charge coverage ratio greater
than 3.25x. Additionally, any upward rating pressure would also
require RLJ to maintain ample liquidity through industry and
economic cycles.
Downward rating momentum would entail the following: 1) weakened
operating performance or inadequate liquidity over the next 12-18
month period; 2) failure to generate positive free cash flow by the
end of 2021; and 3) failure to improve leverage levels closer to
pre-COVID levels could also lead to downward ratings pressure.
RLJ Lodging Trust [NYSE: RLJ] is an internally-managed lodging REIT
that owns, acquires and invests primarily in compact full-service
and focused service hotels. The portfolio caters to the
transient/leisure traveler and some small groups. As one the
leading hoteliers in the United States, the company owns 102
premium-branded hotels with approximately 22,600 rooms, located in
the major leisure and drive-to lodging markets in 23 states and the
District of Columbia. As of March 31, 2021, the company had
approximately $5.33 billion in total assets and $2.62 billion in
book equity.
The principal methodology used in these ratings was REITs and Other
Commercial Real Estate Firms published in September 2018.
RLJ LODGING: S&P Assigns 'B+' Issuer Credit Rating, Outlook Neg.
----------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issuer credit rating to U.S.
lodging REIT RLJ Lodging Trust. In addition, S&P assigned its 'BB-'
issue-level rating and '2' recovery rating to RLJ Lodging Trust
L.P.'s proposed $400 million senior secured notes, reflecting
substantial expected recovery for lenders in a hypothetical
default.
S&P said, "The 'B+' issuer credit rating reflects our expectation
that leverage will decrease to below our 6.5x downgrade threshold
in 2022.RLJ reported that its portfolio RevPAR improved in the
first quarter of 2021 (to 64% below 2019 levels) compared with the
fourth quarter of 2020 (72% below 2019 levels) due primarily to an
increase in drive-to and leisure demand for all-suite and select
service hotels. RLJ specifically reported that it benefited from
pent-up leisure demand for drive-to markets, including south
Florida; Charleston, S.C.; and Orlando. We currently expect that
RLJ's RevPAR will continue to improve through 2021 due to a
successful vaccination campaign that has prompted reduced
restrictions and an acceleration in the U.S. travel recovery. We
expect that leisure travel will continue to lead hotel demand
through 2021, with business transient and group business starting
to recover in the second half of 2021. Later in 2021 and in 2022,
we expect the business and group travel recovery to lead to higher
RevPAR room nights (even with average daily rates still below 2019
levels) and cause U.S. industry RevPAR in 2022 to grow at a faster
rate than it did in 2021. We also expect that RLJ could manage its
cost base in a manner that achieves break-even EBITDA at lower
occupancy rates than in the past because guests may demand lower
service levels, particularly food and beverage or any
high-touch-point service, for some time. This base case set of
RevPAR assumptions drives an expectation that leverage will improve
to below 6.5x by the end of 2022."
Key risk factors include RLJ's revenue exposure to business
transient and group travel and its exposure to destination markets
like San Francisco and Chicago that may recover more slowly as
leisure consumers and business transient travelers gradually gain
confidence they can travel safely.
S&P said, "We believe RLJ's liquidity is adequate.RLJ had about
$648 million of cash as of March 31, 2021. In addition, RLJ has
access to about $400 million of its revolving credit facility. RLJ
reported that it burned about $14 million per month in the first
quarter. The company's guidance indicates a range of $16
million-$20 million cash burn per month in the second quarter,
which includes approximately $14 million in semiannual interest
payments on its senior notes. Based on our estimate of the
company's liquidity pro forma for the proposed transaction, its
liquidity runway would be substantial and will likely enable RLJ to
sustain operations until travel and hotel demand gain further
momentum.
"Our rating incorporates the asset quality and size of RLJ's hotel
portfolio. RLJ has a high-quality, geographically diverse portfolio
of compact full service and focused service hotels."
RLJ has 82 unencumbered hotels as defined by its credit agreements.
The unencumbered asset base provides RLJ the flexibility to
monetize individual hotels to reduce debt if needed, even if the
timing may be disadvantageous in a recession scenario. S&P assumes
no asset sales in our base case forecast through 2022 because the
timing and transaction size of noncore asset sales are not easily
quantifiable.
These positive attributes are partly offset by some geographical
concentration in RLJ's portfolio. The cyclical nature of the
lodging industry and high revenue and earnings volatility
associated with hotel ownership are also key risk factors. RLJ's
concentration in the upscale and upper upscale segments could
result in more volatile EBITDA over a cycle than those for owners
focused in the economy or midscale segments. This is because
pricing tends to compress during an economic downturn, with the
upper upscale and luxury segments falling the most and the midscale
and economy segments the least. As a result, RLJ is exposed to
EBITDA variability over the cycle compared with hotel owners in the
lower-priced, lower-service segments and lodging managers and
franchisers that do not have an owner's fixed-cost burden.
S&P said, "We believe RLJ's public financial policy commitment will
probably result in a reduction in leverage over time.The company
has a publicly stated target to reduce leverage to 4x or below.
Although we anticipate leverage to be very high through 2022, and
the company may use some moderate portion of its large cash
balances to complete hotel acquisitions (to the extent not
partially offset by asset sale or equity proceeds), we believe RLJ
will be motivated to continue to reduce its very high leverage in
the years after 2022.
"We include 100% of the perpetual preferred equity in our
calculation of adjusted debt.We typically assign no equity content
to preferred equity issued by a REIT or a similar tax-driven
ownership structure if the instrument includes a dividend stopper
that requires that ordinary dividend payments must be stopped
before the preferred coupon can be deferred. In our view, the loss
of favorable tax treatment that would result from a failure to
distribute taxable income if the dividend stopper was triggered
would more than outweigh the cash flow benefit of any coupon
deferral. We consider that this gives RLJ a strong incentive to
avoid coupon deferral on the preferred equity, or to redeem it
before deferring preferred coupons.
"The negative outlook reflects very high leverage through 2022 and
significant residual risks to the lodging industry recovery. We
could lower the ratings if the pace of the RevPAR recovery were
slower than we currently anticipate such that our measure of RLJ's
leverage remained above 6.5x in 2022.
"We could lower the rating if we no longer believed RLJ's revenue
and EBITDA could recover and enable the company to reduce our
measure of lease-adjusted debt to EBITDA below 6.5x in 2022. Given
that RLJ only has a modest cushion compared with our 6.5x downgrade
threshold in 2022 under our current base case, there is limited
flexibility for underperformance relative to similarly rated peers.
As a result, we could lower the rating if hotel demand did not
recover as we assumed or widespread immunization did not translate
into a significant enough recovery in business and group travel or
if there were a substantial new wave of cases that impaired the
hotel sector recovery in the U.S. We could also lower the rating if
RLJ increased its leverage by financing hotel acquisitions largely
with cash on hand without generating sufficient asset sale or
equity proceeds to make acquisitions at least neutral for leverage
on a net debt basis.
"Given significant uncertainties regarding the recovery in hotel
demand, it is unlikely we would revise the outlook to stable until
we were sure business and group travel were recovering in 2021 in
line with our current base case assumptions. However, provided the
recovery is underway, we could revise the outlook to stable once we
believed RLJ could achieve a run-rate level of EBITDA that would
enable it to reduce leverage below 6.5x. We could also revise the
outlook to stable if RLJ engaged in equity-financed transactions or
hotel sales that reduced leverage sooner than we currently assume,
but only if the business and group travel recovery were solidly
underway. Although unlikely over the next 12 months, we could raise
the rating if we believed that RLJ would sustain leverage below
5.5x."
ROMANS HOUSE: Trustee Seeks to Hire Hart & Hallman as Counsel
-------------------------------------------------------------
Michael McConnell, the Chapter 11 trustee for Romans House, LLC and
Healthcore System Management, LLC, seeks approval from the U.S.
Bankruptcy Court for the Northern District of Texas to hire Kelly
Hart & Hallman, LLP as his legal counsel.
The firm's services include:
(i) advising the trustee with respect to his rights and
obligations regarding matters of bankruptcy law and other
applicable statutory, common law and regulatory schemes;
(ii) preparing and filing legal papers;
(iii) taking all necessary actions to protect and preserve the
Debtors' estate, including the prosecution of actions, the defense
of any actions, the negotiation of disputes to which the trustee is
involved, and the preparation of objections to claims filed against
the estate; and
(iv) other legal services necessary to administer the Debtors'
Chapter 11 cases.
The hourly rates range from $295 for the most junior associate to
$550 for the most senior partner. The firm's attorneys who are
likely to work on this matter are:
Nancy Ribaudo $550 per hour
Katherine Hopkins $385 per hour
Joseph Austin $295 per hour
Nancy Ribaudo, Esq., a partner at Kelly Hart, disclosed in a court
filing that her firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Nancy Ribaudo, Esq.
Kelly Hart & Hallman LLP
201 Main Street, Suite 2500
Fort Worth, TX 76102
Tel: (817) 878-3569/(817) 878-3574
Fax: (817) 878-9280
Email: nancy.ribaudo@kellyhart.com
About Romans House and Healthcore
System Management
Based in Forth Worth, Texas, Romans House, LLC operates Tandy
Village Assisted Living, a continuing care retirement community and
assisted living facility for the elderly in Fort Worth, Texas. Its
affiliate, Healthcore System Management, LLC, operates Vincent
Victoria Village Assisted Living, also an assisted living facility
for the elderly.
Romans House and Healthcore System Management sought Chapter 11
protection (Bankr. N.D. of Texas Case No. 19-45023 and 19-45024) on
Dec. 9, 2019. At the time of the filing, Romans House had between
$1 million and $10 million in both assets and liabilities.
Meanwhile, Healthcore System Management disclosed total assets of
up to $10 million and total liabilities of up to $50 million.
The Hon. Edward L. Morris is the case judge.
Demarco Mitchell, PLLC and Levene, Neale, Bender, Yoo & Brill
L.L.P. serve as the Debtors' legal counsel.
Michael McConnell is the Chapter 11 trustee appointed in the
Debtors' bankruptcy cases. The trustee is represented by Kelly
Hart & Hallman, LLP.
SM ENERGY: Fitch Rates Proposed 7-Year Unsec. Notes 'B'
-------------------------------------------------------
Fitch Ratings has assigned a 'B'/'RR4' rating to SM Energy
Company's (SM) proposed seven-year senior unsecured notes. Proceeds
are intended to redeem the remaining 2022 senior unsecured notes
outstanding and a portion of the 2024 senior unsecured notes. SM's
Long-Term Issuer Default Rating is 'B'. The Rating Outlook is
Stable.
The rating reflects SM's ability to generate meaningful FCF,
material debt reduction in 2020 and the ability to access capital
markets. The rating also reflects Fitch's view that the company
will generate sufficient FCF to meet debt maturities over the next
several years, sufficient liquidity, a robust hedging program and
strong performance of its Permian assets.
The Stable Outlook reflects Fitch's view SM will use FCF to reduce
debt and address near-term maturities.
KEY RATING DRIVERS
Debt Reduction Efforts: SM reduced debt by approximately $500
million in 2020 through a combination of debt paydowns, debt
repurchases at discount, and a successful debt exchange offer that
was also done at a discount. Fitch anticipates the company will
generate FCF through the forecast period and expects proceeds will
be used to reduce debt until SM attains its target leverage ratio
of less than 2x.
Fitch also believes the company will focus on the second-lien notes
when the notes become callable in mid-2022 in order to simplify the
capital structure and reduce interest costs. Fitch estimates SM can
generate sufficient FCF to meet all debt maturities through 2024.
Protection From Hedge Program: SM has hedged approximately 75% to
80% of its expected 2021 production at an average price of $41.37
per barrel (bbl). The company has also hedged 85% of its expected
natural gas production for 2021 and 2021 hedges are likely to
reduce revenues, given the hedged oil price is well below both the
average YTD and forward Strip price.
SM uses hedges to lock in targeted leverage levels, which would
still allow for improving credit metrics despite the revenue
reduction. Fitch believes the strong hedging program in 2020 was
the primary reason the company was able to generate FCF and reduce
debt during a prolonged period of low oil prices.
Robust Permian Performance: SM's Midland Basin assets continue to
exhibit solid performance since the 2016 acquisition through strong
well performance and increased capital efficiency. SM's wells are
considered among the best performing wells in the basin, and
continue to add value through lower operating and drilling costs.
The 2021 plan envisions average lateral feet per well of 11,300
with 55 net drilled wells and 72 net completions planned with three
rigs and three completion crews currently operating. The company
estimates that its 2021-2022 drilling program has an expected
breakeven pricing of $16/bbl to $31/bbl.
Focus on Austin Chalk: SM's drilling program in South Texas has
moved from the Eagle Ford to the Austin Chalk, which has a higher
oil cut. For all of South Texas, the company estimates it will
drill 39 net wells and complete 21 with an average lateral feet per
well of 12,000. Management believes the expected breakeven pricing
for Austin Chalk wells is in the range of $13/bbl to $28/bbl.
Sustainable Capex Plan: SM is planning spend $650 million to $675
million on capex in 2021 from $540 million in 2020. Spending in
outer years will likely be in the mid-$500 million range, which
allows the company to maintain production, while generating FCF at
Fitch base case price deck assumptions.
DERIVATION SUMMARY
SM's credit metrics are in-line with other 'B' rated oil
exploration and production issuers. SM's debt/EBITDA as of December
2020 was 2.3x, which is the same as CrownRock L.P. (B+/Positive)
and slightly lower than Talos Energy Inc. (B-/Stable) and Great
Western Petroleum LLC (B-/Stable) at 2.5x. SM operates in two
basins (Permian and South Texas) as opposed to its peers, which
operate in only one. The increased diversification is offset by a
higher percentage of its production of natural gas.
SM's production size is materially higher than its peers with full
year 2020 production of 127,000 barrels of oil equivalent per day
(boed) compared with CrownRock of 77,000boed and Great Western at
60,000boed. However, SM's liquid percentage of production at 63% is
below its peers, which average in the 70% to 85% range. The lower
percentage of liquids results in a Fitch-calculated netback of
$10.80 that is slightly lower than its more oily-weighted peers,
such as CrownRock and Double Eagle (B/RWP). SM is above Talos
($7.90) due to the latter's exposure to more costly offshore
drilling.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Base Case West Texas Intermediate (WTI) oil price of
$55.00/bbl in 2021, $50.00/bbl in the long term;
-- Base Case Henry Hub natural gas price of $2.75 per thousand
cubic feet (mcf) in 2020 and $2.45/mcf in the long term;
-- Production increase of 5% in 2021 and 2022;
-- Capex of $651 million in 2021 declining to $500 to $570
million over the forecast period;
-- Positive FCF through the forecast period with proceeds to
reduce debt;
-- No assumptions of acquisitions, divestitures, share
repurchases or dividends.
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that SM Energy Corp. would be
reorganized as a going-concern in bankruptcy rather than
liquidated. Fitch has assumed a 10% administrative claim.
Going-Concern Approach
SMs going-concern EBITDA assumption reflects Fitch's projections
under a stressed case price deck, which assumes WTI oil prices of
$42/bbl in 2021, $32/bbl in 2022, $42/bbl in 2023, and $45/bbl in
the long term.
The going-concern EBITDA estimate reflects Fitch's view of a
sustainable, post-reorganization EBITDA level upon, which Fitch
bases the enterprise valuation. The going-concern EBITDA assumption
reflects the 2023 base case EBITDA when the revolver matures and
larger senior note maturities are due in the succeeding years.
An enterprise valuation multiple of 3.25x EBITDA is applied to the
going-concern EBITDA to calculate a post-reorganization enterprise
value. The multiple was increased from 2.75x to reflect the
development of the Permian assets.
The choice of this multiple considered the following factors:
-- The historical bankruptcy case study exit multiples for peer
companies ranged from 2.8x to 7.0x, with an average of 5.6x
and a median of 6.1x;
-- Although the Permian basin assets are considered valuable, the
South Texas assets are believed to have less value given the
gassier nature and the lower M&A valuations of transactions in
that market.
Liquidation Approach
The liquidation estimate reflects Fitch's view of the value of
balance sheet assets that can be realized in sale or liquidation
processes conducted during a bankruptcy or insolvency proceeding
and distributed to creditors.
Fitch considers valuations such as SEC PV-10 and M&A transactions
for each basin including multiples for production per flowing
barrel, proved reserves valuation, value per acre, and value per
drilling location.
The revolver is assumed to be 80% drawn upon default with the
expectation that commitments would be reduced during a
redetermination. The revolver is senior to the second-lien notes,
secured convertible notes, and senior unsecured bonds in the
waterfall.
The allocation of value in the liability waterfall results in
recovery corresponding to 'RR1' recovery for the first-lien
revolver, an 'RR2' recovery for the second-lien notes and secured
convertible notes, and a recovery corresponding to 'RR4' for the
senior unsecured notes.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Generate material FCF with proceeds applied to reduce debt;
-- Redemption of second-lien note issues to reduce complexity of
the capital structure;
-- Mid-cycle debt/EBITDA of 2.5x or below.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Mid-cycle debt/EBITDA above 3.0x;
-- Inability to generate FCF or FCF proceeds are not applied to
debt reduction;
-- Change in financial policy or hedging program that implies a
more aggressive strategy;
-- Material reduction in liquidity or inability to access debt
capital markets.
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
SM's senior secured credit agreement provides for a maximum loan
amount of $2.5 billion with a borrowing base of $1.1 billion.
Availability under the revolver was $1.024 billion as of April 21,
2021. The credit facility matures on Sept. 28, 2023 but will spring
to Aug. 16, 2022 if there is more than $100 million outstanding on
the 2022 notes and there is more than $300 million of availability
under the revolver combined with unrestricted cash and certain
types of unrestricted investments.
If the 2022 notes are redeemed from the proceeds of the second-lien
debt, the credit facility maturity will be revised to July 2, 2023.
The facility has two financial maintenance covenants: A total
funded debt/adjusted EBITDAX ratio that cannot be greater than 4.0x
and an adjusted current ratio that cannot be less than 1.0 to 1.0.
The 2020 debt exchange, which Fitch considered a distressed debt
exchange, led to the creation of new second-lien notes. In
addition, covenants under the convertible notes indenture provided
for those to receive the same collateral as of the second-lien
notes. The credit facility allows for up to $827 million of
second-lien debt provided the proceeds are used to redeem senior
unsecured debt at a price less than 80% of par value. The company
has $380.8 million of permitted second-lien debt capacity as of
Dec. 31, 2020.
ESG CONSIDERATIONS
The highest level of Environmental, Social and Corporate Governance
(ESG) Credit Relevance, if present, is a Score of '3'. This means
ESG issues are credit-neutral or have only a minimal credit impact
on the entity(ies), either due to their nature or to the way in
which they are being managed by the entity(ies).
ISSUER PROFILE
SM Energy Company is an independent exploration and production
company. The company's oil and gas producing assets are located in
the Midland Basin of West Texas and in the Maverick Basin of South
Texas.
SM ENERGY: Moody's Upgrades CFR to B2 on Improving Debt Leverage
----------------------------------------------------------------
Moody's Investors Service upgraded SM Energy Company's Corporate
Family Rating to B2 from B3 and Probability of Default Rating to
B2-PD from B3-PD. At the same time, Moody's also upgraded SM's
senior secured rating to B1 from B2, its senior unsecured rating to
B3 from Caa1 and its senior unsecured shelf to (P)B3 from (P)Caa1.
The outlook is stable.
Moody's also assigned a B3 rating to SM's proposed issuance of $350
million senior unsecured notes due 2028. Proceeds from the issuance
will be used to retire SM's convertible notes due July 2021, its
senior unsecured notes due 2022 and to repay a portion of its
senior unsecured notes due 2024.
"The upgrade of SM's ratings reflects the company's improving debt
leverage and the considerable progress the company has made in
easing its near-term debt maturity profile," commented John
Thieroff, Moody's Senior Credit Officer. "SM's competitive cost
structure and considerable inventory of highly economic drilling
locations in the Midland basin will support modest production
growth while allowing for debt reduction."
Upgrades:
Issuer: SM Energy Company
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Corporate Family Rating, Upgraded to B2 from B3
Senior Secured Second Lien Notes, Upgraded to B1 (LGD3) from B2
(LGD3)
Senior Unsecured Notes, Upgraded to B3 (LGD5) from Caa1 (LGD5)
Senior Unsecured Shelf, Upgraded to (P)B3 from (P)Caa1
Unchanged
Speculative Grade Liquidity Rating, affirmed at SGL-2
Assignments
Senior Unsecured Notes, B3 (LGD5)
Outlook Actions:
Issuer: SM Energy Company
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
SM's B2 CFR reflects its substantial acreage position in the
Midland Basin, its competitive cost structure, and a substantially
improved debt maturity profile offset by reduced but still high
leverage. SM benefits from a production base (average daily
production was 127 mboe/d in 2020) that is similar in size to many
Ba-rated oil producers and some basin diversification. The
company's good inventory of Permian drilling locations, capable of
generating positive returns in an oil price environment below
$40/bbl, provides SM the ability to generate mid-single digit
percentage production growth and free cash flow for debt reduction.
As the mix of production continues to shift toward the Midland
Basin from South Texas, SM's cost structure and cash margins will
continue to improve and allow the company to realize higher cash
margins.
SM's senior unsecured notes are rated B3, one notch below the B2
CFR, reflecting their subordinated claim to SM Energy's assets
behind the senior secured credit facility and the size of the
facility. The B1 rating on SM's senior secured second lien notes,
one notch above the CFR, reflects their advantaged position to the
unsecured notes in the company's capital structure and the small
size of the second lien notes issuance relative to SM's unsecured
debt.
SM's SGL-2 rating reflects Moody's expectation that SM will
maintain good liquidity through mid-2022, primarily due to ample
borrowing capacity under its revolving credit facility. The company
had negligible cash and more than $1 billion of availability under
its $1.1 billion committed revolving credit facility as of April
21, 2021. The revolver expires in September 2023 and is governed by
two financial covenants -- total debt to EBITDAX of not greater
than 4x and a minimum current ratio requirement of 1x.
While cash flow has downside protection, with more than 75% of its
forecasted 2021 oil production hedged at a minimum average price of
$41.37 per barrel and about 85% of forecasted natural gas
production hedged at $2.44 per mmbtu at Henry Hub and $1.81 per
mmbtu at Waha (63 and 37% of hedged natural gas volumes,
respectively.), these prices are well below current strip prices
and will dampen SM's cash flow into 2022. Following the proposed
notes issuance and repayment of the 2021 and 2022 maturities, SM's
next debt maturity will be the remainder of its 2024 senior
unsecured notes coming due in November 2022. The company's $447
million of senior secured 10% notes due 2025 become callable in
July 2022.
The stable outlook reflects Moody's expectation SM will generate
free cash flow in 2021 and 2022, which will be used primarily to
pay down debt.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if SM reduces its debt/proved developed
reserves to $8.00/boe while maintaining retained cash flow (RCF) to
debt ratio consistently above 30% and a Leveraged Full-Cycle Ratio
(LFCR) above 1.5x. Ratings could be downgraded if LFCR approaches
1x, RCF to debt falls below 15% or if EBITDAX to interest coverage
is less than 2x.
SM Energy Company is a Denver, Colorado based publicly traded E&P
company with primary production operations in the Eagle Ford Shale
(Webb County) and the Midland Basin (Howard, Upton, Midland and
Martin Counties) of Texas.
The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.
SM ENERGY: Registers 3.6 Million Common Shares
----------------------------------------------
SM Energy Company has filed with the Securities and Exchange
Commission a Form S-8 registration statement for the purpose of
registering 3,600,000 shares of the Company's common stock issuable
under its Employee Stock Purchase Plan. A full-text copy of the
regulatory filing is available for free at:
https://www.sec.gov/Archives/edgar/data/893538/000110465921079822/tm2118895d5_s8.htm
About SM Energy
SM Energy Company is an independent energy company engaged in the
acquisition, exploration, development, and production of crude oil,
natural gas, and natural gas liquids in the state of Texas.
SM Energy reported a net loss of $764.61 million for the year ended
Dec. 31, 2020, compared to a net loss of $187 million for the year
ended Dec. 31, 2019. As of March 31, 2021, the Company had $5.02
billion in total assets, $776.62 million in total current
liabilities, $2.47 billion in total noncurrent liabilities, and
$1.77 billion in total stockholders' equity.
SOAS LLC: Wins Cash Collateral Access Thru July 31
--------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
has authorized SOAS, LLC to use the cash collateral of Live Oak
Bank Company on an interim basis through July 31, 2021, and provide
adequate protection.
The Court says Live Oak's cash collateral will be used solely to
pay the ordinary and necessary business expenses of the Debtor's
business, as outlined in the budget, with a 10% variance.
As adequate protection for the Debtor's use of cash collateral,
Live Oak is granted valid, binding, enforceable and perfected
security interests and liens in the same priority as they existed
prior to the petition date in the Chapter 11 case, in and to all
personal property of the Debtor, whether now owned or hereafter
acquired, wherever located, that was subject to the Lender's
security interests in the Debtor's assets pre-petition, and all
rents, profits, and proceeds generated therefrom. The Replacement
Liens will be in addition to those liens against the Debtor's
assets that Live Oak held pre-petition, and will remain in full
force and effect notwithstanding any subsequent conversion or
dismissal of the case.
As additional adequate protection in respect of any diminution in
the value of their respective collateral, junior lienholders Steven
Oliva, Hi-School Pharmacy Services, McKesson Corporation and
Cardinal Health 110 LLC are granted a valid, binding, enforceable,
and automatically perfected replacement lien and security interest
in all of the Debtor's post-petition assets of any kind or nature,
whether real or personal property, tangible or intangible, wherever
located, and the proceeds and products thereof, with the same
status and priority as between the Junior Lienholders as existed
pre-petition.
As further adequate protection, the Debtor will make adequate
protection payment to Live Oak Bank of $13,750 not later than June
15 , 2021, and another $13,750 not later than July 15, 2021,
without prejudice to the estate, the Debtor, any Committee if one
is appointed, or any other party in interest to challenge the rate
of interest at any final hearing or in a plan of reorganization or
to reallocate any adequate protections to interest and principal
after a final ruling on the extent, validity and priority of Live
Oak's and the Junior Lienholders' liens. To the extent that a
component of rent paid to Dry Lake Land Stewardship LLC represented
a partial payment to Live Oak, then the interest paid pursuant to
this provision will be credited against that component of the rent
paid to Dry Lake.
A further interim hearing on the matter is scheduled for July 14 at
11 am.
A copy of the order is available for free at https://bit.ly/2U1AQqz
from PacerMonitor.com.
About Soas, LLC
Soas, LLC, which conducts business under the name Island Drug, is a
long-term care pharmacy in Oak Harbor, Wash. It dispenses
medicinal preparations delivered to patients residing within an
intermediate or skilled nursing facility, including intermediate
care facilities for mentally retarded, hospice, assisted living
facilities, group homes, and other forms of congregate living
arrangements.
Soas LLC sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. W.D. Wash. Case No. 19-10928) on March 18, 2019. At the
time of filing, the Debtor estimated assets and liabilities of
between $1 million and $10 million.
The case is assigned to Judge Marc Barreca.
The Tracy Law Group PLLC is the Debtor's legal counsel. No
official committee of unsecured creditors has been appointed in the
case.
SPHERATURE INVESTMENTS: Wins Cash Collateral Access Thru July 10
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Texas,
Sherman Division, has authorized Spherature Investments LLC and its
affiliates to use cash collateral on an interim basis through July
10, 2021, in accordance with the budget, with a 10% variance.
The Debtor requires the use of cash collateral to fund working
capital, operating expenses, fixed charges, payroll, administrative
expenses of the Debtors' Chapter 11 cases, and other general
corporate purposes arising in the Debtors' ordinary course of
business, each as necessary for the orderly maintenance and
operation of the Debtors' businesses as a going concern.
Montgomery Capital Advisers, LLC serves as collateral agent on
behalf of secured parties. Montgomery asserts a claim in an
aggregate principal amount not less than $5,500,101 and that any
and all cash of the Debtors, including cash and other amounts on
deposit or maintained in any bank account or accounts of the
Debtors and any amounts generated by the collection of accounts
receivable, the sale of inventory, or other disposition of the
Collateral existing as of the Petition Date or arising or acquired
after the Petition Date, together with all proceeds of any of the
foregoing, is cash collateral within the meaning of section 363(a)
of the Bankruptcy Code of the Lender.
As adequate protection for the Debtors' use of cash collateral, the
Debtor will pay $73,334 to the Lender no later than the first
business day of each month. In addition, the Lender is granted
replacement liens and security interests in any and all assets
acquired by the Debtors after the Prepetition Date of the same
kind, category and character that the Lender held a perfected lien
against as of the Petition Date. The Replacement Liens are valid,
binding and enforceable against any trustee or other estate
representative appointed in any Case or Successor Case or upon the
dismissal of any Case or Successor Case.
The Lender is also entitled to an allowed superpriority
administrative expense claim, subject to the Carve-Out. The
Carve-Out are fees pursuant to 28 U.S.C. section 1930(a)(6), if
any, fees payable to the clerk of the Bankruptcy Court and any
agent, and unpaid fees and expenses incurred by persons or firms
retained by the Debtors.
The Debtor is directed to maintain insurance coverage in compliance
with the terms of the Lender's pre-Petition Date loan documents and
on substantially the same basis as maintained prior to the Petition
Date.
A hearing on the matter is scheduled for July 7 at 1:30 p.m.
A copy of the order and the Debtor's budget is available for free
at https://bit.ly/3zlz8At from PacerMonitor.com.
The Debtor projects total operating cash receipts of $1,107,342 and
total operating cash disbursements of $1,436,426 for the week of
June 14 to 20, 2021.
About Spherature Investments LLC
Spherature Investments LLC and its affiliates, including
WorldVentures Marketing, LLC, sought Chapter 11 protection (Bankr.
E.D. Tex. Lead Case No. 20-42492) on Dec. 21, 2020. In the petition
signed by Michael Poates, chief operating officer, the Debtors
disclosed up to $10 million in both assets and liabilities.
WorldVentures Marketing -- http://worldventures.com-- sells travel
and lifestyle community memberships providing a diverse set of
products and experiences.
At the time of filing, Spherature Investments estimated $50 million
to $100 million in assets and liabilities.
The Hon. Brenda T. Rhoades is the case judge.
The Debtors tapped Foley & Lardner, LLP as counsel and Larx
Advisors, Inc. as restructuring advisor. Stretto is the claims
agent.
The U.S. Trustee for Region 6 appointed an official committee of
unsecured creditors on Jan. 22, 2021.
ST. JOSEPH ENERGY: S&P Affirms 'BB-' Rating on Sec. Term Loan B
---------------------------------------------------------------
On June 10, 2021, S&P Global Ratings affirmed its 'BB-' project
finance rating on St. Joseph Energy Center LLC's (SJEC) senior
secured term loan B (TLB) and revolving credit facility (RCF). The
'1' recovery rating is unchanged.
The stable outlook reflects S&P's expectation of high levels of
availability and dispatch, as well as spark spreads in the
$8-$10/megawatt-hour (MWh) range, which should help offset the
weakness in capacity-related cash flows during 2022/2023.
SJEC is a 709-MW natural gas-fired combined cycle generation
facility in New Carlisle, Ind., in the American Electric Power zone
of the PJM market. The plant began commercial operations on April
1, 2018, and is owned by affiliates of AEIF St. Joe Holdings V LLC
(62.5%), Toyota Tsusho St. Joseph II LLC (20%), and Development
Partners Funding I LLC (17.5%).
S&P said, "We expect strong dispatch levels and energy related-cash
flows will mitigate the effects of the capacity price collapse. PJM
announced the BRA results for delivery year 2022/2023 on June 2,
2021. Prices across the board fell significantly, with RTO clearing
at $50/MW-day, or 64% lower than the last auction clearing price of
$140/MW-day. PJM said several factors contributed to the decline in
capacity prices, including a lower load forecast and reserve
requirement, a 19% decline in the net value of cost on new entry,
higher nameplate capability of solar and wind resources that
cleared the auction, participation of new generation assets
(including uprates), as well as lower offer prices from the supply
resources that participated in the auction. The next capacity
auction, which will procure supply for delivery year 2023/2024,
will take place in December 2021. We forecast RTO clearing prices
of $90/MW-day, and $100/MW-day for delivery years 2023/2024 and
2024/2025, respectively. Beyond that, we forecast a mean reverting
RTO clearing price of $120/MW-day, escalated at 2% thereafter.
"Capacity payments represent a notable portion of SJEC's revenue
stream (about 30%-40% of gross margins); therefore, we expect
reduced capacity prices will weaken the project's cash flow
generation and debt service coverage ratio (DSCR) during the next
12-24 months. However, because of its highly efficient nature and
location in a coal-dominated region, SJEC operates as a baseload
facility with high levels of dispatch and capacity factors. We
project energy margins will constitute about 60% of the project's
cash flow through the life of the debt (2021-2043), which should
provide an offset against the weak capacity prices provided the
facility operates reliably with strong availability, maintains its
delivery cost position in the dispatch curve, and spark spreads
remain supportive ($8-$10/MWh). Given the nature of the dispatch
profile, the cash flows of a baseload facility are more sensitive
to energy margins and generation hours compared with peaking
assets, which rely on the strength of capacity prices to operate in
a profitable manner. Based in our assumptions of the facility's
dispatch strength and energy margins, we expect the project will
maintain DSCRs in the 1.8x-2.0x range through the remaining TLB
term (2021-2025). In the post-refinancing period (2025-2043), we
forecast an average DSCR in the 1.6x-1.8x range, with a minimum
DSCR of 1.43x.
"The project's financial performance was negatively affected during
2020 due to planned outages, as well as economic reserve shutdowns.
Availability during the year was 85% (compared with 90% during
2019), and the capacity factor was 73%. The availability-adjusted
capacity factor (capacity factor divided by availability) was about
86% (73% divided by 85%). The realized around-the-clock (ATC)
locational marginal price (LMP) was $20.30/MWh, which was 19% lower
than the level in 2019, at $25.10/MWh. We attribute the weak energy
pricing to pandemic-related demand loss, which would have reduced
peak load, and therefore peak pricing. ATC realized spark spread
during 2020 was $7.30/MWh, which was 16% lower than the spread in
2019, which was $8.70/MWh. The project's EBITDA for the year was
about $44 million, or about 36% lower than in 2019."
The project's year-to-date (YTD) April-2021 capacity factor was
73%, which was affected by a scheduled outage, as well as fuel gas
issues during April that reduced the plant's availability to 35%.
The availability-adjusted capacity factor was 87.5% through the
year. YTD ATC realized spark spread was $8.64/MWh, and the project
generated EBITDA of $12.6 million.
S&P said, "The stable outlook reflects our expectation of high
levels of availability and dispatch, as well as spark spreads in
the $8-$10/MWh range through TLB life. We project DSCRs in the
1.8x-2.0x area until 2025, and a minimum of about 1.43x in the
post-refinancing period. We expect the project will have about $320
million outstanding at maturity on its term loan B.
"We could lower the rating if we expect the project's minimum DSCR
will fall below 1.35x 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 $320 million at maturity, and
consequently a weaker minimum DSCR in the post-refinancing period.
"Although we consider it unlikely over the next year or so, we
could raise the rating if the project is able to materially
deleverage, reaching a projected minimum DSCR above 1.8x. This
could occur if the project realizes energy margins well in excess
of our forecast, or its other sources of revenue, such as capacity
cash flows, exceed our expectations by a material amount."
TECT AEROSPACE: To Sell WA Manufacturing Facility to Pay Debt
-------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that bankrupt Boeing Co.
supplier TECT Aerospace Group Holdings Inc. plans to sell its
Everett, Wash., manufacturing facility to competitor Wipro Givon
USA Inc.
Wipro's stalking horse bid for the manufacturing site was the only
qualified offer submitted ahead of the June 10 deadline, TECT told
the bankruptcy court June 11, 2021. If the deal is approved, Wipro
would pay $31 million in cash and assume certain liabilities.
TECT also intends to sell its Kansas headquarters and two
manufacturing facilities in the state through an auction without a
starting bid.
About TECT Aerospace Holdings Inc.
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/interior structures, doors, wings, landing gear,
and cockpits.
TECT operates manufacturing facilities in Everett, Washington, and
Park City and Wellington, Kansas and their corporate headquarters
is located in Wichita, Kansas. 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.
TECT Aerospace Group Holdings, Inc., and six affiliates sought
Chapter 11 protection (Bankr. D. Del. Case No. 21-10670) on April
6, 2021.
TECT Aerospace 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 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.
Perkins Coie LLP
E-mail: ADSmith@perkinscoie.com
- and -
Kenneth J. Enos, Esq.
Young Conaway Stargatt & Taylor, LLP
E-mail: kenos@ycst.com
* * *
As reported by Troubled Company Reporter on June 2, 2021, Judge
Brendan Linehan Shannon of the U.S. Bankruptcy Court for the
District of Delaware authorized the bidding procedures proposed by
TECT Aerospace Group Holdings Inc. and affiliates in connection
with the auction sale of their Everett, Washington assets.
The deadline to file an initial offer is on June 10, 2021, at 4:00
p.m. (ET). In the event the Debtors receive a qualified bid in
addition to the Stalking Horse Bid, the Debtors will conduct a
virtual Auction beginning at 10:00 a.m. (ET) on June 14, 2021. A
sale hearing will take place on June 24, 2021, at 11:00 a.m. (ET).
Objections to sale, if any, are due on June 10, 2021, at 4:00 p.m.
(ET).
TEGNA INC: S&P Hikes ICR to 'BB' on Continued Advertising Recovery
------------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on TEGNA to 'BB'
from 'BB-'.
S&P said, "The stable outlook reflects our expectation that the
company will pursue shareholder friendly activities that could
increase leverage to 4x-4.5x. Absent potential acquisitions or
share repurchases, we expect TEGNA's leverage will decline to the
mid-3x area in 2021 from around 4x in 2020 due to a recovery in
core advertising revenue and retransmission revenue growth
following recent contract renewals.
"We have increased confidence that core advertising for local
television will recover in 2021. Core advertising revenue
(excluding political) for the local broadcast television industry
continued to sequentially improve in the first quarter of 2021.
TEGNA's core advertising revenue was down only slightly compared
with the first quarter of 2019. The recovery of the U.S. economy
has accelerated, with support from government stimulus and
widespread vaccination allowing markets to increasingly reopen, all
of which bodes well for ad spending. We expect ad spending will
continue to improve throughout 2021, particularly ad categories on
which the pandemic had a more pronounced impact such as restaurants
and retail, which will benefit from increasing vaccination rates
and loosening capacity restrictions. As a result, we have increased
confidence that core advertising revenue for the local broadcast
television industry will recover to about 90% of 2019 levels in
2021."
Digital advertising's contribution to TEGNA's total revenue will
increase. Advertising and marketing services, which includes
revenue from core advertising on local television and digital
advertising on Premion (TEGNA's over-the-top advertising platform),
grew 9.4% in the first quarter of 2021. S&P said, "We expect
Premion will be the key driver of advertising revenue growth over
the next few years as consumers continue to shift to streaming
platforms from traditional television. Premion contributed more
than $145 million to TEGNA's total revenue in 2020 and we expect
this will grow 45%-50% in 2021. Premion currently has low margins
(in the low-double digits), although we expect margins to expand
over the next several years as it achieves greater scale. We
believe TEGNA's partnership with Gray, who purchased a minority
interest in Premion in 2020, will further support Premion's
growth."
S&P said, "The stable outlook reflects our expectation that the
company will pursue shareholder friendly activities that could
increase leverage to 4x-4.5x. Absent potential acquisitions or
share repurchases, we expect TEGNA's leverage will decline to the
mid-3x area in 2021 from around 4x in 2020 because of a recovery in
core advertising revenue and retransmission revenue growth
following recent contract renewals."
S&P could lower the rating if:
-- Leverage increases above 4.5x due to debt-funded shareholder
returns or acquisitions. S&P's ratings tolerance for leverage
increasing above 4.5x due to acquisitions would depend on its
assessment of both sector and macroeconomic trends.
-- The recovery in core advertising is delayed. This scenario is
less likely.
S&P views an upgrade as unlikely because it believes
shareholder-friendly activities will prevent leverage from
remaining below 4x. However, S&P could raise the rating if:
-- Leverage improves below 4x and management makes a public
commitment to keep it there, even with the potential for
debt-funded share repurchases or acquisitions.
-- S&P believes margins will remain stable despite ongoing pay-TV
subscriber declines, which have so far been more than offset by
higher pricing.
TPC GROUP: Fitch Affirms 'B-' LongTerm IDR, Outlook Negative
------------------------------------------------------------
Fitch has affirmed TPC Group, Inc.'s Long-Term Issuer Default
Rating (IDR) at 'B-', its asset-based loan facility (ABL) rating at
'BB-'/'RR1' and its secured notes rating at 'B-'/'RR4', assigned a
'B-'/'RR4' to the company's 10.875% secured notes due 2024, and
maintained the Negative Rating Outlook.
The Negative Rating Outlook reflects the continued stress placed on
the company's liquidity position by a number of operational
setbacks, beginning with the Port Neches incident, continuing with
the coronavirus pandemic's impact on demand, a fire at the
company's Houston Technical Center, and most recently the impact of
severe winter weather on the company's costs and volumes. TPC's
ratings are otherwise supported by strong industry dynamics and a
favorable contract structure.
KEY RATING DRIVERS
Idiosyncratic Operational Issues: A number of TPC's products are
used in the production of synthetic rubbers and fuel additives, the
demand for which was materially affected by the coronavirus
pandemic but has since rebounded. More recently, a fire in the
company's Technical Center, used for quality control and R&D, in
January and extreme weather in February continued to drag on the
company's costs and volumes. These short- to medium-term pressures
on cash generation highlight the importance of liquidity over the
rating horizon.
Port Neches Recovery Ongoing: On Nov. 27, 2019, Port Neches, TX
residents reported two explosions and an ongoing fire at TPC's Port
Neches plant. The plant sustained significant damage, and Fitch
understands it will take significant time and capital investment to
resume operations. The operations at Port Neches accounted for
roughly 25% of total EBITDA, and management indicated it has been
receiving funds under various insurance policies in a timely
manner. The company maintained its supplier and customer
relationships, as well as the integrity of the contracts.
Continued Importance of Liquidity: Fitch views much of the short-
to medium-term risk related to TPC's ongoing operational issues as
stemming from cash burn and coverage metrics, rather than gross
debt levels. The company now faces the challenge of finding the
cash to address its idiosyncratic operational issues at a time when
liquidity is also at roughly a five-year low, with a borrowing base
that is supportive of less than $40 million in additional
borrowings as of March 31, 2021. However, management has taken
steps to bolster liquidity, including issuing $153 million in
secured notes due 2024 and deferring certain charges and capital
projects. Fitch believes 1Q21 represented a bottoming out of
liquidity, with the borrowing base expected to increase as the
company returns to full utilization at a time of rising demand. The
company has begun to realize these trends, with liquidity having
rebounded to over $100 million.
Limited Size and Scale: Following the Port Neches incident, TPC now
relies on one manufacturing complex and a third party processing
arrangement that generate all its earnings -- Port Neches was its
second plant. Any operational disruptions can significantly affect
its cash flow generation, as evidenced by the company's pressured
financial profile when the dehydro unit went down for a scheduled
turnaround for nearly all of 1Q18, or more recently, during the
February 2021 Texas Freeze. In the near term, Fitch will monitor
the company's ability to operate the Houston plant at near full
utilization. The Port Neches incident highlights the company's
exposure to the effects of any operational disruptions at its
facilities. Such risk likely caps TPC's rating in the 'B'
category.
Contracts Provide Less Volatility: Under its C4 processing
agreements, the company is able to price in a fixed margin from its
C4 suppliers of around $0.10/lb-$0.11/lb, with the potential for
further upside based on end-market prices. This generally allows
TPC to realize a predictable gross profit margin of around $0.10/lb
during the course of the year, subject to temporary margin swings
during months when prices drastically change. Nevertheless, the
risk is mitigated over the course of a year and Fitch expects TPC
will see its C4 gross profit at around the fixed floor price over
any four- to six-month period, and contracts typically last 3-5
years. Because TPC is the only significant C4 processor in the
U.S., there is economic incentive for both customers and suppliers
to continue their relationship with TPC if they can.
DERIVATION SUMMARY
TPC Group has operated with similar leverage to SK Mohawk Holdings,
SARL (B/Negative) and substantially lower leverage than Calumet
Specialty Products Partners, L.P. (B-/Negative). Fitch expects
TPC's gross leverage to be consistent with a 'B-' rating despite a
number of setbacks including the Port Neches incident. However, a
portion of the company's cash flow and growth prospects will be
determined by the size and duration of the insurance claims related
to the incident -- to date, claims have been timely and sufficient.
If the determination is made that the incident was the result of
negligence or was otherwise not out of TPC's control, the company
will likely find it difficult to retain customers and receive the
anticipated insurance claims.
This heightened event risk sets TPC apart from its peers, who are
larger in size and scale, as evidenced by access to an expansive
and flexible logistics/production networks both globally (SK
Mohawk) and domestically (SK Mohawk and Calumet). This compares
with TPC's reliance on its manufacturing facility in Houston.
Calumet and TPC are similarly exposed to commodity prices and
historically had high single-digit margins compared with SK
Mohawk's specialized product mix, as evidenced by SK Mohawk's
slightly higher EBITDA margins in the mid-teens. These credit
strengths enable SK Mohawk to support a higher debt load than TPC
and Calumet, resulting in a subsequently higher IDR.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Insurance claims sufficient to support operations in the near
to medium term;
-- Recovery in volumes due to easing demand impacts of
coronavirus pandemic and high utilization rates;
-- EBITDA generation roughly flat, with minimal additional
competitive pressures;
-- FCF generation stabilizes in 2023 and thereafter.
Key Recovery Rating Assumptions
The recovery analysis assumes TPC would be reorganized as a
going-concern (GC) in bankruptcy rather than liquidated. Fitch
believes a GC approach is more likely given the high greenfield
costs. TPC's contracts for its C4 processing segment have a fixed
processing fee of $210/tonne-215/tonne. Management indicated this
fixed cost would need to be in the low $300/tonne range for a large
company that already has C4 processing capacity, the low $400/tonne
range for true greenfield new capacity, and somewhere in between
these two values to add new C4 capacity at a location with related
operations and supporting infrastructure for the project to be
economic.
Fitch's recovery scenario depicts a prolonged period of further
unplanned disruptions or other operational hurdles at the Houston
plant that signal a weakness of the company's asset base and
operations, along with an inability to fully fund the rebuild of
the Port Neches plant and/or a disruption in insurance proceeds. As
a result, the company loses market share, worsening the negotiating
power and renewal rates of the existing contracts, resulting in
increased cash flow risk and potential for losses. The unplanned
disruptions also stress the financial flexibility of the company,
as repairs can be both cost and time extensive.
Fitch has assumed a 10% administrative claim.
GC Approach
Fitch assumed a GC EBITDA of $115 million, reflective of the
Houston plant operating at nearly full capacity and no contribution
from Port Neches.
The 4.0x multiple reflects Fitch's view that the C4 and isobutylene
derivatives have minimal cash flow risk while the methyl
tertiary-butyl ether (MTBE) assets are rolling off minimum floor
contracting and being renewed at spot. The isobutylene derivatives
are high margin, low growth and have historically operated at high
utilization rates. The single facility risk, uncertainty
surrounding customer contracts and potential for competition due to
the loss of capacity at Port Neches weigh on the multiple.
Fitch assumes a borrowing base of $55 million on the ABL, fully
drawn at default as the company would borrow for added liquidity.
The enterprise value, $460 million, is deducted by 10% for
administrative claims, leaving $414 million available to creditors.
The ABL facility (revolver and first-in-last-out tranche) recovers
within the 'RR1' level and is rated 'BB-', and the senior secured
notes recover at the 'RR4' level and are rated 'B-'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Improved operational stability signaled by high utilization
across both segments, a decreased risk of unplanned
disruptions and increased size and scale.
-- Continued favorable contract terms, allowing TPC to maintain
its low margin volatility.
-- Continued strong operational performance with total debt with
equity credit/operating EBITDA sustained at around 3.5x and/or
FFO-adjusted leverage of around 4.0x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Continued unplanned disruptions (outside weather/third-party
incidents), signaling a continued weakness in the company's
asset base.
-- Inability to renew contracts at current terms leading to
greater cash flow volatility.
-- Reduced liquidity driven by negative FCF increasing refinance
risk.
-- FFO fixed-charge coverage trending below 1.5x.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
A contraction in the borrowing base due to the February 2021 Texas
Freeze resulted in liquidity at a five-year low. The freeze came
after a period during which operations were already stressed by the
coronavirus pandemic and the Port Neches incident. However, Fitch
that this period represented a bottoming out in liquidity, with an
improving demand profile driving an increasing borrowing base. In
the meantime, Fitch expects the company's cash on hand to be
sufficient to bridge any gap in ABL availability.
The company's maturity profile is otherwise solid, with limited
maturities until 2024, when roughly $1.1 billion in secured notes
come due.
ISSUER PROFILE
TPC, headquartered in Houston, is a leading producer of value-added
products derived from niche petrochemical raw materials, such as C4
hydrocarbons.
ESG CONSIDERATIONS
TPC has an ESG Relevance Score of '4' for Waste & Hazardous
Materials related to its Port Neches plant explosion.
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.
TRILOGY INTERNATIONAL: 98.9% of Existing Notes Validly Tendered
---------------------------------------------------------------
Trilogy International Partners Inc. reported the expiration and
final results for the previously announced offer by its indirect
subsidiaries, Trilogy International South Pacific LLC and TISP
Finance, Inc. (the "Issuers"), to exchange any and all of the
outstanding $350,000,000 aggregate principal amount of 8.875%
Senior Notes due 2022 (the "Existing Notes") of Trilogy
International Partners LLC and Trilogy International Finance Inc.
(the "Existing Notes Issuers") for newly issued 8.875% Senior
Secured Notes due 2023 of the Issuers (the "New Notes") and the
related solicitation of consents by the Existing Notes Issuers (the
"Consent Solicitation") to certain proposed amendments to the
indenture governing the Existing Notes.
According to information provided by Ipreo LLC, the information
agent for the Exchange Offer and the Consent Solicitation, the
aggregate principal amount of the Existing Notes that were validly
tendered and not validly withdrawn as of 11:59 p.m., New York City
time, on June 3, 2021, the Expiration Date of the Exchange Offer,
was $346,136,000, or 98.9% of the outstanding aggregate principal
amount of Existing Notes.
The settlement date of the Exchange Offer was expected to be June
7, 2021. On the settlement date, $356,997,400 of New Notes
(including the Backstop Notes) were expected to be issued. This
principal amount reflects that New Notes will be issued at 102% of
the principal amount of the Existing Notes that were tendered for
exchange by the early tender date of May 19, 2021; it also reflects
that New Notes will be issued at 97% of the principal amount of
Existing Notes that were tendered after the early tender date and
before the Expiration Date.
Certain holders of Existing Notes committed to acquire on the
settlement date New Notes in an amount that will enable Trilogy LLC
to redeem Existing Notes that remain outstanding after the
completion of the Exchange Offer. The principal amount of the
Outstanding Existing Notes is $3,864,000 and the Issuers expect to
issue to the Backstop Holders additional New Notes in a principal
amount of $3,941,280, representing 102% of the principal amount of
the Outstanding Existing Notes. The proceeds from the issuance of
the Backstop Notes will be used to redeem all of the Outstanding
Existing Notes.
The Proposed Amendments will also become operative on the
settlement date. The Proposed Amendments permit the New Notes to
be issued prior to the redemption of the Outstanding Existing
Notes.
The previously announced consent solicitation to amend the 10%
Senior Secured Notes due 2022 expired at 5:00 p.m., New York City
time, on June 3, 2021. The 10% Notes Consent Solicitation was made
pursuant to the consent solicitation statement dated as of May 6,
2021. Consents with respect to all of the 10% Notes have been
received in response to the Consent Solicitation Statement. The
effective date of the amendment of the note purchase agreement
governing the 10% Notes will be concurrent with the settlement date
for the Exchange Offer.
About Trilogy International Partners Inc.
TIP Inc. is the parent of Trilogy International Partners LLC, an
international wireless and fixed broadband telecommunications
operator formed by wireless industry veterans John Stanton, Theresa
Gillespie and Brad Horwitz. Trilogy LLC's founders have
successfully bought, built, launched and operated communications
businesses in 15 international markets and the United States.
Trilogy International reported a net loss attributable to the
Company of $47.78 million for the year ended Dec. 31, 2020,
compared to net income attributable to the Company of $2.88 million
for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company
had $989.03 million in total assets, $1.02 billion in total
liabilities, and a total shareholders' deficit of $38.89 million.
* * *
As reported by the TCR on May 13, 2021, Fitch Ratings affirmed the
Long-Term Issuer Default Ratings (IDRs) of Trilogy International
Partners, Inc. (TIP Inc.) and its subsidiaries, Trilogy
International Partners, LLC (Trilogy) and Trilogy International
South Pacific LLC (TISP) at 'CCC+'.
TRILOGY INTERNATIONAL: Fitch Affirms 'CCC+' LongTerm IDR
--------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDRs) of Trilogy International Partners, Inc. (TIP Inc.) and
Trilogy International South Pacific LLC (TISP) at 'CCC+' and
withdrawn the IDR at Trilogy International Partners, LLC. Fitch has
also affirmed the $51 million TISP senior secured notes at
'B+'/'RR1' and assigned a 'CCC+'/'RR4' rating to the $357 million
exchanged TISP senior secured notes due 2023.
The affirmation of Trilogy's ratings reflects the completion of the
exchange offer and consent solicitations that extends the debt
maturity to May 2023. Fitch views the transaction as a credit
positive that provides additional runway to pursue additional
strategic actions including asset monetizations that reduce HoldCo
level debt and further refinancings as Trilogy looks to create a
more sustainable capital structure.
Fitch is withdrawing the Long-Term IDR at TIP LLC as the TIP LLC
notes were repaid.
KEY RATING DRIVERS
Exchange Transaction Positive: Fitch views the completion of the
exchange offer and consents solicitation as a credit positive that
extends current Holdco maturities around 12 months to 2023. This
provides additional runway and added flexibility to pursue
additional strategic actions including asset monetizations that
reduce HoldCo level debt and further refinancings as Trilogy looks
to create a more sustainable capital structure.
Preparing for 2degrees IPO: Trilogy is preparing for an IPO of
2degrees on the New Zealand Stock Exchange and Australian
Securities Exchange by the end of 2021. Fitch views an IPO as a
credit positive that could help support a more sustainable
organizational structure over the medium term through the reduction
of debt at the HoldCo level. Net proceeds would be used to
accelerate growth initiatives for 2degrees and reduce debt at the
HoldCo level.
Bolivian Asset Sale Uncertainty: Trilogy was in discussions with
potential buyers regarding a sale of the Bolivian assets prior to
the pandemic. While the company has reengaged with certain parties
that are under non-disclosure agreements, Fitch views a potential
asset sale of the Bolivian operations in the medium term as
indeterminate given the current environment in Bolivia due to the
on-going political instability, social unrest and operating
challenges that were exacerbated by the coronavirus pandemic. The
on-going challenges make any discussions with potential buyers
highly uncertain until greater political and operating clarity
emerges
Inefficient OpCo/HoldCo Structure: The corporate structure is less
than optimal when upstreaming dividends due to cash leakage from
withholding taxes and minority interest distributions in both
Bolivia and New Zealand. Upstreaming dividends are also subject to
FX risk. NuevaTel was historically a dividend contributor and paid
dividends of more than USD300 million to Trilogy since 2008.
However, due to the deterioration in the Bolivian operations,
Trilogy became solely reliant on distributions from New Zealand
operations.
Consequently, Trilogy completed a $50 million debt issuance at TISP
in late 2020 to improve liquidity reserves that are being used for
HoldCo debt servicing costs and allows 2degrees more flexibility to
make growth-related investments during 2021 to improve its
competitive position. Fitch anticipates Trilogy will have
sufficient liquidity to fund HoldCo operating costs including debt
servicing during 2021.
TISP Collateral and Ranking: The new $357 million exchanged TISP
notes are guaranteed by Trilogy LLC, Trilogy International South
Pacific Holdings LLC (TISPH) and the Bolivian Holding companies.
The $357 million TISP Notes are secured by a first priority lien of
the equity interests in TISPH and TISP, a pledge by TISP of its
interest in its loans to Trilogy LLC, and by a first priority lien
on the NuevaTel/2degrees proceeds cash collateral account.
The $51 million TISP notes have priority in recovery ahead of the
$357 million TISP notes in respect to the collateral for net
proceeds received with any dispositions of collateral or in any
insolvency proceeding.
Good Momentum in New Zealand: The New Zealand operations maintained
good operational momentum during the coronavirus pandemic with
service revenue and EBITDA increasing 8% (6% reported) and 13% (5%
reported), respectively during 2020. 2degrees results have
benefitted from lower post-paid churn, increased post-paid
subscribers and expanded EBITDA margins. 2degrees' market
challenger strategy has enabled the company to take market share
from the incumbents. 2degrees is focused on growing its postpaid
share, increasing penetration in the business sector, increasing
bundled broadband growth and leveraging 5G/fixed wireless
strategy.
Bolivian Operations Challenged: Significant cash flow deterioration
occurred in the Bolivian operations during the past several years.
This was due to the competitive environment from mobile number
portability, social unrest from political instability and
aggressive promotional offers resulting in significant subscriber
and ARPU erosion and more recently, the coronavirus pandemic. As a
result, 2020 EBITDA declined to approximately USD6.6 million from
approximately USD82 million in 2016. While subscriber results
stabilized during the latter half of 2020, significant operating
uncertainty remains for 2021 given the current operating
environment in Bolivia.
DERIVATION SUMMARY
Trilogy's 'CCC+' rating reflects its small scale, material exposure
to the higher risk operational environment in Bolivia, challenger
brand strategy, low profitability and constrained financial
profile. 2degrees in New Zealand and NuevaTel in Bolivia compete
against much larger peers in three-competitor markets. Both
operating companies maintain market share in the low- to mid-20%
range with substantial exposure in both markets to lower-valued
prepaid subscribers. In early 2020, 2degrees entered into a network
sharing arrangement which supports a more efficient capital
deployment.
The ratings are not constrained by Bolivia's operating environment
or Country Ceiling of 'B', but the company is wholly exposed to FX
fluctuations due to its reliance on servicing HoldCo debt from
international operations, although the Bolivian boliviano is pegged
to the U.S. dollar.
2degrees competes with a former operating subsidiary of Vodafone
Group Plc (BBB/Stable) in New Zealand, which has more expansive
scale and financial resources. Vodafone sold the operations in 2019
to a New Zealand infrastructure company and Canadian asset
management firm.
In Bolivia, NuevaTel competes against Tigo, S.A., an operating
subsidiary of Millicom International Cellular S.A. (MIC;
BB+/Stable), which has a much stronger business and financial
profile.
Millicom's ratings reflect geographic diversification, strong brand
recognition and network quality, all of which contributed to
leading positions in key markets, a strong subscriber base, and
solid operating cash flow generation. In addition, the rapid uptake
in subscriber data usage and Millicom's ongoing expansion into the
underpenetrated fixed-line services bode well for medium- to
long-term revenue growth. Despite the company's diversification
benefits, Millicom's ratings are tempered by the issuer's presence
in countries in Latin America with low sovereign ratings and low
GDP per capita. Millicom's ratings incorporate Fitch's expectation
that the company will reduce net leverage below 3.0x in the short
to medium term, backed by solid cash flow generation with net
leverage expected to reach 2.7x by 2022.
Oi S.A.'s (CCC+) is another telecom peer with ratings that reflect
its restructured financial profile and the still-uncertain outlook
for its turnaround strategy following the reorganization of the
group's activities. Oi will concentrate on developing fiber optic
infrastructure, to be deployed for retail and wholesale (i.e. other
telecom operators) customers through the services segment.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include (same as previous forecast):
-- Consolidated EBITDA in the range of USD110 million to USD120
million;
-- Capex above 2019 levels;
-- Consolidated ending cash in Bolivia, New Zealand and HoldCo
level between USD50 million to USD75 million;
-- A moderate FCF deficit;
-- Annual operating cash costs including debt service costs of
roughly USD45 million at the HoldCo level;
-- Core telecom leverage (debt/operating EBITDA adjusted for
financial services) in the upper 5x range.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Successful IPO of the New Zealand operations;
-- Debt repayment at TISP using proceeds from strategic
transactions combined with a refinancing of TISP notes that
improves sustainability of capital structure;
-- Improved FCF prospects with sufficient liquidity throughout
the organizational structure including HoldCo debt service
requirements combined with adequate flexibility to make
growth-related capital investments in New Zealand to sustain
2degrees' competitive position.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The inability to complete an IPO of the 2degrees operations;
-- Insufficient liquidity due to an inability, or any material
limitations, with upstreaming cash from operating
subsidiaries. This could include any unforeseen impediment,
regulatory or of another nature, in upstreaming cash to the
parent level;
-- Weaker than expected operating performance in New Zealand;
-- Further deterioration of operating performance in Bolivia.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Limited Liquidity Headroom: Trilogy's consolidated cash, cash
equivalents and restricted cash was about USD93 million for 1Q21)
including USD30.4 million held at 2degrees, USD30.9 million held at
NuevaTel and USD32.0 million held at the parent level. Trilogy also
had short-term investments of USD10.0 million. The USD50 million
debt issuance at TISP LLC during 4Q20 supports improved near-term
liquidity for debt service at the HoldCo level.
Trilogy does not have a revolving bank facility at the HoldCo level
and is subject to FX fluctuations that could negatively affect debt
servicing costs at the HoldCo. The company has suspended the
dividend at Trilogy International Partners, Inc. of CAD0.02 per
common share, roughly CAD1 million. OpCo Capital Structures: Both
2degrees and NuevaTel operations have local facilities agreements
to provide local debt capacity for operational support. 2degrees
completed a bank syndication for a new three-year senior facilities
agreement in February 2020 with an upsized aggregate commitment for
NZD285 million from NZD250 million.
The agreement consists of a NZD235 million, or USD169.5 million,
facility that was fully drawn at closing with no amortization
requirements, a NZD30 million investment facility that was fully
drawn at the end of 1Q21, and a NZD20 million working capital
facility that was fully drawn.
The senior facilities agreement provides for an uncommitted NZD35
million accordion facility that can be used to fund capex. 2degrees
has substantial cushion under its main covenants, including net
leverage of not greater than 3.00x until Dec. 31, 2020; 2.75x from
Jan. 1, 2021 to Dec. 31, 2021; and 2.50x thereafter. 2degrees must
also maintain a total interest coverage ratio of not less than
3.0x. An additional covenant limits permitted distributions to 100%
of FCF and requires a leverage ratio of 2.0x, immediately following
the permitted dividend distribution.
NuevaTel has two bank loans totaling USD7 million and USD8 million
at the time of the initial draw with modest amortization
requirements that mature in 2022 and 2023, respectively. The amount
outstanding was USD4.4 million and USD6.2 million, respectively, as
of Dec. 31, 2020. The 2022 and 2023 bank loan agreements do not
contain financial covenants. The bank loans have no recourse to TIP
Inc. or its subsidiaries other than NuevaTel.
In August 2020, NuevaTel commenced a two series bond offering of up
to USD24.2 million. NuevaTel raised $20.1 million through this
issuance process. NuevaTel used net proceeds to repay existing
indebtedness with the remaining proceeds available for capex. The
bonds will be secured with certain sources of NuevaTel cash flows.
The bonds contain certain financial covenants including a debt
service ratio. The debt service ratio will be applicable starting
with the 1Q22. The bonds have no recourse to TIP Inc. or its
subsidiaries other than NuevaTel.
Recovery Assumptions
The recovery analysis assumes Trilogy would be considered a going
concern (GC) in a bankruptcy and the company would be reorganized
rather than liquidated. Fitch assumed a 10% administrative claim.
The Recovery Rating (RR) considers the Holdco debt's structural
subordination to the local operating subsidiaries' debt. Fitch
believes the recovery analysis for Trilogy is best performed using
a "sum of the parts" approach, where a waterfall analysis for
recovery is performed individually for each operating subsidiary
and rolled up to the parent level.
Consequently, Fitch determined a GC EBITDA for each operating
subsidiary. The recovery also considers the minority stakes at each
operating subsidiary and assigns a proportionate EBITDA to Trilogy.
Fitch's recovery analysis includes an additional discount related
to the withholding tax the company is subject to in Bolivia of
12.5% and New Zealand of 7.5%.
The GC EBITDA assumes both depletion of the current position to
reflect the distress that provoked a default and a level of
corrective action Fitch assumes would have occurred during
restructuring or would be priced into a purchase price by potential
bidders. The recovery analysis reflects a scenario in which EBITDA
declines as a result of continued erosion of the subscriber base in
Bolivia. This is due to aggressive price discounting by the larger,
financially stronger competitors that causes a repricing of the
subscriber bases and additional challenges for Bolivia, which could
be due to a combination of country risk factors including
political, social, economic and legal.
For the Bolivian operations, the LTM EBITDA as of March 31, 2021
was roughly USD5 million. Fitch believes the ongoing political
instability and social unrest and competitive environment, combined
with the negative effects from the coronavirus pandemic, provides
limited clarity on the GC EBITDA. This increases the uncertainty
around any assumptions for the ongoing enterprise valuation.
For the New Zealand operations, the going-concern EBITDA of USD89
million, represents around a 20% decline to EBITDA. The
going-concern EBITDA considers 2degrees' good operating momentum
that has steadily taken share with a good competitive position in
New Zealand's stable three-player operating environment. The GC
assumptions also considers the structural improvements undertaken
and the depressed roaming revenue related to the coronavirus
pandemic. Fitch believes the GC EBITDA represents the level of
sustainable cash flow to support required investments for network
infrastructure and the expected spectrum payments to maintain its
competitive position.
Fitch views the multiple for NuevaTel based on the range of
allowable multiples (2.0x to 6.0x) as below the midpoint for the
Latin American region. The multiple reflects the challenges with
the current uncertainty and instability in the operating/political
environment, small player and the state of the company's business
model, which experienced significant operational disruption and
loss of market share during the past couple of years.
New Zealand's multiple of 6.0x which is at the upper end of the
2.0x to 6.0x recovery band for the APAC region reflects the
2degrees market position, growth prospects, good profitability,
supportive industry dynamics and the country's better ranking, in
creditor friendly policies, and general enforceability. The
multiples compare with the U.S. Corporates 5.9x median Technology,
Media and Telecommunications emergence enterprise value/forward
EBITDA multiple.
For issuers with assets in multiple jurisdictions, the cap analysis
is weighted by the country or countries in which the economic value
of that issuer's business could be realized. When the country of
incorporation of the parent company exhibits a lower cap than the
average of the countries in which the preponderances of assets are
located, the lower cap of the holding company's jurisdiction would
apply only if Fitch believes the recovery process would be
negatively affected, directly or indirectly, by any legal processes
at the parent company level.
New Zealand is in Group A with no ratings cap while Bolivia is in
Group D with a ratings cap of 'RR4'. Fitch has assumed no recovery
value is available from NuevaTel based on the limited clarity and
uncertainties discussed above. Consequently, given that Fitch's
recovery contemplates that all of the economic value resides in the
New Zealand operations, recoveries could be up to a 'RR1'.
The above assumptions result in a recovery notching for the $50
million TISP secured notes at 'RR1' and the $357 million TISP
senior secured notes at 'RR4'.
ISSUER PROFILE
Trilogy is an internationally focused wireless telecommunications
company with operations in New Zealand (2degrees) and Bolivia
(NuevaTel).
SUMMARY OF FINANCIAL ADJUSTMENTS
-- Adjustments for factoring and outstanding handset receivables
related to FS operations that Fitch brought back on balance
sheet (assessed using a debt-to-equity ratio of 1x);
-- Fair value of debt adjusted to reflect debt amount payable at
maturity;
-- Readily available cash excludes restricted amounts and cash in
Bolivia;
-- In calculating leverage metrics, EBITDA is reduced to reflect
any dividends to minorities.
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.
U.S. GLOVE: Avoidance Suit vs. Jacobs Goes to Trial
---------------------------------------------------
In the case, U.S. Glove, Inc., Plaintiff, v. Michael J. Jacobs,
Defendant, Adv. No. 21-1009 (Bankr. D. N.M.), New Mexico Bankruptcy
Judge David T. Thuma denied U.S. Glove's motion for summary
judgment avoiding, as a preferential transfer, the perfection of
Defendant's security interest in U.S. Glove's personal property.
Defendant more or less concedes U.S. Glove's prima facie case but
argues that U.S. Glove lacks standing to assert the claim because
avoiding Defendant's security interest would not benefit creditors.
The Court concludes that there are fact issues relating to the
standing defense.
"Defendant's security interest in the Collateral is avoidable under
[sec.] 547(b) unless Plaintiff lacks standing to pursue the claim.
Plaintiff's standing hinges, in turn, on whether avoiding the
security interest would benefit the estate. Evidence is needed on
this latter point, so the Court will deny Plaintiff's summary
judgment motion," Judge Thuma explained.
Prior to October 2018, Jacobs owned 5,000 shares, representing
100%, of U.S. Glove's capital stock. On October 18, 2018, U.S.
Glove redeemed 2,850 shares of stock from Defendant for $3,390,000.
After the redemption, Defendant owned 2,150 shares, or 43% of U.S.
Glove. On the same date, these individuals purchased shares of
stock from U.S. Glove:
Name Number of shares Percentage
---- ---------------- ----------
Evan Gobdel 800 16%
Greg Bregstone 800 16%
Randolph Chalker 700 14%
Gaye Gustafson 550 11%
---------------- ----------
Total 2,850 57%
To pay Defendant for the shares, U.S. Glove gave Defendant a
$2,140,000 promissory note and a $1,250,000 promissory note.
Neither note is guaranteed. The New Stockholders paid U.S. Glove
essentially nothing for their shares. The transaction appears to be
a classic leveraged buyout, pursuant to which U.S. Glove assumed
$3,390,000 of debt for no exchange consideration.
The larger note includes a security agreement that grants Defendant
a security interest in U.S. Glove's accounts, inventory, equipment,
and other tangible and intangible property. The smaller note is
unsecured. For unknown reasons, Defendant did not perfect his
security agreement in the Collateral for 20 months after the buyout
closed.
On May 19, 2020, in the midst of the COVID-19 pandemic, U.S. Glove
borrowed $150,000 from the Small Business Administration. Repayment
of the loan was secured by a security interest in the Collateral.
The notes require Defendant to subordinate his security interest to
the SBA's security interest, and Defendant has agreed to do so. In
addition, U.S. Glove obtained a $50,000 Paycheck Protection Program
loan from the SBA.
Apparently prompted by this borrowing, on June 1, 2020, Defendant
filed a financing statement with the New Mexico Secretary of State,
perfecting his security interest in the Collateral. The SBA filed a
financing statement on July 8, 2020.
Between February and September 2020, U.S. Glove made six payments
to Defendant on the senior note, totaling about $137,500.
On June 1, 2020, U.S. Glove had assets of about $300,000 and
liabilities of about $3,600,000. U.S. Glove filed this case on
February 14, 2021. U.S. Glove's bankruptcy schedules show
Collateral value of about $280,000.
The Court set a bar date in this case for March 26, 2021. Nine
proofs of claim were filed, including four by Defendant. Two claims
have already been disallowed by default order. The Remaining claims
are:
Claimant Amount
------- ------
Bank of America $50,000 (PPP loan)
Michael Jacobs $2,140,000
Michael Jacobs $1,250,000
Michael Jacobs (rent) $155,000
Michael Jacobs
Equity interest
SBA $149,143
IRS $2,821
----------
Total $3,746,964
Defendant objected to the PPP loan claim and the IRS claim. At this
point, it seems likely that those claims will be satisfied without
payment from the estate. Thus, as a practical matter there are two
creditors in this case -- Defendant, with claims totaling
$3,545,000 and the SBA, with a $149,143 claim secured by a first
lien on U.S. Glove's assets. Defendant represents 95.9% of the
claims pool and is the only unsecured creditor.
Defendant filed a motion to dismiss the bankruptcy case on February
22, 2021, arguing that it was filed in bad faith. A final hearing
on the motion to dismiss is set for June 30, 2021.
U.S. Glove filed this adversary proceeding on March 15, 2021. The
complaint contains three counts: to avoid Defendant's financing
statement as a preference; to recover the Note Payments as a
preference, and to disallow Defendant's claims until he pays the
Note Payments to U.S. Glove.
U.S. Glove filed a Subchapter V plan on February 22, 2021. In the
plan U.S. Glove proposes to pay Defendant $650,000 as a secured
creditor and about an additional $100,000 as an unsecured
creditor.
On April 16, 2021, U.S. Glove moved for a partial summary judgment
avoiding Defendant's security interest in the Collateral.
A copy of the Court's June 11, 2021 Opinion is available at:
https://www.leagle.com/decision/inbco20210614668
About U.S. Glove, Inc.
U.S. Glove, Inc. is a New Mexico Corporation with its headquarters
located at 6801 Washington Street NE, Albuquerque, New Mexico. It
manufactures hand and wrist support products for gymnastics and
cheerleading, as well as a variety of other ancillary products,
including wristbands, chalk, athletic tape, and grip brushes
designed to enhance athletic performance.
U.S. Glove sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.N.M. Case No. 21-10172) on Feb. 14, 2021.
In the petition signed by Randolph Chalker, authorized person, the
Debtor disclosed up to $500,000 in assets and up to $10 million in
liabilities.
Judge David T. Thuma oversees the case.
The Debtor tapped Michael Best & Friedrich LLP as its bankruptcy
counsel and Walker & Associates, PC, as its local counsel.
VALLEY FARM: Secures Continued Cash Access Through Aug. 10
----------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
entered an order approving a fourth stipulation authorizing Valley
Farm Supply, Inc. to use cash collateral on an interim basis
effective upon the expiration of the third stipulation on July 10,
2021 at 11:59 p.m. Community Bank of Santa Maria, Simplot AB
Retail, Inc., and the Debtor are the parties to the stipulation.
The Court directed the Debtor to submit a supplemental budget to
the secured creditors no later than July 27, 2021. Parties in
interest must file objections, if any, no later than August 3. A
copy of the order is available for free at https://bit.ly/3vfBjlL
from PacerMonitor.com.
The hearing on the motion will be continued to August 10, 2021 at
11:30 a.m.
About Valley Farm Supply
Valley Farm Supply, Inc., a wholesaler of farm product raw
materials based in Nipomo, California, filed its voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D.
Cal. Case No. 20-11072) on Sept. 2, 2020. The petition was signed
by Peter Compton, president. At the time of filing, the Debtor
disclosed total assets of $3,711,542 and total liabilities of
$8,460,250.
Judge Deborah J. Saltzman oversees the case.
The Debtor tapped Beall & Burkhardt, APC, as counsel; Terence J.
Long as restructuring consultant; and McDermott & Apkarian, LLP as
accountant.
Community Bank of Santa Maria, as secured creditor, is represented
by Sandra K. McBeth, Esq.
Simplot AB Retail, Inc., as secured creditor, is represented by
Hagop T. Bedoyan, Esq.
VERTEX ENERGY: Reports Unregistered Sales of Equity Securities
--------------------------------------------------------------
A holder of Vertex Energy, Inc.'s Series B1 Preferred Stock, on May
18, 2021, converted 500,000 shares of such preferred stock into the
same number of shares of common stock, on a one-for-one basis,
pursuant to the terms of such Series B1 Preferred Stock.
On June 9, 2021, a holder of the Company's Series B1 Preferred
Stock converted 2,000,000 shares of such preferred stock into the
same number of shares of common stock, on a one-for-one basis,
pursuant to the terms of such Series B1 Preferred Stock.
The Company claims an exemption from registration provided by
Section 3(a)(9) of the Securities Act of 1933, as amended, for such
issuances, as the securities were exchanged by the Company with its
existing security holders in a transaction where no commission or
other remuneration was paid or given directly or indirectly for
soliciting such exchange.
On May 27, 2021, a holder of warrants to purchase shares of the
Company's common stock exercised warrants to purchase 140,766
shares of common stock for cash ($215,372 in aggregate or $1.53 per
share), and was issued 140,766 shares of common stock.
On June 2, 2021, a holder of warrants to purchase shares of the
Company's common stock exercised warrants to purchase 16,026 shares
of common stock for cash ($24,520 in aggregate or $1.53 per share),
and was issued 16,026 shares of common stock.
The resale of all of the shares of common stock issuable upon
conversion of the Series B1 Preferred Stock, and the exercise of
the warrants described above, have been registered by the Company
under the Securities Act, on a registration statement declared
effective by the Securities and Exchange Commission.
After the conversions and exercises described above, there are (a)
3,134,889 outstanding shares of Series B1 Preferred Stock, which if
converted in full, would convert into a maximum of 3,134,889 shares
of common stock; and (b) 1,864,381 outstanding warrants to purchase
shares of the Company's common stock at an exercise price of $1.53
per share, which expire if unexercised on Nov. 13, 2021, which if
exercised in full would result in a maximum of 1,864,281 shares of
common stock being issued.
About Vertex Energy
Houston-based Vertex Energy, Inc. (NASDAQ: VTNR) is a specialty
refiner of alternative feedstocks and marketer of high-purity
petroleum products. Vertex is one of the largest processors of
used motor oil in the U.S., with operations located in Houston and
Port Arthur (TX), Marrero (LA) and Heartland (OH). Vertex also
co-owns a facility, Myrtle Grove, located on a 41-acre industrial
complex along the Gulf Coast in Belle Chasse, LA, with existing
hydro-processing and plant infrastructure assets, that include nine
million gallons of storage. The Company has built a reputation as
a key supplier of Group II+ and Group III Base Oils to the
lubricant manufacturing industry throughout North America.
Vertex Energy reported a net loss attributable to the company of
$12.04 million for the year ended Dec. 31, 2020, compared to a net
loss attributable to the company of $5.05 million for the year
ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $122.10
million in total assets, $60.81 million in total liabilities,
$55.37 million in total temporary equity, and $5.92 million in
total equity.
WASHINGTON PRIME: Vinson, Wachtell Represent Term Lenders
---------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Vinson & Elkins LLP and Wachtell, Lipton, Rosen &
Katz submitted a verified statement to disclose that they are
representing the Ad Hoc Lender Group in the Chapter 11 cases of
Washington Prime Group Inc., et al.
The Ad Hoc Lender Group Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of January 22, 2018 by and among
Washington Prime Group, L.P., an Indiana limited partnership, that
certain Term Loan Agreement, dated as of December 10, 2015 by and
among WPG LP, as borrower, certain Company Parties as guarantors,
GLAS USA LLC and Americas LLC as collateral and administrative
agent, and the lenders party thereto, and that certain Senior
Secured Term Loan Agreement, dated as of June 8, 2016 by and among
WTM Stockton, LLC and WPG LP as borrowers, GLAS USA LLC and
Americas LLC, as collateral and administrative agent.
Wachtell, Lipton, Rosen & Katz and Vinson & Elkins LLP represent
the members of the Ad Hoc Lender Group.
As of June 11, 2021, members of the Ad Hoc Lender Group and their
disclosable economic interests are:
Redwood Capital Management, LLC
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
* Term Loan: $44,283,333.33
* Revolver: $76,050,000.00
* 2015 Credit Facility: $25,833,333.33
Silver Point Capital, L.P.
1100 Louisiana St Suite 4545
Houston, TX 77002
* Term Loan: $44,283,333.33
* Revolver: $81,050,000.00
* 2015 Credit Facility: $25,833,333.00
* Webertown Term Loan Facility: $21,666,667.00
Glendon Capital Management L.P.
1620 26th Street
Santa Monica, CA 90404
* Term Loan: $50,033,333.00
* Revolver: $105,300,000.00
* 2015 Credit Facility: $63,333,333.00
* Unsecured Notes: $409,000.00
Counsel to the Ad Hoc Lender Group can be reached at:
VINSON & ELKINS LLP
Paul E. Heath, Esq.
Michael A. Garza, Esq.
1001 Fannin Street, Suite 2500
Houston, TX 77002-6760
Tel: 713.758.2222
Fax: 713.758.2346
E-mail: pheath@velaw.com
mgarza@velaw.com
- and -
Joshua A. Feltman, Esq.
Angela K. Herring, Esq.
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd Street
New York, NY 10019
Tel: (212) 403-1000
Fax: (212) 403-2000
E-mail: jafeltman@wlrk.com
akherring@wlrk.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3iHJZP7
About Washington Prime Group
Washington Prime Group Inc. (NYSE: WPG) --
http://www.washingtonprime.com/-- is a retail REIT and a
recognized leader in the ownership, management, acquisition and
development of retail properties. The Company combines a national
real estate portfolio with its expertise across the entire shopping
center sector to increase cash flow through rigorous management of
assets and provide new opportunities to retailers looking for
growth throughout the U.S.
Washington Prime Group Inc. and its affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 21-31948) on June 13,
2021. At the time of filing, WPG's property portfolio consists of
material interests in 102 shopping centers in the United States
totaling approximately 52 million square feet of gross leasable
area. The Company operates 97 of the 102 properties.
Washington Prime disclosed total assets of $4.029 billion against
total liabilities of $3.471 billion as of March 31, 2021.
Kirkland & Ellis LLP is serving as legal counsel to the Company,
and Alvarez & Marsal North America, LLC is serving as restructuring
advisor. Guggenheim Securities, LLC is serving as the Company's
investment banker. Jackson Walker LLP is the local bankruptcy
counsel. Prime Clerk LLC is the claims agent, maintaining the page
http://cases.primeclerk.com/washingtonprime
Davis Polk & Wardwell LLP is serving as legal counsel and Evercore
Group L.L.C. is serving as investment banker and financial advisor
to SVPGlobal.
Wachtell, Lipton, Rosen & Katz is serving as legal counsel and PJT
Partners LP is serving as investment banker for an ad hoc group of
Consenting Creditors.
WHITE STALLION ENERGY: June 23 Auction of Substantially All Assets
------------------------------------------------------------------
Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court for
the District of Delaware authorized the bidding procedures proposed
by White Stallion Energy, LLC, and affiliates in connection with
the auction sale of all, substantially all, or any combination of
their assets, free and clear of all claims, liens, and
encumbrances.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: June 18, 2021, at 4:00 p.m. (ET)
b. Initial Bid: Any initial Overbid to the Baseline Bid(s)
will be no less than the value, as determined by the Debtors in an
exercise of their reasonable business judgment, of the Baseline
Bid(s)'s Purchase Price of the Assets or any Asset Group, as
applicable, plus 3% of such value.
c. Deposit: 10% of the aggregate value of the cash and
non-cash consideration of such Bid
d. Auction: June 23, 2021, at 10:00 a.m. (ET) is the date and
time that the Auction, if any, will be held via videoconference, or
such later date, time, and location, as selected by the Debtors.
e. Bid Increments: Any subsequent Overbids will be in
increments equal to 3% of the value of the Baseline Bid(s)'s
Purchase Price of the Assets or any Asset Group, as applicable, as
determined by the Debtors in an exercise of their reasonable
business judgment.
f. Sale Hearing: July 1, 2021, at 10:00 a.m. (ET)
g. Sale Objection Deadline: June 25, 2021, at 4:00 p.m. (ET)
The Debtors are authorized to take any and all actions necessary to
implement the Bidding Procedures.
The Auction and Sale Notice is approved. No other or further
notice of the Auction and Sale will be required.
The Assumption and Assignment Procedures are approved. The notice
to be provided under the Assumption and Assignment Procedures will
constitute adequate and sufficient notice and no additional notice
need be provided.
The Debtors will file with the Court, and serve on the Contract
Counterparties, the Cure Notice, including the Assigned Contracts
Schedule, and, to the extent applicable, such Cure Notice may
include any proposed monetary and non-monetary Cure Costs.
Service of a Cure Notice does not constitute any admission or
agreement of the Debtors that such Assigned Contract is an
executory contract or unexpired lease or that such Assigned
Contract will be assumed at any point by the Debtors or assumed and
assigned pursuant to any Winning Bid. Assigned Contract
Objections, if any, must comply with the Assigned Contract
Objection Requirements and be filed with the Court no later than
the Sale Objection Deadline.
Notwithstanding anything else in the Bidding Procedures Order or
any of the exhibits attached thereto, the Bidding Procedures set
forth are altered only as to Louisville Gas and Electric Co.
("LG&E") and Kentucky Utilities Co. (KU") as follows:
(a) with regard to any LG&E and KU contract sought to be
assumed or assigned, the Debtors agree to include proposed
nonmonetary cure amounts in the Cure Notice, as applicable; and
(b) to the extent the Debtors seek to assume or assign any
LG&E and KU contract, and there is an unresolved dispute regarding
the proposed adequate assurance of future performance, the
proffered cure of existing defaults or other objections ("LG&E/KU
Dispute") with regard to such contract existing as of the date of
the sale hearing, the Debtors agree that solely with regard to the
LG&E/KU Dispute the sale hearing will be a status conference with a
future evidentiary hearing, discovery, and briefing scheduled as
needed.
The Debtors are authorized to take all actions necessary to
effectuate the relief granted pursuant to this Bidding Procedures
Order in accordance with the Motion.
The requirements of Bankruptcy Rules 6004(h) and 6006(d) are
waived.
The requirements of Local Rules 9006-1(c)(ii) are waived.
About White Stallion Energy
White Stallion Energy, LLC, was founded in February 2010 for the
purpose of developing and operating surface mining complexes in
Indiana and Illinois and subsequently grew through a series of
strategic acquisitions. It operates six high-quality, low-cost
thermal surface mines in Indiana and Illinois with approximately
200 million tons of demonstrated reserves.
On Dec. 2, 2020, White Stallion Energy and 18 affiliated debtors
each filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-13037) on Dec. 2,
2020. White Stallion and its affiliates reported between $100
million and $500 million in assets and liabilities.
On Jan. 26, 2021, Eagle River Coal, LLC filed a voluntary Chapter
11 petition. Eagle River is seeking for its case to be jointly
administered with the Initial Debtors' cases.
The Hon. Laurie Selber Silverstein is the case judge.
The Debtors tapped Paul Hastings LLP as bankruptcy counsel, Young
Conaway Stargatt & Taylor, LLP as local counsel, and FTI
Consulting, Inc., as financial advisor. Prime Clerk LLC is the
claims agent and administrative advisor.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' cases. The
committee
tapped Cooley LLP as its bankruptcy counsel, Robinson & Cole LLP
as
Delaware counsel, and Province LLC as financial advisor.
Riverstone Credit Management, LLC serves as DIP Agent. Its
advisors are Bailey & Glasser LLP and Simpson Thacher & Bartlett
LLP.
WOODBRIDGE HOSPITALITY: Seeks OK on Cash Accord with Lender
-----------------------------------------------------------
Woodbridge Hospitality, L.L.C., and its secured lender, Canyon
Community Bank, asked the Bankruptcy Court to authorize the Debtor
to use cash collateral, pursuant to the terms of their
stipulation.
Specifically, the parties seek Court approval for the Debtor's use
of $10,386 of cash remaining from the Paycheck Protection Program
loan (PPP) from the lender. The Lender has advanced $231,018 to
the Debtor as of June 2, 2021 under the program.
The Parties agree, among others, that:
a. the Bank will directly disburse funds on account to a payroll
account with a third party payroll service, or to the Debtor upon
terms agreeable to Bank, in order to guarantee that the uses of the
funds are consistent with the standards of the Small Business
Association for Paycheck Protection Program;
b. the Debtor agrees that the cash collateral will be used for
the purposes of paying employees and for other expenses allowable
under the PPP program;
c. the Debtor will provide the Bank an accounting of PPP funds;
d. the Debtor will establish, to the Bank's satisfaction, that
the Debtor will qualify for satisfaction of its PPP loan from the
SBA, pursuant to Section 1106 of the CARES Act; and
e. the Bank will retain its lien and possession of the cash
collateral post-petition.
The Debtor has agreed to promptly apply to the SBA for loan
forgiveness.
A copy of the motion is available for free at
https://bit.ly/3iC7IjH from PacerMonitor.com.
About Woodbridge Hospitality
Woodbridge Hospitality, L.L.C. is a company that operates in the
hotel and motel industry. It conducts business under the name
Suites on Scottsdale.
Woodbridge Hospitality filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No.
21-04096) on May 26, 2021. Sukhbinder Khangura, the Debtor's
manager, signed the petition. At the time of the filing, the
Debtor had between $10 million and $50 million in both assets and
liabilities. Judge Paul Sala presides over the case. Randy
Nussbaum, Esq., at Sacks Tierney P.A., represents the Debtor as
legal counsel.
Attorneys for Canyon Community Bank:
Michael McGrath, Esq.
MESCH CLARK ROTHSCHILD
259 N Meyer Avenue
Tucson, AZ 85701
Telephone: (520) 624-8886
Email: mmcgrath@mcrazlaw.com
ZUCA PROPERTIES: July 22 Plan & Disclosure Hearing Set
------------------------------------------------------
Zuca Properties LLC filed with the U.S. Bankruptcy Court for the
Southern District of New York a motion for entry of an order
scheduling the Combined Hearing to consider the adequacy of the
Disclosure Statement and confirmation of the Plan.
On June 10, 2021, Judge Martin Glenn granted the motion and ordered
that:
* July 22, 2021, at 10:00 a.m. is the Combined Hearing at
which time the Court will consider, among other things, the
adequacy of the Disclosure Statement and confirmation of the Plan.
* July 8, 2021, is fixed as the last day to file objections to
the adequacy of the Disclosure Statement or confirmation of the
Plan.
* July 15, 2021, at 5:00 p.m. is fixed as the last day to file
any brief in support of confirmation of the Plan and reply to any
objections.
A copy of the order dated June 10, 2021, is available at
https://bit.ly/3wpIZDz from PacerMonitor.com at no charge.
Debtor's Counsel:
Kyle J. Ortiz, Esq.
Brian F. Moore, Esq.
Katharine E. Scott, Esq.
TOGUT, SEGAL & SEGAL LLP
One Penn Plaza, Suite 3335
New York, NY 10119
Tel: 212-594-5000
E-mail: bmoore@teamtogut.com
E-mail: kortiz@teamtogut.com
E-mail: kscott@teamtogut.com
About Zuca Properties
Zuca Properties LLC, which is engaged in activities related to real
estate, filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y.
Case No. 21-11082) on June 7, 2021. At the time of filing, the
Debtor estimated $10 million to $50 million in assets and $50
million to $100 million in liabilities. The Hon. Martin Glenn
oversees the case. TOGUT, SEGAL & SEGAL LLP is the Debtor's
counsel.
ZUCA PROPERTIES: Unsecureds to get Pro Rata of Available Cash
-------------------------------------------------------------
Zuca Properties LLC submitted a Plan and a Disclosure Statement.
The Debtor was established to acquire property investments to serve
as funding for the Trust. On May 26, 2009, the Debtor purchased a
penthouse condominium unit at 470 Broome Street in the New York
city neighborhood of SoHo (the "PHS Unit") for $4.3 million, which
was intended to serve as a residence for the Trust beneficiaries.
On April 30, 2010, the Debtor purchased a second penthouse
condominium unit in the same building for $3.8 million (the "PHN
Unit" and together with the PHS Unit, the "Condo Units") as
investment property for the Trust.
The Debtor does not currently hold leases with any tenant for
either Condo Unit and no persons have any right or are authorized
to occupy either of the Condo Units. Withanage, however, maintains
his transient occupancy in both the Condo Units as of the filing of
this Declaration, frustrating the Debtor's efforts to lease or
market and sell the Condo Units.
The Debtor currently maintains four bank accounts: (i) a deposit
account No. 0011 with the Bank of N. T. Butterfield & Son Limited,
(ii) a blocked security account No. 4945 with JPMorgan Chase Bank,
N.A. ("JPMorgan") which has approximately $125,000 and is subject
to the security interest of JPMorgan, and (iii) two mortgage
accounts (Nos. 8675 and 8686) with JPMorgan associated with the PHN
Note and PHS Note.
Class 7: Allowed Unsecured Claims Other than Convenience Claims are
impaired. On each Distribution Date, paid its Pro Rata Share of
Available Cash less the aggregate amount of Cash previously
distributed to the holder of such Allowed Unsecured Claim in any
Distribution made prior thereto.
Under the Plan, all Distributions to holders of Unsecured Claims in
Class 7, and holders of Equity Interests will be funded entirely
from Available Cash.
To be counted, your Ballot must be actually received by 5:00 p.m.
prevailing Eastern Time on July 8, 2021.
Proposed Counsel for the Debtor:
Kyle J. Ortiz
Brian F. Moore
Katharine E. Scott
TOGUT, SEGAL & SEGAL LLP
One Penn Plaza, Suite 3335
New York, NY 10119
Telephone: (212) 594-5000
A copy of the Disclosure Statement is available at
https://bit.ly/34Z5zqm from PacerMonitor.com.
About Zuca Properties
Zuca Properties is a member-managed limited liability company
organized under the laws of the State of Delaware, having its
corporate headquarters at c/o JTC (Suisse) S.A., 80-84 Rue du
Rhone, 1204 Geneva, Switzerland. The Debtor was established by
Rahula Withanage on May 22, 2009 as a limited liability company
under Delaware law, and on September 29, 2009, Rahula transferred
all of his membership interest in the Debtor to The Woofy Trust.
The Trust was established on September 17, 2009 under English law,
and Rahula Withanage is the Settlor of the Trust. The Trust is
currently the sole member of the Debtor with 100% ownership
interest in the Debtor. The Trustee of the Trust is JTC (Suisse)
S.A. The beneficiaries of the Trust are Rayo Withanage,
Withanage's estranged wife Mayra Tozzi Gottsfritz, and
Withanage’s children and remoter issue.
Zuca Properties LLC sought Chapter 11 protection (Bankr. S.D.N.Y.
Case No. 21-11082) on June 7, 2021. The Debtor estimated $10
million to $50 million in assets and $50 million to $100 million in
liabilities. Kyle J. Ortiz, Brian F. Moore, and Katharine E.
Scott, of TOGUT, SEGAL & SEGAL LLP, serve as the Debtor's counsel.
[*] Commercial Chapter 11 Filings Down 14% in May 2021
------------------------------------------------------
Epiq, a global technology-enabled services leader to the legal
services industry and corporations, released its May 2021
bankruptcy filing statistics from its AACER bankruptcy information
services business. The new filings for May dropped to 34,734 across
all chapters. This is a 15% drop from the April 2021 new filings
count of 40,913. Non-commercial consumer filings across all
chapters totaled 32,958, down 15% from 38,830 in April. Commercial
filings across all chapters were also down in May with a total of
1,776 new filings, down 15% from 2,083 in April.
"Bankruptcy filings in May returned to similar levels during the
COVID-19 global pandemic after a two-month spike in March and
April," said Chris Kruse, senior vice president of Epiq AACER.
"This is not unexpected, as historically March and April new
bankruptcy filings have spiked each year due to holiday over
spending. However, the continued stimulus investments are
positively impacting the consumer and holding down bankruptcy
volumes."
There were 182,629 total new bankruptcy filings across all chapters
for the first five months of 2021, down 29% from 255,697 in the
same period in 2020. Commercial Chapter 11 filings were down 14%
over April with 246 new filings in May.
"The continued decline in chapter 11 filings is anticipated given
ample available market liquidity coupled with federal stimulus
intervention," said Deirdre O'Connor, senior managing director of
corporate restructuring at Epiq.
About Epiq AACER
Epiq AACER is your partner for bankruptcy information and
compliance. Its AACER bankruptcy information services platform is
built with superior data, technology, and expertise to create
insight and mitigate risk for businesses impacted by bankruptcies.
It offers free bankruptcy statistics and monthly email updates for
both commercial and non-commercial consumer bankruptcy filings for
Chapter 7, Chapter 11, and Chapter 13 cases.
About Epiq
Epiq, a global technology-enabled services leader to the legal
services industry and corporations, takes on large-scale,
increasingly complex tasks for corporate counsel, law firms, and
business professionals with efficiency, clarity, and confidence.
Clients rely on Epiq to streamline the administration of business
operations, class action and mass tort, court reporting,
eDiscovery, regulatory, compliance, restructuring, and bankruptcy
matters. Epiq subject-matter experts and technologies create
efficiency through expertise and deliver confidence to
high-performing clients around the world. Learn more at
https://www.epiqglobal.com.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
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affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
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the definitive compilation of stocks that are ideal to sell short.
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than a balance sheet solvency test.
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Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
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The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
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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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Copyright 2021. All rights reserved. ISSN: 1520-9474.
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