/raid1/www/Hosts/bankrupt/TCR_Public/210623.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 23, 2021, Vol. 25, No. 173
Headlines
18 IRVING STREET: Taps Alex R. Hess Law Group as Bankruptcy Counsel
5AAB TRANSPORT: Case Summary & 20 Largest Unsecured Creditors
AADVANTAGE LOYALTY: Fitch Affirms BB Rating on $10-BB Financing
ADVANCED MEDIA: Unsecureds Will Recover 100% in Plan
ARLINGTON DOUBLE DOWN: Taps Quilling Selander as Bankruptcy Counsel
AUCTION.COM HOLDING: S&P Affirms 'B-' ICR, Outlook Stable
AVERY ASPHALT: Seeks Use of Cash Collateral
BACALLAO GRANITE: Seeks to Employ Harper Rains Knight as Accountant
BEEBE RIVER: Unsecured Claims to be Paid in Full in Plan
BILL STARKS: Wins Cash Collateral Access
BLACKROCK INTERNATIONAL: Unsecureds Will Receive 100% of Claims
BLACKWATER TECHNOLOGIES: Unsecureds to Recover 5% in Plan
BMZ LLC: Seeks 60-Day Extension of Plan Filing Deadline
BOUCHARD TRANSPORTATION: Files Flexible Chapter 11 Plan
BOY SCOUTS OF AMERICA: Saunders Claimants Say Disclosure Inadequate
BRAZOS ELECTRIC: DIP Loan, Cash Collateral Use OK'd on Final Basis
BROOKLYN IMMUNOTHERAPEUTICS: Appoints Sandra Gurrola as VP Finance
BRWS PARENT: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
BUILDING 1600: Unsecureds Unimpaired in Sale Plan
CARBONYX INC: July 26 Plan Confirmation Hearing Set
CINEMA SQUARE: Has Deal on Cash Collateral Use
CLARIVATE SCIENCE: Moody's Rates New $1BB Sr. Secured Notes 'B1'
COLGATE ENERGY: S&P Alters Outlook to Positive, Affirms 'B-' ICR
COMMUNITY HEALTH: S&P Ups ICR to 'B-' on Improved Credit Measures
COMMUNITY LEADERSHIP: S&P Affirms BB+ Rating on Rev. Bonds
CP HOLDINGS: Hits Chapter 11 Bankruptcy With $83 Million Debt
DIOCESE OF ROCHESTER: Asks Court OK for $35M Sex Abuse Settlement
DJM HOLDINGS: Unsecured Creditors Will Recover 4% Under Plan
EAGLE HOSPITALITY: Nets $153.9 Million From Assets Sales
EARTH ENERGY: Seeks to Employ Dean Greer as New Bankruptcy Attorney
ELANCO ANIMAL: Fitch Alters Outlook on 'BB ' IDR to Negative
ELANCO ANIMAL: Moody's Puts Ba1 CFR Under Review for Downgrade
ELANCO ANIMAL: S&P Affirms 'BB' ICR on KindredBio Acquisition
ELECTRONICS FOR IMAGING: S&P Affirms 'CCC+' Issuer Credit Rating
ELEMENT SOLUTIONS: S&P Affirms 'BB' ICR on Coventya Acquisition
ESSENTIAL PROPERTIES: S&P Assigned 'BB+' ICR, Outlook Stable
FAIRSTONE FINANCIAL: S&P Raises ICR to 'BB-', Off Watch Developing
FARMACIA NUEVA: July 28 Plan & Disclosure Hearing Set
FH MD PARENT: S&P Assigns B- Issuer Credit Rating, Outlook Stable
FIELDWOOD ENERGY: Chapter 11 Plan Faces Well Cleanup Objections
FIELDWOOD ENERGY: Trade Claimants to Recover Up to 14% in Plan
FIRST TO THE FINISH: Trustee Taps Manier & Herod as Legal Counsel
FIRSTLIGHT HOLDCO: S&P Affirms 'B-' ICR on Continued Improvements
FOCUS FINANCIAL: Moody's Affirms Ba3 CFR Amid Term Loan Add-on
FOCUS FINANCIAL: S&P Rates New $800MM First-Lien Term Loan 'BB-'
FORD CITY CONDOMINIUM: Taps Crane, Simon, Clar & Goodman as Counsel
FORMING MACHINING: S&P Affirms 'CCC+' ICR, Outlook Negative
GC EOS BUYER: S&P Affirms 'B-' Rating on First-Lien Term Loan
GEO GROUP: Receives Wedbush Vote of Confidence
GIRARDI & KEESE: Loaned $20 Mil. to Erika's Business. Says Atty.
GRANITE GENERATION: Moody's Alters Outlook on Ba3 CFR to Negative
GRUBHUB INC: S&P Keeps 'B+' Issuer Credit Rating on Watch Negative
GUI-MER-FE INC: Seeks to Employ Luis Cruz Lopez as Accountant
HEARTWISE INC: Vitamins Online Says Plan Still Unconfirmable
HERTZ CORP: Taps Car-Rental ABS Market for First Time Since Ch.11
HOGAR CARINO: Seeks to Employ Virgilio Vega as Accountant
HORIZON GLOBAL: Appoints Donna Costello to Board of Directors
HUBBARD RADIO: S&P Alters Outlook to Stable, Affirms 'B-' ICR
ICAN BENEFIT: Taps Lipschultz Levin and Gray as Tax Preparer
INFRASTRUCTURE AND ENERGY: S&P Upgrades ICR to 'B', Outlook Stable
J & GC: Has Until November 22 to File Plan & Disclosures
J.F. GRIFFIN: Seeks Cash Collateral Access
JACKSON DURHAM: Case Summary & 18 Unsecured Creditors
JACOBS TOWING: Taps Espy, Metcalf & Espy as Legal Counsel
JOSHUAVILLE LLC: Taps Jones Lang LaSalle as Real Estate Broker
K&D MANAGEMENT: Seeks Cash Collateral Access
K&N PARENT: S&P Affirms 'CCC' ICR on Improved Financial Flexibility
KING MOUNTAIN TOBACCO: Court Approves Disclosure Statement
KLAUSNER LUMBER: Taps Fallace & Larkin as Litigation Counsel
KOLESZAR FARM: Taps Regional Bankruptcy Center as Legal Counsel
KOSSOFF PLLC: Wife Makes Debt Collection Suit Forgery Defense
KTR GLOBAL: July 27 Plan Confirmation Hearing Set
L C OF SHREVEPORT: Unsecureds Will be Paid 100% of Their Claims
LAKES EDGE GROUP: Trustee Taps Bennett Guthrie as Special Counsel
LATAM AIRLINES: Creditors Seek Cancelled Plan Deals Claims
MALLINCKRODT PLC: April 30 Administrative Claims Deadline Set
MALLINCKRODT PLC: Can Resolve Price-Gouging Claims Thru Bankruptcy
MALLINCKRODT PLC: Sept. 21 Plan Confirmation Hearing Set
MALLINCKRODT PLC: Unsecured Notes Claimholders to Get 57% to 86%
MCGRAW-HILL LLC: Fitch Puts 'B+' LongTerm IDR on Watch Negative
MEADOWLARK HILLS: Fitch Assigns 'BB+' Issuer Default Rating
MERCER INTERNATIONAL: S&P Alters Outlook to Stable, Affirms B+ ICR
MIDNIGHT MADNESS: Case Summary & 20 Largest Unsecured Creditors
MISTER CAR WASH: S&P Places 'B-' ICR on CreditWatch Positive
NATIONAL TRACTOR: Wins Cash Collateral Access Thru July 16
NORTHERN OIL: Signs Underwriting Agreement With Wells Fargo
OFS INT'L: $16.5MM DIP Loan Wins Final OK
OMERS RELIEF: S&P Assigns B- Issuer Credit Rating, Outlook Stable
OPPENHEIMER HOLDINGS: S&P Upgrades ICR to 'BB-' on Solid Earnings
PALM BEACH: Liquidation of Receivables to Fund Plan Payments
PARAGON OFFSHORE: It Would Not Owe Ch. 11 Trustee Fees, Says Trust
PARKING MANAGEMENT: Aug. 5 Plan Confirmation Hearing Set
PARKING MANAGEMENT: Unsecured Creditors to Recover 82.84% in Plan
PHOENIX SERVICES: S&P Affirms 'B' ICR, Outlook Negative
PIKEWOOD INC: July 29 Plan Confirmation Hearing Set
PRECIPIO INC: All Six Proposals Approved at Annual Meeting
PURDUE PHARMA: Court Pauses Insurance Suit in Favor of Arbitration
QUALTEK LLC: Roth CH Transaction No Impact on Moody's B3 Rating
RAMAN ENTERPRISES: Unsecureds to Get Proceeds From Sale
RE/MAX LLC: S&P Affirms 'BB' Issuer Credit Rating, Outlook Stable
ROCKIES EXPRESS: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable
SALIENT CRGT: S&P Downgrades ICR to 'CCC', Outlook Developing
SANTA CLARITA: Court Approves Disclosure Statement
SCRANTON, PA: S&P Affirms 'BB+' Long-Term GO Debt Rating
SEANERGY MARITIME: Takes Delivery of Two Capesize Vessels
SHOPTIQUES INC: Public Auction Set for June 24
SINCLAIR BROADCAST: Has New Money Plan from Failed Creditor Talks
SIRINE LLC: All Classes Will be Paid in Full Under Plan
SOUTHEAST SUPPLY: S&P Downgrades ICR to 'BB-', Outlook Negative
THUNDER RAIN: Says Debtor Has Not Complied With Agreed Order
TRINITY INDUSTRIES: Fitch Affirms 'BB' LT IDR, Outlook Stable
TUPELO WOOD: Seeks to Employ Randolph Neel as Bankruptcy Counsel
U.S. STEEL: Moody's Raises CFR to B1 on Strong Market Position
UNIFIED PHYSICIAN: S&P Affirms 'B-' ICR on CCRM Acquisition Plan
UNITED TALENT: S&P Assigns B+ Issuer Credit Rating, Outlook Stable
VAC FUND: Unsecureds to Get Quarterly Payments in Plan
VISUAL COMFORT: S&P Alters Outlook to Negative, Assigns 'B' ICR
VOLUNTEER MOTORSPORTS: Taps Christie Jennings as Accountant
WCG PURCHASER: S&P Affirms 'B' ICR on Strong Performance
WELLPATH HOLDINGS: Moody's Hikes CFR to B2, Outlook Stable
WINDSTREAM SERVICES: Fitch Gives FirstTime 'B' IDR, Outlook Stable
WJA ASSET: August 18 TD Opportunity's Plan Confirmation Hearing Set
WOK HOLDINGS: Moody's Hikes CFR to Caa1, Outlook Stable
WYNDHAM HOTELS: S&P Places 'BB' ICR on CreditWatch Positive
ZIG ZAG DOUGH: Seeks to Employ Quilling Selander as Legal Counsel
ZOHAR FUNDS: Numerous Claims Get 2nd Chance in Tilton Ch. 11 Suit
*********
18 IRVING STREET: Taps Alex R. Hess Law Group as Bankruptcy Counsel
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18 Irving Street, LLC seeks approval from the U.S. Bankruptcy Court
for the District of Massachusetts to hire Alex R. Hess Law Group to
serve as legal counsel in its Chapter 11 case.
The firm's services include:
(a) assisting in the production of the Debtor's schedules and
statement of financial affairs and other pleadings;
(b) assisting in the negotiation and preparation of the
Debtor's anticipated sale of substantially all assets;
(c) assisting in the preparation of the Debtor's plan of
reorganization and disclosure statement;
(d) negotiating with contractors, subcontractors and vendors
to finish the rehab and renovation of the Debtor's property;
(e) preparing legal papers;
(f) representing the Debtor in adversary proceedings and
contested matters related to its bankruptcy case, if applicable;
(g) representing the Debtor in the sale of substantially all
of its assets;
(h) providing legal advice with respect to the Debtor's
rights, powers, obligations and duties in the continuing operation
of its business and the administration of the estate; and
(i) providing other legal services necessary and appropriate
for the administration of the Debtor's estate.
The firm's hourly rates are as follows:
Alex R. Hess, Esq. $400 per hour
Paralegal $150 per hour
The Debtor paid $12,500 on May 26, 2021, to the law firm as a
retainer, while a follow-up refresher retainer of $7,500 will be
due in mid-July 2021.
Alex Hess, Esq., disclosed in a court filing that he is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Alex R. Hess, Esq.
Alex R. Hess Law Group
245 First Street, 18th Floor, Riverview II
Cambridge, MA 02142
Tel.: (610) 730-9472
Fax: (617) 444-8405
Email: ahess@arhlawgroup.com
About 18 Irving
Somerville, Mass.-based 18 Irving Street, LLC sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. D. Mass. Case No.
21-10776) on May 27, 2021. In the petition signed by Gina Strauss,
manager and sole member, the Debtor disclosed $1 million to $10
million in both assets and liabilities. The Debtor tapped Alex R.
Hess Law Group as legal counsel.
5AAB TRANSPORT: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Four affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
5AAB Transport, LLC 21-52150
445 Commerce Square
Columbus, OH 43228
SJS Transport, LLC 21-52151
Heavy Diesel Service, LLC 21-52152
5AAB Holding, LLC 21-52153
Business Description: The Debtors operate in the general freight
trucking industry.
Chapter 11 Petition Date: June 21, 2021
Court: United States Bankruptcy Court
Southern District of Ohio
Judge: Hon. John E. Hoffman Jr. (21-52150, 21-52151, and 21-52153)
Hon. Kathryn C. Preston (21-52152)
Debtors' Counsel: James A. Coutinho, Esq.
ALLEN STOVALL NEUMAN & ASHTON LLP
17 South High Street
Suite 1220
Columbus, OH 43215
Tel: (614) 221-8500
Fax: (614) 221-5988
E-mail: coutinho@asnalaw.com
5AAB Transport's
Estimated Assets: $0 to $50,000
5AAB Transport's
Estimated Liabilities: $1 million to $10 million
SJS Transport's
Estimated Assets: $100,000 to $500,000
SJS Transport's
Estimated Liabilities: $1 million to $10 million
Heavy Diesel's
Estimated Assets: $100,000 to $500,000
Heavy Diesel's
Estimated Liabilities: $1 million to $10 million
5AAB Holding's
Estimated Assets: $100,000 to $500,000
5AAB Holding's
Estimated Liabilities: $1 million to $10 million
The petitions were signed by Navdeep Sidhu, member.
Copies of the petitions containing, among other items, a list of
the Debtor's 20 largest unsecured creditors are available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/A2QYTAQ/5AAB_Transport_LLC__ohsbke-21-52150__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/CRTI4WI/SJS_Transport_LLC__ohsbke-21-52151__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/EBASEWY/Heavy_Diesel_Service_LLC__ohsbke-21-52152__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/DSHEKBA/5AAB_Holding_LLC__ohsbke-21-52153__0001.0.pdf?mcid=tGE4TAMA
AADVANTAGE LOYALTY: Fitch Affirms BB Rating on $10-BB Financing
---------------------------------------------------------------
Fitch Ratings has affirmed the 'BB' ratings and revised the Outlook
to Stable from Negative on the $10 billion financing co-issued
AAdvantage Loyalty IP Ltd. (AAdvantage IP) and American Airlines,
Inc. (American). AAdvantage IP is a SPV incorporated under the laws
of the Cayman Islands for the purpose of this transaction.
AAdvantage IP is an indirect, wholly owned subsidiary of American
Airlines.
The Outlook revision mirrors Fitch's recent actions on American
Airlines, Inc.
DEBT RATING PRIOR
---- ------ -----
AAdvantage Loyalty IP Ltd.
Senior Secured Class A Notes 00253XAA9 LT BB Affirmed BB
Senior Secured Class B Notes 00253XAB7 LT BB Affirmed BB
Senior Secured Term Loan 02376CBJ3 LT BB Affirmed BB
TRANSACTION SUMMARY
The transaction is backed by license-payment obligations from
American and cash flow generated by the AAdvantage Loyalty program.
As part of the financing structure, the intellectual property (IP)
assets associated with the AAdvantage loyalty program and
AAdvantage agreements, including co-branded agreement with
Citibank, N.A. and Barclays Bank Delaware, related to AAdvantage
program are transferred to the bankruptcy-remote IP SPV, AAdvantage
IP.
AAdvantage IP grants a worldwide license to American and its
subsidiaries to use the IP to operate the loyalty program. In
return, the licensee, American, will in return pay a monthly
license fee equivalent to all the cash collections generated by the
sale of miles to American as governed through an Intercompany
Agreement. Additionally, certain third-party agreements will be
assigned to AAdvantage IP and payment for the purchase of
AAdvantage miles from certain third parties will be remitted
directly to a collection account held at Wilmington Trust, National
Association in the name of AAdvantage IP. These third-party
agreements include the co-brand agreements with Citi and Barclays,
the two largest third-party partners of AAdvantage.
The debt facilities will be guaranteed, on a joint and several
basis, by the parent, American Airlines Group Inc, and certain
subsidiaries of the parent, American, namely AAdvantage Holdings 1,
Ltd. (HoldCo 1) and AAdvantage Holdings 2, Ltd (HoldCo 2). The
issuers also grant additional security to the lenders/bondholders,
including a first-priority-perfected security interest in cash
flows from the AAdvantage program, a pledge of all rights under
contracts/agreements related to the AAdvantage program, and a
pledge of the transaction accounts (including the collection,
payment and reserve accounts) and a pledge over the equity
interests in AAdvantage IP, HoldCo1 and HoldCo2.
Fitch's rating addresses timely payment of interest and repayment
of scheduled principal when due and by the final legal maturity
date.
KEY RATING DRIVERS
Credit Quality of American: Cash flows backing the transaction will
primarily come from payment obligations from American under the
licensing agreement related to IP owned by the IP SPV and cash
flows received from third-party partners related to miles issued to
the card holders. Therefore, the Issuer Default Rating (IDR) of
American acts as the starting point for the analysis. American is
rated 'B-'/Outlook Stable by Fitch.
Fitch revised its Outlook for American to Stable from Negative and
affirmed its Long-Term Issuer Default Rating at 'B-' on June 16,
2021. The Outlook revision reflects the company's strong liquidity
position along with rebounding passenger traffic in the U.S. which
together decreases the likelihood of a downgrade into the 'CCC'
category. Meanwhile, the rollout of multiple effective coronavirus
vaccines has increased Fitch's confidence in a meaningful rebound
in air travel in 2021, lowering the likelihood that American will
continue to burn cash for a prolonged period.
American's 'B-' rating reflects material risks that remain for the
airline industry. Air traffic remains well below pre-pandemic
levels, and the pace of recovery continues to remain uncertain as
international travel restrictions and limited business travel are
expected to weigh on traffic and yields well into next year at
least. Substantial debt burdens and rising fuel prices are also
concerns.
Performance Risk and Going Concern Assessment (GCA) Score: Timely
payment on the debt facilities depends on the ongoing performance
of the licensee, American. American 's GCA score of '2' acts as a
cap for the transaction rating. The GCA score provides an
indication of the likelihood that American continues to operate in
the event of default and Chapter 11 bankruptcy. The GCA score of
'2' allows for a four-notch rating differential depending on
American 's IDR and the issuance's default rating.
Strategic Nature of Assets (Likelihood of License Agreement
Affirmation): The affirmation factor, which measures the likelihood
that American would view this obligation as strategic and would
affirm the license in the event of a Chapter 11 bankruptcy, is
considered high by Fitch. The strategic importance of the IP assets
to American 's operations, coupled with the structural incentives
in place, supports this assessment. The assessment of high allows
the transaction to obtain up to a four-notch uplift from American's
current IDR of 'B-'/Outlook Stable.
The $10 billion issuance represents approximately 20% of American's
total liabilities, and this ratio is considered small enough to
differentiate the transaction rating from the IDR of American.
Furthermore, in its DSCR calculations, Fitch considers the rebound
from the low air-traffic level caused by the coronavirus outbreak
to be 96% for its base case by YE 2023. The DSCR during the
amortization period, years three through eight, is expected to
average approximately 3x with the DSCR falling below 2x only during
the first one to two amortization periods. Overall, Fitch estimates
cash flows to be sufficient to meet debt service obligations.
Coronavirus Risk Included in Affirmation Factor: Fitch has made
assumptions about the spread of the coronavirus and the economic
impact of the related containment measures. As far as this
transaction is concerned, the time to return to, or near,
pre-crisis levels is the main consideration. In particular, Fitch
designed a base case scenario in which a full recovery occurs by YE
2023, and a downside scenario, characterized by a more severe and
prolonged period of stress. Both these scenarios will mainly affect
the affirmation factor, as the utility from a loyalty program may
decline if global travel remains sluggish indefinitely. Fitch
estimates cash flow to be more than sufficient to meet debt service
obligations in both the baseline and downside scenario it has
tested.
Asset Isolation and Legal Structure: Fitch assesses the legal
protections present in the U.S. bankruptcy code, as well as the
structural features incorporated into the transaction. In addition
to having the IP assets and the AAdvantage agreements legally
conveyed, lenders/bondholders have a first-perfected security
interest in the contractual obligations due from American and
third-party partners. The legal structure incentivizes American to
continue to make payments on the license. Creditors would also
benefit from other structural features, including potential
liquidated damages and a three-month interest liquidity reserve.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action include:
-- Fitch does not anticipate developments with a high likelihood
of triggering an upgrade. If American's IDR is upgraded, Fitch
will consider whether the same uplift could be maintained or
if it should be further tempered in accordance with criteria.
Factor that could, individually or collectively, lead to negative
rating action include:
-- The rating is sensitive to changes in the credit quality of
American Airlines, Inc., which acts as licensee under the IP
license agreement. Any change in IDR can lead to a change on
the rating. Additionally, a reassessment of the GCA score and
the affirmation factor from high to medium will lead to a
change in the ratings.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
ADVANCED MEDIA: Unsecureds Will Recover 100% in Plan
----------------------------------------------------
Advanced Media Networks, LLC, submitted an Amended Chapter 11
Disclosure Statement explaining its Chapter 11 Plan.
The Plan proposes to restructure the financial affairs of the
Debtor.
The Plan will treat claims as follows:
* Classes 1 and 2 - Secured Claims (divided into subclasses IA,
1B, 2A, 2B, etc.) consist of claims secured by Collateral (such as
a mortgage/deed of trust secured by a house, a car loan secured by
the car, or any other claim secured by a lien on property of the
bankruptcy estate), which generally are entitled to be paid in
full, over time, with interest. Class 1 is reserved for claims
secured only by real estate that is an individual Debtor's
principal residence. Class 2 contains all other secured claims.
* Class 4 - General Unsecured Claims consists of "general"
unsecured claims (claims that are not entitled to "priority" under
the Bankruptcy Code and that are not secured by Collateral), which
will receive, over time, the following estimated percentage of
their claims (or fixed percentage, if the Plan so provides): 100%.
Exception: the Plan may designate a subclass of small "convenience
class" claims which will be paid in full on the Effective Date, and
in rare situations the Plan may designate additional unsecured
subclasses.
The Plan proponent believes it is feasible because, both on the
Effective Date and for the duration of the Plan, the proponent
estimates that Debtor will have sufficient cash to make all
distributions.
Attorney for Advanced Media Networks, LLC:
Peter T. Steinberg, Esq., SBN 96834
Steinberg, Nutter & Brent, Law Corporation
23801 Calabasas Road, Suite 2031
Calabasas, California 91302
Telephone (818) 876-8535
Telecopier (818) 876-8536
Email: mr.aloha@sbcglobal.net
A copy of the Amended Chapter 11 Disclosure Statement is available
at https://bit.ly/3xtASWn from PacerMonitor.com.
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.
ARLINGTON DOUBLE DOWN: Taps Quilling Selander as Bankruptcy Counsel
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Arlington Double Down Enterprises, LLC seeks approval from the U.S.
Bankruptcy Court for the Eastern District of Texas to hire
Quilling, Selander, Lownds, Winslett & Moser, P.C. to serve as
legal counsel in its Chapter 11 case.
The firm's services include:
(a) providing legal advice to the Debtor with regard to its
powers, duties and responsibilities and the continued management of
its affairs and assets under Chapter 11;
(b) preparing legal papers;
(c) preparing a status report and plan of reorganization, and
other services incident thereto;
(d) investigating and prosecuting preference and fraudulent
transfers actions arising under the avoidance powers of the
Bankruptcy Code; and,
(e) performing all other legal services for the Debtor which
may be necessary.
The firm's hourly rates are as follows:
Attorneys $200 - $425 per hour
Paralegals $100 - $135 per hour
The Debtor paid $15,000 to the law firm as a retainer fee and will
advance funds in installments not to exceed $4,000 to the firm's
trust account to replenish the amount of the retainer fee that was
applied for the attorney's fees and expenses and Chapter 11 filing
fee.
Frank Patel, Esq., an attorney at Quilling, disclosed in a court
filing that his firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Frank S. Patel, Esq.
Quilling, Selander, Lownds, Winslett & Moser, P.C.,
2001 Bryan Street, Suite 1800
Dallas, TX 75201
Tel.: (214) 871-2100
Fax: (214) 871-2111
Email: fpatel@qslwm.com
About Arlington Double Down Enterprises
Arlington Double Down Enterprises, LLC owns and operates a Mellow
Mushroom franchise pizzeria and bar located at 200 N Center St.,
Arlington, Texas.
Arlington Double Down sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. E.D. Texas Case No. 21-40796) on May
28, 2021. In the petition signed by Kimberly Slawson, president,
the Debtor disclosed $1 million to $10 million in both assets and
liabilities. Quilling, Selander, Lownds, Winslett & Moser, P.C.
represents the Debtor as legal counsel.
Truist Bank, the Debtor's lender, is represented by Jason T.
Rodriguez, Esq., at Higier Allen & Lautin, P.C.
AUCTION.COM HOLDING: S&P Affirms 'B-' ICR, Outlook Stable
---------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating to
reflect that California-based Auction.com Holding Co. Inc. has
sufficient liquidity to address any cash flow deficits that might
arise while foreclosure volumes remain depressed and that it could
benefit from higher distressed real estate volumes over time once
foreclosure moratoriums are lifted, allowing it to lower leverage
and improve free cash flows.
The stable outlook reflects S&P's view that Auction.com has
sufficient liquidity over at least the next 12 months to offset
cash flow deficits from reduced distressed real estate activity and
that the company's standing within the industry will remain robust
once distressed residential volumes stabilize and grow.
S&P said, "The rating affirmation and stable outlook reflects our
expectation that the company has sufficient liquidity ($123 million
cash balance as of March 31, 2021) to address operating cash flow
deficits over the next 12-24 months and repay its fully drawn $45
million revolving credit facility, should it need to, when it
matures in September 2022. The company's revenue is tied to
distressed real estate volumes, which to a large degree are
dependent on foreclosure moratoriums being lifted. As a result,
cash flow deficits could remain elevated for a prolonged period.
Nonetheless, we believe the company's position as the largest
online marketplace for distressed real estate including
foreclosures and real-estate owned (REO) properties sales online
remains resilient. As a result, we expect the company would
significantly benefit from increased distressed real estate volumes
once moratoriums end, which should translate into significant
revenue and cash flow."
Auction.com's pace of operational recovery will be contingent on
the timing of moratorium expirations, which remains uncertain. The
economic slowdown induced by the COVID-19 pandemic led to soaring
unemployment rates and increased mortgage delinquency rates.
However, countermeasures by the government such as foreclosure
moratoriums on federal-backed mortgages (under the Coronavirus Aid,
Relief, and Economic Security Act) along with state and
municipality restrictions against foreclosures and evictions, have
resulted in record low foreclosure activity in the U.S. In 2020,
the company's revenue was down by over 50% versus 2019 and largely
comprised of REO property sales online. S&P said, "Although we
expect the company's operating performance to recover once
moratoriums are lifted and properties enter the foreclosure
process, a potential moratorium extension or other
government-relief measures to assist homeowners could further limit
the volume of distressed real estate properties flowing to the
company's auction platform. We would expect sales from REO
properties to ramp up slower relative to foreclosure sales due to
the timing of distressed properties during the foreclosure process
before being repossessed by lenders and becoming REO inventory."
Auction.com has sufficient liquidity to address negligible free
operating cash flow (FOCF) generation in 2021. Despite significant
revenue headwinds in 2020, the company maintained its cash
position, largely due to cost-reduction initiatives and a one-time
reimbursement for prior year costs incurred under a transition
services agreement with Ten-X Commercial. S&P said, "We expect
Auction.com to generate negative FOCF in 2021, as we expect
revenues in 2021 to remain at comparable levels relative to 2020,
although we expect the company to resume investments anticipating
revenue growth driven by pent-up foreclosure volumes coming to
market once foreclosure moratoriums are lifted. We believe the
company's $123 million cash balance is sufficient to address any
cash flow deficits and paydown of its fully drawn $45 million
revolver that comes due September 2022, if needed."
S&P said, "We believe the company continues to hold a relatively
favorable position in a challenged industry. Auction.com operates
in the niche distressed residential real estate market with limited
product and service diversity. As a result, its revenues are
dependent on cyclical and volatile distressed real estate inventory
volumes that are outside of the company's control. Nonetheless, we
expect Auction.com's business to remain resilient due to its solid
market share, good relationships with banks that own the mortgages
and supply distressed real estate inventory, and its established
platform for distressed real estate investors. We understand that
its online platforms for foreclosed and REO assets are relatively
faster and more cost effective than traditional offline auctions.
"The stable outlook reflects our view that Auction.com has
sufficient liquidity over at least the next 12 months to offset
cash flow deficits from reduced distressed real estate activity and
that the company's standing within the industry will remain robust
once distressed residential volumes stabilize and grow.
"We could lower our rating if we expect the company's liquidity
position to deteriorate, such that the company could face
refinancing risk. This could occur if government-relief programs
are renewed for a prolonged period, foreclosure activity remains
well below historical levels when foreclosure moratoriums end, or
if the company faces operating challenges and cost overruns.
"An upgrade is unlikely over the next 12 months. We could raise the
rating if the company lowers its leverage below 4.5x on a sustained
basis. This would likely result from a significant improvement in
distressed real estate volumes, continued market share gains, and
EBITDA growth. An upgrade is also contingent on the company's
financial sponsor pursuing a prudent financial policy."
AVERY ASPHALT: Seeks Use of Cash Collateral
-------------------------------------------
Avery Asphalt, Inc. asked the Bankruptcy Court to authorize the use
of cash collateral for the period from July 1 to August 31, 2021,
pursuant to a budget, with a variance of 15%.
The Debtor asserts that it needs to use cash collateral to permit
the orderly continuation of its business operation; to maintain
business relationship with vendors, suppliers and customers; to
make payroll and satisfy other working capital needs.
Sunflower Bank; Greenline CDF Subfund XXIII LLC; the Colorado
Department of Revenue (CODOR); and Nationwide Mutual Insurance
Company each assert a valid, perfected security interests in
substantially all of the Debtor's personal property.
Sunflower asserts it was first -- as between itself, Greenline and
Nationwide -- to file UCC-1 financing statements against the Debtor
and its debtor-affiliates. It also claims to have a first-priority
consensual security interest in the Debtors' prepetition personal
property.
Nationwide asserts that in addition to its perfected security
interest created by the UCC-1 financing statement filed, it also
has rights of equitable subrogation on all bonded contract funds.
CODOR claims a senior statutory lien against the Debtor's
prepetition personal property, asserting that Colorado has a
statutory lien to secure the payment of wage withholding taxes.
As adequate protection for the Secured Parties' interest, the
Debtor proposed that:
* Each of the Secured Parties are granted replacement liens and
security interest in the Debtor's postpetition assets with the same
priority an validity as each secured party's prepetition liens and
security interest to the extent of postpetition cash used by the
Debtor.
* To the extent the adequate protection liens prove to be
insufficient, each of the Secured Parties will have super priority
administrative expense claims to the extent that the Secured Party
has a valid allowed secured claim under 11 U.S.C. Section 506(a) in
the cash collateral used.
* The Debtors will maintain insurance coverage on the
prepetition personal property and any real property for the full
replacement value of those assets and will cause Sunflower to be
named as a loss payee for the insurance policies.
* The Debtors will pay all postpetition federal and state
payroll, withholding, sales, use, personal property, real property,
and other taxes and assessments.
A copy of the motion is available for free at
https://bit.ly/3qklUQu from PacerMonitor.com.
About Avery Asphalt, Inc.
Avery Asphalt, Inc. is the main operating company and installs,
maintains, and improves roadways, parking lots, and other outdoor
surfaces. Avery Equipment, LLC owns the equipment used in Avery
Asphalt's business. Avery Holdings, LLC owns the real estate used
in Avery Asphalt's business. LBLA Ventures, Inc. is the holding
company for a non-operating Arizona asphalt company and 1401 S.
22nd Ave., LLC owns the real estate that was formerly used by
Regional Pavement Maintenance of Arizona, Inc. in its business.
Avery Asphalt and its affiliates sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. D. Colo. Lead Case No.
21-10799) on February 19, 2021. The bankruptcy was filed after a
receiver was appointed for all the Debtors in one state court case.
The receivership hampered Avery Asphalt's ability to operate
profitably. The Debtors believe this reorganization proceeding will
facilitate a better return to creditors than a receivership or
liquidation. The Debtors intend to streamline operations and sell
equipment and real estate that is no longer used by Avery Asphalt
in connection with a plan of reorganization.
In the petition signed by CEO Aaron Avery, the Debtors disclosed up
to $50,000 in assets and up to $10 million in liabilities.
David J. Warner, Esq., at Wadsworth Garber Warner Conrardy, P.C. is
the Debtor's counsel.
BACALLAO GRANITE: Seeks to Employ Harper Rains Knight as Accountant
-------------------------------------------------------------------
Bacallao Granite and Marble, LLC seeks approval from the U.S.
Bankruptcy Court for the Southern District of Mississippi to hire
Harper, Rains, Knight, & Company, P.A. as its accountant.
The firm's hourly rates are as follows:
Certified Public Accountant/Director $360 per
hour
Certified Public Accountant/Senior Management $250 per
hour
Senior Accountant $200 per
hour
Stephen Smith, the firm's accountant who will be providing the
services, disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Stephen Smith, CPA
Harper, Rains, Kinght & Company, P.A.
1052 Highland Colony Parkway, Suite 100
Ridgeland, MS 39157
Phone: 601.605.0722
Email: ssmith@hrkcpa.com
About Bacallao Granite and Marble
Bacallao Granite and Marble, LLC, a Jackson, Miss.-based marble
contractor, filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Texas Case No. 21-00807) on
May 4, 2021. Yoel M. Bacallao, manager and member, signed the
petition. In the petition, the Debtor disclosed total assets of up
to $50,000 and liabilities of up to $10 million.
Judge Neil P. Olack presides over the case.
R. Michael Bolen, Esq. at Hood & Bolen, PLLC and Harper, Rains,
Kinght & Company, P.A. serve as the Debtor's legal counsel and
accountant, respectively.
BEEBE RIVER: Unsecured Claims to be Paid in Full in Plan
--------------------------------------------------------
BeeBe River Business Park, LLC, submitted a Second Amended Plan of
Reorganization.
This Plan proposes paying all non-insider creditors 100% of their
allowed claims. Certain secured creditors have already been paid
from the proceeds of the sale of eight of the ten lots of real
property sold by the Debtor to 10 Shannon Drive, LLC (the "Sale
Proceeds") – the Class 1 creditor's claim and the Class 2
creditor's claim. The remaining claims to be paid under the Plan
are as follows:
* Class 4: Priority Expenses claim of James LaMontagne in the
amount of $2,656.63 will be paid in full on or before the Effective
Date from the Sale Proceeds.
* Class 5: Claims of Unsecured Non-Insider creditors, totaling
$459.10 will be paid in full on or before 60 days after the entry
of an order confirming this Plan.
* Class 6: Claims of Unsecured Insider creditors, totaling
$3,500.00. This claim of Custom Crushing Co., Inc., a related
entity owned and operated by the Debtor's principal, Mr. Andrews,
will receive $100.00 under this Plan.
Payments to be made to creditors under the Plan, and pursuant to
the promissory note to be issued, shall come from a combination of
both Sale Proceeds and from post-petition earnings by the Debtor.
Counsel for Debtor:
Edmond J. Ford (BNH # 01217)
Ryan M. Borden (BNH # 07377)
FORD, McDONALD
McPARTLIN & BORDEN, P.A.
10 Pleasant Street, Suite 400
Portsmouth, New Hampshire 03801
Telephone: 603-373-1600
Facsimile: 603-242-1381
eford@fordlaw.com
rborden@fordlaw.com
A copy of the Second Amended Plan of Reorganization is available at
https://bit.ly/2SC4XV7 from PacerMonitor.com.
About Beebe River Business Park
Based in Campton, N.H., Beebe River Business Park, LLC filed a
voluntary Chapter 11 petition (Bankr. D.N.H. Case No. 20-10210) on
Feb. 26, 2020, listing under $1 million in both assets and
liabilities. The Debtor previously filed a petition for relief on
Aug. 15, 2018 (Bankr. D.N.H. Case No. 18-11103.
Judge Bruce A. Harwood oversees the case.
Ryan M. Borden, Esq., at Ford, McDonald, McPartlin & Borden, P.A.,
is the Debtor's legal counsel.
Counsel for the Debtor:
Edmond J. Ford, Esq.
Ryan M. Borden, Esq.
FORD, McDONALD, McPARTLIN & BORDEN, P.A.
10 Pleasant Street, Suite 400
Portsmouth, NH 03801
Telephone: 603-373-1600
Facsimile: 603-242-1381
E-mail: eford@fordlaw.com
rborden@fordlaw.com
BILL STARKS: Wins Cash Collateral Access
----------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas,
Abilene Division, has authorized Bill Starks Construction Co., Inc.
to use Cash Collateral in accordance with the budget, with a 10%
variance.
In the event a construction job contract is entered into that will
require a variance that exceeds the forgoing budgetary flexibility
provisions, the Court says the Debtor and First National Bank and
Trust Company of Weatherford, which asserts an interest in the
Debtor's cash collateral, may enter into a revised budget without
additional court intervention.
The Debtor's right to use Cash Collateral under the Interim Order
will commence on the date of entry of the Interim Order and expire
on the earlier of (a) the entry of a subsequent interim cash
collateral order; or (b) the entry of a Final Order.
As adequate protection of the Secured Lender's interest in the Cash
Collateral, the Secured Lender is granted replacement security
liens on and replacement liens on all of the Debtor's equipment and
accounts, whether the property was acquired before or after the
Petition Date.
The Replacement Liens are exclusive of any avoidance actions
available to the Debtor's bankruptcy estate pursuant to sections
544, 545, 547, 548, 549, 550, 553(b) and 724(a) of the Bankruptcy
Code and the proceeds thereof.
The Replacement Liens will be equal to the aggregate diminution in
value of the respective Collateral, if any, that occurs from and
after the Petition Date. The Replacement Liens will be of the same
validity and priority as the liens of Secured Lender on the
respective prepetition Collateral.
As additional adequate protection to FNBW, the Debtor will make the
adequate protection payments save and except that the payment for
August 2021 will be $25,000 instead of $20,000. Further, FNBW will
be provided additional adequate protection in the form of an
enforcement mechanism: (i) the adequate protection payments for
July and August 2021 will be payable on the 20 of such month with a
15-day grace period, further, if such payment is not made within
the grace period. The Debtor's use of cash collateral will be
suspended until such past due payment is made save and except that
Debtor can continue to use cash collateral to pay payroll and
payroll related taxes until the date of the following cash
collateral payment.
As additional adequate protection for the FNBW, for any vehicles
upon which FNBW holds a first priority security interest, the
Debtor will insure any of such vehicles that have certificates of
title and that are currently uninsured for loss of the collateral
(rather than liability) within 45 days of the date of the Order,
showing FNBW as additional insured, and with delivery of true and
correct copies of the policy or policies to FNBW within the 45-day
period, or, sell the vehicles and pay the proceeds of sale to FNBW.
FNBW shall have the right, but not the obligation, to relieve the
Debtor of the obligation to sell any vehicles.
The final hearing to consider the entry of a final order
authorizing and approving the use of Cash Collateral is scheduled
for August 25 at 1:30 p.m.
A copy of the order and the Debtor's budget from June to August is
available at https://bit.ly/3gHQQGU from PacerMonitor.com.
The Debtor projects:
$84,094 in income and a deficit of $2,634 following expenses
for June 2021;
$254,975 in income and $25,301 in cash after expenses for July
2021; and
$335,490 in income and $108,883 in cash after expenses for
August 2021.
About Bill Starks Construction Co., Inc.
Bill Starks Construction Co., Inc. operates in the utility system
construction industry. It sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 21-10081) on June
9, 2021. In the petition signed by William Starks, president, the
Debtor disclosed up to $10 million in both assets and liabilities.
Judge Robert L. Jones oversees the case.
Weldon L. Moore, III, Esq., at Sussman and Moore, LLP is the
Debtor's counsel.
BLACKROCK INTERNATIONAL: Unsecureds Will Receive 100% of Claims
---------------------------------------------------------------
Blackrock International, Inc., submitted a First Amended Disclosure
Statement.
The Debtor is a single asset real estate Debtor as that term is
defined in 11 U.S.C. Sec. 101 (51B). The Debtor's sole asset is
residential real property located at 305 Kensington Drive,
Lafayette, Louisiana. This property is a single family home and was
acquired on January 8, 2018. Visio Financial Services was the
original lender. The note secured by the property was in the
original sum of $269,500.00 and payments were $2,062.68 per month.
Blackrock agreed to lease the property to Gregory Red for the sum
of $2,200.00 per month.
The Debtor has made an agreement with the current holder of the
note secured by 305 Kensington Drive, Lafayette, Louisiana, as to a
loan modification whereby Debtor agreed to repay the balance due at
4.50% interest amortized over 240 months with a maturity at 84
months, recapitalizing any unpaid prior payments. Payments are to
begin as Adequate Protection payments once approved by this Court.
The Debtor has reached an agreement with Gregory Red to resume
monthly rental payments beginning May 2021 in the sum of $2,750 per
month.
The Plan will treat claims as follows:
Class 3 consists of the Allowed Secured Claim of the Wilmington
Savings Fund. As of the date of filing of this Plan, the secured
claim due the Wilmington Savings Fund was $319,582.86 inclusive of
accrued interest and attorney fees in accordance with the proof of
claim filed in this proceeding. The Allowed Secured Claim of the
Wilmington Savings Fund will be amortized over two hundred forty
months and accrue interest at rate of 4.50% per annum from date
until paid and will be satisfied by payments of eighty-three equal
monthly payments in the amount of $2,021.84 each and one final
payment on the eighty-fourth month in an amount equal to the entire
unpaid balance of principal and interest then due shall be
immediately due and payable.
Allowed Unsecured Creditors are treated in Class 4. Class 4
consists of holders of all claims against the Debtor whose claims
are not secured by any property of the estate nor are entitled to
any priority in payment under the Bankruptcy Code. Beginning on
the first day of the second month following the Effective Date the
Debtor will deposit the sum of at least $150.00 per month into an
account to be known as the Creditors Pool. The Debtor may pay more
at it is the goal to pay 100% of the Allowed Unsecured Claims as
soon as possible. These contributions shall continue for thirty-six
consecutive months or until all Allowed Unsecured Claims have been
paid in full.
Payments and distributions under the Plan will be funded by future
business operations of the Debtor.
Attorney for Blackrock International:
DAVID PATRICK KEATING
THE KEATING FIRM, APLC
P.O. Box 3426
Lafayette, LA 70502
Phone: (337) 233-0300
Fax: (337) 233-0694
Email: rick@dmsfirm.com
A copy of the Disclosure Statement is available at
https://bit.ly/3vD5nYT from PacerMonitor.com.
About Blackrock International
Blackrock International, Inc., is a single asset real estate debtor
(as defined in 11 U.S.C. Section 101(51B)).
Blackrock International filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. W.D. La. Case No.
20-50922) on Dec. 15, 2020. Helen Jean Williams, authorized
representative, signed the petition. At the time of the filing,
the Debtor had estimated assets of between $1 million and $10
million and liabilities of between $100,000 and $500,000. Judge
John W. Kolwe oversees the case. The Keating Firm, APLC serves as
the Debtor's legal counsel.
BLACKWATER TECHNOLOGIES: Unsecureds to Recover 5% in Plan
---------------------------------------------------------
Judge Paul Baisier has entered an order approving the Amended
Disclosure Statement of Blackwater Technologies, Inc., a Georgia
corporation.
A hearing to consider confirmation of the Plan shall be held at the
2nd Floor Courtroom, Lewis R. Morgan Federal Building, 18
Greenville Street, Newnan, Georgia, 30263, at 1:30 P.M. on July 22,
2021.
The deadline for filing written objections to the Plan and casting
ballots to accept or reject the Plan will be July 16, 2021.
Reorganization Plan
Blackwater Technologies submitted an Amended Disclosure Statement
explaining its Plan.
The Plan contemplates the reorganization and ongoing business
operations of Debtor and the resolution of the outstanding Claims
against Debtor pursuant to sections 1129(b) and 1123 of the
Bankruptcy Code. The Plan classifies all Claims against Debtor into
separate Classes.
The Debtor's assets as of the Filing Date included the following:
(a) checking accounts having a balance of approximately $106,882,
including an operating account, payroll account and tax account,
(b) accounts receivable of approximately $142,313.93, (c) business
inventory of $15,761.25, (d) miscellaneous used office furniture
and equipment having an estimated value of approximately
$43,216.85, and (e) business vehicles having an estimated value of
approximately $175,100.00. The Debtors maintain theft, fire and
other casualty insurance with respect to its motor vehicles and
equipment in amounts believed by Debtor to be equal to its fair
market values and adequate for the casualty risks attributable to
such assets.
The Plan proposes to treat claims and interests as follows:
* Class 3: Claim of Ford Motor Credit Corporation totaling
$8,344. The Debtor will pay Ford Motor Credit Corporation monthly
payments in the amount of $301.06 for a period of 60 months
following the Effective Date or until the Class 3 Secured Claim is
paid in full. Interest shall accrue at the rate of 5.00%. Class 3
is impaired.
* Class 4: Claim of Ally Bank totaling $7,577.69. The Debtor
will pay Ally Bank monthly payments in the amount of $286.60 for a
period of 60 months following the Effective Date or until the Class
3 Secured Claim is paid in full. Interest shall accrue at the rate
of 5.00%. Class 4 is impaired.
* Class 5: Unsecured Claims. The Debtor will pay Holders of
Allowed Class 5 Unsecured Claims aggregate distributions under the
Plan equal to 5% of their Allowed Class 5 Claims. Specifically,
each Holder of an Allowed Class 5 Claim shall receive 5 consecutive
annual payments, each in an amount equal to 1% of such Holder's
Allowed Class 5 Claim. The first annual payment shall be payable
on or before December 31, 2021, and subsequent annual payments
shall be payable on or before December 31, 2022, December 31, 2023,
December 31, 2024 and December 31, 2025. Class 5 is impaired.
* Class 6: Interest Claims. All prepetition interests shall be
canceled and Charles C. Blackwell shall receive 100% of the
newly-issued membership interests in the Reorganized Debtor upon
confirmation of the Plan in exchange for issuance of the promissory
note discussed herein.
Debtor shall pay all claims from Debtor's postpetition income from
the operation of Debtor's business.
Attorney for the Debtor:
J. Nevin Smith
SMITH CONERLY LLP
402 Newnan Street
Carrollton, Georgia 30117
Tel: (770) 834-1160
A copy of the Order is available at https://bit.ly/3cQZBfE from
PacerMonitor.com.
A copy of the Disclosure Statement is available at
https://bit.ly/35BYxbe from PacerMonitor.com.
About Blackwater Technologies
Carrollton, Ga.-based Blackwater Technologies, Inc., specializes in
fire protection as well as low voltage projects. It provides fire
alarm installation, maintenance and inspection services.
Blackwater Technologies filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No.
20-11518) on Nov. 12, 2020. Charles C. Blackwell, chief executive
officer, signed the petition. At the time of the filing, the
Debtor disclosed $100,000 to $500,000 in assets and $1 million to
$10 million in liabilities.
Judge Paul Baisier oversees the case.
Smith Conerly LLP and MJCO, LLC serve, as the Debtor's legal
counsel and accountant, respectively.
BMZ LLC: Seeks 60-Day Extension of Plan Filing Deadline
-------------------------------------------------------
BMZ, LLC and Oldsmar JJ, LLC, move for an extension of time within
which to file a Disclosure Statement and Plan of Reorganization in
the above-entitled Chapter 11 joint proceeding.
The Debtors are unable to file a Disclosure Statement and Plan of
Reorganization on or before June 21, 2021, because the Debtors
require a new attorney to substitute for the undersigned attorney
Steven M. Fishman.
To better prepare and file a feasible Plan, the Debtors request a
60 day extension particularly for the following reasons:
a. A substitute attorney to conclude these cases.
b. The Debtors and creditor, TCF National Bank ("TCF") are
disputing valuation.
c. Debtor is preparing several Complaints to Determine Validity,
Extent and Priority of Liens against other claims.
Attorney for the Debtor:
Steven M. Fishman, Esq.
2454 N. McMullen Booth Road, Suite D-607
Clearwater, FL 33759
Tel: (727) 724-9044
Fax: (727) 724-9503
E-mail: steve@attorneystevenfishman.com
About BMZ, LLC
Based in Clearwater, Fla., BMZ, LLC is a privately held company in
the fast food and quick service restaurants business.
BMZ sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. M.D. Fla. Case No. 20-07203) on Sept. 26, 2020. Scott
Zieba, managing member, signed the petition.
At the time of the filing, Debtor had estimated assets of between
$100,000 and $500,000 and liabilities of between $1 million and $10
million.
Steven M. Fishman, PA is the Debtor's legal counsel.
BOUCHARD TRANSPORTATION: Files Flexible Chapter 11 Plan
-------------------------------------------------------
Law360 reports that bankrupt oil barge fleet owner Bouchard
Transportation Co. filed Chapter 11 plan documents in Texas
bankruptcy court, outlining a flexible path toward completing a
sale of its assets or confirming a reorganization around its
remaining fleet.
In the filings made Friday, June 18, 2021 Bouchard said that it has
made significant progress during its bankruptcy case to return its
fleet of barges and tugboats to operability after it had lost
required safety and maintenance certifications, and that an ongoing
marketing process for the sale of some or all of its fleet presents
an opportunity to complete a value-maximizing transaction.
On June 8, 2021, the Debtors obtained Court approval of bidding
procedures designed to market test the value of their assets and
ultimately consummate a sale or sales of the Debtors' valuable
assets. The Bidding Procedures will culminate in a potential
auction or potential sales of some or all of the Debtors' assets
that will generate significant value for the Debtors' estates.
That process remains ongoing, with initial bids due by July 16,
2021. The deadline to designate a stalking horse bidder (or
bidders), setting a floor for realizable value, is July 7, 2021.
The hearing to approve any sales of assets pursuant to the Bidding
Procedures is currently set for July 23, 2021.
In concert with the Debtors marketing and sale process, the Plan
will bring an orderly and expedient conclusion to these chapter 11
cases. The Plan is designed to flexibly accommodate any
value-maximizing alternative, whether that takes the form of a sale
transaction for some or substantially all of the Debtors' assets, a
blended transaction involving a sale and a reorganization of the
Debtors with a slimmed-down, managed fleet, or otherwise. The
Debtors have engaged extensively with their key stakeholders,
including
* the official committee of unsecured creditors,
* JMB Capital Partners Lending, LLC, as the Debtors' DIP lender
(the "DIP Lender"), and
* Wells Fargo, as the Debtors prepetition revolving credit
facility lender (the "Prepetition Lender").
The Creditors' Committee, the DIP Lender, and Prepetition Lender
are all supportive of the Debtors' parallel sale consummation and
Plan confirmation strategy. Such an approach will minimize
administrative costs and maximize stakeholder recoveries by
bringing about a swift exit from chapter 11 supported by a robust
market test. The proposed solicitation procedures provide the
Debtors with the next seven weeks to confirm the Plan, which will
occur after the Debtors have selected, and obtained Court approval
of, the winning bidder (or bidders).
About Bouchard Transportation
Founded in 1918, Bouchard Transportation Co., Inc.'s first cargo
was a shipment of coal. By 1931, Bouchard acquired its first oil
barge. Over the past 100 years and five generations later, Bouchard
has expanded its fleet, which now consists of 25 barges and 26 tugs
of various sizes, capacities and capabilities, with services
operating in the United States, Canada and the Caribbean.
Bouchard and certain of its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-34682) on Sept. 28, 2020. At
the time of the filing, the Debtors estimated assets of between
$500 million and $1 billion and liabilities of between $100 million
and $500 million.
Judge David R. Jones oversees the cases.
The Debtors tapped Kirkland & Ellis LLP, Kirkland & Ellis
International LLP and Jackson Walker LLP as their legal counsel;
Portage Point Partners, LLC as restructuring advisor; Jefferies LLC
as investment banker; and Berkeley Research Group, LLC as financial
advisor. Stretto is the claims agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtors' cases. The committee tapped
Ropes & Gray LLP as bankruptcy counsel, Clyde & Co US LLP as
maritime counsel, and Berkeley Research Group LLC as financial
advisor.
BOY SCOUTS OF AMERICA: Saunders Claimants Say Disclosure Inadequate
-------------------------------------------------------------------
The Claimants represented by Saunders & Walker, P.A., who are
survivors of childhood sexual abuse and each filed a Sexual Abuse
Survivor Proof of Claim, object to the Disclosure Statement for the
Second Amended Chapter 11 Plan of Reorganization for Debtor Boy
Scouts of America and Delaware BSA, LLC.
The Saunders & Walker Claimants object to the sufficiency and
adequacy of the Disclosure Statement for the following reasons:
* The Disclosure Statement does not provide any
property-by-property valuation of the real or personal property
that the Debtors intend to transfer to a settlement trust, or any
property-by-property valuation of the real or personal property
that the Debtors seek to retain.
* The Disclosure Statement and the accompanying solicitation
procedures failt to notify creditors, including the Saunders &
Walker Claimants, which local council and/or charter organization
is associated with their abuse, whether any such entity will
receive a release, and if so, the terms of the release.
* The Disclosure Statement fails to explain the likelihood of
defeating the insurers' coverage defenses or the insurance
companies' ability to pay abuse claims that total billions of
dollars.
* The Disclosure Statement fails to explain what contribution
the insurers and their non-Debtor insureds will make in order to
receive a release.
* The Saunders & Walker Claimants must have sufficient
information to evaluate the risks of the Plan if the Saunders &
Walker Claimants are to release multiple non-Debtor entities. As
filed, the Disclosure Statement falls far short of the Bankruptcy
Code's standard for its approval.
The Saunders & Walker Claimants join the objection to the
Disclosure Statement filed by the Tort Claimants' Committee.
Counsel to Saunders & Walker Claimants:
Joseph H. Saunders
Pro Hac Vice
Saunders & Walker, P.A.
1901 Avenue of the Stars, 2nd Floor
Los Angeles, CA 90067
Tel: (800)748-7115
Fax: (727)577-9696
E-mail: Jose@saunderslawyers.com
peter@saunderslawyers.com
carol@saunderslawyers.com
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC as financial advisor. Omni
Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BRAZOS ELECTRIC: DIP Loan, Cash Collateral Use OK'd on Final Basis
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, has authorized Brazos Electric Power Cooperative,
Inc. to, among other things, use cash collateral and immediately
borrow money and obtain standby letters of credit pursuant to a DIP
credit agreement with JPMorgan Chase Bank, N.A., as administrative
and collateral agent for the DIP Facility.
The Debtor was, by the Interim Order, permitted to obtain a new
money revolving credit facility in the aggregate principal amount
of $350 million, with up to $200 million available through a
subfacility in the form of standby letters of credit, and of which
$150 million was available immediately upon entry of the Interim
Order.
The Debtor has an immediate and critical need to obtain the DIP
Financing and use the DIP Collateral and Prepetition Collateral
(including Cash Collateral) in order to permit, among other things,
the orderly continuation of the operation of its business, to fund
collateral requirements for ERCOT and other parties, to make
payroll, make capital expenditures, satisfy other working capital
and operational needs, and fund expenses of the bankruptcy case.
As of the Petition Date, the Debtor was liable to Bank of America,
N.A., as Administrative Agent, Swing Line Lender, and L/C Issuer,
and certain lenders party thereto from time to time, in an
aggregate principal amount of not less than:
(1) $20,025,000 in respect of letters of credit issued on
behalf of the Debtor, of which, one letter of credit in the amount
of $20,000,000 was drawn following the Petition Date and
subsequently converted to an L/C Borrowing under and as defined in
the Prepetition Revolving Credit Agreement, and
(2) $479,975,000 in respect of Committed Loans under and as
defined in the Prepetition Revolving Credit Agreement, plus
(3) accrued and unpaid interest, fees, expenses, disbursements,
charges, claims, indemnities and other costs and obligations.
The Debtor is also a party to a Fifth Amended and Restated Loan
Contract dated as of December 15, 2020, providing, pursuant to the
Rural Electrification Act of 1936, for the incurrence of
indebtedness and other obligations to, or guaranteed by, the U.S.,
acting by and through the Administrator of the Rural Utilities
Service of the United States Department of Agriculture.
As of the Petition Date, the Debtor was liable to the U.S. under
the RUS Debt Documents (i) in an aggregate principal amount of not
less than $1,809,613,068 plus (ii) accrued and unpaid interest,
fees, expenses, disbursements, charges, claims, indemnities and
other costs and obligations. Upon entry of the Final Order,
$350,000,000 in principal amount of RUS Secured Obligations, plus
accrued interest thereon, will be deemed the RUS Roll-Up Loans.
As adequate protection for the Debtor's use of cash collateral, the
DIP Collateral Agent for the benefit of the DIP Secured Parties, is
granted valid, enforceable, non-avoidable and automatically
perfected liens pursuant to section 364(c)(2) and 364(c)(3) of the
Bankruptcy Code and pari passu and priming liens pursuant to
section 364(d) on all property of the Debtor's estate.
The DIP Agent for the benefit of the DIP Secured Parties are
allowed superpriority administrative claims pursuant to section
364(c)(1) of the Bankruptcy Code in respect of all DIP Obligations,
subject to the Carve Out.
The Carve Out means the sum of (i) all fees required to be paid to
the Clerk of the Court and to the Office of the United States
Trustee under 28 U.S.C. section 1930(a) plus interest at the
statutory rate; (ii) all reasonable and documented fees and
expenses, in an aggregate amount not to exceed $100,000, incurred
by a trustee under section 726(b) of the Bankruptcy Code; (iii) all
reasonable and documented fees and expenses, whether paid or unpaid
to the extent allowed by the Bankruptcy Court at any time, incurred
by persons or firms retained by the Debtor or retained by the
Committee at any time before or on the first business day following
delivery by the DIP Agent of a Carve Out Trigger Notice, whether
allowed by the Court prior to or after delivery of a Carve Out
Trigger Notice; and (iv) Allowed Professional Fees of Professional
Persons in an aggregate amount not to exceed $15 million incurred
after the first business day following delivery by the DIP Agent of
the Carve Out Trigger Notice.
A copy of the order is available for free at https://bit.ly/3gzTBsy
from Stretto, the claims agent.
About Brazos Electric Power Cooperative
Brazos Electric Power Cooperative Inc. is a 3,994-megawatt
transmission and generation cooperative which members' service
territory covers 68 counties from the Texas Panhandle to Houston.
It was organized in 1941 and the first cooperative formed in the
Lone Star state with the primary intent of generating and supplying
electrical power. At present, Brazos Electric is the largest
generation and transmission cooperative in the state and is the
wholesale power supplier for its 16 member-owner distribution
cooperatives and one municipal system.
Brazos Electric filed a voluntary petition for relief under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-0725)
on March 1, 2021. At the time of the filing, the Debtor disclosed
assets of between $1 billion and $10 billion and liabilities of the
same range.
Judge David R. Jones oversees the case.
The Debtor tapped Norton Rose Fulbright US, LLP as bankruptcy
counsel, Foley & Lardner LLP and Eversheds Sutherland US LLP as
special counsel, Collet & Associates LLC as investment banker, and
Berkeley Research Group, LLC as financial advisor. Stretto is the
claims and noticing agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtor's case on March 15, 2021. The
committee is represented by the law firms of Porter Hedges, LLP and
Kramer, Levin, Naftalis & Frankel, LLP. FTI Consulting, Inc. is the
committee's financial advisor.
BROOKLYN IMMUNOTHERAPEUTICS: Appoints Sandra Gurrola as VP Finance
------------------------------------------------------------------
Brooklyn Immunotherapeutics, Inc. has appointed Sandra Gurrola as
its vice president of Finance, effective June 21, 2021.
The Company entered into an executive employment agreement, dated
June 16, 2021 and effective as of June 21, 2021, Ms. Gurrola with
respect to terms of her employment as its vice president of
finance. The compensatory terms of the employment agreement,
including equity awards, were approved by the compensation
committee of the board of directors, which consists of two
disinterested members of the board. Ms. Gurrola's hiring, and her
employment agreement, were approved by the board.
The employment agreement provides for the Company's at-will
employment of Ms. Gurrola for a term commencing on June 21, 2021
and continuing until terminated by the Company or Ms. Gurrola.
Under the terms of the employment agreement, the Company will pay
Ms. Gurrola an annual base salary of $220,000, which amount is
subject to annual review by the board or the compensation committee
and subject to adjustment to reflect market practices among the
Company's peers in the sole discretion of the board or the
compensation committee.
Ms. Gurrola will be eligible to receive an annual cash bonus award
in an amount up to 35% of her base salary upon achievement of
reasonable performance targets set by the board or the compensation
committee, each in its sole discretion. The bonus will be
determined by the board or the compensation committee and paid
annually in March in the year following the performance year on
which such bonus is based.
In accordance with the terms of the employment agreement, the
Company is granting to Ms. Gurrola, effective as of June 21, 2021,
a time-based restricted stock unit grant covering 35,000 shares of
common stock. The RSU Grant will vest over four years, with
vesting generally subject to Ms. Gurrola's continued employment
through the relevant vesting date. Consistent with the employment
inducement grant rules set forth in Section 711(a) of the NYSE
American LLC Company Guide, the equity award to Ms. Gurrola was
made as an inducement material to her entering into employment with
the Company and was approved by the compensation committee without
need for stockholder approval.
If Ms. Gurrola's employment is terminated by the Company without
Cause or by Ms. Gurrola for Good Reason (each such capitalized term
as defined in the employment agreement), she will be entitled to,
among other things, continued base salary for six months following
the termination date and the total monthly cost of health care
continuation coverage pursuant to COBRA for such period.
Notwithstanding the foregoing, if a termination without Cause or
for Good Reason occurs within ninety days before or twelve months
after a Change in Control (as defined in the employment agreement),
Ms. Gurrola would become entitled to (a) receive the
continued-based salary and total monthly cost of health care
continuation coverage described in the preceding sentence for a
period of twelve months rather than six months, (b) receive a lump
sum payment of her target annual bonus and (c) accelerated vesting
in full of the RSU Grant. Any of such severance benefits under the
employment agreement are contingent on Ms. Gurrola entering into
and not revoking a general release of claims in favor of the
company.
The employment agreement provides for (a) reimbursement of
reasonable business expenses, (b) participation in our benefit
plans and (c) twenty paid vacation days per year.
The employment agreement contains customary covenants related to
non-competition and non-solicitation for one year following
termination of employment, as well as customary covenants related
to confidentiality, inventions and intellectual property rights.
Sandra Gurrola served, from March 2021 to June 2021, as the senior
vice president of eGames.com Holdings, LLC and as a consultant to
the company. Ms. Gurrola was the Company's senior vice president
of finance from September 2019 to March 2021 and its vice president
of finance from 2014 until September 2019. From 2009 to 2014, she
served the company in various leadership accounting roles,
including director of accounting, director of financial reporting
and compliance, and controller. From 2007 until 2009, she was
senior manager of financial reporting for Metabasis Therapeutics,
Inc., a biotechnology company. Ms. Gurrola holds a B.A. in English
from San Diego State University. She is 54 years old.
On June 21, 2021, the Company entered into its standard form of
indemnification agreement with Sandra Gurrola.
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.
BRWS PARENT: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to BRWS
Parent LLC (parent of borrower Engineered Components & Systems LLC)
and 'B' rating to the proposed term loans.
S&P said, "The stable outlook reflects our constructive view on the
company's end markets, which we believe will rebound significantly
in 2021. Although we believe supply chain headwinds could limit
incremental margin growth, we believe the company will adequately
manage its cost base, resulting in leverage below 6.5x over the
next 12-18 months despite high initial debt leverage at close of
the transaction."
Key ratings strengths and weaknesses include:
Weaknesses
-- High S&P Global Ratings adjusted debt to EBITDA at the close of
the transaction (including the earn-out consideration);
-- Exposure to cyclical end markets such as construction,
heavy-duty truck, and agriculture;
-- Limited pricing power given its exposure to market leaders;
-- Sizable customer concentration with the top 10 customers
comprising about 45% of pro forma revenues;
-- Smaller aftermarket business; and
-- Integration risk associated with the merger.
Strengths:
-- Long-standing relationships with its blue-chip customer base;
-- Moderate scale relative to that of peers in the 'B' category;
and
-- Good geographic diversity for a company of its size.
S&P said, "We expect rapid deleveraging over the next 12 months as
the outlook for CentroMotion's customers is strong. For the last 12
months (LTM) ended March 31, 2021, we estimate that CentroMotion's
S&P Global Ratings adjusted leverage was above 8x on a pro forma
basis. This figure includes the full earn out consideration as
debt, but only reflects the trailing twelve-month EBITDA. If
Carlisle Break & Friction's EBITDA were not to grow, however, the
earn out would be reduced significantly.
"We expect the company's sales to grow about 20% in 2021 as a
result of a strong outlook for CentroMotion's customers given the
robust economic and end market recovery. We forecast incremental
margins in the 30% range, resulting in EBITDA margins in the
low-double-digit-percentage range. We believe these factors will
allow the company to reduce leverage to the mid- to high-6x area in
2021 before further deleveraging in 2022.
"Our weak business profile incorporates the company's exposure to
cyclical end markets and its low EBITDA margins relative to peers'.
Approximately 68% of CentroMotion's LTM sales as of March 31, 2021,
were to the construction, heavy-duty truck, and agriculture end
markets. We view these industries as highly cyclical. That said, we
expect these end markets to perform well in 2021 as they rebound
from the pandemic and benefit from the reopening of economies
globally. Residential construction should continue to benefit from
strong demand and high commodity prices should translate into
demand for agriculture equipment. The supply side, however, remains
a risk as OEMs navigate high commodity prices, high logistics
costs, and potential disruptions in the supply chain.
"We believe CentroMotion's EBITDA margins are lower than rated
peers' due to its high proportion of OEM sales, its position as a
supplier to heavy equipment manufacturers, and its limited pricing
power as it serves industry leaders. Over the next 12 months, we
believe higher volume and the company's focus on cost controls will
help the company increase EBITDA margins into the
low-double-digit-percent range. We view this level of profitability
at the lower end of the average range relative to the peer set. We
believe continued cost initiatives and synergies will improve
margins over time, but that they will remain at the lower end of
the average range for the rated peers."
Despite these weaknesses, the company has a broad geographic reach,
long-standing relationships with its customer base, and moderate
scale relative to that of peers. Just under half of the company's
LTM revenues as of March 2021 are from the Americas, a third of its
sales are to Europe, with the rest of sales predominantly coming
from the Asia-Pacific region. S&P views this broad geographic
exposure favorably. Although CentroMotion has sizable customer
concentration, S&P believes it maintains strong relations with its
customer base. The average tenure of the top 10 customers of the
legacy CentroMotion business is above 30 years.
S&P said, "We expect CentroMotion to maintain adequate liquidity,
supported by its $100 million ABL revolving credit facility. We
believe this facility should adequately supplement the $26 million
of cash and cash equivalents on the balance sheet upon the close of
the transaction. Under the terms of the purchase agreement, the
company must address an earn out related to its acquisition of
Carlisle Brake & Friction in early 2022. For every $1 of EBITDA
above $30 million Carlisle Brake & Friction generates in 2021,
CentroMotion must pay out a 6.25x multiplier, up to a cap of $125
million (this would occur at $50 million of adjusted EBITDA). We
have assumed that the delayed-draw term loan will be drawn and
incorporated the $125 million in our leverage calculation (the
delayed-draw term loan can only be used for this purpose).
"The drawing of the delayed-draw term loan is contingent on pro
forma first-lien leverage for the combined company being less than
or equal to 0.25x above the closing date leverage. Although we
believe it is unlikely based on our forecast, the company faces the
risk that the legacy business performs poorly while Carlisle Brake
& Friction performs well, and it is unable to draw the full amount,
and could constrain its liquidity.
"The stable outlook reflects our constructive view on the company's
end markets, which we believe will rebound significantly over the
next 12-18 months. While we believe that supply chain headwinds
could limit incremental margin growth, we believe the company will
adequately manage its cost base, resulting in leverage below 7x."
S&P could lower the ratings over the next 12 months on CentroMotion
if:
-- The company fails to reduce S&P Global Ratings adjusted debt to
EBITDA below 6.5x. S&P believes this could happen if CentroMotion's
operating performance is materially worse than it expects or if it
maintains a more aggressive financial policy; or
-- The company generates negative to neutral free cash flow; or
-- S&P views the company's liquidity position as constrained.
While unlikely over the ratings horizon, S&P could raise the rating
on CentroMotion if:
-- The company maintains S&P Global Ratings adjusted debt to
EBITDA well below 5x and it believes that it is committed to
maintaining that level of leverage; and
-- The company materially improves its EBITDA margins; and
-- The company generates consistently positive free operating cash
flow.
BUILDING 1600: Unsecureds Unimpaired in Sale Plan
-------------------------------------------------
BUILDING 1600, L.L.C., submitted a Plan and a Disclosure
Statement.
The Debtor was formed in the State of Georgia on March 21, 1996.
The Debtor owns and operates an office park condominium having a
local address of 2255 Cumberland Parkway SE, Building 1600,
Atlanta, GA 30339 (the "Property"). Upon information and belief,
the current fair market value of the Property is approximately
$600,000. The Debtor has no employees. The Debtor's business is
the leasing of space in the Property to third-party tenants.
Class 3 — General unsecured claims are not impaired. The Debtor
anticipates and projects but does not warrant the following holders
of unsecured claims in the aggregate amount of $38,700.38, Dargan
Whitington & Maddox, Inc. in the amount of $3,121.33 and Edwin K.
Palmer, as Chapter 7 Trustee for the Estate of Charles D. Menser,
Jr., in the amount of $35,579.05. The Plan provides that the
Debtor will market and sell the Property and pay the Class 3 claims
in full, with interest at the federal judgment interest rate in
effect as of the Effective Date, from the sales proceeds. If the
Class 3 claims are not paid in full no later than May 12, 2022,
being the one year anniversary of the date of entry of the
Supplemental Consent Order, then this bankruptcy case shall be
converted to chapter 7 and the Property will be administered by a
chapter 7 trustee.
The Debtor shall pay all claims from the proceeds from the sale of
the Property.
Counsel for Debtor:
Paul Reece Marr
PAUL REECE MARR, P.C.
Building 24, Suite 350
Marietta, GA 30067
770-984-2255
paul.marr@marrlegal.com
A copy of the Disclosure Statement is available at
https://bit.ly/3cLAPxi from PacerMonitor.com.
About Building 1600
Building 1600, L.L.C., owns and operates an office park condominium
having a local address of 2255 Cumberland Parkway SE, Building
1600, Atlanta, GA 30339. Phyllis Menser owns 50% of the membership
interests, and Charles D. Menser, III, owns 49%.
Building 1600, L.L.C., filed a Chapter 11 bankruptcy petition
(Bankr. N.D. Ga. Case No. 18-71813) on Dec. 31, 2018. In the
petition signed by Charles D. Menser Jr., manager, the Debtor
estimated less than $500,000 in assets and liabilities. Paul Reece
Marr, P.C. is the Debtor's counsel. No official committee of
unsecured creditors has been appointed.
CARBONYX INC: July 26 Plan Confirmation Hearing Set
---------------------------------------------------
Frank Rango, Bhavna Patel, River Partners 2012-CBX LLC, C6 Ardmore
Ventures, LLC, Ingo Wagner, and Harmir Realty Co. LP (collectively,
the "Proponents") submitted a Fourth Amended Disclosure Statement
(the "Rango Disclosure Statement") in Support of the Fourth Amended
Chapter 11 Plan of Reorganization (the "Rango Plan") for Debtor
Carbonyx, Inc.
On June 17, 2021, Judge Brenda T. Rhoades approved the Rango
Disclosure statement and ordered that:
* July 26, 2021, at 10:00 a.m. is the Hearing to consider
Confirmation of the Rango Plan.
* July 16, 2021, at 5:00 p.m. is fixed as the last day to file
objections to Confirmation of the Rango Plan.
* July 21, 2021, is fixed as the last day to submit Ballots
for accepting or rejecting the Plan and Disclosure Statement in
order to be counted as votes.
A copy of the order dated June 17, 2021, is available at
https://bit.ly/2UlLo3P from PacerMonitor.com at no charge.
Counsel for the Proponents:
Mark A. Platt
State Bar No. 00791453
Frost Brown Todd LLC
Rosewood Court
2101 Cedar Springs Road, Suite 900
Dallas, TX 75201
Telephone: (214) 545-3472
Facsimile: (214) 545-3473
About Carbonyx Inc.
Plano, Texas-based Carbonyx, Inc., filed a Chapter 11 petition
(Bankr. E.D. Tex. Case No. 20-40494) on Feb. 18, 2020. In the
petition signed by Hasmukh Patel, authorized agent, the Debtor was
estimated to have up to $50,000 in assets and $10 million to $50
million in liabilities.
Judge Brenda T. Rhoades oversees the case. Eric A. Liepins, P.C.,
serves as the Debtor's bankruptcy counsel.
On Nov. 10, 2020, Linda Payne was appointed as Chapter 11 trustee
in the Debtor's case. The Trustee is represented by the Law
Offices of Bill F. Payne, PC.
CINEMA SQUARE: Has Deal on Cash Collateral Use
----------------------------------------------
Cinema Square, LLC and its secured creditor Wilmington Trust,
National Association, as Trustee, for the benefit of the Holders of
COMM 2016-DC2 Mortgage Trust Commercial Mortgage Pass Through
Certificates, Series 2016-DC2, have advised the U.S. Bankruptcy
Court for the Central District of California, Santa Barbara
Division, that they have reached an agreement regarding Cinema
Square's use of cash collateral and now desire to memorialize the
terms of this agreement into an agreed order.
On December 31,2015, Jeffries Loancore LLC, a Delaware limited
liability company, the original lender, made a $7,800,000 loan to
the Debtor. The Loan is evidenced by, among other instruments, that
Promissory Note dated December 31,2015, executed by the Borrower in
favor of the Original Lender in the original principal sum of
$7,800,000. The Loan is also evidenced by that Loan Agreement dated
as of December 31, 2015, by and between the Borrower and the
Original Lender.
Effective as of March 21,2016, the Original Lender assigned the
Loan Documents to Wilmington Trust pursuant to: (i) that Assignment
of Deed of Trust, Assignment of Leases and Rents and Security
Agreement, recorded in the Official Records on April 18, 2016, as
Document No. 2016017145; and (ii) the Assignment of Assignment of
Leases and Rents, recorded in the Official Records on April 18,
2016, as Document No. 2016017146. Accordingly, Wilmington Trust is
now the holder of the Note, beneficiary under the Deed of Trust,
and secured party and/or assignee under all of the other Loan
Documents.
Commencing on May 6,2020 and continuing to the present, the Debtor
has failed to make its monthly payments due on the Loan.
Accordingly, the Loan is in default and an Event of Default has
occurred.
On July 2, 2020, Wilmington Trust, through its counsel, wrote a
letter to the Borrower providing forma! nolice to the Borrower of
its Events of Default, and demanding all amounts due under the
Loan. Since receiving the Demand Letter, the Borrower has Jailed to
pay all amounts due under the Loan Documents. Accordingly, as of
June 6,2021, Lender contends that due to acceleration of the Loan,
at least $9,586,777.63 in principal, interest, late fees, tax and
reserves, default interest, advances, attorneys' fees and other
costs and expenses remains due and owing.
Due to the events of Default under the Loan Documents, the Lender
commenced a non-judicial foreclosure on the Property by causing a
Notice of Default and Election to Sell under Deed of Trust,
Assignment of Leases and Rents and Security Agreement to be
recorded in the Official Records on October 27,2020, as Instrument
No. 2020060794.
On December 3. 2020, Wilmington Trust filed a complaint captioned
Wilmington Trust, Notional Association, as Trustee, etc. v. Cinema
Square, LLC, San Luis Obispo County Superior Court Case No.
20CVP-0379, seeking (1) the appointment of a receiver, accounting
and specific performance of the rents-and -profit clause; and (2)
injunctive relief. No Order has been entered and no receiver has
taken possession of the Debtor's property. In addition, the Lender
was scheduled to complete a non-judicial foreclosure sale on June
15, but Debtor notified the Lender of its bankruptcy filing on June
14, staying the Receivership Lawsuit.
The parties agree that the Debtor may use cash collateral in
accordance with the budget, with a 10% variance. The Cash
Collateral may not be used for the payment or reimbursement of any
fees or disbursements of counsel for the Debtor absent further
Court order.
Beginning August 15, 2021, the Debtor may remit to Wilmington Trust
monthly interest payments at the non-default rate of interest as
set forth in the Loan Documents and the Budget, with subsequent
monthly payments due no later than the 15th day of each subsequent
month.
The Debtor will grant the Lender a replacement lien in the Debtor's
assets generated postpetition of the same type and class that
comprise the Lender's prepetition collateral to the extent
necessary to prevent diminution in the collateral.
To the extent the Replacement Lien is determined by the Bankruptcy
Court to be inadequate to provide adequate protection to Wilmington
Trust, and the Lender suffers a loss by reason of the Debtor's use
of cash collateral, the Lender will have a super-priority claim
pursuant to Section 507(b) of the Bankruptcy Code.
A copy of the stipulation and the Debtor's budget from June 15 to
December 2021 is available for free at https://bit.ly/3j1LYOE from
PacerMonitor.com.
The Debtor projects $329,549.50 in total operating income and
$32,127 in total operating expenses.
About Cinema Square, LLC
Cinema Square, LLC is the owner of a small shopping center located
at 6917 El Camino Real, Atascadero, CA 93422. There are several
tenants, the primary tenant is a movie theater, the Galaxy
Theater.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Cal. Case No. 21-10634) on June 14,
2021. In the petition signed by Jeffrey C. Nelson, president, the
Debtor disclosed up to $50 million in assets and up to $10 million
in liabilities.
Judge Deborah J. Saltzman oversees the case.
William C. Beall, Esq. at Beall & Burkhardt, APC is the Debtor's
counsel.
CLARIVATE SCIENCE: Moody's Rates New $1BB Sr. Secured Notes 'B1'
----------------------------------------------------------------
Moody's Investors Service has affirmed Camelot UK Holdco Limited's
("Camelot Holdco") B2 Corporate Family Rating and B2-PD Probability
of Default Rating. Concurrent with this rating action, Moody's
upgraded the existing senior secured first-lien credit facilities
and senior secured notes residing at Camelot Finance SA (a
Luxembourg-based indirect wholly-owned holding company of Camelot
Holdco) to B1 from B2, and assigned a B1 rating to the proposed $1
billion 7-year senior secured notes and Caa1 rating to the $1
billion 8-year senior unsecured notes that will be issued by
Clarivate Science Holdings Corporation, a Delaware-based indirect
wholly-owned holding company of Camelot Holdco. The outlook remains
stable.
Camelot Holdco is a wholly-owned direct subsidiary of Clarivate plc
("Clarivate" or the "company"), which is the entity that is owned
by public shareholders and files the group's consolidated financial
statements. As a holding company with no material assets other than
the capital stock of its subsidiaries, Clarivate conducts
substantially all of its operations through its subsidiaries.
Though Clarivate is not an issuer or guarantor of the existing debt
instruments or new notes, the company's consolidated financial
condition and results of operations substantially reflect the
financial condition and results of operations of Camelot Holdco,
which is a guarantor of the existing debt and will be a guarantor
of the new notes.
Proceeds from the new notes together with Clarivate's recently
announced capital raises via the offering of new common shares and
mandatory convertible preferred shares will be used to help finance
the $5.3 billion acquisition of ProQuest LLC, which is expected to
close in Q3 2021. The new notes will initially be held in escrow
without the benefit of guarantees from Camelot Holdco or its
restricted subsidiaries. Upon closing of the acquisition and
release of the notes from escrow, Camelot Holdco will provide a
downstream guarantee together with guarantees from Camelot Holdco's
restricted subsidiaries on a senior secured basis for the secured
notes and senior unsecured basis for of the unsecured notes.
Following release from escrow, the new secured notes will rank pari
passu with and share the same collateral package as the existing
senior secured credit facilities and secured notes, which are
secured by a first-priority lien on substantially all tangible and
intangible assets of Camelot Holdco, the credit facilities'
borrowers and the restricted operating subsidiary guarantors.
Following is a summary of the rating actions:
Affirmations:
Issuer: Camelot UK Holdco Limited
Corporate Family Rating, Affirmed at B2
Probability of Default Rating, Affirmed at B2-PD
Ratings Upgraded:
Issuer: Camelot US Acquisition LLC (Co-Borrower: Camelot UK Bidco
Limited)
$250 Million Gtd Senior Secured First-Lien Revolving Credit
Facility due 2024, Upgraded to B1 (LGD3) from B2 (LGD3)
Issuer: Camelot Finance SA (Co-Borrowers: Camelot US Acquisition
LLC, Camelot US Acquisition 1 Co and Camelot US Acquisition 2 Co)
$1,260 Million ($1,244.25 Million outstanding) Gtd Senior
Secured First-Lien Term Loan B due 2026, Upgraded to B1 (LGD3)
from B2 (LGD3)
$1,600 Million ($1,596 Million outstanding) Gtd Incremental
Senior Secured First-Lien Term Loan B due 2026, Upgraded to
B1 (LGD3) from B2 (LGD3)
Issuer: Camelot Finance SA
$700 Million Gtd Senior Secured Global Notes due 2026,
Upgraded to B1 (LGD3) from B2 (LGD3)
Assignments:
Issuer: Clarivate Science Holdings Corporation
$1,000 Million Senior Secured Global Notes due 2028, Assigned
B1 (LGD3)
$1,000 Million Senior Unsecured Global Notes due 2029, Assigned
Caa1 (LGD6)
Outlook Actions:
Issuer: Camelot UK Holdco Limited
Outlook, Remains Stable
The assigned ratings are subject to review of final documentation
and no material change in the size, terms and conditions of the
transaction as advised to Moody's.
RATINGS RATIONALE
The upgrade of the first-lien credit facilities and senior secured
notes to B1 result from inclusion of new senior unsecured notes in
the debt capital structure, which are structurally subordinated
given the absence of collateral, and provide support to the senior
secured debts under Moody's Loss Given Default (LGD) framework.
Since the unsecured notes would absorb a greater proportion of
losses in a distressed scenario, they are rated Caa1, two notches
below the CFR.
Though pro forma gross debt will increase, the transaction is
leverage and ratings neutral chiefly due to the addition of
ProQuest's EBITDA. Moody's pro forma EBITDA estimate includes
Clarivate's LTM March 31, 2021 EBITDA and the full LTM impact of
EBITDA from ProQuest and Clarivate's CPA Global acquisition
(completed in Q4 2020), plus Moody's expectation for annual
run-rate cost savings (net of Moody's estimates for costs to
achieve planned savings). This results in pro forma LTM financial
leverage in the range of 5x-5.3x total debt to EBITDA (Moody's
adjusted), below the 6.5x downgrade threshold. The new mandatory
convertible preferred shares are excluded from Moody's adjusted
financial metrics calculations (and the LGD model) since they are
given 100% equity credit under Moody's Hybrid Equity Credit
Methodology for speculative grade issuers. This is due to the
instrument's equity-like attributes, which include no debt claim in
bankruptcy, missed dividends do not trigger a default event and no
rights to trigger a default or acceleration.
In addition to increasing Clarivate's annual pro forma 2020 revenue
to around $2.6 billion (includes CPA Global, ProQuest and Decision
Resources Group, and excludes divestitures), further scale benefits
from the ProQuest transaction include: (i) substantial expansion of
Clarivate's content; (ii) enhanced research solutions and
additional library management workflow offerings; (iii) broadening
of analytics offerings; and (iv) access to adjacent markets and
users. Clarivate also expects to achieve around $100 million of
run-rate cost savings (expected to be achievable 15-18 months after
closing) plus $65 million in annual cash tax savings, which
collectively will further enhance the company's strong free cash
flow (FCF) generation. Moody's believes future FCF generation will
be allocated to debt repayment and new product development.
Camelot Holdco's B2 CFR is supported by Clarivate's leading global
market positions across its core scientific/academic research and
intellectual property businesses. The rating also considers the
high proportion of subscription-based recurring revenue (>80% of
revenue) and high switching costs derived from Clarivate's
proprietary data extraction methodology, which facilitates
development of value-added databases that are considered the
"gold-standard" among its clients. Given that its mission-critical
subscription products are embedded in customers' core operations
and research workflows, customer renewals and retention rates on a
weighted average basis have remained above 90%. Clarivate also
benefits from good diversification across end markets, geography
and customers and relatively high EBITDA margins in the 40% range
(Moody's adjusted, excluding one-time cash items). The company's
low net working capital and "asset-lite" operating model
facilitates a high conversion of EBITDA to positive FCF.
Factors that weigh on the rating include Clarivate's moderately
high pro forma financial leverage and low single-digit percentage
organic revenue growth rate, influenced by transactional revenue
declines partially offset by subscription revenue growth.
Transactional revenue has been more vulnerable to reduced demand
due to the economic impact from the coronavirus pandemic. Clarivate
faces competitive challenges from industry players that are
amassing scale as well as new technology entrants, and regulatory
changes that could restrict access to data. Low single-digit
percentage revenue growth at North American universities coupled
with consolidation across the pharmaceutical industry could lead to
customer budget constraints. The credit profile is also influenced
by governance risks related to private equity ownership, such as
sizable debt-financed distributions or growth-enhancing
acquisitions, which could pose integration challenges and lead to
volatile credit metrics. Somewhat offsetting this is Clarivate's
historical use of equity to help fund large acquisitions, which
Moody's expect to continue.
The stable outlook reflects Moody's view that Clarivate's business
model and operating profitability will remain fairly resilient,
experience low-to-mid-single digit organic revenue and EBITDA
growth and generate solid FCF over the next 12-18 months. Moody's
expects the company will expand market share from new client wins
and penetrate further into existing accounts. Moody's projects that
Clarivate will maintain good liquidity, continue to use a prudent
mix of equity and debt to finance future M&A and use FCF to reduce
pro forma leverage to a target of around 4.5x net debt to EBITDA
(as-reported) at close of the ProQuest transaction (depending on
cash balances, equivalent to approximately 5x-5.5x gross leverage
on a Moody's adjusted basis).
Over the next 12-15 months, Moody's expects good liquidity
supported by positive FCF generation in the range of 7%-10% of
total debt (Moody's adjusted), solid cash levels (unrestricted cash
balances totaled $399 million at March 31, 2021) and access to the
$250 million revolving credit facility.
Though Clarivate's shares trade publicly, it remains a portfolio
company of private equity sponsors Onex and Baring Asia, which own
about 38% of Clarivate. Consequently, Moody's expects the company's
financial strategy to be somewhat aggressive given that equity
sponsors have a tendency to tolerate high leverage and favor high
capital return strategies for limited partners. Clarivate's
governance risk is elevated as a result of sponsor ownership,
particularly in view of the highly-leveraged balance sheet.
Management's financial strategy, capital allocation, credibility
and track record are influenced by the equity sponsors'
demonstrated desire to use debt, mitigated by the prudent issuance
of equity to help fund the purchase of ProQuest and past
acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if Clarivate demonstrates organic revenue
growth in the mid-single digit percentage range and EBITDA
expansion that leads to consistent and growing free cash flow
generation of at least 6% of total debt (Moody's adjusted).
Additionally, upward rating pressure could occur if total debt to
EBITDA is sustained below 4.5x (Moody's adjusted) and the company
exhibits prudent financial policies and a good liquidity profile.
Ratings could be downgraded if total debt to EBITDA was sustained
above 6.5x (Moody's adjusted) or free cash flow were to materially
weaken below 2% of total debt (Moody's adjusted) due to
deterioration in operating performance. Market share erosion,
liquidity deterioration, significant client losses or if Clarivate
engages in debt-financed acquisitions or shareholder distributions
resulting in leverage sustained above Moody's downgrade threshold
could also result in ratings pressure.
Headquartered in Philadelphia, PA, Camelot UK Holdco Limited is a
wholly-owned subsidiary of Clarivate plc, which provides
comprehensive intellectual property and scientific information,
decision support tools and services that enable academia,
corporations, governments and the legal community to discover,
protect and commercialize content, ideas and brands. Formerly the
Intellectual Property & Science unit of Thomson Reuters
Corporation, Clarivate was a carve-out purchased by Onex and Baring
Asia for approximately $3.55 billion in October 2016. Following the
May 2019 merger with Churchill Capital Corp., a special purpose
acquisition company (SPAC), Clarivate operates as a publicly traded
company. Revenue for the last twelve months ended March 31, 2021
was approximately $1.4 billion as-reported.
Headquartered in Ann Arbor, Michigan, ProQuest LLC aggregates,
creates, and distributes academic and news content and software
solutions serving academic, corporate and public libraries
worldwide. The company's ownership consists of Cambridge
Information Group, Inc. (majority shareholder), Atairos and Goldman
Sachs. Revenue for the last twelve months ended March 31, 2021 was
approximately $872 million as-reported.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
COLGATE ENERGY: S&P Alters Outlook to Positive, Affirms 'B-' ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook on U.S.-based oil and gas
exploration and production (E&P) company Colgate Energy Partners
III LLC to positive from stable and affirmed its 'B-' issuer credit
rating.
S&P is assigning a 'B' issue-level and '2' recovery rating to the
company's proposed $400 million unsecured notes issuance.
The positive outlook reflects the likelihood of an upgrade if the
company successfully executes its growth and development plans,
improving scale and increasing the proportion of proved developed
reserves, while keeping credit metrics at relatively modest
levels.
Colgate's scale significantly improves as a result of its recent
acquisitions, while credit metrics remain conservative. The Luxe
and Occidental acquisitions nearly doubled the company's proved
reserve base while adding contiguous acreage to its position in the
Permian Basin. Pro forma for the transactions, Colgate holds an
83,000 net acre position in the Delaware Basin of West Texas and
New Mexico with proved reserves of 330 million barrels of oil
equivalent (mmboe) as of year-end 2020 (SEC reported value),
consisting of about 51% oil and about 33% proved developed. Pro
forma production is about 55,000 boe per day (boe/d). This scale
now is on par with peers such as Centennial Resources Development
Inc., although Colgate's proved developed percentage is lower. In
addition, Colgate holds about 19,500 net royalty acres across its
position. The first transaction was financed with 100% equity while
the second is being primarily financed with debt, resulting in
marginally weaker credit metrics compared to pre-transaction
levels.
S&P said, "Our rating reflects execution risk associated with
Colgate's acquisition integration and ambitious growth program,
given the company's limited history. The company plans to run a
five to six rig drilling program over the next 12 months. Pro forma
for the acquisitions, Colgate's production averaged about 55,000
boe/d in June 2021, which it expects to increase to 75,000 boe/d on
average in 2022. After dropping to zero rigs in 2020 because of the
sharp drop in oil prices, Colgate is running four rigs and plans to
add up to two more over the next few months. We anticipate the
company will increase production and reserves, as well as improve
the proportion of proved developed reserves, over the next year.
"We continue to view the company's private equity capital policy
stance as aggressive but see more credit-friendly exit
opportunities available. Pro forma for the transaction, private
equity partners hold five of the seven board seats and company
management holds the remaining two seats. In our view, this
concentration gives the financial sponsors significant influence on
Colgate's strategic direction, as well as the ability to influence
Colgate's financial policy and ultimately its capital structure.
That said, exit opportunities such as consolidation or an IPO,
previously less available to smaller private players, are now more
plausible given the company's increased scale, and the current
commodity price environment.
"The positive outlook reflects our view that post acquisition, the
company will quickly increase production and proved reserves over
the next one to two years, generating significant positive free
cash flow and maintaining modest credit metrics. We expect Colgate
to pay out little to no dividends in the near future as it
considers internal investments as well as its strategic exit
opportunities in a consolidating industry. We expect debt to EBITDA
of about 1.1x and funds from operations (FFO) to debt in the 85%
area in 2022.
"We could revise the outlook to stable should the company fail to
ramp up production in a cost-efficient manner or should the
company's financial metrics materially weaken relative to its
current rating category. This would most likely result if the
company experiences difficulties executing its operations program
or should commodity prices weaken below our current expectations.
"We could raise our rating if Colgate executes and integrates its
announced asset purchases, successfully ramps up production to
targeted levels and increases proved developed reserves, while
maintaining strong financial measures."
COMMUNITY HEALTH: S&P Ups ICR to 'B-' on Improved Credit Measures
-----------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Community
Health Services to 'B-' from 'CCC+'. The outlook is stable.
S&P said, "We raised our issue-level rating on the company's
first-lien secured debt to 'B' from 'B-'. The recovery rating
remains '2' reflecting our expectation for substantial (70%-90%;
rounded estimate: 70%) recovery.
"At the same, we raised our issue-level rating on Community's
junior priority notes and unsecured debt to 'CCC' from 'CCC-'. The
recovery rating remains '6' reflecting our expectation for
negligible (0%-10%; rounded estimate: 0%) recovery in a default.
"The stable outlook reflects our view that the company's
operations, including much improved cash flow prospects, can now
support its lower debt level and now-manageable debt maturity
schedule."
Community Health's extensive downsizing has left it with a
higher-quality hospital portfolio, and manageable debt leverage and
debt maturity schedules. Over the past several years Community has
reduced debt and leverage using several strategies including
downsizing its hospital portfolio, repurchasing debt, and revising
its operating strategy to improve operating efficiency. Reported
debt as of March 31, 2021, declined about $1.5 billion just since
the end of 2019, but has been declining for several years. Adjusted
leverage declined to about 6x as of March 31, 2021, from 9.3x as
the end of 2019, and 10.8x at of the end of 2017. In addition, the
company, via several refinancing transactions, successfully managed
its once-onerous debt maturity schedule. Debt maturity risk is now
very manageable with no debt maturing until 2025.
Prospects for cash flow have significantly improved. The
combination of its hospital rationalization program, reduction of
about $190 million in annual cash interest as a result of debt
repayments and refinancings, and its revised operating and capital
deployment strategies have all contributed to a much brighter cash
flow outlook. S&P expects Community to produce discretionary cash
flow of about $150 million in 2021 and possibly more than $300
million in 2022. These amounts exclude the estimated $1.2 billion
Community must repay the government over these two years from
stimulus monies, mostly Medicare advance payments and tax
deferrals, because including these amounts in an estimate of cash
flow the business produces would be misleading. Moreover, the
company has the cash already set aside to repay it. For comparison,
from 2015-2019 the company had sizable discretionary cash flow
deficits in three of those years, with only small positive
discretionary cash flow in the others. While the company reported
very large cash flow in 2020, does not view it as representative of
the company's cash flow because of all the disruption due to the
pandemic and irregular cash flow characteristics, including the
large increase in working capital from stimulus monies including
Medicare advance payments and deferred payroll taxes.
Profitability is substantially improved from the benefits of the
portfolio rationalization and updated operating strategy. Community
has been steadily downsizing its portfolio for several years. The
company had 85 hospitals as of April 1, 2021 (it sold a hospital
the first day of the second quarter 2021), compared with 194
hospitals at the end of 2015. Its revenue base has declined 39%
from $19.4 billion in 2015 to $11.9 billion in 2021 (our forecast
for 2021). S&P expects Community's EBITDA margin to be between
15%-16% in 2021, increasing to above 16% in 2022, higher than at
any time since the downsizing began in 2015.
Community's updated operating and capital deployment strategies
position it better for the changing marketplace. Community has made
significant strides to improve its operations. Its patient transfer
center has helped its ability to retain patients. In 2019, prior to
the pandemic, the company's patient volume trends were more in line
with peers; a large improvement over the prior several years in
which it was a laggard. Moreover, the company shifted capital
investments, adding new outpatient access points and new,
higher-acuity services which in aggregate will help improve its
market strength and hence its patient volume and profitability. S&P
said, "We expect patient volume trends to continue to be comparable
or better than peers in the near term as the company adds and
utilizes new service capacity. We expect patient volume to remain
below pre-pandemic levels for much of 2021, but revenue to be
higher, reflecting higher patient acuity." Operationally, the
company has implemented strategies that benefit in several ways
including back office productivity, and revenue cycle management.
The impact of the pandemic is lingering into 2021, but declining as
the number of cases falls. Community, like its peers was quite
adversely affected by the pandemic in 2020, largely due to the
deferral of elective procedures and overall avoidance of people
pursuing many health care services. In 2020, same-site adjusted
admission declined 12.5%, but sequentially improved in the second
half of the year. In the first quarter of 2021, same-store adjusted
admissions were 7.2% below Q1 2020, but same-site revenue increased
9.8% when compared the first quarter of last year, reflecting
several items including a favorable payor mix shift and higher
acuity. Community's EBITDA during the pandemic was boosted by
stimulus funding from the CARE's Act. In 2020, it received about
$705 million, recording $601 million of it as a reduction of
expenses in its 2020 financial results, and $82 million as a
reduction of expenses in the first quarter of 2021.
S&P said, "The stable outlook reflects our view that the company's
downsizing has largely been completed and its focus will be to
continue to improve market position and shift to a growth strategy.
We believe the company is now more stable and will perform at a
level that will generate adequate free cash flow to meet all its
obligations exclusive of the amounts it needs to repay in 2021 and
2022 for Medicare advances and deferred payroll taxes.
"We could lower the rating if the company falters in its market
strategy or if it experiences adverse regulatory or reimbursement
developments that results in margin or cash flow degradation that
we believe may become persistent. In our view, an incremental 300
to 350 basis points of EBITDA margin erosion from current levels
would eliminate free cash flow and raise leverage to over 7.5x.
Under this scenario, we would likely view the company's capital
structure as unsustainable over the long term, despite currently
adequate liquidity and lack of near-term debt maturities.
"We could raise the rating if we believe that Community can
continue to sustainably generate moderate discretionary cash flow.
We exclude in our cash flow analysis the impact of advanced
Medicare payments, deferred payroll taxes, and other stimulus
measures in our cash flow calculations because of their
nonrecurring nature, and because the company has the cash reserves
to repay them."
COMMUNITY LEADERSHIP: S&P Affirms BB+ Rating on Rev. Bonds
----------------------------------------------------------
S&P Global Ratings revised its outlook to negative from to stable
and affirmed its 'BB+' long-term rating on Colorado Educational &
Cultural Facilities Authority's series 2008 and series 2013 charter
school revenue bonds, issued for Community Leadership Academy
Building Corp. and Community Leadership Building Corp. II,
respectively, on behalf of Community Leadership Academy.
"The negative outlook reflects continued enrollment declines
through fall 2020, which have been greater than we anticipated at
the time of our last review," said S&P Global Ratings credit
analyst Chase Ashworth. "The outlook also reflects the school's
weakened financial performance in fiscal 2020, which is expected to
further deteriorate in fiscal 2021, due in large part to enrollment
trends, which has led to weakened lease-adjusted maximum annual
debt service coverage based on our calculations."
CP HOLDINGS: Hits Chapter 11 Bankruptcy With $83 Million Debt
-------------------------------------------------------------
Law360 reports that Texas-based assisted living chain CP Holdings
LLC sought Chapter 11 protection in Delaware bankruptcy court late
Sunday, June 20, 2021, with plans for a stalking horse sale led by
Hong Kong-based creditors offering a partial takeback of the
50-site venture's more than $66 million first-lien debt.
CP Holdings operates most of its sites through subsidiaries
operating under the Country Place Senior Living name. Its
principals have been under pressure from first-lien creditor Tor
Asia Credit Master Fund LP in Texas and New York courts for more
than two years.
The Company's business is focused on developing and operating
rural-based aged-care assisted living and memory care facilities in
Alabama and Texas. Ten of the non-debtor subsidiaries operate
facilities under the Company's controlled brand "Country Place
Senior Living." In addition, the Debtors have a minority interest
in one County Place Senior Living operating facility as well an
additional one that is under construction. The Company also
provides management services for a third-party owned facility.
As of the Petition Date, the Company's liabilities total
approximately $83,006,256.
About CP Holdings LLC
CP Holdings LLC is a Texas-based assisted living facility founded
in 2007. CP Holdings and affiliate Pacrim U.S. LLC sought Chapter
11 protection (Bankr. D. Del. Case No. 21-10950 and 21-10949) on
June 20, 2021. In its petition, CP estimated assets of between $10
million and $50 million and estimated liabilities of between $50
million and $100 million. The case is handled by Honorable Judge
Laurie Selber Silverstein. Patrick J. Reilley of Cole Schotz P.C.
is the Debtors' counsel.
DIOCESE OF ROCHESTER: Asks Court OK for $35M Sex Abuse Settlement
-----------------------------------------------------------------
Auburnpub.com reports that the Diocese of Rochester has asked a
federal judge to approve a $35 million settlement agreement with
its insurers to help pay survivors of sexual abuse.
In a recent statement, the diocese said the proposed agreement was
with Lloyd's of London and Interstate Fire and Casualty, who are
among the major insurers involved in its bankruptcy case.
"We believe this settlement, if approved, is a significant step
forward in our goal of achieving a fair and equitable
reorganization plan — the vast majority of which will be funded
by our insurers — that will compensate the survivors of sexual
abuse who have filed claims in our Chapter 11 case," the statement
said.
A hearing has been scheduled for July 9, 2021 with U.S. Bankruptcy
Judge Paul R. Warren.
The diocese, which includes Cayuga County in its geographic
territory, filed for Chapter 11 bankruptcy protection in September
2019, saying it could not afford to pay the compensation being
demanded in a flood of new civil suits alleging sexual abuse by its
priests in past decades.
Rochester was the 20th American Catholic diocese to follow this
path, all of them driven there largely by litigation over sexual
abuse. Seven other dioceses have filed for Chapter 11 protection
since Rochester, including the dioceses in Buffalo, Syracuse and
Rockville Centre.
The announcement by the diocese that it was seeking for approval of
a settlement with its insurers comes two days after a group of
survivors asked the judge to let their cases be heard in state
court, escaping a bankruptcy progress that they argue had stalled
despite attempts at mediation.
"While the funding provided under this settlement is only a portion
of the eventual "Survivors Fund" to be established to settle those
claims, it is a significant and substantial one," the diocese
statement said. "The agreement seeks to overcome a halt in the
mediation, and, if approved, will avoid further litigation between
the Diocese and these specific insurers — legal proceedings that
would be quite costly, reduce available funds for survivors and
perhaps delay by years the conclusion of this process."
In court papers, attorneys for 20 of the abuse survivors said the
sides had reached an impasse during what it described as "months of
halting mediations."
"The Diocese and its insurers have failed to offer reasonable
compensation to Sexual Abuse Claimants through mediation," they
argue in court papers.
Clearly, the diocese and its claimants have different opinions of
what would constitute a reasonable amount of money to compensate
the survivors who say they suffered for years after being sexually
abused as children by priests, nuns, teachers or other church
employees.
"The Diocese believes that continued dialogue and negotiation among
the Diocese, its insurers and the Creditors Committee that is
guided by reasonable and realistic expectations on the part of all
concerned and a dedication to swift and just resolution for
survivors is the best and proper course to benefit survivors," the
statement said.
Attorneys for survivors have suggested that the bankruptcy process
has just presented survivors with another roadblock rather than
moving these cases towards a conclusion.
"Historically, Catholic dioceses have used Chapter 11 bankruptcy as
a shield to stop litigation and prevent jury trials, allowing the
institution to continue business uninterrupted while maintaining
its secrets, hiding assets, and silencing survivors," said attorney
Jeffrey Anderson, whose firm represents roughly 170 survivors in
the diocese's bankruptcy case.
A decision about the amount of money the diocese's insurers would
contribute to the settlement survivors is one of the major hurdles
in the bankruptcy process, but likely not the last one. Still at
issue is how much the diocese itself will have to contribute and
the impact on individual parishes.
"We hope for the Court’s approval and we pray this settlement
will be a catalyst for fruitful dialogue and progress in
negotiations among the remaining concerned parties in the case,"
the diocese said. "We are committed to all reasonable efforts to
bring this Chapter 11 case to a conclusion for the sake of
survivors and the continued mission of the Diocese of Rochester."
About The Diocese of Rochester
The Diocese of Rochester in upstate New York provides support to 86
Roman catholic parishes across 12 counties in upstate New York. It
also operates a middle school, Siena Catholic Academy ("SCA").
The Diocese has 86 full-time employees and six part-time employees
and provides medical and dental benefits to an additional 68
retired priests and 2 former priests.
The Diocese generated $21.88 million of gross revenue for the
fiscal year ending June 30, 2019, compared with a gross revenue of
$24.25 million in fiscal year 2018.
The Diocese of Rochester filed for Chapter 11 bankruptcy protection
(Bankr. W.D.N.Y. Case No. 19-20905) on Sept. 12, 2019, amid a wave
of lawsuits over alleged sexual abuse of children. In the petition,
the Diocese was estimated to have $50 million to $100 million in
assets and at least $100 million in liabilities.
Bond, Schoenec & King, PLLC is the Diocese's counsel. Stretto is
the claims and noticing agent.
DJM HOLDINGS: Unsecured Creditors Will Recover 4% Under Plan
------------------------------------------------------------
DJM Holdings, Ltd., submitted a Plan and a Disclosure Statement.
DJM Holdings was founded in 2000 to manage rental properties.
Within the last 10 years, DJM has held between 40 and 15 rental
properties, mostly in Maple Heights, Cuyahoga County, Ohio. The
principals, Martin and Deborah Maniaci, also hold some rental
properties in their own names, which are subject to the Plan filed
in their individual Chapter 11 case, to wit Case No. 11-19634. The
vast majority of the rentals are single-family houses. In the
2000's before the 2008 real estate crash, DJM did well. The
increase in housing prices led to equity in properties, which
provided liquidity and permitted DJM to acquire more properties.
DJM has since righted itself and the majority of properties are
occupied by paying tenants. DJM appears to be on the right side of
the Covid pandemic and able to reorganize.
The Plan will treat claims as follows:
* Class 1 - Secured Claims of Banks totaling $2,000,000.
Mortgages on Debtor's Rental properties. Creditors will recover 40%
of their claims.
* Class 5 - Unsecured Claims totaling $1,200,000. Unsecured
Claims shall be paid at the rate of 4%, beginning in Month 37 of
the Plan. Unsecured creditors will recover 4% of their claims.
* Class 6 - Convenience Claims. The amount of claim is unknown.
Creditors will recover 2% of their claims.
The Debtor intends to fund the Plan from receipts of the business.
Attorney for DJM Holdings:
Glenn E. Forbes, Esq.
FORBES LAW LLC
Main Street Law Building
166 Main Street
Painesville, OH 44077
Voice: (440) 739-6211 ext 128
Voice: (440) 739-FORB (3672) ext 128
eFax: 1-850-988-7066
E-mail: gforbes@geflaw.net
bankruptcy@geflaw.net
A copy of the Disclosure Statement is available at
https://bit.ly/3xwkGnm from PacerMonitor.com.
About DJM Holdings
Concord-based DJM Holdings Ltd is the fee simple owner of 38
properties in Ohio, having a total current value of $1.02 million.
DJM Holdings sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. N.D. Ohio Case No. 21-10483) on Feb. 14, 2021. At the
time of the filing, the Debtor disclosed $1,144,439 in assets and
$2,816,538 in liabilities. Judge Arthur I. Harris oversees the
case. The Debtor is represented by Forbes Law, LLC.
EAGLE HOSPITALITY: Nets $153.9 Million From Assets Sales
--------------------------------------------------------
Vivienne Tay of Business Times reports that Eagle Hospitality Real
Estate Investment Trust (EH-Reit), which is part of Eagle
Hospitality Trust (EHT), has received net proceeds of about
US$153.9 million following the sale of five Chapter 11 properties.
The net proceeds have been partially used to repay the
debtor-in-possession facility and the stalking horse "break up"
fee, EH-Reit trustee DBS Trustee said in a bourse filing on
Thursday, June 17, 2021.
The balance remaining is around US$109.7 million, which will go to
repaying ongoing post-petition expenses and pre-petition creditors.
This includes some US$380 million under a pre-petition facilities
agreement, as well as claims from trade creditors against these
entities which DBS Trustee said cannot be quantified at this time.
"To the extent any value remains, other junior creditors would be
paid," it added.
The sale of four Chapter 11 properties for US$117.2 million was
completed on June 3, 2021. These assets were Sheraton Denver Tech
Center, Four Points by Sheraton San Jose Airport, Embassy Suites by
Hilton Anaheim North, and Double Tree by Hilton Salt Lake City.
Hilton Atlanta Northeast was later sold for US$37.9 million on June
8, 2021.
DBS Trustee expects the remaining Chapter 11 properties to be sold
by the end of June. Hilton Houston Galleria Area and Delta
Woodbridge remain under receivership.
Urban Commons Queensway, a unit of EHT, on June 4 surrendered the
Queen Mary Long Beach - a former ocean vessel-turned-floating hotel
- to the City of Long Beach, California.
About Eagle Hospitality Group
Eagle Hospitality Trust -- https://eagleht.com/ -- is a hospitality
stapled group comprising Eagle Hospitality Real Estate Investment
Trust ("Eagle H-REIT") and Eagle Hospitality Business Trust. Based
in Singapore, Eagle H-REIT is established with the principal
investment strategy of investing on a long-term basis, in a
diversified portfolio of income-producing real estate which is used
primarily for hospitality and/or hospitality-related purposes, as
well as real estate-related assets in connection with the
foregoing, with an initial focus on the United States.
EHT US1, Inc., and 26 affiliates, including 15 LLC entities that
each owns hotels in the U.S., sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 21-10036) on Jan. 18, 2021.
EHT US1, Inc., estimated $500 million to $1 billion in assets and
liabilities as of the bankruptcy filing.
The Debtors tapped Paul Hastings LLP as bankruptcy counsel; FTI
Consulting, Inc., as restructuring advisor; and Moelis & Company
LLC, as investment banker. Cole Schotz P.C. is the Delaware
counsel. Rajah & Tann Singapore LLP is Singapore Law counsel, and
Walkers is Cayman Law counsel. Donlin, Recano & Company Inc. is the
claims agent.
EARTH ENERGY: Seeks to Employ Dean Greer as New Bankruptcy Attorney
-------------------------------------------------------------------
Earth Energy Renewables, LLC seeks approval from the U.S.
Bankruptcy Court for the Western District of Texas to hire Dean
Greer, Esq., an attorney practicing in San Antonio, Texas, as its
new bankruptcy attorney.
The services to be provided by the attorney include:
(a) advising the Debtor as to its powers and duties in the
continued operation of its business and management of its
properties during bankruptcy;
(b) taking actions to preserve and protect the Debtor's
assets, including, if required by the facts and circumstances, the
prosecution of adversary proceedings and other actions on the
Debtor's behalf, the defense of actions commenced against the
Debtor, negotiations concerning litigation in which the Debtor is
involved, objection to the allowance of any objectionable claims
filed against the Debtor's estate and estimation of claims against
the estates where appropriate;
(c) preparing legal documents;
(d) assisting the Debtor in the development, negotiation and
confirmation of a plan of reorganization and the preparation of a
disclosure statement; and
(e) performing other legal services that the Debtor may
request in connection with its Chapter 11 case.
Mr. Greer will be paid at an hourly rate of $350.
In court filings, Mr. Greer disclosed that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
Mr. Greer holds office at:
Dean W. Greer, Esq.
2929 Mossrock, Suite 117
San Antonio, TX 78230
Tel.: (210) 342-7100
Fax: (210) 342-3633
Email: dean@dwgreerlaw.com
About Earth Energy Renewables
Earth Energy Renewables, LLC is a Canyon Lake, Texas-based company
focused on commercializing bio-based chemicals and fuels. It has
demonstrated success in creating high-margin green alternatives to
petroleum-based products. Visit http://www.ee-renewables.comfor
more information.
Earth Energy Renewables sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Texas Case No. 20-51780) on Oct. 20,
2020. Jeff Wooley, manager, signed the petition. In the petition,
the Debtor disclosed total assets of up to $50 million and total
liabilities of up to $10 million.
Judge Ronald B. King oversees the case.
Dean W. Greer, Esq., is the Debtor's legal counsel.
Eric Terry, Chapter 11 trustee, tapped Chamberlain Hrdlicka White
Williams & Aughtry P.C. as legal counsel, William G. West P.C. CPA
as accountant, CohnReznick Capital Market Securities, LLC as
investment banker, and Macco Restructuring Group LLC as financial
advisor. Mr. McManigle, managing director at Macco, serves as
chief restructuring officer.
ELANCO ANIMAL: Fitch Alters Outlook on 'BB ' IDR to Negative
------------------------------------------------------------
Fitch Ratings has revised the Rating Outlooks to Negative and
affirmed the ratings of Elanco Animal Health Incorporated (ELAN)
and Elanco US Inc. at 'BB ' and its senior secured debt ratings at
'BBB-'/'RR1'. Fitch has also affirmed ELAN's senior unsecured notes
at 'BB'/'RR4'.
The rating actions reflect Fitch's view that ELAN's recently
announced intention to pursue the debt funded acquisition of
Kindred Biosciences (Kindred), which Fitch expects the additional
debt will delay the company's deleveraging timeline. The
acquisition is strategically sound, as Kindred brings a number of
pharmaceutical pipeline products aimed to treat atopic dermatitis,
parvovirus and inflammatory bowel disease.
KEY RATING DRIVERS
Strengthened Pipeline/Delayed Deleveraging: Fitch expects the
additional debt to finance the acquisition to delay the company's
leveraging timeline, which was already extended, by roughly three
months. The Kindred acquisition strengthens ELAN's presence in the
pet health market by adding potential pet health pharmaceutical
pipeline products. Three of these dermatological products could
offer meaningful competitive benefits in treating atopic
dermatitis, the leading reason why owners bring their canines to
the veterinarian. Kindred's pipeline will potentially add $100
million in revenue by 2025, while also driving higher margins.
Competitive Position in Animal Health: ELAN is one of the largest
companies in the animal health industry with a global footprint and
portfolio that spans the feed animal and pet health segments. Fitch
expects the animal health category will benefit from long-term
demand growth and the feed animal segment will be supported by
population growth and increasing global protein consumption. Also,
the pet health segment is expected to benefit from growing consumer
expenditures. Further, Fitch expects revenues to be fairly durable
relative to broader corporate industrial companies given that
ELAN's products benefit from some level of differentiation and
patent exclusivity. ELAN is also expected to benefit from durable
revenues relative to pharmaceutical companies given its more
fragmented and notably private-pay customer base.
Fitch views ELAN's scale and portfolio reach as a competitive
advantage allowing it to serve a global customer base with its
intellectual property and to buffer against the consolidation of
its end customers (e.g. roll-ups of protein producers and
veterinary practices and growth of group purchasing
organizations).
Strategic Combination Improves Business Profile: The combination
with Bayer AG's animal health business has created a more
competitive company with greater product diversification, reduced
reliance on antibiotics and scale benefits such as an improved
competitive position relative to Zoetis Inc., stronger relative
bargaining power with suppliers and customers (e.g. group
purchasing organizations) and more products to sell through its
sales and marketing infrastructure. Further, Fitch expects the
combined organization's R&D pipeline will benefit from their
combined intellectual property and FCF, which will allow for
greater investment on an absolute basis.
Strengthened Pet Health (PH) Segment: The pet health segment
approximates half of ELAN's revenues pro forma having acquired a
few key product lines (e.g. Seresto). The acquisitions of Bayer
AG's animal health business and Kindred accelerate ELAN's focus on
growing the segment, which has favorable fundamentals. Also, it
reduces ELAN's reliance on the feed animal segment, which has been
pressured by a variety of headwinds in recent years (e.g. headwinds
to antibiotic volumes, swine flu). The acquisition will further
improve ELAN's retail presence, a growing channel in the PH
market.
Deleveraging Path: Deleveraging is expected to come from both
EBITDA growth via normalization of some 2020 headwinds (e.g.
distributor inventory destocking, coronavirus-related supply chain
issues in the feed animal segment), margin expansion via cost
synergies resulting from this acquisition and the previously
established margin expansion efforts along with both contractual
and assumed voluntary debt repayment. ELAN noted in December 2020
that it would reduce net leverage below 3x by year-end 2023 under
its calculations. However, the Kindred acquisition will likely
delay that goal by three months. Fitch's forecast projected the
company to be outside its negative leverage rating sensitivities
for more than two years even before the Kindred transaction.
Coronavirus and Issuer Specific Headwinds in 2020: The coronavirus
pandemic has created significant operational challenges for ELAN's
feed animal customers (i.e. ability to safely operate processing
facilities and retooling packaging/distribution toward more retail
consumers) with these headwinds totaling approximately $80 million
in 2Q20 and $35 million in 3Q20. Fitch assumes the feed animal
supply chain's demand will continue to improve, assuming the
pandemic continues to wane, as vaccinations increase and severe
cases decline.
Second, the reduction in the number of distributors that ELAN works
with will reduce 2020 revenues by $160 million as they sell down
remaining inventory. Fitch assumes the issuer-specific PH headwinds
will deliver mid-single digit revenue growth in 2021 and
thereafter.
DERIVATION SUMMARY
ELAN has a competitive position within the global animal health
segment with a large, global footprint and scale that affords it
competitive advantages relating to procurement, manufacturing, R&D,
distribution and to buffer against the effects of customer
consolidation. Compared to pharmaceutical peers that focus on
humans, ELAN's portfolio benefits from no reimbursement risk.
However, its antibiotic segment continues to face material
headwinds from regulatory interventions and end-consumer
preferences. ELAN's closest peer is Zoetis, Inc., which has a
broader portfolio and has already achieved its debt reduction and
margin expansion goals. ELAN's 'BB' IDR is multiple notches lower
than the 'BBB' category and 'A' category ratings of its
pharmaceutical peers due to significantly higher leverage, limited
scale and weaker cash flow generation.
KEY ASSUMPTIONS
-- Strong recovery in revenues in 2021 as headwinds in feed
animal stabilize. Pet health segment continues to see strong
growth from market tailwinds and new product releases;
-- Continued margin improvement throughout the forecast driven by
product mix weighted towards pet health and synergies from the
Bayer acquisition;
-- Issuer reduces leverage to within Fitch's sensitivities by
2023 through amortization, maturities, and optional debt
prepayments;
-- The issuer does not initiate a dividend nor engage in material
M&A until it largely achieves its deleveraging target.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Successful execution of growth and productivity initiatives
manifesting in revenues and margins consistent with
management's forecast;
-- Fitch's expectation of gross leverage (gross debt to operating
EBITDA) sustaining below 3.5x;
-- Fitch's expectation of free cash flow to gross debt sustaining
above 10%;
-- Continued improvements in ELAN's scale and relative
competitive position.
Factor that could, individually or collectively, lead to a Stable
Rating Outlook:
-- Significant progress on reducing gross leverage through debt
reduction and execution on the integration of its two recent
acquisitions.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Fitch's expectation of gross leverage sustaining above 4.5x
due, in part, to weaker or slower recovery in EBITDA or
synergy realization without additional debt repayment;
-- Continued erosion in antibiotic demand without sufficient
offsets.
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
Principally Secured Capital Structure: ELAN is principally a
secured debt borrower with a $750 million secured revolving credit
facility and $4.2 billion secured term loan B (anticipated to
increase to finance the acquisition of Kindred Biosciences). The $2
billion of senior unsecured debt issued in 2018 remains
outstanding.
Sufficient Liquidity: Fitch expects ELAN will have sufficient
liquidity to manage through operating headwinds and upcoming debt
maturities. ELAN has $700 million of availability under its senior
secured revolving credit facility as of March 31, 2021 and $515
million in cash. Fitch forecasts FCF will remain positive
throughout the forecast and normalize above $500 million per year
beginning in 2022, which provides it significant flexibility to
repay a portion of its $500 million senior unsecured notes due 2021
and its $750 million unsecured notes due 2023.
Debt Notching: Fitch does not employ a waterfall recovery analysis
for issuers rated in the 'BB' category. The further up the
speculative-grade continuum a rating moves, the more compressed the
notching between the specific classes of issuances becomes. As
such, Fitch rates the senior secured credit facility 'BBB-'/'RR1',
two notches above the IDR. This rating illustrates Fitch's
expectation for superior recovery prospects in the event of default
given there is no structurally senior debt (e.g. an ABL) and
leverage is not considered to be excessive.
The notching of ELAN's senior unsecured debt is rated 'BB'/'RR4'.
The +0 notching from the IDR reflected the potential for being
subordinated to secured debt and, thus, the secured debt issuances
did not further subordinate the unsecured notes but instead was a
realization of the assumption implicit in the original notching.
ISSUER PROFILE
ELAN is the second largest animal health company in the world based
on pro forma revenue with one of the broadest portfolios of pet
parasiticides in the pet health sector. ELAN controls a diverse
portfolio of more than 225 brands that make it a partner to
veterinarians and feed animal producers in more than 90 countries.
With the integration of Bayer, revenue contribution is estimated to
be evenly split between pet health and feed animal.
ELANCO ANIMAL: Moody's Puts Ba1 CFR Under Review for Downgrade
--------------------------------------------------------------
Moody's Investors Service placed Elanco Animal Health
Incorporated's on review for downgrade, including the Ba1 Corporate
Family Rating, Ba1-PD Probability of Default Rating, Baa3 senior
secured bank credit facilities' ratings, and Ba2 unsecured ratings.
There was no change to the SGL-1 Speculative Grade Liquidity
Rating. The outlook was changed to Rating Under Review from
Stable.
On June 16, Elanco announced that it was acquiring KindredBio, a
development stage, pet health company for a total purchase price of
$455 million. Elanco will fund the transaction with incremental
secured debt which Moody's estimates will increase its pro forma
debt/EBITDA by about half of a turn to 6.2x. Elanco expects the
transaction to close in the third quarter 2021. A downgrade to
Elanco's Corporate Family Rating may be limited to one notch.
Elanco Animal Health Incorporated
Ratings placed on review for downgrade:
Corporate Family Rating, Placed on Review for Downgrade, currently
Ba1
Probability of Default Rating, Placed on Review for Downgrade,
currently Ba1-PD
Senior secured term loan B and revolver, Placed on Review for
Downgrade, currently Baa3 (LGD3)
Senior unsecured notes, Placed on Review for Downgrade, currently
Ba2 (LGD5)
Outlook action:
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Excluding the review, Elanco's Ba1 Corporate Family Rating reflects
its high financial leverage and execution risks related to
integrating the Bayer business without material disruption or cost
overruns. The rating is supported by Elanco's size and scale with
revenue of more than $4.5 billion, making it one of the largest
animal health companies globally. The animal health industry has
lower business risk than many other healthcare sectors and has a
number of tailwinds that will drive growth over the long-term.
Moody's' review will focus on its deleveraging expectations over
the next couple of years, in light of Elanco's high debt/EBITDA
today at over 6x on a pro forma basis. The acquisition of
KindredBio comes at a time when Elanco's credit metrics are already
weak, due to the acquisition of Bayer's animal health business in
2020 including significant integration costs, and negative demand
impacts due in part to the pandemic.
The acquisition of KindredBio has strategic benefits for Elanco's
pipeline, specifically multiple avenues to growing its presence in
dermatology. KindredBio's pipeline includes several compounds
intended to treat atopic dermatitis in dogs, a large and growing
market opportunity. While promising, these compounds are subject to
FDA approvals, and it would be several years before any of the
products contribute meaningfully to sales. The company, today has a
modest annual cash burn to fund its R&D.
ESG considerations are material to the rating. In terms of
governance, Elanco has yet to establish a track record for
deleveraging since being separated from Eli Lilly in 2018, given
its penchant for acquisitions. Further, Elanco still faces risk of
future cost overruns and business disruptions as it integrates the
legacy Bayer business. Social considerations include the risk of
rising regulation to curb the use of Elanco's antibiotic products
in animal protein production globally. Longer-term, declining meat
consumption in the US and Europe may be a headwind, but Moody's
believes this will be more than offset by growing meat consumption
in emerging markets and increasing pet ownership worldwide.
The SGL-1 Speculative Grade Liquidity Rating reflects Moody's
expectation that free cash flow will be positive in 2021 even
incorporating all one-time costs associated with the Bayer
integration. Elanco had $515 million of cash at March 31, 2021, and
$50 million drawn under its $750 million secured revolver that
expires in 2025. Elanco's revolver has financial maintenance
covenants. These include a maximum net debt/EBITDA ratio of 7.71x
and a minimum interest coverage ratio of 2.0x, using pro forma
EBITDA, and Moody's expects ample cushion. Elanco has $500 million
of unsecured notes that will mature in August 2021, that will be
repaid with cash and cash flow.
Headquartered in Greenfield, Indiana, Elanco Animal Health
Incorporated is a global manufacturer of animal health products.
The company develops, manufactures and markets products for a
variety of companion and food animals. Elanco revenue, pro forma
for the legacy Bayer business approximated $4.4 billion in 2020 .
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
ELANCO ANIMAL: S&P Affirms 'BB' ICR on KindredBio Acquisition
-------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating on Elanco
Animal Health Inc., which primarily reflects its view that the
company has strong prospects to meaningfully reduce leverage over
the next couple of years.
S&P said, "At the same time, we affirmed our 'BB+' issue-level
rating on the senior secured credit facility and our 'BB-'
issue-level rating on the unsecured debt.
"The stable outlook reflects our expectation for mid-single-digit
percent revenue growth and continued realization of cost synergies
from the acquisition of Bayer in 2020. It also reflects our
expectation for adjusted debt to EBITDA of 4x-5x in 2022.
"Elanco announced an agreement to acquire KindredBio for $440
million. We expect the transaction to be funded with $455 million
of incremental senior secured debt and is expected to close in the
third quarter of 2021.
"The acquisition of KindredBio increases adjusted leverage and
slows our expected pace of deleveraging. The addition of $455
million of debt with no near-term EBITDA contribution increases
adjusted leverage by about half a turn, to an expected 5.4x for
full-year 2021. Furthermore, the expected pace of deleveraging
following the 2020 acquisition of Bayer, driven by relatively
strong free operating cash flow generation (FOCF) and continued
realization of cost synergies, is slowed moderately. Elanco now
expects that its stated target of achieving net leverage of less
than 3.0x will be delayed by three months, to the end of
first-quarter 2024. We believe this target is achievable based on
our expectation for continued EBIDTA expansion stemming in large
part from mid-single-digit percent organic growth, realization of
cost synergies from the acquisition of Bayer in 2020, and our
assumption that the bulk of the costs to achieve those synergies
will be complete by the end of this year. Furthermore, we expect
Elanco to generate annual FOCF of more than $500 million beyond
2021 that should reduce net debt.
"Although Elanco's pipeline is strengthened by KindredBio's
portfolio of assets, we do not anticipate any material revenue or
EBITDA contribution for several years. The acquisition provides
Elanco with three potential blockbuster pipeline products (i.e.,
peak sales of greater than $100 million) in the highly attractive
atopic dermatology space--a market currently dominated by Zoetis'
Apoquel and Cytopoint. We believe there is a good chance for any of
these portfolio products to make quick headway in the rapidly
expanding segment, but do not expect a launch for a least a couple
years. In the meantime, we expect development and commercialization
expenses to be a minimal drag on EBITDA."
First-quarter 2021 operating performance was stronger than
expected. Revenue came in above guidance at $1.24 billion,
reflecting high retail sales, increased demand for new generation
pain products and parasiticides, and a stabilization of the U.S.
cattle and swine market. Elanco also increased its full-year 2021
guidance and lowered its expected costs to achieve synergies
related to the Bayer transaction to $125 million to $130 million
from the $160 million it announced on a December 2020 analyst call.
As a result, our current expectation for mid-5x adjusted debt to
EBITDA in 2021 is roughly in line with what Elanco guided to during
its December investor call, despite the incremental debt for
KindredBio.
S&P said, "We expect Elanco to be relatively disciplined with
capital allocation going forward until leverage comes down. We
believe Elanco is committed to meaningfully reduce leverage, with a
stated net leverage target of less than 3x by the first quarter of
2024. In our view, the key to achieving this target is the
company's execution on achieving synergies from the Bayer
acquisition and directing FOCF generation beyond 2021 to debt
reduction. That said, our rating on Elanco reflects and expectation
for adjusted debt to EBITDA of 4x-5x beyond 2021 which implies
capacity for some acquisitions over our forecast horizon. While we
view the KindredBio acquisition as accretive to Elanco's pipeline,
we could consider lowering the issuer credit rating if the company
continues to pursue sizable acquisitions, sustaining adjusted
leverage above 5.0x.
"We believe the animal health industry benefits from favorable
tailwinds. These include increasing pet ownership rates and
spending on the companion animal side, and increasing protein
consumption worldwide on the food animal side. Animal
pharmaceuticals also have a faster approval process, lower generic
price erosion, and less dependence on blockbuster products when
compared with human pharmaceuticals, resulting in less volatility
in general.
"The stable outlook reflects our expectation that Elanco will
successfully integrate Bayer's animal health division, including
the realization of anticipated cost synergies, resulting in
adjusted debt to EBIDTA of 4x-5x beyond 2021. It also reflects our
expectation for mid-single-digit percent pro forma revenue growth
over the medium term.
"We could raise our rating on Elanco within the next 12 months if
we expect adjusted debt to EBITDA will be sustained below 4x. This
could occur if Elanco deleverages faster than we expect, by either
realizing synergies more quickly or expanding at a
high-single-digit percentage organically.
"We could lower our rating on Elanco within the next 12 months if
we expect adjusted debt to EBITDA to remain above 5x for a
prolonged period. This could occur if Elanco experiences delays to
the expected realization of synergies from the Bayer acquisition or
pursues sizeable acquisitions."
ELECTRONICS FOR IMAGING: S&P Affirms 'CCC+' Issuer Credit Rating
----------------------------------------------------------------
S&P Global Ratings revised its outlook on digital solutions company
Electronics for Imaging Inc. (EFI) to positive from negative and
affirmed its 'CCC+' issuer credit rating, its 'CCC+' issue-level
rating on its first-lien term loan, and its 'CCC' issue-level
rating on its second-lien term loan. its '3' recovery rating on the
first-lien term loan and '5' recovery rating on the second-lien
term loan are unchanged.
S&P said, "The positive outlook reflects our expectation that EFI's
revenue will rebound in 2021 on strong demand for its industrial
inkjet printers while its EBITDA margins remain stable. We believe
this will improve its leverage to the low-12x area in 2021 and
low-9x area in 2022, and enable it to generate positive unadjusted
FOCF of around $30 million in 2021 and $50 million in 2022."
Despite the significant decline in the company's revenue in 2020,
its EBITDA and FOCF remained stable. EFI faced significant
headwinds due to the macroeconomic effects of the COVID-19 pandemic
in 2020. Given the high price of its digital inkjet printers, the
company's customers were wary of making such a large capital
expenditure and instead focused on keeping cash on their balance
sheets to help survive the COVID-19 pandemic. The demand from many
of its end markets related to in-person activities, such as
shopping or working, had to deal with COVID-19 headwinds, which
negatively affected EFI's topline. Specifically, the company's
revenue declined by more than 25% due to the weak demand for its
digital printing solutions amid the pandemic.
While its revenue declined severely in 2020, EFI focused on
improving its EBITDA margins and working capital management, which
enabled it to sustain stable EBITDA and break even FOCF. The
company has maintained a strong focus on its EBITDA margins since
the completion of its leveraged buyout (LBO) in 2019, at which time
it enacted a large cost savings plan. It also enacted a large
COVID-19-related cost-savings plan amid the pandemic to further
offset the decline in its revenue. Due to the effects of its
multiple cost-savings plans, EFI's S&P Global Rating-adjusted
EBITDA generation was slightly better in 2020 than in 2019 despite
the large decline in its revenue.
The company has also been seeking to improve its working capital
management, specifically around accounts receivable and inventory.
Management has assigned dedicated team members to focus on its
accounts and the customer down payments on its industrial inkjet
printers, which has improved its accounts receivable days. EFI has
also improved its inventory management as it continues to
transition toward a build-to-order fulfillment model. With the
improvement in its working capital, the company generated modestly
positive unadjusted FOCF in 2020. Given its stable FOCF generation,
EFI was able to improve its total liquidity to over $166 million in
the first quarter of 2021. S&P believes that this improved level of
liquidity will help EFI manage its recovery from the pandemic.
S&P said, "We expect EFI to continue to use its free cash flow to
voluntarily pay down its debt. Given the company's
better-than-expected EBITDA generation and modestly positive
unadjusted FOCF generation, it was able to maintain sufficient
liquidity during the pandemic. While EFI secured low-interest
European loans to help increase the amount of cash on its balance
sheet, it also tried to find ways to make its capital structure
more manageable, such as by using its excess liquidity to
voluntarily pay down its other debt obligations. The company
borrowed the entirety of its revolving credit facility in the first
half of 2020 but was able to completely repay its balance as of the
first quarter of 2021. EFI also voluntarily paid off some of its
second-lien term loan in the first quarter of 2021 to reduce its
interest expense. We expect the company to make further voluntary
debt paydowns such that its leverage and interest expense continue
to decrease.
"Good industry tailwinds will likely support the demand for the
company's industrial inkjet printing solutions and we forecast its
financial performance will rebound in 2021 and 2022. While
significant headwinds hurt EFI's business in 2020, we believe good
tailwinds will help it improve its financial performance in 2021
and 2022. The company has seen increased demand for its digital
inkjet printers focused on homebuilding that print materials such
as textiles, floors, and wood paneling because the demand for homes
remains very strong due to the low interest rates and increase in
remote working. EFI also accelerated its continued shift toward
online sales due to the pandemic and saw good demand for its
corrugated packaging digital inkjet printers. We believe these
tailwinds will continue and support a more than 20% increase in
EFI's revenue in 2021, providing a good base for further growth in
2022.
"While we believe that many of the costs EFI eliminated through its
cost-saving programs amid the pandemic will return, we still
anticipate it will maintain stable EBITDA margins. We also believe
it will realize synergies from its LBO cost-savings plan such that
its EBITDA margins remain in the low-10% area in 2021. Given the
recovery in its revenue, supported by the good demand for its
industrial inkjet printers, and its stable EBITDA margins, we
believe that EFI will decrease its leverage to the low-12 area in
2021 and around low-9x area in 2022.
"We forecast the improvement in the company's EBITDA stemming from
the recovery in its revenue will improve its unadjusted FOCF
generation in 2021. While EFI's capital expenditure (capex) was
over $10 million annually in 2019 and 2020 as it invested in new
products, we note that those investments will likely begin to
decline in 2021. We also expect the company's improved EBITDA
generation and lower capex to help it generate around $30 million
of FOCF in 2021 and around $50 million in 2022.
"The positive outlook reflects our expectation that EFI's revenue
will rebound in 2021 on strong demand for its industrial inkjet
printers while its EBITDA margins remain stable. We believe this
will improve its leverage to the low-12x area in 2021 and low-9x
area in 2022, and enable it to generate positive unadjusted FOCF of
around $30 million in 2021 and $50 million in 2022.
"We could raise our rating on EFI if the demand for its industrial
inkjet printers rebounds and its achieve synergies from its LBO
cost-savings plan such that it improves its EBITDA generation,
reduces it leverage toward the 9x area, and generate positive
unadjusted FOCF after debt service.
"We could revise our outlook on EFI to stable if it experiences
weakened demand for its digital imaging solutions, prolonged
restructuring costs, issues with its business operations, and
further macroeconomic headwinds from COVID-19 such that it sustains
leverage of more than 10x or generates negative FOCF after debt
service."
ELEMENT SOLUTIONS: S&P Affirms 'BB' ICR on Coventya Acquisition
---------------------------------------------------------------
S&P Global Ratings affirmed all its ratings on Element Solutions
Inc., including its 'BB' issuer credit rating, 'BBB-' issue-level
rating on the company's senior secured revolver and term loan,
including the add-on of $400 million, and 'BB' rating on its
unsecured notes.
S&P said, "The outlook remains stable, reflecting our expectation
that despite $400 million in incremental debt, leverage will remain
appropriate for the rating. We expect that demand strength in the
company's electronics end markets, a rebound in the automotive
sector, and strong free cash flow generation will help maintain
funds from operations (FFO) to total debt above 20% over the next
two years (pro forma for the transaction)."
On June 11, 2021, Element Solutions Inc. announced the planned
acquisition of Coventya Holding SAS, a global specialty chemical
manufacturer for the surface finishing industry, for EUR420 million
(about $512 million).
The company plans to raise a $400 million fungible add-on to its
senior secured term loan B due in 2026, with the proceeds used to
partially finance the acquisition. The remainder of the purchase
price ($112 million) will be funded through cash on hand.
S&P Global Ratings anticipates that credit metrics for Element
should remain appropriate for the rating, despite the company's
recent announcement that it has entered into an agreement to
acquire French specialty chemical manufacturer Coventya in a
primarily debt-funded transaction. Valued at EUR420 million (about
$512 million), the deal will be funded through a $400 million
add-on to its term loan facility and cash on hand. S&P said, "Given
Coventya's relatively small size of operations, we do not
anticipate any meaningful impact to Element's business risk
profile. We also do not anticipate any weakening in the financial
risk profile. While deteriorating slightly from our previous base
case, pro forma for the transaction we expect S&P Global
Ratings-adjusted weighted FFO to debt will remain 20%-30%. We also
expect management will remain committed to maintaining credit
ratios within this range, but do not expect additional debt
paydowns beyond mandatory amortization on the company's term
loan."
S&P said, "The stable outlook on Element reflects our view that
earnings will improve in 2021, supported by the global economic
recovery, particularly a continued rebound in automotive end
markets (25% of the company's end-market exposure) and bolstered by
outperformance in electronics. It will maintain credit ratios
within this range, and we do not factor in additional material
debt-funded acquisitions or share buybacks."
S&P could lower its ratings in the next year if FFO to debt fell
below 20% on a pro forma basis with no immediate prospect for
improvement. This would most likely occur if:
-- Global industrial demand unexpectedly weakened in 2021 compared
with 2020;
-- Element began facing raw material cost pressures;
-- The company returned a significant amount of balance sheet cash
to shareholders; or
-- EBITDA margins deteriorated significantly, dropping over 200
basis points (bps), along with marginally weaker revenue growth.
S&P could also consider a negative rating action if the company
pursued large debt-funded acquisitions or more aggressive,
leveraging financial policies.
S&P could consider a positive rating action in the next year if FFO
to debt rose above 30% pro forma for acquisitions, and it believed
management was committed to maintaining such leverage. This could
occur if:
-- EBITDA margins expanded over 200 bps;
-- Revenue growth were slightly higher than our expectations; and
-- S&P expected the company to balance shareholder rewards and
acquisitions with debt paydowns.
ESSENTIAL PROPERTIES: S&P Assigned 'BB+' ICR, Outlook Stable
------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issuer credit rating to
Essential Properties Realty Trust Inc. (EPRT) and its operating
partnership, Essential Properties L.P.
S&P said, "The stable outlook reflects our view that EPRT's
operating performance will largely return to pre-pandemic levels
during the second half of 2021 and cash flow generation will remain
stable given the company's long-term triple-net leases. The outlook
also reflects our expectations that the company will fund a
majority of its investment activity with equity and free cash flow.
As a result, we project S&P Global Ratings-adjusted debt to EBITDA
will improve to the mid- to high-5x area over the next 12 months."
EPRT is a small-sized REIT with modest industry and geographic
concentration relative to net-lease peers. EPRT has grown rapidly
since its IPO in 2018 through robust acquisition activity, more
than doubling the size of its portfolio to $2.7 billion in
undepreciated real estate investments as of March 31, 2021 (from
$1.2 billion as of June 30, 2018). However, the company remains the
smallest among our rated net-lease REITs and one of the smallest
rated REITs overall, which S&P sees as a relative weakness. The
company focuses its investments in service and experience-based
retail assets, with 95.3% of first quarter 2021 annualized base
rent (ABR) generated from those categories. These retail categories
were among the hardest hit during the pandemic, and EPRT's rent
collection of 70% in the second quarter of 2020 was lower than most
peers (although collections have since recovered to levels around
key peers). The company's large exposure to retail assets resulted
in quarterly same-store rent declining 2.6% on average in 2020.
EPRT has emphasized investing in smaller-scale properties, with an
average investment of $2.2 million per property. In S&P's opinion,
these smaller properties provide increased asset fungibility from a
leasing perspective and liquidity from a sales perspective,
enabling the company to easily sell vacant properties and keep
occupancy high. This approach has also allowed the company to tweak
its property mix efficiently through its investment strategy by
quickly reallocating capital to subindustries with higher expected
risk-adjusted returns.
The company displays modest concentration at the tenant industry
and market level. EPRT's top-three industries (i.e., car washes,
quick-service, and early childhood education) accounted for 41.9%
of first quarter 2021 ABR, and its top-three markets (i.e., Texas,
Georgia, and Florida) accounted for 29.3% of ABR. Although the
company exhibits strong tenant diversification with no single
tenant accounting for more than 3% of ABR, from a holistic
perspective, EPRT faces modestly more concentration risk than most
of its rated net-lease peers.
S&P said, "EPRT's triple-net lease structure and sale-leaseback
transactions enhance our view of its asset profile and cash flow.
We consider EPRT's approach to sale-leaseback transactions under
triple-net leases as a credit positive. These transactions result
in a lower likelihood of move-outs, given the tenant's prior site
selection and the long-term structure of leases. Furthermore, the
company's approach of leveraging existing relationships allows it
to reach lease agreements with less competition and more favorable
terms. We view triple-net leases as less volatile and as having
more long-term predictability of cash flow than other REIT property
types, given their longer average lease duration." The company's
14.3-year weighted average lease term and 1.5% weighted average
escalation rate compare favorably to those of rated net-lease
peers. Additionally, the company has minimal lease expirations
through 2023, providing greater visibility and cash flow
stability.
EPRT focuses on middle-market tenants, which provide a greater pool
of potential tenants but lower overall tenant credit quality
relative to net-lease peers. Roughly 20% to 25% of the company's
tenants have an implied investment grade rating, with approximately
8% having implied credit ratings of 'CCC+'. Furthermore, unit-level
coverage declined significantly since the beginning of the
pandemic, with 24.9% of ABR generated from tenants with coverage
below 1.49x as of March 31, 2021 (compared to 8.4% one year prior).
While S&P views the company's tenant quality as a slight credit
negative, the company has exhibited extremely strong occupancy (at
least 99.1% throughout the pandemic), with rent collections
recovering to 99% in May of 2021.
S&P said, "We expect EPRT to maintain a conservative balance sheet
with acquisitions financed in a slightly deleveraging manner. We
expect EPRT's triple-net lease structure and solid rent collections
to generate stable cash flows over the forecast period.
Furthermore, we expect significant acquisition volume to underpin
EBITDA growth, and to be financed in a slightly deleveraging manner
on our adjusted metrics. We project S&P Global Ratings-adjusted
debt to EBITDA to improve to the mid- to high-5x area by year-end
2021 from 6.2x as of Dec. 31, 2020.
"Our view of the company's financial risk profile also incorporates
EPRT's relatively long weighted debt maturity schedule, with no
debt maturities coming due until 2024. Moreover, as of March 31,
2021, EPRT had a low weighted average interest rate of 3.04% after
incorporating its interest rate swap agreements. In addition,
EPRT's asset base is almost fully unencumbered, which we think
provides EPRT with financial flexibility to pursue secured debt for
refinancing purposes should the need arise.
"EPRT's assets are largely unencumbered, which gives the company
additional flexibility to raise capital. We would expect a senior
unsecured debt issuance to be notched up to 'BBB-', based on
substantial recovery prospects given the current level of
unencumbered assets.
"The stable outlook reflects our view that EPRT's operating
performance will largely return to pre-pandemic levels during the
second half of 2021 and cash flow generation will remain stable
given the company's long-term triple-net leases. The outlook also
reflects our expectations that the company will fund a majority of
its investment activity with equity and free cash flow. As a
result, we project S&P Global Ratings-adjusted debt to EBITDA will
improve to the mid- to high-5x area over the next 12 months."
S&P could raise the issuer credit rating on EPRT if the company:
-- Successfully executes on its growth strategy in a relatively
leverage-neutral manner and achieves greater scale such that it
compares more closely to key peers; or
-- Maintains its conservative financial policy as it relates to
funding acquisitions, such that adjusted debt to EBITDA declines to
and is sustained below 5.5x.
S&P could lower its ratings on EPRT if the company:
-- Adopts a more aggressive financial policy, financing investment
activity with a greater proportion of debt, such that adjusted debt
to EBITDA rises above 7.5x for a sustained period; or
-- Operating performance deteriorates well beyond our expectations
and compares unfavorably to peers, with material tenant
bankruptcies leading to falling occupancy and same-store cash NOI
declines.
Essential Properties Realty Trust Inc. is an internally managed
real estate company that acquires, owns, and manages primarily
single-tenant properties that are net leased on a long-term basis
in the U.S. The company leases its properties to middle-market
companies operating service-oriented or experience-oriented
businesses, such as restaurants, car washes, automotive services,
medical services, early childhood education, and health and
fitness. As of March 31, 2021, it had a portfolio of 1,240
properties across 259 tenants, 17 industries, and 43 states.
S&P Global Ratings believes there remains high, albeit moderating,
uncertainty about the evolution of the coronavirus pandemic and its
economic effects. Vaccine production is ramping up and rollouts are
gathering pace around the world. Widespread immunization, which
will help pave the way for a return to more normal levels of social
and economic activity, looks to be achievable by most developed
economies by the end of the third quarter. However, some emerging
markets may only be able to achieve widespread immunization by
year-end or later. S&P said, "We use these assumptions about
vaccine timing in assessing the economic and credit implications
associated with the pandemic. As the situation evolves, we will
update our assumptions and estimates accordingly."
-- U.S. real GDP increases by 6.5% in 2021 and by 3.1% in 2022;
-- Unemployment rate of 5.5% in 2021, declining to 4.6% in 2022;
-- Same-property NOI growth in the low-single-digit area given
EPRT's high proportion of leases with fixed annual lease
escalations and a weighted average annual escalation rate of
roughly 1.5%;
-- Acquisitions of $700 million to $800 million annually;
-- Dispositions of $65 million to $75 million per year;
-- Equity issuance of $400 million to $500 million in each of the
next two years; and
-- Dividend distributions of $100 million to $150 million in 2021
and 2022.
Key Metrics
-- S&P Global Ratings-adjusted debt to EBITDA will improve to the
mid- to high-5x area at year-end 2021 and to the mid-5x area at
year-end 2022.
-- Fixed-charge coverage improving to the high-4x to low-5x area
over the next two years.
-- Debt to undepreciated equity in the low-30% area over the next
two years.
S&P assesses EPRT's liquidity as adequate. S&P's assessment of the
company's liquidity profile incorporates the following expectations
and assumptions:
-- Liquidity sources will exceed uses by at least 1.2x over the
next 12 months;
-- Liquidity sources less uses will be positive, even if forecast
EBITDA declines by 10% (a REIT-specific threshold for adequate
liquidity);
- Sufficient covenant headroom for forecast EBITDA to decline by
10% without the company breaching covenant tests, and debt is at
least 10% below covenant limits;
-- The likely ability to absorb high-impact, low-probability
events with limited need for refinancing;
-- A generally satisfactory standing in the credit markets; and
-- Sound relationships with banks.
Principal liquidity sources:
-- Cash and cash equivalents of $42.8 million as of March 31,
2021;
-- $262 million of availability under the $400 million revolving
credit facility as of March 31, 2021;
-- Funds from operations of $140 million to $180 million over the
next 12 months; and
-- Proceeds from equity issuance of $193 million thus far in the
second quarter.
Principal liquidity uses:
-- Maintenance capital expenditures of $0 million to $5 million
annually;
-- Completed acquisitions of $124 million quarter to date; and
-- Dividend distributions of $115 million to $135 million over the
next 12 months.
EPRT was in compliance with all of its financial covenants as of
March 31, 2021. S&P's believe the company will maintain sufficient
covenant headroom over the next 12 to 24 months.
While EPRT does not have any publicly traded unsecured bonds
outstanding, its assets are largely unencumbered, which gives the
company additional flexibility to raise capital. S&P would expect a
senior unsecured debt issuance to be notched up to 'BBB-', based on
substantial recovery prospects given the current level of
unencumbered assets.
FAIRSTONE FINANCIAL: S&P Raises ICR to 'BB-', Off Watch Developing
------------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Fairstone
Financial Inc. to 'BB-' from 'B+'. The outlook is stable. At the
same time, S&P raised its rating on Fairstone's unsecured notes due
2024 to 'BB-' from 'B'. S&P removed the ratings from CreditWatch,
where it placed them with developing implications on Feb. 19,
2020.
The rating action reflects the acquisition of Fairstone Financial
by Duo Bank of Canada, which will result in Fairstone being subject
to prudential regulation. S&P views this as supportive of capital
and liquidity and thus creditworthiness. Duo Bank is regulated by
Canada's banking regulator, the OSFI, and had C$4.9 billion in
assets as of March 31, 2021, of which C$3.0 billion was at
Fairstone. Given that Fairstone makes up a majority of assets and
liabilities, S&P views it as a core operating subsidiary within Duo
Bank's overall business strategy. Fairstone Financial will be a
wholly owned operating subsidiary of Duo Bank of Canada.
S&P said, "We also raised the unsecured debt rating on Fairstone
Financial to 'BB-', consistent with our criteria for rating
unsecured debt issued by nonbank financial institutions subject to
prudential regulation.
"We expect the company to primarily rely on securitization markets
and broker deposits for funding. As of March 31, 2021, the
consolidated company's debt consisted of C$1.6 billion in secured
borrowing, C$0.7 billion of broker deposits, and C$0.6 billion of
long-term notes. In our calculation of ATE, we deduct about C$0.8
billion related to goodwill and intangibles and add back about
C$0.1 billion related to general reserves to reported equity of
C$1.6 billion. We expect that as government stimulus fades and
credit trends normalize, leverage will remain between 4.5x-6.5x on
a sustained basis."
As of March 2021, Duo Bank's regulatory ratios were:
-- Common equity Tier 1 capital: 17.4% (7.0% requirement);
-- Tier 1 capital: 17.4% (8.5%); and
-- Total capital: 18.25% (10.5%).
Duo Bank and subsidiaries provide financial products to underserved
and underbanked customers in Canada. Duo Bank's product offerings
include credit cards and deposit services that complement
Fairstone's core product offerings of unsecured and secured
personal loans, mortgage loans, and retail financing (the company
partners with leading retailers to offer customer credit solutions
to finance their purchases), which S&P views favorably.
S&P said, "The stable outlook reflects our expectations for
leverage, measured as debt to ATE, of 4.5x-6.5x; a net charge-off
ratio around 7%; adequate liquidity; and adequate cushion to OSFI
regulatory requirements.
"We could lower the ratings over the next 12 months if leverage
exceeds 6.5x on a sustained basis or credit performance materially
deteriorates.
"An upgrade is unlikely over the next 12 months. Over time, we
could raise the ratings if leverage is well below 4.5x on a
sustained basis and asset quality remains steady."
FARMACIA NUEVA: July 28 Plan & Disclosure Hearing Set
-----------------------------------------------------
On June 16, 2021, debtor Farmacia Nueva Borinquen, Inc., filed with
the U.S. Bankruptcy Court for the District of Puerto Rico a
Disclosure Statement.
On June 17, 2021, Judge Mildred Caban Flores conditionally approved
the Disclosure Statement and ordered that:
* July 28, 2021, at 9:00 AM, via Microsoft Teams is the
hearing for the consideration of the final approval of the
Disclosure Statement and the confirmation of the Plan.
* That acceptances or rejections of the Plan may be filed in
writing by the holders of all claims on/or before 14 days prior to
the date of the hearing on confirmation of the Plan.
* That any objection to the final approval of the Disclosure
Statement and/or the confirmation of the Plan shall be filed on/or
before 14 days prior to the date of the hearing on confirmation of
the Plan.
* That the debtor shall file with the Court a statement
setting forth compliance with each requirement in U.S.C. Sec. 1129,
the list of acceptances and rejections and the computation of the
same, within 7 working days before the hearing on confirmation.
A copy of the order dated June 17, 2021, is available at
https://bit.ly/3zKzrVv from PacerMonitor.com at no charge.
About Farmacia Nueva Borinquen
Farmacia Nueva Borinquen, Inc. sought protection for relif under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 20 03715)
on Sept. 21, 2020, listing under $1 million in both assets and
liabilities. Nilda Gonzalez Cordero, Esq., represents the Debtor.
FH MD PARENT: S&P Assigns B- Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to FH MD
Parent Inc. (doing business as MedData). At the same time, S&P
assigned its 'B-' issue-level rating and '3' recovery rating to its
secured debt. The '3' recovery rating indicates its expectation of
meaningful (50%-70%; rounded estimate: 55%) recovery in the event
of a default.
S&P said, "The stable outlook reflects our expectation that the
company's organic revenue will rise by the mid-single-digit percent
area in 2021 while its EBITDA margin remains relatively flat in the
low-20% range as it stabilizes its operations after several
customer terminations and challenging pandemic-related
circumstances. We expect adjusted debt leverage to be about 7.7x in
2021, declining to about 5.3x in 2022, with breakeven free
operating cash flow (FOCF) in 2021 and about $20 million in 2022."
MedData has a limited track record since being carved out from
MEDNAX, with modest scale, a narrow business focus, and limited
health care end markets. The company was carved out by MEDNAX in
2019 and bought by private-equity firms Frazier and Edgewater.
MedData is narrowly focused on eligibility in the highly fragmented
and competitive revenue cycle management (RCM) industry, with more
than 60% of revenue stemming from screening patients for Medicaid
programs and assisting with application and enrollment processes.
The company also provides patient responsibility, guiding patients
through bills and determining payment method, and accounts
receivable (A/R) services, assisting hospitals in recovering
revenue from liable third parties and following-up on accounts
denied by payers. The company is acquiring DECO Recovery Management
LLC, an RCM company focused nearly entirely on eligibility, to
expand geographic coverage of MedData's core offering.
The RCM industry is highly fragmented, with large well-financed
multisolution providers. These companies manage health care
providers' revenue cycle operations, including patient
registration, insurance and benefit verification, medical treatment
documentation and coding, bill preparation, and collections from
patients and payers. Some RCM providers assume full responsibility
of the customers' existing RCM organization, including all costs.
Large hospitals and health systems tend to partner with larger RCM
outsourcers, though some of the larger vendors lack certain
specialization, forcing health care providers to utilize multiple
RCM vendors. While some health systems prefer to operate with
multiple vendors to mitigate risk, many consolidate RCM vendors to
save costs and streamline their operations. S&P views companies
that offer specialized point solutions, like MedData, as less
competitive than their larger well-financed peers. Nevertheless,
S&P views MedData presence in the acute-care market favorably due
to hospitals' focus on efficiency and revenue optimization,
especially with patients being responsible for an increasing
portion of their overall health care costs.
While there have been no terminations so far this year, the company
experienced terminations over 2019 and 2020, and its patient
responsibility revenue business has declined for several years.
Contract terminations were largely related to clients switching to
a new vendor following a change in senior leadership as well as
proactively terminating clients if they did not meet certain
profitability thresholds. The remainder of terminations over the
period were due to a client making the decision to bring the
business in-house or for other reasons. Growth in 2022 is expected
to be driven by an increase in new business sales in the second
half of 2021.
S&P said, "We expect a highly leveraged financial risk profile,
with debt to EBITDA of about 7.5x and 5.5x in 2021 and 2022,
respectively, and FOCF of about 10% in 2022. Our assessment of the
company's financial risk incorporates its financial-sponsor
ownership and that it will more likely remain highly leveraged
because we expect it will likely pursue debt-funded acquisitions.
We expect cash flow to improve in 2021 from topline growth, lower
nonrecurring expenses, and some cost synergies. Given single-digit
organic growth driven by the acceleration of new customers,
recovery of elective surgeries, and the end of any further
integration costs, we project better free cash flow in 2022.
"We expect the company to complement its organic growth with
acquisitions to expand its product portfolio. In our analysis, we
assume the company could pursue business development opportunities
to diversify its product portfolio and solidify its position in the
RCM market. We assume it could do so by deploying part of its cash
balance toward acquisitions or through additional debt issuances.
"The stable outlook reflects our expectation that the company's
organic revenue will rise by the mid-single-digit percent area in
2021 while its EBITDA margin remains relatively flat in the low-20%
range as it stabilizes its operations after several customer
terminations and moves away from challenging pandemic-related
conditions. We expect adjusted debt leverage of about 7.7x in 2021,
declining to about 5.3x in 2022 and breakeven FOCF in 2021 and
about $20 million in 2022.
"We could consider a downgrade if the company's operating
performance is significantly weaker than our forecast, possibly if
it continues to experience significant customer terminations, or
has difficulty signing on new customers, leading to minimal cash
flow generation.
"While unlikely within the next year or so, we could consider an
upgrade if the company successfully adds new customers, decreases
leverage comfortably below 5x on a sustained basis, and sustains
free operating cash flow to debt above 5%."
FIELDWOOD ENERGY: Chapter 11 Plan Faces Well Cleanup Objections
---------------------------------------------------------------
Law360 reports that the Gulf of Mexico oil and gas driller
Fieldwood Energy asked a Texas bankruptcy judge on Monday, June 21,
2021, to approve its Chapter 11 plan over the objections of oil
companies and insurers who claimed that the plan will saddle them
with the cost of decommissioning the company's oil rigs.
The virtual confirmation hearing before U.S. Bankruptcy Judge
Marvin Isgur opened with an over eight-hour session that saw former
leaseholders and issuers of the company's surety bonds line up to
oppose the plan, while Fieldwood said it had reached settlements
with a number of earlier objectors.
About Fieldwood Energy
Fieldwood Energy -- https://www.fieldwoodenergy.com/ -- is a
portfolio company of Riverstone Holdings focused on acquiring and
developing conventional assets, primarily in the Gulf of Mexico
region. It is the largest operator in the Gulf of Mexico owning an
interest in approximately 500 leases covering over two million
gross acres with 1,000 wells and 750 employees.
Fieldwood Energy and its 13 affiliates previously sought Chapter 11
protection (Bankr. S.D. Texas Lead Case No. 18-30648) on February
5, 2018, with a prepackaged plan that would deleverage $3.286
billion of funded debt by $1.626 billion.
On August 3, 2020, Fieldwood Energy and its 13 affiliates again
filed voluntary Chapter 11 petitions (Bankr. S.D. Tex. Lead Case
No. 20-33948). Mike Dane, senior vice president, and chief
financial officer signed the petitions.
At the time of the filing, the Debtors estimated $1 billion to $10
billion in both assets and liabilities.
Judge David R. Jones oversees the cases.
The Debtors tapped Weil, Gotshal & Manges LLP as their legal
counsel, Houlihan Lokey Capital, Inc. as an investment banker, and
AlixPartners, LLP, as financial advisor. Prime Clerk LLC is the
claims, noticing, and solicitation agent.
The first-lien group employed O'Melveny & Myers LLP as its legal
counsel and Houlihan Lokey Capital, Inc. as its financial advisor.
The RBL lenders employed Willkie Farr & Gallagher LLP as their
legal counsel and RPA Advisors, LLC as their financial advisor.
Meanwhile, the cross-holder group tapped Davis Polk & Wardwell LLP
and PJT Partners LP as its legal counsel and financial advisor,
respectively.
On August 18, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. Stroock & Stroock & Lavan,
LLPand Conway MacKenzie, LLC serve as the committee's legal counsel
and financial advisor, respectively.
FIELDWOOD ENERGY: Trade Claimants to Recover Up to 14% in Plan
--------------------------------------------------------------
Fieldwood Energy LLC, et al., submitted a Fifth Amended Joint
Chapter 11 Plan.
As of the Effective Date, the DIP Claims shall be Allowed in the
full amount outstanding under the DIP Credit Agreement, including
principal, interest, fees, costs, other charges, and expenses
provided for thereunder. In full and final satisfaction,
settlement, release, and discharge of each Allowed DIP Claim, on
the Effective Date, each holder of such Allowed DIP Claim shall
receive either (a) payment in full in Cash or (b) such other
treatment as to which the Debtors or the Post-Effective Date
Debtors, as applicable, and the holder of such Allowed DIP Claims
will have agreed upon in writing. On the Effective Date, all Liens
granted to secure the Allowed DIP Claims shall be terminated and of
no further force and effect.
The Plan proposes to treat claims and interests as follows:
* Class 1: Other Secured Claims. Such holder shall receive
either (i) payment in full in Cash, payable on the later of the
Effective Date and the date that is 10 Business Days after the date
on which such Other Secured Claim becomes an Allowed Other Secured
Claim, in each case, or as soon as reasonably practicable
thereafter, (ii) such other treatment so as to render such holder's
Allowed Other Secured Claim Unimpaired, or (iii) any other
treatment consistent with the provisions of section 1129 of the
Bankruptcy Code, including by providing such holder with the
"indubitable equivalent" of their Allowed Other Secured Claim.
Class 1 is impaired.
* Class 3: FLFO Claims. On the Effective Date, in full and final
satisfaction of such Allowed FLFO Claim, (a) each holder of an
Allowed FLFO Claim shall receive its Pro Rata Share of the FLFO
Distribution Amount and (b) all remaining Allowed FLFO Claims shall
be assumed by the NewCo Entities as modified to the extent set
forth in the First Lien Exit Facility Documents. Class 3 is
impaired.
* Class 4: FLTL Claims. Each holder of an Allowed FLTL Claim
shall receive its Pro Rata Share of 100% of the New Equity
Interests and the FLTL Subscription Rights. Class 4 is impaired.
* Class 5: SLTL Claims. Each holder of an Allowed SLTL Claim
shall receive its
Pro Rata Share of the SLTL Warrants and the SLTL Subscription
Rights. Class 5 is impaired.
* Class 6A: Unsecured Trade Claims. Each holder of an Allowed
Unsecured Trade Claim that has executed a Trade Agreement shall
receive: (i) if 14% of the aggregate amount of all Allowed
Unsecured Trade Claims is less than or equal to $8,000,000, Cash in
an amount equal to 14% of the Allowed amount of such holder's
Allowed Unsecured Trade Claim; or (ii) if 14% of the aggregate
amount of Allowed Unsecured Trade Claims is greater than
$8,000,000, its Pro Rata share of $8,000,000. Class 6A is
impaired.
* Class 6B: General Unsecured Claims. Each holder of an Allowed
General Unsecured Claim shall receive, up to the full amount of
such holder's Allowed General Unsecured Claim, its Pro Rata Share
of the GUC Warrants and any Residual Distributable Value. Class 6B
is impaired.
Class 8: Subordinated Securities Claims. All Subordinated
Securities Claims, if any, shall extinguished as of the Effective
Date. Class 8 is impaired.
Class 10: Existing Equity Interests. On the Effective Date, all
Existing Equity Interests shall be extinguished, and will be of no
further force or effect. Class 10 is impaired.
Plan Distributions of Cash shall be funded from, among other
things, the Debtors' Cash on hand, the New Money Consideration, and
the proceeds of the Equity Rights Offerings.
Attorneys for Debtors
and Debtors in Possession:
Alfredo R. Pérez
Clifford W. Carlson
WEIL, GOTSHAL & MANGES LLP
700 Louisiana Street, Suite 1700
Houston, Texas 77002
Telephone: (713) 546-5000
Facsimile: (713) 224-9511
Matthew S. Barr (admitted pro hac vice)
Jessica Liou (admitted pro hac vice)
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
A copy of the Disclosure Statement is available at
https://bit.ly/3vCABiw from Primeclerk, the claims agent.
About Fieldwood Energy
Fieldwood Energy -- https://www.fieldwoodenergy.com/ -- is a
portfolio company of Riverstone Holdings focused on acquiring and
developing conventional assets, primarily in the Gulf of Mexico
region. It is the largest operator in the Gulf of Mexico owning an
interest in approximately 500 leases covering over two million
gross acres with 1,000 wells and 750 employees.
Fieldwood Energy and its 13 affiliates previously sought Chapter 11
protection (Bankr. S.D. Texas Lead Case No. 18-30648) on February
5, 2018, with a prepackaged plan that would deleverage $3.286
billion of funded debt by $1.626 billion.
On August 3, 2020, Fieldwood Energy and its 13 affiliates again
filed voluntary Chapter 11 petitions (Bankr. S.D. Tex. Lead Case
No. 20-33948). Mike Dane, senior vice president, and chief
financial officer signed the petitions.
At the time of the filing, the Debtors estimated $1 billion to $10
billion in both assets and liabilities.
Judge David R. Jones oversees the cases.
The Debtors tapped Weil, Gotshal & Manges LLP as their legal
counsel, Houlihan Lokey Capital, Inc. as an investment banker, and
AlixPartners, LLP, as financial advisor. Prime Clerk LLC is the
claims, noticing, and solicitation agent.
The first-lien group employed O'Melveny & Myers LLP as its legal
counsel and Houlihan Lokey Capital, Inc. as its financial advisor.
The RBL lenders employed Willkie Farr & Gallagher LLP as their
legal counsel and RPA Advisors, LLC as their financial advisor.
Meanwhile, the cross-holder group tapped Davis Polk & Wardwell LLP
and PJT Partners LP as its legal counsel and financial advisor,
respectively.
On August 18, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. Stroock & Stroock & Lavan,
LLPand Conway MacKenzie, LLC serve as the committee's legal counsel
and financial advisor, respectively.
FIRST TO THE FINISH: Trustee Taps Manier & Herod as Legal Counsel
-----------------------------------------------------------------
Michael Collins, the trustee appointed in the Chapter 11 case of
First to the Finish Kim and Mike Viano Sports Inc., seeks approval
from the U.S. Bankruptcy Court for the Southern District of
Illinois to hire Manier & Herod, P.C. to serve as his legal
counsel.
The firm's services include:
(a) providing legal advice regarding the trustee's rights,
powers, and duties in the Debtor's Chapter 11 case;
(b) assisting in the preparation and filing of legal
documents, including the Debtor's plan of reorganization and
disclosure statement;
(c) representing the trustee in all litigation aspects of the
case and any related proceeding involving the Debtor's estate;
(d) negotiating with creditors and parties in interest; and
(e) performing other legal services.
The firm's hourly rates are as follows:
Michael E. Collins, Esq. $490 per hour
Robert W. Miller, Esq. $370 per hour
Principals $305 - $490 per hour
Associates $250 - $300 per hour
Paralegals $80 - $130 per hour
Michael Collins, Esq., an attorney at Manier & Herod, disclosed in
a court filing that his firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Michael E. Collins, Esq.
Robert W. Miller, Esq.
Manier & Herod, P.C.
1201 Demonbreun Street, Suite 900
Nashville, TN 37203
Tel: 615-244-0030
Fax: 615-242-4203
Email: MCollins@ManierHerod.com
rmiller@manierherod.com
About First to the Finish Kim
and Mike Viano Sports Inc.
Edwardsville, Ill.-based First to the Finish Kim and Mike Viano
Sports Inc. sells sporting goods, hobbies and musical instruments.
First to the Finish Kim filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ill. Case No.
20-30955) on Oct. 7, 2020. Mike Viano, president, signed the
petition. In the petition, the Debtor disclosed $1 million to $10
million in both assets and liabilities. Judge Laura K. Grandy
oversees the case. The Debtor is represented by Carmody MacDonald
P.C.
Michael E. Collins is the trustee appointed in the Debtor's Chapter
11 case. The trustee is represented by Manier & Herod, P.C.
FIRSTLIGHT HOLDCO: S&P Affirms 'B-' ICR on Continued Improvements
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating and all
other ratings on U.S.-based fiber infrastructure provider
FirstLight Holdco Inc.
At the same time, S&P revised its financial policy assessment to
neutral from FS-6 to adequately capture the long-term risks of the
firm's financial policy.
FirstLight first-quarter 2021 results demonstrated continued
improvement in operating performance. However, ongoing free
operating cash flow (FOCF) deficits will likely keep leverage
higher than 6.5x over the next 12 months.
The stable outlook reflects S&P's expectation that FirstLight will
reduce its leverage to the 7x area in 2021 from about 9x on
earnings growth from recent contract wins and favorable demand
characteristics in the fiber transport industry, although leverage
will remain above our threshold for a higher rating.
S&P said, "While FirstLight's adjusted debt to EBITDA remains
elevated, the affirmation reflects our expectation that leverage
will improve to the mid- to high-7x area by the end of fiscal-year
2021. FirstLight experienced a delay in its new installations due
to the COVID-19 pandemic in the first half of 2020, which kept
leverage elevated. However, we expect it to report a solid
operating and financial performance in 2021 on continued strong
demand for connectivity and wireless backhaul opportunities. These
factors should contribute to leverage reduction to the 7x area by
the end of fiscal-year 2021 from 9x in 2020. Specifically, we
expect 25% EBITDA growth from the full realization of the earnings
from its 2020 installs as well as the EBITDA contributions from its
recent tuck-in acquisitions. Furthermore, we believe the company's
FOCF deficits will moderate over the next 12 months as its capital
intensity subsides to around 50% from 70% in the year-ago period as
it expands in its underutilized footprint."
FirstLight received a sizeable equity commitment from its owners to
support the densification of its existing footprint in 2021. Antin
Infrastructure Partners has contributed $327 million in additional
equity since the July 2018 LBO transaction to support the company's
capital spending and tuck-in acquisitions. While FirstLight may
require additional funds if its capital investment deviates from
its base-case forecast, S&P believes its owners will contribute
additional capital if it continues to successfully execute on its
expansion plans.
S&P said, "We expect leverage will remain elevated over the long
term given the company's small scale.Favorable industry trends
stemming from the rising demand for bandwidth should result in
consolidated organic earnings growth in the mid-teens percent area
through 2022. However, we believe the leverage will remain above
6.5x longer term given our expectations for high leverage on
capital expenditures and debt-financed acquisitions, which should
help improve long-term operating leverage.
"Our adjusted leverage metrics include restructuring/transaction
expenses and exclude any booked-but-not-billed (BBNB) adjustment.
"We are revising our financial policy assessment to neutral from
FS-6 to reflect the long-term risks of the firm's financial policy.
The revision reflects the belief that the company will not
administer any dividends in the near to intermediate term. As an
infrastructure fund, we believe Antin is focused on reinvesting
operating cash flow back into the business without distributions."
Furthermore, Antin has demonstrated a strong ongoing commitment to
the business that reflects a longer investment horizon compared
with a typical private equity sponsor, who typically dispose of
assets within a short to intermediate time frame.
S&P said, "The stable outlook reflects our expectation that
FirstLight will reduce its leverage to the 7x area in 2021 from
about 9x on earnings growth from recent contract wins and favorable
demand characteristics in the fiber transport industry. However, we
believe leverage will remain above our threshold for a higher
rating.
"We could lower our rating on FirstLight if competition leads to
pricing pressure, resulting in lower EBITDA that ultimately hurts
the company's liquidity position and causes us to assess its
capital structure as unsustainable over the longer term.
"We could raise our rating on FirstLight if its adjusted debt to
EBITDA improves to less than 6.5x and we believe it is committed to
maintaining leverage below this level on a sustained basis. An
upgrade is also dependent on the company improving its margins such
that they are on par with those of its peers while generating
positive FOCF."
FOCUS FINANCIAL: Moody's Affirms Ba3 CFR Amid Term Loan Add-on
--------------------------------------------------------------
Moody's Investors Service has affirmed the Ba3 corporate family
rating and Ba3-PD probability of default rating of Focus Financial
Partners, LLC. Concurrently, Moody's has affirmed the Ba3 rating of
the company's senior secured term loan and revolving credit
facility. The outlook on all ratings is stable.
The rating action follows the company's announcement that it will
add-on $400 million to its existing first lien term loan as well as
an additional $400 million on a delayed draw basis over the next 6
months. The proceeds will be used to continue to fund acquisitions
within the global wealth management sector.
A summary of the rating action follows:
Issuer: Focus Financial Partners, LLC
Corporate Family Rating, affirmed at Ba3
Probability of Default Rating, affirmed at Ba3-PD
Senior Secured Bank Credit Facility
$1,639 million Senior Secured Term Loan B3 affirmed at Ba3
$650 million Senior Secured First Lien Revolving Credit Facility
affirmed at Ba3
$400 million Senior Secured Term Loan B4 assigned at Ba3
$400 million Senior Secured Delayed Draw Term Loan assigned at
Ba3
Outlook Actions:
Issuer: Focus Financial Partners, LLC
Outlook, remains stable
RATINGS RATIONALE
The rating affirmation reflects Moody's expectation that the
transaction proceeds will be used to fund acquisitions structured
to provide meaningful downside earnings protection for Focus. The
growth prospects for acquired earnings as well as the company's
commitment to maintain leverage targets also support the ratings.
Leverage over the short-term will be elevated but the robust
pipeline of deal activity is likely to drive revenue and profit
margin growth significantly enough to offset the incremental debt.
Debt-to-EBITDA as calculated by Moody's stood at 5.3x at March 31,
2021. However, Focus' revenue has grown at close to a 30% CAGR for
the past several years and the company has maintained quarterly
EBITDA margins in excess of 20% during 2020 despite the
uncertainties of the pandemic.
Focus' Ba3 corporate family rating reflects its leading position as
an aggregator of registered investment advisers, strong asset
resiliency, stable and growing profit margins. Constraining the
company's ratings is its high financial leverage and intensifying
competition within the global wealth management sector.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Focus' rating could be upgraded if: 1) debt-to-EBITDA, as
calculated by Moody's, is sustained below 3.5x; or 2) the company
continues to benefit from sustained growth and demand for fiduciary
wealth management services ; or 3) there is greater revenue
diversity and increased presence outside the US wealth management
sector.
Conversely, factors that would lead to a downgrade of Focus'
ratings include: 1) debt-to-EBITDA, as calculated by Moody's, is
sustained above 5.0x; or 2) the company is unable to execute its
acquisition strategy successfully; or 3) Focus' financial policy
include a significant share repurchase or cash dividend program
that favors shareholders over creditors.
Focus is a leading aggregator of registered investment advisors
with over 70 partner firms operating primarily in the US. For the
last twelve months ended March 31, the company earned over $1.4
billion in revenue and its partner firms manage over $250 billion
in client assets.
The principal methodology used in these ratings was Asset Managers
Methodology published in November 2019.
FOCUS FINANCIAL: S&P Rates New $800MM First-Lien Term Loan 'BB-'
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue rating to Focus
Financial Partners' (BB-/Stable/--) proposed $800 million
first-lien term loan (including a $400 million delayed draw) that
will mature in 2028. Focus Financial Partners LLC is a subsidiary
of Focus Financial Partners Inc. S&P anticipates that Focus will
use the proceeds to fund future acquisitions and for other general
corporate purposes.
S&P said, "We continue to expect Focus to operate with leverage of
4x-5x, as calculated by S&P Global Ratings, during the next 12
months, even as the company pursues growth that we expect will be
largely debt funded (with proceeds from this issuance).
Furthermore, we anticipate that Focus will remain acquisitive
during our outlook horizon and continue to expect significant
revenue and EBITDA growth resulting from transactions completed
during 2020 and 2021. We also anticipate continued organic
growth."
FORD CITY CONDOMINIUM: Taps Crane, Simon, Clar & Goodman as Counsel
-------------------------------------------------------------------
Ford City Condominium Association seeks approval from the U.S.
Bankruptcy Court for the Northern District of Illinois to hire
Crane, Simon, Clar & Goodman to serve as co-counsel with Golden Law
in its Chapter 11 case.
The firm's services include:
(a) preparing legal papers;
(b) providing the Debtor with legal advice with respect to its
rights and duties involving its property as well as its
reorganization efforts;
(c) appearing in court; and
(d) performing other legal services that may be required from
time to time in the ordinary course of the Debtor's business during
the administration of the bankruptcy case.
The firm's hourly rates are as follows:
Arthur G. Simon, Esq. $520 per hour
Scott R. Clar, Esq. $520 per hour
Karen R. Goodman, Esq. $520 per hour
Jacob D. Comrov, Esq. $300 per hour
John H. Redfield, Esq. $420 per hour
The Debtor paid $35,000 to the law firm as a retainer.
Scott Clar, Esq., the firm's attorney who will be providing the
services, disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Scott R. Clar, Esq.
Crane, Simon, Clar & Goodman
135 S. LaSalle St., Suite 3950
Chicago, IL 60603
Tel.: (312) 641-6777
Email: sclar@craneheyman.com
About Ford City Condominium Association
Chicago-based Ford City Condominium Association sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No.
21-05193) on April 20, 2021. Wendy Watson, president, signed the
petition. In the petition, the Debtor disclosed total assets of
$511,636 and total liabilities of $1,266,643. Judge Carol A. Doyle
oversees the case. Golden Law and Crane, Simon, Clar & Goodman
serve as the Debtor's legal counsel.
FORMING MACHINING: S&P Affirms 'CCC+' ICR, Outlook Negative
-----------------------------------------------------------
S&P Global Ratings affirmed its ratings on Forming Machining
Industries Holdings LLC (FMI), including its 'CCC+' issuer credit
rating.
The negative outlook reflects that the company's liquidity could
weaken further if its production volumes do not begin to recover
this year as S&P expects.
S&P said, "We expect FMI's credit metrics to improve year over year
in 2021. Due to the effects of the coronavirus pandemic on aircraft
build rates combined with the temporary stoppage of Boeing's 737
MAX production, the company's credit metrics weakened significantly
in 2020 with debt to EBITDA of about 13.9x. However, we expect
FMI's leverage to improve in 2021 as its demand starts to recover,
MAX production increases, and the company continues to benefit from
the significant cost reductions it has implemented since the
beginning of 2020. That said, we forecast its debt to EBITDA will
remain weak at more than 10x. We expect a further improvement in
2022, though this could be limited if the build rates on its
commercial and business jet platforms do not increase as expected
or its earnings and cash flow do not improve as its volumes
increase.
"We expect the company's liquidity to improve as the year
progresses. FMI's liquidity weakened in 2020 because it generated
negative free cash flow due to its lower volumes and earnings. To
supplement its liquidity, the company drew on its $50 million
revolving credit facility, which has about $8 million of remaining
availability. As of March 31, 2021, FMI had about $5.6 million of
cash on hand and could pursue other options to further improve
liquidity. We also forecast its free cash flow will be a modest use
of cash of about $5 million-$9 million in 2021. The company had a
limited cushion (4%) under its 6.6x first-lien net leverage
covenant as of the end of the first quarter, though we expect its
cushion to improve as it generates increased earnings.
"We continue to forecast that the volume of global air travel will
not return to pre-pandemic levels until 2024. We have seen some
recovery in certain domestic markets, such as in the U.S. and
China, where the spread of COVID-19 has declined significantly due
to successful vaccine rollouts or government policies. However,
other countries have not been as successful in combating the spread
of the disease, including European countries and India, which will
limit the recovery in international travel. We expect the recovery
in certain domestic markets to benefit the build rates for
narrowbody aircraft. However, we anticipate widebody production
will likely remain weak for the next few years. Business jet demand
was much less affected by the pandemic, thus we expect the
production of these aircraft to return to 2019 levels during 2021.
"The negative outlook on FMI reflects the risk that its credit
metrics or liquidity will deteriorate further if the build rates of
Boeing's platforms, including the 737 MAX, and business jets do not
recover as we expect or its cash usage is higher than we forecast
in 2021. We now expect the company's debt to EBITDA to remain above
10.0x in 2021 before improving to 8.7x-9.1x in 2022.
"We could lower our rating on FMI if we believe it will likely
default in the next 12 months due to a near-term liquidity crisis
or, although less likely, we believe it is considering a distressed
exchange offer or redemption. This liquidity crisis would likely
occur if the headwinds from the pandemic affect the company's
earnings and free cash flow for longer than we currently
anticipate.
"We could revise our outlook on FMI to stable if its earnings and
cash flow are not as weak as expected, it maintains adequate
liquidity, and it improves its debt to EBITDA below 9x and we
anticipate it will continue to decline. This would likely occur if
the company reduces its costs by a greater-than-expected level or
build rates rise at a faster rate than we forecast."
GC EOS BUYER: S&P Affirms 'B-' Rating on First-Lien Term Loan
-------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issue-level rating on GC EOS
Buyer Inc.'s first-lien term debt (term loan and senior secured
notes) following the company's proposed $180 million add-on to its
$678 million first-lien term loan due in 2025. The recovery rating
remains '4', indicating its expectation for average (30%-50%;
rounded estimate: 30%) recovery in a default scenario.
The add-on will be roughly neutral for leverage, with the small
reduction of cash for fees offset by the benefit of lower interest
expense. The company (doing business as BBB Industries) will use
the proceeds to pay off its $180 million second-lien term loan.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
S&P said, "Our simulated default scenario assumes a payment default
in 2023 because of a combination of order fill rate and quality
issues that cause customers to procure from other aftermarket
suppliers and greater competition from new and existing
competitors. We expect these conditions to reduce BBB Industries'
volumes, revenue, gross margins, and net income, reducing liquidity
and operating cash flow."
Simulated default assumptions
-- Year of default: 2023
-- Jurisdiction: U.S.
-- LIBOR: 250 basis points
-- Asset-based lending facility revolver: 60% drawn at default
-- All debt: includes six months of accrued interest
-- Administrative claims: 5% of enterprise value
Simplified waterfall
-- Gross enterprise value: $587 million
-- Administrative expenses: $29 million
-- Net enterprise value: $558 million
-- Obligor/nonobligor valuation split: 90%/10%
-- Priority claims: $183 million
-- Total collateral value for secured debt: $350 million
-- Total first-lien debt: $1.126 billion
--Recovery expectations: 30%-50% (rounded estimate: 30%)
GEO GROUP: Receives Wedbush Vote of Confidence
----------------------------------------------
Davide Scigliuzzo of Bloomberg News reports that, according to
Wedbush Securities Inc., a recent rally in the shares of Geo Group
Inc., on of the largest operators of private prisons in the U.S.,
could be just what the company needs to get over its troubles.
Analysts at the brokerage raised their price target on the firm by
$1.25 to $8.25 in a Friday, June 18, 2021, note and said the
stock's advance this month could make it easier for the company to
sell more shares and address debt maturities.
About Geo Group
Geo Group conducts substantial business and manages and/or owns
correctional facilities (private prisons and/or mental health
facilities) in Thornton, Delaware County, Pennsylvania (George W.
Hill Correctional Facility) as well as elsewhere in Pennsylvania
(Moshannon Valley Correctional Facility in Philipsburg, PA) and
across the United States. Geo Group also conducts substantial
business in this District and Division by providing "rehabilitation
programs to individuals while in-custody and post-release into the
community."
GIRARDI & KEESE: Loaned $20 Mil. to Erika's Business. Says Atty.
----------------------------------------------------------------
Law360 reports that reality television star Erika Girardi's
companies may have received over $20 million in loans from her
husband's law firm, Girardi Keese, along with improperly assigned
fees from a client settlement, a bankruptcy trustee's special
counsel claimed Friday in court documents.
The loans are detailed in "tax documents spanning multiple years,"
according to attorney Ronald Richards, who is investigating whether
she has assets that could be seized by Girardi Keese's bankruptcy
trustee. Richards said he gave Erika Girardi's attorney evidence of
the loans and the alleged improper client settlement fees last
week.
About Girardi & Keese
Girardi and Keese or Girardi & Keese was a Los Angeles-based law
firm founded in 1965 by lawyers Thomas Girardi and Robert Keese. It
served clients in California in a variety of legal areas. It was
known for representing plaintiffs against major corporations.
An involuntary Chapter 7 petition (Bankr. C.D. Cal. Case No.
20-21022) was filed in December 2020 against GIRARDI KEESE by
alleged creditors Jill O'Callahan, Robert M. Keese, John Abassian,
Erika Saldana, Virginia Antonio, and Kimberly Archie.
The petitioners' attorneys:
Andrew Goodman
Goodman Law Offices, Apc
Tel: 818-802-5044
E-mail: agoodman@andyglaw.com
Elissa D. Miller, a member of the firm SulmeyerKupetz, has been
appointed as Chapter 7 trustee.
The Chapter 7 trustee can be reached at:
Elissa D. Miller
333 South Grand Ave., Suite 3400
Los Angeles, California 90071-1406
Telephone: (213) 626-2311
Facsimile: (213) 629-4520
E-mail: emiller@sulmeyerlaw.com
GRANITE GENERATION: Moody's Alters Outlook on Ba3 CFR to Negative
-----------------------------------------------------------------
Moody's Investors Service changed the outlook of Granite
Generation, LLC to negative from stable and affirmed Granite's Ba3
corporate family rating, Ba3 senior secured and Ba3-PD Probability
of Default ratings. Granite's speculative grade liquidity rating is
unchanged and remains SGL-2.
RATINGS RATIONALE
"The negative outlook considers the uncertainty around Granite's
future financial performance following the May 2021 PJM capacity
auction that saw a material reduction in the capacity payments for
2022/2023" said Nati Martel, Vice President-Senior Analyst.
Capacity payments were particularly low in PJM's regional
transmission organization (RTO) zone and Granite's key Locational
Deliverability Areas (LDAs) of ComEd and ATSI. Moody's notes that
Granite did clear all of its bid capacity in the auction, however,
the reduced capacity payments will weaken Granite's cash flow in
2023. The severity of the impact on credit metrics at year-end 2023
will depend both on the outcome of the 2023/2024 PJM capacity
auction in December 2021 as well as Granite's energy margins going
forward. Management recently disclosed that, under its 3-year
rolling hedging program, it has currently hedged around 87% and 26%
of expected output in 2022 and 2023, respectively (2021: around
80%).
The affirmation of Granite's Ba3 CFR reflects Moody's expectation
that credit metrics will remain supportive of the current rating
through year-end 2021 following the improvement reported at
year-end 2020. Specifically, Moody's anticipate that Granite's
ratio of CFO pre changes in working capital (CFO pre-W/C) to debt
will approximate 16% at year-end 2021 underpined by the step-up in
capacity payments for the delivery year 2021/2022 driven by the
previous PJM auction (applicable until mid-2022), as well as
incremental debt repayments according to the company's term loan
cash sweep clauses. During 2020, Granite's repayments under the
term loan totaled nearly $72 million which, along with its energy
margins, largely explain the material improvement in its ratio of
CFO pre-W/C to debt to nearly 12% at year-end 2020 compared to
around 8% at year-end 2019.
Liquidity
Granite's SGL-2 speculative grade liquidity rating reflects good
liquidity and Moody's expectation that operating cash flow will be
sufficient to meet its debt service obligations, maintenance
capital expenditures and dividend payments to shareholders. The
SGL-2 assumes that Granite will remain free cash flow positive
(2020: around $102 million) over the next twelve months. The SGL-2
also considers that Granite had approximately $70 million available
under its $100 million revolving credit facility at the end of the
first quarter of 2021. Moody's assume that the company will
maintain enough availability under this facility to be able to cope
with unexpected calls on its liquidity requirements, for example in
connection with its hedging obligations. Borrowings under the
revolving credit facility are subject to material adverse change
and representation clauses; however, there are no maintenance
covenants. At year-end March 2021, Granite's restricted cash
balance approximated $61 million (FY2020: $42 million; FY2019: $15
million). Granite is subject to quarterly mandatory payments
(annual payments: $14 million) and cash sweep requirements.
According to the term loan agreement, Granite's cash sweep will
step up to 50% if the ratio of consolidated first lien net leverage
ratio exceeds 4.50x. In February 2021, Granite used $20 million of
its cash balance to repay debt.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade
Given Granite's negative outlook, an upgrade of the ratings is
unlikely in the near-term. However, a stable outlook or an upgrade
of Granite's rating is possible if it were to generate a ratio of
CFO pre-W/C (after maintenance costs) to debt above 15%, on a
sustained basis.
Factors that could lead to a downgrade
A downgrade of Granite's rating is possible if its ratio of CFO
pre-W/C (after maintenance costs) to debt falls below 11%, on a
sustained basis. This could occur, for example, if the next auction
for the 2023/2024 delivery year does not result in a material
improvement in Granite's capacity payments and/or if a material
portion of its capacity is not able to clear the auction.
Affirmations:
Issuer: Granite Generation, LLC
Probability of Default Rating, Affirmed Ba3-PD
Corporate Family Rating, Affirmed Ba3
Senior Secured Bank Credit Facility, Affirmed Ba3 (LGD4)
Outlook Actions:
Issuer: Granite Generation, LLC
Outlook, Changed To Negative From Stable
The principal methodology used in these ratings was Unregulated
Utilities and Unregulated Power Companies published in May 2017.
GRUBHUB INC: S&P Keeps 'B+' Issuer Credit Rating on Watch Negative
------------------------------------------------------------------
S&P Global Ratings kept all of its ratings on Grubhub Inc.,
including the 'B+' issuer credit rating, on CreditWatch with
negative implications, where they were placed on March 26, 2020,
until S&P meets with the new management team.
S&P plans to resolve the CreditWatch once it meets with JET's
management over the next 30-60 days and evaluate the combined
business' scale and our expectations for profitability.
On June 15, 2021, Netherlands-based Just Eat Takeaway.com N.V.
(JET) completed its acquisition of U.S.-based online food delivery
company Grubhub Inc. in an all-stock deal.
Under terms of the merger agreement, Grubhub is now an operating
subsidiary of JET, and Grubhub's $500 million senior unsecured
notes due in 2027 remain outstanding.
The CreditWatch is based on the uncertain impact and credit support
of the JET transaction and S&P's expectation to receive more
clarity over the next 1-2 months. It reflects severe deterioration
in Grubhub's credit measures in 2020 and into early 2021 as it
makes significant investments in its restaurant and customer
network and logistics capabilities in newer markets. In addition,
Grubhub's profitability has been negatively impacted by temporary
fee caps in many of its markets during the COVID-19 pandemic. JET
has also given public guidance for negative EBITDA in 2021 as it
looks to gain market share. Nevertheless, both JET and Grubhub have
rapidly expanded their restaurant and customer network scale, order
volume, and revenue over the past year.
The U.S. online food delivery market remains fiercely competitive
as participants continue to sacrifice profits to capture share.
Absent consolidation in the U.S. market, S&P believes operating
conditions and weak profit trends will persist. Industry
consolidation, which could improve pricing discipline, is further
complicated by media reports of excessive fees. Many local
governments implemented temporary fee caps to support restaurants
during the COVID-19 pandemic. Doordash and Uber Eats are the key
large competitors in the U.S. market. JET did not operate in the
U.S. prior to its acquisition of Grubhub.
The combined company is expected to be one of the largest online
food delivery companies in the world based on 2020 pro forma
revenues of over $4.5 billion. It will operate with leading
positions in its key markets--the U.S., U.K., Netherlands, and
Germany--and is headquartered in the Netherlands. Jitse Groen, CEO
and founder of JET, leads the combined company. Both use a hybrid
operating model that focuses on order demand generation and is
indifferent if restaurants utilize their own delivery services or
the company's. S&P said, "We view this model as supporting its more
profitable independent restaurant end markets and the group's
longer-term profitability. We expect the merger will provide modest
immediate synergy benefits given our view that local market scale
and network density is more important to profitability than global
scale. Nevertheless, synergy benefits from shared technology and
marketing investments, customer support, and best practices should
support efficiency over time."
The combined company has about $2.4 billion of outstanding debt
following JET's convertible bond raise in February, of which about
$500 million was outstanding at Grubhub. Since the merger did not
trigger a change of control and mandatory repayment under Grubhub's
senior note indenture, information regarding plans for repayment or
additional parent guarantees is important to our ratings
assessment.
S&P said, "We plan to resolve the CreditWatch once we meet with
JET's management over the next 1-2 months and evaluate the combined
business' scale and our expectations for future profitability. We
could lower our rating on Grubhub one or more notches if we expect
persistent negative EBITDA and cash flows for the combined entity.
We could affirm the 'B+' rating if we improve our view of the
business after incorporating the scale and synergy benefits of the
combined entity and we expect profitability and free operating cash
flow to materially improve in 2022."
GUI-MER-FE INC: Seeks to Employ Luis Cruz Lopez as Accountant
-------------------------------------------------------------
GUI-MER-FE, Inc. seeks approval from the U.S. Bankruptcy Court for
the District of Puerto Rico to hire Luis Cruz Lopez, a certified
public accountant practicing in Puerto Rico.
The Debtor requires an accountant to provide reorganization
advisory services and prepare reports, including monthly operating
reports, in order to offer adequate disclosures to its creditors to
obtain confirmation of a plan of reorganization.
Mr. Lopez will be paid at an hourly rate of $150.
The Debtor paid $4,500 as a retainer fee.
Mr. Lopez disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The accountant can be reached at:
Luis Cruz Lopez, C.P.A.
172 La Coruña Street, Ciudad Jardín
Caguas, PR 00727
Tel: 787.703.2552
Email: cpalcruz@gmail.com.
About GUI-MER-FE
San Juan, P.R.-based GUI-MER-FE, Inc. sought Chapter 11 protection
(Bankr. D. P.R. Case No. 21-01659) on May 27, 2021. At the time of
the filing, the Debtor disclosed total assets of between $100,000
and $500,000 and total liabilities of between $1 million and $10
million. Mercedes Garcia Reyes, president, signed the petition.
Lube & Soto Law Offices, PSC and Luis Cruz Lopez, CPA serve as the
Debtor's legal counsel and accountant, respectively.
HEARTWISE INC: Vitamins Online Says Plan Still Unconfirmable
------------------------------------------------------------
Judgment Creditor Vitamins Online, Inc., objects to the Amended
Disclosure Statement of debtor Heartwise Inc. filed May 5, 2021.
On April 28, 2021, Vitamins' filed Vitamins' Objection objecting to
Debtor Heartwise's original Disclosure Statement and Plan. That
Objection itemized the many fatal defects in Heartwise's original
Plan. On May 5, 2021, Heartwise filed Heartwise's first amended
Disclosure Statement and Heartwise's first amended Plan.
Vitamins claims that the objection accurately lists the illegal
provisions in Heartwise's First Amended Chapter 11 Plan filed May
5, 2021, which simply repeats all the illegal provisions of the
original Plan, plus adds a new illegal provision, all of which make
First Amended Plan nonconfirmable on its face. In addition, this
Objection accurately lists the multiple failures of Heartwise's
First Amended Disclosure Statement filed May 5, 2021 to provide the
adequate information required by 11 USC Sec. 1125(a)(1).
The First Amended Disclosure Statement and First Amended Plan are
worse, not better than the original Disclosure Statement and Plan.
Vitamins' Objection, objecting to Heartwise's original Disclosure
Statement and original Plan, clearly identified the many illegal
provisions in the original Plan, citing the authority for why those
provisions were illegal. Despite that, Heartwise's First Amended
Plan repeats all of the illegal provisions from the original Plan,
and adds additional fatal defects to First Amended Plan, that were
not in original Plan.
The multiple illegal provisions in First Amended Plan make First
Amended Plan nonconfirmable, on its face. Failure to correct the
illegal provisions in the original Plan, that Vitamins' Objection
to the original Plan demonstrated were illegal, is bad faith by
Heartwise. Heartwise's original Plan and First Amended Plan are not
an effort to propose a Plan that could be confirmable. They are
just Heartwise' attempt to delay paying anything to creditors, by
trying to confirm an illusory plan, filled with illegal provisions,
that would get Heartwise a discharge, while Heartwise paid zero to
creditors.
A full-text copy of Vitamins' objection dated June 17, 2021, is
available at https://bit.ly/35HHMvr from PacerMonitor.com at no
charge.
Attorneys for Judgment Creditor:
Kathleen P. March (Bar No. 80366)
THE BANKRUPTCY LAW FIRM, PC
10524 W. Pico Boulevard, Suite 212
Los Angeles, CA 90064
Tel: (310) 559-9224
Fax: (310) 559-9133
E-mail: kmarch@BKYLAWFIRM.com
About Heartwise Inc.
Heartwise Incorporation -- https://www.naturewise.com/ -- is a
retail store that sells wellness and health-related supplements.
Heartwise filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-13335) on Dec.
4, 2020. Tuong V. Nguyen, chief executive officer, signed the
petition. In its petition, the Debtor disclosed $7,653,717 in
assets and $12,030,563 in liabilities.
Judge Mark S. Wallace oversees the case.
The Law Offices of Michael Jay Berger and Trojan Law Offices serve
as the Debtor's bankruptcy counsel and special counsel,
respectively.
HERTZ CORP: Taps Car-Rental ABS Market for First Time Since Ch.11
-----------------------------------------------------------------
Adam Tempkin of Bloomberg News reports that Hertz Corp. is tapping
the asset-backed securities market this week with its first
full-term rental-car securitization since November 2019, part of
its emergence from Chapter 11 protection.
Proceeds from its inaugural post-bankruptcy ABS will be used to
finance the purchase of new vehicles to be leased to Hertz under a
so-called master lease agreement. It will also be used to refinance
both its original pre-bankruptcy legacy fleet-financing facility,
as well as a $4 billion interim facility established last November
with Athene USA Corp., an affiliate of Apollo Capital Management
Inc., as a stepping stone toward an ABS transaction.
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.
HOGAR CARINO: Seeks to Employ Virgilio Vega as Accountant
---------------------------------------------------------
Hogar Carino, Inc. seeks approval from the U.S. Bankruptcy Court
for the District of Puerto Rico to hire Virgilio Vega III, a
certified public accountant practicing in Puerto Rico and Florida.
The Debtor requires an accountant for general accounting and
financial counseling services in connection with its Chapter 11
case. These services include a review of the monthly operating
reports, tax consulting and business consulting in the development
of new strategies.
Mr. Vega will be paid at an hourly rate of $200.
In court filings, Mr. Vega disclosed that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
Mr. Vega holds office at:
Virgilio Vega III, CPA
P.O. Box 19180
San Juan, PR 00910
Phone: 787-306-9199
Email: virgiliocpa@gmail.com
About Hogar Carino
San Juan, P.R.-based Hogar Carino, Inc. filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
D.P.R. Case No. 21-01181) on April 16, 2021. Elizabeth Noemi Padro
Rivera, vice president, signed the petition. In the petition, the
Debtor disclosed total assets of $176,883 and total liabilities of
$1,568,780.
Judge Edward A. Godoy oversees the case.
The Debtor tapped The Law Offices of Luis D. Flores Gonzalez and
Virgilio Vega III, CPA as its legal counsel and accountant,
respectively.
HORIZON GLOBAL: Appoints Donna Costello to Board of Directors
-------------------------------------------------------------
Horizon Global Corporation's Board of Directors has appointed Donna
M. Costello as a director, effective June 16, 2021. Ms. Costello
was appointed to the Board's Audit Committee.
Ms. Costello has extensive experience as both a public company
executive and board member, with deep financial expertise and a
proven track record as a strategic business leader across multiple
industries. Ms. Costello previously served as chief financial
officer of C&D Technologies, a manufacturer and marketer of systems
for power conversion and storage of electrical power, from 2016 to
2020. Prior to joining C&D, Ms. Costello served as chief financial
officer of Sequa Corporation, a diversified industrial with
businesses across the aerospace, automotive, energy and metals
industries, from 2008 to 2015.
Ms. Costello currently serves as a director of CTS Corporation, a
manufacturer of sensors, actuators and electronic components for a
wide range of industries, where she serves on both the Compensation
and Audit Committees. Ms. Costello also serves as a director and
member of the Audit Committee of Neenah, Inc., a global specialty
materials producer of performance-based products, and provider of
fine paper and packaging products worldwide.
John C. Kennedy, chair of Horizon Global's Board of Directors,
stated, "We are excited to welcome Donna to the Board. Donna's
broad financial expertise and strategic mindset will be great
assets to Horizon Global. We look forward to Donna's immediate
contributions as we continue to improve the business and create
long-term value for our shareholders."
As a non-employee director, Ms. Costello will receive compensation
in the same manner as the Company's other non-employee directors,
which compensation the Company disclosed in its definitive proxy
statement for its 2021 annual meeting of stockholders filed with
the Securities and Exchange Commission on April 23, 2021.
About Horizon Global
Horizon Global -- http://www.horizonglobal.com-- is a designer,
manufacturer, and distributor of a wide variety of
custom-engineered towing, trailering, cargo management and other
related accessory products in North America, Australia and Europe.
The Company serves OEMs, retailers, dealer networks and the end
consumer.
Horizon Global reported a net loss attributable to the Company of
$36.56 million for the 12 months ended Dec. 31, 2020, compared to
net income attributable to the company of $80.75 million for the 12
months ended Dec. 31, 2019. As of March 31, 2021, the Company had
$468.15 million in total assets, $492.41 million in total
liabilities, and a total shareholders' deficit of $24.26 million.
HUBBARD RADIO: S&P Alters Outlook to Stable, Affirms 'B-' ICR
-------------------------------------------------------------
S&P Global Ratings revised its outlook on Hubbard Radio LLC to
stable from negative and affirmed its 'B-' issuer credit rating.
S&P said, "The stable outlook reflects our expectation that
Hubbard's gross leverage will remain elevated at about 9x through
2021, before declining toward 5x in 2022 as revenue more fully
recovers from the recession brought on by the COVID-19 pandemic. It
also reflects our expectation that Hubbard has sufficient cash to
meet operating and fixed-charge obligations over the next 12
months."
Radio advertising has continued to improve, although its recovery
will extend into 2022. Radio advertising has sequentially improved
since its low point in April 2020. The recovery of the U.S. economy
has accelerated, with support from government stimulus and
widespread COVID-19 vaccination allowing markets to increasingly
reopen, all of which bodes well for ad spending. S&P said, "We
expect it will continue to improve throughout 2021, particularly in
the second half for ad categories on which the pandemic had a more
pronounced impact such as restaurants and retail. These markets
will benefit from increasing vaccination rates and loosening
capacity restrictions. Despite this momentum, we do not expect
radio advertising revenue to recover to about 90% of full-year 2019
levels until 2022. Radio advertising is predominantly local and
depends on listening in the car, therefore we believe recovery will
take longer than for other forms of traditional media such as
television. Additionally, we believe lead times for radio
advertising remain shorter than before the pandemic, giving us less
visibility into the recovery of radio advertising than other forms
of traditional advertising."
S&P said, "We expect leverage to remain elevated at about 9x in
2021, gradually recovering toward 5x in 2022. We expect significant
leverage improvement as Hubbard's EBITDA base gradually recovers
back toward pre-pandemic performance by the end of 2022. While we
expect Hubbard will reach only about 90% of 2019 revenue in 2022,
we expect permanent cost cuts during the pandemic will help EBITDA
approach pre-pandemic levels. Hubbard reduced its cost base about
$20 million in 2020 due to headcount reduction, salary cuts, and
other restructuring initiatives. We expect some costs to come back
this year as revenue increases, such as sales and marketing
expenses, but expect much of the cost reduction to remain
permanent. We also expect the company will direct all its free
operating cash flow (FOCF) toward debt repayment. The company is
subject to a 100% excess cash flow sweep through the third quarter
of 2022 per its amended credit agreement and had a history of
voluntary debt repayment before the pandemic. We expect the company
will generate $10 million-$15 million of FOCF in 2021 and about $35
million of FOCF in 2022."
Hubbard's small size and geographic concentration could result in
volatile revenue. Its size prevents it from achieving significant
operating leverage compared to larger radio broadcast peers.
Further, its stations are concentrated in large urban markets, with
Washington, D.C., and Chicago accounting for roughly 50% of
pre-pandemic revenue, which magnifies the risk of those markets
underperforming. Reduced advertising spending from the U.S.
recession reduced Hubbard's revenue approximately 30% in 2020,
causing leverage to spike to about 20x.
The stable outlook reflects S&P's expectation that Hubbard's
adjusted leverage will remain elevated at about 9x through 2021,
before declining toward 5x in 2022. It also reflects its
expectation of sufficient cash to meet operating and fixed-charge
obligations over the next 12 months.
S&P could lower the rating if:
-- The recovery from the advertising recession is less robust than
expected, such that S&P believes Hubbard won't reduce leverage
below 6x, and it believes the company could breach its covenant;
or
-- FOCF to debt declines below the mid-single-digit percent area
and S&P does not believe Hubbard can reduce leverage through debt
repayment.
S&P could raise the rating if:
-- The company returns to pre-pandemic revenue and EBITDA margin;
-- Leverage decreases and remains below 5x; and
-- It consistently generates more than 5% FOCF to debt and uses
excess cash flow to reduce leverage.
ICAN BENEFIT: Taps Lipschultz Levin and Gray as Tax Preparer
------------------------------------------------------------
iCan Benefit Group, LLC seeks approval from the U.S. Bankruptcy
Court for the Southern District of Florida to hire Lipschultz,
Levin, and Gray, LLC.
The firm's services include tax services necessary for the filing
of the Debtor's 2019 and 2020 federal and state business income tax
returns.
The firm's hourly rates are as follows:
Staff Accountant $155 per hour
Manager $325 per hour
Director $360 per hour
The Debtor estimates that the cost for the services is
approximately $20,000.
Anton Hendler, the firm's accountant who will be providing the
services, disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm holds offices at:
Anton R. Hendler, CA, CPA
Lipschultz, Levin, and Gray LLC
425 Huehl Road Building 7
Northbrook, IL 60062
Office: 847-205-5430
Mobile: 847-508-4069
About iCan Benefit Group
Boca Raton, Fla.-based iCan Benefit Group, LLC --
https://icanbenefit.com -- is a licensed insurance agency offering
a variety of benefit programs and insurance products from a number
of licensed insurance companies.
iCan Benefit Group and its affiliates, iCan Holding, LLC and On
Call Online, LLC, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Lead Case No. 21-12567) on March
18, 2021. Stephen M. Tucker, manager, signed the petitions. In its
petition, iCan Benefit Group disclosed $10 million to $50 million
in both assets and liabilities. Judge Mindy A. Mora oversees the
cases.
Agentis PLLC serves as the Debtors' legal counsel.
The U.S. Trustee for Region 21 appointed an official committee of
unsecured creditors on May 10, 2021. The committee tapped
Shraiberg, Landau & Page, PA as legal counsel.
INFRASTRUCTURE AND ENERGY: S&P Upgrades ICR to 'B', Outlook Stable
------------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on
Infrastructure and Energy Alternatives Inc. (IEA) to 'B' from 'B-'.
The outlook is stable.
S&P said, "At the same time, we raised our issue-level rating on
the company's term loan to 'B+' with a '2' recovery rating,
indicating our expectation for substantial (70%-90%; rounded
estimate: 85%) recovery in the event of a default.
"The stable outlook reflects our assumption that the company will
benefit from ongoing demand in its renewable energy end market and
a healthy backlog over the next 12 months. We expect IEA's adjusted
leverage to remain below 4x in the next 12 months."
IEA's credit metrics and liquidity improved following good
operating performance over the last several quarters. Strong growth
in both the top line and profitability benefit from increasing
project demand in the company's end markets. Overall profitability
improved due to the increase in higher-margin renewables work as a
percentage of total revenue. IEA previously upsized revolver
capacity to $75 million, which along with its improved cash
position should support adequate liquidity over the next 12
months.
The stable outlook on IEA reflects S&P's assumption that the
company will benefit from ongoing demand in its renewable energy
end market and a healthy backlog over the next 12 months. S&P
expects adjusted leverage to remain below 4x over the next 12
months.
S&P could lower its ratings on IEA if its:
-- Adjusted debt to EBITDA increases toward 6.5x;
-- FOCF-to-debt ratio declines below 3% on a sustained basis.
This could be caused by weaker-than-anticipated operating
performance during the next 12 months due to unexpected material
project delays or losses; or
-- Credit ratios weaken to these levels because of more aggressive
financial policy or large debt-financed acquisitions.
Although unlikely over the next 12 months, S&P could raise the
rating on IEA if:
-- S&P believes the company demonstrates financial policies in
line with a higher rating; and
-- Its controlling owners are committed to pursuing disciplined
merger, acquisition, and shareholder return strategies, such that
adjusted debt to EBITDA remains below 4x, FOCF to debt is more than
10% on a sustained basis, and the risk of increasing leverage above
5x is low.
J & GC: Has Until November 22 to File Plan & Disclosures
--------------------------------------------------------
Judge Harlin DeWayne Hale has entered an order requiring debtor J &
GC, Inc., to file a plan of reorganization and disclosure statement
no later than Nov. 22, 2021, and to confirm a plan no later than
Jan. 6, 2022.
A copy of the order dated June 17, 2021, is available at
https://bit.ly/2Uh9MDG from PacerMonitor.com at no charge.
Counsel for Debtor:
Eric A. Liepins, Esq.
Eric A. Liepins, PC
12770 Coit Road, Suite 1100
Dallas, TX 75251
Telephone: (972) 991-5591
Facsimile: (972) 991-5788
Email: eric@ealpc.com
About J & GC
J & GC, Inc. filed a voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. N.D. Texas Case No. 21-30964) on May
24, 2021, listing under $1 million in both assets and liabilities.
Eric A. Liepins, PC serves as the Debtor's legal counsel.
J.F. GRIFFIN: Seeks Cash Collateral Access
------------------------------------------
J.F. Griffin Publishing, LLC asks the U.S. Bankruptcy Court for the
District of Massachusetts for authority to, among other things, use
cash collateral to continue its business operations uninterrupted.
The Debtor intends to use the cash collateral to pay employees,
purchase supplies, pay service providers, pay administrative
expenses incurred by the Debtor's bankruptcy estate, acquire
inventory, and pay other ongoing usual and necessary expenses
incurred in the day-to-day operation of the business.
The Debtor's bankruptcy filing was primarily precipitated by the
Debtor's inability to pay its printer and largest unsecured
creditor, Quad/Graphics, Inc.
In 2009, the Debtor executed a printing agreement with Quad's
predecessor-in interest, which agreement provided for payment terms
of 60 days. Over a period of time, the Debtor was unable to keep
its debt owed pursuant to the Contract current. In October 2020, to
resolve the existing debt owed to Quad under the Contract, the
Debtor and Quad executed a Vendor Payment Agreement, which provided
for the payment of $2,729,037.48, plus interest, pursuant to an
escalating schedule, by October 2023. Further, since October 2020,
Quad has required the Debtor to pay in advance for all goods and
services, rather than its traditional 60-day terms. The Debtor
failed to pay $50,000 due to Quad by May 15, 2021, which resulted
in a default of the Payment Agreement. The Debtor says it is unable
to maintain its monthly debt obligation, pay in full in advance for
new goods and services to Quad, and keep its other obligations
(e.g., secured debt, payroll, rent, insurances) current. These
circumstances necessitate Chapter 11 relief.
As of the Petition Date, the principal assets of the business have
an estimated value of not less than $587,874.
As of the Petition Date, the Debtor's secured debts total
$348,668.45 and consist of:
MountainOne Bank $179,087
U.S. Small Business Administration $150,000
Greylock Federal Credit Union $19,581
Unsecured debt is estimated to total $2,906,303.
On November 23, 2015, the Debtor entered into a financing
transaction with MountainOne Bank whereby the Bank loaned the
Debtor the total sum of $499,968.03 pursuant to a Commercial
Promissory Note. The Note is secured by a security interest in all
of the Debtor's assets including, but not limited to, all accounts,
accounts receivable, inventory, general intangibles, equipment,
deposit accounts, and their proceeds. The security interest was
granted pursuant to a Security Agreement dated November 23, 2015
and perfected by the filing of a UCC-1 with the Secretary of the
Commonwealth of Massachusetts. The Bank holds a first-priority
security interest in the Collateral.
The total balance currently due to the Bank is approximately
$179,087.32. The Bank is fully secured.
On August 2020, the Debtor entered into a financing transaction
with the U.S. Small Business Administration whereby the SBA loaned
the Debtor the total sum of $150,000 pursuant to a Promissory Note.
The Note is secured by a security interest in all of the
Collateral. The security interest was granted pursuant to a
Security Agreement dated August 2020 and perfected by the filing of
a UCC-1 with the Secretary of the Commonwealth of Massachusetts.
The SBA holds a second-priority security interest in the
Collateral.
The total balance currently due to the SBA is approximately
$150,000.
The Bank and SBA will be granted a replacement lien in all
post-petition property of the Debtor, of the same nature, to the
same extent, and with the same priority as the lien existing as of
the Petition Date. In addition, the Debtor proposes to make regular
monthly payments to the Bank in the amount of $9,900 immediately
and to the SBA in the amount of $731 beginning in August 2021.
The Bank and SBA will be adequately protected in that the
Post-Petition Liens and Post-Petition Payments prevent the
diminution in value of the Secured Parties' interest in their
collateral.
During the period covered by the Budget (through August 2021), the
Debtor projects its cash will increase from approximately $200,000
to $268,000 and its accounts receivable will increase from about
$389,000 to $1,442,859. This activity reflects the seasonality of
the Debtor's business.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3wLY6Y8 from PacerMonitor.com.
About J. F. Griffin Publishing, LLC
J. F. Griffin Publishing, LLC is a full-service publisher of
informational and educational materials for different media types.
Its core services include complete content review, layout and
design services, project management, app development, and sale and
sponsorship integration. It currently produces 100 titles for state
agencies in 30 states, manages more than 90 web properties, and has
a mobile app. It has approximately 14 employees, including its
managing member, and maintains offices in Williamstown,
Massachusetts, and Birmingham, Alabama. Historically, it has
averaged approximately $4.6 million a year in gross revenue.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Mass. Case No. 21-30225) on June 21,
2021.
Judge Elizabeth D. Katz oversees the case.
Andrea M. O'Connor, Esq., at Fitzgerald Attorneys at Law, PC is the
Debtor's counsel.
JACKSON DURHAM: Case Summary & 18 Unsecured Creditors
-----------------------------------------------------
Debtor: Jackson Durham Floral - Event Design, LLC
d/b/a Jackson Durham Events
d/b/a Tete-a-Tete Fine Event Furnishings
2016 Lucas Drive
Dallas, TX 75219
Business Description: The Debtor is a full-service event design
company.
Chapter 11 Petition Date: June 21, 2021
Court: United States Bankruptcy Court
Middle District of Tennessee
Case No.: 21-01907
Judge: Hon. Marian F. Harrison
Debtor's Counsel: R. Alex Payne, Esq.
DUNHAM HILDEBRAND, PLLC
2416 21st Ave S, Ste 303
Nashville, TN 37212
Tel: 629-777-6529
Fax: 615-777-3765
E-mail: alex@dhnashville.com
Total Assets: $303,554
Total Liabilities: $1,719,793
The petition was signed by Sara M. Garner, managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 18 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/GBUPTIA/Jackson_Durham_Floral_-_Event__tnmbke-21-01907__0001.0.pdf?mcid=tGE4TAMA
JACOBS TOWING: Taps Espy, Metcalf & Espy as Legal Counsel
---------------------------------------------------------
Jacobs Towing, LLC seeks approval from the U.S. Bankruptcy Court
for the Middle District of Alabama to hire Espy, Metcalf & Espy,
P.C. to serve as legal counsel in its Chapter 11 case.
The firm's services include:
(a) providing the Debtor with legal advice with respect to its
rights, powers and duties under the Bankruptcy Code;
(b) defending the Debtor in any matters brought to lift the
automatic stay;
(c) preparing legal papers;
(d) assisting in the preparation of a disclosure statement and
Chapter 11 plan; and
(e) other necessary legal services.
The firm will be paid at an hourly rate of $350 for all services
other than trial time which is to be paid at a rate of $400 per
hour.
The Debtor agreed to pay the travel time of the attorneys at a rate
of $100 per hour and the secretarial time at the rate of $75 per
hour, plus reimbursement of out-of-pocket expenses.
J. Kaz Espy, Esq., and C.H. Espy, Jr., Esq., the firm's attorneys
who will be providing the services, disclosed in a court filing
that they are "disinterested persons" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
J. Kaz Espy, Esq.
C.H. Espy, Jr., Esq.
Espy, Metcalf & Espy, P.C.
326 North Oates Street
Dothan, Houston County, AL 36302-6504
Telephone: (334)793-6288
Email: kaz@espymetcalf.com
kc@espymetcalf.com
About Jacobs Towing
Jacobs Towing, LLC, doing business as B &R Wrecker & Recovery in
Troy, Ala., filed a Chapter 11 petition (Bankr. M.D. Ala. Case No.
21-31004) on June 10, 2021. At the time of the filing, the Debtor
had between $1 million and $10 million in both assets and
liabilities. Donnie L. Jacobs, member, signed the petition. Espy
Metcalf & Espy PC represents the Debtor as legal counsel.
JOSHUAVILLE LLC: Taps Jones Lang LaSalle as Real Estate Broker
--------------------------------------------------------------
Joshuaville, LLC seeks approval from the U.S. Bankruptcy Court for
the Central District of California to hire Jones Lang LaSalle
Americas, Inc. to serve as its real estate broker.
The firm's services include:
(a) analyzing and preparing all documentation necessary to
market and advertise the Debtor's asset for sale;
(b) inspecting the asset as necessary to respond to
purchaser's inquiries and soliciting offers from purchasers;
(c) conveying all reasonable purchase offers and making
recommendations to the Debtor and its legal counsel, and subject to
the Debtor's approval, negotiating and confirming the acceptance of
the best offer; and
(d) preparing and submitting to escrow on behalf of the
Debtor all documents necessary to consummate a sale of the asset.
The firm will be paid in an amount equal to 2 percent of the
asset's contract price.
Matt Steward, senior director at Jones Lang LaSalle, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Matt Steward
Jones Lang LaSalle Americas, Inc.
2029 Century Park East
Los Angeles, CA 90067
Tel.: 310-407-2140/773-632-1053
Phone: mattr.jones@am.jll.com
About Joshuaville LLC
Los Angeles-based Joshuaville, LLC filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Calif.
Case No. 20-19443) on Oct. 19, 2020. Wayne Tsang, manager, signed
the petition. In the petition, the Debtor disclosed total assets
of up to $50 million and total liabilities of up to $10 million.
Judge Neil W. Bason oversees the case. Leslie Cohen Law, PC serves
as the Debtor's legal counsel.
K&D MANAGEMENT: Seeks Cash Collateral Access
--------------------------------------------
K&D Management, LLC asks the U.S. Bankruptcy Court for the Northern
District of Georgia, Atlanta Division, for authority to use cash
collateral.
The Debtor says it requires the immediate use of Cash Collateral on
an interim basis for the payment of ordinary expenses incurred on a
daily basis that are essential to the ongoing operation of Debtor's
business, which expenses must be paid from Cash Collateral.
The Debtor executed a promissory note in favor of First Madison
Bank dated February 16, 2007, which was renewed on multiple
occasions. The last commercial Promissory Note with First Madison
Bank and Trust is dated September 20, 2017 and extended by
Modification of Promissory Note dated September 19, 2019.
The non-default rate of interest contained in the Commercial
Promissory Note to First Madison Bank & Trust is 4.75% per annum.
Concurrent with the execution of the promissory note in favor of
First Madison Bank, the Debtor executed a Deed to Secure Debt in
favor of First Madison Bank & Trust, which was recorded in the real
estate records of DeKalb County on February 27,2007 in Deed Book
19704, Page 369.
United Community Bank is the successor by merger to First Madison
Bank & Trust.
The Debtor has been unable to locate a UCC Financing Statement
filed by First Madison Bank or by United Community Bank in the
public records.
The Deed to Secure Debt and Promissory Note was assigned by United
Community Bank to Utrecht Assets, LLC, by instrument dated April
27, 2021.
Utrecht Assets, LLC has, or may have, a security interest in Cash
Collateral. Utrech Associates, LLC claims to being owed
$1,100,241.
In March 2020, the Debtor applied for, and was approved for an
Economic Injury Disaster Loan with the U.S. Small Business
Association. The U.S. Small Business Administration filed a UCC
Financing Statement on July 7, 2020. The U.S. Small Business
Association has, or may have, a security interest in Cash
Collateral.
As adequate protection, the Debtor proposes to grant the
Respondents a replacement lien on property acquired during the Case
to the same extent, validity and priority as their respective liens
existing on the Petition Date.
The Debtor also proposes to make monthly adequate protection
payments to Utrecht Assets in an amount equal to the non-default
contractual rate of interest on the outstanding principal balance,
in order to preserve equity in Cash Collateral.
A copy of the motion is available for free at
https://bit.ly/3vHEtPn from PacerMonitor.com.
About K&D Management LLC
K&D Management, LLC is a Single Asset Real Estate debtor as that
term is defined in Section 101(51B) of the Bankruptcy Code. The
Debtor filed a Chapter 11 petition (Bankr. N.D. Ga. Case No.
21-54486) on June 11, 2021.
In the petition signed by Dhansukh Patel, managing member, the
Debtor estimated up to $50,000 in assets and between $1,000,000 and
$10,000,000 in liabilities. Danowitz Legal, P.C. is the Debtor's
counsel.
Utrecht Assets, LLC is represented by G. Frank Nason, IV, Esq. at
Lamberth, Cifelli, Ellis and Nason, PA.
K&N PARENT: S&P Affirms 'CCC' ICR on Improved Financial Flexibility
-------------------------------------------------------------------
S&P Global Ratings affirmed its 'CCC' issuer credit rating on car,
truck, and motorcycle aftermarket parts provider K&N Parent Inc. At
the same time, S&P lowered its issue-level rating on the company's
first-lien term loan and revolver to 'CCC' from 'CCC+' and revised
its recovery rating to '3' (rounded estimate: 65%) from '2' due to
its higher estimate of its priority claims in a simulated default
scenario.
S&P's 'CC' issue-level rating and '6' recovery rating on K&N's
second-lien term loan remain unchanged.
The negative outlook reflects the likelihood that K&N's operating
performance will remain sufficiently weak to spark a liquidity
crisis.
S&P believes K&N's liquidity will remain constrained despite the
improvement in its credit metrics in 2021. Over the past year the
company has relied on capital infusions from its sponsor, sale
leaseback transactions, and accounts receivable securitizations to
support its operations. If the improvement in K&N's top-line
revenue or margin are weaker than it expects, S&P believes this
could cause it to face a liquidity crisis and, subsequently, engage
in a debt restructuring. In addition, the company might eventually
find it difficult to maintain sufficient covenant headroom, though
its credit agreement allows significant add-backs to maintain its
compliance.
S&P said, "We forecast a good increase in K&N's top-line revenue as
consumer demand normalizes following the coronavirus pandemic,
though we anticipate its credit metrics will remain highly
leveraged. We expect the company to increase its revenue by the
mid-teens percent area in 2021 on a resurgence in consumer demand
and, to a lesser extent, original equipment manufacturer (OEM)
sales. We expect the semiconductor chip shortage to delay some new
vehicle launches, which will push back OEM demand, though we expect
this to moderate in the second half of 2021. We forecast K&N's
margins will remain pressured due to the costs associated with the
ongoing shift of its manufacturing to Texas, which we anticipate it
will complete by the end of the year, in addition to raw material
cost inflation. We estimate the company will significantly improve
its S&P Global Ratings-adjusted leverage in 2021 but anticipate it
will remain unsustainably high at above 10x over the next two
years."
The negative outlook on K&N reflects the risk that it will pursue a
debt restructuring in the next 12 months due to its elevated debt
leverage and constrained liquidity.
S&P could lower its rating on K&N if it announces a debt exchange
or other restructuring transaction that it views as tantamount to a
default.
Before raising our rating on K&N, S&P would expect it to
demonstrate a significant and sustained improvement in its
performance as well as a material increase in its liquidity.
KING MOUNTAIN TOBACCO: Court Approves Disclosure Statement
----------------------------------------------------------
Following hearings on May 12, 2021, May 26, 2021, and June 3, 2021,
Judge Whitman L. Holt has entered an order approving the Second
Amended Disclosure Statement of King Mountain Tobacco Company,
Inc.
The judge has not yet entered an order setting a hearing to
consider confirmation of the Second Amended Plan.
The Plan provides for full payment to all non-affiliate creditors
from the proceeds of its Escrow Accounts, and from amounts
generated from the Debtor's business operations, which, in the
Debtor's opinion, provides greater recovery than which is likely
under a liquidation of King Mountain Tobacco Company.
THe Debtor's cash assets totaling $4,821,664 consist of cash and
funds in various accounts, prepaid insurance, legal retainers,
accounts receivable and NPM tobacco bonds.
The Plan proposes to treat claims and interests as follows:
Class 1: Secured Claim of Alcohol and Tobacco Tax & Trade Bureau
Class 2: Secured Claim of FIRST Insurance Funding
Class 3: Secured Claim of the IRS
Class 4: Unsecured Claim of State of Indiana
Class 5: Unsecured Claim of State of South Carolina
Class 6: Unsecured Claim of the U.S. Department of Agriculture
Class 7: Unsecured Claim of the U.S. Food & Drug Administration
Class 8: Administrative Convenience Claims
Class 9: General Unsecured Claims
Class 10: Equity Interests
Each Allowed Claim in Classes 1–9 will be paid in full, with
interest accruing at the rate specified in the Plan, if any, from
income generated from the Debtor's business operations and from the
proceeds of its Escrow Accounts, as specified in the Plan. The
Holder(s) of the Equity Interests shall retain their interests
following Confirmation and will continue to own, manage and operate
the Debtor and its property.
Attorneys for the Debtor:
James L. Day
Richard B. Keeton
BUSH KORNFELD LLP
A copy of the Order is available at https://bit.ly/3xxwndM from
PacerMonitor.com.
About King Mountain Tobacco
King Mountain Tobacco Company, Inc. --
https://www.kingmountaintobacco.com/ -- is a Native American-owned
premium tobacco manufacturer. It was founded by Delbert and Trina
Wheeler and incorporated in November 2005 under the laws of the
Yakama Nation, and registered as a foreign corporation with the
State of Washington. Its products are 100% manufactured in the
United States. King Mountain has paid Yakama Nation over $10
million in taxes over the past 10 years, which has been used to
assist the community in a variety of ways.
King Mountain Tobacco Company sought Chapter 11 protection (Bankr.
W.D. Wash. Case No. 20-01808) on Sept. 25, 2020. The Debtor
disclosed total assets of $28,586,378 and total liabilities of
$92,425,329 as of the bankruptcy filing. The Hon. Whitman L. Holt
is the case judge. James L. Day, Esq., at Bush Kornfeld LLP,
serves as the Debtor's legal counsel.
KLAUSNER LUMBER: Taps Fallace & Larkin as Litigation Counsel
------------------------------------------------------------
Klausner Lumber Two, LLC seeks approval from the U.S. Bankruptcy
Court for the District of Delaware to hire Fallace & Larkin, L.C.
as litigation counsel.
The Debtor needs the firm's legal services in the civil action
styled as Johnnie Raymond vs. Klausner Lumber One LLC, et al., and
in other litigation-related matters that may arise in Florida.
The firm's hourly rates are as follows:
James Fallace $400 per hour
David G. Larkin $400 per hour
Jesse Kabaservice $300 per hour
Drew Williams $200 per hour
Paralegals $150 per hour
David G. Larkin, Esq., a partner at the firm, disclosed in a court
filing that his firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
About Klausner Lumber Two
Klausner Lumber Two, LLC, a sawmill company in Enfield, N.C.,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
D. Del. Case No. 20-11518) on June 10, 2020. Robert Prusak, chief
restructuring officer, signed the petition. At the time of the
filing, the Debtor had estimated assets of between $10 million and
$50 million and liabilities of between $100 million and $500
million.
Judge Karen B. Owens oversees the case.
The Debtor has tapped Westerman Ball Ederer Miller Zucker &
Sharfstein, LLP and Morris, Nichols, Arsht & Tunnell, LLP as its
bankruptcy counsel; Fallace & Larkin, L.C. as litigation counsel;
Asgaard Capital LLC as restructuring advisor; and Cypress Holdings
LLC as investment banker.
The U.S. Trustee for Region 3 appointed a committee of unsecured
creditors in the Debtor's Chapter 11 case on June 25, 2020.
Armstrong Teasdale, LLP and EisnerAmper, LLP serve as the
committee's legal counsel and financial advisor, respectively.
KOLESZAR FARM: Taps Regional Bankruptcy Center as Legal Counsel
---------------------------------------------------------------
Koleszar Farm LLC seeks approval from the U.S. Bankruptcy Court for
the Eastern District of Pennsylvania to hire Regional Bankruptcy
Center of Southeastern PA, P.C. to serve as legal counsel in its
Chapter 11 case.
Regional Bankruptcy Center will be paid at an hourly rate of $300.
Roger V. Ashodian, Esq., the firm's attorney who will be providing
the services, disclosed in a court filing that he is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
Mr. Ashodian can be reached at:
Roger V. Ashodian, Esq.
Regional Bankruptcy Center of Southeastern PA, P.C.
101 West Chester Pike, Suite 1A
Havertown, PA 19083
Tel: (610) 446-6800
Email: ecf@schollashodian.com
About Koleszar Farm
Newtown, Pa.-based Koleszar Farm LLC filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Pa.
Case No. 21-11653) on June 11, 2021. At the time of the filing, the
Debtor disclosed total assets of up to $1 million and total
liabilities of up to $10 million. Judge Ashley M. Chan oversees
the case. The Debtor tapped Roger V. Ashodian, Esq., of the
Regional Bankruptcy Center of Southeastern PA, P.C. as its legal
counsel.
KOSSOFF PLLC: Wife Makes Debt Collection Suit Forgery Defense
-------------------------------------------------------------
Law360 reports that the wife of a New York City real estate
attorney accused of misusing millions in client funds is claiming
that her signature may have been forged on an $84,000 defaulted
business deal. Pamela Kossoff filed an answer Monday in Brooklyn
Supreme Court, urging the court to let her out of a lawsuit filed
in May by Atlanta-based packaging company WestRock over the
unspecified deal from July 2019. She said she "did not sign" any
documents associated with WestRock's deal.
About Kossoff PLLC
Kossoff PLLC is a real estate law firm based in New York City. It
operated as a law firm with offices located at 217 Broadway in New
York City. The firm held itself out as a law firm that provided
full-service real estate legal services specializing in litigation
and transactional matters, including leasing, sale and acquisition
of real property, commercial landlord tenant matters, real estate
litigation, and city, state and federal agency regulatory matters
Mitchell H. Kossoff, the firm's founder and only known managing
member, is alleged to have failed to and/or refused to return
millions of dollars of client funds when requested by clients.
Since on or about April 1, 2021, Kossoff's whereabouts have been
unknown, and Kossoffhas ceased all communications with the Debtor's
clients and with the attorneys and staff who were employed by the
Debtor.
Kossoff PLLC is subject to an involuntary petition for Chapter 7
bankruptcy (Bankr. S.D.N.Y. Case No. 21-10699) by creditors on
April 13, 2021. The case is handled by Honorable Judge David S
Jones.
Gran Sabana Corp NV, Louis & Jeanmarie Giordano, and other former
clients of the Debtor signed the involuntary petition. Carter
Ledyard & Milburn LLP, led by Aaron R. Cahn, represents the
petitioners.
Veteran restructuring lawyer Albert Togut of Togut, Segal & Segal
LLP, was named as Chapter 7 Trustee. He tapped his own firm as
counsel in the case.
KTR GLOBAL: July 27 Plan Confirmation Hearing Set
-------------------------------------------------
On June 9, 2021, debtor KTR Global Partners LLC filed with the U.S.
Bankruptcy Court for the District of Arizona a First Amended
Chapter 11 Plan.
On June 17, 2021, Judge Brenda K. Martin ordered that:
* July 27, 2021, at 2:00 p.m. is the Confirmation Hearing to
be held telephonically.
* July 20, 2021, is fixed as the last day for any party
desiring to object to confirmation of the Plan to file a written
objection.
* July 20, 2021, is fixed as the last day for any creditor
desiring to vote for or against confirmation of the Plan to
complete and sign a Ballot.
A copy of the order dated June 17, 2021, is available at
https://bit.ly/3xFkDWn from PacerMonitor.com at no charge.
Attorneys for Debtor:
Gerald L. Shelley, Esq.
Fennemore Craig, P.C.
2394 E. Camelback Rd., Suite 600
Phoenix, AZ 85016
Tel: (602) 916-5000
Email: aaustin@fclaw.com
About KTR Global Partners
KTR Global Partners, LLC owns and operates an indoor action sports
playground serving kids of all ages and abilities.
KTR Global Partners sought Chapter 11 protection (Bankr. Ariz. Case
No. 20-08282) on July 16, 2020. At the time of the filing, the
Debtor disclosed total assets of $1,294,450 and total liabilities
of $1,533,572. Judge Brenda K. Martin oversees the case.
Fennemore Craig, P.C. is Debtor's legal counsel.
L C OF SHREVEPORT: Unsecureds Will be Paid 100% of Their Claims
---------------------------------------------------------------
L C of Shreveport LLC and CL of Bossier LLC submitted an
Immaterially Modified Amended Joint Plan of Reorganization.
The Plan Proponent's financial projections show that the Debtor
will have a projected disposable income of $2,400,000.00.
This Joint Plan of Reorganization under chapter 11 of the
Bankruptcy Code proposes to pay creditors of LC of Shreveport LLC
and CL of Bossier, LLC from future income.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately 100 cents on the dollar.
The Plan proposes to treat claims and interests as follows:
* Class 2 - Secured claim of Amur Equipment Finance. Amur
Equipment Finance Inc. This creditor filed Claim 7-1 in the amount
of $30,767.90 secured by the debtor CL's equipment. The secured
claim is $17,000.00 and the general unsecured claim is $13,767.90.
The secured claim of $17,000.00 will be paid with interest at 4.5%
per annum in 60 monthly installment payments of $316.95. The
general unsecured claim of this creditor will be treated in Class 9
General Unsecured claims. Class 2 is impaired.
* Class 5 – Putative Secured Claim of Joe C. Davis. Joe C.
Davis holds an unfiled putative secured claim in the amount of
$75,000.00 that purports to be secured by a lien/mortgage on the
Immovable Property identified by municipal number 1003 Gould Drive,
Bossier City, Louisiana. Joe C. Davis's entire claim will be
treated as a Class 9 General Unsecured Claim in the amount of
$75,000.00. Class 5 is impaired.
* Class 7 - Putative Secured Claim of J & S Electronics, LLC.
J&S Electronics, LLC filed Claim No.13, a putative secured claim,
in the amount of $11,544.43 that purports to be secured by a
judicial lien/mortgage on Immovable Property identified by
municipal number 1003 Gould Drive, Bossier City, Louisiana. J&S
Electronics, LLC's entire claim will be treated as a Class 9
General Unsecured Claim in the amount of $11,544.43. Class 7 is
impaired.
* Class 8 – b1Bank PPP Cares Act claim is in the amount of
$64,747.38. It is believed that the Class 8 Claim will be
extinguished by forgiveness based upon the Debtor CL's compliance
with the program requirements. Should it be necessary for the
Reorganized Debtor CL to make payments because it does not meet the
program requirements for loan forgiveness for any portion of the
Class 8 Claim pursuant to the Paycheck Protection Program under the
CARES ACT, then the Reorganized Debtor CL will pay the Class 8
Claim with interest at 1% per annum in 60 monthly installments of
$1,106.78. Class 8 is impaired.
* Class 9 – General Unsecured Claims. This Class consists of
all allowed unsecured claims other than Class 8. These claims are
estimated to be approximately $668,716. The reorganized debtors
will pay 100% of these general unsecured claims with interest at 1%
per annum in 60 monthly installments. The accrual of interest and
the payments will commence on the15th day of the first month
following the Plan's Effective Date. Class 9 is impaired.
* Class 10 – Equity Claims. The equity owners are Enos Fangue
and Chad Fangue, who each own a 50% membership interest in LC of
Shreveport LLC and CL of Bossier LLC. The holders of the Equity
interests in the debtors shall retain their Equity Interests in
debtors as of the Effective Date of the Plan. Class 10 is
impaired.
The Reorganized Debtors shall continue to operate their business
following the Effective Date. The Reorganized Debtors shall only be
required to pay the Monthly Distributions required by the Plan
and/or Confirmation Order and Professional Fee Claims, including,
but not limited to, the Debtor’s and Reorganized Debtor's
attorneys and other professionals.
A copy of the Disclosure Statement is available at
https://bit.ly/3vDkAJc from PacerMonitor.com.
About L C of Shreveport
L C of Shreveport, LLC filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. W.D. La. Case No.
21-10113) on Feb. 9, 2021. Chad D. Fangue, managing member, signed
the petition. In the petition, the Debtor disclosed $1 million to
$10 million in both assets and liabilities. Judge John S. Hodge
oversees the case. The Debtor tapped Robert W. Raley, Esq., as
counsel and Trent Millican, CPA, RBM LLP as accountant.
LAKES EDGE GROUP: Trustee Taps Bennett Guthrie as Special Counsel
-----------------------------------------------------------------
Ashley Rusher, the trustee appointed in the Chapter 11 case of The
Lakes Edge Group, LLC, seeks approval from the U.S. Bankruptcy
Court for the Middle District of North Carolina to hire Bennett
Guthrie, PLLC to serve as her special counsel in the bankruptcy
case.
The trustee needs the firm's legal assistance to complete and amend
the Debtor's monthly operating reports for the period from Nov. 16,
2020 to Feb. 16, 2021.
The firm's hourly rates are as follows:
Elizabeth F. Lawson, Esq. $275 per hour
Associate Attorney $200 per hour
Elizabeth Lawson, Esq., the firm's attorney who will be providing
the services, disclosed in a court filing that she and her firm are
"disinterested persons" as the term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached at:
Elizabeth F. Lawson, Esq.
Bennett Guthrie, PLLC
1560 Westbrook Plaza Drive
Winston-Salem, NC
Phone: (336) 765-3121
Fax: (336) 765-8622
About Lakes Edge Group
The Lakes Edge Group, LLC, a Winston Salem, N.C.-based company,
classifies its business as single asset real estate (as defined in
11 U.S.C. Section 101(51B)).
The Lakes Edge Group filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D.N.C. Case No.
20-50715) on Sept. 24, 2020. Mark Fletcher, authorized
representative, signed the petition. In the petition, the Debtor
disclosed total assets of up to $50,000 and total liabilities of up
to $10 million.
Judge Lena M. James oversees the Debtor's Chapter 11 case.
Bennett-Guthrie, PLLC represented the Debtor as legal counsel in
the case.
On Nov. 16, 2020, the court appointed Ashley S. Rusher as Chapter
11 trustee. Blanco Tackabery & Matamoros, P.A. serves as the
trustee's legal counsel.
LATAM AIRLINES: Creditors Seek Cancelled Plan Deals Claims
----------------------------------------------------------
Law360 reports that LATAM Airline Group's creditors have asked a
New York bankruptcy court for permission to file claims against a
pair of the company's major shareholders, alleging LATAM allowed
them to duck out of aircraft sale and leasing deals while it was
heading into Chapter 11.
LATAM's unsecured creditors committee is asking for permission to
file claims against Qatar Airways and Delta Air Lines on LATAM's
behalf, claiming the South American airline did the shareholders a
favor by allowing them to back out of the deals for less than they
were worth even as the COVID-19 pandemic was driving the airline
into insolvency.
About LATAM Airlines Group
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise. It is the largest passenger airline in South
America.
Before the onset of the COVID-19 pandemic, LATAM offered passenger
transport services to 145 different destinations in 26 countries,
including domestic flights in Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, and international services within Latin America
as well as to Europe, the United States, the Caribbean, Oceania,
Asia and Africa.
LATAM and its 28 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in
Chile, Peru, Colombia, Ecuador and the United States are part of
the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as
bankruptcy counsel, FTI Consulting as restructuring advisor, Lee
Brock Camargo Advogados as local Brazilian litigation counsel, and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. The Boston Consulting Group, Inc. and The Boston
Consulting Group UK LLP serve as the Debtors' strategic advisors.
Prime Clerk LLC is the claims agent.
The official committee of unsecured creditors formed in the case
tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters
Jureller Southard & Stevens, LLP as conflicts counsel, UBS
Securities LLC as investment banker, and Conway MacKenzie, LLC as
financial advisor. Ferro Castro Neves Daltro & Gomide Advogados, is
the committee's Brazilian counsel.
The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as
counsel.
Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew
Glenn and partner Shai Schmidt, has been retained as counsel to the
Ad Hoc Committee of Shareholders.
MALLINCKRODT PLC: April 30 Administrative Claims Deadline Set
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware set April
30, 2021, at 5:00 p.m. (prevailing Eastern Time), as the last date
and time for persons and entities to file their proofs of
administrative claim against Mallinckrodt PLC and its
debtor-affiliates.
Each proof of administrative claim must be filed, including
supporting documentation, to Prime Clerk LLC either (i)
electronically using the interface available on Prime Clerk's
website at https://restructuring.primeclerk.com/Mallinckrodt or
(ii) via U.S. Mail or other hand-delivery system, which proof of
administrative claim must include an original signature, at:
a) if by first class mail:
Mallinckrodt PLC Claims Processing Center
c/o Prime Clerk LLC
Grand Central Station
PO Box 4850
New York, NY 10163-4850
b) if by overnight courier or hand delivery:
Mallinckrodt PLC Claims Processing Center
c/o Prime Clerk LLC
850 3rd Avenue, Suite 412
Brooklyn, NY 11232
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.
MALLINCKRODT PLC: Can Resolve Price-Gouging Claims Thru Bankruptcy
------------------------------------------------------------------
Daniel Gill of Bloomberg Law reports that a judge ruled
Mallinckrodt Plc can use its bankruptcy to handle an Illinois
city's allegations that the drugmaker engaged in price-gouging
related to the sale of its Acthar Gel. Judge John T. Dorsey on
Wednesday granted summary judgment to Mallinckrodt solely on the
issue of whether the company can eliminate the portion of the
city's claims that isn't paid though its Chapter 11 plan. He
didn't address the merits or monetary value of the claims.
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.
MALLINCKRODT PLC: Sept. 21 Plan Confirmation Hearing Set
--------------------------------------------------------
Mallinckrodt PLC and its Debtor Affiliates filed with the U.S.
Bankruptcy Court for the District of Delaware a motion for entry of
an order approving the Disclosure Statement for the Plan.
On June 17, 2021, Judge John T. Dorsey granted the motion and
ordered that:
* The Disclosure Statement is approved as containing adequate
information.
* Sept. 21, 2021, at 10:00 a.m. is the Confirmation Hearing to
consider confirmation of the Plan.
* Sept. 3, 2021, is fixed as the last day to file any
objections to the Plan.
* Sept. 17, 2021, at 4:00 p.m. is the deadline to file any
brief in support of confirmation of the Plan and reply to any
objections.
* To the extent that the Official Committee of Opioid-Related
Claimants proposes good-faith modifications to the Debtors'
solicitation and notification of Opioid Claimants (including,
without limitation, the Additional Opioid Notice Plan), and the
Debtors refuse to incorporate such modifications, the parties shall
in good faith attempt to resolve such dispute.
Counsel to the Debtors:
Mark D. Collins, Esq.
Michael J. Merchant, Esq.
Amanda R. Steele, Esq.
Brendan J. Schlauch, Esq.
Garrett S. Eggen, Esq.
Richards, Layton & Finger, P.A.
One Rodney Square
920 N. King Street
Wilmington, DE 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
E-mail: collins@rlf.com
merchant@rlf.com
steele@rlf.com
schlauch@rlf.com
eggen@rlf.com
- and -
George A. Davis, Esq.
George Klidonas, Esq.
Andrew Sorkin, Esq.
Anupama Yerramalli, Esq.
Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
Telephone: (212) 906-1200
Facsimile: (212) 751-4864
E-mail: george.davis@lw.com
george.klidonas@lw.com
andrew.sorkin@lw.com
anu.yerramalli@lw.com
- and -
Jeffrey E. Bjork
LATHAM & WATKINS LLP
355 South Grand Avenue, Suite 100
Los Angeles, California 90071
Telephone: (213) 485-1234
Facsimile: (213) 891-8763
E-mail: jeff.bjork@lw.com
- and -
Jason B. Gott
LATHAM & WATKINS LLP
330 North Wabash Avenue, Suite 2800
Chicago, Illinois 60611
Telephone: (312) 876-7700
Facsimile: (312) 993-9767
E-mail: jason.gott@lw.com
About Mallinckdrodt PLC
Mallinckrodt -- http://www.mallinckrodt.com/-- is a global
business consisting of multiple wholly owned subsidiaries that
develop, manufacture, market and distribute specialty
pharmaceutical products and therapies. The company's Specialty
Brands reportable segment's areas of focus include autoimmune and
rare diseases in specialty areas like neurology, rheumatology,
nephrology, pulmonology and ophthalmology; immunotherapy and
neonatal respiratory critical care therapies; analgesics and
gastrointestinal products. Its Specialty Generics reportable
segment includes specialty generic drugs and active pharmaceutical
ingredients.
As of March 27, 2020, the Company had $10.17 billion in total
assets, $8.27 billion in total liabilities, and $1.89 billion in
total shareholders' equity.
On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates
sought Chapter 11 protection in Delaware in the U.S. (Bankr. D.
Del. Lead Case No. 20-12522) to seek approval of a restructuring
that would reduce total debt by $1.3 billion and resolve opioid
related claims against the Company.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Latham & Watkins LLP, Ropes & Gray LLP and Wachtell, Lipton, Rosen
& Katz are serving as counsel to the Company, Guggenheim
Securities, LLC is serving as investment banker and AlixPartners
LLP is serving as restructuring advisor to Mallinckrodt. Hogan
Lovells is serving as counsel with respect to the Acthar Gel
matter. Prime Clerk LLC is the claims agent.
MALLINCKRODT PLC: Unsecured Notes Claimholders to Get 57% to 86%
----------------------------------------------------------------
Mallinckrodt PLC and its Debtor Affiliates filed with the U.S.
Bankruptcy Court for the District of Delaware a Disclosure
Statement for Joint Chapter 11 Plan of Reorganization dated June
17, 2021.
The Supporting Term Lenders, who, together with other Supporting
Parties, hold approximately 70% in principal amount of the Debtors'
First Lien Term Loan Claims, support the Plan. Fifty (50) U.S.
States and Territories and the Plaintiffs' Executive Committee in
the Multi-District Litigation, including the members of the
Governmental Plaintiff Ad Hoc Committee, that each maintain or
represent Opioid Claims against certain of the Debtors, support the
Plan.
The MSGE Group, representing 1,318 entities that maintain Opioid
Claims against certain of the Debtors, including 1,245 counties,
cities and other municipal entities, 9 tribal nations, 13 hospital
districts, 16 independent public school districts, 33 medical
groups, and 2 funds, supports the Plan. The Guaranteed Unsecured
Notes Ad Hoc Group, who, together with the other Supporting Parties
hold approximately 84% in principal amount of the Debtors'
Guaranteed Unsecured Notes Claims, supports the Plan.
The Official Committee of Opioid-Related Claimants (the "OCC") has
not yet completed its investigation regarding the sufficiency of
the aggregate value being provided to Opioid Claimants under the
Plan. Therefore, the OCC is not yet in a position to recommend that
Opioid Claimants vote to either accept or reject the Plan. The OCC
is continuing to do its work, and at the appropriate time, will
file a supplemental letter on the Court's docket setting forth its
final position. In addition, although the Plan sets forth the
aggregate allocations being made available to categories of Opioid
Claimants, there is no information publicly available yet that
explains the rules of how such value will be allocated to
individual claimants within each category.
The Plan contemplates that on the Effective Date or as soon as
reasonably practicable, the Reorganized Debtors may, consistent
with the terms of the Restructuring Support Agreement, take all
actions as may be necessary to effectuate the Plan, including:
* the execution and delivery of appropriate agreements or
other documents of sale, merger, consolidation, or reorganization
containing terms that are consistent with the terms of the Plan and
that satisfy the requirements of applicable law;
* the creation of a NewCo and/or any NewCo Subsidiaries that
may, at the Debtors' or Reorganized Debtors' option in consultation
with the Supporting Parties, acquire all or substantially all the
assets of one or more of the Debtors;
* the execution and delivery of an equity and asset transfer
agreement and any other appropriate instruments of transfer,
assignment, assumption, or delegation of any property, right,
liability, duty, or obligation on terms consistent with the terms
of the Plan;
* the creation of certain opioid trusts where all Opioid
Claims will be channeled to in accordance with the terms of the
Plan and the applicable trust documents which will be filed with
the Bankruptcy Court on the earlier of (a) 30 days from entry of
the Disclosure Statement Order, and (b) July 21, 2021.
* the filing of appropriate certificates of incorporation,
merger, migration, consolidation, or other organizational documents
with the appropriate governmental authorities pursuant to
applicable law; and
* all other actions that the Reorganized Debtors determine are
necessary or appropriate.
The Plan provides that Holders of General Unsecured Claims are
entitled to indicate their preference, via a duly-submitted Ballot,
to receive New Mallinckrodt Ordinary Shares as a portion of their
distribution under the Plan. The proportion of the distributions
made to such Holders in the form of New Mallinckrodt Ordinary
Shares will be equal to the proportion of the Ballots submitted by
Holders of General Unsecured Claims indicating the requisite
election, calculated using the amount of General Unsecured Claims
attributed to each such Ballot for purposes of voting on the Plan
under the Disclosure Statement Order.
Class 5 consists of Guaranteed Unsecured Notes Claims. Each Holder
of an Allowed Guaranteed Unsecured Notes Claim shall receive its
Pro Rata Share of (i) the Takeback Second Lien Notes and (ii) 100%
of New Mallinckrodt Ordinary Shares, subject to dilution on account
of the New Opioid Warrants, the Management Incentive Plan, and any
General Unsecured Claims Distribution in the form of New
Mallinckrodt Ordinary Shares. The Guaranteed Unsecured Notes
projected recovery would be approximately 57% to 86%.
Class 6 General Unsecured Claims:
* Class 6(a) consists of all Acthar Claims with $2.8 billion
filed amount. Each Allowed Acthar Claim, each Holder of an Allowed
Acthar Claim shall receive its General Unsecured Claims
Distribution. If all Filed Amounts are Allowed in full at the
greater of the Filed Amount, scheduled amount, or the Debtors'
books and records amounts: 0.8%. If Class 6 Claims are Allowed in
amount equal to Debtors' books and records: 0.0% ($0 Allowed).
* Class 6(b) consists of all Generics Price Fixing Claims with
$4.0 billion filed amount. Each Holder of an Allowed Generics Price
Fixing Claim shall receive its General Unsecured Claims
Distribution. If all Filed Amounts are Allowed in full at the
greater of the Filed Amount, scheduled amount, or the Debtors'
books and records amounts: 0.8%. If Class 6 Claims are Allowed in
amount equal to Debtors' books and records: 0.0% ($0 Allowed).
* Class 6(c) consists of all Asbestos Claims with $4.5 billion
filed amount. Each Holder of an Allowed Asbestos Claim shall
receive its General Unsecured Claims Distribution. If all Filed
Amounts are Allowed in full at the greater of the Filed Amount,
scheduled amount, or the Debtors' books and records amounts: 0.8%.
If Class 6 Claims are Allowed in an amount equal to Debtors' books
and records: 34.1% ($17.5 million Allowed).
* Class 6(d) consists of all Legacy Unsecured Notes Claims
with $152,098,338.00 filed amount. Each Holder of an Allowed Legacy
Unsecured Notes Claim shall receive its General Unsecured Claims
Distribution. If all Filed Amounts are Allowed in full at the
greater of the Filed Amount, scheduled amount, or the Debtors'
books and records amounts: 0.8%. If Class 6 Claims are Allowed in
an amount equal to Debtors' books and records: 34.1% ($152,098,338
Allowed).
* Class 6(e) consists of all Environmental Claims with
$306,000,000.00 filed amount. Each Holder of an Allowed
Environmental Claim shall receive its General Unsecured Claims
Distribution. If all Filed Amounts are Allowed in full at the
greater of the Filed Amount, scheduled amount, or the Debtors'
books and records amounts: 0.8%. If Class 6 Claims are Allowed in
an amount equal to Debtors' books and records: 34.1% ($52.2 million
Allowed).
* Class 6(f) consists of all Other General Unsecured Claims
with $238,000,000.00 filed amount. Each Holder of an Allowed Other
General Unsecured Claim shall receive its General Unsecured Claims
Distribution. If all Filed Amounts are Allowed in full at the
greater of the Filed Amount, scheduled amount, or the Debtors'
books and records amounts: 0.8%. If Class 6 Claims are Allowed in
an amount equal to Debtors' books and records: 34.1% ($71.6 million
Allowed).
Holders of Equity Interests shall receive no distribution on
account of their Equity Interests. On the Effective Date, all
Equity Interests will be canceled and extinguished and will be of
no further force or effect.
The Debtors shall fund Cash distributions under the Plan with Cash
on hand, including Cash from operations, and the proceeds of the
New Term Loan Facility. Cash payments to be made pursuant to the
Plan will be made by the Reorganized Debtors in accordance with the
Plan. Subject to any applicable limitations set forth in any
post-Effective Date agreement (including the New Governance
Documents), the Reorganized Debtors will be entitled to transfer
funds between and among themselves as they determine to be
necessary or appropriate to enable the Reorganized Debtors to
satisfy their obligations under the Plan.
The Confirmation Hearing will take place on September 21, 2021 at
10:00 a.m. before the Honorable John T. Dorsey, United States
Bankruptcy Judge, in the United States Bankruptcy Court for the
District of Delaware, located at 824 Market Street North, 3rd
Floor, Wilmington, DE 19801. The Plan Objection Deadline is
September 3, 2021 at 4:00 p.m.
Counsel to the Debtors:
Mark D. Collins, Esq.
Michael J. Merchant, Esq.
Amanda R. Steele, Esq.
Brendan J. Schlauch, Esq.
Garrett S. Eggen, Esq.
Richards, Layton & Finger, P.A.
One Rodney Square
920 N. King Street
Wilmington, DE 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
E-mail: collins@rlf.com
merchant@rlf.com
steele@rlf.com
schlauch@rlf.com
eggen@rlf.com
- and -
George A. Davis, Esq.
George Klidonas, Esq.
Andrew Sorkin, Esq.
Anupama Yerramalli, Esq.
Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
Telephone: (212) 906-1200
Facsimile: (212) 751-4864
E-mail: george.davis@lw.com
george.klidonas@lw.com
andrew.sorkin@lw.com
anu.yerramalli@lw.com
- and -
Jeffrey E. Bjork
LATHAM & WATKINS LLP
355 South Grand Avenue, Suite 100
Los Angeles, California 90071
Telephone: (213) 485-1234
Facsimile: (213) 891-8763
E-mail: jeff.bjork@lw.com
- and -
Jason B. Gott
LATHAM & WATKINS LLP
330 North Wabash Avenue, Suite 2800
Chicago, Illinois 60611
Telephone: (312) 876-7700
Facsimile: (312) 993-9767
E-mail: jason.gott@lw.com
About Mallinckdrodt PLC
Mallinckrodt -- http://www.mallinckrodt.com/-- is a global
business consisting of multiple wholly owned subsidiaries that
develop, manufacture, market and distribute specialty
pharmaceutical products and therapies. The company's Specialty
Brands reportable segment's areas of focus include autoimmune and
rare diseases in specialty areas like neurology, rheumatology,
nephrology, pulmonology and ophthalmology; immunotherapy and
neonatal respiratory critical care therapies; analgesics and
gastrointestinal products. Its Specialty Generics reportable
segment includes specialty generic drugs and active pharmaceutical
ingredients.
As of March 27, 2020, the Company had $10.17 billion in total
assets, $8.27 billion in total liabilities, and $1.89 billion in
total shareholders' equity.
On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates
sought Chapter 11 protection in Delaware in the U.S. (Bankr. D.
Del. Lead Case No. 20-12522) to seek approval of a restructuring
that would reduce total debt by $1.3 billion and resolve opioid
related claims against the Company.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Latham & Watkins LLP, Ropes & Gray LLP and Wachtell, Lipton, Rosen
& Katz are serving as counsel to the Company, Guggenheim
Securities, LLC is serving as investment banker and AlixPartners
LLP is serving as restructuring advisor to Mallinckrodt. Hogan
Lovells is serving as counsel with respect to the Acthar Gel
matter. Prime Clerk LLC is the claims agent.
MCGRAW-HILL LLC: Fitch Puts 'B+' LongTerm IDR on Watch Negative
---------------------------------------------------------------
Fitch Ratings has placed McGraw-Hill, LLC's (MH) Long-Term Issuer
Default Rating (IDR) of 'B+' and associated issue rating on Rating
Watch Negative. The rating action affects approximately $2.1
billion of debt outstanding as of March 31, 2021. The Negative
Watch is driven by the lack of clarity regarding the funding
structure for Platinum Equity, LLC's $4.5 billion acquisition of MH
from funds managed by Apollo Global Management, Inc., announced on
June 15, 2021, and the potential for an increase in
Fitch-calculated FFO leverage. Fitch notes MH's Fitch-calculated
FFO leverage was 4.9x at Dec. 31, 2020, pro forma for the inclusion
of Fitch's estimated cost-savings. The Negative Rating Watch will
be resolved once the capital structure is finalized and its effect
on MH's leverage is determined.
KEY RATING DRIVERS
Coronavirus: The pandemic's negative effect on state budgets were
muted by several rounds of direct and indirect federal stimulus
injections during 2020. The American Rescue Plan (ARP), signed into
law in March 2021, provides an additional $350 billion of direct
aid to state and local governments. The ARP includes $130 billion
for K-12 schools, which eases the burden on both state, which
typically fund approximately 45% of local K-12 education content
purchases and depend on sales and/or income tax for revenue, and
local governments. While local governments were less affected as
they derive varying portions of their revenues from property taxes,
they were responsible for funding school safety measures, including
establishing and maintaining remote learning infrastructure.
Fitch notes that during prior periods of economic stress, K-12
adoptions were rarely cancelled or even delayed (if they were
delayed it was only for one year). Given that the current economic
dislocation has little historic precedent, Fitch will continue to
pay close attention to near-term adoption calendars for delays in
timing. However, Fitch believes delays don't represent a
significant near-term concern given the de minimis adoption delays
to date and funding provided by the ARP.
For higher ed, the potential for federal and state cuts in college
funding and student aid is always an issue. Fitch believes
long-term enrolment will continue to stabilize as college degrees
remain a necessity for many jobs. In addition, college enrolment
typically increases during recessions as jobs are harder to find
and people look to augment their skills. Finally, most funding for
higher ed textbooks and other course materials comes directly from
students.
Fitch notes the pandemic drove an aggregate low single digit
decline in higher ed enrollment in the 2020-21 academic year as
students delayed starting or returning to school (gap year), with
community colleges being the hardest hit. Fitch expects the 2021-22
academic year's enrollment declines to stabilize somewhat and that
community colleges will continue to be the worst affected as
prospective students weigh ongoing economic concerns.
Diversified Revenues: For the LTM ended Dec. 31, 2020,
approximately 42% of MH's total reported revenues were derived from
higher ed content, 38% from K-12 content, 11% from international
content, which includes sales of higher ed and K-12 materials, and
9% from global professional education content and services.
Market Share: MH holds leading positions in its two largest
segments. The company has a strong market share in the U.S. higher
ed market, with its digital offerings showing continued growth.
While the overall market remains under pressure due to ongoing
"share" loss to rental and used textbook offerings, MH is
recapturing some of these units with its digital offerings. For the
U.S. K-12 publishing market, Fitch believes Houghton Mifflin
Harcourt (HMHC), MH and Savvas Learning Company (f.k.a. Pearson
U.S. K12 Education), collectively, hold more than 80% market
share.
Long-Term Digital Opportunity: Fitch believes the overall
transition to digital will continue apace, with digital billings
having grown to approximately 72% of FYE March 31, 2021 total
billings from 33% in fiscal 2015. Fitch notes K-12 billings are
excluded from this number due to adoption-related variations.
During 2Q21, higher ed digital billings growth more than offset
print declines for the first time, which Fitch expects to continue
over the rating horizon. The transition to digital, which the
coronavirus only accelerated, allows for a more efficient cost
structure. Fitch expects MH to continue investing in its digital
products, including through small bolt-on acquisitions.
Cost Savings: MH expects to realize more than $100 million of cost
savings by FYE March 31, 2022. The synergies are driven primarily
by operating efficiency improvements, along with corporate function
and technology benefits and real estate optimization. Fitch
believes the cost synergies are largely attainable, and its rating
case assumes a blend of expense realization success for each
category and approximately $43 million of upfront costs. Fitch's
estimates are based on varying expectations for synergy
realizations based on the category and scope of the expected
expense cuts, the probability of realizing reductions within each
category, and typical industry expense cut realizations.
Higher Ed Concerns: Students, concerned about rising educational
content costs, are increasingly choosing to rent or purchase used
textbooks or not to buy them. The shift from print to digital also
disrupted demand predictability and increased lower priced or free
alternatives (e.g. open-source content). To combat this, MH created
lower cost offerings through inclusive access and term-length
textbook rentals via its distribution network that are increasingly
gaining traction.
DERIVATION SUMMARY
MH is well positioned in the domestic K-12 and global higher ed
textbook publisher markets, with additional global exposure to
professional education content and services. MH is one of the
leading global providers offering a full set of content and
services, including robust digital platforms, across a broad range
of education segments. In addition, MH has generally outperformed
its competitors over the last few years, despite industry issues
that resulted in several of its competitors experiencing operating
issues.
KEY ASSUMPTIONS
Fitch's key assumptions within its current rating case for the
issuer include:
-- Higher ed digital billings continues to gain traction and
total billings grow by mid-single digits in 2021 and low
single digits thereafter.
-- K-12 sees low single digit revenue growth annually.
-- Aggregate remaining segments are expected to grow in the low
single digits.
-- EBITDA margins continue to improve driven by planned cost
savings and growing digital acceptance.
-- FFO grows to almost $300 million by fiscal 2024.
-- $700 million of aggregate sponsor dividends in fiscal 2023 and
fiscal 2024 funded with debt issuance and cash balances.
-- Pro forma FFO leverage remains in the low 5x range over the
rating horizon.
KEY RECOVERY RATING ASSUMPTIONS
-- The recovery analysis assumes MH would be reorganized as a
going-concern in bankruptcy rather than liquidated.
-- Fitch has assumed a 10% administrative claim.
Going-Concern (GC) Approach
MH's recovery analysis assumes significant coronavirus-related K-12
adoptions delays followed by market share loss, driven by an
inability to win enough upcoming adoptions and ongoing industry
issues in the higher ed segment dragging down revenues, which
pressure margins. The post-reorganization GC EBITDA of $400 million
is based on Fitch's estimate of MH's average EBITDA over a normal
cycle, adjusted to include the change in deferred revenues. It also
accounts for MH's operating performance relative to its competitors
and its overall industry segments.
Fitch assumes MH will receive a GC recovery EV multiple of 7.0x
EBITDA. The estimate considered several factors. HMHC and Pearson
have traded at a median EV/EBITDA of 12.2x and 10.9x, respectively.
During the last financial recession, Pearson traded at ~8.0x
EV/EBITDA, while neither MH nor HMHC were public at the time. In
2014, Cengage emerged from bankruptcy with a $3.6 billion
valuation, equating to an emergence multiple of 7.7x. The most
recent textbook publishing transaction occurred in February 2019
with Pearson's sale of its K-12 business for 9.5x operating profit
(EBITDA was not disclosed). Prior to that, in March 2013 Apollo
Global Management LLC acquired MH from S&P Global, Inc. for $2.5
billion, or a multiple of estimated EBITDA of approximately 7x.
Fitch assumes the AR securitization facility will be 75% drawn and
the revolver would be 100% drawn ($260 million) at bankruptcy.
Under this scenario it estimates full recovery prospects for the
first lien senior secured credit facilities and rates them
'BB+'/'RR1', or three notches above MH's 'B+' IDR. Although Fitch
also estimates full recovery prospects for the 1.5 lien debt, Fitch
criteria only allows first lien debt to receive an 'RR1'. As such,
the 1.5 lien debt is notched down from the first lien to
'BB'/'RR2'. Finally, the unsecured debt is notched down to
'BB-'/'RR3' given MH's heavy weighting toward secured debt under
the proposed capital structure and the resultant reduced recovery
prospects.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch could resolve the Negative Rating Watch and affirm MH's
ratings if financial policies and credit metrics are in line
with the current rating.
-- Favorable rating action could occur if post-closing Fitch
calculated FFO total leverage is below 5.0x or debt reduction
is sufficient enough to drive Fitch-calculated FFO total
leverage below 5x and can be sustained below 5.0x through
cyclical adoption troughs.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Fitch could resolve the Negative Rating Watch and downgrade
MH's ratings if financial policies and credit metrics are more
aggressive.
-- Fitch-calculated FFO total leverage exceeds 6x at closing
without a credible plan to delever.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of March 31, 2021, MH had $353 million in
cash, full availability under its $260 million revolver due
November 2023 and a $150 million incremental seasonal AR line due
August 2023. There are currently no material maturities until
November 2024 when the $1.4 billion first lien and $718 million 1.5
lien term loans mature. Fitch-calculated FFO-adjusted total
leverage at Dec. 31, 2020 was 4.9x, pro forma for the inclusion of
Fitch's estimated cost-savings.
Fitch's focus on FFO-adjusted total leverage is in line with how
Fitch calculates leverage across the K-12 industry, with the change
in deferred revenue included in the calculation of FFO to account
for GAAP-driven revenue timing differentials. As digital revenues
continue increasing, revenues realized in a given year will
eventually match revenues recognized in that year, although Fitch
does not expect that to occur within the rating horizon.
ISSUER PROFILE
MH is a leading producer of physical and digital learning tools and
platforms to K-12, higher education, academic institutions,
professionals and companies. MH expanded its offerings from print
textbook and instructional materials to include digital content and
technology enabled adaptive learning solutions.
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.
MEADOWLARK HILLS: Fitch Assigns 'BB+' Issuer Default Rating
-----------------------------------------------------------
Fitch Ratings has assigned a 'BB+' Issuer Default Rating (IDR) to
Meadowlark Hills, KS and a 'BB+' rating to approximately $41.7
million in series 2021A health care facilities revenue bonds and
$3.5 million in series 2021B taxable health care facilities revenue
bonds expected to be issued by the City of Manhattan, Kansas on
behalf of Meadowlark Hills.
The Rating Outlook is Stable.
Proceeds from the series 2021 bonds will be used to refinance
Meadowlark Hills' outstanding debt, fund a project fund for an
on-site physician clinic, terminate an interest rate swap and pay
the costs of issuance. The bonds are expected to sell via
negotiation on or about July 7.
SECURITY
Bondholders are granted a security interest in the gross revenues
of Meadowlark Hills and a first mortgage lien on the Meadowlark
Hills campus. A fully-funded DSRF provides additional security.
ANALYTICAL CONCLUSION
The 'BB+' rating reflects Meadowlark Hills' steady market position
as the leading life plan community in a weak service area, with a
high exposure to skilled nursing facility (SNF) operations,
particularly those reimbursed by Medicaid and historically modest
leverage profile. The rating also reflects Meadowlark Hills'
predominantly type-B contracts that provide for good profitability
exhibited by an operating ratio and net operating margin (NOM) that
have averaged 89.1% and 14.6% over the past four fiscal years.
Management is currently considering an independent living
unit/wellness expansion project in 2022 that is expected to dilute
the community's financial profile if undertaken. Though Meadowlark
Hills has some debt capacity at the current rating, the future
expansion plan is not fully incorporated into the rating given the
preliminary nature of the timing and cost estimates. Fitch will
incorporate the impact of the plan once more information is
available.
KEY RATING DRIVERS
Revenue Defensibility: 'bbb'
Limited Life Plan Community (LPC) Competition; Adequate Demand
The 'bbb' revenue defensibility reflects Meadowlark Hills' market
position as a single-site LPC operating in a service area with no
competitive entrance-fee communities. Meadowlark Hills has numerous
competitors who offer a select continuum of care services, such as
standalone assisted living (AL) providers. Though demand is also
supported by Meadowlark Hills' good reputation in the community and
high SNF quality ratings, the service area has experienced a large
population decline over the past five years, which Fitch views as a
longer-term risk.
Operating Risk: 'bb'
Solid Core Profitability, High SNF and Medicaid Exposure
Fitch's 'bb' assessment of Meadowlark Hills' operating risk
reflects a historical track record of strong cost management, and
the community's predominantly type-B contracts. The assessment also
considers risks associated with Meadowlark Hills' high exposure to
skilled nursing operations and Medicaid payor mix exposure, which
accounted for 40% of SNF net revenues through the fiscal 2021
10-month interim period. Meadowlark Hills has a modest debt burden
and the average age of plant has increased to 12.3 years as of
April 30, 2021 from 11.2 years as of June 30, 2017. The debt burden
and capex plans may increase over the outlook period as management
contemplates a debt issuance to fund a potential independent living
(IL) unit expansion project and a new wellness center.
Financial Profile: 'bb'
Financial Profile Consistent with Rating Through Moderate Stress
Meadowlark Hills has historically maintained a relatively modest
leverage profile, with pro forma cash-to-adjusted debt of 43.8% at
fiscal year-end 2020. Given Meadowlark Hills' 'bbb' revenue
defensibility and 'bb' operating risk assessments and Fitch's
forward-looking scenario analysis, Meadowlark Hills is expected to
maintain key leverage metrics that are consistent with historical
levels and the 'BB+' rating through a moderate stress. While
Meadowlark Hills has some debt capacity at the current rating
level, it is not unlimited, and a very sizeable debt issuance could
pressure the rating.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
Meadowlark Hills' unfavorable reliance on SNF and particularly
Medicaid revenues (at 40.4% of SNF net revenues in the fiscal 2021
10-month interim period) is included in the 'bb' assessment of
operating risk and reflected in Meadowlark Hills' overall rating of
'BB+'. No other asymmetric risk considerations are relevant to the
rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Improved financial profile such that cash to adjusted debt is
expected to stabilize above 100% and MADS coverage is
consistently above 2x;
-- Reduced concentration of net resident service revenues in
skilled nursing;
-- Improved SNF payor mix where Medicaid consistently accounts
for less than 25% of the skilled nursing net revenues.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Weakening in the operations/financial profile or issuance of
additional debt such that cash to adjusted debt falls below
40% and/or MADS coverage is expected to be consistently at or
below 1.5x.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CREDIT PROFILE
Meadowlark Hills is a predominantly type-B LPC located on
approximately 55 acres in Manhattan, KS. The campus currently
consists of 167 IL units (54 duplexes/cottages and 113 apartments),
38 AL units (all private, with 14 utilized as memory care units)
and 134 skilled nursing beds (74 semi-private and 60 private).
Meadowlark Hills generated $27 million in total operating revenue
at FYE June 30, 2020.
REVENUE DEFENSIBILITY
Meadowlark Hills has a total of 167 IL units on its campus, which
generate approximately 21% of the community's total net resident
service revenues. Despite a drop in IL occupancy to 87% over the
fiscal 2021 10-month interim period, IL occupancy is assessed as
midrange given the 94% average over the four fiscal years leading
up to 2021. Fitch expects IL occupancy to improve in fiscal 2022 as
marketing apartments during the coronavirus pandemic had been a
challenge and activity has been increasing on campus with the
removal of restrictions on in person sales and marketing
restrictions.
Similar to IL, AL, memory care and skilled nursing censuses have
recently fallen because of the coronavirus pandemic. AL, memory
care and skilled nursing beds averaged 93%, 89% and 86% from fiscal
2017 through fiscal 2020, but these averages weakened to 84%, 85%
and 81% through the fiscal 2021 10-month interim period. Management
reports that census levels for all three service lines are starting
to recover in the last quarter of fiscal 2021, which Fitch views
positively.
Competition in Meadowlark Hills' primary service area is limited as
there is one entrance-fee community in the primary market with only
eight independent living units and one rental community that is
expected to open in the near future. The remainder of Meadowlark
Hills' competitors are providers who offer select healthcare
services. Though the community's historical independent living unit
(ILU) demand is healthy and competition is light, population trends
are unfavorable as Manhattan, KS and Riley County have experienced
a respective 2.9% and 5.3% population decline over the past five
years. Fitch does not currently view this as a major risk at this
time given the community's robust wait list of over 400 prospective
residents.
Meadowlark Hills has a consistent history of rate increases for its
monthly fees for all levels of care, but entrance fee increases
have been inconsistent with 5% and 2.5% increases in 2019 and 2020.
Management is not planning on increasing ILU entrance fees and
assisted living monthly service fees in 2021. ILU entrance fees
range between $60,000 and $250,000, which Fitch views as comparable
to home values based on a review of public data that shows average
home values of approximately $225,000 in Manhattan, KS and $200,000
in Riley County.
OPERATING RISK
Meadowlark Hills offers two contract types -- a type-B residential
entrance-fee agreement and a rental agreement. Approximately 50% of
contracts currently outstanding are 75% refundable contracts, 38%
of the contracts outstanding are nonrefundable contracts and 12%
are rental contracts. Entrance fees are refundable within six
months of vacancy. Once a resident transfers from an ILU to a
higher level of care, the unamortized portion of the entrance fee
is transferred to a resident deposit for care (RDC) and used to pay
the cost of healthcare services. Once the RDC is exhausted, the
resident is responsible for payment for the cost of healthcare
services. The usage of entrance fees for healthcare service payment
lowers the community's entrance fee refunds and provides for
increased balance sheet stability, which is viewed favorably.
Meadowlark Hills had a track record of strong cost management prior
to the effects of the coronavirus pandemic on operations. The
community's operating ratio and net operating margin (NOM) averaged
89.1% and 14.6%, respectively, from fiscal 2017 to fiscal 2020.
Furthermore, despite a heavy SNF concentration and the fact that
half of the community's contracts are 75% refundable contracts,
Meadowlark Hills NOM-adjusted has averaged a good 23.6%, which is
supported by the drawdown of the RDC that reduces the refund
liability.
In fiscal 2021, Meadowlark Hills experienced increased census
volatility associated with the coronavirus pandemic, but was still
able to produce an adequate operating ratio of 93%, NOM of 10.3%
and NOM-adjusted of 17.9% for the ten months ended April 30, 2021.
These metrics should improve by the end of the fiscal year through
the recognition of a $2.5 million Paycheck Protection Program (PPP)
loan as revenue and growth in census across service lines that has
been noted by management.
Capex-to-depreciation has averaged 100.4% over the last four fiscal
years and Meadowlark Hill's average age of plant of 12.3 years as
of April 30, 2021 is viewed as adequate. Spending was particularly
high in fiscal 2020 at 182.4% of depreciation as management
invested into the renovation and expansion of an eatery/pub on
campus. The series 2021 bonds will refinance a bank construction
loan that will be converted to a project fund. The project fund
will be used to construct a primary care clinic, expected to be
leased to and operated by a privately-owned physician group, that
will serve both residents and the general public.
Meadowlark Hills' capital-related metrics are solidly midrange,
with pro forma MADS of $2.9 million equating to a moderate 10.6% of
fiscal 2020 revenues. Based on fiscal 2020 results, pro forma
revenue-only MADS coverage and debt to net available are good at
1.7x and 6.3x, respectively.
Management is currently considering two separate projects in
addition to the clinic project that will be funded with the series
2021 bonds. The first is an ILU expansion project that would add 24
IL hybrid homes and 36 underground parking spots. Preliminary cost
estimates for the IL project are $17 million and management
estimates that the new ILUs could potentially generate $5.5 million
of initial entrance fees at full occupancy.
The second project is a wellness center that has a $10 million
preliminary cost estimate. Management believes the cost of the
wellness project will be primarily covered by fundraising. Design
work is completed for the ILU expansion project and the wellness
center is in preliminary planning phases. Management expects to
presell 75% of the new ILUs before proceeding with the expansion
project. Fitch will review the details of any potential debt
financing when more details are available.
Meadowlark Hills derives nearly 60% of its net resident service
revenue from SNF operations. Of this amount, an average of 31% of
SNF net revenues have been derived from Medicaid over the past four
fiscal years. SNF revenues have made up an increasing percentage of
net resident service revenue over the past few years (35.4% in
fiscal 2020, 40.4% in the fiscal 2021 10-month interim period), but
this is partially a result of substantial rate increases from
Medicaid that Meadowlark Hills has received over the past few
years.
Despite the fact that Medicaid reimbursement rates have recently
improved, Fitch views the high exposure to SNF operations and
Medicaid as an asymmetric additional risk consideration as Medicaid
programs provide the lowest reimbursement rates among all payors
for SNF services. Furthermore, SNF demand/revenues are highly
dependent on external factors including hospital referrals and
local aging and SNF utilization trends, which are a major risk in
the midst of industry trends to refer discharges to home.
FINANCIAL PROFILE
Given Meadowlark Hills' midrange revenue defensibility and weak
operating risk assessments, and Fitch's forward-looking scenario
analysis, Fitch expects key leverage metrics to remain consistent
with a below investment-grade rating throughout the current
economic and business cycle. The 2021 plan of finance only adds
approximately $7.6 million of new debt (including premium) and pro
forma debt measures approximately $49.5 million after removing the
liability for a PPP loan that has been forgiven. Meadowlark Hills
has no debt equivalents. At April 30, 2021, Meadowlark Hills had
approximately $25.3 million of unrestricted cash and investments
(inclusive of debt service reserve funds). Fitch calculated days
cash on hand (DCOH) was 417 days at April 31, 2021.
Fitch's baseline scenario - a reasonable forward look of financial
performance over the next five years given current economic
expectations - shows Meadowlark Hills maintaining operating and
financial metrics that are largely consistent with historical
levels of performance as census rebounds across all service lines.
Capex is expected to be above depreciation to fund the upcoming
clinic project and additional debt is considered for the IL
expansion project. As part of the forward look, Fitch assumes an
economic stress (to reflect financial market volatility), which is
specific to Meadowlark Hills' asset allocation. As a result of the
stress and additional debt, Meadowlark Hills' cash-to-adjusted debt
drops to a low of 40%, which is consistent with the current rating
level. Debt service coverage remains at or above 1.5x and DCOH
remains well above 300 days throughout the stress scenario.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
Apart from Meadowlark Hills' high reliance on SNF and particularly
Medicaid revenues, no other asymmetric risk considerations are
relevant to the rating.
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.
MERCER INTERNATIONAL: S&P Alters Outlook to Stable, Affirms B+ ICR
------------------------------------------------------------------
S&P Global Ratings revised its outlook on Mercer International Inc.
to stable from negative and affirmed its 'B+' issuer credit rating
on the company and its 'B+' issue-level rating on Mercer's notes.
The '3' recovery rating on the notes is unchanged.
S&P said, "The outlook revision reflects our expectation that the
company's cash flows and credit measures will improve over the next
two years. We expect Mercer will generate earnings and cash flow
above our previous estimates over the next two years, led by higher
pulp and lumber prices. We now estimate the company will generate
adjusted debt to EBITDA in the mid-3x to low-4x area in 2021 and
2022, which is a meaningful improvement from 6.3x at year-end 2020.
In addition, based largely on the upward revision to our price
assumptions, we believe the risk of the company generating free
operating cash flow (FOCF) deficits has materially abated and this
alleviates downside risk to liquidity."
Pulp prices have rallied since the beginning of 2021, with the
benchmark Northern Bleached Softwood Kraft (NBSK) delivered price
to Europe increasing about 35%. S&P said, "We attribute the sharp
increase primarily to shipping container shortages and extended
producer maintenance downtime, which have constrained supply amid
improving demand. We estimate prices will decline from current
highs as logistical bottlenecks ease and heavy maintenance activity
subsides but remain well above weak 2020 levels over the next two
years. Our NBSK price assumptions are underpinned by our
expectation for improving demand in printing and writing paper end
markets amid strengthening macroeconomic conditions and lack of new
softwood capacity coming online through 2022."
S&P said, "Pulp is expected to continue to contribute to the vast
majority of Mercer's earnings and cash flow, but we expect the
company will also benefit from much improved lumber market
conditions. The company exports about 40% of its lumber shipments
to the U.S., where prices have increased significantly since our
last review. Robust new housing construction and repair and remodel
activity contributed to historical high prices in 2021. We expect
low interest rates to support continued demand from new housing and
favorable prices over the next two years, above 2020 levels
(albeit, well below prevailing levels mainly as new supply
emerges). We also expect comparably more stable European markets
will account for most of its remaining lumber sales.
"The current rating on Mercer incorporates our expectation that
earnings and cash flow will exhibit volatility through cycles.
Credit measures are very sensitive to changes in pulp prices, with
close to 85% of revenue derived from this segment. All else
remaining equal, we estimate that if average pulp prices declined
by 10% in 2021 relative to our assumptions (which are about 5%-10%
below year-to-date average levels), adjusted debt to EBITDA would
increase to 5x. In addition, the company is exposed to fluctuations
in fiber costs due to seasonality in logging supplies as fiber
account for about 50% of its pulp. Mercer is also exposed to
fluctuations in the value of the Canadian dollar and euro against
the U.S. dollar, given that its operations in Canada and Germany
incur most costs in local currency and revenue is priced in U.S.
currency.
"We expect Mercer will maintain a surplus liquidity position and
stable debt levels through 2022. We expect Mercer will generate
positive FOCF this year, which provides financial flexibility from
improved liquidity. Our estimated cash flows from operations of
close to US$300 million should more than cover the company's
capital spending this year, including growth spending on the
Stendal pulp mill expansion." This project is expected to
moderately increase pulp production and power generation at the
mill. The completion of Mercer's Friesau sawmill Phase II expansion
is also estimated to increase total lumber production capacity by
about 35% by the end of 2021. The addition of this new capacity
should modestly benefit the company's commodity diversification and
sales output, without weakening the balance sheet.
The company is contemplating a potential greenfield sawmill
investment near its Stendal pulp mill. The size of the investment
would be material, estimated at US$200 million-US$250 million over
a two-year period and result in an expansion of Mercer's lumber
production capacity by about 50% in 2024. S&P said, "We have not
incorporated this investment into our estimates, and the timing of
a decision is unknown. If the company does proceed with its
construction, we do not anticipate a material impact on its credit
measures. This primarily reflects Mercer's large cash position
(US$395 million at March 31, 2021, which is not netted from our
adjusted debt calculations) that, in tandem with positive FOCF,
should more than fund the development. However, such a project
would not be without risk, in our view. As with most large
projects, we believe the company could face exposure to potential
delays and cost overruns. Therefore, the financial impact could be
exacerbated in the event of an unexpected and protracted downturn
in pulp prices."
S&P said, "The stable outlook reflects our view that Mercer will
maintain an adjusted debt-to-EBITDA ratio in the mid-3x-to-4x range
and generate positive FOCF over the next two years. Pulp prices
have recently rebounded, and we expect much stronger macroeconomic
conditions will lead to higher demand and pulp prices well above
2020 lows. We assume an increase in the company's earnings and cash
flow over this period, with continuing strong liquidity.
"We could upgrade Mercer if, over the next 12 months, we expect the
company will generate and sustain an adjusted debt-to-EBITDA ratio
below 4x, with positive FOCF generation. In this scenario, we would
expect a material improvement in NBSK prices relative to our
current assumptions over the next two years, with stronger
liquidity that mitigates the risk associated with potential growth
investments and/or acquisitions.
"We could lower the ratings if, within the next 12 months, we
estimate Mercer will generate negative FOCF to an extent that
materially reduces its cash position and liquidity cushion. This
could result from an unexpected deterioration in pulp prices,
particularly if this corresponds with materially higher
growth-related investments or acquisitions."
MIDNIGHT MADNESS: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Midnight Madness Distilling LLC
d/b/a Faber Distilling
f/k/a Theobald & Oppenheimer LLC
118 N. Main Street
Trumbauersville, PA 18970
Business Description: Midnight Madness Distilling LLC operates in
the beverage manufacturing industry.
Chapter 11 Petition Date: June 21, 2021
Court: United States Bankruptcy Court
Eastern District of Pennsylvania
Case No.: 21-11750
Judge: Hon. Magdeline D. Coleman
Debtor's Counsel: Harry J. Giacometti, Esq.
FLASTER GREENBERG PC - PHILADELPHIA
1835 Market St.Ste 1050
Philadelphia, PA 19103
Tel: 215-279-9323
E-mail: harry.giacometti@flastergreenberg.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Casey Parzych, manager.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/7CCCCLA/Midnight_Madness_Distilling_LLC__paebke-21-11750__0002.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/7GFO3RI/Midnight_Madness_Distilling_LLC__paebke-21-11750__0001.0.pdf?mcid=tGE4TAMA
MISTER CAR WASH: S&P Places 'B-' ICR on CreditWatch Positive
------------------------------------------------------------
S&P Global Ratings placed all ratings on U.S.-based conveyor car
wash operator Mister Car Wash Holdings Inc. (MCW), including the
'B-' issuer credit rating, on CreditWatch with positive
implications, reflecting the high likelihood of a significant
education in leverage and possibility of a higher rating.
A successful IPO would generate sufficient proceeds to
significantly reduce debt, leading to leverage of below 6.5x. On
June 17, 2021, MCW outlined expectations for total net proceeds
from the IPO of about $465 million. Proceeds will first be used to
repay the full outstanding balance of the second lien term loan,
then used to repay up to about $222.5 million of the first lien
term, with any remainder utilized for general corporate purposes.
As of year-end fiscal 2020, S&P Global Ratings adjusted leverage
was 7.8x. S&P said, "Although we need to review our expectations
for MCW's performance, we believe that debt paydown with IPO
proceeds would lead to leverage below 6.5x, which is one of our
triggers for an upgrade."
S&P will also need to assess its expectation for the financial
policy of the newly public company to determine the likelihood of
leverage sustained below 6.5x. An upgrade would be dependent on our
determination that the public company will have financial policies
supporting sustained lower leverage long term. Furthermore, the
level of ownership and influence that financial sponsor Leonard
Green may exercise will be an important consideration in the
analysis.
S&P intends to resolve our CreditWatch placement following
completion of the IPO and proposed debt reduction. At that time,
S&P will also review its expectations for business performance and
MCW's financial policy.
NATIONAL TRACTOR: Wins Cash Collateral Access Thru July 16
----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois,
Eastern Division, has authorized National Tractor Parts, Inc. to
use the cash collateral of First Midwest Bank and eCapital
Commercial Finance Corp., the prepetition secured lenders, on an
interim basis through July 16, 2021, in accordance with the budget,
with a 10% variance.
As of the Petition Date, the Debtor owes First Midwest Bank
$1,052,387, pursuant to loan agreements, promissory notes, security
agreements, and other documents evidencing the Indebtedness
executed by the Debtor in favor of First Midwest Bank. The Bank
further asserts that pursuant to the Loan Documents, the Debtor
granted it perfected security interest and lien on the property
located at 12127A Galena Road, Plano, Illinois 60545, as well as
all of the assets of the Debtor together with the proceeds thereon,
some of which constitutes "cash collateral" within the meaning of
section 363(a) of the Bankruptcy Code.
As of the Petition Date, the Debtor owes eCapital $99,371, pursuant
to a Master Purchase and Sale Agreement, security agreements, and
other documents evidencing the Indebtedness executed by the Debtor
in favor of eCapital. Pursuant to the Factoring Documents, the
Debtor granted eCapital a perfected security interest and junior
lien all of the Assets of the Debtor other than the Plano Property
together with the proceeds thereon some of which constitutes Cash
Collateral, except for the accounts receivable for which eCapital
has a valid first lien.
Other potential lien holders, whose liens are subordinate to First
Midwest and eCapital, are:
a) U.S. Small Business Administration
b) First National Bank of Ottawa
c) Echo Capitol (a/k/a/ Snap Advances)
d) Berco of America
e) Steel Tracks, Inc.
As adequate protection for the Debtor's use of cash collateral, the
Prepetition Secured Lenders will be secured by a lien to the same
extent, priority and validity as existed prior to the Petition
date. The Prepetition Secured Lenders will receive a security
interest in and replacement lien upon all of the Debtor's property
and the proceeds thereof, to the extent actually used and for the
diminution, if any, in the value of the Prepetition Secured
Lenders' Collateral.
In return for the Debtor's continued interim use of Cash
Collateral, First Midwest Bank is granted adequate protection
payments in the amount of $5,000 per month until further Court
order to protect against any diminution in value of the collateral.
eCapital is granted adequate protection payments in the amount of
$500 per month until further Court order to protect against any
diminution in value of the collateral. The Prepetition Secured
Lenders will receive an administrative expense claim pursuant to
Section 507(b) of the Bankruptcy Code.
The Prepetition Secured Lenders are also granted adequate
protection for their secured interests in substantially all of the
Debtor's assets, including Cash Collateral equivalents and the
Debtor's cash and accounts receivable, among other collateral to
the extent and validity as held prepetition and subject to the
terms of the Subordination Agreement between the Prepetition
Secured Lenders.
A further hearing on the use of cash collateral is scheduled for
July 14 at 10:30 a.m.
A copy of the order is available for free at https://bit.ly/3q9c57P
from PacerMonitor.com.
About National Tractor Parts, Inc.
National Tractor Parts, Inc. -- https://www.ntparts.com/ -- is a
family-owned business in the heavy equipment parts industry.
National Tractor Parts sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ill. Case No. 20-20833) on November
30, 2020. In the petition signed by Charles H. Gunier Jr.,
president, the Debtor disclosed up to $1,844,491 in assets and up
to $3,098,844 in liabilities.
Judge David D. Cleary oversees the case.
Richard G. Larsen, Esq., at Springer Brown, LLC is the Debtor's
counsel.
NORTHERN OIL: Signs Underwriting Agreement With Wells Fargo
-----------------------------------------------------------
Northern Oil and Gas, Inc. has entered into an underwriting
agreement with Wells Fargo Securities, LLC, as representative of
the other several underwriters, relating to its previously
announced public offering of 5,000,000 shares of common stock, par
value $0.001 per share, of the Company.
Under the terms of the Agreement, the Company granted the
Underwriters a 30-day option to purchase up to 750,000 additional
shares of Common Stock, which option was exercised in full on June
17, 2021.
The Equity Offering, including the sale of the Option Shares,
closed on June 21, 2021. The Company expects to use the net
proceeds from the Equity Offering and, to the extent necessary,
cash on hand and/or borrowings under the Company's revolving credit
facility to fund the purchase price for the Company's recently
announced pending acquisition of certain oil and gas properties,
interests and related assets located in the Permian Basin. Pending
the use of proceeds, the Company may temporarily apply a portion of
the net proceeds from the Equity Offering to repay outstanding
borrowings under its revolving credit facility. If the pending
acquisition is not consummated, the Company intends to use the net
proceeds from the Equity Offering for general corporate purposes,
which may include the repayment of outstanding indebtedness.
The Equity Offering was made pursuant to a prospectus supplement,
dated June 16, 2021, and filed with the Securities and Exchange
Commission on June 17, 2021, and the base prospectus, dated April
15, 2021, filed as part of the Company's shelf registration
statement (File No. 333-255065) filed with the SEC on April 6, 2021
and declared effective on April 15, 2021.
About Northern Oil
Northern Oil and Gas, Inc. -- http://www.northernoil.com-- is an
independent energy company engaged in the acquisition, exploration,
development and production of oil and natural gas properties,
primarily in the Bakken and Three Forks formations within the
Williston Basin in North Dakota and Montana.
Northern Oil reported a net loss of $906.04 million for the year
ended Dec. 31, 2020, compared to a net loss of $76.32 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $873.24 million in total assets, $1.05 billion in total
liabilities, and a total stockholders' deficit of $180.68 million.
OFS INT'L: $16.5MM DIP Loan Wins Final OK
-----------------------------------------
OFS International LLC and its debtor-affiliates sought and obtained
the Bankruptcy Court's approval, on a final basis, to obtain up to
$16,500,000 in senior secured, super priority credit facility
consisting of a $12,500,000 revolving loan facility and a term loan
facility in an aggregate amount of up to $4,000,000 from Sandton
Capital Solutions Master Fund V, LP, as DIP Lender.
Material Terms of DIP Facility
A. Borrower: OFS International LLC
B. Guarantor: Threading and Precision Manufacturing LLC
C. DIP Lender: Sandton Capital Solutions Master Fund V, LP
D. Commitment:
a. $12,500,000 Revolving Commitment;
b. Commitment of up to $4,000,000 in multi-tranche, one-time
term loans, of which:
* $800,000 will be available as a first tranche upon entry
of the Interim Order;
* $700,000 will be available as a second tranche upon entry
of the Final Order; and
* the $2,500,000 balance potentially available as a
discretionary third tranche at the DIP Lender's sole discretion for
purposes of funding working capital purchases acceptable to Sandton
and depending upon Borrowing Base Availability. For the avoidance
of doubt, the DIP Lender shall have no obligation to fund the $2.5
million discretionary third tranche.
E. Interest Rates: 11% interest rate, 5.0% PIK and 6% Cash
F. Term: December 31, 2021, or any earlier date on which the
Revolving Commitment is reduced to zero or otherwise terminated
pursuant to the DIP Credit Agreement; provided that such date shall
be extended by six months upon satisfaction of the Extension
Conditions.
G. Fees: A Closing Fee of $100,000 and an Exit Fee of $100,000
Purposes for Use of Cash Collateral
The proceeds of the Loans will be used by the Borrower solely on or
after the Effective Date:
a. to fund the Chapter 11 Cases in accordance with the Approved
Budget;
b. to finance the Debtors' ordinary working capital and other
general corporate needs, including certain fees and expenses of
professionals retained by the Loan Parties, subject to the
Carve-Out;
c. to fund other pre-petition and pre-filing expenses and
payments; and
d. to pay the Pre-Petition Obligations.
Superpriority Claims and DIP Liens
As security for the DIP Obligations, the DIP Lender shall be
granted, subject to the Carve-out:
* First Lien on Unencumbered Property;
* Priming Liens Senior to the Pre-Petition Lender's Liens;
* Liens Junior to Certain Other Liens; and
* Liens Senior to Certain Other Liens.
Significant Provisions
The significant provisions necessary to obtain the DIP Lender's
agreement to provide the DIP Facilities on the terms reflected in
the DIP Agreement and Interim Order, include:
a. Sale or Plan Confirmation Milestones. The Debtors shall file
a plan of reorganization or liquidation within 90 days of the
Petition Date.
b. Liens on Avoidance Actions or Proceeds of Avoidance
Actions.
c. Roll-ups. Effective upon entry of the Interim Order and the
occurrence of the Effective Date, all collections received by the
Debtors shall be applied to reduce, on a dollar-for-dollar basis,
the Prepetition Obligations, with each post-petition advance made
by the DIP Lender constituting DIP Loans.
The conversion, or "roll up," shall be authorized solely on account
of the Prepetition Lender's agreement to fund amounts and provide
other consideration to the Debtors under the DIP Facilities and not
as payments under, adequate protection for, or otherwise on account
of, any Prepetition Obligations.
Carve-out
The Carve-Out consists of:
a. all Allowed Professional Fees incurred by persons or firms
retained by the Debtors and the Committee (to the extent one is
appointed) at any time before or on the first business day after
the delivery of a Carve Out Trigger Notice;
b. allowed Professional Fees of Professional Persons in an
aggregate amount up to $200,000 incurred after the first business
day after the delivery of the Carve Out Trigger Notice; and
c. fees owed the clerk of the Bankruptcy Court.
Prepetition Capital Structure
Debtor OFSI entered into a Loan Agreement dated September 19, 2017,
with PAO TMK as lender, with respect to an advancing line of credit
of up to $25,000,000. The Debtor's obligation under the Loan
Agreement, however, was not secured until July 2018. The parties
amended the PAO TMK Loan Agreement extending the maturity date to
December 20, 2021, and executed a Security Agreement granting PAO
TMK a lien on OFSI's equipment, and on OFSI's real property,
pursuant to a Deed of Trust, Assignment of Rights, Security
Agreement and Financing Agreement.
The Debtors entered into a Credit Agreement with JPMorgan Chase
Bank, N.A., as lender, with respect to an initial revolving
commitment for $20,000,000. On July 13, 2018, the Debtors granted
JPMorgan a first lien on all of the Debtors' assets, except for the
real property, pursuant to a Security Agreement.
JPMorgan entered into an Intercreditor Agreement with PAO TMK,
pursuant to which PAO TMK agreed that its liens on the Debtors'
equipment were junior to the liens of JPMorgan. In the event of
default on the PAO TMK Loan Agreement, JPMorgan agreed that PAO TMK
could foreclose its liens against the Debtors' real property.
Thereafter, before the Petition Date, the Debtors and JPMorgan
amended the JPMorgan Credit Agreement:
* increasing JPMorgan's commitment to $30,000,000 on October 26,
2018;
* permitting the repayment of a loan for $20,000,000 from
Volzhsky Pipe Plant, pursuant to a second amendment;
* increasing JPMorgan's commitment to $40,000,000 and
specifically permitting the $10,000,000 additional borrowing to be
used as a cash dividend to OFSI Holdings, pursuant to a third
amendment.
On April 13, 2020, Debtor OFSI received a loan for $6,048,962 under
the Paycheck Protection Program, and an additional $2,000,000 on
April 5.
On May 27, 2021, JPMorgan closed the Debtors' revolving credit
facility with a balance of $12,500,000. The next day, on May 28,
JPMorgan sold to all of its right, interests, and liens related to
the JPMorgan Credit Agreement to Sandton Capital, the DIP Lender.
As of the Petition Date, balance on the PAO TMK Loan is
approximately $14,500,000, including accrued interest. The Debtors
estimate that their total prepetition trade debt is approximately
$50,000,000, of which approximately $40,000,000 is owed to PAO TMK
and related entities.
Adequate Protection
As adequate protection of the Pre-Petition Lender's interests in
the Pre-Petition Collateral against any diminution in value
thereof, the Debtors shall grant to the Pre-Petition Lender:
a. continuing, valid, binding, enforceable, and perfected
post-petition security interests in and liens on all DIP
Collateral.
b. an allowed super-priority administrative expense claim,
subject and subordinate to the Carve Out;
c. adequate protection in the form of payment in cash of the
reasonable and documented fees, out-of-pocket expenses, and
disbursements incurred by the Pre-Petition Lender arising prior to
the Petition Date, including reasonable and documented fees and
expenses of its counsel, McGuireWoods LLP, without the need for the
filing of a formal fee application.
A copy of the DIP Motion is available for free at
https://bit.ly/2TJFYzq from BMC Group, claims agent.
On June 2, 2021, Judge David R. Jones, authorized the Debtors to
borrow up to $800,000 under the DIP Term Loan Facility.
All collections received by the Debtors shall be applied to reduce,
on a dollar-for-dollar basis, the Prepetition Obligations, upon
entry of the Interim Order and the occurrence of the Effective
Date.
A copy of the interim DIP order is available for free at
https://bit.ly/3z0RqXv from BMC Group, claims agent.
The final hearing was held June 21.
Sandton Capital Solutions Master Fund V, LP, DIP Lender, is
represented by:
Mark Freedlander, Esq.
MCGUIREWOODS LLP
260 Forbes Avenue, Suite 1800
Pittsburg, PA 15222-3142
Facsimile: (412)667-7967
About OFS International
OFS International providers of oil and gas production/processing
equipment and services, with their headquarters in Houston, Texas
and operations in the Permian, Barnett and Marcellus regions. It
provides field services, inspections, couplings, threading and
accessories to the oil and gas industry.
OFS International and affiliates, OFSI Holding LLC and Threading
and Precision Manufacturing LLC, sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 21-31784) on May 31, 2021. In the
petition signed by chief financial officer Alexey Ratnikov, OFS
estimated assets of between $10 million and $50 million and
estimated liabilities of between $50 million and $100 million.
The
cases are handled by Honorable Judge David R. Jones. The Debtors'
attorneys are Joshua W. Wolfshohl, Aaron J. Power, and Megan
Young-John of PORTER HEDGES LLP. BMC GROUP, Inc., is the Debtors'
claims agent.
Sandton Capital Solutions Master Fund V, LP, the Debtors' DIP
lender, is represented by MCGUIREWOODS LLP.
OMERS RELIEF: S&P Assigns B- Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to OMERS
Relief Acquisition LLC. The outlook is stable.
S&P also assigned its 'B-' and 'CCC' issue-level ratings to its
first-lien term loans and second-lien term loan, respectively. The
recovery ratings are '3' and '6' on the first-lien and second-lien
term loans, respectively.
OMERS Private Equity is acquiring Gastro Health Group Holdings LLC,
a leading provider of gastrointestinal (GI) services in the U.S.,
through a combination of equity and debt financing. OMERS Relief
Acquisition LLC will be the borrower and the parent organization of
Gastro Health.
S&P said, "Our stable outlook reflects an expectation for revenue
growth of about 50% in 2021 and about 20% in 2022, mainly driven by
an aggressive acquisition strategy and low-to-mid-single-digit
organic growth. As the company expands, we expect improved
efficiency will lead to expanding margins and better cash flow
generation, aided by a normalization of procedural volumes
following COVID-19-related shutdowns in 2020.
"Our ratings on OMERS Relief Acquisition LLC, parent of Gastro
Health, reflects the company's narrow focus on gastrointestinal
procedures, profitability that is below average relative to the
broader health care services industry, relatively low barriers to
entry, significant geographic concentration in Florida (49% of
last-12 month revenue), and risks from potential advancements in
alternative colon cancer screening methods (blood and stool
tests).Colonoscopies and endoscopies (42% of 2020 total revenue)
comprise a substantial portion of the company's revenue, and many
ancillary revenue, including infusion, anesthesia, and pathology,
depend on the same patient visits. We view the market for
gastrointestinal (GI) services as highly competitive and
fragmented, with only modest potential for differentiation. Among
physician practice management companies, there are limited barriers
to entry for competing with Gastro Health. Although we do not
expect significant technological disruption in the next few years,
we believe technological improvements in non-invasive testing for
colorectal cancer could potentially present a significant challenge
to the company's procedure volumes in the future.
"Offsetting strengths are the company's scale, growth trajectory,
market leadership position, and record for quality. We also view
the relatively low level of fixed costs positively. More
specifically, partner physicians (about 89% of all physicians) have
compensation tied to the profitability of their clinics. The
company's roll-up strategy offers an attractive value proposition
to single specialty GI practices, given its ability to materially
improve clinic profitability through the addition of ancillary
services and scale that support moderately higher reimbursement
from payers. The company is well positioned to benefit from the
industry trends of performing more low-risk procedures in
outpatient settings as it delivers significant cost savings.
Moreover, given the role in preventative care, we believe Gastro
Health is less exposed to reimbursement risk and future
reimbursement cuts from both its public and private payers.
"Given financial sponsor ownership, we expect leverage will remain
elevated for at least the next two years as the company prioritizes
growth and acquisitions over deleveraging. We expect Gastro
Health's adjusted debt leverage will be about 10.5x-11.5x in 2021
and 9.5x-10.5x in 2022. Although acquisitions are discretionary,
given the recurring nature of the expenses to integrate and
optimize newly acquired practices within the company's strategy, we
burden our measure of adjusted EBITDA with these costs. Given
financial sponsor ownership, we expect leverage will remain
elevated as the company prioritizes acquisitions and growth over
deleveraging."
Although the company could improve its profitability, leverage, and
cash flow by scaling back the pace of acquisitions, which could
help mitigate unexpected distress, S&P views the aggressive growth
strategy involving very high leverage and persistent free cash flow
deficits as contributing material credit risk, relative to a more
measured pace of acquisitions.
S&P said, "Our stable outlook reflects an expectation for revenue
growth of about 50% in 2021 and about 20% in 2022, mainly driven by
an aggressive acquisition strategy and low-to-mid-single-digit
organic growth. As the company expands, we expect improved
efficiency will lead to gradually expanding margins and better cash
flow generation.
"Although unlikely over the next 12 months, we could lower our
rating if we expected the company to generate persistent free cash
flow deficits before investment in growth (capital expenditure or
acquisitions). This would lead us to believe the capital structure
is unsustainable. This scenario could result from unanticipated
integration challenges, increased competition, or technological
innovations that lead to significant industry headwinds.
"Although unlikely over the next 12 months, we could consider
upgrading the company if it continued to improve margins such that
it sustained a ratio of discretionary cash flow to debt of more
than 3%."
OPPENHEIMER HOLDINGS: S&P Upgrades ICR to 'BB-' on Solid Earnings
-----------------------------------------------------------------
S&P Global Ratings raised its issuer credit ratings on Oppenheimer
Holdings Inc. to 'BB-' from 'B+'. The outlook is stable.
S&P also raised the issue rating on the firm's senior secured notes
to 'BB-'.
S&P said, "The upgrade reflects our view that notwithstanding
uncertainty from the pandemic, Oppenheimer's performance over the
last 12 months was much stronger than we initially expected. The
upgrade also reflects our expectation that the company's RAC ratio
should remain solidly above 10% over the next year.
"Oppenheimer's earnings accelerated notably in the second half of
2020, and into the first quarter of 2021, despite the low interest
rate environment which severely affected the company's sweep
revenues ($20 million over the past 12 months, down from $117
million in full-year 2019). Oppenheimer's core earnings to risk
weighted assets on a three-year average basis (our key earnings
metric) was approximately 1.6% as of year-end 2020. This is up
significantly from historical levels (for example, less than 1% at
the end of 2019) and we believe it will remain at improved levels
in 2021, especially given the strong start to the year."
The turnaround in earnings performance was particularly evident in
the capital markets segment (which includes investment banking and
sales and trading), with a $134 million pre-tax profit over the
last 12 months ending March 31, after being loss-making for several
years before 2020. The strong results in this segment over the last
12 months have been supported by high equity capital markets
activity over the past two quarters in particular, an area where we
believe the company took market share from competitors. While
capital markets revenue could moderate somewhat in the future,
sweep revenues will also increase when interest rates normalize,
helping to provide some offset.
The firm's wealth management platform also grew over the last 12
months, supported by rising markets. Specifically, assets under
administration (AUA) grew by 15% in 2020, to $105 billion (and
further to $111 billion as of March 31), which outpaced market
performance (assuming approximately 60% of AUA was in equities and
40% in bonds).
S&P said, "The company's RAC ratio was approximately 12% as of Dec.
31, 2020, and we expect it to stay within the 10% to 13% range over
the next year. While we believe Oppenheimer may consider small
acquisitions, which could lead to some erosion in capital, our base
case assumes management will allocate capital prudently such that
our RAC ratio remains above 8%, our downside threshold for the
rating. We view favorably Oppenheimer's capital management policy
which is focused on capital retention. Oppenheimer pays a
relatively modest dividend and only selectively repurchases shares
on an opportunistic basis."
Oppenheimer's gross stable funding ratio (GSFR) was 133% as of
March 31, 2021, indicating the company has ample stable funding to
support its less liquid or higher-risk assets. However, while
auction rate securities are no longer a substantial funding issue
for Oppenheimer, the company remains partly reliant on short-term
wholesale funding which weighs on our liquidity assessment. S&P's
assessment also considers the impact of relatively high volatility
in the company's liquidity coverage metric (it dipped to 0.6x as of
March 31, 2020, but has since recovered to 0.9x as of March 31,
2021) which it views as a weakness.
S&P said, "We make a one notch unfavorable comparable rating
adjustment to Oppenheimer's rating. This adjustment reflects our
view that while Oppenheimer has a relatively low risk and stable
business, its market position compares unfavorably to much larger
and higher rated peers like Raymond James or Stifel.
"The stable outlook reflects our expectation for Oppenheimer to
maintain solid earnings and a RAC ratio above 10% over the next 12
months.
"We could lower the ratings if the company's earnings materially
weaken or the RAC ratio decreases to below 8% on a sustained basis.
We could also lower the ratings if we observe significant attrition
of advisors such that we believe the company's market position
deteriorated.
"We could raise the ratings if the company sustains its improved
earnings and demonstrates otherwise stable business trends while
also maintaining a RAC ratio above 13% on a sustained basis, or if
its liquidity coverage ratio strengthens to comfortably above 100%
on a sustained basis."
PALM BEACH: Liquidation of Receivables to Fund Plan Payments
------------------------------------------------------------
Palm Beach Brain & Spine, LLC, ("PBBS") Midtown Outpatient Surgery
Center, LLC ("MOSC"), and Midtown Anesthesia Group, LLC ("MAG")
submitted a First Amended Plan of Liquidation dated June 17, 2021.
All payments under the Plan shall be separated for distribution by
individual Debtor. Specifically, only PBBS's Creditors and Allowed
Claims are paid from PBBS's collected Unsold Receivables, to the
extent available. Only MOSC's Creditors and Allowed Claims are paid
by MOSC's collected Unsold Receivables, to the extent available.
Only MAG's Creditors and Allowed Claims are paid by MAG's collected
Unsold Receivables, to the extent available.
The remaining Creditors and Allowed Claims are divided into the
following classes, which classes shall be mutually exclusive, and
satisfied in full as follows:
* Class Four consists of the Claim of Well States, as
successor to The Northern Trust Company. The Northern Trust Company
is a secured creditor of MOSC and asserts that it has a lien. The
NTWS allowed secured claim shall be treated as follows: In addition
to amounts already received, the allowed secured claim of NTWS
shall be paid from the net proceeds of collections of the Unsold
MOSC A/R subordinated to the amounts due to the Administrative
Claims, payments from funders/factors on account of the Sold MOSC
A/R as agreed to by those parties or adjudicated by non-bankruptcy
courts, and payment of $450K Mortgage.
* Class Five consists of General Unsecured Claims. The general
unsecured creditors shall be paid on a pro rata basis from the
collection and liquidation of the Unsold Receivables. These cases
shall not be substantively consolidated. Each Debtor's unsecured
creditors shall only be paid from collection of that Debtor's
receivables. The dividend to this class shall not commence until
the Administrative claims and Classes 1-3 are paid in full. The
dividend to this class of creditors is subject to change upon the
determination of objections to claims and the collection and
liquidation of the Unsold Receivables.
* Class Six Creditors consists of the Purchasers of Purchased
Receivables, including Well States, Echelon Financial, LLC f/k/a
Echelon Medical Capital, LLC, Momentum Funding, Medical Financial
Group Holdings, Med-Link Capital and Carecentric Investments. These
Purchasers shall continue to collect the Purchased Receivables
subject to any rights to any residual that the Debtors may have and
any setoff/recoupment rights that Purchasers may have. To the
extent the Purchaser is not paid in full, the Purchaser shall be
entitled to a General Unsecured Claim in Class 5.
* Class Seven consists of Equity Shareholders. There shall be
no distribution to the equity holders of the Debtors under the
confirmed Plan and no dividends to this class of claimants. The
equity shareholders shall retain their currently held equity
interest in the Debtors.
The source for payments under the Plan shall be the cash proceeds
derived from the liquidation of the Debtors' collection of Unsold
Receivables for each Debtor and any other assets of the Debtor that
may be liquidated.
The Debtors shall continue to be managed by Maria Marchetti with
collection of the Unsold Receivables to be managed by the
Liquidating Agent. Maria Marchetti shall retain a continuing
obligation to assist the Liquidating Agent to collect and liquidate
the Unsold Receivables as may be necessary.
A full-text copy of the First Amended Plan of Liquidation dated
June 17, 2021, is available at https://bit.ly/3xFhTbM from
PacerMonitor.com at no charge.
Attorneys for Debtors:
KELLEY, FULTON & KAPLAN, P.L.
Craig I. Kelley, Esquire
Florida Bar No.: 782203
1665 Palm Beach Lakes Blvd.
The Forum - Suite 1000
West Palm Beach, Florida 33401
Telephone: (561) 491-1200
Facsimile: (561) 684-3773
About Palm Beach Brain and Spine
Palm Beach Brain & Spine -- http://www.pbbsneuro.com/-- is a
medical practice providing neurosurgery, minimally invasive spine
surgery, and treatment for cancer of the brain and spine.
Palm Beach Brain & Spine and two affiliates, Midtown Outpatient
Surgery Center, LLC and Midtown Anesthesia Group, LLC, filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Fla. Lead Case No. 19-20831) on Aug. 15, 2019.
The petitions were signed by Dr. Amos O. Dare, manager.
Palm Beach Brain disclosed $13,412,202 in assets and $2,685,278 in
liabilities. Midtown Outpatient disclosed $6,857,558 in assets and
$2,920,846 in liabilities while Midtown Anesthesia listed
$5,081,861 in assets and under $50,000 in liabilities. Judge Mindy
A. Mora is the case judge. Dana L. Kaplan, Esq. and Craig I.
Kelley, Esq., at Kelley Fulton & Kaplan, P.L. are the Debtors'
counsel.
PARAGON OFFSHORE: It Would Not Owe Ch. 11 Trustee Fees, Says Trust
------------------------------------------------------------------
Law360 reports that the litigation trust created under the Chapter
11 plan of oil services company Paragon Offshore told a Delaware
bankruptcy judge Monday, June 21, 2021, that state law there
prohibits the debtor from clawing back distributions to the trust
to satisfy fees potentially owed to the federal bankruptcy
watchdog.
In a letter to U.S. Bankruptcy Judge Christopher S. Sontchi in
response to specific questions he asked during a June 10, 2021
hearing on the fee issue, the litigation trust said that when
Paragon transferred $90 million in settlement funds it received
from a deal with former parent company Noble PLC.
About Prospector Offshore and Paragon Offshore
Paragon Offshore Plc, and several affiliates filed Chapter 11
bankruptcy petitions (Bankr. D. Del. Case Nos. 16-10385 to
16-10410) on Feb. 14, 2016. The Delaware Bankruptcy Court entered
an order on June 7, 2017, confirming the 2016 Debtors' Fifth Joint
Chapter 11 Plan of Reorganization.
Prospector Offshore Drilling S.a r.l. and three affiliates filed
separate Chapter 11 bankruptcy petitions (Bankr. D. Del. Case Nos.
17-11572 to 17-11575) on July 20, 2017. The affiliates are
Prospector Rig 1 Contracting Company S.a r.l.; Prospector Rig 5
Contracting Company S.a r.l.; and Paragon Offshore plc (in
administration).
The Hon. Christopher S. Sontchi presides over the cases.
The Debtors are represented by Gary T. Holtzer, Esq., and Stephen
A. Youngman, Esq., at Weil, Gotshal & Manges LLP, and Mark D.
Collins, Esq., Amanda R. Steele, Esq., and Joseph C. Barsalona II,
Esq., at Richards, Layton & Finger, P.A., as counsel. The Debtors
hired as their financial advisors, Lazard Freres & Co. LLC; as
their restructuring advisor, AlixPartners, LLP; and as their
claims, noticing and solicitation agent, Kurtzman Carson
Consultants LLC.
In the petitions signed by Senior VIce President and CFO Lee M.
Ahlstrom, the Debtors estimated $1 billion to $10 billion in both
assets and liabilities.
The Debtors' bankruptcy filing came two days after the Paragon
Offshore group completed its corporate and financial reorganization
on July 18, 2017. The plan of reorganization under chapter 11 of
the U.S. Bankruptcy Code substantially de-levered Paragon
Offshore's ongoing business, eliminating approximately $2.3 billion
of secured and unsecured debt.
PARKING MANAGEMENT: Aug. 5 Plan Confirmation Hearing Set
--------------------------------------------------------
On May 27, 2021, debtor Parking Management Services of America,
Inc., filed with the U.S. Bankruptcy Court for the Central District
of California a Third Amended Disclosure Statement to its Small
Business Chapter 11 Plan of Reorganization.
On June 17, 2021, Judge Julia W. Brand approved the Revised Third
Amended Disclosure Statement to Chapter 11 Plan of Reorganization
in Small Business and ordered that:
* July 19, 2021, is fixed as the last day for filing written
acceptances or rejections of the Chapter 11 Plan of
Reorganization.
* July 23, 2021 is fixed as the last day to submit ballots to
be counted as votes.
* July 19, 2021, is fixed as the last day for filing and
serving written objections to confirmation of the Chapter 11 Plan
of Reorganization.
* August 5, 2021, at 10:00 a.m., in Courtroom 1375, at 255 E
Temple Street, Thirteenth Floor, Los Angeles, CA 90012 is the
confirmation hearing.
A copy of the order dated June 17, 2021, is available at
https://bit.ly/3gTRwrz from PacerMonitor.com at no charge.
Counsel for Parking Management Services of America:
Alla Tenina, Esq.
Tenina Law, Inc.
15250 Ventura Blvd, Suite 601
Sherman Oaks, CA 91403
Tel: (213)596-0265
Fax: (310)774-3674
E-mail: alla@teninalaw.com
About Parking Management
Services of America
Parking Management Services of America, Inc., provides parking
attendants and attending personnel to various third parties'
parking locations. Parking Management Services filed a Chapter 11
petition (Bankr. C.D. Cal. Case No. 19-21103) on Sept. 19, 2019, in
Los Angeles, California. TENINA LAW, INC., serves as the Debtor's
counsel.
PARKING MANAGEMENT: Unsecured Creditors to Recover 82.84% in Plan
-----------------------------------------------------------------
Parking Management Services of America, Inc., submitted a Revised
Third Amended Disclosure Statement.
This is a reorganizing plan. The Debtor seeks to make payments
under a plan paying creditors a dividend over time. The effective
date of the proposed plan is projected to be July 15, 2021. Unless
provided otherwise, payments under the Plan are scheduled to be
made on the 1st day of each month for 60 months, starting with the
month subsequent to the month of the effective date.
The Plan will treat claims as follows:
* Class 2A - On Deck Capital, Inc. totaling $23,922.32. Pursuant
to Stipulation, the Debtor will repay Lender's Claim, which as of
March 1, 2021 will be at $22,922.00, with 0% interest per annum
over sixty months period in equal monthly installments of principal
and interest of $382.00 each commencing on March 1, 2021, and
continuing for the next 59 installments on the first day of each
subsequent month, after which point the Claim will be deemed fully
repaid and satisfied. Class 2A is impaired.
* Class 2B - On Deck Capital, Inc. totaling $87,488.21. Pursuant
to Stipulation, the Debtor will repay this claim, which as of March
1, 2021 will be at $73,181.00, with 6% interest per annum over
sixty months period in equal monthly installments of principal and
interest of $1,417.48 each commencing on March 1, 2021, and
continuing for the next 59 installments on the first day of each
subsequent month, after which point the Claim will be deemed fully
repaid and satisfied. Class 2B is impaired.
* Class 2C - Swift Financial, LLC totaling $32,071.96. Pursuant
to Stipulation, the Debtor will repay Claim, which as of March 1,
2021 will be at $30,519.00 together with 6% interest per annum on
the claim over sixty months period in equal monthly installments of
principal and interest of $590.02 each commencing on March 1, 2021,
and continuing for the next 59 installments on the first day of
each subsequent month, after which point the Claim will be deemed
fully repaid and satisfied. Class 2C is impaired.
* Class 2D - Ford Motor Credit Company, LLC totaling $85,188.03.
The Debtor has cured or will continue curing any default in
payments pursuant to Adequate Protection Agreement and Order on
Motion for Relief of Stay and will continue making contractually
scheduled payments of $1,740.87 a month pursuant to the terms of
Contract/Promissory Note and Security Agreement. As of the
Effective Date, the total estimated balance will be $69,223.74.
Class 2D is impaired.
* Class 2E - Ford Motor Credit Company, LLC totaling $83,198.98.
Debtor has cured or will continue curing any default in payments
pursuant to Adequate Protection Agreement and Order on Motion for
Relief of Stay and will continue making contractually scheduled
payments of $1,789.83 a month pursuant to the terms of
Contract/Promissory Note and Security Agreement. Class 2E is
impaired.
* Class 2F - Wells Fargo Bank, NA d/b/a Wells Fargo Auto
totaling $70,693.57. Debtor has made and will continue making
contractually scheduled payments of $1,453.90 each that are equal
to adequate protection payments. There will be 36 remaining
payments under the contract from the Effective Date of the Plan.
Class 2F is impaired.
* Class 2G - Funding Metrics, LLC totaling $15,477.99. Pursuant
to Stipulation, the Debtor shall only be obligated to repay this
Creditor's secured portion of Claim, which as of March 1, 2021 is
$7,226.00 with 6% interest per annum over sixty months period in
equal monthly installments of principal and interest of $139.70
each commencing on March 1, 2021, and continuing for the next 59
installments on the first day of each subsequent month, after which
point the entire Claim, secured and unsecured portions, will be
deemed fully repaid and satisfied. Class 2G is impaired.
* Class 2H - Kabbage, Inc. totaling $14,000. The Debtor will
make sixty (60) equal monthly payments under the plan on this claim
at 6% interest per annum in equal installments of $270.66 each, for
the total sum of $16,239.60 ($270.66x60), beginning on the first
day of the month subsequent to the Effective Date of the Plan.
Class 2H is impaired.
* Class 4A General Unsecured Claims totaling $190,303. Payment
Interval: 60 monthly installments from the Effective Date at 0%
interest as follows: Months 1-35: $101.74 a month; months 36-38:
$1,993.95 a month; months 39: $3,946.12 a month; months 40-50:
$5,400.02 a month; months 51-55: $7,210.52 a month; and months
56-60: $9,739.72 a month, for the total estimated payout of
$157,640.29; estimated to pay 82.84% of all claims in this class,
but not more than 100% of all claims in this class. Class 4A is
impaired.
The Plan will be funded by continuing Debtor's business
operations.
Counsel for the Debtor:
Alla Tenina, Esq.
Tenina Law, Inc.
15250 Ventura Blvd, Suite 601
Sherman Oaks, CA 91403
Phone: (213)596-0265
Fax: (310)774-3674
E-Mail: alla@teninalaw.com
A copy of the Disclosure Statement is available at
https://bit.ly/3gGIn5O from PacerMonitor.com.
About Parking Management
Services of America
Parking Management Services of America, Inc., provides parking
attendants and attending personnel to various third parties'
parking locations. Parking Management Services filed a Chapter 11
petition (Bankr. C.D. Cal. Case No. 19-21103) on Sept. 19, 2019, in
Los Angeles, California. TENINA LAW, INC., serves as the Debtor's
counsel.
PHOENIX SERVICES: S&P Affirms 'B' ICR, Outlook Negative
-------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on Radnor,
Pa.-based steel mill services provider Phoenix Services
International LLC and its 'B' issue-level rating on its senior
secured term loan. S&P's '3' recovery rating on the term loan
remains '3'.
The negative outlook indicates that S&P could lower its ratings on
Phoenix if the weakening profitability trend does not reverse as
anticipated, such that its leverage stays above 7x through 2021 and
into 2022.
Leverage should improve to about 6x from 8x as market conditions
for Phoenix's customers strengthen this year; however,
profitability is still lagging the recovery. Steel markets have
improved significantly over the past 12 months. After a period of
uncertainty in the market, customers are increasing production
under the strong post-pandemic demand rebound and advancing growth
projects and expansions that had been temporarily on hold. S&P
said, "As a result, we expect Phoenix's EBITDA generation to
improve in 2021 and 2022 as overall customer steel production
should grow by about 10% to 15%. Disruptions at a couple of
Phoenix's operating sites affected first quarter results and
trailing 12-month debt leverage remains very high at above 8x. We
expect leverage to improve over the coming quarters, as these
issues are resolved, and to decline to about 6x by year-end 2021.
However, we expect that recovery in gross margins and in EBITDA
margins may not reach historical levels until 2022 or later."
Phoenix's adjusted gross and EBITDA margins were about 30% and 19%,
respectively, on a rolling-12-month (RTM) basis as of March 31,
2021, which compares unfavourably with its five-year average of 35%
and 27%. Phoenix is most profitable during periods of high steel
production given its volumes-based contracts. Profitability
declined in 2020 as customer steel production dropped suddenly due
to the steel market disruption in the first half of 2020 because of
the COVID-19 outbreak and recovered slowly in the second half of
the year.
The ramp up of new site contracts secured in 2020 and first quarter
of 2021 should aid reversing recent margin dilution. Steel
producers are undertaking new investments and accelerating
expansion plans as steel supply remains constrained while demand is
strong due to post pandemic spending growth and steel supply chain
inventory levels are at decade lows. As a result, there are growth
opportunities and new contracts for Phoenix that should contribute
positively to the overall margin profile of its portfolio of sites.
S&P expects these new contracts to have higher margins than
existing older contracts that are in later stages (typical contract
length can be about 10 years). With that being said, the typical
time frame from signing a contract, making the investment, ramping
up and generating EBITDA can take about 12 months. As a result, the
overall margin profile should begin to improve in the latter half
of 2021 and continue into 2022 onwards.
The negative outlook acknowledges a steady and sharp decline in
profitability over the past several years, as measured by adjusted
EBITDA margins. Weaker profitability and modestly higher debt
levels pushed leverage to 8x, which S&P views to be very high.
S&P could lower its rating on Phoenix Services over the next 12
months if newly won contracts and cost savings initiatives are not
sufficient to halt or reverse declining profitability trends such
that:
-- Leverage is sustained above 7x through 2021 and into 2022, or
Discretionary cash deficits continue. S&P could revise its outlook
on Phoenix Services to stable over the next 12 months if:
-- The company sees sufficient incremental EBITDA from its cost
improvement efforts and new contracts such that its gross and
EBITDA margins improve and cause it to sustain debt leverage of
less than 6x.
PIKEWOOD INC: July 29 Plan Confirmation Hearing Set
---------------------------------------------------
Judge Patricia M. Mayer will hold a hearing on confirmation of the
Pikewood, Inc.'s plan of reorganization on Thursday, July 29, 2021,
at 11:00 A.M. in the United States Bankruptcy Court, Gateway
Building, Fourth Floor Courtroom, 201 Penn Street, Reading,
Pennsylvania, 19601.
A secured creditor that wishes to make an election under 11 U.S.C.
Sec. 1111(b)(2) must do so no later than Thursday, July 22, 2021.
Thursday, July 22, 2021, is the deadline for filing and serving
written objections to confirmation of the Debtor's plan of
reorganization.
About Pikewood Inc.
Pikewood, Inc., is the operator of a Minuteman Press franchise,
which has two locations, in Allentown and Bethlehem, Pennsylvania.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Pa. Case No. 21-10595) on March 11, 2021. David
A. Pike, vice president, signed the petition. In its petition, the
Debtor disclosed assets of $113,419 and liabilities of $3,039,125.
Judge Patricia M. Mayer oversees the case.
Fitzpatrick Lentz & Bubba, P.C. is the Debtor's legal counsel.
PRECIPIO INC: All Six Proposals Approved at Annual Meeting
----------------------------------------------------------
Precipio, Inc. convened its Annual Meeting of shareholders on June
18, 2021, at which the stockholders:
(1) elected Kathleen D. LaPorte and Ron A. Andrews as Class III
directors for terms to expire in 2024;
(2) approved, on an advisory basis, the compensation of the
Company's executive officers;
(3) approved, on an advisory basis, the holding of
(non-binding)
future advisory votes on executive compensation every three
years;
(4) approved an amendment to and restatement of the Company's
2017 Stock Option and Incentive Plan to increase the number
of shares authorized for issuance under the 2017 Plan by
925,000 shares;
(5) approved an amendment to and restatement of the 2017 Plan to
remove the limitation on the number of Stock Options or
Stock
Appreciation Rights (as such term is defined the 2017 Plan)
that may be issued to any one individual grantee during any
one calendar year; and
(6) ratified the appointment of Marcum LLP as the Company's
independent registered public accounting firm for the year
ending Dec. 31, 2021.
The number of shares of common stock entitled to vote at the Annual
Meeting was 18,133,063. The number of shares of common stock
present or represented by valid proxy at the Annual Meeting was
9,470,286 representing 52.22% of the total number outstanding
shares of the Company.
About Precipio
Omaha, Nebraska-based Precipio, formerly known as Transgenomic,
Inc. -- http://www.precipiodx.com-- is a cancer diagnostics
company providing diagnostic products and services to the oncology
market. The Company has developed a platform designed to eradicate
misdiagnoses by harnessing the intellect, expertise and technology
developed within academic institutions and delivering quality
diagnostic information to physicians and their patients worldwide.
Precipio operates a cancer diagnostic laboratory located in New
Haven, Connecticut and has partnered with the Yale School of
Medicine.
Precipio reported a net loss of $10.6 million for the year ended
Dec. 31, 2020, compared to a net loss of $13.24 million for the
year ended Dec. 31, 2019. As of March 31, 2021, the Company had
$20.42 million in total assets, $5.86 million in total liabilities,
and $14.56 million in total stockholders' equity.
Hartford, CT-based Marcum LLP issued a "going concern"
qualification in its report dated March 29, 2021, citing that the
Company has a significant working capital deficiency, has incurred
significant losses and needs to raise additional funds to meet its
obligations and sustain its operations. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.
PURDUE PHARMA: Court Pauses Insurance Suit in Favor of Arbitration
------------------------------------------------------------------
Maria Chutchian of Reuters reports that a group of insurers has
convinced the judge overseeing Purdue Pharma LP's bankruptcy to
halt litigation over the scope of the OxyContin maker's insurance
policies so the matter can go to arbitration instead.
U.S. Bankruptcy Judge Robert Drain in White Plains, New York said
he would stay the case during a virtual hearing on Monday, June 21,
2021. He determined that the company’s insurance coverage is not
critical to its proposed reorganization that includes a settlement
that resolves extensive litigation accusing it of fueling the
national opioid crisis through deceptive marketing.
"The insurance dispute here, while clearly important, in the
context of these Chapter 11 cases, is not so fundamentally
important as to warrant its centralization in the court presiding
over the bankruptcy cases," Judge Drain said.
The insurers include AIG Specialty Insurance Co, represented by
Willkie Farr & Gallagher, and Liberty Mutual Insurance Europe SE,
represented by Abrams Gorelick Friedman & Jacobson. The
arbitration, which can start now, likely will not conclude until
well after Purdue's bankruptcy wraps up.
Purdue, represented in the bankruptcy by Davis Polk & Wardwell and
in the insurance lawsuit by Reed Smith, argued that arbitration
would interfere with its efforts to move ahead with its proposed
settlement because the insurance policies are a key asset of the
company. A spokesperson for Purdue had no comment.
Purdue sued several insurers in January seeking a declaratory
judgment finding that it is entitled to coverage for opioid-related
claims. The lawsuit was filed as part of the bankruptcy case more
than a year after the Chapter 11 proceeding began. The insurers
moved to stay the lawsuit, citing arbitration clauses in their
respective contracts in April 2021.
Purdue, which was joined in its bid to keep the insurance lawsuit
alive by its unsecured creditors' committee and an ad hoc group of
states that support its settlement, said the 113 insurance policies
at issue provide more than $3.3 billion in coverage. The company
said the timing and allocation of payments to opioid claimants will
be impacted by the outcome of the insurance dispute.
But in his ruling on Monday, June 21, 2021, Judge Drain held that
arbitration is appropriate in part because the reorganization plan
currently proposed is not actually contingent on Purdue's ability
to access insurance proceeds. If the court ultimately approves the
plan, personal injury claimants will receive $300 million on the
day the plan goes into effect, followed by $400 million more over
the next few years, regardless of how the insurance dispute plays
out.
"Insurance recovery is not even mentioned as a risk factor," in
Purdue's plan-related documents, Mitchell Auslander of Willkie said
during Monday's hearing.
The plan incorporates a proposed settlement that the company says
is worth more than $10 billion to resolve the lawsuits brought by
states, local governments and private individuals that led to its
bankruptcy. As part of the framework, trusts will be set up to
distribute funds to support opioid abatement programs across the
country. The Sackler family members who own the company say they
will contribute $4.275 billion in exchange for protection against
opioid-related litigation.
The settlement is backed by dozens of states as well as a slew of
municipalities, local government entities, Native American tribes
and hospitals, among others. Critics of the deal, which include
about 24 U.S. states, say the Sackler family members should pay
more.
Purdue recently secured Judge Drain's approval to begin soliciting
votes for its proposed plan. A hearing on the plan itself is slated
for Aug. 9 and could last several days.
For Purdue: Marshall Huebner, Benjamin Kaminetzky, Timothy
Graulich, Eli Vonnegut and James McClammy of Davis Polk & Wardwell;
and Paul Breene, Ann Kramer, Anthony Crawford and Lisa Szymanski of
Reed Smith
For AIG: Mitchell Auslander of Willkie Farr & Gallagher
For Liberty Mutual: Michael Gorelick and Thomas Maeglin of Abrams,
Gorelick, Friedman & Jacobson
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.
QUALTEK LLC: Roth CH Transaction No Impact on Moody's B3 Rating
---------------------------------------------------------------
Moody's Investors Service said that the combination of QualTek LLC
(B3 negative) with Roth CH Acquisition III Co. ("ROCR"), a
publicly-traded special purpose acquisition company ("SPAC"), is
credit positive, because this transaction will boost QualTek's
equity base, reduce its net debt leverage and improve liquidity.
Despite these credit positive effects, QualTek's B3 rating with a
negative outlook continues to reflect its small business scale,
high gross debt leverage and challenges in reviving its earnings
and cash flows from recent weakness. A change in the rating outlook
to stable from negative is possible, if the company completes the
transaction, improves its earnings and reduces its debt leverage.
On June 16, 2021, BCP QualTek HoldCo, LLC (QualTek LLC's parent
company) and ROCR announced a definitive agreement for a business
combination that will result in QualTek becoming a public company.
The business combination is subject to ROCR's stockholder approval
and is expected to close in the third quarter of 2021. The
companies also announced a private placement as well as a fully
committed PIPE from institutional investors in connection with the
business combination.
QualTek will have approximately $207 million of cash, including $44
million private placement, $66 million PIPE, and $115 million of
cash held in ROCR's trust account, assuming no redemptions. The
completion of this transaction is crucial for QualTek to secure
liquidity for its business operations, as funding sources have
dwindled amid additional spending for a large fixed price contract
and COVID-19 induced project interruptions in the last 12-18
months.
The company will use the refresh capital for its daily business
operations and the execution on its $1.7 billion backlog.
Delivering quality projects on time and within budget will be key
to earnings improvement, which is needed to support credit metrics
that are in line with its B3 rating requirements. QualTek's credit
metrics exceeded Moody's downgrade triggers of an adjusted leverage
ratio (Debt/EBITDA) above 6.0x and interest coverage
(EBITA/Interest Expense) below 1.5x in 2020.
QualTek will benefit from the growing demand for infrastructure
services to the 5G wireless, telecom, and renewable energy sectors
across North America. However, companies in the telecom and
renewables sectors are still in the early stages of a multi-year
cycle of capital deployment. There is still uncertainty with regard
to the scope and timing of their capital spending in the near
term.
QualTek's gross debt of approximately $470 million remains high for
the business. A potential reduction in gross debt will depend on
the deployment of cash, acquisition strategy, refinancing plan and
long-term financial policy. Management has already indicated the
proceeds from the private placement will be used to complete three
complementary acquisitions by early July. Existing QualTek
shareholders including QualTek management and Brightstar Capital
Partners, which are rolling 100% of their equity as part of the
transaction and will hold 52.2% in QualTek at transaction closing,
will continue to have a strong influence on financial policy.
QualTek LLC, headquartered in Blue Bell, PA, provides engineering,
infrastructure assessment, installation, project management,
fulfillment, business continuity and disaster recovery services to
the North American telecommunications and power sectors. The
company generated revenues of about $675 million in 2020.
Brightstar Capital Partners is the majority owner of QualTek.
RAMAN ENTERPRISES: Unsecureds to Get Proceeds From Sale
-------------------------------------------------------
Raman Enterprises, LLC submitted a Plan and a Disclosure
Statement.
This is a reorganizing Chapter 11. The Reorganized Debtor shall
become the owner of all of the Debtor's Assets. The Plan provides
for the Debtor to sell the properties within 12 months of the
Effective Date and pay all holders of Allowed Secured Claims in
full and all holders of Allowed Unsecured Claims Pro-Rata. All
interests in the Debtor shall be cancelled, and the Interests in
the Reorganized Debtor shall be owned by the New Value Contributor.
The New Value Contributor is affiliated with the Interest Holders
of Debtor. Dr. Daluvoy (New Value Contributor) will manage the
Reorganized Debtor post-confirmation.
Class 8 - General Unsecured Claims totaling $394,107.60. Each
holder of an Allowed Claim in Class 8 will receive a Cash payment
equal to its Pro-Rata share of the Proceeds remaining after payment
of Classes 1, 2, 3, 4, 5, 6, and 7. Class 8 is impaired.
Counsel for the Debtor:
Donald W. Reid
LAW OFFICE OF DONALD W. REID
PO Box 2227
Fallbrook, CA 92088
Tel: (951) 777-2460
E-mail: don@donreidlaw.com
A copy of the Disclosure Statement is available at
https://bit.ly/3vztLdE from PacerMonitor.com.
About Raman Enterprises
Raman Enterprises, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. C.D. Cal. Case No. 6:20-bk-17826) on Dec. 8, 2020. The
Debtor hired the Law Office of Donald W. Reid, as counsel.
Donald W. Reid can be reached at:
Donald W. Reid, Esq.
LAW OFFICE OF DONALD W. REID
PO Box 2227
Fallbrook, CA 92088
Tel: (951) 777-2460
E-mail: don@donreidlaw.com
RE/MAX LLC: S&P Affirms 'BB' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating on
Denver-based RE/MAX LLC, a leading franchisor of real estate
brokerage services, and assigned its 'BB' issue-level ratings to
the proposed secured credit facilities. The '3' recovery rating on
this debt indicates its expectation for meaningful recovery
(50%-70%; rounded estimate: 65%).
S&P said, "The stable outlook reflects our expectation that over
the next 12 months, RE/MAX will continue to expand its global agent
network, scale its mortgage franchise (Motto Mortgage), and uphold
its financial policy such that it sustains adjusted leverage in the
2.5x-3x area.
"Our rating affirmation reflects our positive view of the INTEGRA
NA acquisition and our expectation for good cash flow generation
and deleveraging over the next 12 months. The acquisition allows
RE/MAX greater control of its brand, the ability to capture all of
the respective agent fees, increasing the average revenue per agent
in the reacquired regions, and ultimately providing favorable sales
execution and operating leverage. We believe there are minimal
risks associated with the Integra integration. Under our base case,
we expect the acquisition to be accretive by the end of 2021 and
fully integrated over the next 12 months."
Although the scaling of Motto Mortgage and cross-selling technology
solutions may drive up to $50 million in incremental revenue over
the next five years, competition for agents remains fierce. The
Motto Mortgage franchise, which launched in 2016, has grown to over
150 offices, generating about $7 million in annual revenue with
adjusted EBITDA expected to break even in the fourth quarter of
2021. In addition, we believe RE/MAX's growing technology portfolio
(booj, First App, wemlo, Gadberry Group) has opened opportunities
to increase its average revenue per agent and improve productivity,
retention, and recruitment by providing essential technology
solutions for its agents. S&P believes these new markets and
cross-selling opportunities could offset the lack of organic agent
growth in the North American market, which has been fiercely
competitive.
S&P said, "We expect RE/MAX to sustain its adjusted leverage in the
mid-2x-3x range with only temporary spikes for strategic
acquisitions.RE/MAX has a track record of operating with low debt
leverage and deleveraging quickly following debt-funded
investments. Following the acquisition of Integra, we believe the
risk of future deleveraging may shift to acquiring technology
solutions. Five independently owned targets remain, which account
for about 11,000 agents or about 8% of total agents at independent
regions. The remaining independent regions are substantially
smaller than Integra, and we believe further spikes in adjusted
leverage to fund the acquisition of independent regions will be
muted. Nevertheless, technology continues to transform the U.S.
residential home buying process, and we expect increased
investments to be a requirement to maintain and grow market share.
Purchase multiples for software and data analytics providers are
often expensive, and EBITDA acquisition multiples can be well over
15x for point and scaled solutions.
"The stable outlook reflects our expectation that over the next 12
months the company will continue to expand its global agent
network, scale its mortgage franchise (Motto Mortgage), and uphold
its financial policy such that it sustains adjusted leverage in the
2.5x-3x area."
S&P could lower its ratings if it believes RE/MAX will sustain
adjusted leverage over 3.5x or free operating cash flow (FOCF) to
debt below 10%. In this scenario:
-- The integration of Integra is more costly or takes longer than
expected and results in material agent attrition;
-- Business conditions deteriorate due to weak U.S. or global
housing markets or increased competition resulting in multiple
quarters of agent count and broker fee declines; or
-- A change in financial policy results in a sharp increase in
debt to fund acquisitions, shareholder distributions, or share
repurchase to support the sale of co-founder David Linigar's
minority ownership stake.
Although unlikely given RE/MAX's scale and financial policy, S&P
could raise the ratings if it believes that the company is willing
to sustain adjusted debt to EBITDA of below 2x over the economic
cycle, including consideration of potential acquisitions and
shareholder returns.
ROCKIES EXPRESS: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed Rockies Express Pipeline LLC's (ROCKIE)
Long-Term Issuer Default Rating (IDR) and senior unsecured ratings
at 'BB+' and 'BB+'/'RR4'. The ratings are removed from Rating Watch
Negative (RWN) and assigned a Stable Rating Outlook.
The ratings were placed on RWN in January due to a customer
bankruptcy. Since then, customer Gulfport Energy Corporation (GPOR;
B/Positive) has emerged from bankruptcy and accessed the debt
markets. The ROCKIE-GPOR negotiation exceeded Fitch's
expectations.
First, GPOR extracted less of a concession from ROCKIE than Fitch
had forecasted. Second, one of the concessions facilitated a profit
for ROCKIE. GPOR used its bankruptcy to cut its ROCKIE reservation.
The freed-up capacity was re-directed to more valuable uses than
Fitch had forecasted. In summary, the bankruptcy has been a neutral
event for ROCKIE.
The 'BB+' rating reflects ROCKIE's contracted revenue profile and
its owners' policy of keeping the debt amount steady. Concerns are
the credit quality of ROCKIE's core customers, and the mid-2024
expiry of a large contract.
KEY RATING DRIVERS
Value of the Service: The mid-February cold snap demonstrated to
ROCKIE's customer base the value of the service. The weather events
had its biggest impact on the South Central U.S. Though ROCKIE does
not traverse that region, the February nationwide cold snap
impacted the entire U.S. natural gas market. To select just one day
in this week-long event, Feb. 12, 2021 showed a basis differential
of $170 per dekatherm per day, shipping from Clarington, OH to
Cheyenne Wyoming. ROCKIE had more spot capacity on this west bound
service than in 2020 due to the GPOR capacity turnback. GPOR turned
back some capacity that had a rate of 55 cents.
ROCKIE cannot ship any but a slightly material amount of natural
gas on the above path, but at the spot rates that prevailed during
the cold snap, even a small volume caused a windfall. 1Q21 EBITDA
was approximately 40% higher than 1Q20 EBITDA. By contrast, Fitch
at the time the Watch was set in January 2021 expected a decrease.
While the opportunity was unusual, it was not aberrant. The cold
snap, measured in Texas, was somewhat more rare than a once in ten
year event, but less rare than a once in 30 year event. ROCKIE's
performance during an unusual event demonstrates the value of the
service. Fitch expects a 3.7x leverage performance for ROCKIE in
2021, better than its prior forecast.
Market Recognizes the Value: Since the time the ratings were placed
on RWN, ROCKIE has added about a half dozen customers for a new
long-term service. This service is shipping from Zone 3 (a zone
that stretches from the OH-PA border to the Mississippi River) to
the other zones. The new customers are highly credit-worthy.
Revenues from this contract portfolio more than offset the
aggregate concession that ROCKIE gave to GPOR. Fitch forecasts that
in 2022, the first full-year of this contract portfolio, ROCKIE
leverage will be approximately 4.0x, again, better than the prior
forecast.
High 2024 Leverage: In mid-2024, ROCKIE has its most remunerative
contract expire. Well ahead of this expiration, ROCKIE is
succeeding at contracting. In addition to the above contracts for
the new service, ROCKIE has since January added some new
exclusively East End contracts and some new exclusively West End
contracts. Fitch has estimated rates for some assumed additional
contracts yet to be signed. Based on Fitch's estimate, Fitch
forecasts 2024 leverage of approximately 5.1x. Though high, this
leverage is acceptable for the rating. Fitch will continue to
monitor spot basis differentials for LTM periods as well as peak
send-out weeks in order confirm that ROCKIE is tracking to Fitch's
2024 forecast.
East End Customer Counterparty Risk: ROCKIE's biggest source of
total revenues in the forecast period is from East End customers.
Among the largest of these customers, all are rated (senior
unsecured) below investment grade. Accordingly, ROCKIE remains
exposed to another confluence of events that could cause a customer
to fall into distress. Fitch has taken account of this risk by
assuming in its base case that a small customer in the East End
files for bankruptcy. On a positive matter, since Fitch set a Watch
Negative, three of the top four East End customers have been
upgraded.
DERIVATION SUMMARY
Among the group of 'BB'-category midstream companies that enjoy
contracts that feature more than a decade of take or pay payment
terms, the best comparable for ROCKIE is Sunoco, LP (SUN;
BB/Positive). Almost all of ROCKIE's EBITDA is sourced from
long-term contracts where the customer bears take-or-pay
obligations. ROCKIE has, on average, a below-investment-grade
customer profile. A subsidiary of 7-Eleven, Inc. takes from SUN
about 25% of SUN's delivered gasoline volumes, also on a
take-or-pay basis, for a 15-year contract term (over 10 years left
to run).
Fitch expects SUN to have 2021 leverage in an approximate range of
4.0x-4.3x. ROCKIE will have leverage in 2022 (after the exceptional
fiscal 2021) of approximately 4.0x. Fitch forecasts that in 2024,
ROCKIE will have leverage of approximately 5.1x.
Though not as highly contracted as ROCKIE, SUN has showed good cash
flow stability from those volumes that are not under its top
contract with 7-Eleven, Inc. ROCKIE's higher contract coverage
compared with SUN explains why it is rated one-notch higher,
notwithstanding the higher leverage that ROCKIE is expected to post
in the out years, compared to Fitch's 2021 forecast for SUN.
KEY ASSUMPTIONS
-- Fitch price deck of natural gas at Henry Hub of $2.45/Mcf in
2022 and out;
-- Minimal maintenance capex, and no material growth projects;
-- ROCKIE's owners distribute all cash flow after funding
maintenance capex;
-- A generic small customer files for bankruptcy in the out
years;
-- East End (just Zone 3) re-contracting in 2022 for a contract
that expires mid-2021 will obtain rates similar to recent
contract wins by ROCKIE. West End contracting, though recently
active, is paused and does not resume contract awards until
Jan. 1, 2024, at which time ROCKIE obtains rates similar to
recent contract wins (wins that were for small amounts of
capacity and tenor).
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The ratio of (a) total debt with equity credit (note: there
are no hybrids) to (b) adjusted EBITDA of at or below 4.3x in
2024 and after.
-- While not expected in the medium term, a weighted (by volume)
average shipper unsecured rating of 'BB' for the large
shippers that ship west-bound in Zone 3.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The ratio of (a) total debt with equity credit (note: there
are no hybrids) to (b) adjusted EBITDA of above 5.1x
forecasted on a sustained basis.
-- One of the top four customers approaching a distressed
financial condition, e.g., showing weak access to the capital
markets; or a collection of smaller companies being in a
similar condition.
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
Ample Liquidity on a Long Runway: ROCKIE has a $150 million
revolving credit facility, which it amended in 2019 and had $26
million outstanding as of March 31, 2021. The amendments, among
other things, extended the maturity date of the revolving credit
facility from Jan. 31, 2020 to Nov. 18, 2024 and reduced certain of
the applicable margins and commitment fee rates in the pricing grid
used to determine the interest rate and commitment fee. The
revolving credit facility includes a $75 million sublimit for LOC
and a $20 million sublimit for swing line loans and may be used for
working capital and general company purposes. The revolving credit
facility generally requires ROCKIE to comply with various
affirmative and negative covenants, including a limit on the
leverage ratio (as defined in the credit agreement) of ROCKIE of
4.5x. As of March 31, 2021, the company was in compliance with the
covenants required under the revolving credit facility. The next
long-term debt maturity is ROCKIE's $400 million senior notes due
2025.
ISSUER PROFILE
ROCKIE transports natural gas. ROCKIE's pipeline system stretches
from Ohio to Wyoming. The company is regulated by the Federal
Energy Regulatory Commission of the federal government.
SUMMARY OF FINANCIAL ADJUSTMENTS
A financial adjustment is made pertaining to revenue for the
contract with Ovintiv Inc. This company several years ago reduced
its contractual rate paid to ROCKIE from approximately a level per
unit rate schedule to one that varied. Under accounting rules,
ROCKIE is required to recognize an approximately level amount of
revenue from that new contract. In the early years of that new
contract, more revenue was booked than cash was received. Now, and
in the future till the contract expires, more cash is received than
revenue is booked. Accordingly, Fitch increases adjusted EBITDA in
the time periods 2020-2024 inclusive by the difference between cash
and revenue in this Ovintiv contract.
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.
SALIENT CRGT: S&P Downgrades ICR to 'CCC', Outlook Developing
-------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Fairfax,
Va.-based health, data analytics, cloud, cyber security, and
infrastructure solutions provider Salient CRGT Inc. to 'CCC' from
'B-'.
S&P said, "At the same time, we lowered our issue-level ratings on
the company's senior secured term loan to 'CCC+' from 'B'. Our '2'
recovery rating (70%-90%; rounded estimate: 75%) on the loan
remains unchanged.
"The developing outlook reflects that we could raise or lower our
rating on Salient depending on its ability to address its upcoming
debt maturities."
Salient faces near-term refinancing requirements. The company's
revolving credit facility (currently undrawn) matures in November
2021 and its first-lien term loan ($323 million currently
outstanding) matures in February 2022. In addition, the remaining
outstanding portion of Salient's $55 million subordinated mezzanine
loan matures in August 2022. S&P said, "Given the size and timing
of these maturities, we anticipate it could be challenging for the
company to refinance them prior to their maturity. Specifically, we
believe Salient requires external funding to address its maturing
debt and is dependent on favorable capital market conditions."
S&P said, "We expect Salient's revenue to improve in 2021, though
we still see some potential for a contraction in its EBITDA margin.
Through the first quarter of 2021, the company reported new
contract wins that we expect will contribute to a year-over-year
increase in its top-line revenue during the second half of the
year. While we see some risk for a contraction in its EBITDA margin
stemming from shifts in the contract economics on some of its key
programs, we forecast Salient's margins will remain relatively
healthy in the 13.50%-14.50% range."
The developing outlook on Salient reflects the uncertainty around
its ability to refinance or extend its revolver and term loan,
which mature in November 2021 and February 2022, respectively.
S&P said, "Over the next 12 months, we could lower our rating on
Salient if we believe a default is inevitable. This would likely
occur if the company is unable to refinance its upcoming maturities
prior to their maturity.
"We could raise our ratings on Salient over the next 12 months if
it successfully refinances or extends the maturities of its
revolver and term loan."
SANTA CLARITA: Court Approves Disclosure Statement
--------------------------------------------------
Judge Madeleine C. Wanslee has entered an order approving the
Disclosure Statement explaining the Plan of Santa Clarita, LLC.
The Court will consider whether to confirm the Plan at a hearing on
Aug. 3, 20021, at 2:00 p.m. The Confirmation Hearing will be held
in Courtroom 702, at the U.S. Bankruptcy Court, 230 N. First Ave.,
Phoenix, AZ 85003.
The objection must be filed and served by July 27, 2021.
About Santa Clarita
Santa Clarita, LLC, was formed in 1998 by Remediation Financial,
Inc. ("RFI") for the sole purpose of acquiring a real property
consisting of approximately 972 acres of undeveloped land generally
located at 22116 Soledad Canyon Road, Santa Clarita, California
(the "Property"). The Debtor purchased the Property from Whittaker
Corporation. Whittaker used the Property to manufacture munitions
and related items for the U.S. Department of Defense (the "DOD").
The soil and groundwater on the Property suffered environmental
contamination thus the property required remediation before the
Property could be developed.
On or about January 2019, the controlling interest in RFI was
acquired by Glask Development, LLC. Glask Development, LLC has
two members, K&D Real Estate Consulting, LLC and Gracie Gold
Development, LLC. The Debtor's sole member and manager is RFI.
Santa Clarita filed a voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 20-12402) on
Nov. 12, 2020. The petition was signed by David W. Lunn, chief
executive officer of Remediation Financial, Inc., manager of the
Debtor. At the time of filing, the Debtor estimated $100 million
to $500 million in assets and $500 million to $1 billion in
liabilities. Judge Madeleine C. Wanslee oversees the case. Thomas
H. Allen, Esq., at Allen Barnes & Jones, PLC, is the Debtor's legal
counsel.
SCRANTON, PA: S&P Affirms 'BB+' Long-Term GO Debt Rating
--------------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative on
Scranton, Pa.'s general obligation (GO) debt. At the same time, S&P
affirmed its 'BB+' long-term rating on the city's GO debt, which is
secured by its full faith and credit pledge.
"The outlook revision reflects our view that economic pressures
stemming from the COVID-19 pandemic are waning and Scranton's
financial pressures have been mitigated by significant federal
support," said S&P Global Ratings credit analyst Cora Bruemmer.
Additionally, the litigation challenging the city's Act 511 revenue
has been resolved in the city's favor, providing additional
stability.
"While Scranton's relatively lower wealth and income ratios, poorly
funded pension plans, and high fixed costs remain credit
weaknesses, the city is no longer facing immediate, short-term
financial pressure related to the COVID-19 pandemic," said Ms.
Bruemmer. It expects to receive $68 million in American Rescue Plan
Act (ARPA) funding, which will offset the increased costs and
revenue declines over the past year. The local economy weathered
the COVID-19-induced recession better than expected, and while
there is still some risk to the local economy, S&P Global Economics
is optimistic that recovery is starting to accelerate nationally.
Also, because the Act 511 revenue litigation has been resolved, we
no longer view the city to have sizable contingent liabilities.
"We analyzed Scranton's environmental and social risks relative to
its economy, management, and financial measures and determined that
all are in line with our view of the sector standard. The city is
not prone to extreme weather events. It did experience a ransomware
cyber-security attack within the last year, but there was no
material financial or operational effect on the city, and it has
taken the requisite steps to improve its vulnerabilities. While the
city is designated as distressed under Act 47, we view current
management and governance practices, as being in line with the
sector standard."
SEANERGY MARITIME: Takes Delivery of Two Capesize Vessels
---------------------------------------------------------
Seanergy Maritime Holdings Corp. reported the delivery of two
previously-announced Capesize vessel acquisitions. The first
vessel is a 181,709 dwt Capesize bulk carrier, built in 2010 by
Imabari Shipbuilding Co., Ltd. in Japan, which was renamed M/V
Patriotship, and the second is a 176,925 dwt Capesize bulk carrier,
built in 2006 by Namura Shipbuilding Co., Ltd. in Japan, which was
renamed M/V Tradership.
Taking advantage of the strong market conditions, Seanergy fixed
the M/V Patriotship proactively at $31,000 per day for a period
employment of 12 to 18 months with a major European cargo operator.
Additionally, the M/V Tradership has been fixed for a period
employment of 11 to 15 months with a major South Korean industrial
company at an index-linked rate based on the Baltic Capesize Index.
Both time charters are expected to commence promptly upon
finalization of the customary handover process.
Moreover, the Company is in advanced discussions with a leading
Asian financial institution to finance part of the acquisition
price of the M/V Patriotship through a sale and leaseback structure
at competitive terms.
Stamatis Tsantanis, the Company's chairman & chief executive
officer, stated:
"I am pleased to announce the timely delivery of our fourteenth and
fifteenth Capesize vessels and the immediate commencement of their
respective period employments."
"We are also excited to initiate business relationships with two
additional reputable charterers. Including these deliveries, 87%
of our operating fleet is employed under advantageous medium to
long-term charters."
"At the financing front, we have secured competitively-priced
financings for our recent vessel acquisitions, as previously
announced, which will further enhance our strong liquidity position
and reduce the Company's average cash interest expense."
"We believe Seanergy is optimally positioned to take advantage of
the rising market conditions."
About Seanergy Maritime
Greece-based Seanergy Maritime Holdings Corp. --
http://www.seanergymaritime.com-- is the only pure-play Capesize
ship-owner publicly listed in the US. Seanergy provides marine dry
bulk transportation services through a modern fleet of Capesize
vessels. On a 'fully-delivered' basis, the Company's fleet will
consist of 16 Capesize vessels with average age of 11.8 years and
aggregate cargo carrying capacity of above 2,800,000 dwt.
Seanergy Maritime reported a net loss of $18.35 million for the
year ended Dec. 31, 2020, compared to a net loss of $11.70 million
for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company
had $295.24 million in total assets, $199.55 million in total
liabilities, and $95.69 million in total stockholders' equity.
SHOPTIQUES INC: Public Auction Set for June 24
----------------------------------------------
Bleichroeder Agent LLC, as collateral agent, will offer for sale at
public auction the property of Shoptiques Inc. on June 24, 2021, at
10:00 a.m. (Prevailing Eastern Time) at Paul Hastings LLP, 200 Park
Avenue, New York, New York 10166.
The terms of sale may be obtained by contacting:
Matthew Smart
Paul Hastings LLP
71 S. Wacker Drive
Chicago, IL 60606
Tel: 499-6040
E-mail: matthewsmart@paulhastings.com
Shoptiques Inc. -- https://www.shoptiques.com -- operates an
ecommerce Web site.
SINCLAIR BROADCAST: Has New Money Plan from Failed Creditor Talks
-----------------------------------------------------------------
Katherine Doherty of Bloomberg News reports that Sinclair Broadcast
Group said it was unable to reach a deal with creditors to rework
borrowings at its regional sports unit Diamond Sports Group but is
continuing discussions, according to a regulatory filing on Monday,
June 21, 2021.
Sinclair proposed issuing $500 million of new Diamond Sports Group
notes to existing bondholders, according to documents filed Monday,
June 21, 2021.
The proposal, dated April 29, 2021 comes in response to a creditor
plan. The proposed company plan included roll-up of unsecured notes
into first-lien notes at prices between par and a 35% discount,
depending on participation in new money.
About Sinclair Broadcast Group
Sinclair Broadcast Group, Inc. operates as a television
broadcasting company in the United States. It owns or provides
various programming, operating, sales, and other non-programming
operating services to television stations. The company was founded
in 1986 and is headquartered in Hunt Valley, Maryland.
SIRINE LLC: All Classes Will be Paid in Full Under Plan
-------------------------------------------------------
Sirine, LLC, submitted a Corrected Second Amended Plan of
Reorganization.
This Plan of Reorganization under chapter 11 of the Bankruptcy Code
proposes to pay creditors of Sirine from cash flow from operations,
or future income.
All classes of allowed claims will be paid in full at 100%.
The 100% owner and manager is Mohamed Bellalah. He will retain his
interests under the Plan.
A copy of the Disclosure Statement is available at
https://bit.ly/2U7Cwi5 from PacerMonitor.com.
About Sirine LLC
Sirine LLC, a Mobile, Ala.-based gas station, sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ala. Case No.
20-11952) on Aug. 6, 2020.
At the time of the filing, the Debtor estimated assets of up to
$50,000 and liabilities of between $50,001 and $100,000.
Barry A Friedman & Associates, PC, is the Debtor's legal counsel.
SOUTHEAST SUPPLY: S&P Downgrades ICR to 'BB-', Outlook Negative
---------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Southeast Supply Header LLC (SESH) to 'BB-' from 'BB+'. S&P also
lowered its issue-level rating on SESH's senior unsecured debt to
'BB-' from 'BB+'. The '3' recovery rating is unchanged.
S&P said, "The negative outlook reflects material uncertainty
around the recontracting process. If SESH is unable to renew its
contracts, we would expect a weaker contractual profile, which
would ultimately weaken the company's business risk profile.
"The downgrade reflects weaker credit metrics based on our view of
current market conditions and as legacy contracts are replaced on
less-attractive terms. SESH's financial performance and cash flow
generation have been well below our forecast. In September 2020,
approximately 50% of SESH's firm take-or-pay contracts expired and
have not yet been extended. While Enbridge Inc., as operator, is
proactively making efforts to renew the expired capacity, we expect
any renewals will be at lower rates and shorter tenors based on
current market conditions. Consequently, our updated forecast
reflects reduced cash flows from the company's assets and
materially weaker credit metrics. Our base-case forecast assumes
that expired capacity will be replaced through a mix of long and
short-term contracts; however, short-term contracts will continue
to expose SESH to renewal risk and, therefore, add potential
volatility to its revenue stream.
"The negative outlook reflects the likelihood that the expired
contracts might not be renewed. In our opinion, SESH is well
positioned to provide Florida-based utilities access to diverse
sources of natural gas supplies, which should facilitate
recontracting efforts. Although it is a less-attractive rate, the
company's recent seven-year contract extension with Duke Energy is,
in our view, credit supportive. Still, SESH is in a period of
heightened recontracting uncertainty, and failure to renew the
expired capacity will expose it to volume risk and, hence, weaken
its business risk profile. SESH historically benefited from a high
utilization rate exceeding 90% and stable credit metrics due to the
long-term, take-or-pay and fee-based nature of its contracts, which
limited the pipeline's exposure to commodity prices and volumetric
risk.
"Under our base-case scenario, we expect adjusted debt to EBITDA
will be about 6x over our forecast period. We expect EBITDA will be
about $60 million annually, which is a step down from recent years
given the legacy contract maturities in September 2020 (which had
higher pricing). We assume that SESH will maintain its historical
utilization level and most of the capacity will be renewed on a
long-term basis, though at a lower rate, reflecting current market
conditions. While this would likely lead to lower cash flows, we
expect SESH would recover some value through extended terms.
"We expect operations and maintenance (O&M) expenses will remain
steady because a natural gas pipeline's O&M is predictable and not
as complex as that of other infrastructure asset classes. Also, we
do not have any material growth projects embedded in our forecast."
SESH does not have any maturities until the senior unsecured notes
mature in mid-2024, and has no upcoming material obligations to
fund.
The negative outlook reflects material uncertainty around the
recontracting process. If SESH is unable to renew its contracts,
S&P would expect its weaker contractual profile would lead to cash
flow uncertainty and volatility. This would negatively affect the
company's business risk profile. In addition, a decline in
utilization rates on the company's uncontracted assets would reduce
cash flow generation, weakening SESH's credit metrics.
S&P asid, "We could lower the rating if SESH's adjusted debt to
EBITDA increases above 7x for an extended period or if we envision
a deterioration of the company's contract profile. This could stem
from the company's inability to renew customer contracts or from
contracts renewed at substantially lower rates and shorter terms,
or if utilization fell materially.
"We could revise the outlook to stable if SESH successfully renews
its contracts on credit-supportive terms. We could also consider a
positive rating action if we forecast the company will achieve and
maintain debt to EBITDA under 6x."
THUNDER RAIN: Says Debtor Has Not Complied With Agreed Order
------------------------------------------------------------
TLD McCUTCHIN, LTD ("TLD") filed a limited objection to the
Disclosure Statement and Plan of Reorganization submitted by debtor
Thunder Rain Holdings, LLC.
TLD would have supported any plan of reorganization proposed by
this Debtor that provides for the payment of $1.6 million to TLD on
or before July 6, 2021 and is shown to be feasible to accomplish
that goal. That was the crux of the agreement reached by TLD and
Thunder Rain and memorialized in the Agreed Order Providing for
Adequate Protection of Collateral Interests Belonging to TLD
McCutchin, LTD with Respect to Real Property Located at Pelzel Rd,
Pilot Point, Texas and Conditioning Automatic Stay ("Agreed Order,"
Dkt. No. 24). However, Debtor has not complied with the Agreed
Order and, consequently, the automatic stay has terminated with
respect to TLD conducting a foreclosure sale of the real property
described in that order. Specifically, Debtor has failed to deliver
payment of the $15,000.00 on or before June 15, 2021, as required
by that order; and Debtor has further failed to cause $5,000.00 to
be released by the Denton County District Clerk and paid over to
TLD. These two violations of the Agreed Order require termination
of the automatic stay and eviscerate the Plan proposed by Debtor.
Further, even if the stay had not been terminated by Debtor's
violations, Debtor has been less than forthcoming regarding the
financing it expects to receive in order to "take out" TLD (and
other creditors, for that matter), and its Plan deviates from the
provisions of the Agreed Order. Consequently, TLD must object to
the Disclosure Statement and Plan and urge that confirmation of the
Plan be denied.
Attorneys for TLD:
Richard D. Pullman
Howard C. Rubin
KESSLER COLLINS
2100 Ross Avenue, Suite 750
Dallas, Texas 75201
Tel: (214) 379-0722
Fax: (214) 373-4714
E-mail: rpullman@kesslercollins.com
hrubin@kesslercollins.com
About Thunder Rain Holdings
Thunder Rain Holdings, LLC filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tex. Case No.
21-40163) on Feb. 1, 2021. At the time of filing, the Debtor
disclosed $2,281,753 in assets and $2,543,976 in liabilities. Gary
G. Lyon, Esq., at Bailey Johnson & Lyon, PLLC, is the Debtor's
legal counsel.
TRINITY INDUSTRIES: Fitch Affirms 'BB' LT IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating
(IDR) of Trinity Industries Inc. at 'BB'. Trinity's senior
unsecured notes and revolving credit facility also were affirmed at
'BB'/'RR4'. The Outlook is Stable.
The affirmation reflects Trinity's strong position in North
American railcar leasing and manufacturing and higher but still
moderate financial leverage within the leasing business, offsetting
cyclical weakness in its leasing and manufacturing operations. The
ratings incorporate a high level of cyclicality in the railcar
manufacturing business, with sales declines of more than 30% in
2016 and 2017 and 45% in 2020. This cyclicality is balanced by the
more stable leasing business, which will account for most of
Trinity's pretax earnings through the cycle.
KEY RATING DRIVERS
Substantial Leasing Business: Trinity's railcar leasing business
generates the majority of Trinity's consolidated earnings through
the cycle, broadening the company's presence and scale within the
railcar industry and mitigating the effects of cyclicality at the
railcar manufacturing operations. There are meaningful synergies
between manufacturing and leasing as TILC generates substantial
railcar orders for Trinity as it obtains lease commitments from its
customers.
Increased Leasing Leverage: Financial leverage, defined as
debt/tangible equity, within the leasing business was 2.0x at March
31, 2021 compared with 1.9x at YE 2019. On a consolidated basis,
including recourse debt at the parent company, debt/tangible equity
was 2.9x at March 31, 2021 up from 2.2x at the end of 2019. The
rating takes into account higher financial leverage within the
leasing segment, with a loan to value on the wholly owned lease
portfolio of 61% at March 31, 2021 up from 53% as of YE 2019 and
25% at the end of 2017. This compares with the company's target of
to 60%-65% and Fitch does not expect leverage to move materially
higher over the near term.
Good Leasing Asset Quality: TILC's credit profile is characterized
by good asset quality, sufficient liquidity and financial leverage
that has increased but is still moderate. The leasing company's
operating performance is driven by core leasing and management
services plus gains from asset sales. TILC's asset quality metrics
have been relatively steady through the pandemic and, over time,
Fitch believes the company will maintain low write-offs and the
ability to remarket railcars within the fleet.
Freight Railcar Downturn: Trinity's manufacturing operations have
been negatively affected by a sharp drop in railcar deliveries in
2020 and generally weak market conditions over the past several
years. Fitch expects railcar orders and deliveries will begin to
recover over the balance of 2021 and that the industry will
strengthen in 2022.
Weak Manufacturing FCF: FCF after dividends at the manufacturing
operations is negative in most years due to low manufacturing
margins and ongoing capital requirements, though this is offset by
cash flow from the leasing operations and from sizable tax refunds
related to the Coronavirus Aid, Relief, and Economic Security
(CARES) Act in 2021 and 2022. Consolidated company cash flow will
be used to finance growth in the leasing portfolio and for ongoing
share repurchases.
DERIVATION SUMMARY
Trinity's key competitors in its core rail business include The
Greenbrier Companies, a railcar manufacturer and lessor, and TTX
Co. (A/Stable) and GATX Corp., which are large railcar lessors.
Trinity is the largest railcar manufacturer and a meaningful
lessor. The credit metrics for Trinity's manufacturing operations
vary widely through cycles, while the leasing business is more
stable and has below-average leverage. No Country Ceiling,
parent/subsidiary or operating environment aspects affect the
rating.
KEY ASSUMPTIONS
Fitch's assumptions for Trinity's manufacturing operations,
excluding the leasing business, are as follows:
-- Fitch assumes unallocated corporate expenses are split evenly
between the manufacturing and leasing operations;
-- Revenues decline by 7% in 2021, and grow by 16%-18% in 2022
2023;
-- The EBITDA margin improves to around 5% in 2021, supported by
cost containment measures and a recovery in the business over
the second half of the year, and to 6%-7% in 2022-2023;
-- Annual FCF is positive in 2021-2022 due to inclusion of
expected tax refunds. FCF is negative beyond 2022 due to
narrow margins and inclusion of the entirety of the company's
dividend. Negative FCF plus share repurchases are covered by
inflows from the leasing company.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An improvement in profitability metrics at the leasing segment
while maintaining strong asset quality;
-- A more diversified funding profile at the leasing business;
-- Slower growth in the leased railcar fleet and/or lower levels
of share repurchases leading to flat to lower consolidated
financial leverage.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A sustained deterioration in earnings and cash flow at the
manufacturing operations that prevents a return to mid-cycle
cash flow within a normal timeframe;
-- A material increase in consolidated debt to tangible equity
above 4.0x;
-- Significant asset quality deterioration or the need for
significant financial support for TILC.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Trinity had liquidity totaling $772 million as
of March 31, 2021. This included $178 million in cash and
marketable securities plus $358 million available on a $450 million
unsecured revolver that matures in November 2023, and $236 million
available on a $1 billion warehouse facility at TILC that matures
in March 2024. TILC uses the facility and to fund railcar purchases
on an interim basis until permanent funding is obtained from
securitizations or sales to investment vehicles.
Trinity had $1.1 billion net book value of unpledged equipment as
of March 31, 2021. This equipment could be used as collateral for
the warehouse facility or it could be sold. In addition, cash flow
will benefit from $441 million in tax refunds related to the CARES
Act expected in 2021-2022.
Debt Structure: Trinity had $5.2 billion of debt as of March 31,
2021, composed of $400 million of senior notes at the parent
company and $4.8 billion of nonrecourse debt at TILC. Trinity does
not have a legal obligation to repay TILC's nonrecourse debt, but
Fitch expects the parent would support TILC if necessary. The
senior notes and the revolver are guaranteed by key 100%-owned
subsidiaries.
TILC Leverage: Under its criteria for rating non-financial
corporates, Fitch calculates an appropriate target debt/equity
ratio for a finance subsidiary based on asset quality and funding,
liquidity and coverage metrics. In TILC's case, Fitch calculates a
target leverage ratio of 3.0x, compared with debt/equity of 2.0x at
March 31, 2021.
Trinity does not maintain a formal support agreement with TILC, but
it has an undertaking agreement to ensure leasing contracts are
serviced in the event TILC were to default. The bank revolver
includes a cross default to Trinity's performance under the
agreement.
ISSUER PROFILE
Trinity Industries, Inc. is a leading provider of railcar products
and services in North America, including railcar leasing and
management services, railcar manufacturing, and railcar maintenance
and modification services. The company also manufactures roadway
guardrail, crash cushions, and other highway barriers.
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.
TUPELO WOOD: Seeks to Employ Randolph Neel as Bankruptcy Counsel
----------------------------------------------------------------
Tupelo Wood, LLC seeks approval from the U.S. Bankruptcy Court for
the Central District of California to hire Randolph Neel, Esq., an
attorney practicing in Burbank, Calif., to handle its Chapter 11
case.
The services to be provided by the attorney include:
(a) giving advice to the Debtor with respect to its power and
duties under the Bankruptcy Code;
(b) negotiating with creditors in working out a reorganization
plan and taking necessary legal steps in order to confirm the
plan;
(c) preparing legal papers; and
(d) performing all of the legal services for the Debtor, which
may be necessary in the case.
Mr. Neel will be paid at an hourly rate of $400.
In court filings, Mr. Neel disclosed that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
Mr. Neel holds office at:
Randolph L. Neel, Esq.
Neel Law Group
1601 Riverside Drive
Burbank, CA 91506
Tel.: 818-558-5747
Fax: 818-558-5782
Email: rneel@neellawgroup.com
About Tupelo Wood
Tupelo Wood, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Case No. 21-10759) on March 24,
2021, listing under $1 million in both assets and liabilities.
Vassili Charalambous, managing member, signed the petition. Judge
Scott C. Clarkson oversees the case. The Debtor tapped Neel Law
Group, APC as legal counsel and Frith-Smith & Archibald, LLP as
accountant.
U.S. STEEL: Moody's Raises CFR to B1 on Strong Market Position
--------------------------------------------------------------
Moody's Investors Service upgraded United States Steel
Corporation's ("U. S. Steel") Corporate Family rating to B1 from
B3, its Probability of Default rating to B1-PD from B3-PD, its
senior unsecured debt rating to B3 from Caa1, its senior unsecured
shelf rating to (P) B3 from (P) Caa1, and Big River Steel LLC's
("Big River Steel") secured debt rating to Ba3 from B1. U. S.
Steel's and Big River Steel's ratings outlook was changed to stable
from positive. The Speculative Grade Liquidity Rating remains
SGL-2.
Upgrades:
Issuer: United States Steel Corporation
Corporate Family Rating, Upgraded to B1 from B3
Probability of Default Rating, Upgraded to B1-PD from B3-PD
Senior Unsecured Shelf, Upgraded to (P)B3 from (P)Caa1
Senior Unsecured Conv./Exch. Bond/Debenture, Upgraded to B3 (LGD5)
from Caa1 (LGD5)
Senior Unsecured Regular Bond/Debenture, Upgraded to B3 (LGD5)
from Caa1 (LGD5)
Issuer: Allegheny County Industrial Dev. Auth., PA
Senior Unsecured Revenue Bonds, Upgraded to B3 (LGD5) from Caa1
(LGD5)
Issuer: Bucks County Industrial Development Auth., PA
Senior Unsecured Revenue Bonds, Upgraded to B3 (LGD5) from Caa1
(LGD5)
Issuer: Hoover (City of) AL, Industrial Devel. Board
Senior Unsecured Revenue Bonds, Upgraded to B3 (LGD5) from Caa1
(LGD5)
Issuer: Indiana Finance Authority
Senior Unsecured Revenue Bonds, Upgraded to B3 (LGD5) from Caa1
(LGD5)
Issuer: Ohio Water Development Authority
Senior Unsecured Revenue Bonds, Upgraded to B3 (LGD5) from Caa1
(LGD5)
Issuer: Southwestern Illinois Development Authority
Senior Unsecured Revenue Bonds, Upgraded to B3 (LGD5) from Caa1
(LGD5)
Issuer: Big River Steel LLC
Senior Secured Regular Bond/Debenture, Upgraded to Ba3 (LGD3) from
B1 (LGD2)
Issuer: ARKANSAS DEVELOPMENT FINANCE AUTHORITY
Senior Secured Revenue Bonds, Upgraded to Ba3 (LGD3) from B1
(LGD2)
Outlook Actions:
Issuer: United States Steel Corporation
Outlook, Changed To Stable From Positive
Issuer: Big River Steel LLC
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
U. S. Steel's B1 corporate family rating reflects its inconsistent
historical operating performance due to its exposure to cyclical
end markets and volatile steel prices, and its inconsistent free
cash flow which will continue to be impacted by elevated capital
investments in its "Best of Both" strategy. The rating also
incorporates the company's large scale and strong market position
as a leading US flat-rolled steel producer and whose footprint is
further enhanced by its diversification in Central Europe, as well
as Moody's expectation for moderate financial leverage and ample
interest coverage in a normalized steel price environment due to
significant debt reduction in 2021. It also considers Moody's
expectation for a significantly improved operating performance in
2021 that will result in near term metrics that are strong for the
rating, but are not likely sustainable as steel prices return to a
more normalized level when supply and demand come into balance.
U. S. Steel's operating results will materially strengthen in 2021
with adjusted EBITDA in the range of about $3.5 - $4.0 billion due
to a quicker than anticipated recovery in its key end markets, with
the exception of the oil & gas sector, along with the addition of
Big River Steel and the recent surge in steel prices. Its U. S.
Steel Europe segment will also benefit from the same improved
fundamentals as its domestic operations. Domestic steel prices have
surged with hot rolled coil prices (HRC) at a record high of about
$1,650 per ton in June 2021 after declining to a 4.5 year low
around $440 per ton in July 2020 due to the effects of the
pandemic. The price surge has been attributable to industry
consolidation, a temporary dislocation of supply and demand, low
steel inventories and elevated iron ore and scrap prices, which
have also benefited U. S. Steel since it sells excess iron ore to
other steel producers.
U. S. Steel has taken advantage of the favorable steel sector
dynamics and accommodative capital markets and completed
significant financing actions in the first half of 2021 to pay down
its debt, reduce its interest costs, maintain a good liquidity
profile, enhance its financial flexibility and push out its debt
maturities. The company raised $790 million in a secondary stock
offering and issued $750 million of 6.875% Senior Notes due 2029
and used the proceeds from these transactions to redeem all of its
$1.056 billion of 12% Senior Secured Notes due 2025. It also used
cash on hand to repay the remaining $180 million of borrowings
under the Export-Import loan, about $860 million of borrowings
under the US and USSK credit facilities and around $82 million of
its 2025 and 2026 unsecured notes. The company also announced on
June 17, 2020 its intention to use cash on hand to redeem all $718
million of its outstanding 6.875% senior notes due 2025 on August
16, 2021 when the redemption premium declines to 101.719% of the
principal amount. These actions will have reduced net debt by
approximately $2.2 billion and annual interest expense by about
$155 million excluding the impact of the Big River Steel debt
assumed in connection with the acquisition in January 2021, and
further debt reduction could be pursued this year funded by
additional free cash generation and proceeds of about $640 million
from the sale of its Transtar rail subsidiary.
If U. S. Steel is able to produce adjusted EBITDA of $3.5 - $4.0
billion and uses its free cash flow and the Transtar proceeds to
retire additional debt, then its leverage ratio (debt/EBITDA) could
decline to about 1.5x and its interest coverage (EBIT/Interest)
could rise to around 9.0x. These metrics will be strong for the B1
corporate family rating, but are expected to return to a level more
commensurate with its rating when steel prices and metal spreads
decline towards more normalized historical levels. Moody's
anticipate that demand will ebb as inventories are replenished and
supply continues to ramp up as productivity improves and new
capacity comes online and for the worldwide supply/demand imbalance
to still exist and for prices to gradually decline towards their
10-year average price range of about $600 - $700 per ton. Steel
prices have historically overshot to the upside and the downside
for short periods of time before returning to more normalized price
levels.
U. S. Steel has a speculative grade liquidity rating of SGL-2 since
it is expected to maintain good liquidity. It had $753 million of
unrestricted cash and borrowing availability of $1.543 billion on
its $2 billion asset based revolving credit facility as of March
31, 2021. The credit facility matures in October 2024 and had no
borrowings outstanding and $5 million of letters of credit issued.
The facility requires the company to maintain a fixed charge
coverage ratio of 1.0x should availability be less than the greater
of 10% of the total aggregate commitment and $200 million. The
company's borrowing availability was effectively reduced by $200
million since it did not meet the fixed charge coverage ratio for
the LTM period ended March 31, 2021. Additionally, due to the level
of receivables and inventory qualifying for inclusion in the
borrowing base being less than the facility total, availability was
reduced by a further $252 million. Moody's anticipate its borrowing
base will increase as covenant restrictions are removed and the
value of its inventories and receivables rise along with increased
demand and higher steel prices.
The company also has a Euro 460 million ($539 million equivalent at
March 31, 2021) secured credit facility at its U. S. Steel Kosice
(USSK) subsidiary in Europe, which matures in September 2023. Euro
175 million (roughly $205 million) was outstanding as of March 31,
2021, but the company repaid this debt with cash on hand during the
second quarter.
Big River Steel's secured debt is rated one notch above the CFR due
to its priority position in the consolidated capital structure and
the benefit of U. S. Steel redeeming all of its secured notes and
issuing additional unsecured debt which enhances the loss absorbing
buffer below the secured debt. The B3 ratings on U. S. Steel's
convertible notes, senior unsecured notes and IRB's reflects their
effective subordination to the secured ABL, secured notes and bonds
as well as priority payables.
The stable ratings outlook incorporates Moody's expectation for a
significantly improved operating performance in 2021 that will
result in credit metrics that are strong for the company's rating,
but that its credit metrics will return to a level more
commensurate with its rating when steel prices and metal spreads
decline towards more normalized historical levels.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
U. S. Steel's ratings could be considered for an upgrade if steel
prices and metal spreads are sustained above historical averages,
the strategic benefits of the "Best of Both" strategy is achieved
and the company demonstrates a clearly defined and more
conservative financial policy and pursues further debt reduction.
Quantitatively, if U. S. Steel is able to sustain leverage of no
more than 3.5x through varying steel price points and its CFO less
dividends is in excess of 23% of its outstanding debt, then its
ratings could be positively impacted.
The company's ratings could be downgraded should steel sector
conditions materially deteriorate such that its leverage ratio is
sustained above 4.5x, its CFO less dividends falls below 13% of its
outstanding debt, or it fails to maintain an adequate liquidity
profile.
Headquartered in Pittsburgh, Pennsylvania, United States Steel
Corporation is the third largest flat-rolled steel producer in the
US in terms of production capacity. The company manufactures and
sells a wide variety of steel sheet, tubular and tin products
across a broad array of industries including service centers,
transportation, appliance, construction, containers, and oil, gas
and petrochemicals. It also has an integrated steel plant and coke
production facilities in Slovakia (U. S. Steel Kosice). Revenues
for the twelve months ended March 31, 2021 were $10.7 billion.
The principal methodology used in these ratings was Steel Industry
published in September 2017.
UNIFIED PHYSICIAN: S&P Affirms 'B-' ICR on CCRM Acquisition Plan
----------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on
Unified Physician Management L.P. (UPM). At the same time, S&P
affirmed its 'B-' issue-level rating and '3' recovery rating on the
senior secured debt, indicating its expectation of meaningful
(50%-70%; rounded estimate: 60%) recovery in the event of default.
UPM agreed to acquire CCRM Management Co. Holdings LLC (CCRM) for
$775 million. To fund the acquisition, the company is issuing $235
million in incremental fungible first-lien term loan, $120 million
incremental fungible second-lien term loan, and $432 million in new
and rollover equity.
The acquisition will provide some diversification from UPM's core
OB/GYN services. CCRM is a leading provider of fertility clinics in
the U.S, providing treatments including infertility care to in
vitro fertilization (IVF). Although cost synergies with UPM's
OB/GYN facilities are limited, S&P expects a modest boost to
revenue through synergies that come from patients seeking
continuity of care across both platforms. The business combination
also expands and diversifies UPM's geographic footprint,
potentially leading to acquisitions in other markets with
cross-selling opportunities.
S&P said, "We expect UPM will remain highly leveraged. We expect
debt-to-EBITDA leverage of 9.4x in 2021 (inclusive of half year
CCRM EBITDA contribution) and 7.4x in 2022. UPM has been
aggressively acquiring companies over the past several years, and
we expect it will continue to require debt as the major source of
funding for additional acquisitions, keeping it highly leveraged."
CCRM should improve the company's reimbursement profile. CCRM
derives approximately 70% of its revenue from self-pay clients that
pay in full, with the remaining 30% from commercial insurers. S&P
believes this payer mix limits reimbursement risk.
S&P expects solid organic growth for CCRM. The steady rise in the
average maternal age along with higher prevalence of infertility
has increased the demand for reproductive services and IVF
procedures. Health insurance coverage has also expanded, partly
aided by recent mandates in several states that large group
insurers provide coverage for IVF and medically necessary fertility
preservation of egg or sperm freezing. Although the overall
national birth rate is declining, the demand for CCRM's services by
its typical age cohort is increasing as demonstrated by data
provided by the CDC's National Center for Health Statistics.
A new holding company will be formed when the acquisition is
completed. There will be some revisions to the company's
organization structure upon the completion of the acquisition
transaction. Once that takes place, the issuer credit rating will
be transferred to a newly formed holding company that we expect
will be the issuer of the financial statements. CCRM Management
Company LLC and Unified Women's Healthcare L.P., the current
borrower will become co-borrowers of the debt.
S&P said, "Our stable outlook reflects our expectation for solid
revenue growth of 16%-18% annually over the next two years and
stable margins leading to modest discretionary cash flow
generation.
"We could lower our rating if the company generates discretionary
cash flow deficits with limited prospects for improvement. In our
view, this could happen if there is a sizable cut in reimbursement
rates, significantly weaker-than-expected patient volume, or if
there are integration challenges as the company pursues its
acquisition strategy.
"We would consider raising the rating if we believe the company can
generate sustained discretionary cash flow-to-debt ratio over 3%
and adjusted debt to EBITDA of below 6.0x, which is in line with
comparable 'B' rated peers."
UNITED TALENT: S&P Assigns B+ Issuer Credit Rating, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issuer credit rating to United
Talent Agency (UTA). At the same time, S&P assigned its 'B+'
issue-level rating and '3' recovery rating to UTA's proposed
first-lien credit facility.
S&P said, "The stable outlook reflects our view that UTA will
continue to benefit from growth in content spending that will drive
revenue, EBITDA, and cash flow growth over the next 12 months. The
outlook also reflects our view that the company's adjusted leverage
will remain below 5x over the next 12 months."
UTA is one of the three largest talent agencies in the U.S.--albeit
the smallest of the three. The company benefits from its
well-entrenched relationships in the industry driving the strength
of its brand. Its strong talent roster further strengthens its
market position in the industry. UTA is the smallest of the three
agencies, with the other two being, CAA Holdings LLC (B/Stable) and
Endeavor Operating Co. LLC (B/Negative/--). A key disadvantage for
UTA is a lack of revenue diversification.
The company has continued to expand its sports business, beginning
with its strategic investment in Klutch Sports in 2019, and has
subsequently expanded this segment organically. The company also
expanded its music representation segment over the past 12 months
and saw a good amount of growth in its podcasting and digital
influencer business. While TV and film representation contributes
over 60% to total revenue (as of 2019) the growth in these other
business segments in the past five years has decreased that share
from 85% in 2015. S&P expects UTA's revenue diversification to
continue improving as its investments in sports and music benefit
from the return of live events to pre-pandemic levels in 2022
onward.
UTA's scope of services has also materially improved over the past
five years. It continues to invest in its 360-degree platform model
by using resources and relationships across the company and
industry to build out a client's presence and fanbase across
multiple platforms. As an example, UTA can use its relationships
within film, TV, and corporate brands to expand a music client's
platform with film or tv roles and corporate
sponsorships--increasing revenue opportunities. This model creates
a stickiness for the client and reduces agent churn since their
success is tied to UTA's ecosystem and relationships. As a result,
the company has historically had high retention rates with its
partners.
COVID-19-related shutdowns affected the company, but it also
elevated UTA's nascent podcasting and digital influencers business
segment. COVID-19's impact on UTA was similar to other talent
agency peers due to production shutdowns and the cessation of live
events. The company managed through the shutdown without needing to
raise additional capital or amend its debt facilities by managing
its variable cost structure, allowing it to maintain adequate
liquidity through the year.
S&P said, "The company also saw strong growth in its podcasting and
digital influencers business during the pandemic, which we expect
will continue to grow going forward. UTA also took advantage of the
COVID-19 slowdown to expand its music representation segment by
recruiting agents and clients in the space. We don't expect the
benefit of the live events recovery to materialize in the company's
operating performance in 2021, but UTA is well positioned to
benefit from the return of live events to post-pandemic levels in
2022 and beyond."
The company's settlement with the Writer's Guild of America (WGA)
addresses uncertainties associated with the dispute. The settlement
with the WGA prevents UTA (and all other talent agencies) from
collecting packaging fees beginning in mid-2022. At this point, UTA
will revert to commissioning each talent in a package individually.
S&P doesn't expect this to materially affect the company's earnings
potential going forward and would likely actually lead to a
marginal benefit to revenue in the short term. This is because the
packaging fees collected are usually lower than individual
commissioning of the talent within the package. On the other hand,
there could be lower revenue upside on back-end deals, but, given
the currently evolving media landscape--particularly with the rise
of streaming platforms--back-end deals are not as lucrative as they
once were while front-end payments have been rising. The agreement
with the WGA does not preclude UTA from continuing to collect
packaging fees for all existing deals made before mid-2022 so we
don't expect any sudden and material declines in revenue
contributions from the packaging segment.
UTA was the first major talent agency to make an agreement with the
WGA. This gave the company an opportunity to reunite with its
writer clients and begin recovering lost revenues sooner than its
competitors. UTA also used that opportunity to sign up new
unrepresented writers (mainly writers who had fired their agents
from competing agencies as part of the WGA dispute) and further
expand its writing talent pool.
S&P said, "The company has historically maintained a less
aggressive financial policy, and we expect that will continue over
the next 12 months. We forecast UTA to maintain S&P Global
Ratings-adjusted leverage below 5.0x over the next 12 months,
declining from about 5.5x as of Dec 31, 2020. We expect the decline
to be largely driven by the recovery after the pandemic in 2021 and
2022, increasing revenue and EBITDA growth.
"We expect the company will continue to pursue shareholder
distributions (outside of base compensation and discretionary bonus
payments) in line with its historical policies. This includes
determining distributable cash after accounting for all operational
uses, debt service charges, and tax obligations. We also expect UTA
will complete bolt-on acquisitions with a combination of cash on
hand and its revolving credit facility as it continues to expand
its smaller segments, including sports and music.
"However, we don't expect the company to pursue material
debt-financed distributions or acquisitions that could keep
adjusted leverage above 5x on a sustained basis.
"The stable outlook reflects our view that UTA will continue to
benefit from the growth in content spending that will drive
revenue, EBITDA, and cash flow growth over the next 12 months. The
outlook also reflects our view that the company's adjusted leverage
will remain below 5x over the next 12 months."
S&P could lower its ratings on UTA if we expected credit metrics to
weaken such that it forecasts adjusted leverage to rise above 5x
and remain there indefinitely. This could occur if:
-- UTA pursued a more aggressive financial policy that includes
material debt-funded distributions or acquisitions;
-- Competition for talent and clients led to materially higher
compensation payments that could start to drive operating
efficiency and EBITDA margins down; and
-- The growth in content spending declined rapidly, leading to
materially fewer opportunities for clients and in turn,
commissioning revenue.
S&P could raise its ratings on UTA under the following scenarios:
-- UTA commits to maintaining adjusted leverage in the low-4x
area, even when considering shareholder distributions and
acquisitions; and
-- The company continues to improve its revenue diversification
and scale such that film and TV are not the dominant contributor to
total revenue.
VAC FUND: Unsecureds to Get Quarterly Payments in Plan
------------------------------------------------------
Vac Fund Houston, LLC and its Official Committee of General
Unsecured Creditors submitted a Fifth Amended Disclosure
Statement.
The Debtor and the Committee, after analysis of the case, the
decisions of this Court, an effort to limit additional
administrative fees, and the current market conditions for the
Debtor's properties in Houston Texas, have determined that they
must focus on obtaining proceeds through litigation of the
Lendinghome Action and possible claims against the Debtor's
insiders and affiliates.
The Plan proposes to treat claims and interests as follows:
* Classes 1 - Secured Claims of Goldman Sachs. All of Goldman
Sachs' collateral has been sold or transferred to it via deeds in
lieu. As a result, it no longer holds a secured claim and any
remaining amounts due to it constitute an unsecured claim in Class
6. Class 1 is impaired.
* Class 3 Secured Claims of Cypress. Cypress shall retain its
liens on any assets of the Debtor and shall be paid from the
proceeds of the sale of each house against which it has a perfected
lien in accordance with the terms of the Joint Plan. The Debtor
estimates the amount of the secured claim of Class 3 is $0, because
all the properties for this district were sold, will be or have
been deeded back to the Lenders. Class 3 is impaired.
* Class 6 General Unsecured Claims. The Unsecured Claims against
the estate total approximately $4 million, of which an estimated
$3.5 million will be Allowed Unsecured Claims. Each holder of an
Allowed Claim in Class 6 shall receive a beneficial interest equal
to the amount of their Allowed Claim in the Unsecured Creditors
Pool in exchange for their Allowed Claim. On a quarterly basis, the
Reorganized Debtor shall make a distribution to holders of
beneficial interests in the Unsecured Creditors Pool, and each
holder shall receive their pro rata share of the Unsecured
Creditors Pool on each quarterly distribution date. Class 6 is
impaired.
* Class 7 Holders of Equity Interests. No holder of Equity
Interests shall retain any interests under this Joint Plan. Holders
of Equity Interests are deemed to reject this Joint Plan. Class 7
is impaired.
On the Effective Date, all real property and personal property
belonging to the Estate, including any leases, licenses and
executory contracts, except for the assets transferred to Goldman
Sachs or Lendinghome prior to or on the Effective Date, and all
claims or causes of action which are owned by the Estate shall be
transferred to and owned by the Reorganized Debtor free and clear
of all claims and encumbrances including and rights and interests
of any person.
Attorneys for the Debtor:
Christopher R. Kaup
Ace Van Patten
Tiffany & Bosco P.A.
10100 West Charleston Boulevard
Las Vegas, Nevada 89135
Telephone: (702) 258-8200
Facsimile: (602) 258-8787
E-Mail: crk@tblaw.com; avp@tblaw.com
Counsel for Official Committee of Unsecured Creditors:
Daren R. Brinkman
Laura Portillo
BRINKMAN PORTILLO RONK, APC
8275 S. Eastern Ave., Ste 200
Las Vegas, NV 89123-2545
Telephone: (702) 598-1776
E-mail: firm@brinkmanlaw.com
A copy of the Disclosure Statement is available at
https://bit.ly/3qabjaI from PacerMonitor.com.
About VAC Fund Houston
VAC Fund Houston, LLC, a Nevada-based company engaged in activities
related to real estate, filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Case No.
19-17670) on Dec. 2, 2019, disclosing $15,948,556 in assets and
$17,369,695 in liabilities. The petition was signed by Christopher
Shelton, trustee of VAC Fund Houston Trust, manager of Debtor.
Judge Mike K. Nakagawa oversees the case.
Christopher R. Kaup, Esq., at Tiffany & Bosco, P.A., is the
Debtor's legal counsel.
The U.S. Trustee for Region 17 appointed a committee of unsecured
creditors on Jan. 15, 2020. The committee is represented by
Brinkman Portillo Ronk, APC.
VISUAL COMFORT: S&P Alters Outlook to Negative, Assigns 'B' ICR
---------------------------------------------------------------
S&P Global Ratings revised the outlook on U.S.-based Visual Comfort
& Co. to negative from stable, reflecting the increase in leverage.
S&P could lower the ratings over the next 12 months if it expects
leverage remains above 6.5x over the next 12 months.
Visual Comfort is being recapitalized at a value of approximately
$2.2 billion with a strategic investment from Goldman Sachs Asset
Management and Leonard Green & Partners, L.P., alongside their
existing investment partners AEA investors and current management.
An undrawn $125 million asset-based lending (ABL) facility
(unrated), $835 million first-lien term loan, $335 million
second-lien term loan, and $625 million of new common equity will
fund the investment and related fees.
S&P said, "We assigned our 'B' issuer credit rating to the new
parent and borrower of the proposed debt, Illuminate Merger Sub
Corp. Immediately following the proposed acquisition, Illuminate
will merge with and into VC GB Holdings I Corp., which will become
the borrower of the senior secured facilities. We will withdraw the
ratings on the former parent, Visual Comfort & Co., and debt
following close of this transaction. The ratings are based on
preliminary terms and subject to review of final documentation.
"We assigned a 'B' issue-level rating and '3' recovery rating to
the proposed $835 million first-lien term loan, indicating our
expectation of meaningful (50%-70%; rounded estimate: 55%) recovery
in the event of a payment default. We also assigned a 'CCC+'
issue-level rating and '6' recovery rating to the proposed $335
million second-lien term loan, indicating our expectation of
negligible (0%-10%; rounded estimate: 0%) recovery.
"The outlook revision reflects Visual Comfort's increased leverage
following the sponsor turnover, and the rating affirmation reflects
our expectation for deleveraging within the next year.We assess
adjusted leverage as 7.8x pro forma for the transaction for the 12
months ended March 31, 2021, up from 3.2x before the leveraged
buyout. We revised the outlook to negative from stable to reflect
the increased risk of elevated leverage sustained over a longer
period, particularly if demand significantly declines for lighting
products or operational difficulties diminish profitability. In our
view, there is limited cushion in the rating at such leverage to
withstand weak operating conditions or unexpected one-time costs.
We could consider a downgrade to reflect more aggressive leverage.
However, in our base-case scenario, we expect favorable operating
trends to continue and the company to reduce leverage through
EBITDA growth and debt repayment. We forecast leverage to decline
to 7x in fiscal 2021 and around 6.5x by the middle of fiscal 2022.
We also forecast strong free operating cash flow (FOCF) of about
$80 million in 2021 and 2022."
Omnichannel strategy and Circa resale showrooms expansion will
drive top-line growth and profitability expansion. Visual Comfort
sells its products through a variety of distribution channels,
including 50% directly to the consumer or key decisionmaker such as
interior design firms or electrical distributors that partner with
local builders and architects. The company also generates sales
through independent showrooms, third party e-commerce partners, and
a private label platform. Visual Comfort has exclusive
relationships with 26 renowned global designers that give it an
innovative design edge. Despite a temporary disruption during the
height of the COVID-19 pandemic, the Circa expansion has continued
to bolster sales growth. Visual Comfort operates 22 Circa showrooms
and plans ongoing capital expenditure (capex) to open additional
showrooms annually. Although there is an initial investment and
ramp-up period, S&P expects showrooms to achieve positive EBITDA in
the second year of operation. Through its Circa showrooms, the
company exclusively displays and sells its own products, which are
drop shipped to customers.
It further leverages the Circa concept through branded segment
displays within third-party lighting showrooms, which accelerates
volume sales by 4x-5x compared to unmerchandised stocking dealers.
Additionally, web sales have also grown quickly and are highly
profitable, though S&P expects this growth to moderate.
Lighting market demand remains healthy, though it could moderate as
consumers reallocate discretionary spending. Visual Comfort holds a
7% market share in the highly fragmented residential lighting
market and a leading market position within the popular, premium,
and ultra-premium wholesale lighting segment. Renovation and
remodel spending increased about 9.2% in 2020 to $440 billion from
$403 billion in 2019, which helped drive 3.1% revenue growth for
the company despite store and showroom closures in the second
quarter of fiscal 2020. This was because of consumers reallocating
spending to home categories from travel and leisure during the
COVID-19 pandemic. S&P said, "While we expect continued residential
repair and remodeling expenditure in the near term, we believe this
will moderate in 2022 as consumers resume travel and leisure
spending. Additionally, our economists forecast 1.5 million housing
starts in 2021, up from 1.4 million in 2020, another driver of
consumer demand." However, they forecast housing starts to decline
to 1.4 million in 2022. While Visual Comfort operates an asset-lite
outsourced manufacturing model, expansion of its Circa resale
showrooms could leave it more vulnerable to economic downturns
given the higher fixed cost base of retail locations. Visual
Comfort's sales dropped 10% during the second quarter fiscal 2020
over the same quarter in fiscal 2019 on store closures because of
the pandemic. While year-over-year profitability remained flat,
increasing Circa showrooms could expose the company's profitability
particularly if the premium/ultra-premium segment were hit the
hardest.
In addition to demand dynamics, supply chain shift and commodity,
labor, and freight inflation are also risks to profitability.
Visual Comfort is diversifying its production out of China, a
project which began in 2018 to address import tariffs that affected
86% of its material spending at the time. Since then, the company
has increased prices to partially mitigate tariffs and shifted some
production to Vietnam, Korea, and the Philippines. As of 2020, its
material spending affected by tariffs was reduced to 74%. We expect
it will further continue this supply chain shift to reduce exposure
to tariffs, though this could also result in temporary
inefficiencies and disruption as production ramps up in new
territories.
Visual Comfort has also been affected by the global rebound in
consumer demand. Though it has diverse ports of entry across the
U.S. that reduce bottlenecks, it also faces higher shipping costs.
S&P said, "Additionally, copper and other metal prices have
increased. The company already increased prices in 2021, and we
expect that to continue to address rising costs. We expect
consumers will be willing to absorb price increases if demand
remains strong, particularly in premium/ultra-premium products."
S&P said, "We believe financial sponsor ownership will keep
leverage over 5x in the long term. We continue to believe that the
new group of financial sponsor owners and existing owners will
continue to manage leverage over the longer term at 5x or above. We
believe the sponsors would prioritize reinvestment in the business,
particularly through opening more Circa showrooms, or potential
acquisitions to further expand its scale and accelerate growth over
debt prepayment.
"The negative outlook reflects our expectation that we could
downgrade the company over the next 12 months if we expect leverage
would be maintained above 6.5x."
Downside scenario
S&P believes this could happen if:
-- The U.S. housing market weakens and consumer demand for the
company's products falls substantially, leading to sustained
declines in revenues, EBITDA margin contraction, sustained leverage
above 6.5x, and minimal free cash generation; or
-- The company adopts a more aggressive financial policy through
debt funded acquisitions or dividends.
Upside scenario
S&P could revise the outlook to stable if:
-- S&P expects the company to deleverage to below 6.5 within
fiscal 2022 through organic earnings and top-line growth, while
continuing to generate strong free cash flows; and
-- It demonstrates prudent financial policies by not significantly
leveraging up for an acquisition or dividend.
VOLUNTEER MOTORSPORTS: Taps Christie Jennings as Accountant
-----------------------------------------------------------
Volunteer Motorsports, LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Tennessee to hire Christe
Jennings and her firm, Jennings Group EA, Inc., to prepare its tax
returns.
The Debtor paid $1,000 to the firm and expected the total costs to
be under $2,000.
Ms. Jennings disclosed in a court filing that she is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
Ms. Jennings holds office at:
Christe Jennings
Jennings Group EA, Inc.
1567 N. Eastman Road, Suite 15
Kingsport, TN 37664
Phone: 423.408.2106
Email: cj@jenningsgroupea.com
About Volunteer Motorsports
Volunteer Motorsports, LLC -- http://volunteerspeedway.com-- is a
Bulls Gap, Tenn.-based company that owns properties, including a
64.3-acre tract improved by a 4/10 mile dirt race track, spectator
grandstands, shop and office buildings, fan indoor suite building,
and officials tower. The properties are valued at $2.5 million.
Volunteer Motorsports filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tenn. Case. No.
21-50272) on March 9, 2021. Landon Stallard, managing member,
signed the petition. At the time of the filing, the Debtor
disclosed $2,606,702 in assets and $1,808,173 in liabilities.
Dean Greer, Esq., of Dean Greer& Associates and Christe Jennings of
Jennings Group EA, Inc. serve as the Debtor's legal counsel and
accountant, respectively.
WCG PURCHASER: S&P Affirms 'B' ICR on Strong Performance
--------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating and
issue-level ratings on WCG Purchaser Corp. S&P also affirmed its
'B' issue-level rating on WCG's first-lien debt; the recovery
rating on this debt remains '3'.
WCG Purchaser announced plans to acquire a leader in clinical trial
solutions (CTS) for cognitive and central nervous system (CNS)
therapies. This follows significant spending on two acquisitions
earlier this year. This pace of acquisition is more rapid than S&P
expected.
S&P said, "Our stable outlook on WCG reflects our expectation that
the company will grow annual revenues by about 25% in 2021 and 15%
in 2022, while maintaining stable margins. Additionally, we
anticipate that the company will generate free cash flow to debt of
greater than 2.5% and sustain leverage of more than 6.5x over the
next two years.
"We expect the acquisition will complement WCG's existing offerings
and enhance its competitive advantage despite the presence of
several competitors in this area. The target's business is focused
on electronic clinical outcome assessment (eCOA) and electronic
patient reporting outcome (ePRO) for clinical trials focused on
central nervous system (CNS) drugs. We believe there is substantial
competition from larger competitors with greater financial
resources, but view WCG's acquisition as strengthening its
businesses by further broadening WCG's offerings that help large
contract research organizations and pharmaceutical customers
optimize their clinical research trials. Moreover, we believe
CNS-related trials can be complicated by the somewhat subjective
nature of measured outcomes, which is a niche area of
specialization of the target. More broadly we believe the company's
strategy of broadening service offerings deepens relationships with
customers and provides substantial cross-selling opportunities with
its other service offerings.
"The 'B' rating is constrained by WCG's limited scale, narrow
focus, and high adjusted leverage. The company's market leading
position in the institutional review board (IRB) space and
differentiated offerings and leadership in several niche segments
within the clinical trial services (CTS) segment provide
above-average profitability and support robust free cash flow
generation. Still, we expect WCG's adjusted debt leverage will
remain above 6.5x over the next two years as a result of the
financial policies of the private equity owner. More specifically,
we expect the company to continue pursuing a steady cadence of debt
financed acquisitions that will preclude substantial deleveraging.
"As a leading provider of IRB services, WCG benefits from a strong
reputation in the industry, an extensive network of relationships
across the pharmaceutical industry, and the trend of pharmaceutical
companies outsourcing noncore activities. We believe there are
moderate barriers to competition in the IRB business, including
Association for the Accreditation of Human Research Protection
Programs (AAHRPP) accreditation, and that the company has more
limited negotiating power with clients within the CTS division.
Given the multiyear contracts with customers, and a highly variable
cost structure, we view the company's profitability and cash flow
generation as relatively stable and predictable. We believe the
greatest long-term risk is if the company's largest customers
decide to insource CTS services, or leverage their size to insist
on lower pricing, particularly in the event of material pressure on
drug prices in the U.S.
"We view adverse changes to the regulatory environment as a risk
for WCG. The company benefits from extensive global regulatory
oversight on clinical trials. Policy simplification or
international regulatory harmonization could reduce barriers to
competition and make insourcing easier for its customers.
Additionally, in 2020 the U.S. Government Accountability Office
opened an investigation into the IRB industry, particularly
providers owned by private-equity sponsors, over concerns about
ethical standards and the ability to keep clinical trial research
safe for participants. Given the company's long history and strong
reputation in the industry, we think it is unlikely that any
material lapses will be found. Furthermore, we believe that more
than 70% of the IRB market is handled by private equity-owned
firms, thus transitioning away from a for-profit IRB system would
likely be disruptive to the pharmaceutical industry, and an
unlikely outcome.
"Our stable rating outlook on WCG reflects our expectation the
company will grow annual revenues by about 25% in 2021 and 15% in
2022, while maintaining stable margins. Additionally, we anticipate
the company will generate free cash flow to debt of greater than
2.5% and sustain leverage of more than 6.5x over the next two
years.
"We could lower the rating if we expect the ratio of free cash flow
to debt will be sustained below 2.5%. We believe this scenario
could unfold if WCG experiences a significant increase in
competition, operational challenges, or acquisitions-related
integration disruptions, or if the company materially increases
leverage relating to debt-financed acquisitions.
"Although unlikely over the next 12 months given our expectations
that financial sponsor owners will keep leverage elevated, we could
consider an upgrade if we expect leverage to be sustained below
5x."
WELLPATH HOLDINGS: Moody's Hikes CFR to B2, Outlook Stable
----------------------------------------------------------
Moody's Investors Service upgraded the ratings of Wellpath
Holdings, Inc. including the 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 the company's senior secured first lien
bank credit facilities to B1 from B2, and senior secured second
lien term loan to Caa1 from Caa2. The outlook remains stable.
The upgrade of the Corporate Family Rating to B2 reflects
meaningful improvement in Wellpath's performance over the last
several years, reflected in a substantial reduction in financial
leverage (5.5x as of March 31, 2021 on Moody's adjusted basis).
Moody's expects modest improvement in metrics supported by
mid-single digit organic growth and reduction in non-recurring
expenses, over the next 12-18 months. The upgrade also reflects
Moody's expectations of sustained good liquidity, including healthy
free cash flow generation in excess of $50 million per annum.
Rating Actions:
Upgrades:
Issuer: Wellpath Holdings, Inc.:
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Sr. Secured First Lien Bank Credit Facilities, Upgraded to B1
(LGD3) from B2 (LGD3)
Sr. Secured Second Lien Term Loan, Upgraded to Caa1 (LGD5) from
Caa2 (LGD5)
Outlook Actions:
Issuer: Wellpath Holdings, Inc.:
Outlook, Remains Stable
RATINGS RATIONALE
Wellpath's B2 Corporate Family Rating (CFR) broadly reflects
Moody's expectation that the company will operate with moderately
high financial leverage. Moody's estimates adjusted debt to EBITDA
of approximately 5.5 times for the twelve months ended March 31,
2021, pro forma for addbacks related to non-recurring expenses. The
rating also incorporates business risks associated with the
correctional healthcare segment, as well as Moody's belief that
Wellpath will pursue an aggressive growth strategy, including
acquisitions, under private equity ownership. However, the ratings
benefit from Wellpath's scale and good diversity across customers,
geographies, and business segments, as well as strong market
position in the lower risk public jails segment. The ratings also
reflect Moody's expectation that the company's good liquidity
profile will continue to be supported by positive free cash flow,
as the business is characterized by minimal bad debt expense and
modest capital investment needs.
Social and governance considerations are material to Wellpath's
credit profile. Wellpath will remain exposed to the social risks of
providing health care and related services in correctional
facilities to a highly vulnerable patient base. There is ongoing
legislative, political, media and regulatory focus on ensuring the
delivery of medically appropriate care to this patient base.
Effectively managing the cost, quality and continuity of providing
healthcare in correctional facilities is an ongoing challenge and
presents unique complexities. Any weakness in providing healthcare
services - real or perceived - can negatively affect Wellpath's
reputation and ability to attract and sustain clients at profitable
rates.
With respect to governance, Moody's expects financial strategy to
be aggressive under private equity ownership, and that the company
could incur debt to fund acquisitions if a suitable opportunity
arose.
The stable ratings outlook reflects Moody's expectation of modestly
improving credit metrics and good liquidity, offset by moderately
high financial leverage. The stable outlook also reflects Moody's
expectation for reduction in non-recurring expenses, over the next
12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if Wellpath continues to demonstrate
growth in revenues and profitability. Quantitatively, debt/EBITDA
sustained below 4.5x and free cash flow to debt of at least 5%, on
a sustained basis, could support an upgrade. The company would also
need to maintain its good liquidity.
Moody's could downgrade the ratings if the company's liquidity were
to erode, or free cash flow was to turn negative for a sustained
period. Quantitatively, ratings could be downgraded if Moody's
expects debt/EBITDA to be sustained above 5.5 times for an extended
period.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Wellpath Holdings, Inc. ("Wellpath"), headquartered in Nashville,
Tennessee, provides medical, dental, and behavioral health services
to patients in local detention facilities, federal and state
prisons and behavioral healthcare facilities. Wellpath is privately
owned by H.I.G. Capital. The company generated revenues of
approximately $1.6 billion for the twelve months ended March 31,
2021.
WINDSTREAM SERVICES: Fitch Gives FirstTime 'B' IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has assigned a first time Long-Term Issuer Default
Rating of 'B' to Windstream Services LLC (WIN) and Windstream
Holdings II, LLC. The Rating Outlook is Stable. Fitch has also
assigned 'BB'/'RR1' rating to the company's first lien secured debt
comprised of super senior revolving facility, first lien term loan
and 7.75% first lien notes.
Windstream's capital structure provides some financial flexibility
as the company accelerates fiber deployment across its Kinetic
footprint. The upgrade will be funded by Uniti as part of a
settlement agreement providing a total of $1.75 billion in funding
over the next 10 years. WIN will pay Uniti rent incremental to the
existing master lease payments.
Adjusted gross leverage is expected to remain around the mid-4x
range over the next two years. WIN's ratings also reflect secular
declines in legacy enterprise and wholesale revenues and efforts to
offset those with growing strategic revenue coupled with cost-take
out measures that will support EBITDA margins over the rating
horizon.
KEY RATING DRIVERS
Improved Capital Structure Post-Emergence: Windstream's 2020 gross
leverage (total debt/ EBITDA) reduced significantly to
approximately 2.2x as the company emerged from Chapter 11
bankruptcy in September 2020 with over $4 billion of reduced debt.
However, Fitch evaluates the company's leverage on a lease-adjusted
basis since a significant portion of WIN's assets are leased from
Uniti (applying an 8x multiple to the master lease payment). Fitch
projects gross adjusted leverage (total adjusted debt/EBITDAR) will
remain near mid-4x over the forecast. The improved balance sheet
provides WIN financial flexibility to pursue increased spending on
fiber deployment and gain market share.
Revenue Pressures Continue: Windstream continues to experience
pressure particularly in Enterprise segment due to declining
legacy-products-related revenue and effects of competition.
However, the strategic Enterprise revenue, comprised of SDWAN and
UCaaS offerings, continues to grow in double digits and offset some
of these underlying pressures. Fitch's base case assumes Enterprise
revenue declines in high single digits in 2021 moderating to
mid-single-digits by 2023 supported by growth in strategic revenue.
Consumer revenues have grown over the past year, aided by sustained
broadband customer growth over the past three years.
High Strategic Execution Risk: Fitch believes there is a meaningful
execution risk to the company's strategy to contain revenue
declines and grow EBITDA over the next few years. While there are
relatively low risk opportunities such as interconnection costs
take-out that will support EBITDA, WIN's ability to gain
residential market share through increased network investments will
be a key driver for future revenue growth. In Fitch's view,
Windstream has limited capacity to mitigate execution risks while
still deleveraging.
GCI Led Increased Spending: As part of the settlement agreement
with Uniti, the latter will reimburse WIN a total of $1.75 billion
in growth capital investments (GCI) through 2030, and pay
Windstream about $400 million over five years, at an annual
interest rate of 9%. The original master lease agreement is
bifurcated into two separate agreements for ILEC and CLEC
facilities, however, the combined rent payment remains the same as
the existing agreement (approximately $670 million annually). GCI
reimbursements will be critical to support WIN's fiber to the home
(FTTH) investment strategy that aims to drive 1GB speed to
approximately half of its ILEC footprint, roughly 2 million homes
over the next five years.
Cost Savings Support Margins: Windstream continues to optimize
costs including realization of cost savings from interconnection
expenses (i/c expenses) as it transitions away from legacy
products. During 2020 and 2019, i/c expenses reduced averaging in
mid-teens. WIN launched a three-year TDM exit plan in 2020 to
migrate almost all its CLEC customers off of the TDM network to
newer technologies. Fitch believes i/c cost savings along with
additional identified cost saving opportunities will support EBITDA
margins over the rating horizon.
DERIVATION SUMMARY
Windstream is a hybrid in that it has characteristics of both an
incumbent operator with its Kinetic business unit (ILEC business)
operating in primarily rural areas in 18 states and as a business
services provider with its Enterprise and Wholesale units (CLEC),
which compete nationally.
In comparison to Frontier Communications Holdings, LLC
(BB-/Stable), Windstream has less exposure to the residential
market. The residential market held up relatively well during the
coronavirus pandemic but continues to face secular challenges. WIN
derives approx. 25% of revenues from consumers whereas Frontier
generates about 50% of consumer revenues. However, Frontier has a
slightly larger scale than Windstream and operates at a lower debt
leverage on a lease adjusted basis. Both Frontier and WIN have
similar EBITDA(/R) margins on a like-to-like basis, however,
Frontier exhibits a stronger FCF profile.
In the enterprise service market, Windstream has a weaker
competitive position based on scale and size of its operations in
the enterprise market. Larger companies, including AT&T Inc.
(BBB+/Stable), Verizon Communications Inc. (A-/Stable), and Lumen
Technologies, Inc. (BB/Stable), have an advantage with national or
multinational companies given their extensive footprints in the
U.S. and abroad. Besides scale, these companies operate at a lower
leverage and have better financial flexibility and FCF profile.
KEY ASSUMPTIONS
-- Fitch expects near mid-single-digit revenue declines in 2021
and 2022 due to continued pressures in Enterprise and
Wholesale segments. Kinetic segment is expected to grow in low
single digits in 2021, but decline in 2022 as CAF-II funding
rolls off and is partly compensated by RDOF related funding.
-- EBITDA margins to remain stable in 21.5% to 22.5% range over
the next two years. The margins are expected to dip in 2022
due to the CAF funding step down and expected to normalize in
2023. The growth in EBITDA margins will be supported by
continued interconnection cost take-outs and other cost saving
measures.
-- No dividends are assumed over the forecast.
-- Fitch expects adjusted leverage (total adjusted debt/EBITDAR)
to remain in mid to low 4x range.
Recovery
-- The recovery analysis assumes that Windstream would be
reorganized as a going-concern in bankruptcy rather than
liquidated. Fitch has assumed a 10% administrative claim. The
revolving facility is assumed to be fully drawn.
-- Going concern (GC) EBITDA reflects Fitch's view of a
sustainable, post-reorganization EBITDA level, upon which
Fitch bases the evaluation of the company.
-- The reduced EBITDA could come about due to company's inability
to grow consumer and/or strategic business revenue that is
sufficient to offset declines in legacy revenue. These
pressures could stem from competitive pressures, an
unsuccessful fiber deployment strategy or protracted pressures
on enterprise revenue. EBITDA declines faster than
anticipated, eroding benefits from cost cutting measures.
-- An EV multiple of 4.5x EBITDA is applied to the GC EBITDA to
calculate a post-reorganization enterprise value. The choice
of this multiple considered the following factors:
-- The historical bankruptcy case study exit multiples for most
telecom companies ranged from 3x-7x, with a median of 5.2x.
-- Windstream emerged from bankruptcy in 2020 with a
reorganization multiple of roughly 3.5x. Fitch used a 4.5x
multiple to reflect Windstream's improved capital structure
(reduced debt levels) following the recent restructuring and
the strategic focus on fiber spending to increase market
share.
-- The revolver is assumed to be fully drawn. The recovery
analysis produces Recovery Ratings of 'RR1' for the all
secured debt, reflecting strong recovery prospects (100%).
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Revenue stabilization achieved through a) continued growth in
broadband subscribers as a result of increased GCI spending
and b) expansion in strategic enterprise revenue.
-- Successful execution on cost reduction plans, resulting in
EBITDA margins sustained in low to mid 20s range and
consistently positive FCFs.
-- Adjusted leverage, defined as total adjusted debt/ operating
EBITDAR, sustained below 4.0x or FFO leverage sustained below
4.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Weakening of revenue and EBITDA profile due to competitive and
business conditions. Any concerns or execution risks around
realization of synergies or cost savings will negatively
impact the CO.
-- Aggressive shareholder policies (e.g. dividend recaps)
resulting in negative FCFs (adjusted for Uniti payments) on a
sustained basis.
-- FFO Interest Coverage sustained 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
Fitch believes Windstream has sufficient liquidity supported by
cash balances and availability under the $500 million revolver. As
of March 31, 2021, the revolving facility was undrawn. There are no
significant maturities in the near term.
Windstream's capital structure consists of exit financing comprised
of: (a) a $500 million "first out" senior secured revolving
facility, (b) a $750 million term loan facility, and (c) $1,400
million of senior secured notes. The revolver matures on Sept. 21,
2024. The term loan amortizes at the rate of 1% annually and
matures on Sept. 21, 2027. The 7.75% first lien notes are due on
Aug. 15, 2028.
The first lien obligations under both the credit agreement and the
indenture are secured by substantially all assets of the company
and its guarantor subsidiaries. The credit facility is also
guaranteed by Windstream Holdings II, LLC. The revolver includes a
financial maintenance covenant of 3.5x total net leverage ratio.
Windstream's settlement agreement with Uniti has a 3.0x total
leverage incurrence covenant with respect to Uniti's GCI commitment
obligations. The settlement agreement also provides that Uniti will
not be required to comply with its GCI funding commitment if
Windstream's total leverage ratio exceeds 3.5x (the maintenance
leverage covenant) and Windstream breaches certain conditions on
debt incurrence, dividends and acquisitions amongst other
provisions as provided in the agreement. The maintenance and
incurrence covenant do not apply at certain rating levels, as
defined in the agreement.
ISSUER PROFILE
Windstream offers bundled broadband, voice, digital television and
security solutions to consumers primarily in rural areas in 18
states. As it transforms into an advanced, nationwide network
communications provider, it provides data, cloud solutions, unified
communications and managed services to enterprise clients.
Windstream's fiber-optic network spans approximately 170,000
miles.
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.
WJA ASSET: August 18 TD Opportunity's Plan Confirmation Hearing Set
-------------------------------------------------------------------
On June 16, 2021, the U.S. Bankruptcy Court for the Central
District of California conducted a hearing to consider approval of
the Disclosure Statement Describing Chapter 11 Plan of Liquidation
of TD Opportunity Fund, LLC proposed by TD Opportunity Fund, LLC, a
California limited liability company and a Debtor Affiliate of WJA
Asset Management, LLC.
On June 17, 2021, Judge Scott C. Clarkson approved the Disclosure
Statement and ordered that:
* Aug. 18, 2021, at 1:30 p.m. is the hearing to consider
confirmation of the Chapter 11 Plan of Liquidation of TD
Opportunity.
* July 23, 2021, at 5:00 p.m. is fixed as the last day to
submit Ballots accepting or rejecting the Plan.
* July 23, 2021, is fixed as the last day to file any
objection to confirmation of the Plan.
* Aug. 4, 2021, is fixed as the last day for the Debtor to
file and serve its memorandum of points and authorities in support
of confirmation of the Plan and in response to any objections to
confirmation of the Plan.
* Aug. 11, 2021, is fixed as the last day for any objecting
party wishing to reply to the Debtor's brief in support of
confirmation of the Plan to file and serve its reply.
A copy of the order dated June 17, 2021, is available at
https://bit.ly/3djP4dh from PacerMonitor.com at no charge.
Attorneys for the Debtors:
SMILEY WANG-EKVALL, LLP
Lei Lei Wang Ekvall
Philip E. Strok
Kyra E. Andrassy
Robert S. Marticello
3200 Park Center Drive, Suite 250
Costa Mesa, California 92626
Telephone: 714 445-1000
Facsimile: 714 445-1002
E-mail: lekvall@swelawfirm.com
pstrok@swelawfirm.com
kandrassy@swelawfirm.com
rmarticello@swelawfirm.com
About WJA Asset Management
Luxury Asset Purchasing International, LLC, et al., are part of a
network of entities or "Funds" formed to offer a range of
investment opportunities to individuals. Many of the existing
funds are performing and some Funds had substantial gains. However,
certain Funds, i.e., those invested in private trust deeds secured
by real estate, suffered losses.
William Jordan Investments, Inc. ("Advisor"), is a registered
investment advisor. Laguna Hills, California-based WJA Asset
Management, LLC ("Manager"), is the managing member of Luxury, et
al. William Jordan was the president and sole owner of Advisor and
was the sole member and manager of Manager.
On May 18, 2017, Luxury and its affiliates filed voluntary
petitions under Chapter 11 of the United States Bankruptcy Code. On
May 25, 2017, four other affiliated filed voluntary Chapter 11
petitions. On June 6, 2017, CA Real Estate Opportunity Fund III
filed its Chapter 11 petition. The Debtors' cases are jointly
administered under Bankr. C.D. Cal. Lead Case No. 17-11996, and the
Debtors continue to operate their businesses and manage their
affairs as DIP.
Pursuant to court orders, Howard Grobstein is now serving as the
chief restructuring officer of the Debtors and Mr. Jordan no longer
has any ongoing role in the Debtors' operations.
At the time of the filing, WJA estimated assets of less than
$500,000 and liabilities of $1 million to $10 million.
Judge Scott C. Clarkson presides over the cases.
Lei Lei Wang Ekvall, Philip E. Strok, Robert S. Marticello, and
Michael L. Simon, at Smiley Wang Ekvall, LLP, are serving as
counsel to the Debtors. Ann Moore of Norton Moore Adams has been
tapped as special counsel. Elite Properties Realty is the broker.
WOK HOLDINGS: Moody's Hikes CFR to Caa1, Outlook Stable
-------------------------------------------------------
Moody's Investors Service upgraded Wok Holdings Inc.'s corporate
family rating to Caa1 from Caa2 and probability of default rating
to Caa2-PD from Caa3-PD. Moody's also upgraded Wok Holdings' senior
secured bank credit facilities to Caa1 from Caa2. The ratings
outlook is stable.
"The upgrade and stable outlook reflects our expectation that the
gradual improvement in same store sales will continue as government
restrictions are scaled back driving higher earnings and result in
lower leverage, improved coverage and stronger liquidity over
time." stated Bill Fahy, Moody's Senior Credit Officer. "However,
the ratings and outlook also consider the company's current high
leverage and weak interest coverage with an inability to cover
interest expense on an EBIT basis." Fahy added.
Upgrades:
Issuer: Wok Holdings Inc.
Corporate Family Rating, Upgraded to Caa1 from Caa2
Probability of Default Rating, Upgraded to Caa2-PD from Caa3-PD
Gtd Senior Secured First Lien Term Loan, Upgraded to Caa1 (LGD3)
from Caa2 (LGD3)
Gtd Senior Secured First Lien Revolving Credit Facility, Upgraded
to Caa1 (LGD3) from Caa2 (LGD3)
Outlook Actions:
Issuer: Wok Holdings Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Wok Holding's credit profile is constrained by its high leverage
and weak interest coverage driven in large part by government
restrictions in response to the coronavirus pandemic which are
being scaled back in a number of states. For the LTM period ending
March 30, 2021, debt to EBITDA was about 7.5 times and EBIT to
interest was around 0.5 times. The rating also considers the
company's high level of capex expected for new unit growth and
remodel initiatives in 2021 which will result in a free cash flow
deficit in 2021. Wok Holdings benefits from its high level of brand
awareness within the Asian cuisine sector of the restaurant
industry, distribution of its restaurants across major MSA's and
the material growth of its off-premise business including third
party delivery. The ratings and outlook also consider its adequate
liquidity which was bolstered in the 1Q21 with a $35 million equity
contribution from current owners and will allow it to support the
higher capital spending in 2021.
The stable outlook reflects Moody's expectation that the gradual
improvement in same store sales will continue driving higher
earnings and result in lower leverage, improved interest coverage
and stronger liquidity over time. The stable outlook also
anticipates that the company maintains at least adequate
liquidity.
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.
Wok Holdings' 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 impact brand image and consumers
view of the brand overall.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A higher rating would require a sustained improvement in operating
performance, liquidity and credit metrics, particularly after
restrictions on in-restaurant dining are scaled back or eliminated
through-out the US. Specifically, an upgrade would require at least
adequate liquidity and debt to EBITDA sustained below 6.5x and EBIT
to interest expense sustained around 1.0x.
Ratings could be downgraded should Wok Holdings be unable to
strengthen credit metric from current levels or should there be any
deterioration in liquidity.
Wok Holdings operates restaurants under the brand name P.F. Chang's
China Bistro (Bistro) in the casual dining segment of the
restaurant industry. Annual revenue were approximately $700 million
for the LTM period ending March 30, 2021. Wok Holdings is owned by
TriArtisan Capital Advisors LLC and Paulson & Co Inc.
The principal methodology used in these ratings was Restaurant
Industry published in January 2018.
WYNDHAM HOTELS: S&P Places 'BB' ICR on CreditWatch Positive
-----------------------------------------------------------
S&P Global Ratings placed all ratings on Wyndham Hotels & Resorts
Inc. on CreditWatch with positive implications, including the 'BB'
issuer credit rating.
S&P plans to resolve the CreditWatch over the coming months and
could raise the issuer credit rating one notch to 'BB+' once it has
greater certainty the anticipated recovery in lodging demand can
translate into material deleveraging in 2021 and 2022.
The CreditWatch placement reflects robust year-to-date recovery in
the lodging industry, particularly for midscale and economy hotels.
S&P said, "We believe this could result in adjusted debt to EBITDA
in the low-4x area in 2021 for Wyndham, with the likelihood of
additional improvement to the 3.5x-4x range in 2022. Based on
recent trends, we revised our U.S. lodging industry forecast for
2021 RevPAR to be 25%-35% below 2019 levels, and we believe Wyndham
will outperform the better end of this range in 2021 and possibly
achieve close to full RevPAR recovery in 2022 compared to 2019."
Wyndham experienced a more moderate revenue decline in 2020
compared to the lodging industry because of the company's exposure
to economy and midscale price segments, which totaled about 88% of
the company's rooms base as of March 2021. These price segments
demonstrated resilience during the pandemic by catering to
essential workers, traveling medical professionals, construction
crews, and small group demand. A significant portion of Wyndham
franchisees since late 2020 have been and will continue to be
profitable because the hotels have a primarily select-service
operating model and can achieve break-even profitability at lower
occupancy levels than higher chain scale hotels, and partly because
Wyndham relaxed brand standards and postponed fee collection to
support hotel owners' financial health. Furthermore, issuers with
business models that generate a significant majority of EBITDA from
franchised or managed hotels, such as Wyndham, have experienced
less strain on credit metrics and will rebound more quickly because
of high EBITDA margin and strong cash flow conversion. Wyndham has
retained its strong EBITDA margin partly by cutting costs in 2020,
a portion of which could remain reduced for years.
S&P said, "We believe the U.S. lodging sector may have reached an
inflection point given the good pace of U.S. vaccinations, massive
fiscal stimulus and consumer savings, and pent-up demand for
leisure travel. Leisure demand will likely be robust this summer
and could extend into 2022 as restrictions on daily activity are
lifted. Wyndham will likely be a beneficiary of this leisure
demand, since almost 70% of its room nights are sold to leisure
travelers based on 2019 results. Wyndham has low exposure to
business transient and large-group convention demand, which will
enable the company to lead the lodging recovery and restore credit
metrics sooner compared to most peers.
"The CreditWatch reflects our belief that Wyndham could restore
credit metrics to be in-line with the 'BB+' issuer credit rating in
the coming quarters if lodging demand is sustained. The CreditWatch
is also supported by the leverage cushion at the previous 'BB+'
rating that Wyndham had prior to the crisis. Wyndham's adjusted
leverage spiked significantly to 7.3x in 2020 from 3.8x in 2019,
which was reflected in our downgrade to the 'BB' issuer credit
rating in April 2020, and we could raise the rating back to
'BB+'."
Debt-financed acquisitions and financial policy will become more
important risk factors as Wyndham realizes a clear path to EBITDA
recovery.Our updated base-case forecast is that Wyndham could begin
to build some cushion against the 5x upgrade threshold by the end
of 2021. The cushion provides flexibility to make acquisitions,
which pose a risk to the restoration of credit metrics. As the
recovery becomes more visible, companies could be opportunistic and
access the favorable credit markets or use stockpiled cash balances
to complete acquisitions. A number of companies, including Wyndham,
have publicly discussed growth strategies involving acquisitions or
organic investments, and, in some cases, have stated a
prioritization of growth before shareholder capital returns. S&P's
base case does not assume any M&A activity, which if pursued, could
slow the deleveraging path.
S&P plans to resolve the CreditWatch over the coming months and
could raise the issuer credit rating one notch to 'BB+' once it has
greater certainty the anticipated recovery in lodging demand in
2021 and 2022 can translate into material deleveraging.
ZIG ZAG DOUGH: Seeks to Employ Quilling Selander as Legal Counsel
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Zig Zag Dough, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of Texas to hire Quilling, Selander,
Lownds, Winslett & Moser, P.C. to serve as legal counsel in its
Chapter 11 case.
The firm's services include:
(a) providing legal advice to the Debtor with regard to its
powers, duties and responsibilities and the continued management of
its affairs and assets under Chapter 11;
(b) preparing legal papers;
(c) preparing a status report and plan of reorganization, and
other services incident thereto;
(d) investigating and prosecuting preference and fraudulent
transfers actions arising under the avoidance powers of the
Bankruptcy Code; and,
(e) performing all other legal services for the Debtor which
may be necessary.
The firm's hourly rates are as follows:
Attorneys $200 - $425 per hour
Paralegals $100 - $135 per hour
The Debtor paid $15,000 to the law firm as a retainer fee and will
advance funds in installments not to exceed $4,000 to the firm's
trust account to replenish the amount of the retainer fee that was
applied for the attorney's fees and expenses and Chapter 11 filing
fee.
Frank Patel, Esq., an attorney at Quilling, disclosed in a court
filing that his firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Frank S. Patel, Esq.
Quilling, Selander, Lownds, Winslett & Moser, P.C.
2001 Bryan Street, Suite 1800
Dallas, TX 75201
Tel.: (214) 871-2100
Fax: (214) 871-2111
Email: fpatel@qslwm.com
About Zig Zag Dough
Fort Worth, Texas-based Zig Zag Dough, LLC owns and operates a
Mellow Mushroom franchise pizzeria and bar located at 3455 Blue
Bonnet Cir., Fort Worth, Texas. The store serves dine-in and
takeout food and alcohol.
Zig Zag Dough sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Texas Case No. 21-40798) on May 28, 2021. In the
petition signed by Kimberly Slawson, managing member, the Debtor
disclosed up to $1 million in assets and up to $10 million in
liabilities. Judge Brenda T. Rhoades oversees the case. Quilling,
Selander, Lownds, Winslett & Moser, P.C. is the Debtor's legal
counsel.
ZOHAR FUNDS: Numerous Claims Get 2nd Chance in Tilton Ch. 11 Suit
-----------------------------------------------------------------
Law360 reports that a Delaware bankruptcy judge dismissed a string
of claims Friday, June 18, 2021, in a 15-month-old Chapter 11
battle between interests of distressed-debt mogul Lynn Tilton and
bankrupt Zohar Funds holding more than $1.4 billion in Tilton
venture-related debt, but allowed repleading for a majority of
those tossed.
Judge Karen B. Owens' 63-page ruling drilled into each of the 33
counts in the complaint, filed in March of 2020 and kept under seal
until March of this year, when a 1,288-page, redacted version was
made public. Specific details of the financial stakes remain murky
because of the redactions and the courtroom closings.
About the Zohar Funds LLC
New York-based Patriarch Partners, LLC, is a private equity firm
specializing in acquisition, buyouts, and turnaround investment in
distressed American companies and brands. Patriarch Partners was
founded by Lynn Tilton in 2000. Lynn Tilton and her affiliates
held substantial equity stakes in portfolio companies, which
include iconic American manufacturing companies with tens of
thousands of employees.
The Zohar funds were created to raise money through selling a form
of notes called collateralized loan obligations to investors that
was then used to extend loans to dozens of distressed mid-size
companies, often in connection with the acquisition of those
companies out of bankruptcy.
Patriarch bought "distressed" companies via funding from a series
of collateralized loan obligations (CLOs) marketed through
Patriarch via its $2.5 billion "Zohar" funds. Tilton placed the
funds into bankruptcy in 2018 in an attempt to keep Patriarch's
portfolio from being liquidated by Zohar creditors including bond
insurer MBIA, which insured $1 billion worth of Zohar notes.
Combined debt of the funds is estimated at $1.7 billion.
Zohar CDO 2003-1, Zohar CDO 2003-1 Corp., Zohar II 2005-1, Limited,
Zohar II 2005-1 Corp., Zohar III, Limited, and Zohar III, Corp.
(collectively, the "Zohar Funds"), sought protection under Chapter
11 of the Bankruptcy Code (Bankr. D. Del. Case Nos. 18-10512 to
18-10517) on March 11, 2018. In the petition signed by Lynn
Tilton,
director, the Debtors were estimated to have $1 billion to $10
billion in assets and $500 million to $1 billion in liabilities.
Young Conaway Stargatt & Taylor, LLP, is the Debtors' bankruptcy
counsel.
*********
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