/raid1/www/Hosts/bankrupt/TCR_Public/210702.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, July 2, 2021, Vol. 25, No. 182
Headlines
218 JACKSON: Wins Continued Cash Access Until July 15
381 BROADWAY REALTY: Amends Unsecureds' Claims Pay Details
5035 N. LINCOLN: Seeks to Hire Cozen O'Connor as Bankruptcy Counsel
A & S ENTERTAINMENT: Seeks to Hire Moffa & Breuer as Legal Counsel
AIWA CORP: Hits Chapter 11 Bankruptcy Protection
AKUMIN INC: Moody's Puts B3 CFR Under Review for Downgrade
ALAMO STRATEGIC: Unsecureds to Get Share of Income for 3 Years
ALLIANCE HEALTHCARE: Akumin Deal No Impact on Moody's Caa2 CFR
AMKOR TECHNOLOGY: Fitch Assigns FirstTime 'BB' IDR, Outlook Stable
AMSTERDAM HOUSE: Continued Access to Cash Collateral OK'd
AMSTERDAM HOUSE: U.S. Trustee Appoints Creditors' Committee
APX GROUP: Moody's Rates New $900MM Unsecured Notes 'Caa1'
ARIZONA AIRCRAFT: Cash Access Thru September 30 OK'd
ASSOCIATED ASPHALT: S&P Alters Outlook to Stable, Affirms 'B-' ICR
AVADIM HEALTH: Committee Hires Fox Rothschild as Legal Counsel
AVADIM HEALTH: Committee Hires Lowenstein Sandler as Co-Counsel
AVADIM HEALTH: Committee Taps Province LLC as Financial Advisor
AVERY COMMERCIAL: Cash Access Continued Under 2nd Interim Order
AVID BIOSERVICES: Swings to $11.2 Million Net Income in Fiscal 2021
BALTIMORE HOTEL: S&P Retains 'CCC' Bond Rating on Watch Negative
BARENZ INVESTMENTS: May Use Cash Collateral Until July 12
BEAR COMMUNICATIONS: U.S. Trustee Appoints Creditors' Committee
BELOIT COLLEGE: Moody's Withdraws Ba2 Rating on Series 2016 Bonds
BLTN GROUP: Seeks to Employ Maribel Koella as Real Estate Broker
BRILL BAKERY: Brill Inc. Sale No Impact on Moody's 'Caa2' CFR
CALERES INC: Moody's Affirms B1 CFR & Alters Outlook to Positive
CALIFORNIA-NEVADA METHODIST: Seeks Oct. 12 Exclusivity Extension
CARVER BANCORP: Incurs $4 Million Net Loss in Fiscal 2021
CEDAR FAIR: S&P Places 'B-' Issuer Credit Rating on Watch Positive
CHARTER NEXT: S&P Rates Senior Secured Credit Facilities 'B'
CHICAGO, IL: Fitch Affirms BB+ Rating on 2013 Motor Fuel Tax Bonds
CINEMA SQUARE: Cash Collateral Deal with Trustee OK'd
CITY WIDE COMMUNITY: Seeks to Hire Capstone as Property Manager
CITY WIDE COMMUNITY: Seeks to Hire Neal A. Walker as Accountant
COMMERCIAL VEHICLE: Moody's Rates New First Lien Loans 'B2'
CORP GROUP BANKING: Bonds Dive for 2nd Day After Chapter 11 Filing
COTTAGE CAR WASH: Gets Interim Cash Access Thru September 30
COUNCIL FOR AID: Case Summary & 6 Unsecured Creditors
COUNCIL FOR AID: Seeks Cash Collateral Access
DAVE & BUSTER'S: Considers Bankruptcy With New Recovery Plan
DELCATH SYSTEMS: Has 7.3 Million Shares Outstanding as of June 28
DIOCESE OF ROCHESTER: Committee Seeks to Hire Valuation Expert
ELASTIC NV: Moody's Assigns First Time B1 Corporate Family Rating
ELECTRONIC DATA: May Use Truist Bank's Cash Thru August 6
ENTRAVISION COMMUNICATIONS: S&P Affirms 'B' ICR, Outlook Stable
FIELDWOOD ENERGY: Court Confirms Eighth Amended Joint Ch. 11 Plan
FIGUEROA MOUNTAIN: Cash Collateral Deal with White Winston OK'd
FIRST STUDENT: Moody's Assigns Ba3 CFR & Rates Secured Notes Ba3
FLYNN CANADA: Moody's Assigns First Time 'B1' Corp Family Rating
GIBSON FARMS: Gets Court Nod to Use Cash Collateral Thru July 31
GIRARDI & KEESE: Secured $1.5M PPP Loan Before Chapter 7 Filing
GTM REAL ESTATE: Seeks to Increase Rental Receipts With LSC
H-BAY MINISTRIES: S&P Lowers Rating on Senior Living Bonds to 'CC'
HANDL NEW YORK: Seeks Cash Collateral Access
HARI 108: Case Summary & 15 Unsecured Creditors
HARI 108: Seeks to Use Cash Collateral
HERTZ GLOBAL: Emerges from Ch. 11 Bankruptcy With Changes to Board
HOMES BY KC: Seeks to Hire Trend Atlanta as Real Estate Broker
ILPEA PARENT: S&P Affirms 'B' LT ICR Following Debt Extension
INDIVIOR FINANCE: Moody's Gives B2 Rating on New $250MM Term Loan
INNOVATIVE WATER: S&P Upgrades ICR to 'B-', Outlook Stable
INSPIREMD INC: Amends Bylaws to Change Quorum Requirement
INTERPACE BIOSCIENCES: Extends Maturity of Ampersand Note to Aug 31
INVESTVIEW INC: Swings to $565,793 Net Income in Fiscal 2021
J.F. GRIFFIN: Gets OK to Use Cash Collateral Thru August 12
JACKSON DURHAM: Seeks Approval to Hire C-Suite Now as Accountant
JACKSON DURHAM: Taps Dunham Hildebrand as Bankruptcy Counsel
JACKSONVILLE ADVANCED: Court OKs Cash Collateral Use Thru Aug. 12
JAMES C. LEWIS: Seeks to Hire Bultynck & Co as Accountant
JP MORGAN 2021-8: Moody's Assigns (P)B3 Rating to Cl. B-5 Certs
JUDSON COLLEGE: Plans to Sell Campus as Part of Deal With Creditor
KUMTOR GOLD: Seeks to Employ Young Conaway as Co-Counsel
KUMTOR GOLD: Seeks to Hire Stretto as Administrative Advisor
KUMTOR GOLD: Taps Sullivan & Cromwell as Lead Bankruptcy Counsel
LATAM AIRLINES: Creditors Seek Cayman Subsidiaries Consolidation
LEVELBEST LLC: Seeks Approval to Hire an Appraiser
LUCKY BUCKS: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
LUTHERAN SOCIAL SERVICES: U.S. Trustee Unable to Appoint Committee
MACK-CALI REALTY: Fitch Lowers LT IDR to 'B', Outlook Negative
MAPLE MANAGEMENT: Has Cash Collateral Access Thru August 11
MATT'S SMALL ENGINE: Taps Allen P. Turnage as Legal Counsel
MAUNESHA RIVER: U.S. Trustee Appoints Creditors' Committee
MCLEAN AFFILIATES: Fitch Affirms BB+ Ratings on 2020A/B1/B2 Bonds
MIDCAP FINANCIAL: Fitch Gives 'BB(EXP)' to $400MM Unsec. Debt
MIDNIGHT MADNESS: Hires Wm. F. Comly & Son as Marketing Broker
MIDNIGHT MADNESS: Seeks to Hire Flaster Greenberg as Attorney
MIDTOWN CAMPUS: All Classes to Be Paid in Full After Plan Sale
MUKEUNJI II: Case Summary & 3 Unsecured Creditors
NAHAUL INC: May Use Cash Collateral Until August 6
NATURALSHRIMP INC: Incurs $3.6 Million Net Loss in Fiscal 2021
NEW HAPPY FOOD: Seeks to Use Cash Collateral
NIEMAN PRINTING: Wins Interim Access to Cash Collateral
NS8 INC: Bankruptcy Estate Can Depose Ex-Exec on Certain Conditions
NUVERRA ENVIRONMENTAL: All 3 Proposals Approved at Annual Meeting
OREGON CLEAN ENERGY: S&P Lowers Senior Secured Debt Rating to 'B+'
PARK RIVER: Moody's Puts 'B2' CFR Under Review for Downgrade
PERFORMANCE FOOD: Moody's Affirms Ba3 CFR on Core-Mark Acquisition
POWER BAIL: Trustee, Lexington Agree on Cash Collateral Access
PROCERA I LP: S&P Alters Outlook to Stable, Affirms 'B-' ICR
PURDUE PHARMA LP: Reps Urge DOJ to Reject Sacklers' Releases
RABUN MANOR: Seeks to Hire PRC Consulting as Accountant
RECESS HOLDCO: Fitch Assigns 'BB- (EXP)' Issuer Default Rating
RGN-GROUP HOLDINGS: Hires Ashby & Geddes as Conflicts Counsel
SANTA MARIA: Seeks Approval to Hire Crone Law as Special Counsel
SEAWORLD PARKS: S&P Places 'B-' ICR on CreditWatch Positive
SERTA SIMMONS: S&P Upgrades ICR to 'CCC' Amid Restructuring Risk
SIX FLAGS: S&P Places 'B-' Issuer Credit Rating on Watch Positive
SKS CONSTRUCTION: Seeks to Hire Spiro & Browne as Legal Counsel
SONOMA PHARMACEUTICALS: Delays Filing of Fiscal 2021 Form 10-K
STARWOOD PROPERTY: Fitch Gives FirstTime 'BB+' IDR, Outlook Stable
STARWOOD PROPERTY: Moody's Gives Ba3 Rating to New Unsecured Notes
STEINWAY MUSICAL: Moody's Alters Outlook on B2 CFR to Stable
STONEWAY CAPITAL: Seeks to Hire Lazard Freres as Investment Banker
SUZLON ENERGY: U.S. Subsidiary Suzlon Wind Files for Liquidation
TELEMACHUS LLC: Unsecured Creditors Will Get 100% of Claims in Plan
TENNESSEE CLEAN: Subchapter V Plan to Pay Claims From Sale Proceeds
THEOS FEDRO: Manager Has Conflict of Interest, Pender Capital Says
TTK INVESTMENTS: Unsecureds' Recovery "Unknown" in Liquidating Plan
U-HAUL CO: Unsecured Creditors to Get Share of $2.5MM Dividend Fund
US ANESTHESIA: S&P Affirms 'B' ICR on Strong Performance
VAMCO SHEET: Seeks to Hire Leotta and Associates as Accountant
VANTAGE SPECIALTY: Moody's Alters Outlook on Caa1 CFR to Stable
VASCULAR ACCESS: Trustee Submits Liquidating Plan
VERNON 4540: CSC, JSMB Join as Plan Proponents
VICTORIA'S SECRET: Moody's Rates New $500MM Unsecured Notes 'B1'
VICTORIA'S SECRET: S&P Raises Senior Unsecured Rating to 'BB-'
VISTAGEN THERAPEUTICS: Posts $17.9 Million Net Loss in Fiscal 2021
WALTER ENERGY: KKR, Blackstone, Apollo to Face Suit
WASHINGTON PRIME: Unsecured Claims Unimpaired in Plan
WELLS FARGO: S&P Withdraws BB+ Trust Preferred Securities Ratings
WOLVERINE WORLD: Moody's Alters Outlook on Ba1 CFR to Stable
[^] BOOK REVIEW: Jacob Fugger the Rich
*********
218 JACKSON: Wins Continued Cash Access Until July 15
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Judge Lori V. Vaughan authorized 218 Jackson LLC to use cash
collateral on an interim basis until the continued hearing on the
motion set for July 15, 2021 at 10 a.m.
The Debtor may use the cash collateral to pay (a) amounts expressly
authorized by the Bankruptcy Court, including payments to the
United States Trustee for quarterly fees; (b) the current and
necessary expenses set forth in the budget, plus up to 10%
permitted variance for each line item; and (c) additional amounts
as may be expressly approved in writing by National Loan
Acquisitions Company (NLAC).
NLAC shall have perfected post-petition liens against cash
collateral to the same extent and with the same validity and
priority as the prepetition lien, without the need to file or
execute any documents as may otherwise be required under applicable
non-bankruptcy law.
A copy of the order is available for free at https://bit.ly/3w3mZNC
from PacerMonitor.com.
About 218 Jackson LLC
218 Jackson LLC sought protection under Chapter 11 of the
Bankruptcy Code on March 8, 2021 (Bankr. M.D. Fla. Case No.
21-00983). The petition was signed by Amos Vizer, member of
TwoChi, LLC. As of January 31, 2020, the Debtor had total assets
in the amount of $1,283,900 and total liabilities in the amount of
$41,287,387.
Judge Lori V. Vaughan oversees the case.
The Debtor is represented by Justin M. Luna, Esq. and Daniel A.
Velasquez, Esq., at Latham, Luna, Eden & Beaudine, LLP.
381 BROADWAY REALTY: Amends Unsecureds' Claims Pay Details
----------------------------------------------------------
Gregory Messer, as Chapter 11 Trustee of the estate of 381 Broadway
Realty Corp., submitted Third Amended Chapter 11 Plan of
Liquidation and a corresponding Disclosure Statement.
The Amended Plan discusses the Class 2 Allowed Unsecured Claims
against the Debtor, arising prior to the Filing Date. The amount of
the timely filed general unsecured claims is $91,032.9977,465.
In addition, on April 23, 2021, Communication and Security Systems,
Inc. ("CSS") filed a claim designated as Claim 13, as a general
unsecured claim in the amount of $255,833.51. CSS maintained that
they did not receive notice of the Debtor's bankruptcy filing nor
the notice of the last day to file claims against the Debtor's
Estate. The Trustee confirmed that no notice was sent to CSS and it
was proper for CSS to be allowed a timely filed claim. The Trustee
and CSS have stipulated to have the CSS Claim be deemed a timely
filed and Allowed General Unsecured Claim against the Estate in the
amount of $208,625.00. The stipulation is being presented to the
Court for approval on July 2, 2021.
Similarly, on or about June 7, 2021, Myriad Realty LLC filed a
motion seeking to allow it to have a timely filed and allowed
secured claim against this estate in the amount of $116,807.41.
Myriad maintained that they did not receive notice of the Debtor's
bankruptcy filing nor the notice of the last day to file claims
against the Debtor's Estate. The Trustee confirmed that no notice
was sent to Myriad and it was proper for Myriad to be allowed a
timely filed claim. The Trustee and Myriad have stipulated to have
the Myriad Claim be deemed a timely filed and Allowed General
Unsecured Claim against the Estate in the amount of $100,304.96.
The stipulation is being presented to the Court for approval on
July 2, 2021. Inclusive of the Claims of CSS and Myriad, the
Trustee estimates that the Allowed Unsecured Claims to be
approximately $399,962.95.
The amount of the timely filed Unsecured Claims is
$91,032.9977,465. However, if the CSS and Myriad stipulations are
approved by the Court the Allowed amount of the Unsecured Claims
will be approximately $399,962.95. As soon as reasonably
practicable after the Effective Date, after paying and reserving
funds to pay the present and future estimated Administrative
Expense Claims and the reserve for any disputed claim, the Trustee
or Plan Administrator, whichever is applicable, shall pay, from and
to the extent of the funds in the Confirmation Account, each Holder
of an Allowed Class 2 Claim, their respective pro rata Distribution
up to the amount of their respective Allowed Class 2 Claim. Such
Distribution(s) shall be in full, final and complete satisfaction,
settlement, release, and discharge of such Claim.
Distributions under the Plan will be funded by the Senior Lender
who will be providing the Senior Lender Contribution of $225,000.00
together with, if any, the proceeds from the liquidation of all
other estate assets or prosecution of Causes of Action. The Senior
Lender Contribution shall be addition to the Senior Lender's
payment of the all of the New York City Claims filed against the
Estate (Claims 6 through 10); (2) the outstanding ECB violations;
(3) real estate taxes and water charges; (4) any other senior liens
on the 381 Property; and (5) the fees that may be due FTI
Consulting, the former manager of the Debtor.
Distributions to Allowed Claimants under the Plan will be funded
from the Senior Lender Contribution. The Senior Lender Contribution
and any and all claims and Causes of Action are deemed transferred
to the Plan Administrator on the Effective Date. Distributions may
be made by the Trustee and/or the Plan Administrator by wire,
electronic transfer, check or such other method as the Trustee
and/or the Plan Administrator deems appropriate under the
circumstances.
Initial distributions made under the Plan and the Plan
Administrator are expected to occur within 3 months of the
Effective Date, although this time may be extended by the Trustee
or Plan Administrator. If the stipulations with CSS and Myriad are
approved by the Court the Trustee estimates that the distribution
to the Holders of Allowed Unsecured Claims under Class 2 will be
approximately 15%.
A full-text copy of the Disclosure Statement dated June 29, 2021,
is available at https://bit.ly/365mx6Z from PacerMonitor.com at no
charge.
Attorneys for Chapter 11 Trustee Gregory Messer:
Gary F. Herbst, Esq.
Jacqulyn S. Loftin, Esq.
Cristina M. Lipan, Esq.
LAMONICA HERBST & MANISCALCO, LLP
3305 Jerusalem Avenue, Suite 201
Wantagh, New York 11793
Tel: (516) 826-6500
About 381 Broadway Realty
381 Broadway Realty Corp. is a single asset real estate debtor (as
defined in 11 U.S.C. Section 101(51B)). It owns a real property
worth $19 million, which is located at 381 Broadway, N.Y.
381 Broadway Realty filed a Chapter 11 petition (Bankr. S.D.N.Y.
Case No. 20-12605) on Nov. 6, 2020. At the time of the filing, the
Debtor disclosed $19,021,000 in total assets and $23,119,091 in
total liabilities.
Goldberg Weprin Finkel Goldstein LLP, led by Kevin J. Nash, Esq.,
is the Debtor's legal counsel.
Gregory Messer is the Chapter 11 trustee appointed in the Debtor's
bankruptcy case. The trustee is represented by LaMonica Herbst &
Maniscalco, LLP.
5035 N. LINCOLN: Seeks to Hire Cozen O'Connor as Bankruptcy Counsel
-------------------------------------------------------------------
5035 N. Lincoln Avenue, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Illinois to hire Cozen O'Connor
to serve as legal counsel in its Chapter 11 case.
The Debtor requires the firm to:
(a) give the Debtor legal advice with respect to its rights,
powers and duties in connection with the administration of its
estate and the operation of its business;
(b) advise the Debtor with respect to asset dispositions,
including sales, abandonments, and assumptions or rejections of
executory contracts and unexpired leases, and take such actions as
may be necessary to effectuate those dispositions;
(c) assist the Debtor in the negotiation, formulation and
drafting of a Chapter 11 plan;
(d) take such actions as may be necessary with respect to
claims that may be asserted against the Debtor and property of its
estate;
(e) prepare legal documents;
(f) represent the Debtor with respect to inquiries and
negotiations concerning creditors and property of its estate;
(g) initiate, defend or otherwise participate on behalf of the
Debtor in all proceedings before the bankruptcy court or any other
court of competent jurisdiction; and
(h) perform other legal services that may be required to aid
in the proper administration of the case.
The firm's hourly rates are as follows:
Robert M. Fishman, Esq. $885 per hour
Mark L. Radtke $580 per hour
Christina M. Sanfelippo $435 per hour
Patricia M. Fredericks $295 per hour
The Debtor paid $25,000 to the law firm as prepayment for services
rendered in connection with the case.
Robert Fishman, Esq., one of the firm's attorneys who will be
handling the case, 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:
Robert M. Fishman, Esq.
Mark L. Radtke, Esq.
Cozen O'Connor
123 North Wacker Drive, Suite 1800
Chicago, IL 60606
Tel.: (312) 382-3100
Fax: (312) 382-8910
Email: mradtke@cozen.com
About 5035 N. Lincoln
Chicago-based 5035 N. Lincoln Avenue, LLC sought Chapter 11
bankruptcy protection (Bankr. N.D. Ill. Case No. 21-07043) on June
2, 2021. Kumtor Gold had between $1 million and $10 million in both
assets and liabilities as of the bankruptcy filing. The Hon.
Lashonda A. Hunt is the case judge. Cozen O'Connor is the Debtor's
legal counsel.
A & S ENTERTAINMENT: Seeks to Hire Moffa & Breuer as Legal Counsel
------------------------------------------------------------------
A & S Entertainment, LLC seeks approval from the U.S. Bankruptcy
Court for the Southern District of Florida to hire Moffa & Breuer,
PLLC as its legal counsel.
It is necessary to employ an attorney to perform ordinary and
necessary legal services and assist with the preparation of the DIP
reporting requirements.
The firm will be compensated on an hourly basis.
Moffa & Breuer does not hold or represent any interest adverse to
the Debtor and its estate, according to court filings.
The firm can be reached through:
John A. Moffa, Esq.
Moffa & Breuer, PLLC
1776 N Pine Island Rd #102
Plantation, FL 33322
Tel: 954-634-4733
Fax: 954-337-0637
Email: john@moffa.law
About A & S Entertainment, LLC
A & S Entertainment, LLC, filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
21-14020) on April 27, 2021. The petition was signed by Ciara
Latrice Jones, Claudette M. Pierre, manager. At the time of filing,
the Debtor estimated $50,000 to $100,000 in assets and $1 million
to $10 million in liabilities.
Judge Robert A. Mark presides over the case. John A. Moffa, Esq. at
MOFFA & BIERMAN represents the Debtor as counsel.
AIWA CORP: Hits Chapter 11 Bankruptcy Protection
------------------------------------------------
Chicago Business reports that Aiwa Corp., the former global stereo
brand that attempted second life as a Chicago-based startup, filed
for Chapter 11 bankruptcy protection. The boombox-maker was
running at a loss. The company has around $1.8 million in
estimated assets and liabilities, according to a filing made.
About Aiwa Corporation
Aiwa Corporation -- https://aiwa.co/ -- f/k/a Hale Devices, Inc.
965 W. Chicago Ave. Chicago, IL 60642 -- is a consumer electronics
brand that manufactures audio equipment.
Aiwa Corporation sought Chapter 11 protection (Bankr. N.D. Ill.
Case No. 21-07762) on June 22, 2021. In the petition signed by CEO
Joseph J. Born, Aiwa estimated total assets of $1,764,887 and total
liabilities of $5,818,251. The case is handled by the Honorable
Deborah L. Thorne. Jeremy C. Kleinman, of FRANKGECKER LLP, is the
Debtor's counsel.
AKUMIN INC: Moody's Puts B3 CFR Under Review for Downgrade
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Moody's Investors Service has placed the ratings of Akumin Inc.'s
on review for downgrade, including its B3 corporate family rating,
B3-PD probability of default rating, and B3 senior secured ratings.
The SGL-2 speculative grade liquidity rating remains unchanged.
The rating action follows the announcement on June 25, 2021 of an
agreement to acquire Alliance Healthcare Services, Inc.
("Alliance", Caa2 stable) in a transaction valued at $820 million,
to be funded with a combination of cash, new equity issuance and
debt financing, including at least $200 million in new unsecured
notes and alternate debt financing of up to $500 million to be
determined prior to closing of the acquisition, which Akumin
expects will occur in the third quarter of 2021.
On Review for Downgrade:
Issuer: Akumin Inc.
Probability of Default Rating, Placed on Review for Downgrade,
currently B3-PD
Corporate Family Rating, Placed on Review for Downgrade, currently
B3
Senior Secured Bank Credit Facility, Placed on Review for
Downgrade, currently B3 (LGD3)
Senior Secured 1st Lien Regular Bond/Debenture, Placed on Review
for Downgrade, currently B3 (LGD3)
Outlook Actions:
Issuer: Akumin Inc.
Outlook, Changed To Rating Under Review From Stable
The review for downgrade reflects execution risks associated with
the transformational nature of the acquisition, including the
integration of a larger-scale, lower-rated operation with a
distinct business model, and the high cost of the proposed bridge
financing, some of which is expected to remain in place when the
transaction closes. The review also takes into consideration
heightened governance risks associated with a more aggressive M&A
strategy.
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Excluding the review for downgrade, Akumin's B3 CFR reflects: (1)
modest scale and geographic concentration in Texas and Florida; (2)
high leverage; and (3) execution risk associated with an aggressive
growth strategy. The company benefits from: (1) a strong market
position and good density in its target markets; (2) a favorable
payor mix and good payor diversity; (3) a track record of
integrating acquired businesses; and (4) good liquidity.
The rating review will focus on the final capital structure,
leverage and free cash flow generation of the combined entity, as
well as potential synergies, mitigants to execution and integration
risks, and benefits of increased scale and diversification.
Instrument ratings could also change depending on the final mix of
secured and unsecured debt in the company's capital structure.
Akumin Inc., with its head office in Plantation, FL, is a provider
of diagnostic imaging services in the US states of Delaware,
Florida, Georgia, Illinois, Kansas, Pennsylvania and Texas. The
company's services include magnetic resonance imaging, computed
tomography, positron emission tomography, nuclear medicine,
mammography, ultrasound, digital radiography (X-ray), fluoroscopy
and other related procedures. Revenues are approximately US$250
million.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
ALAMO STRATEGIC: Unsecureds to Get Share of Income for 3 Years
--------------------------------------------------------------
Alamo Strategic Manufacturing Inc. filed with the U.S. Bankruptcy
Court for the Western District of Texas a Plan of Reorganization
and a corresponding Disclosure Statement dated June 29, 2021.
The Debtor has applied a conservative approach to the revenue
numbers included in the attached projections. The Debtor's current
knee and elbow pad contract is scheduled to expire in December 2021
but may extend to March 2022. The Debtor plans to submit an
application for the award of a new knee and elbow pad with the DOD.
In the event the Debtor is not awarded the new knee and elbow pad
contract, its revenue and expenses will change as the Debtor's
operations will be limited to the glove contract. If the Debtor is
awarded the new knee and elbow contract, the Debtor's revenue and
expenses should not change drastically from their current numbers.
Under either scenario, the Debtor anticipates that the recovery and
payments to creditors will not change because the Debtor will have
paid all Class 4 Claims in full by the time the current knee and
elbow pad contract expires, and only payments to the SBA, IRS and
general unsecured creditors will remain. The monthly payments to
the SBA are $731.00, the monthly payments to the IRS will be less
than $1,000 and payments to Class 5 general unsecured creditors
vary based on the Debtor's disposable income. Therefore, the
Debtor's expiring contract and ability to win a new contract does
not affect payments to creditors or feasibility of this Plan.
This Plan of Reorganization proposes to pay creditors of Alamo
Strategic Manufacturing, Inc. from cash flow from operations and/or
future income.
The Plan will treat claims as follows:
* The Class 1 claims consist of the claims of the Internal
Revenue Service. The allowed claims of the IRS will be paid through
equal monthly payments with interest at the rate of 3%. The allowed
claims of the IRS will be paid in full through monthly payments
within 5 years of the petition date.
* Class 2 consists of the Secured Claim of Panthers Capital.
Panthers Capital shall have an allowed secured claim in the amount
of $5,000.00 which shall be paid in one monthly payment of $5,000
made on the 30th day after the effective date.
* Class 3 consists of the Secured Claim of United States Small
Business Association. The SBA shall have an allowed secured claim
in the amount of $154,438.36 which shall be paid in equal monthly
installments of $731.00 at 3.75% interest commencing 30 days after
the effective date of the Plan over 30 years.
* The Class 4a claims shall include the allowed unsecured
claims of critical vendor Adjon Leather. As of the filing of the
Plan, Adjon Leather has an outstanding claim in the amount of
$134,632.91. The Debtor will make monthly payments to Adjon Leather
in the amount of $10,000.00 beginning on August 1, 2021 and
continuing on the first day of each month thereafter until the
claim is paid in full. The Debtor estimates Class 4a claims will be
paid in full by September 2022.
* The Class 4b claims shall include the allowed unsecured
claims of critical vendor Minnesota Knitting. As of the filing of
the Plan, Minnesota Knitting has an outstanding claim in the amount
of $127,053.00. The Debtor will make monthly payments to Minnesota
Knitting in the amount of $31,763.25 beginning on July 1, 2021 and
continuing on the first day of each month thereafter until the
claim is paid in full.
* The Class 4c claims shall include the allowed unsecured
claims of critical vendor SSM. As of the filing of the Plan, SSM
has an outstanding claim in the amount of $323,010.00 which
includes its allowed administrative expense claim in the amount of
$133,195.97. The Debtor will make monthly payments to payments to
SSM in the amount of $25,000.00 beginning on August 1, 2021 until
the claim is paid in full.
* The Class 5 claims shall include the allowed unsecured
claims that are not included in Class 4(a)-(c). Class 5 claimants
shall receive their pro rata share of the Debtor's monthly
disposable income for three years following the effective date. The
first distribution to Class 5 creditors will be made by the 15th
day of the month following the effective date. The Debtor shall act
as the disbursing agent for all payments made to holders of allowed
Class 5 Claims.
* Class 6a – Rene Sosa's Equity security Interests in the
Debtor. Rene Sosa shall retain his interest in the Debtor.
* Class 6b – Other Equity security holders of the Debtor.
All other existing or potential equity interests shall be
extinguished including those asserted by McKinlay Properties, LLC.
The Debtor disputes that any other equity interests are valid or
existing.
This Plan is based upon the distributions to creditor by the
Debtor, at its option, by means of one or more of the following:
(a) cash presently held by the Debtor and cash to be acquired
through the operation of its business including cash generated from
the contracts the Debtor is currently under and those contracts
that the Debtor may win at a later date; and (b) collection of
accounts receivable. Rene Sosa shall be the disbursing agent for
all distributions and plan payments.
A full-text copy of the Disclosure Statement dated June 29, 2021,
is available at https://bit.ly/3Ai2C2u from PacerMonitor.com at no
charge.
Counsel for the Debtor:
Allen M. DeBard
William R. Davis, Jr.
Langley & Banack, Inc.
745 E. Mulberry, Suite 700
San Antonio, TX 78212
Telephone: (210) 736-6600
Facsimile: (210) 735-6889
About Alamo Strategic
Alamo Strategic Manufacturing sells military gear. It is located at
700 N. Saint Mary's St., Suite 700, San Antonio, TX 78205.
The company filed for Chapter 11 bankruptcy protection (Bankr. W.D.
Tex. Case No. 21-50373) on March 31, 2021. The petition was signed
by CEO Rene H. Sosa. It estimated assets of between $0 to $50,000
and liabilities of between $1 million and $10 million.
The case is handled by Honorable Judge Craig A. Gargotta,
LANGLEY & BANACK, INC., led by Allen M. DeBard, is the Debtor's
counsel.
ALLIANCE HEALTHCARE: Akumin Deal No Impact on Moody's Caa2 CFR
--------------------------------------------------------------
Moody's Investors Service views Akumin Inc.'s (B3 review for
downgrade) acquisition of Alliance Healthcare Services, Inc. (Caa2,
Stable) as overall credit positive as it will expand the size and
scale of Alliance. However, the transformational nature of the
acquisition presents execution risks. There is no change to
Alliance's existing ratings, including the Caa2 Corporate Family
Rating, Caa2-PD Probability of Default Rating, Caa1 senior secured
first lien term loan rating, Ca senior secured second lien term
loan rating or its stable outlook.
On June 25, Akumin announced that it will acquire all outstanding
shares from Tahoe Investment Group Co., Ltd., Alliance's current
shareholder. The transaction, which represents an enterprise value
of US$820 million will close in the third quarter of 2021 subject
to regulatory approvals. After the transaction, Tahoe will become a
minority shareholder of Akumin and will hold approximately 19.99%
stake in the combined company. Moody's expects Alliance's
outstanding senior secured credit facilities to be repaid at close
and Moody's will withdraw the ratings at that time.
Alliance Healthcare Services, Inc. is a national provider of
freestanding, outsourced and joint venture healthcare services that
include outpatient radiology, oncology and interventional services,
including both mobile and fixed sites, and ambulatory surgical
centers Alliance Healthcare Services, Inc. is currently owned by
Tahoe Investment Group Co., Ltd. ("Tahoe") through its affiliated
company.
AMKOR TECHNOLOGY: Fitch Assigns FirstTime 'BB' IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has assigned first-time ratings for Amkor Technology,
Inc. with a Long-Term Issuer Default Rating (IDR) of 'BB' and a
senior unsecured rating of 'BB'/'RR4'. The Rating Outlook is
Stable. Fitch's actions affect $1.1 billion of total debt.
The ratings and Outlook reflect Amkor's leading share positions and
long-term customer relationships in semiconductor packaging markets
from ongoing investments in advanced technologies and product
breadth, secular market growth trends from customer outsourcing and
semiconductor content growth, and conservative financial profile.
Meaningful customer concentration, particularly in smartphone
markets, demand volatility related to short life cycles, and low
cash flow margins for the semiconductor sector weigh on the
rating.
Over the nearer-term, Fitch expects Amkor will benefit from a
robust and broad-based demand environment as developed economies
recover from coronavirus-related economic shutdowns. Broad-based
supply shortages may sustain heightened demand visibility through
2022 but Fitch remains concerned about double ordering, creating
the potential for an inventory correction through the supply
chain.
KEY RATING DRIVERS
Barriers to Entry: Cumulative investments and expectations for high
ongoing capital intensity should sustain barriers to entry and,
therefore, Amkor's solid market positions over the
intermediate-term. Capital intensity should remain between 10% and
15% of net sales, supporting Amkor's broad geographic footprint and
technological capabilities, particularly advanced packaging.
However, leading foundries which benefit from greater financial
flexibility, are investing to internalize in their own packaging
capabilities and increasingly competing with outsourced
semiconductor assembly and test (OSAT) providers such as Amkor,
potentially raising investment requirements over the longer-term.
Modest FCF Generation: Amkor's modest scale and profit margins with
high capital intensity structurally constrain its cash flow
profile. Amkor's $5.2 billion of latest 12-month revenue and
operating EBITDA margins near 20% are modest compared with other
segments of the semiconductor supply chain. However, capital
intensity of 10%-15% is in-line, to above, averages across the
supply chain. As a result, Fitch expects flat to low-single digit
FCF margins through the forecast period with the potential for
negative FCF should Amkor be forced to continue technology
investment amid a sharp or sustained downturn.
Secular Growth Drivers: Fitch believes increasing semiconductor
content and ongoing outsourcing trends supports low- to mid-single
digit long-term growth for Amkor. Accelerating digitalization and
electronification continues to drive increasing semiconductor
penetration across a wide range of products, in certain markets
doubling growth from volume alone. Meanwhile, ongoing adoption of
the fabless semiconductor model, particularly for advanced
technologies, continues unabated, expanding Amkor's addressable
market.
Conservative Financial Policies: Amkor's financial profile should
remain conservative for the rating, prompted in part by historical
operating volatility. Amkor is poised to sustain total
debt/operating EBITDA below the company's recent high-water mark of
2.0x in 2019 through the forecast period, absent a material
debt-funded acquisition that Fitch expects the company would
subsequently repay with FCF. Fitch expects positive FCF over the
forecast period will add to cash balances at the higher end of
historical balances, which could support capital returns in the out
years.
Amkor's leverage (total debt/operating EBITDA) was 1.3x as of FY
2020. Fitch expects gross leverage will gradually decline
throughout the forecast period due to strong top-line growth driven
from end-market demand for smartphones and automotive. Thereafter,
Fitch expects EBITDA margins will recover to historical levels,
resulting in gross leverage remaining below 1.0x throughout the
forecast period.
Customer Concentration: Moderate customer concentration amplifies
Amkor's operating volatility. For fiscal 2020, Amkor's top 10
customers accounted for 65% of consolidated net sales in 2020 and
Apple, Inc. alone accounted for 14.5%. Despite long-standing,
collaborative relationships with customers, the shorter product
life cycles and commercial adoption uncertainty of smartphones and
other consumer-oriented products reduce revenue and cash flow
visibility. At the same time, its share with leading smartphone
providers positions Amkor to benefit from highly defensible market
positions.
DERIVATION SUMMARY
Amkor credit profile is in-line with issuers rated in the 'BB'
category, while the company is less favorably positioned than
semiconductor peers. The company's industry structure is weaker
than those of semiconductor peers despite a number two share
position and moderately high barriers to entry due to weak
bargaining power with customers. Amkor's customer concentration,
particularly with smartphone makers, and outsourcing dynamics limit
the company's ability to meaningfully expand profit margins.
Additionally, barriers to entry require high ongoing investment
levels to keep pace with Moore's Law, which also results in
comparatively weak low-single digit cash flow margins.
Still, Amkor's credit profile will benefit from secular
semiconductor content growth and increased outsourcing trends that
should enable the company to outgrow competitors and increase end
market and customer diversification over time. Amkor's conservative
financial profile positions it favorably versus semiconductor
peers. Leverage metrics are in-line with the 'BBB' category, while
'BB' category rated peers metrics generally are at
non-investment-grade levels.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Strong and broad-based end-market demand, resulting in low-to
mid double-digit growth for fiscal 2021.
-- Mid-single digit revenue growth in fiscal 2022 followed by a
correction (down low-single digits) in 2023 before the
resumption of low-single digit positive revenue growth in
2024.
-- Operating EBITDA margins range from 19%-20% through the
forecast period.
-- Capex of $700 million for 2021, reverting to 10%-15% of
revenue through the remainder of the forecast period.
-- Acquisition targets will be bolt-on in nature and funded with
cash flow.
-- Upcoming debt maturities will be refinanced.
-- Annual dividend growth and no significant share repurchases
until the out years and absent greater than expected top line
growth resulting in meaningful excess cash.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Mid-cycle FCF margin in the low- to mid-single digits.
-- Sustained total leverage, or total debt/operating EBITDA below
2.0x or cash flow from operations (CFFO) less capex/total debt
in the high-teens.
-- Increased end-market diversification resulting in top 10
customers accounting for less than 40% of total revenue.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Sustained negative FCF margins.
-- Sustained total leverage above 3.5x or CFFO less capex/total
debt in the mid-single digits.
-- Weakened competitive position or loss of market share
resulting in structurally lower than expect revenue or
operating profit margins.
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
Sufficient Liquidity: Fitch believes Amkor's liquidity is
sufficient and, as of March 31, 2021, was supported by $650 million
of cash and cash equivalents, $164 million of short-term
investments, and approximately $330 million of availability under
total lines of credit, including $250 million of availability under
the company's $250 million asset-backed loan (ABL). Fitch's
expectation for modest positive FCF throughout the forecast period
also supports liquidity.
ISSUER PROFILE
Amkor Technology, Inc., and its subsidiaries is the number two
global provider of outsourced semiconductor assembly and test
(OSAT) services by revenue and the number one for automotive
markets. The company provides packaging and testing services to
integrated device manufacturers (IDMs), fabless semiconductor
companies and contract foundries. These services include:
semiconductor wafer bump, wafer probe, wafer back-grind, package
design, packaging, test and drop shipment services. Revenue by end
market for fiscal 2020 was: 41% for communications, including
smartphones, 24% for consumer, 20% for auto and industrial, and 15%
for computing.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch made no material financial statement adjustments to the
published financial statements for Amkor Technology, Inc.
ESG CONSIDERATIONS
Amkor Technology, Inc. has an ESG Relevance Score of '4' for
Governance Structure due to the company's concentration of
ownership by one shareholder, which has a negative impact on the
credit profile, and is relevant to the ratings in conjunction with
other factors.
Unless otherwise disclosed in this section, the highest level of
ESG Credit Relevance is a Score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
AMSTERDAM HOUSE: Continued Access to Cash Collateral OK'd
---------------------------------------------------------
Judge Alan S. Trust entered a second interim order authorizing
Amsterdam House Continuing Care Retirement Community Inc., d/b/a
The Amsterdam at Harborside, to use cash collateral in which UMB
Bank, N.A., as 2014 Bond Trustee has an interest.
The Debtor is authorized to use cash collateral, any Revenues
derived in the ordinary course of the Debtor's business, all
accounts receivable held by the Debtor, and all amounts currently
held in the Debtor's operating accounts until the earlier of (i)
the Debtor's ability to use Cash Collateral terminates as the
result of the occurrence of a Termination Event or (ii) the last
day included in the Cash Collateral Budget, pursuant to the terms
of the Second Interim Order.
A Termination Event shall be deemed to have occurred five business
days after written notice is sent by the 2014 Bond Trustee to the
Debtor, its counsel, the Committee, if any, the Committee's
counsel, and the United States Trustee of the occurrence of any of
the following:
* the payment of any expenses that would cause aggregate
expenditures under the Cash Collateral Budget to exceed 110% of the
total budgeted expenses for that same measuring period;
* the failure of the Debtor to pay, within 10 days of the
applicable due date, all undisputed administrative expenses in full
in accordance with their terms to the extent provided for in the
Cash Collateral Budget;
* the occurrence of a Support Agreement Termination Event and
expiration of any cure period under the PSA;
* the failure of the Debtor to timely pay all fees due under
Section 1930, Title 28 of the U.S. Code; and
* the failure of the Debtor to comply with any of its agreements
or undertakings under the Second Interim Order.
As of the Petition Date, the Debtor owed the 2014 Trustee these
amounts with respect to the Series 2014 Bonds and the obligations
under the Bond Documents:
-- unpaid principal on the Series 2014 Bonds (including accreted
value on the Series 2014C Bonds) of $207,793,773;
-- accrued but unpaid interest on the Series 2014 Bonds for
$6,517,450 as of June 14, 2021; and
-- unliquidated, accrued and unpaid fees and expenses of the
2014 Bond Trustee and its professionals incurred through the
Petition Date.
As adequate protection for any diminution in the value of its Cash
Collateral and other Prepetition Bond Collateral resulting from the
Debtor's use thereof, to the extent of any Diminution, the 2014
Bond Trustee shall have a valid, perfected, and enforceable
replacement lien and security interest in all postpetition assets
of the Debtor, of the same type as the Prepetition Bond Collateral,
including the proceeds, rents, products, and profits thereof, to
the same extent, validity, perfection, enforceability, and priority
of the liens and security interests of the 2014 Bond Trustee as of
the Petition Date, excluding actions for preferences, fraudulent
conveyances or other avoidance power claims. The Replacement Lien
shall be subject and subordinate to the Carve Out and any valid and
perfected liens existing on the Petition Date.
As additional adequate protection for any Diminution, to the extent
of any Diminution, the 2014 Bond Trustee shall have a superpriority
administrative expense claim pursuant to Section 507(b) of the
Bankruptcy Code with recourse to all assets of the Debtor's estate,
including rights of the Debtor. The Secured Party Superpriority
Claim shall be subject only to Prior Liens and the Carve Out and
shall have priority over all administrative expenses.
A copy of the second interim order is available for free at
https://bit.ly/3jCvnkT from Kurtzman Carson Consultants, claims
agent.
The final hearing on the Motion shall be held on July 13, 2021 at
11:30 a.m., prevailing Eastern Time. Objections must be filed on
or before 4 p.m., prevailing Eastern Time, on July 7.
About Amsterdam House
Amsterdam House Continuing Care Retirement Community Inc., d/b/a
The Amsterdam at Harborside, operates Nassau County's first and
only continuing care retirement community licensed under Article 46
of the New York Public Health Law, which provides residents with
independent living units, enriched housing and memory support
services, comprehensive licensed skilled nursing care, and related
health, social, and quality of life programs and services.
The Debtor filed a Chapter 11 petition (Bankr. E.D.N.Y. Case No.
21-71095) on June 14, 2021. At the time of filing, the Debtor
estimated $100 million to $500 million in assets and liabilities.
The Hon. Louis A. Scarcella oversees the case. Sidley Austin LLP
is the Debtor's counsel. Kurtzman Carson Consultants LLC is the
Debtor's claims and noticing agent.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. serves as
counsel for UMB Bank, N.A., 2014 Bond Trustee.
AMSTERDAM HOUSE: U.S. Trustee Appoints Creditors' Committee
-----------------------------------------------------------
The U.S. Trustee for Region 2 on June 30 appointed an official
committee to represent unsecured creditors in the Chapter 11 case
of Amsterdam House Continuing Care Retirement Community, Inc.
The committee members are:
1. Irwin W Silverberg,
300 E Overlook-Apt 641
Port Washington, NY 11050
2. Bernard Cooperman
300 E Overlook-Apt 612
Port Washington, NY 11050
3. Barbara Sciarra
300 E Overlook-Apt 639
Port Washington, NY 11050
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Amsterdam House Continuing Care
Amsterdam House Continuing Care Retirement Community, Inc. (doing
business as The Amsterdam at Harborside) operates Nassau County's
first and only continuing care retirement community licensed under
Article 46 of the New York Public Health Law, which provides
residents with independent living units, enriched housing and
memory support services, comprehensive licensed skilled nursing
care, and related health, social, and quality of life programs and
services.
Amsterdam House Continuing Care Retirement Community filed a
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code (Bankr. E.D.N.Y. Case No. 21-71095) on June 14, 2021. James
Davis, president and chief executive officer, signed the petition.
At the time of the filing, the Debtor had between $100 million
and$500 million in both assets and liabilities.
Judge Louis A. Scarcella oversees the case.
The Debtor tapped Sidley Austin LLP as legal counsel, RBC Capital
Markets, LLC as investment banker, and Kurtzman Carson Consultants
LLC as claims and noticing agent.
APX GROUP: Moody's Rates New $900MM Unsecured Notes 'Caa1'
----------------------------------------------------------
Moody's Investors Service assigned Caa1 instrument ratings to a
new, $900 million senior unsecured notes issuance by APX Group,
Inc., a wholly-owned subsidiary of residential alarm monitoring
company Vivint Smart Home, Inc. (dba "Vivint"). Proceeds from the
unsecured notes and from a $1.25 billion first-lien senior secured
term loan launched last week, as well as nearly $150 million of
balance sheet cash, will be used to refinance $1,843 million of
existing first-lien term loan and notes debt, and $400 million of
existing unsecured notes, and to satisfy call premiums and
transaction fees.
Assignments:
Issuer: APX Group, Inc.
Senior Unsecured Regular Bond/Debenture, Assigned Caa1 (LGD5)
RATINGS RATIONALE
The assignment of the Caa1 rating to the new unsecured notes
issuance represents effectively no change to Vivint's existing
unsecured debt ratings, which are two notches below Vivint's CFR.
The refinancing transaction's resultant net increase in unsecured
debt relative to a net decrease in secured debt (and a moderate,
nearly $100 million net decrease in overall debt) implies, via
Moody's LGD methodology, instrument ratings support from the
unsecured debt to the secured debt. Accordingly, the new term loan
and revolver are rated B1, one notch above Vivint's CFR.
Upon closing of the new notes issuance, Moody's will withdraw
ratings on the existing $400 million unsecured notes.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider an upgrade if: i) revenue growth exceeds
mid-single digit percentages; ii) GAAP-based free cash flow as a
percentage of debt is sustained in the mid-single-digits, and; iii)
private equity ownership is anticipated to fall below 50%. A
downgrade may be considered if: i) positive revenue or attrition
trends reverse themselves, or; ii) free cash flow on a GAAP basis
approaches breakeven.
Vivint provides alarm monitoring and home automation services to
approximately 1.7 million residential subscribers in North America.
With 2020 revenue of $1.26 billion (a 9.1% gain over 2019), Vivint
is the second-largest provider of home security and automation
services, well behind The ADT Security Corporation. As the result
of a late 2012 acquisition, Vivint is majority-owned by The
Blackstone Group Inc., while its management team has maintained a
meaningful ownership stake. Even after the early 2020 SPAC
transaction, affiliates of Blackstone continue to own nearly 58% of
Vivint.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
ARIZONA AIRCRAFT: Cash Access Thru September 30 OK'd
----------------------------------------------------
Judge Daniel P. Collins extended the authority of Arizona Aircraft
Painting, LLC to use cash collateral from June 30 through September
30, 2021.
The Debtor is authorized to pay all expenses in the ordinary course
of its business pursuant to the approved operating budget. The
Debtor is also authorized to make adequate protection payments to
its secured creditors (i) On Deck Capital, (ii) Internal Revenue
Service, and (iii) Wells Fargo Bank, N.A. for the period of July
through September, 2021, as follows:
* $228 per month to On Deck;
* $300 per month to the IRS; and
* $7,200 per month to Wells Fargo on the 15th day of each month
through and including September 15, 2021.
As adequate protection for the limited use of cash collateral, the
Debtor grants post-petition liens to Wells Fargo, On Deck and the
IRS on the Debtor's inventory, accounts, and contract rights
pursuant to Sections 361(2) and 552(b) of the Bankruptcy Code to
the extent of cash collateral actually expended, and on the same
assets and in the same order of existing priority between Debtor
and the Secured Creditors.
A copy of the stipulated order is available for free at
https://bit.ly/35Wswet from PacerMonitor.com.
About Arizona Aircraft Painting, LLC
Arizona Aircraft Painting, LLC specializes in aerospace performance
coatings. It also offers design services, interior refurbishment,
vortex generators, aircraft cleaning and detailing services, and
window replacement services. Arizona Aircraft Painting operates
out of a 10,000-square-foot facility in Mesa, Arizona.
Arizona Aircraft Painting filed a Chapter 11 petition (Bankr. D.
Ariz. Case No. 19-05477) on May 3, 2019. In the petition signed by
Steven Head, member, the Debtor estimated $1 million to $10 million
in assets and $500,000 to $1 million in liabilities.
Judge Daniel P. Collins oversees the case.
Keery McCue, PLLC serves as the Debtor's bankruptcy counsel.
Wells Fargo Bank, N.A., secured creditor, is represented by:
Wade Burgeson, Esq.
Engelman Berger, PC
2800 North Central Avenue, Ste. 1200
Phoenix, AZ 85004
Telephone (Main): (602) 271-9090
Telephone (Direct): (602) 222-4989
Facsimile: (602) 222-4999
Email: wmb@eblawyers.com
ASSOCIATED ASPHALT: S&P Alters Outlook to Stable, Affirms 'B-' ICR
------------------------------------------------------------------
S&P Global Ratings revised the outlook to stable from negative and
affirmed its 'B-' issuer credit rating on Associated Asphalt
Partners LLC (AA).
S&P's 'B-' issue-level rating and '3' recovery rating on the
company's debt are affirmed, indicating its expectation of
meaningful (50%-70%; rounded estimate: 65%) recovery.
The stable outlook reflects S&P's expectation that the transaction
will eliminate near-term refinancing risk. It forecasts AA will
achieve an adjusted debt to EBITDA ratio in the 5.5x-6x range for
2021.
The refinancing transaction mitigates near-term refinancing risk
for Associated Asphalt. The company's asset-based lending (ABL)
facility was previously due in October 2021 and has been refinanced
to mature in 2026. The general terms of the facility are unchanged.
The ABL facility continues to have a first lien on AA's inventory
and accounts receivable, and a second lien on all other assets. S&P
said, "We continue to expect the ABL's availability to fluctuate
throughout the year as AA draws on the facility to purchase
inventory and then makes repayments thereafter. We believe AA will
follow historical trends and exit 2021 with approximately $40
million-$65 million drawn on the facility."
S&P said, "We forecast adjusted debt to EBITDA to be in the 5.5x-6x
range in 2021. As AA enters the peak paving season in the second
and third quarter, we expect the company to experience increased
customer demand. As customers who had previously delayed projects
during the height of the COVID-19-related lockdowns will now resume
activity. We forecast asphalt sales margins to return to mid-cycle
levels and volumes to modestly grow from the prior year. We also
highlight the accretive growth project AA has commissioned in
Martinsburg, W. Va., which manufactures paving j-band. The company
estimates the project could realize 20 or more projects across 15
states, with volumes accelerating through the second half of 2021.
AA could realize modest EBITDA upside from this in 2021 and beyond
although our base-case does not forecast further upside at this
time.
"The stable outlook reflects the mitigated refinancing risk through
the ABL refinancing transaction. We expect AA will realize a more
normalized customer demand through its peak season, while
maintaining adequate liquidity and remaining compliant with its
debt service coverage ratio (DSCR) covenant on a sustained basis.
We forecast AA's will achieve a debt to EBITDA ratio in the 5.5x-6x
range for 2021.
"We could consider taking a positive rating action on AA if it
reduces its adjusted debt to EBITDA below 5.5x on a sustained
basis.
"We could lower our rating on AA if we believe adjusted debt to
EBITDA will increase to the point where we view the capital
structure as unsustainable. This could occur due to a prolonged
period of intense market competition that pressures its margins and
volumes."
AVADIM HEALTH: Committee Hires Fox Rothschild as Legal Counsel
--------------------------------------------------------------
The official committee of unsecured creditors of Avadim Health,
Inc. and its affiliates seeks approval from the U.S. Bankruptcy
Court for the District of Delaware to retain Fox Rothschild, LLP as
its legal counsel.
The firm's services include:
(a) advising the committee with respect to its rights, duties,
and powers in these Chapter 11 cases;
(b) assisting and advising the committee in its consultations
with the Debtors relative to the administration of these Chapter 11
cases;
(c) assisting the committee in analyzing the claims of the
Debtors' creditors and the Debtors' capital structure and in
negotiating with holders of claims and equity interests;
(d) assisting the committee in its investigation of the acts,
conduct, assets, liabilities, and financial condition of the
Debtors and of the operation of the Debtors' business;
(e) assisting the committee in analyzing (i) the Debtors'
pre-petition financing, (ii) proposed use of cash collateral, and
(iii) the Debtors' proposed debtor-in-possession financing, the
terms and conditions of the
proposed DIP Financing and the adequacy of the proposed DIP
Financing budget;
(f) assisting the committee in its investigation of the liens
and claims of the holders of the Debtors' pre-petition debt and the
prosecution of any claims or causes of action revealed by such
investigation;
(g) assisting the committee in its analysis of, and
negotiations with, the Debtors or any third party concerning
matters related to, among other things, the assumption or rejection
of certain leases of nonresidential real property and executory
contracts, asset dispositions, sale of assets, financing of other
transactions and the terms of one or more plans of reorganization
for the Debtors and accompanying disclosure statements and related
plan
documents;
(h) assisting and advising the committee as to its
communications to unsecured creditors regarding significant matters
in these Chapter 11 Cases;
(i) representing the committee at hearings and other
proceedings;
(j) reviewing and analyzing applications, orders, statements
of operations, and schedules filed with the Court and advising the
committee as to their propriety;
(k) assisting the committee in preparing pleadings and
applications as may be necessary in furtherance of the committee's
interests and objectives in these Chapter 11 cases, including
without limitation, the preparation of retention papers and fee
applications for the committee's professionals, including Fox;
(l) preparing, on behalf of the committee, any pleadings,
including without limitation, motions, memoranda, complaints,
adversary complaints, objections, or comments in connection with
any of the foregoing;
(m) acting as local Delaware counsel in connection with any
filings and court appearances as may be required; and
(n) performing such other legal services as may be required or
are otherwise deemed to be in the interests of the committee in
accordance with the committee's powers and duties as set forth in
the Bankruptcy Code, Bankruptcy Rules, or other applicable law.
The firm will be paid at these hourly rates:
Partners $325 - $1,525
Senior Counsel and Counsel $275 - $875
Associates $185 - $570
Paralegals, Practice Support
and Assistants $125 - $465
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Fox
Rothschild disclosed that:
-- it has not agreed to any variations from, or alternatives
to, its standard or customary billing arrangements for this
engagement;
-- none of the professionals included in the engagement vary
their rate based on the geographic location of the bankruptcy
case;
-- the firm has not represented the committee in the 12 months
prepetition; and
-- Fox expects to develop a budget and staffing plan to
reasonably comply with the U.S. Trustee's request for information
and additional disclosures, as to which Fox reserves all rights.
The Committee has approved Fox's proposed hourly billing rates.
Fox Rothschild is disinterested within the meaning of Section
101(14) of the Bankruptcy Code, according to court papers filed by
the firm.
The firm can be reached through:
Seth A. Niederman, Esq.
Fox Rothschild LLP
919 N. Market St., Suite 300
P.O. Box 2323
Wilmington DE 19899-2323
Tel: 302-622-4238
Fax: 302-655-7004
Email: sniederman@foxrothschild.com
About Avadim Health
Avadim Health, Inc. is a Asheville, N.C.-based healthcare and
wellness company that develops, manufactures and markets topical
products for the institutional care and consumer markets. It was
formerly known as Avadim Technologies Inc.
Avadim and its affiliates sought Chapter 11 protection (Bankr. D.
Del. Lead Case No. 21-10883) on June 1, 2021. In the petition
signed by CRO Keith Daniels, Avadim disclosed total assets of
between $10 million and $50 million and total liabilities of
between $100 million and $500 million.
Judge Craig T. Goldblatt oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones LLP and Chapman
and Cutler LLP as legal counsel, SSG Capital Advisors LLC as
investment banker, and Carl Marks Advisory Group LLC as
restructuring advisor. Keith Daniels, a partner at Carl Marks,
serves as the Debtors' chief restructuring officer. Omni Agent
Solutions is the claims and noticing agent.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in the Debtors' Chapter
11 cases on June 9, 2021. The committee tapped Fox Rothschild, LLP
and Lowenstein Sandler, LLP as its legal counsel and Province, LLC
as its financial advisor.
AVADIM HEALTH: Committee Hires Lowenstein Sandler as Co-Counsel
---------------------------------------------------------------
The official committee of unsecured creditors of Avadim Health,
Inc. and its affiliates seeks approval from the U.S. Bankruptcy
Court for the District of Delaware to retain Lowenstein Sandler LLP
to serve as co-counsel with Fox Rothschild, LLP.
The firm's services include:
(a) advising the committee with respect to its rights, duties,
and powers in these Chapter 11 Cases;
(b) assisting and advising the committee in its consultations
with the Debtors relative to the administration of these Chapter 11
cases;
(c) assisting the committee in analyzing the claims of the
Debtors' creditors and the Debtors' capital structure and in
negotiating with holders of claims and equity interests;
(d) assisting the committee in its investigation of the acts,
conduct, assets, liabilities, and financial condition of the
Debtors and of the operation of the Debtors' business;
(e) assisting the committee in analyzing (i) the Debtors'
pre-petition financing, (ii) proposed use of cash collateral, and
(iii) the Debtors' proposed debtor-in-possession financing, the
terms and conditions of the proposed DIP Financing and the adequacy
of the proposed DIP Financing budget;
(f) assisting the committee in its investigation of the liens
and claims of the holders of the Debtors' pre-petition debt and the
prosecution of any claims or causes of action revealed by such
investigation;
(g) assisting the committee in its analysis of, and
negotiations with, the Debtors or any third party concerning
matters related to, among other things, the assumption or rejection
of certain leases of nonresidential real property and executory
contracts, asset dispositions, sale of assets, financing of other
transactions and the terms of one or more plans of reorganization
for the Debtors and accompanying disclosure statements and related
plan documents;
(h) assisting and advising the committee as to its
communications to unsecured creditors regarding significant matters
in these Chapter 11 Cases;
(i) representing the committee at hearings and other
proceedings;
(j) reviewing and analyzing applications, orders, statements
of operations, and schedules filed with the Court and advising the
committee as to their propriety;
(k) assisting the committee in preparing pleadings and
applications as may be necessary in furtherance of the committee's
interests and objectives in these Chapter 11 Cases, including
without limitation, the preparation of retention papers and fee
applications for the committee's professionals, including
Lowenstein Sandler;
(l) preparing, on behalf of the committee, any pleadings,
including without limitation, motions, memoranda, complaints,
adversary complaints, objections, or comments in connection with
any of the foregoing; and
(m) performing such other legal services as may be required or
are otherwise deemed to be in the interests of the committee in
accordance with the committee's powers and duties as set forth in
the Bankruptcy Code, Bankruptcy Rules, or other applicable law.
The firm will be paid at these hourly rates:
Partners $650 - $1,495 per hour
Senior Counsel and Counsel $495 - $850 per hour
Associates $405 - $750 per hour
Paralegals, Practice Support
and Assistants $220 - $385 per hour
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases,
Lowenstein Sandler disclosed that:
-- it has not agreed to any variations from, or alternatives
to, its standard or customary billing arrangements for this
engagement;
-- none of the professionals included in the engagement vary
their rate based on the geographic location of the bankruptcy
case;
-- the firm has not represented the committee in the 12 months
prepetition; and
-- Lowenstein Sandler is to develop a budget and staffing plan
to reasonably comply with the U.S. Trustee's request for
information and additional disclosures, as to which Fox reserves
all rights. The Committee has approved Lowenstein Sandler's
proposed hourly billing rates.
As disclosed in court filings, Lowenstein Sandler is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Eric Chafetz, Esq.
Lowenstein Sandler LLP
1251 Avenue of the Americas
New York, NY 10020
Tel: (212) 262-6700
Fax: (212) 262-7402
Email: echafetz@lowenstein.com
About Avadim Health
Avadim Health, Inc. is a Asheville, N.C.-based healthcare and
wellness company that develops, manufactures and markets topical
products for the institutional care and consumer markets. It was
formerly known as Avadim Technologies Inc.
Avadim and its affiliates sought Chapter 11 protection (Bankr. D.
Del. Lead Case No. 21-10883) on June 1, 2021. In the petition
signed by CRO Keith Daniels, Avadim disclosed total assets of
between $10 million and $50 million and total liabilities of
between $100 million and $500 million.
Judge Craig T. Goldblatt oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones LLP and Chapman
and Cutler LLP as legal counsel, SSG Capital Advisors LLC as
investment banker, and Carl Marks Advisory Group LLC as
restructuring advisor. Keith Daniels, a partner at Carl Marks,
serves as the Debtors' chief restructuring officer. Omni Agent
Solutions is the claims and noticing agent.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in the Debtors' Chapter
11 cases on June 9, 2021. The committee tapped Fox Rothschild, LLP
and Lowenstein Sandler, LLP as its legal counsel and Province, LLC
as its financial advisor.
AVADIM HEALTH: Committee Taps Province LLC as Financial Advisor
---------------------------------------------------------------
The official committee of unsecured creditors of Avadim Health,
Inc. and its affiliates seeks approval from the U.S. Bankruptcy
Court for the District of Delaware to employ Province, LLC as its
financial advisor.
The firm's services include:
a. becoming familiar with and analyzing the Debtors' DIP
budget, assets and liabilities, and overall financial condition;
b. reviewing financial and operational information furnished
by the Debtors;
c. monitoring the sale process, reviewing bidding procedures,
stalking horse bids, asset purchase agreements, interfacing with
the Debtors' professionals, and advising the committee regarding
the process;
d. scrutinizing the economic terms of various agreements,
including, but not limited to various professional retentions;
e. analyzing the Debtors' proposed business plans and
developing alternative scenarios, if necessary;
f. assessing the Debtors' various pleadings and proposed
treatment of unsecured creditor claims therefrom;
g. preparing, or reviewing as applicable, avoidance action and
claim analyses;
h. assisting the committee in reviewing the Debtors' financial
reports, including, but not limited to, statements of financial
affairs, schedules of assets and liabilities, DIP budgets, and
monthly operating reports;
i. advising the committee on the current state of these
chapter 11 cases;
j. advising the committee in negotiations with the Debtors and
third parties as necessary;
k. if necessary, participating as a witness in hearings before
the Court with respect to matters upon which Province has provided
advice; and
l. other activities as are approved by the committee, the
committee's counsel, and as agreed to by Province.
The firm will be paid at these rates:
Managing Directors and Principals $740 - $1,050 per hour
Vice Presidents, Directors,
and Senior Directors $520 - $740 per hour
Analysts, Associates,
and Senior Associates $250 - $520 per hour
Paraprofessionals $185 - $225 per hour
Sanjuro Kietlinski, managing director at Province, disclosed in
court filings that he and his firm are "disinterested" within the
meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Sanjuro Kietlinski
Province, LLC
2360 Corporate Circle, Suite 330
Henderson, NV 89074
Tel: +1 (702) 685-5555
Email: skietlinski@provincefirm.com
info@provincefirm.com
About Avadim Health
Avadim Health, Inc. is a Asheville, N.C.-based healthcare and
wellness company that develops, manufactures and markets topical
products for the institutional care and consumer markets. It was
formerly known as Avadim Technologies Inc.
Avadim and its affiliates sought Chapter 11 protection (Bankr. D.
Del. Lead Case No. 21-10883) on June 1, 2021. In the petition
signed by CRO Keith Daniels, Avadim disclosed total assets of
between $10 million and $50 million and total liabilities of
between $100 million and $500 million.
Judge Craig T. Goldblatt oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones LLP and Chapman
and Cutler LLP as legal counsel, SSG Capital Advisors LLC as
investment banker, and Carl Marks Advisory Group LLC as
restructuring advisor. Keith Daniels, a partner at Carl Marks,
serves as the Debtors' chief restructuring officer. Omni Agent
Solutions is the claims and noticing agent.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in the Debtors' Chapter
11 cases on June 9, 2021. The committee tapped Fox Rothschild, LLP
and Lowenstein Sandler, LLP as its legal counsel and Province, LLC
as its financial advisor.
AVERY COMMERCIAL: Cash Access Continued Under 2nd Interim Order
---------------------------------------------------------------
Judge David R. Jones authorized Avery Commercial Small C, LLC to
use the cash collateral of Great Western Bank and Wells Fargo Bank,
pursuant to a second interim agreed order.
Great Western and Wells Fargo, individually, are parties with the
Debtor under these prepetition loan documents:
A. Great Western:
* Business Loan Agreement dated December 21, 2018;
* Promissory Note dated December 21, 2018, as renewed, modified
and/or extended, evidencing a loan extended to the Debtor for
$2,381,000;
* Deed of Trust dated August 8, 2020 in certain real property
located in Pima County, Arizona (the Oracle Property) and
improvements thereon, to secure payment of the GW Note;
* Assignment of Rents dated December 21, 2018 in the real
property located in Pima County, Arizona (the GW Assignment) to
secure payment of the GW Note.
Great Western asserts it has valid security interests in all of the
Debtor's rents, revenues, income, profits, proceeds, accounts
receivable, deposit accounts, equipment, furniture, fixtures,
goods, vehicles, general intangibles, and cash proceeds thereof,
generated by a commercial building on the Oracle Property.
B. Wells Fargo:
* Promissory Note dated July 10, 2017, as renewed, modified
and/or extended, evidencing a loan extended to the Debtor for
$1,064,000; and
* Deed of Trust dated July 10, 2017 in certain real property
located in Pima County, Arizona (the Thornydale Property) and
improvements thereon, securing payment of the WF Note.
Great Western and Wells Fargo assert that each has valid security
interests in all of the Debtor's rents, revenues, income, profits,
proceeds, accounts receivable, deposit accounts, equipment,
furniture, fixtures, goods, vehicles, general intangibles, and cash
proceeds thereof generated by the commercial building on the Oracle
Property and Thornydale Property, respectively, and that each of
their liens are duly perfected.
Judge Jones ruled that each of Great Western and Wells Fargo shall
have a replacement perfected security interest in any rents,
revenues, income, profits, proceeds, accounts receivable, deposit
accounts, general intangibles, and cash proceeds thereof, that the
Debtor may acquire postpetition, to the extent and with the same
priority that the Secured Creditors held in the Debtor's
prepetition collateral, to the extent that the Secured Creditors'
cash collateral is used by the Debtor.
The Secured Creditors shall also have a superpriority
administrative expense claim, senior to any and all claims against
the Debtor under Section 507(a) of the Bankruptcy Code.
In addition, the Debtor will pay Great Western $10,000 monthly,
with the first payment due on July 1, 2021 and on the first of each
month thereafter. The the Debtor will also pay Wells Fargo $5,954
monthly, with the first payment due on July 10, 2021 and on the
10th of each subsequent month.
A copy of the second interim order is available for free at
https://bit.ly/2UeBFfS from PacerMonitor.com.
About Avery Commercial Small C
Avery Commercial Small C, LLC sought protection under Chapter 11 of
the Bankruptcy Code on Feb. 22, 2021 (Bankr. S.D. Tex. Case No.
21-50020). Brian T. Moreno, the Debtor's vice president and chief
operating officer, signed the petition. In the petition, the
Debtor disclosed total assets of $4,985,519 and total liabilities
of $3,398,302.
The Debtor is represented by Carl M. Barto, Esq., at the Law
Offices of Carl M. Barto.
Great Western Bank, secured creditor, is represented by:
Diann M. Bartek, Esq.
Jeana Long, Esq.
Dykema Gossett PLLC
1400 N. McColl Road, Suite 204
McAllen, TX 78501
Telephone: (956) 984-7400
Facsimile: (956) 984-7499
Email: dbartek@dykema.com
jlong@dykema.com
Wells Fargo Bank, also as secured creditor, is represented by:
Robert L. Barrows, Esq.
Warren, Drugan & Barrows, P.C.
800 Broadway, Suite 200
San Antonio, TX 78215
Telephone: (210) 226-4131
Facsimile: (210) 224-6488
Email: rbarrows@wdblaw.com
AVID BIOSERVICES: Swings to $11.2 Million Net Income in Fiscal 2021
-------------------------------------------------------------------
Avid Bioservices, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing net income of
$11.21 million on $95.87 million of revenues for the year ended
April 30, 2021, compared to a net loss of $10.47 million on $59.70
million of revenues for the year ended April 30, 2020.
As of April 30, 2021, the Company had $265.51 million in total
assets, $187.77 million in total liabilities, and $77.74 million in
total stockholders' equity.
As of April 30, 2021, the Company had cash and cash equivalents of
$169.9 million. The Company believes that its existing cash on
hand and our anticipated cash from operating activities will be
sufficient to fund its operations for at least the next 12 months
from the date of this Annual Report.
Avid said, "We currently expect to finance our operations with our
existing cash on hand and our anticipated cash flows from
operations. If cash flows from operations are not sufficient to
support our operations or capital requirements, including our
ongoing two phases of expansion to our Myford Facility, then we may
need to obtain additional equity or debt financing to fund our
future operations. We may raise these funds at the appropriate
time, accessing the form of capital that we determine is most
appropriate considering the markets available to us and their
respective costs of capital, such as through the issuance of debt
or through the public offering of securities. These financings may
not be available on acceptable terms, or at all. Our ability to
raise additional capital in the equity and debt markets is
dependent on a number of factors including, but not limited to, the
market demand for our common stock. The market demand or liquidity
of our common stock is subject to a number of risks and
uncertainties including, but not limited to, our financial results,
economic and market conditions, and global financial crises and
economic downturns, including those caused by widespread public
health crises such as the COVID-19 pandemic, which may cause
extreme volatility and disruptions in capital and credit markets.
In addition, even if we are able to raise additional capital, it
may not be at a price or on terms that are favorable to us."
Management Commentary
"Fiscal 2021 was a very strong year for Avid. During the year,
revenues increased by 61% as compared to fiscal 2020 and gross
margins were significantly improved from 7% to more than 30%.
During fiscal 2021 we signed eight new customers, and during the
fourth quarter we successfully completed FDA inspections for two
product approvals with zero 483 observations. During fiscal 2021,
we generated more than $31 million in cash from operations, and for
the first time, we achieved four consecutive quarters of
operational profitability. Beyond our operational successes,
Avid's financial position was significantly strengthened during the
year by both new and existing investors who demonstrated support
for Avid's strategy through two separate offerings which were
completed in the third and fourth quarters of fiscal 2021, raising
combined net proceeds of $170.6 million. Further, as a sign of the
momentum we have moving into the next year, we ended fiscal 2021
with a backlog of $118 million, the majority of which we expect to
recognize during fiscal 2022. Given this backdrop, I am pleased to
report that we expect to record revenue of between $115 million and
$117 million in fiscal 2022, representing growth of approximately
20% - 22% as compared to fiscal 2021," stated Nicholas Green,
president and chief executive officer of Avid Bioservices.
"The growth experienced during fiscal 2021 made it increasingly
evident that an expansion of our capacity is required not only to
best service our existing customers who are advancing products
through the clinical development process toward commercialization,
but to also maintain our competitive advantage in attracting new
customers seeking capacity today. As discussed previously, Avid
has initiated a two-phased expansion plan which was designed to
bring incremental capacity online by the end of calendar 2021, and
significantly more capacity in calendar 2022. I am very pleased to
report that both phases are underway and advancing according to
plan, and we look forward to reporting progress on this effort in
the coming quarters. Given this work, it is important to note that
our annual maintenance shutdowns that are usually conducted
back-to-back in Q2, will be amended slightly this year with the
Myford shutdown taking place in Q3 to accommodate our expansion
schedule.
"Looking ahead into fiscal 2022, we expect these expansion
investments, combined with ongoing investments in the recruitment,
training and retention of our workforce, to result in a continued
strengthening of our core business, opening doors to new
opportunities for growth. Given the expectation of increasing
demand, our additional planned capacity and a strong balance sheet,
we will not only be able to best support additional customers
working to develop mammalian drug products, but we look forward to
strategically evaluating adjacent and/or strategic business
expansions that may create value for Avid and our customers.
"The exceptional execution of our team during fiscal 2021 was
transformative, bringing Avid to a position of operational and
financial strength. We look forward to the many opportunities that
lie ahead."
Financial Highlights and Guidance
* The company is providing revenue guidance for the full fiscal
year 2022 of $115 million to $117 million.
* Revenues for the fourth quarter of fiscal 2021 were $27.6
million, more than double the revenues of $12.6 million
recorded during the fourth quarter of fiscal 2020. For the
full fiscal year 2021, revenues were $95.9 million, a 61%
increase as compared to revenues of $59.7 million in the prior
year period. The increases in revenue for both the fourth
quarter and full fiscal year 2021 were primarily due to the
growth in the number and scope of in-process and completed
manufacturing runs, as well as an increase in the number of
process development projects during the periods.
Additionally,
as previously disclosed, fourth quarter and full fiscal year
2020 manufacturing revenue was impacted by a production
interruption.
* As of April 30, 2021, revenue backlog was $118 million, an
increase of 82% compared to $65 million at the end of last
fiscal year. The company expects to recognize the majority of
this backlog during fiscal 2022.
* Gross margin for the fourth quarter of fiscal 2021 was 29%
compared to a gross margin of negative 10% for the fourth
quarter of fiscal 2020. Gross margin for the full fiscal year
2021 was 31% compared to 7% in the prior year period. The
increases in gross margin during both the fourth quarter and
full fiscal year 2021 were primarily from higher plant
utilization resulting from higher manufacturing and process
development revenues during the periods. Additionally, full
fiscal year 2020 gross profit was impacted by certain costs
associated with the production interruption, which costs which
did not recur during fiscal 2021.
* Selling, general and administrative expenses for the
fourth quarter of fiscal 2021 were $5.1 million, an increase
of
43% compared to $3.5 million recorded for the fourth quarter
of
fiscal 2020. For the full fiscal year 2021, SG&A expenses
were
$17.1 million, an 18% increase compared to $14.5 million for
the prior year. The increases in SG&A during both the fourth
quarter and full fiscal year 2021 were primarily due to
increases in payroll related costs, including stock-based
compensation.
* During the fourth quarter of fiscal 2021, Avid redeemed its
outstanding 10.5% Series E Convertible Preferred Stock. This
redemption resulted in a one-time charge of $3.4 million,
which
was unrelated to operations, and recorded as a reduction to
net
income attributable to common stockholders. As a result, for
the fourth quarter of fiscal 2021, the company recorded a net
loss attributable to common stockholders of approximately $2.7
million or $0.04 per basic and diluted share, as compared to a
net loss attributable to common stockholders of $6.2 million
or
$0.11 per basic and diluted share, for the fourth quarter of
fiscal 2020. However, when adjusting for the one-time
redemption charge, Avid would have recorded net income
attributable to common stockholders of approximately $0.8
million, or $0.01 per basic and diluted share, during the
fourth quarter of fiscal 2021, marking the company's fourth
consecutive quarter of net income attributable to common
stockholders. For the full fiscal year 2021, the company
recorded net income attributable to common stockholders of
$3.3
million or $0.06 per basic and diluted share, compared to net
loss attributable to common stockholders of $15.2 million or
$0.27 per share, for fiscal 2020. Excluding the one-time
redemption charge, Avid would have recorded net income
attributable to common stockholders of approximately $6.8
million or $0.12 and $0.11 per basic and diluted share,
respectively, for the full fiscal year 2021.
* Avid reported $169.9 million in cash and cash equivalents as
of
April 30, 2021, an increase of $133.7 million from the end of
the prior fiscal year. The increase in cash and cash
equivalents as compared to fiscal 2020, is primarily due to
$31.2 million generated from operations during the 2021 fiscal
year, of which $17.9 million was generated during the fourth
quarter. The fiscal 2021 balance also includes approximately
$32.1 million in net proceeds which were raised during the
third quarter in a follow-on underwritten equity financing, as
well as approximately $138.5 million in net proceeds raised
during the fourth quarter in an offering of 1.25% convertible
senior notes.
Recent Corporate Developments
* Signed multiple new orders during the fourth quarter, totaling
approximately $26 million. These projects span all areas of
the business, from process development to commercial
manufacturing. During fiscal 2021, the company signed new
business orders for approximately $148 million as compared to
$80 million during fiscal 2020. Additionally, the company
signed eight new customers in fiscal 2021, a significant
increase over fiscal 2020.
* Completed an offering of 1.25% convertible senior notes during
the fourth quarter, raising net proceeds of $138.5 million,
after deducting initial purchaser discounts and other debt
issuance related expenses. The company used approximately
$12.8 million to purchase capped call transactions with
certain
financial institution counterparties in connection with the
issuance of the convertible senior notes and approximately
$40.5 million in April 2021 to redeem all of the company's
previously outstanding 10.5% Series E Convertible Preferred
Stock. The company plans to use the remaining net proceeds
for
working capital and other general corporate purposes. The
company may also use a portion of these funds for the
acquisition of, or investment in, technologies, solutions or
businesses that complement our existing capabilities, although
it has no commitments to enter into any such acquisitions or
investments at this time.
* Two-part expansion of the Myford facility continues to
progress
according to plan. The first phase of the expansion, which
was
initiated during the second quarter of fiscal 2021, expands
the
production capacity of the company's existing Myford North
facility by adding a second downstream processing suite. The
second phase, which was initiated during the fourth quarter of
fiscal 2021, is designed to further expand capacity through
the
build out of a second manufacturing train, including both
upstream and downstream processing suites within Myford
South.
Combined, the company estimates that the first and second phases of
this expansion will result in a total revenue generating capacity
of up to $270 million annually. While the company believes that
this expansion is critical to its ability to service the future
needs of its customers, Avid presently has adequate capacity to
accommodate current demand.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/704562/000168316821002764/avid_10k-043021.htm
About Avid Bioservices
Avid Bioservices -- http://www.avidbio.com-- is a dedicated
contract development and manufacturing organization (CDMO) focused
on development and CGMP manufacturing of biopharmaceutical drug
substances derived from mammalian cell culture. The company
provides a comprehensive range of process development, CGMP
clinical and commercial manufacturing services for the
biotechnology and biopharmaceutical industries. With over 28 years
of experience producing monoclonal antibodies and recombinant
proteins, Avid's services include CGMP clinical and commercial drug
substance manufacturing, bulk packaging, release and stability
testing and regulatory submissions support. For early-stage
programs, the company provides a variety of process development
activities, including upstream and downstream development and
optimization, analytical methods development, testing and
characterization. The scope of its services ranges from standalone
process development projects to full development and manufacturing
programs through commercialization.
Avid Bioservices reported a net loss of $10.47 million for the year
ended April 30, 2020, a net losses of $4.21 million for the year
ended April 30, 2019, and a net loss of $21.81 million for the year
ended April 30, 2018.
BALTIMORE HOTEL: S&P Retains 'CCC' Bond Rating on Watch Negative
----------------------------------------------------------------
S&P Global Ratings retains the 'CCC' rating on Baltimore Hotel
Corp.'s (BHC's) senior secured revenue refunding bond on
CreditWatch, where it was placed with negative implications on Feb.
22, 2021, given that the potential for default within the next 12
months still exists.
BHC owns Hilton Baltimore, which is connected to the Baltimore
Convention Center and operated by an affiliate of Hilton Worldwide
Holdings Inc. since August 2008. It is a 757-room convention center
hotel in downtown Baltimore's Inner Harbor area, overlooking Oriole
Park at Camden Yards and connected to the convention center by a
pedestrian bridge. The hotel has approximately 100,000 square feet
of meeting and prefunction space; two ballrooms of 42,400 square
feet; and a 567-space, four-story parking garage with two
subterranean levels. The hotel's net revenue and pledged city tax
revenue secure the bonds. City revenue includes a pledge of $7
million, subject to city appropriation, to be funded from the
citywide hotel occupancy tax (HOT) revenue. It also includes a
pledge of site-specific HOT revenue, which will vary based on the
project's occupancy, and the tax increment financing payment.
S&P said, "The hotel had a reduced cash deficit, leading to a
stronger liquidity position in the first month of reopening than
what we had previously expected. For April 2021, the hotel reported
a negative operational cash flow of $105,000, compared to our
expectation of negative $400,000-$500,000. The hotel achieved
$18.99 revenue per available room (about 11% of the April 2019
level), with 16.1% occupancy and $118.16 average daily rate. The
preliminary feedback from the project for its performances in May
and June may demonstrate a solid recovery to breakeven for monthly
operating expenses, driven primarily by leisure demand over the
weekend and some group demand for the hotel's meeting spaces.
Therefore, we expected the risk of the project not being able to
pay operating expense would be further mitigated given a recovery
that reduces cash deficits and drawing on the project's operating
reserve.
"However, we believe the risk of default still remains because the
project does not have sufficient funds to cover administrative
expenses, which could also lead to a covenant breach and subsequent
event of default after a 120-day grace period. In June, the project
requested a supplemental appropriation of about $2.2 million from
the City of Baltimore with the intention of covering this
administration expense deficit. Based on conversations with
management, we expect the supplemental appropriation to be approved
in the first week of July at the earliest. We believe this
liquidity injection, if approved, will be sufficient to cover
nearly two years of administrative expenses. We are actively
monitoring the status of the supplemental appropriation as a delay
would lead to a further rating downgrade."
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety.
S&P said, "We consider the impact of the COVID-19 pandemic to be a
social public health and safety issue, related to our ESG factors.
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. 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.
"The CreditWatch placement reflects our view that absent the
supplemental appropriation from the City of Baltimore, or a
faster-than-anticipated recovery of the hotel's performance that
could generate sufficient cash for administrative expenses, the
project could be exposed to an event of default via covenant breach
due to nonpayment of administrative expenses, leading to a further
ratings downgrade.
"We expect to resolve the CreditWatch placement within the next 90
days, or as soon as there is confirmation from the project
regarding the receipt of supplemental appropriation, or when the
hotel reports its June performance data."
BARENZ INVESTMENTS: May Use Cash Collateral Until July 12
---------------------------------------------------------
Judge Caryl E. Delano authorized Barenz Investments, LLC to use
cash collateral on an interim basis until 2 p.m. on July 12, 2021.
The Debtor is authorized to pay amounts expressly approved by the
Court; current and necessary expenses according to the budget; and
additional amounts that may be expressly approved in writing by its
secured creditor, American Capital Group, LLC (ACG).
The Debtor's budget provided for total revenue and operating
expenses, as follows:
Month Total Revenue Total Expenses
------- ------------- --------------
June $22,000 $26,104
July $25,000 $11,412
August $22,000 $10,987
September $16,000 $10,796
October $22,000 $10,747
November $22,000 $11,107
ACG consents to the monthly line item amounting to $3,000 for
"Owner Draws" (on a cumulative basis for both owner
representatives) for the length of the cash collateral order,
provided that the Debtor shall pay this line item last and only if
all other budgeted and actual expenses are paid on a monthly
basis.
The Court ruled that ACG shall have perfected postpetition liens
against cash collateral to the same extent and with the same
validity and priority as the prepetition lien.
The Court will consider ACG's request for adequate protection
payments at the continued hearing scheduled for July 12, 2021 at 2
p.m. via Zoom.
A copy of the order is available for free at https://bit.ly/3y2jMPH
from PacerMonitor.com.
About Barenz Investments, LLC
Barenz Investments, LLC operates a boutique beach guest house and a
hotel. The company filed a Chapter 11 petition (Bankr. M.D. Fla.
Case No. 21-02682) on May 24, 2021.
On the Petition Date, the Debtor reported $3,009,800 in total
assets and $1,427,953 in total liabilities. The petition was
signed by David Alan Barenz, manager.
Debt Relief Legal Group, LLC represents the Debtor as counsel.
BEAR COMMUNICATIONS: U.S. Trustee Appoints Creditors' Committee
---------------------------------------------------------------
The U.S. Trustee for Region 20 on June 29 appointed an official
committee to represent unsecured creditors in the Chapter 11 case
of Bear Communications, LLC.
The committee members are:
1. Advance Business Capital, LLC,
dba Triumph Business Capital
George Thorson, president
651 Canyon Drive, Suite 105
Coppell, TX 75019
Phone: 214-513-9615
E-mail: gthorson@tbcap.com
2. Erica Burnette
Huntsville, AL
3. Eagle Capital Corp.
Joe Estess, president
P.O. Box 4215
Tupelo, MS 38803
Phone: 662-844-5264
E-mail: joe@magnoliabusinesscentre.com
4. KLJ Engineering, LLC,
fka Kadrmas, Lee & Jackson, Inc.
Gregory Clum, chief operating officer
4585 Coleman St.
Bismarck, ND 58503-0431
Phone: 202-297-1633
E-mail: gregory.clum@kleng.com
5. Poblocki Paving Corp.
Paul Sagan, chief financial officer
525 S. 116th St.
West Allis, WI 53214
Phone: 414-476-9130
E-mail: psagan@poblockipaving.com
6. RC Underground, LLC
Andreaa Epure, owner
6421 Key Island Ave.
Apollo Beach, FL 33572
Phone: 954-478-2581
E-mail: ralukys@yahoo.com
7. Verizon Sourcing, LLC
Harley Raff, counsel
One Verizon Way
Mail Stop: 54S097A
Basking Ridge, NJ 07920
Phone: 908-559-1251
E-mail: harley.raff@verizon.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Bear Communications
Lawrence, Kan.-based Bear Communications, LLC --
http://www.bearcommunications.net-- is a communications contractor
offering aerial construction, underground construction, splicing,
subscriber drop placement, residential and commercial
installations, residential/commercial wiring, consulting, and
testing services.
Bear Communications filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Kansas Case No.
21-10495) on May 28, 2021. At the time of the filing, the Debtor
disclosed total assets of up to $50 million and total liabilities
of up to $100 million. Judge Dale L. Somers presides over the
case.
W. Thomas Gilman, Esq., at Hinkle Law Firm LLC, represents the
Debtor as legal counsel.
BELOIT COLLEGE: Moody's Withdraws Ba2 Rating on Series 2016 Bonds
-----------------------------------------------------------------
Moody's Investors Service has withdrawn Beloit College's (WI)
rating on the Series 2016 bonds. At the time of the withdrawal, the
rating was Ba2 and the outlook was negative.
RATINGS RATIONALE
Moody's has decided to withdraw the rating for its own business
reasons.
METHODOLOGY
The principal methodology used in this rating was Higher Education
published in May 2019.
BLTN GROUP: Seeks to Employ Maribel Koella as Real Estate Broker
----------------------------------------------------------------
The BLTN Group seeks approval from the U.S. Bankruptcy Court for
the Eastern District of Tennessee to hire Maribel Koella, a real
estate broker at NAI Koella RM Moore.
The Debtor requires a real estate broker to list and market its
property located at 7535 Connor Road, Knoxville, Tenn.
Ms. Koella will be paid a 6 percent commission on the gross sales
price.
Ms. Koella disclosed in a court filing that she is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The broker can be reached at:
Maribel Koella
NAI Koella RM Moore
255 N. Peters, Suite 101
Knoxville, TN 37923
Tel: +1 865 250 9001
Mobile: +1 865 250 9001
Email: mkoella@koellamoore.com
About BLTN Group
The BLTN Group filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tenn. Case No.
21-30559) on April 2, 2021. At the time of the filing, the Debtor
disclosed assets of between $1 million and $10 million and
liabilities of the same range. Judge Suzanne H. Bauknight oversees
the case. Moore & Brooks and Marret & Company, PLLC serve as the
Debtor's legal counsel and accountant, respectively.
BRILL BAKERY: Brill Inc. Sale No Impact on Moody's 'Caa2' CFR
-------------------------------------------------------------
Moody's Investors Service said Baker & Baker Group Limited's
(formerly CSM Bakery Solutions) agreement to sell its North
American baking business (Brill Inc.) is credit positive for Brill
Bakery Solutions LLC ("Brill") because it will facilitate the full
repayment of its outstanding debt using proceeds from the
transaction. Brill had approximately EUR188 outstanding under its
second lien secured term loan at March 31, 2021. Additionally, the
sale of Brill Inc. to Minneapolis, MN based Rise Baking Company
will eliminate the near-term refinancing need of Brill's existing
$100 million ABL revolver that comes due October 2021. There are no
immediate changes to Brill Bakery Solutions LLC's Caa2 Corporate
Family Rating or the Caa3 instrument rating on the senior secured
second lien term loans that are under review for upgrade. The
review for upgrade was initiated on April 14, 2021 when Baker &
Baker Group Ltd (at the time operating as CSM Bakery Solutions)
announced its planned divestiture of its European and International
Ingredients division to Investindustrial for approximately EUR650
million. The sale of Brill Inc. is expected to close in the summer
of 2021, pending regulatory approvals.
Moody's expects to withdrawal Brill's ratings upon completion of
the transaction if the second lien term loan is repaid.
Baker & Baker Group Ltd is headquartered in Cardiff, United
Kingdom. The company is managed out of its Brill Inc. US operations
located in Tucker, Georgia (USA). Baker & Baker produces and
distributes bakery ingredients and products for artisan and
industrial bakeries, and for in-store and out-of-home markets,
mainly in Western Europe and North America. The company supplies
bakery products finished or semi-finished. Annual sales are
approximately EUR1.0 billion, proforma for the divestiture of its
European and International ingredients division. The company is
owned and controlled by investment funds associated with private
equity firm Rhone Capital.
CALERES INC: Moody's Affirms B1 CFR & Alters Outlook to Positive
----------------------------------------------------------------
Moody's Investors Service changed Caleres, Inc.'s outlook to
positive from negative. Concurrently, Moody's affirmed all of the
company's ratings, including the B1 corporate family rating, B1-PD
probability of default rating and B2 senior unsecured notes rating.
The speculative grade liquidity rating was upgraded to SGL-1 from
SGL-3.
The change in outlook to positive from negative reflect Caleres'
significant earnings recovery coming out of the coronavirus
pandemic and Moody's view that credit metrics will continue to
improve driven by debt repayment and further earnings normalization
towards pre-pandemic levels over the next 12-18 months.
The SGL upgrade to SGL-1 from SGL-3 reflects Moody's expectations
for nearly $150 million in free cash flow in 2021 and over $300
million in excess availability under the $600 million asset-based
revolving facility, following the repayment of a significant
portion of 2020 revolver borrowings.
Moody's took the following rating actions for Caleres, Inc.:
Corporate Family Rating, affirmed B1
Probability of Default Rating, affirmed B1-PD
Senior Unsecured Regular Bond/Debenture, affirmed B2 (LGD5)
Speculative Grade Liquidity Rating, upgraded to SGL-1 from SGL-3
Outlook, changed to positive from negative
RATINGS RATIONALE
Caleres' B1 CFR reflects the company's diversified portfolio of
recognized footwear brands and solid recovery coming out of the
disruption in apparel and footwear spending due to the coronavirus
pandemic. Caleres' Famous Footwear business, which predominantly
sells casual and athletic shoes, returned to pre-pandemic levels of
adjusted operating profit in Q3 2020 and in Q1 2021 exceeded Q1
2019, supported by stronger footwear spending, a low level of
markdowns across the sector, and government stimulus. Moody's
expects growth to continue, driven by ongoing consumer demand for
casual footwear and a normalized back-to-school season in 2021.
While the Brand Portfolio remains below pre-pandemic levels due to
the pullback of orders by retail partners and the drag from the
dress shoe-oriented Allen Edmonds, Moody's expects the segment to
recover as consumers update their office-appropriate and going out
wardrobes. The credit profile also incorporates governance factors,
specifically the company's financial strategy, which balances
debt-financed acquisitions and opportunistic share repurchases with
maintaining moderate leverage levels. Caleres has reduced its
outstanding debt below pre-pandemic levels, and Moody's expects
continued debt repayment to support deleveraging. Moody's projects
leverage to decline to 2.6x in 2021, and EBIT/interest expense to
increase to 3.5x.
The credit profile is constrained by the fashion risk and high
level of competition in the apparel and footwear sector. The rating
also reflects Caleres' low margins relative to specialty retail
peers, narrow product focus, and sensitivity to shifts in consumer
discretionary spending. Despite an overall balanced financial
policy, Caleres financed its sizeable Allen Edmonds and Vionic
acquisitions with short-term debt, which Moody's views as
relatively aggressive. In addition, the acquisition of Allen
Edmonds underperformed initial expectations. As a retailer, the
company also needs to make ongoing investments in social and
environmental drivers including responsible sourcing, product and
supply sustainability, privacy and data protection.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if earnings continue to recover,
while the company maintains very good liquidity and balanced
financial strategies. Quantitatively, the ratings could be upgraded
if Moody's-adjusted debt/EBITDA is sustained below 3.25 times and
EBITA/interest expense above 2.75 times.
The ratings could be downgraded if earnings or liquidity decline.
More aggressive financial strategies, including debt-financed share
repurchases, could also lead to a downgrade. Quantitatively, the
ratings could be downgraded with expectations of Moody's-adjusted
debt/EBITDA maintained above 4 times or EBITA/interest expense
below 2.0 times.
Headquartered in St. Louis, Missouri, Caleres is a retailer and a
wholesaler of footwear. Its Famous Footwear chain, which generates
just over half of total revenue, sells moderately priced branded
footwear targeting families through about 913 stores in the U.S.
and Canada, and its e-commerce operations. Through its Brand
Portfolio segment, Caleres designs and markets owned and licensed
footwear brands including Naturalizer, Vionic, Sam Edelman, Allen
Edmonds, Dr. Scholl's, Blowfish Malibu, LifeStride, Franco Sarto,
Vince, Ryka, and Bzees. The Brand Portfolio segment also includes
specialty retail stores mostly under the Allen Edmonds brand in the
U.S. and Canada. Revenues for the twelve months ended May 1, 2021
were approximately $2.4 billion.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
CALIFORNIA-NEVADA METHODIST: Seeks Oct. 12 Exclusivity Extension
----------------------------------------------------------------
Debtor California-Nevada Methodist Homes asks the U.S. Bankruptcy
Court for the Northern District of California, Oakland Division to
extend the Debtor's exclusive periods to file a Chapter 11 plan to
October 12, 2021, and solicit acceptances to December 13, 2021.
This is the Debtor's first request for exclusivity extensions.
The Debtor has diligently moved forward toward reorganization,
which will likely involve the sale of the Debtor's Real Property to
benefit the Debtor's creditors. The Debtor has retained an
investment banking firm, B.C. Ziegler and Company, which will be
circulating to potentially interested parties in the next few days
a confidential offering memorandum regarding the potential
acquisition of:
(i) the Debtor's Lake Park continuing care retirement community
("CCRC") facility in Oakland, California;
(ii) the Debtor's Forest Hill CCRC facility in Pacific Grove,
California; and
(iii) an office building adjacent to the Debtor's Lake Park
facility.
Ziegler is in the process of contacting potential purchasers of the
Debtor's Real Property. Once a buyer is identified, a lengthy
regulatory approval process must then commence before the Debtor's
Real Property sale can be completed. Additional time likely will
enable the Debtor to identify the most suitable buyer and close the
sale of the Debtor's Real Property to that buyer.
Because some unresolved contingencies still exist in the Chapter 11
Case, an extension of the Exclusive Periods is appropriate.
Permitting other parties in interest to propose a plan of
reorganization while the sale and regulatory approval are still
pending, is likely to dissuade potential purchasers from making an
offer to purchase the Debtor's Real Property and may also drive
down the purchase price potential purchasers might offer or cause a
sale of the Debtor's Real Property to fall apart altogether.
The Debtors does not believe any party would be prejudiced by the
requested extension of the Debtor's Exclusive Periods. Rather, the
extension of exclusivity will permit the Debtor to advance its
efforts to sell the Debtor's Real Property at the highest possible
price, thereby maximizing the value of the Debtor's estate for the
benefit of all stakeholders.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3h6Bj3F from Stretto.com.
About California-Nevada Methodist Homes
California-Nevada Methodist Homes -- http://www.cnmh.org/-- is a
California non-profit public benefit corporation that operates
nursing homes and long-term care facilities. It presently operates
two continuing care retirement communities, one known as Lake Park,
in Oakland Calif., and the other, known as Forest Hill, in Pacific
Grove, Calif.
On March 16, 2021, California-Nevada Methodist Homes filed a
Chapter 11 petition (Bankr. N.D. Calif. Case No. 21-40363). The
Debtor estimated assets of $10 million to $50 million and
liabilities of $50 million to $100 million.
The Honorable Charles Novack is the case judge.
The Debtor tapped Hanson Bridgett LLP, led by Neal L. Wolf, Esq.,
as legal counsel; and Silverman Consulting and B.C. Ziegler and
Company as financial advisors. Stretto LLC is the claims agent.
The U.S. Trustee for Region 17 appointed an official committee to
represent unsecured creditors in the Chapter 11 case of
California-Nevada Methodist Homes. Perkins Coie, LLP serves as the
committee's legal counsel.
CARVER BANCORP: Incurs $4 Million Net Loss in Fiscal 2021
---------------------------------------------------------
Carver Bancorp, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$3.89 million on $20.31 million of total interest income for the
year ended March 31, 2021, compared to a net loss of $5.42 million
on $21.63 million of total interest income for the year ended March
31, 2020.
As of March 31, 2021, the Company had $676.75 million in total
assets, $624.45 million in total liabilities, and $52.30 million in
total equity.
Carver Bancorp stated, "The Company is closely monitoring its asset
quality, liquidity, and capital positions. Management is actively
working to minimize the current and future impact of this
unprecedented situation, and is making adjustments to operations
where appropriate or necessary to help slow the spread of the
virus. In addition, as a result of further actions that may be
taken to contain or reduce the impact of the COVID-19 pandemic, the
Company may experience changes in the value of collateral securing
outstanding loans, reductions in the credit quality of borrowers
and the inability of borrowers to repay loans in accordance with
their terms. The Company is actively managing the credit risk in
its loan portfolio, including reviewing the industries that the
Company believes are most likely to be impacted by emerging
COVID-19 events. These and similar factors and events may have
substantial negative effects on the business, financial condition,
and results of operations of the Company and its customers."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1016178/000101617821000011/carv-20210331.htm
About Carver Bancorp
Carver Bancorp, Inc., is the holding company for Carver Federal
Savings Bank, a federally chartered savings bank. The Company is
headquartered in New York, New York. The Company conducts business
as a unitary savings and loan holding company, and the principal
business of the Company consists of the operation of its
wholly-owned subsidiary, Carver Federal. Carver Federal was
founded in 1948 to serve African-American communities whose
residents, businesses and institutions had limited access to
mainstream financial services. The Bank remains headquartered in
Harlem, and predominantly all of its seven branches and four
stand-alone 24/7 ATM centers are located in low- to moderate-income
neighborhoods.
CEDAR FAIR: S&P Places 'B-' Issuer Credit Rating on Watch Positive
------------------------------------------------------------------
S&P Global Ratings placed all ratings on U.S. regional theme park
operator Cedar Fair L.P., including the 'B-' issuer credit rating,
on CreditWatch with positive implications.
S&P said, "The CreditWatch reflects the likelihood we will raise
ratings by one notch if we believe Cedar Fair can materially reduce
leverage starting in 2021 if recent pent-up demand trends for
out-of-home entertainment continue, including for Cedar Fair's
theme parks. Attendance at Cedar Fair's parks was depressed in 2020
due to park closures, cautious consumer behavior, government
restrictions, and discomfort with wearing masks for extended
periods in warm outdoor weather. Cedar Fair has not reported any
2021 attendance data, partly because its parks were closed for all
of the first quarter (Knotts Berry Farm was the only park open in
the same period of 2019), but we have observed a number of signals
that point toward a potentially sharp rebound this year. In
addition, all of Cedar Fair's parks except Canada's Wonderland were
reopened by Memorial Day weekend, which will be crucial as demand
ramps up this summer. While there are important differences in the
geographic locations of parks and the revenue model at regional
theme park operator SeaWorld Entertainment, we believe recently
disclosed attendance at SeaWorld could be a preliminary indication
of the continued recovery in attendance at Cedar Fair. SeaWorld
disclosed that its attendance at parks operating without
significant operating or capacity restrictions improved to around
15% below 2019 levels in April. The base case that underlies our
'B-' rating on Cedar Fair is for 2021 attendance that is 50%-55% of
2019 levels, which we will address and probably revise
significantly upward in resolving the CreditWatch. "In addition to
these attendance disclosures, a general recovery in out-of-home
entertainment is pacing ahead of our expectations as evidenced by:
-- Local governments have relaxed, or completely removed, social
distancing restrictions as over half of U.S. adults are fully
vaccinated according to the CDC. California, home to four of Cedar
Fair's parks including Knott's Berry Farm, lifted all restrictions
on June 15.
-- S&P said, "Our S&P Global economists now expect that the U.S.
could experience a summer boom, fueled by reduced virus fears,
elevated savings, and a pick-up in wages. Household spending, also
partly bolstered by accumulated savings from recent generous
government support, has continued to rise through June as the
economy reopened and the labor market steadily recovered. We expect
that out-of-home entertainment, including theme parks, could
benefit from this demand as consumers seek out-of-home
experiences." For example, both Disney and Comcast reported strong
demand for tickets, albeit at reduced capacity, at their Florida
theme parks; Live Nation recently reported record sell-out rates
for concert tours and music festivals; and the Indianapolis 500
easily sold out, although this is a well-known marquis sporting
event and partly due to being limited to 40% capacity and 135,000
tickets.
-- S&P said, "We believe that consumers are meaningfully less
resistant to, and to some extent eagerly reentering public spaces
due to pent-up demand that could drive a sharp rebound in
attendance at Cedar Fair's parks this summer. Additionally, Cedar
Fair recently loosened mask requirements in its parks following
updated CDC guidance, which we expect could benefit its attendance
during the key summer season. Depending on the pace of attendance
recovery, Cedar Fair could reduce leverage below our 7.5x upgrade
threshold at the current rating sooner than we previously
contemplated in the base case that underlies the current 'B-'
rating."
In addition, as of March 31, 2021, Cedar Fair had adequate
liquidity with about $272 million of cash on hand and $359 million
undrawn under its revolving credit facility. Cedar Fair also
reported that it burned about $35 million per month in the first
quarter of 2021, lower than previously expected because of improved
season pass sales. The company guided toward an expected cash burn
of approximately $60 million per month in the second quarter of
2021 due to expected capital investments, timing of interest
payments, and incremental operating costs associated with park
reopening. Cedar Fair's substantial ongoing cash burn and the $835
million of incremental debt it has issued since March 2020 could
prolong its already long road to reducing net leverage to its
stated policy range of 3x-4x. However, despite the impact of
incremental debt and a substantial cash burn through at least the
first half of 2021, attendance could plausibly still recover
sufficiently to drive EBITDA generation that pushes leverage below
S&P's 7.5x upgrade threshold this year.
S&P said, "We plan to resolve the CreditWatch over the next few
months, with the outcome largely dependent on how quickly
attendance recovers. We will also assess the company's likely
capital allocation policies, which will influence the pace of
deleveraging. Additionally, the company's business optimization
plan could deliver incremental EBITDA in 2021 and 2022 depending on
whether planned cost improvements are offset by potentially higher
wage costs. Lastly, we will monitor developments in the tight labor
market, which could affect Cedar Fair's capacity to successfully
deliver the guest experience and ramp up operations at its parks in
the key summer season. We believe that near-term ratings upside is
likely limited to one notch."
CHARTER NEXT: S&P Rates Senior Secured Credit Facilities 'B'
------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level ratings and '3'
recovery ratings to Charter Next Generation Inc.'s senior secured
credit facilities, including its $100 million revolving facility
due Dec. 1, 2025, and $1.596 billion term loan due Dec. 1, 2027.
The '3' recovery rating indicates S&P's expectation for meaningful
(50%-70%; rounded estimate: 50%) recovery in the event of a payment
default.
The company completed its sixth amendment to its credit facility on
June 29, 2021, which fully redeemed the previous debt and allowed
for a reduction to the applicable margin on the revolving loan and
first-lien term loan compared with the prior issuances. S&P said,
"As such, we have withdrawn our ratings on the company's previous
debt. Our ratings continue to include the proposed issuance of a
fungible $240 million incremental first-lien term loan to the
$1.596 billion facility, which we expect will be closed and funded
by late July."
All of S&P's existing ratings, including its 'B' issuer credit
rating, are unchanged.
With $987 million of revenue during its fiscal-year-ended Jan. 3,
2021, Milton, Wis.-based Charter Next Generation Inc. is an
independent producer of high-performance polyethylene films, and
focuses on the high-growth flexible packaging market serving the
food and consumer product packaging, medical, pharmaceutical, and
industrial surface protection applications. Financial sponsors
Kohlberg Kravis Roberts & Co. (KKR) and Leonard Green & Partners
L.P. are acquiring the company. S&P expects the company's adjusted
debt to EBITDA to hover within the 7.0x-7.5x range during most of
2021 following the proposed $240 million incremental first-lien
term loan issuance.
Issue Ratings - Recovery Analysis
Key analytical factors
-- The borrower of the credit facilities is Charter Next
Generation Inc. (formerly known as Charter NEX US Inc.).
-- The revolving credit facility and first-lien term loan each
have issue-level and recovery ratings of 'B' and '3', respectively,
indicating its expectation for meaningful recovery.
-- S&P does not rate the unsecured PIK toggle notes.
-- S&P said, "Our simulated default scenario contemplates a
default occurring in 2024 with the company experiencing distress
through the loss of its market shares to larger competitors while
newer innovative substitution products enter the market. The
company's EBITDA generation would deteriorate significantly,
especially if the lost business is on higher-margin products. We
also assume the company opts to start accreting PIK interest on the
holding company toggle notes in 2023 (the last year in which it has
the PIK toggle option) prior to the assumed default in 2024."
-- S&P continues to value the company on a going-concern basis
using a 5.5x multiple of our projected emergence EBITDA.
Simulated default assumptions
-- Year of default: 2024
-- Jurisdiction: U.S.
Simplified waterfall
-- Emergence EBITDA: $191 million
-- Multiple: 5.5x
-- Gross recovery value: $1.05 billion
-- Net recovery value for waterfall after administrative expenses
(5%): $1.0 billion
-- Obligor/nonobligor group: 100%/0%
-- Estimated first-lien debt claims: $1.92 billion*
--Recovery range: 50%-70%; rounded estimate: 50%
-- Estimated unsecured debt claims (accreted PIK notes): $549
million*
-- Pari passu secured (deficiency) claims: $923 million*
--Recovery range: 0%-10%; rounded estimate: 0%
*Note: Debt amounts include six months of accrued interest that we
assume the company will owe at default. Collateral value includes
asset pledges from obligors plus equity pledges in nonobligors. S&P
generally assumes usage of 85% for cash flow revolvers at default.
S&P assumes the company refinances any debt maturing before our
simulated default on similar terms.
CHICAGO, IL: Fitch Affirms BB+ Rating on 2013 Motor Fuel Tax Bonds
------------------------------------------------------------------
Fitch Ratings has affirmed the 'BB+' rating on Chicago, IL's motor
fuel tax (MFT) revenue Transportation Infrastructure Finance and
Innovation Act (TIFIA) bonds, series 2013 and MFT revenue refunding
bonds, series 2013. The Rating Outlook is revised to Positive from
Negative to match the Outlook on the state of Illinois' Issuer
Default Rating (IDR), to which this rating is linked.
SECURITY
The MFT bonds have a first lien on all MFTs distributed to the city
by the state, subject to annual appropriation by the state
legislature. Pledged MFT revenues are net of a statutory 25%
set-aside that must be used to improve non-arterial streets.
Additionally, various Riverwalk project-related revenues are
pledged as long as the TIFIA bonds remain outstanding.
ANALYTICAL CONCLUSION
The rating on Chicago's MFT bonds is capped at the 'BB+'
appropriation rating of the state of Illinois, one notch below its
'BBB-' IDR. The revision of the Rating Outlook to Positive from
Negative on the MFT bonds reflects the recent affirmation of
state's IDR and Outlook revision to Positive from Negative. The MFT
bond structure continues to provide solid protection against
potential revenue declines in Fitch's scenario analysis and would
support a higher rating absent the rating cap. The structure's
resilience assessment reflects a boost in revenues related to a
change in the MFT rate, in addition to a reduction in leverage
following the refunding of the MFT revenue bonds, series 2008A from
proceeds of bonds recently issued by the Chicago Sales Tax
Securitization Corporation.
KEY RATING DRIVERS
Growth Prospects for Revenues: Fitch expects fuel tax revenue
growth to remain stagnant (absent policy action) following a
significant bump in revenues in 2020 as a result of a doubling of
the tax rate effective July 2019. Fitch's 'bbb' growth prospect
assessment reflects the sensitivity of the revenue stream to fuel
prices, economic cycles and increasing fuel efficiency of vehicles,
improved by the new statutory indexing of the rate to the CPI.
Strong Resilience: The MFT structure exhibits solid cushion against
potential revenue declines, consistent with a 'a' resilience
assessment, even when assuming full leverage to the 2.0x maximum
annual debt service (MADS) additional bonds test (ABT). Fitch
believes the fuel tax revenue bonds resilience assessment could
support a higher rating on the bonds absent the state rating cap.
State Appropriation Rating: The rating is capped at one notch below
the state's IDR, as the city's receipt of MFT revenues is subject
to appropriation by the state. Fitch recently revised the Outlook
on Illinois' 'BBB-' IDR to Positive from Negative based on the
state's preservation of fiscal resilience given the quick and
sustained economic recovery since the start of the pandemic,
coupled with the state's unwinding of certain nonrecurring fiscal
stimulus. Recent fiscal results and the enacted fiscal 2022 budget
suggest further improvements in operating performance and
structural balance in the near and medium term that could support a
return to the pre-pandemic rating or higher.
RATING SENSITIVITIES
Factor that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
-- An upgrade of the Illinois' IDR/appropriation ratings would
likely result in a change to the MFT rating.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Negative action on the Illinois' IDR/appropriation ratings.
-- Although not expected, severe declines in MFT revenues that
weaken the MFT bond structure's resilience.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CURRENT DEVELOPMENTS
MFT revenues continue to provide robust coverage of MADS and would
support a higher rating absent the state rating cap. MFT revenues
will continue to exceed those collected pre-pandemic as the state
increased the MFT rate to 38 cents per gallon from 19 cents
effective July 2019. As a result, MFT revenues increased 19.9% in
2019, reflecting a six-month period of collections at the higher
tax rate. Unaudited MFT revenues in 2020 totaled $101 million or a
22.5% increase over 2019 levels. Net of the statutory set aside,
pledged MFT revenues of approximately $75.8 million provide robust
coverage of MADS ($14.5 million) at roughly 5.2x. MFT revenues are
budgeted at $105.5 million in 2021 with actual collections through
the first months of the year reported by the city at $31.7 million
or 30% of the annualized budgeted amount.
ECONOMIC RESOURCE BASE
Chicago acts as the economic engine for the Midwestern region of
the United States and offers abundant and diverse employment
opportunities. The city also benefits from an extensive
infrastructure network, including a vast rail system, which
supports continued economic growth. The employment base is
represented by all major sectors including wholesale trade,
professional and business services and financial sectors, with no
one sector dominating. Socioeconomic indicators are mixed as is
typical for an urbanized area, with above-average per capita income
and educational levels but also elevated individual poverty rates.
The city's estimated population declined by a modest 0.7% since the
2010 Census, while the state's declined 1.9% and the U.S. grew by
6.7%.
DEDICATED TAX CREDIT PROFILE
Rating Cap
The rating on the bonds is limited to one notch below Illinois' IDR
as the city's receipt of MFT revenues is subject to appropriation
by the state legislature.
MFT Rate Increase Provides One-time Revenue Boost
The state amended the MFT statute resulting in an increase in the
MFT rate to 38 cents per gallon from 19 cents effective July 2019.
The rate will be automatically adjusted annually to keep pace with
inflation. The city plans to allocate the additional revenues to
ongoing department of transportation (CDOT) projects, providing
some relief to the general fund, which currently provides funding.
MFTs are collected monthly by the state and, once appropriated, are
allocated first to priority distributions (including those for the
state boating act fund, grade-crossing protection fund, and vehicle
inspection fund, among others). The balance is then split between
state (45.6%) and local governments (54.4%) with municipalities
garnering the bulk (49.1%) of the local portion. The city of
Chicago receives a share of the municipality portion, based upon
its population relative to all incorporated municipalities within
the state.
Resilience Analysis Excludes Riverwalk Component
Certain revenues associated with the city's Riverwalk venue
(approximately $2.6 million in 2020) are also pledged to all series
of MFT bonds, but only as long as the 2013 TIFIA bonds are
outstanding (the TIFIA bonds have a scheduled final maturity of
2048 but are subject to earlier prepayment). Given the difficulty
in predicting future Riverwalk receipts and the limited duration of
the pledge, Fitch does not consider the additional revenues in its
analysis, but they are included in the definition of revenues for
the ABT.
Slow Revenue Growth Anticipated
MFT revenues are likely to remain relatively stagnant,
notwithstanding the bump expected due to the increase in the rate
and the subsequent indexing of the rate to the CPI. This reflects
Fitch's expectations of a long-term, national trend of stable to
declining fuel consumption and the city's stagnant to declining
population trends pre-pandemic.
MFT Resilience Remains Sound
Fitch uses the Fitch Analytical Stress Test (FAST) model, which
relates the volatility of historical transit sales surtax revenues
to U.S. GDP, to evaluate the sensitivity of the dedicated tax
structure to a moderate recession scenario (a 1% decline in U.S.
GDP). Based on the historical performance of pledged MFTs (net of
the 25% set-aside and excluding Riverwalk revenues), FAST yields a
7% revenue decline. Fitch also considers the largest historical
cumulative revenue decline over the period covered by the
sensitivity analysis, which was a nearly 24% decline between
2006-2011.
Assuming the revenue stream is leveraged to the maximum amount
allowed under the 2.0x additional bonds test, pledged revenues
could withstand an approximately 50% decline (adjusted for
Riverwalk revenues excluded from Fitch's analysis) before they were
insufficient to fully cover existing maximum annual debt service.
The revenue cushion equates to 2.1x the largest actual historical
cumulative decline or 7.1x the FAST scenario. Fitch views these
results as consistent with an 'a' level of resilience, implying the
rating on Chicago's MFT bonds would be higher absent the rating
cap.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The rating of the city of Chicago's MFT revenue bonds is directly
linked to the IDR of the state of Illinois. A downgrade or
assignment of a RW negative on the IDR of the state of Illinois
would automatically result in a change in the rating on the MFT
revenue bonds.
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.
CINEMA SQUARE: Cash Collateral Deal with Trustee OK'd
-----------------------------------------------------
Judge Deborah J. Saltzman approved the stipulation between Cinema
Square LLC and 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 --
over the Debtor's continued use of the Lender's cash collateral.
As previously reported by the Troubled Company Reporter, the
stipulation provided that (i) the Debtor may use cash collateral
pursuant to the budget; (ii) the Debtor may remit to the Lender
monthly interest payments at the non-default rate of interest
beginning August 15, 2021 according to the loan documents and the
budget, with subsequent monthly payments due no later than the 15th
day of each month thereafter; (iii) 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; and (iv) the Debtor will grant the
Lender a super-priority claim pursuant to Section 507(b) of the
Bankruptcy Code to the extent the Replacement Lien is determined by
the Court to be inadequate.
A copy of the stipulation is available for free at
https://bit.ly/3h3d723 from PacerMonitor.com.
Accordingly, Judge Saltzman ruled that the Debtor is authorized to
use cash collateral and Wilmington Trust is granted a replacement
lien pursuant to the terms of the stipulation.
Moreover, Judge Saltzman ruled that the United States Small
Business Administration (SBA) is granted a replacement lien in the
Debtor's postpetition assets of the same type and class that
comprise its asserted prepetition collateral to the extent
necessary to prevent diminution in the SBA's prepetition collateral
securing the SBA Loan as a result of the Debtor's use of SBA's
prepetition collateral. The replacement lien has the same
validity, extent and priority as any asserted pre-petition lien in
favor of the SBA.
A copy of the order is available for free at https://bit.ly/3x6rMPA
from PacerMonitor.com.
The Court will continue hearing on the Debtor's cash collateral
motion on November 16, 2021 at 11:30 a.m.
About Cinema Square LLC
Santa Barbara, Calif.-based Cinema Square, LLC is the owner of a
small shopping center located at 6917 El Camino Real, Atascadero,
California.
Cinema Square sought protection under Chapter 11 of the 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.
Beall & Burkhardt, APC and Damitz, Brooks, Nightingale, Turner &
Morrisset serve as the Debtor's legal counsel and accountant,
respectively.
CITY WIDE COMMUNITY: Seeks to Hire Capstone as Property Manager
---------------------------------------------------------------
City-Wide Community Development Corporation and its affiliates seek
approval from the U.S. Bankruptcy Court for the Northern District
of Texas to hire Capstone Real Estate Services, Inc.
Capstone will oversee the management and operation of the Lancaster
Urban Village Apartments owned by Lancaster Urban Village
Residential, LLC, an affiliate of City-Wide Community Development.
The property is located at 4417 South Lancaster, Dallas.
The firm will receive a fee of 2.5 percent of the gross monthly
income or $1,500 per month, whichever is greater. In addition, a
leasing fee of $200 per unit will be paid to the manager when the
resident signs the lease agreement and pays the deposit for the
first month's rent until a 90 percent occupancy level is achieved.
As disclosed in court filings, Capstone does not represent
interests adverse to the Debtors or their estate in the matters
upon which the firm is to be engaged.
The firm can be reached through:
Matthew C. Lutz
Capstone Real Estate Services, Inc.
210 Barton Springs Road, Suite 300
Austin, TX 78704
Phone: 512-646-6700
Email: info@capstonemanagement.com
About City-Wide Community Development Corp.
City-Wide Community Development Corp. and affiliates are primarily
engaged in renting and leasing real estate properties.
City-Wide Community Development Corp. and affiliates Lancaster
Urban Village Residential, LLC and Lancaster Urban Village
Commercial, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Texas Lead Case No. 21-30847) on April
30, 2021. In the petitions signed by Sherman Roberts, president
and chief executive officer, the Debtors disclosed $12,026,657 in
assets and $10,332,946 in liabilities.
Judge Michelle V. Larson oversees the cases.
The Debtors tapped Wiley Law Group, PLLC as legal counsel, Neal A.
Walker, CPA, P.C. as accountant, and Capstone Real Estate Services,
Inc. as property manager.
CITY WIDE COMMUNITY: Seeks to Hire Neal A. Walker as Accountant
---------------------------------------------------------------
City-Wide Community Development Corp. and its affiliates seek
approval from the U.S. Bankruptcy Court for the Northern District
of Texas to hire Neal A. Walker, CPA, P.C., as its accountant.
The firm's services include:
a. auditing services, including completion of the examination
of financial statements as of May 31, 2021, which examination is
currently in progress;
b. assistance in the preparation of accounting statements as
of May 31, 2021;
c. assistance in the preparation of monthly accounting to the
bankruptcy court and the official unsecured creditors' committee;
d. assistance in the preparation of cash flow forecast for the
period commencing June 1, 2021;
e. assistance in the preparation of trial exhibits for plans
of reorganization;
f. preparation of tax returns; and
g. all other accounting services that the Debtors may
require.
The firm will charge $225 an hour for accounting services.
As disclosed in court filings, Neal A. Walker does not represent
interests adverse to the Debtors or their estate in the matters
upon which the firm is to be engaged.
The firm can be reached through:
Neal A. Walker, CPA
Neal A. Walker, CPA, P.C.
400 N. St. Paul St., Suite 1210
Dallas, TX 75201
Phone: (972)223-9700
Email: info@nawcpa.com
About City-Wide Community Development Corp.
City-Wide Community Development Corp. and affiliates are primarily
engaged in renting and leasing real estate properties.
City-Wide Community Development Corp. and affiliates Lancaster
Urban Village Residential, LLC and Lancaster Urban Village
Commercial, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Texas Lead Case No. 21-30847) on April
30, 2021. In the petitions signed by Sherman Roberts, president
and chief executive officer, the Debtors disclosed $12,026,657 in
assets and $10,332,946 in liabilities.
Judge Michelle V. Larson oversees the cases.
The Debtors tapped Wiley Law Group, PLLC as legal counsel, Neal A.
Walker, CPA, P.C. as accountant, and Capstone Real Estate Services,
Inc. as property manager.
COMMERCIAL VEHICLE: Moody's Rates New First Lien Loans 'B2'
-----------------------------------------------------------
Moody's Investors Service affirmed Commercial Vehicle Group, Inc.
(CVG)'s corporate family rating at B2 and the probability of
default rating at B2-PD, assigned a B2 rating to its new senior
secured first lien credit facilities and withdrew the B2 rating on
the 1st lien bank credit facility due April 2023. The outlook is
stable.
The rating actions reflect the leverage neutral nature of CVG's
refinancing with debt at the same class. Proceeds from the new bank
term loan and some cash repaid in full the 1st lien bank credit
facility due 2023. The new capital structure, which closed end of
April 2021, extends debt maturities and also enhances free cash
flow generation by reducing cash interest expense by approximately
$12 million per year.
The following rating actions were taken:
Affirmations:
Issuer: Commercial Vehicle Group, Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Assignments:
Issuer: Commercial Vehicle Group, Inc.
Senior Secured 1st Lien Revolving Credit Facility, Assigned B2
(LGD3)
Senior Secured 1st Lien Term Loan A, Assigned B2 (LGD3)
Withdrawals:
Issuer: Commercial Vehicle Group, Inc.
Senior Secured 1st Lien Term Loan, Withdrawn at B2 (LGD4)
Outlook Actions:
Issuer: Commercial Vehicle Group, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
CVG's ratings reflect its competitive position as an OEM supplier
to builders of commercial trucks (Class 5-8) of seating systems,
trim and wire harnesses, and what is expected to be an improving
build rate of new trucks into next year. Moody's expects CVG's
revenues to increase by at least 15% in 2021, following a 20%
decline in 2020, with significant recovery in North American truck
build.
Given the highly cyclical nature of truck builds, CVG has
maintained a low amount of funded debt with generally moderate
leverage compared to other issuers at the same rating level.
Despite supply chain and inflation pressures, CVG's end markets
should be favorable enough for profits to produce Moody's-adjusted
debt to EBITDA improving to near a 3x level in 2021.
However, as CVG diversifies its exposure away from the trucking
industry, CVG could become aggressive with debt financed
acquisitions to grow its warehouse automation business or even to
tolerate higher leverage as its revenue sources become less
cyclical.
CVG has undertaken a strategic shift as management looks to add
business with less cyclical revenue than new-build commercial
trucks, and also with high long-term growth prospects. These
include a build-out of its warehouse automation systems which the
company entered through its late-2019 acquisition of First Source
Electronics, and also to expand into last mile delivery vehicles.
Favorable trends in e-commerce support the growth in these areas.
However, competition for warehouse automation services is expected
to be intense with many larger, traditional manufacturing companies
having entered the space. Furthermore, this new strategic focus is
unprecedented for CVG so there is meaningful execution risk and the
need to balance investments to sustain the position as a truck
supplier while growing a separate business line.
CVG also operates with relative modest scale, and customer and
geographic concentrations in its core business. Although CVG has
reduced its exposure to the most cyclical heavy truck production,
it still remains significant at approximately 35%.
Near term, CVG will have to make investments to meet production
growth, through working capital usage and capital expenditures.
This will pressure on free cash flow. Further, CVG is also expected
to face headwinds from chassis shortages and inflationary pressures
associated with labor and freight in 2021.
The stable outlook reflects Moody's view that CVG will maintain
moderate leverage with debt/EBITDA around 3x along with adequate
liquidity with positive free cash flow as the company continues its
ongoing shift to diversify away from its core trucking business.
CVG's SGL-3 liquidity rating reflects Moody's expectation for an
adequate liquidity from cash of $38 million at the end of March
2021 (although a substantial portion is outside the US) and
modestly positive free cash flow. In the new bank credit facility
there is a more onerous mandatory amortization requirement. CVG has
a $125 million senior secured revolver, which is expected to fund
occasional seasonal working capital needs. Moody's anticipates that
the company will maintain solid cushion with its leverage covenant
and minimum fixed charge coverage ratio covenant.
The B2 rating of the new senior secured credit facilities is in
line with the CFR in that all of the debt and the majority of the
liability claims are from the senior secured debt. In the
refinancing, CVG replaced its ABL facility with a secured bank
revolver. The B2 rating on the secured credit facilities reflects a
one notch override down of the outcome of the Loss Given Default
model as Moody's anticipates potential for additional borrowings
for working capital, internal growth projects and working capital,
and those borrowings would also be secured.
ESG CONSIDERATIONS
The company's role in the commercial vehicle industry exposes it to
environmental risks arising from increasing regulations on carbon
emissions, particularly as it relates to its end customers. Moody's
views CVG's risk to be manageable with certain opportunities in its
electrical systems segment to contribute to trends toward
longer-term electrification of commercial vehicles.
As a publicly traded company that has maintained a relatively low
amount of funded debt due to exposure to highly cyclical class 8
commercial truck market, Moody's views CVG's governance risk as
low.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RAT INGS
The ratings could be upgraded if CVG demonstrates ability to
withstand inherent volatility in its primary end markets, while
profitably expanding its presence in growing business areas,
specifically warehouse automation. This can be demonstrated by
maintaining EBITA margins in the high-single digit range and
debt/EBITDA below 3.5x, along with strong liquidity.
The ratings could be downgraded if CVG's liquidity position
deteriorates from an inability to generate positive free cash flow
or if Moody's expects debt/EBITDA to be sustained above 5x.
The principal methodology used in these ratings was Automotive
Suppliers published in May 2021.
CVG is a global provider of components and assemblies into two
primary end markets -- the global vehicle market and the U.S.
technology integrator markets. The company provides components and
assemblies to global vehicle companies to build original equipment
and provides aftermarket products for fleet owners. The company
also provides mechanical assemblies to warehouse automation
integrators and to U.S. military technology integrators. Revenue
for the twelve months ending March 2021 was $776 million.
CORP GROUP BANKING: Bonds Dive for 2nd Day After Chapter 11 Filing
------------------------------------------------------------------
Valentina Fuentes of Bloomberg News reports that the yield of Corp
Group Banking's $500 million notes due in 2023 rose 5.6 percentage
points in the last two days after the financial holding company
controlled by businessman Alvaro Saieh sought Chapter 11 protection
on Friday, June 25, 2021. Yields increased to 107.6% from 102%
before the announcement. Bonds traded at 26.8 cents on the dollar,
from 28.3 on Friday, June 25, 2021. The announcement also affected
shares of lender Itau CorpBanca, which fell as much as 5% on
Tuesday, June 29, 2021, in Santiago to their lowest since Nov.
2020.
About Corp Group Banking SA
Corp Group Banking SA is a Chile-based financial holding firm
controlled by billionaire Alvaro Saieh. Corp Group owns a 26.6%
stake at Itau CorpBanca.
Corp Group Banking SA sought Chapter 11 protection (Bankr. D. Del.
Lead Case No. 21-10969) on June 25, 2021. The company estimated at
least $500 million in assets and debt in excess of $1 billion as of
the bankruptcy filing.
Pauline K. Morgan, of Young Conaway Stargatt & Taylor, LLP, is the
Debtor's counsel.
COTTAGE CAR WASH: Gets Interim Cash Access Thru September 30
------------------------------------------------------------
Judge Janet E. Bostwick authorized Cottage Car Wash, LLC to use
cash collateral on an interim basis through September 30, 2021, on
the same terms and conditions under the Order Authorizing Interim
Use of Cash Collateral dated April 30, 2021.
The April 30 cash collateral order provided that the Debtor's
secured creditor, LendingClub Bank National Association f/k/a
Radius Bank, is granted a continuing replacement lien and security
interest in all of the Debtor's assets in which the Secured
Creditor possessed a security interest as of the Petition Date, to
the same validity and extent and priority that it would have had
prepetition, to secure any diminution in value of its collateral as
a result of the use of cash collateral.
The Debtor is directed to pay the Secured Creditor monthly adequate
protection of $5,263.
About Cottage Car Wash
Cottage Car Wash, LLC, a Norfolk, Mass.-based company in the car
wash business, filed a voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. D. Mass. Case No. 21-10596) on
April 26, 2021. Michael Brabants, manager, signed the petition.
The Debtor disclosed total assets of $916,000 and total liabilities
of $1,481,676. Judge Janet E. Bostwick oversees the case. Madoff
& Khoury LLP serves as the Debtor's legal counsel.
COUNCIL FOR AID: Case Summary & 6 Unsecured Creditors
-----------------------------------------------------
Debtor: Council For Aid To Education, Inc.
1732 First Avenue
New York, NY 10120-8000
Business Description: Council For Aid To Education, Inc., a
Delaware not-for-profit corporation,
develops performance-based and custom
assessments that authentically measure
students' essential college and career
readiness skills and identify opportunities
for student growth.
Chapter 11 Petition Date: June 30, 2021
Court: United States Bankruptcy Court
Southern District of New York
Case No.: 21-11221
Debtor's Counsel: James B. Sowka, Esq.
SEYFARTH SHAW LLP
233 S. Wacker Drive
Suite 8000
Chicago, IL 60606
Tel: 312-460-5000
Fax: 312-460-7000
Email: jsowka@seyfarth.com
Debtor's
Co-Counsel: Jeffrey A. Cooper, Esq.
RABINOWITZ, LUBETKIN & TULLY, LLC
293 Eisenhower Parkway, Suite 100
Livingston, NJ 07039
Tel: (973) 597-9100 ext. 118
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Robert J. Yayac, CEO and president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's six unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/O7JQQLI/Council_For_Aid_To_Education_Inc__nysbke-21-11221__0001.0.pdf?mcid=tGE4TAMA
COUNCIL FOR AID: Seeks Cash Collateral Access
---------------------------------------------
Council for Aid to Education, Inc. asks the U.S. Bankruptcy Court
for the Southern District of New York for authority to use cash
collateral and provide adequate protection.
The Debtor seeks to utilize cash collateral to fund its ongoing
business operations and enable it to reorganize.
As of the Petition Date, the Debtor is the borrower under a
Relationship Ready Line of Credit with Citibank, N.A., executed and
entered into on May 18, 2012 in the original principal amount of
$500,000.
As of the filing, the Debtor is indebted to Citi in the principal
amount of $478,097.85 with accrued interest of $1,195.65.
The Debtor agrees and acknowledges that the Citi obligations are
secured pursuant to a duly perfected security interest in, and
liens upon, substantially all of the Debtor's assets.
As adequate protection for, and to the extent of any decrease in
the value of Citi's secured interest in the Debtor's assets arising
from the Debtor's use of Cash Collateral, Citi is granted a
replacement post-petition security interest in fixtures and
personal property and proceeds and products of that personal
property, together with a post-petition replacement lien and
security interest on Citi's Pre-Petition Collateral and its
proceeds.
The Adequate Protection Lien will be subject to existing priority
liens as of the Petition Date, and will not extend to the estate's
avoidance claims under sections 544, 547, 548, and 550.
As additional adequate protection, the Debtor will make timely
interest payments and be granted a super-priority administrative
expense claim pursuant to section 507.
The Adequate Protection Lien and Super-Priority Claim will be
subordinate to a certain carveout for the court and the U.S.
Trustee's fees and the Debtor's professionals, as well as the
subchapter V trustee in an amount to be agreed by the parties.
A copy of the motion is available at https://bit.ly/2UQyBGN from
PacerMonitor.com.
About Council For Aid To Education, Inc.
Council For Aid To Education, Inc. sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 21-11221)
on June 30, 2021. In the petition signed by Robert J. Yayac, chief
executive officer and president, the Debtor disclosed up to $10
million in both assets and liabilities.
James B. Sowka, Esq., at Seyfarth Shaw LLP is the Debtor's
counsel.
DAVE & BUSTER'S: Considers Bankruptcy With New Recovery Plan
------------------------------------------------------------
Nina Rangel of San Antonio Current reports that after the pandemic
nearly forced it into Chapter 11 bankruptcy reorganization last
fall, Te,xas-based Dave & Buster's is hoping a new business plan
can put it on the path to a comeback.
The arcade-and-restaurant recently announced that it's acquired
seven exclusive new games, pared down its food menu, added new
in-store tech and third-party delivery as part of the revamp.
The moves come after the Dallas-based chain laid off 1,300 workers
across seven states during the height of the pandemic. It
temporarily closed its two San Antonio stores, located in Balcones
Heights and at Rivercenter Mall, but reopened them this spring.
D&B's new games include a life-size version of Hungry Hungry Hippos
and Minecraft Dungeons Arcade, along with new virtual reality
experiences, according to the company. The new food items include
chimichurri bowls, garlic parmesan truffle fries and strawberry
shortcake.
D&B officials said the company's 2021 outlook is positive, with 107
locations reopening in January — or 76% of its total footprint.
About Dave & Buster's Entertainment
Founded in 1982 and headquartered in Dallas, Texas, Dave & Buster's
Entertainment, Inc., is the owner and operator of 136 venues in
North America that combine entertainment and dining and offer
customers the opportunity to "Eat Drink Play and Watch," all in one
location. Dave & Buster's offers a full menu of entrées and
appetizers, a complete selection of alcoholic and non-alcoholic
beverages, and an extensive assortment of entertainment attractions
centered around playing games and watching live sports and other
televised events. Dave & Buster's currently has stores in 40
states, Puerto Rico, and Canada.
DELCATH SYSTEMS: Has 7.3 Million Shares Outstanding as of June 28
-----------------------------------------------------------------
The outstanding shares of common stock, $0.01 par value per share
of Delcath Systems, Inc. had increased by more than 5% since the
last reported shares of Common Stock outstanding.
As of June 28, 2021, the Company had 7,349,777 shares of Common
Stock issued and outstanding. The increase in outstanding shares
of Common Stock is due to (i) the conversion of 7,651.35 shares of
Series E Convertible Preferred Stock into 765,135 shares of Common
Stock, (ii) the conversion of 1,122.44 shares of Series E-1
Convertible Preferred Stock into 112,244 shares of Common Stock
(iii) the exercise of 3,750 Series F warrants to purchase 3,750
shares of Common Stock, (iv) the exercise of 4,341 Series E and E-1
warrants to purchase 4,341 shares of Common Stock and (v) the
exercise of 215,000 pre-funded warrants to purchase 215,000 shares
of Common Stock.
About Delcath Systems
Headquartered in New York, NY, Delcath Systems, Inc. --
http://www.delcath.com-- is an interventional oncology company
focused on the treatment of primary and metastatic liver cancers.
The Company's lead product candidate, Melphalan Hydrochloride for
Injection for use with the Delcath Hepatic Delivery System, or
Melphalan/HDS, is designed to administer high-dose chemotherapy to
the liver while controlling systemic exposure and associated side
effects. In Europe, Melphalan/HDS is approved for sale under the
trade name Delcath CHEMOSAT Hepatic Delivery System for Melphalan.
Delcath Systems reported a net loss of $24.15 million for the year
ended Dec. 31, 2020, compared to a net loss of $8.88 for the year
ended Dec. 31, 2019. As of March 31, 2021, the Company had $32.32
million in total assets, $12.31 million in total liabilities, and
$20.01 million in total stockholders' equity.
New York, NY-based Marcum LLP, the Company's auditor since 2018,
issued a "going concern" qualification in its report dated March
31, 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.
DIOCESE OF ROCHESTER: Committee Seeks to Hire Valuation Expert
--------------------------------------------------------------
The official committee of unsecured creditors of The Diocese of
Rochester seeks approval from the U.S. Bankruptcy Court for the
Western District of New York to hire The Claro Group, LLC, a
valuation expert based in Chicago, Ill.
The Committee requires a valuation expert in relation to the
Debtor's motion to settle with LMI/Interstate as well as other
possible events in the case.
The firm's hourly rates are as follows:
Katie McNally $625
John Cadarette $675
Managing Director $605 - $675
Director $495
Managers/Senior Managers $350 - $395
Analysts/Consultants/Senior Consultants $265 to $305
Katie McNally, the managing director of the firm, disclosed in a
court filing that she is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm holds office at:
Katie McNally
The Claro Group, LLC
123 N. Wacker Dr. Suite 2100
Chicago, IL 60606
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. 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 two 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 and Bonadio & Co. serve as the
diocese's legal counsel and accountant, respectively. Stretto is
the claims and noticing agent.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors in the diocese's Chapter 11 case. Pachulski
Stang Ziehl & Jones, LLP and Berkeley Research Group, LLC serve as
the committee's legal counsel and financial advisor, respectively.
ELASTIC NV: Moody's Assigns First Time B1 Corporate Family Rating
-----------------------------------------------------------------
Moody's Investors Service assigned to Elastic N.V. a B1 Corporate
Family Rating, B1-PD Probability of Default Rating, and a
Speculative Grade Liquidity rating of SGL-1. Concurrently, Moody's
assigned a B1 rating to Elastic's proposed $500 million senior
unsecured notes due 2029. Elastic plans to use proceeds from the
notes for general corporate purposes, including acquisitions and
strategic investments. The outlook is stable.
Assignments:
Issuer: Elastic N.V.
Corporate Family Rating, Assigned B1
Probability of Default Rating, Assigned B1-PD
Speculative Grade Liquidity Rating, Assigned SGL-1
Senior Unsecured Regular Bond/Debenture, Assigned B1 (LGD4)
Outlook Actions:
Issuer: Elastic N.V.
Outlook, Assigned Stable
RATINGS RATIONALE
Elastic's B1 CFR reflects the company's leading enterprise search
platform and its growing presence in the observability and security
markets; the company's exceptional revenue growth (56% CAGR in
fiscal 2018-2021), supported by expansion with existing customer
base and new customer wins; highly recurring revenue consisting of
subscription and SaaS and high renewal rates; very good liquidity;
and a very strong equity cushion relative to debt levels. Elastic
benefits from its extensive user base (developer community and paid
customers) and the broad applicability of its solutions (Enterprise
search, Observability and Security) that suggests large total
addressable market and growth opportunity for the company. The
rating also incorporates favorable secular trends, such as growing
volume of data and data sources, and the increasing complexity of
IT support demand for Elastic's solutions.
The rating is constrained by Elastic's modest scale and limited
operating history, relatively new offerings for the observability
and security use cases, and the highly competitive and rapidly
evolving technology landscape with many large and established
competitors. Elastic's rapid growth has been supported by large
investments in R&D and sales and marketing, which resulted in
operating losses, negative adjusted EBITDA (on a Moody's basis) and
weak free cash flow. When adjusting for stock-based compensation,
change in deferred revenue and cash costs to acquire contracts,
cash adjusted leverage pro forma for the transaction can be viewed
as 7.2x in fiscal 2021 (ending April 30). Given Elastic's
growth-oriented strategy and significant investments required to
support growth, free cash flow will likely remain limited and
deleveraging will be gradual over the next 2 years. Moody's
projects the company's revenue to grow in the high 20s over the
next 2 years and its free cash flow to debt to reach mid-single
digits in fiscal 2023. As the company scales over the longer term,
its profitability will improve, supporting stronger free cash flow
generation.
As a software company, Elastic's exposure to environmental risk is
considered low. Social risks are considered low to moderate, in
line with the software sector. Broadly, the main credit risks
stemming from social issues are linked to data security, diversity
in the workplace and access to highly skilled workers. Governance
considerations have positive impact on the rating and include
Elastic's public company status and its majority independent board
of directors. Given Elastic's growth strategy, Moody's does not
expect the company to pay dividends or do share buybacks over the
next several years and expects the company will maintain a
disciplined financial policy that balances shareholder and creditor
interests.
The stable outlook reflects Moody's expectation that Elastic's
organic revenue will grow in the high 20s, cash adjusted leverage
will decline below 4x and free cash flow to debt will improve to
mid-single digits in fiscal 2023. The stable outlook also reflects
the expectation that the company will maintain healthy cash balance
relative to debt levels.
The SGL-1 rating reflects very good liquidity supported by expected
cash and cash equivalents of approximately $901 million at the
close of the transaction. Moody's expects Elastic to be cash flow
generative over the next 12-18 months, with free cash flow to gross
debt in the mid-single digit percent range. The company does not
have access to an external revolving credit facility.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Elastic's ratings could be upgraded if the company maintains strong
revenue growth and improves free cash flow to the mid-teens range
as a percentage of gross debt. The upgrade will also require a
longer track record of conservative financial policies.
The ratings could be downgraded if Elastic's revenue growth is
weaker than currently projected, free cash flow to debt is not on
track to improve to mid-single digits, and/or the company were to
pursue more aggressive financial strategy that results in Moody's
adjusted cash leverage sustaining above 5x. Weakening liquidity
could also result in ratings pressure.
The principal methodology used in these ratings was Software
Industry published in August 2018.
Headquartered in Mountain View, CA, Elastic N.V. is a software
company that uses search technology across solutions for enterprise
search, observability, and security, built on one technology stack
that can be deployed on premises, within public or private clouds,
or in a hybrid model. The company generated revenue of $608.5
million in fiscal 2021 (ending April 30).
ELECTRONIC DATA: May Use Truist Bank's Cash Thru August 6
---------------------------------------------------------
Judge Lena Mansori James authorized Electronic Data Magnetics to
use cash collateral through the earlier of (i) August 6, 2021 at 5
p.m.; (ii) the entry of an order terminating or modifying the
Debtor's permitted use of Cash Collateral; or (iii) the entry of a
final order authorizing the use of Cash Collateral.
As of the Petition Date, the Debtor owed Truist Bank in excess of
$3,500,000 under certain prepetition loans and financial
accommodation. Truist asserts a valid and perfected security
interest in and lien on all accounts, equipment, inventory, and
general intangibles of the Debtor, and the proceeds thereof.
The Debtor also owed the U.S. the Small Business Association
$150,000 in original principal amount on account of a prepetition
loan. The SBA asserts a valid and perfected security interest in
and lien on all accounts of the Debtor, and the proceeds thereof as
set forth in the prepetition loan and security documents. The
Debtor is obligated to pay the SBA $731 monthly beginning May 28,
2021 pursuant to the SBA Debt.
Judge James ruled that notwithstanding any suspension or
termination of the right to use Cash Collateral, there shall be
carved out from Cash Collateral or any replacement collateral an
aggregate amount necessary to pay all Permitted Trailing Expenses.
Permitted Trailing Expenses shall mean the costs of operating and
preserving the estate, including allowed administrative fees,
costs, or expenses, to the extent incurred post-petition and prior
to the Termination Date, in an aggregate amount not to exceed 110%
of the aggregate amounts set forth in the budget through such
Termination Date, and labeled as Truist Expense.
The Debtor shall only be authorized to use Cash Collateral for the
purpose of paying the Truist Expense line items according to the
budget, and shall not use Cash Collateral for payment of any other
expense unless otherwise authorized by order of the Court.
The budget provided for Truist-funded monthly operating expenses,
as follows:
$31,960 for the week ending July 2, 2021;
$35,000 for the week ending July 9, 2021;
$21,000 for the week ending July 16, 2021;
$5,000 for the week ending July 23, 2021;
$5,000 for the week ending July 30, 2021; and
$30,000 for the week ending August 6, 2021.
Truist and the SBA are granted a valid, attached, choate,
enforceable, perfected and continuing security interest in and lien
on all postpetition assets of the Debtor that is of the same
character and type, and to the same extent, as the liens and
encumbrances that their security interests imposed upon the
Debtor's assets prepetition, to the extent the Debtor uses Cash
Collateral.
As additional adequate protection to Truist, the Debtor shall make
monthly adequate protection payments to Truist for the amount of
non-default rate of interest with respect to the First Note and the
Second Note contracted with Truist. The Debtor is not required to
pay interest with respect to the Paycheck Protection Program loan
granted by Truist to the Debtor.
With respect to the SBA, the Debtor shall keep the SBA Debt current
by making the regular monthly payments as set forth in the budget,
as additional adequate protection for the SBA's interest.
A copy of the order, along with the budget, is available for free
at https://bit.ly/3xXUUbU from PacerMonitor.com.
A further interim hearing on the motion will be held on August 6,
2021, at 9:30 a.m.
About Electronic Data Magnetics
Electronic Data Magnetics manufactures and reproduces magnetic and
optical media. The Company is a manufacturer of technically
advanced printed products used in a variety of markets including,
airlines, mass transit agencies, toll roads, parking institutions,
betting slips, printing for US GPO, tabulating cards, and RFID
tags.
Electronic Data Magnetics sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. M.D.N.C. Case No. 21-10222) on April
22, 2021. In the petition signed by R. Richard Hallman, president
and CEO, the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Lena M. James oversees the case.
James C. Lanik, Esq. at Waldrep Wall Babcock & Bailey PLLC is the
Debtor's counsel.
Truist Bank, as lender, is represented by Bell, Davis & Pitt, P.A.
ENTRAVISION COMMUNICATIONS: S&P Affirms 'B' ICR, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings affirmed the 'B' issuer credit rating on
Entravision Communications Corp.
S&P said, "The stable outlook reflects our expectation that digital
revenue will continue to be the main driver of revenue and EBITDA
growth and that the company will continue to prioritize using its
cash for tuck-in acquisitions. The shift in revenue toward the
digital segment will result in a lower EBITDA margin over the next
12 months, but leverage will remain in the low-4x area.
"We expect Entravision will prioritize tuck-in acquisitions over
debt repayment, such that leverage will remain above 4x over the
next few years. We believe the company will continue to use its
cash balance ($165.7 million as of March 31, 2021) to acquire
digital assets to improve the profitability of its digital segment
with greater scale. Entravision is in the process of acquiring
digital advertising company MediaDonuts Pte. Ltd. for a total cash
consideration of $22.5 million (including a $15 million up-front
payment and earn-out payments in 2023), which follows its
investment in digital advertising company Cisneros in October 2020.
We believe there are considerable execution risks to this strategy
as the digital advertising space is highly competitive. In
addition, the company reported deficiencies in internal controls
over financial reporting related to its digital businesses. We
would only view continued digital acquisitions as a positive to the
rating if the company were able to demonstrate a track record of
successfully integrating these acquisitions and materially
increased the EBITDA margin of its digital segment closer to its
broadcast business, such that broadcast TV were no longer the
majority of total EBITDA."
Digital acquisitions will drive revenue growth, but broadcast
television still generates the majority of Entravision's EBITDA.
Entravision acquired 51% of Cisneros Interactive in 2020 for
roughly $30 million in cash and both parties have an option to
force the sale of the remaining 49% in 2024 at a 6x multiple of
2023 EBITDA. S&P said, "We currently deconsolidate the redeemable
non-controlling interest from Entravision's revenue and EBITDA and
add the liability related to the put option to debt. This
acquisition has improved the company's revenue growth prospects,
but Cisneros has a much lower EBITDA margin (5%-7%) than the
traditional broadcast TV EBITDA margin (over 40%). We expect the TV
segment will account for roughly 70%-80% of Entravision's EBITDA
generation in 2021 and will account for the majority of EBITDA
until Entravision is able to achieve economies of scale in its
digital businesses."
S&P said, "We expect core advertising for local television will
largely recover in 2021. Core advertising revenue (excluding
political) for the local broadcast television industry has
continued to sequentially improve in the first half of 2021.
Entravision's core advertising revenue increased 3% in the first
quarter of 2021 compared with 2019. The recovery of the U.S.
economy has accelerated, with support from government stimulus and
widespread vaccination allowing markets to increasingly reopen, all
of which bodes well for ad spending. We expect ad spending will
continue to improve throughout 2021, particularly ad categories on
which the pandemic had a more pronounced impact, such as
restaurants and retail, which will benefit from increasing
vaccination rates and loosening capacity restrictions. We expect
core advertising revenue for the local broadcast television
industry will recover to about 90% of 2019 levels in 2021."
Core advertising contributed 65% of Entravision's total TV revenue
in 2020 compared with less than 50% for its peers. Entravision is
more exposed to core advertising revenue than its peers because its
retransmission revenue arrangement largely benefits Univision.
Entravision has long-term network affiliation agreements with
Univision for the exclusive right to broadcast Univision's primary
network and Uni-Mas network programming. In addition, unlike
English-language media, advertising rates for Spanish-language
media aren't commensurate with audience share. Univision's ratings
had been declining for several years, but began to improve in 2019,
which we believe could help Entravision stabilize its core
television advertising revenue in 2021.
S&P said, "We expect radio advertising's recovery will extend into
2022. Like television advertising, broadcast radio advertising has
sequentially improved since the onset of the pandemic. However,
radio advertising is more localized and depends on listening in the
car. In addition, we believe radio relies more on advertising for
out-of-home activities, such as restaurants, movies, and events,
which face a longer road to recovery from the pandemic. As a
result, we believe radio's recovery will take longer than for other
forms of traditional media and do not expect radio advertising
revenue to recover to about 90% of full-year 2019 levels until
2022. Further, 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. Radio revenue contributed 13% to Entravision's total
revenue in 2020.
"The stable outlook reflects our expectation that digital revenue
will continue to be the main reason for revenue and EBITDA growth
and that the company will continue to prioritize using its cash for
tuck-in acquisitions. The shift in revenue toward the digital
segment will result in a lower EBITDA margin over the next 12
months, but leverage will remain in the low-4x area."
S&P could lower the rating if:
-- Declines in Entravision's core advertising business
significantly outpaced the EBITDA growth from digital businesses,
leading to leverage increasing and remaining above 5x; or
-- Entravision used its cash balance for shareholder rewards or
acquisitions not immediately accretive to EBITDA, causing leverage
to be above 5x.
While unlikely at this time, S&P could raise the rating if:
-- The company returned to sustained positive organic core revenue
growth in the TV and radio segments or reduced its reliance on
broadcast advertising so it relied less on broadcast EBITDA; and
-- S&P expected the company to maintain leverage below 4x.
FIELDWOOD ENERGY: Court Confirms Eighth Amended Joint Ch. 11 Plan
-----------------------------------------------------------------
Judge Marvin Isgur confirmed the Eighth Amended Joint Chapter 11
Plan of Fieldwood Energy and its affiliated debtors.
The revisions incorporated into the Eighth Amended Plan provide
that:
* with respect to subrogation rights of surety providers in
connection with the "abandoned properties", sureties that have
furnished in favor of any Governmental Unit; including the United
States, on behalf of the Debtors; including for the Debtors'
Decommissioning Obligations, shall retain any subrogation rights
relating to obligations that both (x) accrue post-Effective Date
and (y) arise from post-Effective Date activity, if any, under such
bonds, as applicable and subject to the provisions of the Plan
documents.
Abandoned Properties refer to the Debtors' rights to and interest
in executory contracts and unexpired federal leases listed on the
Schedule of Abandoned Properties.
* the term "Additional Predecessor Agreement" was revised to
convey that the term refers to any postpetition, consensual
agreement (i) included in the Plan Supplement or (ii) that the
Debtors may enter into prior to or on the Effective Date, of which
notice was filed or given prior to the Effective Date, in each
case, with any entity or entities in the chain of title, co-working
interest owner(s), or other related party for decommissioning of or
transition services for any of the Abandoned Properties.
Prior to the revision, the term was defined as any consensual
agreement included in the Plan Supplement that the Debtors may
enter into prior to or on the Confirmation Date.
No other amendments were incorporated into the Eighth Amended Plan.
A blackline of the Eighth Amended Plan is available for free at
https://bit.ly/3h7Yg6x from Prime Clerk, claims agent.
A copy of the Findings of Facts, Conclusions of Law, and Order
Confirming the Eighth Amended Joint Plan is available for free at
https://bit.ly/2SGtRmA from Prime Clerk, claims agent.
The Eighth Amended Joint Plan
The provisions of the Plan and other documents entered into in
connection with the Plan constitute a good faith compromise and
settlement among the Debtors, the Consenting Creditors and the
Creditors' Committee of claims, Causes of Action and controversies
among such parties, including all potential claims, Causes of
Action and controversies, including those related to any Challenge
under the DIP Order.
A. Credit Bid Purchase Agreement
Credit Bid Purchase Agreement is Purchase and Sale Agreement
between Fieldwood Energy LLC, the other seller parties, and the
Credit Bid Purchasers (consisting of the Credit Bid Purchaser and
Mako Buyer LLC), subject to certain provisions.
Mako Buyer LLC is a newly formed special purpose bidding entity, a
purchaser of certain of the Debtors' assets pursuant to the Credit
Bid Purchase Agreement.
The Plan provides that (i) if the Confirmation Date occurs on or
before the Confirmation Outside Date or (ii) the Debtors, the
Required DIP Lenders, and Requisite FLTL Lenders do not otherwise
elect to pursue a 363 Credit Bid Transaction, then, on the
Effective Date, in accordance with the Credit Bid Purchase
Agreement:
a. all Credit Bid Acquired Interests shall be transferred to, and
the Credit Bid Acquired Interests owned by the Debtors shall vest
free and clear of all Liens; and
b. all Credit Bid Assumed Liabilities shall be assumed by the
Credit Bid Purchaser.
The Liens contemplated in (a) above do not include:
* the Liens securing the FLFO Claim or the obligations under the
First Lien Exit Facility;
* all Liens securing the FLTL Claims that attach to the Credit
Bid Acquired Interests and are deemed assigned to the Second Lien
Exit Facility Agent upon the Effective Date to secure the
obligations under the Second Lien Exit Facility; or
* Credit Bid Permitted Encumbrances except in the case of
Fieldwood U.A.Interests, which shall vest free and clear of all
Liens, Claims, charges, Interests, or other encumbrances, including
the Credit Bid Consent Rights and the Credit Bid Preferential
Purchase Rights.
B. Plan of Merger
The Plan contemplates the adoption of a Plan of Merger on the
Effective Date after consummation of the transactions contemplated
by the Credit Bid Purchase Agreement.
Pursuant to the Plan of Merger:
a. FWE Assets will be allocated to and vest in FWE I, FWE III,
and any FWE Additional Entity free and clear of all Plan of Merger
Consent Rights and Plan of Merger Preferential Purchase Rights;
and
b. 1. the FWE I Obligations shall be allocated to and shall vest
in, and shall constitute liabilities and obligations of, FWE I;
2. the FWE III Obligations shall be allocated to and shall
vest in, and shall constitute liabilities and obligations of, FWE
III; and
3. any obligations allocated to an FWE Additional Entity
pursuant to the Plan of Merger shall be allocated to and shall vest
in, and shall constitute liabilities and obligations of, such
applicable FWE Additional Entity.
C. Treatment of Unsecured Claims
a. Class 6A Unsecured Trade Claims
Holders of Class 6A claims, in full satisfaction of the Allowed
Unsecured Trade Claim and except to the extent that a holder of
such claim agrees to a less favorable treatment, shall receive on
or after the Effective Date:
* if 14% of the aggregate amount of all Allowed Unsecured Trade
Claims is less than or equal to $8,000,000, Cash in an amount equal
to 14% of the Allowed amount of such holder's Allowed Unsecured
Trade Claim; or
* if 14% of the aggregate amount of Allowed Unsecured Trade
Claims is greater than $8,000,000, its Pro Rata share of
$8,000,000.
b. Class 6B General Unsecured Claims
Holders of Class 6B Claims shall receive on or after the Effective
Date, 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, in full satisfaction of such
Allowed General Unsecured Claims, except to the extent that a
holder of an Allowed General Unsecured Claim agrees to less
favorable treatment.
A full-text copy of the Eighth Amended Joint Chapter 11 Plan is
available for free at https://bit.ly/2UdMyyv from Prime Clerk,
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. Tex. Lead Case No. 18-30648) on Feb. 15,
2018, with a prepackaged plan that would deleverage $3.286 billion
of funded by $1.626 billion.
On Aug. 3, 2020, Fieldwood Energy and its 13 affiliates again file
voluntary Chapter 11 petitions (Bankr. S.D. Tex. Lead Case No.
20-33948). Mike Dane, senior vice president and chief financial
officer, signed the petitions.
At the time of the filing, the Debtors disclosed $1 billion to $10
billion in both assets and liabilities.
Judge David R. Jones oversees the cases.
The Debtors tapped Weil, Gotshal & Manges LLP as their legal
counsel, Houlihan Lokey Capital, Inc. as investment banker, and
AlixPartners, LLP as financial advisor. Prime Clerk LLC is the
claims, noticing, and solicitation agent.
The first-lien group employed O'Melveny & Myers LLP as its legal
counsel and Houlihan Lokey Capital, Inc. as its financial advisor.
The RBL lenders employed Willkie Farr & Gallagher LLP as their
legal counsel and RPA Advisors, LLC as their financial advisor.
Meanwhile, the cross-holder group tapped Davis Polk & Wardwell LLP
and PJT Partners LP as its legal counsel and financial advisor,
respectively.
On Aug. 18, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. Stroock & Stroock & Lavan, LLP
and Conway MacKenzie, LLC serve as the committee's legal counsel
and financial advisor, respectively.
FIGUEROA MOUNTAIN: Cash Collateral Deal with White Winston OK'd
---------------------------------------------------------------
Judge Martin R. Barash approved the stipulation reached between
Figueroa Mountain Brewing, LLC, on the one hand, and its secured
creditors, White Winston Select Asset Funds, LLC and SCS
Acquisition LLC, successor in interest to Montecito Bank & Trust,
on the other hand.
Pursuant to the stipulation, the Debtor may use cash collateral on
a final basis from June 21, 2021 through the earlier of (a)
September 19, 2021, or (b) the date on which the Debtor's cash on
hand falls below the Cash Floor. The Debtor shall immediately
notify counsel for the Secured Creditors in writing if the Debtor's
cash on hand falls below the Cash Floor, which is initially set at
$750,000.
The Debtor may use Cash Collateral solely to pay the expenses set
forth in the budget subject to the Order on Application for Payment
of Interim Fees and/or Expenses for Lesnick, Prince & Pappas, LLP,
the Debtor's counsel.
If the Court grants the Debtor's request to approve a proposed
settlement agreement with party-in-interest Stephen Almaraz, the
Cash Floor shall be reduced by the amount of the settlement payment
made by the Debtor to Almaraz pursuant to the settlement.
Judge Barash ruled, referencing the terms of the ninth stipulation,
that White Winston and SCS shall continue to receive replacement
liens in post-petition collateral for any diminution in their
collateral as of the Petition Date arising from the Debtor's use of
the collateral to the same extent, applicability and validity as
the prepetition liens held by White Winston and SCS.
A copy of the referenced ninth stipulation is available for free at
https://bit.ly/2Tc8dqH from PacerMonitor.com.
A copy of the order is available for free at https://bit.ly/3qyJuJg
from PacerMonitor.com.
About Figueroa Mountain Brewing LLC
Founded in 2020, Figueroa Mountain Brewing, LLC --
https://www.figmtnbrew.com/ -- is in the business of manufacturing
beer with principal place of business in Buellton, Calif.
Figueroa Mountain Brewing sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-11208) on Oct. 5,
2020. Jaime Dietenhofer, the company's manager, signed the
petition.
At the time of the filing, the Debtor had estimated assets of
between $1 million and $10 million and liabilities of the same
range.
Judge Martin R. Barash oversees the case.
Lesnick Prince & Pappas LLP is the Debtor's legal counsel.
FIRST STUDENT: Moody's Assigns Ba3 CFR & Rates Secured Notes Ba3
----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 corporate family rating, a
Ba3-PD probability of default rating and a Ba3 senior secured
rating to First Student Bidco Inc., which is a co-borrower with
First Transit Parent Inc. and both are held under common control.
The rating outlook is stable.
First Student is launching a $1,490 million term loan B, $800
million senior secured notes and a $500 million revolving credit
facility, which, together with about $1.5 billion in equity from
EQT Infrastructure, will fund the acquisition of First Student and
First Transit from U.K. publicly-traded passenger transportation
services provider FirstGroup plc. The company is also launching a
$525 million term loan C, whose funds will be placed in restricted
accounts to collateralize letters of credit for insurance
liabilities. The rating action considers the company's significant
market positions in the outsourced student transportation and
transit service markets in North America, and the relative
stability of these end-markets. Governance was a consideration in
the rating action, as First Student will now be owned by a private
equity company and is likely to operate with high financial
leverage.
RATINGS RATIONALE
The ratings, including the Ba3 CFR, reflect the position of First
Student/First Transit as a North American leading provider of bus
transportation services for school districts, municipalities, and
transit authorities. The company benefits from its broad presence
in the United States and very high contract retention rates. The
rating also reflects increasing insurance and driver costs, the
need for high levels of capital expenditures that are necessary to
lower and maintain a low average bus fleet age, and the high
financial leverage relative to peers.
The customers of First Student/First Transit are highly rated
entities that receive public funding and rely on First
Student/First Transit services for critical transportation needs.
Even amidst severe drops in ridership during the peak of the
Covid-19 pandemic, the company continued to receive some level of
payment from its customers, which mitigated the earnings impact and
enabled it to generate positive free cash flow for the fiscal year
ending March 2021.
The credit profile also considers risks that stem from labor cost
inflation from a reduced supply of drivers relative to heightened
demand. Competition for drivers and the related pay scales are
rising due to the increase in home delivery services with online
shopping.
Similarly, the company also faces rising self-insurance costs that
have led to higher than expected payouts for insurance claims in
recent years and a large self-insurance liability approximating
$500 million. These factors will constrain margins in the near
term, but are mitigated by the company's ability to pass on some of
these costs to customers through inflation-indexed contracts and
customer negotiations.
Moody's expects EBITA margins to be slightly under 6% for fiscal
year ending March 2022 and to improve with time as costs normalize
and contracts are adjusted in the aftermath of the pandemic.
Financial leverage is high relative to rated peers in the industry,
with adjusted debt/EBITDA expected to remain in the high 5 times
level at fiscal year end. Leverage includes Moody's adjustments for
operating leases and a pension liability.
Liquidity is adequate. However, Moody's expects free cash flow to
be negative in the next six months as the company resumes higher
levels of fleet investments, after deferring some of these during
2020. Free cash flow should turn positive after that as demand
approximates pre-pandemic levels and capital expenditures moderate.
Cash and committed revolver availability of around $600 million in
aggregate will help manage near-term cash needs.
In the area of corporate governance, Moody's expects that the
company's new owner, EQT Infrastructure, will employ a long-term
investment strategy that entails no dividend distributions over the
next three to four years. Acquisitions remain a risk, but Moody's
expect the company to focus on small, bolt-on acquisitions in the
short term.
The Ba3 senior secured rating reflects the very sizeable proportion
of secured debt in the capital structure as reflected by the
planned $500 million revolving credit facility, $1,490 million term
loan B, $525 million term loan C and $800 million senior secured
notes. Each of these instruments will have a first lien security
position in all of the company's assets and the assets of the
guarantors.
As proposed, the new credit facilities are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
Incremental debt capacity is permitted up to the greater of closing
date EBITDA and 100% of trailing four quarter EBITDA, plus unused
capacity reallocated from the general debt basket, plus unlimited
amounts subject to a First Lien Secured Leverage Ratio (if pari
passu secured). Except for customary prepayment terms in connection
with customary escrow or similar arrangements, no portion of the
incremental may be incurred with an earlier maturity than the
initial term loans. The credit agreement permits the transfer of
assets to unrestricted subsidiaries, up to the carve-out
capacities, subject to "blocker" provisions which state that the
fair market value of such subsidiary shall be treated as an
investment by the parent company, which entails limitations as to
the amounts, and no event of default has occurred or will occur
upon the transfer. Non-wholly-owned subsidiaries are not required
to provide guarantees; dividends or transfers resulting in partial
ownership of subsidiary guarantors could jeopardize guarantees,
with no explicit protective provisions limiting such guarantee
releases.
The stable ratings outlook reflects Moody's expectation of the
school transportation end market approaching pre-pandemic levels
towards the back half of calendar year 2021, with the transit end
market slightly below that. The market stabilization should enable
the company to approximate pre-Covid revenue levels for fiscal year
ending March 2022, aided also by pricing measures, and EBITA
margins just below 6%.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if First Student manages to mitigate
the impact of self-insurance and other costs such that EBITA
margins are sustained at or close to 7%. Additional considerations
for an upgrade include improved financial leverage such that
debt/EBITDA is expected to remain at or below 4.5x. Improved
stability in free cash flow such that free-cash-flow-to-debt is
expected to be sustained in the low to mid single-digit range could
also lead to an upgrade.
The ratings could be downgraded if Moody's expects that EBITA
margins decrease to 4.5% or less, possibly due to continued
pressures from insurance and labor costs and an inability to pass
on some of those costs. Expectations that debt/EBITDA will remain
above 6x or a deterioration in liquidity, such that the company is
unable to generate moderate amounts of free cash flow could also
pressure the ratings.
The following rating actions were taken:
Assignments:
Issuer: First Student Bidco Inc.
Corporate Family Rating, Assigned Ba3
Probability of Default Rating, Assigned Ba3-PD
Senior Secured Regular Bond/Debenture, Assigned Ba3 (LGD3)
Senior Secured Bank Credit Facility, Assigned Ba3 (LGD3)
Outlook Actions:
Issuer: First Student Bidco Inc.
Outlook, Assigned Stable
First Student Bidco Inc. is a leading provider of student
transportation services in North America through long-term
contracts with school districts. First Transit Parent Inc., which
is a co-borrower and is held under common control with First
Student, provides contracted transportation services for transit
authorities and municipalities. Upon transaction close, the
companies will be owned by EQT Infrastructure. Revenues for the
fiscal year ended March 31, 2021, were approximately $2.9 billion.
The principal methodology used in these ratings was Passenger
Railways and Bus Companies Methodology published in January 2021.
FLYNN CANADA: Moody's Assigns First Time 'B1' Corp Family Rating
----------------------------------------------------------------
Moody's Investors Service assigned a B1 corporate family rating and
B1-PD probability of default rating to Flynn Canada Limited.
Moody's also assigned B1 senior secured ratings to the company's
proposed $300 million first lien term loan due 2028, and $75
million senior secured revolving credit and $10 million swingline
facilities due 2026. The outlook is stable. This is the first time
Moody's has rated Flynn.
Net proceeds from the new first lien term loan will be used to
refinance existing debt, pay shareholder distributions and share
buybacks, and fund an acquisition.
Assignments:
Issuer: Flynn Canada Limited
Corporate Family Rating, Assigned B1
Probability of Default Rating, Assigned B1-PD
Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Assigned B1
(LGD3)
Senior Secured 1st Lien Swingline Revolving Credit Facility,
Assigned B1 (LGD3)
Senior Secured 1st Lien Swingline Multi Currency Revolving Credit
Facility, Assigned B1 (LGD3)
Outlook Actions:
Issuer: Flynn Canada Limited
Outlook, Assigned Stable
RATINGS RATIONALE
Flynn's B1 CFR reflects (1) its leading market position as a
dedicated total building envelope contractor within a fragmented
industry; (2) strong business diversification supported by a wide
range of small-scale projects and recurring customers spread across
multiple markets in both Canada and the US; (3) a significant
portion of revenue (close to 40%) tied to the less volatile, higher
margin building services segment; and (4) Moody's expectation that
leverage will remain comfortably below 4.5x, settling around 4x by
year end 2022 (pro-forma 4.4x at LTM Apr-21). The company is
constrained by: (1) small scale in terms of EBITA (less than $100
million) relative to rated construction peers; (2) exposure to
cyclicality in the construction industry given dependence on new
projects (about 60% of revenue); (3) a highly competitive
environment given the fragmented nature of bidding processes; and
(4) financial policies that are likely to favor shareholders.
Flynn's first lien facilities ($300 million term loan due 2028, and
$75 million revolver and $10 swingline facilities due 2026) are
rated B1, at the same level as the CFR, since they represent the
preponderance of liabilities in the capital structure.
Fremont Private Holdings (Fremont), through its preferred equity
ownership, is the largest equity owner with about 39%. Fremont's
equity can be put to the company with six months' notice for a
value of approximately $95mm, however the fair market value of the
ownership likely exceeds this value. Moody's believe the likelihood
that Fremont would exercise the put right in the near term is low
and that is only likely to materialize in the event of a formal
exit. The enforcement of the payment of put proceeds is subject to
the restricted payment provisions in the credit agreement.
Furthermore, there is limited incentive for the company to
refinance the preferred equity with debt in the future given the
absence of a coupon. For speculative grade issuers, Moody's assumes
100% equity credit based on the subordinated status of the claim in
bankruptcy, which is senior only to common stock.
Flynn has adequate liquidity. Pro forma for the transaction as of
June 2021, sources total about C$130 million compared to uses of
C$4 million over the next twelve months. Sources consist of cash on
hand of about C$10 million, full availability under the US$75
million (C$95 million equiv.) committed revolver due 2026 and US$10
million (C$13 million equiv.) swingline facilities, and positive
free cash flow of around C$15 million. Uses are limited to
mandatory debt amortizations. The secured revolver is subject to a
springing first lien net leverage covenant when more than 35%
drawn. Moody's expect the company to rely on the revolver to some
extent for working capital swings and although Moody's do not
anticipate the covenant will spring, Flynn would have a comfortable
cushion of more than 35% if triggered. The company has limited
capacity to sell assets to raise cash.
As proposed, the new credit facilities are expected to provide
covenant flexibility that, if utilized, could negatively impact
creditors. Notable terms include the following: Incremental debt
capacity up to the greater of $64.5 million and 100% of LTM
Combined EBITDA, plus unlimited amounts subject to a first lien net
leverage ratio test equal to threshold at closing (4.2x) (if pari
passu secured). No portion of secured incremental debt may be
incurred with an earlier maturity than the initial term loans. The
credit agreement permits the transfer of assets to unrestricted
subsidiaries, up to the carve-out capacities; no "blocker"
provisions are reflected in the documents at this time but final
terms are expected to include "blocker" provisions.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, with no
explicit protective provisions limiting such guarantee releases.
The credit agreement provides some limitations on up-tiering
transactions, including consent of each directly and adversely
affected lender for modifications to the waterfall provisions or
subordination of the Facilities, and consent of all lenders with
respect to subordination of the liens on all or substantially all
of the value of the collateral. The proposed terms and the final
terms of the credit agreement may be materially different.
The stable outlook reflects Moody's expectation that Flynn will
maintain leverage comfortably below 4.5x while generating positive
free cash flow and maintaining adequate liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Flynn expands its scale and
demonstrates a strong track record of execution, with Moody's
adjusted debt to EBITDA declining toward 3.0x (4.4x pro forma at
LTM Apr-21) and FFO to debt is sustained above 20% (16% pro forma
as of Q1'21) while maintaining good liquidity.
The ratings could be downgraded if Moody's adjusted debt to EBITDA
exceeds 5x (4.4x pro forma at LTM Apr-21) or FFO to debt falls
under 10% (16% pro forma as of Q1'21), or if the company generates
sustained negative free cash flow.
Governance risks include the company's private status, a high
likelihood that financial policies will favor shareholders, and an
acquisitive growth strategy. The company's ownership is somewhat
diluted, with Fremont as the largest, but non-majority, shareholder
with 39%, another 29% held by two top executives and the remaining
32% held by company management and employees of which none hold
more than 2%. Moody's believe the composition of ownership,
including Fremont's status as a family investment firm (as opposed
to traditional private equity) which is likely to maintain a
comparatively long-term stake, is conducive to the maintenance of a
conservative financial policy in terms of leverage in line with
management's target of 4x net debt to EBITDA. However, Moody's
expect the company to continue allocating cash flow primarily
toward a combination of dividends and acquisitions in lieu of debt
reduction. While there is a risk of releveraging to absorb a large
acquisition, Moody's believe it is somewhat mitigated by the
fragmented nature of the market which is characterized primarily by
small-scale, locally based firms. The company does not have
independent members on its board of directors.
Social risks include the health and safety of employees at
high-risk work sites and the company's ability to source labor for
both technical know-how and physically demanding work. Flynn
addresses safety concerns by promoting a culture focused on
prevention and safety-first, including a comprehensive safety
program, compensation linked to its safety record, and tracking
incidents and injuries in accordance with standardized metrics. The
company's geographical diversification and comparatively large
scale within its market segment support the ability to attract,
retain and transfer labor resources as needed.
Environmental risks are low. Sustainability-focused projects will
remain a long-term growth opportunity for Flynn as buildings are
modernized to align to more energy efficient, environmentally
friendly codes and standards.
The principal methodology used in these ratings was Construction
Industry published in March 2017.
Headquartered in Toronto, Ontario, and founded in 1978, Flynn
Canada Limited is a total building envelope contractor with
operations throughout Canada and the United States. The company
provides construction and maintenance services, including roofing,
outer wall systems and glazing. Flynn is owned by Fremont Private
Holdings (39% stake), and key executives (29%) as well as other
management and employees.
GIBSON FARMS: Gets Court Nod to Use Cash Collateral Thru July 31
----------------------------------------------------------------
Judge Robert L. Jones authorized Gibson Farms and its affiliated
debtors to use cash collateral through the earliest to occur of
July 31, 2021, or the date of entry of an order confirming the
Debtors' Plan of Reorganization, whichever comes first, pursuant to
each Debtor's budget.
The Debtors' budgets provided for total income and operating
expenses for July 2021, as follows:
Total Income Total Expenses
------------ --------------
Gibson Farms $680,417 $293,433
Nature's Way Compost ($2,606) $148,196
Gibson Investments $14,079 $1,725
Lee & Paula Gibson $10,132 $8,952
Judge Jones incorporated into the current ruling the terms under
the Fourth Agreed Cash Collateral Order, entered February 25, 2021,
based on the agreement between the Debtors and secured creditors,
Rabo Agrifinance LLC, fka Rabo Agrifinance, Inc., and the Small
Business Administration.
Judge Jones ruled that Rabo and SBA are granted, pursuant to the
Fourth Agreed Order, additional valid, automatically perfected
post-petition replacement liens against all of the Debtor's
personal property assets acquired or generated postpetition, and in
any products, proceeds or insurance recoveries related thereto,
including all post-petition farm products, feed, fertilizer,
supplies, inventory, accounts, proceeds from crop or livestock
insurance, general intangibles, and all products and proceeds
thereof, for the full amount of the Cash Collateral which is
utilized pursuant to the Order.
A copy of the fourth agreed order is available at no charge at
https://bit.ly/2USRkBN from PacerMonitor.com
If the Debtors' Plan of Reorganization is not confirmed by July 28,
2021, the Court will consider the Debtor's continued use of cash
collateral at a hearing on July 28, 2021 at 1:30 p.m.
A copy of the current order, along with each Debtor's budget, is
available for free at https://bit.ly/3hbwfdc from PacerMonitor.com.
Counsel for U.S. Small Business Administration:
Erin Nealy Cox
United States Attorney
Donna K. Webb, Assistant U.S. Attorney
1100 Commerce St., Ste. 300
Dallas, TX 75242
Telephone: (214) 659-8600
Facsimile: (214) 659-8807
E-mail: donna.webb@usdoj.gov
About Gibson Farms
Gibson Farms has over 45 years' experience in farm management as
well as an established history in Moore County agriculture. Gibson
Farms rents farmland from Beauchamp Estates Partnership and Gibson
Investments as well as other landowners in the area. They raise
feed grains, forage crops, cotton which they sell either through
private contract or on the open market.
Gibson Farms and its affiliates, Nature's Way Compost LLC, Gibson
Investments, and Wendell and Paula Gibson filed separate voluntary
petitions for relief under Chapter 11 of Bankruptcy Code (Bankr.
N.D. Tex. Lead Case No. 20-20271) on Oct. 5, 2020. Paula Gibson,
partner, signed the petitions. At the time of the filing, the
Debtors estimated assets of between $1,000,001 and $10,000,000 and
liabilities of between $10,000,001 and $50,000,000.
Judge Robert L. Jones oversees the cases.
The Debtors have tapped Mullin Hoard & Brown, LLP as legal counsel;
Clint W. Bumguardner of W.T. Appraisal, Inc. as real estate
appraiser; and Frost, PLLC as accountant.
Rabo AgriFinance LLC is represented by:
Michael R. Johnson, Esq.
Ray Quinney & Nebeker P.C.
36 South State, Suite 1400
Salt Lake City, UT 84111
Telephone: (801) 532-1500
Facsimile: (801) 532-7543
Email: MJohnson@rgn.com
GIRARDI & KEESE: Secured $1.5M PPP Loan Before Chapter 7 Filing
---------------------------------------------------------------
Eileen Reslen of Page Six reports that the law firm of "Real
Housewives of Beverly Hills" star Erika Jayne's estranged husband,
Tom Girardi, was approved for a PPP loan worth over $1.5 million
less than a year before they were forced into Chapter 7
bankruptcy.
According to public records, Girardi & Keese secured a loan of
$1,503,000 -- earmarked for payroll, with 84 jobs reported -- on
April 15, 2020.
The Paycheck Protection Program allowed entities to apply for
low-interest private loans to pay for their payroll and certain
other costs amid the hardships of the COVID-19 pandemic.
In December 2020, Girardi's law partner, Robert Keese, sued him to
dissolve their business venture, 1126 Wilshire Partnership.
Keese, along with Robert Finnerty and Jill O'Callahan, alleged
Girardi, 82, never paid them approximately $315,000 in income from
the partnership, claiming he absconded with the money "for his own
personal gain."
A bombshell report released by the Los Angeles Times that month
said Girardi had been foundering to keep his firm alive while his
"RHOBH" star wife, Erika Jayne, flaunted her wealth on national
television.
Jayne, 49, filed for divorce in November in what some deemed an
attempt to distance herself from her estranged husband's mounting
legal troubles.
In March 2021, a 64-page report filed in Los Angeles bankruptcy
court showed the longtime lawyer owed at least $56.8 million to law
firms, litigation funders and other creditors.
Girardi's also being sued by Wells Fargo Financial Services for
allegedly breaching a written agreement and conversation with the
bank and is being accused of stealing money from his clients to
fund he and his wife's lavish lifestyles.
He admitted to having financial struggles in a September 2020
deposition, which aired in part on Hulu's recent "The Housewife and
the Hustler" documentary.
"At one point I had about $80 million or $50 million in cash," the
attorney said in the clip. "That's all gone. I don't have any
money. I also had a stock portfolio of about $50 million, and
that's all gone."
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
GTM REAL ESTATE: Seeks to Increase Rental Receipts With LSC
-----------------------------------------------------------
GTM Real Estate Partners, LLC, submitted an Amended Plan of
Reorganization and a Disclosure Statement on June 29, 2021.
The Debtor filed a Motion to Approve Assumption of Lease of Non
Residential Real Property on March 17, 2021 for authority to assume
the lease with LSC that is set for hearing on June 8, 2021.
The Debtor retained Quadrus Consulting as its proposed consultant
and equity auctioneer and filed its retention application on June
2, 2021 to approve the retention.
Class 2a consists of the claim of Prosperity Bank. Beginning the
first day of the next calendar month following Effective Date,
Prosperity Bank shall receive 4 monthly consecutive sash payments
of $38,000.00 and then 10 monthly consecutive Cash payments of
$68,000.00. Thereafter, Prosperity shall receive monthly Cash
payments of $58,000.00 until maturity as provided under the
underlying loan documents. Any and all amounts which are over and
above accrued interest shall be applied to principal.
Class 2b consists of the claim of J Bar Consolidated LLC.
Commencing the first day of the month following 30 days after the
Effective Date, J Bar Consolidated LLC shall receive five
consecutive monthly Cash Payments of $20,000.00 followed by monthly
Cash payments of $6,500.00 for a term of fifty-five months with the
entire remaining balance of its Secured Claim due and immediately
payable within 30 days following the remittance of the 55th monthly
$6,500.00 payment on the Secured Claim. Interest shall bear on J
Bar's secured claim at the rate of six and half percent per annum.
Class 4 consists of General Unsecured Claims. Holders of General
Unsecured Claims shall receive 5 consecutive monthly Cash Payments
of $20,000.00 then monthly Cash payments of $3,750 for a term of
fifty-five months. Interest shall bear on this claim at 0%.
Holders of Equity Interests in Class 5 who include Tonya and Glen
Cronin shall retain their equity interests in the Debtor and shall
contribute additional capital to the Reorganized Debtor of thirty
thousand dollars in exchange for retention of their equity interest
to be paid upon the Effective Date. The Debtor retained the
consulting firm of Quadrus Consulting for the purpose of valuing
assets of the estate and claims against the estate in order to
determine the value of the equity in the Debtor; Debtor shall
provide all creditors of the estate and interested parties the
marketing materials and any potential offers received by Quadrus
Consulting prior to the hearing on confirmation of the Debtor's
Plan.
The Debtor may hold a public auction of the purchase of equity in
the Debtor if creditors of the estate object to the proposed new
value contribution by Tonya and Glen Cronin; should a public
auction be required, Debtor will file a motion with the court to
approve the auction and bid procedures.
Payments and distributions under the Plan will be funded from the
continued leasing of the Windmill Property to LSC. Debtor intends
to enter into an amended lease agreement with LSC to increase
rental receipts and equity interest holders Glen and Tonya Cronin
shall contribute additional capital following the Effective Date to
facilitate payments under the Plan. The Reorganized Debtor may
lease space to other tenants in order to generate additional
income.
A full-text copy of the Amended Plan and Disclosure Statement dated
June 29, 2021, is available at https://bit.ly/3qEWuwM from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Susan Tran Adams, Esq.
Brendon Singh
Briana Head
Tran Singh, LLP
1010 Lamar St., Suite 1160
Houston TX 77002
Tel: (832) 975-7300
Fax: (832) 975-7301
Email: brendon.singh@ctsattorneys.com
About GTM Real Estate Partners
Houston, Texas-based GTM Real Estate Partners, LLC is owned and
operated by Tonya and Glen Cronin, who have managed the affairs of
the company since its inception. GTM operates a commercial building
located at 9202 Windmill Park Lane, Houston and leases it to a
single tenant. GTM financed the purchase of the Windmill property
with Prosperity Bank on June 6, 2014, and granted a security
interest in the property and assignment of rents in favor of the
bank.
GTM filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Texas Case No. 20-35095) on Oct. 22,
2020. Tonya Thomas Cronin, authorized representative, signed the
petition. In the petition, the Debtor disclosed $10,824,015 in
total assets and $9,052,430 in total liabilities. Judge Jeffrey P.
Norman oversees the case.
The Debtor tapped Tran Singh, LLP as legal counsel, Haynie &
Company as accountant, and Quadrus Consulting as consultant.
H-BAY MINISTRIES: S&P Lowers Rating on Senior Living Bonds to 'CC'
------------------------------------------------------------------
S&P Global Ratings lowered its ratings on Capital Trust Agency,
Fla.'s series 2018A senior living bonds to 'CC' from 'B+' and
second-tier series 2018B senior living bonds to 'CC' from 'B-'. The
bonds were issued on behalf of the borrower, H-Bay Ministries Inc.,
Texas, for the Superior Residences project in Florida. At the same
time, S&P removed both ratings from CreditWatch where they were
originally placed with negative implications March 1, 2021. The
outlook is negative.
The bonds were placed on CreditWatch with negative implications,
based on persistently low occupancy, as well as financial
statements that lacked independent third-party audits. The
CreditWatch placement was extended on May 26, 2021.
S&P said, "The rating on the bonds reflects management's indication
to us on June 29, 2021, that the project would not be able to make
full and timely debt service payment on the bonds outstanding on
the upcoming July 1, 2021 payment date. Consistent with our
"Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings" an
issue is rated 'CC' when we expect default to be a virtual
certainty. Specifically, we use the 'CC' rating when an entity has
announced that it will miss its next interest or principal payment,
as is the case in this instance.
"We have reached out to the trustee several times but have been
unable to obtain information regarding available balances in the
trust estate accounts, if any. Therefore, we are unable to conclude
if full or partial payment to bondholders can be made from other
available resources within the trust estate, despite management's
assertions that the project would not be able to make full and
timely payment on the upcoming debt service payment date."
"The negative outlook reflects our view that we expect that default
is a virtual certainty," said S&P Global Ratings credit analyst
Adam Torres.
Failure to make full payment on the rated bonds on any due date
will result in the rating on the bonds being lowered to 'D'.
HANDL NEW YORK: Seeks Cash Collateral Access
--------------------------------------------
HANDL New York LLC asks the U.S. Bankruptcy Court for the District
of Delaware for authority to use cash collateral.
The Debtor needs to use the Collateral to generate income for the
estate, including but not limited to its Cash Collateral. Absent
the use of Cash Collateral, the Debtor will not be able to protect
the Collateral, and its estate, and its creditors will suffer
immediate and irreparable harm.
Before the Petition Date, the Debtor manufactured attachable phone
holders and stands. Although the Debtor submits that its products
are superlative in quality and generated excellent sales prior to
the Petition Date, both internal woes and external creditor
pressure led to a liquidity crisis that paralyzed the Debtor's
ability to continue functioning.
As of the Petition Date, the Debtor had approximately $339,249 in
account receivables as well as $215,000 in inventory (at cost) in
its warehouse. This inventory, if properly delivered to the
retailers, has the potential to generate as much as $500,000 in
additional revenue for the Debtor and its estate.
The Chapter 11 case was filed to ease the liquidity crisis, provide
reasonable protections to a lender under the supervision of the
Court, enable the Debtor to restart its sales, and emerge leaner
and ready to supply its products.
On the Petition Date, the Debtor may have had, and may also
acquire, property of the estate in which C2 Wireless and
Accessories LLC and Argento S.C. may assert an interest in the cash
collateral.
The Debtor also asks the Court to find that the Secured Parties'
interests in the Collateral, including but not limited to the Cash
Collateral, is adequately protected without the making of
additional adequate protection payments, other than the ongoing
payment of expenses to protect and preserve the Debtor's
inventory.
In the event that the Court determines the Lenders' interest in the
Collateral is not adequately protected, however, the Debtor
requests that the Court determine what protection, if any, will be
adequate to enable the Debtor's continued use of the Collateral.
The Debtor acknowledges that C2 holds a validly perfect
first-priority lien and security interest in the Collateral.
Therefore, C2 is entitled to protection of its interest in the
Collateral from diminution.
According to the Debtor's books and records, C2's claim is
approximately $200,000, while the value of the Debtor's inventory
is approximately $214,911. The documents governing C2's claims do
not provide for interest or finance charges, so the amount of C2's
claims is not increasing.
Moreover, according to the prepetition documents creating C2's
liens, C2 holds certain inventory under a complex consignment
relationship which, by the Debtor's understanding, C2 may sell in
order to pay down the amount of its claims against the Debtor. This
provides C2 with additional protection of its claims secured by the
Collateral, including but not limited to the Cash Collateral.
The Debtor believes C2 is oversecured because the value of the
Collateral -- plus the amount of excess inventory in C2's
possession that it sells to pay down its claim against the Debtor
-- was higher than the amount of C2's debt as of the Petition Date.
Because the amount of the debt is not increasing and the tangible
Collateral will be sold for its fair market value, C2's interest in
the Collateral is protected. Except for administrative expenses,
the Debtor will conserve its cash from sales until a plan can be
filed and confirmed.
The Debtor is still studying C2's claims to determine whether they
are valid, validly secured, validly perfected, and/or subject to
other defenses and setoffs. The documents underlying those claims
are complex and may contain errors or defects.
The Debtor believes Argento's lien, which appears to hold a second
lien in the Collateral, is avoidable because it is not perfected
and purported to attach fewer than 90 days before the Petition
Date. Therefore, the Debtor submits that Argento's lien is not
entitled to any protection.
A copy of the motion is available at https://bit.ly/3qBHFeJ from
PacerMonitor.com.
About HANDL New York, LLC
HANDL New York, LLC is a supplier of cell phone cases and
attachable phone holders and stands. The Debtor sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case
No. 21-10984) on June 30, 2021. In the petition signed by Allen
Hirsch, principal manager, the Debtor disclosed up to $1 million in
assets and up to $10 million in liabilities.
Judge John T. Dorsey oversees the case.
Adam Hiller, Esq. at Hiller Law, LLC is the Debtor's counsel.
HARI 108: Case Summary & 15 Unsecured Creditors
-----------------------------------------------
Debtor: HARI 108, LLC
d/b/a Illinois Valley Food & Deli
235 3rd Street
La Salle, IL 61301
Business Description: HARI 108, LLC owns and operates grocery
stores.
Chapter 11 Petition Date: June 30, 2021
Court: United States Bankruptcy Court
Northern District of Illinois
Case No.: 21-08044
Judge: Hon. Timothy A. Barnes
Debtor's Counsel: O. Allan Fridman, Esq.
LAW OFFICE OF ALLAN FRIDMAN
555 Skokie Blvd 500
Northbrook, IL 60062
Tel: 847-412-0788
Fax: 847-412-0898
Email: allan@fridlg.com
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Sanjay Amin, manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 15 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/DI3SWSI/HARI_108_LLC__ilnbke-21-08044__0001.0.pdf?mcid=tGE4TAMA
HARI 108: Seeks to Use Cash Collateral
--------------------------------------
HARI 108, LLC asks the U.S. Bankruptcy Court for the Northern
District of Illinois, Eastern Division, for authority to use cash
collateral and for related relief.
The Debtor requests that the Court authorize it to use cash and
cash equivalents that allegedly serve as collateral for claims
asserted against the Debtor and its property by these Secured
Creditors:
1. Associated Wholesale Grocers, Inc.
2. MBH Investments, LLC
3. U.S. Small Business Administration
On May 15, 2017, Central Grocers filed for Chapter 11 bankruptcy.
The Debtor was a member of the Central Grocers distribution and
rebate program. As a result of the Central Grocers bankruptcy, the
Debtor lost over $248,000 in rebates and membership interest in
Central Grocers.
Also on May 15, 2017, the Debtor entered into a membership
agreement with Associated Wholesale Grocers, Inc., an association
that supplies inventory and produce to grocery stores at preferred
prices.
Since the contract date, AWG has been supplying the Debtor with
inventory and supplies according to the credit terms that requires
the Debtor to pay for weekly purchase on the following Friday after
the week of delivery. The Debtor filed the Chapter 11 case to
preserve the estate property for its creditors.
On November 25, 2020, United Food and Commercial Workers Unions and
Employers Midwest Pension Fund, issued a citation to discover
assets to the Debtor's bank account in for a judgment stemming from
pension withdrawal liability Hometown National Bank.
The Debtor initially negotiated a payment plan for the First
Citation allowing it operate while the Debtor was dealing with the
economic impact of the Covid19 Pandemic.
On May 26, 2021, United Food and Commercial Workers International
Union-Industry Pension Fund, issued a citation to discover assets
to the Debtor's bank account in Hometown National Bank for a
judgment stemming from pension withdrawal liability.
On June 3, 2021, the Citation caused Hometown National Bank to
freeze the Debtor's account. At the time, the account had
approximately $68,673 of fund. These funds were earmarked for
payment to AWG. Pursuant to the membership agreement, AWG has a
security interest in the Debtor accounts.
As a result, the Debtor could not meet its financial obligations.
AWG asserts a security lien and claim against the Debtor's
inventory and accounts, with a current indebtedness of
approximately $0.00 after AWG applied a setoff.
The MBH Investments, LLC asserts a security interest lien and claim
against the Debtor's inventory and accounts, with a current
indebtedness of approximately $750,000 and a cross-collateralized
loan with the related entities.
The U.S. Small Business Administration asserts a security interest
lien and claim against the Debtor's inventory and accounts, with a
current indebtedness of approximately $150,000.
The Debtor proposes to use cash collateral and provide adequate
protection to the Lender on these terms and conditions:
A. The Debtor will permit the Lender to inspect, upon
reasonable notice, within reasonable hours, the Debtor's books and
records;
B. The Debtor will maintain and pay premiums for insurance to
cover all of its assets from fire, theft and water damage;
C. The Debtor will, upon reasonable request, make available to
the Lender evidence of that which purportedly constitutes its
collateral or proceeds;
D. The Debtor will reserve sufficient funds for the payment of
current real estate taxes relating to the Property;
E. The Debtor will properly maintain the Property in good
repair and properly manage such Property; and
F. The Lender will be granted valid, perfected, enforceable
security interests in and to the Debtor's post-petition assets,
including all proceeds and products which are now or hereafter
become property of the estate to the extent and priority of its
alleged prepetition liens, if valid, but only to the extent of any
diminution in the value of the assets during the period from the
commencement of the Debtor's Chapter 11 case through the next
hearing on the use of cash collateral.
A copy of the motion and the Debtor's budget is available at
https://bit.ly/3h9L1lU from PacerMonitor.com.
The Debtor projects $220,954 in gross sales per month and
$200,168.30 in expenses per month.
About HARI 108, LLC
HARI 108, LLC, doing business as Illinois Valley Food & Deli, is a
grocery and delicatessen operating in LaSalle, Ill. Hari was formed
in February 17, 2011. The Debtor acquired IVFD, a business that had
been operating in LaSalle for over 60 years.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ill. Case No. 21-08044) on June 30,
2021. In the petition signed by Sanjay Amin, manager, the Debtor
disclosed up to $500,000 in assets and up to $10 million in
liabilities.
O. Allan Fridman, Esq., at Law Office of Allan Fridman is the
Debtor's counsel.
HERTZ GLOBAL: Emerges from Ch. 11 Bankruptcy With Changes to Board
------------------------------------------------------------------
Hertz Global Holdings, Inc. (OTCPK:HTZGQ) on June 30, 2021,
announced that it has successfully completed its Chapter 11
restructuring process and has emerged as a financially and
operationally stronger company that is well-positioned for the
future. Hertz's Plan of Reorganization was confirmed by the
Bankruptcy Court on June 10, 2021. In doing so, Judge Mary Walrath
described the outcome as a "fantastic result" that "surpasses any
result that I've seen in any Chapter 11 case that I've faced in my
20-plus years."
With over $5.9 billion of new equity capital being provided by
Hertz's new investor group, led by Knighthead Capital Management
LLC, Certares Opportunities LLC, and certain funds managed by
affiliates of Apollo Capital Management, L.P., Hertz has reduced
its corporate debt by nearly 80% and significantly enhanced its
liquidity to fund operations and future growth. Specifically,
Hertz has eliminated nearly $5.0 billion of debt, including all of
Hertz Europe's corporate debt. In addition, Hertz has emerged with
a new $2.8 billion exit credit facility (including an undrawn $1.3
billion revolving credit facility) and a $7.0 billion asset-backed
vehicle financing facility, each having terms the Company views as
extremely favorable. The aggregate interest rate on the Company's
new ABS financing is less than 2.0%.
Henry Keizer, Chairman of Hertz's outgoing Board of Directors,
said: "Faced with the epic and unprecedented challenges presented
by the COVID-19 pandemic, and unfazed by early leadership changes,
we stayed focused on stabilizing the business and seizing
opportunities to mitigate losses and create value for our
stakeholders. When the economy began to show signs of recovery
earlier this year, we were perfectly positioned to drive a
competitive process that would maximize recoveries. The result –
paying our nearly $19 billion of creditors in full and returning
substantial value to our shareholders – is remarkable."
In tandem with its financial restructuring, Hertz also executed on
a series of operational initiatives to create a more focused and
profitable enterprise. Among these actions, Hertz launched a cost
reduction program that is generating significant savings,
right-sized its fleet across both its U.S. and International
businesses, optimized its location footprint, negotiated cost
reductions and concessions at certain airport locations, and
completed the sale of its Donlen fleet leasing business for $891
million in cash. In addition, Hertz focused on meeting changing
demand through its portfolio of neighborhood rental locations as a
complement to its airport business. These efforts, combined with a
sharp increase in car rentals in the U.S. and the continued
strength in used car sales, are putting the Company on track for
strong financial results in 2021.
Paul Stone, Hertz's President and Chief Executive Officer, said:
"Today marks a significant milestone in Hertz's 103-year history.
Through the relentless efforts of our Board and team, we are moving
forward in an incredibly strong position with an exciting road
ahead of us. Now with a solid financial foundation, a leaner, more
efficient operating model, and ample liquidity to invest in our
business, Hertz has outstanding potential to drive long-term
profitable growth. Both in the U.S. and around the world, we are
poised to capitalize on our industry leadership, deep operational
expertise and iconic global brand."
He continued: "I am tremendously proud of all we have accomplished
and confident that this is only the beginning in delivering even
greater value to our stakeholders. Thank you to the Hertz team
around the world and Board of Directors, to our new investor group,
who bring extensive industry experience, and to our customers,
franchisees, partners and shareholders for your confidence and
support during this process. We look forward to a bright future as
a vibrant part of the rebounding travel industry and as a trusted
partner for our customers' mobility needs."
Hertz filed for Chapter 11 for its U.S. operations on May 22, 2020
following the onset of the COVID-19 pandemic, which had a severe
and dramatic effect on travel demand. Hertz's principal
international operating regions including Europe, Australia and New
Zealand were not included in the U.S. Chapter 11 proceedings.
Following its successful restructuring process, Hertz's creditors
will receive payment in cash in full and existing shareholders will
receive more than $1 billion of value. Shares of Hertz common stock
will continue to be publicly traded on the over-the-counter (OTC)
market, until such time as the Company relists on a national
securities exchange. The new ticker symbols effective July 1 will
be HTZZ for Hertz common stock and HTZZW for warrants.
For Court documents or filings, please visit
https://restructuring.primeclerk.com/hertz or call (877) 428-4661
or (929) 955-3421. White & Case LLP is serving as legal advisor,
Moelis & Co. is serving as investment banker, and FTI Consulting is
serving as financial advisor.
Changes to Board
Hertz Global announced the composition of its new Board of
Directors whose term is effective with the Company's successful
completion of its restructuring and emergence from Chapter 11
today. The new Board will initially include eight members with up
to three additional directors to be named in the future. The eight
members named include Certares founder Michael Gregory O'Hara as
Chairperson; Knighthead Capital co-founder Thomas Wagner as Vice
Chairperson; Certares Senior Managing Director Colin Farmer;
Knighthead Partner Andrew Shannahan; Apollo Partner Christopher
Lahoud; TPG Capital Senior Advisor and former CEO of Ford Motor
Company Mark Fields; current Hertz Board member Vincent Intrieri;
and Hertz President and CEO Paul Stone.
Paul Stone said, "We are excited to welcome our new Board members
and benefit from their collective expertise, leadership and
oversight at this pivotal time for Hertz and the travel industry.
These executives bring extensive financial, operational and market
experience that will be invaluable in the next chapter for Hertz. I
also want to express our company's appreciation to our retiring
Board members for their service and tireless efforts, particularly
throughout the past year and a half of the pandemic and our
successful restructuring."
Bios of Hertz new board members:
* Michael Gregory (Greg) O'Hara, Chairperson; Founder and Senior
Managing Director of Certares, a firm that invests in the travel,
tourism and hospitality sectors, and co-founder of GO Acquisition
Corp. He is the Head of Certares' Investment Committee and a member
of the Management Committee. Prior to forming Certares, he served
as Chief Investment Officer of JPMorgan Chase's Special Investments
Group ("JPM SIG"). Prior to this role at JPM SIG, Greg was a
Managing Director of One Equity Partners ("OEP"), the private
equity arm of JPMorgan. Before joining OEP in 2005, he served as
Executive Vice President of Worldspan and was a member of its Board
of Directors. Greg is the Executive Chairman of American Express
Global Business Travel and Vice Chairman of Liberty TripAdvisor
Holdings and serves on the Boards of Directors of Liberty
TripAdvisor Holdings and Tripadvisor, The Innocence Project, World
Travel & Tourism Council and Certares Holdings.
* Thomas (Tom) Wagner, Vice Chairperson; Co-Founder and Managing
Member of Knighthead Capital Management, LLC, an event driven and
deep value focused SEC registered investment advisor that
specializes in investing in companies that need financial and
operational restructuring. His deep financial experience also
includes serving as Managing Director at Goldman Sachs in Capital
Structure Franchise Trading, as well as roles at Credit Suisse
First Boston and Ernst & Young, LLP. Tom is currently Board
Chairman of Knighthead Annuity & Life Assurance Company and on the
Board of Trustees of Villanova University, the National Advisory
Board for Youth Inc., and the National Leadership Council for the
Navy SEAL Foundation. He is the Co-Portfolio Manager of all funds
and accounts managed by Knighthead Capital Management, LLC.
* Colin Farmer, Senior Managing Director and the Head of the
Management Committee of Certares. Previously, he was Managing
Director of One Equity Partners. Prior to that, he was a Principal
at Harvest Partners, a middle market private equity firm, and an
Analyst at Robertson Stephens & Company, a middle market investment
bank. Colin serves on the Boards of Internova Travel Group,
AmaWaterways, Guardian Alarm, Mystic Invest and Certares Holdings,
and is a member of Certares' Investment Committee.
* Andrew Shannahan, Head of Research and Partner at Knighthead
Capital Management, LLC, an event driven and deep value focused SEC
registered investment advisor that specializes in investing in
companies that need financial and operational restructuring. Andrew
brings oversight to the Knighthead research team through his
investment expertise gained during thirteen years at Knighthead,
leading complex investment situations. Prior to joining Knighthead
in 2008, he spent six years as a senior research analyst for
Litespeed Partners, an event-driven hedge fund. Andrew serves as a
member of the Investment Committee of certain funds managed by
Knighthead Capital Management, LLC.
* Christopher Lahoud, Partner in Credit at Apollo Global
Management. Prior to joining Apollo, he was the Head of the
Distressed Product Group at Deutsche Bank managing a team of 15
professionals. He began his career with Citigroup in 2006 as a
credit trader and currently serves on the Board of Directors of
Moxe Health.
* Mark Fields, Senior Advisor at TPG Capital and former
President and CEO of Ford Motor Company. He held senior leadership
roles at the company, including Chief Operating Officer, Executive
Vice President & President of the Americas, Executive Vice
President and Chief Executive Officer of Premier Automotive Group
and Ford Europe, Chairman and Chief Executive Officer of the
Premier Automotive Group, and President and Chief Executive Officer
of Mazda Motor Corporation. He is the Lead Independent Director of
Tanium and serves on Qualcomm's Board of Directors. He has served
on the Boards of Ford, IBM and Mazda, as well as four private
companies on behalf of TPG Capital.
* Vincent Intrieri, CEO and founder of VDA Capital Management
LLC and has served as a director of Hertz Global Holdings since
June 2016 and Hertz since September 2014. Previously, he was with
Icahn-related entities from October 1998 to December 2016 in
various investment-related capacities, including as Senior Managing
Director of Icahn Capital LP, Senior Managing Director of Icahn
Onshore LP, and Icahn Offshore LP. Prior to joining Icahn Capital,
Vincent was a partner at Arthur Andersen LLP. He is the co-lead
director of Navistar International and a director of Transocean
Limited. Previously, he served as a director of Energen
Corporation, Conduent Incorporated, Chesapeake Energy, Forest
Laboratories Inc, CVR Energy Inc, Federal-Mogul Corporation, and
various other public companies.
* Paul Stone, President and Chief Executive Officer of Hertz
Global Holdings, Inc. Named CEO in May 2020, Paul has led the
Company through its successful operational and financial
restructuring. He joined Hertz in March 2018 as Executive Vice
President and Chief Retail Operations Officer for North America.
Previously, he was Chief Retail Officer at Cabela's Inc. He spent
the first 28 years of his career in various leadership roles at
Walmart Inc.
About Hertz Global Holdings
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. The Company also
operates a vehicle leasing and fleet management solutions
business.
On May 22, 2020, The Hertz Corporation and certain of its U.S. and
Canadian subsidiaries and affiliates filed voluntary petitions for
reorganization under Chapter 11 in the U.S. Bankruptcy Court
(Bankr. D. Del. Case No. 20-11218).
The Hon. Mary F. Walrath is the presiding judge.
White & Case LLP is serving as legal advisor, Moelis & Co. is
serving as investment banker, and FTI Consulting is serving as
financial advisor. Richards, Layton & Finger, P.A., is the local
counsel.
Prime Clerk LLC is the claims agent, maintaining the page
https://restructuring.primeclerk.com/hertz
HOMES BY KC: Seeks to Hire Trend Atlanta as Real Estate Broker
--------------------------------------------------------------
Homes by KC, LLC seeks approval from the U.S. Bankruptcy Court for
the Northern District of Georgia to hire Trend Atlanta Realty as
its real estate broker.
The firm will list and market the Debtor's real property located at
1373 Benteen Way SE, Atlanta Georgia 30315.
The firm will get a flat fee of $1,000 to be paid at closing.
As disclosed in court filings, Trend Atlanta is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
Jia Liu
Trend Atlanta Realty, Inc.
4825 Atlanta Hwy #100
Alpharetta, GA 30004
Phone: +1 770-777-1321
About Homes By KC
Homes By KC, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ga. Case No. 20-63784) on March 2,
2020. At the time of the filing, the Debtor had between $100,001
and $500,000 in both assets and liabilities. Judge James R. Sacca
oversees the case. Rountree, Leitman & Klein, LLC is the Debtor's
legal counsel.
ILPEA PARENT: S&P Affirms 'B' LT ICR Following Debt Extension
-------------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term issuer credit rating
on U.S.-based gasket maker Ilpea Parent Inc. and its 'B' issue
rating on the company's extended and upsized $225 million TLB and
$35 million RCF. While the '3' recovery rating on the senior
secured debt facilities is unchanged, S&P revised its rounded
recovery prospect estimate to 60% from 55%.
The stable outlook reflects S&P's view that Ilpea's S&P Global
Ratings-adjusted funds from operations (FFO) to debt will remain at
about 12% in the next 12 months, with free operating cash flow
(FOCF) of EUR5 million-EUR10 million and adequate liquidity, with
sources covering uses by at least 1.2x.
Ilpea's TLB increase will drive higher debt for 2021, though a
strong operating performance will more than offset the impact on
the group's credit metrics, even when including a EUR20 million
divided recap. At the same time, an adequate liquidity profile
sustains its 'B' rating on the company. As of second-quarter 2021,
Ilpea's TLB had amortized down to about $195 million. Following the
amendment, the TLB increased to $225 million, representing about a
EUR25 million increase to the company's debt. S&P said, "Therefore,
we now expect Ilpea's adjusted debt will reach EUR300 million in
2021, from EUR280 million in 2020. Furthermore, given the group's
neutral cash flow in recent years, we regard the EUR20 million
divided recap as slightly negative from a governance standpoint.
Nevertheless, the company's operating performance has been strong
through the first six months of fiscal 2021, with good performance
across all segments. The group's half-year revenue of EUR188
million is up 20% over the same period in 2020 and 5% higher than
that from first-half 2019. Ilpea's reported EBITDA margin also
reached about 14.4%, an improvement of about 240 basis points
versus levels seen in 2020 and 2019. We therefore now expect the
company's top line to increase by about 20% in 2021, with adjusted
EBITDA margins of 15.0%-16.0% versus 17.3% in 2020 and 14.5% in
2019. This should lead to stable credit metrics for 2021, with
adjusted debt to EBITDA of about 5.0x notwithstanding the EUR20
million divided recap."
This transaction materially extends the maturity of Ilpea's debt,
supporting the company's liquidity position. Because of this
amendment, the maturity of Ilpea's $225 million TLB will extend to
June 2028 (the previous maturity was March 2023) while the maturity
of the $35 million RCF will be extended to June 2026 (from December
2022). Ilpea is also gaining headroom under its financial
covenants, with maximum debt to EBITDA moving to 5.0x (from 4.5x)
and minimum cash interest coverage moving to 2.0x (from 2.4x). S&P
said, "These factors, along with the $10 million increase of the
RCF, support our view of Ilpea's liquidity, which we continue to
assess as adequate. In addition, we view favorably Ilpea's reduced
usage of overdraft lines, which stood at EUR5.2 million as of
second-quarter 2021, and we believe that the company will continue
to avoid a reliance on short-term, uncommitted lines." This overall
should place the group's liquidity in a stronger position compared
with 2020.
S&P said, "Although we expect Ilpea's FOCF to improve somewhat, the
group's muted cash generation prospects continue to constrain the
ratings. Its improved profitability notwithstanding, Ilpea
generated only slightly positive adjusted FOCF of about EUR2
million in 2020, in line with 2019 levels. While we expect the
group's annual absolute adjusted EBITDA to reach EUR60
million-EUR65 million in 2021 and 2022, annual working capital
outflow of about EUR8 million and annual capex spend of about EUR21
million will result in FOCF of EUR5 million-EUR10 million per year.
While this is a steady improvement versus 2019 and 2020, we still
see the company's prospects for deleveraging as limited.
"The stable outlook reflects our view that Ilpea's S&P Global
Ratings-adjusted FFO to debt will remain at about 12% in the next
12 months, with FOCF of EUR5 million-EUR10 million and adequate
liquidity, and sources covering uses by at least 1.2x.
"We could lower the ratings if the company's FOCF turns negative
for more than a year or its FFO cash interest coverage falls to
below 2.5x.
"Given the company's limited financial flexibility and lower
diversification relative to that of rated peers in the capital
goods sector, we see an upgrade as unlikely over the next 12
months. However, we could take a positive rating action if the
group outperforms our base-case metrics, improving its adjusted
debt to EBITDA to 4.5x or below and FOCF to debt sustainably in the
5%-10% range. This could happen if Ilpea were to increase EBITDA
margins to 16%-18% sustainably. Any upgrade would need to be
supported by our view of the company's commitment to maintaining an
adequate liquidity position, with sources covering uses by at least
1.2x and ample covenant headroom of 15%-30%."
INDIVIOR FINANCE: Moody's Gives B2 Rating on New $250MM Term Loan
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to the new term loan
issued by Indivior Finance S.ar.l., an indirect wholly-owned
subsidiary of Indivior PLC and RBP Global Holdings Ltd
(collectively "Indivior"). There are no changes to Indivior's
existing ratings, including the B2 Corporate Family Rating, B2-PD
Probability of Default Rating and existing B2 ratings on the senior
secured bank credit facilities. There is no change to Indivior's
SGL-1 Speculative Grade Liquidity Rating. The outlook on all rated
entities is stable.
Proceeds for the new $250 million term loan will be used to repay
Indivior's existing term loan and for general corporate purposes.
Moody's expects that the existing $50 million revolver will be
terminated in conjunction with the refinancing. Moody's will
withdraw the ratings on the existing credit facilities, after
repayment in full of the existing term loan and termination of the
revolver.
Rating assigned:
Issuer: Indivior Finance S.ar.l.
New Gtd. senior secured term loan, assigned B2 (LGD3)
RATINGS RATIONALE
Indivior's B2 Corporate Family Rating reflects significant revenue
concentration in buprenorphine-based products, which represent the
substantial majority of the company's revenue. Concentration in
buprenorphine will continue to be a challenge as Sublocade replaces
Suboxone Film as the largest product over time. Moody's expect
gross debt/EBITDA to rise in 2021 assuming further erosion in
Suboxone Film revenue and higher investment in the
commercialization of Sublocade for future growth. Moody's believes
that after peaking in 2021, debt/EBITDA will improve to around 7x
in 2022. Moody's debt adjustments include the present value of
Indivior's settlement payments which are being paid on a fixed
schedule and add about 4x of adjusted financial leverage to derive
Moody's 2022 estimate. Settlement payments, while manageable, will
also be a drag on cash flow for the foreseeable future. Supporting
the rating is Indivior's significant cash balance of more than $900
million, prior to settlement payments, relative to $250 million of
funded debt.
The SGL-1 Speculative Grade Liquidity Rating is supported by
Indivior's large reported cash balance of $945 million at March 31,
2021. Indivior has no remaining settlement payments until early
2022. Moody's expects cash balances will remain in excess of $800
million over the next 12 to 18 months, incorporating working
capital fluctuations as well as significant investments to support
the commercial uptake. The new term loan facility will have no
leverage covenant and will mature in July 2026. There will be a
minimum cash requirement of the greater of $100 million or 50% of
the outstanding balance. Moody's believes that covenant compliance
cushion will be good over the next twelve months given its net cash
position.
ESG considerations include Indivior's very high social risks
relating to cash outflows for settled litigation. Indivior will be
making cash settlement payments to the DOJ to resolve litigation
related to past marketing practices on Suboxone Film for various
years. Governance considerations include Indivior's prudent
policies around cash management, typically maintaining high cash
levels relative to its debt obligations. Indivior entered into a
5-year Corporate Integrity Agreement (CIA) with the Office of
Inspector General of the Department of Health and Human Services
(HHS), another governance consideration.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Factors that could lead to a downgrade include a significant
depletion of cash prior to Indivior's term loan maturing or if
positive trends in Sublocade and Perseris reverse such that EBITDA
becomes negative.
Factors that could lead to an upgrade include fast uptake in the
launch of Sublocade and Perseris and improved revenue diversity.
UK-based RBP Global Holdings Ltd is a subsidiary of publicly-traded
Indivior PLC (collectively with other subsidiaries "Indivior"), a
global specialty pharmaceutical company headquartered in Richmond,
Virginia. Indivior is focused on the treatment of opioid addiction
and closely related mental health disorders. Reported revenue for
the twelve months ended March 31, 2021 approximated $674 million.
The principal methodology used in this rating was Pharmaceutical
Industry published in June 2017.
INNOVATIVE WATER: S&P Upgrades ICR to 'B-', Outlook Stable
----------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on water
treatment products manufacturer Innovative Water Care Global Corp.
(doing business as Sigura Water) to 'B-' from 'CCC+'.
S&P said, "We also raised our issue-level rating on Sigura Water's
$360 million first-lien term loan due in February 2026 to 'B-' from
'CCC+' with a recovery rating of '3' (reflecting a rounded recovery
estimate of 50% in the event of a payment default) and our rating
on its $100 million second-lien term loan due in February 2027 to
'CCC+' from 'CCC' with a recovery rating of '5' (rounded estimate:
10%)."
The stable outlook reflects Sigura Water's improved profitability,
as many one-time costs have now ceased, higher volumes in its pool
treatment segment, and better cost management. The outlook also
incorporates S&P's view that Sigura Water will maintain an S&P
Global Ratings-adjusted debt-to-EBITDA ratio in the low- to mid-6x
area over the next 12 months and EBITDA interest coverage of about
2x.
The upgrade reflects improved credit metrics due to
better-than-expected operating performance and a favorable industry
outlook. Sigura Water's net sales increased 17% year over year in
the first quarter (ended March 31, 2021) on increased volumes and
favorable pricing. Increased EBITDA significantly reduced its S&P
Global Ratings-adjusted debt to EBITDA to 6.3x for the 12 months
ended March 31 compared to 14.7x year over year. This improvement
largely came from increased volumes, product mix shift to the club
channel, new account wins and price increases. S&P said, "We
forecast EBITDA margins will improve 100 basis points (bps) in
fiscal 2021 despite expected cost increases in packaging and labor.
We also expect Sigura Water will continue to incur certain
regulatory and legal costs related to chemical use permits. We
expect global pricing increases, a rebound in the higher-margin
industrial, commercial, and municipal (ICM) sales and operating
leverage from better capacity utilization as more public swimming
pools open and stock-keeping unit rationalization to offset these
trends." This coupled with one-time transition-related costs
significantly decreasing should improve profitability, including an
EBITDA margin of 12%-13% and leverage closer to 6x over the next
two years.
Stronger-than-expected demand also supports operating performance.
S&P said, "We believe Sigura Water will benefit from the strong
demand for pool treatment (85% of revenue) as consumers increase
pool use and new pool installations. The installed base of pools is
at record levels, which bodes well for future demand, subject to
weather conditions. The company will also benefit from
manufacturing disruptions at its largest competitor KIK Consumer
Products, which experienced a fire at its Lake Charles, LA facility
in August 2020. Volumes should also remain strong because we
believe the company's ICM businesses will rebound as economies
start to open in Europe, the Middle East, and Africa (EMEA) and
North America. Over the last two years, Sigura Water strengthened
relationships with its largest customer, increased channel
expansion including into club retailers, and invested in new
product innovation and brand awareness with a focus on pricing. We
anticipate the favorable industry outlook and market share gains
should continue sales growth, including 4%-5% growth over the next
year."
S&P said, "We expect Sigura Water's free operating cash flow (FOCF)
in 2021 will break even as capital expenditure (capex) remains
elevated due to capacity expansion. Despite a healthy growth
outlook, we do not project material cash flow generation in 2021.
We estimate break-even FOCF because of higher working capital use
to build inventory and increased capex plans. This includes
investments in capacity expansion given higher customer demand, new
product launches, and additional innovation projects. To the extent
Sigura Water underperforms its plans, we would expect it to pare
back capex so that it generates sufficient cash flows to service
debt, but not necessarily to materially pay it down. We project
EBITDA interest coverage of 2x over the next two years, while
mandatory annual debt amortization requirements of $3.5 million
should also be serviceable.
"The stable outlook reflects Sigura Water's improved profitability,
driven by one-time costs rolling off, higher volumes in its pool
treatment segment, and satisfactory cost management. It also
incorporates our view that Sigura Water will maintain an S&P Global
Ratings-adjusted debt-to-EBITDA ratio in the low- to mid-6x area
over the next 12 months and EBITDA interest coverage of about 2x."
S&P could lower the ratings on Sigura Water if adjusted EBITDA
interest coverage approached 1.5x. This could happen if:
-- The company's operating performance weakened below the
base-case forecast due to more promotional activity at retailers
because of increasing competition with its largest competitor that
reduced EBITDA margins by 300 bps -500 bps; or
-- Free cash flow remains negative due to operating
underperformance.
Under this scenario, S&P could view its capital structure as
unsustainable and see elevated risk for a covenant breach.
S&P could raise its rating on Sigura Water if:
-- S&P said, "The company executed its growth strategy and
profitability with expanded adjusted EBITDA margins at least 200
bps higher than our base-case projection, such that we had a more
favorable view of its business. For this to occur, we would want to
see a sustained improvement in financial performance given its poor
track record under prior management and the short recent history of
reporting better results;" and
-- S&P expected adjusted leverage to decline and remain below 6x
because of better-than-expected performance.
INSPIREMD INC: Amends Bylaws to Change Quorum Requirement
---------------------------------------------------------
On and effective as of June 28, 2021, the board of directors of
InspireMD, Inc. approved and adopted Amended and Restated Bylaws of
the Company, which changed the quorum requirement set forth in
Section 4 of Article I thereof, from "...the holders of a majority
of the voting power of all of the shares of the stock entitled to
vote at the meeting, present in person or by proxy, shall
constitute a quorum for all purposes," to now read, "the holders of
not less than 33.33% of the voting power of all of the shares of
the stock entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum a quorum for all purpose".
About InspireMD Inc.
Headquartered in Tel Aviv, Israel, InspireMD --
http://www.inspiremd.com-- is a medical device company focusing on
the development and commercialization of its proprietary MicroNet
stent platform technology for the treatment of complex vascular and
coronary disease. A stent is an expandable "scaffold-like" device,
usually constructed of a metallic material, that is inserted into
an artery to expand the inside passage and improve blood flow. Its
MicroNet, a micron mesh sleeve, is wrapped over a stent to provide
embolic protection in stenting procedures.
InspireMD reported a net loss of $10.54 million for the year ended
Dec. 31, 2020, compared to a net loss of $10.04 million for the
year ended Dec. 31, 2019. As of March 31, 2021, the Company had
$48.63 million in total assets, $4.68 million in total
liabilities,
and $43.95 million in total equity.
INTERPACE BIOSCIENCES: Extends Maturity of Ampersand Note to Aug 31
-------------------------------------------------------------------
Interpace Biosciences, Inc. previously entered into promissory
notes with Ampersand 2018 Limited Partnership, in the amount of $3
million, and 1315 Capital II, L.P., in the amount of $2 million,
respectively, and a related security agreement. On May 10, 2021,
the Company amended the Ampersand Note to increase the principal
amount to $4.5 million, and amended the 1315 Capital Note to
increase the principal amount to $3.0 million. The maturity dates
of the Notes were the earlier of (a) June 30, 2021 and (b) the date
on which all amounts become due upon the occurrence of any event of
default as defined in the Notes.
On June 24, 2021, the Company and Ampersand amended the Ampersand
Note to change its maturity date to the earlier of (a) Aug. 31,
2021 and (b) the date on which all amounts become due upon the
occurrence of any event of default as defined in the Ampersand
Note. On June 25, 2021, the Company and 1315 Capital amended the
1315 Capital Note to change its maturity date in a similar manner.
Except with respect to their respective maturity dates, the terms
of the Notes are otherwise unchanged. The Security Agreement
remains in full force and effect, and was not amended in connection
with the amendments to the Notes.
Ampersand holds 28,000 shares of the Company's Series B Convertible
Preferred Stock, which are convertible from time to time into an
aggregate of 4,666,666 shares of the Company's Common Stock, and
1315 Capital holds 19,000 shares of the Company's Series B, which
are convertible from time to time into an aggregate of 3,166,668
shares of the Company's Common Stock. On an as-converted basis,
such shares would represent approximately 39.1% and 26.5% of the
Company's fully-diluted shares of Common Stock, respectively. As a
result, the Company considers the June 24, 2021 and June 25, 2021
amendments to the Notes to be related party transactions.
About Interpace
Headquartered in Parsippany, NJ, Interpace Biosciences f/k/a
Interpace Diagnostics Group, Inc. -- http://www.interpace.com--
offers specialized services along the therapeutic value chain from
early diagnosis and prognostic planning to targeted therapeutic
applications. Clinical services, through Interpace Diagnostics,
provides clinically useful molecular diagnostic tests,
bioinformatics and pathology services for evaluating risk of cancer
by leveraging the latest technology in personalized medicine for
improved patient diagnosis and management. Pharma services, through
Interpace Pharma Solutions, provides pharmacogenomics testing,
genotyping, biorepository and other customized services to the
pharmaceutical and biotech industries.
Interpace Biosciences reported a net loss of $26.45 million for the
year ended Dec. 31, 2020, compared to a net loss of $26.74 million
for the year ended Dec. 31, 2019. As of March 31, 2021, the
Company had $43.86 million in total assets, $30.22 million in total
liabilities, and $46.54 million in preferred stock, and a total
stockholders' deficit of $32.9 million.
Woodbridge, New Jersey-based BDO USA, LLP, the Company's auditor
since 2012, issued a "going concern" qualification in its report
dated April 1, 2021, citing that the Company has suffered operating
losses, has negative operating cash flows and is dependent upon its
ability to generate profitable operations in the future or obtain
additional financing to meet its obligations and repay its
liabilities arising from normal business operations when they come
due. In addition, the Company has been materially impacted by the
outbreak of a novel coronavirus (COVID-19), which was declared a
global pandemic by the World Health Organization in March 2020.
These conditions raise substantial doubt about its ability to
continue as a going concern.
INVESTVIEW INC: Swings to $565,793 Net Income in Fiscal 2021
------------------------------------------------------------
Investview, Inc. filed with the Securities and Exchange Commission
its Annual Report on Form 10-K disclosing net income of $565,793 on
$38.27 million of total net revenue for the year ended March 31,
2021, compared to a net loss of $21.29 million on $24.18 million of
total net revenue for the year ended March 31, 2020.
As of March 31, 2021, the Company had $19.55 million in total
assets, $23.25 million in total liabilities, and a total
stockholders' deficit of $3.70 million.
For the year ended March 31, 2020 the Company had incurred a
significant net loss, had a working capital deficit, and had a
large accumulated deficit. These conditions raised substantial
doubt about the Company's ability to continue as a going concern.
During the year ended March 31, 2021 the Company raised $5,893,135
in cash proceeds from related parties, $1,405,300 in cash proceeds
from new lending arrangements, and $1,960,325 in cash proceeds from
the sale of preferred stock. Additionally, the Company reported
$6,887,284 in cash provided by operating activities, $774,389 of
income from operations, and net income of $565,793. As of March
31, 2021 the Company has cash of $5,389,654 and a working capital
balance of $2,005,576. Further, subsequent to March 31, 2021 the
Company received gross proceeds of $2,471,875 in connection with
its Preferred Unit Offering and plan to continue to increase
revenues and decrease expenses to generate income from operations.
As of March 31, 2021 the Company's unrestricted cryptocurrency
balance was reported at a cost basis of $4,679,256. The fair
market value of those holdings, based on the closing market price
on March 31, 2021, was $5,978,597. These positive conditions and
events have led management to determine that the substantial doubt
about the Company's ability to continue as a going concern has been
mitigated and alleviated.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/862651/000149315221015566/form10-k.htm
About Investview
Headquartered in Salt Lake City, Utah, Investview, Inc., is a
diversified financial technology organization that operates through
its subsidiaries, to provide financial products and services to
individuals, accredited investors and select financial
institutions.
Haynie & Company, in Salt Lake City, Utah, the Company's auditor
since 2017, issued a "going concern" qualification in its report
dated June 29, 2020, citing that the Company has suffered losses
from operations and its current cash flow is not enough to meet
current needs. This raises substantial doubt about the Company's
ability to continue as a going concern.
J.F. GRIFFIN: Gets OK to Use Cash Collateral Thru August 12
-----------------------------------------------------------
Judge Elizabeth D. Katz authorized J. F. Griffin Publishing, LLC to
use cash collateral on an interim basis through August 12, 2021.
A telephonic hearing on the Debtor's further use of cash collateral
will be held on August 12, 2021 at 10 a.m.
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: Seeks Approval to Hire C-Suite Now as Accountant
----------------------------------------------------------------
Jackson Durham Floral - Event Design, LLC seeks approval from the
U.S. Bankruptcy Court for the Middle District of Tennessee,
Nashville Division, to employ C-Suite Now to provide accounting and
financial consulting services.
The current rates charged by C-Suite Now are as follows:
Accounting and Bookkeeping $45 per hour
Business consulting $10 per hour
C-Suite Now also bills for its out-of-pocket expenses.
Cole Campbell, a director at C-Suite Now, disclosed in a court
filing that the firm is a disinterested person within the meaning
of Sec. 101(14) of the Bankruptcy Code.
The firm can be reached through:
Cole Campbell
C-Suite Now
5210 Village Parkway
Rogers, AR 72758
Phone: 479-696-2998
Email: Cole@c-suitenow.com
About Jackson Durham Floral - Event Design
Jackson Durham Floral - Event Design, LLC, a full-service event
design company based in Dallas, sought protection under Chapter 11
of the Bankruptcy Code (Bankr. M.D. Tenn. Case No. 21-01907) on
June 21, 2021. In the petition signed by Sara M. Garner, managing
member, the Debtor disclosed $303,554 in assets and $1,719,793 in
liabilities. Judge Marian F. Harrison oversees the case. The
Debtor tapped Dunham Hildebrand, PLLC as legal counsel and C-Suite
Now as accountant.
JACKSON DURHAM: Taps Dunham Hildebrand as Bankruptcy Counsel
------------------------------------------------------------
Jackson Durham Floral - Event Design, LLC seeks approval from the
U.S. Bankruptcy Court for the Middle District of Tennessee to
employ Dunham Hildebrand, PLLC to serve as legal counsel in its
Chapter 11 case.
The firm's services include:
a. rendering legal advice with respect to the rights, powers
and duties of the Debtor in the management of its property;
b. investigating and, if necessary, instituting legal action
on behalf of the Debtor to collect and recover assets of the estate
of the Debtor;
c. preparing all necessary pleadings, orders and reports with
respect to this proceeding and to render all other necessary or
proper legal services;
d. assisting and counseling the Debtor in the preparation,
presentation and confirmation of its disclosure statements and
plans of reorganization;
e. representing the Debtor as may be necessary to protect
their interests; and
f. performing all other legal services that may be necessary
and appropriate in the general administration of the Debtor's
estate.
Dunham Hildebrand's current standard hourly rates are as follows:
Attorneys $325 - $400 per hour
Paralegals $175 per hour
The firm received $25,000 as a retainer.
Dunham Hildebrand is a "disinterested person" under Bankruptcy Code
Secs. 101(14) and 327, according to court filings.
The firm can be reached through:
R. Alex Payne, Esq.
Dunham Hildebrand, PLLC
2416 21st Avenue South, Suite 303
Nashville, TN 37212
Phone: 629-777-6529
Email: alex@dhnashville.com
About Jackson Durham Floral - Event Design
Jackson Durham Floral - Event Design, LLC, a full-service event
design company based in Dallas, sought protection under Chapter 11
of the Bankruptcy Code (Bankr. M.D. Tenn. Case No. 21-01907) on
June 21, 2021. In the petition signed by Sara M. Garner, managing
member, the Debtor disclosed $303,554 in assets and $1,719,793 in
liabilities. Judge Marian F. Harrison oversees the case. The
Debtor tapped Dunham Hildebrand, PLLC as legal counsel and C-Suite
Now as accountant.
JACKSONVILLE ADVANCED: Court OKs Cash Collateral Use Thru Aug. 12
-----------------------------------------------------------------
Judge Roberta A. Colton granted Jacksonville Advanced Machining,
LLC further interim authority to use cash collateral in the
ordinary course of its business until the continued hearing on the
cash collateral motion on August 12, 2021 at 2 p.m.
Judge Colton directed the Debtor to pay the Internal Revenue
Service $718.24 per month for 60 months at 4% interest starting
June 10, 2021, as adequate protection of IRS' interest in cash
collateral.
A copy of the order is available for free at https://bit.ly/3h2VMXh
from PacerMonitor.com.
About Jacksonville Advanced Machining
Jacksonville Advanced Machining, LLC, a Jacksonville, Fla.-based
manufacturer of metal parts, sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. M.D. Fla. Case No. 3:21-bk-01149) on
May 7, 2021. In the petition signed by Ramkumar Devarajan,
president, the Debtor disclosed up to $500,000 in assets and up to
$10 million in liabilities. Judge Roberta A. Colton oversees the
case. Parker & DuFresne, P.A and William G. Haeberle, CPA, LLC
serve as the Debtor's legal counsel and accountant, respectively.
JAMES C. LEWIS: Seeks to Hire Bultynck & Co as Accountant
---------------------------------------------------------
James C. Lewis, Sr., LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Michigan to hire Bultynck & Co.,
P.L.L.C. as its accountant.
The Debtor requires an accountant to perform annual accounting,
prepare business tax returns and unfiled tax returns.
The firm will receive a retainer of $2,000 and will be paid at an
hourly basis.
David Bultynck, a partner at Bultynck & Co., disclosed in a court
filing that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
Bultynck & Co can be reached at:
David Bultynck
Bultynck & Co., P.L.L.C.
15985 Canal Rd.
Clinton Township, MI 48038
Tel: (586) 286-7300
About James C. Lewis, Sr., LLC
James C. Lewis, Sr., LLC sought protection for relief under Chapter
11 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 21-44189) on
May 12, 2021, listing $100,001 to $500,000 in both assets and
liabilities. Michael A. Stevenson, Esq. at STEVENSON & BULLOCK,
P.L.C. represents the Debtor as counsel.
JP MORGAN 2021-8: Moody's Assigns (P)B3 Rating to Cl. B-5 Certs
---------------------------------------------------------------
Moody's Investors Service has assigned provisional ratings to 53
classes of residential mortgage-backed securities issued by J.P.
Morgan Mortgage Trust (JPMMT) 2021-8. The ratings range from (P)Aaa
(sf) to (P)B3 (sf).
JPMMT 2021-8 is the ninth prime jumbo transaction in 2021 issued by
J.P. Morgan Mortgage Acquisition Corporation (JPMMAC). The credit
characteristic of the mortgage loans backing this transaction is
similar to both recent JPMMT transactions and other prime jumbo
issuers that Moody's have rated. Moody's consider the overall
servicing framework for this pool to be adequate given the
servicing arrangement of the servicers, as well as the presence of
an experienced master servicer to oversee the servicers.
JPMMT 2021-8 has a shifting interest structure with a five-year
lockout period that benefits from a senior subordination floor and
a subordinate floor. Moody's coded the cash flow to each of the
certificate classes using Moody's proprietary cash flow tool. In
coding the cash flow, Moody's took into account the step-up
incentive servicing fee structure.
In this transaction, the Class A-11, A-11-A and A-11-B notes'
coupon is indexed to SOFR. However, based on the transaction's
structure, the particular choice of benchmark has no credit impact.
First, interest payments to the notes, including the floating rate
notes, are subject to the net WAC cap, which prevents the floating
rate notes from incurring interest shortfalls as a result of
increases in the benchmark index above the fixed rates at which the
assets bear interest. Second, the shifting-interest structure pays
all interest generated on the assets to the bonds and does not
provide for any excess spread.
Moody's base its ratings on the certificates on the credit quality
of the mortgage loans, the structural features of the transaction,
Moody's assessments of the origination quality and servicing
arrangement, the strength of the third-party review (TPR) and the
representations and warranties (R&W) framework of the transaction.
The complete rating actions are as follows:
Issuer: J.P. Morgan Mortgage Trust 2021-8
Cl. A-1, Assigned (P)Aaa (sf)
Cl. A-2, Assigned (P)Aaa (sf)
Cl. A-3, Assigned (P)Aaa (sf)
Cl. A-3-A, Assigned (P)Aaa (sf)
Cl. A-3-X*, Assigned (P)Aaa (sf)
Cl. A-4, Assigned (P)Aaa (sf)
Cl. A-4-A, Assigned (P)Aaa (sf)
Cl. A-4-X*, Assigned (P)Aaa (sf)
Cl. A-5, Assigned (P)Aaa (sf)
Cl. A-5-A, Assigned (P)Aaa (sf)
Cl. A-5-B, Assigned (P)Aaa (sf)
Cl. A-5-X*, Assigned (P)Aaa (sf)
Cl. A-6, Assigned (P)Aaa (sf)
Cl. A-6-A, Assigned (P)Aaa (sf)
Cl. A-6-X*, Assigned (P)Aaa (sf)
Cl. A-7, Assigned (P)Aaa (sf)
Cl. A-7-A, Assigned (P)Aaa (sf)
Cl. A-7-B, Assigned (P)Aaa (sf)
Cl. A-7-X*, Assigned (P)Aaa (sf)
Cl. A-8, Assigned (P)Aaa (sf)
Cl. A-8-A, Assigned (P)Aaa (sf)
Cl. A-8-X*, Assigned (P)Aaa (sf)
Cl. A-9, Assigned (P)Aaa (sf)
Cl. A-9-A, Assigned (P)Aaa (sf)
Cl. A-9-X*, Assigned (P)Aaa (sf)
Cl. A-10, Assigned (P)Aaa (sf)
Cl. A-10-A, Assigned (P)Aaa (sf)
Cl. A-10-X*, Assigned (P)Aaa (sf)
Cl. A-11, Assigned (P)Aaa (sf)
Cl. A-11-X*, Assigned (P)Aaa (sf)
Cl. A-11-A, Assigned (P)Aaa (sf)
Cl. A-11-AI*, Assigned (P)Aaa (sf)
Cl. A-11-B, Assigned (P)Aaa (sf)
Cl. A-11-BI*, Assigned (P)Aaa (sf)
Cl. A-12, Assigned (P)Aaa (sf)
Cl. A-13, Assigned (P)Aaa (sf)
Cl. A-14, Assigned (P)Aa1 (sf)
Cl. A-15, Assigned (P)Aa1 (sf)
Cl. A-16, Assigned (P)Aaa (sf)
Cl. A-17, Assigned (P)Aaa (sf)
Cl. A-X-1*, Assigned (P)Aaa (sf)
Cl. A-X-2*, Assigned (P)Aaa (sf)
Cl. A-X-3*, Assigned (P)Aaa (sf)
Cl. A-X-4*, Assigned (P)Aa1 (sf)
Cl. B-1, Assigned (P)Aa3 (sf)
Cl. B-1-A, Assigned (P)Aa3 (sf)
Cl. B-1-X*, Assigned (P)Aa3 (sf)
Cl. B-2, Assigned (P)A3 (sf)
Cl. B-2-A, Assigned (P)A3 (sf)
Cl. B-2-X*, Assigned (P)A3 (sf)
Cl. B-3, Assigned (P)Baa3 (sf)
Cl. B-4, Assigned (P)Ba3 (sf)
Cl. B-5, Assigned (P)B3 (sf)
*Reflects Interest-Only Classes
RATINGS RATIONALE
Moody's expected loss for this pool in a baseline scenario-mean is
0.34%, in a baseline scenario-median is 0.18%, and reaches 3.39% at
a stress level consistent with Moody's Aaa ratings.
The action reflects the coronavirus pandemic's residual impact on
the ongoing performance of consumer assets as the US economy
continues on the path toward normalization. Economic activity will
continue to strengthen in 2021 because of several factors,
including the rollout of vaccines, growing household consumption
and an accommodative central bank policy. However, specific sectors
and individual businesses will remain weakened by extended pandemic
related restrictions.
Moody's regard the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety.
Moody's increased its model-derived median expected losses by
10.00% (6.60% for the mean) and Moody's Aaa loss by 2.50% to
reflect the likely performance deterioration resulting from the
slowdown in US economic activity due to the coronavirus outbreak.
These adjustments are lower than the 15% median expected loss and
5% Aaa loss adjustments Moody's made on pools from deals issued
after the onset of the pandemic until February 2021. Moody's
reduced adjustments reflect the fact that the loan pool in this
deal does not contain any loans to borrowers who are not currently
making payments. For newly originated loans, post-COVID
underwriting takes into account the impact of the pandemic on a
borrower's ability to repay the mortgage. For seasoned loans, as
time passes, the likelihood that borrowers who have continued to
make payments throughout the pandemic will now become non-cash
flowing due to COVID-19 continues to decline.
Collateral Description
Moody's assessed the collateral pool as of June 1, 2021, the
cut-off date. The deal will be backed by 1,010 fully amortizing
fixed-rate mortgage loans with an aggregate unpaid principal
balance (UPB) of $930,391,473 and an original term to maturity of
up to 30 years. The pool consists of prime jumbo non-conforming
(91.8% by UPB) and GSE-eligible conforming (8.2% by UPB) mortgage
loans. The GSE-eligible loans were underwritten pursuant to GSE
guidelines and were approved by DU/LP.
With the exception of 185 loans which were underwritten pursuant to
the new general QM rule, all of the mortgage loans in the aggregate
pool are QM, with the prime jumbo mortgage loans meeting the
requirements of the QM-Safe Harbor rule.
There are 193 loans originated by United Wholesale Mortgage, LLC
and 2 loans originated by loanDepot.com, LLC pursuant to the new
general QM rule. The third party review verified that the loans'
APRs met the QM rule's thresholds. Furthermore, these loans were
underwritten and documented pursuant to the QM rule's verification
safe harbor via a mix of the Fannie Mae Single Family Selling
Guide, the Freddie Mac Single-Family Seller/Servicer Guide, and
applicable program overlays. As part of the origination quality
review and in consideration of the detailed loan-level third-party
diligence reports, which included supplemental information with the
specific documentation received for each loan, Moody's concluded
that these loans were fully documented loans, and that the
underwriting of the loans is acceptable. Therefore, Moody's ran
these loans as "full documentation" loans in Moody's MILAN model.
Overall, the pool is of strong credit quality and includes
borrowers with high FICO scores (weighted average primary borrower
FICO of 779), low loan-to-value ratios (WA CLTV 69.3%), high
monthly incomes (about $29,384) and substantial liquid cash
reserves (about $324,776), on a weighted-average basis,
respectively, which have been verified as part of the underwriting
process and reviewed by the TPR firms. Approximately 49.9% of the
mortgage loans (by balance) were originated in California which
includes metropolitan statistical areas (MSAs) San Francisco
(14.6%) and Los Angeles (14.9%). The high geographic concentration
in high-cost MSAs is reflected in the high average balance of the
pool ($921,180). Approximately 81.2% of the mortgage loans are
designated as safe harbor Qualified Mortgages (QM) and meet
Appendix Q to the QM rules, 18.8% of the mortgage loans are
designated as Safe Harbor APOR loans, for which mortgage loans are
not underwritten to meet Appendix Q but satisfy AUS with additional
overlays of originators.
As of the cut-off date, none of the borrowers of the mortgage loans
are currently subject to a forbearance plan or are in the process
of being subject to a forbearance plan, including as a result of
COVID-19. In the event a borrower enters into a forbearance plan,
including as a result of COVID-19, after the cut-off date, such
mortgage loan will remain in the pool.
Aggregation/Origination Quality
Moody's consider JPMMAC's aggregation platform to be adequate and
Moody's did not apply a separate loss-level adjustment for
aggregation quality. In addition to reviewing JPMMAC aggregation
quality, Moody's have also reviewed the origination quality of
originator(s) contributing a significant percentage of the
collateral pool (above 10%) and MAXEX Clearing LLC (an
aggregator).
loanDepot (loanDepot.com, LLC), United Wholesale Mortgage, LLC and
Guaranteed Rate (Guaranteed Rate, Inc., Guaranteed Rate Affinity,
LLC and Proper Rate, LLC) sold/originated approximately 19.8%,
19.2% and 11.1% of the mortgage loans (by UPB) in the pool. The
remaining originators each account for less than 10.0% (by UPB) of
the loans in the pool (49.9% by UPB in the aggregate).
Approximately 18.1% (by UPB) of the mortgage loans were acquired by
JPMMAC from MAXEX(the aggregator) , respectively, which purchased
such mortgage loans from the related originators or from an
unaffiliated third party which directly or indirectly purchased
such mortgage loans from the related originators.
Moody's did not make an adjustment for GSE-eligible loans, since
those loans were underwritten in accordance with GSE guidelines.
Moody's increased its base case and Aaa loss expectations for
certain originators (except being neutral for Guaranteed Rate
Parties, Finance of America Mortgage LLC, CrossCountry Mortgage and
loanDepot) of non-conforming loans where Moody's do not have clear
insight into the underwriting practices, quality control and credit
risk management.
United Wholesale Mortgage, LLC originated approximately 19.8% of
the mortgage loans by pool balance. The majority of these loans
were originated under United Wholesale Mortgage, LLC's prime jumbo
program which are processed using the Desktop Underwriter (DU)
automated underwriting system, and are therefore predominantly
underwritten to Fannie Mae guidelines. The loans receive a DU
Approve Ineligible feedback due to the 1) loan amount or 2) LTV for
non-released prime jumbo cash-out refinances is over 80%; none of
the loans under number 2) are included in this pool.
Moody's increased its loss expectations for UWM loans due mostly to
the fact that underwriting prime jumbo loans mainly through DU is
fairly new and no performance history has been provided to Moody's
on these types of loans. More time is needed to assess UWM's
ability to consistently produce high-quality prime jumbo
residential mortgage loans under this program.
Servicing Arrangement
Moody's consider the overall servicing framework for this pool to
be adequate given the servicing arrangement of the servicers, as
well as the presence of an experienced master servicer. Nationstar
Mortgage LLC (Nationstar) (Nationstar Mortgage Holdings Inc.
corporate family rating B2) will act as the master servicer.
NewRez LLC f/k/a New Penn Financial, LLC d/b/a Shellpoint Mortgage
Servicing (Shellpoint), loanDepot.com, LLC (loanDepot) (subserviced
by Cenlar FSB) and United Wholesale Mortgage, LLC (subserviced by
Cenlar FSB) are the principal servicers in this transaction and
will service approximately 60.37%, 19.83% and 19.22% loans (by UPB)
of the mortgage, respectively. Shellpoint will act as interim
servicer for these mortgage loans from the closing date until the
servicing transfer date, which is expected to occur on or about
August 1, 2021 (but which may occur after such date). After the
servicing transfer date, these mortgage loans will be serviced by
JPMorgan Chase Bank, National Association.
The servicers are required to advance P&I on the mortgage loans. To
the extent that the servicers are unable to do so, the master
servicer will be obligated to make such advances. In the event that
the master servicer, Nationstar, is unable to make such advances,
the securities administrator, Citibank, N.A. (rated Aa3) will be
obligated to do so to the extent such advance is determined by the
securities administrator to be recoverable. The servicing fee for
loans in this transaction will be predominantly based on a step-up
incentive fee structure with a monthly base fee of $40 per loan and
additional fees for delinquent or defaulted loans (fixed fee
framework servicers, which will be paid a monthly flat servicing
fee equal to one-twelfth of 0.25% of the remaining principal
balance of the mortgage loans, account for less than 1.00% of
UPB).
Third-Party Review
The transaction benefits from a TPR on 100% of the loans for
regulatory compliance, credit and property valuation. The TPR
results confirm compliance with the originator's underwriting
guidelines for the vast majority of loans, no material regulatory
compliance issues, and no material property valuation issues. The
loans that had exceptions to the originator's underwriting
guidelines had significant compensating factors that were
documented.
R&W Framework
Moody's review of the R&W framework takes into account the
financial strength of the R&W providers, scope of R&Ws (including
qualifiers and sunsets) and enforcement mechanisms. JPMMT 2021-8's
R&W framework is in line with that of other JPMMT transactions
Moody's have rated where an independent reviewer is named at
closing, and costs and manner of review are clearly outlined at
issuance. The loan-level R&Ws meet or exceed the baseline set of
credit-neutral R&Ws Moody's have identified for US RMBS. The R&W
framework is "prescriptive", whereby the transaction documents set
forth detailed tests for each R&W.
The originators and the aggregators each makes a comprehensive set
of R&Ws for their loans. The creditworthiness of the R&W provider
determines the probability that the R&W provider will be available
and have the financial strength to repurchase defective loans upon
identifying a breach. JPMMAC does not backstop the originator R&Ws,
except for certain "gap" R&Ws covering the period from the date as
of which such R&W is made by an originator or an aggregator,
respectively, to the cut-off date or closing date. In this
transaction, Moody's made adjustments to Moody's base case and Aaa
loss expectations for R&W providers that are unrated and/or
financially weaker entities.
Transaction Structure
The transaction has a shifting interest structure in which the
senior bonds benefit from a number of protections. Funds collected,
including principal, are first used to make interest payments to
the senior bonds. Next, principal payments are made to the senior
bonds. Next, available distribution amounts are used to reimburse
realized losses and certificate write-down amounts for the senior
bonds (after subordinate bonds have been reduced to zero i.e. the
credit support depletion date). Finally, interest and then
principal payments are paid to the subordinate bonds in sequential
order. Realized losses are allocated in a reverse sequential order,
first to the lowest subordinate bond. After the balance of the
subordinate bonds is written off, losses from the pool begin to
write off the principal balance of the senior support bond, and
finally losses are allocated to the super senior bonds.
The Class A-11, A-11-A and A-11-B Certificates will have a
pass-through rate that will vary directly with the SOFR rate and
the Class A-11-X, A-11-AI and A-11-BI Certificates will have a
pass-through rate that will vary inversely with the SOFR rate.
Tail Risk & Subordination Floor
The transaction cash flows follow a shifting interest structure
that allows subordinate bonds to receive principal payments under
certain defined scenarios. Because a shifting interest structure
allows subordinate bonds to pay down over time as the loan pool
balance declines, senior bonds are exposed to eroding credit
enhancement over time, and increased performance volatility as a
result. To mitigate this risk, the transaction provides for a
senior subordination floor of 0.70% of the cut-off date pool
balance, and as subordination lockout amount of 0.50% of the
cut-off date pool balance. Moody's calculate the credit neutral
floors as shown in Moody's principal methodology.
Factors that would lead to an upgrade or downgrade of the ratings:
Down
Levels of credit protection that are insufficient to protect
investors against current expectations of loss could drive the
ratings down. Losses could rise above Moody's original expectations
as a result of a higher number of obligor defaults or deterioration
in the value of the mortgaged property securing an obligor's
promise of payment. Transaction performance also depends greatly on
the US macro economy and housing market. Other reasons for
worse-than-expected performance include poor servicing, error on
the part of transaction parties, inadequate transaction governance
and fraud.
Up
Levels of credit protection that are higher than necessary to
protect investors against current expectations of loss could drive
the ratings of the subordinate bonds up. Losses could decline from
Moody's original expectations as a result of a lower number of
obligor defaults or appreciation in the value of the mortgaged
property securing an obligor's promise of payment. Transaction
performance also depends greatly on the US macro economy and
housing market.
The principal methodology used in rating all classes except
interest-only classes was "Moody's Approach to Rating US RMBS Using
the MILAN Framework" published in April 2020.
JUDSON COLLEGE: Plans to Sell Campus as Part of Deal With Creditor
------------------------------------------------------------------
Amanda Albright of Bloomberg News reports that Judson College, an
Alabama women's college that announced it would close this summer
of 2021, has been in discussions with bank creditors over a
forbearance agreement that would give the college time to sell or
dispose of its campus, according to a regulatory filing by its
trustee Regions Bank.
The agreement will also give the college time to explore its
options regarding its endowment funds and to what extent that money
can satisfy the claims of creditors, the filing says.
In May 2021, the college announced it would suspend academic
operation after the summer term ending July 31, 2021 and file for
Chapter 11 bankruptcy.
About Judson College
Founded in 1838, Judson College is a small undergraduate liberal
arts women's college located in Marion, Ala. It is a 183-year-old
private Baptist college and one of the nation's oldest universities
for women.
KUMTOR GOLD: Seeks to Employ Young Conaway as Co-Counsel
--------------------------------------------------------
Kumtor Gold Company CSJC and Kumtor Operating Company CSJC seek
approval from the U.S. Bankruptcy Court for the Southern District
of New York to hire Young Conaway Stargatt & Taylor, LLP.
The firm will serve as co-counsel with Sullivan & Cromwell LLP, the
lead counsel handling the Debtors' Chapter 11 cases. It will also
handle specified aspects of the cases, which Sullivan & Cromwell
may not handle because of a potential conflict of interest.
The firm's services include:
(a) supporting in case management duties, such as monitoring
the docket, maintaining appropriate service lists, maintaining
critical date calendars, and preparing agendas for court hearings;
(b) advising the Debtors regarding their powers and duties in
the continued management and operation of their businesses and
properties;
(c) attending meetings and negotiating with representatives of
creditors and other parties in interest;
(d) advising on debtor-in-possession financing and available
options;
(e) taking necessary action to protect and preserve the
Debtors' estates, including prosecuting actions on the Debtors'
behalf, defending any action commenced against the Debtors and
representing the Debtors' interests in negotiations concerning
litigation in which the Debtors are involved, including, but not
limited to, objections to claims filed against the estates;
(f) performing all necessary legal services including
preparing legal papers and appearing before the bankruptcy court,
any appellate courts, and the U.S. trustee.
The firm's hourly rates are as follows:
Partners and Counsel $725 - $1,075 per hour
Associates $400 - $645 per hour
Paralegals $310 - $320 per hour
Pauline Morgan, Esq., at Young Conaway, disclosed in a court filing
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Ms.
Morgan disclosed the following:
(a) Young Conaway has not agreed to a variation of its
standard or customary billing arrangements for this engagement.
(b) None of the firm's professionals included in this
engagement have varied their rate based on the geographic location
of the Chapter 11 cases.
(c) Young Conaway was retained by the Debtors pursuant to an
engagement agreement dated as of March 10, 2020. The billing rates
and material terms of the pre-bankruptcy engagement are the same as
the rates and terms proposed by the Debtors.
(d) The Debtors will be approving a prospective budget and
staffing plan for Young Conaway's engagement for the post-petition
period as appropriate. In accordance with the U.S. Trustee
Guidelines, the budget may be amended as necessary to reflect
changed or unanticipated developments.
Young Conaway can be reached at:
Pauline K. Morgan, Esq.
Young Conaway Stargatt & Taylor, LLP
1270 Avenue of the America, Suite 2210
New York, NY 10020
Tel.: (212) 332-8840/(302) 571-6707
Fax: (212) 332-885/(302) 576-3318
Email: pmorgan@ycst.com
About Kumtor Gold
Centerra Gold Inc., a Canadian mining company that owns and
operates the Kumtor Gold Mine in the Kyrgyz Republic, placed
subsidiaries, Kumtor Gold Co and Kumtor Operating Co., into Chapter
11 bankruptcy in the U.S. following the nationalization of the
miner's Kumtor gold mine by the Kyrgyz Republic, a former Soviet
republic.
Kumtor Gold Company CSJC and Kumtor Operating Company CSJC sought
Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No.
21-11051) on May 31, 2021. Both had between $1 billion and $10
billion in assets and between $100 million and $500 million in
liabilities as of the bankruptcy filing.
The Hon. Lisa G. Beckerman is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as their lead
bankruptcy counsel. Young Conaway Stargatt & Taylor, LLP serves as
co-counsel and conflicts counsel. Stretto is the Debtors' claims
and noticing agent and administrative advisor.
KUMTOR GOLD: Seeks to Hire Stretto as Administrative Advisor
------------------------------------------------------------
Kumtor Gold Company CJSC and Kumtor Operating Company CJSC seek
approval from the U.S. Bankruptcy Court for the Southern District
of New York to hire Stretto as administrative advisor.
The Debtors need an administrative advisor to:
(a) assist in the solicitation, balloting, and tabulation of
votes, and prepare any related reports, as required in support of
confirmation of a Chapter 11 plan;
(b) prepare an official ballot certification and, if
necessary, testify in support of the ballot tabulation results;
(c) assist in the preparation of the Debtor's schedules of
assets and liabilities and statements of financial affairs and
gather data in conjunction therewith;
(d) assist in the preparation of the Debtors' monthly
operating reports and gather data in conjunction therewith;
(e) provide a confidential data room;
(f) manage and coordinate any distributions pursuant to a
Chapter 11 plan if designated as distribution agent under such
plan; and
(g) provide other bankruptcy administrative services.
The firm's hourly rates are as follows:
Analyst $33 - $66 per hour
Consultant $70 - $200 per hour
Director/ Managing Director $210 - $250 per hour
Executive Management waived
Solicitation Associate $230 per hour
Director of Securities & Solicitations $250 per hour
Sheryl Betance, senior managing director at Stretto, disclosed in a
court filing that her firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Sheryl Betance
Stretto
410 Exchange, Ste. 100
Irvine, CA 92602
Tel: 714.716.1872
Email: sheryl.betance@stretto.com
About Kumtor Gold
Centerra Gold Inc., a Canadian mining company that owns and
operates the Kumtor Gold Mine in the Kyrgyz Republic, placed
subsidiaries, Kumtor Gold Co and Kumtor Operating Co., into Chapter
11 bankruptcy in the U.S. following the nationalization of the
miner's Kumtor gold mine by the Kyrgyz Republic, a former Soviet
republic.
Kumtor Gold Company CSJC and Kumtor Operating Company CSJC sought
Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No.
21-11051) on May 31, 2021. Both had between $1 billion and $10
billion in assets and between $100 million and $500 million in
liabilities as of the bankruptcy filing.
The Hon. Lisa G. Beckerman is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as their lead
bankruptcy counsel. Young Conaway Stargatt & Taylor, LLP serves as
co-counsel and conflicts counsel. Stretto is the Debtors' claims
and noticing agent and administrative advisor.
KUMTOR GOLD: Taps Sullivan & Cromwell as Lead Bankruptcy Counsel
----------------------------------------------------------------
Kumtor Gold Company CSJC and Kumtor Operating Company CSJC seek
approval from the U.S. Bankruptcy Court for the Southern District
of New York to hire Sullivan & Cromwell LLP to serve as lead
counsel in their Chapter 11 cases.
The firm's services include:
(a) advising the Debtors with respect to their powers and
duties, including the legal and administrative requirements of
operating in Chapter 11;
(b) attending meetings and negotiating with representatives of
creditors and other parties-in-interest;
(c) assisting with the preservation of the Debtors' estates,
including the prosecution of actions commenced under the Bankruptcy
Code or otherwise on their behalf, and objections to claims filed
against the estates;
(d) preparing and prosecuting legal papers;
(e) negotiating and preparing a Chapter 11 plan, disclosure
statement and all related agreements or documents;
(f) advising the Debtors with respect to certain corporate,
financing, tax, and employee benefit matters as requested by the
Debtors and without duplication of other professionals' services;
(g) appearing before the bankruptcy court and any appellate
courts;
(h) advising the Debtors in connection with the arbitration
proceedings against the Krygyz government and its related parties;
and
(i) performing all other legal services in connection with the
cases.
The firm's hourly rates are as follows:
Partners and Special Counsel $1,425 - $1,825 per hour
Associates $685 - $1,225 per hour
Paralegals $375 - $545 per hour
The Debtors paid a retainer fee in the amount of $2,499,980 to the
law firm.
James Bromley, 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.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Mr.
Bromley disclosed the following:
Question: Did you agree to any variations from, or
alternatives to, your standard or customary billing arrangements
for this engagement?
Response: Yes. Sullivan & Cromwell does not ordinarily
determine its fees solely on the basis of hourly rates. For the
purposes of its engagement by the Debtors, Sullivan & Cromwell has
agreed that it will charge for services performed during these
Chapter 11 cases, and will apply to the court for approval of such
charges. The hourly rates proposed by Sullivan & Cromwell are the
same or less than the hourly rates used by the firm when preparing
estimates of fees under its normal billing practices.
In particular, the rates for the more senior timekeepers for each
class of personnel represent a discount from the rates used by
Sullivan & Cromwell when preparing estimates of fees under its
normal billing practices for non-bankruptcy engagements.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic location of the
bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference.
Response: Sullivan & Cromwell performed services for the
Debtors and was compensated for its services at rates that reflect
all of the factors prescribed by rule 1.5(a) of the New York Rules
of Professional Conduct.
Question: Has your client approved your prospective budget and
staffing plan, and, if so, for what budget period?
Response: The Debtors have approved Sullivan & Cromwell's
budget and staffing plan for the period from May 31 to June 30,
2021. If necessary, Sullivan & Cromwell expects to submit for
approval by the Debtors prospective budgets and staffing plans for
the duration of the Debtors' bankruptcy cases.
Sullivan & Cromwell can be reached at:
James L. Bromley
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004-2498
Tel.: (212) 558-4000
Fax: (212) 558-3588
Email: bromleyj@sullcrom.com
About Kumtor Gold
Centerra Gold Inc., a Canadian mining company that owns and
operates the Kumtor Gold Mine in the Kyrgyz Republic, placed
subsidiaries, Kumtor Gold Co and Kumtor Operating Co., into Chapter
11 bankruptcy in the U.S. following the nationalization of the
miner's Kumtor gold mine by the Kyrgyz Republic, a former Soviet
republic.
Kumtor Gold Company CSJC and Kumtor Operating Company CSJC sought
Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No.
21-11051) on May 31, 2021. Both had between $1 billion and $10
billion in assets and between $100 million and $500 million in
liabilities as of the bankruptcy filing.
The Hon. Lisa G. Beckerman is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as their lead
bankruptcy counsel. Young Conaway Stargatt & Taylor, LLP serves as
co-counsel and conflicts counsel. Stretto is the Debtors' claims
and noticing agent and administrative advisor.
LATAM AIRLINES: Creditors Seek Cayman Subsidiaries Consolidation
----------------------------------------------------------------
Michael Klein of Cayman Compass reports that a group of Chilean
creditors of LATAM Group has filed an application to a US
bankruptcy court to include two Cayman financing subsidiaries in
the reorganisation process of South America's largest airline.
The creditors argue in their application that the consolidation of
LATAM Finance Ltd. and Peuco Finance Ltd. would "have a tremendous
impact" on how much money they can recover and whether they would
vote in favour of LATAM's restructuring plan.
LATAM filed for bankruptcy protection in the US in May 2020 after
the airline was hit by the collapse in air travel in response to
the coronavirus pandemic.
Earlier this June 2021, the group requested from the bankruptcy
court a deadline extension until September for the presentation of
its restructuring plan, stating that it would not interfere with
its intention to exit Chapter 11 by the end of this 2021.
The creditors, who hold US$490.5 million in bonds issued by the
airline locally in Chile, said there were "serious concerns" about
certain intercompany transactions between LATAM Group and its
Cayman subsidiaries.
The motion was filed by Banco del Estado de Chile in its capacity
as indenture trustee of several of the airline's Chilean local
bonds series.
The filing stated that LATAM Finance and Peuco were created in
connection with the issuance of $1.5 billion in international
bonds, but the subsidiaries had no operations and assets and were
relying on the parent group to repay international bond investors.
The creditors claim that after issuing the international bonds,
LATAM Group, without notice, "engaged in certain transactions that
resulted in Peuco holding $1.3 billion in intercompany claims
against certain operating companies, thus siphoning away hundreds
of millions of dollars in value" from local bondholders and LATAM's
other creditors.
The creditors said they aim to file a more substantive
consolidation motion to ensure that they and other creditors "are
not unfairly deprived of $1.3 billion in value" and that
international bondholders, "who never expected to have access to
any separate assets at Peuco or LATAM Finance, do not receive an
unjustified windfall in that same amount."
The application aims to have the matter heard in court before the
company presents its reorganisation plan.
On 27 May 2021, LATAM filed a petition to wind up LATAM Finance in
Cayman's Grand Court on the basis that the parent company had
passed a special resolution and LATAM Finance was unable to pay its
debt.
In the petition, LATAM Finance was described as a financing vehicle
that "other than the issuing, and making payments on, the notes
that it has issued, its ability to pay principal, interest and
other amounts due on the notes that it has issued depends upon the
financial condition of LATAM and the proceeds generated from its
operations."
According to a September 2020 schedule of assets and liabilities
filed with the bankruptcy court, LATAM Finance had unsecured
liabilities of $1.5 billion, representing the principal amount of
the outstanding international bonds, and $1.3 billion in assets in
the form of an inter-company receivable owed by Peuco.
Peuco, in turn, reported this amount as its entire debt that was
fully matched by money it is owed by LATAM operating companies.
The creditors' court application cited a report published by
corporate restructuring news outlet Reorg on 12 Jan. 2021, which
noted that, "Holders of unsecured bonds issued by special purpose
vehicle LATAM Finance could recover value from certain operating
companies within the group as a result of $1.3 billion of
intercompany receivables due to the SPV issuer."
The Chilean local bondholders suggest that since then the prices of
international and local bonds, which "had been essentially the
same," started to diverge with international bond prices increasing
significantly in value compared with local bond prices and the
value of other unsecured creditor claims.
Court documents show that an ad hoc group, which says it represents
more than 70% of holders of international bonds, has stated that it
believes its members' claims are "structurally senior."
A committee of unsecured creditors has filed a limited objection to
the local bondholders' application stating that the issues raised
and the validity of intercompany claims should be resolved quickly
through mediation and negotiation rather than litigation.
LATAM Group objected to the application arguing that litigation of
these issues would be premature and interfere with its exclusive
right to develop and propose a plan.
In a court filing, the group said the consolidation application
seeks to litigate substantive consolidation questions on a
fast-track basis before engaging with other bondholders to explore
these issues "as part of the larger plan conversations."
Such "litigate-first tactics" should not be rewarded, LATAM said,
because it would incentivise other parties to negotiate through
aggressive litigation tactics that would result in higher costs and
"distract management from the larger consensual plan."
LATAM added that it "takes umbrage" with the characterisation of
the transactions involving LATAM Finance and Peuco "to the extent
that BancoEstado even indirectly raises any questions regarding the
purpose of these intercompany transactions or the sufficiency of
any disclosures related thereto."
In a letter to Chilean newspaper La Segunda, Juan José Toha, the
director of corporate affairs for the LATAM Group, denied claims
made in a news article that any funds had been transferred to the
Cayman Islands or that the transactions had anything to do with
lowering the company’s tax burden.
He clarified that all financing transactions had taken place
between 2017 and 2019, before the group entered Chapter 11
proceedings.
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.
LEVELBEST LLC: Seeks Approval to Hire an Appraiser
--------------------------------------------------
Levelbest LLC seeks approval from the U.S. Bankruptcy Court for the
Northern District of New York to hire an appraiser.
The Debtor tapped Jan Colabelli as its appraiser to determine the
date of filing(9/11/19) market value of 21 Greenwood Avenue,
Mechanicville, NY 12018.
The cost of the initial appraisal inspection and report will be
$550 for the initial inspection and report plus the costs of
testimony, travel, advisement and testimony which will be $250/hour
for in court services and $75/hour for out of court services.
Ms. Colabelli is a disinterested person within the meaning of 11
U.S.C. Section 101(14).
Ms. Colabelli can be reached at:
Jan Colabelli
Full Service Appraisals
6 Pond Hollow Road
Averill Park, NY 1208
Phone: 518-331-5882
About Levelbest LLC
Levelbest LLC sought Chapter 11 protection (Bankr. N.D.N.Y. Case
No. 19-11673) on Sept. 11, 2019. At the time of filing, the Debtor
$50,001 to $100,000 in assets and 100,001 to $500,000 in
liabilities.
Judge Robert E Littlefield Jr presides over the case. The Debtor's
counsel is Matthew J. Mann, Esq. of MANN LAW FIRM, PC.
LUCKY BUCKS: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to
Atlanta, Ga.-based coin-operated amusement machine (COAM) operator
Lucky Bucks LLC and 'B' issue-level rating and '3' recovery rating
to the proposed senior secured credit facility. The '3' recovery
rating reflects its expectation for meaningful (50%-70%; rounded
estimate: 50%) recovery in the event of a payment default.
S&P said, "The stable outlook reflects our expectation that Lucky
Bucks will grow EBITDA organically and through the integration of
recently completed and pending acquisitions, such that leverage
improves to the mid- to high-5x range by the end of 2021.
"The 'B' issuer credit rating primarily reflects the highly
competitive and fragmented nature of the Georgia COAM market,
limited geographic diversity, and our expectation for leverage of
around 5x-6x through 2021. We also view the company's majority
ownership by private equity firm Trive Capital as a risk given our
belief that financial sponsors tend to employ debt to fund
shareholder returns, which could result in elevated leverage over
the long term." Somewhat offsetting these risks are the company's
leading market share by revenue in the Georgia COAM market,
industry-leading win per unit per day (WPUPD) in Georgia, long-term
contracts with high renewal rates, strong profitability, and low
capital intensity, which result in high predictability of revenues
and good free cash flow generation.
Lucky Bucks is an established player in the Georgia COAM market but
faces significant competition from other slot route operators in a
crowded industry. This market is highly fragmented, as evidenced by
Lucky Bucks' 20% market share by revenue, or 10% by number of
machines (pro forma for the acquisitions made between June 11, 2021
and June 18, 2021), followed by the next six largest competitors
with a 25% collective share of the market. S&P said, "However, as
the largest COAM operator in Georgia, we believe Lucky Bucks'
leading scale and market position give the company a competitive
advantage in terms of its ability to provide customers with
best-in-class equipment, superior service, and better contract
terms, which are difficult for smaller competitors to replicate.
These factors have translated into a market-leading WPUPD of $186
in 2020, compared to the statewide average of $102, which reflects
Lucky Bucks' market leadership. However, Lucky Bucks is now facing
competition in Georgia from Accel Entertainment (not rated) as
Accel looks to expand its presence in the state. While Accel's
Georgia operations are relatively small, with 60 live locations
compared to Lucky Bucks' 500 (including acquisitions made through
June 18, 2021), Accel could pose a competitive threat to Lucky
Bucks' in the long term. Nevertheless, Accel has a diversified
strategy and might be less focused on the Georgia COAM market as it
seeks to not only expand operations in Georgia but also
Pennsylvania while also integrating its Century Gaming acquisition.
Therefore, we believe the risk posed by Accel is manageable
considering Lucky Bucks' current market leadership, established
track record, and favorable reputation."
S&P said, "The Georgia COAM market has favorable operating dynamics
and we expect Lucky Bucks to continue to be a consolidator in the
market. We view the operating dynamics in Georgia favorably given a
relatively attractive COAM revenue split of 45%, 45% and 10%
amongst Lucky Bucks, the location owner and the state respectively.
Furthermore, operators do not have cash-related responsibilities as
location owners and the Georgia Lottery Corporation handle cash
collection and cash distribution and auditing, respectively. Lucky
Bucks also benefits from a higher max bet ranging from $5 to $20
per spin, based on the type of machine in Georgia, and a maximum of
9 machines per location in Georgia, which results in higher
potential revenue per location. Additionally, gaming activity in
Georgia is limited to the state lottery, charity bingo games, and
COAMs, which limits competition and the potential for
cannibalization from other forms of gaming like casinos.
Furthermore, Georgia has no limitations on contracts, which results
in favorable contract lengths and better long-term revenue
visibility. By comparison, J&J Ventures Gaming (a rated pure play
distributed gaming operator in Illinois) only earns a 33% revenue
share from its machines and is subject to a lower max bet ($4) and
fewer machines per location (6). The gaming market in Illinois is
also more saturated given a higher number of machines per adult and
significant competition from other forms of gaming (e.g. casino
gaming, sports betting, etc.). However, J&J has a much higher
market share (30%) compared to Lucky Bucks' 20% market share
because of significant consolidation in Illinois. Like J&J, we
expect Lucky Bucks to be a consolidator of locations going forward.
In fact, Lucky Bucks has completed 69 acquisitions since 2016,
including 4 acquisitions representing 25 locations from June 11,
2021 to June 18, 2021. Given the more fragmented nature of the
market in Georgia, we see higher upside for Lucky Bucks to gain
share and solidify its leading market position.
"We view Lucky Bucks' business as being less volatile and
relatively more predictable than traditional casinos given the
nature of its revenue base and higher frequency of play given the
convenience nature of its product. We view Lucky Bucks' model as
similar to the lottery business in that COAM operators and lottery
operators benefit from less volatile revenue given the low price
points of their products and customers' easy access to locations
that have COAMs or sell lottery products (e.g. gas stations,
convenience stores). Consequently, we view Lucky Bucks' hyper-local
gaming model as less cyclical and volatile relative to casino
gaming given that Lucky Bucks is not reliant on destination travel
or group business, which are still recovering from the pandemic."
Furthermore, although Lucky Bucks' operations are concentrated in
Georgia, the company is not dependent on a single location or
customer because its machines are located in hundreds of locally
convenient establishments, resulting in increased frequency of
play, stickier customers, and highly recurring revenues.
Lucky Bucks is vulnerable to operating volatility given the
concentration of its operations, but this risk is somewhat
mitigated by the company's leading market position and diversity of
its customer base. Given that the company's operations are
concentrated in Georgia, Lucky Bucks lacks material geographic
diversity, which heightens its exposure to adverse regional events,
weather risk, regional economic weakness, or changes in the
competitive landscape that could result in significant revenue and
EBITDA volatility. Furthermore, S&P believes that longer-term,
Lucky Bucks is vulnerable to adverse changes in the regulatory
environment in Georgia, particularly changes in the tax rate or
expansion of gaming activities in the state, which could weaken
Lucky Bucks' competitive position and cash flow profile. However,
given that Georgia already has one of the highest effective gaming
tax rates in the country and any change to cash payments require a
constitutional amendment, we think the economics for COAM operators
are unlikely to change, at least in the near term. Furthermore, any
proposed change to the gaming tax rate or expansion of gaming in
Georgia would be subject to a high legislative hurdle. S&P's
understanding is a constitutional amendment would first require a
supermajority vote at the two committees of the Georgia General
Assembly and at the Georgia General Assembly itself, followed by
popular vote.
The stable rating outlook reflects our expectation that Lucky Bucks
will grow EBITDA organically and through the integration of
recently completed and pending acquisitions, such that leverage
improves to the mid- to high-5x range in 2021.
S&P said, "We could lower the ratings if Lucky Bucks sustains
leverage above 5.75x, which could occur if the company undertook
leveraging transactions to pursue acquisitions or return capital to
shareholders.
"We could consider raising the ratings if Lucky Bucks is able to
grow EBITDA such that leverage is sustained below 4.25x,
incorporating any potential acquisitions or shareholder
distributions."
LUTHERAN SOCIAL SERVICES: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------------------
The U.S. Trustee for Region 12 on June 30 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of Lutheran Social Services of
North Dakota.
About Lutheran Social Services of North Dakota
Lutheran Social Services of North Dakota sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. N.D. Case No.
21-30203) on May 13, 2021. At the time of the filing, the Debtor
had between $1 million and $10 million in both assets and
liabilities. Judge Shon Hastings oversees the case. ichael S.
Raum, Esq., at Fredrikson & Byron, P.A. is the Debtor's legal
counsel.
MACK-CALI REALTY: Fitch Lowers LT IDR to 'B', Outlook Negative
--------------------------------------------------------------
Fitch Ratings has downgraded the Long-Term Issuer Default Ratings
(IDR) for Mack-Cali Realty Corporation (NYSE: CLI) and its
operating subsidiary Mack-Cali Realty, L.P. to 'B' from 'BB-'. The
Rating Outlook is Negative. Mack-Cali's IDR reflects the company's
persistently high and increased leverage, weak liquidity coverage,
aggressive development program, limited unsecured debt and equity
capital access and moderate complexity from joint venture (JV)
investments, which also limit the company's strategic and
operational control and reduce financial reporting transparency.
The Negative Rating Outlook is based on Fitch's concern about the
prospects for backfilling leases in Mack-Cali's Jersey City
waterfront office portfolio. Successful stabilization of the rating
would be predicated on substantial progress in leasing up the
company's Jersey City waterfront office portfolio, which should
serve to lower leverage.
KEY RATING DRIVERS
Office Leasing Remains Challenged: After occupancy remained at a
low but stable level in 2020, 1Q21 saw office same-store occupancy
decline by 430bp due to moveouts that will be a challenge to
replace. This, combined with an environment where rents appear to
be modestly declining, results in Fitch's expectation of SSNOI
declines to approach 10% in 2021. Fitch believes it is unlikely
that Mack-Cali will be able to return to YE2020 occupancy in the
office portfolio. Speculative new leasing has been largely on hold
due to the pandemic and potential tenants reassessing their space
needs. This had been compounded by the inability to conduct tours
for much of 2020, which should at least not be an impediment as
businesses continue to reopen.
Speculative Grade Credit Metrics: Fitch expects Mack-Cali's
leverage will remain elevated and increase to around 14x-15x in
Fitch's one- to two-year forecast horizon, while moderately
decreasing thereafter but remaining above 12x in 2024. This is due
to the continuing struggle to address tenant moveouts in the
company's New Jersey waterfront office portfolio that began in
2018, where Mack-Cali has made minimal progress backfilling vacant
space since when the Waterfront office portfolio was over 90%
leased. However, the situation has been exacerbated by the pandemic
as the company lost 430bp of occupancy in 1Q21. In addition,
suburban asset sales that the company has executed are geared to
pay off debt are partially offset by debt-funded development
projects, which serve to increase leverage further in 2021. Future
delevering is contingent upon incremental NOI from multifamily
development stabilizations, and leasing success in its Jersey City
waterfront office portfolio.
Suburban Asset Sale Mostly Complete: Mack-Cali has mostly completed
its disposition program of selling its entire New Jersey suburban
office portfolio, having sold $352 million of office assets in 2020
with an incremental $631 million of sales as of beginning of June
2021. This is the culmination of a six-year process that began in
2015. Fitch views the disposition program as executed within
initial valuation expectations.
Apartment Poised to Represent Majority: Fitch expects multifamily
to comprise over 50% of NOI by 2022 given the sales of the suburban
office portfolio and oncoming development projects over the next
two years. The company's growing multifamily portfolio offers
better growth and liquidity prospects, albeit with elevated
development risk.
Fitch views the de-emphasis of the office portfolio favorably
since, as a secondary office market, New Jersey has weaker
institutional lender and investor interest than core, 24-hour
gateway central business district office markets, such as New York,
Washington, DC, Boston, Chicago and San Francisco. New Jersey
office fundamentals will remain a headwind given the state's
difficult business climate that includes high labor and living
costs, as well as regulatory and tax burdens. New Jersey employment
growth has been weak during the past decade, partly due to telecom
and pharma industry consolidation, which has led to job
eliminations and relocations out of state.
Positively, Mack-Cali's extensive portfolio repositioning towards
the Jersey City Waterfront focuses on one of the strongest New
Jersey office submarket, which generally has above average
occupancy and rental rates for Class A New Jersey office space and
mass transit access. The company's growing multifamily portfolio
offers better growth and liquidity prospects.
Transition to Exclusive Secured Financing Strategy: In the last few
years, Mack-Cali had increasingly relied on secured mortgage debt,
unsecured bank term loans, joint venture and redeemable preferred
equity and asset sales proceeds to fund refinancing its maturing
obligations and new investments, and debt capital. Mack-Cali has
transitioned its balance sheet to a fully secured strategy in 2Q21.
In May 2021, the company replaced its prior $600 million unsecured
credit facility with a new $400 million secured credit facility and
term loan. Subsequently, the company drew on the new credit
facility, along with cash to pay off its two existing public
unsecured bonds outstanding in full. Therefore, Mack-Cali no longer
has any remaining unsecured borrowings. This results in less
financial flexibility and weaker relative capital access for the
company, especially in the context of limited access to
attractively priced public equity.
Elevated Rental Risk Profile: Challenging New Jersey market
fundamentals, combined with high asset level concentrations and
Mack-Cali's growing exposure to shorter lease duration multifamily
assets are key factors contributing to a higher rental income risk
profile for Mack-Cali, which will likely result in greater relative
cash flow volatility through the cycle. Fitch estimates that once
the suburban office portfolio dispositions are complete that
Mack-Cali's six Jersey City Waterfront office assets will comprise
close to half of the company's operating portfolio value.
Positively, only 20.3% of Waterfront office rents expire through YE
2024.
DERIVATION SUMMARY
Mack-Cali owns a concentrated portfolio, consisting of metro and
remaining suburban New Jersey office assets and multifamily
properties. The company's portfolio markets have more challenging
office market demand fundamentals and lower supply barriers than
higher rated peers SL Green Realty Corp. and Vornado Realty Trust.
The company's operating strategy also entails elevated development
risk exposure, which is partially offset by related residential
property portfolio with better growth and liquidity elements.
Mack-Cali has not publicly committed to financial policy targets,
with current metrics consistent with high speculative-grade REITs.
The company has weaker access to unsecured debt and equity capital,
notwithstanding its prior long-tenure as a regular public unsecured
bond issuer.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- High-single-digit SSNOI decline in 2021 in the combined
office/multifamily portfolio, which is driven by an assumed
200bps occupancy loss and mid-single digit releasing spread
declines, followed by low-to-mid single digit SSNOI growth in
2022-2024, based on low single-digit positive rent spreads and
100-150bps improved occupancy per annum;
-- Development spend of approximately $150 million per year from
2021 to 2023 with anticipated delivery volumes of
approximately $450 million per year in 2021-2022 at 6.1%
yields;
-- Dispositions of approximately $835 million and $100 million in
2021 and 2022, respectively.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Leverage sustaining below 13.0x
-- Stronger access to public equity and non-bank unsecured debt
capital;
-- Stronger tangible progress in leasing up vacancy in Jersey
City office waterfront portfolio;
-- FCC sustaining above 1.3x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Leverage (net debt/ recurring operating EBITDA) sustaining
above 14.5x or consideration of decline in supplementary
leverage metrics;
-- Continuing difficulty in leasing up Jersey City office
waterfront portfolio;
-- A sustained liquidity shortfall;
-- FCC sustaining below 1.0x.
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: Mack-Cali has an adequate liquidity position.
The company's sources cover its uses by 1.1x, based on Fitch's base
case liquidity analysis for the April. 1, 2021 to Dec. 31, 2022
forecast period, which is pro forma for the company's recasting of
its secured credit facility and term loan in May 2021 and
subsequent paydown of its two remaining unsecured public bond
issuances outstanding, which totalled $575 million. In addition, it
incorporates Mack-Cali's projected development and capital
expenditure spend. The company's liquidity improves to 1.5x on a
pro forma basis, if it is assumed that 80% of secured debt is
refinanced.
The size of Mack-Cali's unencumbered asset pool has decreased
considerably during the last few years. Fitch estimates the
company's unencumbered assets covered its net unsecured debt
(UA/UD) by 0.8x based on a direct capitalization approach of
unencumbered NOI using a stressed 9.0% capitalization rate at March
31, 2021. This compares with a net UA/UD for Mack-Cali of 1.7x at
Fitch's prior review. Fitch usually views 2.0x UA/UD coverage as
the standard threshold for investment-grade REITs. Mack-Cali's
secured debt as a percent of total debt increased to 80% at March
31, 2020 from 70% at March 31, 2020 and 38% at the end of 2016.
After redemption of Mack-Cali's $575 million of unsecured bonds and
implementation of a secured credit facility, secured debt is now
100% of total debt.
ISSUER PROFILE
Mack-Cali Realty Corporation is an owner, manager and developer of
office and multifamily properties in select waterfront and
transit-oriented markets throughout New Jersey.
SUMMARY OF FINANCIAL ADJUSTMENTS
-- EBITDA excludes non-cash stock compensation;
-- EBITDA includes recurring cash distributions from
unconsolidated JVs;
-- Fitch has included Mack-Cali's Series A and A1 redeemable
preferreds in Mack-Cali's debt quantum to calculate leverage.
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.
MAPLE MANAGEMENT: Has Cash Collateral Access Thru August 11
-----------------------------------------------------------
Judge Janet S. Baer authorized Maple Management, LLC to use cash
collateral through 5 p.m. on August 11, 2021, to pay only the
actual, ordinary and necessary operating expenses related to its
business, up to the amounts set forth in the budget.
The Trustees of the National Elevator Industry Pension Fund, Health
Benefit, Educational, Elevator Industry Work Preservation Funds,
Elevator Constructors Annuity and 401(K) Retirement Fund assert
that Greenwich Capital Management LP, as funder, has an interest in
the cash collateral pursuant to a pre-petition, perfected, senior
security interest in substantially all of the personal property of
the Debtor, as evidenced by a security agreement and a duly
recorded UCC Financing Statement.
As adequate protection, the Funder is granted valid, binding,
continuing, unavoidable, enforceable and perfected post-petition
liens and security interests in the Personal Property and all
proceeds generated from the Personal Property, to the same extent,
validity and priority held by the Funder prior to the Petition Date
and to the extent of the diminution in the amount of Cash
Collateral used by the Debtor after the Petition Date.
As further adequate protection, the Debtor shall pay the Funder
$1,000 per week or such sum as may be further determined by the
Court. The Debtor must also pay any arrearage due to the Funder.
A copy of the order is available for free at https://bit.ly/3vXSiJO
from PacerMonitor.com.
The Court will convene a status hearing on August 11, 2021 at 1:30
p.m. to consider the Debtor's use of the cash collateral.
About Maple Management, LLC
Maple Management, LLC is engaged in the business of owning and
operating a construction-related business that installs elevators,
ramps and lifts for the disabled, elderly and infirm at their
primary residences. Maple Management operates from the real
property commonly known as 245 W Roosevelt Rd Ste 77, West Chicago,
IL 60185-4838. Maple rents this premises. Its principal is James
Mecha.
Maple sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. N.D. Ill. Case No. 21-02059) on February 17, 2021. In
the petition signed by Mecha, the Debtor disclosed up to $50,000 in
assets and up to $1 million in liabilities.
Judge Janet S. Baer oversees the case.
Ariel Weissberg, Esq., at Weissberg and Associates, Ltd. is the
Debtor's counsel.
MATT'S SMALL ENGINE: Taps Allen P. Turnage as Legal Counsel
-----------------------------------------------------------
Matt's Small Engine Repair, LLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Florida to employ the
Law Office of Allen P. Turnage to handle its Chapter 11 case.
The firm's services will be provided mainly by Allen Turnage, Esq.,
who will be paid at the rate of $400 per hour.
Mr. Turnage, Esq., disclosed in court filings that he has no
connection with the U.S. trustee, any creditor or other
party-in-interest.
The attorney can be reached at:
Allen P. Turnage, Esq.
Law Office of Allen P. Turnage
P.O. Box 15219
Tallahassee FL 32317
Telephone: (850) 224-3231
Facsimile: (850) 224-2525
Email: service@turnagelaw.com
About Matt's Small Engine Repair
Matt's Small Engine Repair, LLC is a Florida corporation limited
liability company owned by its managing member and founder, Matthew
Roberts, along with his wife, Casey Roberts.
Matt's Small Engine Repair filed Chapter 11 petition (Bankr. N.D.
Fla. Case No. 21-40220) on June 22, 2021. At the time of the
filing, the Debtor had between $100,001 and $500,000 in both assets
and liabilities. The Debtor is represented by the Law Office of
Allen Turnage, P.A.
MAUNESHA RIVER: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------
The U.S. Trustee for Region 11 on June 30 appointed an official
committee to represent unsecured creditors in the Chapter 11 case
of Maunesha River Dairy, LLC.
The committee members are:
1. Eastland Feed & Grain Inc.
Adam Coulthard
210 N. Stanton Street
Shannon, IL 61078
Phone: (608) 426-6534
E-mail: alc@efgi.net
2. Lemmenes Custom Farms LLC
Roy Lemmenes
N11135 Cottonwood Road
Waupun, WI 53963
Phone: (920) 324-9931
E-mail: lemmenesllc@gmail.com
3. Ritchie Implement, Inc.
Ronald Ritchie
507 W. Main Street
Cobb, WI 53526
Phone: (608) 623-2331
E-mail: ronritchie@ritchiesinc.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Maunesha River Dairy
Sun Prairie, Wis.-based Maunesha River Dairy, LLC sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wis. Case. No.
21-11157) on May 27, 2021. In the petition signed by Dennis E.
Ballweg, member, the Debtor disclosed $1 million to $10 million in
both assets and liabilities.
Judge Catherine J. Furay oversees the case.
Murphy Desmond S.C. and JMS Dairy Business Consulting, LLC serve as
the Debtor's legal counsel and financial advisor, respectively.
MCLEAN AFFILIATES: Fitch Affirms BB+ Ratings on 2020A/B1/B2 Bonds
-----------------------------------------------------------------
Fitch Ratings has removed from 'Under Criteria Observation' and
affirmed the 'BB+' ratings on the $65 million series 2020A,
2020B-1, and 2020B-2 revenue bonds issued by Connecticut Health &
Educational Facilities Authority on behalf of McLean Affiliates,
Inc. Additionally, Fitch has assigned McLean a 'BB+' Issuer Default
Rating (IDR).
The Rating Outlook is Stable.
SECURITY
The bonds are secured by a pledge of gross revenues of the
obligated group (OG), a mortgage lien on certain properties, a
DSRF, and an unconditional and irrevocable guarantee from the
Special Additions & Contingency Fund (SACF), the unrestricted
endowment of the McLean Fund (an affiliated non-OG entity).
ANALYTICAL CONCLUSION
The 'BB+' rating primarily reflects the guarantee of timely payment
of principal and interest on the series 2020 bonds by SACF, the
unrestricted endowment of the McLean Fund. With the inclusion of
the SACF, McLean reported $32.7 million in unrestricted reserves in
fiscal 2020, which translates into a strong 55.7% cash to adjusted
debt. Additionally, the 'BB+' ratings incorporate McLean's solid
historical demand, somewhat weak unit composition, which is more
heavily weighted towards assisted living and skilled nursing care,
and the various execution risks associated with its ongoing
independent living expansion project.
The Stable Outlook reflects Fitch's expectation that McLean will
successfully execute its independent living unit (ILU) expansion
project on time and on budget, and that McLean's strong liquidity
position affords the organization a solid degree of financial
flexibility to absorb lingering pandemic pressures on census and
operations at the current rating level.
KEY RATING DRIVERS
Revenue Defensibility: 'bbb'
Adequate Historical Census, But Recent Pandemic Pressures
McLean's revenue defensibility is assessed at midrange, reflecting
its adequate census levels historically, which Fitch attributes to
its favorable local reputation, desirable location with access to
its adjacent country club, and enhanced marketing efforts. Prior to
the pandemic, McLean averaged a solid 92% occupancy in its ILUs,
86% in its assisted living units (ALUs), and 88% in its skilled
nursing facility (SNF) beds during fiscal 2019.
Additionally, McLean has pre-sold 66% of its new ILUs to date.
However, McLean has experienced softening in census across all
service lines, which Fitch attributes entirely to pressures and
disruptions from the pandemic. Fitch believes McLean's long-term
demand indicators remain adequate and expects census across all
service lines to incrementally improve to historical levels over
the next year.
Operating Risk: 'bbb'
Operations Pressured, But Expected to Improve
McLean's operating risk assessment is midrange, which reflects
Fitch's expectation of improved core operations over the next few
years, manageable debt burden relative to revenues, and enhanced
campus and manageable capital needs following completion of its
upcoming projects. While McLean's census and low debt burden
produced solid core operations historically, as evidenced by its
91% operating ratio and 8% net operating margin (NOM) in fiscal
2019, its operations deteriorated in fiscal 2020 as expected during
Fitch's last review to 103.8% operating ratio and negative 4.8%
NOM.
Fitch attributes the deterioration to pandemic disruptions and
elevated expenses related to McLean's ongoing capital project.
However, Fitch expects operations to improve over the medium term
to levels more consistent with its midrange operating risk
assessment following project completion as additional ILU revenues
and entrance fees boost total cash flow levels.
Financial Profile: 'bb'
Improved Financial Profile Despite Pandemic Pressures
In context of its midrange revenue defensibility and operating risk
assessments, McLean's financial profile is assessed at 'bb',
reflecting its strong and improving unrestricted reserves
(including its SACF) and expectations for adequate coverage levels
following completion of its ILU expansion project. Despite ongoing
pandemic pressures, McLean improved its unrestricted cash and
investments to $32.7 million in fiscal 2020, which translates into
a solid 427 days cash on hand (DCOH), 55.7% cash to adjusted debt,
and 10.2x cushion ratio. Furthermore, in Fitch's forward-looking
scenario, McLean demonstrates the ability to maintain key leverage
metrics consistent with its current rating level despite Fitch
imposed stresses to operations and investment earnings.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
No asymmetric risk factors impacted the outstanding ratings.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Successful completion of its ongoing capital projects, coupled
with a change in its financial profile assessment to 'bbb',
which would likely occur if the organization maintains cash to
adjusted debt above 75% and MADS coverage levels above 1.6x
for consecutive years.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Any project execution issues such as cost overruns,
construction delays, or fill-up delays;
-- Unexpected deterioration in unrestricted cash reserves that
weakens cash to adjusted debt below 45%.
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
McLean primarily operates a Type-C (fee-for-service) life plan
community (LPC) located on 125-acre campus in Simsbury,
Connecticut. In addition to its LPC, McLean provides home care,
hospice, adult day care, and Meals on Wheels services to residents
of Simsbury and the surrounding communities. McLean's LPC currently
consists of 88 ILUs (27 IL cottages, 13 IL villas, and 48 IL
apartments), 74 ALUs (including 3 residential care beds), and 89
SNF beds. In fiscal 2020, McLean reported total operating revenues
of approximately $28.2 million.
McLean has two non-OG affiliated entities: the McLean Game Refuge
and the McLean Fund. The McLean Refuge is a non-profit organization
that is dedicated to the protection of native wildlife, the
conservation of landscapes that they own, education, research, and
recreation. The Refuge currently has over 4,400 acres of land in
Simsbury, Granby, and Canton, which protects hundreds of animal
species while maintaining focus on conservation and recreation.
The McLean Fund is a non-profit organization established under the
will of Senator George P. McLean for the purposes of supporting
McLean and its affiliated entities. Additionally, the Fund owns the
land and property adjacent to McLean's LPC campus, which Hop Meadow
Country Club is located on. While the Country Club is operated by
another entity, all McLean residents receive social membership
privileges to the country club as part of its residency agreement.
For this analysis, Fitch includes the unrestricted investments of a
separate, obligated fund (SACF, the unrestricted board-designated
endowment of the McLean Fund). The SACF exists solely to support
McLean and its affiliates and guarantees the timely payment of
principal and interest on the series 2020 bonds. This method is
consistent with McLean's liquidity covenant calculation. As of
March 31, 2021, the Fund had unrestricted cash and investments of
approximately $20.6 million.
REVENUE DEFENSIBILITY
Despite the presence of competition, McLean as demonstrated solid
census levels historically, which Fitch attributes to its favorable
local reputation, desirable location that includes access to the
adjacent country club, and its enhanced marketing efforts in recent
years. In fiscal 2019, McLean averaged a solid 92% in its ILUs, 86%
in its ALUs, and 89% in its SNF beds. However, McLean's census has
been negatively impacted across all service lines due to
pandemic-related pressures and disruptions, as evidenced by its
occupancy rates of 90% in its ILUs, 77% in ALUs, and 79% in its SNF
beds at the six-month interim period (ending March 31, 2021).
Despite the recent pressures, Fitch believes McLean's long-term
demand indicators remain adequate for its current assessment and
expects census across all service lines to incrementally improve
through 2022 as coronavirus restrictions are lifted and external
admissions and marketing channels return to pre-pandemic norms.
McLean's main competitors include Duncaster (BBB/Stable), Seabury
(BB/Stable), and the Mercy Community, which all are not-for-profit
LPCs located within 12 miles of its campus. Each community offers
different contract types and have solid census levels across all
service lines. Furthermore, a third-party feasibility study
conducted for its 2020 bond issuance indicates low penetration
rates in McLean's primary service area that should support the
addition of its new ILUs. McLean's service area of Simsbury and
Hartford County has favorable demographics and trends relative to
state and national averages.
McLean has a steady history of annual rate increases, which have
been between 2%-3% in recent years. McLean's entrance fees remain
in line with local housing prices and its resident's average net
worth and annual income indicate affordability and solid degree of
pricing flexibility.
Presales on McLean's 55 expansion ILUs have remained flat at
approximately 66% over the last year. Fitch views this level of
pre-sales as adequate and neutral to the overall rating given the
disruptions to marketing and sales from the coronavirus over the
past year. The construction of McLean's new ILUs are not
anticipated to be completed until July 2022, which affords the
organization ample time to increase pre-sales even amidst lingering
coronavirus pressures. Overall, Fitch views the project favorably
if successfully executed, as it will increase McLean's exposure to
ILU revenues, enhance the amenities provided on its campus, and
will right size its overall unit mix between its three offered
service lines.
OPERATING RISK
McLean currently offers four types of contracts at its LPC: a 90%
refundable entrance fee fee-for-service (Type-C) contract, a 50%
refundable entrance fee Type-C contract, a 2% declining balance
(traditional) entrance fee Type-C contract, and a monthly rental
contract. While McLean's exposure to rental contracts is somewhat
high for a typical Type-C LPC at approximately 42% of current
resident contracts, McLean management will not offer rental
contracts at its new ILUs and expects to diminish its exposure to
these agreements as existing ILUs turnover.
McLean's solid census levels and low debt burden have produced
solid core operations historically as evidenced by the 91.6%
operating ratio, 7.4% NOM, and 6.5% excess margin averaged from
fiscal 2017- 2019. However, McLean's cash flow from entrance fee
receipts has been weak in recent years as evidenced by its average
11.2% NOM-adjusted (NOMA) during the same time frame. Fitch
attributes McLean's weaker NOMA to its unit composition, which is
more heavily weighted to non-IL services, and its high exposure to
monthly rental contracts. Fitch expects McLean's cash flow from
entrance fees to improve following completion of its new ILUs.
Despite its strong core operations historically, McLean's
performance deteriorated in fiscal 2020 to 103.8% operating ratio,
negative 4.8% NOM, and negative 6.1% NOMA. McLean's weaker
performance in fiscal 2020 was expected during Fitch's last review
and is attributed to pandemic-related disruptions and pressures on
census, increased expenses related to its expansion project, and
deterioration in its payor mix. This weaker performance was
maintained at the six-month interim period as evidenced by McLean's
106.2% operating ratio, negative 8.3% NOM, and negative 4% NOMA.
McLean's Medicaid exposure increased to approximately 27% of net
SNF revenues in fiscal 2020 and during the six-month interim period
from an average of 13% over the prior three fiscal years. Fitch
expects this payor mix deterioration to be temporary as a direct
result of pandemic pressures that should return to historical
levels over the next couple years.
While McLean's weaker performance during the six-month interim
period was not expected during Fitch's last review, Fitch believes
McLean's strong liquidity positions affords the organization
additional flexibility to absorb prolonged pandemic-related
pressures. Fitch anticipates McLean's operational performance will
continue to be pressured over the next 12 months as census slowly
recovers to pre-pandemic levels, but expects its key operating
metrics to gradually improve following completion of its expansion
project.
McLean's new ILUs should enhance top line revenues, cash flow from
entrance fees, and overall cash flow levels following completion;
however, cash expenses are expected to dramatically increase due to
the increased debt burden associated with the project as its
interest expense increases to $3 million in fiscal 2023 from
$177,000 in fiscal 2019. Original third-party forecasts show a
101.3% operating ratio, 6.4% NOM, and 11.5% NOMA in 2025, which
remains somewhat weak but sufficient for its midrange operating
risk assessment in context of its manageable capital needs and
solid capital metrics.
McLean is underway on an ILU expansion project at its campus that
entails building a four-story ILU apartment building that will
house 55 new ILU apartments, an underground parking garage, and a
new bistro and dining room that will have a patio that overlooks
the adjacent country club golf course. In conjunction with the
project, McLean is expected to remove 12 IL cottages from its
campus, which typically operate with lower census than its IL
apartments.
Project construction began in July 2020 and is expected to be
completed by June 2022, with initial occupancy of the new ILUs
beginning in July 2022. Total project costs are currently estimated
at $57 million, which include approximately $45 million in hard
costs and $9 million in soft costs. Additionally, there is a $3
million contingency fund for potential cost overruns. Project costs
are expected to be funded by its series 2020 bond issuance and an
approximately $2 million equity contribution from McLean, which was
already made. To date, the project is on time and under budget.
Fitch expects McLean's annual capex to be somewhat elevated over
the next couple years as it funds needed upgrades/renovations on
its campus. These projects include improvements to its HVAC and air
handling systems, SNF roof replacement, chapel roof and interior
renovations, and replacement of its main electrical service. These
projects, along with its routine capital needs, are expected to be
funded via operating cash flow and unrestricted reserves.
McLean's debt burden remains manageable as evidenced by MADS
equating to 10.8% of its fiscal 2020 revenues. Additionally,
revenue-only coverage averaged a solid 0.9x from fiscal 2016-2019.
While some of McLean's capital related metrics declined in fiscal
2020 as expected due to pandemic pressures and elevated expense
related to its capital project, Fitch expects McLean's debt burden
to moderate significantly following completion of its IL expansion
project and pay down of its temporary debt. Original third-party
forecasts illustrate MADS equating to 8.9% of 2025 revenues and
debt to net available measuring 10.2x.
Fitch views the construction risks associated with McLean's ILU
expansion project as neutral to its overall operating risk
assessment. McLean entered into a guaranteed maximum price (GMP)
contract for $45 million with its construction manager to cover the
hard costs of the project. Additionally, the construction manager
provided a payment and performance bond for 100% of the GMP and
have a liquidated damages provision. The presence of the GMP,
payment and performance bonds, and the liquidated damages provision
help mitigate some concerns over construction risk.
However, Fitch views McLean's current exposure to SNF revenues as
somewhat elevated as evidenced by SNF revenue comprising
approximately 40% of total resident service revenues in recent
years and SNF units comprising approximately 37% of total units
relative to ILUs of 18% of revenues and 32% of units. Additionally,
while Medicaid exposure has been moderate in recent years, Medicaid
increased to approximately 27% of SNF net revenues in fiscal 2020,
which is attributed to pandemic-related disruptions.
Despite these pressures, Fitch views these risks as neutral to
McLean's operating risk assessment at this time since its ILU
expansion project will lower its reliance on SNF revenues, and
Medicaid exposure is expected to moderate following recovery from
the pandemic. However, should SNF or Medicaid exposure continue at
their current levels following ILU project completion, these risks
could be viewed as asymmetric to McLean's overall operating risk
assessment.
FINANCIAL PROFILE
Despite pandemic pressures, McLean improved its unrestricted cash
and investments to $32.7 million in fiscal 2020, which translates
into a solid 427 DCOH and 55.7% cash to adjusted debt. Fitch
attributes McLean's strong yoy growth in its unrestricted reserves
to strong investment gains, particularly in its SACF. Additionally,
Fitch includes McLean's $3.6 million DSRF in its calculation of
cash to adjusted debt. McLean's MADS coverage remained weak in
fiscal 2020, but Fitch expects MADS coverage levels to stabilize
around 1.4x following completion of its expansion project once its
new revenues come online.
Fitch believes McLean's strong liquidity position, particularly
given its growth over the past year, provides the organization with
enough financial flexibility to absorb a stressed scenario,
including lingering pandemic pressures, at the current rating
level. Fitch's stressed scenario incorporates both an investment
portfolio and cash flow stress that are in line with current
economic conditions and expectations.
McLean's investment portfolio stress was moderate given its
diversified investment allocation. Additionally, Fitch scenario
incorporates expectations the McLean will complete its expansion
project on time and on budget and successfully fills all its new
ILUs by 2024. Under these assumptions, McLean's key leverage
metrics and coverage levels remain consistent with its current
rating level.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
No asymmetric risk factors are relevant to the rating.
Debt Profile
McLean's $65 million in series 2020 bonds remain its only debt
outstanding. The bonds are fixed rate, have a final maturity of
2055, and a MADS of approximately $3.4 million. The $14 million in
series 2020B-1 and 2020B-2 bonds are temporary debt that will be
paid down by the $16 million in initial entrance fees generated
from McLean's new ILUs. McLean has no exposure to a pension
liability or derivative instruments.
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.
MIDCAP FINANCIAL: Fitch Gives 'BB(EXP)' to $400MM Unsec. Debt
--------------------------------------------------------------
Fitch Ratings has assigned an expected rating of 'BB(EXP)' to
MidCap Financial Issuer Trust's (MidCap Financial) announced
unsecured debt issuance of $400 million due 2030. Fitch does not
expect the issuance to have a material impact on the firm's
leverage, as a portion of the proceeds are expected to be used to
repay secured borrowings.
KEY RATING DRIVERS
The expected rating is equalized with the rating assigned to MidCap
Financial's existing senior unsecured debt, as the new notes rank
equally in the capital structure. The unsecured debt rating is one
notch below the Long-Term Issuer Default Rating (IDR) of MidCap
Financial, which is equalized with the Long-Term IDR of its direct
parent, MidCap FinCo Intermediate Holdings Limited (MidCap), a
guarantor on the debt. The unsecured debt rating is one notch below
the IDR given the high balance sheet encumbrance and the largely
secured funding profile, which indicates weaker recovery prospects
under a stress scenario.
Existing ratings for MidCap and MidCap Financial reflect the
companies' strong middle market franchise and relationship with
Apollo Global Management, Inc. (A/Stable), which provides access to
industry relationships and deal flow, a lower risk portfolio
profile, low portfolio concentrations, minimal exposure to equity
investments, relatively strong asset quality historically and an
experienced management team.
Rating constraints include higher leverage than commercial lending
peers, below-average core earnings metrics, a largely secured
funding profile and the potential impact of meaningful portfolio
company revolver draws on leverage and liquidity. Other constraints
include the competitive underwriting conditions in the middle
market and the potential for asset quality deterioration and weaker
earnings performance over the medium term as a result of the
coronavirus pandemic.
The Stable Outlook reflects Fitch's expectation that MidCap will
retain underwriting discipline, demonstrate relatively sound credit
performance, manage leverage within the targeted range and maintain
sufficient liquidity to navigate the current economic environment.
RATING SENSITIVITIES
The expected unsecured debt rating is expected to move in tandem
with the Long-Term IDR. However, a material increase in the
proportion of unsecured funding or the creation of a sufficient
unencumbered asset pool, which alters Fitch's view of the recovery
prospects for the debt class, could result in the unsecured debt
rating being equalized with the IDR.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A sustained reduction in leverage to below 3.0x;
-- Improved funding flexibility, including unsecured debt
approaching 35% of total debt;
-- Strong and differentiated credit performance of recent
vintages.
-- Any rating upgrade would be contingent on the maintenance of
consistent operating performance and a sufficient liquidity
profile.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A sustained increase in leverage above the targeted range;
-- Material deterioration in asset quality;
-- An inability to maintain sufficient liquidity to fund interest
expenses and revolver draws;
-- A change in the perceived risk profile of the portfolio;
-- Material operational or risk management failures;
-- Damage to the firm's franchise that negatively affects its
access to deal flow and industry relationships.
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.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
MIDNIGHT MADNESS: Hires Wm. F. Comly & Son as Marketing Broker
--------------------------------------------------------------
Midnight Madness Distilling LLC seeks approval from the U.S.
Bankruptcy Court for the Eastern District of Pennsylvania to hire
Wm. F. Comly & Son, Inc. as its marketing broker.
The firm will will prepare and implement a marketing program to
promote the sale of the Debtor's assets.
Comly will be compensated as follows:
Marketing: $6,500
Labor & Travel: $2,500
The Debtor agrees to pay Comly a 10 percent commission of the
difference between the initial bid of the existing bidder and the
final, successful bid.
Comly is a "disinterested person" as defined by section 101(14),
and used in Section 327(a) of the Bankruptcy Code, according to
court filings.
The firm can be reached through:
Andrew J. Comly
Wm. F. Comly & Son, Inc.
1825 E. Boston Ave.
Philadelphia, PA 19125
Phone: (215) 634-2500
Email: acomly@comly.com
About Midnight Madness Distilling
Midnight Madness Distilling operates in the beverage manufacturing
industry.
Midnight Madness Distilling LLC filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Penn.
Case No. 21-11750) on June 21, 2021.The petition was signed by
Casey Parzych, manager. At the time of filing, the Debtor estimated
$1 million to $10 million in both assets and liabilities.
Flaster/Greenberg, P.C., is the Debtor's counsel.
MIDNIGHT MADNESS: Seeks to Hire Flaster Greenberg as Attorney
-------------------------------------------------------------
Midnight Madness Distilling LLC seeks approval from the U.S.
Bankruptcy Court for the Eastern District of Pennsylvania to hire
Flaster Greenberg, P.C., as its attorney.
The firm will render these services:
(a) provide legal advice with respect to the Debtor's powers
and duties in the continued operation of its business and
management of its property;
(b) take necessary action to protect and preserve the
Debtor’s estate, including the prosecution of actions on behalf
of the Debtor and the defense of any actions commenced against the
Debtor;
(c) assist the Debtor in pursuing any and all insurance claims
with respect to any loss incurred by the Debtor;
(d) prepare, present and respond to, on behalf of the Debtor,
necessary applications, motions, answers, orders, reports and other
legal papers in connection with the administration of its estate;
(e) negotiate and prepare plan(s) of reorganization,
disclosure statement(s), and all related agreements and/or
documents, and take any necessary action on behalf of the Debtor to
obtain confirmation of such plan(s);
(f) attend meetings and negotiations with representatives of
creditors and other parties in interest and advising and consulting
on the conduct of the case;
(g) advising the Debtor with respect to bankruptcy law aspects
of any proposed sale or other disposition of assets as well as any
efforts to obtain financing;
(h) advising and representing the Debtor in connection with a
potential claim against its insurer on account of a loss incurred
in connection with its business; and
(i) perform any other legal services for the Debtor in
connection with this chapter 11 case, except those requiring
specialized expertise or for other reasons, for which special
counsel will be retained.
Flaster Greenberg will be paid at these hourly rates:
Associates/Shareholders $385 to $690
Attorneys $310 to $465
Paralegals $155 to $310
Flaster Greenberg will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Harry Giacometti, shareholder of Flaster Greenberg, P.C., assured
the Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
Flaster Greenberg can be reached at:
Harry J. Giacometti, Esq.
FLASTER GREENBERG P.C.
1835 Market St., Suite 1050
Philadelphia, PA 19103
Tel: 215-279-9393
Fax: 215-279-9394
About Midnight Madness Distilling
Midnight Madness Distilling operates in the beverage manufacturing
industry.
Midnight Madness Distilling LLC filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Penn.
Case No. 21-11750) on June 21, 2021.The petition was signed by
Casey Parzych, manager. At the time of filing, the Debtor estimated
$1 million to $10 million in both assets and liabilities.
Flaster/Greenberg, P.C., is the Debtor's counsel.
MIDTOWN CAMPUS: All Classes to Be Paid in Full After Plan Sale
--------------------------------------------------------------
Midtown Campus Properties, LLC, filed with the U.S. Bankruptcy
Court for the Southern District of Florida a Disclosure Statement
for Chapter 11 Plan of Reorganization dated June 29, 2021.
The Plan contemplates the sale of the 500,000 square foot mixed use
student housing project known as One College Park ("Project") as
the means for implementation of the Plan. Distributions to the
holders of Allowed Claims and Equity Interests shall be made from
Available Cash, including specifically the Net Sales Proceeds.
The Debtor anticipates promptly seeking the approval and retention
of an Investment Banker to conduct a marketing and sale process,
including with the Debtor seeking the approval of certain bidding
and sale procedures by the Bankruptcy Court. The Debtor believes
that a sale of the Project, if approved by the Bankruptcy Court and
thereafter consummated, will generate Net Sales Proceeds sufficient
to pay in full the expected amount of all Allowed Administrative
Claims, Allowed Priority Tax Claims, the DIP Loans and Allowed
Claims in Classes 1, 2, 3 and 4 under the Plan, and return monies
to the holders of the Equity Interests.
The proposed sale of the Property, through a marketing and sale
process, shall be done in connection with and as part of the
implementation of the Plan for all purposes, including specifically
Section 1146(a) of the Bankruptcy Code. The Debtor believes that
the Plan will allow for a prompt resolution of the Debtor's Chapter
11 Case.
Class 1 consists of Other Priority Claims. Each holder of an
Allowed Other Priority Claim shall receive the full unpaid amount
of such Allowed Other Priority Claim in Cash, on the later of (i)
the Effective Date or as soon as practicable thereafter, (ii) the
date such Allowed Other Priority Claim becomes Allowed or as soon
as practicable thereafter, and (iii) the date such Allowed Other
Priority Claim is payable under applicable non-bankruptcy law.
Class 2 consists of the Allowed Secured Claim of the Indenture
Trustee. The Allowed Secured Claim of the Indenture Trustee within
this Class 2 shall be satisfied and paid in full from a combination
of the Cash Collateral and the Net Sales Proceeds generated from
the sale of the Project, in each case which secures the Lien of
such Allowed Secured Claim. Such treatment shall be in full and
final satisfaction, settlement, release, extinguishment, and
discharge of such Allowed Class 2 Secured Claim.
Class 3 consists of the Allowed Other Secured Claims, including (i)
the Allowed Other Secured Claim of Sauer, and (ii) the Allowed
Other Secured Claim of any other Creditor who asserts a Lien on the
Project. Each Allowed Class 3 Other Secured Claim against the
Estate shall be classified in a separate sub-class within Class 3
and shall be satisfied and paid in full from the Net Sales Proceeds
generated from the sale of the Project which secures the Lien of
such Allowed Class 3 Other Secured Claim.
Class 4 consists of the Allowed General Unsecured Claims. Each
Allowed General Unsecured Claim in Class 4 shall be satisfied and
paid in full, without interest from and after the Petition Date,
from the Available Cash, including the Net Sales Proceeds from the
sale of the Project. Such treatment shall be in full and final
satisfaction, settlement, release, extinguishment, and discharge of
such Allowed Class 4 General Unsecured Claims.
Each holder of an Equity Interest in the Debtor as of the Petition
Date shall retain its respective Equity Interest in the Reorganized
Debtor from and after the Effective Date, provided however, that no
Distribution shall be made to holders of the Equity Interests in
Class 5 unless and until all Allowed Administrative Claims, all
Allowed Priority Tax Claims, the DIP Loans and all Allowed Claims
in Classes 1, 2, 3 and 4 have been paid in full, reserved or
otherwise resolved, and/or included in or accounted for in the
Distribution at issue.
The Debtor proposes to sell the Project as the means for
implementation of the Plan. Distributions to the holders of Allowed
Claims and Equity Interests shall be made from Available Cash,
including specifically the Net Sales Proceeds.
A full-text copy of the Disclosure Statement dated June 29, 2021,
is available at https://bit.ly/3h5Cqkf from PacerMonitor.com at no
charge.
Counsel for the Debtor:
GENOVESE JOBLOVE & BATTISTA, P.A.
Paul J. Battista, Esq.
Mariaelena Gayo-Guitian, Esq.
John K. Olson, Esq.
Heather L. Harmon. Esq.
100 Southeast Second Street, 44th Floor
Miami, FL 33131
Tel: (305) 349-2300
Fax: (305) 349-2310
E-mail: pbattista@gjb-law.com
About Midtown Campus Properties
Midtown Campus Properties, LLC, is a single asset real estate that
owns the Midtown Apartments. The Midtown Apartments is a 310-unit
student housing apartment complex currently under construction at
104 NW 17th St in Gainesville, Florida, just across from the
University of Florida. It consists of a six-story main building, a
parking garage for resident and public use, and a commercial retail
space.
Each unit includes a full-size kitchen, carpet, tile, and hardwood
floors and be fully furnished. It is located near several Midtown
bars and restaurants frequented by students, and just a couple of
minutes' walk from Ben Hill Griffin Stadium.
Midtown Campus Properties sought Chapter 11 protection (Bankr. S.D.
Fla. Case No. 20-15173) on May 8, 2020. The Debtor was estimated to
have $50 million to $100 million in assets and liabilities as of
the bankruptcy filing.
The Honorable Robert A. Mark is the presiding judge.
The Debtor tapped Genovese Joblove & Battista, P.A., as bankruptcy
counsel; and The Bosch Group, Inc., as construction consultants.
No creditors' committee has been appointed in this case. In
addition, no trustee or examiner has been appointed.
MUKEUNJI II: Case Summary & 3 Unsecured Creditors
-------------------------------------------------
Debtor: Mukeunji II, Inc.
34 W32nd Street
New York, NY 10001
Business Description: Mukeunji II, Inc. operated a restaurant at
34 West 32nd Street, Ground Floor, New York,
NY 10001.
Chapter 11 Petition Date: June 30, 2021
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 21-41737
Judge: Hon. Elizabeth S. Stong
Debtor's Counsel: Lawrence F. Morrison, Esq.
MORRISON TENENBAUM, PLLC
87 Walker Street, Second Floor
New York, NY 10013
Tel: 212-620-0938
Fax: 646-390-5095
E-mail: info@m-t-law.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Yong Sun Kim, chief executive officer.
A full-text copy of the petition containing, among other items, a
list of the Debtor's three largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/YKBWKZA/MUKEUNJI_II_INC__nyebke-21-41737__0001.0.pdf?mcid=tGE4TAMA
NAHAUL INC: May Use Cash Collateral Until August 6
--------------------------------------------------
Judge Carol A. Doyle authorized NAHAUL, Inc. to use cash collateral
belonging to Partner's Funding, Inc. until August 6, 2021, pursuant
to the approved budget.
PF asserts that as of the Petition Date, the Debtor owed PF
$421,709 under certain prepetition factoring agreements.
Judge Doyle ruled that:
* PF is granted, as adequate protection, additional
post-petition security interests and liens against the Collateral
to the same extent and validity as PF's pre-petition liens and
security interests, subject to prior liens or security interests
held by other secured creditors. The replacement post-petition
security interests and liens are deemed to have been properly
perfected as of the Petition Date, without any further action by
any party.
* PF is granted, as additional adequate protection, an
administrative expense claim up to the amount of cash collateral in
the event the Collateral is inadequate to satisfy the Pre-Petition
Obligation.
A copy of the order is available for free at https://bit.ly/2T7ZYMh
from PacerMonitor.com.
The Court will further consider the Debtor's cash collateral motion
at a status hearing on August 5, 2021 at 10:30 a.m.
About NAHAUL, Inc.
NAHAUL, Inc., an affiliate of Chicagoan Logistic Company, is a
privately held company in the general freight trucking industry.
The Debtor filed a Chapter 11 petition (Bankr. N.D. Ill. Case No.
21-07152) on June 5, 2021.
In the petition signed by Serkan B. Kaputluoglu, president, the
Debtor estimated between $100,000 and $500,000 in assets and
between $1,000,000 and $10,000,000. Judge Carol A. Doyle is
assigned to the case. Laxmi P. Sarathy represents the Debtor as
counsel.
Chicagoan Logistic Company filed a Chapter 11 petition (Bankr. N.D.
Ill. Case No. 21-07154) on June 5, 2021, listing between $500,000
and $1,000,000 in assets and between $1,000,000 and $10,000,000 in
liabilities. The petition was also signed by Kaputluoglu.
Laxmi P. Sarathy is the Debtor's counsel. Judge Janet S. Baer was
initially assigned to the case. The case was later assigned to
Judge Carol A. Doyle.
The two cases are not jointly administered.
NATURALSHRIMP INC: Incurs $3.6 Million Net Loss in Fiscal 2021
--------------------------------------------------------------
Naturalshrimp Incorporated filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$3.59 million on zero sales for the year ended March 31, 2021,
compared to a net loss of $4.81 million on zero sales for the year
ended March 31, 2020.
As of March 31, 2021, the Company had $15.22 million in total
assets, $10.12 million in total liabilities, $2.02 million in
series D redeemable convertible preferred stock, and $3.07 million
in total stockholders' equity.
Dallas, Texas-based Turner, Stone & Company, L.L.P., the Company's
auditor since 2015, issued a "going concern" qualification in its
report dated June 29, 2021, citing that the Company has suffered
significant losses from inception and has a significant working
capital deficit. These conditions raise substantial doubt about
its ability to continue as a going concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1465470/000165495421007393/shmp_10q.htm
About Natural Shrimp
NaturalShrimp, Inc. is a publicly traded aqua-tech Company,
headquartered in Dallas, with production facilities located near
San Antonio, Texas. The Company has developed a commercially
viable system for growing shrimp in enclosed, salt-water systems,
using patented technology to produce fresh, never frozen, naturally
grown shrimp, without the use of antibiotics or toxic chemicals.
NaturalShrimp systems can be located anywhere in the world to
produce gourmet-grade Pacific white shrimp.
NEW HAPPY FOOD: Seeks to Use Cash Collateral
--------------------------------------------
New Happy Food Company and affiliates ask the U.S. Bankruptcy Court
for the Northern District of Georgia, Atlanta Division, for
authority to use cash collateral on an emergency basis.
The Debtors propose to use Cash Collateral for general operational
and administrative expenses as set forth in the budget.
In 1988, Ms. You Nay Khao and her husband began operating a "mom
and pop" grocery store in College Park, Georgia, which has been a
successful business for over three decades. A few years later, the
business was incorporated as New Happy Food Company. By 2013, the
grocery store had become so successful that it had outgrown its
space, and New Happy needed a warehouse. To fill that need, NHC
Food Company Inc. was formed in 2013 to operate the warehouse
business, which took a few years to get up and running.
In 2015, Ms. Khao's husband died, leaving the business in the hands
of Ms. Khao and her oldest son, Danny. Unfortunately for Ms. Khao
and her businesses, her son Danny had a bit of a gambling problem.
Without her knowledge, Danny signed Ms. Khao's name to over a dozen
loans with merchant credit advance (MCA) companies, resulting in
the Debtors being saddled with very expensive debt at extremely
high effective interest rates. Inevitably, the Debtors began having
cash flow issues due to the MCA loans. When the MCAs began filing
lawsuits and garnishing bank accounts, Danny's activities came to
light, and Ms. Khao, New Happy, and NHC were left with no choice
but to file for chapter 11 protection to save the businesses and
reorganize.
The Debtors are allegedly borrowers on certain loans with The
Avanza Group, LLC, Bridge Funding Cap, LLC, CFG Merchant Solutions,
LLC, EBF Holdings, LLC d/b/a Everest Business Funding, Fox Capital
Group, Inc., Highbridge Funding, LLC, Hunter Caroline Holdings,
LLC, IOU Central Inc., KYF Global Partners, Merchant Advance, LLC,
Metro City Bank, NewCo. Capital Group, Prosperum Capital Partners,
LLC, River Capital Partners, LLC, Toyota Industries Commercial
Finance, Inc., and the United States Small Business Administration,
which assert security interests in certain of the Debtors' personal
property.
Alleged Outstanding Amount
Borrower/s Lender As of Petition Date
---------- ------ -------------------
New Happy Avanza $100,000
NHC and
You Nay
Hor Khao
NHC Bridge Funding $100,000
New Happy, CFG $200,000
You Nay
Hor Khao
New Happy EBF $175,000
All Debtors Fox $100,000
All Debtors Green Note $30,000
New Happy, Highbridge $50,000
NHC and
You Nay
Hor Khao
New Happy Hunter Caroline $250,000
NHC IOU Central $400,000
NHC IOU Central $100,000
New Happy IOU Central $300,000
New Happy IOU Central $500,000
NHC IOU Central $250,000
New Happy KYF Global $40,000
NHC, and You Merchant Advance $90,000
Nay Hor Khao
NHC, New Metro City Bank $709,978
Happy and You
Nay Khao
All Debtors NewCo. Capital $250,000
NHC Prosperum Capital $106,900
All Debtors River Capital $250,000
NHC Toyota Industries $90,000
New Happy SBA $180,000
NHC
The Debtors contend they did not authorize the vast majority of
these loans, many of which were obtained without the Debtors'
knowledge, and the Debtors dispute liability to many of the
Lenders.
The Debtors recognize that the Lenders may be entitled to adequate
protection of their interests in Cash Collateral (if any) within
the meaning of 11 U.S.C. sections 361 and 363. To the extent that
any interest that the Lenders may have in the Cash Collateral is
diminished, the Debtors propose to grant the Lenders replacement
liens in post-petition collateral of the same kind, extent, and
priority as the liens existing pre-petition, except that the
Adequate Protection Liens will not extend to the proceeds of any
avoidance actions received by the Debtors or the estate pursuant to
chapter 5 of the Bankruptcy Code. Hence, the Lenders' interests in
the Debtors' Cash Collateral, to the extent they have any, are
adequately protected.
The Debtors further request that the Court schedule a final hearing
on Cash Collateral use, and following such hearing, enter a final
order authorizing Cash Collateral use.
A copy of the motion is available at https://bit.ly/3qHTJef from
PacerMonitor.com.
About New Happy Food Company
New Happy Food Company operates a grocery store in Atlanta,
Georgia. Its affiliate, NHC Food Company Inc. operates a warehouse
business.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ga. Case No. 21-54898) on June 29,
2021. In the petition signed by You Nay Khao, owner, the Debtors
disclosed $500,000 in assets and $10 million in liabilities.
William A. Rountree, Esq., at Rountree, Leitman & Klein, LLC is the
Debtors' counsel.
NIEMAN PRINTING: Wins Interim Access to Cash Collateral
-------------------------------------------------------
Judge Stacey G.C. Jernigan authorized Nieman Printing, Inc. to use
cash collateral pursuant to the approved budget.
Goodman Capital Finance, a division of Independent Bank, the U.S.
Small Business Administration, and People's Capital and Leasing
Corp, secured lenders of the Debtor, claim that substantially all
of the Debtor's assets are subject to the prepetition liens of the
secured lenders, including liens on accounts receivable relevant to
the Debtor's current motion.
The Court ruled that:
* the Secured Lenders, as adequate protection for the diminution
in the value of the their interests, are granted replacement liens
and security interests co-extensive with their prepetition liens;
* the replacement liens granted to the Secured Lenders under the
current order are automatically perfected;
* all of the Debtor's cash accounts and all accounts receivable
collections by the Debtor postpetition (except collections on
accounts previously purchased by Goodman) shall be deposited in the
Debtor's DIP accounts;
* the Debtor shall maintain insurance on the Secured Lenders'
collateral and pay taxes when due;
* the automatic stay under Section 362(a) of the Bankruptcy Code
is modified to the extent necessary to allow the Secured Lenders to
retrieve, collect and apply payments and proceeds with respect to
the prepetition collateral and postpetition collateral, pursuant to
the terms of the current order;
* the Debtor shall execute and deliver to the Secured Lenders
all agreements, financing statements, instruments and other
documents as the Secured Lenders may reasonably request to
evidence, confirm, validate and perfect the liens granted under the
agreements;
* Goodman is permitted to continue to collect payments on
accounts that it purchased pursuant to the Factoring Agreement
dated June 19, 2019, and that such accounts do not constitute cash
collateral and are not property of the estate; and
* the Debtor agrees to turn over to Goodman all payments the
Debtor receives from account debtors, within three business days of
said receipt, on accounts purchased by Goldman.
A copy of the order is available for free at https://bit.ly/2UcJORD
from PacerMonitor.com.
About Nieman Printing, Inc.
Nieman Printing, Inc., which owns and operates a printing company
in Dallas, Texas, filed a Chapter 11 petition (Bankr. N.D. Tex.
Case No. 21-31134) on June 17, 2021. As of the Petition Date, the
Debtor estimated between $1,000,000 and $10,000,000 in both assets
and liabilities. The petition was signed by Garrett Graves,
president. Eric A. Liepins, P.C. represents the Debtor as
counsel.
NS8 INC: Bankruptcy Estate Can Depose Ex-Exec on Certain Conditions
-------------------------------------------------------------------
Daniel Gill of Bloomberg Law reports that the bankruptcy estate for
cybersecurity company NS8 Inc. can depose a former executive only
under certain conditions that preserve his Fifth Amendment rights,
a judge ruled.
The ruling Monday, June 28, 2021, from Judge Craig T. Goldblatt of
the U.S. Bankruptcy Court for the District of Delaware gave the
bankruptcy estate -- called Cyber Litigation Inc. -- a choice
between an order blocking NS8 co-founder Phil Vizzaccaro's
deposition or agreeing to keep any civil litigation against him in
Goldblatt's court.
Mr. Vizzaccaro had asked the court to put a hold on the company's
discovery request on the grounds that he might have to assert his
right against self-incrimination.
About NS8 Inc.
Las Vegas-based NS8 Inc. is a developer of a comprehensive fraud
prevention platform that combines behavioral analytics, real-time
scoring, and global monitoring to help businesses minimize risk.
Visit https://www.ns8.com for more information.
NS8 sought Chapter 11 protection (Bankr. D. Del. Case No. 20-12702)
on Oct. 27, 2020. The petition was signed by Daniel P. Wikel, the
chief restructuring officer.
The Debtor was estimated to have $10 million to $50 million in
assets and $100 million to $500 million in liabilities at the time
of the filing.
The Hon. Christopher S. Sontchi is the case judge.
The Debtor tapped Blank Rome LLP and Cooley LLP as its legal
counsel, and FTI Consulting Inc. as its financial advisor. Stretto
is the claims agent.
* * *
The company changed its name to Cyber Litigation after it sold
substantially all of its assets to Codium Software LLC in December
2020.
NUVERRA ENVIRONMENTAL: All 3 Proposals Approved at Annual Meeting
-----------------------------------------------------------------
At Nuverra Environmental Solutions, Inc.'s Annual Meeting of
Stockholders held on June 28, 2021, the stockholders:
(1) elected Michael Y. McGovern to serve as a Class I director;
(2) approved, on an advisory (nonbinding) basis, the
compensation
awarded by the Company to its named executive officers; and
(3) ratified the selection of Moss Adams as the Company's
independent registered public accounting firm for the fiscal
year ending Dec. 31, 2021.
About Nuverra
Nuverra Environmental Solutions, Inc. provides water logistics and
oilfield services to customers focused on the development and
ongoing production of oil and natural gas from shale formations in
the United States. Its services include the delivery, collection,
and disposal of solid and liquid materials that are used in and
generated by the drilling, completion, and ongoing production of
shale oil and natural gas. The Company provides a suite of
solutions to customers who demand safety, environmental compliance
and accountability from their service providers.
Nuverra Environmental reported a net loss of $44.14 million for the
year ended Dec. 31, 2020, compared to a net loss of $54.94 million
for the year ended Dec. 31, 2019. As of March 31, 2021, the
Company had $184 million in total assets, $59.40 million in total
liabilities, and $124.6 million in total shareholders' equity.
OREGON CLEAN ENERGY: S&P Lowers Senior Secured Debt Rating to 'B+'
------------------------------------------------------------------
S&P Global Ratings lowered the rating on Oregon Clean Energy LLC's
(OCE) senior secured debt to 'B+' from 'BB-'. Its recovery rating
on this debt remains '2' (80% rounded estimate).
The stable outlook reflects S&P's expectation for good operational
and financial performance over the near term. Despite weakness in
2023, S&P projects average DSCRs of about 1.7x through the maturity
of OCE's term loan in 2026.
Oregon, Ohio-based OCE is an 870-megawatt (MW) combined cycle
gas-fired power plant in the American Transmission Systems Inc.
(ATSI) zone of the PJM market. Ares EIF and I-Squared Capital own
the project through a 50/50 joint venture. Construction of the $856
million plant began in November 2014 and was completed in July
2017.
Efficient combined cycle gas turbine (CCGT) with an expected heat
rate of about 6,600-6,800 British thermal units per kilowatt hour
(Btu/kWh).
Strategically located near the load center in Toledo, Ohio, with
access to low-cost natural gas feedstock.
Firm gas supply and swing supply agreements mitigate its fuel
procurement risk.
OCE has a revenue put that provides a gross energy margin floor of
$50 million annually through August 2022. This revenue put
contributes to cash flow stability and reduces near-term downside
risk.
OCE sells all its power into the merchant market, where it is
exposed to uncertain power prices driven by demand, supply, and
commodity prices.
OCE has a short operational track record and has not yet
established a demonstrated ability to consistently generate at high
capacity factors.
S&P said, "Lower PJM capacity prices will weaken DSCRs in 2023. The
PJM Capacity Auction prices for the 2022-2023 delivery year were
materially lower than our expectations. The PJM Regional
Transmission Organization (RTO) price for 2022-2023 is $50/MW-day.
Compared to our previous forecast of $85/MW-day, the cleared price
results in a roughly $8.5 million decline in 2022-2023 capacity
revenues. Because capacity payments are nonvariable revenues, this
reduction directly affects cash flow available for debt service
(CFADS), weakening DSCRs for the period. We now forecast the June
2023 quarter will be OCE's weakest period, with a forecast trailing
twelve-month DSCR of 1.20x.
"We forecast PJM capacity prices will revert to the mean. Although
OCE is located in ATSI, we do not expect ATSI to break out from RTO
in future capacity auctions and thus use our assumed RTO price in
our forecast. Following the disappointing 2022-2023 auction
results, we have not changed our forecast for RTO to clear at
$90/MW-day for the 2023-2024 delivery year. We do not believe
$50/MW-day is a new normal for PJM RTO, and we expect clearing
prices to remain volatile around a mean price of about $100/MW-day
to $120/MW-day over the long term. Our forecast thus implies a
rebound in OCE's DSCRs beginning in the September 2023 quarter. We
forecast DSCRs will rise to about 2x by March 2026 (when OCE's term
loan B matures) from 1.20x in June 2023. This forecast supports our
'B+' rating on OCE.
"A key risk to this forecast is that capacity prices for the
2023-2024 delivery year, which will be determined in an auction
this December, clear lower than we currently forecast. Given the
historical volatility of PJM auction results and despite our
forecast, 2023-2024 prices could clear materially below our
forecast. Such a result would weaken DSCRs between now and when the
term loan B matures. It would also lower projected cash flow
sweeps, leading to a higher debt balance at maturity and resulting
in weaker DSCRs over the remaining life of the asset.
"Although the project lagged expectations in 2020, our near-term
forecast is strong. Like most PJM generators, OCE faced
weaker-than-expected spark spreads in 2020 as weak demand--much of
it related to the COVID-19 pandemic but also because of an
uneventful weather year--kept power prices down. The plant also had
a lengthy forced outage in June 2020, which, together with weak
spark spreads, led to lower-than-expected generation in 2020. The
weak energy margin in 2020 resulted in an excess cash flow sweep of
about $6 million against OCE's term loan B balance versus our
forecast for about $14 million, though the future debt service
effect of this incremental carrying balance is marginal."
Recent performance has been stronger. Through April 2021, OCE's
generation and pricing performance has been very closely in line
with the project's budget. The short-term forecast is also
brighter. Following the recent auction results, forward power
prices in PJM have improved, and the project is now realizing
capacity prices for the June 2021-May 2022 delivery year of
$171.33/MW-day, up from $76.53/MW-day last year. The project also
has locked in short-term spark spread hedges for about 400 MWs of
capacity. These factors result in increasing forecast CFADS and
DSCRs over the next few quarters until June 2022 when the
$50/MW-day capacity price begins being realized.
Debt repayment between now and the 2026 maturity is a key rating
consideration. S&P said, "We expect merchant generators to endure
earnings volatility, and the term loan B structure should absorb
some of the impact from this volatility. Bad years, during which
little debt is paid down, are balanced by good years, during which
more debt is paid down. Thus, the somewhat weak debt paydown in
2020 is not a major cause for concern in and of itself. However,
given our forecast for CFADS over the short term, we will be
watching for cash flow sweeps in future periods--particularly in
2022, for which we forecast a sweep of $14 million. Failure to
translate projected strong cash flow into debt paydown will exert
downward pressure on our rating on OCE. We currently project OCE's
term loan B will have $397 million outstanding at maturity in 2026,
leading to a post-refinance minimum DSCR of 1.48x."
S&P said, "The stable outlook reflects our expectation for good
operational and financial performance over the near term. Despite
weakness in 2023, we project average DSCRs of about 1.7x through
the maturity of OCE's term loan in 2026. We project the term loan
will have a balance of $397 million outstanding at maturity in
2026, and we expect the project to generate a minimum DSCR of 1.20x
in June 2023 and a post-refinancing minimum DSCR of 1.48x through
the rest of the asset's useful life."
The rating would face downward pressure if OCE sustains DSCRs below
1.2x. The most likely cause of such a decline in coverage would be
some combination of a disappointing auction result in December, a
retrenching of power price forwards in 2022-2023, and operational
outages that meaningfully lower OCE's projected generation.
S&P would consider a higher rating if it forecasts OCE will
generate DSCRs above 1.4x in each period of its forecast.
PARK RIVER: Moody's Puts 'B2' CFR Under Review for Downgrade
------------------------------------------------------------
Moody's Investors Service placed Park River Holdings, Inc.'s,
operating as PrimeSource Building Products, Inc., ratings on review
for downgrade including the company's B2 Corporate Family Rating,
B2-PD Probability of Default Rating, the B1 rating on the company's
senior secured term loan and the Caa1 ratings on the senior
unsecured notes. The review follows an announcement that
PrimeSource has signed a definitive agreement to acquire Wolf Home
Products (Wolf) from affiliates of Tenex Capital Management. Terms
of the transaction are not publicly disclosed at this time. Wolf,
headquartered in York, Pennsylvania, is a provider of branded
kitchen and bath, outdoor living and specialty exterior building
products for residential applications.
The proposed transaction is a credit negative, despite potential
revenue and synergy benefits, since PrimeSource's leverage could
increase shortly after the company's debt-financed acquisition of
Nationwide Enterprises, Inc. (Nationwide). PrimeSource completed
the purchase of Nationwide less than four weeks ago.
The following ratings/assessments are affected by the actions:
On Review for Downgrade:
Issuer: Park River Holdings, Inc.
Corporate Family Rating, Placed on Review for Downgrade, currently
B2
Probability of Default Rating, Placed on Review for Downgrade,
currently B2-PD
Senior Secured Bank Credit Facility, Placed on Review for
Downgrade, currently B1 (LGD3)
Senior Unsecured Notes, Placed on Review for Downgrade, currently
Caa1 (LGD5)
Outlook Actions:
Issuer: Park River Holdings, Inc.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
PrimeSource's B2 CFR (rating under review for downgrade) reflects
Moody's expectation of high leverage in excess of 6.5x over the
next eighteen months. Fixed charges including cash interest, term
loan amortization and operating and finance lease payments may
approach $200 million per year, significantly reducing financial
flexibility. PrimeSource also faces strong competition and may face
challenges integrating both Nationwide, and Wolf. Good
profitability is a key credit strength and provides an offset to
the company's leveraged capital structure. Ample revolver
availability, no near-term maturities and positive end market
dynamics further support PrimeSource's credit profile.
Governance characteristics Moody's consider in PrimeSource's credit
profile include an aggressive financial strategy, evidenced by high
leverage and a mostly debt-financed acquisition strategy. Since
acquiring PrimeSource at the end of 2020 affiliates of Clearlake
Capital Group, L.P., the owner of PrimeSource, will have increased
total adjusted debt to about $1.7 billion, excluding the additional
debt used to finance the acquisition of Wolf, from about $830
million at Q3 2020. Additional debt for acquisitions and future
distributions are an ongoing possibility.
The rating review will focus on PrimeSource's new capital
structure, deleveraging strategy and liquidity following the
acquisition of Wolf. Moody's believes that leverage will exceed
6.5x, to which Moody's previously projected leverage would approach
at year-end 2022 and the previously identified downward rating
trigger.
PrimeSource Building Products, Inc., headquartered in Irving,
Texas, is a distributor of building materials, selling its products
and services to retailers and other distributors for new housing
construction and repair and remodeling activity. Clearlake Capital
Group, L.P., through its affiliates, is the owner of PrimeSource.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
PERFORMANCE FOOD: Moody's Affirms Ba3 CFR on Core-Mark Acquisition
------------------------------------------------------------------
Moody's Investors Service changed Performance Food Group, Inc.'s
(PFG) outlook to stable from negative. Concurrently, Moody's
affirmed the company's Ba3 corporate family rating, Ba3-PD
probability of default rating and B2 senior unsecured notes rating.
The company's speculative grade liquidity rating was upgraded to
SGL-1 from SGL-2.
The outlook change to stable from negative reflects Moody's
expectations for a continued recovery in the food service sector
following the lifting of coronavirus-related dining restrictions
across the majority of US jurisdictions. Moody's projects PFG's
earnings reaching pre-pandemic levels over the next 12 months on a
pro-forma basis for the acquisition of Core-Mark Holding Company
(Core-Mark), which combined with debt repayment will support
significant deleveraging despite the incremental acquisition debt.
Moody's projects that debt/EBITDA will decline to below 4.0x in FY
2022, from an estimated 5.1x pro-forma for the Core-Mark
acquisition (Moody's-adjusted leverage based on PFG's fiscal year
2021 guidance, Core-Mark's LTM March 31, 2021 results, and expected
financing). The stable outlook also reflects Moody's expectation
that integration risk will be limited due to the company's track
record with previous acquisitions, including Reinhart (completed in
2019).
The upgrade of the speculative grade liquidity rating to SGL-1 from
SGL-2 reflects Moody's expectation for solid positive free cash
flow over the next 12-18 months, good availability under the
sizeable asset-based revolver, lack of near-term maturities, and a
covenant-lite capital structure.
Moody's took the following rating actions for Performance Food
Group, Inc.:
Corporate family rating, affirmed Ba3
Probability of default rating, affirmed Ba3-PD
Senior unsecured regular bond/debenture, affirmed B2 (LGD5)
Speculative grade liquidity rating, upgraded to SGL-1 from SGL-2
Outlook, changed to stable from negative
RATINGS RATIONALE
PFG's Ba3 CFR is supported by the company's scale and market
position as the third-largest food service provider in the US food
service industry and second-largest distributor in the convenience
store industry pro-forma for the Core-Mark acquisition. PFG's
diversified operations and a customer base that was less affected
by coronavirus restrictions, including in the quick service
restaurant, independent pizza, and convenience-store channels,
supported its relatively resilient performance during the pandemic.
The recovery is now more firmly in place, with a reported early Q4
FY 2021 increase in sales over pre-pandemic levels in the Food
Service segment and flat results in Vistar. The credit profile also
benefits from governance considerations, specifically PFG's
balanced financial strategy, which includes a 2.5-3.5x leverage
target (based on the company's definition) outside of major
acquisitions, and the use of a mix of equity and debt to finance
deals.
The rating is constrained by PFG's modest operating margins
relative to its larger peers and its acquisitive business strategy.
The company's relatively high leverage of 5.1x pro-forma for the
Core-Mark acquisition also constrains the rating. Nevertheless,
reflecting expectations for continued earnings recovery and debt
repayment, Moody's projects pro-forma Moody's-adjusted debt/EBITDA
to decline to under 4.0x from 5.1x in FY 2022 (or to an estimated
3.4x from 4.4x based on the company's definition), and
EBITA/interest expense to increase to 3.2x from 2.4x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include a sustained
improvement in earnings while maintaining a balanced financial
strategy that results in debt/EBITDA of under 3.75x and
EBITA/interest expense above 3.25x on a sustained basis.
Factors that could lead to a downgrade include the adoption of a
more aggressive financial strategy that does not prioritize near
term debt reduction that results in debt/EBITDA sustained above
4.25x or EBITA/interest expense not recovering to 2.75x or higher.
A sustained deterioration in liquidity for any reason could also
lead to a downgrade.
Performance Food Group, Inc., a wholly owned subsidiary of
Performance Food Group Company (PFGC) headquartered in Richmond,
Virginia, is a food distributor with revenues of approximately $27
billion (about $44 billion pro forma for the acquisition of
Core-Mark) as of March 31, 2021.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
POWER BAIL: Trustee, Lexington Agree on Cash Collateral Access
--------------------------------------------------------------
Caroline Djang, the duly appointed Subchapter V
Trustee-in-Possession for the bankruptcy estate of Power Bail
Bonds, Inc., and Lexington National Insurance Corporation ask the
U.S. Bankruptcy Court for the Central District of California,
Riverside Division, for authority to use cash collateral.
LNIC is a secured creditor of the Debtor by virtue of a blanket
security interest in all of the Debtor's assets properly perfected
by the recording of a UCC-1 financing statement on or August 28,
2017. LNIC's collateral includes, without limitation, the Debtor's
accounts receivable and intellectual property.
LNIC alleges, and the Debtor has agreed, that the proceeds that the
Debtor receives/collects from its accounts receivable are cash
collateral of LNIC as defined by 11 U.S.C. Section 363(a). The term
"Cash Collateral" includes all monies received by the Debtor from
its accounts receivable.
LNIC is the only creditor with a security interest in Debtor's
accounts receivable.
LNIC will be filing an amended proof of claim in the amount of not
less than $5,882,958.
The Trustee and LNIC agreed on the consensual use of Cash
Collateral which would allow the Trustee's interim use of Cash
Collateral to pay ordinary, necessary and reasonable operating
expenses incurred by the estate for the Third Quarter of 2021 (July
1, 2021 to September 30, 2021) and accordingly, have entered into
the Fifth Interim Stipulation Authorizing Use of Cash Collateral.
The Stipulation provides for these terms:
a. During the period from July 1, 2021 to September 30, 2021,
the Trustee may use Cash Collateral in the amounts set forth in the
budget to pay ordinary, necessary and reasonable operating expenses
incurred by the Estate.
b. Any expenditure in excess of this authorization will
require prior written approval of LNIC (email is sufficient) or
further order of the Court after appropriate notice.
The Trustee's access to Cash Collateral is conditioned upon these
terms:
a. For accounts that are current (i.e., payment made within
last 120 days), the Trustee will be allowed to offer up to a 25%
discount on accounts receivable with a balance of $1,000 or less;
on current accounts with a balance of more than $1,000, the Trustee
shall be allowed to offer no more than a 10% discount without
express written permission from LNIC; for accounts that are
delinquent (payment not made within last 120 days), the Trustee
will be allowed to offer up to a 50% discount so long as the amount
forgiven does not exceed $3,000.
b. The Trustee will remit to LNIC 90% of all net revenues
collected by the Trustee during the Term. The monies will be
received by LNIC on a monthly basis through a designated account
via ACH transmittal not later than 5 calendar days after the end of
July, August and September of 2021.
c. LNIC will inform the Trustee of its total claims, legal,
and recover expense: (i) for the period of July 1, 2021 to July 31,
2021 by 9:00 am on August 2, 2021; (ii) for the period of August 1,
2021 to August 31, 2021 by 9:00 am on September 1, 2021; and (iii)
for the period of September 1, 2021 to September 30, 2021 by 9:00
am on October 1, 2021 so that Trustee can timely provide LNIC
reimbursement for LINC's CLR expense and then in turn provide LNIC
with the 90% of all net revenues as set for in section 3(b) above.
d. LNIC will provide the Trustee with proof of its expenses
(i.e., invoices, copies of checks, etc.) for claims, legal, and
recovery costs for: (i) for the period of July 1, 2021 to July 31,
2021, by August 4, 2021; (ii) for the period of August 1, 2021 to
August 31, 2021 by September 6, 2021; and (iii) for the period of
September 1, 2021 to September 30, 2021 by October 4, 2021.
e. Noncompliance by the Trustee with any of the express terms
or provisions of the Stipulation will result in the immediate loss
of the Trustee's authorization to use Cash Collateral.
LNIC has consented to the use of Cash Collateral and waives any
adequate protection requirement.
A copy of the motion and the Debtor's budget for the months of
July, August, and September is available at https://bit.ly/3AgyxQS
from PacerMonitor.com.
The Debtor projects $62,629 in total expenses for July 2021.
About Power Bail Bonds
Power Bail Bonds, Inc., a company based in Temecula, Calif., filed
a Chapter 11 petition (Bankr. C.D. Calif. Case No. 20-14155) on
June 15, 2020. In the petition signed by Marcus Romero, chief
executive officer and president, Debtor disclosed $55,112,483 in
assets and $2,673,222 in liabilities.
Judge Mark S. Wallace oversees the case.
The Debtor tapped Reid & Hellyer, APC as its bankruptcy counsel and
John R. Mayer, A Professional Law Corporation as its special
counsel.
Caroline R. Djang has been appointed as Subchapter V trustee in the
Debtor's Chapter 11 case.
PROCERA I LP: S&P Alters Outlook to Stable, Affirms 'B-' ICR
------------------------------------------------------------
S&P Global Ratings revised its outlook on Procera I L.P. to stable
from negative and affirmed its 'B-' issuer credit rating.
S&P said, "At the same time, we affirmed our 'B-' issue-level
rating on the company's revolving credit facility and first-lien
term loan and our 'CCC+' issue-level rating on its second-lien term
loan.
"The stable outlook reflects our expectation that Sandvine will
generate mid-single-digit percentage revenue growth and generate
free cash flow of about $50 million annually while sustaining its
profitability at current levels."
Sandvine has improved its financial metrics over the past year,
including by expanding its top line, optimizing its cost structure,
and reducing its debt, which caused its S&P Global Ratings-adjusted
leverage to fall to the 6x area. S&P expects the company's
performance to remain stable over the next 12 months.
Despite the headwinds from the COVID-19 pandemic, the company's
operating performance has remained stable. S&P does not believe the
COVID-19 pandemic has had any effect on Sandvine's performance.
Over the past year, the company managed to increase its revenue by
the mid-single digit percent area, supported by its good bookings,
while improving its S&P Global Ratings-adjusted EBITDA margins to
about 35%. Over this period, Sandvine also improved its leverage to
about 6x while increasing its free cash flow to debt to about 10%.
In addition, the company built up a cash balance of about $115
million as of the first quarter of 2021, which represents a
significant improvement in its liquidity position.
Sandvine's products used to censor news during the elections in
Belarus in 2020, though this did not affect its performance. While
the company faced negative press related to the use of its products
to censor news amid the most recent elections in Belarus, these
reports did not affect its performance. Sandvine's products were
sold through a channel partner and the company has since decided to
stop selling its products in Belarus. Based on our discussions with
management, S&P expects Sandvine will be much more selective when
selling its products and avoid working with customers that may
misuse its technology.
S&P said, "The stable outlook reflects our expectation that
Sandvine will generate mid-single-digit percentage revenue growth
and generate free cash flow of about $50 million annually while
sustaining its profitability at current levels.
"We would consider an upgrade if Sandvine continues to increase its
revenue, maintains its profitability at current levels, and commits
to maintaining leverage around the 6x area, while free cash flow to
debt is sustained above 5%. The company would need to be able to
meet its acquisition and shareholder return objectives and also
absorb an operating downturn while maintaining these metrics.
"Although unlikely over the next 12 months, we could lower our
rating on Sandvine to 'CCC+' if the company faces sustained revenue
declines, its free cash flow turns negative, and we no longer view
its capital structure as sustainable."
PURDUE PHARMA LP: Reps Urge DOJ to Reject Sacklers' Releases
------------------------------------------------------------
Law360 reports that two members of the House Committee on Oversight
and Reform urged Attorney General Merrick Garland to oppose
confirmation of the Chapter 11 plan of drugmaker Purdue Pharma,
saying granting releases to the company's ownership would be
incompatible with the U.S. Department of Justice's position on
non-debtor releases.
In the letter sent Tuesday, June 29, 2021, Rep. Carolyn B. Maloney,
D-N. Y. , and Rep. Mark DeSaulnier, D-Calif. , said the Justice
Department should use its status as a creditor in the case to vote
to reject Purdue's plan because it would release the claims of two
dozen states against the Sackler family.
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.
RABUN MANOR: Seeks to Hire PRC Consulting as Accountant
-------------------------------------------------------
Rabun Manor Resort, LLC and Crystal Fountain Chapel Funeral Home,
LLC seek approval from the U.S. Bankruptcy Court for the Northern
District of Georgia to hire Phillip R. Coleman d/b/a PRC Consulting
as its accountant and financial advisor.
The firm will prepare tax returns with supporting schedules and
perform any bookkeeping functions necessary for preparation of
those returns and provide other accounting and consulting services
requested by the Debtor and its counsel.
The firm represents no interest adverse to the estate in the matter
upon which it is to be retained, according to court filings.
The firm can be reached through:
Phillip R. Coleman
PRC Consulting
2477 Palladian Manor Way SE
Atlanta, GA 30339
About Rabun Manor Resort, LLC
Rabun Manor Resort, LLC owns and operates a bed & breakfast and
150-seat restaurant facility located at 205 Carolina Street,
Dillard, Georgia.
Rabun Manor Resort's manager is David Okun, who owns a 50% equity
interest in the Debtor. Mr. Okun has over 22 years of experience in
the hospitality business.
Rabun Manor Resort sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ga. Case No. 21-20596) on May 31,
2021. In the petition signed by Mr. Okun, manager, the Debtor
disclosed up to $10 million in both assets and liabilities.
Theodore N. Stapleton serves as the Debtor's counsel.
About Crystal Fountain Chapel Funeral Home
Crystal Fountain Chapel Funeral Home, LLC filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
S.D. Mich. Case No. 21-44190) on May 12, 2021, listing under $1
million in both assets and liabilities. Elder Melvin Lewis,
responsible person, signed the petition. Judge Lisa S. Gretchko
oversees the case. Stevenson & Bullock, PLC serves as the Debtor's
counsel.
RECESS HOLDCO: Fitch Assigns 'BB- (EXP)' Issuer Default Rating
--------------------------------------------------------------
Fitch Ratings has assigned first-time Long-Term Issuer Default
Ratings of 'BB- (EXP)' to Recess Holdco Inc., First Student Bidco
Inc. and First Transit Parent Inc., the newly created entities
acquiring First Student and First Transit from FirstGroup plc.
Fitch has also assigned ratings of 'BB+'/'RR1(EXP)' to the
company's proposed senior secured term loan B, revolving credit
facility, senior secured notes, and term loan C. The instrument
ratings apply to First Student Bidco, Inc. and First Transit Parent
Inc. which act as co-borrowers.
The ratings are limited by the company's expected elevated leverage
profile following its purchase by EQT Infrastructure (EQT), and by
the impact of the coronavirus pandemic on its performance over the
past year. First Transit's thin margin profile, seasonality in the
First Student business and tight labor market also contribute to
the 'BB-' rating. Concerns around leverage following the purchase
by EQT are offset by positive rating factors including First
Student's number one market position, solid liquidity and the
company's stable contracted customer base.
KEY RATING DRIVERS
First Student's Leading Market Position: Fitch views First
Student's size and the stability of its contracts as supportive of
the rating. First Student is the largest provider of outsourced
student transportation in North America with a company-estimated
21% market share, nearly twice the size of the next largest
competitor. Fitch views the school transportation sector as highly
competitive and fragmented, with somewhat high barriers to entry
due to the capital investment required for a large fleet of yellow
school buses. The company reports that only roughly 38% of the
school bus market is outsourced. Fitch believes this leaves a large
addressable market that may drive future growth, but outsourcing is
often complicated by resistance from labor unions and long bidding
processes.
Contracted Customer Base: Both First Student and First transit
benefit from multi-year customer contracts, typically 3-5 years,
that provide a high degree of revenue stability and visibility.
Contracts are typically structured on a per route, per hour, or per
mile basis and often include price escalators and fuel purchasing
provisions to account for cost inflation and fuel exposure.
Customer relationships have generally been stable, with customer
retention around 95% and 10+ year average tenure for around 85% of
customers. No customer accounts for more than 2% of revenue.
Coronavirus Impact: Both business segments were heavily impacted by
the coronavirus, consistent with the general passenger
transportation environment in North America. First Student
experienced a sharper decline with 1H revenues down nearly 53%
(fiscal year ending March 31) driven by school closures and remote
learning compared with First Transit's 1H revenue decline of
roughly 18%. For the full year, First Student's contract revenues
were down by roughly 30%. Fitch expects some negative effects to
linger into FY2022 as the company navigates through driver
shortages and the varied pace of school and business reopenings
leaving near-term leverage elevated. Fitch believes the company
should be at or near pre-pandemic levels by FY2023.
Thin Margins at First Transit: First Transit operates with a
considerably lower margin profile than First Student, weighing down
margins for the consolidated business. First Transit's reported
adjusted operating margin in FY2020 and FY2019 were 2.4% and 4.6%,
respectively, compared with First Student's reported adjusted
operating margin of 8.3% in FY2020 and 9.4% in FY 2019. First
Transit's predominately asset light operating model is largely
based on routing and hiring of drivers limiting the segment's
ability to obtain higher margins. Fitch believes each segment has
the potential to grow margins but assumes there will be a continued
disparity in margin profiles at the segments.
Seasonality: First Student operates a highly seasonal business with
lower activity during the summer break months when schools are
closed. Due to this seasonality the first half of the financial
year (fiscal year ends March 31) generates lower revenues and
profits compared to the second half. Seasonal effects cause working
capital to build from September to December causing the company to
generate less free cash flow and often rely on the revolver for
working capital requirements. The company utilizes some spare
capacity during the summer for charter operations, i.e. summer
camps and private charters. Nevertheless, performance in the
September quarter remains materially weaker than the rest of the
year.
Labor Exposure: The potential for driver shortages and labor cost
inflation is a rating concern. The company has a large exposure to
labor with labor cost representing roughly 67% of FY2020 operating
costs, the company's largest cost. In the current environment,
labor and labor cost are pressured by many factors that include a
tight labor market, driver shortages, and possible regulation
surrounding rising wages. Driver shortages have been exacerbated by
the pandemic as transportation companies compete to fill positions.
Fitch believes the driver shortage will continue to impact the
company in the short-term as they continue to fill open spots.
First Student believes that it has a hiring advantage relative to
peers due to its size and scale.
DERIVATION SUMMARY
First Student and First Transit previously operated under
FirstGroup plc (BBB-/Negative) before they were sold as FirstGroup
focuses on its UK segments that include First Bus and First Rail.
Under FirstGroup, First Student was the company's strongest
performing segment with a significantly higher margin profile than
the other operating segments. First Student and First Transit are
less diversified and operate at higher leverage than FirstGroup. In
terms of competitors, National Express Group plc (BBB/Negative) is
First Student's largest competitor and is the second largest yellow
bus transportation company in North America behind First Student.
National Express operates with higher margins and lower leverage
than First Student and First Transit.
KEY ASSUMPTIONS
-- School bus transportation market rebounds in FY2022 before
fully recovering by FY2023;
-- Future margin expansion driven by price increases and
strategic initiatives to streamline operations and realize
efficiencies;
-- Working capital build in FY2022 to reflect return to full
utilization;
-- Cash taxes remain low due to $1 Billion NOL at First Student
business;
-- No shareholder distributions assumed as sponsor typically
focuses on reinvesting cash flows into the businesses in its
portfolio;
-- Additional FCF allocated to Capex; No debt prepayments
assumed.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Commitment to deleveraging with Total Adjusted Debt/EBITDAR
sustained below 4.0x;
-- FCF margins sustained in the mid- to high-single digits;
-- EBITDA margins above 15% or significantly stronger margins in
the First Transit segment.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Total Adjusted Debt/EBITDAR sustained above 5.0x;
-- FFO Interest Coverage sustained below 2.5x;
-- Expectations of neutral to negative FCF generation;
-- Loss of market share in either segment.
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
New Debt Structure: FS BidCo and FT Parent are
co-issuers/co-borrowers of the new debt structure that includes a
$500 million 5-year revolver (undrawn at close), a $1,490 million
7-year term loan B, a $525 million 7-year term loan C, and $800
million 8-year notes. Substantially all of the existing and future
wholly owned domestic restricted subsidiaries will be Guarantors.
All debt will be secured on a first lien basis by substantially all
assets, including the bus fleet, and will be ranked pari passu. The
term loan C will be used exclusively for providing cash collateral
against letters of credit with all cash proceeds held in a
specified restricted account.
Fitch considers the cash proceeds from the term loan C to be
restricted and doesn't believe it can be accessed for any other
purpose than to back letters of credit. Fitch believes leverage
(total adjusted debt/EBITDAR) will remain high for the 'BB' rating
category in the mid 4x range at close before falling to in the low
4x range in the next few years. Deleveraging will be supported by
the 1% term loan B amortization and margin improvement surrounding
new initiatives and recovery from the pandemic.
Adequate Liquidity: Total liquidity at close of the transaction
should total $575 million consisting of $75 million of cash and
$500 million of availability on the revolver. Due to the
seasonality of the school bus business, the company is expected to
draw down the revolver from time to time. The company is not
expected to pay a dividend to the sponsor. Fitch believes free cash
flow generation will remain positive supporting liquidity. Excess
free cash flow generation will be used for capital expenditures
which will vary between 5%-9% of revenues based on fleet
requirements. There is also potential for additional excess free
cash flow to be allocated to prepaying the term loan B. Fitch
believes liquidity is adequate.
ISSUER PROFILE
First Student is the largest national provider of essential K-12
student transport services in North America. The segment
transported roughly 900 million students in FY2020 and operates a
fleet of roughly 42,000 yellow school buses. As a combined company,
the segment's FY2020 revenue and EBITDA contribution would account
for 63% and 87%, respectively.
First Transit is one of the largest private sector providers of
public transit management and contracting in North America
operating roughly 12,900 vehicles from 300 locations. The segment
transported roughly 300 million people in FY2020 through a mix of
fixed route public buses, paratransit buses and vans, and shuttles.
As a combined company, the segment's FY2020 revenue and EBITDA
contribution would account for 37% and 13%, respectively.
On April 23, 2021, FirstGroup plc. announced that it entered into
an agreement for the sale of its North American contract divisions
First Student and First Transit to EQT Infrastructure for $4.6
billion. The sale allows FirstGroup to focus on its UK operations
which include UK Bus and UK Rail as well as continue to look to
sell its Greyhound segment. In FY2020 First Student and First Group
accounted for a combined 40% of FirstGroup's revenues and over 60%
of FirstGroup's adjusted operating profit.
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.
RGN-GROUP HOLDINGS: Hires Ashby & Geddes as Conflicts Counsel
-------------------------------------------------------------
RGN-Group Holdings, LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ Ashby
& Geddes, P.A. as their special conflicts counsel.
The firm will provide legal services where Faegre Drinker Biddle &
Reath, LLP, the Debtors' lead bankruptcy counsel, cannot do so
because of an actual or potential conflict of interest.
The firm's hourly rates are as follows:
Ricardo Palacio, Director $670 per hour
Amanda Hrycak, Paralegal $265 per hour
Partners/Of Counsel $525 - $960 per hour
Associates $265 - $395 per hour
Paralegals/Legal Secretaries $225 - $275 per hour
Ricardo Palacio, director of Ashby & Geddes, disclosed in a court
filing that his firm is a "disinterested person," as defined in
Section 101(14) of the Bankruptcy Code.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Ashby &
Geddes made the following disclosures:
-- the firm has not agreed to any variations from, or
alternatives to, its standard or customary billing arrangements for
this engagement;
-- none of the professionals included in the engagement vary
their rate based on the geographic location of the bankruptcy
case;
-- the firm has not represented the Debtor in the 12 months
prepetition; and
-- the firm has not provided the Debtor with a budget and
staffing plan.
Ashby & Geddes can be reached at:
Ricardo Palacio, Esq.
Ashby & Geddes, P.A.
500 Delaware Ave.
Wilmington, DE 19899
Tel: (302) 654-1888
Fax: (302) 654-2067
About RGN-Group Holdings
RGN-Group Holdings, LLC and its affiliates are primarily engaged in
renting and leasing real estate properties.
On Aug. 17, 2020, RGN-Group Holdings and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 20-11961).
At the time of the filing, RGN-Group Holdings disclosed total
assets of $1,005,956,000 and total liabilities of $946,016,000.
Judge Brendan Linehan Shannon oversees the cases.
The Debtors tapped Faegre Drinker Biddle & Reath LLP as lead
bankruptcy counsel, Ashby & Geddes, P.A. as special conflicts
counsel, Alixpartners as financial advisor, Duff & Phelps LLC as
restructuring advisor, and Epiq Corporate Restructuring LLC as
claims and noticing agent.
Natasha Songonuga is the Subchapter V trustee appointed in the
Debtors' cases. The trustee is represented by Gibbons P.C.
The U.S. Trustee for Region 3 appointed a committee to represent
the Debtors' unsecured creditors on Sept. 21, 2020. The committee
hired Frost Brown Todd LLC, and Cole Schotz P.C. as its legal
counsel and FTI Consulting, Inc. as its financial advisor.
SANTA MARIA: Seeks Approval to Hire Crone Law as Special Counsel
----------------------------------------------------------------
Santa Maria Brewing Co. Inc. seeks approval from the U.S.
Bankruptcy Court for the Central District of California to employ
The Crone Law Group as its special counsel.
The firm will assist the Debtor and chapter 11 counsel in
connection with the Debtor's reorganization and chapter
11 plan.
The firm will be paid at these rates:
Nnana U. Awa $375 per hour
Senior Partners $745 per hour
Paralegals $150 per hour
Mark Crone, managing partner of Crone Law, assured the court that
his firm is a "disinterested person" within the meaning of Section
101(14) of the Bankruptcy Code and does not hold any interest
adverse to the estate.
The firm can be reached through;
Mark Crone, Esq.
The Crone Law Group
9665 Wilshire Boulevard, Suite 895
Beverly Hills, CA 90212
Email: mcrone@cronelawgroup.com
About Santa Maria Brewing
Santa Maria Brewing Co. Inc. filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal.
Case No. 20-11486) on Dec. 15, 2020. Byron Moles, chief executive
officer, signed the petition. At the time of the filing, the Debtor
disclosed $1 million to $10 million in assets and $10 million to
$50 million in liabilities.
Judge Deborah J. Saltzman oversees the case. Leslie Cohen Law, PC
serves as the Debtor's bankruptcy counsel.
SEAWORLD PARKS: S&P Places 'B-' ICR on CreditWatch Positive
-----------------------------------------------------------
S&P Global Ratings placed all ratings on U.S. regional theme park
operator SeaWorld Parks & Entertainment Inc., including the 'B-'
issuer credit rating, on CreditWatch with positive implications.
S&P said, "The CreditWatch reflects the likelihood we will raise
ratings if we believe SeaWorld can materially reduce leverage
starting in 2021 if recent pent-up demand trends for out-of-home
entertainment continue, including for SeaWorld's theme parks.
Following depressed levels of attendance in 2020 due to park
closures, cautious consumer behavior, government restrictions, and
discomfort with wearing masks for extended periods in warm outdoor
weather, SeaWorld reported that attendance at its parks in the
first quarter of 2021 was 33.7% below the same period in 2019, an
improvement compared with attendance that was 53% below same period
2019 levels in the fourth quarter of 2020. Additionally, SeaWorld
disclosed that of the parks outside of Pennsylvania, Virginia, and
California that were operating without significant capacity and
operating restrictions, attendance improved sequentially through
the first four months of the year, and was 15% below 2019 levels in
April. The base case that underlies the 'B-' rating is for 2021
attendance that is 50% of 2019 levels, which we will address and
probably revise significantly upward in resolving the CreditWatch."
In addition to these attendance disclosures, a general recovery in
out-of-home entertainment is pacing ahead of our expectations as
evidenced by:
-- Local governments have relaxed, or completely removed, social
distancing restrictions as over half of U.S. adults are fully
vaccinated according to the CDC. California, the last state
SeaWorld operates in to lift restrictions, and home to SeaWorld San
Diego and Aquatica San Diego, removed all restrictions on June 15.
-- S&P's S&P Global economists now expect that the U.S. could
experience a summer boom, fueled by reduced virus fears, elevated
savings, and a pick-up in wages. Household spending, also partly
bolstered by accumulated savings from recent generous government
support, has continued to rise through June as the economy reopened
and the labor market steadily recovered. S&P expects that
out-of-home entertainment, including theme parks, could benefit
from this demand as consumers seek out-of-home experiences. For
example, both Disney and Comcast reported strong demand for
tickets, albeit at reduced capacity, at their Florida theme parks;
Live Nation recently reported record sell-out rates for concert
tours and music festivals; and the Indianapolis 500 easily sold
out, although this is a well-known marquis sporting event and
partly due to being limited to 40% capacity and 135,000 tickets.
S&P believes that consumers are meaningfully less resistant to, and
to some extent eagerly reentering public spaces due to pent-up
demand that could drive a sharp rebound in attendance at
SeaWorld's' parks this summer. Additionally, SeaWorld recently
loosened mask requirements in its parks following updated CDC
guidance, which S&P expects could benefit its attendance during the
key summer season. If SeaWorld's 2021 attendance improves to at
least 80% of 2019 levels, per caps remain elevated higher than
2019, and margin expands compared with 2019 despite anticipated
wage pressures, then SeaWorld could plausibly improve its leverage
to around our 6x upgrade threshold by the end of 2021.
Following an attendance recovery, SeaWorld could use cash to reduce
leverage by prepaying some portion of the significant incremental
pandemic-related debt it issued last year. As of March 31, 2021,
SeaWorld had approximately $431 million of cash on hand. SeaWorld
also reported that it generated about $5.1 million per month of
positive cash flow during the quarter when adjusted for previously
deferred payments to vendors, and that it expects to be cash flow
positive for the remainder of the year. SeaWorld has issued $608
million of incremental debt since March 2020 (pro-forma for the
recently announced repayment), which will slow the company's
ability to reduce leverage to pre-pandemic levels even following a
full attendance recovery. If cash flow generation continues to
improve through 2021, SeaWorld could use some of its cash to pay
down debt and reduce leverage more quickly than previously
expected. SeaWorld recently announced that it plans to redeem $50
million of its second priority senior secured notes due 2025 on
July 14, 2021.
S&P said, "We plan to resolve the CreditWatch over the next few
months, with the outcome largely dependent on how quickly
attendance recovers. We will also assess the company's likely
capital allocation policies, which will influence the pace of
deleveraging. Additionally, the company's cost reductions could
deliver incremental EBITDA in 2021 and 2022 depending on whether
planned cost improvements are offset by potentially higher wage
costs. Lastly, we will monitor developments in the tight labor
market, which could affect SeaWorld's capacity to successfully
deliver the guest experience and ramp up operations at its parks in
the key summer season."
SERTA SIMMONS: S&P Upgrades ICR to 'CCC' Amid Restructuring Risk
----------------------------------------------------------------
S&P Global Ratings raised the issuer credit rating on U.S.-based
Serta Simmons Bedding, LLC to 'CCC' from 'CCC-'.
S&P said, "We lowered the rating to 'B' from 'B+' on the $200
million first-out super-priority term loan due 2023. The recovery
rating remains '1+', indicating our expectation for full recovery
(greater than 100%) in the event of a payment default. We lowered
the rating on the $851 million second-out super-priority debt due
in 2023 to 'B-' from 'B'. The recovery rating remains '1',
indicating our expectation for very high recovery (90%-100%;
rounded estimate: 95%). We lowered the rating on the $882 million
outstanding first-lien term loan due 2023 to 'CC' from 'CCC-'. The
recovery rating remains '6', indicating our expectation for
negligible recovery (0%-10%; rounded estimate: 5%). We removed all
ratings from CreditWatch with negative implications, where they
were placed on April 5, 2021, following the company's announced
tender offer.
"We affirmed the 'C' issue-level and '6' recovery ratings on the
$11 million outstanding second-lien term loan due 2024, indicating
our expectation for negligible recovery (0%-10%; rounded estimate:
0%).
"The negative outlook reflects our expectation that we could lower
the ratings over the next 12 months if there is a greater
likelihood of an immediate debt restructuring or liquidity
materially deteriorates."
The upgrade reflects the possibility of additional debt
restructurings, but they may not be imminent. S&P said, "We had
previously expected the company to announce a debt restructuring
transaction within six months of the announcement of the first-lien
debt repurchase transaction, which began on April 5, 2021. At that
time, the company announced that it was considering additional
opportunistic debt repurchases at a discount. We continue to
believe the company will seek restructuring options to alleviate
its onerous capital structure within 12 months, though this timing
is uncertain. If the company does announce or execute on further
debt restructurings at a discount, then we could lower the ratings
again."
The capital structure remains unsustainable and liquidity remains
constrained. S&P said, "Although industry conditions have been
favorable since the second half of fiscal 2020, we believe demand
will start moderating as consumers reallocate spending away from
home goods and into travel and leisure categories. Additionally,
supply chain constraints including shortages of materials, and
increased shipping costs have contributed to weaker gross margins
of about 38.9% for the 12 months ended March 31, 2021, compared to
41.2% for the same prior-year period. While some of the supply
chain difficulties will abate as the initial surge in demand for
consumer goods moderates, we believe this will continue to hurt the
company's earnings through 2021, resulting in the capital structure
remaining unsustainable with leverage of about 11x and EBITDA
margins of about 8.5%-9%."
S&P said, "We continue to assess the company's ratio of sources
over uses as adequate with coverage of at least 1.2x. Despite this,
we believe liquidity is at risk of deteriorating as we believe the
company will continue to struggle to generate positive cash flow,
relying on cash on hand and the revolver to fund operations and
debt service. The company received $56.7 million of liquidity
support via a dividend from its China joint venture in fiscal 2020.
A large portion of the dividend was considered a dividend of future
earnings. We do not expect this infusion to repeat and as such the
company will have to rely on generating cash to bolster its
liquidity. Given the difficult operating conditions and our
expectation for moderating demand, we expect the company to
generate minimal funds from operations (FFO) through fiscal 2021.
The liquidity problem is further exacerbated by the upcoming
maturities in 2023, as we will assess the debts as uses of
liquidity upon becoming current in 2022, at which point we would
lower our liquidity assessment if the debt maturities have not been
extended or refinanced.
"The negative outlook reflects our expectation that the company
could be downgraded during the next 12 months if we expect the
company could restructure its debt in the immediate term, we
believe the company is unable to meet its debt service requirement,
or liquidity further deteriorates."
S&P could lower the ratings if:
-- The company further restructures its debt; or
-- Operating performance deteriorates such that it believes
default is imminent.
While unlikely, S&P could raise the ratings if:
-- S&P no longer expect the company to restructure its debt within
a 12-month time frame;
-- The company successfully refinances its capital structure at
par; and
-- Operating performance improves through organic sales growth and
improved margins, such that the company is consistently generating
positive free cash flows, strengthening its liquidity.
SIX FLAGS: S&P Places 'B-' Issuer Credit Rating on Watch Positive
-----------------------------------------------------------------
S&P Global Ratings placed all ratings on U.S. regional theme park
operator Six Flags Entertainment Corp., including the 'B-' issuer
credit rating, on CreditWatch with positive implications.
S&P plans to resolve the CreditWatch over the next few months, with
the outcome likely largely dependent on the pace of attendance
recovery.
S&P said, "The CreditWatch reflects the likelihood we will raise
ratings if we believe Six Flags can materially reduce leverage
starting in 2021 if recent pent-up demand trends for out-of-home
entertainment continue, including for Six Flag's theme parks.
Following depressed levels of attendance in 2020 due to park
closures, cautious consumer behavior, government restrictions, and
discomfort with wearing masks for extended periods in warm outdoor
weather, Six Flags reported that attendance at its parks in the
first quarter of 2021 was 38% below the same period in 2019, an
improvement compared with attendance in the fourth quarter 2020
that was 49% below 2019. Further, Six Flags reported that
year-to-date through April 25 attendance at the company's open
parks was approximately 21% below the same period in 2019. In
addition, all of Six Flags' parks were reopened by Memorial Day
weekend, which will be crucial as attendance ramps up this summer.
While there are important differences in the geographic locations
of parks and the revenue model at regional theme park operator
SeaWorld Entertainment, we believe recently disclosed attendance at
SeaWorld could be a preliminary indication of the continued
improvement in attendance recovery at Six Flags. SeaWorld disclosed
that its attendance at parks operating without significant
operating or capacity restrictions improved to around 15% below
2019 levels in April. The base case that underlies the 'B-' rating
is for 2021 attendance that is 50%-55% of 2019 levels, which we
will address and probably revise significantly upward in resolving
the CreditWatch." In addition to these attendance disclosures, a
general recovery in out-of-home entertainment is pacing ahead of
our expectations as evidenced by:
-- Local governments have relaxed, or completely removed, social
distancing restrictions as over half of U.S. adults are fully
vaccinated according to the CDC. California, home to four of Six
Flags' parks including Six Flags Magic Mountain, lifted all
restrictions on June 15.
-- S&P said, "Our S&P Global economists now expect that the U.S.
could experience a summer boom, fueled by reduced virus fears,
elevated savings, and a pick-up in wages. Household spending, also
partly bolstered by accumulated savings from recent generous
government support, has continued to rise through June as the
economy reopened and the labor market steadily recovered. We expect
that out-of-home entertainment, including theme parks, could
benefit from this demand as consumers seek out-of-home experiences.
For example, both Disney and Comcast reported strong demand for
tickets, albeit at reduced capacity, at their Florida theme parks;
Live Nation recently reported record sell-out rates for concert
tours and music festivals; and the Indianapolis 500 easily sold
out, although this is a well-known marquis sporting event and
partly due to being limited to 40% capacity and 135,000 tickets."
S&P said, "We believe that consumers are meaningfully less
resistant to, and to some extent eagerly reentering public spaces
due to pent-up demand that could drive a sharp rebound in
attendance at Six Flags' parks this summer. Additionally, Six Flags
recently loosened mask requirements in its parks following updated
CDC guidance, which we expect could benefit its attendance during
the key summer season. Depending on the pace of attendance
recovery, Six Flags could reduce leverage below our 7.5x upgrade
threshold at the current rating sooner than we previously
contemplated in the base case that underlies the current 'B-'
rating."
In addition, as of April 4, 2021, Six Flags had adequate liquidity
with about $67 million of cash on hand and full availability under
its $479 million revolving credit facility. Six Flags burned about
$32 million per month in the first quarter of 2021 but has guided
toward an expectation for positive cash flow generation during the
remainder of the year. Six Flags has issued $357 million of
incremental debt since March 2020, which will slow the company's
ability to reduce leverage to pre-pandemic levels even following a
full attendance recovery. However, despite the impact of
incremental debt, attendance could plausibly still recover
sufficiently to drive EBITDA generation that pushes leverage below
our 7.5x upgrade threshold this year.
S&P said, "We plan to resolve the CreditWatch over the next few
months, with the outcome largely dependent on how quickly
attendance recovers. We will also assess the company's likely
capital allocation policies, which will influence the pace of
deleveraging. Additionally, the company's transformation plan could
deliver incremental EBITDA in 2021 and 2022 depending on whether
planned cost improvements are offset by potentially higher wage
costs. Lastly, we will monitor developments in the tight labor
market, which could affect Six Flag's capacity to successfully
deliver the guest experience and ramp up operations at its parks in
the key summer season."
SKS CONSTRUCTION: Seeks to Hire Spiro & Browne as Legal Counsel
---------------------------------------------------------------
SKS Construction, Inc. seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Virginia to hire Spiro & Browne,
PLC as its counsel to render general legal services.
The firm will be paid at these rates:
David K. Spiro, Partner $350
David G. Browne, Partner $350
Paralegal $150
Spiro & Browne does not hold or represent any interest adverse to
the Debtor and its estate, according to court filings.
The firm can be reached through:
David K. Spiro, Esq.
SPIRO & BROWNE, PLLC
6802 Paragon Place, Suite 410
Richmond, VA 23230
Tel: 804-441-6080
Fax: 804-836-1855
E-mail: dspiro@sblawva.com
About SKS Construction, Inc.
SKS Construction, Inc. filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Case No.
21-31862) on June 9, 2021. The petition was signed by Steven J.
Zuchowski, vice-president. At the time of filing, the Debtor
estimated $1 million to $10 million in both assets and
liabilities.
David K. Spiro, Esq. at SPIRO & BROWNE, PLLC, represents the Debtor
as its counsel.
SONOMA PHARMACEUTICALS: Delays Filing of Fiscal 2021 Form 10-K
--------------------------------------------------------------
Sonoma Pharmaceuticals, Inc. filed a Form 12b-25 with the
Securities and Exchange Commission notifying the delay in the
filing of its Annual Report on Form 10-K for the year ended March
31, 2021. The Company's auditors require additional time to
complete their audit of the annual report on Form 10-K.
About Sonoma Pharmaceuticals
Sonoma Pharmaceuticals, Inc. -- http://www.sonomapharma.com-- is a
global healthcare company that develops and produces stabilized
hypochlorous acid, or HOCl, products for a wide range of
applications, including wound care, animal health care, eye care,
oral care and dermatological conditions. The Company's products
reduce infections, itch, pain, scarring and harmful inflammatory
responses in a safe and effective manner. In-vitro and clinical
studies of HOCl show it to have impressive antipruritic,
antimicrobial, antiviral and anti-inflammatory properties. Its
stabilized HOCl immediately relieves itch and pain, kills pathogens
and breaks down biofilm, does not sting or irritate skin and
oxygenates the cells in the area treated assisting the body in its
natural healing process. The Company sells its products either
directly or via partners in 53 countries worldwide.
Sonoma reported a net loss of $2.95 million for the year ended
March 31, 2020, compared to a net loss of $11.80 million for the
ear ended March 31, 2019. As of Dec. 31, 2020, the Company had
$18.23 million in total assets, $5.91 million in total
liabilities,
and $12.32 million in total stockholders' equity.
Marcum LLP, in New York, the Company's auditor since at least 2006,
issued a "going concern" qualification in its report dated July 10,
2020, citing that the Company 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.
STARWOOD PROPERTY: Fitch Gives FirstTime 'BB+' IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has assigned Starwood Property Trust, Inc. a
first-time 'BB+' Long-Term Issuer Default Rating (IDR). The Rating
Outlook is Stable. Concurrently, Fitch has assigned a 'BB+' rating
to Starwood's existing unsecured debt, and an expected 'BB+(EXP)'
rating to Starwood's proposed unsecured debt issuance. Debt
issuance proceeds are expected to be used to reduce outstanding
secured borrowings and for general corporate purposes.
KEY RATING DRIVERS
Starwood's ratings reflect the strength of its affiliation with
Starwood Capital Group (SCG) and its affiliate manager, SPT
Management, LLC, which provides access to deal flow and deep
industry and collateral expertise, solid market position as a
commercial real estate (CRE), residential real estate and
infrastructure lender, special servicer and property investor,
diversity of its business model, strong asset quality, consistent
operating performance, relatively low leverage, appropriate
interest coverage, a diverse and well-laddered funding profile, and
solid liquidity.
Rating constraints include Starwood's primary focus on the CRE
market, which exhibits volatility through the credit cycle, a
continued challenging environment for certain CRE property types
such as office and hotel, a largely secured funding profile and
potential for margin calls on secured credit facilities, although
the exposure is more modest than peers.
Starwood is one of the largest and most diverse commercial mortgage
real estate investment trusts (REITs) in the U.S. Fitch believes
Starwood's product line diversity allows it be opportunistic in
different market environments, as it can quickly pivot to business
segments with more attractive risk-adjusted returns. The firm
remained active in 2020, despite the pandemic, originating and
acquiring $1.9 billion of CRE loans, $1.6 billion of residential
loans and $286 million of infrastructure investments.
Starwood's asset quality has been strong with minimal losses
historically. Fitch believes this performance has been supported by
strong collateral coverage, as the loan book had a below-peer
loan-to-value ratio of 60.1% at March 31, 2021. Impaired and
delinquent loans were 2.0% of the loan book at 1Q21, which compared
to a four-year average of 1.9%, and was within Fitch's 'bbb'
category benchmark range of 2% to 5%, for balance sheet heavy
finance and leasing companies with an operating environment score
of 'a'. Fitch believes Starwood's diverse portfolio and
conservative underwriting should help mitigate the effects of the
pandemic on hotel and office properties.
Annualized pre-tax income to average assets was 2.7% in 1Q21, which
was below the four-year average of 2.95%, given the impact of the
pandemic on interest rates, spreads realization activity and fair
market value adjustments. Earnings volatility arises as a result of
the fair market value changes in the company's derivative
instruments and FX adjustments, which are largely offset by changes
in the fair market value of the held-for-sale portfolio.
Accordingly, Fitch also considers annualized distributable earnings
to average assets, which was 3.3% in 1Q21, below the four-year
average of 3.9%. Distributable earnings adjusts for certain items
such as non-cash equity compensation expense, incentive fees under
the management agreement, depreciation and amortization of real
estate, and unrealized gains, losses or other non-cash items
recorded in the net income.
Starwood's leverage, calculated by Fitch as gross debt-to-tangible
equity including off-balance sheet, non-recourse funding comprised
of CLO liabilities, CRE A-Note sales and securitizations, and
residential lending securitizations, adding back accumulated
depreciation on real estate to tangible equity, was 4.3x at 1Q21;
up from 4.2x at YE20 and 3.5x at YE19, driven largely by growth in
non-recourse borrowings.
Fitch believes it is appropriate to add accumulated depreciation on
the real estate portfolio back to tangible equity, as the firm has
a strong track record of recognizing the gross book value of the
portfolio at exit. While Starwood's baseline leverage is higher
than rated peers, Fitch notes that leverage would be considerably
lower, at 2.8x, if all non-recourse borrowings were excluded from
the calculation.
Starwood seeks to manage its adjusted leverage ratio, as measured
by net debt-to-tangible equity, excluding cash, restricted cash and
any nonrecourse borrowings related to securitizations and including
accumulated depreciation, at-or-around 2.5x. On this basis,
leverage was 2.3x at 1Q21, which Fitch believes is appropriate for
the rating.
At March 31, 2021, approximately 12.8% of Starwood's debt was
unsecured, which is below the peer average and at the lower-end of
Fitch's 'bb' category benchmark range of 10%-40% for finance and
leasing companies with an operating environment score of 'a'. Fitch
would view an increase in Starwood's unsecured funding mix
favorably as it would enhance its financial flexibility. Still,
Starwood's secured funding is considered to be diverse, comprised
of warehouse lines, repurchase facilities, mortgages and
securitizations, with a well-laddered maturity profile.
Several REIT peers faced significant liquidity constraints in the
early stages of the pandemic as spread widening and credit
deterioration yielded meaningful margin calls. Starwood, however,
minimized its exposure by voluntarily repaying a portion of its
repurchase facilities while also gaining flexibility to negotiate
amendments and waivers with its borrowers and sponsors, most
notably in the hotel portfolio.
At March 31, 2021, 21% of Starwood's funding was exposed to
credit-related margin calls and 11% was related to spread and
credit margin calls, which is well-below the peer average. The
company had $351.2 million of unrestricted cash and $7.2 billion of
borrowing capacity on its funding lines at 1Q21, which Fitch
believes is sufficient to address funding needs, including $700
million of unsecured note maturities in 2021 ($300 million will be
repaid with the proposed unsecured debt issuance) and $1.5 billion
of unfunded commitments.
Starwood's liquidity position is somewhat constrained by its
election to be taxed as a REIT for U.S. Federal income tax
purposes, as REITs are required to distribute at least 90% of their
taxable net income, excluding capital gains, each year. Starwood
maintained its dividend of $0.48 per share throughout the pandemic
and has regularly covered its dividend with cash earnings since
inception.
The Stable Outlook reflects Fitch's view that Starwood will
continue to maintain strong asset quality, generate stable and
consistent operating cash flows and maintain leverage at a level
appropriate for the risk profile of the portfolio. Additionally,
Fitch believes the company will continue to opportunistically issue
unsecured debt, to enhance its funding flexibility, appropriately
manage its debt maturity profile and maintain solid liquidity.
The unsecured debt rating and the expected unsecured debt rating
are equalized with Starwood's Long-Term IDR, reflecting the
availability of unencumbered assets and average recovery prospects
for creditors under a stressed scenario.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- A sustained increase in Fitch-calculated leverage, excluding
all non-recourse debt, above 3.0x and/or a material increase
in total leverage; an inability to maintain sufficient
liquidity relative to near-term debt maturities, unfunded
commitments and margin call potential; a reduction in business
line diversity, material deterioration in credit performance,
a reduction in core earnings and coverage of the dividend,
and/or a sustained reduction in the proportion of unsecured
debt funding below 10% could all yield negative rating action.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Positive rating momentum could be driven by a sustained
increase in the proportion of unsecured approaching 40% of
total debt; a reduction in margin call exposure; and the
maintenance of leverage at-or-below 2.5x on a Fitch-calculated
basis, excluding all non-recourse debt. Positive rating action
would also be conditioned on the maintenance of strong asset
quality performance, consistent core earnings generation; and
a solid liquidity profile.
-- The existing and expected unsecured debt ratings are sensitive
to changes to Starwood's long-term IDR, unsecured funding mix
and the level of unencumbered balance sheet assets relative to
outstanding unsecured debt. An increase in secured debt and/or
a sustained decline in the level of unencumbered assets, which
weakens recovery prospects on the unsecured debt, could result
in the unsecured debt ratings being notched down from the IDR.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
ESG Considerations:
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3. ESG issues are credit neutral
or have only a minimal credit impact on the entity, either due to
their nature or the way in which they are being managed by the
entity.
STARWOOD PROPERTY: Moody's Gives Ba3 Rating to New Unsecured Notes
------------------------------------------------------------------
Moody's Investors Service has assigned a Ba3 rating to Starwood
Property Trust, Inc.'s new senior unsecured notes. The company's
Ba2 corporate family and Ba3 long-term senior unsecured ratings are
unaffected. The company's outlook is stable.
Assignments:
Issuer: Starwood Property Trust, Inc.
Senior Unsecured Regular Bond/Debenture, Assigned Ba3
RATINGS RATIONALE
Moody's assigned a rating of Ba3 to the proposed senior unsecured
notes based on Starwood's ba2 standalone assessment, the priority
and proportion of the notes in Starwood's debt capital structure,
and the strength of the notes' asset coverage. The terms of the
notes are consistent with those of Starwood's existing senior
unsecured notes. Starwood intends to use the proceeds of the
transaction to repay outstanding debt and for other corporate
purposes.
Moody's expects that the transaction will have a neutral effect on
Starwood's leverage. Starwood's ratio of tangible common equity to
tangible managed assets (Moody's adjusted) measured 22.5% at March
31, 2021, down slightly from 23.5% at December 31, 2020. Starwood
increased investing activity in the first quarter of 2021,
resulting in net growth of its held-for-investment loan portfolio
to $12.3 billion from $11.1 billion at year-end 2020.
Starwood's ratings are based on the company's effective credit and
liquidity risk management during the pandemic induced downturn in
the commercial real estate sector, its superior revenue diversity
compared to peers, history of strong operating performance and
affiliation with Starwood Capital Group, the well-established
commercial real estate investment and asset management firm.
Starwood's credit challenges include its high reliance on
confidence-sensitive secured funding and its high exposure to the
cyclicality of the certain commercial property segments, especially
hotels.
Starwood's outlook is stable, based on the resilience of the
company's asset performance and strong liability and liquidity
management over the past year, which Moody's expects positions the
company well to generate improving operating results even as
uncertainties regarding asset performance linger in certain
property sectors and regions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's could upgrade Starwood's ratings if the company: 1) further
diversifies its funding sources to include additional senior
unsecured debt, resulting in a ratio of secured debt to tangible
assets declining to not more than 45%; 2) maintains strong, stable
profitability and low credit losses; and 3) maintains a ratio of
adjusted debt to adjusted tangible equity of not more than 3.0x.
Starwood's ratings could be downgraded if the company: 1) increases
exposure to volatile funding sources or otherwise encounters
material liquidity challenges, 2) increases its adjusted debt to
adjusted tangible equity leverage to more than 4.5x, 3) rapidly
accelerates growth, or 4) suffers a sustained decline in
profitability.
The principal methodology used in this rating was Finance Companies
Methodology published in Novemeber 2019.
STEINWAY MUSICAL: Moody's Alters Outlook on B2 CFR to Stable
------------------------------------------------------------
Moody's Investors Service revised the rating outlook of Steinway
Musical Instruments, Inc. to stable from negative. The company's B2
Corporate Family Rating, B2-PD Probability of Default Rating, and
B2 $200 million outstanding senior secured term loan rating were
affirmed. The company's $110 million asset-based revolving credit
facility is not rated.
The revision to a stable outlook considers that Steinway's net
sales and EBITDA have performed well despite the challenges
presented by the coronavirus pandemic. Most recently, net sales and
EBITDA for the 3-month period ended March 31, 2021 were up about
15% and 50%, respectively. While both March 31, 2021 latest
12-month net sales and EBITDA are still below fiscal 2019 results,
Moody's projects sustained good demand for musical instruments will
continue into 2021 and 2022 with more individuals pursuing leisure
activities close to home. Online orders helped limit revenue losses
while showrooms were closed, and improving employment trends and
the reopening of showrooms as the pandemic eases are now boosting
sales. As a result, Steinway will continue to improve revenue and
EBITDA, generate positive free cash flow, and maintain moderate
leverage and very good liquidity.
The following ratings/assessments are affected by the action:
Ratings Affirmed:
Issuer: Steinway Musical Instruments, Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
GTD Senior Secured 1st Lien Term Loan B, Affirmed B2 (LGD4)
Outlook Actions:
Issuer: Steinway Musical Instruments, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Steinway's B2 CFR is supported by its strong brand recognition,
high product quality, and global revenue base. Also considered a
positive credit consideration is the company's history of
maintaining relatively modest debt-to-EBITDA leverage, at below
4.0x. For the latest 12-month period ended March 31, 2021,
debt/EBITDA on a Moody's adjusted basis was 3.2x. Proceeds from
sale of non-essential real estate assets in 1Q 2020 were used to
reduce the term loan by about $65 million with the debt repayment
helping to maintain modest leverage (debt-to-EBITDA peaked at 3.8x
in June 2020) despite the initial earnings pullback due to the
pandemic.
Key credit concerns include the highly discretionary nature of
consumer demand for the company's high-end piano products along
with the company's narrow product focus. Steinway is also
inherently exposed to event risk under hedge fund ownership, which
is the most meaningful Environmental, Social and Governance (ESG)
consideration. The company is controlled by John Paulson,
Steinway's majority shareholder, which creates event risk. Partly
mitigating this concern is management's demonstrated adherence to a
relatively conservative financial policy and long-term investment
perspective.
The coronavirus outbreak and the government measures put in place
to contain it continue to disrupt economies and credit markets
across sectors and regions. Although an economic recovery is
underway, it is tenuous, and its continuation will be closely tied
to containment of the virus. As a result, a degree of uncertainty
around Moody's forecasts remains. Moody's regards the coronavirus
outbreak as a social risk under Moody's ESG framework, given the
substantial implications for public health and safety. From a
financial policy perspective, there is always the possibility that
John Paulson, Steinway's majority shareholder, will alter
Steinway's financial policy and operate in a manner to maximize
dividend and equity value at the expense of creditors.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Steinway's ratings could be upgraded if the company demonstrates
the ability and willingness to achieve and maintain debt/EBITDA at
or below 2.0x, the operating environment continues to show signs of
a return to long-term stability, and the company generates positive
organic revenue growth with a stable to higher EBITDA margin.
Ratings could be downgraded if Steinway's liquidity deteriorates or
operating performance weakens materially. A downgrade could also
occur if the company pursues a material debt-funded acquisition or
shareholder distribution or increases and maintains debt to EBITDA
above 4.5x.
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
Steinway Musical Instruments, Inc., headquartered in New York, New
York, is one of the world's leading manufacturers of musical
instruments. The company's products include Steinway & Sons, Boston
and Essex pianos, Selmer Paris saxophones, Bach Stradivarius
trumpets, C.G. Conn French horns, King trombones, and Ludwig snare
drums. The company is owned by Paulson & Co. Inc. and generated
annual revenues of $429 million for the latest 12-month period
ended March 31, 2021.
STONEWAY CAPITAL: Seeks to Hire Lazard Freres as Investment Banker
------------------------------------------------------------------
Stoneway Capital Corporation and its affiliates seek approval from
the U.S. Bankruptcy Court for the Southern District of New York to
hire Lazard Freres & Co. LLC as investment banker.
The firm's services include:
(a) reviewing and analyzing the Debtors' business, operations
and financial projections;
(b) evaluating the Debtors' potential debt capacity in light
of its projected cash flows;
(c) assisting in the determination of a capital structure for
the Debtors;
(d) assisting in the determination of a range of values for
the Debtors on a going concern basis;
(e) advising the Debtors on tactics and strategies for
negotiating with stakeholders;
(f) rendering financial advice to the Debtors and
participating in meetings or negotiations with the stakeholders,
rating agencies or other appropriate parties in connection with any
restructuring;
(g) advising the Debtors on the timing, nature and terms of
new securities, other consideration or other inducements to be
offered pursuant to any Restructuring;
(h) advising and assisting the Debtors in evaluating any
potential financing transaction by the Debtors, and, subject to
Lazard's agreement so to act and, if requested by Lazard, to
execution of appropriate agreements, on behalf of the Debtors,
contacting potential sources of capital as the Debtors may
designate and assisting the Debtors in implementing such
Financing;
(i) assisting the Debtors in preparing materials or other
documentation within Lazard's area of expertise that is required in
connection with the negotiation or implementation of any
Transaction contemplated by the Debtors;
(j) assisting the Debtors in identifying, soliciting, and
evaluating candidates for any potential Financing or Sale
Transaction, and advising the Debtors in connection with
negotiations and aiding in the consummation of any Financing or
Sale Transaction;
(k) attending meetings of the Board of Directors of Stoneway
Capital Ltd., Inc. with respect to matters on which Lazard has been
engaged to advise under the engagement letter;
(l) providing testimony; and
(m) providing the Debtors with other financial restructuring
advice.
The firm's rates are as follows:
Monthly fee $150,000
Restructuring Fee $3,000,000
Additional Restructuring Fee. $1,500,000
The Debtors will likewise pay the firm a sale transaction fee, a
minority sale transaction fee, and a financing fee. Moreover, the
Debtors will reimburse the firm for all reasonable expenses
incurred.
Kenneth Ziman, a managing director at 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.
The firm holds office at:
Kenneth Ziman
Lazard Frères & Co. LLC
30 Rockefeller Plaza
New York, NY 10112
Phone: +1 212 632 6000
About Stoneway Capital Corp.
Stoneway Capital Corporation is a limited corporation incorporated
in New Brunswick, Canada, formed for the purpose of owning and
operating, through its Argentine subsidiaries, power generation
projects that will provide electricity to the wholesale electricity
markets in Argentina. The Argentine subsidiaries operate four
power-generating plants in Argentina that provide electricity to
the wholesale electricity market in Argentina.
Stoneway is 100% owned by GRM Energy Investment Limited.
On Oct. 8, 2020, the Company commenced proceedings under the Canada
Business Corporations Act (the "CBCA"). The Debtors were well on
the way toward closing the consensual restructuring when on Dec. 4,
2020, the Argentine Supreme Court issued a decision in an ongoing
noise discharge dispute involving one of the Generation Facilities
located in Pilar, Argentina. The Argentine Supreme Court Decision
created significant uncertainty as it overturned a decision of the
federal appeals court in San Martin, Buenos Aires.
As a result of the looming expiration of the informal standstill
arrangement, the Debtors commenced chapter 11 cases in the U.S. in
order to put the automatic stay in place, maintain the status quo
pending resolution of the various issues in Argentina, and ensure
that neither the Indenture Trustee nor the Argentine Trustee takes
any action that could be detrimental or value destructive to the
Company.
Stoneway Capital Ltd. and five related entities, including Stoneway
Capital Corp., sought Chapter 11 bankruptcy protection (Bankr.
S.D.N.Y. Case No. 21-10646) on April 7, 2021. Stoneway estimated
liabilities of $1 billion to $10 billion and assets of $500 million
to $1 billion.
Judge James L. Garrity, Jr. oversees the cases.
Shearman & Sterling, LLP and Lazard Freres & Co., LLC serve as the
Debtors' legal counsel and investment banker, respectively. Prime
Clerk LLC is the claims agent.
SUZLON ENERGY: U.S. Subsidiary Suzlon Wind Files for Liquidation
----------------------------------------------------------------
Craig Richard of WindPower Monthly reports that Indian wind OEM
Suzlon's U.S. subsidiary has filed for voluntary liquidation in an
Illinois bankruptcy court due to continued financial stress during
the coronavirus pandemic.
Its parent company does not believe the decision will have any
direct or material impact on Suzlon Energy.
Suzlon Wind Energy Corporation, USA (Sweco) -- a subsidiary of
Suzlon Energy Ltd -- filed for voluntary liquidation in the United
States Bankruptcy Court of the Northern District of Illinois.
Under Chapter 7 of the US's bankruptcy code, an administrator
gathers and sells Sweco’s nonexempt assets and then uses the
proceeds to pay its creditors.
Suzlon has nearly 3GW of wind turbines installed in the US,
according to Windpower Intelligence, the research and data division
of Windpower Monthly.
However, none of its turbines have been installed in the US since
2011.
Indian parent
Meanwhile, parent company Suzlon narrowed its net loss in both the
full financial year (1 April 31 to March) and in the fourth
quarter.
It posted a net loss of INR 7.01 billion ($94.5 million) in the
full financial year, compared with INR 26.92 billion one year
earlier. The manufacturer also recorded a net loss of INR 542.5
million in the fourth quarter, compared with INR 8.34 billion one
year earlier.
CFO Ashwani Kumar noted that this was Suzlon's first year of
operations after it restructured its debt. It had teetered on the
brink of insolvency for years beforehand.
Kumar added: "While our installations remained low, our strategic
imperatives for the year were restarting our manufacturing
facilities, ensuring continuation of our operations and maintenance
service without interruptions and fulfilling the obligations of our
debt restructuring.
"However, exponential increase in commodity prices like those of
steel has impacted our profitability significantly in India."
Suzlon did not disclose how much capacity it installed in the last
financial year of 2020.
At the end of March 2021, Suzlon had a firm order book of 817.1MW,
which it aims to install this coming year. Most of this (632.1MW)
was accumulated through India's central government auctions, while
the remainder came from state auctions (71.4MW) and corporate
customers (113.6MW).
It values this order book at INR 47.15 billion.
Earlier this month, Suzlon publicly announced a firm turbine order
for the first time since December 2018: a 252MW turbine purchase
agreement with CLP India for a wind farm in Gujarat, India.
About Suzlon Energy
Headquartered in Pune, India, Suzlon Energy Ltd (BOM:532667) --
http://www.suzlon.com/-- is engaged in the business of design,
development, manufacturing and supply of wind turbine generators
(WTGs) of a range of capacities and its components. Its operations
relate sale of WTGs and allied activities, including sale/sub-lease
of land, infrastructure development income; sale of gear boxes, and
sale of foundry and forging components. Others primarily include
power generation operations.
About Suzlon Wind Corp.
Suzlon Wind Energy Corp is a U.S. subsidiary of Suzlon Energy Ltd.
that constructs and manufactures wind energy turbines. The Company
installs, maintains, and develops wind energy in North America.
Suzlon Wind Corp. filed for Chapter 7 liquidation (Bankr. N.D. Ill.
Case No. 21-07923) on June 29, 2021. The case is handled by
Honorable Jacqueline P. Cox. David J Schwab, of Ralph, Schwab &
Schiever, Chtd, is the Debtor's counsel.
TELEMACHUS LLC: Unsecured Creditors Will Get 100% of Claims in Plan
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Telemachus, LLC, filed with the U.S. Bankruptcy Court for the
Northern District of Illinois a Chapter 11 Plan and a Disclosure
Statement on June 29, 2021.
The Debtor lost a key tenant during the COVID-19 pandemic and was
unable to find a new tenant at the same rent due to the pandemic as
well as the Jackson St. bridge closing.
Class 2 consists of the Secured claim of Wells Fargo Bank, National
Association, as Trustee for the Registered Holders of Key
Commercial. This claim is for a secured loan that is secured by the
principal place of business of the Debtor. This claim is impaired
because it alters the pre-bankruptcy contractual rights of the
secured creditor and pays less to that creditor than it would have
received if the Debtor was not in bankruptcy.
The Class 2 creditor shall retain its lien. The Debtor shall pay
graduated monthly payments to this creditor which include
principal, interest, and an escrow amount for taxes and insurance.
The payments shall be made on the following schedule:
Months 1-24: $18,400 per month
Months 25-60: $21,500 per month
Months 61-108: $26,000 per month
Months 108-120: $29,000 per month
After the 120th payment has been made the loan shall mature and
become due in full. The Debtor shall be allowed to refinance or pay
off this loan at any time without penalty. The Debtor shall be
allowed to sell this property at any time as long as the secured
claim is paid in full without penalty.
Class 3 consists of Non-priority unsecured creditors totaling
$28,129.26. This class of creditors is impaired because it is being
paid over a longer period of time than if the Debtor was not in
bankruptcy. This class of creditors shall be paid in full on the
following monthly schedule:
Month 1: $1,990.31
Months 2-18: $1,537.59
The Debtor shall receive a discharge from all Class 3 claims upon
payment in full under this Plan.
The Plan pays all unsecured creditors 100% of the amounts due to
them. Therefore, the equity security holders shall retain their
pre-bankruptcy equity security positions.
The Debtor shall be the disbursing agent and will make Plan
payments from the cash flow from its operations.
A full-text copy of the Disclosure Statement dated June 29, 2021,
is available at https://bit.ly/3xfLf0E from PacerMonitor.com at no
charge.
The Debtor is represented by:
Ben Schneider, Esq.
Schneider & Stone
8424 Skokie Blvd., Suite 200
Skokie, IL 60077
Phone: 847-933-0300
Email: ben@windycitylawgroup.com
About Telemachus LLC
Telemachus, LLC, is a single asset real estate debtor (as defined
in 11 U.S.C. Section 101(51B)). It is the owner of fee simple
title to a property located at 769 W. Jackson Blvd., Chicago,
Illi., having an appraised value of $3 million.
Telemachus filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 20-21374) on Dec.
11, 2020. The petition was signed by Marc Washor, managing member
of Baklava, LLC (owner of Debtor). At the time of filing, the
Debtor disclosed $3,226,189 in assets and $2,228,372 in
liabilities. Judge Jack B. Schmetterer oversees the case.
Schneider & Stone is the Debtor's counsel.
TENNESSEE CLEAN: Subchapter V Plan to Pay Claims From Sale Proceeds
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Tennessee Clean, LLC, filed with the U.S. Bankruptcy Court for the
Eastern District of Tennessee a Small Business Plan of
Reorganization for restructuring the debt of the debtor.
The Debtor has approximately 14 acres with 14 mobile homes located
in Spring City, Rhea County, Tennessee, with an approximate market
value of $200,000.00. The Debtor does not have any personal
property except for the mobile homes. There are no accounts
receivables or other personal property.
The Debtor has 2 priority claims. The Rhea County Trustee filed a
proof of claim for secured priority in the amount of $1,699.00. The
Tennessee Department of Revenue filed a proof of claim in the
amount of $1,058.36. The Debtor owes Simply Bank a mortgage
obligation and for the mobile home park. It is the Debtor's plan to
pay Simply Bank in from the sale of the mobile home park. The
Debtor does not have any unsecured debt except the under-secured
balance owed to Simply Bank which will be dealt with in this Plan.
A foreclosure was started by Simply Bank on the mobile home park.
The Debtor was forced to file this Chapter 11, Subchapter V to stop
that foreclosure.
Class 1 consists of the pre-petition secured claim of Simply Bank.
The claim of Simply Bank, filed as Claim No. 3, on May 12, 2021, in
the amount of $774,369.21, whose collateral is the Debtor's real
property and 14 mobile homes located at Glenn Lane and 385 Village
Drive, Spring City, Rhea County, Tennessee. The Debtor proposes
that the entire claim of Simply Bank will be fully satisfied upon
its receipt of the net proceeds from the sale of the real estate
and mobile homes. The remaining undersecured balance is
uncollectable against the Debtor and any/or all guarantors, if any,
based upon the applicable statute of limitations.
Bradley Varner is the sole member of the Debtor.
Debtor proposes to sell its only asset (real estate and mobile
homes) to satisfy the claim of Simply Bank because the under
secured balance is uncollectable against the Debtor and any/all
guarantors. The Debtor will then commence other business operations
to pay the sum of $500.00 per month to the Chapter 11, Subchapter V
Trustee who will serve as disbursing agent. The $500.00 per month
payment will commence on September 1, 2021 and will be paid until
all other claims and administrative expenses are paid in full,
including the Trustee's commission.
The Debtor anticipates that the sale of the mobile home park will
generate enough funds to pay Simply Bank and property taxes at
closing. The Debtor will have sufficient monthly funds to pay,
through the disbursing agent, the remaining claims plus any
professional fees, after commencing other business income.
A full-text copy of the Plan dated June 29, 2021, is available at
https://bit.ly/3wbO815 from PacerMonitor.com at no charge.
Attorney for the Debtor:
Richard L. Banks, Esq.
Rachel Fisher, Esq.
Richard Banks & Associates, PC
393 Broad Street NW
Cleveland, TN 37364-1515
Tel: (423) 479-4188
Fax: (423) 478-1175
Email: rbanks@rbankslawfirm.com
rfisherqueen@rbankslawfirm.com
About Tennessee Clean
Tennessee Clean, LLC filed a Chapter 11 bankruptcy petition (Bankr.
E.D. Tenn. Case No. 21-10673) on March 31, 2021, disclosing under
$1 million in both assets and liabilities. Judge Nicholas W.
Whittenburg oversees the case. The Debtor is represented by
Richard Banks & Assoiates, P.C.
THEOS FEDRO: Manager Has Conflict of Interest, Pender Capital Says
------------------------------------------------------------------
Pender Capital Asset Based Lending Fund I, LP, a secured creditor
of Theos Fedro Holdings, LLC, asked the Bankruptcy Court to dismiss
the Debtor's Chapter 11 case, or in the alternative, convert the
case to a proceeding under Chapter 7 of the Bankruptcy Code, or in
the alternative, appoint a Chapter 11 Trustee for the Debtor.
Pender Capital has sought foreclosure of the Debtor's property due
to the Debtor's failure to timely pay its fully matured loan. The
Debtor filed for bankruptcy on the same day scheduled for Pender
Capital's non-judicial foreclosure proceedings with respect to the
Debtor's three-story commercial building located at 819 Ellis
Street, in San Francisco, California, to stay foreclosure.
Before the Petition Date, the Debtor executed and delivered to
Pender Capital a Promissory Note for $3.6 million, secured by a
Deed of Trust, Assignment of Rents, Security Agreement, and Fixture
dated December 15, 2017 that was recorded in the San Francisco
County Recorder's Office on February 20, 2018 naming Pender Capital
as beneficiary. The Note has a maturity date of September 1, 2019.
The Debtor is in material default under the Note and DOT for
failing to pay the outstanding debt in full on or before the
Maturity Date. As of March 17, 2021, Pender Capital asserts a
secured claim for $4,125,607 against the Property and the rents
generated, plus all interest, fees, costs, attorney's fees and
other charges that continue to accrue.
The Property includes a parking garage that is leased to AA
Parking, Inc., a parking lot business owned by Philip Achilles, the
Debtor's managing member. The Debtor and Mr. Achilles entered into
a lease agreement with respect to the occupation and use of the
Property on January 1, 2020, with a stated monthly rental of
$20,000. Mr. Achilles uses the garage in the operation of AA
Parking where he is the sole shareholder and officer. In addition
to being a creditor in the Debtor's case, Mr. Achilles is also a
guarantor of the Debtor's obligation to Pender Capital and the
trustor, trustee, and beneficiary of a revocable trust that is the
Debtor's sole managing member.
The Debtor's Schedules included deposits and prepayments totaling
$24,525. The only other asset the Debtor valued in its Schedule is
a claim for damages against Pender Capital for $2,000,000, which is
the subject of a pending action in San Francisco Superior Court
entitled Philip Achilles, et al. v. Pender Capital, Inc., et al.,
for fraud, breach of contract, and unfair competition, among other
causes of action. Thus, the only assets other than the Property
with a reasonable probability of collection total $24,525. Based
on the schedules, the Debtor collected rents totaling $11,000 for
April 2021, while its expenses for the same time period totaled
$8,804, for a net difference of $2,196. According to the Debtor's
Statement of Financial Affairs, rental revenue for the Property
totaled $382,789 in 2019, or an average of $31,899 per month.
Jason E. Rios, Esq., at Felderstein Fitzgerald Willoughby Pascuzzi
& Rios LLP, counsel for Pender Capital, said the COVID-19 pandemic
no doubt played a large role in AA Parking's revenues, and the
Debtor has borne the burden of this reduction by accepting reduced
rent to the detriment of creditors, including Pender Capital. He
said the Debtor obtained Court approval to employ a broker to
assist in leasing the Property. The listing agreement stated a
rental amount for the Property of $36,000 monthly. Moreover,
although AA Parking has been paying reduced rent for over one year,
no lease modification or other agreement has been entered into
between the Debtor and AA Parking, Inc. setting the terms and
duration of the reduced rental payments.
Mr. Rios contended that multiple grounds exist to dismiss the
Debtor's Chapter 11 case for cause under Section 1112(b) of the
Bankruptcy Code, including continuing loss to the estate, breach of
fiduciary duty, conflicts of interest, and lack of good faith in
filing this Chapter 11 case. The Debtor has permitted AA Parking
to escape its obligations under the Lease to the tune of over
$150,000 as of the Petition Date and continuing to accrue
thereafter. The Debtor has provided no evidence of it taking any
proactive steps towards a reorganization or refinance or sale of
the Property while the estate continues to accrue legal fees.
More importantly, there is no viable possibility for the Debtor to
refinance over $5,420,462 in secured claims, particularly given the
minimal rental income generated by the Property, Mr. Rios said.
The Debtor's only potential option is to sell the Property, which
the Debtor has taken no steps to accomplish. Pender Capital
contends there is an inherent conflict of interest with Mr.
Achilles and the Debtor is not being run for the benefit of
creditors, but rather for the benefit of Mr. Achilles vis-a-vis AA
Parking, Inc. These conflicts have manifested by the Debtor’s
failure to collect market rents for the Property or market and sell
the Property for the benefit of its creditors.
In addition, there is no reasonable prospect for reorganization and
the Debtor is maintaining its Chapter 11 case merely to frustrate
Pender Capital's pursuit of its state law rights and remedies and
to benefit Mr. Achilles and his insider business. This bankruptcy
case should be dismissed to allow a secured lender to exercise its
state law rights and remedies against the Debtor. In the best
interests of creditors, the Court should dismiss the case or,
alternatively, convert the case to Chapter 7, or, alternatively,
appoint a Chapter 11 trustee so that the estate may be administered
by an independent fiduciary, Pender Capital averred.
A copy of the motion is available for free at
https://bit.ly/3jcBAUn from PacerMonitor.com.
The Court will consider the motion at a hearing on July 16, 2021 at
10:30 a.m.
Counsel for Pender Capital Asset Based Lending Fund I, LP:
Jason E. Rios, Esq.
Nicholas L. Kohlmeyer, Esq.
Felderstein Fitzgerald
Willoughby Pascuzzi & Rios LLP
500 Capitol Mall, Suite 2250
Sacramento, CA 95814
Telephone: (916) 329-7400
Facsimile: (916) 329-7435
Email: jrios@ffwplaw.com
nkohlmeyer@ffwplaw.com
About Theos Fedro Holdings
Theos Fedro Holdings, LLC, a San Francisco, Calif.-based company
that provides support services to the transportation industry,
filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Calif. Case No. 21-30202) on March 16,
2021. Philip Achilles, managing member, signed the petition.
In its petition, the Debtor disclosed $1 million to $10 million in
both assets and liabilities. Judge Dennis Montali oversees the
case. The Law Offices of Stuppi & Stuppi serves as the Debtor's
legal counsel.
Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP serves as
counsel for Pender Capital Asset Based Lending Fund I, LP,
creditor.
TTK INVESTMENTS: Unsecureds' Recovery "Unknown" in Liquidating Plan
-------------------------------------------------------------------
Management Impact LLC, d/b/a TTK Investments, filed with the U.S.
Bankruptcy Court for the District of New Jersey a Plan of
Liquidation and a corresponding Disclosure Statement dated June 29,
2021.
The Debtor is a New Jersey Limited Liability Company engaged in the
business of owning and managing 10 residential properties in
southern New Jersey.
The Allowed Administrative Claims for the Debtor's court-approved
professionals, including, (i) Kurtzman | Steady, LLC, chapter 11
counsel for the Debtor, and (ii) the Trustee, shall be paid in full
upon the Effective Date of the Plan or as otherwise agreed to by
the Debtor and the administrative claimants. To the extent any fees
are due and owing to the Bankruptcy Court Clerk's Office, such fees
shall be paid in full upon the Effective Date.
The Secured Claims of Anchor Loans, LP, as reflected in proofs of
claim # 5 through 14, shall be treated in accordance with Class 1
as follows: Anchor's aggregate secured claim in the amount of
$1,689,389.71 shall be paid upon the sale of the Properties to the
extent of the value of the Properties from the net proceeds
thereof. Any deficiency shall be classified and treated as a
general unsecured Claim.
The Secured Claims of FNA DZ, LLC FBO WSFS, as reflected in proofs
of claim # 3 through 4 in the amounts of $12,573.72 and $4,632.18,
respectively, shall be treated in accordance with Class 2 as
follows: paid in full upon the sale of the Properties which relate
to claim #s 3 and 4.
The Secured Claim of the Township of Monroe, as reflected in proof
of claim # 15 in the amount of $10,853.64, shall be treated in
accordance with Class 2 as follows: paid in full upon the sale of
the Properties which relate to claim # 15.
The Secured Claims of all real estate tax claimants shall be
treated in accordance with Class 2 as follows: paid in full upon
the sale of the Properties which relate to each such claim.
General Unsecured Claimants in the amount of $12,000.00, plus the
estimated deficiency claim of Anchor in the amount of $146,700.00,
totaling $158,700.00, will be treated in accordance with Class 3
and will receive their pro-rata share of net proceeds from the sale
of the Properties. The approximate percentage distribution to this
class of creditor is unknown at this time and will be dependent on
a number of factors, including amounts available to pay senior
Claims from the proceeds of the sale of the Properties. Any
distributions to this class of creditor shall be made on or as
reasonably practicable after the Effective Date of the Plan.
Equity Interest holder Emily K. Vu shall Retain Membership
Interest.
The Plan will be funded through the sale of the Properties.
Currently, the Properties are listed with the Court-approved
realtors, Century 21 Alliance and Soleil Sotheby's International
Realty, and are being marketed for sale. The Debtor is also
soliciting offers from potential buyers who will the buy the
Properties as a pool of assets, except for (a) 48 Prospect Drive,
Sicklerville, NJ which is under an agreement of sale for the
purchase price of $186,000.00 and expected to close on or before
the Effective Date, and (b) 16 York Terrace, Sicklerville, NJ,
which continues to be marketed for sale for $195,000.00.
A full-text copy of the Disclosure Statement dated June 29, 2021,
is available at https://bit.ly/2UWlmoe from PacerMonitor.com at no
charge.
Attorneys for the Debtor:
Maureen P. Steady, Esq.
Kurtzman Steady, LLC
38 N. Haddon Avenue
Haddonfield, NJ 08033
Tel: (856) 428-1060
Fax: (609) 482-8011
Email: steady@kurtzmansteady.com
About TTK Investments
TTK Investment, LLC is primarily engaged in renting and leasing
real estate properties. It is the owner of fee simple titles to 10
properties in New Jersey having a total comparable sale value of
$1.92 million.
TTK Investment sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D.N.J. Case No. 21-12659) on March 31, 2021. Emily K.
Vu, sole member, signed the petition. In its petition, the Debtor
disclosed assets of $1,924,380 and liabilities of $1,782,755.
Judge Jerrold N. Poslusny, Jr. oversees the case.
Kurtzman Steady, LLC is the Debtor's legal counsel.
U-HAUL CO: Unsecured Creditors to Get Share of $2.5MM Dividend Fund
-------------------------------------------------------------------
U-Haul Co. of West Virginia filed with the U.S. Bankruptcy Court
for the Southern District of West Virginia a Disclosure Statement
in support of Plan of Reorganization dated June 29, 2021.
The Debtor believes that restructuring the company through a
chapter 11 reorganization is in the best interests of creditors,
and is the best alternative to ensure that the Debtor will be able
to continue to serve customers in the Debtor's territory as it has
since 1970. The filing will preserve jobs for 107 families in the
State of West Virginia, the 123 dealers and their families, and
will preserve the Debtor's direct and indirect positive impact on
the community in the State of West Virginia.
The Plan is a new-value "pot" plan that provides for the auction
sale of the New Equity in the Reorganized Debtor to U-Haul
International, Inc. ("UHI"), or another party that submits a higher
and better bid. Based on the Stalking Horse Bid submitted by UHI,
the Dividend Fund would be $2,500,000. The Dividend Fund is and
shall be the sole source of payments under the Plan for: (1)
payment of Allowed Administrative Expense Claims, Allowed Priority
Claims, Allowed Class 1 Secured Tax Claims, Allowed Class 5 General
Unsecured Claims, and subordinated Allowed Class 6 Penalty Claims
against the Debtor, and (2) all post-petition fees and expenses
incurred by the Reorganized Debtor in the Claims administration
process.
Based on the Debtor's estimates, the Dividend Fund should be
sufficient to pay all Allowed Administrative Expense Claims and
Allowed Priority Claims in full, and leave a remaining balance of
approximately $1,800,000 to pay fees and expenses incurred in the
Claims administration process and to make pro rata payments to
holders of Allowed General Unsecured Claims. Under the Plan, UHI
and the Debtor have agreed to settle UHI's $118,131,303 unsecured
claim against the Debtor in exchange for a release of any Estate
Claims that may exist against UHI as of the Effective Date.
The Plan separately classifies and subordinates any claims for
punitive damages or penalty claims asserted against the Debtor in
the two pending lawsuits. Punitive damages or penalty claims only
will be paid, if at all, after such claims have been Allowed by a
Final Order, and then only on a pro rata basis to the extent that
funds remain in the Dividend Fund after all Allowed General
Unsecured Claims have been paid in full.
The Plan will treat claims as follows:
* Class 4 consists of any Secured Claims against the Debtor
other than the Secured Claims in classes 1-3. Each Other Secured
Claim will be placed in a separate subclass under Class 4 of the
Plan. Every holder of a Class 4 Other Secured Claim will retain its
Lien in its prepetition Collateral. The Allowed amount of each
Class 3 Other Secured Claim will be paid in full with interest at
the rate of 8% per annum through 60 equal monthly installments of
principal and interest. Class 4 Claims are impaired under the Plan,
and the holders are entitled to vote to accept or reject the Plan.
* Class 5 consists of all General Unsecured Claims against the
Debtor. Holders of Allowed Class 5 General Unsecured Claims will be
paid, up to the Allowed amount of each such Claim, a pro rata share
of the remaining Dividend Fund after: (i) all post petition fees
and expenses incurred by the Reorganized Debtor in the Claim
administration process have been paid in full, and (ii) all Allowed
Administrative Expense Claims and Allowed Priority Claims, and
(iii) all Allowed Class 1 Secured Tax Claims have been paid in
full. The Reorganized Debtor will make distributions to holders of
Allowed Class 5 General Unsecured Claims no less often than
quarterly. Class 5 Claims are impaired under the Plan, and the
holders are entitled to vote to accept or reject the Plan.
* Class 6 consists of all Penalty Claims against the Debtor.
The holders of Allowed Penalty Claims shall not receive or retain
any property under this Plan on account of such Claims, unless and
until all Allowed Class 5 General Unsecured Claims have been paid
in full. To the extent that funds remain in the Dividend Fund after
all Allowed Class 5 General Unsecured Claims have been paid in
full, holders of Allowed Class Penalty Claims shall receive a pro
rata share of the remaining amount of the Dividend Fund. Class 6
Claims are impaired under the Plan, and the holders are entitled to
vote to accept or reject the Plan.
* Class 7 consists of UHI's Unsecured Claim against the
Debtor. In full and final settlement and satisfaction of the
unsecured claim, the Debtor on behald of itself and its estate,
fully and forever settles, waives and releases all estate claims
against UHI that may exist as of the effective date. The Class 7
Claims is impaired under the Plan, and the holder is entitled to
vote to accept or reject the Plan.
* Class 8 consists of the Equity Security Interests in the
Debtor. All Class 8 Equity Security Interests shall be cancelled on
the Effective Date and the holders of such Interests will not
receive or retain any property under the Plan on account of such
Interests. Holders of Class 8 Equity Security Interests are deemed
to reject the Plan and are not entitled to vote to accept or reject
this Plan.
The Dividend Fund is and shall be the sole source of payments under
the Plan for: (1) payment of Allowed Administrative Expense Claims,
Allowed Priority Claims, Allowed Class 1 Secured Tax Claims,
Allowed Class 5 General Unsecured Claims, and Allowed Class 6
Penalty Claims against the Debtor, and (2) all post petition fees
and expenses incurred by the Reorganized Debtor in the Claims
administration process. The Reorganized Debtor shall hold the
Dividend Fund, and make payments to holders of Allowed Claims in
accordance with the terms of the Plan
A full-text copy of the Disclosure Statement dated June 29, 2021,
is available at https://bit.ly/3jA4U7g from PacerMonitor.com at no
charge.
Counsel for Debtor:
James W. Lane, Esq.
Eric M. Johnson, Esq.
Emily L. Ford, Esq.
Flaherty Sensabaugh Bonasso, PLLC
200 Capitol Street
Charelston, WV 25338
Tel: (304) 345-0200
Email: jlane@flahertylegal.com
About U-Haul Co. of West Virginia
St Albans, W.Va.-based U-Haul Co. of West Virginia sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.W.
Va. Case No. 21-20140) on June 16, 2021. At the time of the
filing, the Debtor disclosed total assets of $1,056,439 and total
liabilities of $118,626,327. Judge B. Mckay Mignault oversees the
case. Flaherty Sensabaugh Bonasso, PLLC and Brown Edwards &
Company, LLP serve as the Debtor's legal counsel and financial
advisor, respectively.
US ANESTHESIA: S&P Affirms 'B' ICR on Strong Performance
--------------------------------------------------------
S&P Global Ratings revised its outlook on U.S. Anesthesia Partners
Holdings Inc. (USAP) to stable from negative and affirmed its 'B'
issuer rating. S&P also affirmed its 'B' and 'CCC+' issue-level
ratings on the company's first- and second-lien debt,
respectively.
S&P said, "The stable outlook reflects our expectation that the
company will continue to recover from pandemic-related headwinds
and will generate significant growth and sustain margins of about
12%-13%. We expect leverage to decrease to below 8x by the end of
2021 and to remain in the 7x-8x range for the next few years."
USAP delivered stronger-than-expected performance in 2020 and the
first quarter of 2021, despite the global pandemic and
weather-related disruptions in Texas. Although measures to contain
the spread of COVID-19 pushed medical procedure volumes down,
mainly in the second quarter of 2020, USAP's revenues declined only
5% from 2019, compared to our early-pandemic estimate of
low-teens-percent decline. As procedures volume began to return in
the second half of 2020, they tended to be of higher complexity,
generating higher revenue per procedure. This mitigated much of the
volume decline.
In the first quarter of 2021 the company reported 2.4% revenue
growth versus the first quarter 2020, outperforming its budget and
our prior estimates despite the storm disruption in Texas in
February.
In addition, the impact of forcibly moving out-of-network with UHC
in Texas, Washington, and Colorado in the first half of 2020 was
lower than S&P previously estimated. The company offset the
reduction in reimbursement through patient advocacy, arbitrations
vis-a-vis UHC and revenue cycle management improvements.
The company's S&P Global Ratings-adjusted EBITDA margin in 2020
(excluding $30.9 million received from the CARES Act in 2020) was
10.8%, outperforming our previous forecast of 9%-10%. S&P expects
the margin to continue to increase to the 12%-13% range in 2021 as
business continues to return to normal, possibly modestly above
pre-pandemic levels, due to the benefits of the company's
cost-saving initiatives (i.e., reduction in general and
administration expenses, process automation).
S&P said, "We project revenue to grow in the mid-single-digit
percent area for 2021 and high-single-digit percent in 2022. We
believe that as the recovery from pandemic continues and procedure
volumes normalize, revenue in 2021 will exceed 2019 levels. We
believe the company will resume its merger and acquisition (M&A)
activity, possibly contributing to even larger revenue growth in
2022.
"We project solid free cash flow and leverage to fall below 8x in
2021 and 2022.We estimate free cash flow at or above $100 million
in 2021 and 2022. We assume this cash will fund the vast majority
of the company's business development activity. We do not forecast
a large, transformative acquisition transaction.
"The stable outlook reflects our expectation that the company will
continue to recover from pandemic-related headwinds and will
generate significant growth and sustain margins of about 12%-13%.
We expect leverage to decrease to below 8x by the end of 2021 and
to remain in the 7x-8x range in the next few years.
"We could lower our rating if margins declined by about 200 basis
points (bps), most likely due to difficulties with integrating
acquisitions and managing receivables. Under this scenario, we
would expect leverage to remain above 10x or discretional cash flow
to debt to decline to under 2% per year.
"While unlikely at this time, we could raise our rating if it
reduced leverage below 5x. We view this as unlikely because it
would require the company to prioritize debt repayment over its
growth and shareholder returns."
VAMCO SHEET: Seeks to Hire Leotta and Associates as Accountant
--------------------------------------------------------------
Vamco Sheet Metals, Inc. seeks approval from the U.S. Bankruptcy
Court for the Eastern District of New York to employ Leotta and
Associates CPA LLC as its accountant.
The firm will render these services:
a) gather and verify all pertinent information required to
compile and prepare monthly operating reports; and
b) prepare monthly operating reports for the debtor in
Bankruptcy Case No. 1-21-40385-jmm.
The preparation of operating reports, reviewing of bank statements,
consulting and reviewing of all Debtor's financial documents will
be billed at rate of $500 per report.
Leotta and Associates does not hold or represent an adverse
interest to the estate, and is a disinterested person, as that term
is defined in 11 U. S. C. Sec. 101(14), according to court
filings.
The firm can be reached through:
Albert S. Leotta, CPA
Leotta and Associates CPA LLC
100 Dutch Hill Rd, Suite 260
Orangeburg, NY 10962
Phone: (845) 627-8281
Fax: (845) 623-1326
Email: aleotta@leottacpa.com
About Vamco Sheet Metals
Jamaica, N.Y.-based Vamco Sheet Metals, Inc. filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
E.D.N.Y. Case No. 21-40385) on Feb. 18, 2021. Joyce Vettorino,
president, signed the petition. At the time of the filing, the
Debtor disclosed $1,099,467 in total assets and $3,103,368 in
total
liabilities.
Judge Jil Mazer-Marino oversees the case.
The Debtor tapped the Law Offices of Alla Kachan, PC as legal
counsel and Terrence O'Connor, PC and Edmond R. Shinn, Esq. LTD. as
special counsel.
VANTAGE SPECIALTY: Moody's Alters Outlook on Caa1 CFR to Stable
---------------------------------------------------------------
Moody's Investors Service has affirmed Vantage Specialty Chemicals,
Inc.'s Caa1 Corporate Family Rating, Caa1-PD Probability of Default
Rating, Caa1 first lien senior secured bank credit facility ratings
and Caa3 senior secured second lien term loan rating. The outlook
is revised to stable from negative.
"The outlook revision reflects expectations that Vantage's
improving financial performance will gradually restore its credit
metrics during the year, but remain below levels that would support
an upgrade," said Domenick R. Fumai, Moody's Vice President and
lead analyst for Vantage Specialty Chemicals, Inc.
Affirmations:
Issuer: Vantage Specialty Chemicals, Inc.
Corporate Family Rating, Affirmed Caa1
Probability of Default Rating, Affirmed Caa1-PD
Gtd Senior Secured Revolving Credit Facility, Affirmed Caa1
(LGD3)
Gtd Senior Secured 1st Lien Term Loan, Affirmed Caa1 (LGD3)
Gtd. Senior Secured 2nd Lien Bank Credit Facility, Affirmed Caa3
(LGD6 from LGD5)
Outlook Actions:
Issuer: Vantage Specialty Chemicals, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
The affirmation of the Caa1 CFR and outlook revision reflects
expectations that credit metrics have stabilized and should
moderately improve during the year thus reducing the risk of
further downgrades. Vantage's Debt/EBITDA, including Moody's
standard adjustments, measures 9.2x as of March 31, 2021, and
although Moody's forecasts leverage will decrease in 2021 towards
low 8x, it remains elevated and is more reflective of the "Caa"
rating category. The rating also factors the significant amount of
debt on the balance sheet due to several debt-financed acquisitions
over the last few years, lack of EBITDA growth, weak cash flow
generation, and small asset base relative to the amount of
outstanding debt.
Vantage's rating is supported by the company's established market
positions in oleochemicals and their expanded specialty derivatives
portfolio, which have a wide range of applications, including
personal care, food, consumer products and industrial specialties.
Adjusted EBITDA margins remain in the low-to-mid-teens thanks to
the increasing contributions from specialty derivatives, which have
higher margins than basic oleochemicals such as fatty acids and
glycerine. An additional benefit incorporated in Vantage's credit
profile is the company's large, diversified customer base and
exposure to products used in food processing and applications for
pharmaceutical and personal care products, which are relatively
non-cyclical and more stable end markets.
During the first quarter of 2021, Vantage experienced increased
operational challenges due to supply chain disruptions caused by
Winter Storm Uri as well as severe weather in the Midwest which
deferred volumes and increased costs resulting in lower fixed cost
absorption causing gross profits and EBITDA to decline despite
favorable product mix; however, Moody's expects volume growth,
further pricing gains and favorable mix to drive revenue and EBITDA
growth for the remainder of 2021 as some of the company's
industrial end markets such as oil and gas, lubricants and
metalworking as well as food service that have been impacted by the
pandemic recover. Moody's further assumes that Vantage will produce
modest free cash flow of approximately $14 million in 2021.
Nonetheless, the lack of material free cash flow generation is
expected to limit financial flexibility and debt reduction. While
Moody's does not anticipate any problems refinancing the revolving
credit facility once it becomes current this year, expectations for
modest revenue and EBITDA growth over the next several years,
elevated leverage and limited free cash flow generation will
increase refinancing risk as the maturity of the first lien term
loan approaches in 2024.
The stable outlook assumes that Vantage's financial and operational
performance will improve in 2021 as volumes, revenues and EBITDA
grow because of the economic recovery and that the company does not
face any challenges refinancing its revolving credit facility.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would likely consider a downgrade if there is a further
significant deterioration in EBITDA compared to Moody's base case
scenario, free cash flow becomes meaningfully negative on a
sustained basis, if liquidity falls below $50 million or if the
company makes a debt-financed acquisition or distribution to its
sponsor. A negative rating action is also likely if the company is
unable to refinance or demonstrate sufficient progress towards
refinancing its $75 million revolving credit facility, which
becomes current in October 2021. Moody's would consider an upgrade
if financial leverage, including Moody's standard adjustments, is
sustained below 7.5x, balance sheet debt is materially reduced, the
company experiences substantial revenue growth and free cash flow
generation, and the private equity sponsor demonstrates a
commitment to more conservative financial policies.
ESG CONSIDERATIONS
Moody's also evaluates environmental, social and governance factors
in Vantage's rating. As a specialty chemicals company, Moody's
views Vantage as having high environmental risk related to its
manufacturing sites, though the company does not currently have any
significant environmental litigation or claims. Vantage holds a
number of sustainable certifications that reflect management's
commitment to health, safety and the environment. Social risk is
characterized as somewhat below-average as a number of raw
materials used are derived from natural products such as almond,
jojoba, palm oil and animal fats, which are natural and renewable.
Vantage is committed to efficient use of water in irrigation, and
farming practices that avoid land erosion. Governance risks are
elevated due to private equity ownership by H.I.G. Capital, which
includes a board of directors with majority representation by
members affiliated with the sponsor and reduced financial
disclosure requirements as a private company. Vantage also has high
financial leverage compared to most public companies.
Moody's expects Vantage to have adequate liquidity over the next 12
months with available cash on the balance sheet, minimal free cash
flow generation and access to the revolving credit facility. As of
March 31, 2021, the company had roughly $27 million of cash and $59
million of availability under its revolving credit facility.
Vantage's debt capital is comprised of a $633 million first lien
senior secured term loan ($613 million outstanding as of March 31,
2021) due 2024 and $150 million senior secured second lien term
loan due 2025. The company also maintains a rated $75 million first
lien revolving credit facility due 2022. The Caa1 rating on the
first lien credit facilities benefits from the security of
substantially all assets of the company on a first priority basis.
The revolving credit facility contains a springing first lien net
leverage covenant, which is set at 7.5x once utilization exceeds
35%. The company is in compliance with the covenant as of March 31,
2021, and Moody's does not anticipate that Vantage will breach the
covenant over the next 12 months. The $150 million second lien term
loan, rated Caa3, reflects its effective subordination to first
lien debt in the capital structure.
The principal methodology used in these ratings was Chemical
Industry published in March 2019.
Vantage Specialty Chemicals, Inc. based in Chicago, Illinois, is a
privately-held company that focuses on natural ingredient products
including those derived from animal fat and vegetable oil. The
company operates through two main complementary business segments,
Oleochemicals and Specialty Derivatives, and produces more than
2,000 products for over 3,500 customers in over 50 countries. In
October 2017, H.I.G Capital acquired the majority equity stake in
Vantage from its previous owner, The Jordan Company. Vantage
reported revenue of $661 million in FY 2020.
VASCULAR ACCESS: Trustee Submits Liquidating Plan
-------------------------------------------------
Stephen V. Falanga, Chapter 11 Trustee of the Bankruptcy Estate of
Vascular Access Centers, L.P., submitted a Liquidating Plan for the
Debtor's estate.
This is a Liquidating Plan. The Trustee proposes to sell all or
substantially all of the remaining assets of the Debtor and to
liquidate any claims held by the Debtor against third parties in
order to winddown the affairs of the Debtor and make payments under
the Plan.
The Plan contemplates distributions being made pursuant to a
waterfall priority scheme in accordance with the Bankruptcy Code. T
hus, the recoveries for each class listed in this chart depend
entirely on the extent to which classes senior to them are
satisfied and the success of recoveries with respect to the
liquidation of the Debtor's remaining assets and pursuit of claims
against third parties.
The Plan proposes to treat claims and interests as follows:
* Class 3 - DOJ Settlement Claim. Each Holder of Allowed DOJ
Settlement Claim that is not assumed by a Purchaser shall receive
the payments from those Purchased Assets approved by the Bankruptcy
Court pursuant to prior Orders of the Bankruptcy Court under 11
U.S.C. Sec. 363 and its Pro Rata share of the Distributable
Proceeds pursuant to the Waterfall Recovery.
* Class 4 - General Unsecured Claims. Each Holder of Allowed
General Unsecured Claim that is not assumed by a Purchaser shall
receive its Pro Rata share of the Distributable Proceeds, if any,
pursuant to the Waterfall Recovery.
* Class 5 - Intercompany Claims. Each Holder of Allowed
Intercompany Claim, will either be Reinstated if the Allowed
Intercompany Claim is assumed by a Purchaser pursuant to the
Restructuring Transactions Documentation or each Holder of Allowed
Intercompany Claim that is not assumed by a Purchaser shall receive
its Pro Rata share of the Distributable Proceeds, if any, pursuant
to the Waterfall Recovery.
* Class 6 - Section 510 Claims. Each Holder of Allowed Section
510 Claim shall receive its Pro Rata share of the Distributable
Proceeds, if any, pursuant to the Waterfall Recovery.
* Class 7 - Debtor Interests. Each Holder of Allowed Class 8
Debtor Interests shall receive its Pro Rata share of the
Distributable Proceeds, if any, pursuant to the Waterfall Recovery.
This Plan provides for the disposition of the remaining assets of
the Debtor and the distribution of the Distributable Proceeds as
part of the orderly wind-down of the Debtor. Cash on hand,
borrowings under the Post-Petition Senior Secured Credit Agreement,
the Distributable Proceeds, if any, proceeds from the Retained
Assets, the Wind-Down Amount, the Debtor's rights under the
Restructuring Transactions Documentation, payments made directly by
a Purchaser on account of any Assumed Liabilities under the
Restructuring Transactions Documentation, payments of Cure Costs
made by a Purchaser pursuant to sections 365 or 1123 of the
Bankruptcy Code, the return of any utility deposits as set forth in
the Utility Orders, and all Causes of Action not previously
settled, released, or exculpated under the Plan, if any, shall be
used to fund the distributions to Holders of Allowed Claims against
the Debtor in accordance with the treatment of such Claims and
subject to the terms provided herein.
Counsel for Stephen V. Falanga:
Peter J. Pizzi
Christopher M. Hemrick
WALSH PIZZI O'REILLY FALANGA LLP
Center Square, East Tower
1500 Market Street, 12th Floor
Philadelphia, PA 19102
Tel: 973-757.1100
Fax: 973.757.1090
E-mail: ppizzi@walsh.law
chemrick@walsh.law
A copy of the Disclosure Statement is available at
https://bit.ly/2UDUxFa from PacerMonitor.com.
About Vascular Access Centers
Vascular Access Centers -- https://www.vascularaccesscenters.com/
-- provides comprehensive dialysis access maintenance including
thrombectomy and thrombolysis, fistulagrams, fistula maturation
procedures, vessel mapping, central venous occlusion treatment and
complete catheter services. Its centers offer an alternative
setting for a wide spectrum of vascular interventional procedures,
including central venous access for oncology, nutritional and
medication delivery, venous insufficiency (including venous ulcer
and non-healing ulcer treatments), peripheral arterial disease
(PAD), limb salvage, uterine fibroid embolization and pain
management.
On Nov. 12, 2019, an involuntary Chapter 11 petition was filed
against Vascular Access Centers (Bankr. E.D. Pa. Case Number.
19-17117). The petition was filed by creditors Philadelphia
Vascular Institute, LLC, Metter & Company and Crestwood Associates,
LLC. David Smith, Esq., at Smith Kane Holman, LLC, is the
petitioners' counsel.
On Nov. 13, 2019, the Debtor consented to the relief sought under
Chapter 11.
Judge Ashely M. Chan is the presiding judge.
The Debtor tapped Dilworth Paxson LLP as its legal counsel.
VERNON 4540: CSC, JSMB Join as Plan Proponents
----------------------------------------------
Creditors of debtor Vernon 4540 Realty, LLC, have filed an Amended
Plan for the Debtor.
45-50 Vernon LP previously filed the Plan. Creditors CSC 4540, LLC
and JSMB 4540 LLC join 45-50 Vernon LP as the plan proponents of
the Amended Plan.
The Debtor's Schedules list the Brownfield Tangible Property Credit
Share as an asset of the Debtor. The Debtor's Managing Member,
Brent Carrier, believes that this asset is potentially worth $10
million to the Estate. For the reasons discussed in Article I,
Section C, below, and as evidenced by the Liquidation Analysis
prepared by FTI Consulting, which is attached to this Amended Plan
as Exhibit 1, the Plan Proponents believe recovery of this asset is
highly speculative, with conditions precedent outside Debtor's
control, and as such there is no value to the Brownfield Tangible
Property Credit Share. But if there is, this Amended Plan provides
for the distribution of any recovery from this potential asset to
the creditors of this Estate and, if there is a surplus after
payment of all Allowed Claims at par plus interest at the Federal
Judgment Rate, for a distribution of this surplus to 85% to the
Plan Proponents and 15% the Holders of Liquidating Trust Class B
Interests.
Although a number of claims were scheduled by the Debtor, all but
one of the scheduled claims -- the Carrier Claim, a $1,500,000
unsecured claim of the Debtor's Manager -- were filed as
contingent, unliquidated, or disputed. No basis was provided in
the Schedules for the Carrier Claim. Brent Carrier has stated on
the record that the Carrier Claim is a salary and performance claim
for services rendered by him to the Debtor. Based on the lack of
any evidentiary support for this claim in the Debtor's Schedules or
otherwise, the Plan Proponents will be filing an objection to the
Carrier Claim to be heard in conjunction with the Confirmation
Hearing. The Plan Proponents have obtained an order from the Court
to take the Debtor's and Brent Carrier's depositions and obtain
documents under Bankruptcy Rule 2004 to determine if the Carrier
Claim and certain other payments made to Brent Carrier by the
Debtor have any validity.
Other than the Carrier Claim, the only Claim scheduled without any
objection by the Debtor, all creditors were required to file a
proof of claim on or before the Bar Dates order to be eligible to
receive a Distribution from this Estate. As of the Bar Dates, a
total of 8 claims were filed against the Debtor:
i. Four Unsecured Claims were filed by the Plan Proponents and
JSMB MM. These Claims were filed as unliquidated, but are now
estimated by the Plan Proponents to be obligations of the Debtor in
the amounts of: (a) creditor CSC: no less than $2,521,786; (b)
creditor Vernon LP: no less than $22,521,558; and (c) creditor
JSMB: no less than $29,475. The Claim filed by JSMB MM remains
unliquidated at this time and will be withdrawn.
ii. One Unsecured Claim was filed by former counsel to the
Debtor in the amount of $85,474.50.
iii. One Unsecured Claim was filed on account of a judgment
obtained against the Debtor in the amount of $216,589.96. This
Claim is now owned by an affiliate of the Plan Proponents and for
the avoidance of doubt, with respect to distributions under this
Amended Plan, shall not be considered to be Unsecured Claims of
Plan Proponents.
iv. One Unsecured Claim was filed by the Internal Revenue
Service in the amount of $23,247.13.
v. One Claim was filed by the New York State Department of
Taxation and Finance in the secured amount of $3,137.56, the
priority amount of $34.10, and the non-priority unsecured amount of
$600.
Consequently, the total amount of Unsecured Claims filed or that
the Plan Proponents believe will be Allowed against the Debtor is
approximately $25.4 million (not including the Carrier Claim). In
addition, there is $3,171.66 in secured and Priority Claims.
However, other than the Claim of Brent Carrier and the Plan
Proponents, the total amount of Unsecured Claims asserted is
$325,911.59.
Under this Amended Plan, in exchange for the transfer of all
assets, Rights of Action, claims, and all property of the Estate as
defined in Section 541 of the Bankruptcy Code, other than the
Liquidation Trust Assets—which are to be distributed by the
Liquidating Trustee in accordance with the Waterfall—to 45-50
Vernon LP on the Effective Date, 45-50 Vernon LP will provide the
Liquidating Trustee with the Funding Commitment. This will create
what is commonly known as a "pot plan." The Plan Proponents believe
that funding this "pot" will provide sufficient liquidity to enable
the Liquidating Trustee to make the First Distribution. 45-50
Vernon LP will also provide funding for the Examiner and the
Liquidating Trustee as described below.
In addition, in the event, for the reasons described below, that
the Funding Commitment is not sufficient to pay all Allowed
Unsecured Claims in full, all Allowed Unsecured Creditors will
share in the recovery from the Brownfield Tax Credit -- estimated
to be approximately $1.9 million -- for any deficiency in payment
from the Funding Commitment. This will, the Plan Proponents
believe, result in full payment of all Allowed Unsecured Claims.
The Funding Commitment of $630,000 will be sufficient to:
(i) pay the following Allowed claims in full on or shortly after
the Effective Date of the Amended Plan:
a. Allowed Secured Claims in the estimated amount of
$3,171.66,
b. Allowed Administrative Claims as follows:
i. Debtor's counsel including fees to be incurred by
Debtor's counsel through the Effective Date, estimated to be
$50,000.
ii. statutory fees and expenses of the United States
Trustee in the estimated amount of approximately $5,000;
iii. the Examiner and her counsel through the Effective
Date in the estimated amount of $75,000.
c. Allowed Priority Claims in the estimated amount of $34.10
(ii) After payment of the amounts above, the balance of the
Funding Commitment, estimated to be approximately $496,794 will pay
all Allowed Unsecured Claims their Pro Rata Share of each
creditor's Allowed Claim (the Plan Proponents are deferring
distribution on account of their Allowed Claims and waiving any
distribution on account of their Claims from the Funding
Commitment.) In connection with this payment, the following
information is critical:
a. The Plan Proponents will be filing an objection to the
Carrier Claim shortly after the filing of this Amended Plan.
b. If the Carrier Claim is ultimately disallowed in full by
the Bankruptcy Court, the Funding Commitment is sufficient to pay
all Allowed Unsecured Claims in full and there will be funds
remaining from the Funding Commitment that will be returned to
45-50 Vernon LP, used to compensate the Liquidating Trustee and the
continuing work of the Examiner, if necessary, at the sole
discretion of 45-50 Vernon LP.
c. If the Carrier Claim is ultimately allowed in any amount
equal to, or less than approximately $170,916.75 all Allowed
Unsecured Claims will be paid in full.
d. If the Carrier Claim is allowed in full, each Allowed
Unsecured Claim will receive a 27.21% distribution on its Allowed
Unsecured Claim.
e. Accordingly, the potential range of recovery for payment
to Holders of Allowed Unsecured if the Carrier Claim is determined
to be between $1,500,000 and $175,916, will be between 27.21% and
100%, respectively.
f. By way of example, if the Carrier Claim is determined to
be Allowed in the amount of $500,000, then Holders of Allowed
Unsecured Claims including Carrier shall receive 60% distribution
from the Funding Commitment.
g. In its Schedule G, the Debtor lists two executory
contracts: CRE Consulting Agreement dated Nov. 15, 2013, and
Limited Liability Company Agreement dated Nov. 15, 2013. The Plan
Proponents do not know what these are, but will reject both
contracts under the Amended Plan. The counterparties to these
contracts will have 30 days after the Effective Date to file claims
arising from the rejection. These claims, if filed, are treated as
Unsecured Claims. The Plan Proponents cannot quantify, at this
time, the possible amount of any such Rejection Claim.
As stated, in the event, and only in the event, that the Funding
Commitment is not sufficient to pay all Allowed Unsecured Claims in
full, Holders of Allowed Unsecured Claims, will receive, in
addition to the Initial Distribution additional distributions from
the Liquidating Trust Assets (which include the proceeds of the
Brownfield Tax Credit and the Brownfield Tangible Property Credit
Share) to be made by the Liquidating Trustee in accordance with the
Waterfall as follows:
From the Second Distribution:
-- First, pro rata to
a. to the Allowed fees and expenses of the Examiner, to the
extent that that such fees and expenses were not paid for services
rendered through the Effective Date, in full from the Funding
Commitment;
b. all Statutory Fees to the extent that that the Statutory
Fees were not paid in full from the Funding Commitment;
c. to the Allowed fees and expenses of the Debtor's Bankruptcy
Court approved and retained professionals, to the extent that that
such fees and expenses were not paid for services rendered through
the Effective Date, in full from the Funding Commitment;
d. all fees and expenses of the Liquidating Trustee and the
Liquidating Trustee's counsel or other professionals—these fees
and expenses will be incurred post-Effective Date and are not
subject to Court review or approval; they will, however be
disclosed in the Plan Supplement;
-- Second, reimbursement of 75% of the amounts actually paid from
the Funding Commitment—this is an arbitrary number chosen by the
Plan Proponents to partially repay the Funding Commitment and to
facilitate a partial or full payment for all Allowed Claims upon
the Effective Date without waiting for or taking the risk that
Brownfield Tax Credit will not be realized, it is not an offset,
satisfaction, or deduction from the Allowed Claims of the Plan
Proponents;
-- Third, to the extent the First Distribution did not pay all
Allowed Unsecured Claims (including, without limitation, the
Allowed Unsecured Claims owned by affiliates of Plan Proponents,
but not the Allowed Unsecured Claims of the Plan Proponents) in
full, then to the Holders of Allowed Unsecured Claims;
-- Fourth, reimbursement of the remaining 25% of the amounts
actually paid from the Funding Commitment to the Plan Proponents
(for the avoidance of doubt, this payment shall not be an offset,
deduction, or satisfaction of the Allowed Claims of the Plan
Proponents);
-- Fifth, payment in full of the Allowed Unsecured Claims of the
Plan Proponents;
-- Sixth, if there are any remaining proceeds from the Brownfield
Tax Credit, then interest shall be paid at the Federal Judgement
Rate to all Holders of Allowed Claims; and finally
-- Seventh, any remaining proceeds shall be distributed 100% to
the Holders of Liquidating Trust Class B Interests.
From the Third Distribution:
-- Eighth, in the event that the Liquidating Trust receives the
Brownfield Tangible Property Credit Share, then to the extent that
all Allowed Claims have not been paid in full with interest from
the Funding Commitment and the Second Distribution, then
a. first, all Holders of Allowed Claims shall receive their
Pro Rata Share of the proceeds of the Brownfield Tangible Property
Credit Share including interest on their Allowed Claims at the
Federal Judgment Rate and then,
b. second, 45-50 Vernon LP shall be repaid in full for the
Funding Commitment and then,
c. third, any surplus shall be distributed 85% to the Plan
Proponents and 15% to the Holders of Liquidating Trust Class B
Interests.
The Plan Proponents seek confirmation of the Amended Plan at a
hearing scheduled on July 28, 2021 at 10 a.m. ET before the
Honorable Robert D. Drain, United States Bankruptcy Judge, United
States Bankruptcy Court for the Southern District of New York, 300
Quarropas Street White Plains, NY 10601-4140.
The Bankruptcy Court has established July 21, 2021, at 4 p.m. ET,
as the deadline to object to confirmation of the Amended Plan.
The deadline to vote on the Plan is July 21, 2021 at 4 p.m. ET.
Counsel to Creditors and Plan Proponents:
Joseph T. Moldovan
Edward P. Gilbert
David J. Kozlowski
Morrison Cohen LLP
909 Third Avenue
New York, NY 10022
Tel: 212-735-8600
Fax: 212-735-8708
E-mail: jmoldovan@morrisoncohen.com
egilbert@morrisoncohen.com
dkozlowski@morrisoncohen.com
A copy of the Disclosure Statement is available at
https://bit.ly/35NiE6G from PacerMonitor.com.
About Vernon 4540 Realty
Vernon 4540 Realty, LLC filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No.
20-22919) on Aug. 5, 2020. Brent Carrier, managing member, signed
the petition. At the time of the filing, the Debtor had between
$10 million and $50 million in both assets and liabilities.
Judge Robert D. Drain presides over the case. Bruce H. Bronson,
Esq., at Bronson Law Office, P.C. serves as the Debtor's legal
counsel in the case.
On March 29, 2021, the court appointed Angela Orlandella as
examiner. The examiner is represented by Barclay Damon, LLP.
VICTORIA'S SECRET: Moody's Rates New $500MM Unsecured Notes 'B1'
----------------------------------------------------------------
Moody's Investors Service assigned an B1 rating to Victoria's
Secret & Co.'s ("VS'") proposed offering of $500 million senior
unsecured notes due in 2029. The net proceeds from the offering are
expected to be used to partially fund a cash payment of
approximately $1 billion to L Brands, Inc. (Ba3 on review up). The
spinoff is expected to close in August 2021.
The assignment reflects governance considerations particularly VS'
public equity ownership upon execution of its proposed spinoff from
L Brands, Inc. and the expectation that as an independent company
it will maintain conservative financial strategies that support
moderate leverage and very good liquidity.
The B1 rating on VS' senior unsecured notes, which is one notch
below the Ba3 corporate family rating reflects its junior position
in VS' capital structure relative to its proposed $500 million
secured term loan and its $750 million ABL, which has a first lien
over the company's most liquid assets including inventory.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: Victoria's Secret & Co.
Senior Unsecured Global Notes, Assigned B1 (LGD5)
RATINGS RATIONALE
VS' Ba3 CFR is supported by the company's solid market position as
a leading intimates apparel retailer through its Victoria's Secret
brand and PINK brand as well as its formidable beauty business. The
company has been successful in a turnaround of its operational
performance which has required the rationalization of its fleet,
addressing its assortments and imagery, remodeling to improve store
presentation, and reducing costs as the company navigated the
pandemic. Demand for its product categories has been favorable
through the pandemic as consumers focused on personal care and
casual apparel. VS was able to lower its inventories and reset its
product while growing its e-commerce business rapidly. The rating
is also supported by VS' conservative capital structure. Moody's
estimates that pro-forma debt/EBITDA was 2.2x for the LTM period
ending May 1, 2021 based upon the proposed transaction. The CFR is
constrained by its narrow product focus which has a significant
fashion element which can lead to earnings volatility. The rating
is also constrained by the risk of demand normalization as
consumers engage in demand for other products categories as social
distancing restrictions are lifted as well as its lack of earnings
consistency historically.
The stable outlook reflects VS' success at its business turnaround
reflected in its improving sales and operating performance. The
outlook also reflects that the proposed company will be
conservatively capitalized which will enable it to weather the risk
of future operational volatility given the significant fashion
component of its products and the potential for demand weakening as
alternative apparel categories and services increase in
favorability as pandemic restrictions ease.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Rating could be upgraded to the extent the company continues to
post consistent sales and operating earnings growth while
maintaining very good liquidity. An upgrade would require a
conservative and clearly articulated financial strategy.
Quantitatively, an upgrade would require operating margins
sustained in excess of 10% and Moody's debt/EBITDA sustained below
1.75x.
Ratings could be downgraded if liquidity deteriorates for any
reason or financial strategies become more aggressive. Ratings
could also be downgraded should the transition to a publicly traded
entity present operational challenges or unforeseen costs that
depress profitability. Quantitatively, ratings would be downgraded
should Moody's debt/EBITDA remain above 3.0x.
Victoria's Secret & Co. ("VS") operates leading brands of women's
intimate and other apparel personal care and beauty products.
Products are sold under two brands, Victoria's Secret and PINK with
$6.1 billion in sales in LTM sales as of May 1, 2021. VS is a
global lingerie brand with a leading market position with 867
locations in North America as of May 1, 2021 and 520 stores
internationally including 62 company operated stores in Greater
China and 458 stores in other markets operated by partners under
franchise, license, wholesale and joint venture arrangements. Its
beauty products business, which comprise 15% of its North America
retail sales, are also sold both under the Victoria's Secret and
PINK brand names.
The principal methodology used in this rating was Retail Industry
published in May 2018.
VICTORIA'S SECRET: S&P Raises Senior Unsecured Rating to 'BB-'
--------------------------------------------------------------
S&P Global Ratings raised its issue-level rating on Victoria's
Secret & Co.'s (VS) proposed senior unsecured notes to 'BB-' from
'B+' and revised the recovery rating to '4' from '5'. The '4'
recovery rating indicates its expectation for average (30%-50%;
rounded estimate: 30%) recovery in the event of a payment default.
S&P's 'BB+' issue-level rating on the company's senior secured term
loan B is affirmed and '1' recovery rating is unchanged. The '1'
recovery rating indicates its expectation for very high (90%-100%;
rounded estimate: 95%) recovery in the event of a payment default.
S&P raised its rating on the proposed debt following VS'
announcement that it will issue a $400 million first-lien term loan
B and $600 million of senior unsecured notes. Previously, S&P
assumed it would issue a $500 million term loan and $500 million of
senior unsecured notes. Because of the change in the structure of
the issuance and the reduction in the amount of senior secured
borrowing, there is additional value available for the unsecured
lenders, which improves their anticipated recovery in a simulated
default scenario.
The company will use the proceeds from the $600 million of
unsecured notes and $400 million first-lien term loan B to return
capital to Bath and Body Works and cover financing costs following
the completion of its spin-off as an independent, publicly-traded
company.
S&P's 'BB-' issuer credit rating and stable outlook on VS are
unchanged and reflect its expectation that it will recover a
significant portion of the sales its lost amid the coronavirus
pandemic in 2021 while maintaining margins above pre-pandemic
levels, which will reduce its leverage to the high-1x area and
enable it to generate good free operating cash flow.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P's simulated default scenario contemplates a default
occurring due to a steep decline in the company's EBITDA stemming
from several factors, including a deterioration in its competitive
standing--because of ineffective merchandising and marketing
strategies--and intensified competition. S&P believes this could
occur amid a protracted decline in the economy and a weak consumer
spending environment.
-- S&P assumes that VS would reorganize as a going concern to
maximize its lenders' recovery prospects. S&P applies a 5x multiple
to our projected emergence-level EBITDA to arrive at its estimated
gross emergence value.
Simulated default assumptions
-- Simulated year of default: 2025
-- EBITDA at emergence: About $230 million
-- Implied enterprise value (EV) multiple: 5x
-- Estimated gross EV at emergence: About $1.2 billion.
Simplified waterfall
-- Net EV after 5% administrative costs: About $1.1 billion
-- Revolver-related claims*: $470 million (not rated)
-- Senior secured term loan claims*: $400 million
--Recovery expectations: 90%-100% (rounded estimate: 95%)
-- Senior unsecured claims and non-debt unsecured claims*: $730
million
--Recovery expectations: 30%-50% (rounded estimate: 30%)
*All debt amounts include six months of prepetition interest.
VISTAGEN THERAPEUTICS: Posts $17.9 Million Net Loss in Fiscal 2021
------------------------------------------------------------------
VistaGen Therapeutics, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss and
comprehensive loss of $17.93 million on $1.10 million of total
revenues for the fiscal year ended March 31, 2021, compared to a
net loss and comprehensive loss of $20.77 million on zero revenue
for the year ended March 31, 2020.
As of March 31, 2021, the Company had $108.28 million in total
assets, $16.30 million in total liabilities, and $91.98 million in
total stockholders' equity.
The Company recognized $1.1 million in sublicense revenue from its
$5 million non-dilutive upfront payment pursuant to its PH94B
development and commercialization agreement with EverInsight
Therapeutics (now AffaMed Therapeutics) during the year ended March
31, 2021, compared to none in the year ended March 31, 2020.
Research and development expense decreased from $13.4 million to
$12.5 million for the years ended March 31, 2020 and 2021,
respectively. The decrease is primarily due to the completion of a
Phase 2 clinical study of AV-101 in MDD in Fiscal 2020, offset by
increased development expenses for PH94B and PH10 in Fiscal 2021.
General and administrative expense decreased to approximately $6.5
million from approximately $7.4 million for the years ended March
31, 2021 and 2020, respectively. Cash compensation expense for the
year ended March 31, 2021 increased by approximately $0.7 million,
including the impact of new employees, and was offset by a decrease
of approximately $1.0 million in noncash stock-based compensation
for the year ended March 31, 2021 compared to those expenses in the
year ended March 31, 2020. Further, in the year ended March 31,
2020, the Company modified certain outstanding warrants and
recognized non-cash warrant modification expense of approximately
$0.8 million.
At March 31, 2021, the Company had cash and cash equivalents of
approximately $103.1 million.
As of June 29, 2021, the Company had 191,382,350 shares of common
stock outstanding.
Management Commentary
"Our fiscal year 2021 was transformative, involving several drug
development, financial and regulatory milestones that fortified the
foundation for our very strong start this fiscal year. Notably, we
achieved an important consensus with the U.S. Food and Drug
Administration regarding our PALISADE Phase 3 program for PH94B in
social anxiety disorder. Building on that positive meeting, we
completed a PH94B collaboration in ex-U.S. markets, strengthened
our balance sheet with substantial investment from numerous
long-biased, healthcare-focused institutional investors, and
advanced several development programs across our CNS pipeline, most
notably preparations for PALISADE-1, our U.S. multi-center Phase 3
clinical study of PH94B as a potential rapid-onset, acute treatment
of anxiety in adults with social anxiety disorder. If successful,
PALISADE-1 is designed to be among the studies necessary to support
a potential PH94B New Drug Application to the U.S. Food and Drug
Administration in 2023. We recently initiated PALISADE-1, moving
us closer to our goal of going beyond the current treatment
paradigm for social anxiety disorder, not only displacing
antidepressants, benzodiazepines and beta blockers, but also
reaching those in need of support who find those therapies to be
undesirable or inadequate. We anticipate topline data from
PALISADE-1 in mid-2022. Later this year, we expect to launch
PALISADE-2, a second U.S. multi-center Phase 3 clinical study of
PH94B designed to be substantially similar to PALISADE-1 and
equally supportive of our U.S. New Drug Application goal."
Singh added, "During the current fiscal year, we also expect to
prepare for and initiate several exploratory Phase 2A clinical
trials of PH94B in additional anxiety disorders, advance
preparations necessary to initiate a U.S. multi-center Phase 2B
clinical trial of PH10 as a potential rapid-onset, stand-alone
treatment for major depressive disorder, and initiate a Phase 1B
clinical trial of AV-101 with probenecid, which, if successful, has
the potential to support exploratory Phase 2A development of the
combination in several CNS disorders."
"To develop and commercialize game-changing treatments, you need
great people. During the past year, we have strengthened our team
by adding several key personnel with deep CNS drug development and
commercial experience to drive our programs through important
late-stage development milestones and appropriately-timed
pre-commercial and commercial launch operations. We look forward
to initiating several more clinical trials this fiscal year and
remain focused on pursuing our mission to improve mental health and
well-being for individuals in the U.S. and abroad," concluded
Singh.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1411685/000165495421007380/vtgn_10k.htm
About VistaGen
Headquartered in San Francisco, California, VistaGen Therapeutics
-- http://www.vistagen.com-- is a clinical-stage biopharmaceutical
company developing new generation medicines for CNS diseases and
disorders where current treatments are inadequate, resulting in
high unmet need. VistaGen's pipeline is focused on clinical-stage
CNS drug candidates with a differentiated mechanism of action, an
exceptional safety profile in all clinical studies to date, and
therapeutic potential in multiple large and growing CNS markets.
WALTER ENERGY: KKR, Blackstone, Apollo to Face Suit
---------------------------------------------------
Mike Leonard of Bloomberg Law reports that asset management titans
including Apollo Management LLC, Blackstone Group LP, Franklin
Mutual Advisors LLC, and KKR & Co. must face litigation over their
deal to buy a bankrupt coal company's assets in exchange for debt
relief, a Delaware judge ruled Wednesday, June 30, 2021.
Vice Chancellor Sam Glasscock III let the proposed class action
move forward in Delaware Chancery Court with an unjust enrichment
claim on behalf of Joshua Angel and other former creditors of
Walter Energy Inc. who claim they missed out on the bankruptcy deal
after getting inadequate notice of a filing deadline.
About Walter Energy Inc.
Walter Energy, Inc. -- http://www.walterenergy.com/-- is a
metallurgical coal producer for the global steel industry with
strategic access to steel producers in Europe, Asia and South
America. The Company also produces thermal coal, anthracite,
metallurgical coke and coal bed methane gas, with operations in the
United States, Canada and the United Kingdom.
For the year ended Dec. 31, 2014, the Company reported a net loss
of $471 million following a net loss of $359 million in 2013.
Walter Energy and its affiliates sought Chapter 11 protection
(Bankr. N.D. Ala. Lead Case No. 15-02741) in Birmingham, Alabama
on July 15, 2015, after signing a restructuring support agreement
with first-lien lenders.
Walter Energy disclosed total assets of $5.2 billion and total debt
of $5 billion as of March 31, 2015.
The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison as
counsel; Bradley Arant Boult Cummings LLP, as co-counsel; Ogletree
Deakins LLP, as labor and employment counsel; Maynard, Cooper &
Gale, P.C., as special counsel; PJT Partners LP serves as
investment banker, replacing Blackstone Advisory Services, L.P.;
AlixPartners, LLP, as financial advisor, and Kurtzman Carson
Consultants LLC, as claims and noticing agent.
The Bankruptcy Administrator for the Northern District of Alabama
appointed an Official Committee of Unsecured Creditors and an
Official Committee of Retirees. The Creditors Committee tapped
Morrison & Foerster LLP and Christian & Small LLP as attorneys.
The Retiree Committee retained Adams & Reese LLP and Jenner & Block
LLP as attorneys.
The informal group of certain unaffiliated First Lien Lenders and
First Lien Noteholders -- Steering Committee -- retained Akin,
Gump, Strauss, Hauer and Feld LLP as legal advisor, and Lazard
Freres & Co. LLC as financial advisor.
WASHINGTON PRIME: Unsecured Claims Unimpaired in Plan
-----------------------------------------------------
Washington Prime Group Inc., et al. submitted Plan and a Disclosure
Statement.
The Restructuring Support Agreement provides for two paths toward a
consensual resolution of these chapter 11 cases, each of which is
encompassed in the Plan. The first path is the Equitization
Restructuring, which is a comprehensive restructuring pursuant to
which the equity of Reorganized WPG will be issued to existing
shareholders, Unsecured Noteholders (on account of their Claims),
and Unsecured Noteholders, and Backstop Parties that participate in
an Equity Rights Offering. The Equitization Restructuring is
anchored by the Plan Sponsor's commitment to equitize its Unsecured
Notes Claims and backstop a $325 million rights offering, and the
agreement of both the Plan Sponsor and Ad Hoc Lender Group to
accept takeback paper in satisfaction of the bulk of the credit
facilities claims.
In addition, a key component of the Restructuring Support Agreement
and Plan is a "toggle" feature, allowing the Debtors to seek an
alternative value-maximizing transaction that would repay, in full
in Cash, all of the Company's corporate-level debt. Specifically,
the Debtors will use the 60 days following the Petition Date to
solicit proposals for such an alternative transaction, continuing
the comprehensive marketing process that began prepetition. If such
a proposal is received, and it provides a distribution to the
Debtors' Existing Equity Interests in excess of what is provided
for under the Equitization Restructuring, the Debtors are able to
toggle to, and then effectuate, the Toggle Restructuring. Notably,
to ensure a robust marketing process on the timeline proposed in
the Bidding Procedures Motion, the Debtors, with the assistance of
their proposed investment backer, Guggenheim Securities, LLC
("Guggenheim Securities"), and their other advisors, have conducted
outreach to a broad group of relevant strategic and financial
parties and have been in discussions with several potentially
interested parties for nearly one month.
The Equitization Restructuring contemplates (1) a full equitization
of the Unsecured Notes in exchange for the majority of the equity
in Reorganized WPG,7 (2) an Equity Rights Offering available to
Holders of the Unsecured Notes to pay down the DIP Facility and
fund emergence costs, (3) a partial paydown of the 2018 Credit
Facility Claims, 2015 Credit Facility Claims, and Weberstown Term
Loan Facility Claims, with the remainder of these Claims satisfied
through takeback secured debt on terms acceptable to the Consenting
Stakeholders, (4) unimpaired treatment for Holders of General
Unsecured Claims, and (5) a recovery in the form of Cash or New
Common Equity for Holders of Existing Preferred Equity Interests
and Existing Common Equity Interests
As part of the Equitization Restructuring, the Debtors will conduct
an Equity Rights Offering to raise up to $325 million in cash.
Eligible Holders of Unsecured Notes Claims are entitled to purchase
their Pro Rata share of 50% of the Equity Rights at 32.5% discount
to Set-Up Equity Value of $800 million.9 Proceeds from the Equity
Rights Offering will be utilized to satisfy the DIP Facility Claims
in Cash in full, fund emergence costs, and fund the cash payments
to Holders of Allowed Existing Equity Interests. If the maximum
amount of $325 million is raised, the New Common Equity issued
pursuant to the Equity Rights Offering will represent 60.2% of the
New Common Equity on the Effective Date, subject to dilution by the
Management Incentive Plan. The Plan Sponsor and its related funds
have agreed to backstop 100% of the Equity Rights Offering.
The Equitization Restructuring is intended to shed approximately
$950 million in secured and unsecured funded debt and provides a
meaningful recovery for equity holders. The Plan treatment for each
Class of Claims and Interests in an Equitization Restructuring is
as follows:
* Revolving and Term Loan Facility Claims. Each Holder of
Revolving and Term Loan Facilities Claims shall receive in an
Equitization Restructuring its Pro Rata share of (i) $1,187
million, plus the Elective Exit Loan Amount attributable to the
Revolving and Term Loan Facilities Claims, if any, in principal
amount of loans under the New Term Loan Exit Facility, and (ii) the
Revolving and Term Loan Facilities Cash Pool (i.e., $150 million
plus Cash in the amount of certain additional accrued and unpaid
amounts specified in the Plan);
* Weberstown Term Loan Facility Claims. Each Holder of
Weberstown Term Loan Facility Claims shall receive in the
Equitization Restructuring its Pro Rata share of (i) $25 million,
plus the Elective Exit Loan Amount attributable to the Weberstown
Term Loan Facility Claims, if any, in principal amount of loans
under the New Term Loan Exit Facility and (ii) the Weberstown Cash
Pool (i.e., $40 million plus Cash in the amount of certain
additional accrued and unpaid amounts specified in the Plan);
* Unsecured Notes Claims. Each Holder of Unsecured Notes Claims
shall receive if the Equitization Restructuring occurs its Pro Rata
share of (i) 100% of the New Common Equity, less any New Common
Equity distributed to Holders of Existing Equity Interests pursuant
to the Equity Options and subject to dilution on account of the
Management Incentive Plan, Backstop Equity Premium, and the Equity
Rights Offering and (ii) the Unsecured Noteholder Rights (i.e., the
right to purchase their Pro Rata share of 50% of the New Common
Equity offered in the Equity Rights Offering, as specified in the
Plan);
* Property-Level Mortgage Guarantee Claims: Each Holder of
Property-Level Mortgage Guarantee Claims shall receive, at the
option of the applicable Debtor(s) (i) Reinstatement, or (ii) such
other treatment reasonably acceptable to the Plan Sponsor rendering
such Property- Level Mortgage Guarantee Claim Unimpaired in
accordance with section 1124 of the Bankruptcy Code;
* General Unsecured Claims. Each Holder of General Unsecured
Claims shall receive, at the option of the applicable Debtor, (i)
payment in full in Cash, (ii) Reinstatement, or (iii) such other
treatment reasonably acceptable to the Plan Sponsor rendering such
General Unsecured Claim Unimpaired in accordance with section 1124
of the Bankruptcy Code;
* Existing Preferred Equity Interests. Each Holder of Existing
Preferred Equity Interests shall receive (i) if Class 10 votes in
favor of the Plan, such Holder's Pro Rata share of the (A)
Preferred Equity Cash Pool (i.e., $40 million or $20 million if
Class 11 votes to accept the Plan) or (B) if such Holder is an
Eligible Election Participant,10 and such Holder elects the
Preferred Equity Option, such Holder's Pro Rata share of the
Preferred Equity Equity Pool in lieu of the distribution pursuant
to the Preferred Equity Cash Pool11; or (ii) if Class 10 votes to
reject the Plan, each Holder of Existing Preferred Equity Interests
shall not receive any distribution on account of such Interests,
which will be canceled, released, and extinguished as of the
Effective Date, and will be of no further force or effect; and
* Existing Common Equity Interests. Each Holder of Existing
Common Equity Interests shall receive in an Equitization
Restructuring (i) if Holders of Existing Preferred Equity Interests
and Existing Common Equity Interests in their respective Classes
both vote in favor of the Plan, such Holder's Pro Rata share of the
(A) Common Equity Cash Pool (i.e., $20 million) or (B) if such
Holder is an Eligible Election Participant, and such Holder elects
the Common Equity Option, such Holder's Pro Rata share of the
Common Equity Equity Pool in lieu of the distribution pursuant to
the Common Equity Cash Pool12; or (ii) if Holders of Existing
Preferred Equity Interests and Existing Common Equity Interests in
their respective Classes, vote to reject the Plan, Holders of
Existing Common Equity Interests shall not receive any distribution
on account of such Interests, which will be canceled, released, and
extinguished as of the Effective Date, and will be of no further
force or effect.
The Debtors shall fund distributions under the Plan pursuant to the
Equitization Restructuring, as applicable, with (1) the issuance of
the New Common Equity; (2) the proceeds of the Equity Rights
Offering; (3) the issuance of or borrowings under the New Term Loan
Exit Facility and the New Revolving Exit Facility; and (4) Cash on
hand.
Proposed Co-Counsel to the Debtors:
Matthew D. Cavenaugh
Kristhy M. Peguero
Genevieve Graham
JACKSON WALKER LLP
1401 McKinney Street, Suite 1900
Houston, Texas 77010
Telephone: (713) 752-4200
Facsimile: (713) 752-4221
Email: mcavenaugh@jw.com
kpeguero@jw.com
ggraham@jw.com
Proposed Co-Counsel to the Debtors:
Joshua A. Sussberg, P.C.
Alexander J. Nicas
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, New York 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
Email: joshua.sussberg@kirkland.com
alexander.nicas@kirkland.com
- and -
Chad J. Husnick, P.C.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
300 North LaSalle Street
Chicago, Illinois 60654
Telephone: (312) 862-2000
Facsimile: (312) 862-2200
Email: chad.husnick@kirkland.com
A copy of the Disclosure Statement is available at
https://bit.ly/3qrWpfP from Primeclerk, the claims agent.
About Washington Prime Group
Washington Prime Group Inc. (NYSE: WPG) --
http://www.washingtonprime.com/-- is a retail REIT and a
recognized leader in the ownership, management, acquisition and
development of retail properties. It combines a national real
estate portfolio with its expertise across the entire shopping
center sector to increase cash flow through rigorous management of
assets and provide new opportunities to retailers looking for
growth throughout the U.S.
Washington Prime Group and its affiliates sought Chapter 11
protection (Bankr. S.D. Texas Lead Case No. 21-31948) on June 13,
2021. At the time of the filing, Washington Prime Group's property
portfolio consists of material interests in 102 shopping centers in
the United States totaling approximately 52 million square feet of
gross leasable area. The company operates 97 of the 102
properties.
As of March 31, 2021, Washington Prime Group had total assets of
$4.029 billion against total liabilities of $3.471 billion.
The Debtors tapped Kirkland & Ellis LLP as lead bankruptcy counsel,
Jackson Walker LLP as local bankruptcy counsel, Alvarez & Marsal
North America LLC as restructuring advisor, and Guggenheim
Securities, LLC as investment banker. Prime Clerk LLC is the
claims agent, maintaining the page
http://cases.primeclerk.com/washingtonprime
SVPGlobal, the Debtors' lender, tapped Davis Polk & Wardwell, LLP
and Evercore Group, LLC as its legal counsel and investment banker,
respectively.
WELLS FARGO: S&P Withdraws BB+ Trust Preferred Securities Ratings
-----------------------------------------------------------------
S&P Global Ratings withdrew its 'BB+' ratings on two of Wells Fargo
& Co.'s trust preferred securities, Central Fidelity Capital Trust
I and Wachovia Capital Trust II. Wells recently liquidated these
securities and distributed the debentures pro rata as follows:
-- The holders of Central Fidelity Capital Trust I received
floating-rate junior subordinated debt, series A, due April 15,
2027.
-- The holders of Wachovia Capital Trust II received floating-rate
junior subordinated deferrable debt due 2027.
Ratings List
RATINGS WITHDRAWN
TO FROM
CENTRAL FIDELITY CAPITAL TRUST I
Preferred Stock NR BB+
WACHOVIA CAPITAL TRUST II
Preferred Stock NR BB+
WOLVERINE WORLD: Moody's Alters Outlook on Ba1 CFR to Stable
------------------------------------------------------------
Moody's Investors Service affirmed Wolverine World Wide, Inc.'s
ratings, including its Ba1 corporate family rating, Ba1-PD
probability of default rating, and Ba2 senior unsecured notes
ratings. The company's speculative grade liquidity rating was
upgraded to SGL-1 from SGL-2. The rating outlook was changed to
stable from negative.
"The outlook change to stable reflects our expectation for improved
operating performance and credit metrics as the company recovers
from the global coronavirus pandemic," stated Moody's Vice
President, Mike Zuccaro. "Wolverine is exhibiting strong demand,
particularly in running, outdoor and work, with a healthy wholesale
order book, strong growth in direct to consumer channels as well as
international markets."
The upgrade to SGL-1 reflects the company's very good liquidity,
supported by $365 million of cash as of Q1 2021 and nearly full
excess availability on its undrawn $800 million revolver, and
Moody's expectation for continued positive free cash flow.
Affirmations:
Issuer: Wolverine World Wide, Inc.
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Senior Unsecured Notes, Affirmed Ba2 (LGD5)
Upgrades:
Issuer: Wolverine World Wide, Inc.
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Outlook Actions:
Issuer: Wolverine World Wide, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Wolverine's Ba1 CFR reflects its meaningful scale in the global
footwear industry, its sizable portfolio of brands which appeal to
a broad range of consumer needs, and dependable replenishment
demand cycles of the footwear category due to normal product wear
and tear. The rating also reflects Moody's expectation for a
significant improvement in financial metrics, with lease-adjusted
debt to EBITDA falling below 3.5x and EBITA to interest coverage
above 5 times in 2021, as the business rapidly recovers from the
global coronavirus pandemic. Liquidity is very good, supported by
balance sheet cash, positive free cash flow and ample availability
under its revolving credit facility. Wolverine is constrained by
its relatively small absolute revenue scale and its narrow product
focus in the footwear segment, and greater degree of fashion risk
for certain brands.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
While not likely over the near-to-intermediate term given its small
revenue scale and narrow product focus, over time, Wolverine's
ratings could be upgraded if it were to sustainably reduce
financial leverage through further debt reduction and profitable
growth. An upgrade would also require Increased diversification via
international expansion or an expanded portfolio of brands or
products. Quantitative measures include lease adjusted debt/EBITDA
sustained below 3.0 times, EBITA/Interest above 5.0x, and FFO/Net
Debt above 35%.
Ratings could be downgraded if the company were to see a sustained
decline in operating performance, or if the company were to
undertake more aggressive financial policies such as a sizable
debt-financed acquisitions or share repurchases. Quantitative
measure include lease adjusted debt/EBITDA sustained above 3.5x or
EBITA to interest coverage below 4.0x.
Wolverine is a marketer of branded casual, active lifestyle, work,
outdoor sport, athletic, children's and uniform footwear and
apparel. The company's portfolio of brands includes: Merrell,
Saucony, Sperry, Hush Puppies, Wolverine, Keds, Chaco, Bates,
HYTEST and Stride Rite. The company also is the global footwear
licensee of the Cat and Harley-Davidson brands. Revenue for the
latest twelve month ended April 4, 20201 was around $1.9 billion.
The principal methodology used in these ratings was Apparel
published in June 2021.
[^] BOOK REVIEW: Jacob Fugger the Rich
--------------------------------------
Jacob Fugger the Rich: Merchant and Banker of Augsburg, 1459-1525
Author: Jacob Streider
Publisher: Beard Books
Hardcover: 227 pages
List Price: $34.95
Quick, can you work out how much $75 million in sixteenth century
dollars would be worth today? Well, move over Croesus, Gates,
Rockefeller, and Getty, because that's what Jacob Fugger was
worth.
Jacob Fugger was the chief embodiment of early German capitalistic
enterprise and rose to a great position of power in European
economic life. Jacob Fugger the Rich is more than just a
fascinating biography of a powerful and successful businessman,
however. It is an economic history of a golden age in German
commercial history that began in the fifteenth century. When the
book was first published, in 1931, The Boston Transcript said that
the author "has not tried to make an exhaustive biography of his
subject but rather has aimed to let the story of Jacob Fugger the
Rich illustrate the early sixteenth century development of economic
history in which he was a leader."
Jacob Fugger's family was one of the foremost family in Augsburg
when he was born in 1459. They got their start by importing raw
cotton, by mule, from Mediterranean ports. They later moved into
silk and herbs and, for a long while, controlled much of Europe's
pepper market.
Jacob Fugger diversified into copper mining in Hungary and
transported the product to English Channel and North Sea ports in
his own ships. A stroke of luck led to increased mining
opportunities. Fugger lent money to the Holy Roman Emperor
Maximilian I to help fund a war with France and Italy. Mining
concessions were put up as collateral. The war dragged on, the
Emperor defaulted, and Fugger found himself with a European
monopoly on copper.
Fugger used his extensive business network in service of the Pope.
His branches all over Europe collected payments due the Vatican and
issued letters of credit that were taken to Rome by papal agents.
Fugger is credited with creating the first business newsletter. He
collected news of evolving business climate as well as current
events from his agents all across Europe and distributed them to
all his branches.
Fugger's endeavors were not universally applauded. The sin of
usury was still hotly debated, and Fugger committed it wholesale.
He was sued over his monopoly on copper. He was involved in some
messy bribes in bringing Charles V to the throne. And, his
lucrative role as banker in the sale of indulgences, those chits
that absolve the buyer of sin, raised the ire of Martin Luther
himself. Luther referred to Fugger specifically in his Open Letter
to the Christian Nobility of the German nation Concerning the
Reform of the Christian Estate just before being excommunicated in
1521. Fugger went on, however, to fund Charles V's war on
Protestanism and became even richer. Fugger built many churches and
buildings in Augsburg. He was generous to the poor and designed
the world's first housing project. These buildings and lovely
gardens, called the Fuggerei, are still in use today.
A New York Times reviewer said that Jacob Fugger the Rich, a book
"concerned with the most famous, most capable, and most interesting
of all [the members of the Fugger family] will be as interesting
for the general reader as for the special student of business
history." This observation is just as true today as in 1931, when
first made.
Jacob Streider was born in 1877 and died in 1936. He was a
professor of economic history at the University of Munich.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
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S U B S C R I P T I O N I N F O R M A T I O N
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