/raid1/www/Hosts/bankrupt/TCR_Public/210910.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, September 10, 2021, Vol. 25, No. 252
Headlines
43 HARRISON AVENUE: Seeks to Use Cash Collateral
4YL DEVELOPMENT: Oct. 14 Plan & Disclosure Hearing Set
4YL DEVELOPMENT: Updates Secured Claims Pay Details; Amends Plan
A.B.C. CARPET: Case Summary & 30 Largest Unsecured Creditors
ABC CARPET & HOME: Files for Chapter 11 Bankruptcy
ACV AUCTIONS: Putative Class Suit Underway in New York
ADVANCED CONTAINER: Eric Horton Quits as Director
AGREE REALTY: S&P Assigns 'BB+' Rating on New Preferred Shares
ALGITS INC: Wins Cash Collateral Access Thru October 8
ALLEGHENY TECHNOLOGIES: Moody's Affirms B2 CFR, Rates New Notes B3
ALLEGHENY TECHNOLOGIES: S&P Affirms 'B' Issuer Credit Rating
AMERICORE HOLDINGS: Taps Rose Grasch as Special Counsel
ARC FALCON I: S&P Assigns 'B' ICR, Outlook Stable
ASP UNIFRAX: Fitch Assigns FirstTime 'B' LT IDR, Outlook Pos.
ASP UNIFRAX: Moody's Ups CFR to B3 & Rates New $700MM Sr. Notes B2
ASP UNIFRAX: S&P Affirms 'B-' ICR on Lydall Deal, Outlook Stable
AUTOMOTIVE PARTS: Committee Taps Kelley Drye as Bankruptcy Counsel
AUTOMOTIVE PARTS: Committee Taps Province LLC as Financial Advisor
AVANTOR FUNDING: Moody's Affirms Ba3 CFR on Masterflex Transaction
AVANTOR INC: Fitch Affirms 'BB' LT IDRs & Alters Outlook to Stable
AVANTOR INC: S&P Places 'BB+' ICR on CreditWatch Negative
AVID BIOSERVICES: Posts $6.3 Million Net Income in First Quarter
AZURITY PHARMACEUTICALS: Moody's Assigns 'B2' CFR, Outlook Stable
AZURITY PHARMACEUTICALS: S&P Assigns 'B' ICR, Outlook Stable
B&L INTERNATIONAL: Case Summary & 10 Unsecured Creditors
BANCO NACIONAL: Chapter 15 Case Summary
BELVIEU BRIDGE: May Use Cash Collateral Through Oct. 31
BIOSTAGE INC: Appoints Jerry He to Board of Directors
BL SANTA FE: Wins Interim OK on Postpetition Financing
BRIDGEPORT HEALTH: Taps Brass Moon Realty as Real Estate Broker
CCC INTELLIGENT: Moody's Assigns B1 CFR Amid Go-Public Transaction
CCC INTELLIGENT: S&P Raises ICR to 'B' on Continued Lower Leverage
CHANNEL CLARITY: Wins Interim Cash Access Until October 14
COLORADO PROPERTY: Voluntary Chapter 11 Case Summary
CORNERSTONE ONDEMAND: Moody's Assigns B3 CFR Amid Clearlake Buyout
CORNERSTONE ONDEMAND: S&P Cuts ICR to 'B-' on Leveraged Buyout Deal
CRC BROADCASTING: Affiliate Media West May Use Cash Until Sept. 30
CRC BROADCASTING: Gets Interim Cash Access Until Sept. 30
DEP LASHES: Unsec. Creditors Will Get 2.5% of Claims in 60 Months
DI PURCHASER: Moody's Puts Caa1 CFR Under Review for Upgrade
DIAMOND (BC) BV: Moody's Rates New $1.5BB Term Loan B 'Ba3'
DIAMOND (BC) BV: S&P Affirms 'B' ICR, Outlook Positive
DK PROPERTIES: Seeks to Hire Kelley & Clements as Legal Counsel
DUNN PAPER: S&P Downgrades ICR to 'CCC+' on Near-Term Maturities
EPR PROPERTIES: Fitch Affirms 'BB+' IDR & Alters Outlook to Stable
EVERGREEN 1 ASSOCIATES: Case Summary & Top Unsecured Creditors
EVO TRANSPORTATION: Grant Thornton Replaces Marcum as Auditor
FIRST TO THE FINISH: May Use Cash Collateral Through Sept. 30
FORD CITY CONDOMINIUM: Trustee Taps Freeborn & Peters as Counsel
GAINCO INC: Wins Continued Cash Access Pending Final Hearing
GANESH AND MARUTI: Seeks to Hire Hall Estill as Bankruptcy Counsel
GBG USA: Committee Taps FTI Consulting as Financial Advisor
GBG USA: Committee Taps Stroock & Stroock as Legal Counsel
GBG USA: Obtains Final Court Nod on Use of Cash Collateral
HAWAIIAN HOLDINGS: Bookings Drop as COVID Cases Rise Due to Delta
HTP INC: Seeks to Hire Bush Kornfeld as Bankruptcy Counsel
INNER CITY BUILDERS: Taps Tran Singh as Bankruptcy Counsel
INVO BIOSCIENCE: Incurs $1.8 Million Net Loss in Second Quarter
JOHNSON + ASSOCIATES: Taps Leftkovitz & Leftkovitz as Legal Counsel
KK FIT INC: Court Extends Cash Access to November 30
LA TERRAZA: Claims Will be Paid From Continued Operations
LATAM AIRLINES: Has Several Financing Offers to Exit Bankruptcy
LEVEL EIGHT: Unsecured Creditors Will Get 100% of Claims in Plan
MAJESTIC GARDENS: Seeks to Hire Valancy & Reed as General Counsel
MAJESTIC GARDENS: Taps Van Horn Law Group as Bankruptcy Counsel
MATTRESS FIRM: Moody's Rates New Secured Term Loan Due 2028 'B1'
MATTRESS FIRM: S&P Alters Outlook to Positive, Affirms 'B+' ICR
MERCURITY FINTECH: Raises US$5 Million via Private Placement
MODA INGLESIDE: S&P Places 'BB' ICR on CreditWatch Positive
NATURE COAST: U.S. Trustee Unable to Appoint Committee
NESV ICE: Has Interim Cash Access Until Continued Hearing
OLCAN PROPERTIES: Wins Authority to Use Cash Collateral
ONDAS HOLDINGS: Incurs $2.8 Million Net Loss in Second Quarter
PARADISE REDEVELOPMENT: May Use Cash Collateral to Fix Property
PELCO STRUCTURAL: Seeks to Hire RSM US as Accountant
PELCO STRUCTURAL: Seeks to Hire Warkentin & McElyea as Accountant
POST OAK TX: Wins Interim Cash Collateral Access
PRO VIDEO: Seeks to Employ Ronald Yelland as Accountant
PURDUE PHARMA: Nevada to Get $50 Mil. From Opioid Settlement
PURDUE PHARMA: Several States Vow to Fight Plan Approval
REGIONAL HOUSING: Wins Interim OK on $600,000 DIP Loan
REMARK HOLDINGS: Settles Litigation With CBG Over 2016 Acquisition
REXNORD CORP: Moody's Affirms 'Ba3' CFR, Outlook Stable
SEAWIND DEVELOPMENT: Unsecureds to Get Proceeds from Asset Sale
SEMORAN PINES: Seeks to Hire Brian Michael Mark as Legal Counsel
SIWF HOLDINGS: S&P Downgrades ICR to 'B-', Outlook Stable
SMITHFIELD FOODS: Moody's Rates New Senior Unsecured Notes 'Ba1'
SOMETHING SWEET: Committee Taps Horwood Marcus as Lead Counsel
SOMETHING SWEET: Taps Armstrong Teasdale as Delaware Counsel
SPHERATURE INVESTMENTS: Seeks to Hire Mazars USA as Tax Advisor
STV GROUP: Moody's Affirms 'B2' CFR, Outlook Stable
SWF HOLDINGS I: Moody's Gives B3 CFR & Rates New Credit Facility B2
TAILWIND SMITH: S&P Affirms 'B-' ICR on Stronger First Half
TEMPUR SEALY: Moody's Hikes CFR to Ba1 & Alters Outlook to Stable
TLASJ LLC: Unsecured Creditors Have 2 Options in Reorganizing Plan
TPT GLOBAL: Entertainment Unit Expands Sales of Documentaries
TPT GLOBAL: HK Unit Inks Telecom Services Contract
TPT GLOBAL: Major General John Wharton Joins Board of Directors
U.S. STEEL: Egan-Jones Hikes Sr. Unsecured Debt Ratings to B+
VIRTUS INVESTMENT: S&P Raises ICR to 'BB+' on Asset Growth
WALNUT SYCAMORE: S&P Assigns 'BB' ICR, Outlook Stable
WATTSTOCK LLC: May Use SBA's Cash Collateral Thru Final Hearing
WB BRIDGE HOTEL: Taps Rosewood Realty Group as Real Estate Advisor
WB SUPPLY: Seeks to Employ Starz Realty as Real Estate Broker
WC 717 N HARWOOD: Taps Fishman Jackson Ronquillo as Legal Counsel
WORLD SERVICE: Seeks to Hire Ringstad & Sander as Legal Counsel
ZEFNIK LLC: Property Sale & Rent Collections to Fund Plan
ZION HOTEL: Seeks to Tap Grier Wright Martinez as Legal Counsel
[*] Bankruptcies in Colorado Declined 16% in August 2021
[*] Hawaii's Bankruptcies Dropped by 20.2% in August 2021
[*] SierraConstellation Wins M&A Advisor Annual Turnaround Awards
[*] Stretto Bags M&A Turnaround Product/Service of the Year Award
[^] BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles
*********
43 HARRISON AVENUE: Seeks to Use Cash Collateral
------------------------------------------------
43 Harrison Avenue LLC asked the U.S. Bankruptcy Court for the
District of Massachusetts to authorize the use of cash collateral
to pay the necessary expenses for its continued operation.
The Debtor owns a rental property in Abington, Massachusetts
consisting of a multi-apartment building. The acquisition and
operation of the Property was funded by loans from Hingham
Institution for Savings with the Property being used as collateral
with a loan from Northeast Bank. The Debtor has signed notes for
$330,000 on August 31, 2010, with Hingham, and $1,050,000 on
September 26, 2016, with Northeast. The notes were secured by
deeds of trust and assignments of rents.
The Town of Abington has a recorded tax lien against the Debtor for
$2,893.
As adequate protection for the use of Cash Collateral, the Debtor
proposed that Hingham and Northeast will retain their liens and be
paid their regular monthly loan payments. The Debtor proposed that
the Town of Abington will be granted an administrative expense
claim secured by a Replacement Lien on THE Debtor's postpetition
assets for the amount of Cash Collateral actually expended.
A copy of the motion is available for free at
https://bit.ly/2X1V052 from PacerMonitor.com.
The Court will hear the request on September 15, 2021 at 2:45 p.m.,
by video conference. Objections are due by September 14 at 12
p.m.
About 43 Harrison Avenue LLC
43 Harrison Avenue LLC, a Single Asset Real Estate (as defined in
Section 101(51B) of the Bankruptcy Code) located in Hingham,
Massachusetts, filed a petition under Subchapter V of Chapter 11 of
the Bankruptcy Code (Bankr. D. Mass. Case No. 21-11059) on July 22,
2021.
On the Petition Date, the Debtor estimated $100,000 to $500,000 in
both assets and liabilities. The petition was signed by Laura J.
Barry, manager.
The Debtor is represented by Daigle Law Office.
The firm may be reached through:
Peter M. Daigle, Esq.
Daigle Law Office
1550 Falmouth Road, Suite 10
Centerville, MA 02632
Telephone: (508) 771-7444
Email: pmdaigleesq@yahoo
4YL DEVELOPMENT: Oct. 14 Plan & Disclosure Hearing Set
------------------------------------------------------
4YL Development, Inc. filed with the U.S. Bankruptcy Court for the
Western District of Texas an Amended Disclosure Statement and
Amended Plan of Reorganization dated September 3, 2021.
On Sept. 7, 2021, Judge H. Christopher Mott conditionally approved
the Disclosure Statement and ordered that:
* Oct. 5, 2021, at 5:00 p.m. is fixed as the last day for
filing and serving objections to final approval of the Disclosure
Statement.
* Oct. 5, 2021, at 5:00 p.m. is fixed as the last day for
submitting ballots for acceptance or rejection of the Plan.
* Oct. 5, 2021, at 5:00 p.m. is affixed as the last day for
filing and serving written objections to confirmation of the Plan.
* Oct. 14, 2021, at 10:00 a.m. at the U.S. Bankruptcy Court,
511 E. San Antonio Ave, 4th Floor, El Paso, Texas, is fixed as the
time and place of the hearing on final approval of the Disclosure
Statement combined with the hearing on confirmation of the Plan.
A full-text copy of the order dated September 7, 2021, is available
at https://bit.ly/3zYsNLk from PacerMonitor.com at no charge.
Attorneys for the Debtor:
Carlos Miranda, Esq.
Carlos G. Maldonado, Esq.
Miranda & Maldonado, PC
2915 Silver Springs Bldg. 7
El Paso, TX 79912
Tel: (915) 587-5000
Email: cmiranda@eptxlawyers.com
About 4YL Development
4YL Development, Inc., is an owner-operator of multi-family
residential real estate in El Paso, Texas renting apartment units
within its properties. 4YL Development sought Chapter 11
protection (Bankr W.D. Tex. Case No. 21-30157) on March 1, 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 H.
Christopher Mott oversees the case. Miranda & Maldonaldo, PC, led
by Carlos Miranda, Esq., is the Debtor's legal counsel.
4YL DEVELOPMENT: Updates Secured Claims Pay Details; Amends Plan
----------------------------------------------------------------
4YL Development, Inc., submitted a First Amended Plan of
Reorganization and accompanying First Amended Disclosure
Statement.
The Bankruptcy Court has scheduled Oct. 5, 2021 at 5:00 P.M. as the
voting deadline.
Class 1 pertains to the allowed secured claim of the City of El
Paso in the estimated amount of $25,081. The City of El Paso
allowed secured claim in the estimated amount of $25,081 shall be
paid in full in the ordinary course prior to delinquency on or
before January 31, 2022. In the event the City of El Paso tax claim
is not paid in full prior to delinquency, post-petition interest
will accrue at the rate of 12% per annum from February 1, 2022
until the tax debt is paid in full.
Class 2 consists of the claim of SM VER Enterprises, LLC. The
Secured Claim of SM VER Enterprises will be paid on a 360-month
amortization with interest at 6.5% commencing on the Effective Date
on a 7-year balloon.
Class 2 consists of the claim of Zia Trust, Inc., as Custodian for
Teren D. Klein, IRA. The Secured Claim of Zia Trust, Inc. as
Custodian for Teren D. Klein IRA will be paid on a 360-month
amortization with interest at 6.5% commencing on the Effective Date
on a 7-year balloon.
Class 3 consists of the claim of AJPMMV Investments, LLC. The
Secured Claim of AJPMMV Investments, LLC will be paid on a
360-month amortization with interest at 6.5% commencing on the
Effective Date on a 7-year balloon.
Class 4 consists of the claim of PTTN Investments, LLC. The Secured
Claim of PTTN Investments, LLC will be paid on a 360-month
amortization with interest at 6.5% commencing on the Effective Date
on a 7-year balloon.
Class 5 consists of the claim of Ruben W. Moralez (2nd Lien on 131
-141 Newman substituted by a 2nd Lien on 1001 Nevada). As
consideration for the transfer securing the second lien, 4YL
proposes a discounted second lien claim of $25,982.34. This Secured
Claim will be paid on a 360-month amortization with interest at
6.5% commencing on the Effective Date on a 7-year balloon. 4YL
proposes the waiver of the remaining $25,982.34 balance.
Like in the prior iteration of the Plan, 4YL proposes to pay a
total of $20,000 to the Class 7{b) Unsecured Creditors. 4YL will
disburse the $20,000 over 8 years with interest at 5.00%. Monthly
payments in the total amount of $230 will be made beginning on the
Effective Date with like payments to be on the 15th day of each
succeeding month until the total of $20,000 with interest is paid.
Payments will be shared pro-rata amongst the Class 7(b) creditors.
Doug Rutter and his wife Terri Rutter have personally guaranteed
all of the secured debt. Pursuant to the terms of the Agreed Orders
on the Applications to Compromise Controversy, their personal
guarantees have been released as to the Surrendered Properties.
With regards to the Retained Properties, the personal guarantees
remain in effect.
The Plan is based on the future earnings of 4YL and contributions
from its Equity Holders.
A full-text copy of the First Amended Plan of Reorganization dated
September 7, 2021, is available at https://bit.ly/3yUJeqH from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Carlos Miranda, Esq.
Carlos G. Maldonado, Esq.
Miranda & Maldonado, PC
2915 Silver Springs Bldg. 7
El Paso, TX 79912
Tel: (915) 587-5000
Email: cmiranda@eptxlawyers.com
About 4YL Development
4YL Development, Inc., is an owner-operator of multi-family
residential real estate in El Paso, Texas renting apartment units
within its properties. 4YL Development sought Chapter 11
protection (Bankr W.D. Tex. Case No. 21-30157) on March 1, 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 H.
Christopher Mott oversees the case. Miranda & Maldonaldo, PC, led
by Carlos Miranda, Esq., is the Debtor's legal counsel.
A.B.C. CARPET: Case Summary & 30 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: A.B.C. Carpet Co., Inc.
888 Broadway
New York, NY 10003
Business Description: The Debtors own and operate ABC Carpet &
Home, an iconic lifestyle brand and home
furnishing retailer with stores in
Manhattan and Brooklyn.
Chapter 11 Petition Date: September 8, 2021
Court: United States Bankruptcy Court
Southern District of New York
Three affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
A.B.C. Carpet Co., Inc. (Lead Case) 21-11591
A.B.C. Home Furnishings, Inc. 21-11592
A.B.C. Oriental Carpets, Inc. 21-11593
Judge: Hon. David S. Jones
Debtors'
General
Bankruptcy
Counsel: Oscar N. Pinkas, Esq.
Sara A. Hoffman, Esq.
GREENBERG TRAURIG, LLP
MetLife Building
200 Park Avenue
New York, New York 10166
Tel: (212) 801-9214
Fax: (212) 801-6400
Email: pinkaso@gtlaw.com
hoffmans@gtlaw.com
- and -
Ari Newman, Esq.
GREENBERG TRAURIG, LLP
333 S.E. 2nd Avenue
Suite 4400
Miami, FL 33131
Tel: (305) 579-0500
Fax: (305) 579-0717
Email: newmanar@gtlaw.com
Debtors'
Investment
Banker &
Financial
Advisor: B. RILEY SECURITIES, INC.
Debtors'
Noticing &
Claims
Agent: BANKRUPTCY MANAGEMENT SOLUTIONS, INC.
D/B/A STRETTO
Estimated Assets
(on a consolidated basis): $10 million to $50 million
Estimated Liabilities
(on a consolidated basis): $50 million to $100 million
The petitions were signed by Aaron Rose as chief executive
officer.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/FS3O7GQ/ABC_Carpet_Co_Inc__nysbke-21-11591__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/F3WWQLA/ABC_Home_Furnishings_Inc__nysbke-21-11592__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/KDJ7TAA/ABC_Oriental_Carpets_Inc__nysbke-21-11593__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Northern Trust Bank Debt $15,545,648
P.O Box 75965
Chicago, IL 60675-5965
2. Mccreary Modern,Inc. Trade Claim $263,661
2564 Hwy 321 South
P.O. Box 130
Newton, NC 28658
Tel: 828-464-6465
3. Ashoka Creations Trade Debt $205,787
19 Dashahera Kothi
Govind Nager, Amer Road
Jaipur, 302002
India
Tel: 91-141-2631780
4. Art Palace Trade Claim $193,248
Fattupur Mondh Road
Bhadohi, 221401
India
Tel: 915414227554
5. DFC HD, Inc. Professional $174,229
138 Arthur Street Services
Garden City, NY 11530-3002 (Delivery
Tel: 516-677-0350 Services)
6. Step Halicilik Trade Claim $169,167
Tesvikiye Caddesi 101/2
Instanbul, 34365
Turkey
Tel: 90-212-327-0050
7. Presidio Networked Trade Claim $152,705
Solutions Group
PO Box 677638
Dallas, TX 75267
Tel: 469-549-3800
8. Meathway Contracting Inc. Professional $144,647
53-46 70th Street Services
Maspeth, NY 11378
9. Saberpoint, LLC Professional $126,315
300 East 55th Street Services
Suite 24B (IT Vendor)
New York, NY 10022
10. Alam Rugs Trade Claim $119,040
Haneef Villa, Station Road
Bhadohi 221 401 , Up, 221401
India
11. Fried,Frank,Harris,Shriver & Professional $102,184
Jacobson LLP Services
One New York Plaza (Legal)
New York, NY 10004
Lee Parks
Tel: 212-859-8000
Email: lee.parks@friedfrank.com
12. Anadol Rug Co Trade Claim $101,944
1088 Huff Road
Atlanta, GA 30318
Tel: 404-350-8558
13. Meathway Contracting Inc. Professional $101,534
53-46 70th Street Services
Maspeth, NY 11378
14. Frette Inc. Licensee $98,574
15 West 37th Street
Suite 8Th Floor
New York, NY 10018
15. Ryder Last Mile Inc. Professional $98,209
75 Remittance Drive Services
Dept. 6030
Chicago, IL 60675
16. Rococo Rug Company Inc. Trade Claim $93,600
888 Main Street Suite 845
New York, NY 10044
Tel: 212-933-1737
17. Highmark Technical & Professional $83,317
Chiller Serv. Services
49 West 45th St.
6th Flr
New York, NY 10036
18. Mobital Usa Trade Claim $81,710
3201 Jules-Brillant
Laval, QC H7P-6C9
Canada
Tel: 514-335-0909
19. American Express Trs Credit Card $79,316
P.O. Box 1270 Services
Newark, NJ 07101
Tel: 800-492-3932
20. Lahore Carpets Mfg Co Trade Claim $78,428
3.5 K.M. Defenco Road
Off Raiwind Road
Lahore, 53700 Pakistan
Tel: 924-275-41280
21. Saba Italia Srl Trade Claim $78,185
Via Dell' Ilndustria 17
35018 San Martino Di Lupari (Pd)
San Martinodilupatri, 35018
Italy
Tel: +39 049 5951767
22. Taracea Trade Claim $75,765
6619 South Dixie Highway #338
Miami, FL 33143
Tel: 305-271-0508
23. Allstar Security & Professional $74,955
Consulting Inc. Services
1441 Broadway, 17th Fl.
New York, NY 10018
Tel: 212-616-7031
24. Costikyan Workroom Inc. Trade Claim $73,742
37-11 48th Avenue
Long Island City, NY 11101
25. Fabric Inc. Professional $72,084
10400 Ne 4th St, Ste 500 Services
Bellevue, WA 98004
Tel: 425-298-3167
26. Bilsa S.A. Trade Claim $71,700
Avenue Des Cerisiers, 15
Bruxelles 1030
Belgium
Tel: 328-365-886
27. Fenwick & West LLP Professional $66,932
P.O. Box 742814 Services
Los Angeles, CA 90074-2814
Tel: 650-428-4422
28. Rug And Kilim (Consign) Trade Claim $66,399
Nazmiyal & Sons Inc
25-18 40Th Ave.
Long Island City, NY 11101
Tel: 212-829-9995
29. Bereket Halicilik Ltd. Trade Claim $64,303
Peykhane Cad. No. 46
Giris Kat Cemberlitas
Istanbul
Turkey
30. Mohawk Carpet Corp Trade Claim $63,773
Mohawk Factoring Inc
160 South Industrial Blvd.
Calhoun, GA 30701
ABC CARPET & HOME: Files for Chapter 11 Bankruptcy
--------------------------------------------------
Bloomberg News reports that ABC Carpet & Home, the more than a
century-old New York luxury home goods retailer, filed for
bankruptcy late Wednesday with plans to sell itself after the
pandemic and a delayed renovation upended its business.
The Covid-19 pandemic cleared the city of many of ABC's regular
customers, while delays in restoring its store near Union Square
made access more difficult for those who remained. And ABC, known
for goods like $6,900 rugs and $1,480 coffee tables, didn't develop
a robust e-commerce business even as more spending shifted online.
ABC generated sales of about $25.5 million year-to-date through
July 31, a roughly 50% drop compared to the same period in 2018,
according to court papers.
By the time it filed for bankruptcy, ABC's lack of cash became so
dire that it risked a forced shutdown without near-term funding,
lawyers for the company wrote in court papers.
The retailer's existing lender, 888 Capital Partners, has agreed to
advance $5.7 million of fresh cash to ABC during the bankruptcy to
fund operations. The lender has also agreed to serve as the
so-called stalking-horse bidder for ABC's assets, setting a floor
for further bids. If no better offers come in, the lender would
forgive the bankruptcy loan and some $8.7 million of pre-bankruptcy
debt in exchange for ownership of the business, court papers show.
ABC Carpet & Home has been working with advisers from B. Riley
Financial Inc. and Greenberg Traurig to seek new financing or a
buyer after a planned private-equity sale fell through, Bloomberg
previously reported.
About ABC Carpet & Home
A.B.C. Carpet & Home, Inc. is a New York-based seller of luxury
home goods. The company traces its roots to the late 1800s, when
Austrian immigrant Samuel Weinrib started the business from a
pushcart on Manhattan's Lower East Side. His great-granddaughter
Paulette Cole helped build its red-brick building on Broadway into
a high-end destination for designers and decorators and their
affluent clients.
A.B.C. Carpet Co. Inc., along with two affiliates, sought Chapter
11 protection (Bankr. S.D.N.Y. Lead Case No. 21-11591) on Sept. 8,
2021. It listed assets of up to $50 million and as much as $100
million of liabilities in its petition.
The Debtors tapped GREENBERG TRAURIG, LLP as counsel; and B. RILEY
SECURITIES, INC., as financial advisor. BANKRUPTCY MANAGEMENT
SOLUTIONS, INC. (STRETTO) is the claims agent.
ACV AUCTIONS: Putative Class Suit Underway in New York
-------------------------------------------------------
ACV Auctions Inc. said in its Form 10-Q Report filed with the
Securities and Exchange Commission on August 11, 2021, for the
quarterly period ended June 30, 2021, that the company continues to
defend a putative class action suit filed in the U.S. District
Court for the Western District of New York.
On March 19, 2021, a putative class action was filed against ACV
Auctions, Inc., et al. in the U.S. District Court for the Western
District of New York, alleging violations of the federal antitrust
laws and New York State law related to an alleged conspiracy to set
bids on our marketplace from transactions that originated from one
seller.
The complaint seeks statutory damages under such laws and other
relief.
In July 2021, the complaint was amended to add and modify
allegations beyond the initial complaint, as well as to add certain
individuals as individual defendants, including George Chamoun, the
company's Chief Executive Officer.
ACV said, "We intend to vigorously defend ourselves in this case.
Due to the inherent uncertainties of litigation, we cannot
accurately predict the ultimate outcome and cannot estimate the
range of any potential loss at this time. However, we believe that
the resolution of this matter will not have a material adverse
effect on our consolidated financial position."
ACV Auctions Inc. develops mobile application. The Company offers
platform that enables used car dealers to view, bid, and purchase
car inventory via online auctions. ACV Auctions serves customers in
the United States. The company is based in Buffalo, New York.
ADVANCED CONTAINER: Eric Horton Quits as Director
-------------------------------------------------
Eric Horton resigned as a director of Advanced Container
Technologies, Inc. on Sept.8, 2021.
The resignation was voluntary and was not because of a disagreement
with Advanced Container Technologies on any matter relating to its
operations, policies or practices, as disclosed in a Form 8-K filed
by the company with the Securities and Exchange Commission.
About Advanced Container
Corona, Calif.-based Advanced Container Technologies, Inc.
--www.advancedcontainertechnologies.com -- markets and sells two
principal products: (i) GrowPods, which are specially modified
insulated shipping containers manufactured by GP Solutions, Inc.,
in which plants, herbs and spices may be grown hydroponically in a
controlled environment and (ii) Medtainers, which may be used to
store pharmaceuticals, herbs, teas and other solids or liquids and
can grind solids and shred herbs.
Advanced Container reported a net loss of $579,031 for the year
ended Dec. 31, 2020, compared to a net loss of $1.41 million for
the year ended Dec. 31, 2019. As of June 30, 2021, the Company had
$4.41 million in total assets, $2.23 million in total liabilities,
and $2.18 million in total stockholders' equity.
Irvine, California-based Haskell & White LLP, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated April 15, 2021, citing that the Company has a working capital
deficit, continued operating losses since inception, and has notes
payable that are currently in default. These matters raise
substantial doubt about the Company's ability to continue as a
going concern.
AGREE REALTY: S&P Assigns 'BB+' Rating on New Preferred Shares
--------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue level rating to
Bloomfield Hills, Mich.-based Agree Realty's proposed preferred
stock offering. Agree intends to use net proceeds for general
corporate purposes, including partially funding its acquisition
pipeline. S&P expects to assign minimal equity credit (0%) to the
preferred shares, based on the proposed terms, consistent with its
treatment for U.S.-based REITs.
Agree's operating performance was solid in the first half of 2021.
At second quarter end, the company's portfolio was 99.5% leased
with a weighted average remaining lease term of 9.7 years. Agree
has very manageable near-term lease expirations with minimal
exposure to tenant categories most affected by the pandemic, such
as entertainment retail, health/fitness, and movie theaters. As a
result, Agree collected over 99% of contractual rents over the past
10 months, among the best collection rate for retail-focused REITs.
S&P said, "In our view, Agree's resilient operating performance
over the past year is largely attributed to its high concentration
of investment-grade rated tenants (68%) and its focus on
non-discretionary and national tenants (85%). Agree maintains the
highest level of investment-grade rated tenants out of the net
lease retail REITS we rate, and it continues to increase tenant
credit quality each year. Moreover, the ground lease portfolio
(12.7% of ABR as of Jun. 30, 2021), contributes to cash flow
stability."
Rental revenues also continue to grow, driven by the company's
aggressive acquisition strategy. Agree completed a record level of
acquisition activity during the first half of 2021, investing $732
million into 146 retail net lease properties across 35 states, $346
million of which was invested during the second quarter. S&P said,
"Of annualized base rents from this acquisition activity, 75% is
generated from investment-grade tenants, reinforcing our view that
Agree is committed to its largely investment-grade rated tenant
strategy. In our opinion, investment-grade tenants offer increased
stability of cash flows as there is less risk of tenant distress.
We expect the level of acquisition activity to remain robust over
the next several years, funded in a largely leverage-neutral manner
such that S&P adjusted debt to EBITDA is maintained in the high-5x
to low-6x area. Given Agree's focus on growth, we expect the
company will use any additional capital to fund investments rather
than de-lever over the next one to two years."
ALGITS INC: Wins Cash Collateral Access Thru October 8
------------------------------------------------------
Judge David E. Rice of the U.S. Bankruptcy Court for the District
of Maryland authorized Algits Incorporated to use the Prepetition
Collateral, including the cash collateral, during the period from
September 1 through and including October 8, 2021 for ordinary
course purposes, pursuant to the budget and as agreed between the
Debtor and Lender, EagleBank.
The Lender is entitled to valid, perfected and non-avoidable
first-priority security interests and replacement liens in all
post-petition assets of the Debtor, of any kind, to the same extent
and with the same priority as Lender's interest in the Prepetition
Cash Collateral, to the extent the Debtor's use of the Prepetition
Collateral results in a diminution of the value of such
collateral.
The Debtor owed the Lender $208,536 pursuant to various loan
documents, as of the Petition Date.
A final hearing to consider the use of cash collateral is scheduled
for October 5, 2021 at 11 a.m. prevailing Eastern Time. Objections
must be filed and served no later than September 28.
A copy of the third consent interim order is available for free at
https://bit.ly/2WUtMxi from PacerMonitor.com.
Counsel to EagleBank, Lender:
Craig M. Palik, Esq.
McNamee, Hosea, P.A.
6411 Ivy Lane, Suite 200
Greenbelt, MD 20770
Telephone: (301) 441-2420
Email: cpalik@mhlawyers.com
About Algits Incorporated
Algits Incorporated, which operates an amusement/recreational
facility at 9301-9315 Snowden River Parkway, in Columbia, Maryland,
filed a Chapter 11 petition (Bankr. D. Md. Case No. 21-13888) on
June 11, 2021. In the petition signed by Dawn Alexander,
president, the Debtor estimated up to $50,000 in assets and between
$1,000,000 and $10,000,000 in liabilities.
Judge David E. Rice oversees the case.
Kline Law Group LLC is the Debtor's counsel.
EagleBank, as lender, is represented by Craig M. Palik, Esq. at
McNamee, Hosea, P.A.
ALLEGHENY TECHNOLOGIES: Moody's Affirms B2 CFR, Rates New Notes B3
------------------------------------------------------------------
Moody's Investors Service affirmed Allegheny Technologies
Incorporated's (ATI) B2 Corporate Family Rating, B2-PD Probability
of Default rating and its B3 senior unsecured ratings. The B3
senior unsecured rating for Allegheny Ludlum Corporation was also
affirmed. At the same time, Moody's assigned a B3 rating to ATI's
proposed senior notes which will include an 8-year and a 10-year
tranche with a minimum size of $300 million for each tranche and a
targeted total amount of $650 million, and a rating of (P)B3 to
ATI's senior unsecured shelf from which the notes will be issued.
The proceeds will be used to redeem its $500 million of senior
notes due 2023 and pay associated premiums and fees and to make a
contribution of up to $50 million to its underfunded pension plan.
The remaining proceeds will be added to its cash balance. ATI's
speculative grade liquidity rating remains at SGL-2. The outlook is
stable.
"The affirmation of Allegheny Technologies ratings reflects our
expectation that its operating performance will gradually improve
over the next 12 to 18 months and its credit metrics will become
more commensurate with its rating" said Michael Corelli, Moody's
Senior Vice President and lead analyst for Allegheny Technologies
Incorporated.
Assignments:
Issuer: Allegheny Technologies Incorporated
Senior Unsecured Regular Bond/Debenture, Assigned B3 (LGD4)
Senior Unsecured Shelf, Assigned (P)B3
Affirmations:
Issuer: Allegheny Ludlum Corporation
Gtd Senior Unsecured Regular Bond/Debenture, Affirmed B3 (LGD4)
Issuer: Allegheny Technologies Incorporated
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Unsecured Regular Bond/Debenture, Affirmed B3 (LGD4)
Outlook Actions:
Issuer: Allegheny Ludlum Corporation
Outlook, Remains Stable
Issuer: Allegheny Technologies Incorporated
Outlook, Remains Stable
RATINGS RATIONALE
Allegheny Technologies B2 corporate family rating reflects its very
high near-term leverage and weak interest coverage due to the
gradual recovery in the commercial aerospace market which weakened
materially in 2020 due to the COVID-19 pandemic. It also
incorporates Moody's expectation for a gradually improving
operating performance, which will enable its credit metrics to
eventually return to a level that is more commensurate with its
rating. Although, its operating performance will remain
historically weak over the next 12 to 18 months.
ATI's rating also reflects its position as a leading producer of
specialty titanium and titanium alloys, nickel-based alloys and
super alloys serving a wide range of end markets including
aerospace and defense, energy, medical, electronics, automotive and
others. The company benefits from long term agreements (LTA's) with
many of its customers across the airframe, aero engine, defense and
medical markets. The rating also incorporates its good liquidity
position which provides support to its credit profile and enables
it to navigate the near-term weakness in its operating performance
and potential investments in working capital as its business
recovers.
ATI's operating performance is expected to gradually improve along
with the protracted recovery in the commercial aerospace sector,
since the aerospace and defense sectors account for more than 50%
of revenue in a typical year. Continued strength in the defense
sector and improving trends in the specialty energy (about 10% of
sales), electronics and medical end markets will also support its
recovery. In addition, it will benefit from recent cost cutting
initiatives and its new toll converting agreement with JSW Steel.
However, the improvement in its operating performance will be
tempered by a 105-day strike by 1,300 united steelworkers at nine
plants primarily in the Specialty Rolled Products division of its
Advanced Alloys & Solutions segment. The company and the union
reached an agreement on a new contract in mid-July 2021, but the
company estimates it incurred about $40 million of costs related to
the strike in Q2 2021 and expects an additional negative impact in
Q3. Including the impact of the strike and excluding the pre-tax
gain of approximately $65 million related to reduced funding
requirements for postretirement medical benefits resulting from the
new USW labor agreement, Moody's anticipate that ATI's adjusted
EBITDA will be relatively flat with last year and in the range of
$240 million - $260 million in 2021. Its operating performance
should materially improve in 2022 as the economic recovery
continues and strike related costs go away.
ATI's credit metrics have weakened materially with a leverage ratio
(debt/EBITDA) of 11.6x as of June 2021 due to the substantial
decline in its operating results which was exacerbated by the
impact of the steelworkers strike and an increase in its
outstanding debt as it focused on shoring up its liquidity
position. Moody's expect the company's leverage ratio will decline
to about 9.5x in December 2021 and continue to strengthen
thereafter as it benefits from improved end market demand, a lower
pension underfunding adjustment and the elimination of strike
related costs. The leverage ratio would be closer to 7.5x excluding
the strike related costs which are unlikely to be repeated next
year and its adjusted debt level will decline in 2022 due to
voluntary pension plan contributions. In addition, the leverage
ratio would be about 8.0x on a pro forma basis assuming the
company's convertible debt is converted to equity. The leverage
ratio calculation includes $84.2 million of convertible notes due
in July 2022 with a conversion price of $14.45 per share and $291.4
million of convertible notes due 2025 with a conversion price of
$15.49 per share. The company's current share price is about $18.00
per share so it is possible this debt could eventually convert to
equity.
ATI's speculative grade liquidity rating of SGL-2 considers the
company's good liquidity profile which consists of $472.5 million
in cash and approximately $350 million of borrowing availability as
of June 30, 2021. The company utilized $42.8 million of its
revolver availability to support the issuance of letters of credit
and had no borrowings outstanding on its $500 million asset backed
revolving credit facility (ABL) which matures in September 2024.
Availability was limited by the borrowing base calculation and
since the company did not meet the springing fixed charge coverage
ratio test.
The B3 rating on ATI's senior unsecured debt instruments reflects
the effective subordination of the unsecured debt relative to the
ABL facility and the term loan. The senior unsecured debt at
Allegheny Ludlum (guaranteed by ATI) has the same rating as the
senior unsecured debt at ATI given the high level of
interdependence between the operations. The instruments are also
considered to be at parity given the significantly higher asset
values of ATI relative to the asset value of Allegheny Ludlum and
the view that given the operating interdependence, ATI would
support Allegheny Ludlum.
The stable outlook incorporates Moody's expectation that ATI's
operating performance will gradually improve over the next 12 to 18
months and its credit metrics will become more commensurate with
its rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Though a rating upgrade is unlikely in the near term, ATI's rating
could be upgraded if the company demonstrates the ability to
sustain EBIT/interest above 2x, debt/EBITDA below 5x and an
adjusted operating margin above 5%.
Downward rating pressure could materialize if the recovery in the
aerospace sector is more protracted than currently anticipated and
ATI's adjusted operating margin remains below 3%, retained cash
flow is sustained below 6% of outstanding debt or free cash flow
remains negative. The rating could also be downgraded if the
company's liquidity position materially deteriorates.
Headquartered in Pittsburgh, Pennsylvania, ATI is a diversified
producer and distributor of components and specialty metals such as
titanium and titanium alloys, nickel-based alloys and stainless and
specialty steel alloys. It sells these products to the aerospace &
defense, energy, automotive, electronics, medical, construction,
mining, appliance and food equipment sectors. For the twelve months
ended June 30, 2021 the company generated revenues of $2.6
billion.
The principal methodology used in these ratings was Aerospace and
Defense Methodology published in July 2020.
ALLEGHENY TECHNOLOGIES: S&P Affirms 'B' Issuer Credit Rating
------------------------------------------------------------
S&P Global Ratings affirmed its ratings on U.S.-based specialty
materials and components producer Allegheny Technologies Inc.
(ATI), including its 'B' issuer credit rating. At the same time,
S&P revised its outlook to stable from negative.
S&P said, "We assigned our 'B' rating to the new senior unsecured
notes. We revised the recovery rating for ATI's senior unsecured
notes to '4' from '3', indicating our expectations for average
recovery (30%-50%; rounded estimate: 45%) in the event of a payment
default.
"The stable outlook reflects our expectation that credit metrics
will remain weak in 2021, but should improve over the next 12
months as demand from ATI's largest end market (commercial
aerospace) stabilizes and begins the long, uneven return to
pre-pandemic levels."
ATI's proposed debt issuance removes the refinance risk associated
with the 2023 notes while the recovery of the global commercial
aerospace is in the early stages. ATI plans to issue $650 million
in senior notes to refinance its $500 million senior notes due in
2023. This will give the company flexibility as the aerospace
recovery picks up pace over the coming 12 months by extending its
maturity profile and strengthening the balance sheet, with
incremental proceeds also going to reduce pension liabilities. The
next meaningful debt maturities are the $200 million term loan due
in 2024 (unrated) and $440 million in 2025, which comprises $290
million of convertible notes (unrated) and $150 million of senior
notes.
S&P said, "We anticipate leverage will remain elevated in 2021,
recovering below 6x EBITDA in 2022 onwards. The commercial
aerospace industry represents ATI's largest end market (reflecting
34% of revenue in 2020 and 45% in 2019); as such ATI's credit
metric recovery will be closely related to the recovery in global
air travel. While global air traffic has started to recover, we
expect it to be long and very uneven around the world. ATI
experienced further disruption to its operations this year due to a
three-month strike at several of its facilities. While the company
was able to maintain production, albeit at lower levels, at the
affected facilities, it will reduce EBITDA by about $40 million.
With that being said, we anticipate the worst of the downturn and
strike impact is now behind ATI and credit metrics should begin
improving incrementally quarter over quarter over the next 12
months. We forecast adjusted EBITDA of about $220 million in 2021,
recovering to about $350 million-$400 million in 2022 (compared to
$565 million of EBITDA in 2019). This translates into debt to
EBITDA returning to about6x by the end of 2022 and then trending
below 5x in 2023."
ATI has a significant liquidity cushion to support the ramp-up of
production as the market begins to stabilize and recover. As of the
end of the second quarter, ATI had $470 million of cash and $350
million of revolver availability. This level of liquidity should be
sufficient to cover working capital investments, ongoing capital
expenditure (capex) spending, which S&P expects to remain around
$130 million in 2022, and future pension contributions to continue
proactively reducing outstanding liabilities, all while production
levels start to increase from pandemic lows.
S&P said, "We forecast ATI's exit from stainless steel products and
cost-reduction efforts to support margin growth as the commercial
aerospace recovery progresses. At the end of 2020, ATI announced it
was exiting its standard stainless steel product business to focus
on aerospace and defense end markets. As well as releasing cash
from working capital that will be deployed to invest in
higher-margin production capabilities, the exit will materially
reduce the group's exposure to volatile raw materials prices, from
metals such as nickel, which has contributed to volatile earnings
and working capital in this business historically. During the
pandemic, ATI lowered its cost structure to meet depressed demand
levels by taking actions such as idling some primary titanium
operations and workforce right-sizing, which should result in about
$90 million of cost savings in 2021. Further supporting ATI's
cost-position improvements is a new long-term tolling agreement
reached with JSW in May 2021, which will increase utilization and
fixed-cost absorption at its hot-rolling and processing facility in
Brackenridge, Pa. These steps as well as the exit from the highly
volatile stainless-steel sector, a lower-value, commodity-like
product business, should support EBITDA-margin expansion and lead
to more margin stability as demand recovers. Under our current base
case, we forecast S&P Global Ratings-adjusted EBITDA margins to
increase to about 15.5% by 2023, compared to 13.7% in 2019.
"The stable outlook reflects our expectation that credit metrics
will remain weak through the balance of 2021 at above 9x. However,
credit measures, including debt to EBITDA, should improve over the
next 12 months as demand from commercial aerospace stabilizes and
begins the long, uneven return to pre-pandemic levels."
S&P could lower its rating on ATI in the next 12 months if debt to
EBITDA is sustained above 7x. This could be due to:
-- Slower-than-expected recovery in the commercial aerospace
market, indicating a more sustained dislocation in the aerospace
market than S&P currently anticipates.
-- Cash flows weaken and the company's liquidity cushion tightens
because of slower-than-anticipated industry recovery.
S&P could raise its rating on ATI if the company sustains debt
leverage below 4x under normalized market conditions. This would be
dependent on a recovery in the commercial aerospace market as well
as the following:
-- Improved free cash flow generation due to improved
profitability and a lower pension burden.
AMERICORE HOLDINGS: Taps Rose Grasch as Special Counsel
-------------------------------------------------------
Americore Holdings, LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the Eastern District of Kentucky to hire
Rose Grasch Camenisch Mains, PLLC to serve as special counsel in
matters involving Cardinal Health 110, LLC and Cardinal Health 200,
LLC.
Cardinal Health 110 and Cardinal Health 200 have objected to the
agreed order filed by Pineville Community Hospital Association,
Inc.'s Chapter 7 trustee, which approved a resolution between the
trustee and Pineville Medical Center, LLC, an affiliate of
Americore Holdings, regarding the allocation of proceeds from the
sale of PCHA's personal properties.
J. Wesley Harned, Esq., the firm's attorney who will be providing
the services, will be paid at an hourly rate of $290.
Americore Holdings paid $2,500 to Mr. Harned's law firm as a
retainer fee.
Mr. Harned 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:
J. Wesley Harned, Esq.
Rose Grasch Camenisch Mains PLLC
326 South Broadway
Lexington, KY 40508
Tel: 859-721-2856
Fax: 859-523-3857
Email: info@rgcmlaw.com
About Americore Holdings
Americore Holdings, LLC and its affiliates, including Americore
Health LLC, own and operate the Ellwood City Medical Center in
Pennsylvania, Southeastern Kentucky Medical Center (formerly
Pineville Community Hospital), Izard County Medical Center in
Arkansas; and St. Alexius Hospital in St. Louis.
Americore Holdings and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Ky. Lead Case
No.19-61608) on Dec. 31, 2019, listing as much as $50,000 in both
assets and liabilities. Judge Gregory R. Schaaf oversees the case.
Bingham Greenebaum Doll, LLP and Rose Grasch Camenisch Mains, PLLC
serve as the Debtors' bankruptcy counsel and special counsel,
respectively.
Carol A. Fox was appointed as the Debtors' Chapter 11 trustee. The
trustee is represented by Baker & Hostetler LLP.
Suzanne Koeing was appointed as the Debtor's patient care
ombudsman. The PCO is represented by Saul Ewing Arnstein & Lehr
LLP.
ARC FALCON I: S&P Assigns 'B' ICR, Outlook Stable
-------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to
U.S.-based engineered solutions and performance products producer
ARC Falcon I Inc., ahead of financial sponsor The Jordan Co.'s
acquisition of LSF 10 Cedar Investments L.P., d/b/a Arclin.
S&P said, "At the same time, we assigned our 'B' rating to the
company's proposed $100 million revolving credit facility, $675
million first-lien term loan and $100 million delayed-draw term
loan, as well as our 'CCC+' rating to its proposed $155 million
second-lien term loan.
"We affirmed our 'B' rating on LSF 10 Cedar Investment L.P. and
will discontinue ratings after the transaction closes because there
will no longer be debt at this entity.
"The stable outlook reflects our expectation for debt leverage of
about 6x over the next 12 months, despite the higher
transaction-related debt, due to elevated EBITDA from strong new
construction and repair and remodeling end markets.
"Despite a full-turn increase in debt leverage in 2021, we expect
credit metrics to remain consistent with our expectations for the
'B' issuer credit rating. We expect debt to EBITDA to increase to
slightly over 6x in 2021, compared to just above 5x in 2020 despite
about a $224 million increase in debt (just over 35% higher than in
2020) at transaction close and for margins to remain steady at
about 20%-21% despite inflationary input costs. This is because we
also expect EBITDA to increase about 7%-8% from about $126 million
in 2020 as a result of positive tailwinds for housing starts and
residential repair and remodeling spending, with S&P Global Ratings
expecting housing starts of 1.59 million in 2021 and 1.53 million
in 2022, up from 1.3 million in 2020." The EBITDA improvement is
also supported by Arclin's highly variable cost structure and
ability to reduce costs given that 90% of cost of goods sold (COGS)
is variable. In addition, about 80% of COGS is derived from
material costs and Arclin has historically been able to pass
through increasing raw material prices to customers given
pass-throughs embedded into its customer contracts; the company's
price charged is typically its raw material costs plus a margin.
The Jordan Co. is acquiring LSF 10 Cedar Investments (d/b/a Arclin)
using debt and equity. As part of the transaction, ARC Falcon I
Inc. will obtain a $100 million revolving credit facility due 2026
(undrawn at close) and a $675 million first-lien term loan due
2028. The company will also have a delayed-draw term loan of $100
million (undrawn at close), which it could use to fund future
acquisitions and for general corporate purposes, as well as a $155
million second-lien term loan due 2029. Finally, the capital
structure will include $365 million of equity contributed by The
Jordan Co.
The proposed transaction will elevate adjusted leverage, resulting
in tightened credit cushion if profits weaken. S&P said, "While we
expect earnings to remain strong at least over the next 12 months,
weaker business conditions and profits could result in sustained
deterioration in credit measures given a full turn less of cushion.
For instance, if EBITDA declined by just over 10% compared to our
7% growth assumption for 2021, debt leverage could increase above
7x. However, the company's strong performance in the first half of
2021 and our expectation for strong tailwinds in its end markets
provide some counterbalance. In our experience, sponsor-owned
companies typically have more aggressive financial policies than
those that are not owned by a financial sponsor and are more likely
to pursue debt-financed acquisitions or dividend distributions over
time. However, we do not expect the company to pursue large
debt-financed acquisitions or distributions over the next year as
it works to absorb the leverage buyout. The Jordan Co. also
contributed equity for the transaction, and we expect the company
to focus on new product development and organic growth projects
over the next 12 months."
S&P said, "The stable outlook reflects our expectation for debt
leverage of about 6x over the next 12 months despite the higher
transaction-related debt due to elevated EBITDA from strong new
construction and repair and remodeling end markets. We also expect
EBITDA margin to remain above 20% given the company's ability to
pass-through material cost increases."
S&P could lower its rating on ARC Falcon I Inc if debt to EBITDA
increases above 7x over the next 12 months, which could occur if:
-- EBITDA margin is 200 basis points lower than S&P's current
expectation. This could occur if new residential construction and
repair and remodeling markets weaken materially, or inputs costs
increase exponentially, and price increases are limited; or
-- The financial sponsor undertakes a more aggressive financial
policy than S&P anticipates including debt-funded acquisitions
and/or dividends, including using its delayed-draw term loan,
causing leverage to increase and it believes there is little
prospect of recovery.
S&P believes an upgrade is unlikely within the next 12 months given
the company's limited scale and product focus and elevated leverage
pro forma for the transaction; however it could take a positive
action if:
-- The company significantly and profitably expands in size and
scale, boosting revenue by more than 20% while also sustaining
EBITDA margins above 20%, resulting in adjusted leverage of well
under 5x; and
-- S&P could also raise the rating if ARC Falcon sustains adjusted
leverage well below 5x and it believes financial sponsor The Jordan
Co. commit to maintaining.
ASP UNIFRAX: Fitch Assigns FirstTime 'B' LT IDR, Outlook Pos.
-------------------------------------------------------------
Fitch Ratings has assigned a 'B' first-time Long-Term Issuer
Default Rating (IDR) to ASP Unifrax Holdings, Inc. (Unifrax) with a
Positive Outlook. Fitch has also assigned a 'BB'/'RR1' rating to
the company's first lien revolver, term loans, and proposed senior
secured notes and a 'CCC+'/'RR6' to its proposed senior unsecured
notes.
The 'B' rating reflects Unifrax's leading position in thermal
management, specialty filtration, battery materials, emission
control, and other ESG applications, pro forma for the acquisition
of Lydall, Inc. The rating is also supported by the company's
stable EBITDA margins, strong FCF generation, and expectations that
FFO fixed charge coverage metrics will improve to approximately
2.5x-3.0x in the 2023-2024 timeframe. Fitch anticipates the company
will use its annual cash generation in the $50 million-$150 million
range to prepay portions of the term loan debt. The Lydall
acquisition will allow Unifrax to leverage its flexible
manufacturing capabilities and global footprint to add value to
Lydall's existing asset portfolio, and to capitalize on the
emerging electric vehicle and energy efficiency trends.
The Positive Outlook reflects Fitch's confidence that Unifrax will
be able to achieve cost synergies, organic growth, margin
expansion, and scale the business post-Lydall transaction, which
should determine the rate at which it can de-leverage to a level
consistent with a 'B+' rating. The Outlook also reflects the
positive upside of the Lydall business combination due to end
market expansion and promising ESG - friendly product development,
offset by an elevated near-term leverage profile. Unifrax's margin
resiliency is derived from the company's ability to tailor its
products to a given price and function and relatively modest Capex
requirements. Accordingly, much of the company's cash flow risk is
volumetric. Fitch expects to resolve the Outlook following the
realization of FCF and gross debt reduction resulting in leverage
and coverage metrics consistent with 'B+' rating tolerance, which
is currently expected within 18-24 months.
KEY RATING DRIVERS
Lydall Acquisition Provides Scalability and Diversification: On
June 21, 2021, Unifrax announced the acquisition of Lydall for $1.3
billion, which is likely to contribute around $800 million in
revenue and $100 million in EBITDA. Though the acquisition adds
significant debt to the capital structure, Fitch believes that the
Lydall assets complement Unifrax's business profile and views
management's expectation of around $70 million of synergies to be
achievable, as they are expected to be largely G&A, labor
optimization, and backroom consolidation related. Additionally, the
elimination of Lydall's public company costs is expected to
contribute to the synergy realization.
Fitch views Unifrax's operations as efficient in terms of the
product and volume flexibility at site-level, and across the entire
company footprint. Post-Lydall acquisition, Unifrax should be well
positioned to capture significant growth with limited capital
investments, including the ability to leverage Unifrax's global
infrastructure to globally scale Lydall's products, and offers a
significant opportunity to drive Lydall penetration in regions such
as APAC, where it does not have a material presence today.
Additionally, Unifrax and Lydall each bring significant R&D
expertise and innovative portfolios, and together offer the ability
to develop new filtration and battery products. Unifrax maintains
spec'ed in, consumable, low-cost, and high-performance
characteristics (particularly in the thermal management space) that
provide underlying growth and customer stickiness to the company's
operational and cash flow profiles.
Promising ESG-Friendly Energy Product Development: Unifrax has
positioned itself as a world leader in Thermal Management and
Specialty Fibers products. It is one of two global, vertically
integrated manufacturers of high-performance insulating fiber, with
almost 40% of worldwide market share based on production volume.
Unifrax uses its superior product quality and ability to rapidly
develop customized solutions to gain market share and expand into
new, high growth end markets. Customers value Unifrax as a
"one-stop" solution to their high temperature insulation needs. As
regulatory pressures and demand for energy efficient insulation
solutions increase from customers, Unifrax's product suite is
positioned to capitalize on these growth drivers.
Unifrax maintains a robust ESG-friendly innovation pipeline that is
accelerated by specialty filtration capabilities. SiFAB, which is a
flexible nanoporous fiber that causes silicon to expand inward on
lithium batteries rather than outward, is likely to commercialize
next year based on its recent patent approval. This product could
replace graphite as a more energy-efficient solution. Unifrax also
has two more products in the pipeline, including Ecolyic, a new
nano-structured alumina catalyst technology that reduced emissions
on existing ICE vehicles, vehicle weight, and precious metal costs,
and FlexCat, a high-surface area flexible media designed to provide
enhanced catalyst effectiveness with increased yield using fewer
raw materials.
FCF Supports Debt Reduction: Fitch's expectation for resilient
EBITDA generation, modest Capex commitments at around 6% of
revenues, and margin expansion supports positive FCF generation.
Once the Lydall transaction is complete, Fitch believes the company
will generate FCF in the range of $50million-$150 million per year,
with most excess FCF prioritized towards debt repayment, as well as
to support continued organic growth. Fitch expects modest annual
maintenance Capex over the forecast, with growth Capex positioned
towards the development of new products and other organic growth
drivers. The biggest operational challenge to FCF generation is
volumetric, as management has guided towards organic growth as a
driver for FCF generation. However, the company's resiliency
through the coronavirus pandemic, as well as its product, customer
and geographic diversification, highlights the resiliency of the
company's cash flows.
Improving Leverage and Coverage Metrics: Fitch believes that
Unifrax has the ability to significantly de-lever once the Lydall
transaction is complete, despite currently elevated leverage
metrics. The company has expressed its commitment to maintain
disciplined and balanced financial policies going forward,
prioritizing deleveraging through excess free cash flow. Over the
next two to three years, Fitch expects that the Unifrax and Lydall
business combination and integration processes will conclude, and
the commercialization of the company's current R&D pipeline will be
completed. Fitch expects that as a result of the 2021 acquisition
of Lydall, FFO net leverage will remain elevated in 2021, but
normalize in 2022, and trend towards 7.0x over the forecast, and
FFO interest coverage trending towards 3.0x by 2024.
DERIVATION SUMMARY
Unifrax is positioned below Aruba's 'B+' rating, which is informed
by the company's niche specialty chemicals position as the leading
global producer of nitroalkanes, resulting in earnings resiliency
in the current environment, its geographic diversity and growing
product breadth within its end markets, as well as its strong FCF
generation. Unifrax is also rated below S.K. Invictus
(B+/Negative), which maintains lower leverage levels than Unifrax.
Invictus also holds considerable, wildfire-linked product
concentration, giving the company more volumetric risk than
Unifrax.
Unifrax's credit profile compares favorably with Solenis UK
International Limited's (not rated), a key supplier of specialty
chemicals into the pulp & paper and industrial water treatment
industries. Solenis and Unifrax both should experience positive FCF
over the next few years, but Unifrax maintains higher EBITDA
margins over the forecast. Hexion Inc. (not rated), a specialty
chemicals company that produces resins and forest materials,
maintains EBITDA margins in the low teens, while Unifrax maintains
EBITDA margins in the low-20s. Hexion's credit profile is
influenced by its more cyclical end market exposure to autos,
construction, and energy, while Unifrax is expected to be more
diversified moving forward due to end market expansion post-Lydall
acquisition.
KEY ASSUMPTIONS
-- Lydall transaction assumed to close by YE 2021;
-- Post-transaction revenue growth slightly above GDP in the mid
single digits;
-- Post-transaction, synergy EBITDA margins in the low-20% range;
-- Approximately $70 million of EBITDA synergies realized by year
three of the acquisition;
-- Capex assumed at about 6% of revenues;
-- Excess FCF mainly used for debt paydown;
-- No acquisitions or dispositions projected after the Lydall
acquisition in 2021.
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that Unifrax would be reorganized as
a going-concern in bankruptcy rather than liquidated. Fitch has
assumed a 10% administrative claim.
Going-Concern Approach
Fitch's recovery analysis uses a consolidated approach and a $300
million going concern EBITDA. This approximates a midcycle EBITDA
in the Stress Case, assuming the combination of Lydall, and
acknowledges the volatility of the auto, construction and steel
industry, the most cyclical end-market subsectors that Unifrax is
exposed to. The GC EBITDA also reflects a scenario where synergies
from the Lydall acquisition are not fully realized, the company
does not successfully launch its new products, and the company
levers up without realizing significant growth.
An EV multiple of 7.0x is applied in Fitch's recovery analysis. The
7.0x multiple is at the upper end within Fitch's chemicals
portfolio and is warranted to reflect its relatively lower cash
flow risk as demonstrated by the company's growth-orientation,
resilient EBITDA margins, cash flow generation, and end-market
optimization. The 7.0x multiple is also within the range of
historical bankruptcy case study exit multiples for peer companies,
which ranged from 5.2x-7.7x, but above the median of 5.9x.
The allocation of value in the liability waterfall results in
recovery corresponding to 'BB'/'RR1' recovery for the first-lien
credit facility with an assumed 80% draw, first-lien term loans,
and proposed first-lien secured notes. The proposed senior
unsecured notes have a recovery corresponding to 'CCC+'/'RR6'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The scaling of Lydall acquisition, realization of synergies
and organic growth prospects, and successful new product
development that allow margins to approach the low-mid 20%;
-- Demonstrated ability to generate positive FCF and management
commitment to a financial policy oriented towards gross debt
repayment;
-- FFO interest coverage approaching 2.5x and FFO Net Leverage
sustained below 7.0x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- FFO interest coverage below 1.5x;
-- Inability to generate FCF and a tightening liquidity position;
-- Additional leverage due to failed integration efforts and
unsuccessful product launches.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of June 30, 2021, Unifrax has $58 million in
cash, and full availability on its secured credit facility due
December 2023 (upsized to $200 million in conjunction with the
Lydall transaction). The pro forma maturity profile is laddered
with company's approximately $1 billion in secured term loans due
December 2025, proposed $700 million senior secured notes due in
2028, and proposed $500 million senior unsecured notes due in 2029.
Fitch believes forecasted FCF and gross debt reduction over the
rating horizon help mitigate liquidity and refinancing risks, but
recognizes that integration and execution risks remain.
ISSUER PROFILE
ASP Unifrax Holdings, Inc. is a global specialty materials platform
focused on providing innovative thermal management, emission
control, filtration, and energy solutions for a variety of end
markets and applications. It is one of two vertically integrated
global manufacturers of high temperature refractory and insulating
fiber and engineered products, and is the only company to cover all
three of its product categories globally (Thermal Management,
Emission Control, and Specialty Fibers).
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.
ASP UNIFRAX: Moody's Ups CFR to B3 & Rates New $700MM Sr. Notes B2
------------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to ASP Unifrax
Holdings, Inc.'s (Unifrax) proposed $700 million senior secured
notes and a Caa2 rating to the proposed $500 million senior
unsecured notes. At the same time, Moody's upgraded Unifrax's
corporate family rating to B3 from Caa1, probability of default
rating to B3-PD from Caa1-PD and the ratings of the upsized $200
million senior secured first lien revolving credit facility and
$1.05 billion senior secured first lien term loans, including both
the US dollar and Euro tranches, to B2 from Caa1. The outlook is
stable.
Proceeds from the notes issuance along with $450 million in new
cash equity in the form of preferred stock to be issued by Ulysses
Investment HoldCo, Inc. (parent) will be used to fund the $1.3
billion acquisition of Lydall, Inc., pay for the related
transaction fees and expenses and to refinance the existing $250
million 2nd lien term loan, the rating of which will be withdrawn
upon repayment.
Upgrades:
Issuer: ASP Unifrax Holdings, Inc.
Probability of Default Rating, Upgraded to B3-PD from Caa1-PD
Corporate Family Rating, Upgraded to B3 from Caa1
Backed Senior Secured Revolving Bank Credit Facility, Upgraded to
B2 (LGD 3) from Caa1 (LGD 3)
Backed Senior Secured 1st Lien Term Loan, Upgraded to B2 (LGD 3)
from Caa1 (LGD 3)
Assignments:
Issuer: ASP Unifrax Holdings, Inc.
Senior Secured Regular Bond/Debenture, Assigned B2 (LGD 3)
Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD 5)
Outlook Actions:
Issuer: ASP Unifrax Holdings, Inc.
Outlook, Remains Stable
The ratings are subject to the transaction closing as proposed and
receipt and review of the final documentation.
RATINGS RATIONALE
Unifrax's B3 corporate family rating reflects, on proforma basis,
the company's increased scale, broadened geographic reach and
improved customer, product and end-market diversity through the
larger exposure to the growing EV market and entry into the
fast-expanding specialty filtration market that is capitalizing on
the health and safety driven demand for better indoor air quality
and industrial air filtration needs. The rating benefits from the
company's leading global market positions in thermal management,
battery materials, filtration and emissions control markets. The
rating is also supported by the company's longstanding
relationships with many blue-chip customers, its good liquidity,
ongoing initiatives to drive additional growth via technology
innovation, vehicle electrification, and specialty and industrial
filtration growth opportunities. The rating is constrained by the
company's still elevated leverage, high exposure to cyclical
automotive, industrial, and chemical end markets and lower, but
still considerable, susceptibility to economic downturns as
evidenced in prior years.
Moody's anticipates that after solid H1 results, Unifrax's
stand-alone operating and financial performance will evidence
further improvement in H2 2021 as a result of the continued global
economic recovery and strong demand from the end-markets it serves.
Unifrax's thermal management business will continue to grow on the
back of the strength in the industrial end-markets, including the
steel sector with steel prices likely remaining at historically
high levels throughout 2021 despite the anticipated gradual
weakening in the second half of the year. Unifrax is also expected
to benefit from the rebound in global automotive production,
notwithstanding that semiconductor shortage could dampen the
projected recovery. In the medium and the long term, sales are
likely to get a boost from the completion of PCW Line 7 scheduled
for Q4 2021 and the impact of tightening carbon regulations.
Post transaction close, Unifrax's gross and operating margins are
expected to be lower as compared to the LTM ended June 30, 2021,
given Lydall's lower margins. However, the expected top line growth
driven by volume growth, price increases and material cross-selling
opportunities, highly recurring nature of the business, focus on
higher margin products, cost reduction and restructuring
initiatives, supply chain optimization and the resulting earnings
growth along with relatively low sustaining capex requirements of
the business should lead to a material improvement in operating
margins and free cash flow generation in the medium term.
Moody' forecasts that Unifrax's debt/EBITDA, as adjusted by
Moody's, will decline to 8.5-8.8x by 2021 year-end. While the
projected leverage is still high for the B3 rating, it will be
lower than in 2020 and is, importantly, expected to decline to more
appropriate low 7x by 2022-end. This expected strengthening of the
credit profile will be driven by revenue growth, EBITDA margin
expansion, the ensuing EBITDA growth and debt repayments. Moody's
estimates retained cash flow to debt (RCF/Debt) of under 7% and
interest coverage (EBITDA/Interest) of above 2.5x in 2022.
The stable outlook reflects Moody's expectations that, post Lydall
acquisition, Unifrax will evidence a material growth in revenues,
earnings and cashflow in 2021-2023, successfully implements the
outlined cost saving, productivity enhancing and business
optimization opportunities and will execute on its commitment to
deleverage its balance sheet through both the earnings growth and
absolute debt reduction. The stable outlook also assumes that the
company will not pursue any additional material M&A transactions.
Unifrax faces moderate environmental, largely relate to obligations
for clean-up of disposal sites, but the company's previous owners
assumed liability for potential off-site clean-up obligations and
generally agreed to indemnify the company for certain environmental
liabilities which might emerge in the future. Lydall incurs
moderate remediation costs associated with its facilities and has
had inspections related to groundwater discharge. Moody's view the
social risk to be moderate for ASP Unifrax. The company has
multiple programs in place to ensure workplace and product safety.
Lydall has over 3,000 employees with a relatively small portion of
the workforce unionized (225 in the United States) or covered by a
National Collective Bargaining Agreement (France, Germany, China,
and Canada). Unifrax's governance risk is above average due to
private equity ownership which extracts substantial management fees
from the company, the sponsor's historically aggressive financial
policy manifested in the pursuit of acquisitive growth and high
capex spending during weak macro environment, which are key drivers
of the currently high financial leverage. The company is also
exposed to corporate governance issues by a virtue of operating in
many emerging markets including China. That said, the company has
committed to reducing leverage and to a more balanced capital
allocation policy going forward.
Unifrax is expected to have a good liquidity profile supported by
$58 million cash on hand, on proforma basis, full availability
under the upsized $200 million revolving credit facility and its
28% equity stake in Luyang, publicly listed ceramic fiber producer
in China, which provides an alternative source of liquidity for
debt service if management chooses to do so. The revolver is
expected to have a springing first-lien leverage ratio covenant of
7.5x if borrowings exceed 35%. Moody's expect the company to remain
compliant with the covenant with a good cushion.
The B2 ratings on the senior secured first lien revolving credit
facility, term loans and the new senior secured notes, one notch
above the B3 CFR, reflect their priority position in the capital
structure. Senior secured notes will be secured by the first
priority security interest in the same collateral as the existing
Unifrax's first lien term facility, which are secured by a first
priority lien on substantially all domestic assets and, in the
instance of Euro-denominated borrowings, the assets of certain
international subsidiaries in the U.K. and Germany. The Caa2 rating
on the new senior unsecured notes reflects their effective
subordination to the significant amount of secured debt. Senior
secured and unsecured notes will be guaranteed, jointly and
severally, by all current and future wholly-owned domestic
restricted subsidiaries that are guarantors of the existing first
lien term facility. In H1 2021, Unifrax's non-guarantor foreign
subsidiaries generated about 49% of proforma consolidated revenues
and 51% of the proforma company-adjusted EBITDA and accounted for
about 46% of the consolidated assets and none of the company's
consolidated liabilities.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings upgrade could be considered if Moody's-adjusted
debt/EBITDA improves to below 6.0x driven by both the EBITDA growth
and the reduction in the quantum of debt, if the RCF/Debt is
sustained at above 8% and if the company demonstrates the ability
to generate positive free cash flow on a consistent basis. An
upgrade would also require the execution of more conservative
financial policies from the sponsor and management.
Moody's could downgrade the ratings if operating performance
deteriorates, the adjusted leverage were expected to remain above
7.5x or if the company undertakes a significant debt-financed
acquisition or dividend recapitalization. Moody's could also
downgrade the ratings if liquidity deteriorates and free cash flow
turns and remains negative on a sustained basis.
The principal methodology used in these ratings was Chemical
Industry published in March 2019.
Headquartered in Tonawanda, N.Y., ASP Unifrax Holdings, Inc.
produces heat-resistant ceramic fiber products, specialty
filtration, advanced materials solutions and specialty glass
microfiber materials for a variety of industrial applications. The
company has been a portfolio company of Clearlake Capital Group
since late 2018. Unifrax generated revenues of approximately $600
million for the twelve months ended June 30, 2021. On a proforma
acquisition basis, revenues are expected to increase to about $1.6
billion in 2021.
ASP UNIFRAX: S&P Affirms 'B-' ICR on Lydall Deal, Outlook Stable
----------------------------------------------------------------
S&P Global Ratings affirmed all its ratings, including its 'B-'
issuer credit rating on Tonawanda, N.Y.-based specialty fiber
manufacturer ASP Unifrax Holdings Inc.
S&P said, "Concurrently, we assigned our 'B-' issue-level and '3'
recovery ratings to the proposed senior secured notes due 2028 and
'CCC+' issue-level and '5' recovery ratings to the proposed
unsecured notes due 2029.
"The stable outlook reflects our expectation that although debt
leverage will remain high, solid demand will allow Unifrax to
reduce debt/EBITDA over the next 12 months to about 9x, with
sustained improvement thereafter.
"We forecast Unifrax's S&P Global Ratings-adjusted debt leverage
will be about 9x by the end of 2022, 12 months after the expected
close of its acquisition of Lydall Inc., a specialty filtration
media manufacturer.
"Unifrax's capital structure will remain sustainable, despite the
aggressive transaction funding mix. The decision to fund the
acquisition entirely with debt and preferred equity, which we view
as debt, will double Unifrax's S&P Global Ratings-adjusted debt to
$2.8 billion from $1.4 billion in 2020. However, we forecast EBITDA
expansion will outstrip debt growth in 2022, resulting in S&P
Global Ratings-adjusted leverage below 10x and positive free
operating cash flow, excluding transaction-related expenses. The
company's latest dry-laid polycrystalline wool production line (PCW
line 7) will come online in late 2021, which underpins our EBITDA
growth assumptions. In addition, thermal management, which lags the
industrial activity, should benefit from the 2021 economic
recovery. Net of related costs, we forecast the combined company
will realize only moderate synergy benefits in the first 12 months,
largely from procurement and overhead efficiency.
"Despite significant manufacturing synergy potential, the
acquisition will dilute Unifrax's S&P Global Ratings-adjusted
EBITDA margin for at least the next two years. We believe Lydall's
manufacturing operations are less efficient than Unifrax's and that
some of its products are more commoditized. While Unifrax will
implement lean manufacturing process and formal benchmarking as it
has in its own facilities, the benefits will be gradual.
Furthermore, although Unifrax and Lydall do not sell competing
products, each company's facilities have the ability to manufacture
the other's products. We expect the combined company to use its
broader global manufacturing capacity to scale production of its
most-profitable and highest-demand products more quickly and
efficiently than either company could on a stand-alone basis.
Unifrax may simultaneously deemphasize less-profitable products.
However, we believe it could take more than two years to fully
realize this opportunity.
"Stronger material development and manufacturing capability
moderately strengthens our view of the business. The acquisition of
Lydall improves our view of the scale and the scope of Unifrax's
business by giving the company different types of fiber
manufacturing and end-market applications. The collective
manufacturing capacity and product portfolio will improve the
combined company's ability to serve customers globally. However, we
believe the combined company will still be smaller, with a narrower
product portfolio, compared to that of many rated manufacturers and
will remain focused on specialty components for cyclical end
markets.
"The stable outlook reflects our expectation that although debt
leverage will remain high, we believe solid demand will allow
Unifrax to reduce S&P Global Ratings-adjusted debt/EBITDA over the
next 12 months to about 9x, with sustained improvement
thereafter."
S&P could lower its rating on Unifrax over the next 12 months if it
expects:
-- Unifrax's capital structure will be unsustainable in S&P's
view, for example if it will sustain S&P Global Ratings-adjusted
debt to EBITDA above 10x or will have significant free operating
cash outflow;
-- The company's liquidity position will weaken significantly due
to operating underperformance or because S&P believes the company
will be unable to extend its December 2023 revolver maturity; or
-- It will increase its reliance on its revolver such that it
triggers the leverage covenant, and S&P believes it will not
maintain headroom of at least 15%.
S&P said, "Although unlikely over the next 12 months given
Unifrax's high leverage, we could raise our rating if we expect
that the company's S&P Global Ratings-adjusted debt to EBITDA will
fall and remain below 6.5x, including potential future acquisitions
and shareholder rewards."
AUTOMOTIVE PARTS: Committee Taps Kelley Drye as Bankruptcy Counsel
------------------------------------------------------------------
The official committee of unsecured creditors of Automotive Parts
Distribution International, LLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Texas to hire Kelley
Drye & Warren, LLP as bankruptcy counsel.
The firm's services include:
(a) advising the committee with respect to its rights, duties,
and powers in the Debtor's Chapter 11 case;
(b) assisting the committee in its consultations with the
Debtor in connection with the administration of the case;
(c) assisting the committee in its investigation of the acts,
conduct, assets, liabilities, and financial condition of the
Debtor, operation of the Debtor's business and any other matter
relevant to the case, including potential claims and causes of
action with respect to the Debtor's parent entity;
(d) advising and representing the committee in connection with
matters generally arising in the case, including the sale of the
Debtor's assets and any proposed Chapter 11 plan or other wind-down
process;
(e) assisting the committee in analyzing the claims of
creditors and the Debtor's capital structure and in negotiating
with holders of claims, including analysis of possible objections
to the priority, amount, subordination, or avoidance of claims or
transfers of property in consideration of such claims;
(f) assisting the committee in its assessment of potential
claims and causes of action retained by the estate;
(g) appearing before the bankruptcy court and any other
federal, state or appellate court;
(h) preparing legal papers; and
(i) performing other necessary legal services.
The firm's hourly rates are as follows:
Partners $745 - $1,315 per hour
Special Counsel $625 - $870 per hour
Associates $400 - $760 per hour
Paraprofessionals $245 - $380 per hour
Jason Adams, Esq., a member of Kelley Drye & Warren, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Jason R. Adams, Esq.
Kelley Drye & Warren LLP
3 World Trade Center, 175 Greenwich Street
New York, NY 10007
Tel.: (212) 808-7800
Fax: (212) 808-7897
Email: jadams@kelleydrye.com
About Automotive Parts
Automotive Parts Distribution International, LLC was established in
January 2008 as a distribution and marketing company to cover the
North American aftermarket. It offers radiators, condensers, fan
assemblies, heater cores, intercoolers, heavy duty radiators, and
fuel pump module assemblies.
Automotive Parts Distribution filed a petition for Chapter 11
protection (Bankr. N.D. Texas Case No. 21-41655) on July 12, 2021,
listing as much as $50 million in both assets and liabilities.
Judge Edward L. Morris oversees the case.
Winstead PC, and Ice Miller, LLP serve as the Debtor's legal
counsel.
The U.S. Trustee for Region 6 appointed an official committee of
unsecured creditors in the Debtor's Chapter 11 case on Aug. 6,
2021. The committee is represented by Kelley Drye & Warren, LLP
while Province, LLC serves as the committee's financial advisor.
AUTOMOTIVE PARTS: Committee Taps Province LLC as Financial Advisor
------------------------------------------------------------------
The official committee of unsecured creditors of Automotive Parts
Distribution International, LLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Texas to hire
Province, LLC as financial advisor.
The firm's services include:
(a) becoming familiar with and analyzing the Debtor's assets
and liabilities, and overall financial condition;
(b) assisting the committee in determining how to react to the
Debtor's Chapter 11 plan or in formulating and implementing its own
plan;
(c) preparing or reviewing, as applicable, avoidance action
and claim analyses;
(d) monitoring the sale process, reviewing bidding procedures,
stalking horse bids, asset purchase agreements, interfacing with
the Debtor's professionals, and advising the committee regarding
the process;
(e) assisting the committee in its review of the Debtor's
financial reports, including, but not limited to, statement of
financial affairs, bankruptcy schedules, cash budgets and monthly
operating reports;
(f) advising the committee on the current state of the
Debtor's Chapter 11 case;
(g) advising the committee in negotiations with the Debtor and
third parties as necessary;
(h) if necessary, participating as a witness in hearings
before the bankruptcy court with respect to matters upon which the
firm has provided advice; and
(i) providing other necessary services.
The firm's hourly rates are as follows:
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
David Dunn, a principal at Province, LLC, disclosed in a court
filing that his firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
David Dunn
Province, LLC
2360 Corporate Circle, Suite 330
Henderson, NV 89074
Phone: +1 (702) 685-5555
Email: ddunn@provincefirm.com
About Automotive Parts
Automotive Parts Distribution International, LLC was established in
January 2008 as a distribution and marketing company to cover the
North American aftermarket. It offers radiators, condensers, fan
assemblies, heater cores, intercoolers, heavy duty radiators, and
fuel pump module assemblies.
Automotive Parts Distribution filed a petition for Chapter 11
protection (Bankr. N.D. Texas Case No. 21-41655) on July 12, 2021,
listing as much as $50 million in both assets and liabilities.
Judge Edward L. Morris oversees the case.
Winstead PC, and Ice Miller, LLP serve as the Debtor's legal
counsel.
The U.S. Trustee for Region 6 appointed an official committee of
unsecured creditors in the Debtor's Chapter 11 case on Aug. 6,
2021. The committee is represented by Kelley Drye & Warren, LLP
while Province, LLC serves as the committee's financial advisor.
AVANTOR FUNDING: Moody's Affirms Ba3 CFR on Masterflex Transaction
------------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Avantor Funding,
Inc., including the Ba3 Corporate Family Rating, Ba3-PD Probability
of Default Rating, Ba1 senior secured ratings and its B2 senior
unsecured ratings. There is no change to the Speculative Grade
Liquidity Rating of SGL-1. The outlook remains stable.
The rating actions follow the announcement that Avantor will
acquire Masterflex, a manufacturer of peristatic instruments and
single-uses fluid transfer technologies for bioproduction for $2.9
billion. Avantor will use $200 million of cash on hand together
with new debt to fund the acquisition. Avantor may also opt to
raise new equity to help fund the transaction. The companies expect
the deal to close by the end of 2021. The ratings affirmation
reflects Moody's view of Avantor's track record of strong operating
performance, including improved profitability and ample cash flow
generation. The affirmation also reflects governance
considerations, as the company has stated it intends to delever
such that net debt/EBITDA will decline below 4 times by the end of
2022. The acquisition of Masterflex is strategically sensible, as
it will strengthen Avantor's offering to bioproduction platforms
and enable significant cross-selling opportunities of the combined
firms' products. Moody's expects pro forma adjusted debt to EBITDA
will rise from 4.4 times as of June 30, 2021 to around 5.6x at
year-end 2021, assuming no equity issuance to help fund the
acquisition. Moody's expects Avantor will deleverage such that
debt/EBITDA will decline below 5 times within a year from closing.
The acquisition of Masterflex, occurring soon after the June 2021
acquisition of Ritter indicates a greater willingness to raise
leverage to fund acquisitions, and there is very limited cushion
for the company to deviate from its current deleveraging plans.
Avantor's funding plans for the debt portion of the acquisition are
uncertain at this time. Instrument ratings could change depending
on the mix of secured and unsecured debt used to fund the
Masterflex acquisition.
Ratings affirmed:
Avantor Funding, Inc.
Corporate Family Rating, at Ba3
Probability of Default Rating, at Ba3-PD
Senior Secured Bank Credit Facility, at Ba1 (LGD3)
Senior Secured Regular Bond/Debenture, at Ba1 (LGD3)
Senior Unsecured Regular Bond/Debenture, at B2 (LGD5)
The outlook remains stable
RATINGS RATIONALE
Avantor's Ba3 CFR is supported by the company's track record of
delivering good revenue and earnings growth. It also reflects
moderate financial leverage with adjusted debt/EBITDA of 4.4 times
as of June 30, 2021. The rating is supported by the steady and
largely recurring nature of around 85% of revenue, as well as high
customer switching costs associated with the ultra-high purity
materials business. It also reflects good scale with revenues of
approximately $7.0 billion and good customer, geographic, and
product diversification. Moody's expects Avantor will generate
strong free cash flow over the next 12-18 months. Moody's expects
leverage will rise to around 5.6 times by the end of 2021, pro
forma for the closed acquisition of Ritter for roughly $1 billion
and the pending Masterflex acquisition.
Near term, the COVID-19 pandemic has presented opportunities to
Avantor; the company has been involved in the production of both
COVID-19 therapies and vaccines but also benefitted from increased
demand for PPE and Diagnostic testing. Moody's expect this tailwind
to continue in 2022, but it is likely to be temporary. Meanwhile,
Avantor has also invested to meet growing demand in its
bioproduction offering. This is supported by a moderate increase in
capex geared towards strengthening Avantor's position as a key
supplier for the biopharma industry.
The Speculative Grade Liquidity Rating of SGL-1 reflects Moody's
expectation that Avantor's liquidity will remain very good over the
next 12 to 18 months. Avantor's liquidity is supported by $223
million of cash as of June 30, 2021. Moody's estimates that Avantor
will generate at least $800 million of free cash flow over the next
12 months, aided by working capital management and lower interest
expense. External liquidity is supported by a $515 million senior
secured revolving credit facility expiring in July 2025.
Furthermore, the company has an accounts receivable securitization
facility (unrated) that provides for borrowings of up to $300
million, which expires in March 2023.
The stable outlook reflects Avantor's good track record of earnings
growth and free cash flow generation. The stable outlook further
reflects that pro forma for the Masterflex acquisition, Moody's
expects pro forma adjusted debt to EBITDA to decline to below 5
times within 12-18 months of the close.
Avantor faces some degree of environmental risk due to the handling
of, manufacturing, use or sale of substances that are or could be
classified as toxic or hazardous materials. From a governance
standpoint, Avantor has adopted more conservative financial
policies since its 2019 IPO, including a publicly stated
debt/EBITDA target range of 2.0 - 4.0 times. However, Avantor is
willing to temporarily increase its leverage over its target range
to fulfill its external growth strategy. In 2021, the company has
announced two large acquisitions for close to $4 billion. Leverage
as calculated by the company is in the mid four times range on a
pro-forma basis however the company has stated it will prioritize
deleverage such that leverage will be below 4 times by the end of
2022.
Regarding social risk, Avantor is exposed to both positive and
negative social considerations. Moody's regards the coronavirus
pandemic as a social risk under its ESG framework given the
substantial implications for public health and safety. The pandemic
has reduced demand for some of Avantor's products due to the
temporary closure of some research facilities and lower demand from
healthcare and industrial customers. However, the company has been
involved in the production of COVID-19 therapies and vaccines and
benefitted from increased demand for PPE and diagnostic testing,
which has supported earnings growth in 2021.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Avantor further improves its scale
and business line diversity while maintaining balanced financial
policies. Specifically, debt to EBITDA sustained below 3.5 times
would support an upgrade.
The ratings could be downgraded if Avantor's operating performance
deteriorates, or if it engages in large debt-funded acquisitions. A
downgrade could also occur if debt to EBITDA is sustained above 5.0
times. The Ba1 senior secured rating is weakly positioned and
further increases in secured debt without commensurate increases in
junior capital could pressure the secured instrument rating.
Avantor is a global provider of mission critical products and
services to the life sciences and advanced technologies & applied
materials industries. Headquartered in Pennsylvania, the company
generates revenue of approximately $7.0 billion annually.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
AVANTOR INC: Fitch Affirms 'BB' LT IDRs & Alters Outlook to Stable
------------------------------------------------------------------
Fitch Ratings has affirmed Avantor, Inc.'s and Avantor Funding,
Inc.'s Long-Term Issuer Default Ratings (IDRs) at 'BB', and revised
the Rating Outlook to Stable from Positive, given the company's
announcement to acquire Masterflex for roughly $2.9 billion cash.
The company has secured bridge financing, but may use some equity
to finance a portion of the transaction. Fitch has also affirmed
Avantor Funding, Inc.'s secured debt at 'BB+'/'RR2', secured bonds
at 'BB+'/'RR2' and unsecured notes at 'BB'/'RR4'.
The Stable Outlook reflects Fitch's expectation that the company
will deleverage to below 4.5x gross debt/EBITDA over the next 18-24
months following the close of the acquisition, but will be more
acquisitive than originally assumed. Fitch's assumptions reflect
that Masterflex will be accretive to Avantor's EBITDA margins. In
addition, debt repayment far above required term loan amortization
will be necessary for deleveraging over the course of the
forecast.
KEY RATING DRIVERS
Acquisition Makes Strategic Sense: Fitch believes the Masterflex
acquisition is strategically sound. Masterflex is a bioprocessing
carve-out of Antylia. It is a bioprocessing business that makes
pumps and fluid-transfer technologies. Masterflex's products are
used in bioproduction for medical therapies and vaccines,
contributing to the creation of monoclonal antibodies, cell and
gene therapies and messenger RNA.
Fitch expects Avantor will deleverage to below 4.5x in the 18-24
months following its announced acquisition of Masterflex. This
expectation is driven by Masterflex's higher EBITDA margins and the
expectation for significant debt reduction above annual term loan
amortization.
Avantor's gross debt/EBITDA was 4.3x at June 30, 2021, and Fitch
views leverage of 4.0x-4.5x in line with the 'BB' IDR. The Stable
Outlook reflects Fitch's expectation that continued deleveraging
below 4.5x following the Masterflex acquisition is likely, given
management's long-term public net leverage target of 2x-4x, and
Fitch's view that the company has the financial flexibility
necessary to achieve this goal. The company has successfully
reduced debt since the merger with VWR, from a Fitch-calculated,
nearly 10x following the close of the transaction. This was the
result of the combined effects of EBITDA growth and debt reduction,
which was partly funded through the proceeds of an initial public
offering.
Acquisitive Posture Likely to Persist: Fitch expects Avantor to
maintain an acquisitive posture given the fragmented nature of the
industry, which may forestall when, and how long, the company
operates with lower leverage. The company will likely focus on
targets that fill in potential gaps in its product portfolio and/or
strengthen its existing product platforms. Targets that offer
adjacencies will also likely be considered.
Fitch expects that Avantor will deleverage to below 4.5x within
18-24 months following acquisitions, but that meaningful
improvements beyond that may be temporary given the strategic
rationale for additional transactions. The company has demonstrated
its ability to successfully integrate large and targeted
acquisitions.
Manageable Coronavirus Effects: Avantor's business profile is
relatively resilient because of good end market diversification and
non-cyclical demand for healthcare products. Avantor's biopharma
end markets have held up well and have benefited from
COVID-19-related testing demand and vaccine-related production,
which is expected to continue into 2021. The industrials end
markets have seen more significant business disruption effects from
the pandemic.
However, because of the diversity of the customers served in the
advanced technologies and applied materials businesses, demand for
the company's products has remained relatively stable. EBITDA
sustainably grew in 2020 due to positive operating leverage effects
with higher sales volumes and mix shift to higher margin
proprietary products.
Sufficient Liquidity: Fitch expects Avantor to maintain a
comfortable liquidity cushion going forward. Fitch expects cash on
hand, ongoing cash generation and committed lines of revolving
credit will ensure the company has adequate liquidity to support
operations, capital spending needs, preferred dividends and
required term loan amortization during 2021. A highly recurring
revenue model, with a shift to higher margin proprietary products,
and Avantor's ability to refinance outstanding debt at lower coupon
rates during 2020 supports FCF generation exceeding $600 million
annually and the 'BB' IDR.
Strong Competitive Position and Good Diversification: Avantor is
well diversified through end markets and product categories, with
biopharma representing about 50% of total sales. Advanced
technologies and applied materials end markets represent roughly
25% of sales and includes a mix of more cyclical end markets that
benefit from highly recurring consumable sales.
Consistent cash generation is supported through highly diversified
consumables and service-focused revenues representing roughly 85%
of sales, and more limited exposure to equipment and
instrumentation (15% of sales) versus peers. Strength and
diversification in high-growth end markets should offset slower
growth and cyclical end markets, resulting in single-digit revenue
growth above the average life sciences industry.
DERIVATION SUMMARY
Avantor's strongest competitors are significantly larger, with
leading positions in the broader life sciences industry and greater
financial flexibility. Thermo Fisher (BBB+/Stable) is Avantor's
closest peer within the lab products industry. Thermo Fisher, a
direct distribution competitor, is materially larger than Avantor,
has an industry-leading manufacturing business and is much more
conservatively capitalized. Other low- to mid-'BB' rated healthcare
companies operating in different industry subsectors typically have
leverage sensitivities in the 4.0x-5.0x range.
KEY ASSUMPTIONS
-- Pandemic-related tailwinds help to support biopharma end
market growth;
-- Organic revenue growth in the low- to mid-single-digits;
-- EBITDA margins moderately increase, driven by improved sales
mix of Avantor's proprietary products and the added higher
margin products of recent acquisitions;
-- Capex is forecasted to be around 1.0% of revenues;
-- Capital deployment balanced between targeted acquisitions and
share repurchases;
-- FCF $750 million to $930 million annually during the forecast
period, aided by reduced cost of capital after 2020
refinancing activity;
-- Gross debt/EBITDA declines to or below 4.5x in 2023.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Operating with gross debt/EBITDA sustained below 4.0x;
-- Continued operational strength that results in (cash flow from
operations - capex)/total debt around or above 9%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Operating with gross debt/EBITDA sustained above 4.5x;
-- Pressures to profitability, increased expenses or missteps
with M&A-related integration that result in (cash flow from
operations - capex)/total debt sustained below 7.5%.
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: Stand-alone liquidity was supported by cash
on hand of $223 million and full availability its $515 million
first-lien, secured revolver due 2025 as of June 30, 2021. The
revolver was upsized to $515 million in July 2020. Avantor's senior
secured credit facility does not include financial maintenance
covenants aside from a springing first-lien, net leverage covenant
of 7.35x if 35% of the revolver is drawn. Additionally, working
capital needs are supported by a $300 million accounts receivable
securitization facility, which was unused at June 30, 2021.
Debt Maturities Manageable: The company's stand-alone debt
maturities and amortization requirements are manageable. The 2020
refinancing transactions pushed out maturities, leaving the nearest
maturity the receivables facility maturing in March 2023 and a
portion of the term loans due in October 2024. Fitch expects the
company will refinance most maturities but pay down some debt to
reduces leverage to or below 4.5x.
ISSUER PROFILE
Avantor, Inc. is a leading global provider of mission critical
products and services to customers in the biopharma, healthcare,
education & government, and advanced technologies & applied
materials industries. Offerings include materials & consumables,
equipment & instrumentation and services & specialty procurement.
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.
AVANTOR INC: S&P Places 'BB+' ICR on CreditWatch Negative
---------------------------------------------------------
On Sept. 8, 2021, S&P Global Ratings placed all its ratings on
Avantor Inc., including the 'BB+' issuer credit rating, on
CreditWatch with negative implications following the company's
announcement that it plans to acquire Masterflex for $2.9 billion.
Avantor Inc. plans to acquire Masterflex for $2.9 billion, or $2.7
billion net of anticipated tax benefits.
The CreditWatch reflects the potential for a lower rating due to
increased leverage from the Masterflex deal, less certainty
regarding the company's commitment and ability to deleverage below
4x, and potential for future acquisitions.
AVID BIOSERVICES: Posts $6.3 Million Net Income in First Quarter
----------------------------------------------------------------
Avid Bioservices, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing net income
of $6.30 million on $30.75 million of revenues for the three months
ended July 31, 2021, compared to net income of $4.73 million on
$25.39 million of revenues for the three months ended July 31,
2020.
As of July 31, 2021, the Company had $270.53 million in total
assets, $63.25 million in total current liabilities, $138.81
million in net convertible senior notes, $23.84 million in
operating lease liabilities (less current portion), and $44.64
million in total stockholders' equity.
The Company's principal sources of liquidity are cash flows from
operating activities as well as its cash and cash equivalents on
hand.
As of July 31, 2021, the Company had cash and cash equivalents of
$159.7 million. The Company believes that its existing cash on
hand and its anticipated cash from operating activities will be
sufficient to fund its operations for at least the next 12 months
form the date of this Quarterly Report.
Management Commentary
"We are pleased to announce another strong quarter. During the
first quarter of fiscal 2022, we recorded an increase in revenues
compared to the prior year period. Our margins significantly
improved during the first quarter, reflecting the efficiencies of
our business model and our ability to strategically leverage our
existing fixed costs. In business development, we continued to
expand and diversify our pipeline. And, as always, our business
development team remains highly engaged in pursuit of multiple new
business opportunities. Finally, with respect to operations, both
Phase 1 and Phase 2 of our buildout remain on track as work
continues to enhance our high throughput capabilities for upstream,
downstream and analytical services, and we expect the Phase 1
expansion to be online in January of 2022," stated Nicholas Green,
president and chief executive officer of Avid Bioservices.
"As we now have the first quarter behind us, and we are well into
the second quarter, we believe we are on track to achieve our
stated full year fiscal 2022 revenue guidance of between $115
million and $117 million. This represents a year-over-year growth
rate of between 20% and 22%. Multiple factors contribute to our
confidence in reaching this milestone, including an increase in
existing customer demand, a growing pool of new customer projects,
and our substantial backlog. Having said that, we remain keenly
aware of the supply chain challenges that many companies continue
to face due to the COVID-19 pandemic. While we have not
experienced any material delays or shortages to date, it is
important to recognize that uncertainty remains in the supply
market, and we are cognizant of the impact it may have on timing
and pricing of materials. As of today, we are aware of no supply
related factors affecting our business," Mr. Green said.
Having completed two successful fundraisings in December 2020 and
March 2021, the company is very well capitalized, with
approximately $160 million of cash on hand. These proceeds support
the company's expansion and enhancement efforts, and will allow the
company to explore value-creating opportunities for organic and
inorganic growth in the future.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/704562/000168316821004164/avid_i10q-073121.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 net income of $11.21 million for the year
ended April 30, 2021, compared to a net loss of $10.47 million for
the year ended April 30, 2020.
AZURITY PHARMACEUTICALS: Moody's Assigns 'B2' CFR, Outlook Stable
-----------------------------------------------------------------
Moody's Investors Service assigned ratings to Azurity
Pharmaceuticals, Inc. including a B2 Corporate Family Rating, B2-PD
Probability of Default Rating, and a B2 rating to the new senior
secured credit facilities. The outlook is stable.
Proceeds from a new $600 million senior secured term loan, together
with equity financing, will be used to finance the acquisition of
Arbor Pharmaceuticals, LLC ("Arbor") (B3 negative). Azurity is a
small branded pharmaceutical company with a marketed portfolio of
505(b)(2) patent products approved through the 505(b)(2) regulatory
pathway. The company's products typically offer innovations such as
new dosage forms of off-patent medicines.
Ratings assigned:
Issuer: Azurity Pharmaceuticals, Inc.
Corporate Family Rating, assigned B2
Probability of Default Rating, assigned B2-PD
Senior Secured First Lien Term Loan, assigned B2 (LGD3)
Senior Secured First Lien Revolving Credit Facility, assigned B2
(LGD3)
Outlook action:
Assigned, stable outlook
RATINGS RATIONALE
Azurity's B2 Corporate Family Rating reflects its small size, pro
forma for Arbor, with revenues of around $400 million, high revenue
concentration in several products, and moderate financial leverage.
Most of the products in the combined portfolio are highly
promotionally-sensitive branded products, competing for share of
prescriptions against significantly larger pharmaceutical
companies. In addition, three of the five marketed products sold by
legacy Azurity (accounting for about 15% of combined revenue) face
patent challenges. In addition to patent challenges on several
Arbor products, Azurity's portfolio is subject to erosion if the
patents are not upheld.
Azurity's late state pipeline offers opportunities to accelerate
revenue and earnings growth in 2023 and beyond. The success of its
pipeline will be contingent on regulatory approvals as well as
commercial execution. The combination of Arbor and Azurity also
creates the opportunity to generate significant cost synergies,
that Moody's believes are achievable, but also pose some risk of
business disruption around sales force strategy. The rating is
supported by good profit margins, cash flow and an asset-lite
infrastructure relying on contract manufacturers.
The stable outlook reflects Moody's view that Azurity will grow
earnings over the next 12-18 months, largely through cost synergy
capture and will be successful in integrating Arbor's business.
ESG considerations are material to the rating. Social risks include
exposure to payor reimbursement pressure and concerns over high
drug pricing in the US. These dynamics contribute to the company's
challenges with commercial coverage and price and volume declines
(primarily on legacy Arbor products). Governance considerations
include Azurity's private equity ownership, which creates risk of
financial policies that raise leverage.
Azurity's liquidity is very good, supported by cash expected to be
in excess of $35 million at deal close. Moody's expects that
Azurity will generate about more than $75 million of free cash flow
in 2022. Cash needs will be modest with $6 million in annual
mandatory term loan amortization and capital expenditures of $5-$10
million per year. Azurity will have a $60 million undrawn revolver
that expires in 2026. The credit agreement will have a financial
maintenance covenant on the revolver, where Moody's anticipates
ample cushion over the next 12-18 months.
As proposed, the new credit facilities are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
The first lien credit facility contains incremental capacity up to
the sum of the greater of closing date Consolidated EBITDA and 100%
of Consolidated EBITDA for the most recent four consecutive fiscal
quarters, plus unlimited amounts up pro forma closing date senior
secured net leverage. No portion of the incremental may be incurred
with an earlier maturity than the initial term loan.
The credit agreement does not permit the designation of
unrestricted subsidiaries, preventing collateral "leakage" to
unrestricted subsidiaries.
Subsidiaries must provide guarantees whether or not wholly-owned,
eliminating the risk that guarantees will be released because they
cease to be wholly-owned.
The credit agreement provides some limitations on up-tiering
transactions, including the requirement that each lender directly
affected is offered a reasonable, bona fide opportunity to
participate on a pro rata basis in any priming indebtedness in
order to: (a) subordinate the lien on a material portion of the
collateral, taken as a whole, to the lien securing other
indebtedness; or (b) subordinate the obligations in right of
payment to any other indebtedness.
The proposed terms and the final terms of the credit agreement may
be materially different.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include improved product
diversity, successful integration with Arbor, reduced exposure to
patent challenges, and debt/EBITDA sustained below 3.0x.
Factors that could lead to a downgrade include significant pipeline
setbacks, negative developments on patent challenges to certain
products, and debt/EBITDA sustained above 5.0x.
Headquartered in Woburn, Massachusetts, Azurity Pharmaceuticals,
Inc. is a manufacturer of primarily branded pharmaceutical drugs in
the US with a small portfolio of "unit-of-use" prescription
compounded drugs. Pro forma reported revenue for the twelve months
ended June 30, 2021 approximated $400 million. Azurity will be
majority, privately owned by NovaQuest Private Equity.
The principal methodology used in these ratings was Pharmaceutical
Industry published in June 2017.
AZURITY PHARMACEUTICALS: S&P Assigns 'B' ICR, Outlook Stable
------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to Woburn,
Mass.-based specialty pharmaceutical provider Azurity
Pharmaceuticals Inc. The outlook is stable.
S&P said, "At the same time, we assigned our 'B' issue-level rating
and '3' recovery rating to the company's term loan and revolver,
reflecting our expectations for meaningful recovery of about
50%-70% (rounded estimate: 55%) in the event of default.
"The stable rating outlook reflects our expectation that despite
steady earnings growth and positive cash flow generation, Azurity
will maintain leverage above 5x given the risks to the pipeline and
our expectation for the company to pursue an aggressive growth
strategy.
"Key credit risks include its small scale, limited product
pipeline, and geographic concentration. We view the company's
potential for 10 new product launches the next couple of years as
healthy to support future growth but, this metric is below industry
leaders. The company remains relatively small in scale compared to
other branded pharmaceutical companies, leaving it more vulnerable
to unforeseen events, such as manufacturing disruptions or
litigation. In addition, the company is largely based out of the
U.S. where the pharmaceutical market remains exposed to pricing
pressure and, under the new administration, could see a renewed
interest in drug price reform.
"The stable outlook reflects our expectation that Azurity will
generate relatively steady earnings and operating cash flows over
the next few years. We view generic entrants and patent challenges
as ongoing risks to the pipeline and expect the company to pursue
an aggressive growth strategy to mitigate loss of exclusivity,
keeping leverage above 5x over time.
"We could consider a lower rating if the company suffers unforeseen
operational setbacks, creating increased uncertainty around its
portfolio, causing credit metrics to deteriorate such that free
operating cash flow to debt is sustained below 3% or adjusted
leverage rises above 6.5x. We could also consider a downgrade if
the company implements a more aggressive financial policy through a
larger acquisition or partnership agreement.
"We could consider a higher rating if the company continues to
generate solid EBITDA growth, mainly via the launch of new
products, resulting in sustained leverage below 4.5x. In addition,
S&P Global Ratings would need to gain greater comfort in
management's commitment to lower leverage, despite the potential
for future acquisitions to further strengthen the pipeline."
-- S&P expects revenues to increase 2%-5%, organically driven by
Azurity's pipeline products and some growth from Arbor's legacy
portfolio.
-- Combined adjusted EBITDA margins expected at 30%-35% in 2021
and 2022.
-- Working capital requirement of about $4 million to $12 million
over the next two years.
-- S&P has also included in its assumptions potential milestone
payments, which are largely from Arbor Pharmaceuticals.
-- Capital expenditure of about $7 million to $8 million
annually.
Based on the above expectations, S&P expects adjusted debt to
EBITDA about 4.5x-5x for the 12 months.
B&L INTERNATIONAL: Case Summary & 10 Unsecured Creditors
--------------------------------------------------------
Debtor: B&L International Inc.
d/b/a Taco Bell Express
P.O. Box 3174
Gaithersburg, MD 20885
Chapter 11 Petition Date: September 9, 2021
Court: United States Bankruptcy Court
District of Maryland
Case No.: 21-15728
Debtor's Counsel: Steven L. Goldberg, Esq.
MCNAMEE, HOSEA, JERNIGAN, KIM, GREENAN &
LYNCH, P.A.
6411 Ivy Lane, Ste. 200
Greenbelt, MD 20770
Tel: (301) 441-2420
E-mail: sgoldberg@mhlawyers.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Jing Xu as authorized representative.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 10 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/DMYHGYI/BL_International_Inc__mdbke-21-15728__0001.0.pdf?mcid=tGE4TAMA
BANCO NACIONAL: Chapter 15 Case Summary
---------------------------------------
Chapter 15 Debtor: Banco Nacional S.A.
Avenida Rio Branco, 115
20o Andar, Sala 2033, Centro
Rio de Janeiro/RJ 20040
Brazil
Business Description: Banco Nacional operates as a bank.
Nacional was founded in 1944 as Banco
Nacional de Minas Gerais S.A.
Foreign Proceeding: BACEN Presidential Act No. 1059/2004
Chapter 15 Petition Date: September 9, 2021
Court: United States Bankruptcy Court
Southern District of New York
Case No.: 21-11594
Judge: Hon. Martin Glenn
Foreign Representative: Reginaldo Brandt Silva
Avenida Rio Branco, 115
20o Andar, Sala 2033, Centro
Rio de Janeiro/RJ 20040
Brazil
Foreign
Representative's
Counsel: Warren Gluck, Esq.
Elliot A. Magruder, Esq.
HOLLAND & KNIGHT LLP
31 W. 52nd St.
New York, NY 10019
Tel: (212) 513-3200
Fax: (212) 385-9010
Email: warren.gluck@hklaw.com
elliot.magruder@hklaw.com
Estimated Assets: Unknown
Estimated Debt: Unknown
A full-text copy of the Chapter 15 petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/WMDABNA/Banco_Nacional_SA_and_Reginaldo__nysbke-21-11594__0001.0.pdf?mcid=tGE4TAMA
BELVIEU BRIDGE: May Use Cash Collateral Through Oct. 31
-------------------------------------------------------
Judge David E. Rice of the U.S. Bankruptcy Court for the District
of Maryland authorized Belvieu Bridge Properties Group, LLC to use
the funds in its bank accounts aggregating $163,396, from August 31
through and including October 31, 2021, to pay for the Debtor's
ordinary operating expenses, pursuant to the budget. U.S. Bank
National Association, as Trustee for Velocity Commercial Capital
Loan Trust 2017-2, agreed to such use.
The budget pertaining to the Debtor's Belvieu Property provided for
$8,075 in total expenses for each of September and October 2021.
The budget relating to the Lakeview Property provided for $20,921
in total expenses for September and $3,348 in total expenses for
October 2021.
Before the Petition Date, the Debtor borrowed from Velocity
Commercial under two loans: (1) for $1,500,000, evidenced by a
Semi-Annual Adjustable Term Note (Belvieu Note), and (2) for
$1,176,000, evidenced by a Semi-Annual Adjustable Term Note
(Lakeview Note). The Belvieu Note and Lakeview Note are secured,
as applicable, by Purchase Money Deeds of Trust, Security Agreement
and Assignment of Leases and Rents on the Belvieu Property and
Lakeview Property.
As adequate protection, the Debtor grants to the Lender a lien on
all of the Debtor's assets existing as of the Petition Date. The
Debtor will pay the Lender $100,000 to be applied equally between
the Belvieu Loan and Lakeview Loan. Moreover, the Debtor shall pay
the remaining real property taxes due of $17,573 on or before
September 30. 2021.
A copy of the consent order is available for free at
https://bit.ly/3nfPxTu from PacerMonitor.com.
About Belvieu Bridge Properties Group
Baltimore, Md.-based Belvieu Bridge Properties Group, LLC is the
owner of multi-unit residential apartment buildings located at 3915
Belvieu Avenue & 4610 Wallington Avenue, Baltimore, MD 21215; and
2427-2429 & 2431-2433 Lakeview Avenue, Baltimore, MD 21217. The
company is the owner of fee simple title to the properties, having
a current value of $2.93 million.
Belvieu Bridge Properties Group filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case
No. 21-11452) on March 9, 2021. Zenebe Shewayene, managing member,
signed the petition. At the time of the filing, the Debtor
disclosed total assets of $3,115,322 and total liabilities of
$3,108,307.
Judge David E. Rice oversees the case. The Weiss Law Group, LLC
serves as the Debtor's legal counsel.
James C. Olson, Esq. represents lender U.S. Bank National
Association, as Trustee for Velocity Commercial Capital Loan Trust
2017-2.
The firm may be reached at:
James C. Olson, Esq.
James C. Olson, Attorney
and Counselor At Law
10451 Mill Run Circle, Suite 400
Owings Mills, MD 21117
Telephone: (410) 356-8852
Email: jolson@jamesolsonattorney.com
BIOSTAGE INC: Appoints Jerry He to Board of Directors
-----------------------------------------------------
Biostage, Inc. has appointed Jerry He as an independent director to
its Board of Directors, adding strength in the areas of business
innovation, strategy and finance.
Mr. Jerry He is the executive vice chairman of Bright Scholar
Education Holdings Limited (NYSE listed: BEDU) and has been in that
position since January 2019. Prior to the promotion, Mr. He had
served as the CEO of Bright Scholar since October 2015. Prior to
joining Bright Scholar, Mr. He was a managing director at TStone
Corp, and he also served as CFO, CEO and a director of Noah
Education Holdings Ltd., a former NYSE listed private education
services provider in China, from July 2009 to December 2011. Mr.
He was a portfolio manager at Morgan Stanley Global Wealth
Management from June 2008 to June 2009 and was employed by Bear
Stearns from July 2006 to May 2008. Mr. He obtained a bachelor's
degree in science from Peking University and a MBA with Honors from
the University of Chicago, Booth School of Business. Mr. He is
also a CFA charter holder.
"We are pleased to welcome Jerry He to the Biostage Board," said
Jason Chen, chairman of Biostage. "Jerry's deep business and
financial experience will be instrumental in helping the company to
pursue the mission to serve the potential unmet patient needs. His
appointment will be invaluable to Biostage at a time of significant
opportunity and growth."
Mr. He commented, "I am very pleased to be joining the Board of
Directors for Biostage at this exciting stage of its clinical
development. Biostage is developing promising novel cell therapies
with the potential to change the lives of patients with significant
unmet needs. I look forward to helping Biostage reach its
financial and strategic objectives."
In connection with his appointment, the Company will grant Mr. He,
on the fifth business day following his appointment, stock options
with a value of $25,000 at the grant date that will vest in full in
equal quarterly increments over a period of one year from the grant
date. In addition, for his service, Mr. He will receive
compensation commensurate with that received by the Company's other
non-employee directors, which as may be modified by the Board from
to time, currently includes annual compensation of cash fees of
$20,000 to be paid in quarterly increments, and an annual grant of
stock options, granted on the fifth business day following the
Corporation's annual stockholders meeting, with a value of $25,000
at the grant date to vest in full in equal quarterly increments
over a period of one year from the grant date. In addition, all
non-employee directors shall be reimbursed for their expenses
incurred in connection with attending Board and committee
meetings.
Completes Private Placement of $2.6 Million
The Company received aggregate gross and net proceeds of
approximately $0.6 million in May and June of 2021 from existing
investors in private placements. In September 2021, the Company
received an additional $2.0 million of gross and net proceeds from
existing investors in private placements, which, in total, provide
a total cash infusion of $2.6 million. These placements will
enable Biostage to fund its operating expenses and capital
expenditure requirements into the fourth quarter of 2021.
About Biostage
Holliston, Massachusetts-based Biostage, Inc. -- www.biostage.com
-- is a biotechnology company developing bioengineered organ
implants based on the Company's novel Cellframe and Cellspan
technology. The Company's technology is comprised of a
biocompatible scaffold that is seeded with the recipient's own
cells. The Company believes that this technology may prove to be
effective for treating patients across a number of life-threatening
medical indications who currently have unmet medical needs. The
Company is currently developing its technology to treat
life-threatening conditions of the esophagus, bronchus or trachea
with the objective of dramatically improving the treatment paradigm
for those patients. Since inception, the Company has devoted
substantially all of its efforts to business planning, research and
development, recruiting management and technical staff, and
acquiring operating assets.
Biostage reported a net loss of $4.86 million for the year ended
Dec. 31, 2020, compared to a net loss of $8.33 million for the year
ended Dec. 31, 2019. As of June 30, 2021, the Company had $1.12
million in total assets, $387,000 in total liabilities, and
$728,000 in total stockholders' equity.
Boston, Massachusetts-based RSM US LLP, the Company's auditor since
2018, issued a "going concern" qualification in its report dated
April 13, 2021, citing that the Company has suffered recurring
losses from operations, has an accumulated deficit, uses cash flows
in operations, and will require additional financing to continue to
fund operations. This raises substantial doubt about the Company's
ability to continue as a going concern.
BL SANTA FE: Wins Interim OK on Postpetition Financing
------------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District
of Delaware authorized BL Santa Fe, LLC (Senior Borrower) and BL
Santa Fe (MEZZ), LLC (Mezzanine Borrower) to obtain postpetition
financing, pursuant to the Interim Order, as follows:
* Mezzanine Borrower is authorized to borrow, and Senior
Borrower is authorized to guarantee, borrowings up to an aggregate
principal amount of $2,917,706 in postpetition financing consisting
of superpriority senior secured loans under the Mezzanine Loan
Agreement dated as of June 14, 2019 among the Mezzanine Borrower,
Juniper Bishops, LLC (Mezzanine Agent) and the DIP Lenders; and
* The Senior DIP Loan is approved, and Senior Borrower shall be
authorized to borrow up to $2,644,512 under the Senior Loan
Agreement dated as of June 14, 2019, as amended, among the Senior
Borrower, DB Bishops Lodge LLC (Senior Agent) and the Senior
Lender, if the DIP Facility is fully funded. The Senior DIP Loan
shall be used solely in accordance with the current Interim Order.
Security for the DIP Facility
All of the DIP Obligations shall constitute allowed superpriority
administrative expense claims against each of the Debtors'
estates.
As security for the DIP Obligations, the DIP Agent, for the benefit
of the DIP Secured Parties, is granted (a) Second Priority Lien On
Any Mezzanine Unencumbered Property and (b) Liens Priming Mezzanine
Lender's Prepetition Liens, subject to Permitted Encumbrances,
Adequate Protection Liens, the Carve-Out, and the Intercreditor
Agreement.
The Carve-Out includes, among other things, (i) all reasonable fees
and expenses up to $25,000 incurred by a trustee under Section
726(b) of the Bankruptcy Code, and (ii) Allowed Professional Fees
of Professional Persons in an aggregate amount not to exceed
$100,000 incurred after the first business day following delivery
by the Senior Agent or the DIP Agent of the Carve Out Trigger
Notice.
Security for the Senior DIP Loan
All of the obligations under the Senior DIP Loan shall constitute
allowed superpriority administrative expense claims against each of
the Debtors' estates.
As security for the Senior DIP Obligations, the Prepetition Senior
Secured Parties are granted fully perfected postpetition security
interests in and liens on all (A) Prepetition Collateral; (B) DIP
Collateral; (C) all Mezzanine Unencumbered Property; and (D) all
Senior Unencumbered Property, subordinate only to the Carve-Out and
other valid, perfected and unavoidable liens existing as of the
Petition Date that are senior in priority to the Senior Liens.
Use of the Cash Collateral
The Debtors are authorized to use all Cash Collateral of the
Prepetition Secured Parties, pursuant to the Interim Order, and in
accordance with the budget until the earlier of (x) November 13,
2021 or (y) if an Event of Default occurs and remains uncured for
more than five business days following the delivery of a
Termination Declaration. All of the Debtors' cash is the
Prepetition Secured Parties' cash collateral.
The budget for the period from August 29 through October 31, 2021
provided for $3,298,869 in total Resort operating expenses for such
period.
As adequate protection of their interests in the Prepetition
Collateral (including Cash Collateral), for an amount equal to the
aggregate postpetition diminution in value of such interests, the
Senior Agent and the Mezzanine Agent, for the benefit of themselves
and the other Prepetition Secured Parties, are granted:
* Senior Adequate Protection Liens;
* Mezzanine Adequate Protection Liens;
* Senior Adequate Protection Superpriority Claims; and
* Mezzanine Adequate Protection Superpriority Claims.
As further adequate protection, the Debtors are directed to pay (i)
all reasonable and documented fees and expenses; and (ii)
postpetition monthly interest payments in cash to the Senior Agent
of all accrued and unpaid interest.
As of the Petition Date, Senior Borrower was indebted to Senior
Lender pursuant to the Senior Loan Documents, for the aggregate
principal amount of $40,979,544, plus accrued and unpaid interest,
fees, costs and expenses. As of the Petition Date, the Prepetition
Senior Obligations include default interest accruing at an
additional 5%.
As of the Petition Date, Mezzanine Borrower owed the Mezzanine
Lender, pursuant to the Mezzanine Loan Documents, the aggregate
principal amount of $35,967,572, plus accrued and unpaid interest,
fees, costs and expenses.
The Prepetition Secured Parties have consented to the Debtors'
incurrence of the DIP Facility and proposed use of Cash Collateral
on the terms and conditions set forth in the Interim Order, and the
terms of the adequate protection.
The Senior Agent, the Mezzanine Agent and the DIP Agent shall each
have the right to credit bid up to the full amount of their
respective claims in any sale of all or any portion of their
respective collateral.
Milestones
The postpetition financing provided for these case milestones, the
Debtors' non-compliance of any of which shall constitute an event
of default:
-- entry of the Final DIP Order on or before 25 calendar days
after the Petition Date;
-- hearing on the Chapter 11 Plan on or before 50 calendar days
after the Petition Date;
-- entry of the confirmation order on or before 60 calendar days
after the Petition Date; and
-- occurrence of the effective date of the Chapter 11 Plan no
later than 75 days after the Petition Date.
A copy of the Interim Order is available for free at
https://bit.ly/3BPz6Bm from Stretto, claims agent.
The Final Hearing on the Motion will be held on September 23, 2021,
at 2 p.m., prevailing Eastern Time. Objections or responses to
entry of a final order on the Motion must be filed on or before 4
p.m., prevailing Eastern Time, on September 16.
About BL Santa Fe
BL Santa Fe, LLC, and BL Santa Fe (MEZZ), LLC own and operate a
luxury resort known as Bishop's Lodge located at 1297 Bishops Lodge
Road, Santa Fe, New Mexico 87506, approximately three miles north
of historic Downtown Santa Fe.
The Debtors filed Chapter 11 Petition (Bankr. D. Del. Lead Case No.
21-11190) on August 30, 2021. Hon. Mary F. Walrath oversees the
case.
In the petition signed by Michael Norvet as authorized person, the
Debtor disclosed $50 million to $100 million in assets and
liabilities. Young Conaway Stargatt & Taylor, LLP represents the
Debtors as counsel. Stretto serves as the Debtors' claims and
noticing agent.
BRIDGEPORT HEALTH: Taps Brass Moon Realty as Real Estate Broker
---------------------------------------------------------------
Bridgeport Health Care Realty Co. seeks approval from the U.S.
Bankruptcy Court for the District of Connecticut to hire Brass Moon
Realty to market its real property at 600 Bond St. and 735 Palisade
Ave., Bridgeport, Conn.
The firm will receive a 3% commission on the purchase price.
Levi Judqin, a principal at Brass Moon Realty, 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:
Levi Y. Judqin
Brass Moon Realty
2 Lakewood Road
Waterbury, CT 06704
Tel: +1 (203) 724-7127
Email: info@brassmoonrealty.com
About Bridgeport Health Care Realty Co.
Bridgeport, Conn.-based Bridgeport Health Care Realty Co. sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Conn.
Case No. 21-50521) on Aug. 20, 2021, listing as much as $10 million
in assets and as much as $50 million in liabilities. Miriam Stern,
member, signed the petition. Judge Julie A. Manning oversees the
case. The Debtor tapped Stephen M. Kindseth, Esq., at Zeisler &
Zeisler, P.C. as legal counsel.
CCC INTELLIGENT: Moody's Assigns B1 CFR Amid Go-Public Transaction
------------------------------------------------------------------
Moody's Investors Service assigned a B1 corporate family rating, a
B1-PD probability of default rating and a SGL-1 speculative-grade
liquidity ("SGL") rating to CCC Intelligent Solutions Holdings Inc.
("CCC", "the company"). Moody's also assigned B1 instrument ratings
to CCC Intelligent Solutions Inc.'s (a wholly-owned subsidiary of
CCC) new first-lien senior secured credit facilities, which include
a $250 million revolving credit facility and a $800 million term
loan. Moody's also withdrew CCC Intelligent Solutions Inc.'s
(formerly known as CCC Information Services Inc.) existing B3 CFR
and B3-PD PDR ratings. The existing first-lien senior secured
instrument ratings will be withdrawn upon repayment. The outlook is
stable.
The ratings action follows CCC's go-public transaction, debt
repayment and proposed debt issuance. CCC is publicly traded after
the merger with special purpose acquisition company ("SPAC")
Dragoneer Growth Opportunities Corp., which closed in July 2021.
Moody's expects the company will maintain a more modest leverage
profile as a public entity, compared to historical levels. Moody's
views this ESG -- Governance consideration as a key driver of the
ratings action.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: CCC Intelligent Solutions Holdings Inc.
Corporate Family Rating, Assigned B1
Probability of Default Rating, Assigned B1-PD
Speculative Grade Liquidity Rating, Assigned SGL-1
Issuer: CCC Intelligent Solutions Inc.
Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Assigned B1
(LGD3)
Ratings Withdrawn:
Issuer: CCC Intelligent Solutions Inc.
Corporate Family Rating, Withdrawn , previously rated B3
Probability of Default Rating, Withdrawn , previously rated B3-PD
Outlook Actions:
Issuer: CCC Intelligent Solutions Holdings Inc.
Outlook, Assigned Stable
Issuer: CCC Intelligent Solutions Inc.
Outlook, Changed To No Outlook From Stable
RATINGS RATIONALE
The rating action reflects CCC's improved leverage, liquidity and
free cash flow profile after the company reduced debt by roughly
40% using proceeds from the SPAC go-public transaction. Debt/EBITDA
leverage as of June 2021, pro forma with the new capital structure,
has declined from roughly 7x to 4.3x (Moody's adjusted). Access to
public equity markets add an incremental source of liquidity and
SEC disclosure requirements enhance reporting transparency. As a
public company, Moody's anticipates leverage moving forward will
remain well below historical levels above 7x. However, private
equity sponsor Advent retains control through its majority stake
(above 60%), which could result in a return to more aggressive
financial policies. Ratings would be pressured in the event of
debt-funded M&A or other leveraging transactions that raise
debt/EBITDA above closing levels without a clear path to
deleveraging.
CCC's concentrated revenue base and small scale for the rating
category, with $631 million of revenue as of the twelve months
ending June 2021, constrain the credit. Almost all of CCC's revenue
is generated in the US and the top 10 customers comprise a large
proportion of total revenue. Auto physical damage ("APD") services
in the US generate the majority of revenue, which creates product
and geographic concentration.
A leading market position in the US auto physical damage ("APD")
market, a stable revenue base with high retention rates and healthy
margins support the credit. CCC generates most of its revenue from
subscription-based solutions, which mitigates the cyclical nature
of claim volumes. Organic revenue in 2020 grew 5%, despite the
recession caused by the coronavirus pandemic (pro forma with the
divestiture of First Party Clinical Services). An established,
growing, network of connected insurers, repair shops and other
players in the auto claims ecosystem supports the credit. CCC's
solutions are embedded in client workflows, creating high switching
costs and barriers to entry. A proprietary claims database with
over 30 years of repair history is hard to replicate and creates a
competitive advantage.
The stable outlook reflects the expectation for strong revenue
growth in the 12%-14% range in 2021 (pro forma for the divestiture
of First Party Clinical Services), as demand for digital APD
solutions accelerates and claim volumes normalize. After 2021,
Moody's expects revenue will expand at mid to high single-digit
growth rates driven by new customer wins and upsell/cross-sell
opportunities. Moody's anticipates EBITDA margins around 33% in
2021, expanding towards 35% over time (Moody's adjusted excluding
stock-based comp add-backs and other standard adjustments). The
divestiture of CCC's less profitable clinical services, along with
increased scale, will benefit margins, partially offset by higher
ongoing costs as a public company and investments in mobile, AI,
telematics and other growth initiatives. Revenue growth and
expanding margins are expected to support debt to EBITDA
improvement towards 3.5x, in the absence of leveraging
transactions.
CCC has very good liquidity, as reflected in the SGL-1 rating,
supported by a cash and cash equivalents balance of roughly $128
million (pro forma for the recapitalization) as of June 2021, and
full capacity under its new 5-year $250 million revolver. Moody's
expects the company to generate free cash flow to debt in the
10%-13% range (Moody's adjusted assuming no dividends) over the
next 12 months, which will more than suffice to cover mandatory
amortization payments on CCC's new $800 million first-lien term
loan (1% annually). The revolving credit agreement has a springing
net first-lien leverage maximum of 6.25x, tested only when at least
35% of the facility has been drawn. Moody's does not anticipate the
company will have difficulty staying within the covenant
threshold.
The ratings for the individual debt instruments incorporate CCC's
overall probability of default, reflected in the B1-PDR, and the
loss given default assessments for individual debt instruments. The
first-lien credit facilities, consisting of a $250 million
multicurrency revolver maturing 2026, and a $800 million term loan
due 2028, are rated B1 with a loss given default assessment of
LGD3. Because there is no other meaningful debt in the capital
structure to absorb potential losses, the first-lien senior secured
facilities are rated in line with the B1 corporate family rating.
As proposed, the new credit facilities are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
1. Incremental first lien debt capacity not to exceed (x) the
greater of $220 million and 100% of consolidated EBITDA, plus (y)
an amount such that First Lien Leverage Ratio does not exceed
3.65x. Amounts up to $220 million along with debt incurred in
connection with a permitted acquisition in an amount not exceeding
3.65x First Lien Leverage Ratio and/or any debt incurred under the
Ratio Debt Basket, may be incurred with an earlier maturity date
than the initial term loans
2. There are no express "blocker" provisions which prohibit the
transfer of specified assets to unrestricted subsidiaries; such
transfers are permitted subject to carve-out capacity and other
conditions.
3. 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
4. There are no express protective provisions prohibiting an
up-tiering transaction
The proposed terms and the final terms of the credit agreement may
be materially different.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the ratings if 1) sustained revenue growth
leads to increased scale, closer to higher-rated peers, while
diversifying revenue sources and maintaining strong profitability;
and 2) sponsor equity ownership falls below 50% and CCC is expected
to employ more conservative financial policies, with debt to EBITDA
to remain below 3.5x and free cash flow to debt sustained above 15%
(all metrics Moody's adjusted).
Moody's could downgrade the ratings if 1) revenue growth or
profitability decline materially compared to historical levels; 2)
debt-funded M&A or other leveraging transactions raise leverage
above closing levels without a clear path to deleveraging, such
that Moody's expects debt to EBITDA will be sustained above 5x, or
free cash flow to debt will remain below 8.0%; 3) liquidity
deteriorates; or 4) Moody's anticipates more aggressive financial
policies.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
CCC INTELLIGENT: S&P Raises ICR to 'B' on Continued Lower Leverage
------------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on CCC
Intelligent Solutions Inc. to 'B' from 'B-'. S&P also raised its
rating on the first-lien credit facility to 'B' from 'B-'. The '3'
recovery rating is unchanged.
S&P said, "We assigned our 'B' issue-level rating and '3' recovery
rating to the proposed $250 million revolving credit facility and
$800 million term loan.
"The stable outlook reflects our expectations for CCC to continue
increasing earnings and deleveraging over the next year as it
effectively cross-sells additional technology-enabled solutions
into its customer base and wins new work from auto repair shop
customers."
CCC recently became public following a special purpose acquisition
company (SPAC) process and used a portion of the proceeds to prepay
debt. The company has capacity to deleverage through continued
earnings growth, but ratings upside potential is limited until it
displays a track record of conservative financial policies. In
February 2021, Dragoneer Growth Opportunities Corp., a SPAC,
announced a merger agreement with CCC. The deal closed on July 30,
and CCC received total funds of about $800 million related to SPAC
proceeds, a forward purchase agreement, and private investment in
public equity funds. CCC then prepaid $525 million on its then
outstanding $1.3 billion first-lien term loan and distributed $135
million in dividends to shareholders. S&P views public companies as
having less leverage than private companies and note that the SPAC
transaction helped CCC substantially deleverage. Pro forma for the
recent debt reduction and one-time SPAC transaction related costs,
its S&P Global Ratings-adjusted leverage is 4.9x.
Private equity sponsor, Advent International Corp., holds
approximately 62% of the company's equity and three of nine seats
on the board of directors. While CCC's leverage and cash flow
profile are strong for the rating, further upside potential is
limited until it manages leverage under 5x even through
acquisitions. CCC has not made any material acquisitions since
Advent became the owner, but S&P notes the company has signaled it
will become more acquisitive now as a public company.
S&P said, "The stable outlook reflects our expectation that CCC
will continue deleveraging toward the mid-4x area by the end of
2022 from the high-4x area, including debt reduction from the SPAC
transaction. Continued low-double-digit percentage business growth
on a pro forma basis will drive credit metrics improvement, as CCC
continues to effectively cross-sell solutions into its customer
base and win work from repair shops that historically did not use
many tech-enabled solutions."
S&P could raise its rating if:
-- Management builds a track record of a more conservative
financial policy, maintaining leverage under 5x even through
acquisitions.
While unlikely over the next 12 months, S&P could lower the rating
if:
-- Leverage increases above 7.5x; or
-- S&P expects free operating cash flow to debt decline and remain
below 5%. This could occur if CCC undertakes a transformative large
debt-financed acquisition.
CHANNEL CLARITY: Wins Interim Cash Access Until October 14
----------------------------------------------------------
Judge LaShonda A. Hunt of the U.S. Bankruptcy Court for the
Northern District of Illinois authorized Channel Clarity Holdings,
LLC to use cash collateral to pay for post-petition expenses to
third parties during the period from September 3 through October
14, 2021, on an interim basis. The Debtor is authorized to pay
Oxford Media up to $30,000, pursuant to the budget.
In consideration for the use of cash collateral,
parties-in-interest to the cash collateral, Brock Flagstad and
Kasey Klaas are granted replacement liens to the extent of their
pre-petition liens, with any valid liens attaching to the
Collateral and its proceeds, until further Court Order. The Debtor
is directed to maintain and pay premiums for insurance to cover the
Collateral from fire, theft and water damage.
A final hearing on the motion is set for October 14, 2021 at 11
a.m.
A copy of the interim order is available for free at
https://bit.ly/3hhcBgJ from PacerMonitor.com.
About Channel Clarity Holdings
Chicago-based Channel Clarity Holdings, LLC filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
N.D. Ill. Case No. 21-07972) on June 30, 2021. Brock Flagstad,
managing member, signed the petition. At the time of the filing,
the Debtor disclosed $100,000 to $500,000 in assets and $1 million
to $10 million in liabilities. Judge Lashonda A. Hunt oversees the
case. Crane, Simon, Clar & Goodman represents the Debtor as legal
counsel.
COLORADO PROPERTY: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Colorado Property Associates, LLC
5101 Columbine St.
Denver, CO 80216
Business Description: Colorado Property Associates is a Single
Asset Real Estate debtor (as defined in 11
U.S.C. Section 101(51B)).
Chapter 11 Petition Date: September 8, 2021
Court: United States Bankruptcy Court
District of Colorado
Case No.: 21-14645
Judge: Hon. Joseph G. Rosania Jr.
Debtor's Counsel: Benjamin Shloss, Esq.
SHLOSS LAW OFFICE, LLC
PO Box 202227
Denver, CO 80220
Tel: 720-504-5997
Email: shlosslaw@gmail.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $500,000 to $1 million
The petition was signed by Teresa Immel, president/managing
member.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/ALLFBZI/Colorado_Property_Associates_LLC__cobke-21-14645__0001.0.pdf?mcid=tGE4TAMA
CORNERSTONE ONDEMAND: Moody's Assigns B3 CFR Amid Clearlake Buyout
------------------------------------------------------------------
Moody's Investors Service assigned new ratings to Cornerstone
OnDemand, Inc. (Clearlake), including a B3 Corporate Family Rating,
a B3-PD Probability of Default Rating, a B2 debt instrument rating
to the proposed first lien credit facility consisting of a $2,117.5
million first lien term loan due 2028 and $300 million first lien
revolving credit facility due 2026 (expected to be undrawn at
close), and a Caa2 debt instrument rating to the proposed $770
million second lien term loan due 2029. The outlook is stable.
The capital raised from the aforementioned debt issuance will be
used in conjunction with proceeds from issuing $700 million of
preferred equity and approximately $1,940 million of new cash
equity to support Clearlake Capital Group, L.P.'s (together with
certain of its affiliates, "Clearlake" or "Sponsor") $5.2 billion
LBO of Cornerstone. In addition, about $240 million of cash will be
added to the balance sheet.
Following the consummation of the acquisition, initial borrower
Sunshine Software Merger Sub, Inc. will merge with and into
Cornerstone OnDemand, Inc. (collectively with Sunshine Software
Merger Sub, Inc., "the Company" or "the Borrower"), with
Cornerstone continuing operations as the surviving entity.
Cornerstone will become a privately held company and shares of
Cornerstone common stock will no longer be listed on any public
market. Concurrently, Moody's will withdraw the existing CFR, PDR,
and existing debt instrument ratings associated with existing rated
entity Cornerstone OnDemand, Inc. The transaction is expected to
close in the second half of 2021.
Moody's views the transaction as credit negative, citing the
reduced financial flexibility from the material increase in debt as
the chief concern. The LBO will add roughly $1,760 million of
incremental debt to the balance sheet and increase cash debt
service requirements by approximately $90 million per annum (both
metrics inclusive of Moody's adjustments). A conservative
calculation method would place closing debt/EBITDA around 9.7x
("cash adjusted debt/EBITDA"; as adjusted by Moody's, inclusive of
pro forma management fees, net go-private cost saving, and
including stock compensation and changes in deferred revenue);
however, closing cash adjusted debt/EBITDA would approach 7.4x from
9.7x when giving credit for pro forma cost synergies not yet
realized ("synergized cash adjusted debt/EBITDA"). Cornerstone has
a solid track record of achieving proposed cost savings since the
Saba acquisition in early 2020.
Assignments:
Issuer: Cornerstone OnDemand, Inc. (Clearlake)
Probability of Default Rating, Assigned B3-PD
Corporate Family Rating, Assigned B3
Senior Secured First Lien Multiple Currency Revolving Credit
Facility, Assigned B2 (LGD3)
Senior Secured First Lien Term Loan, Assigned B2 (LGD3)
Senior Secured Second Lien Term Loan, Assigned Caa2 (LGD5)
Outlook Actions:
Issuer: Cornerstone OnDemand, Inc. (Clearlake)
Outlook, Assigned Stable
RATINGS RATIONALE
Cornerstone's B3 CFR reflects the Company's very high closing
financial leverage following Clearlake's take-private transaction,
as well as the potential for near term business disruption that
could result from an ownership change during the implementation of
significant cost cutting measures. The rating also recognizes the
company's leading market position in the market for learning
management, performance management and recruiting software systems,
and Cornerstone's large base of highly recurring subscription and
maintenance revenues, which make up roughly 96% of LTM Q2 2021
revenue.
While the B3 rating derives support from Cornerstone's strong niche
market position and highly recurring base of revenues, the company
operates in a very competitive environment against much larger,
better capitalized players such as SAP SE, Oracle Corporation, and
Workday. These peers offer broad enterprise resource management and
human capital management software suites which may meet the needs
of many enterprises seeking an integrated "one-size fits all"
solution rather than Cornerstone's more specialized "best of breed"
talent, performance, and learning management offerings.
Cornerstone's credit profile is expected to strengthen as actioned
cost savings are achieved and Moody's projects the closing cost
structure will decline by roughly $40 million by the end of FY
2022. Cash adjusted debt/EBITDA is expected to decline towards 7.3x
from closing 9.7x (or synergized cash adjusted debt/EBITDA to 6.5x
from 7.4x). However, there is some risk that the integration and
cost cutting measures could disrupt the combined company's revenue
growth trajectory as certain functional areas across the businesses
are rationalized.
The stable outlook reflects Moody's expectation for Cornerstone to
achieve organic revenue growth in the low-to-mid- single digit
range while continuing to realizing cost savings over the next
12-18 months. EBITDA margins will likely improve by at least 500
basis points and exceed 40% of revenue with cash adjusted
debt/EBITDA declining towards 7.3x. The stable outlook is also
supported by Cornerstone's $240 million closing cash balance and
highly recurring base of subscription revenues that will lead to
strong free cash flow (FCF). FCF to debt will approach at least
2.5% (when reducing cash payments for RSU from FFO) over the next
12-18 months.
Cornerstone is exposed to governance risks typical of
private-equity ownership, given that financial sponsors, including
Clearlake Capital, look to enhance equity returns through
distributions or debt financed acquisitions. Accordingly, Moody's
views Cornerstone's financial policy to be somewhat aggressive
given the private-equity ownership, high closing leverage, and the
potential for debt financed distributions and/or preferred equity
redemptions or acquisitions to enhance equity returns. Lack of
public financial disclosure and the absence of board independence
are also governance risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Cornerstone's ratings could face upward pressure if the company
were to achieve its targeted synergies and grow revenue organically
such that it can sustain cash adjusted debt/EBITDA below 6x and
FCF/debt above 5%.
Ratings could face downward pressure if Cornerstone were to
experience organic revenue declines or integration difficulties
such that cash adjusted debt/EBITDA is sustained above 7.5x or
FCF/debt approaches breakeven on other than a temporary basis. The
ratings could be negatively impacted if the company adopts a more
aggressive financial policy.
Cornerstone has a good liquidity profile, supported by $240 million
of cash at close, an undrawn $300 million revolving credit
facility, and the expectation for pro forma annual free cash flow
generation of at least $150 million (not including $110 million of
cash RSU payments due in 2022). FCF will be tempered through June
2022 as the company operates with a high cost structure and incurs
various cash integration/transaction expenses but is projected to
sustain quarterly FFO generation in excess of $60 million by Q1
2023+. Capital expenditures are consistent at roughly 4.5% of
revenue. While Cornerstone does not have debt maturities outside of
annual debt amortization of approximately $21.2 million for the
first lien term loan, it will be exposed to roughly $200 million of
cash payments associated with various RSUs throughout FY 2023, with
$110 million due in FY 2022. Moody's projects the company will have
ample cash on hand to fund the RSU payments, should management
choose to hold enough cash to do so.
The B2 rating on Cornerstone's proposed first lien bank credit
facilities reflects the company's PDR of B3-PD and the facility's
senior-most position within the capital structure. The Caa2 rating
on the $770 million second lien term loan reflects the debt's
junior position within the capital structure.
Preliminary terms in the first lien credit facility contain
provisions for incremental facility capacity up to (a) the greater
of $385 million or 100% of the consolidated adjusted EBITDA for the
most recently ended fiscal quarter for which financial statements
are available, plus (b) an additional amount subject to a pro forma
First Lien Leverage Ratio of 5.5x (first lien debt or debt secured
on a pari passu basis to the first lien credit facility), Senior
Secured Leverage Ratio exceeding 0.5x outside of the Closing Date
Senior Secured Leverage Ratio (8.0x preliminary; junior debt), or
Total Leverage Ratio exceeding 0.5x outside of the Closing Date
Total Leverage Ratio (8.0x preliminary; unsecured debt). Only
wholly-owned material U.S. domestic subsidiaries must provide
guarantees. There are leverage-based step-downs in the asset sale
prepayment requirement to 50% and 0% if the First Lien Leverage
Ratio is within 0.5x and 1.0x, respectively, of the Closing Date
First Lien Leverage Ratio (5.0x and 4.5x).
The proposed terms and the final terms of the credit agreement can
be materially different.
The principal methodology used in these ratings was Software
Industry published in August 2018.
Cornerstone OnDemand, Inc., founded in 1999 and headquartered in
Santa Monica, CA, is a provider of enterprise learning & content
management, performance management, and recruiting management
software systems. The company was taken private following a $5.2
billion LBO by private equity sponsor Clearlake Capital Group, L.P.
and affiliates in August 2021. The company generated revenues of
approximately $869 million for the twelve months ending June 30,
2021.
CORNERSTONE ONDEMAND: S&P Cuts ICR to 'B-' on Leveraged Buyout Deal
-------------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on talent
management software provider Cornerstone OnDemand Inc. to 'B-' from
'B+' because of the increase in leverage.
S&P said, "We assigned our 'B-' issue-level and '3' recovery
ratings to Cornerstone's $300 million revolving credit facility and
$2.1 billion first-lien term loan. We also assigned our 'CCC+'
issue-level and '5' recovery ratings to its $770 second-lien term
loan.
"The stable outlook reflects our expectation that while
Cornerstone's leverage will be high following the transaction and
the potential for business disruptions will be elevated because of
its multiple actioned cost savings plan, its mid-90% recurring
revenue, good unadjusted free operating cash flow (FOCF)
generation, and more than $500 million of total liquidity will help
sustain its capital structure.
"Cornerstone will start the leveraged buyout (LBO) acquisition by
financial sponsor Clearlake Capital Group with high leverage, but
we believe that it can sustain its capital structure. As a public
company, Cornerstone showed it was focused on paying down debt to
improve its leverage. However, now that is has been acquired by
financial sponsor Clearlake Capital, Cornerstone's leverage will
increase as Clearlake levers up Cornerstone's balance sheet to help
fund this acquisition.
"Cornerstone will add more than $2.8 billion of debt, $700 million
of payment-in-kind (PIK) preferred equity, and additional common
equity to its capital structure. We will treat the $700 million
preferred equity as debt for analytical purposes because it is
callable and the high PIK margin creates an incentive for
redemption, potentially with proceeds from new debt. The preferred
equity is PIK or cash pay at the company's option. However, the
preferred equity does not detract from our view of Cornerstone's
credit quality because it is subordinated to the company's debt and
does not require cash payments. We believe that Cornerstone's
starting leverage will be in the mid-13x area, including the $700
million preferred equity, which we will treat as debt.
"The stable outlook reflects our expectation that while
Cornerstone's leverage will be high following the LBO and business
disruptions could arise from the multifaceted cost-savings plan,
the company's mid-90% recurring revenue, good unadjusted FOCF
generation, and more than $500 million of total liquidity will help
sustain its capital structure.
"We could downgrade Cornerstone over the next 12 months if the
company underperforms its cost-savings plans, experiences larger
than expected restructuring costs, or problems related to business
disruptions such as significant employee attrition, such that FOCF
after debt service about breaks even. We could also downgrade
Cornerstone if it engages in debt-funded acquisitions or
shareholder returns that increase leverage.
"While unlikely over the over the next 12 months, we could raise
our rating on Cornerstone if it sustains leverage below the mid-7x
area through its cost-savings plans and keeps FOCF to debt above
5%. Cornerstone could achieve this by achieving its cost-saving
plans and growing its subscription revenue."
CRC BROADCASTING: Affiliate Media West May Use Cash Until Sept. 30
------------------------------------------------------------------
Judge Paul Sala of the U.S. Bankruptcy Court for the District of
Arizona authorized CRC Media West, LLC, affiliate of CRC
Broadcasting Company, Inc., to use cash collateral, on an interim
basis, until September 30, 2021, pursuant to the Debtor's
stipulation with Desert Financial Federal Credit Union.
As adequate protection for the use of cash collateral:
a. Desert Financial is granted replacement liens on all of the
Debtor's property after the Petition Date, to the extent of any
diminution in the value of Desert Financial's prepetition
collateral;
b. Desert Financial is also granted a superpriority
administrative expense claim to the extent the replacement liens do
not adequately protect Desert Financial for any diminution of
collateral;
c. the Debtor, on or before October 5, 2021, must remit to
Desert Financial an aggregate amount of no less than $8,000 among
both Debtors, CRC Media West and CRC Broadcasting.
As of February 28, 2020, the Debtor owes Desert Financial no less
than $1,477,964 under the prepetition loan documents as a result of
its own primary debts, and the debts of CRC Broadcasting that it
guaranteed and secured. The Debtor granted Desert Financial
first-priority liens and senior security interests in all of the
Debtor's property as security for the obligations.
Nothing in the stipulated order shall prime or prejudice the
validity or priority of the claim of Crestmark Vendor Finance, a
division of MetaBank, arising from the Equipment Finance Agreement
with the Debtor.
A copy of the stipulated order is available for free at
https://bit.ly/3trW5j1 from PacerMonitor.com.
Counsel for Desert Financial Federal Credit Union, secured
creditor:
Kelly E. Singer, Esq.
Squire Patton Boggs (US) LLP
1 E. Washington St., Suite 2700
Phoenix, AZ 85004
Telephone: (602) 528-4099 (Direct)
Email: kelly.singer@squirepb.com
About CRC Broadcasting Co.
CRC Broadcasting Company, Inc., a broadcast media company based in
Scottsdale, Ariz., filed a voluntary petition under Chapter 11 of
the Bankruptcy Code (Bankr. D. Ariz. Case No. 20-02349) on March 6,
2020, listing under $1 million in both assets and liabilities.
Affiliate CRC Media West, LLC also filed for Chapter 11 petition
(Bankr. D. Ariz. Case No. 20-02352) on March 6, 2020, listing under
$1 million in both assets and liabilities.
The cases are jointly administered.
Judge Paul Sala oversees both cases.
Allan D. NewDelman, Esq., at Allan D. NewDelman, P.C., is the
Debtors' legal counsel.
Squire Patton Boggs (US) LLP represents Desert Financial Federal
Credit Union, secured creditor.
CRC BROADCASTING: Gets Interim Cash Access Until Sept. 30
---------------------------------------------------------
Judge Paul Sala of the U.S. Bankruptcy Court for the District of
Arizona approved the stipulation between CRC Broadcasting Company,
Inc. and Desert Financial Federal Credit Union, allowing the Debtor
to use cash collateral on an interim basis until September 30,
2021, pursuant to a one-month budget. The budget, which covers the
period from September 1 to 30, provided for $98,000 in total
expenses.
In consideration for the use of cash collateral, Desert Financial
is granted replacement liens on all of the Debtor's property after
the Petition Date, to the extent of diminution in value of Desert
Financial's interest in the estate property. Desert Financial also
is granted a superpriority administrative expense claim to the
extent the replacement liens are not adequate to protect for any
diminution of collateral. Moreover, on or before October 5, 2021,
the Debtor must remit to Desert Financial no less than the
aggregate amount of $8,000 among Debtor CRC Broadcasting and CRC
Media West, as further adequate protection.
The Debtor owes Desert Financial under certain loan documents no
less than $1,477,964 resulting from its own debts and the debts of
affiliated debtor, CRC Media West, LLC that it guaranteed and
secured.
A copy of the stipulated order is available for free at
https://bit.ly/3nnadJ0 from PacerMonitor.com.
Counsel for Desert Financial Federal Credit Union, secured
creditor:
Kelly E. Singer, Esq.
Squire Patton Boggs (US) LLP
1 E. Washington St., Suite 2700
Phoenix, AZ 85004
Telephone: (602) 528-4099 (Direct)
Email: kelly.singer@squirepb.com
About CRC Broadcasting Co.
CRC Broadcasting Company, Inc., a broadcast media company based in
Scottsdale, Ariz., filed a voluntary petition under Chapter 11 of
the Bankruptcy Code (Bankr. D. Ariz. Case No. 20-02349) on March 6,
2020, listing under $1 million in both assets and liabilities.
Affiliate CRC Media West, LLC also filed for Chapter 11 petition
(Bankr. D. Ariz. Case No. 20-02352) on March 6, 2020, listing under
$1 million in both assets and liabilities.
The cases are jointly administered.
Judge Paul Sala oversees both cases.
Allan D. NewDelman, Esq., at Allan D. NewDelman, P.C., is the
Debtors' legal counsel.
Squire Patton Boggs (US)LLP represents Desert Financial Federal
Credit Union, secured creditor.
DEP LASHES: Unsec. Creditors Will Get 2.5% of Claims in 60 Months
-----------------------------------------------------------------
Dep Lashes, LLC filed with the U.S. Bankruptcy Court for the
Northern District of Texas a Plan of Reorganization and Disclosure
Statement dated September 7, 2021.
The bankruptcy filing was caused by the COVID pandemic and the
government mandate which caused Debtor to shut down its business
operations. This in turn caused Debtor to fall behind on payments
to several of its creditors including Debtor's landlords and
litigation subsequently ensued. Due to the liabilities and the loss
of revenues, Debtor filed and sought protection under the
Bankruptcy Code to restructure its obligations.
Pursuant to 11 U.S.C. Sec. 101(51D), Debtor elected to proceed
under Subchapter V, which provides for the appointment of a trustee
to assist in, among other things, the development of a consensual
plan, account for the debtor's property, and investigate the
Debtor's business. On July 27, 2021, Katharine B. Clark was
appointed as the Subchapter V Trustee.
After it filed this Chapter 11 Case, the Debtor has continued to
operate. In general, the Plan proposes to pay the holders of
Allowed Claims from continued business operations over a maximum
five-year period.
Class 2 consists of All Allowed Secured Claims of Dallas County,
Frisco ISD, Plano ISD and City of Frisco. The Class 2 Claims shall
be treated as secured claims up to the allowed amount of such
claim. The Class 2 Claimants shall receive interest on their claims
from the Petition Date through the Effective Date of the Plan at
the state statutory rate of 1% per month. The Class 2 Claimants
will also receive post-Effective Date interest on their claims at
the state statutory rate of 12% per annum. Upon Confirmation, the
Class 2 claims will be paid in full within 12 months of the
Effective date of the Confirmed Plan. The Class 2 Claimants shall
retain their statutory liens against the Debtor's property pursuant
to the Texas Property Code.
Class 3 consists of the U.S. Small Business Administration. Upon
Confirmation, the allowed Class 3 Claim will be paid in monthly
installments of $1,032.00 per month over 60 months commencing 30
days after the Effective Date of the Confirmed Plan. The Class 3
Claimant shall retain its liens against the Debtor's accounts,
receivables, equipment and other personal property to the same
extent, validity and priority that those liens existed prepetition
until the Class 3 Claim is paid in full. However, upon payment in
full of the allowed Class 3 Claim, the SBA shall promptly release
its lien and UCC filing with the Texas Secretary of State against
the Debtor.
Class 4 consists of All Allowed Unsecured Claims. A Class 4
Claimant holding an Allowed Unsecured Claim shall be paid a pro
rata share of $10,000.00 over a term of 60 months. Payments to an
allowed Class 4 Claimant will begin within 30 days of the Effective
Date of the Confirmed Plan. The combined monthly payment to all
allowed, unsecured creditors will be $167.00 per month. Based on
Debtor's Schedules, Debtor has approximately $458,217.46 in general
unsecured claims. Debtor estimates the dividend to unsecured
creditors will be approximately 2.5% of each creditor's allowed
unsecured claim. The Class 4 claims are impaired.
Class 5 consists of All Allowed Unsecured Convenience Claims. On or
before, but no later than 20 days after the Effective Date, the
holder of any Allowed General Unsecured Claim who is scheduled to
receive a pro rata distribution in excess of $500.00 may elect to
reduce the holder's Allowed Claim and total pro rata distribution
to $500.00, after which the Allowed Claim shall be treated as a
Convenience Claim. Allowed Convenience Claims shall be paid in full
within 90 days after the Effective Date. The Class 5 claims are
impaired.
Class 6 consists of Equity Interest Holders. The pre-petition
interests in this Debtor shall be cancelled. The Debtor shall issue
a new equivalent unit of ownership in this Debtor to Thao Duong.
Ms. Duong will be the sole shareholder of the Reorganized Debtor.
The Class 6 claims are unimpaired.
The Reorganized Debtor will continue to perform work in accordance
with ordinary business practices. Debtor's projections for the next
five years which Debtor believes will permit it to make the
payments contemplated by the Plan.
A full-text copy of the Reorganizing Plan dated September 7, 2021,
is available at https://bit.ly/3hdZrRt from PacerMonitor.com at no
charge.
Counsel for the Debtor:
Areya Holder Aurzada, Esq.
Holder Law
901 Main Street, Suite 5320
Dallas, TX 75202
Tel.: (972) 438-8800
E-mail: areya@holderlawpc.com
About Dep Lashes
Dep Lashes, LLC, filed a Chapter 11 petition (Bankr. N.D. Ala. Case
No. 21-31323) on July 22, 2021. In its petition, the Debtor
disclosed total assets of up to $500,000 and total liabilities of
up to $1 million. Thao Duong, managing director, signed the
petition. Judge Michelle V. Larson oversees the case. Holder Law
serves as the Debtor's legal counsel.
DI PURCHASER: Moody's Puts Caa1 CFR Under Review for Upgrade
------------------------------------------------------------
Moody's Investors Service placed DI Purchaser, Inc.'s ratings on
review for upgrade, including the company's Caa1 Corporate Family
Rating, Caa1-PD Probability of Default Rating, the Caa1 rating on
the company's senior secured first lien credit facility, and the
Caa2 rating on the company's senior secured second lien credit
facility. The review follows an announcement that TopBuild Corp.
(Ba1 stable) will acquire DI in an all cash transaction valued at
$1 billion. Closing is expected by year end 2021.
Moody's views the proposed transaction as credit positive for DI,
since TopBuild Corp. is higher rated, is larger with around $3
billion in revenue, and is better capitalized than DI.
The following ratings/assessments are affected by the actions:
On Review for Upgrade:
Issuer: DI Purchaser, Inc.
Corporate Family Rating, Placed on Review for Upgrade, currently
Caa1
Probability of Default Rating, Placed on Review for Upgrade,
currently Caa1-PD
Senior Secured 1st Lien Term Loan, Placed on Review for Upgrade,
currently Caa1 (LGD3)
Senior Secured 2nd Lien Term Loan, Placed on Review for Upgrade,
currently Caa2 (LGD5)
Outlook Actions:
Issuer: DI Purchaser, Inc.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The review for upgrade was prompted by the announcement that DI
Purchase, Inc. and TopBuild Corp. have signed a definitive
agreement for TopBuild Corp. to acquire DI for about $1 billion in
cash. The Moody's review will focus on the completion of the
announced acquisition plan. Moody's anticipates that all of DI's
debt will be repaid at the close of the transaction due to change
of control provisions in DI's debt agreements. If any DI debt
remains outstanding in the post-acquisition capital structure, an
upgrade is likely given TopBuild Corp.'s substantially (Ba1)
stronger credit profile. However, Moody's ability to maintain DI's
ratings will consider where in the corporate structure its debt
will reside, any guarantees of DI's debt by TopBuild, and the
financial and operational disclosures available with respect to
DI.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
DI Purchaser, Inc., headquartered in Houston, TX, is a distributor
and fabricator of insulation and related products in North America.
It serves the industrial, commercial and the metal building
insulation end markets.
DIAMOND (BC) BV: Moody's Rates New $1.5BB Term Loan B 'Ba3'
-----------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Diamond (BC)
B.V. (Diversey)'s proposed $1.5 billion term loan B due in 2028.
Proceeds will be used to repay outstandings under the existing USD
and EUR term loans due 2024. The outlook on the ratings is
positive.
"The transaction is positive to the credit profile in that it
reduces pre-tax debt service cost and the company's overall cost of
debt capital," according to Joseph Princiotta, Moody's SVP and lead
analyst for Diversey. "The transaction is also virtually net
leverage neutral and improves the company's debt profile with its
next maturity not until 2025," Princiotta added.
Assignments:
Issuer: Diamond (BC) B.V.
Senior Secured Bank Credit Facility, Assigned Ba3 (LGD3)
Adjustments:
Issuer: Diamond (BC) B.V.
LGD Senior Secured Bank Credit Facility, Adjusted to (LGD3) from
(LGD2)
RATINGS RATIONALE
On March 25, 2021, Moody's upgraded Diversey to reflect the
issuance of new equity capital with proceeds used to reduce debt
and meaningfully improve the company's credit metrics. Proceeds
from the IPO, plus the subsequent greenshoe, reduced debt by
roughly $730 million to $2,030 million. The rating outlook was
changed to positive from stable at that time to reflect the
improved outlook for the company's end markets, EBITDA and free
cash flow. Aside from the step change in leverage with IPO net
proceeds, Diversey expects to deleverage further through EBITDA
growth and further debt reduction overtime. Gross adjusted leverage
peaked at 8.4x in 2Q19 and improved to roughly 5.0x at June 30,
2021.
Diversey's ratings are supported by the company's exposure to
stable and faster growing end markets, industry leading positions,
a global footprint, low customer concentration and long-standing
customer relationships. The credit profile also reflects moderately
aggressive growth objectives focusing on new business wins and food
service growth, both of which require investment, and occasional
bolt-on acquisitions to support and drive growth. The credit
profile also reflects fragmented and competitive markets and
exposure to foreign exchange movements given that over 75% of its
revenues are generated outside the U.S.
With Food & Beverage end markets accounting for about 23% of
revenues on a pre-pandemic basis, the pandemic posed a significant
headwind and continues to be a source of some uncertainty to
Diversey's sales and profits in these markets. However, the
pandemic also introduced tailwinds to Diversey's P&L, including
strong growth in healthcare end markets and opportunities in a
number of cleaning and sanitizing product categories such as wipes,
bulk cleaners, hand care and alcohol related products, all of which
has helped offset headwinds caused by the pandemic as well as
current risks and uncertainties associated with the Delta variant.
The credit profile is impacted by governance considerations.
Although Bain Capital's ownership share is expected to remain in
the mid-to-high 70% range post IPO, the IPO will create a
publicly-traded float and expand the pool of equity holders that
will provide improved public oversight and should encourage the
company to follow more disciplined financial policy, enhance
transparency, and better balance the interests of creditors and
shareholders.
Although environmental and social factors are not key drivers of
the ratings or today's action, environmental and social factors are
viewed as favorable given the importance and positioning of
cleaning products and services in the portfolio. In addition, as
economies continue to re-open, Moody's expects healthy demand for
cleaning products and services sold to consumer facing businesses
and office and manufacturing buildings.
Diversey's SGL-2 rating reflects good liquidity due to the $70.7
million in cash balance at June 30, 2021 and $450 million revolver
which was undrawn except for about $9.8 million LC usage leaving
over $440 million availability. The revolver has a springing first
lien net leverage test of 7.5x when the use of the revolver is more
than 35% of the total revolving commitment. The company is expected
to remain in compliance with the covenant over the next four
quarters.
The first half of the year is generally a significant working
capital cash use period; the second half of the year working
capital tends to be a source of cash. The company is expected to
generate free cash flow in 2021 but to rely on the revolver from
time to time for organic growth and working capital as well as for
general corporate purposes.
The positive outlook the improving EBITDA outlook arising from
management actions as well as potential COVID related tailwinds and
new business opportunities. The positive outlook also reflects
improved free cash flow through both improved earnings growth, cost
reduction actions, contributions from bolt-on acquisitions, and
reduced collective cash usage for transition & transformation,
dosing & dispensing, restructuring and the collective resulting
positive impact on free cash flow.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's would consider an upgrade if the company continues to
execute its business plan, growing revenues, EBITDA and cash flow
supported by moderate M&A activity and further improvement in
metrics, including gross adjusted leverage in the mid 4X range,
RCF/TD above 10%, significant positive free cash flow, and
maintenance of adequate liquidity.
The ratings could be downgraded if the direction of performance and
free cash flow is not positive and indicates the company will
exceed some or all of its downgrade triggers -- leverage sustained
above 5.5x, negative or minimal free cash flow for multiple
quarters, or EBITDA to interest expense below 2.0 times. The
ratings could also be downgraded if M&A activity is aggressive and
stresses or spikes metrics beyond these triggers.
Headquartered in Fort Mill, South Carolina, Diversey is a global
supplier of cleaning, hygiene, sanitizing products, equipment and
related services to the institutional and industrial cleaning and
sanitation markets. The company generated approximately $2.6
billion of sales in 2020. Diversey is currently a portfolio company
of Bain Capital.
The principal methodology used in this rating was Chemical Industry
published in March 2019.
DIAMOND (BC) BV: S&P Affirms 'B' ICR, Outlook Positive
------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer-credit rating on Diamond
(BC) B.V. (Diversey), with a positive outlook.
S&P said, "At the same time, we assigned our 'B' issue-level rating
and '3' recovery rating to the company's new senior secured term
loan B, indicating our expectation for meaningful (50%-70%; rounded
estimate: 65%) recovery in the event of a payment default.
"The positive outlook reflects our expectation that we could raise
our issuer-credit rating on Diversey by one notch within the next
few quarters if the macroeconomic recovery is more rapid than our
base case indicates, the company's transition costs are lower than
what we currently project, or the company raises additional equity
for the purpose of debt repayment.
"We view the refinancing transaction as neutral for leverage and
expect S&P Global Ratings' adjusted debt to EBITDA will remain in
the 5x-6x range during 2021."
The company used proceeds generated from its March IPO to fully
repay its incremental U.S. dollar-denominated term loan issued in
2020 and a portion of its euro-denominated term loan due in 2024,
resulting in an absolute debt repayment of about $730 million.
Additionally, in a related transaction, the company enhanced its
liquidity via the $200 million upsize of its existing revolving
credit facility, bringing total commitments to $450 million.
Diversey now plans to refinance the entirety of its outstanding
senior secured debt, including $869 million of U.S.
dollar-denominated term loan borrowings and $544 million of
euro-denominated borrowings, with a new $1,500 million term loan B
due 2028. S&P said, "Because the company will use the proceeds from
the new term loan almost entirely for debt repayment, we view the
transaction as leverage neutral. We expect S&P Global Ratings'
adjusted weighted average debt to EBITDA will remain within the
5x-6x range during 2021, an improvement from over 8x at the end of
2020. While we view current metrics as consistent with our 'B'
rating, we could consider an upgrade over the next 12 months if the
company is able to de-lever at a faster pace than we project, such
that weighted average S&P Global Ratings' adjusted debt to EBITDA
falls below 5x."
S&P said, "The positive outlook reflects our view that Diversey's
credit metrics have the potential to strengthen above our base-case
expectations over the coming quarters.
"We believe there are a number of factors, beyond those which we
consider in our base case, that could lead to further financial
metric improvement over the next 12 months. These considerations
include, additional debt repayment, a more rapid reopening of and
demand rebound in the company's international hospitality and food
service end-markets, and EBITDA margin expansion from pricing
initiatives, cost-cutting measures, and lower transition expenses.
The company recently repaid a substantial amount of debt using IPO
proceeds and management has set a medium-term net debt target of 3x
company adjusted EBITDA. We would view any incremental debt
repayment, funded either using the proceeds of an additional equity
raise or through internally generated free cash flow, as positive
for credit quality. Beyond debt repayment, we believe there is
upside potential to credit metrics from EBITDA margin expansion.
Lower prospective transition, transformation, and restructuring
expenses (all of which we include in our EBITDA calculation), as
the company completes its transition to a stand-alone public
entity, could improve profitability and EBITDA beyond our current
forecast. However, we note that raw material and logistics cost
inflation are key risks to margin expansion and may offset some of
the positive impact from lower transition costs over the next few
quarters. We view a more rapid macroeconomic recovery and economic
reopening, which could lead to an earlier-than-expected demand
rebound in the company's institutional hospitality, lodging, and
food service end-markets, as also potentially positive for credit
quality. Offsetting the potential upside from reopening is still
considerable uncertainty both in the magnitude and extent of future
lockdowns and international vaccination rates.
"The positive outlook reflects our view that Diversey's operating
performance and credit metrics could continue to improve beyond our
base-case expectations, as global reopening supports underlying
demand in the company's institutional segment, and the company's
transformation initiatives and special charges roll off. In our
base case, we expect minimal top-line growth in 2021, as the $400
million benefit provided by heightened infection prevention demand
in 2020 normalizes, albeit at a higher baseline level, while the
$400 million of hospitality and food service sales that did not
occur in 2020 due to COVID-related lockdowns, gradually come back
into the business. For the current 'B' rating, we expect weighted
average debt to EBITDA of 5x-6x.
"We could revise the outlook to stable within the next 12 months if
Diversey faces unexpected challenges, or higher costs, in its
transition to a public entity. We could also revise the outlook to
stable if transformation costs are higher than expected and
cost-reduction initiatives are unsuccessful in driving margin
improvement. Delays or cost overruns in transformation efforts
could lead to lower profitability than our base-case forecast, as
well as weaker credit measures. We could also revise our outlook to
stable if EBITDA margins are pressured by rising raw material
costs, which the company is unable to pass through to customers in
a timely manner.
"We could consider lowering our rating, if in a downside scenario,
EBITDA margins fell 200 basis points (bps) below our current
expectations, resulting in debt to EBITDA of around 6x. A negative
rating action would also be possible if, contrary to our current
expectations, the company were to pursue a large debt-funded
acquisition or if considerable unexpected cash outlays or business
challenges reduced the company's liquidity such that liquidity
sources fell to less than 1.2x uses.
"We could raise our rating within the next year if EBITDA margin
improvement exceeds our current expectation by 150 bps-200 bps
along with marginally higher-than-projected revenue growth, or if
the company repays additional debt, improving leverage metrics such
that debt to EBITDA falls below 5x on a weighted average basis. In
such a scenario, we would expect to see a sharper recovery than
currently forecast in 2021 or lower transformation costs in the
back-half of the year. We would also have to be more certain that
the company would sustain debt to EBITDA below 5x and believe that
management's financial policies would continue to support metrics
at those levels. We could also consider a positive rating action if
Diversey's sponsor, Bain Capital, were to reduce its equity stake
below 40% and we expected the company's financial policies would
support leverage below 5x."
DK PROPERTIES: Seeks to Hire Kelley & Clements as Legal Counsel
---------------------------------------------------------------
DK Properties, LLP seeks approval from the U.S. Bankruptcy Court
for the Northern District of Georgia to employ Kelley & Clements,
LLP as its legal counsel.
Kelley & Clements will render these legal services:
(a) advise the Debtor regarding its Chapter 11 case and how to
accomplish its goals in connection with the prosecution of this
Chapter 11 case;
(b) advise the Debtor of its obligations, duties and rights;
(c) prepare documents to be filed with the court;
(d) appear in court and at any meeting with the U.S. trustee
and any meeting of creditors;
(e) perform various services in connection with the
administration of the case;
(f) interact and communicate with the court's chambers and the
court's Clerk's Office;
(g) prepare and file legal papers; and
(h) perform all other services necessary to prosecute the
Debtor's Chapter 11 case to a successful conclusion.
The hourly rates of the firm's attorneys and staff are as follows:
Charles N. Kelley, Jr., Partner $415 per hour
Jonathan D. Clements, Partner $250 per hour
Tammy A. Winkler, Paralegal $135 per hour
In addition, the firm will seek reimbursement for expenses
incurred.
Prior to the petition date, the Debtor made payments to Kelley &
Clements totaling $21,672.50.
Charles Kelley, Jr., Esq., a partner at Kelley & Clements,
disclosed in a court filing that his firm is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Charles N. Kelley, Jr., Esq.
Kelley & Clements LLP
P.O. Box 2758
Gainesville, GA 30503
Telephone: (770) 531-0007
Email: ckelley@kelleyclements.com
About DK Properties
Winder, Ga.-based DK Properties LLP filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga.
Case No. 21-20951) on Sept. 6, 2021, listing $2,345,390 in assets
and $1,616,009 in liabilities. David H. Smith, managing partner,
signed the petition. Kelley & Clements LLP serves as the Debtor's
legal counsel.
DUNN PAPER: S&P Downgrades ICR to 'CCC+' on Near-Term Maturities
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
specialty paper and tissue manufacturer Dunn Paper Holdings Inc. to
'CCC+' from 'B-'.
S&P said, "At the same time, we lowered our issue-level rating on
the company's first-lien secured credit facilities to 'CCC+' from
'B-'. The recovery rating remains '3', indicating our expectation
of meaningful (50%-70%; rounded estimate: 60%) recovery of
principal in the event of a payment default.
"We also lowered our issue-level rating on the company's
second-lien term loan to 'CCC-' from 'CCC'. The recovery rating
remains '6', indicating our expectation of negligible (0%-10%;
rounded estimate: 0%) recovery of principal in the event of a
payment default.
"The negative outlook reflects Dunn Paper's near-term debt
maturities and diminishing liquidity. We view the company's capital
structure as unsustainable and believe challenging operating
conditions, amid the current price-run in global pulp market,
increase the company's refinancing risk.
"We view Dunn Paper's capital structure as unsustainable given the
company's current debt maturities, weak liquidity, and free cash
flow deficit through the first half of 2021. As of June 30, 2021,
there was $9.8 million outstanding on Dunn Paper's revolving credit
facility and $259.6 million outstanding on its first-lien term
loan, both of which are due Aug. 26, 2022. We believe the company
must successfully refinance its capital structure to avoid
defaulting on these commitments. Consequently, we view its
liquidity as constrained and, after accounting for these upcoming
maturities, we estimate the company's liquidity sources will be
less than 1x its uses over the next 12 months." Furthermore,
through the first half of 2021, Dunn Paper's covenant headroom
rapidly deteriorated. To avoid a covenant breach, on June 29, 2021,
it amended its first-lien and second-lien credit agreements to
revise its maximum total net leverage ratio. Though the amendment
provided some operating flexibility and eased its narrowing EBITDA
cushion, the financial covenant is scheduled to begin stepping-down
on March 31, 2022.
Another historical run-up in pulp prices, reminiscent of the rise
in prices in the second half of 2017, is expected to pressure
earnings. The steep rise in pulp prices since last December has
strained Dunn Paper's profit margins and suppressed cash flow
through the second quarter. The magnitude of the increase in pulp
prices has greatly exceeded expectations for the year, and although
the effect on the company's profitability is similar to that during
the last cycle, the recent increase has unfolded at a breakneck
pace, much faster than the previous 2018 peak. The upward pressure
on pulp prices from low producer inventories and strong demand
following the COVID-19 pandemic has been exacerbated by delayed and
extended maintenance outages, unexpected production outages, and
supply chain disruptions related to lack of available shipping
containers. Approximately 35% of Dunn Paper's volumes are indexed
to trailing RISI prices with pricing resets occurring every 50-90
days. For the remaining 65% of volumes, Dunn Paper enacts price
increases. Once announced, price increases are implemented within
30-45 days and apply to any volumes delivered after the effective
date. Although Dunn Paper has executed several price increases, the
temporary absorption of higher pulp prices has resulted in
significant margin compression. S&P expects Dunn to continue
executing price increases until pulp prices normalize, which should
occur as supply chain issues are remedied and capacity growth
investments ease supply shortages.
The negative outlook reflects Dunn Paper's near-term debt
maturities and diminishing liquidity. S&P views the company's
capital structure as unsustainable and believes challenging
operating conditions, amid the current price-run in global pulp
market, increase the company's refinancing risk.
S&P could lower its rating on Dunn Paper if:
-- It does not address its upcoming debt maturities by the end of
the year; or
-- The company announces an exchange or restructuring that we deem
as tantamount to a default.
S&P could raise its rating on Dunn Paper if:
-- The company addresses its upcoming debt maturities and
strengthens its liquidity, through a refinancing or maturity
extension, in a way in which we would not consider it a distressed
exchange or restructuring;
-- It mitigates the rise in pulp prices through pricing actions
and improves its profitability such that the company is able to
generate sufficient internal cash flow to fund operations; and
-- It increases its EBITDA resulting in debt leverage sustained
below 8x and an EBITDA cushion of at least 10% under its financial
covenant.
EPR PROPERTIES: Fitch Affirms 'BB+' IDR & Alters Outlook to Stable
------------------------------------------------------------------
Fitch Rating has affirmed the ratings of EPR Properties (EPR)
including the Issuer Default Rating (IDR) at 'BB+'. The Rating
Outlook has been revised to Stable from Negative.
The affirmation and Stable Outlook reflect Fitch's expectations
that the company will sustain metrics appropriate for the rating,
including leverage (net debt/recurring operating EBITDA) decreasing
below 6.5x and a fixed-charge coverage ratio at or above 2.0x.
Indeed, stronger rent collections during 2H21 and 2022 should drive
leverage to the high-5x range next year and the mid-5x range during
2023.
KEY RATING DRIVERS
Rent Collections Near Full Recovery: Fitch expects EPR's collection
rate to improve to 90% in 3Q21 and around 95% in 4Q21. EPR
collected 85% of contractual rents during 2Q21, a marked
improvement from 72% in 1Q21 and 28% during 2Q20. Collection
improvements have been driven by strong performance of non-theatre
tenants and increased theatre collections, Fitch expects this trend
to continue in 2H21 resulting in overall collections of 85% for
2021.
Industry/Tenant Concentrations: EPR's concentrated portfolio is a
credit negative, including its large exposure to movie theatre
operators given the technological and pandemic related disruption
that industry must contend with. Retaining competitive positioning
in a marketplace increasingly offering in-home and on-demand
entertainment remains a post-pandemic challenge for operators.
EPR's high-quality theatre locations and productivity balance the
disintermediation challenges facing the movie exhibitor industry.
For example, the vast majority of EPR theatres rank within the top
half of revenue producing theatres in the U.S. and offer enhanced
food and beverages.
EPR's top 10 tenants accounted for 73.6% of 2Q21 revenue, well
above the Fitch net lease REIT peer average in the mid-20% range.
EPR's three largest tenants AMC Theatres (19.0%), Topgolf (17.1%)
and Regal Cinemas (8.9%) represented 45% of rents. Movie theatre
tenants represented 46% of EPR's contractual cash revenues as of
June 30, 2021.
Well-Laddered Maturities/Leases: Fitch views EPR's laddered debt
maturities and limited near-term lease expirations as a credit
positive. EPR benefits from long-term leases. Approximately 4% of
leases are scheduled to expire through 2024 and 17% of leases
expire through 2030. Historically, most tenants have chosen to
exercise their renewal options, which has mitigated re-leasing risk
and provided predictability to portfolio-level cash flows, although
the dearth of rental expirations and the propensity to invest in
property capital improvements upon expiration limits the sample
size for evaluating renewal and new lease rental rate changes.
Conservative Leverage Target: Fitch views EPR's public leverage
target of mid-5x range as strong for the 'BB' rating category. Per
Fitch's leverage calculation, EPR was 5.3x and 4.5x levered in 2018
and 2019, respectively. Leverage was elevated in 2020 and Fitch
expects EPR to reduce leverage to the high-5x range in 2022 which
is below Fitch's negative leverage sensitivity of 6.5x. Fitch
Forecasts EPR will further reduce leverage to the mid-5x range in
2023 and 2024, assuming improved, normalized rent collections and a
conservative acquisition funding mix during the forecast period.
Portfolio Strategy: EPR's portfolio consists primarily of
experiential property types and is supported by consumer trends
that place greater value on experiences. Fitch expects the company
will continue to sell down its remaining education segment
investments in early education and private school assets and
reinvest the proceeds in expanding its experiential offerings.
Additionally, Fitch expects movie theatres to encompass a smaller
proportion of revenues during the forecast period as the firm's
acquisitions will center around other properties types (e.g. Eat &
Play, Ski, Attractions and Gaming properties).
Alternative uses of EPR's assets are generally more limited than
traditional property types and can require significant capital
investment to suit new tenants. In addition, the mortgage
financeability and depth of the asset transaction market of these
asset classes are less robust than that of other real estate
sectors.
Box Office Results: The coronavirus pandemic continues to present a
challenge to movie theatre operators, as their business model
depends on in-person attendance of filmed content. Operators do not
have control over the quality and timing of its theatrical film
releases. Per Box Office Mojo, domestic box office revenues
improved to around $600 million in July, a notable increase from
approximately $400 million in June and $200 million in May and
April, respectively. Year-to-date (YTD) Sept. 1, 2021, domestic box
offices sales are in-line with the whole of 2020 at $2.1 billion.
DERIVATION SUMMARY
EPR's historical credit metrics, long-term leases and low near-term
debt maturities compare well to peers. EPR's high tenant and
industry concentrations, along with its focus on property types
that have fewer mortgage financing options and weaker contingent
liquidity, are credit concerns relative to peers.
EPR's closest peers in the net-lease space with higher individual
sector concentrations include Getty Realty Corp. (BBB-/Stable; gas
stations) and Four Corners Property Trust (BBB-/Stable;
restaurants).
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Rent collections improve to 90% and around 95% in 3Q21 and
4Q21, respectively;
-- EPR receives deferred rent totaling $50 million in each of
2021 and 2022, respectively and $25 million in 2023;
-- Net acquisitions total approximately $150 million and $700
million in 2021 and 2022, respectively;
-- Dividend per share of $3.50 and $3.80 in 2022 and 2023,
respectively.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch's expectation of net debt to recurring operating EBITDA
sustaining below 5.5x;
-- Material reduction in tenant concentrations - reduction of top
10 tenant exposure to less than 50% of annual revenues and no
one tenant representing more than 20% of rental revenues;
-- Fitch's expectation of fixed-charge coverage sustaining above
2.5x;
-- Increased mortgage lending activity in the experiential
property sectors, demonstrating contingent liquidity for the
asset classes.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Continued secular pressure in the theatre industry, measured
by sustained declines in box office revenues and attendance
even after the coronavirus-related health risk has subsided
leading to a decline in tenant rent coverage;
-- Fitch's expectation of net debt to recurring operating EBITDA
sustaining above 6.5x;
-- Fitch's expectation of fixed-charge coverage sustaining below
2.0x.
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
Strong Liquidity: Fitch estimates EPR's base case liquidity
coverage at 19.5x through fiscal 2022, which is robust for the
rating. EPR's liquidity is supported by $510 million in cash and
full capacity available under the firm's $1.0 billion revolver
revolving credit facility. The company has no debt maturities until
2023.
Fitch defines liquidity coverage as sources of liquidity (readily
available unrestricted cash, availability under the unsecured
revolving credit facility and projected retained cash flows from
operating activities after dividends and distributions) divided by
uses of liquidity (debt maturities, projected recurring capital
expenditures and committed (re) development expenditures).
ISSUER PROFILE
EPR Properties (NYSE: EPR) is a specialty REIT that primarily
invests in and finances experiential properties. As of June 30,
2021, the company owned approximately 360 properties in 44 states
and Ontario, Canada.
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.
EVERGREEN 1 ASSOCIATES: Case Summary & Top Unsecured Creditors
--------------------------------------------------------------
Four affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Evergreen I Associates LLC 21-17116
S. Pemberton Road and 1722 Route 38
Mount Holly, NJ 08060
Evergreen II Associates LLC 21-17118
Evergreen III Associates LLC 21-17119
Evergreen Plaza Associates, LLC 21-17120
Business Description: The Debtors are engaged in activities
related to real estate.
Chapter 11 Petition Date: September 9, 2021
Court: United States Bankruptcy Court
District of New Jersey
Judge: Hon. Christine M. Gravelle
Debtors' Counsel: Joseph L. Schwartz, Esq.
RIKER, DANZIG, SCHERER, HYLAND & PERRETTI LLP
Headquarters Plaza
One Speedwell Avenue
Morristown, NJ 07962-1981
Tel: (973) 538-0800
Email: jschwartz@riker.com
Evergreen I Associates'
Estimated Assets: $1 million to $10 million
Evergreen I Associates'
Estimated Liabilities: $1 million to $10 million
Evergreen II Associates'
Estimated Assets: $1 million to $10 million
Evergreen II Associates'
Estimated Liabilities: $1 million to $10 million
Evergreen III Associates'
Estimated Assets: $100,000 to $500,000
Evergreen III Associates'
Estimated Liabilities: $1 million to $10 million
Evergreen Plaza Associates'
Estimated Assets: $0 to $50,000
Evergreen Plaza Associates'
Estimated Liabilities: $1 million to $10 million
The petitions were signed by Nicholas Aynilian as manager.
Full-text copies of the petitions containing, among other items,
lists of the Debtors' largest unsecured creditors are available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/FVL5XOQ/Evergreen_I_Associates_LLC__njbke-21-17116__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/TMXLNHQ/Evergreen_Plaza_Associates_LLC__njbke-21-17120__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/S3ESF6Q/Evergreen_III_Associates_LLC__njbke-21-17119__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/F2VMVDA/Evergreen_II_Associates_LLC__njbke-21-17118__0001.0.pdf?mcid=tGE4TAMA
EVO TRANSPORTATION: Grant Thornton Replaces Marcum as Auditor
-------------------------------------------------------------
The audit committee of the board of directors of EVO Transportation
& Energy Services, Inc. approved the dismissal of Marcum LLP, as
the Company's independent registered public accounting firm on
Sept. 1, 2021.
The audit report of Marcum on the Company's financial statements
for the fiscal year ended Dec. 31, 2019 did not contain an adverse
opinion or a disclaimer of opinion, and was not qualified or
modified as to uncertainty, audit scope or accounting principles,
except the audit report of Marcum on the Company's financial
statements for the fiscal year ended Dec. 31, 2019 contained an
explanatory paragraph indicating that there was substantial doubt
about the ability of the Company to continue as a going concern.
Marcum did not report on the Company's annual or any interim period
financial statements for the fiscal year ended Dec. 31, 2020.
As previously disclosed in Item 9A of the Company's Annual Report
on Form 10-K filed on Aug. 10, 2021, the Company identified the
following material weaknesses in its internal control over
financial reporting as of Dec. 31, 2019:
* The Company had not fully implemented the necessary internal
controls under the COSO (2013 Framework) to design, test and
evaluate the operating effectiveness of its internal control over
financial reporting;
* The Company's management and board of directors had
insufficient oversight of the design and operating effectiveness of
the Company's disclosure controls and internal control over
financial reporting;
* The Company had insufficient written policies and procedures
for accounting and financial reporting with respect to the
requirements and application of GAAP and SEC disclosure
requirements;
* The Company failed to maintain effective controls over the
period-end financial reporting process, including controls with
respect to identification of unrecorded liabilities; revenue
reconciliations to ensure appropriate revenue recognition; payroll
reconciliations; preparation and disclosure of provision for income
taxes; and account-level reconciliations in the general ledger,
resulting in numerous adjusting entries identified by the Company
and identified through audit procedures;
* The Company failed to maintain effective controls over the
recording of business combinations to ensure purchase accounting
was properly reconciled in the general ledger;
* The Company did not have sufficient internal personnel
resources to review the financial statements and notes to the
financial statements prepared by external consultants and
professionals to ensure accuracy and completeness; and
* The Company failed to maintain effective controls over journal
entries, both recurring and nonrecurring, and did not maintain
proper segregation of duties. Journal entries were not always
accompanied by sufficient supporting documentation and were not
adequately reviewed and approved for validity, completeness and
accuracy. In most instances, persons responsible for reviewing
journal entries for validity, completeness and accuracy were also
responsible for preparation.
During the fiscal year ended Dec. 1, 2019 and through the date
preceding Marcum's dismissal, there were no disagreements between
the Company and Marcum on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedures, which disagreements, if not resolved to the
satisfaction of Marcum would have caused Marcum to make reference
thereto in their report on the Company's financial statements for
such year.
On Sept. 1, 2021, the audit committee of the Company's board of
directors approved Grant Thornton LLP as the Company's new
independent registered public accounting firm, subject to Grant
Thornton's completion of their client acceptance procedures, which
were completed on Sept. 3, 2021.
During the fiscal year ended Dec. 31, 2019 and through the date
preceding Grant Thornton's engagement, neither the Company nor
anyone on their behalf consulted with Grant Thornton regarding any
matters on either (1) the application of accounting principles to a
specified transaction, either completed or proposed; or (2) the
type of audit opinion that may be rendered on the Company's
financial statements, and Grant Thornton did not provide either a
written report or oral advice to the Company that Grant Thornton
concluded was an important factor considered by the Company in
reaching a decision as to the accounting, auditing or financial
reporting issue; or (3) any matter that was either the subject of a
disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K,
or a reportable event, as defined in Item 304(a)(1)(v) of
Regulation S-K.
About EVO Transportation
Headquartered in Peoria, AZ, EVO Transportation & Energy Services,
Inc. is a transportation provider serving the United States Postal
Service ("USPS") and other customers. EVO is the second largest
surface transportation company serving the USPS with approximately
1,000 vehicles in operation as of Dec. 31, 2019.
EVO Transportation reported a net loss of $32.71 million for the
year ended Dec. 31, 2019, compared to a net loss of $6.58 million
for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company
had $111.74 million in total assets, $122.87 million in total
liabilities, $341,000 in series A redeemable preferred stock, $1.2
million in redeemable common stock, and a total stockholders'
deficit of $12.67 million.
Houston, Texas-based Marcum LLP, the Company's auditor since 2019,
issued a "going concern" qualification in its report dated Aug. 10,
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
and lacks the financial resources it needs to sustain operations
for a reasonable period of time, which is considered to be one year
from the issuance date of the financial statements. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.
FIRST TO THE FINISH: May Use Cash Collateral Through Sept. 30
-------------------------------------------------------------
Michael E. Collins, Chapter 11 Trustee for First to the Finish Kim
and Mike Viano Sports Inc., on behalf of the Debtor, entered into a
stipulation with CNB Bank & Trust, N.A. and Nike USA, Inc.
pertaining to the Trustee's use of cash collateral.
CNB, Nike and the Bank of Springfield, as Secured Lenders, have
asserted a perfected security interest in the Debtor's bankruptcy
estate.
Judge Laura K. Grandy of the U.S. Bankruptcy Court for the Southern
District of Illinois approved the stipulation, and accordingly
authorized the Trustee to use the cash collateral from the
appointment date through and including the termination date, solely
in accordance with the budget, plus the permitted variance.
The budget provided for total cash disbursements, as follows:
$163,535 for August 2021;
$188,551 for September 2021;
$212,507 for October 2021; and
$227,507 for November 2021.
The termination date shall be the earlier of (i) September 30,
2021, (ii) the entry of a final order on the Trustee's use of the
cash collateral, (iii) five business days after notice of a
termination event, (iv) the dismissal of the Debtor's case, or the
conversion of the case to one under Chapter 7 of the Bankruptcy
Code, (vi) the consummation of the sale of substantially all of the
assets of the estate, or (vii) the effective date of any confirmed
Chapter 11 plan.
The Court ruled that the Trustee may exceed the budget by an agreed
amount, subject to Court approval, to pay a mediator to conduct a
global mediation of the claims and defenses asserted by the Secured
Lenders, the Chapter 11 Trustee and Michael Viano, as well as for
purchasing inventory to fulfill open purchase orders, subject to
the assent of Nike.
As adequate protection, the Secured Lenders shall be granted access
to examine the books and records of the Debtors and take inventory
of assets of the estate. In addition, the Secured Lenders are
granted valid and perfected security interests in and lies,
including replacement liens, on all property of the estate, to the
extent of diminution in value of the Secured Lenders' interest in
the prepetition collateral. The Secured Lenders shall also have
administrative expense claims against the Debtor's estate.
The liens and claims granted to the Secured Lenders are subject to
a carve-out of funds of up to $100,000 for fees owed to the U.S.
Trustee; fees and expenses incurred by the Trustee and his
professionals and the Debtor's professionals.
A copy of the stipulation and eighth agreed interim order is
available for free at https://bit.ly/3jUi1A5 from PacerMonitor.com.
Final telephonic hearing on the motion will be held on September
28, 2021 at 9 a.m. Objections are due no later than 14 days after
entry of the interim order.
About First to the Finish Kim
and Mike Viano Sports Inc.
First to the Finish Kim and Mike Viano Sports Inc. sells sporting
goods, hobbies, and musical instruments.
First to the Finish Kim and Mike Viano Sports filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
S.D. Ill. Case No. 20-30955) on October 7, 2020. The petition was
signed by Mike Viano, president. At the time of filing, the Debtor
estimated $1 million to $10 million in both assets and
liabilities.
Judge Laura K. Grandy oversees the case.
The Debtor is represented by Carmody MacDonald P.C.
The Chapter 11 Trustee, Michael E. Collins, is represented by
Manier & Herod, P.C.
CNB Bank & Trust, N.A., as secured lender, is represented by Silver
Lake Group, Ltd. Nike USA, Inc., also a secured lender, is
represented by A.M. Saccullo Legal, LLC.
FORD CITY CONDOMINIUM: Trustee Taps Freeborn & Peters as Counsel
----------------------------------------------------------------
William Avellone, the Subchapter V trustee appointed in Ford City
Condominium Association's Chapter 11 case, seeks approval from the
U.S. Bankruptcy Court for the Northern District of Illinois to hire
Freeborn & Peters, LLP as his legal counsel.
The firm's services include:
(a) advising the trustee on all legal issues as they arise;
(b) responding to all motions and pleadings filed by
parties-in-interest;
(c) advising the trustee regarding the terms of any sale of
assets or plan of reorganization or liquidation and assisting the
trustee in negotiations with third parties;
(d) analyzing the perfection and priority of the liens on the
Debtor's property;
(e) preparing legal papers;
(f) representing the trustee in all proceedings in the case,
including investigation and pursuit of any estate causes of
action;
(g) assisting the trustee in his administration of the case;
and
(h) providing other necessary legal services.
The firm's hourly rates are as follows:
Shelly A. DeRousse, Esq. $490 per hour
Jason J. Ben, Esq. $450 per hour
Elizabeth L. Janczak, Esq. $400 per hour
Jacqueline E. Webster $255 per hour
Shelly DeRousse, Esq., a partner at Freeborn & Peters, 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 can be reached at:
Shelly A. DeRousse, Esq.
Elizabeth L. Janczak, Esq.
Freeborn & Peters LLP
311 South Wacker Drive, Suite 3000
Chicago, IL 60606
Tel: 312.360.6000
Fax: 312.360.6520
Email: sderousse@freeborn.com
ejanczak@freeborn.com
About Ford City Condominium Association
Chicago-based Ford City Condominium Association sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No.
21-05193) on April 20, 2021, listing total assets of $511,636 and
total liabilities of $1,266,643. Wendy Watson, president of Ford
City Condominium Association, signed the petition.
Judge Carol A. Doyle oversees the case.
Golden Law and Crane, Simon, Clar & Goodman serve as the Debtor's
legal counsel. The Debtor also tapped the services of Mitchell
Abrons Jr., an Illinois-based certified public accountant.
William B. Avellone, the Debtor's Subchapter V trustee, employed
Freeborn & Peters LLP as his legal counsel.
GAINCO INC: Wins Continued Cash Access Pending Final Hearing
------------------------------------------------------------
Judge David R. Jones of the U.S. Bankruptcy Court for the Southern
District of Texas authorized Gainco, Inc. to temporarily use cash
collateral to avoid immediate and irreparable harm to its estate,
pending final hearing on the cash collateral motion.
As adequate protection, the Debtor is directed to pay in September
2021 these parties-in-interest:
a. $15,000 to Traditions Commercial Finance, LLC to be applied
pursuant to the settlement agreement between the Debtor and
Traditions;
b. $2,101 to First Community Bank (FCB), pursuant to the setoff
right of FCB;
c. $5,000 as postpetition retainer to the Law Offices of William
B. Kingman, P.C.; and
d. $2,500 as postpetition retainer to Ruble, Leadbetter &
Associates P.C, as accountants for the Debtor.
Alleged Secured Creditors, Yellowstone Capital LLC; Traditions;
Payroll Funding Company LLC; CHTD Company; FCB; and Affiliated
Funding Corporation are granted a valid, perfected, and
non-avoidable replacement lien and security interest on all of the
Debtor's accounts, receivables and proceeds thereof to the extent
acquired after the Petition Date, in order to secure payment of
cash collateral used by the Debtor, if any.
A continued hearing on the motion will be held remotely on October
1, 2021 at 9 a.m., via video and telephone.
A copy of the sixth interim order is available for free at
https://bit.ly/3l0lZ9z from PacerMonitor.com.
About Gainco, Inc.
Gainco, Inc. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-21122 on April 30,
2021. In the petition signed by Theresa Nix, president, the Debtor
disclosed up to $1 million in assets and up to $10 million in
liabilities.
Judge David R. Jones oversees the case.
The Law Offices of William B. Kingman, P.C. is the Debtor's
counsel.
GANESH AND MARUTI: Seeks to Hire Hall Estill as Bankruptcy Counsel
------------------------------------------------------------------
Ganesh and Maruti, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Oklahoma to hire Hall, Estill,
Hardwick, Gable, Golden & Nelson, P.C. to serve as legal counsel in
its Chapter 11 case.
The firm's services include:
(a) advising the Debtor of its rights, obligations and powers
in the case;
(b) appearing before the bankruptcy court and other courts;
(c) preparing and filing for the Debtor all necessary
bankruptcy court schedules and other legal papers;
(d) representing the Debtor in any potential claim against or
by third parties;
(e) assisting in investigating and analyzing the acts,
liabilities and financial condition of the Debtor, the Debtor's
assets and business operations, including disposition of those
assets, and any other matters relevant to the case and the
interests of unsecured creditors;
(f) assisting the Debtor in examining claims filed against the
Debtor to determine whether those claims are objectionable or
otherwise improper;
(g) assisting the Debtor in developing a plan of
reorganization or liquidation;
(h) advising the Debtor regarding any potential sale or other
disposition of estate assets; and
(i) performing all other necessary legal services.
Thomas Creekmore, III, Esq., the firm's attorney who will be
providing the services, will be paid at an hourly rate of $460.
The Debtor paid $85,000 to the law firm as a retainer fee.
Mr. Creekmore 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:
Thomas A. Creekmore III, Esq.
Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C.
320 South Boston Avenue, Suite 200
Tulsa, OK 74103-3706
Tel.: (918) 594-0400
Fax: (918) 594-0505
Email: tcreekmore@hallestill.com
About Ganesh and Maruti
Ganesh and Maruti, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Okla. Case No. 21-12313) on Aug. 25,
2021, listing as much as $50,000 in assets and as much as $1
million in liabilities. Nisha Gheewala, managing member, signed
the petition. The Debtor tapped Hall, Estill, Hardwick, Gable,
Golden & Nelson, P.C. as legal counsel.
GBG USA: Committee Taps FTI Consulting as Financial Advisor
-----------------------------------------------------------
The official committee of unsecured creditors of GBG USA, Inc. and
its affiliates seeks approval from the U.S. Bankruptcy Court for
the Southern District of New York to employ FTI Consulting, Inc. as
its financial advisor.
The firm will render these services:
-- review financial-related disclosures required by the court,
including schedules of assets and liabilities, statement of
financial affairs and monthly operating reports;
-- prepare analyses required to assess any proposed
debtor-in-possession financing or use of cash collateral;
-- assess and monitor the Debtors' short-term cash flow,
liquidity and operating results;
-- assist in evaluating the relief requested in the Debtors' cash
management motion, including an analysis of the Debtors'
intercompany transactions involving non-debtor affiliates and
related party transactions;
-- review the Debtors' proposed key employee retention and other
employee benefit programs, if any;
-- review the Debtors' analysis of core business assets and the
potential disposition or liquidation of non-core assets;
-- assist in the review of the Debtors' cost/benefit analysis
with respect to the affirmation or rejection of various executory
contracts and leases;
-- review the Debtors' identification of potential cost savings,
including overhead and operating expense reductions and efficiency
improvements;
-- assist in the review and monitoring of the asset sale process,
including, but not limited to, an assessment of the adequacy of the
marketing process, completeness of any buyer lists, review and
quantifications of any bids;
-- review any tax issues associated with, but not limited to,
claims/stock trading, preservation of net operating losses, refunds
due to the Debtors, plans of reorganization, and asset sales;
-- assist in the review of the claims reconciliation and
estimation process;
-- review other financial information prepared by the Debtors,
including, but not limited to, cash flow projections and budgets,
business plans, cash receipts and disbursement analysis, asset and
liability analysis, and the economic analysis of proposed
transactions for which court approval is sought;
-- attend meetings and assist in discussions with the Debtors,
potential investors, banks, other secured lenders, the committee
and any other official committees organized in the Debtors' Chapter
11 proceedings, the U.S. Trustee, and other parties in interest;
-- assist in the review or preparation of information and
analysis necessary for the confirmation of a Chapter 11 plan and
related disclosure statement;
-- assist in the evaluation and analysis of avoidance actions,
including, but not limited to, fraudulent conveyances and
preferential transfers;
-- assist in the prosecution of committee responses/objections to
the Debtors' motions; and
-- render other general business consulting services.
The firm's services include:
Senior Managing Directors $950 - $1,295 per hour
Directors/Senior Directors/
Managing Directors $715 - $935 per hour
Consultants/Senior Consultants $385 - $680 per hour
Administrative/Paraprofessionals $155 - $290 per hour
As disclosed in court filings, FTI Consulting is a "disinterested
person" as that term is defined in Bankruptcy Code section 101(14),
as modified by Bankruptcy Code section 1107(b).
The firm can be reached through:
Liz Park
FTI Consulting, Inc.
Three Times Square, 9th Floor
New York , NY - 10036
Tel: +1 212 499 3683
Email: liz.park@fticonsulting.com
GBG USA Inc.
GBG USA, Inc. is a company incorporated under the laws of Delaware
and is an indirect wholly-owned subsidiary of Global Brands Group
Holding Limited (SEHK Stock Code: 787). It is primarily engaged in
operating the wholesale and direct-to-consumer footwear and apparel
business in North America.
Global Brands Group Holding Limited is a branded apparel and
footwear company. It designs, develops, markets and sells
products
under a diverse array of owned and licensed brands.
The Group's European wholesale business operates under legal
entities entirely separate and independent from the wholesale
business in North America. It primarily supplies apparel, footwear
and accessories to retailers and consumers across Europe under
licenses separately entered into by the European entities of the
Group. The Group's global brand management business operates on a
different business model and is distinctly separate from the
wholesale businesses in North America and Europe.
GBG USA and 10 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 21-11369) on July 29, 2021. In its
petition, GBG listed between $1 billion and $10 billion in both
assets and liabilities.
The cases are handled by Judge Michael E. Wiles.
The Debtors tapped Willkie Farr & Gallagher LLP as legal counsel,
Ankura Consulting Group LLC as financial advisor, and Ducera
Partners LLC as investment banker. Alan M. Jacobs, president of
AMJ Advisors LLC, serves as the Debtor's chief strategy officer.
Prime Clerk, LLC is the claims and noticing agent and
administrative advisor.
Moses & Singer, LLP serves as legal counsel to the first lien admin
agent, first lien collateral agent and second lien collateral
agent.
The pre-bankruptcy first lien lenders are represented by
Linklaters, LLP while ReStore Capital, LLC, as DIP administrative
and collateral agent, is represented by Dechert LLP.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors on Aug. 16, 2021. Stroock & Stroock & Lavan,
LLP and FTI Consulting, Inc. serve as the committee's legal counsel
and financial advisor, respectively.
GBG USA: Committee Taps Stroock & Stroock as Legal Counsel
----------------------------------------------------------
The official committee of unsecured creditors of GBG USA, Inc. and
its affiliates seeks approval from the U.S. Bankruptcy Court for
the Southern District of New York to employ Stroock & Stroock &
Lavan, LLP as its legal counsel.
The firm's services include:
a) advising the committee with respect to its powers and
duties under Section 1103 of the Bankruptcy Code;
b) assisting the committee in its consultations, meetings and
negotiations with the Debtors, creditors and other
parties-in-interest;
c) assisting the committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of the
Debtors;
d) assisting the committee in connection with any proposed
sale of the Debtors' assets;
e) assisting the committee in analyzing the claims of
creditors and the Debtors' capital structure;
f) assisting the committee in negotiating with holders of
claims, including analysis of possible objections to the priority,
amount, subordination, or avoidance of claims or transfers of
property in consideration of such claims;
g) representing the committee in matters generally arising in
the Debtors' Chapter 11 cases, including motion to incur
debtor-in-possession financing, "second day" pleadings and other
pleadings;
h) assisting the committee in its review, analysis and
negotiation of any potential compromises or settlements, and the
assumption and rejection of executory contracts and unexpired
leases;
i) advising the committee in connection with any proposed
mediation;
j) assisting the committee in connection with any Chapter 11
plan and other documents that may be filed;
k) appearing before the bankruptcy court, any other court and
the Office of the U.S. Trustee;
l) taking all necessary actions to protect and preserve the
interests of the committee and unsecured creditors generally;
m) responding to inquiries, as appropriate, from individual
creditors as to the status of, and developments in, the Debtors'
Chapter 11 cases;
n) preparing legal papers; and
o) performing other necessary legal services.
The firm's hourly rates are as follows:
Partners $1,150 - $1,650 per hour
Associates/Special Counsel $575 - $1,195 per hour
Paraprofessionals $375 - $550 per hour
Frank Merola, Esq., a partner at Stroock, disclosed in a court
filing that his firm is "disinterested" within the meaning of
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.
Merola disclosed that:
-- Stroock 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;
-- Stroock has not represented the committee in the 12 months
prior to the Debtors' Chapter 11 filing; and
-- Stroock is developing a prospective budget and staffing
plan for the committee's review and approval.
Stroock can be reached through:
Frank A. Merola, Esq.
Stroock & Stroock & Lavan LLP
2029 Century Park East
Los Angeles , CA 90067-3086
Tel. 310-556-5800
Fax. 310-556-5959
Email: fmerola@stroock.com
GBG USA Inc.
GBG USA, Inc. is a company incorporated under the laws of Delaware
and is an indirect wholly-owned subsidiary of Global Brands Group
Holding Limited (SEHK Stock Code: 787). It is primarily engaged in
operating the wholesale and direct-to-consumer footwear and apparel
business in North America.
Global Brands Group Holding Limited is a branded apparel and
footwear company. It designs, develops, markets and sells
products
under a diverse array of owned and licensed brands.
The Group's European wholesale business operates under legal
entities entirely separate and independent from the wholesale
business in North America. It primarily supplies apparel, footwear
and accessories to retailers and consumers across Europe under
licenses separately entered into by the European entities of the
Group. The Group's global brand management business operates on a
different business model and is distinctly separate from the
wholesale businesses in North America and Europe.
GBG USA and 10 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 21-11369) on July 29, 2021. In its
petition, GBG listed between $1 billion and $10 billion in both
assets and liabilities.
The cases are handled by Judge Michael E. Wiles.
The Debtors tapped Willkie Farr & Gallagher LLP as legal counsel,
Ankura Consulting Group LLC as financial advisor, and Ducera
Partners LLC as investment banker. Alan M. Jacobs, president of
AMJ Advisors LLC, serves as the Debtor's chief strategy officer.
Prime Clerk, LLC is the claims and noticing agent and
administrative advisor.
Moses & Singer, LLP serves as legal counsel to the first lien admin
agent, first lien collateral agent and second lien collateral
agent.
The pre-bankruptcy first lien lenders are represented by
Linklaters, LLP while ReStore Capital, LLC, as DIP administrative
and collateral agent, is represented by Dechert LLP.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors on Aug. 16, 2021. Stroock & Stroock & Lavan,
LLP and FTI Consulting, Inc. serve as the committee's legal counsel
and financial advisor, respectively.
GBG USA: Obtains Final Court Nod on Use of Cash Collateral
----------------------------------------------------------
Judge Michael E. Wiles of the U.S. Bankruptcy Court for the
Southern District of New York authorized GBG USA, Inc. and its
debtor-affiliates to use cash collateral on a final basis, pursuant
to the approved budget, during the period from the entry of the
interim order through the earliest to occur of (a) November 3,
2021, or (b) the occurrence of any termination event. The Debtors
acknowledge that all cash, including all cash proceeds, are Cash
Collateral of the Prepetition Secured Parties.
As adequate protection for any collateral diminution, the First
Lien Collateral Agent, for the benefit of the First Lien Secured
Parties, is granted:
(a) First Lien Adequate Protection Liens, subject to the
Carve-Out;
(b) First Lien Adequate Protection Claims, subject to the
Carve-Out;
(c) Adequate Protection Payments in cash in an amount equal to
all accrued and unpaid prepetition and postpetition fees and costs
due under the First Lien Credit Agreement; and
(d) Payment by the Debtors, in cash, of the fees of the First
Lien Agent and the professional fees and out-of-pocket expenses of
the counsel to the First Lien Secured Lenders; counsel to agent
under the Prepetition Loan Documents; financial advisor to the
First Lien Secured Lenders and any other professionals retained by
or on behalf of the First Lien Secured Parties.
The Carve-Out includes $1,000,000 in Post-Default Carve-Out Cap of
professional fees and expenses incurred.
The Second Lien Collateral Agent, for the benefit of the Second
Lien Secured Parties, is granted (a) Second Lien Adequate
Protection Liens and (b) Second Lien Adequate Protection Claims, as
adequate protection for any collateral diminution.
The Debtors' use of the cash collateral is subject to these
milestones:
* no later than September 27, 2021, the Debtors shall have
received binding and unconditional bids for the sale of the
Aquatalia Business;
* no later than October 7, 2021, the Debtors shall conduct an
auction for the sale of the Aquatalia Business, and that by such
date a closing of the sale of the Aquatalia Business to the
Successful Bidder shall have occurred, as well as the sale of the
remaining assets.
As of the Petition Date, the Debtors were indebted to the First
Lien Secured Parties at least $126,516,527 in aggregate principal
amount (plus accrued and unpaid interest, fees and costs) under the
Amended and Restated Credit Agreement dated as of October 23, 2020
among the GBG USA Inc., as borrower; Global Brands Group Holding
Limited, as parent guarantor; HSBC Bank USA, National Association,
as administrative agent; and the First Lien Secured Lenders. The
First Lien Collateral Agent possesses valid first priority liens on
and security interests in substantially all of the personal
property of the Debtors and the other First Lien Loan Parties.
As of the Petition Date, the Debtors owed the Second Lien Secured
Lenders not less than $109,629,953 in aggregate principal amount
pursuant to certain bilateral facility agreements, as amended,
between the Borrower; the other Second Lien Loan Parties; and the
Second Lien Secured Lenders together with HSBC Bank USA, National
Association, as second lien collateral agent.
The Second Lien Collateral Agent possesses, for the benefit of the
Second Lien Secured Parties, valid and perfected second priority
liens on substantially all of the personal property of the Debtors,
subject to the Intercreditor Agreement dated as of October 23, 2020
among the First Lien Collateral Agent, the Second Lien Collateral
Agent, the Borrower, the Parent and the Subsidiary Guarantors party
thereto.
The First Lien Secured Parties shall have the right to credit bid
all of their claims in connection with a sale of any of the
Debtors' assets, provided, that in no event shall any First Lien
Secured Party be permitted to credit bid for the DIP Collateral as
part of any competing bid for the DIP Collateral at any auction at
which Stalking Horse Bidder, WH AQ Holdings LLC is bidding.
A copy of the final order is available for free at
https://bit.ly/3DW1bZC from Prime Clerk, claims and noticing
agent.
GBG USA Inc.
GBG USA, Inc., is a company incorporated under the laws of Delaware
and is an indirect wholly-owned subsidiary of Global Brands Group
Holding Limited (SEHK Stock Code: 787). It is primarily engaged in
operating the wholesale and direct-to-consumer footwear and apparel
business in North America.
Global Brands Group Holding Limited is a branded apparel and
footwear company. It designs, develops, markets and sells products
under a diverse array of owned and licensed brands.
The Group's European wholesale business operates under legal
entities entirely separate and independent from the wholesale
business in North America. It primarily supplies apparel, footwear
and accessories to retailers and consumers across Europe under
licenses separately entered into by the European entities of the
Group. The Group's global brand management business operates on a
different business model and is distinctly separate from the
wholesale businesses in North America and Europe.
GBG USA and 10 affiliates sought Chapter 11 protection (Bankr. S.D.
N.Y. Lead Case No. 21-11369) on July 29, 2021. In its petition,
GBG listed between $1 billion and $10 billion in both assets and
liabilities.
The cases are handled by Judge Michael E. Wiles.
The Debtors tapped Willkie Farr & Gallagher LLP as legal counsel,
Ankura Consulting Group LLC as financial advisor, and Ducera
Partners LLC as investment banker. Alan M. Jacobs, president of AMJ
Advisors LLC, serves as the Debtor's chief strategy officer. Prime
Clerk, LLC is the claims and noticing agent and administrative
advisor.
Moses & Singer, LLP serves as legal counsel to the first lien admin
agent, first lien collateral agent and second lien collateral
agent. Meanwhile, the first lien lenders are represented by
Linklaters, LLP.
HAWAIIAN HOLDINGS: Bookings Drop as COVID Cases Rise Due to Delta
-----------------------------------------------------------------
Hawaiian Holdings, Inc. has provided an update on recent
developments as well as an update to its outlook for the third
quarter of 2021.
Since providing the Company's third quarter 2021 outlook on July
27, 2021, the Company has experienced a deceleration in bookings
that the Company attributes to the recent rise in COVID-19 cases
associated with the Delta variant, as well as an increase in
cancellations believed to be accelerated by the Governor of
Hawai'i's public comments suggesting that it was not a good time to
visit Hawai'i.
Since the beginning of the COVID-19 pandemic, the Company
anticipated that the path to recovery might not be linear. The
Company remains encouraged that the strong rebound in demand for
travel to Hawai'i prior to the recent surge in COVID-19 cases
associated with the Delta variant demonstrates resilient demand for
travel to Hawai'i, and accordingly, the Company expects demand to
recover as circumstances related to the virus improve.
Third Quarter 2021 Outlook Update
The Company now expects its third quarter of 2021 total revenue to
be down approximately 34 to 37 percent compared to the third
quarter of 2019, whereas the Company's prior guidance was down
approximately 28 to 33 percent.
The Company now expects its operating expenses, excluding
non-recurring items, for the third quarter of 2021 to be down
approximately 13 to 15 percent compared to the third quarter of
2019, whereas the Company's prior guidance was down approximately
10 to 14 percent. The improvement is mainly driven by the timing
of maintenance events, lower passenger-related costs, and lower
variable compensation expense.
The Company now expects its Adjusted EBITDA for the third quarter
of 2021 to be between $(40) million and $(20) million.
The Company now expects its fuel price per gallon for the third
quarter of 2021 to be $2.06.
About Hawaiian Holdings
Hawaiian Holdings, Inc.'s primary asset is sole ownership of all
issued and outstanding shares of common stock of Hawaiian Airlines,
Inc. The Company is engaged in the scheduled air transportation of
passengers and cargo amongst the Hawaiian Islands (the Neighbor
Island routes) and between the Hawaiian Islands and certain cities
in the United States (the North America routes together with the
Neighbor Island routes, the Domestic routes), and between the
Hawaiian Islands and the South Pacific, Australia, New Zealand and
Asia (the International routes), collectively referred to as its
Scheduled Operations.
Hawaiian Holdings reported a net loss of $510.93 million for the
year ended Dec. 31, 2020, compared to net income of $223.98 million
for the year ended Dec. 31, 2019. As of June 30, 2021, the Company
had $5.22 billion in total assets, $1.44 billion in total current
liabilities, $1.89 billion in long-term debt, $1.28 billion in
total other liabilities and deferred credits, and $610.47 million
in total shareholders' equity.
* * *
As reported by the TCR on April 12, 2021, S&P Global Ratings
revised its ratings outlook to positive from negative and affirmed
its 'CCC+' issuer credit rating on Hawaiian Holdings Inc. (parent
of Hawaiian Airlines). "The positive outlook indicates that we
could raise our ratings on Hawaiian if we see sustained
improvements in traffic resulting in funds from operations (FFO)
to
debt improving to at least the mid-single-digit-percent area in
2022 and further in 2023, with the company also continuing to
maintain adequate liquidity.
HTP INC: Seeks to Hire Bush Kornfeld as Bankruptcy Counsel
----------------------------------------------------------
HTP, Inc. seeks approval from the U.S. Bankruptcy Court for the
Western District of Washington to hire Bush Kornfeld, LLP to serve
as legal counsel in its Chapter 11 case.
The firm's services include:
a. giving legal advice with respect to the Debtor's powers and
duties in the continued operation of its business and management of
its property;
b. preparing legal papers;
c. assisting the Debtor in reviewing claims and in addressing
issues associated with the distribution on allowed claims;
d. taking necessary action to avoid any liens subject to the
Debtor's avoidance power; and
e. performing other necessary legal services.
Thomas Buford, Esq., the firm's attorney who will be providing the
services, will be paid at the rate of $450 per hour. The hourly
rates for other Bush Kornfeld professionals and support personnel
range from $75 to $585.
Mr. Buford disclosed in a court filing that his firm is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Thomas A. Buford, Esq.
Bush Kornfeld LLP
601 Union St., Suite 5000
Seattle, WA 98101-2373
Tel: (206) 521-3855 / (206) 292-2110
Fax: (206) 292-2104
Email: tbuford@bskd.com
About HTP Inc.
HTP, Inc.'s assets and operations consist of holding 48% of Hytech,
LLC and pursuing certain litigation against parties that have,
among other things, misappropriated technology and usurped business
opportunities.
HTP, Inc. filed its voluntary petition for Chapter 11 protection
(Bankr. W.D. Wa. Case No. 21-11611) on Aug. 24, 2021, listing $772
million in total assets and $10.45 million in liabilities. Judge
Timothy W. Dore presides oversees the case. Bush Kornfeld, LLP
represents the Debtor as legal counsel.
INNER CITY BUILDERS: Taps Tran Singh as Bankruptcy Counsel
----------------------------------------------------------
Inner City Builders and Developers, LLC seeks approval from the
U.S. Bankruptcy Court for the Southern District of Texas to hire
Tran Singh, LLP to serve as legal counsel in its Chapter 11 case.
The firm's services include:
(a) analyzing the financial situation and rendering legal
advice to the Debtor;
(b) advising the Debtor with respect to its rights, duties,
and powers under the Bankruptcy Code;
(c) representing the Debtor at all necessary hearings and
other proceedings;
(d) preparing and filing legal papers;
(e) representing the Debtor at any meeting of creditors;
(f) representing the Debtor in all proceedings before the
bankruptcy court and in any other judicial or administrative
proceeding where the rights of the Debtor may be litigated or
otherwise affected;
(g) preparing and filing a Chapter 11 plan of reorganization;
(h) assisting the Debtor in analyzing the claims of creditors
and in negotiating with such creditors; and
(i) assisting the Debtor in any matters relating to its
bankruptcy case.
The firm's hourly rates are as follows:
Susan Tran Adams, Esq. $425 per hour
Brendon Singh, Esq. $450 per hour
Briana Head, Esq. $250 per hour
The Debtor paid $7,000 to the law firm as a retainer fee.
Brendon Singh, Esq., a partner at Tran Singh, 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:
Brendon Singh, Esq.
Tran Singh LLP
2502 La Branch
Houston, TX 77004
Tel.: (832) 975-7300
Fax: (832) 975-7301
Email: info@ts-llp.com
About Inner City Builders
Inner City Builders and Developers, LLC filed a voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Tex. Case No. 21-60061) on July 5, 2021, listing as much as $1
million in both assets and liabilities. Creg Thompson, manager,
signed the petition. Judge Christopher M. Lopez oversees the case.
The Debtor tapped Tran Singh, LLP as legal counsel.
INVO BIOSCIENCE: Incurs $1.8 Million Net Loss in Second Quarter
---------------------------------------------------------------
INVO Bioscience, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $1.82 million on $208,472 of total revenue for the three months
ended June 30, 2021, compared a net loss of $1.32 million on
$246,072 of total revenue for the three months ended June 30,
2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $4.27 million on $892,995 of total revenue compared to a
net loss of $2.77 million on $504,643 of total revenue for the six
months ended June 30, 2020.
As of June 30, 2021, the Company had $9.93 million in total assets,
$5.57 million in total liabilities, and $4.36 million in total
stockholders' equity.
Invo Bioscience stated, "If we are unable to raise additional
capital in sufficient amounts or on terms acceptable to us, we may
have to significantly scale back our operations or delay, scale
back or discontinue development of our products. If we raise
additional funds through the issuance of additional debt or equity
securities, it could result in dilution to our existing
stockholders and increased fixed payment obligations, and these
securities may have rights senior to those of our common stock. If
we incur indebtedness, we could become subject to covenants that
would restrict our operations, such as limitations on our ability
to incur additional debt, limitations on our ability to acquire,
sell or license intellectual property rights and other operating
restrictions that could adversely impact our ability to conduct our
business. Any of these events could significantly harm our
business, financial condition and prospects."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1417926/000149315221020127/form10-q.htm
About INVO Bioscience
Sarasota, Florida-based INVO Bioscience, Inc. --
http://invobioscience.com-- is a medical device company focused on
creating simplified, lower-cost treatments for patients diagnosed
with infertility. The Company's solution, the INVO Procedure, is a
revolutionary in vivo method of vaginal incubation that offers
patients a more natural and intimate experience. Its lead product,
the INVOcell, is a patented medical device used in infertility
treatment and is considered an Assisted Reproductive Technology
(ART).
Invo Bioscience reported a net loss of $8.35 million in 2020, a net
loss of $2.16 million on $1.48 million in 2019, a net loss of $3.07
million in 2018, and a net loss of $702,163 in 2017. As of March
31, 2021, the Company had $10.19 million in total assets, $4.59
million in total liabilities, and $5.60 million in total
stockholders' equity.
JOHNSON + ASSOCIATES: Taps Leftkovitz & Leftkovitz as Legal Counsel
-------------------------------------------------------------------
Johnson + Associates Architects, Inc. seeks approval from the U.S.
Bankruptcy Court for the Middle District of Tennessee to hire
Leftkovitz & Leftkovitz, PLLC to serve as legal counsel in its
Chapter 11 case.
The firm's services include:
(a) advising the Debtor as to its rights, duties and powers
under the Bankruptcy Code;
(b) preparing and filing statements of financial affairs and
bankruptcy schedules, Chapter 11 plans and other documents;
(c) representing the Debtor at all hearings, meetings of
creditors, conferences, trials, and any other proceedings in the
case; and
(d) performing other necessary legal services.
The firm's hourly rates are as follows:
Steven L. Leftkovitz, Esq. $555 per hour
Associate Attorney $350 per hour
Paralegals $125 per hour
The Debtor paid $5,000 to the law firm as a retainer fee.
Steven Leftkovitz, Esq., the firm's attorney who will be providing
the services, disclosed in a court filing that he is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Steven L. Leftkovitz, Esq.
Leftkovitz & Leftkovitz, PLLC
618 Church Street, Suite 410
Nashville, TN 37219
Tel.: (615) 256-8300
Fax: (615) 255-4516
Email: sleftkovitz@leftkovitz.com
About Johnson + Associates
Johnson + Associates Architects, Inc. sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Tenn. Case No.
21-02612) on August 26, 2021, disclosing up to $100,000 in assets
and up to $500,000 in liabilities. Wayne Johnson, president of
Johnson + Associates, signed the petition. Judge Marian F Harrison
oversees the case. The Debtor tapped Leftkovitz & Leftkovitz, PLLC
as legal counsel.
KK FIT INC: Court Extends Cash Access to November 30
----------------------------------------------------
Judge Henry W. Van Eck of the U.S. Bankruptcy Court for the Middle
District of Pennsylvania extended to November 30, 2021, the interim
authority of KK Fit, Inc. and its debtor affiliates to use the cash
collateral, based on the budget, pursuant to the terms of the
Debtors' stipulation with secured creditor, PeoplesBank, A Codorus
Valley Company.
The budget provided for the following total monthly expenses:
$138,502 for September 2021;
$143,952 for October 2021;
$133,952 for November 2021; and
$133,962 for December 2021.
The Debtors' authority is conditioned upon payment to the Bank of
$20,000 on each of September 25, October 25, and November 25,
2021.
A further hearing on the Debtors' continued use of the cash
collateral will be held on November 30, 2021 at 9:30 a.m.
A copy of the consent order is available for free at
https://bit.ly/2X6PONQ from PacerMonitor.com.
About KK Fit Inc.
KK Fit, Inc., formerly known as Gold's Gym, and its affiliates
filed Chapter 11 petitions (Bankr. M.D. Pa. Lead Case No. 21-01035)
on May 7, 2021. KK Fit President Kurt Krieger signed the
petitions. At the time of the filing, KK Fit had total assets of
between $100,000 and $500,000, and total liabilities of between $1
million and $10 million.
Judge Henry W. Van Eck oversees the cases.
Cunningham, Chernicoff & Warshawsky, P.C. and Senft Law Firm, LLC
serve as the Debtors' bankruptcy counsel and special counsel,
respectively. Stutz Arment, LLP is the Debtor's accountant.
LA TERRAZA: Claims Will be Paid From Continued Operations
---------------------------------------------------------
La Terraza, Inc. submitted an Amended Subchapter V Plan of
Reorganization dated September 7, 2021.
The Debtor submits to the supervision and control of the Chapter
11, Subchapter V trustee the amounts set forth from the Debtor's
future disposable income from its business operations as required
for performance of this Chapter 11 Plan. The Debtor will be able
to make all payments under its Chapter 11 case and will be able to
otherwise comply with the Chapter 11 Plan. The Debtor shall move
the Court for approval of a period of Plan payments lasting for 5
years.
Class 3 consists of the unsecured claim of On Deck Capital. The
claim of On Deck is unsecured and is in the estimated amount of
approximately $114,462. Within 30 days of the effective date of
the Plan, the Debtor shall commence quarterly payments to the
Trustee in the amount of $6,867.70 which equates to approximately
5% of the aggregate amount of the allowed priority claims and the
Designated Agent shall deliver such quarterly payments to the
applicable priority creditors over a 5 year time period.
Class 4 consists of the unsecured claim of Southern Glazer Wine &
Spirits. Within 30 days of the Effective Date of the Plan, the
Debtor shall commence quarterly payments to the non-trustee
Disbursing Agent in the amount of $919.70 which equates to
approximately 5% of the aggregate amount of the allowed priority
claims and the Designated Agent shall thereafter deliver such
quarterly payments to the applicable priority creditors over a
5-year time period.
Class 5 consists of the Contingent Claim of Enterprise Bank &
Trust. Payments on all the loans are made by The Morse Building,
LLC from tenant income from the building located 1027 2nd St., Old
Sacramento, 95814; all payments on the loans are current and will
remain so.
Class 11 consists of the Allowed Unsecured Claims. The aggregate
amount of Class 7 claims is estimated to be $19,579, assuming all
unsecured claims that have been filed as of the date of this Plan
are allowed in full. On March 25th and December 25th of each year
of plan performance (beginning in March 2022), the Debtor shall
make payments to the Designated Agent in the amount of $2000.00 to
be applied on a pro rata basis to Class 5 allowed unsecured claims
for 5 years following the effective date of the Plan.
On the fifth anniversary of the effective date of the Plan, the
Debtor shall pay the entire remaining outstanding amount of each
Class 5 allowed unsecured claim directly to each general unsecured
creditor holding an allowed claim.
The Debtor shall implement the Plan by continuing its restaurant
operations on the Old Sacramento, which shall consist of the sale
of food and beverages; the Debtor's family affiliate businesses may
also contribute funds to Debtor's Plan, if and to the extent
necessary. The funds necessary for implementing the Plan shall be
derived from such La Terraza business operations.
The Plan anticipates payment in full of all allowed unsecured
claims, therefore the Plan satisfies the requirements of Section
1225(a)(4).
A full-text copy of the Subchapter V Plan dated September 7, 2021,
is available at https://bit.ly/3BUq2uT from PacerMonitor.com at no
charge.
Attorneys for the Debtor:
Noel Knight, Esq.
The Knight Law Group
800 J St., Ste. #441,
Oakland, CA 95814
Phone: (510) 435 9210
Fax: (510) 281 6889
Email: lawknight@theknightlawgroup.com
About La Terraza Inc.
La Terraza, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Cal. Case No. 21-21012) on March 23,
2021. At the time of the filing, the Debtor disclosed total assets
of up to $50,000 and total liabilities of up to $500,000. The
Knight Law Group and Dr. Betsy Peterson serve as the Debtor's legal
counsel and accountant, respectively.
LATAM AIRLINES: Has Several Financing Offers to Exit Bankruptcy
---------------------------------------------------------------
Maria Chutchian of Reuters reports that LATAM Airlines said on
Thursday it has received several offers to fund its exit from
Chapter 11 bankruptcy, each of which are worth more than $5
billion.
LATAM, the largest airline in Latin America, received the offers
from creditors and shareholders, according to a filing with the
U.S. Bankruptcy Court in New York City.
The Santiago, Chile-based company did not reveal the number of
offers received or from whom they came, but Delta Air Lines Inc is
LATAM’s largest shareholder. Other shareholders include Qatar
Airways, with a 10% stake.
LATAM, which also operates in Brazil, Colombia, Ecuador and Peru as
well as having operations through Latin America, Europe, the United
States and the Caribbean, only said in the filing the offers came
from "its most significant claimholders and its majority
shareholders." It said negotiations for financing are ongoing.
LATAM filed for Chapter 11 bankruptcy protection in New York in May
2020 as world travel came to a halt amid the COVID-19 pandemic.
It hopes to accomplish by the end of the year the major tasks it
needs to exit bankruptcy but may not formally exit by that time,
according to a person familiar with the company’s thinking who
asked not to be identified.
The financing proposals the airline has received each include a
combination of new debt and equity, which would be backstopped by
the creditors or shareholders making the offer, the company said.
Each offer would likely result in the substantial dilution of
existing shares, it said.
However, the source said LATAM has no intention of pursuing a sale
of any of its business units.
The company also forecast in Chilean regulatory filings a return to
pre-pandemic profitability and capacity by 2024, as well as a
projected 13% increase in total revenue by 2026.
LATAM estimates the total claims filed in the bankruptcy will fall
between $8 billion and $9.9 billion, according to the regulatory
filing.
The company’s exclusive period to file a proposed reorganization
plan expires on Sept. 15, but it filed a motion seeking an
extension through Oct. 15. It will have the option to extend that
deadline again by about a month if necessary.
LATAM has said it wants to grow its Boeing 787 Dreamliner fleet as
part of its five-year business plan and expects to have a fleet of
28 by the end of 2021.
The airline’s overall fleet will decrease to 286 by the end of
the year from around 340 before the pandemic. However, it expects
to increase that amount back up to 331 by 2026.
In August, the company secured court approval to enter into lease
agreements with Avolon Aerospace Leasing Limited and ORIX Aviation
Systems for five Dreamliners made by Boeing Co.
The company had $1.9 billion in liquidity as of July 31. It also
has the option to tap additional financing approved earlier in the
bankruptcy proceeding, including up to $750 million in secondary
financing.
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.
LEVEL EIGHT: Unsecured Creditors Will Get 100% of Claims in Plan
----------------------------------------------------------------
Level Eight, Inc., filed with the U.S. Bankruptcy Court for the
Northern District of Texas a Plan of Reorganization under
Subchapter V dated September 7, 2021.
The Debtor operates as a scrap metal procurement company based in
Dallas and Fort Worth, Texas. The Debtor filed a Chapter 11 case
due to a downturn in business it experienced as a result of the
COVID-19 pandemic.
Under the liquidation analysis, Unsecured Claimants would receive
nothing in a Chapter 7 case. Under this Plan; however, Unsecured
Claimants will receive 100% of their Claims. This Plan does not
contemplate a liquidation of the Assets.
All Allowed Secured Claimants shall retain all their liens on any
property securing their Claims. Should the value of the Collateral
securing a Secured Claim be less than the amount of the Claim, the
Claim will be bifurcated into a Secured Claim equal to the value of
the Collateral and an Unsecured Claim for the remainder.
Class 1 consists of the Allowed Secured Claims of Spectra Bank.
These Claims will be paid in full in 120 equal monthly installments
of principal and interest at the rate of 4.25% per annum. Payments
will commence on the first day of the first month following the
Effective Date and continue on the first day of each month
thereafter until paid in full.
Class 2 consists of the Allowed Secured Claims of SBA. These Claims
will be paid in full in 120 equal monthly installments of principal
and interest at the rate of 3.75% per annum. Payments will commence
on the first day of the first month following the Effective Date
and continue on the first day of each month thereafter until paid
in full.
Class 3 consists of Allowed Unsecured Claims. These Claimants shall
receive 100% of the amount of their Allowed Claims, payable over
120 months in equal monthly installments commencing on the first
day of the first month following the Effective Date and continuing
on the first day of each month thereafter.
Class 4 consists Allowed Insider Claims. These Claims will receive
no distribution under this Plan.
Class 5 consists of Equity Interests. Class 5 Equity Interests
shall be retained.
The Debtor intends to make all payments required under the Plan
from available cash and income from the business operations of the
Debtor.
A full-text copy of the Subchapter V Plan dated September 7, 2021,
is available at https://bit.ly/3BZ2Bkm from PacerMonitor.com at no
charge.
Attorneys for Debtor:
Joyce W. Lindauer, Esq.
Kerry S. Alleyne, Esq.
Guy H. Holman, Esq.
Joyce W. Lindauer Attorney, PLLC
1412 Main Street, Suite 500
Dallas, TX 75202
Tel.: (972) 503-4033
Fax: (972) 503-4034
Email: joyce@joycelindauer.com
About Level Eight
Arlington, Texas-based Level Eight, Inc. sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No.
21-41365) on June 7, 2021. The Debtor operates a scrap metal
recycling facility located in Dallas, Texas.
In the petition signed by Bhavesh Patel, president, the Debtor
disclosed total assets of up to $50,000 in assets and total
liabilities of $10 million.
Judge Mark X. Mullin oversees the case.
The Debtor tapped Joyce W. Lindauer, Esq., as legal counsel.
Spectra Bank, the secured lender, is represented by:
Richard J. Cinclair, Jr., Esq.
Thomas, Cinclair & Beuttenmuller, PLLC
5335 Spring Valley Road
Dallas, TX 75254
Tel: 9972) 991-2121
MAJESTIC GARDENS: Seeks to Hire Valancy & Reed as General Counsel
-----------------------------------------------------------------
Majestic Gardens Condominium C Association, Inc. seeks approval
from the U.S. Bankruptcy Court for the Southern District of Florida
to hire the Law Offices of Valancy & Reed, P.A. as its general
counsel.
The Debtor needs the firm's legal assistance in its collection
efforts, foreclosure actions and other state court proceedings as
well as in general association matters.
The firm will bill a flat fee of $1,500. The rate for any services
required after the entry of a summary judgement on foreclosure
cases is $250 per hour while the rate for monitoring mortgage
foreclosures is $350 per hour.
Steven Valancy, Esq., a partner at Valancy & Reed, disclosed in a
court filing that his firm does not represent any interest adverse
to the Debtor.
The firm can be reached through:
Steven S. Valancy, Esq.
Law Offices of Valancy & Reed, P.A.
310 S.E. 13th Street
Fort Lauderdale, FL 33316
Tel: (954) 463-1600
Fax: (954) 463-1222
About Majestic Gardens Condominium C
Association Inc.
Majestic Gardens Condominium C Association, Inc. filed its
voluntary petition for Chapter 11 protection (Bankr. S.D. Fla. Case
No. 21-18653) on Sept. 3, 2021, listing up to $500,000 in assets
and up to $50,000 in liabilities. Judge Peter D. Russin oversees
the case.
Van Horn Law Group, P.A. and the Law Offices of Valancy & Reed,
P.A. serve as the Debtor's bankruptcy counsel and general counsel,
respectively.
MAJESTIC GARDENS: Taps Van Horn Law Group as Bankruptcy Counsel
---------------------------------------------------------------
Majestic Gardens Condominium C Association, Inc. seeks approval
from the U.S. Bankruptcy Court for the Southern District of Florida
to hire Van Horn Law Group, P.A. to serve as legal counsel in its
Chapter 11 case.
The firm's services include:
(a) advising the Debtor regarding its powers and duties and
the continued management of its business operations;
(b) advising the Debtor regarding its responsibilities in
complying with the U.S. trustee's operating guidelines and
reporting requirements and with the rules of the court;
(c) preparing legal documents;
(d) protecting the Debtor's interest in all matters pending
before the bankruptcy court; and
(e) representing the Debtor in negotiation with its creditors
in the preparation of a Chapter 11 plan.
The firm's hourly rates are as follows:
Chad van Horn, Esq. $450 per hour
Associates $350 per hour
Jay Molluso $250 per hour
Paralegals $200 per hour
Law Clerks $175 per hour
In addition, Van Horn Law Group will seek reimbursement for
expenses incurred.
The firm received a retainer in the amount of $5,000 plus $1,738
for the filing fee cost.
Chad Van Horn, Esq., a partner at Van Horn Law Group, disclosed in
a court filing that his firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Chad T. Van Horn, Esq.
Van Horn Law Group, PA
330 N. Andrews Ave., Suite 450
Fort Lauderdale, FL 33301
Telephone: (954) 765-3166
Email: Chad@cvhlwgroup.com
About Majestic Gardens Condominium C
Association Inc.
Majestic Gardens Condominium C Association, Inc. filed its
voluntary petition for Chapter 11 protection (Bankr. S.D. Fla. Case
No. 21-18653) on Sept. 3, 2021, listing up to $500,000 in assets
and up to $50,000 in liabilities. Judge Peter D. Russin oversees
the case.
Van Horn Law Group, P.A. and the Law Offices of Valancy & Reed,
P.A. serve as the Debtor's bankruptcy counsel and general counsel,
respectively.
MATTRESS FIRM: Moody's Rates New Secured Term Loan Due 2028 'B1'
----------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Mattress Firm,
Inc.'s proposed senior secured term loan due 2028. All other
ratings, including the B1 corporate family rating and B1-PD
probability of default rating, and the stable outlook, remain
unchanged. The Ba3 rating on the existing senior secured credit
facility will be withdrawn upon close.
Proceeds from the $1.1 billion proposed term loan, together with
$550 million of balance sheet cash will be used to repay the
company's existing $523 million outstanding term loan and pay a
$1.1 billion shareholder distribution. The assignment reflects
governance considerations, specifically the increase in debt levels
as a result of the shareholder distribution.
"While the dividend recapitalization increases leverage, we expect
credit metrics to remain solid driven by Mattress Firm's effective
business execution and favorable near-term demand trends," said
Moody's Vice President Raya Sokolyanska.
Moody's took the following rating actions for Mattress Firm, Inc.:
New senior secured term loan due 2028, assigned B1 (LGD3)
RATINGS RATIONALE
Mattress Firm's B1 CFR is constrained by governance considerations,
including the financial strategy risks associated with control by
hedge funds and other former creditors following its emergence from
bankruptcy in 2018. Mattress Firm also has a narrow product focus
in a highly competitive product category, which remains dependent
on cyclical discretionary consumer spending. In addition, as a
retailer, the company needs to make ongoing investments in its
brand and infrastructure, as well as in social and environmental
drivers including responsible sourcing, product and supply
sustainability, privacy and data protection.
Nevertheless, the rating reflects the company's recognized brand
name and leading position in the mattress retail industry. Credit
metrics are solid compared to similarly rated peers, with pro forma
Moody's-adjusted debt/EBITDA at 2.8x and an estimated EBIT/interest
expense at 4.2x as of June 29, 2021. In addition, Moody's expects
the company to have very good liquidity over the next 12-18 months,
including solid cash balances and free cash flow, full ABL revolver
availability and lack of near-term maturities.
The stable outlook reflects Moody's expectations for very good
liquidity and solid credit metrics over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be upgraded if the company demonstrates sustained
earnings performance and very good liquidity beyond the current
period of strong demand. An upgrade would also require a reduction
in private equity ownership and board representation and a
commitment to and maintenance of more conservative financial
strategies. Quantitatively, the ratings could be upgraded if
Moody's expects debt/EBITDA to be sustained below 3.0 times, and
EBIT/interest expense above 3.0 times.
The ratings could be downgraded if liquidity deteriorates or
operating performance declines materially or if financial
strategies become more aggressive. Quantitatively, Moody's-adjusted
debt/EBITDA above 4.0 times or EBIT/interest expense below 2.25
times could result in a downgrade.
As proposed, the new first lien term loan is 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 $650 million and
100% of Consolidated EBITDA, plus unlimited amounts subject to a
1.7x first lien net leverage ratio or 2.7x total net leverage
ratio, or solely in the case of unsecured debt, 1.75x interest
coverage ratio. 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 prohibit unrestricted subsidiaries
from owning, or holding an exclusive license in, any intellectual
property that is material to the business of the Borrower and its
restricted subsidiaries and prohibit the Borrower nor any of its
restricted subsidiaries from making an investment in an
unrestricted subsidiary in the form of Material IP.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees subject to
protective provisions, which only permit guarantee releases if the
Subsidiary Guarantor has become a party to a bona fide joint
venture with respect to which the applicable joint venture partner
is not an affiliate of Holdings.
The credit agreement provides some limitations on up-tiering
transactions, including the requirement for consent of each lender
adversely affected by changes to the "payment waterfall" or pro
rata sharing provisions; and requirement for 100% lender consent
with respect to (i) modifications to any of the voting percentages,
(ii) releases of all or substantially all the Collateral (other
than in connection with any disposition of the applicable
Collateral permitted by the Facility Documentation) and (iii)
releases of all or substantially all the value of the Guarantees.
The proposed terms and the final terms of the credit agreement may
be materially different.
Headquartered in Houston, Texas, Mattress Firm, Inc. is a leading
US mattress retailer offering mattresses and related products
through over 2,300 stores across the United States and its website.
Revenues for the twelve months ended June 29, 2021 were around $4.3
billion. The company is owned by its former creditors and Steinhoff
International Holdings N.V.
The principal methodology used in this rating was Retail Industry
published in May 2018.
MATTRESS FIRM: S&P Alters Outlook to Positive, Affirms 'B+' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook to positive from stable and
affirmed its 'B+' issuer credit rating on mattress specialty
retailer Mattress Firm Inc.
At the same time, S&P assigned a 'B+' rating on the company's
proposed $1.1 billion senior secured term loan. The recovery rating
is '3', indicating its expectation for a meaningful recovery
(50%-70%; rounded recovery: 65%).
S&P said, "The positive outlook reflects the potential that we will
raise our rating on Mattress Firm if its management team continues
to successfully execute its omni-channel and private-label
expansion strategies while increasing the company's EBITDA.
"The positive outlook reflects the possibility that we will raise
our ratings on Mattress Firm over the next year if it is able to
sustain its good credit protection metrics. The company posted
almost 40% revenue growth for the 12 months ended June 2021 as it
continued to benefit from elevated at-home consumer spending
trends. In addition, since it emerged from bankruptcy in 2018, the
management's turnaround initiatives, in particular the execution of
its omni-channel strategy, improved marketing spending efficiency,
and strong relationship with its key supplier Tempur-Sealy, have
resulted in adjusted S&P Global Ratings-adjusted EBITDA margins
increasing to the low-20% area. As a consequence, adjusted leverage
declined to 2x for the 12 months ended June 30, 2021, from 3x in
the first quarter of 2021 shortly after its latest refinancing.
Even with this aggressive and large dividend, we estimate Mattress
Firm's leverage--inclusive of one-time compensation charges--to be
in the low-3x area following the close of the transaction and
expect the company to maintain leverage in the high-2x area over
the next year.
"We believe that the continuation of the company's recent good
performance is highly dependent upon its ability to maintain recent
market share gains and leverage strategic and operational
improvements. Given the short operating track record of its current
management team, which is handling the execution of its
omni-channel and private-label expansion strategies, we believe
there is greater risk to the company's performance and credit
metrics relative to that of its higher-rated peers. Thus, we
continue to apply a negative one-notch comparable ratings analysis
modifier to our anchor rating on Mattress Firm.
"The company's top line in 2021 will likely normalize relative to
this year's record levels, though we expect the expansion in its
margins and free cash flow to remain healthy. Mattress Firm
benefits from its larger scale compared with its peers and
relatively strong merchandise assortment strengthened by its recent
three years contract extension with its main key supplier
Tempur-Sealy. Notwithstanding the company's strengths, its
competitive position remains threatened by the changing industry
dynamics introduced by online players in an otherwise highly
cyclical industry. Although we anticipate consumer demand for
mattresses to continue in the near term with free operating cash
flow generation normalizing to about $250 million-$300 million per
year, we recognize that some of Mattress Firm's recent
outperformance may be due to the pull forward of future demand,
which could reduce its sales potential in a period of weak demand.
The spread of the delta variant of the coronavirus, supply chain
headwinds, inflation, and rising wage pressure are additional
challenges the company will need to navigate.
"We assigned a 'B+' rating to the company's proposed $1.1 billion
senior secured term loan due 2028. The company will use proceeds
from the proposed term loan along with $550 million of cash on hand
to repay its existing $550 million senior secured term loan and
fund a $1.1 billion distribution to shareholders and management. In
conjunction with the new proposed term loan, Mattress Firm will
also enter into a new $125 million asset-based loan (ABL) revolving
credit facility to replace its existing $125 million ABL revolver
and slightly push out the maturity dates on its existing debt
instruments.
"While Mattress Firm lacks a record of financial policy guidance,
we expect its capital management priorities to balance shareholders
returns with reinvesting in its business through store remodels,
digital initiatives, and net unit growth and to maintain a
sufficient cushion in its credit metrics to withstand a short-term
economic downturn. The proposed transaction moderately increases
leverage by about half a turn. However, the company's debt load
remains materially lower than its total debt of $3.5 billion in
October 2018 prior to its restructuring."
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Social: Health and safety
The positive outlook reflects the potential that S&P will raise its
rating on Mattress firm if its management team continues to
successfully execute its omni-channel and private-label expansion
strategies while growing the company's EBITDA.
S&P could raise its rating on Mattress Firm if:
-- It builds on its current operating momentum with revenue and
EBITDA margins in line with our forecast and we believe it has
established a successful record of retaining its market share and
deploying omni-channel capabilities; and
-- It maintains a consistent financial policy that supports
leverage below the mid-3x area.
S&P could revise its outlook on Mattress Firm to stable if it
expects leverage sustained above 3.5x , which could occur due to:
-- Consumer demand for mattresses tapering off more than S&P
expects; or
-- Operating performance stabilizing at lower levels than S&P
currently forecasts, due to a loss of market share and intensifying
competitive pressures from online players; or
-- A more aggressive financial policy, including material
leveraging acquisitions or additional debt-funded shareholder
returns.
MERCURITY FINTECH: Raises US$5 Million via Private Placement
------------------------------------------------------------
Mercurity Fintech Holding Inc. announced that three investors, TEAO
TECHNOLOGY CO., LIMITED, GUANRUI TECHNOLOGY CO., LIMITED and XUAN
YING CO., LTD, have agreed to purchase a total of 571,428,570
ordinary shares of the Company and warrants to purchase up to
571,428,570 Ordinary Shares for an aggregate consideration of
US$5,000,000, to be settled in the form of 105.2430 bitcoins. The
Company's American depositary shares are listed on the Nasdaq
Capital Market. Each ADS represents 360 Ordinary Shares.
The transaction is subject to customary closing conditions and the
closing was expected to take place in Sept. 8, 2021. The investors
have agreed to a contractual lock-up restriction of their shares to
be acquired in the transaction for 180 days after the closing. The
securities issuance is exempt from registration under the
Securities Act of 1933, as amended, in compliance with Regulation S
under the Securities Act.
About Mercurity
Formerly known as JMU Limited, Mercurity Fintech Holding Inc.'s
current principal business is to design and develop digital asset
transaction platforms based on blockchain technologies for
customers to facilitate asset trading, asset digitalization and
cross-border payments and provide supplemental services for such
platforms, such as customized software development services,
maintenance services and compliance support services. The Company
started this new business since its acquisition of Mercurity
Limited (previously known as Unicorn Investment Limited) in May
2019.
Mercurity reported a net loss of $1.65 million for the year ended
Dec. 31, 2020, a net loss of $1.22 million for the year ended Dec.
31, 2019, a net loss of $123.24 million for the year ended Dec. 31,
2018, and a net loss of $161.90 million for the year ended Dec. 31,
2017.
MODA INGLESIDE: S&P Places 'BB' ICR on CreditWatch Positive
-----------------------------------------------------------
S&P Global Ratings placed all its ratings on Moda Ingleside Energy
Center LLC, including the 'BB' issuer credit rating and 'BBB-'
issue-level rating, on CreditWatch with positive implications.
Moda and its owner, Encap Flatrock Midstream, announced on Sept.
07, 2021 that they have entered into a definitive agreement to sell
its assets to Enbridge Inc. (Enbridge; BBB+/Stable/A-2) for an
enterprise value of about US$3 billion.
S&P said, "We placed our ratings on Moda and its debt on
CreditWatch with positive implications to reflect the likelihood
that we will raise the ratings following the close of its
acquisition by Enbridge. Both companies' boards have approved the
transaction, which is still subject to regulatory approvals and
customary closing conditions.
"The CreditWatch with positive implications reflects the likelihood
that we will raise our ratings on Moda and its debt to match our
rating on Enbridge upon the close of the acquisition. We expect to
resolve the CreditWatch at or near the transaction closing, which
is expected to be in the fourth quarter of 2021. We expect that
Enbridge will fully integrate the company into its business
following the acquisition."
NATURE COAST: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------
The U.S. Trustee for Region 21 until further notice, will not
appoint an official committee of unsecured creditors in the Chapter
11 case of Nature Coast Wellness Clinic, LLC, according to court
dockets.
About Nature Coast Wellness Clinic
Nature Coast Wellness Clinic, LLC filed a Chapter 11 bankruptcy
petition (Bankr. N.D. Fla. Case No. 21-40250) on Aug. 2, 2021,
listing as much as $500,000 in assets and as much as $1 million in
liabilities. Judge Karen K. Specie oversees the case. Bruner
Wright, P.A. serves as the Debtor's legal counsel.
NESV ICE: Has Interim Cash Access Until Continued Hearing
---------------------------------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts,
Eastern Division, has authorized NESV Ice, LLC and affiliates to
use cash collateral on an interim basis.
Judge Christopher J. Panos authorized the Debtor to use cash
collateral, pursuant to the budget, from the Petition Date through
the commencement of the continued hearing on the cash collateral
motion.
The budget provided for net cash outflow, as follows:
$22,500 for the week ending September 3, 2021;
$26,850 for the week ending September 10, 2021; and
$40,000 for the week ending September 17, 2021.
As adequate protection, SHS ACK, LLC is granted replacement liens
in all property of the kind presently securing the Debtor's
obligations to SHS, including property acquired with the cash
collateral.
The hearing scheduled for September 20, 2021 at 2 p.m. shall be
conducted telephonically. Objections must be filed on or before
4:30 p.m. (ET) on September 16.
A copy of the order is available for free at https://bit.ly/3hysdgb
from PacerMonitor.com.
About NESV Ice, LLC
NESV Ice, LLC and affiliates NESV Swim, LLC, NESV Field, LLC, NESV
Hotel, LLC, NESV Tennis, LLC, NESV Land, LLC, and NESV Land East,
LLC, offer fitness and sports training services. The Debtor sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.
Mass. Case No. 21-11226) on August 26, 2021. The petitions were
signed by Stuart Silberberg as manager.
Judge Christopher J. Panos oversees the case.
William McMahon, Esq., at Downes McMahon LLP is the Debtor's
counsel.
OLCAN PROPERTIES: Wins Authority to Use Cash Collateral
-------------------------------------------------------
Judge David E. Rice of the U.S. Bankruptcy Court for the District
of Maryland authorized Olcan Properties III, LLC to use cash
collateral to pay its ordinary operating expenses based on the
budget. The budget provided for $10,980 in total monthly
expenses.
The Court ruled that the Debtor shall pay D.A.N. Joint Venture III,
L.P., secured creditor, $7,000 monthly -- which amount includes the
$2,000 contribution from non-debtor obligor OLCAN II Properties,
LLC -- beginning September 1, 2021 and on the first of each month
thereafter, to be applied to the secured debt owed to the secured
creditor amounting to $316,701 until the Debtor files a plan of
reorganization.
In addition, the Debtor grants the secured creditor a first
priority postpetition security interest and lien against all
postpetition accounts, deposits and monies received by the Debtor
to the same extent that the secured creditor held a prepetition
security interest in such assets of the Debtor.
The Debtor owed the secured creditor under a prepetition Purchase
Money Deed of Trust, Security Agreements, Assignment of Contracts,
Leases and Rents, which was recorded in the Land Records of Anne
Arundel County, Maryland.
A copy of order is available for free at https://bit.ly/2X21dOo
from PacerMonitor.com.
About Olcan Properties III
Olcan Properties III, LLC filed a Chapter 11 bankruptcy petition
(Bankr. D. Md. Case No. 21-15323) on Aug. 18, 2021, disclosing $1
million in assets and $500,000 in liabilities. The Debtor is
represented by the Law Office of Marc R. Kivitz.
ONDAS HOLDINGS: Incurs $2.8 Million Net Loss in Second Quarter
--------------------------------------------------------------
Ondas Holdings Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $2.82 million on $887,432 of net revenues for the three months
ended June 30, 2021, compared to a net loss of $3.22 million on
$1.16 million of net revenues for the three months ended June 30,
2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $5.96 million on $2.05 million of net revenues compared to
a net loss of $6.03 million on $1.36 million of net revenues for
the six months ended June 30, 2020.
As of June 30, 2021, the Company had $64.92 million in total
assets, $5.14 million in total liabilities, and $59.78 million in
total stockholders' equity.
The Company stated, "Our future capital requirements will depend
upon many factors, including progress with developing,
manufacturing and marketing our technologies, the time and costs
involved in preparing, filing, prosecuting, maintaining and
enforcing patent claims and other proprietary rights, our ability
to establish collaborative arrangements, marketing activities and
competing technological and market developments, including
regulatory changes and overall economic conditions in our target
markets. Our ability to generate revenue and achieve profitability
requires us to successfully market and secure purchase orders for
our products from customers currently identified in our sales
pipeline as well as new customers. We also will be required to
efficiently manufacture and deliver equipment on those purchase
orders. These activities, including our planned research and
development efforts, will require significant uses of working
capital. There can be no assurance that we will generate revenue
and cash as expected in our current business plan. We may seek
additional funds through equity or debt offerings and/or borrowings
under additional notes payable, lines of credit or other sources.
We do not know whether additional financing will be available on
commercially acceptable terms or at all, when needed. If adequate
funds are not available or are not available on commercially
acceptable terms, our ability to fund our operations, support the
growth of our business or otherwise respond to competitive
pressures could be significantly delayed or limited, which could
materially adversely affect our business, financial condition or
results of operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1646188/000121390021043005/f10q0621_ondasholdings.htm
About Ondas Holdings Inc.
Ondas Holdings Inc., through its wholly owned subsidiary, Ondas
Networks Inc., is a developer of proprietary, software-based
wireless broadband technology for large established and emerging
industrial markets. The Company's standards-based, multi-patented,
software-defined radio FullMAX platform enables Mission-Critical
IoT (MC-IoT) applications by overcoming the bandwidth limitations
of today's legacy private licensed wireless networks. Ondas
Networks' customer end markets include railroads, utilities, oil
and gas, transportation, aviation (including drone operators) and
government entities whose demands span a wide range of mission
critical applications. These markets require reliable, secure
broadband communications over large and diverse geographical areas,
many of which are within challenging radio frequency environments.
Customers use the Company's FullMAX technology to deploy their
ownprivate licensed broadband wireless networks. The Company also
offers mission-critical entities the option of a managed network
service. Ondas Networks' FullMAX technology supports IEEE 802.16s,
the new worldwide standard for private licensed wide area
industrial networks. For additional information, visit
www.ondas.com.
Ondas Holdings reported a net loss of $13.48 million for the year
ended Dec. 31, 2020, compared to a net loss of $19.39 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $26.95 million in total assets, $12.24 million in total
liabilities, and $14.71 million in total stockholders' equity.
PARADISE REDEVELOPMENT: May Use Cash Collateral to Fix Property
---------------------------------------------------------------
Judge M. Elaine Hammond of the U.S. Bankruptcy Court for the
Northern District of California authorized Paradise Redevelopment
Company, LLC to use the rents received from the 4-plex located at
2118 Addison Avenue, East Palo Alto, California, for purposes of
repairing the 4-plex, to pay utilities owed on the property, as
well as payment for landscaping, and management fee of up to $2,500
monthly to the Debtor's owner.
Secured creditor, Rediger Investment Mortgage Fund, does not oppose
to said use of the cash collateral.
A copy of the order is available for free at https://bit.ly/3tobr7S
from PacerMonitor.com.
About Paradise Redevelopment Company
Paradise Redevelopment Company, LLC owns a 4-plex located at 2118
Addison Ave., East Palo Alto, Calif.
Paradise Redevelopment Company filed a voluntary petition for
Chapter 11 protection (Bankr. N.D. Calif. Case No. 21-50596) on
April 27, 2021, listing up to $50,000 in assets and up to $10
million in liabilities. Juan Carlos Casas, managing member, signed
the petition. Judge Elaine M. Hammond oversees the case. Stanley
A. Zlotoff, Esq., serves as the Debtor's legal counsel.
PELCO STRUCTURAL: Seeks to Hire RSM US as Accountant
----------------------------------------------------
Pelco Structural, LLC seeks approval from the U.S. Bankruptcy Court
for the Western District of Oklahoma to employ RSM US, LLP as its
accountant.
The firm's services include the preparation of tax returns and tax
reporting documents, general tax advice, general accounting
services, and assistance with any audits.
The firm's hourly rates are as follows:
Robert Best, CPA $450 per hour
Tax Manager $350 per hour
Staff Accountants $165 per hour
RSM US will also be reimbursed for out-of-pocket expenses
incurred.
Rainy Walker, a partner at RSM US, 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.
RSM US can be reached at:
Rainy Walker
RSM US LLP
210 Park Ave., Suite 1725
Oklahoma City, OK 98402
Tel: 405-239-7961
About Pelco Structural
Edmond, Okla.-based Pelco Structural, LLC filed a voluntary
petition for Chapter 11 protection (Bankr. W.D. Okla. Case No.
21-11926) on July 16, 2021, listing as much as $50 million in both
assets and liabilities. Pelco President Stephen P. Parduhn signed
the petition.
Judge Janice D. Loyd oversees the case.
The Debtor tapped Phillips Murrah, PC as legal counsel and RSM US,
LLP and Warkentin & McElyea as accountant.
PELCO STRUCTURAL: Seeks to Hire Warkentin & McElyea as Accountant
-----------------------------------------------------------------
Pelco Structural, LLC seeks approval from the U.S. Bankruptcy Court
for the Western District of Oklahoma to employ Warkentin & McElyea
as its accountant.
The firm's services include the preparation of tax returns and tax
reporting documents, general tax advice, general accounting
services, and assistance with any audits.
The hourly rate charged by the firm is $250.
As disclosed in court filings, Warkentin & McElyea is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
John B. McElyea
Warkentin & McElyea
1000 W Wilshire Blvd
Oklahoma City, OK 73116
Tel: (405)-840-4300
About Pelco Structural
Edmond, Okla.-based Pelco Structural, LLC filed a voluntary
petition for Chapter 11 protection (Bankr. W.D. Okla. Case No.
21-11926) on July 16, 2021, listing as much as $50 million in both
assets and liabilities. Pelco President Stephen P. Parduhn signed
the petition.
Judge Janice D. Loyd oversees the case.
The Debtor tapped Phillips Murrah, PC as legal counsel and RSM US,
LLP and Warkentin & McElyea as accountant.
POST OAK TX: Wins Interim Cash Collateral Access
------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
West Palm Beach Division, authorized Post Oak TX, LLC to use cash
collateral on an interim basis in accordance with the budget and
provide adequate protection.
As adequate protection for the Debtor's use of cash collateral, RSS
JPMBB2014-C25 - TX Pot, LLC, the lender, is granted post-petition,
replacement liens in all of the Debtor's assets. The Replacements
Liens will not attach to avoidance actions or the proceeds
therefrom. The Replacement Liens are deemed automatically perfected
without further action by the Lender.
As the Debtor is providing adequate protection to the collateral
interests of the Lender for the continued imposition of the
automatic stay, and if the value of the Lender's collateral
diminishes by the continued imposition of the automatic stay, then
the Lender will have a claim pursuant to 11 U.S.C. section 507(b),
subject to a carve out of Lender’s Cash Collateral solely for the
payment of all then due and accrued United States Trustee Fees and
court costs.
The Debtor is directed to furnish the Lender with payments to fund
tax and insurance escrows.
A further interim hearing on the matter is scheduled for September
29, 2021 at 1:30 p.m. via Zoom for the Government.
The Court says any further budget(s) to be considered at the Second
Interim Hearing must be furnished to the Lender and parties in
interest and filed with the Court no later than September 24.
Objections are due September 27.
A copy of the order is available at https://bit.ly/3zYCjhi from
PacerMonitor.com.
About Post Oak TX, LLC
Post Oak TX, LLC is part of the traveler accommodation industry.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-18563) on August 31,
2021. In the petition signed by E. Llywd Ecclestone, Jr., president
of General Partner of Member, the Debtor disclosed up to $100
million in both assets and liabilities.
Judge Erik P. Kimball oversees the case.
Andrew Zaron, Esq. at Leon Cosgrove, LLP, is the Debtor's counsel.
Kapilamukamal, LLP is the Debtor's financial advisor.
PRO VIDEO: Seeks to Employ Ronald Yelland as Accountant
-------------------------------------------------------
Pro Video Instruments, LLC seeks approval from the U.S. Bankruptcy
Court for the Middle District of Florida to hire Ronald Yelland, a
certified public accountant at Prince CPA Group, LLC, to prepare
its financial statements and federal tax returns, and provide
general accounting on a monthly basis.
The Debtor will pay Mr. Yelland the amount of $2,500 per week for
his general accounting services and $150 per hour for the
bankruptcy consulting and support services.
Mr. Yelland disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
Mr. Yelland can be reached at:
Ronald Yelland, CPA
Prince CPA Group, LLC
9161 Narcoosee Rd., Ste. 202
Orlando, FL 32827
Tel.: (407) 823-8230
Fax: (407) 823-8233
Email: info@princecpagroup.com
About Pro Video Instruments
Pro Video Instruments, LLC is a Orlando, Fla.-based hi-tech
manufacturer of digital video distribution products, providing
solutions for the homes, hospitality, entertainment, advertising,
sport, broadcast, Internet, security, surveillance, industrial,
educational, scientific, and consumer markets.
Pro Video Instruments filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
21-02491) on May 28, 2021. Silvia Fioravanti, manager, signed the
petition. At the time of the filing, the Debtor had between
$100,000 and $500,000 in assets and between $1 million and $10
million in liabilities.
Judge Karen S. Jennemann oversees the case.
Justin M. Luna, Esq., at Latham, Luna, Eden & Beaudine, LLP and
Ronald Yelland of Prince CPA Group, LLC serve as the Debtor's legal
counsel and accountant, respectively.
PURDUE PHARMA: Nevada to Get $50 Mil. From Opioid Settlement
------------------------------------------------------------
Nevada Appeal Capitol Bureau reports that Attorney General Aaron
Ford says Nevada will get an estimated $50 million from the opioid
settlement reached with the makers of Oxycontin.
He said the funds are badly needed to combat the opioid crisis
which has become even worse during the pandemic.
"This settlement represents only a small portion of what the
companies and individuals responsible for creating the opioid
epidemic owe," he said.
He said Nevada will continue pursuing litigation to hold other
opioid defendants accountable.
The Sackler family will pay about $4.5 billion to settle the case.
Purdue Pharma, makers of Oxycontin, however, can't be sued by the
thousands of individual victims under terms of the settlement in
New York federal bankruptcy court.
He said because of the scale of the case, it will take time for
bankruptcy trustees to liquidate the assets and determine exactly
what each state gets.
About Purdue Pharma
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. The Debtors' consolidated
balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets
and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain oversees the cases.
The Debtors tapped Davis Polk & Wardwell, LLP and Dechert, LLP as
legal counsel; PJT Partners as investment banker; AlixPartners as
financial advisor; and Grant Thornton, LLP as tax structuring
consultant. Prime Clerk LLC is the claims agent.
Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A., represent the
official committee of unsecured creditors appointed in the Debtors'
bankruptcy cases.
David M. Klauder, Esq., is the fee examiner appointed in the
Debtors' cases. The fee examiner is represented by Bielli &
Klauder, LLC.
PURDUE PHARMA: Several States Vow to Fight Plan Approval
--------------------------------------------------------
The Wall Street Journal reports that some attorneys general are
vowing to keep fighting the chapter 11 reorganization plan of
Purdue Pharma LP and a $4.5 billion settlement with the family that
owns the maker of OxyContin, which could force an influential
federal appeals court to consider the scope of bankruptcy judges'
power to end lawsuits over defective or dangerous products.
Attorneys general for Washington state and Connecticut as well as
the attorney general for Washington, D.C. said they would appeal
Wednesday's decision by Judge Robert Drain.
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.
REGIONAL HOUSING: Wins Interim OK on $600,000 DIP Loan
------------------------------------------------------
Judge Paul W. Bonapfel of the U.S. Bankruptcy Court for the
Northern District of Georgia authorized Regional Housing &
Community Services Corp. and its debtor-affiliates, on an interim
basis, to obtain up to $600,000 of secured postpetition financing
from bondholders, Ecofin Direct Municipal Opportunities Fund, LP
(f/k/a Tortoise Direct Municipal Opportunities Fund, LP) and Ecofin
Tax-Advantaged Social Impact Fund, Inc.
Funds advanced under the DIP facility shall accrue interest at 7.5%
per annum, and shall be secured by first priority liens and
security interest in favor of the Bondholders on all assets of the
Debtors, together with the proceeds thereof, that were previously
pledged to Bond Trustee, UMB Bank, N.A.
The DIP facility shall become due and payable on the sale of any of
the Debtors' facilities; the effective date of any confirmed plan
of reorganization involving the any of the Debtors' facilities; at
the option of the Bondholders, upon approval by the Court of any
lien senior to the liens of the Bond Trustee; or upon conversion or
dismissal of any of the bankruptcy cases.
The Debtors are authorized to use, as cash collateral, any revenue
derived in the ordinary course of business until the conclusion of
the final hearing, but no later than September 25, 2021, pursuant
to the terms of the current order.
UMB Bank, as successor trustee for certain bonds, agreed to the
terms of the current order.
A final hearing on the cash collateral motion, the DIP facility and
any additional funds to be advanced by the Bondholders will be held
on September 21, 2021 at 2 p.m., via Zoom.
A copy of the interim order is available for free at
https://bit.ly/3BOT92G from Kurtzman Carson Consultants, claims and
balloting agent.
Counsel or UMB Bank, N.A., as indenture trustee:
Kevin J. Walsh, Esq.
Charles W. Azano, Esq.
Greenberg Traurig, LLP
One International Place, Ste. 2000
Boston, MA 02110
Telephone: (617) 310-6000
Facsimile: (618) 310-6001
Email: walshke@gtlaw.com
azanoch@gtlaw.com
About Regional Housing & Community Services
Regional Housing & Community Services Corp. and its affiliates
filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ga. Case No. 21-41034) on Aug. 26,
2021, listing as much as $100,000 in both assets and liabilities.
Judge Paul W. Bonapfel oversees the cases.
The Debtor tapped Scroggins & Williamson, P.C. as legal counsel and
GGG Partners, LLC as interim management services provider. Kurtzman
Carson Consultants, LLC is the claims, noticing and balloting
agent.
Greenberg Traurig, LLP serves as counsel for UMB Bank, N.A., as
indenture trustee.
REMARK HOLDINGS: Settles Litigation With CBG Over 2016 Acquisition
------------------------------------------------------------------
Remark Holdings, Inc., together with its wholly owned subsidiary
KanKan Limited, entered into a settlement agreement with China
Branding Group Limited and its joint official liquidators to settle
the parties' claims against each other in the legal proceeding the
Company filed arising from its acquisition of assets of CBG in
September 2016.
Pursuant to the terms of the Settlement Agreement, in consideration
for a settlement of the parties' claims and a mutual release, the
Company has agreed to (i) release to CBG, within five business days
following the Effective Date, the $375,000 held in escrow in
connection with the Company's acquisition of assets of CBG and (ii)
issue to CBG warrants to purchase up to 5,710,000 shares of the
Company's common stock at a per share exercise price of $6.00,
which warrants are exercisable for a period of five years from the
Effective Date. Additionally, if the closing price of the
Company's common stock is $8.00 or greater for any five days (which
may be non-consecutive) in any consecutive 30-day trading period,
the Company has the right to cause the holder of the Warrants to
exercise, at its election, all or any portion of the Warrants on a
cashless basis at a deemed exercise price of $8.00 per share. The
Company has also agreed to file a registration statement
registering the resale of the shares of common stock underlying the
Warrants within 10 business days of the Effective Date.
About Remark Holdings
Remark Holdings, Inc. (NASDAQ: MARK) --
http://www.remarkholdings.com-- delivers an integrated suite of AI
solutions that enable businesses and organizations to solve
problems, reduce risk and deliver positive outcomes. The company's
easy-to-install AI products are being rolled out in a wide range of
applications within the retail, financial, public safety and
workplace arenas. The company also owns and operates digital media
properties that deliver relevant, dynamic content and ecommerce
solutions. The company is headquartered in Las Vegas, Nevada, with
additional operations in Los Angeles, California and in Beijing,
Shanghai, Chengdu and Hangzhou, China.
Remark Holdings reported a net loss of $13.68 million for the year
ended Dec. 31, 2020, compared to a net loss of $25.61 million for
the year ended Dec. 31, 2019. As of June 30, 2021, the Company had
$13.73 million in total assets, $28.94 million in total
liabilities, and a total stockholders' deficit of $15.21 million.
Los Angeles, California-based Weinberg & Company, the Company's
auditor since 2020, issued a "going concern" qualification in its
report dated March 31, 2021, citing that the Company has suffered
recurring losses from operations and negative cash flows from
operating activities and has a negative working capital and a
stockholders' deficit that raise substantial doubt about its
ability to continue as a going concern.
REXNORD CORP: Moody's Affirms 'Ba3' CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service affirmed Rexnord Corporation's (NYSE: RXN
or "Rexnord") Ba3 corporate family rating and Ba3-PD probability of
default rating. Moody's also assigned a Ba3 rating and a stable
outlook to Zurn Holdings, Inc.'s ("Zurn Holdings") planned $750
million senior secured credit facility comprised of a $550 million
term loan B and a $200 million revolving credit facility. There is
no change to Rexnord's other existing debt ratings. The outlook is
stable. The speculative grade liquidity rating at Rexnord is
maintained at SGL-1.
Rexnord is in the process of becoming a standalone pure-play water
management company following the spinoff of the Process & Motion
Control (PMC) business. Zurn Holdings is currently Rexnord's Water
Management (WM) subsidiary and at the close of the transaction
Rexnord Corporation will be renamed Zurn Water Solutions
Corporation ("Zurn") and will be publicly traded on the NYSE under
the symbol ZWS.
Rexnord Corporation's subsidiary RBS Global, Inc.'s existing debt
will be repaid using proceeds from the first lien term loan,
roughly $321 million of existing Rexnord cash, and a $487 million
one-time dividend resulting from the spin-off of PMC. The ratings
for RBS Global, Inc. will be withdrawn following the repayment of
its rated debt obligations.
The affirmation of Rexnord's Ba3 CFR reflects Moody's expectation
that the company will have stronger margins, interest coverage, and
better free cash flow-to-debt as a standalone entity. Leverage is
also anticipated to trend lower than Rexnord had as a standalone
entity going forward. Moody's believes these factors will more than
offset Rexnord's smaller size and less diversified business profile
after spinning off a large part of the company.
Assignments:
Issuer: Zurn Holdings, Inc.
Senior Secured First Lien Term Loan B, Assigned Ba3 (LGD3)
Senior Secured First Lien Revolving Credit Facility, Assigned Ba3
(LGD3)
Affirmations:
Issuer: Rexnord Corporation
Corporate Family Rating, Affirmed Ba3
Probability of Default Rating, Affirmed Ba3-PD
Outlook Actions:
Issuer: Zurn Holdings, Inc.
Outlook, Assigned Stable
Issuer: Rexnord Corporation
Outlook, Affirmed Stable
RATINGS RATIONALE
Zurn's ratings reflect its good scale and well established position
in several water management categories including water safety,
hygienic and environmental, and flow systems. The company's
governance risk is relatively low, as Zurn is expected to exhibit a
conservative financial policy with moderate pro forma financial
leverage of about 3.4 times LTM debt-to-EBITDA at June 30, 2021,
which Moody's expects will approach 3.0 times by the end of 2022
(all ratios are Moody's adjusted unless otherwise stated). Zurn
will also be publicly traded on the NYSE, as Rexnord currently is
prior to the separation, and must adhere to their listing
standards.
However, Zurn's credit profile is constrained by concentration risk
with the company operating solely in the water management business.
Also, the majority of Zurn's revenue is derived from the inherently
cyclical new construction, and almost all of its revenue is derived
in North America. Revenue exhibits seasonality with a greater
proportion of sales occurring in the warmer spring and summer
months with more construction activity. Finally, Moody's expects
the company to engage in share buybacks and potentially debt funded
bolt-on acquisitions.
Zurn Holdings, Inc. and Rexnord LLC will be co-borrowers under the
senior secured credit facilities. The Ba3 ratings for the company's
senior secured bank credit facility is in line with the Ba3 CFR,
reflecting the fact that it represents the preponderance of debt in
the capital structure.
The stable outlook reflects Moody's expectation that Zurn will grow
its topline about 15% in 2021 and about 7% in 2022 while
debt-to-EBITDA approaches 3.0 times at the end of 2022.
Zurn will also have very good liquidity as reflected in the SGL-1
speculative grade liquidity rating. Liquidity is supported by
Moody's expectation for annual free cash flow to be greater than
$100 million over the next year together with full availability on
the company's new $200 million revolving credit facility.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Zurn continues to grow its size
and scale, and is able to successfully complete the spinoff and
separation of PMC while effectively maintaining performance as a
smaller and less diverse company. Also, the company is able to
sustain debt-to-EBITDA below 2.5 times, and sustain free cash
flow-to-debt above 15%.
The ratings could be downgraded if debt-to-EBITDA climbs above 4.0
times and free cash flow-to-debt is sustained below 10%. Also, if
the company implements an increasingly aggressive financial policy,
executes a large debt financed acquisition, or there is a
significant weakening of liquidity the ratings could be
downgraded.
The principal methodology used these ratings was Manufacturing
Methodology published in March 2020.
Zurn Holdings, Inc. ("Zurn") designs, procures, manufactures, and
markets products that provide and enhance water quality, safety,
flow control and conservation. The company is currently a
subsidiary of Rexnord Corporation (NYSE: RXN), which is in the
process of merging its Process & Motion Control (PMC) business with
Regal Beloit Corporation (NYSE: RBC). Zurn had approximately $746
million of revenue in calendar year 2020.
SEAWIND DEVELOPMENT: Unsecureds to Get Proceeds from Asset Sale
---------------------------------------------------------------
Seawind Development, Corp., et al., filed with the U.S. Bankruptcy
Court for the District of Delaware a Subchapter V Plan dated
September 7, 2021.
Debtors Seawind Development Corp., Seawind, LLC and Seawind, Inc.
are entities formed by Richard F. Silva. Seawind Development Corp.
and Seawind, LLC operated until Mr. Silva passed away on January 9,
2019. The office address for Seawind Development Corp. and Seawind,
LLC is 933 Pike Springs Road Kimberton, PA 19442 through December
2021. Seawind, Inc. is a Pennsylvania corporation and never
operated.
Debtors filed their respective chapter 11 cases to facilitate a
court approved unified sale of the Debtors' assets, along with
related assets owned by non-Debtor parties, voluntarily, which are
the assets belonging to the Estate of Richard F. Silva and SAC to
promote an orderly resolution of the claims against each of the
Debtors and to maximize the value for all. The assets for the
Seawind Project are worth more in the aggregate than they are
individually.
Class 1 consists of Priority Non-Tax Claims. Except to the extent
that the holder of an allowed priority non-tax claim agrees to less
favorable treatment, each such holder will receive payment of its
allowed claim in full in cash on the later of the Effective Date
and the date on which such claim becomes allowed, or as soon as
reasonably practicable thereafter.
Class 2 consists of Secured Claims. Except to the extent that the
holder of an allowed Secured Claim agrees to less favorable
treatment, the holder of such allowed Secured Claim shall paid the
value attributable to the holder of such allowed Secured Claim's
collateral from a sale thereof.
Class 3 consists of General Unsecured Claims. Each such holder will
receive pro rata net proceeds from the sale of the Debtors'
business and assets after payment of any allowed secured claims,
administrative expense claims, priority tax claims, and Class 1 and
2 claims on the later of (1) the Effective Date; (2) the date on
which such claim becomes allowed, or as soon as reasonably
practicable thereafter; and (3) the consummation of the sale and
receipt of proceeds therefrom to the Debtors' Estates in which any
such creditor has a claim.
Class 4 consists of Interests. Upon the Effective Date, all holders
of Interests in the Debtors shall retain such Interests.
The funding of the payments under the Plan will come from a sale of
the Debtors' business assets, which payments will be payable to
each Estate based upon the allocation of purchase price toward the
assets being sold. Prior to the filing of the Debtors' bankruptcy
cases, Debtors have been engaged in discussions with two interested
purchasers. One potential purchaser has completed some of its due
diligence and the Debtors anticipate receiving a letter of intent
by October 31, 2021, followed by additional due diligence, and an
executed contract for sale to be submitted for bankruptcy court
approval, with a closing of the sale to be completed no later than
March 31, 2022.
On confirmation of the Plan, all property of each Debtor, tangible
and intangible, including, without limitation, licenses, furniture,
fixtures and equipment, will revert to the Debtor that owned such
property, subject only to any allowed claim.
A full-text copy of the Subchapter V Plan dated September 7, 2021,
is available at https://bit.ly/38TRi04 from PacerMonitor.com at no
charge.
About Seawind Development
Seawind Development Corp. is a manufacturer of aerospace products
and parts. Seawind Development filed Chapter 11 Petition (Bankr. D.
Del. Case No. 21-10910) on June 8, 2021. At the time of the filing,
the Debtor disclosed total assets of up to $1 million and total
liabilities of up to $10 million. Judge Kate J. Stickles oversees
the case. Daniel K. Astin, Esq. of CIARDI CIARDI & ASTIN represents
the Debtor as legal counsel.
SEMORAN PINES: Seeks to Hire Brian Michael Mark as Legal Counsel
----------------------------------------------------------------
Semoran Pines Phase II Condominium Association, Inc. seeks approval
from the U.S. Bankruptcy Court for the Middle District of Florida
to hire Brian Michael Mark, P.A. to serve as legal counsel in its
Chapter 11 case.
The firm's services include:
(a) advising the Debtor of its rights and duties in the case;
(b) preparing pleadings related to the case, including a plan
of reorganization; and
(c) taking all other necessary actions incident to the proper
preservation and administration of the estate.
The firm's hourly rates are as follows:
Brian M. Mark, Esq. $350 per hour
Paraprofessionals $175 per hour
The Debtor paid $6,768 to the law firm as a retainer fee.
Brian Mark, Esq., the firm's attorney who will be providing the
services, disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Brian M. Mark, Esq.
Brian Michael Mark, P.A.
111 E. Monument Avenue, Suite 510
Kissimmee, FL 34741
Tel: (407) 932-3933
Email: bmark@marklawfirm.com
About Semoran Pines
Semoran Pines Phase II Condominium Association, Inc. filed a
petition for Chapter 11 protection (Bankr. M.D. Fla. Case No.
21-03745) on Aug. 18, 2021, listing as much as $50,000 in both
assets and liabilities. Alfonso Paredes, president of Semoran
Pines, signed the petition. The Debtor tapped Brian Michael Mark,
P.A. as legal counsel.
SIWF HOLDINGS: S&P Downgrades ICR to 'B-', Outlook Stable
---------------------------------------------------------
S&P Global Ratings lowered its ratings on U.S.-based SIWF Holdings
Inc. (Springs Window Fashions) to 'B-' from 'B', reflecting its
expectations that leverage will be elevated in the 8x area.
S&P said, "We assigned its 'B-' issuer credit rating to the initial
borrower, Sunset Debt Merger Sub, Inc., and subsequent to
acquisition close, SWF Holdings I Corp., the proposed borrower of
the debt facilities and the entity where we believe the group's
consolidated financial statements will be issued post transaction
close. The outlook is stable. We will withdraw all of our existing
ratings on the former parent, SIWF Holdings Inc., including the
group's existing debt, upon repayment.
"At the same time, we assigned our 'B-' issue-level and '3'
recovery rating to the company's proposed senior secured first-lien
credit facilities. The '3' recovery rating indicates our
expectation for meaningful (50%-70%; rounded estimate: 50%)
recovery in the event of payment default. The ratings are based on
preliminary terms and subject to review of final documentation.
"The stable outlook reflects our expectation that the residential
window coverings market will continue to grow, albeit at slower
rates, the company's products will continue to resonate well with
customers, and that Springs will manage its costs and raise prices
to offset input cost pressures."
Clearlake has entered into a definitive agreement to acquire
Springs Window Fashions from AEA Investors (AEA) and British
Columbia Investment Management Corp. (BCI).
The transaction will be financed with a proposed $1,625 million
first-lien term loan due 2028, $625 million of junior debt, and
equity contributions. The proposed transaction also includes an
$150 million asset-based lending (ABL) credit facility due 2026 and
$125 million revolving credit facility (RCF) due 2026 (both undrawn
at close).
S&P said, "We expect leverage to remain elevated above 8x for the
next two years post the leveraged buyout (LBO) transaction and for
financial policies to remain aggressive under new financial sponsor
owners, Clearlake. Leverage will rise to 7.3x from 3.7x at the end
of June 30, 2021, following the debt-funded acquisition by
Clearlake. In addition, we forecast the leverage will further
increase to the mid-8x area at the end of fiscal 2021 and be
sustained in the 8x area for 2022. Clearlake will be the majority
owner of the company following this transaction. We believe the
company's financial policies will remain aggressive under the new
sponsor ownership, resulting in elevated leverage over the next
several years. Financial sponsors typically operate with high debt
levels that focuses on maximizing equity returns for the sponsor
over a short time horizon (typically around five years).
"Additionally, Clearlake has recently executed several transactions
with leverage above the 7x threshold (such as Woof Intermediate
Inc. and Balrog Acquisition Inc.), which indicates to us
Clearlake's willingness to utilize debt and operate its portfolio
companies with high leverage. We believe the company will deploy
the majority of its excess cash funds toward opportunistic
acquisitions to expand its scale and brand portfolio or distribute
dividends to its shareholders. Therefore, any improvement in credit
metrics will result from EBITDA expansion rather than debt
repayment.
"We forecast revenue and EBITDA would decline in the second half of
2021 as the company laps a very strong second half of 2020,, though
we project demand to remain healthy. The company's LTM revenue and
EBITDA are elevated because consumers delayed the purchases of
window blinds and shades during the onset of the pandemic but
resumed purchases very quickly in the third quarter as stay-at-home
mandates were sustained and consumers focused on household
improvement purchases or nesting purchases--effectively shifting a
sizable portion of profitability from the second quarter to the
third quarter in 2020. We expect more normal buying patterns to
return in 2021 and beyond, thus we expect an EBITDA drop in the
second half of 2021, resulting in leverage increasing to the 8x
area from 7.3x at close. Notwithstanding the one-time revenue
shift, we continue to expect above-market growth rates for the
company as we believe the company will continue to take share in
its fragmented and competitive dealer channel, as well as continued
healthy consumer demands. The demand in new residential markets
remains strong, reflecting higher activity levels in the
homebuilder channel, home inventory at historically low levels, low
mortgage rates, and rising demand for more spacious suburban homes.
Similarly, the diversion of consumer spending toward home
improvements has fueled elevated demand in the repair and
remodeling markets. We expect positive market momentum to persist
through 2021, with full-year revenue growth of over 20% in 2021
(this compares to the 38% revenue growth LTM June 30, 2021). We
also expect the company to maintain stable EBITDA margins in the
next 12 months as risks from higher input costs and increased
marketing spend are offset by benefits from continued cost-saving
initiatives like procurement optimization, investment in advanced
manufacturing technologies, and continued cost-efficiency
projects.
"We believe residential repair and remodeling spending will slow
down significantly in 2022 as economies reopen and consumers resume
travel and leisure spending. According to Euromonitor, the U.S.
window covering market is also expected to grow at about 3.5% in
2022 from a 1.5% decline in 2021. As such, we expect revenue and
EBITDA growth of mid- to high-single-digit percentage in 2022 as
the company typically benefits from the six-month lag period after
the home purchases because window covering is usually one of the
last large ticket items that homeowners purchase."
Springs continues to gain market share in the dealer channel, but
still lags behind the No.-1 player, Hunter Douglas, in the overall
windows covering market. Spring's business is characterized by its
participation in the niche, fragmented window coverings market,
marked by intense competition, lack of product diversity, and
vulnerability to economic cycles. It holds the No. 1 position with
significant market share in the retail and commercial channels and
a No. 2 position in the dealer channel following Hunter Douglas.
The company gained some market share during the pandemic from
Hunter Douglas in the dealer channel by providing shorter lead
times due to its localized Mexico manufacturing footprint as
compared to many competitors' Asia Pacific manufacturing base. One
of the company's key growth strategies is to continue to take share
in the dealer channel, as previous infrastructure investments in
technology and customer services has enabled the company to win out
over other players in terms of dealer services levels and
incremental margin contributions of its product lines. Furthermore,
S&P believes the company will maintain its leading position in the
retail channel, while continuing to have high customer
concentration as two of its national retail customers--Home Depot
and Lowe's—account for about 28% of its total revenues.
S&P said, "The stable outlook reflects our expectation that the
residential window coverings market will continue to grow, albeit
at slower rates, the company's products will continue to resonate
well with customers, and that Springs will remain disciplined in
managing its costs and raise prices to offset input cost pressures.
We expect the company's leverage will be in the mid-8x area for
2021 and improve to around 8x in 2022, while generating free
operating cash flow of around $100 million annually."
S&P could lower its ratings if the company's capital structure
becomes unsustainable in its view with leverage approaching the
double digits area or interest coverage ratio weakening to the
mid-1x area, which could occur if:
-- Revenue declined rapidly either from a contraction in consumer
demand from a housing market shock, or from a loss of one of its
key retail customers.
-- The company is not able to effectively manage input cost
increases bypassing the cost along via price increase or
cost-efficiency initiatives.
-- If the company's financial policy becomes even more aggressive,
and the company continues to undertake debt-funded acquisitions or
shareholder returns.
While unlikely in the next 12 months, S&P could raise its ratings
if leverage is sustained below 7x. This could occur if:
-- Financial policy becomes less aggressive, and the company
prioritizes debt repayment instead of shareholder-friendly
activities and operates with sustained lower leverage.
-- The company meaningfully expands its product and geographic
diversification, which S&P believes is not likely unless the
company undertakes transformative acquisitions.
SMITHFIELD FOODS: Moody's Rates New Senior Unsecured Notes 'Ba1'
----------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to Smithfield
Foods, Inc's new senior unsecured notes. Other ratings, including
Smithfield's Ba1 Corporate Family Rating are not affected. The
rating outlook is stable.
Smithfield will use net proceeds from the new notes to refinance
existing debt including repayment of the existing 2.65% notes
coming due in October 2021 and borrowings under the company's
revolving credit facility. Moody's views the proposed transaction
as credit positive because it will improve liquidity by extending
near-term debt maturities without materially affecting interest
costs or free cash flow.
Moody's expects Smithfield's operating performance to improve over
the next 12-18 months as foodservice demand and the packaged meats
segment recovers. Moody's anticipates that this demand increase and
various pricing actions will more than offset inflationary cost
pressures from higher labor costs and grain prices. Debt-to-EBITDA
leverage will decline to around 2.0x by the end of 2022 from 2.8x
as of July 4, 2021. Moody's further expects that the company will
maintain good liquidity, demonstrate concerted effort at reducing
event risk tied to legislation and maintain a balanced financial
policy that allows it to successfully manage through inherent
earnings and cash flow volatility.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: Smithfield Foods, Inc.
Senior Unsecured Notes, Assigned Ba1 (LGD4)
RATINGS RATIONALE
Smithfield's Ba1 Corporate Family Rating reflects its large scale
and global leadership in hog production, fresh pork, and
value-added packaged pork products. Additionally, the rating is
also supported by the company's good liquidity and the positive
fundamentals for the protein industry from growing global demand
for protein. These strengths are balanced against high earnings
volatility inherent in the protein processing industry, single
protein focus on pork and financial obligations to parent, WH Group
Limited, in the form of an ongoing dividend. The company is weighed
down by event risk associated with pending litigation cases, as
well as the recent CEO turnover and settlement associated with
settling a price fixing case that elevate governance concerns.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Moody's analysis has considered the effect on the performance of
consumer sectors from the current weak U.S. economic activity and a
gradual recovery for the coming months. Although an economic
recovery is underway, it is tenuous, and its continuation will be
closely tied to containment of the virus. As a result, the degree
of uncertainty around forecasts is unusually high. Moody's regard
the coronavirus outbreak as a social risk under Moody's ESG
framework, given the substantial implications for public health and
safety.
The animal protein sector is exposed to environmental risks such as
soil/water and land use, and energy & emissions impacts, among
others. In addition, the sector has high exposure to social risks
related to responsible production, health and safety standards and
evolving consumer lifestyle changes. These factors will continue to
play an important role in evaluating the overall creditworthiness
of the animal protein companies, like Smithfield, particularly as
the industry continues to evolve globally.
Smithfield's corporate governance practices include financial
policies that make a priority of maintaining strong liquidity and
modest financial leverage. Debt/EBITDA is generally managed at
around 2.0x during normal operating conditions. However, Smithfield
is wholly-owned by WH Group who extracts cash from Smithfield via
dividends, which reduces cash available for debt repayment,
acquisition funding and reinvestment. Smithfield's dividend payment
to its parent will likely increase over time providing less
financial flexibility for Smithfield.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's view that Smithfield's
operating performance will continue to improve as foodservice
demand returns. The outlook also reflects that the company will
continue to have good liquidity, demonstrate concerted effort at
reducing legislation risk and maintain a balanced financial
policy.
The ratings could be downgraded if debt/EBITDA is sustained above
2.5x or if the company's liquidity deteriorates. Other events that
could trigger a downgrade are partly out of the company's control,
including further coronavirus-related disruptions, prolonged trade
disputes in key export markets, a disease outbreak or a major pork
supply and demand imbalance.
A rating upgrade could occur if Smithfield sustains debt/EBITDA
below 2.0x and strong liquidity, including access to at least $1
billion of cash and undrawn committed multi-year bank facilities.
In addition, the company would need to maintain overall earnings
stability and a conservative financial policy before an upgrade
would be considered.
The principal methodology used in these ratings was Protein and
Agriculture published in May 2019.
Smithfield Foods, Inc., headquartered in Smithfield, Virginia, is
the world's largest pork producer and processor. Net revenue during
the last twelve months ended July 4, 2021 totaled approximately
$16.4 billion. Smithfield's Hong Kong-based parent company,
publicly-traded WH Group Limited, is an investment holding company
that owns 100% of Smithfield along with 70.3% of publicly-traded
Henan Shuanghui Investment & Development Co., Ltd. (Shuanghui;
SZSE: 000895), the largest pork processor in China.
SOMETHING SWEET: Committee Taps Horwood Marcus as Lead Counsel
--------------------------------------------------------------
The official committee of unsecured creditors of Something Sweet
Acquisition, Inc. and its affiliates seeks approval from the U.S.
Bankruptcy Court for the District of Delaware to hire Horwood
Marcus & Berk Chartered to serve as the lead counsel in its Chapter
11 case.
The firm's services include:
(a) advising the committee on all legal issues as they arise;
(b) representing and advising the committee regarding the
terms of any asset sales or plans of reorganization or liquidation,
and assisting the committee in negotiations with the Debtors,
secured creditors and other parties in interest;
(c) investigating the Debtors' assets and pre-bankruptcy
conduct, and investigating the validity, priority and extent of any
liens asserted against the Debtors' assets;
(d) preparing all necessary pleadings, reports and other
papers;
(e) representing and advertising the committee in all
proceedings in the cases;
(f) assisting and advising the committee in its
administration; and
(g) providing other necessary legal services.
The firm's hourly rates are as follows:
Partners $375 - $825 per hour
Associates $210 - $340 per hour
Paralegals $185 - $215 per hour
Aaron Hammer, Esq., a partner at Horwood Marcus & Berk Chartered,
disclosed in a court filing that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Aaron L. Hammer, Esq.
Horwood Marcus & Berk Chartered
500 W. Madison, Suite 3700
Chicago, IL 60661
Phone: 312-606-3200
Fax: 312-606-3232
Email: ahammer@hmblaw.com
About Something Sweet Acquisition
Something Sweet Acquisition, Inc., a grocery and related product
merchant wholesaler based in New Haven, Conn., and its affiliates
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
D. Del. Lead Case No. 21-10992) on July 20, 2021. At the time of
the filing, Something Sweet Acquisition had between $1 million and
$10 million in both assets and liabilities. Judge Benjamin A. Kahn
oversees the cases.
Bielli & Klauder LLC and The Peakstone Group, LLC serve as the
Debtor's legal counsel and investment banker, respectively.
Reliable Companies is the claims and noticing agent.
The U.S. Trustee for Region appointed an official committee of
unsecured creditors in the Debtors' cases on July 21, 2021. The
committee tapped Horwood Marcus & Berk Chartered as lead bankruptcy
counsel and Armstrong Teasdale, LLP as Delaware and conflicts
counsel.
SOMETHING SWEET: Taps Armstrong Teasdale as Delaware Counsel
------------------------------------------------------------
The official committee of unsecured creditors of Something Sweet
Acquisition, Inc. and its affiliates seeks approval from the U.S.
Bankruptcy Court for the District of Delaware to hire Armstrong
Teasdale, LLP as Delaware and conflicts counsel.
The firm's services include:
(a) rendering legal advice with respect to the powers and
duties of the committee and the other participants in the Debtors'
Chapter 11 cases;
(b) assisting the committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of the
Debtors, the operation of the Debtors' business and any other
matter relevant to the Chapter 11 cases to the extent such matters
affect the Debtors' creditors;
(c) participating in negotiations with parties-in-interest
with respect to any disposition of the Debtors' assets, plan of
reorganization and disclosure statement in connection with such
plan, and otherwise protect and promote the interests of the
Debtors' unsecured creditors;
(d) preparing legal papers;
(e) rendering legal advice with respect to all Delaware
substantive and procedural matters, including, but not limited to,
local rules and practices;
(f) serving as conflicts counsel, as needed; and
(g) performing all other necessary legal services.
The firm's hourly rates are as follows:
Partners and Of Counsel $300 - $925 per hour
Associates $250 - $450 per hour
Paralegals, Specialists, Assistants $150 - $350 per hour
Rafael Zahralddin-Aravena, Esq., a partner at Armstrong Teasdale,
disclosed in a court filing that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Rafael X. Zahralddin-Araven, Esq.
Armstrong Teasdale LLP
300 Delaware Avenue, Suite 210
Wilmington, DE 19801
Tel.: 302.824.7089
Email: rzahralddin@atllp.com
About Something Sweet Acquisition
Something Sweet Acquisition, Inc., a grocery and related product
merchant wholesaler based in New Haven, Conn., and its affiliates
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
D. Del. Lead Case No. 21-10992) on July 20, 2021. At the time of
the filing, Something Sweet Acquisition had between $1 million and
$10 million in both assets and liabilities. Judge Benjamin A. Kahn
oversees the cases.
Bielli & Klauder LLC and The Peakstone Group, LLC serve as the
Debtor's legal counsel and investment banker, respectively.
Reliable Companies is the claims and noticing agent.
The U.S. Trustee for Region appointed an official committee of
unsecured creditors in the Debtors' cases on July 21, 2021. The
committee tapped Horwood Marcus & Berk Chartered as lead bankruptcy
counsel and Armstrong Teasdale, LLP as Delaware and conflicts
counsel.
SPHERATURE INVESTMENTS: Seeks to Hire Mazars USA as Tax Advisor
---------------------------------------------------------------
Spherature Investments LLC and its affiliates seek approval from
the U.S. Bankruptcy Court for the Eastern District of Texas to hire
Mazars USA LLP to provide tax advisory and accounting services.
The firm's services include:
(a) preparing the federal and all applicable state corporate
income tax returns with supporting schedules, including (i) Federal
Income Tax Return Form 1065 and required filings based on the 2019
tax return, and (ii) State income tax returns based on the 2019
filings; and
(b) preparing and reviewing the quarterly estimated payment
vouchers.
The firm's hourly rates are as follows:
Partners $500 – $550
Senior Manager $450 – $500
Manager $200 – $350
Senior Associate $150 – $200
Associates/Intern $75 – $150
The Debtors paid $50,000 to the firm as a retainer fee.
Ryan Vaughan, partner of the firm, disclosed in a court filing that
his firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Ryan Vaughan, CPA
Mazars USA LLP
5100 Tennyson Parkway
Plano, TX 75024
About Spherature Investments LLC
Spherature Investments LLC and its affiliates, including
WorldVentures Marketing, LLC, sought Chapter 11 protection (Bankr.
E.D. Tex. Lead Case No. 20-42492) on Dec. 21, 2020. In the petition
signed by Michael Poates, chief operating officer, the Debtors
disclosed up to $10 million in both assets and liabilities.
WorldVentures Marketing -- http://worldventures.com-- sells travel
and lifestyle community memberships providing a diverse set of
products and experiences. At the time of filing, Spherature
Investments estimated $50 million to $100 million in assets and
liabilities.
The Hon. Brenda T. Rhoades is the case judge.
The Debtors tapped Foley & Lardner, LLP as counsel and Larx
Advisors, Inc. as restructuring advisor. Mazars USA LLP serves as
the Debtor's tax advisor, while Stretto is the claims agent.
The U.S. Trustee for Region 6 appointed an official committee of
unsecured creditors on Jan. 22, 2021. The committee is represented
by Pachulski Stang Ziehl & Jones, LLP.
STV GROUP: Moody's Affirms 'B2' CFR, Outlook Stable
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Moody's Investors Service affirmed STV Group, Incorporated's B2
corporate family rating, B3-PD probability of default rating, and
B2 rating on its existing first lien senior secured credit facility
including the proposed $45 million add-on to its existing $225
million term loan due 2026. Proceeds from the proposed add-on along
with new cash equity from financial sponsor Tom Pritzker Family
Business Interests (PFBI), advised by The Pritzker Organization,
L.L.C. (TPO), rollover equity from CP&Y management, $10 million of
existing balance sheet cash and $3 million in revolver borrowings
will be used to fund the acquisition of CP&Y, Inc. (CP&Y) and pay
related fees & expenses. The outlook is stable.
The affirmation of STV's ratings is based on Moody's assumption
that the company will deleverage from relatively high levels over
the next 18 months while maintaining good liquidity at all times.
The acquisition of CP&Y, a transportation and water infrastructure
design and engineering firm based largely in Texas, is considered
marginally aggressive given the decline in STV's hard backlog and
revenue with both down modestly over the past twelve months ended
June 30, 2021 (the LTM period) and the increase in debt-to-EBITDA
leverage (Moody's adjusted) to 5.6 times from 4.5 times over the
same period. Nonetheless, leverage remains below the previously
indicated downgrade threshold of 6 times and Moody's assumes the
company's performance should rebound in 2022 as construction delays
brought on by the COVID-19 pandemic subside leading to sequential
revenue and earnings growth in 2022. Additionally, the combination
of STV and CP&Y increases the company's total revenue by nearly 17%
and diversifies the company's geographic footprint in Texas, an
area where STV previously had very limited exposure.
Affirmations:
Issuer: STV Group, Incorporated
Probability of Default Rating, Affirmed B3-PD
Corporate Family Rating, Affirmed B2
Gtd Senior Secured 1st Lien Bank Credit Facility, Affirmed B2
(LGD3)
Outlook Actions:
Issuer: STV Group, Incorporated
Outlook, Remains Stable
RATINGS RATIONALE
STV's B2 CFR is constrained by the company's elevated leverage and
modest size in terms of net service revenue which remains below
$500 million including the CP&Y acquisition. The company operates
within a fragmented industry that includes many large competitors.
The company's business is also reliant on state and federal
spending budgets and would be adversely impacted during periods of
reduced capital spending. STV's ability to manage the risk stemming
from project timing and execution is essential to maintain margins.
The company must also adequately estimate labor demand needs for
projects and retain key personnel to support the business. The
construction projects on which STV works are also subject to
compliance with environmental and safety standards that can affect
the cost and timing of the projects.
The rating is supported by a visible backlog of contracted work,
recurring maintenance projects that represent roughly two-thirds of
revenue, and its small average project sizes despite reliance on
multiple state and federal transportation-related agencies. Moody's
expects the company will benefit from the potential federal
infrastructure program which could drive incremental backlog and
revenue growth along with state and local government spending
supported by low interest rates. Good liquidity also underpins the
rating and is supported by Moody's expectation of $15 to $20
million of free cash flow in 2022, approximately $18.6 million of
balance sheet cash at the close of the acquisition of CP&Y,
availability on its $55 million revolver, and a lack of meaningful
maturities over the next year. Notably, the company's ownership,
PFBI, has a longer-term orientation than more traditional private
equity firms and Moody's views financial policy risk as more
moderate as a result.
ESG considerations incorporated in the B2 CFR include governance
pressure from Moody's expectation for moderately aggressive
financial strategies given PFBI's ownership and as evidenced by the
acquisition of CP&Y which was partially funded with incremental
debt.
The B3-PD is one notch below the B2 CFR to reflect a higher than
average expected family recovery rate based on the all first lien
credit facility debt structure with a net first lien leverage
financial maintenance covenant on both the revolver and term loan.
The stable outlook reflects Moody's expectation that the company's
backlog and net service revenue will resume sequential growth at
stable margins such that the company will generate sustained
positive free cash flow that will be used for debt repayment and
reinvestment. Moody's expects debt-to-EBITDA to gradually improve
toward the low 5 times range during the next 12 to 18 months while
maintaining good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if revenue declines or
debt-to-EBITDA rises and is sustained above 6x. A deterioration in
liquidity or free cash flow-to-debt below 5% could also lead to a
downgrade.
Ratings could be upgraded through consistent earnings growth at
current margins, along with debt-to-EBITDA sustained below 4x, and
free cash flow-to-debt above 10%. STV would also need to maintain
good liquidity and financial strategies consistent with maintaining
the aforementioned metrics.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Headquartered in New York, NY and Douglassville, PA, STV Group,
Incorporated is a consulting, engineering, architectural, planning,
environmental, and construction management services company. The
company's segments include Transportation & Infrastructure,
Building & Facilities, and Construction/Program Management. STV is
majority owned by PFBI, and advised by TPO, a merchant bank for the
business interests of the Pritzker Family.
SWF HOLDINGS I: Moody's Gives B3 CFR & Rates New Credit Facility B2
-------------------------------------------------------------------
Moody's Investors Service assigned ratings to SWF Holdings I Corp.
(Springs Window or Springs) including a B3 Corporate Family Rating
and a B3-PD Probability of Default Rating. Concurrently, Moody's
assigned a B2 rating to the company's proposed senior secured first
lien credit facility, consisting of a $125 million first lien
revolver due 2026 and a $1,625 million first lien term loan due
2028. The outlook is stable.
Proceeds from the proposed $1,625 million first lien term loan, new
$1,260 million common equity contribution by Clearlake Capital
Group, L.P. (Clearlake), along with additional unsecured financing
will fund Clearleake's $3.4 billion leveraged buyout (LBO) of
Springs, including repayment of the company's existing debt, and to
pay related fees and expenses.
Concurrent with the transaction the company will also enter into a
new $150 million asset based lending (ABL) revolving facility due
2026 (unrated) and a new $125 million first lien revolving facility
due 2026, and the company expects both facilities will be undrawn
at close. Moody's will withdraw all the existing ratings of SIWF
Holdings, Inc. including the B2 CFR upon the close of the
transaction and the repayment of its existing debt obligations.
All ratings are subject to Moody's final review of the
documentation.
Assignments:
Issuer: SWF Holdings I Corp.
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Gtd Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
Gtd Senior Secured Multi Currency Revolving Credit Facility,
Assigned B2 (LGD3)
Outlook Actions:
Issuer: SWF Holdings I Corp.
Outlook, Assigned Stable
RATINGS RATIONALE
Springs' B3 CFR broadly reflects it high financial leverage pro
forma for the LBO with debt/EBITDA at 7.0x for the last twelve
months period (LTM) ending July 3, 2021, up from about 3.6x
pre-LBO. Demand for the company's products has been very high over
the past year, benefiting from increased consumer spending in home
improvement, and the EBIT margin has expanded about 400 basis
points year-to-date through the second quarter of 2021 benefitting
from positive pricing actions, favorable mix, and manufacturing
efficiencies and costs savings initiatives. Moody's projects
debt/EBITDA leverage will increase to the mid-to-high 7x range at
the end of 2021 as the company faces tough comps relative to very
strong results during the second half last year, and subsequently
improve to around 7.0x in 2022 primarily from earnings growth
supported by stable revenues and continued margin expansion. The
company is exposed to cyclical downturns given the discretionary
nature of its products, and a prolonged period of high unemployment
or weak economic conditions will negatively affect the company's
operating results. Springs has customer concentration with two
national retailers accounting for approximately a quarter of
revenue, and the company's direct competitor is considerably larger
with global scale, which creates the potential for market share
volatility.
The credit profile also reflects Springs strong position in the
window coverings market, supported by a broad product portfolio and
ability to execute quick order turnaround times. The company has
good channel diversification and has long-standing relationships
with well-recognized retailers. Moody's expects continued good
consumer demand for the company's products over the next 12-18
months. Moody's also anticipates some of the elevated consumer
spending on home products to gradually shift toward other spending
such as travel as the effects of the coronavirus moderate, but to a
level that still supports Springs' leverage remaining within the
projected range. Springs' relatively high EBIT margin supports good
free cash flow generation and provides financial flexibility to
fund growth investments as well as accelerate deleveraging through
optional debt repayment. Springs' very good liquidity reflects
Moody's expectations for good annual free cash flow generation in
the $110-$120 million range over the next 12-18 months, its access
to undrawn combined $275 million revolving facilities due 2026, and
the lack of meaningful near term maturities until the revolving
facilities expire.
Environmental considerations primarily relate to factors such as
responsible sourcing and manufacturing that help protect Springs'
strong brand image and good customer relationships.
Governance risk factors primarily relate to the company's
aggressive financial policies under private equity ownership,
including high financial leverage, and the inherent risk of
shareholder friendly activities such as debt funded dividend
distributions.
The B2 rating on the company's proposed first lien credit
facilities, consisting of a $125 million first lien revolver due
2026 and a $1,625 million first lien term loan due 2028, is one
notch above the B3 CFR. The differential reflects the facilities'
effective priority relative to the company's unsecured debt and
non-debt obligations, particularly the anticipated additional
unsecured debt that the company will be issuing in the near future
as part of the total acquisition financing, as well as the
facilities' weaker collateral coverage relative to the much smaller
$150 million ABL revolving (unrated) due 2026.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectations that continued
good consumer demand for the company's products will support stable
revenue and earnings over the next 12-18 months, resulting in good
annual free cash flow generation in the $110-$120 million range.
The stable outlook also reflects Moody's expectations that the
company will maintain at least good liquidity.
The ratings could be upgraded if the company consistently reports
meaningful positive free cash flows while benefitting from organic
revenue growth and EBITDA margin expansion, and debt/EBITDA is
sustained below 6.0x. A ratings upgrade would also require the
company to maintain at least good liquidity and balanced financial
policies that support credit metrics at the above levels.
The ratings could be downgraded if the company's operating results
deteriorate, highlighted by revenue declines or weakness in the
EBITDA margin, or if free cash flow is weak or negative. Ratings
could also be downgraded if liquidity meaningfully deteriorates,
the company completes a sizable debt-financed acquisition or
shareholder distribution, or EBITA/interest is below 1.0x.
As proposed, the new first lien credit facilities are expected to
provide covenant flexibility that if utilized could negatively
impact creditors. Notable terms include the following: incremental
debt capacity up to the sum of the greater of a fixed amount and a
grower basket, plus unlimited amounts subject to a leverage ratio
incurrence test (if pari passu secured). A fixed amount may be
incurred with an earlier maturity date than the initial term loan.
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.
There are no express "blocker" provisions which prohibit the
transfer of specified assets to unrestricted subsidiaries; such
transfers are permitted subject to carve-out capacity and other
conditions. There are no express protective provisions prohibiting
an up-tiering transaction. The above are proposed terms and the
final terms of the credit agreement can be materially different.
Headquartered in Middleton, Wisconsin, Springs Windows designs and
manufactures window coverings. Pro forma for the proposed $3.4
billion LBO, the company is owned by Clearlake Capital Group, L.P.
The company reported revenue of approximately $1.27 billion for the
last twelve months period ending July 3, 2021.
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
TAILWIND SMITH: S&P Affirms 'B-' ICR on Stronger First Half
-----------------------------------------------------------
S&P Global Ratings affirmed all its ratings on U.S.-based
piping-system components and valves distributor Tailwind Smith
Cooper Holding Corp., including the 'B-' issuer credit rating, and
revised the outlook to stable from negative.
The stable outlook reflects S&P's expectation that S&P Global
Ratings-adjusted debt to EBITDA will remain between 7x and 8x
through 2022.
A broad-based end-market recovery in 2021 should increase revenue
and profit for Tailwind and allow for further modest leverage
reduction. S&P said, "Tailwind's performance through the
recessionary environment of 2020 was like our forecast, with a
revenue decline of about 18% and margin degradation despite
cost-cutting actions. Leverage reached 11x through the first
quarter, and we expect sequential recovery in all end markets to
help drive leverage to about 8x by the end of 2021 and in the
low-7x area in 2022. Supply chain disruptions, in which we believe
sales trends late in 2021 will mirror those from the first half,
will partially constrain demand rebound."
S&P said, "We expect some margin compression in 2021 because of
cost inflation, supply chain disruptions, and the return of some
discretionary costs. Despite solid volume growth over the past 12
months, we expect an increasing cost environment could compress
Tailwind's EBITDA margins up to 100 basis points in the second
half. To combat the impact of rising costs, Tailwind is increasing
prices, but there is a lag in passing them on to customers. In
addition, like with other industrial manufacturers, supply chain
disruptions may constrain growth over the next few quarters.
"Despite the ongoing margin pressure, we forecast Tailwind's EBITDA
margins to improve toward 17% from 14% in 2021 as the company
benefits from operating leverage and acquisition-related costs fall
off.
"We expect Tailwind will generate positive free cash flow and
maintain adequate liquidity throughout the forecast period. As of
June 30, 2021, the company had about $14 million cash on its
balance sheet and about $81 million available under its asset-based
lending (ABL) revolving credit facility. In our opinion, the
company has managed its costs well. We anticipate it will continue
to generate moderate positive free operating cash flow over the
next 12 months.
"The stable outlook reflects our expectation that S&P Global
Ratings-adjusted debt to EBITDA will remain between 7x and 8x
through 2022. Our forecast assumes operating performance rebounds
as weaker COVID-19 pandemic-induced quarters are lapped,
acquisitions are integrated, and the company benefits from
manufacturing plant consolidation to optimize distribution network
and improve operating margins."
S&P could lower its rating on Tailwind if it views its capital
structure as unsustainable. This could occur if:
-- Reduced demand for its products weakens its operating
performance materially from our expectations, keeping leverage
above 9x with limited prospects for improvement;
-- Operating performance deteriorates such that its free cash
generation is limited, which would constrain liquidity while
leverage remains elevated; or
-- Diminishing liquidity results in reliance on the ABL facility
to fund operations.
S&P could raise its rating on Tailwind if:
-- The rebound in the company's end markets persists and we expect
a restoration of operating trends to support sustainable positive
free cash flow and sufficient liquidity; and
-- S&P expects the company to maintain adjusted leverage
consistently below 6.5x, including acquisitions or shareholder
returns.
TEMPUR SEALY: Moody's Hikes CFR to Ba1 & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service upgraded Tempur Sealy International
Inc.'s Corporate Family Rating to Ba1 from Ba3, Probability of
Default rating to Ba1-PD from Ba3-PD, and senior unsecured debt
instrument rating to Ba2 from B1. The Speculative Grade Liquidity
rating remains at SGL-1. The outlook is stable.
The rating upgrade reflects Tempur Sealy's continued strong
operating performance and low financial leverage that Moody's
expects will persist based on the company's reduced leverage
target. Mattress demand will remain robust over the next 12 to 18
months as a result of the improving US and European macroeconomic
environment, persistent strong US housing activity, and continued
disruptions to travel and leisure caused by the coronavirus
outbreak. Additionally, the upgrade reflets Tempur Sealy's much
improved market position, recently taking the top spot as the
largest US and global mattress company. Moody's believes the
majority of Tempur Sealy's recent market share gains are permanent
as they are related to its expanding customer base through its
rekindled relationship with Mattress Firm and the acquisition of UK
retailer, Dreams. Additionally, the company's focus on expansion in
manufacturing and distribution will better position the company to
service its customer base. Moody's expects that higher input costs
will persist through 2021 and possibly into 2022, but that the
company will be able to offset these increases with pricing actions
and accelerated efficiencies gained during the coronavirus
shutdowns.
Moody's expects that Tempur Sealy will continue to grow organic
sales by 2%-3% over the next 12 to 18 months and maintain strong
Moody's-adjusted EBITDA margins of around 22% resulting in strong
annual free cash flow of around $500 million to $550 million. The
company plans to primarily use cash towards continued investment in
its businesses and to repurchase about 6% of its shares in 2021 and
3% thereafter. However, given the cyclicality of mattress
purchases, Moody's expects management to adjust these priorities in
the event that operating performance weakens. Historically the
company has engaged in large share repurchases, but has adjusted
these levels during economic weakness and uncertainty. The
company's stated financial policy of a leverage target of 2.0x to
3.0x net debt to EBITDA (company calculated, 1.44x as of June 30,
2021) was lowered from 3.0x to 4.0x in recent years and signals
that it will comfortably manage leverage at a low level. Over the
next 12-18 months, Moody's expects Tempur Sealy will conservatively
maintain leverage at the lower end of the 2.0x to 3.0x range.
The SGL-1 Speculative Grade Liquidity reflects Tempur Sealy's very
good liquidity that is supported by $58 million of cash as of June
30, 2021 and access to a $725 million revolving credit facility
that expires in 2024, of which $629 million was available for
borrowings. Liquidity is also enhanced by the company's strong
annual free cash flows.
The stable outlook reflects Moody's expectation that the mattress
industry will remain steady and Tempur Sealy will maintain a good
market position and operating performance over the next 12-18
months including annual free cash flow exceeding $400 million. The
outlook also reflects Moody's view that the company will continue
to demonstrate a disciplined financial policy and manage its
leverage at the lower end of its target.
The following ratings/assessments are affected by the action:
Ratings Upgraded:
Issuer: Tempur Sealy International Inc.
Corporate Family Rating, Upgraded to Ba1 from Ba3
Probability of Default Rating, Upgraded to Ba1-PD from Ba3-PD
GTD Senior Unsecured Global Notes, Upgraded to Ba2 (LGD5) from B1
(LGD5)
Outlook Actions:
Issuer: Tempur Sealy International Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
Tempur Sealy's credit profile (Ba1 CFR) reflects the company's
leading market position, brand strength, product innovation,
breadth of products in varying pricing points, and diverse
omnichannel approach. Tempur's reduced leverage target and strong
free cash flow provide good flexibility to reinvest in growing the
business including through acquisitions. The company also maintains
very good liquidity. The credit profile also incorporates the
company's discretionary nature of products, and sensitivity to
changes in macroeconomic conditions and consumer spending. Tempur
Sealy's credit profile is constrained by its sensitivity to
economic cycles.
Tempur Sealy is moderately exposed to environmental, social and
governance (ESG) risks. The company uses, transports, and stores
chemicals in its foam manufacturing process and also utilizes other
commodities, water, and energy. A failure to adhere to
environmental regulations and safe practices could result in
financial penalties and remediation costs. From a governance
standpoint, Tempur Sealy's share repurchases are at times
aggressively financed with debt but there is flexibility to pull
back on share buybacks when operating pressures increase, as it did
in early 2020. Moody's also views corporate governance as improving
and a key driver to the ratings given the transition by management
over the last two years to a more conservative leverage target of
2.0x-3.0x debt-to-EBITDA. The company commenced a quarterly
dividend in Q1 2021 at a manageable level of 10%-15% of net
earnings. The majority of Tempur Sealy's board members are
independent directors and have extensive consumer product
experience. But the Chairman of the Board is also the CEO. Tempur
Sealy is a widely held public company.
The coronavirus outbreak and the government measures put in place
to contain it continue to disrupt economies and credit markets
across sectors and regions. Although an economic recovery is
underway, it is tenuous, and its continuation will be closely tied
to containment of the virus. As a result, there is uncertainty
around Moody's forecasts. Moody's regards the coronavirus outbreak
as a social risk under its ESG framework, given the substantial
implications for public health and safety. The consumer durables
industry is one of the sectors most meaningfully affected by the
coronavirus because of exposure to discretionary spending. After
initial sales declines in part related to temporary production
pullbacks, demand for mattress increased meaningfully because
consumers spent a higher share of income on home-related products.
A return of some spending away from the home could present a sales
headwind but Moody's expects a strong housing market and low
interest rates to sustain good mattress demand for the next
12-to-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could be upgraded if Tempur Sealy's operating performance
materially improves and leverage remains at a low level for a
sustained period. Specifically, ratings could be upgraded if
Moody's-adjusted debt to EBITDA is sustained below 2.0x and the
company generates consistent strong free cash flow. The company
would also need to maintain financial policies that sustain low
leverage and a conservative approach to balance sheet management
cash usage.
Ratings could be downgraded if liquidity deteriorates, the company
adopts a more aggressive financial policy, operating performance
weakens, or if leverage increases. A significant drop in consumer
confidence or any material disruption in the housing market could
also lead to a downgrade. Moody's-adjusted Debt to EBITDA above
3.0x or free cash flow-to-debt below 20% could result in a
downgrade.
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
Tempur Sealy International Inc. develops, manufactures, markets,
and sells bedding products, including mattresses, foundations and
adjustable bases, and other products such as pillows and
accessories. Revenue for the publicly-traded company approximates
$4.4 billion for the last-twelve-month period ended June 30, 2021.
TLASJ LLC: Unsecured Creditors Have 2 Options in Reorganizing Plan
------------------------------------------------------------------
TLASJ, LLC, submitted a Third Amended Disclosure Statement for the
Third Amended Plan of Reorganization dated September 7, 2021.
The Plan is a Plan of Reorganization. Debtor owns approximately
four acres of unimproved land located at 1300 McKies in the City of
Austin, Travis County, Texas (the "Property"). The Debtor proposes
to pay off the Cambia secured debt of $6,750,000.00, taxes and a
return to the unsecured creditors by the Effective Date. Proceeds
from a refinance and new equity contributions in at least the
amount of $200,000.00 will pay all the creditors according to the
Plan.
The Plan proposes to pay Allowed Secured Creditors in full and to
pay Unsecured Creditors a return on the Effective Date and then
convert some of the unsecured debt to equity under the Plan. Four
Arrows will receive an equity position in the Reorganized Debtor
for obtaining the refinance funds and providing the cash for the
distributions on the Effective Date.
The Debtor's assets consist of the Property, with a scheduled value
of $7,000,000.00. Once developed the Property will be worth 3 to 4
times the current value of the Property. The Debtor is still
investigating potential claims against Cambia Capital.
The Debtor scheduled aggregate liabilities in the amount of
$7,334,806.00 as of the Petition Date. The claims of Cambia
entities re Secured Claims and the largest Claims in this
bankruptcy case.
There are no current operations other than arranging the financing
for the construction of the project. Such financing will be
provided to all Claimants by no later than 10 days prior to the
Confirmation hearing. Debtor is working on financing with Corvest
and other lenders.
The Debtor's projections of Plan payments will be provided along
with the arranged financing for the project. The Plan will be
funded by the Debtor at a closing whereupon the new construction
financing and equity pays off all the secured, impaired, and
unsecured creditors As called for in the Plan. Future management of
the Debtor shall consist of the Debtor's Managing Member and
staff.
As of the Petition Date, the Debtor owned real property consisting
of the Property, the value of which is scheduled by the Debtor as
$7,000,000.00 as is, but if completed the value will increase to
the projected $20-25M range. The Debtor believes that in a Chapter
7 the Property would yield net proceeds of no more $5,000,000.00,
in a forced liquidation sale such as a foreclosure under Texas law.
The Debtor believes its has claims against Cambia which are being
investigated.
This Plan pays 100% to Allowed Secured Claims with lawful and legal
interest under Texas law and a return to the Unsecured Creditors.
In contrast, a Chapter 7 liquidation would result in no recovery to
Unsecured Claims.
Class 1 shall consist of the Allowed Secured Claims of the Travis
County Tax Assessor. Class 1 Claims shall be paid will be paid in
full on the Effective Date, with interest accruing from the
Petition Date at the rate of 12% per annum. This Claimant shall
retain any valid liens it had as of the Petition Date until paid in
full. This Class is not Impaired.
The Class 2 Allowed Secured Claim of the Cambia Entities shall be
paid $6,750,000 cash no later than October 1, 2021. The Debtor may
extend the payment of the $6,750,000 up to October 31, 2021 by the
additional payment of $2,000.00 per day. Should the Debtor not pay
the $6,750,000 by October 31, 2021, the Cambia Entities may
exercise their default remedies pursuant to their pre-Petition loan
documents. The Cambia Entities shall retain their liens until paid
and then shall provide a release of all liens upon full payment of
the $6,750,000 for all their claims. In exchange, the Debtor will
release all its claims against the Cambia Entities.
The Class 3 Allowed Secured Claim of the U.S. Small Business
Association shall be paid 25% of its Allowed Claim on the Effective
Date. The balance of its Allowed Claim shall be treated as a Class
5 Unsecured Claim. U.S. Small Business Association shall be paid
and shall retain its liens until paid as provided in this Class 3
of the Plan and then shall provide a release of all liens.
Class 4 shall consist of Allowed M&M Lien Claims. Class 4 Claims
shall be paid 25% of their Allowed Claims on the Effective Date.
The balance of its Allowed Claim shall be treated as A Class 5
Unsecured Claim. These Claims are Impaired.
Class 5 shall consist of Allowed Unsecured Claims that shall have
the option of receiving 10% of their Allowed Claims in cash on the
Effective Date OR 5% of their Allowed Claims in cash on the
Effective Date and their pro-rata share of 25% of the common equity
stock in the Debtor under this Plan. These Interests are Impaired.
Class 6 shall consist of the Allowed Claims of Insiders of the
Debtor. Class 6 Claims shall receive nothing under the Plan. These
Claims are Impaired.
Class 7 shall consist of Allowed Common Equity Interests in the
Debtor. Class 7 Interests shall be cancelled under the Plan. The
new shares shall be issued as follows. The common equity interests
shall be allocated 25% to the Class 5 Unsecured Claims and 75% to
Four Arrows in exchange for the new value it is contributing under
this Plan. The new value contribution is estimated at $250,000. Any
creditor may further elect to participate as an equity holder by
contributing their own new value to this Plan on the same basis as
Four Arrows. Each dollar of new value shall be equal to .0004% of
the 75%. For every $10,000 of new value that is 4% of the $250,000.
These Interests are Impaired.
The Plan is a Plan of Reorganization. Debtor owns approximately
four acres of unimproved land located at 1300 McKies in the City of
Austin, Travis County, Texas (the "Property"). Under the Plan, the
Debtor intends to refinance the secured debt on the Property in
order to develop the Property. The proceeds from the refinance
together with approximately $250,000.00 in new equity contributions
from Four Arrows will pay the cash distributions to creditors
according to the Plan.
The funding will be consummated and all creditors will be paid on
the Effective Date. No future payments are anticipated to be paid
by the Debtor after the Effective Date. Upon the Effective Date,
all property of the Debtor and its Estate shall vest in the
Reorganized Debtor, subject to the Allowed Secured Claims.
A full-text copy of the Third Amended Disclosure Statement dated
September 7, 2021, is available at https://bit.ly/2Vnm4eE from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Joyce W. Lindauer
Kerry S. Alleyne
Guy H. Holman
Joyce W. Lindauer Attorney, PLLC
1412 Main Street, Suite 500
Dallas, Texas 75202
Telephone: (972) 503-4033
Facsimile: (972) 503-4034
About TLASJ LLC
TLASJ, LLC sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. W.D. Texas Case No. 21-10248) on April 5, 2021. At
the time of the filing, the Debtor disclosed total assets of up to
$50 million and total liabilities of up to $10 million. Judge
Christopher H. Mott oversees the case. Joyce W. Lindauer Attorney,
PLLC is the Debtor's legal counsel.
TPT GLOBAL: Entertainment Unit Expands Sales of Documentaries
-------------------------------------------------------------
TPT Global Tech, Inc.'s subsidiary Blue Collar Productions --
www.bluecollar.com -- the entertainment division of TPT Global Tech
based in Los Angeles, has completed sales in worldwide territories
for its documentary "The Air of The Time." Endeavor Content is
handling worldwide sales for the project. Blue Collar is also in
development on an untitled confidential Docu-Series at Amazon
Studios; as well as developing documentaries on Rosa Parks; The
World Famous Record Plant Recording Studio; and the scripted
long-form films, "The Price of Fame" and "The Pierre."
Mark Rowen, CEO of Blue Collar is excited about the growth of the
documentary and television division saying, "As the market demand
for new content across all OTT platforms continues to grow, our
current projects continue to position us for a strong push into
television and documentaries that started with the "A Night At The
Movies' series we worked on for Turner Classic Movies; and the
scripted limited series at Hulu, "Looking For Alaska" where I was a
producer. Our current projects are further examples of
high-quality content that is extremely commercially viable in
today's marketplace."
"Blue Collar's ability to create content aligns perfectly with TPT
Global Tech's focus on using technology to enhance the viewer
experience by creating targeted OTT content, utilizing innovative
advertising solutions, and using the data received to continually
improve our products," said Stephen Thomas, president, and CEO, TPT
Global Tech. "Through the launch of our upcoming consumer-facing
content deliver Super App that we plan on announcing later this
Fall, we continue to fuel TPT Global's growth and will continue to
enhance our ability to deliver unique and high-performing content
while generating ad revenues and subscriber fees in a way no one
else has been able to do."
TPT Global Tech maintains its commitment to invest in innovative,
forward-thinking technology and content companies.
About TPT Global Tech
TPT Global Tech Inc. (OTC:TPTW) based in San Diego, California, is
a technology-based company with divisions providing
telecommunications, medical technology and product distribution,
media content for domestic and international syndication as well as
echnology solutions. TPT Global Tech offers Software as a Service
(SaaS), Technology Platform as a Service (PAAS), Cloud-based
Unified Communication as a Service (UCaaS). It offers
carrier-grade performance and support for businesses over its
private IP MPLS fiber and wireless network in the United States.
TPT's cloud-based UCaaS services allow businesses of any size to
enjoy all the latest voice, data, media and collaboration features
in today's global technology markets. TPT Global Tech also operates
as a Master Distributor for Nationwide Mobile Virtual Network
Operators (MVNO) and Independent Sales Organization (ISO) as a
Master Distributor for Pre-Paid Cell phone services, Mobile phones
Cell phone Accessories and Global Roaming Cell phones.
TPT Global reported a net loss attributable to the Company's
shareholders of $8.07 million for the year ended Dec. 31, 2020,
compared to a net loss attributable to the company's shareholders
of $14.03 million for the year ended Dec. 31, 2019. As of June 30,
2021, the Company had $12.49 million in total assets, $39.36
million in total liabilities, $5.03 million in total mezzanine
equity, and a total stockholders' deficit of $31.90 million.
Draper, Utah-based Sadler, Gibb & Associates, LLC, the Company's
auditor since 2016, issued a "going concern" qualification in its
report dated April 15, 2021, citing that the Company has suffered
recurring losses from operations and has insufficient cash flows
from operations to support working capital requirements. These
factors raise substantial doubt about the Company's ability to
continue as a going concern.
TPT GLOBAL: HK Unit Inks Telecom Services Contract
--------------------------------------------------
TPT Global Tech, Inc.'s Hong Kong subsidiary, TPT Asia, has signed
an initial US$240K per year Telecommunications Services contract
christening the division.
The contract covers a Submarine Data transport system that will
provide 200G of data service between Hong Kong and Singapore. The
Hong Kong Fiber contract will be the first of what the company
anticipates will be a series of contracts and was delayed due to
the global pandemic. The company will continue to work to secure
additional work to expand its Submarine Fiber Optic
telecommunications services throughout the region.
"We are very pleased that TPT Asia is now generating revenue. I
know it has been very difficult for our Hong Kong team to gain
traction during these trying times due to the pandemic. It's great
to see our domestic and international divisions gaining momentum as
we manage our way through this pandemic. Great job team, keep up
the good work," said Stephen Thomas, president and CEO, TPT Global
Tech.
About TPT Global Tech
TPT Global Tech Inc. (OTC:TPTW) based in San Diego, California, is
a technology-based company with divisions providing
telecommunications, medical technology and product distribution,
media content for domestic and international syndication as well as
echnology solutions. TPT Global Tech offers Software as a Service
(SaaS), Technology Platform as a Service (PAAS), Cloud-based
Unified Communication as a Service (UCaaS). It offers
carrier-grade performance and support for businesses over its
private IP MPLS fiber and wireless network in the United States.
TPT's cloud-based UCaaS services allow businesses of any size to
enjoy all the latest voice, data, media and collaboration features
in today's global technology markets. TPT Global Tech also operates
as a Master Distributor for Nationwide Mobile Virtual Network
Operators (MVNO) and Independent Sales Organization (ISO) as a
Master Distributor for Pre-Paid Cell phone services, Mobile phones
Cell phone Accessories and Global Roaming Cell phones.
TPT Global reported a net loss attributable to the Company's
shareholders of $8.07 million for the year ended Dec. 31, 2020,
compared to a net loss attributable to the company's shareholders
of $14.03 million for the year ended Dec. 31, 2019. As of June 30,
2021, the Company had $12.49 million in total assets, $39.36
million in total liabilities, $5.03 million in total mezzanine
equity, and a total stockholders' deficit of $31.90 million.
Draper, Utah-based Sadler, Gibb & Associates, LLC, the Company's
auditor since 2016, issued a "going concern" qualification in its
report dated April 15, 2021, citing that the Company has suffered
recurring losses from operations and has insufficient cash flows
from operations to support working capital requirements. These
factors raise substantial doubt about the Company's ability to
continue as a going concern.
TPT GLOBAL: Major General John Wharton Joins Board of Directors
---------------------------------------------------------------
TPT Global Tech Inc. reported that Major General John F. Wharton,
former Commanding General of U.S Army Research, Development and
Engineering Command who has been leading the company's Global
Defense Division, will be joining the parent company Board of
Directors.
General Wharton has served the Nation for more than three decades
and has extensive experience in leadership, technology,
acquisition, and logistics. He is currently a public and private
sector advisor to numerous industries, universities, and
governments. In his last military assignment, he was responsible
for 75% ($6.2 billion) of the Army's annual R&D budget and led more
than 13,000 scientists, engineers and support personnel.
Major General Wharton, who has been providing guidance and
expertise for TPT's Global Defense Division, will take on an
additional role as a member of the Board of Directors. He has
already been actively helping the company across internal industry
verticals in his capacity as a member of the Global Tech Advisory
Board. His work with the company's telecoms, satellite, 5G and
radar technologies units as well as his proactive involvement and
contacts have resulted in expanded opportunities for domestic and
international government contracts across geographies ranging from
Europe, the Middle East, India, Africa and the Caribbean posturing
TPT for future growth.
In his short period of time with the company, General Wharton's
involvement has substantially aided the business. His involvement
includes a wide range of expertise, from assistance in registering
businesses to be able to work with the DOD and US Government
understanding business processes, introduction to innovation
accelerators, business strategy consulting, and submission and
on-going technology transitions and commercialization.
"I joined the TPT Global Tech team because of my close personal
relationship with the CEO, Stephen J. Thomas, III and the
tremendous upside of the company. As a member of the Board of
Directors, I plan on doing more to influence the future direction
of the business. It's a role I look forward to very much," said
the General.
"We initially established our Defense Division because we knew the
strengths we had obtained with Major General Wharton joining our
team. His experience, knowledge and government contacts are
already paying substantial dividends," said Stephen J. Thomas, III,
CEO of TPT Global Tech, Inc. "With the appointment to serve on our
Board, we will further benefit from his expertise and leadership
and establish him as a more integral part of our future. I am
pleased he is taking on an even larger role with TPT."
About TPT Global Tech
TPT Global Tech Inc. (OTC:TPTW) based in San Diego, California, is
a technology-based company with divisions providing
telecommunications, medical technology and product distribution,
media content for domestic and international syndication as well as
echnology solutions. TPT Global Tech offers Software as a Service
(SaaS), Technology Platform as a Service (PAAS), Cloud-based
Unified Communication as a Service (UCaaS). It offers
carrier-grade performance and support for businesses over its
private IP MPLS fiber and wireless network in the United States.
TPT's cloud-based UCaaS services allow businesses of any size to
enjoy all the latest voice, data, media and collaboration features
in today's global technology markets. TPT Global Tech also operates
as a Master Distributor for Nationwide Mobile Virtual Network
Operators (MVNO) and Independent Sales Organization (ISO) as a
Master Distributor for Pre-Paid Cell phone services, Mobile phones
Cell phone Accessories and Global Roaming Cell phones.
TPT Global reported a net loss attributable to the Company's
shareholders of $8.07 million for the year ended Dec. 31, 2020,
compared to a net loss attributable to the company's shareholders
of $14.03 million for the year ended Dec. 31, 2019. As of June 30,
2021, the Company had $12.49 million in total assets, $39.36
million in total liabilities, $5.03 million in total mezzanine
equity, and a total stockholders' deficit of $31.90 million.
Draper, Utah-based Sadler, Gibb & Associates, LLC, the Company's
auditor since 2016, issued a "going concern" qualification in its
report dated April 15, 2021, citing that the Company has suffered
recurring losses from operations and has insufficient cash flows
from operations to support working capital requirements. These
factors raise substantial doubt about the Company's ability to
continue as a going concern.
U.S. STEEL: Egan-Jones Hikes Sr. Unsecured Debt Ratings to B+
-------------------------------------------------------------
Egan-Jones Ratings Company, on September 1, 2021, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by United States Steel Corporation to B+ from CCC+.
Headquartered in Pittsburgh, Pennsylvania, United States Steel
Corporation operates as an integrated steel producer.
VIRTUS INVESTMENT: S&P Raises ICR to 'BB+' on Asset Growth
----------------------------------------------------------
S&P Global Ratings upgraded Virtus Investment Partners Inc. to
'BB+' from 'BB'. S&P also assigned its 'BB+' rating to its proposed
term loan B with a recovery rating of '3' (60%), indicating
meaningful recovery in the event of a default. At the same time,
S&P revised the outlook to stable from positive.
S&Ps said, "We have reassessed our view of Virtus' business and
competitive position as a result of acquisitions and positive net
flows over the past year. Its total AUM has grown to $178.6 billion
as of June 30, 2021, from $108.4 billion the same time in 2020--a
65% increase year-over-year. The company has had positive net
inflows since second-quarter 2020, cumulatively adding $7.7 billion
over the trailing 12 months. The company's acquisitions of Stone
Harbor Investment Partners and Westchester Capital Management have
yet to close, but will further bolster AUM. The acquisitions have
significantly diversified Virtus' product offerings, which, in our
opinion, provide a catalyst for continued net inflows. We think
Virtus has enhanced its position within the marketplace.
"The company is now larger than some of its competitors, including
Victory Capital Holdings and Brightsphere Investment Partners.
Given Virtus' growth trajectory, we believe it could close the gap
with other larger asset managers, such as Janus Henderson.
"Our calculation of leverage is little changed. Although we now net
Virtus' accessible cash in our calculation of leverage (i.e., net
debt versus gross debt), each of the acquisitions have contingent
considerations. We view each of these considerations as debt,
albeit a soft form of leverage. We expect for the company to
operate with net debt to EBITDA of 2.0x-3.0x over the next year. At
the same time, Virtus is proposing to issue a new $275 million term
loan B and a $170 million revolver due in September 2028 and 2026,
respectively. In our view, this shores up any near-term concerns
about the capital structure and provides the company flexibility to
continue to pursue M&A.
"The stable outlook reflects our expectation that Virtus will
continue to grow AUM, both organically and through M&A, while
maintaining leverage as measured through net debt to EBITDA of
2.0x-3.0x.
"If leverage rises above 3.0x, we could take a negative rating
action. A highly levered acquisition could likewise lead to a
negative rating action, as could deterioration in operating
performance (e.g., negative net outflows or worsening investment
performance).
"An upgrade is contingent on leverage remaining comfortably below
2.0x. We also expect to see solid investment performance with
positive net inflows."
Recovery Analysis
Simplified waterfall
-- Emergence EBITDA: $53.8 million
-- Multiple: 5.0x
-- Gross recovery value: $269.1 million
-- Net recovery value for waterfall after 5% administrative
expenses: $255.7 million
-- Obligor/nonobligor valuation split: 100%/0%
-- Estimated priority claims: None
-- Remaining recovery value: $255.7 million
-- Estimated first-lien claim: $414.9 million
-- Value available for first-lien claim: $255.7 million
-- Recovery range: 60%
WALNUT SYCAMORE: S&P Assigns 'BB' ICR, Outlook Stable
-----------------------------------------------------
S&P Global Ratings assigned a 'BB' issuer credit rating to Walnut
Sycamore Holdings LLC with a stable outlook, and a 'BB+' issue
rating to the company's proposed senior secured credit facility,
consisting of a 5-year $750 million revolving credit facility
(undrawn), 5-year $1 billion term loan A-1, 7-year $750 million
term loan A-2, and seven-year $750 million term loan B. The
recovery rating assigned to this facility is '2', indicating its
expectations for substantial recovery (80% rounded estimated) in
the event of a payment default.
The stable outlook reflects S&P's expectation for
above-historical-average EBITDA margins in the 13%-15% range over
the next year, given the currently favorable chicken pricing that
should enable the company to sustain debt to EBITDA near or below
2.5x.
Cargill Inc. and Continental Grain Corp. (with minority partner
Healthcare of Ontario Pension Plan) have formed a 50/50 joint
venture to acquire Sanderson Farms Inc., merge it with Wayne Farms
Inc. (currently majority owned by Continental Grain), and create
the third-largest U.S. poultry producer in a transaction valued at
about $7 billion, to be held by Walnut Sycamore Holdings LLC
(WSH).
The transaction will be capitalized with 64% equity and 36% debt,
resulting in projected pro forma debt to EBITDA at close of about
2.3x, which may modestly increase in subsequent years given S&P's
expectations that future debt repayment will partially offset the
impact of lower margins as currently strong chicken prices
normalize.
S&P said, "The company will target a low-2x debt-to-EBITDA ratio.
We estimate pro forma leverage at transaction close will be 2.3x,
consistent with the company's low-2x leverage target. We expect the
company to maintain leverage near or below 2.5x over the next year
as it applies discretionary cash flow (DCF) to debt repayment,
partially offsetting modestly declining EBITDA in our base-case
projections primarily because of declining chicken prices. Still,
we are projecting above-historical-average EBITDA margins in the
13%-15% range over the next 12-18 months, which should enable the
company to generate annual DCF of more than $150 million. This DCF
projection assumes dividend payments based on the company's planned
payout ratio of 40% of free operating cash flow (FOCF), excluding
capital expenditures for synergy capture. We do not anticipate the
company will consider acquisitions over the next 12-24 months, and
instead expect it to prioritize integrating the two companies. In
addition, if the company were to face a weaker-than-expected
earnings environment, we would expect it to reduce capital
expenditure (capex) and/or dividends to maintain leverage near its
stated targets. Based on our DCF projections and WSH's expressed
commitment to debt repayment, the company should be able to sustain
leverage near or below such targets.
"We factor cash flow ratio volatility in our financial risk profile
assessment given the history of earnings volatility in the U.S.
poultry industry and the limited track record of the newly merged
company. Although the company's low-2x leverage profile could
support a more favorable financial risk profile, we factor ratio
volatility when assessing our projected ratios based on the
industry's history of significant EBITDA and cash flow volatility.
Based on industry peers', as well as Wayne Farms' and Sanderson
Farms' historical performance, annual EBITDA can decline by well
over 20% year-over-year during weaker earnings cycles. We estimate
this magnitude of EBITDA volatility could result in WSH's debt to
EBITDA weakening above 3x temporarily during weaker earnings
cycles. Moreover, we have a limited track record with the company
and are uncertain how effectively it can adapt its pricing and use
other cost levers to stabilize earnings in a weaker earning cycle.
Therefore, we consider the company's debt leverage profile to be
higher risk than otherwise suggested by our base-case
projections."
The company will become the third-largest poultry producer in the
U.S., albeit exclusively concentrated in chicken with a product mix
that is more skewed to fresh and whole bird offerings. The
combination of Wayne Farms and Sanderson Farms will result in pro
forma sales of more than $7 billion, which makes it the
third-largest poultry producer in the U.S. behind Tyson Foods
(BBB+/Stable) and Pilgrim's Pride Corp. (BB+/Positive),
respectively. This market position coupled with the two companies'
long-tenured retail and foodservice customer relationships will
improve the combined company's overall competitive advantage by
enabling it to leverage a larger manufacturing footprint to meet
customer needs. The company benefits from some channel
diversification between foodservice, retail, and industrial food
manufacturers as well as some product diversification between fresh
and whole bird offerings, and to a lesser degree exports and
prepared chicken offerings. Still, the company remains largely
regional in terms of production footprint, and in S&P's opinion
likely will not materially change its product mix toward
higher-margin and more stable prepared offerings. Moreover,
earnings volatility remains a key industry risk factor that tempers
the company's overall competitive position. The company also is
concentrated in poultry exclusively and does not have any product
or geographic diversification outside the U.S. to meaningfully
mitigate this risk. Therefore, profitability is a constraining
factor for the company's overall business risk profile assessment,
consistent with how S&P assesses other industry peers that
primarily produce one protein in one geography.
S&P said, "The current EBITDA margin outlook is favorable, which we
assume will slowly normalize closer to historical levels beyond
2021, while integration risk is an additional credit factor that
may delay future synergy capture. The company operates a vertically
integrated business model, consistent with the broader industry in
the U.S. market. The manufacturing footprint of the newly combined
entity is complementary, with little regional overlap in each
company's respective plant footprint. Although Sanderson has a
history of periodically building capacity, which can lead to
periods of underutilization and weaker pricing, we expect capacity
utilization to continue to improve and assume no future plant
expansions. Our expectation for largely unchanged industry-wide
production capacity, continued pricing strength globally for
chicken, and a rebounding foodservice sector, supports our view
that the company will be able to sustain EBITDA margins of more
than 13% over the next 12-18 months; this is moderately below the
closer to 15% margins we anticipate in the current fiscal year, but
still higher than a long-term average that is likely closer to 10%.
Although continued productivity initiatives and manufacturing
synergies that Wayne's management plans to introduce at Sanderson
could support higher margins (including implementing a more
centralized plant-level organizational structure and increasing the
mix dedicated lines to specific bird sizes), we believe integration
risk is a near-term factor given the different manufacturing
strategies of the stand-alone companies; specifically that Wayne
has focused on yield and mix efficiencies while Sanderson has
primarily focused on scale and cost efficiencies.
"The stable outlook reflects our expectation for significant margin
expansion in the current fiscal year and into the start of the next
fiscal year given the current favorable operating landscape,
including strong pricing because of tight poultry supplies
industry-wide and rebounding foodservice volumes, both of which
will offset higher feed costs. We expect the company to generate
13%-15% EBITDA margins in the current environment and sustain debt
to EBITDA near or below 2.5x.
"We could lower the ratings if the company sustains debt to EBITDA
well above 2.5x during normal industry cycles (when EBITDA margins
likely would be closer to 10%). This could occur if the newly
merged company does not cost effectively integrate and is unable to
capture its targeted cost and manufacturing synergies. We could
also downgrade the company if debt to EBITDA increases above 3.5x
during a weak industry cycle (when EBITDA margins can fall below
8%). This could occur if the company faces sustained
double-digit-percent feed-cost inflation while facing a pronounced
weak pricing cycle, including double-digit-percent price declines
across its core product offerings."
An upgrade is not likely over the next 12 months, given the
integration and execution risk of this transformational merger
between Wayne Farms and Sanderson Farms. If the company
successfully integrates the two companies, S&P could upgrade it if
it sustains debt to EBITDA in the low-2x area during normal
industry cycles and demonstrates enough cash flow stability to
maintain debt to EBITDA below 3x during weak industry cycles.
WATTSTOCK LLC: May Use SBA's Cash Collateral Thru Final Hearing
---------------------------------------------------------------
Judge Harlin DeWayne Hale of the U.S. Bankruptcy Court for the
Northern District of Texas authorized WattStock, LLC to use cash
collateral, on an interim basis, to pay these expenses:
$25,000 -- Munsch Hardt Kopf & Harr, P.C. for postpetition
retainer;
$7,856 -- Donald J. Brunswick for wages (Aug. 1 to Sept. 30,
2021);
$7,000 -- Subchapter V Trusteee for administrative reserve; and
$1,462 -- debt service to the SBA for two months.
The Debtor is authorized to use the cash collateral for the period
between August 17 and the final hearing on the cash collateral
motion scheduled for September 27, 2021, at 1:30 p.m., via WebEx.
The Court found that the U.S. Small Business Administration (SBA)
is adequately protected with respect to its allowed claim against
the Debtor for $150,000, on an interim basis only, so long as the
Debtor continues debt service under the loan documents. The SBA
shall have an automatically valid and perfected first priority
replacement lien against all property of the Debtor and its estate
to the extent of collateral diminution. The SBA asserts an
interest in substantially all of the Debtor's assets.
A copy of the agreed order is available for free at
https://bit.ly/3hbqzRe from PacerMonitor.com.
About WattStock LLC
Dallas, Texas-based WattStock, LLC sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 21-31488)
on Aug. 17, 2021, listing as much as $10 million in both assets and
liabilities. Patrick Jenevein, manager of WattStock, signed the
petition. Judge Stacey G. Jernigan oversees the case. Davor
Rukavina, Esq., at Munsch Hardt Kopf and Harr, PC is the Debtor's
legal counsel.
WB BRIDGE HOTEL: Taps Rosewood Realty Group as Real Estate Advisor
------------------------------------------------------------------
WB Bridge Hotel, LLC and 159 Broadway Member, LLC seek approval
from the U.S. Bankruptcy Court for the Southern District of New
York to hire Rosewood Realty Group as real estate advisor.
The Debtors need a real estate advisor to arrange for a joint
venture, financing or recapitalization, and to sell or otherwise
dispose of its property located at 159 Broadway, Brooklyn, N.Y.
The Debtor will pay the firm a fee equal to 2.5 percent if it is
the sole broker or 3.5 percent if there is a co-brokerage
agreement, of the aggregate amount of gross refinancing or
restructured debt, recapitalization, or joint venture investment
received or obtained.
Moreover, the firm will receive a commission of 1.5 percent if it
is the sole broker or 2 percent if there is a co-brokerage
agreement on the gross purchase price of the property, where the
successful purchaser will pay the commission as a buyer's premium.
Greg Corbin, president of Rosewood Realty Group , 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:
Greg Corbin
Rosewood Realty Group
38 East 29th Street 5th Floor
New York, NY 10016
Tel.: (212) 359-9904
Email: Greg@rosewoodrg.com
About WB Bridge Hotel
WB Bridge Hotel LLC and 159 Broadway Member LLC are the owners of a
hotel and residential tower project in Brooklyn's hip Williamsburg
neighborhood. The project covers a planned 26-story tower at 159
Broadway in Brooklyn, N.Y., that includes apartments and a 235-room
hotel across the street from the legendary Peter Luger Steakhouse.
The Debtors are affiliated with Hollywood, Fla.-based GC Realty
Advisors LLC. They are also affiliated with 85 Flatbush RHO Mezz
LLC, the owner of the Tillary Hotel Brooklyn, located at 85
Flatbush Extension, Brooklyn, N.Y.
WB Bridge Hotel and 159 Broadway Member sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 20-23288) on December 21,
2020. The Debtors were each estimated to have $10 million to $50
million in assets and liabilities.
Judge Robert D. Drain oversees the cases.
Robinson Brog Leinwand Greene Genovese & Gluck PC is the Debtors'
legal counsel.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases. The committee
tapped SilvermanAcampora, LLP as its legal counsel.
WB SUPPLY: Seeks to Employ Starz Realty as Real Estate Broker
-------------------------------------------------------------
WB Supply, LLC seeks approval from the U.S. Bankruptcy Court for
the District of Delaware to hire Starz Realty, LLC as real estate
broker.
The Debtor requires the services of a real estate broker to market
and sell its real and personal properties located at 207 S. Rex,
Forsan, Texas, and the real property located at 113 W. Gulf Ave.,
Goldsmith, Texas.
The firm will receive a 6 percent commission on the total purchase
price for each property.
Stacie Russell, a principal at Starz Realty, 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 can be reached at:
Stacie Russell
Starz Realty LLC
1221 W. University Blvd.
Odessa, TX 79764
Tel: +1 432-653-0053
About WB Supply
WB Supply, LLC is a privately held pipe and supply company based in
Pampa, Texas. Founded in 1971, WB Supply has grown to more than a
dozen locations in multiple states, including Texas, Oklahoma and
New Mexico.
WB Supply sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Case No. 21-10729) on April 20, 2021, listing as
much as $50 million in both assets and liabilities. Judge Brendan
Linehan Shannon oversees the case.
The Debtor tapped Chipman Brown Cicero & Cole, LLP as legal
counsel; Great American Global Partners, LLC as liquidation agent;
and EHI, LLC, a division of KBF CPAS LLP, as restructuring advisor.
EHI President Edward Hostmann serves as the Debtors' chief
restructuring officer. Stretto is the claims and noticing agent
and administrative advisor.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors in the Debtor's case on April 29, 2021. The
committee is represented by William A. Hazeltine, Esq.
WC 717 N HARWOOD: Taps Fishman Jackson Ronquillo as Legal Counsel
-----------------------------------------------------------------
WC 717 N Harwood Property, LLC seeks approval from the U.S.
Bankruptcy Court for the Western District of Texas to hire Fishman
Jackson Ronquillo, PLLC to serve as legal counsel in its Chapter 11
case.
The firm's services include:
(a) serving as attorneys of record for the Debtor in all
aspects;
(b) providing representation and legal advice to the Debtor
throughout the bankruptcy case;
(c) assisting the Debtor in carrying out its duties under the
Bankruptcy Code, including advising the Debtor of its legal rights;
(d) consulting with the Office of the U.S. Trustee, any
statutory committee that may be formed, and all other creditors and
parties in interest concerning the administration of the bankruptcy
case;
(e) assisting in the possible sale of the Debtor's assets;
(f) preparing legal papers and assisting the Debtor in the
preparation of its bankruptcy schedules, statements of financial
affairs and reports;
(g) assisting the Debtor in connection with formulating and
confirming a Chapter 11 plan, if necessary;
(h) assisting the Debtor in analyzing and treating the claims
of creditors;
(i) appearing before the bankruptcy court, any appellate
courts or other courts having jurisdiction over any matter
associated with the bankruptcy case; and
(j) performing all other necessary legal services.
The firm's hourly rates are as follows:
Mark. H. Ralston, Esq. $400 per hour
Attorneys $300 - $450 per hour
Paraprofessionals $135 - $175 per hour
The Debtor's affiliate, World Class Holdings, LLC, paid $26,738 to
the law firm as a retainer fee.
Mark Ralston, Esq., the firm's attorney who will be providing the
services, disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Mark H. Ralston, Esq.
Fishman Jackson Ronquillo PLLC
Three Galleria Tower
13155 Noel Road, Suite 700
Dallas, TX 75240
Tel.: (972) 419-5544
Fax: (972) 4419-5500
Email: mralston@fjrpllc.com
About WC 717 N Harwood Property
Austin, Texas-based WC 717 N Harwood Property, LLC sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D.
Texas Case No. 21-10630) on Aug. 3, 2021, listing up to $500
million in assets and up to $100 million in liabilities. Natin
Paul, authorized representative, signed the petition. Judge Tony
M. Davis oversees the case. The Debtor tapped Fishman Jackson
Ronquillo, PLLC as legal counsel.
WORLD SERVICE: Seeks to Hire Ringstad & Sander as Legal Counsel
---------------------------------------------------------------
World Service West/LA Inflight Service Company, LLC seeks approval
from the U.S. Bankruptcy Court for the Central District of
California to hire Ringstad & Sanders, LLP to serve as legal
counsel in its Chapter 11 case.
The firm's services include:
a. advising and assisting the Debtor with respect to
compliance with the requirements of the Office of the U.S.
Trustee;
b. advising the Debtor concerning the requirements of the
Bankruptcy Code and applicable rules;
c. advising the Debtor regarding matters of bankruptcy law,
including its rights and remedies with regard to its assets and
claims of creditors;
d. conferring with the Subchapter V trustee regarding the
Debtor and its financial affairs, the bankruptcy case, formulation
and confirmation of a Chapter 11 plan of reorganization, and such
other matters as the Debtor and trustee deem necessary or
appropriate;
e. representing the Debtor in any proceedings or hearings in
the bankruptcy court and, subject to separate agreement, in other
courts where the Debtor's rights under the Bankruptcy Code may be
litigated or affected;
f. conducting examinations of witnesses, claimants or adverse
parties, and preparing legal papers;
g. assisting the Debtor in the negotiation, formulation,
confirmation, and implementation of a Chapter 11 plan of
reorganization; and
h. performing other necessary legal services.
The firm will charge its normal hourly rates as follows:
Attorneys
Todd C. Ringstad $695 per hour
Nanette D. Sanders $695 per hour
William N. Burd (Of Counsel) $695 per hour
Karen Sue Naylor $595 per hour
Christopher Minier $550 per hour
Ashley M. Teesdale $495 per hour
Legal Assistants/Law Clerks
Becky Metzner $195 per hour
Arlene Martin $150 per hour
The firm received a pre-bankruptcy retainer of $95,000.
Christopher Minier, Esq., at Ringstad & Sanders, disclosed in a
court filing that his firm and its professionals are "disinterested
persons" within the meaning of Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
Todd C. Ringstad, Esq.
Christopher A. Minier, Esq.
Ringstad & Sanders, LLP
4343 Von Karman Avenue, Suite 300
Newport Beach, CA 92660
Telephone: (949) 851-7450
Facsimile: (949) 851-6926
Email: todd@ringstadlaw.com
cminier@ringstadlaw.com
About World Service West/
LA Inflight Service Company LLC
World Service West/LA Inflight Service Company, LLC provides
cleaning and janitorial services at several international airport
terminals at Los Angeles International Airport (LAX), and provides
aircraft cabin cleaning services to a number of airlines operating
international flights out of LAX.
World Service West filed its voluntary petition for Chapter 11
protection (Bankr. C.D. Calif. Case No. 21-16800) on Aug. 27, 2021,
listing $867,858 in assets and $2,656,349 in liabilities. Steven
Yoon, as co-managing member, signed the petition. Judge Sheri
Bluebond presides over the case. Ringstad & Sanders, LLP
represents the Debtor as legal counsel.
ZEFNIK LLC: Property Sale & Rent Collections to Fund Plan
---------------------------------------------------------
Zefnik, LLC, filed with the U.S. Bankruptcy Court for the Eastern
District of Michigan a Combined Plan and Disclosure Statement dated
September 7, 2021.
Through this Plan, the Debtor intends to reorganize and continue
its business.
The company operated successfully until 2019 and 2020, when the
impact of the COVID-19 pandemic caused it to lose its tenants (and
their rents). The Debtor has since been able to re-let the
available suites, but the secured creditor refused to negotiate or
restructure payments on the balance due, which precipitated this
filing.
Debtor will continue to lease the available space at its Property
to satisfy building expenses and the payments due under this Plan.
Debtor's principal has listed his Residence for sale with a
realtor. In the event the property sells, the net proceeds will be
committed to the Plan. Debtor will also take any commercially
reasonable steps to collect on its claim for rent against its
former tenant. Any proceeds of same will be committed to the Plan.
The Plan divides Claims and Interests into classes and treats them
as follows:
* Class 1 shall consist of Chief Financial Federal Credit
Union ("CFFCU"). CFFCU shall have an allowed secured claim in the
aggregate amount of $709,535.81 against the Debtor, secured by 101
South Street, Rochester, MI ("Property"). CFFCU shall receive
monthly payments in the amount of $8,000.00, to be applied per the
terms of the contract between the Debtor and CFFCU at the
non-default interest rate. Such payments shall commence immediately
and continue until CFFCU's claim is paid in full, including all
accruing interest and reasonable attorney's fees and costs.
* Class 2 shall consist of the City of Rochester, which has a
secured claim in the amount of $13,593.00 for property taxes from
2020 against the Property. Pursuant to M.C.L. §§ 211.40 and
211.59, the lien of the City of Rochester is superior to all other
liens, claim, or encumbrances. The lien of the City of Rochester
shall remain attached to the Property until such lien (with
applicable interest) is paid in full. This claim shall not accrue
interest. This claim will be paid within one year of the Effective
Date. The fair market value of this property is $1,000,000.00.
* Class 3 consists of Equity Security Holders. Zef Nikprelaj
is the sole equity security holder of the Debtor, and his continued
personal services provided to the Debtor are essential to its
successful operation, both during this case and following
confirmation. Notwithstanding anything else in this Plan or 11
U.S.C. § 1141(d)(1)(B), in exchange for such services, Mr.
Nikprelaj shall retain his equity interest in the reorganized
Debtor in the same manner, nature, and extent as prior to the
Petition Date. In exchange for the retention of this equity, Mr.
Nikprelaj shall fund the Plan.
The Plan will be funded in the following manner:
* Sale of Real Estate – 5423 Orion Road, Rochester, MI
48306. The Debtor's principal, Zef Nikprelaj, owns residential real
estate located at 5423 Orion Road, Rochester, MI 48306
("Residence"). The initial listing price for the property shall be
$1,249,000.00. While the property is marketed for sale, Debtor also
intends to pursue alternative financing in an amount sufficient to
pay all allowed secured claims that are secured by the Property. If
Debtor's efforts to obtain alternative financing are successful,
the listing shall be withdrawn and the allowed secured claims paid
in full, with accrued interest.
* Collection of Judgment. Debtor shall take all commercially
prudent steps required to collect the past-due rent owed by its
former tenant. To the extent Debtor recovers any funds from this
judgment, such funds will be contributed to the Plan.
A full-text copy of the Combined Plan and Disclosure Statement
dated September 7, 2021, is available at https://bit.ly/3jTkTgC
from PacerMonitor.com at no charge.
Attorneys for the Debtor:
Yuliy Osipov, Esq.
Jeffrey H. Bigelman, Esq.
Osipov Bigelman, P.C.
20700 Civic Center Dr., Ste. 420
Southfield, MI 48076
Tel: (248) 663-1800
Fax: (248) 663-1801
Email: yo@osbig.com
jhb@osbig.com
About Zefnik LLC
Zefnik, LLC, is a Michigan limited liability company. Zef Nikprelaj
is the sole member.
Zefnik, LLC, a Rochester, Mich.-based company, filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
E.D. Mich. Case No. 21-44889) on June 7, 2021. Zef Nikprelaj,
authorized representative, signed the petition. At the time of the
filing, the Debtor disclosed total assets of up to $10 million and
total liabilities of up to $1 million. Judge Mark A. Randon
oversees the case. Osipov Bigelman, P.C. represents the Debtor as
legal counsel.
ZION HOTEL: Seeks to Tap Grier Wright Martinez as Legal Counsel
---------------------------------------------------------------
Zion Hotel Fund IV, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of North Carolina to employ Grier
Wright Martinez, PA as its legal counsel.
The firm will render these legal services:
(a) advise and consult with respect to the Debtor's powers and
duties;
(b) negotiate, prepare, and pursue confirmation of a Chapter
11, Subchapter V plan and all related agreements and documents;
(c) take all necessary action to protect and preserve the
Debtor's estate;
(d) prepare legal papers;
(e) perform any and all other legal services for the Debtor in
connection with the Debtor's Chapter 11 case;
(f) advise and assist the Debtor regarding all aspects of the
plan and confirmation process at the earliest possible date; and
(g) advise and perform legal services with respect to other
issues.
Grier Wright Martinez received a retainer of $25,000 from the
Debtor's sole manager and member, Anuj Mittal.
The hourly rates of the firm's attorneys and staff are as follows:
Joseph W. Grier, III $600 per hour
A. Cotton Wright $400 per hour
Michael L. Martinez $350 per hour
Anna S. Gorman $360 per hour
Paraprofessionals $175 per hour
In addition, the firm will be reimbursed for expenses incurred.
Michael Martinez, Esq., a member of Grier Wright Martinez,
disclosed in a court filing that his firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Michael L. Martinez, Esq.
Grier Wright Martinez, PA
521 East Morehead Street, Suite 440
Charlotte, NC 28202
Telephone: (704) 375-3720
Facsimile: (704) 332-0215
Email: mmartinez@grierlaw.com
About Zion Hotel Fund IV
Raleigh, N.C.-based Zion Hotel Fund IV, LLC filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
W.D.N.C. Case No. 21-30503) on Sept. 6, 2021, listing $3,892,319 in
assets and $4,400,000 in liabilities. Anuj N. Mittal, manager,
signed the petition. Judge Laura T. Beyer oversees the case. Grier
Wright Martinez, PA serves as the Debtor's legal counsel.
[*] Bankruptcies in Colorado Declined 16% in August 2021
--------------------------------------------------------
Christopher Wood of the Reporter Herald reports that Colorado
bankruptcy filings declined 16% in August 2021 compared with the
same period in 2020, with bankruptcy filings also declining in
Larimer, Weld, Boulder and Broomfield counties.
That's according to a BizWest analysis of U.S. Bankruptcy Court
data. The state recorded 545 bankruptcy filings in August 2021,
down from 650 in 2020. Year to date, bankruptcy filings totaled
4,552 statewide, down 22.5% from 5,875 recorded through August
2020.
Among counties in Northern Colorado and the Boulder Valley:
* Larimer County filings totaled 23 in August, compared with 45
a year ago. Year-to-date filings totaled 222, down from 291 through
August 2020.
* Weld County bankruptcy filings totaled 31 in August 2021, down
from 41 recorded a year ago. Year to date, Weld County has
recorded 321 bankruptcy filings, compared with 377 a year ago.
* Boulder County recorded 16 bankruptcy filings in August 2021,
compared with 24 in August 2020. Year-to-date filings totaled 161,
compared with 211 a year ago.
* Broomfield recorded four bankruptcy filings in August 2021,
compared with nine in August 2020. Year-to-date filings totaled
54, down from 76 in 2020.
[*] Hawaii's Bankruptcies Dropped by 20.2% in August 2021
---------------------------------------------------------
Dave Segal of The Star Advertiser reports that the statewide
bankruptcies in Hawaii dropped by 20.2% statewide in August 2021.
Hawaii's bankruptcies nose-dived 20.2% in August 2021 to its lowest
total in 16 years, but there's mixed opinion on whether the ending
of both the state's eviction moratorium, and federal unemployment
insurance and assistance programs, will bump up cases during the
rest of 2020.
[*] SierraConstellation Wins M&A Advisor Annual Turnaround Awards
-----------------------------------------------------------------
SierraConstellation Partners (SCP), a national interim management
and advisory firm, has been honored in two categories at the 15th
Annual Turnaround Awards. The awards, sponsored by The M&A Advisor
and presented in conjunction with the 2021 Distressed Investing
Summit, recognizes standout transactions in the bankruptcy and
restructuring space over the past year. This is the third time The
M&A Advisor's prestigious annual awards have acknowledged SCP as
one of the top turnaround dealmakers.
"Our work being recognized by The M&A Advisor's annual awards for
the third time is an incredible feat, and a testament to the
quality work we do for all of our clients, including Wave Computing
and Alto Ingredients," said SCP Founder and CEO Larry Perkins.
SCP was named a winner in two categories:
* Information Technology Deal of the Year: For guiding Wave
Computing, a processor technology company, through a year-long
Chapter 11 restructuring process and a successful exit from
bankruptcy rebranded as MIPS, generating a strong outcome for
creditors and other stakeholders.
* Turnaround of the Year (Over $100M): For the firm's work on
the restructuring and rebranding of Alto Ingredients (formerly
known as Pacific Ethanol), a major provider of alcohol/ethanol
products and agricultural ingredients, positioning this $1 billion
company to capitalize on the surging need for alcohol products such
as hand sanitizer during the COVID-19 pandemic and setting the
company up for long-term success.
"We're always looking for ways to work with management teams to
navigate and take advantage of major disruptions," said SCP Partner
and Senior Managing Director Winston Mar. "Our team's experience
and reputation for results has allowed us to be at the center of
landmark restructuring projects like Alto, where we worked
hand-in-hand with management to successfully capitalize on an
opportunity created by the pandemic."
Now in its 15th year, The M&A Advisor Turnaround Awards recognize
excellence in deal-making, restructuring, and financing,
celebrating the contributions and achievements of leading firms and
professionals. Awards will be presented at The M&A Advisor's 2021
Distressed Investing Summit in Manhattan, New York, on September
29.
About SierraConstellation Partners
SierraConstellation Partners (SCP) --
http://www.sierraconstellation.com/-- is a national interim
management and advisory firm headquartered in Los Angeles with
offices in Houston, Boston, and New York. SCP serves middle-market
companies and their partners and investors navigating their way
through difficult business challenges. Its team's real-world
experience, operational mindset, and hands-on approach enable us to
deliver effective operational improvements and financial solutions
to help companies restore value, regain creditor confidence, and
capitalize on opportunities.
As former CEOs, COOs, CFOs, private equity investors, and
investment bankers, the firm's team of senior professionals has
decades of experience operating and advising companies.
About The M&A Advisor
Founded in 1998, The M&A Advisor -- http://www.maadvisor.com/--
has built a leading global network of M&A, turnaround, and finance
professionals across domestic and international dealmaking.
Recipients of its prestigious awards are among the most respected
financial professional around the world. During the past two
decades, M&A Advisor has established a legacy of showcasing
emerging leaders, connecting pillars of the profession, and
recognizing achievement throughout the community.
[*] Stretto Bags M&A Turnaround Product/Service of the Year Award
-----------------------------------------------------------------
The M&A Advisor has selected Stretto, a market-leading
bankruptcy-services and technology firm, as a winner in its 15th
Annual Turnaround Awards. This year's award program named Stretto's
Corporate Restructuring Administration Services as the Turnaround
Product/Service of the Year. The recognition marks the second
consecutive year that Stretto has received this award for its
bankruptcy services and technology. Stretto also was honored in the
Chapter 11 Reorganization of the Year category for its role in the
Neiman Marcus and Old Time Pottery cases, as well as in the
Restructuring of the Year category for its role in the Vivus Inc.
case.
"These award winners represent the best of the distressed investing
and reorganization industry over the past year," said Roger
Aguinaldo, Founder of The M&A Advisor. "We are in an environment
that has seen whole industries, such as retail, restaurants,
leisure and hospitality experience depression-like effects. Despite
it all, these professionals have helped companies during these
difficult times. We recognize these leading transactions, firms and
individuals that represent the highest levels of performance."
Stretto's corporate restructuring services allow clients to focus
on the substantive matters of their transactions by alleviating
case-management burdens. Its claims and noticing practice provides
innovative services and technology with access to real-time data
and reporting on the status of each case. In doing so,
professionals and their teams can leverage time and
cost-efficiencies which ultimately can benefit the estate and
recoveries to all stakeholders.
"It is an honor for the entire Stretto team to be recognized once
again among the turnaround industry's most highly regarded firms
and professionals," comments Jonathan Carson, co-CEO of Stretto.
"As companies increasingly turned to bankruptcy as a strategic
alternative to navigate the COVID-19 economic crisis, we have
consistently delivered efficient and streamlined approaches to our
clients' restructuring needs."
To celebrate the achievements of its award recipients, the M&A
Advisor will host a live, in-person awards gala on Wednesday,
September 29 at the New York Athletic Club in midtown Manhattan,
New York. The gala will follow the M&A Advisor Distressed Investing
Summit featuring a full-day program of insights, guidance and
discussion from industry professionals and leaders.
About Stretto
Stretto -- http://www.stretto.com-- delivers a full spectrum of
case-management services, depository solutions, and technology
tools to fiduciaries. Offering a comprehensive suite of
corporate-restructuring and consumer-bankruptcy capabilities along
with multi-faceted deposit and disbursement services, Stretto
provides an unparalleled portfolio of solutions under the executive
leadership of industry veterans Eric Kurtzman and Jonathan Carson.
Sitting at the center of the bankruptcy ecosystem, Stretto
leverages deep-industry expertise and market insights to facilitate
every aspect of case and cash management for its
corporate-restructuring and consumer-bankruptcy clients, as well as
fiduciaries and other industry professionals. "Stretto" is a
musical term indicating when one voice picks up where another
leaves off, and, as our name implies, Stretto seamlessly integrates
streamlined workflows and best-in-class technology to orchestrate
the case-management process and create harmony for professionals
and their teams.
About The M&A Advisor
Founded in 1998, The M&A Advisor -- http://www.maadvisor.com/--
has built a leading global network of M&A, turnaround, and finance
professionals across domestic and international deal-making.
Recipients of its prestigious awards are among the most respected
financial professionals around the world. During the past two
decades, M&A Advisor has established a legacy of showcasing
emerging leaders, connecting pillars of the profession, and
recognizing achievement throughout the community.
[^] BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles
-------------------------------------------------------------
Author: Sallie Tisdale
Publisher: BeardBooks
Softcover: 270 pages
List Price: $34.95
Order your own personal copy at http://is.gd/9SAfJR
An earlier edition of "The Sorcerer's Apprentice" won an American
Health Book Award in 1986. The book has been recognized as an
outstanding book on popular science. Tisdale brings to her subject
of the wide nd engrossing field of health and illness the
perspective, as well as the special sympathies and sensitivities,
of a registered nurse. She is an exceptionally skilled writer.
Again and again, her descriptions of ill individuals and images of
illnesses such as cancer and meningitis make a lasting impression.
Tisdale accomplishes the tricky business of bringing the reader to
an understanding of what persons experience when they are ill; and
in doing this, to understand more about the nature of illness as
well. Her style and aim as a writer are like that of a medical or
science journalist for leading major newspaper, say the "New York
Times" or "Los Angeles Times." To this informative, readable style
is added the probing interest and concern of the philosopher trying
to shed some light on one of the central and most unsettling
aspects of human existence. In this insightful, illuminating,
probing exploration of the mystery of illness, Tisdale also
outlines the limits of the effectiveness of treatments and cures,
even with modern medicine's store of technology and drugs. These
are often called "miracles" of modern medicine. But from this
author's perspective, with the most serious, life-threatening,
illnesses, doctors and other health-care professionals are like
sorcerer's trying to work magic on them. They hope to bring
improvement, but can never be sure what they do will bring it
about. Tisdale's intent is not to debunk modern medicine, belittle
its resources and ways, or suggest that the medical profession
holds out false hopes. Her intent is do report on the mystery of
serious illness as she has witnessed it and from this, imagined
what it is like in her varied work as a registered nurse. She also
writes from her own experiences in being chronically ill when she
was younger and the pain and surgery going with this. She writes,
"I want to get at the reasons for the strange state of amnesia we
in the health professions find ourselves in. I want to find clues
to my weird experiences, try to sense the nature of being sick."
The amnesia of health professionals is their state of mind from the
demands placed on them all the time by patients, employers, and
society, as well as themselves, to cure illness, to save lives, to
make sick people feel better. Doctors, surgeons, nurses, and other
health-care professionals become primarily technicians applying the
wonders of modern medicine. Because of the volume of patients, they
do not get to spend much time with any one or a few of them. It's
all they can do to apply the prescribed treatment, apply more of it
if it doesn't work the first time, and try something else if this
treatment doesn't seem to be effective.
Added to this is keeping up with the new medical studies and
treatments. But Tisdale stepped out of this problem-solving
outlook, can-do, perfectionist mentality by opting to spend most of
her time in nursing homes, where she would be among old persons she
would see regularly, away from the high-charged atmosphere of a
hospital with its "many medical students, technicians,
administrators, and insurance review artists." To stay on her
"medical toes," she balanced this with working occasional shifts in
a nearby hospital. In her hospital work, she worked in a neonatal
intensive care unit (NICU), intensive care unit (ICU), a burn
center, and in a surgery room. From this combination of work with
the infirm, ill, and the latest medical technology and procedures
among highly-skilled professionals, Tisdale learned that "being
sick is the strangest of states." This is not the lesson nearly all
other health-care workers come away with. For them, sick persons
are like something that has to be "fixed." They're focused on the
practical, physical matter of treating a malady. Unlike this
author, they're not focused consciously on the nature of pain and
what the patient is experiencing. The pragmatic, results-oriented
medical profession is focused on the effects of treatment. Tisdale
brings into the picture of health care and seriously-ill patients
all of what the medical profession in its amnesia, as she called
it, overlooks.
Simply in describing what she observes, Tisdale leads those in the
medical profession as well as other interested readers to see what
they normally overlook, what they normally do not see in the
business and pressures of their work. She describes the beginning
of a hip-replacement operation, the surgeon "takes the scalpel and
cuts -- the top of the hip to a third of the way down the thigh --
and cuts again through the globular yellow fat, and deeper. The
resident follows with a cautery, holding tiny spraying blood
vessels and burning them shut with an electric current. One small,
throbbing arteriole escapes, and his glasses and cheek are
splattered." One learns more about what is actually going on in an
operation from this and following passages than from seeing one of
those glimpses of operations commonly shown on TV. The author
explains the illness of meningitis, "The brain becomes swollen with
blood and tissue fluid, its entire surface layered with pus . . .
The pressure in the skull increases until the winding convolutions
of the brain are flattened out . . . The spreading infection and
pressure from the growing turbulent ocean sitting on top of the
brain cause permanent weakness and paralysis, blindness, deafness .
. . . " This dramatic depiction of meningitis brings together
medical facts, symptoms, and effects on the patient. Tisdale does
this repeatedly to present illness and the persons whose lives
revolve around it from patients and relatives to doctors and nurses
in a light readers could never imagine, even those who are immersed
in this world.
Tisdale's main point is that the miracles of modern medicine do not
unquestionably end the miseries of illness, or even unquestionably
alleviate them. As much as they bring some relief to ill
individuals and sometimes cure illness, in many cases they bring on
other kinds of pains and sorrows. Tisdale reminds readers that the
mystery of illness does, and always will, elude the miracle of
medical technology, drugs, and practices. Part of the mystery of
the paradoxes of treatment and the elusiveness of restored health
for ill persons she focuses on is "simply the mystery of illness.
Erosion, obviously, is natural. Our bodies are essentially
entropic." This is what many persons, both among the public and
medical professionals, tend to forget. "The Sorcerer's Apprentice"
serves as a reminder that the faith and hope placed in modern
medicine need to be balanced with an awareness of the mystery of
illness which will always be a part of human life.
*********
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
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
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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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