/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/210915.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, September 15, 2021, Vol. 25, No. 257 Headlines 16913 HARBOUR TOWN: Taps Richard B. Rosenblatt as Legal Counsel 220 52ND STREET: Has Until Oct. 29 to Confirm Plan & Disclosures 265 OCEAN PARKWAY: Case Summary & 10 Unsecured Creditors 5150 ECR GROUP: Voluntary Chapter 11 Case Summary ADMIRAL PROPERTY: Third Amended Liquidation Plan Confirmed ADVANCED CONTAINER: Unit Inks Sublease Agreement With DPH AERION CORP: Retains DSI to Manage Sale of Assets AEROSPACE FACILITIES: Case Summary & 9 Unsecured Creditors AIRXCEL INC: Moody's Withdraws B3 CFR Amid Thor Industries Deal AMADO AMADO: Seeks to Hire Kreston PR as Accountant B&L INTERNATIONAL: Seeks to Hire McNamee Hosea as Legal Counsel BLACKSTONE DEVELOPERS: Seeks Cash Collateral Access BLAKE FAMILY: Court OKs Motion to Enforce Plan Obligations BMC SOFTWARE: S&P Assigns 'CCC+' Rating on Second-Lien Term Loan BOXER PARENT: Moody's Affirms B3 CFR & Alters Outlook to Positive BRISTOL PROPERTIES: Taps Geremia & DeMarco as Legal Counsel BROOKLYN IMMUNOTHERAPEUTICS: All Proposals Passed at Annual Meeting BROOKLYN IMMUNOTHERAPEUTICS: Appoints New Stock Transfer Agent CALIFORNIA STATEWIDE CDA: Moody's Confirms Ba2 Rating on A-2 Bonds CANNABICS PHARMACEUTICALS: Gabriel Yariv Nominated as Exec Chairman CB REAL ESTATE: Seeks to Hire Correa Acevedo as Special Counsel CCM MERGER: Moody's Hikes CFR to B1 & First Lien Revolver to Ba2 CHENIERE ENERGY: Fitch Assigns BB+ Rating on Senior Unsec. Notes CHENIERE ENERGY: Moody's Rates $1.2BB Senior Unsecured Notes 'Ba2' CHENIERE ENERGY: S&P Assigns 'BB' Rating on $1.2BB Unsecured Notes CHG HEALTHCARE: Moody's Rates New 1st Lien Loans 'B1' CHG HEALTHCARE: S&P Affirms 'B' ICR on Dividend Recapitalization COGECO FINANCING 2: Moody's Rates New $900MM First Lien Loan 'B1' COINBASE GLOBAL: Moody's Assigns 'Ba2' CFR, Outlook Stable COINBASE GLOBAL: S&P Assigns 'BB+' ICR, Outlook Stable COLOGIX HOLDINGS: S&P Ups ICR to 'B' on Improved Business View COLORADO PROPERTY: Taps Shloss Law Office as Bankruptcy Counsel CONNECTWISE LLC: Fitch Assigns FirstTime 'B+' LongTerm IDR CONNECTWISE LLC: Moody's Assigns First Time B2 Corp. Family Rating CREATION TECHNOLOGIES: Moody's Assigns First Time 'B3' CFR CREATION TECHNOLOGIES: S&P Assigns 'B' ICR, Outlook Stable DAME CONTRACTING: Seeks Cash Collateral Access Thru Oct. 2021 DANA INC: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable DANE HEATING: Seeks to Hire Springer Larsen Greene as Legal Counsel DCR ENGINEERING: Unsecureds Will be Paid in Full in Plan DELTA MATERIALS: Plan & Disclosure Hearing Continued to Sept. 22 DEXKO GLOBAL: Moody's Assigns B2 CFR & Rates First Lien Debt B1 DEXKO GLOBAL: S&P Affirms 'B-' ICR on Sale to New Sponsor DIAMOND (BC) BV: Moody's Rates New $500MM Unsecured Notes 'Caa1' DIAMOND (BC) BV: S&P Rates New $500MM Senior Unsecured Notes 'B' DIFFUSION PHARMACEUTICALS: Issues Letter to Shareholders EVERGREEN GARDENS: Case Summary & 50 Largest Unsecured Creditors FRALEG GROUP: Voluntary Chapter 11 Case Summary GAP INC: Moody's Affirms Ba2 CFR & Rates New Unsecured Notes Ba3 GAP INC: S&P Assigns 'BB' Rating on New $1.5BB Sr. Unsecured Notes GATEWAY RADIOLOGY: Amended Reorganizing Plan Confirmed by Judge GBT TECHNOLOGIES: Board Approves Reverse Common Stock Split GENWORTH LIFE: A.M. Best Affirms B(Fair) Financial Strength Rating GIP II BLUE: Moody's Assigns First Time B1 Corporate Family Rating GIP II BLUE: S&P Assigns BB- Issuer Credit Rating, Outlook Stable GLOBAL ACADEMY: S&P Rates 2021A-B Revenue and Refunding Bonds 'BB' GLOBAL MEDICAL: $300MM Loan Add-on No Impact on Moody's B2 CFR GPSPRO LLC: Seeks Cash Collateral Access GYPSUM RESOURCES: Missed Chapter 11 Payments, Says Rep-Clark HELIUS MEDICAL: Appoints Paul Buckman to Board of Directors HOTEL OXYGEN: Unsecureds to Get Pro Rata Payments in Plan INKSTER, MI: S&P Cuts GO Debt Rating to 'BB+' on Governance Risks JDUB'S BREWING: Court Modifies and Confirms Plan KANSAS CITY UNITED: Seeks to Hire Gilmore & Bell as Special Counsel KANSAS CITY UNITED: Taps McDowell Rice as Bankruptcy Counsel KISSMYASSETS LLC: Nov. 9 Plan Confirmation Hearing Set KTR GLOBAL: Unsecs. to Split Residual Distribution Fund Pro Rata LATAM AIRLINES: Taps PwC Auditores Independentes as Auditor LFS TOPCO: Fitch Assigns 'B' LongTerm IDR, Outlook Stable LFS TOPCO: Moody's Assigns First Time 'B1' Corporate Family Rating MALLINCKRODT PLC: Creditors' Release Not Consensual, SEC Says MALLINCKRODT PLC: U.S. Gov't. Says Third Party Releases, Overbroad MALLINCKRODT PLC: Unregistered Shareholders Oppose Plan MEDAILLE COLLEGE: S&P Affirms 'BB' Rating on 2013 Revenue Bonds MY FL MANAGEMENT: Court Confirms Amended Plan N.G. PURVIS: Nov. 9 Plan Confirmation Hearing Set NASSAU BREWING: Gets OK to Hire Goldberg Weprin as Legal Counsel NESV ICE: Gets Approval to Employ Hollis Meddings Group NEW YORK INN: Seeks to Hire Joyce W. Lindauer as Bankruptcy Counsel OFS INTERNATIONAL: Taps Gordon Brothers as Appraiser ORCHARD PLAZA: Shopping Center to Be Auctioned on Oct. 28 PATH MEDICAL: Seeks to Hire Foley & Lardner as Special Counsel PENNYMAC FINANCIAL: Moody's Rates New $500MM Unsecured Notes 'B1' PENNYMAC FINANCIAL: S&P Affirms 'BB-' ICR, Outlook Stable PEORIA DAY SURGERY: Seeks to Hire Eide Bailly as Accountant PHARMHOUSE INC: CCAA Case to End; RIV Gets $6.5M PHUNWARE INC: To Acquire Lyte Tech for $10.3 Million POWAY PROPERTY: Case Summary & 12 Unsecured Creditors PRIMARIS HOLDINGS: Lender Seeks to Prohibit Cash Collateral Use PRIMARIS HOLDINGS: Taps Black & Gold as Auctioneer QUTOUTIAO INC: Incurs RMB209.5 Million Net Loss in 2nd Quarter RIZZO & RESTUCCIA: Taps Margaret Hinkle of JAMS Boston as Mediator RMS HOLDING: S&P Affirms 'B-' ICR, Outlook Stable SABRE OXIDATION: Auction for Inventory, Equipment Set for Sept. 22 SALEM MEDIA: S&P Assigns 'B' Rating on Super Senior Secured Notes SALINE LODGING: Taps Darnell Law Office as Bankruptcy Counsel SAVI TECHNOLOGY: Seeks Approval to Hire Special Litigation Counsel SENSEONICS HOLDINGS: Incurs $180.3-Mil. Net Loss in Second Quarter SILVER PLAZA: Taps Vortman & Feinstein as Bankruptcy Counsel SMG INDUSTRIES: Units Sign $12.7M Loan Agreement With Amerisource SMG US MIDCO 2: Moody's Ups CFR to B3 & Alters Outlook to Stable SUFFERN PARTNERS: Court Sets Confirmation Hearing for October 14 SWF HOLDINGS I: Moody's Rates New $625MM Unsecured Notes 'Caa2' SWF HOLDINGS: S&P Rates New $625MM Senior Unsecured Notes 'CCC' TEAM HEALTH: Fitch Affirms 'CCC+' LongTerm IDR, Outlook Positive TRI-WIRE ENGINEERING: Seeks Cash Collateral Access TUKHI BUSINESS: Seeks Cash Collateral Use US ANESTHESIA: Moody's Affirms B3 CFR & Rates 1st Lien Loans B2 VANDEWATER INTERNATIONAL: Taps Faegre Drinker as Special Counsel WASHINGTON PRIME: Second Revised Plan Confirmed, Disclosures OK'd ********* 16913 HARBOUR TOWN: Taps Richard B. Rosenblatt as Legal Counsel --------------------------------------------------------------- 16913 Harbour Town Holdings Trust seeks approval from the U.S. Bankruptcy Court for the District of Maryland to hire the Law Offices of Richard B. Rosenblatt, PC to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) giving the Debtor legal advice with respect to its powers and duties under the Bankruptcy Code; (b) preparing legal papers; (c) preparing a disclosure statement and plan of reorganization; and (d) performing all other legal services for the Debtor, which may be necessary in the case. The firm's hourly rates are as follows: Richard B. Rosenblatt, Esq. $350 per hour Linda M. Dorney, Esq. $350 per hour Other attorneys $295 per hour Paralegal $150 per hour The Debtor paid $1,400 to the law firm as a retainer fee. Richard Rosenblatt, Esq., one of the firm's attorneys 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: Richard B. Rosenblatt, Esq. Law Offices of Richard B. Rosenblatt, PC 30 Courthouse Square, Suite 302 Rockville, MD 20850 Tel.: 866-930-0413 Fax: 301-838-3498 About 16913 Harbour Town 16913 Harbour Town Holdings Trust sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case No. 21-15735) on September 9, 2021. Carla Donna McPhun, trustee, signed the petition. At the time of the filing, the Debtor disclosed $0 to $50,000 in both assets and liabilities. Judge Lori S. Simpson oversees the case. The Debtor tapped the Law Offices of Richard B. Rosenblatt, PC. as legal counsel. 220 52ND STREET: Has Until Oct. 29 to Confirm Plan & Disclosures ---------------------------------------------------------------- Judge Elizabeth S. Stong has entered an order within which the time for debtor 220 52nd Street, LLC, to confirm a Chapter 11 Small Business plan of reorganization and disclosure statement shall be extended from Sept. 9, 2021 to and including Oct. 29, 2021. A copy of the order dated September 9, 2021, is available at https://bit.ly/3z3ml4d from PacerMonitor.com at no charge. Debtor's Counsel: Alla Kachan, Esq. LAW OFFICES OF ALLA KACHAN, P.C. 3099 Coney Island Avenue Brooklyn, NY 11235 Telephone: (718) 513-3145 About 220 52nd Street LLC 220 52nd Street, LLC owns four real estate properties in New York and California, having a total current value of $4.76 million. 220 52nd Street filed a Chapter 11 petition (Bankr. E.D.N.Y. Case No. 19-44646) on July 30, 2019. In the petition signed by Ruslan Agarunov, president, the Debtor disclosed $4,760,124 in assets and $3,705,011 in liabilities. Judge Elizabeth S. Stong oversees the case. The Law Offices of Alla Kachan, P.C., serves as the Debtor's bankruptcy counsel. 265 OCEAN PARKWAY: Case Summary & 10 Unsecured Creditors -------------------------------------------------------- Debtor: 265 Ocean Parkway LLC 265 Ocean Pkwy Brooklyn, NY 11218-4104 Business Description: 265 Ocean Parkway LLC is a New York limited liability company, which owns as its principal asset certain real property located at 265 Ocean Parkway, Brooklyn, NY. The Property was acquired about 10 years ago with the intention of redeveloping the site into a residential condominium building. Chapter 11 Petition Date: September 14, 2021 Court: United States Bankruptcy Court Eastern District of New York Case No.: 21-42325 Debtor's Counsel: Kevin J. Nash, Esq. GOLDBERG WEPRIN FINKEL GOLDSTEIN LLP 1501 Broadway 22nd Floor New York, NY 10036 Tel: (212) 221-5700 Email: knash@gwfglaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Michael Sorotzkin as manager. 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/PFYMSYA/265_Ocean_Parkway_LLC__nyebke-21-42325__0001.0.pdf?mcid=tGE4TAMA 5150 ECR GROUP: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: 5150 ECR Group LLC 5150 El Camino Real, Suite E20 Los Altos, CA 94022 Business Description: 5150 ECR Group LLC is a Single Asset Real Estate debtor (as defined in 11 U.S.C. Section 101(51B)). Chapter 11 Petition Date: September 14, 2021 Court: United States Bankruptcy Court Northern District of California Case No.: 21-51196 Judge: Hon. Stephen L. Johnson Debtor's Counsel: Vinod Nichani, Esq. NICHANI LAW FIRM 111 N. Market Street, Suite 300 San Jose, CA 95113 Tel: 408-800-6174 Fax: 408-290-9802 Email: vinod@nichanilawfirm.com Estimated Assets: $50 million to $100 million Estimated Liabilities: $50 million to $100 million The petition was signed by Vahe Tashjian, manager of 5150 ECR Group Manager, LLC, as manager. The Debtor stated it has no creditors holding unsecured claims. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/RSPJ2RQ/5150_ECR_GROUP_LLC__canbke-21-51196__0001.0.pdf?mcid=tGE4TAMA ADMIRAL PROPERTY: Third Amended Liquidation Plan Confirmed ---------------------------------------------------------- Judge Nancy Hershey Lord of the U.S. Bankruptcy Court for the Eastern District of New York confirmed the Third Amended Plan of Liquidation of Admiral Property Group, LLC. The Court directed the Debtor to file an application and a proposed order for a final decree within 14 days following substantial consummation of the Plan. A copy of the order is available for free at https://bit.ly/3E8dTEv from PacerMonitor.com. About Admiral Property Group Admiral Property Group, LLC, is a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)). It owns the property at 157 Beach 96thStreet, Queens, New York. On July 31, 2020, an involuntary petition was filed against Admiral Property Group by Metro Mechanical LLC, N&K Plumbing and Heating Corp, and Borowide Electrical Contractors (Bankr. E.D.N.Y. Case No. 20-42826). The petitioning creditors are represented by Joel Shafferman, Esq., at Shafferman & Feldman, LLP. Judge Nancy Hershey Lord oversees the Debtor's Chapter 11 case. The Kantrow Law Group, PLLC serves as the Debtor's legal counsel in its bankruptcy case. ADVANCED CONTAINER: Unit Inks Sublease Agreement With DPH --------------------------------------------------------- DPH Supplements, Inc., a company of which Douglas P. Heldoorn, an officer and director of Advanced Container Technologies, Inc., is the sole shareholder, leased the building that is partially occupied by Advanced Container from its owner under a master lease, dated Aug. 27, 2018, which had a term of two years that expired on Aug. 31, 2020, at a rental of $11,108 per month. This lease was extended for a 2-year term, so as to expire on Aug. 31, 2022, at a rental of $9,791 per month. DPH subleased 8,000 square feet of the building to Advanced Container under a 1-year sublease expiring on Aug. 31, 2019, at a monthly rent of $8,640 per month and subleased the remaining 2,000 square feet to an unrelated party at a rent of $2,467 per month. On Sept. 1, 2019, Advanced Container and DPH extended its term for one year, such that its term expired on Aug. 31, 2020, at a monthly rent of $8,967. On Sept. 1, 2020, DPH leased these premises to Med X Technologies Inc., a wholly owned subsidiary of Advanced Container which operates its Medtainer business for a monthly rent of $9,007, for a term that expired on Aug. 31, 2021. Under a sublease entered into on Sept. 9, 2021, and dated as of Sept. 1, 2021, DPH leased these premises to Med X for a monthly rent of $9,791, for a term that will expire on Aug. 31, 2022. Under each of these subleases, Advanced Container or Med X, as the case may be, agreed to assume and all of the obligations of DPH under the master lease, including the payment in full of certain capital expenses and the sharing of others; the payment of "common area operating expenses" (which includes real property taxes paid by master lessor); the maintenance of the property; and payment of insurance premium increases. Under the immediately prior subleases, Advanced Container and Med X subleased 80% of the area of the building and paid 77.8% and 72.5% of the total rent paid by DPH for the building under the earlier and later of these subleases, respectively. Under the current sublease, Med X leases 80% of the total area of the building and pays 78.1% of the total rent paid by DPH for the building. Under all of these subleases, the amounts of rent payable by Advanced Container to DPH were equal to the rent that DPH paid to the owner of the building under the master lease, such that DPH netted and will net no income after it paid rent to the master lessor. Advanced Container believes that the rent for these premises approximates the market rate for space in the area in which they are located and that the current sublease is fair to the company and in its best interest. 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. AERION CORP: Retains DSI to Manage Sale of Assets ------------------------------------------------- Development Specialists, Inc. (DSI) has been retained to manage the sale of the assets of Aerion Corp. and its related companies through an assignment for the benefit of creditors. DSI has extensive experience in the disposition of intellectual property, including patents and trademarks. "We foresee a sale process that would be of great interest to companies in aerospace, aviation, and U.S. military defense, while maximizing value for creditors" said Joseph J. Luzinski, the Assignee and a Senior Managing Director of Development Specialists, Inc. "While the sales process is being implemented, we welcome expressions of interest from interested parties." Aerion Inc. was formed in 2003 with the vision to design and manufacture subsonic and supersonic technology, to build aircraft for private, business, and U.S. military use. Aerion was developing technology for aircraft to be faster, longer range, environmentally sustainable and carbon neutral, all while traveling at supersonic speeds without creating the sonic boom of breaking the sound barrier. In the 2010s, Aerion received orders from a fractional ownership jet company and tentative commitments from other private buyers. The company attracted investment from a significant aircraft manufacturer and partnered with many of the top companies in the aviation industry and defense industry. In 2020, the company selected Melbourne, Fla., as the corporate office site and received an incentive package from area government entities of approximately $480 million to build an aircraft manufacturing facility. Aerion also maintained an engineering office in Reno, Nev. In June 2021, the company ceased operations due to difficulties in raising capital to achieve the next steps in the manufacture and regulatory approval of the company's supersonic aircraft, the Aerion AS2. As a result, the company elected to wind down operations and commence an "Assignment for the Benefit of Creditors" pursuant to Florida Statutes, as an alternative to bankruptcy, in order to maximize value for creditors in a streamlined sale of the Aerion assets. Any party interested in bidding on the assets of Aerion Corp. and its related companies should contact Steven L. Victor, DSI Senior Managing Director, at svictor@DSIConsulting.com, Matthew P. Sorenson, DSI Managing Director, at msorenson@DSIConsulting.com, or Joseph J. Luzinski, DSI Senior Managing Director, at jluzinski@DSIConsulting.com. About DSI Development Specialists, Inc. (DSI) -- http://www.dsiconsulting.com/-- is one of the leading providers of management consulting and financial advisory services, including turnaround consulting, financial restructuring, litigation support, fiduciary services, and forensic accounting. Our clients include business owners, private-equity investors, corporate boards, financial institutions, secured lenders, bondholders, and unsecured creditors. For more than 40 years, DSI has been guided by a single objective: maximizing value for all stakeholders. With our highly skilled and diverse team of professionals, offices in the U.S. and international affiliates and an unparalleled range of experience, DSI has built a solid reputation as an industry leader. AEROSPACE FACILITIES: Case Summary & 9 Unsecured Creditors ---------------------------------------------------------- Debtor: Aerospace Facilities Group, Inc. 1590 Raleys Court, Suite 30 West Sacramento, CA 95691 Business Description: Aerospace Facilities Group, Inc. is part of the Other Nonmetallic Mineral Product Manufacturing industry. Chapter 11 Petition Date: September 14, 2021 Court: United States Bankruptcy Court Eastern District of California Case No.: 21-23244 Judge: Hon. Christopher M. Klein Debtor's Counsel: Gabriel E. Liberman, Esq. LAW OFFICES OF GABRIEL LIBERMAN, APC 1545 River Park Drive, Ste 530 Sacramento, CA 95815 Tel: 916-485-1111 Fax: 916-485-1111 E-mail: attorney@4851111.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Dennis R. Robinson as president. A full-text copy of the petition containing, among other items, a list of the Debtor's nine unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/FDTFHFY/Aerospace_Facilities_Group_Inc__caebke-21-23244__0001.0.pdf?mcid=tGE4TAMA AIRXCEL INC: Moody's Withdraws B3 CFR Amid Thor Industries Deal --------------------------------------------------------------- Moody's Investors Service has withdrawn all ratings for Airxcel, Inc., including the company's B3 corporate family rating and B3-PD probability of default rating. Moody's has also withdrawn the B3 rating on the company's senior secured first lien facilities and Caa2 rating on the second lien term loan. RATINGS RATIONALE The rating action follows Airxcel's acquisition by Thor Industries, Inc. (Ba3 Positive), and the subsequent repayment of all of the company's rated debt. The transaction closed in September 2021. Withdrawals: Issuer: Airxcel, Inc. Probability of Default Rating, Withdrawn, previously rated B3-PD Corporate Family Rating, Withdrawn, previously rated B3 Senior Secured First Lien Term Loan, Withdrawn, previously rated B3 (LGD3) Senior Secured Second Lien Term Loan, Withdrawn, previously rated Caa2 (LGD5) Outlook Actions: Issuer: Airxcel, Inc. Outlook, Changed To Rating Withdrawn From Stable Headquartered in Wichita, Kansas, Airxcel manufactures products such as air conditioning and ventilation systems, furnaces, water heaters, window coverings and roofing membranes for RVs. The company also manufactures specialty air conditioners, environmental control units and heat pumps for the telecommunications, education and multi-tenant housing end markets. AMADO AMADO: Seeks to Hire Kreston PR as Accountant --------------------------------------------------- Amado Amado Salon & Body Corp. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Kreston PR, LLC as its accountant. The firm's services include: (a) providing assistance to the Debtor in preparing monthly reports of operation; (b) preparing financial statements; (c) assisting the Debtor in preparing cash flow projections or any other projections needed for cash collateral purposes, disclosure statement and plan of reorganization; (d) assisting the Debtor in all financial aspects in connection with the administration of its estate; (e) assisting the Debtor in the preparation and filing of federal, state and municipal tax returns; and (f) assisting the Debtor in any other assignment that might be properly delegated by the management. The firm's hourly rates are as follows: Partner $180 per hour Tax Consultant $160 per hour Managers $120 per hour Supervisors $100 per hour Auditors $80 per hour Accountant $55 per hour Clerical $35 per hour Frank Sanchez Ruiz, the firm's managing member, disclosed in a court filing that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Frank Sanchez Ruiz, C.P.A. Kreston PR, LLC P.O. Box 193488 San Juan, Puerto Rico 00919-348 Tel: (787) 641-4611 Fax: 1-800-808-1459 About Amado Amado Salon San Juan, P.R.-based Amado Amado Salon & Body Corp. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. P.R. Case No. 21-02630) on Aug. 31, 2021, disclosing up to $500,000 in assets and up to $10 million in liabilities. Amado Navarro Elizalde, president of Amado Amado Salon, signed the petition. Gloria Justiniano Irizarry, Esq., an attorney practicing in Mayaguez, P.R., and Kreston PR, LLC serve as the Debtor's bankruptcy counsel and accountant, respectively. B&L INTERNATIONAL: Seeks to Hire McNamee Hosea as Legal Counsel --------------------------------------------------------------- B&L International Inc. seeks approval from the U.S. Bankruptcy Court for the District of Maryland to hire McNamee Hosea, P.A. to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) preparing and filing the Debtor's bankruptcy schedules, statement of financial affairs and other documents required by the court; (b) representing the Debtor at the initial interview and meeting of creditors; (c) advising the Debtor in connection with the formulation, negotiation and promulgation of a plan of reorganization and related documents; (d) advising the Debtor concerning, and assisting in the negotiation and documentation of, financing agreements, debt restructurings and related transactions; (e) reviewing the validity of liens asserted against the Debtor's property and advising the Debtor concerning the enforceability of such liens. (f) preparing legal documents and reviewing all financial reports to be filed in the Debtor's case; and (g) performing all other necessary legal services. The firm's hourly rates are as follows: Partners $350 per hour Associates $325 per hour Paralegal $105 per hour Steven Goldberg, 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. Goldberg, Esq. McNamee Hosea, P.A. 6411 Ivy Lane, Suite 200 Greenbelt, MD 20770 Telephone: (301) 441-2420 Fax: (301) 982-9450 Email: sgoldberg@mhlawyers.com About B&L International Gaithersburg, Md.-based B&L International Inc. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case No. 21-15728) on Sept. 9, 2021, disclosing up to $1 million in assets and up to $10 million in liabilities. Jing Xu, as authorized representative, signed the petition. The Debtor tapped McNamee Hosea, P.A. as legal counsel. BLACKSTONE DEVELOPERS: Seeks Cash Collateral Access --------------------------------------------------- Blackstone Developers, LLC asks the the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division, for authority to use cash collateral to pay insurance premium in full and to make additional roof repairs. ABLP REIT, LLC as a secured creditors holds a lien on the Property and other assets of the Estate pursuant to a Note, Deed of Trust, Assignment of Rents and other loan documents. In the ordinary course of its business, the Debtor must maintain commercial liability insurance on the Property. The Property currently is insured under a policy issued by ABS Insurance Services, LLC, which also financed the annual premium on the policy. After payment of an initial deposit, the Debtor was required to make monthly premium payments of approximately $2,500. The Debtor is current on the premium payments. The current policy is scheduled to expire September 15, 2021. ABS Insurance has indicated that it no longer will finance the premiums on the policy because of the pending Chapter 11 case and the requirement to list the United States Trustee as a party to receive notice under the policy. As a result, the Debtor is required to pay in full the total annual premium on the new policy in the amount of $63,538.60. The initial down payment of $15,884.60 was paid in August, leaving a balance due of $47,654.79. In June 2021, the Court entered its Agreed Order Authorizing Use of Cash Collateral. The Debtor was authorized to use cash collateral of ABLP to pay the monthly insurance premium and to make repairs to the roofs of certain designated leased spaces. The Debtor has completed the repairs on these spaces and they are ready for immediate occupancy. The leasing/management company that the Debtor expects to retain (motion filed) has several prospective tenants very interested in leasing the three repaired spaces. The Debtor now needs to pay for roof repairs on three additional occupied spaces. The roof repairs are essential so that the Debtor can maintain the Property and retain its tenants. The estimated cost for the additional repairs is approximately $22,000. The Debtor currently has on hand in its DIP Account the sum of $95,000 which amount is more than enough to pay the annual insurance premium and to pay for the needed roof repairs. The Debtor requests authority to use Cash Collateral for these expense. A copy of the motion is available for free at https://bit.ly/3nAAJPl from PacerMonitor.com. About Blackstone Developers Blackstone Developers, LLC is a privately held Texas corporation that operates a one-asset commercial real estate property located at 205 S. Main, Red Oak, Texas. The Property is occupied by several tenants. As part of its operations, Blackstone, among other things: (i) manages the Property; (ii) collects rents; and (iii) maintains the common areas of the Property. Blackstone sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 21-41055) on April 30, 2021. In the petition signed by Randy R. Shelly, agent, the Debtor disclosed up to $50,000 in assets and up to $10 million in liabilities. Judge Mark X. Mullin oversees the case. The Law Office of Marilyn D. Garner serves as the Debtor's counsel. BLAKE FAMILY: Court OKs Motion to Enforce Plan Obligations ---------------------------------------------------------- Judge Stephani W. Humrickhouse of the U.S. Bankruptcy Court for the Eastern District of North Carolina granted the motion of CL45 MW Loan 1, LLC, successor in interest to Yadkin Bank, to enforce the obligations relating to the performance by Blake Family Properties, LLC with respect to certain auction requirements, as set forth in the Debtor's Plan that was confirmed in 2016. The Settlement Agreement provided that the Bank has a valid claim against the Debtor and the Property that was the object of the auction. Pursuant to the Plan, the Debtor was required to pay its obligation to the Bank through the proceeds of a sale of the Property. The Debtor was given 18 months from the Effective Date to liquidate the Property. However, the marketing period has passed, and the Bank's liens have not been satisfied. The Debtor argued that the Bank does not have standing to bring the motion to Court. The Debtor has also initiated an adversary proceeding seeking to rescind and set aside the Bank's security interest in the property. The parties later reached the Settlement Agreement, which, according to the Debtor, is the only relevant document. The Debtor asserted that it need only apply one-half of the proceeds of any of the Property sold to the Bank's claim, with no time limitations on the sale of the Property. The Court opined, however, that inasmuch as the confirmed plan contemplated the adversary proceeding and its resolution, the Settlement Agreement must be read and interpreted as a supplement to, and not as a replacement for, the confirmed Plan. Accordingly, the Court approved the Bank's motion to enforce the Debtor's obligations under the confirmed Plan with respect to auction requirement relating to the sale of the Property and satisfaction of the Bank's lien. A copy of the order is available for free at https://bit.ly/3nleZH9 from PacerMonitor.com. About Blake Family Properties Blake Family Properties, LLC, filed a Chapter 11 petition (Bankr. E.D. N.C. Case No. 15-01497) on March 18, 2015. On the Petition Date, the Debtor estimated $1 million to $10 million in both assets and liabilities. The petition was signed by Charles E. Blake, Sr., member/manager. Judge Stephani W. Humrickhouse is assigned to the case. Oliver & Cheek, PLLC, serves as counsel for the Debtor. The Debtor's Chapter 11 Plan was confirmed on January 20, 2016. BMC SOFTWARE: S&P Assigns 'CCC+' Rating on Second-Lien Term Loan ---------------------------------------------------------------- S&P Global Ratings assigned a 'CCC+' issue-level rating and a '5' recovery rating to BMC Software's new second-lien term loan, the same as its ratings on the company's existing second-lien notes. S&P said, "We also affirmed our 'B-' issuer credit rating on Banff Parent Inc. The outlook is stable. At the same time, we affirmed, our 'B-' issue-level rating on its first-lien debt and our 'CCC+' ratings on its existing second-lien and unsecured debt. "The stable outlook reflects our view that BMC's high recurring revenue and strong customer retention provide it with a solid revenue base that, combined with synergies from its merger with Compuware and the paring of one-time costs, will improve its credit metrics. Specifically, we expect leverage to fall to 8.5x and free operating cash flow (FOCF) to debt to increase to 5.4% in fiscal 2022 (ending in March)." High recurring revenue, good customer retention, and good recent performance support the rating. BMC has a solid base of recurring revenue above 80% of total revenue and high customer retention about 90%. Revenue growth of 7% in fiscal 2021 pro forma for the Compuware acquisition was well above expectations despite the pandemic-driven macroeconomic slowdown because of continued strong demand from enterprises as they sought information technology operations efficiencies. Leverage is still high. Leverage is 8.9x pro forma for the transaction, but the capital structure is sustainable with about $400 million of S&P Global Ratings adjusted FOCF that we expect in fiscal 2022, supported partially by annual savings of about $80 million in interest expense resulting from the proposed transaction. S&P could raise the rating if leverage fell below 8x and we believed the company intended to sustain this level through acquisitions and shareholder returns while maintaining FOCF to debt in the mid-single-digit percent area. -- BMC's secured instruments carry a recovery rating of '3' and the second-lien and unsecured instruments carry a recovery rating of '5'. -- S&P assumes BMC would undergo a restructuring rather than a liquidation in bankruptcy due to the considerable value of its contractually recurring revenue and intellectual property. -- S&P values the firm using a 6.5x multiple of its projected emergence EBITDA, which is higher than the multiples it uses for most sponsor-owned companies it rates due to its larger scale and greater percentage of recurring revenue. -- S&P's simulated default scenario contemplates a default occurring in 2023 due to a weak macroeconomic environment combined with intense competition from large, well-capitalized multiline companies amid persistent declines in the mainframe business. -- In S&P's default scenario, the collateral is entirely consumed by the first-lien lenders, leaving the second-lien and unsecured lenders with equal recovery prospects. -- Simulated year of default: 2023 -- Emergence EBITDA: $630 million -- Multiple: 6.5x -- The revolving credit facility is 85% drawn at default -- Net recovery value (after administrative expenses): $3.9 billion -- Obligor/nonobligor valuation split: 50%/50% -- Value available to first-lien debt claims (collateral/noncollateral): $3.2 billion/$470 million -- First-lien debt claims: $6.4 billion --Recovery expectations: 50%-70% (rounded estimate: 55%) -- Value available to second-lien and unsecured lenders: $210 million -- Second-lien and unsecured debt claims: $1.4 billion --Recovery expectations: 10%-30% (rounded estimate: 10%) BOXER PARENT: Moody's Affirms B3 CFR & Alters Outlook to Positive ----------------------------------------------------------------- Moody's Investors Service affirmed BOXER PARENT COMPANY INC. (BMC)'s ratings, including the B3 Corporate Family Rating, and changed the outlook to positive from stable. Moody's also affirmed the B2 rating on the first lien debt and Caa2 ratings on the second lien notes and senior unsecured notes. In addition, Moody's assigned a Caa2 rating to the proposed second lien term loan and assigned a B2 rating to the revolving credit facility. The proposed second lien term loan, upsized first lien debt and cash on hand will be used to retire the 9.75% senior unsecured notes due 2026. The ratings on the unsecured notes will be withdrawn at closing of the transaction. The outlook revision was driven by Moody's expectation of continued moderate growth as well as interest savings from the proposed debt refinancing and recent debt reduction. The combined debt transactions will result in an approximate $310 million debt reduction and $70 million of net annual interest savings. The debt repayment is the first one since the closing of the Compuware acquisition in June 2020. Debt to EBITDA after the transactions is approximately 7.5x excluding certain acquisition and restructuring related expenses but over 8x including those costs. RATINGS RATIONALE BMC's B3 CFR reflects the company's high leverage as a result of the KKR buyout and Compuware acquisition, as well as its aggressive financial policies. The rating also considers the strength of BMC's market position as a leading independent provider of IT systems management software solutions, the company's scale (over $2 billion in revenue), the resiliency of the high-margin mainframe software business, and resultant cash generating capabilities. BMC's mainframe business (including the mainframe portion of workload automation business) is estimated to generate close to half of the company's operating profit and cash flow. BMC's distributed platform products, including the Helix service desk lines, generate lower profit margins than the rest of the business but has the potential for moderate growth despite a challenging competitive environment. BMC's revenues, profits, and cash flow can swing significantly based on renewal cycles resulting in free cash flow (FCF) to debt levels fluctuating between 1% and 6%. Although Moody's expects modest "through the cycle" growth, revenues and EBITDA are expected to demonstrate much higher volatility under accounting standard ASC 606 which accentuates upfront revenue recognition during renewal cycles. While Moody's views the product portfolio as stronger and broader than after the previous buyout (2013), BMC needs to continually introduce new products and features or risk declines in market share. Similar to other enterprise software companies, BMC has limited environmental and moderate social risks. The company is controlled by private equity firm KKR and does not have a fully independent Board. The company is expected to have aggressive financial policies as highlighted by its acquisition appetite and very high leverage post-closing of the KKR buyout and subsequent Compuware acquisition, as well as the repayment of preferred equity in FY 2021. The September 2021 unsecured note repayment does however indicate a willingness to use excess cash to repay debt and represents the first material paydown since KKR's acquisition. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The positive outlook for BMC reflects the expectation of continued modest multi-year growth in revenue, EBITDA and free cash flow with leverage declining towards 7x albeit with some fluctuation through the renewal cycle. The ratings could be upgraded if BMC demonstrates modest long term growth, reduces leverage to less than 7x, and produces free cash flow to debt averaging greater than 5% through the renewal cycle. BMC's ratings could be downgraded if performance deteriorates (other than typical renewal cycle swings), leverage is expected to be sustained above 8.5x, or free cash flow is negative on other than a temporary basis. BMC's liquidity is expected to be good based on solid levels of cash (estimated $335 at closing of the refinancing), a $475 million undrawn revolver, and Moody's expectation of over $250 million of free cash flow (before receivables financing proceeds) over the next 12 -- 18 months. The following ratings were affected: Assignments: Issuer: BOXER PARENT COMPANY INC. (BMC) Senior Secured Revolving Credit Facility, Assigned B2 (LGD3) Senior Secured 2nd Lien Term Loan, Assigned Caa2 (LGD6) Affirmations: Issuer: BOXER PARENT COMPANY INC. (BMC) Probability of Default Rating, Affirmed B3-PD Corporate Family Rating, Affirmed B3 Senior Secured 1st Lien Term Loan, Affirmed B2 (LGD3) Senior Secured 1st Lien Revolving Credit Facility, Affirmed B2 (LGD3) Senior Secured 1st Lien Regular Bond/Debenture, Affirmed B2 (LGD3) Senior Secured 2nd Lien Regular Bond/Debenture , Affirmed Caa2 (LGD6. from LGD5) Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD6) Outlook Actions: Issuer: BOXER PARENT COMPANY INC. (BMC) Outlook, Changed To Positive From Stable BMC is a provider of a broad range of IT management software tools. The company is owned by private equity firm KKR. Run rate revenues were approximately $2.1 billion for the twelve months ended June 30, 2021. The company is headquartered in Houston, TX. The principal methodology used in these ratings was Software Industry published in August 2018. BRISTOL PROPERTIES: Taps Geremia & DeMarco as Legal Counsel ----------------------------------------------------------- Bristol Properties, LLC seeks approval from the U.S. Bankruptcy Court for the District of Rhode Island to hire Geremia & DeMarco, Ltd. to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) giving the Debtor advice with respect to its powers and duties in the continued operation of its business, management of its property and reorganization; (b) advising the Debtor with respect to any Chapter 11 plan of reorganization it proposes and any other matters relevant to the formulation and negotiation of the plan; (c) representing the Debtor at all hearings and matters pertaining to its affairs; (d) preparing legal papers; (e) reviewing and analyzing the nature and validity of any liens asserted against the Debtor's property and advising the Debtor concerning the enforceability of such liens; (f) advising the Debtor regarding its ability to initiate actions to collect and recover property for the benefit of the estate; (g) advising and assisting the Debtor in connection with any potential property dispositions; (h) advising the Debtor concerning executory contract and unexpired lease assumptions, assignments and rejections and lease restructurings and characterizations; (i) reviewing and analyzing various claims of the Debtor's creditors and treatment of such claims, and the preparation, filing or prosecution of any objections thereto; (j) commencing litigation to assert rights held by the Debtor, protect assets of the Debtor's Chapter 11 estate or otherwise further the goal of completing the Debtor's successful reorganization other than with respect to matters to which the Debtor retains special counsel; and (k) performing all other necessary legal services. The firm's hourly rates are as follows: Lisa A. Geremia, Esq. $350 per hour Paralegal $95 per hour The Debtor paid $20,000 to the law firm as a retainer fee. Lisa Geremia, Esq., the firm's attorney who will be providing the services, 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: Lisa A. Geremia, Esq. Geremia & DeMarco, Ltd. 620 Main Street, Unit CU-3A East Greenwich, RI 02818 Tel: 401-885-1444 Fax: 401-471-6283 About Bristol Properties Bristol Properties LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. R.I. Case No. 21-10619) on Aug. 11, 2021, disclosing up to $10 million in assets and up to $500,000 in liabilities. James McGown, president of Bristol Properties, signed the petition. Judge Diane Finkle oversees the case. The Debtor tapped Lisa A. Geremia, Esq., at Geremia & DeMarco, Ltd. as legal counsel. BROOKLYN IMMUNOTHERAPEUTICS: All Proposals Passed at Annual Meeting ------------------------------------------------------------------- Brooklyn ImmunoTherapeutics, Inc. held its reconvened Annual Meeting of Stockholders, at which the stockholders: (1) elected Charles Cherington, Howard J. Federoff, Luba Greenwood, Dennis H. Langer, and Erich Mohr as directors to serve until the 2022 Annual Meeting of Stockholders and until his or her successor is duly elected and qualified; (2) approved the ratification of the amendment to the Company's certificate of incorporation to effect an increase in the number of authorized shares of common stock from 15,000,000 to 100,000,000; and (3) approved the Restated 2020 Stock Incentive Plan. About Brooklyn ImmunoTherapeutics Brooklyn (formerly NTN Buzztime, Inc.) is focused on exploring the role that cytokine-based therapy can have in treating patients with cancer, both as a single agent and in combination with other anti-cancer therapies. The company is also exploring opportunities to advance therapies using leading edge gene editing/cell therapy technology through its option agreement with Factor Bioscience/Novellus. Brooklyn's most advanced program is studying the safety and efficacy of IRX-2 in patients with head and neck cancer. In a Phase 2A clinical trial in head and neck cancer, IRX-2 demonstrated an overall survival benefit. Additional studies are either underway or planned in other solid tumor cancer indications. NTN Buzztime reported a net loss of $4.41 million for the year ended Dec. 31, 2020, compared to a net loss of $2.05 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $64.71 million in total assets, $29.53 million in total liabilities, and $35.18 million in total stockholders' and members' equity. San Diego, California-based Baker Tilly US, LLP, the Company's auditor since 2013, issued a "going concern" qualification in its report dated March 11, 2021, citing that the Company incurred a significant net loss for the year ended Dec. 31, 2020 and as of Dec. 31, 2020 had a negative working capital balance, and does not expect to have sufficient cash or working capital resources to fund operations for the twelve-month period subsequent to the issuance date of these financial statements. These factors raise substantial doubt about the Company's ability to continue as a going concern. BROOKLYN IMMUNOTHERAPEUTICS: Appoints New Stock Transfer Agent -------------------------------------------------------------- Effective as of Sept. 14, 2021, Brooklyn Immunotherapeutics, Inc. appointed Computershare Trust Company, N.A. as its stock transfer agent and registrar and dismissed American Stock Transfer & Trust Company from those roles. About Brooklyn ImmunoTherapeutics Brooklyn (formerly NTN Buzztime, Inc.) is a clinical-stage biopharmaceutical company focused on exploring the role that cytokine-based therapy can have on the immune system in treating patients with cancer, both as a single agent and in combination with other anti-cancer therapies. The Company is seeking to develop IRX-2, a novel cytokine-based therapy, to treat patients with cancer. NTN Buzztime reported a net loss of $4.41 million for the year ended Dec. 31, 2020, compared to a net loss of $2.05 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $64.71 million in total assets, $29.53 million in total liabilities, and $35.18 million in total stockholders' and members' equity. San Diego, California-based Baker Tilly US, LLP, the Company's auditor since 2013, issued a "going concern" qualification in its report dated March 11, 2021, citing that the Company incurred a significant net loss for the year ended Dec. 31, 2020 and as of Dec. 31, 2020 had a negative working capital balance, and does not expect to have sufficient cash or working capital resources to fund operations for the twelve-month period subsequent to the issuance date of these financial statements. These factors raise substantial doubt about the Company's ability to continue as a going concern. CALIFORNIA STATEWIDE CDA: Moody's Confirms Ba2 Rating on A-2 Bonds ------------------------------------------------------------------ Moody's Investors Service has confirmed the A2 ratings on the California Statewide Communities Development Authority's (CSCDA) Taxable Pension Obligation Bonds 2006 Series A-1 Bonds (Current Interest Bonds) and Taxable Pension Obligation Bonds 2006 Series A-2 Bonds (Capital Appreciation Bonds), affecting about $16.6 million and $11.3 million outstanding debt respectively. Concurrently, Moody's has confirmed the Ba2 rating on CSCDA's Taxable Pension Obligation Bonds 2007 Series A-2 (Capital Appreciation Bonds), affecting about $31.6 million outstanding debt. The outlook for the Taxable Pension Obligation Bonds 2007 Series A-2 (Capital Appreciation Bonds) is stable. This action concludes the review with direction uncertain initiated on July 8, 2021 due to the lack of sufficient, current financial information for fiscal 2020 for certain pool participants. Moody's has since received and reviewed sufficient information from the pool participants. RATINGS RATIONALE The A2 rating for the 2006 Series A-1 bonds reflects the credit quality of the weakest pool participant rather than the weighted average credit quality of the remaining pool participants. The pool is unenhanced, with no step up provisions or debt service reserve, and the strongest participant is currently more than 65% of the pool, but its portion will mature in fiscal 2029. The weakest participant will be the only member for the final seven years. The A2 rating for the 2006 Series A-2 bonds reflects the weighted average credit quality of the four pool participants and an unenhanced pool, with no step up provisions or debt service reserve. The weakest participant will maintain about a 25% share through maturity in 2036. However, the strongest pool participant's portion of the pool is increasing over time, thereby stabilizing the weighted average credit quality in the near- and long- term. The Ba2 rating for the 2007 Series A-2 bonds is constrained to one notch above the credit quality of the weakest pool participant because it is an unenhanced pool that lacks a step up provision or debt service reserve and the weakest participant is equal to over 25% of the pool. The pool participants' remaining share of debt service are as follows: the City of Palm Springs (29%), the Town of Paradise (38%) and the City of Port Hueneme (33%). Paradise's share of the pool is declining but remains material until fiscal 2028. Thereafter, Paradise's share will decline rapidly through fiscal 2031 when Port Hueneme will become the sole pool participant. RATING OUTLOOK Outlooks are not typically assigned to local governments or pool financings with this amount of debt outstanding (2006 Series A-1 and 2006 Series A-2). The stable outlook on the authority's Taxable Pension Obligation Bonds, 2007 Series A-2 Bonds reflects Moody's view that the settlement payment received by Paradise from Pacific Gas & Electric Company (PG&E, B1 stable) will stabilize the town's financial position, which had been weakened by the loss of nearly all ongoing revenue sources following the November 2018 Camp Fire. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS -- Improvement in the weighted average credit quality of pool participants -- Adoption of long-term financial plan by the Town of Paradise that provides path for ongoing financing of city operations, capital investments and debt service (2007 Series A-2) -- Economic recovery and rebuilding of Paradise (2007 Series A-2) FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS -- Decline in the weighted average credit quality of pool participants -- Rapid depletion of Paradise's reserves that doesn't provide pathway for ongoing payment of debt service (2007 Series A-2) LEGAL SECURITY Payments by the participating municipalities to the authority for their share of debt service are their unconditional obligations, payable from any legally available funds. There is no cross collateralization or cross default. Therefore, no municipality is responsible for the bond repayments of any other municipality and default of one municipality will not constitute default of any other municipality. Additionally, the authority's general funds are not pledged for payment of the bonds. There is no debt service reserve fund. Under the terms of separate trust indentures, the participating municipalities make debt service payments to the trustee, Wells Fargo Bank, NA (Aa1). The terms in the agreements are similar except for the debt service schedules. Payments sufficient to pay the municipality's proportionate share of principal and interest on the bonds are due to the trustee on August 1 each year. For current interest bonds, payment for interest is due in January and June, and payment for principal is due in June. For capital appreciation bonds, payment of principal and accreted interest is due in June. Once the funds are received by the trustee they are deposited into a bond fund, where there are held until they are transferred for payment to bondholders. If any funds remain after full debt service has been paid, those funds will be returned to the appropriate municipality by the trustee. Failure to pay principal and/or interest by August 1 constitutes a default under the trust agreement. If a default occurs, the municipality is given a 60 day period by the trustee to cure the default. PROFILE The California Statewide Communities Development Authority's Pension Obligation Bond Program provides an opportunity for local governments in California (Aa2 stable) to finance their unfunded pension liabilities. Each of the local governments issued pension obligation bonds, which were sold to the authority to finance all or a portion of their unfunded pension liability. Pool participants in the 2006 Series A-1 Bonds include the Cities of Auburn, Benicia and Novato. Pool participants in the 2006 Series A-2 Bonds include the Cities of Benicia, Novato, Pacific Grove and Pinole. Pool participants in the 2007 Series A-2 Bonds include the Town of Paradise and Cities of Palm Springs and Port Hueneme. METHODOLOGY The principal methodology used in these ratings was Public Sector Pool Programs and Financings Methodology published in April 2020. CANNABICS PHARMACEUTICALS: Gabriel Yariv Nominated as Exec Chairman ------------------------------------------------------------------- The Board of Directors of Cannabics Pharmaceuticals Inc. nominated fellow director Mr. Gabriel Yariv as executive chairman of the Board. Mr. Yariv, 44, brings over 20 years of successful executive experience in the medical industry. Mr. Yariv was part of the founding group of BreathID, an Oridion Medical (now Medtronic) business unit, and its subsequent spinoff company BreathID Inc. (Exalenz Bioscience), which develops and manufactures advanced non-invasive diagnostic medical devices for gastrointestinal and liver conditions. Mr. Yariv also co-founded and was CEO of SimuTec, a medical simulation and training company in Brazil that develops and commercializes advanced personalized Virtual Reality training programs for physicians. Mr. Yariv is actively engaged in non-profit and philanthropic activities including ongoing business mentoring of entrepreneurs, founder and CEO of the Yariv Foundation for Leadership, and current member of the Friends of the Israel Museum society. Mr. Yariv holds a BA (Cum Laude) in History, Philosophy & Political Science from Boston University. About Cannabics Cannabics Pharmaceuticals Inc., based in Bethesda, Maryland, is dedicated to the development and licensing of personalized cannabinoid-based treatments and therapies. The Company's main focus is development and marketing innovative bioinformatic delivery systems for cannabinoids, personalized medicine therapies and procedures based on cannabis originated compounds and bioinformatics tools. The parent Company Cannabics Inc was founded by a group of Israeli researchers from the fields of cancer research, pharmacology and molecular biology. Cannabics reported a net loss of $7.47 million for the year ended Aug. 31, 2020, compared to net income of $1.13 million for the year ended Aug. 31, 2019. As of May 31, 2021, the Company had $3.80 million in total assets, $1.47 million in total current liabilities, and $2.33 million in total stockholders' equity. Weinstein International. C.P.A., in Tel-Aviv, Israel, the Company's auditor since 2019, issued a "going concern" qualification in its report dated Nov. 4, 2020, citing that the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. CB REAL ESTATE: Seeks to Hire Correa Acevedo as Special Counsel --------------------------------------------------------------- CB Real Estate, LLC seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Correa Acevedo & Abesada Law Offices, P.S.C. as special counsel. The Debtor needs the firm's legal assistance in the case styled CB Real Estate v. Lilly del Caribe before the Court of First Instance of Puerto Rico and the appellate cases involving the same respondent. The firm's hourly rates are as follows: Sergio Criado, Esq. $175 per hour Associates $125 per hour Paralegals and law clerks $75 per hour Sergio Criado, 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: Sergio Criado, Esq. Correa Acevedo & Abesada Law Offices, P.S.C. Centro Internacional de Mercadeo, Torre II 90 Carr. 165, Suite 407 Guaynabo, P.R. 00968 Tel.: (787) 273-8300 Fax:(787) 273-8379 Email: scriado@calopsc.com About CB Real Estate San Juan, P.R.-based CB Real Estate, LLC is a fee simple owner of two commercial buildings located in Puerto Rico and a residential property in New York, valued at $8.9 million in the aggregate. CB Real Estate sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 21-01849) on June 16, 2021, listing total assets of $10,147,500 and total liabilities of $3,407,130. Horacio Campolieto Bielicki, president of CB Real Estate, signed the petition. Judge Mildred Caban Flores oversees the case. The Debtor tapped Charles A. Cuprill, PSC Law Offices as bankruptcy counsel and Correa Acevedo & Abesada Law Offices, P.S.C. as special counsel. Luis R. Carrasquillo & Co. P.S.C. and Vicente Garcia CPA & Co., P.S.C. serve as the Debtor's financial consultant and accountant, respectively. CCM MERGER: Moody's Hikes CFR to B1 & First Lien Revolver to Ba2 ---------------------------------------------------------------- Moody's Investors Service upgraded CCM Merger, Inc.'s Corporate Family Rating to B1 from B2 and Probability of Default Rating to B1-PD from B2-PD. CCM's first lien revolver and term loan were upgraded to Ba2 from Ba3 and its senior unsecured notes were upgraded to B3 from Caa1. The outlook is stable. "The upgrade considers that CCM will continue to generate significant free cash flow and maintain debt/EBITDA below 4.0x," stated Keith Foley, a Senior Vice President at Moody's. For the latest 12-month period ended June 30, 2021, CCM generated about $56 million of free cash flow after capital expenditure, and all scheduled debt service. Moody's expects that amount will increase to more than $75 million annually in the next 12-months. Like other gaming companies, CCM's results have been strong despite continued coronavirus concerns and social distancing restrictions. Additionally, CCM has made a significant voluntary term loan payment above the $2.8 million scheduled annual term loan payment requirement. In June, the company made a $36 million term loan repayment, which is about 13% of the original $275 million amount issued. As a result, CCM's debt/EBITDA calculated on an annualized basis using the first six months EBITDA for the year-to-date period ended June 30, 2021 debt/EBITDA was modest at 3.1x. For the latest 12-months ended June 30, 2021, debt-to-EBITDA was 4.5x, which includes period of temporary closure (debt/EBITDA on a net debt basis was lower at 4.0x). Moody's believes leverage will decline from 4.5x over the next year given that the company's latest 12-month amounts include periods of temporary closures and volume restrictions that negatively affected earnings. As the second half of 2020 moves out of the LTM periods, earnings will improve despite headwinds from a potential easing of demand as volume at competing entertainment options gradually recovers and some expenses are restored. The stable outlook considers that CCM will continue to generate substantial free cash flow that supports the company's very good liquidity and can be used to manage the company's leverage at a level consistent with Moody's expectations for the company's B1 Corporate Family Rating. The following ratings/assessments are affected by the action: Ratings Upgraded: Issuer: CCM Merger, Inc. Corporate Family Rating, Upgraded to B1 from B2 Probability of Default Rating, Upgraded to B1-PD from B2-PD Senior Secured 1st Lien Term Loan B, Upgraded to Ba2 (LGD2) from Ba3 (LGD2) Senior Secured 1st Lien Revolving Credit Facility, Upgraded to Ba2 (LGD2) from Ba3 (LGD2) Senior Unsecured Notes, Upgraded to B3 (LGD5) from Caa1 (LGD5) Outlook Actions: Issuer: CCM Merger, Inc. Outlook, Remains Stable RATINGS RATIONALE CCM's B1 Corporate Family Rating reflects the demonstrated stability and favorable characteristics of the Detroit gaming market-- high poluation density and limit of three casinos in the Detroit gaming market -- history of financial support from its owner, and limited capital expenditure plans. Also supporting CCM's credit profile is the expectation that the company has demonstrated the ability and willingness to use its free cash flow to repay date above and beyond scheduled required amortization amounts. Corporate governance in terms of financial policy is also good. Marian Ilitch, the company's owner, has supported the company with cash infusions to support liquidity when necessary, and the company has historically paid down debt in amounts above scheduled amounts. Key credit concerns include CCM's small, single asset profile, credit pressure from efforts to contain the coronavirus, potential for a slow recovery, and long-term fundamental challenges facing regional gaming companies. 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, the recovery is tenuous, and continuation will be closely tied to containment of the virus. As a result, a degree of uncertainty around Moody's forecasts remains. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The gaming sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, CCM remains vulnerable to a renewed spread of the outbreak. CCM also remains exposed to discretionary consumer spending that leave it vulnerable to shifts in market sentiment in these unprecedented operating conditions. Additional social risk for gaming companies includes evolving consumer preferences related to entertainment choices and population demographics that may drive a change in demand away from traditional casino-style gaming. Younger generations may not spend as much time playing casino-style games (particularly slot machines) as previous generations. Data security and customer privacy risk is elevated given the large amount of data collected on customer behavior. In the event of data breaches, the company could face higher operational costs to secure processes and limit reputational damage. Corporate governance in terms of financial policy is good. Marian Ilitch has supported the company with cash infusions to support liquidity when necessary, and the company has consistently paid down debt. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A ratings upgrade is unlikely without a diversification of the asset base. CCM would also need to generate consistent and positive free cash flow, achieve and maintain debt-to-EBITDA below 3.0x, and adhere to financial policies that maintain low leverage. The company's ratings could be downgraded if competition in the Detroit gaming market increases, there is a decline in EBITDA performance from factors such as volume pressures or higher operating costs, a deterioration in liquidity, or an inability to achieve and sustain debt-to-EBITDA on an LTM basis below 4.5x. The principal methodology used in these ratings was Gaming published in June 2021. CCM, through its subsidiary Detroit Entertainment L.L.C, owns and operates the MotorCity Casino Hotel in Detroit, Michigan, one of only three commercial casinos allowed to operate in the Detroit area. CCM is owned by Marian Ilitch and generated approximately $327 million in net revenue in the last twelve months ended June 30, 2021. The company is privately held and does not publicly disclose detailed financial information. CHENIERE ENERGY: Fitch Assigns BB+ Rating on Senior Unsec. Notes ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB+'/'RR4' rating to Cheniere Energy Partners, L.P.'s (CQP) senior unsecured notes due 2032. The Long-Term Issuer Default Rating (IDR) was upgraded on Sept. 10, 2021 to 'BB+'. The upgrade reflects upcoming leverage reductions and FCF increases at CQP's subsidiaries. Sabine Pass Liquification's (SPL; BBB-/Positive) unlevered Train 6 is slated to come online in 1Q22, nine months earlier than Fitch previously expected. Cheniere Marketing (CMI) has also increased revenues (about 12% of CQP's revenues) due to a run-up in global liquefied natural gas (LNG) prices, which are double the level of last summer, and increased excess capacity for marketing. CQP's rating reflects the stable cash flows provided by long-term sale and purchase agreements (SPA) at SPL with investment-grade counterparties that effectively pass through fixed and variable expenses. These factors are offset by the structural subordination of CQP's debt to significant project-level debt at SPL, refinancing risk at SPL and the lack of a planned redundant storage tank at Sabine. KEY RATING DRIVERS Long-Term Contracted Cash Flows: Fitch believes the contract structure insulates cash flows from demand trends in the global LNG market and provides stable cash flows of consolidated debt obligations. SPL's cash flows are backed by long-term SPAs with investment-grade counterparties. Each SPA provides revenue from a fixed- capacity fee paid regardless of LNG volumes lifted and a commodity based variable fee on LNG volumes delivered, equal to 115% of current Henry Hub prices. Fitch notes that Train 6 is not fully contracted and Cheniere announced it will assign a SPA for the remaining open capacity from an investment-grade counterparty by Train 6's completion. High-Quality Counterparties: SPL's counterparties for the long-term SPAs are investment-grade. Concerns relate to the 'BBB' rated customers, namely Naturgy and GAIL, under a low-likelihood/high-severity scenario of customer nonpayment. The SPL indenture contains a cash trap provision preventing cash distributions to CQP if forward-looking debt service coverage ratios are less than 1.20x. The most likely way to trigger a cash trap is non-payment from a long-term customer during a period of low spot prices, as these two tend to correlate. This nonpayment risk is remote, but does factor into the rating. Financial Policy Supports Leverage Reduction: The recently announced capital allocation strategy supports debt reduction and migration of project level debt to CQP while initiating a dividend and restarting the share repurchase program at Cheniere. Under Fitch's forecast, free cash flow turns positive in 2022 and consolidated leverage trends lower, approaching 5.0x by 2022. Train 6 construction is fully funded and future capex is limited to debottlenecking projects. Fitch expects leverage to remain around 5.0x through 2024. The debt reduction matches management's strategy to lower consolidated leverage at Cheniere to below 5.0x as it begins shareholder returns in 3Q21 and funds the Stage 3 project at Corpus Christi. LNG Sales Rebound: CQP's volumes rebounded to pre-pandemic levels, loading 630TBtu in 1H21, above the 578TBtu loaded in 1H19. The strong rebound is due to the severe winter cold in Asia, and low European gas storage levels while demand picks up as countries accelerate its transition to green energy. Global LNG prices are also near all-time highs with prices more than doubled compared to last summer. This trend contrasts 2020 when SPL's long-term customers cancelled cargos permitted under the SPAs. SPL continued receiving fixed-capacity payments of about $2.9 billion despite the cancellations. Based on Fitch's price deck, additional cargo cancellations are not expected during the forecast. More Cargos for CMI: Fitch believes there is better visibility into CMI revenues, as it enters more medium-term (two- to three-year) contracts Excess capacity not lifted by the long-term off-takers can be marketed by CMI through a contract between CMI and SPL. These LNG sales provided earnings upside historically and vary based on demand, global production capacity, weather and government policy. Cheniere's ability to quantify and mitigate emissions to support clean energy policies is critical to remaining competitive in the global LNG markets, and especially for CMI sales, as the energy transition accelerates. Fitch includes CMI revenues in the rating case, based on the resilience seen during 2020 and higher volumes available to CMI. CMI revenues are up 71% YTD 2021 compared with 2020. SPL's train production improved by an average 3% after completing debottlenecking projects and CMI is contracting 90% of capacity, up from 80%. Fitch believes the revenues from short- to medium-term sales are more volatile than those generated under long-term contracts. Structural Subordination: CQP is structurally subordinate to $13.7 billion in SPL nonrecourse project debt used for the construction and development of Trains 1-5. Project debt covenants restrict distributions to CQP, subject to coverage tests. Significant project debt maturities occur every year. Refinancing of SPL project debt requires full amortization of principal within the SPA term and reduces cash available for distributions to CQP over the long term. The company plans to migrate portions of SPL debt to CQP to alleviate the structural subordination of CQP's debt. Structural Complexity: The ratings consider that CQP is structured as a bankruptcy-remote entity from SPL. There are weak legal ties between the obligations of CQP and its subsidiary SPL, and operational linkages are much stronger, as SPL could not operate without use of the storage, regasification and loading facilities owned by CQP. While the ratings between SPL and CQP are not linked, Sabine Pass is the primary revenue generator for parent Cheniere. These companies have a one notch difference due to the potential for cash traps at the project level, limiting upstream cash to CQP. DERIVATION SUMMARY CQP's consolidated operations are supported by long-term, take-or-pay style contracts for import, export and pipeline capacity. Its contract tenor, earnings and stable cash flow profile compares favorably with midstream energy peers, such as Boardwalk Pipeline Partners LP (Boardwalk; BBB-/Positive) and New Fortress Energy (NFE; BB-/Stable). Boardwalk has subsidiaries with very low leverage, while debt at its operating companies pose no threat of a cash trap. For NFE, the majority of its subsidiaries do not have project level debt. In contrast, SPL is more highly levered, and in a combined and severe downside case of payment default by a large customer and weak merchant price forecast realizations, cash could be trapped. Fitch notes SPL's contracts have a more substantial duration the majority of its midstream peers and are primarily fee-based revenue with a pass-through of fixed and variables costs. On this basis, Fitch considers CQP's business risk profile to be similar to a company with full take-or-pay contracts. SPL's current contracts on Trains 1-5 have between 15 to 18 years remaining, providing a significant amount of revenue and earnings. The contracts are with investment-grade counterparties, in contrast to NFE that has over 60% of its counterparties based in non-investment countries. NFE's contract tenor compare favorably with CQP, averaging about 15 years. However, even after the Hygo and Golar acquisitions, it has a lower portion of fixed take-or-pay revenues, is exposed to changes in commodity price and offtake volumes, and is smaller scale than CQP, factors which drive the difference in ratings. Consolidated leverage levels are falling for CQP, and will compare more favorably with Fitch's rated midstream coverage. Fitch expects consolidated debt with equity credit/operating EBITDA of 6.0x in 2021, declining to around 5.0x under the rating case versus Fitch's expectations of leverage for 'BB' midstream issuers in the 5.0x to 5.5x range. Fitch believes the growth of CQP's operating profile, its demonstrated ability to manage construction and completion risks at liquefaction projects, and cash flow stability provided by long-term capacity contracts are meaningful offsets to relatively higher consolidated leverage. Cash flows are primarily derived from operations at Sabine Pass and the ratings consider the structural subordination CQP's debt has to Sabine's high levels of project level financing. KEY ASSUMPTIONS -- Fitch's price deck, e.g. for 2021 Henry Hub (HH) of $3.40/MMBtu, Title Transfer Facility (TTF) and National alancing Point (NBP) of $10 of natural gas, and for 2022, HH at $2.75, TTF/NBP at $6 and long-term natural-gas price at HH of $2.45 and TTF/NBP of $5; -- Construction of Train 6 at SPL is complete, consistent with management expectations of 1Q21; -- Tolling Use Agreement payments to Sabine Pass LNG from third parties remain stable until contract expiration in 2029; -- Train capacity is in line with management's guidance of 4.9mtpa-5.1mtpa, contracted at 90%; -- CMI revenues are assumed in the rating case; -- Consolidated debt reduction in line with management guidance; -- Upstream distributions to CQP increase based on MLP payout terms. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Consolidated total debt with operating credit to operating EBITDA below 5.5x on a sustained basis, which would allow the company to receive a rating closer to Sabine Pass' rating, although still likely notched below Sabine Pass' rating; -- Positive rating action at Sabine Pass. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Any construction or operating delays at Sabine Pass beyond the original construction completion of first-half 2023 that delay or deteriorate cash flows or increase leverage; -- New debt at Sabine Pass LNG or Creole Trail Pipeline; -- Negative ratings actions at Sabine Pass; -- A multi-notch downgrade or financial distress of any SPA counterparty; -- Consolidated total debt with operating credit to operating EBITDA above 6.5x expected on a sustained basis. 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, CQP's consolidated liquidity was approximately $2.8 billion, including $1.2 billion unrestricted cash. SPL maintains a revolving credit facility which is primarily used for gas procurement. The revolver matures in 2025 and had $804 million available for borrowing as of June 30, 2021. CQP has its own $750 million revolver that is currently unutilized and matures in 2024. Management stated that the remaining construction expenditures are expected to be funded through cash on hand and FCF. CQP and its subsidiaries have large cash accounts, with amounts held at SPL considered restricted totaling $65 million as of June 30, 2021. These amounts are available to CQP as long as DSCR is equal to or greater than 1.25x in the next 12 months and the previous 12 months. Fitch anticipates that distributions to CQP will not be restricted by the distribution test and will increase as Train 6 comes online. While this cash is held at a non-recourse entity and can be withheld for a variety of reasons, Fitch continues to believe that CQP's liquidity remains sufficient to meet its needs and will not be limited by the distribution test. Maturities Manageable but Steady: CQP's and SPL's near-term maturities are manageable. The secured revolver is CQP's earliest maturity in 2024. Proceeds of this transaction will refund the CQP note maturing in 2026, and the new transaction matures in 2032. SPL's maturity profile is a bit more aggressively laddered, with SPL having between $1.0 billion and $2.0 billion project level debt maturing annually from 2022 through 2028 with $1 billion due in March 2022. Management indicated it expects to refinance these maturing obligations with a combination of project level, amortizing debt, CQP unsecured notes and cash repayments to shift project level debt to the CQP and reduce leverage. ISSUER PROFILE CQP is a master limited partnership owning an LNG import-export facility and a Federal Energy Regulatory Commission regulated interstate natural gas pipeline operating subsidiary, Creole Trail Pipeline LP. Through its subsidiary, SPL, it owns and operates liquefaction facility located in Cameron Parish, Louisiana in the U.S. Gulf Coast. The SPL facility includes six liquefaction trains that convert natural gas (delivered to the facility via several interstate pipelines) into LNG. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch adjusted the restricted cash accounts on the balance sheet on a historical basis to show cash available at guarantor subsidiaries. ESG CONSIDERATIONS CQP has a relevance Score of '4' for Group Structure and Financial Transparency as it possesses a complex group structure, with significant related party transactions and ownership concentration. This has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. CHENIERE ENERGY: Moody's Rates $1.2BB Senior Unsecured Notes 'Ba2' ------------------------------------------------------------------ Moody's Investors Service assigned a Ba2 rating to Cheniere Energy Partners, L.P's (CQP) $1.2 billion senior unsecured note offering. The outlook for CQP is stable. Proceeds from the offering combined with cash on hand will be used to refinance and retire CQP's $1.1 billion 5.625% senior unsecured notes due 2026, approximately $318 million of its affiliate Sabine Pass Liquefaction LLC's (SPL: Baa3, stable) $1.0 billion senior secured notes due 2022 and to pay related fees and expenses. SPL intends on refinancing the remaining amount of its senior secured notes due 2022 later this year through a combination of available cash and a separate note offering. CQP's unsecured notes will rank pari passu with its existing unsecured notes also rated Ba2 stable. Moody's expect CQP's debt profile to increase to $4.2 billion from $4.1 billion upon closing of the proposed bond offering. A $750 million senior secured revolving credit facility, currently undrawn, provides CQP liquidity support for construction costs and general corporate purposes. RATINGS RATIONALE The Ba2 rating assigned to CQP's senior unsecured notes reflects the predictability and recurring nature of anticipated long-dated cash flows derived under existing contractual arrangements from its two unencumbered wholly-owned operating subsidiaries Cheniere Creole Trail Pipeline, L.P (CTPL: not rated) and Sabine Pass LNG, L.P. (SPLNG: not rated), and distributions from its most significant subsidiary, Baa3 rated SPL. Cash flow and distributions from these operating subsidiaries represent CQP's primary source of cash flow. These positive credit features are balanced by CQP's structurally subordinated position to SPL's $13.7 billion of funded deb (approximately $13.3 billion on a pro forma basis), the ongoing meaningful distribution requirements of CQP's equity ownership and a highly leveraged capital structure that is forecasted to remain in excess of 6.0x on a consolidated Debt to Contracted EBITDA basis through at least 2023. CQP's current annualized distribution to unitholders is $2.66 or approximately $1.4 billion annually. SPL is a six train liquified natural gas facility located in Cameron Parish, Louisiana, on the coast of the Gulf of Mexico. Trains 1-5 have achieved commercial operation with the majority of the aggregate capacity contracted to investment grade counterparties. Contracted fixed payments from these counterparties for Trains 1-5 total approximately $2.9 billion annually and provide for annual recurring EBITDA in excess of $1.8 billion. Train 6 remains under construction with substantial completion anticipated in the first quarter of 2022. Contractual cash flows associated with Train 6 will strengthen SPL's overall cash flow profile. Distributions from SPL to CQP totaled $1 billion in 2020. CQP's financial performance for the last twelve months has been slightly stronger than anticipated owing in large part to increased global demand and market pricing for liquified natural gas. Moody's calculate CQP's consolidated EBITDA and cash flow from operating activities at approximately $2.6 billion and $1.9 billion, respectively during the last twelve months ended June 30, 2021 and debt-to-EBITDA and project cash from operations to adjusted debt at approximately 6.9 times and 11%, respectively. These financial metrics should improve modestly over the near-term due to the anticipated substantial completion of SPL Train 6 in early 2022. Moreover, CQP's cash flow after capital expenditures, calculated at $1.2 billion over the trailing twelve months, is expected to increase more materially with the completion of Train 6. This cash flow will continue to be distributed to CQP unitholders. There is no current plan to expand SPL beyond 6 trains. RATING OUTLOOK CQP's stable outlook reflects the heavy reliance on distributions from SPL along with consistent cash flow from CTPL and SPLNG, which together will enable CQP meets its funding requirements. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Given CQP's level of reliance on SPL cash flow, a rating change at SPL would likely trigger a similar change at CQP. SPL's rating could be upgraded if there is a significant and sustained reduction in outstanding debt or improvement in cash flow generation such that its ratio of project cash from operations to debt exceeds 15% on an ongoing basis. Moody's calculate this ratio at 12% over the last twelve months. Factors that could lead to a downgrade Given CQP's level of reliance on SPL cash flow, a rating change at SPL would likely trigger a similar change at CQP. SPL's rating could be downgraded or the outlook revised to negative should it encounter major operating problems, not generate the expected level of cash flow or the weighted average credit profile of its off-takers decline materially. CQP is a publicly traded master limited partnership that owns and operates CTPL, a 94 mile long 42 inch diameter pipeline that provides natural gas supply transportation to SPL; SPLNG, a regasification terminal that has been operating since 2008; and SPL, a six liquefaction train development with trains in various stages of construction and operation. The principal methodology used in this rating was Midstream Energy published in December 2018. CHENIERE ENERGY: S&P Assigns 'BB' Rating on $1.2BB Unsecured Notes ------------------------------------------------------------------ S&P Global Ratings assigned its 'BB' issue-level rating and '4' recovery rating to U.S.-based liquefied natural gas (LNG) developer Cheniere Energy Partners L.P.'s (CQP) $1.2 billion senior unsecured notes due in January 2032. The company plans to use the proceeds from the financing to fully redeem the existing $1.1 billion 5.625% senior notes due in 2026 at CQP and with the balance partially repay the 6.25% secured notes due in 2022 at Sabine Pass Liquefaction LLC (SPL). The notes are part of a broader initiative to delever the debt outstanding at SPL through debt issuance at CQP. S&P said, "The 'BB' issue-level rating and '4' recovery rating on the notes due in January 2032 reflect our expectation that lenders would receive meaningful (30%-50%; rounded estimate: 35%) recovery if a payment default occurs. The 'BB' issuer credit rating on CQP and the 'BBB-' issue-level rating on the company's senior secured revolver are unchanged. "Our simulated default scenario for CQP contemplates a default arising in 2026 from a prolonged period of weak LNG prices, which could pressure the company's commodity-sensitive cash flows, despite being generated by a diverse portfolio of long-term take-or-pay contracts with investment-grade counterparties. The default could also arise because CQP relies on its subsidiaries for cash flow, which it receives after the debt service at the subsidiary level." Simulated default assumptions -- All debt has six months' interest outstanding at default. -- S&P believes that in a default scenario, claims relating to the company's senior unsecured notes would be effectively subordinated to the claims relating to the senior secured credit facility, to the extent of the value of the collateral securing the facility. -- S&P is assuming a post-default run rate EBITDA of about $347 million. -- S&P uses a 7x EBITDA multiple to arrive at the enterprise value. Simplified waterfall -- Net enterprise value after 5% administrative costs: $2.31 billion -- Secured first-lien debt: $766 million --Recovery expectations: 90%-100% (rounded estimate: 95%) -- Total value available to unsecured claims: $1.55 billion -- Senior unsecured debt: $4.29 billion --Recovery expectations: 30%-50% (rounded estimate: 35%) CHG HEALTHCARE: Moody's Rates New 1st Lien Loans 'B1' ----------------------------------------------------- Moody's Investors Service affirmed the B2 Corporate Family Rating and B2-PD Probability of Default Rating of CHG Healthcare Services, Inc. Moody's also assigned B1 rating to the company's new senior secured first lien credit facilities. At the same time, Moody's changed the outlook to negative from stable. This follows CHG's announcement of refinancing its entire capital structure with a new $1.58 billion senior secured 1st lien term loan, a new $150 million senior secured 1st lien revolver and a new $430 million secured 2nd lien notes (not rated). The proceeds from the new debt instruments together with roughly $300 million of cash on hand will be used to pay a $560 million dividend to shareholders, retire all outstanding debt, and pay transaction fees and expenses. The negative outlook reflects CHG's very high leverage pro forma for the debt refinancing and uncertainties related to the pace of deleveraging. Moody's estimates that CHG's pro forma debt/EBITDA will be above 7 times but Moody's expects that CHG's leverage will decline below 6 times in 2022. However, there are uncertainties related to the pace of deleveraging as the company's business volumes and earnings return to pre-pandemic levels. Governance risk considerations are material to the rating. Moody's views CHG's financial policies as aggressive reflecting its private equity ownership. Ratings affirmed: Issuer: CHG Healthcare Services, Inc. Corporate Family Rating at B2 Probability of Default Rating at B2-PD Ratings Assigned: $150 million senior secured first lien revolving credit facility expiring in 2026 at B1 (LGD3) $1.58 billion senior secured first lien term loan due 2028 at B1 (LGD3) Outlook action: Outlook changed to negative from stable RATINGS RATIONALE CHG's B2 CFR reflects its high leverage and niche focus in the locum tenens business. With improving business volumes, Moody's expects that debt/EBITDA will decline below 6.0 times in 2022 as the company continues to recover from the negative impact of the coronavirus pandemic. The company's CFR is also constrained by the company's aggressive financial policies as evidenced by shareholder dividends. The company's ratings benefit from good scale and leading market position in the fragmented locum tenens market, positive long-term fundamental demand trends in locum tenens, and a demonstrated track record of good cash flow and earnings growth. CHG further benefits from diversification of physician specialty and minimal concentration across customers. Moody's views CHG's liquidity as very good. Liquidity is supported by $15 million of cash on hand and full availability under the new $150 million revolver. Moody's expects CHG to generate $125-$175 million in cash flow from operations the next 12 months, which will easily cover $45-$55 million in capex, and approximately $16 million in mandatory debt amortization. The updated capital structure rated B1 is one notch above the B2 CFR reflecting its senior position to the second lien debt (unrated) issued by CHG. The proposed first lien term loan is expected to have no financial maintenance covenants while the proposed revolving credit facility will contain a springing maximum first lien net leverage ratio of 8.50:1.00 that will be tested when the revolver is more than 35% drawn. The new credit facilities are expected to provide covenant flexibility that if utilized could negatively impact creditor. Notable terms include the following: (1) The proposed first lien credit facility contains incremental facility capacity up to the sum of the greater of $287 million and 100.0% of LTM Consolidated Adjusted EBITDA, plus unlimited amounts up to either 5.50x first lien net leverage ratio or the ratio immediately prior to such incurrence. Amounts up to the greater of $143.5 million and 50.0% of LTM Consolidated Adjusted EBITDA may be incurred with an earlier maturity 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, and (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. Social and governance considerations are material to the rating, given the substantial implications for public health and safety. Although CHG faces no direct reimbursement risk, pricing pressure placed on its clients as a result of regulatory changes could partially flow through to the company as clients look to reduce costs. This could also lead to weakened volume growth as providers may become more prudent in their use of locum tenens. Governance risk include CHG's aggressive financial policies reflecting its private equity ownership FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating could be downgraded if CHG's financial policy becomes more aggressive, liquidity deteriorates, demand for CHG's services/supply of locum tenens physicians decline on a sustained basis. While the historical level of dividend payout is already incorporated in Moody's analysis, any outsized dividend payout will pressure the company's ratings. Quantitatively, if the company's debt/EBITDA is sustained above 6.0 times, the rating could be downgraded. Moody's could upgrade the rating if CHG reduces its leverage on a sustained basis such that total debt/EBITDA is maintained below 5.0 times. An upgrade would also require the company to maintain strong organic earnings growth and a good liquidity profile with growing levels of free cash flow. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. CHG is a provider of temporary healthcare staffing services to hospitals, physician practices and other healthcare settings in the United States. CHG derives the majority of its revenue from temporary physician staffing but also provides travel nurse, allied health, and permanent placement services. CHG reported $1.9 billion of revenue for the twelve months ended June 30, 2021. CHG HEALTHCARE: S&P Affirms 'B' ICR on Dividend Recapitalization ---------------------------------------------------------------- S&P Global Ratings affirmed its 'B' issuer credit rating on Salt Lake City-based health care staffing provider CHG Healthcare Services Inc. The outlook remains stable. S&P said, "We also assigned our 'B' issue-level and '3' recovery ratings to the company's revolving credit facility and first-lien senior secured debt. The '3' recovery rating indicates our expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of default. "The stable outlook on CHG reflects our expectation that adjusted leverage will remain above 5x over the next 12 months despite EBITDA growth and good cash flow because of its financial sponsor's aggressive financial policies. "We expect CHG to remain highly leveraged, with debt to EBITDA of more than 6x over the next two years. "The company's proposed use of about $300 million of cash from its balance sheet to fund the dividend limits the increase in leverage to about 7x by the end of 2021. We expect leverage to decline to 6.0x-6.5x due to improvement in the locum tenens segment's operating performance, as the pandemic eases. Nevertheless, we expect leverage to remain above 5x due to financial sponsor ownership that prioritizes shareholder return over sustainable debt reduction." Demand for locum tenens has recently recovered to pre-COVID-19 levels while nursing and certain allied disciplines continue to benefit from exceptionally high demand. Volume in the high-margin locum tenens business has recovered to pre-COVID-19 levels following the return of non-emergent procedure volume. Despite the uptick in COVID-19 cases over the past month, S&P does not expect any large scale patient volume disruptions like it saw in spring 2020. Following the onset of the pandemic, the bill rates and wages for nurses increased significantly due to the urgent need to quickly fill positions and hazard pay requirements to attract nurses to higher-risk positions. Though bill rates and wages have fluctuated significantly over the past 12 months, they remain elevated. S&P said, "Notwithstanding the near-term elevation of premium rates, we expect premium revenue to eventually decrease slowly from current levels, with declining average nurse bill rates and acuity levels. We expect higher-than-usual compensation packages for nurses and other clinicians supporting the COVID-19 surges to begin to subside toward the end of 2021. Nurse staffing companies pass through nearly all rate increases to the hospital clients. We expect demand for the company's services to remain high, as the workforce shortages that were already severe before the pandemic began have been accentuated." The nursing segment is expected to see a larger-than-usual number of retirements, greater-than-usual turnover among permanent staff, and some changes in work environments as the industry grapples with an unusually high level of burnout. CHG's market leadership position in the U.S. locum tenens market is solidified with the diversity of specialty physicians and the new workflow solutions offering. CHG has a leading 38% market share in the high-margin locum tenens market, far exceeding that of its close pure-play competitors, AMN Healthcare Inc. and Jackson Healthcare (not rated). The company continues to benefit from its national scale and network position as one of the major providers with a significantly larger presence in locum tenens than competitors. Through the acquisition of Modio in 2019 and LocumsMart in early 2020, CHG now offers cloud-based credentialing and vendor-neutral vendor management system solutions, respectively. S&P believes these service offerings will help deepen its relationships with customers as well as physicians and provide moderate entry barriers since these offerings will be integrated with the customer's systems. S&P said, "The stable outlook on CHG reflects our expectation that adjusted leverage will remain above 5x over the next 12 months despite EBITDA growth and good cash flow because of its financial sponsor's aggressive financial policies. "We could lower the rating on CHG if an unforeseen operating issue resulted in significant customer losses; a sharp contraction in EBITDA; and free operating cash flow (FOCF) to debt of less than 3%. We estimate this scenario would entail a margin contraction of more than 300 basis points (bps) coupled with a modest revenue decline. "We could raise the rating if we believed the company would sustain leverage below 5.5x and funds from operations (FFO) to total debt of above 12%. While the company could achieve these metrics with mid-single-digit percent revenue growth and some margin expansion, we would likely view it as temporary given the company's financial sponsor ownership and aggressive financial policies." COGECO FINANCING 2: Moody's Rates New $900MM First Lien Loan 'B1' ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to a new 7-year, $900 million first-lien secured term loan (due 2028) issued at Cogeco Financing 2, LP to fund the acquisition of the Ohio Broadband Systems of WideOpenWest Finance, LLC. Cogeco Financing 2, LP ("Cogeco Financing"), Cogeco Communications Finance (USA), LP ("Cogeco Communications Finance") and Atlantic Broadband Finance, LLC (the borrowers under the existing credit facility) are affiliates of Cogeco Communications (USA) Inc. (Cogeco), which through its subsidiaries owns all of the operating assets. The rating outlook is stable for Cogeco. Assignments: Issuer: Cogeco Financing 2, LP Senior Secured Bank Credit Facility, Assigned B1 (LGD4) RATINGS RATIONALE Cogeco's credit profile is supported by a very competitive, fiber-rich, high speed network that is generating strong broadband demand (high-speed data or HSD) and subscriber growth. High broadband margins are helping to effectively offset the lower margin video business which is in decline. This balance, coupled with good in-market demographics, produces strong operating metrics including rising EBITDA margins in the mid 40% range, and EBITDA to Homes Passed greater than $400 and rising to over $425 (before the acquisition). Support from its much larger investment grade parent and another cash-rich equity partner are also positive credit factors, as is the Company's very good liquidity profile. The primary rating constraints include the Company's relatively small scale (one of the smallest US rated cable companies with over $1 billion in revenue, including this transaction), declining video business, and a less than conservative financial policy that periodically tolerates elevated leverage when executing M&A transactions. Cogeco has a very good liquidity profile supported by solid free cash flow generation, a fully undrawn $150 million revolver, and covenant-lite loans with substantial cushion. The Company also benefits from a favorable maturity profile with its revolver not maturing until 2024. Alternate liquidity is limited with a fully secured capital structure, however. The instrument ratings reflect the probability of default of the Company, as reflected in the B1-PD Probability of Default Rating, an average expected family recovery rate of 50% at default given the covenant-lite nature of the secured debt, and the particular instruments' ranking in the capital structure. The secured credit facilities are rated B1 (LGD4), the same as the CFR, with no significant rated junior debt to provide additional lift. Cogeco Financing 2, LP is the direct obligor of the new $900 million credit facility, as reflected in the amended credit agreement. Through a series of intercompany credit agreements, this obligation is pushed down to Atlantic Broadband Finance, LLC, a wholly owned indirect subsidiary of Cogeco Communications (USA) Inc. (B1 stable), which has assumed the debt via an indirect intercompany note obligation to Cogeco Financing 2, LP in an equivalent amount, and on essentially the same terms and conditions. The new borrower, and all intermediaries in the intercompany transactions, are now parties to the same security and guarantor agreements as the existing borrower, Cogeco Communications Finance (USA), LP., and therefore the obligations of Cogeco Financing 2, LP (secured by all assets) are pari-passu in rank. Cogeco is an indirect, 79% owned subsidiary of Cogeco Communications Inc., a publicly traded Canadian communications infrastructure company based in Montreal, Quebec which secured indebtedness is rated investment grade (Baa3 equivalent) by other credit rating agencies. Cogeco Communications Inc. provides cable services to residential and commercial customers in Ontario and Québec. LTM revenues of the parent at May 31, 2021 were approximately CND $2.48 billion, with Cogeco Communications USA, Inc. accounting for 45% of total consolidated revenue (51% pro forma the Ohio acquisition). This relationship provides certain benefits including management expertise and oversight, and greater equipment purchasing power which is handled by the parent. Specifically, Cogeco benefits from shared services including, procurement, HR, IT, insurance, and other resources shared with the parent. Beyond these benefits, Moody's believe there are few synergies given the different geographic footprints. However, the large size of the segment , requires Cogeco to maintain financial policies that will not jeopardize the credit profile of the parent company. Moody's believe this constraint on Cogeco (Moody's rated US operating subsidiary) implies the Company must maintain a leverage ratio at or below 6x (gross, as reported) based on management's guidance. Moody's believe Moody's adjusted ratio is very close to the as-reported calculations. Historically, management has executed a disciplined M&A growth strategy that tolerated elevated leverage for a temporary period and distributes limited to no distributions (upstream dividends to the parent would not be tax efficient). The stable outlook of Cogeco incorporates Moody's view that the company will grow revenues and EBITDA, maintain strong and rising EBITDA margins in the mid-40% range, and positive and rising free cash flow. Moody's expect capital expenditures to average mid twenties percent of revenue pro forma for the transaction and cost of debt to average near 3.0% as reported. Moody's project leverage to rise by about 1.2x at the close of the acquisition of the WOW assets, with about .5x annual deleveraging possible thereafter. Moody's outlook assumes video subscriber losses accelerating from low single-digit percentage to at least mid-single-digit, and growth in broadband subscribers of at least mid-single digit percent range. Moody's expect this dynamic to yield slowing revenue growth, falling to the low to mid-single digit percent range but generate better EBITDA margins. Moody's expects liquidity to remain very good. Note: all figures are Moody's adjusted projection over the next 12-18 unless otherwise noted. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Moody's could consider an upgrade rating action if leverage (Moody's adjusted debt-to-EBITDA) is sustained below 4x, and Free Cash Flow to debt (Moody's adjusted) is sustained above high single-digit percent. A positive rating action could also be considered with growth in the scale and or diversity of the business, greater stability in the video business, and or a more conservative financial policy. Moody's could consider a downgrade rating action if leverage (Moody's adjusted debt-to-EBITDA) is sustained above 5.5x, or Free Cash Flow to debt (Moody's adjusted) is sustained below 5%. A negative rating action could also be considered if liquidity deteriorated, company scale declined, financial policy turned more aggressive, or there was a material and unfavorable change in the operating trends or position of the broadband business. The principal methodology used in this rating was Pay TV published in December 2018. Headquartered in Quincy, Massachusetts, Cogeco Communications (USA) Inc., doing business as Atlantic Broadband, is a private company currently serving, pro forma the Ohio acquisition just completed, approximately 1.087 million primary service units (370 thousand basic video, 714 thousand high speed data and 182 thousand phone) across 12 states including Western Pennsylvania, Maryland, Delaware, Florida, Eastern Connecticut, New York, West Virginia, South Carolina, Maine, New Hampshire, Virginia and Ohio. The company is an operating subsidiary, and majority owned and controlled by Cogeco Communications Inc, a public company in Canada. Caisse de depot et placement du Quebec ("CDPQ") holds a 21% minority interest. Revenue for the last twelve months ended May 31, 2021 was approximately $868 million. COINBASE GLOBAL: Moody's Assigns 'Ba2' CFR, Outlook Stable ---------------------------------------------------------- Moody's Investors Service has assigned a Ba2 corporate family rating to Coinbase Global, Inc. and a Ba1 rating to the firm's proposed senior guaranteed notes. The rating assignment follows Coinbase's announcement of its proposed $1.5 billion senior unsecured notes issuance, that it intends to be guaranteed by its main operating subsidiaries. Coinbase intends to use the net issuance proceeds for general corporate purposes, and possibly to help finance acquisitions. Moody's said Coinbase's outlook is stable. The following ratings were assigned: Issuer: Coinbase Global, Inc. Corporate Family Rating, Assigned Ba2 Senior unsecured Notes Rating, Assigned Ba1 Outlook actions: Issuer: Coinbase Global, Inc. Outlook: Stable RATINGS RATIONALE Moody's said Coinbase's Ba2 CFR balances the credit strengths of its significant market share in cryptocurrency custody and trading, strong cash flow generation and high margins, with the underlying risks of an uncertain and fast-evolving operating environment. The firm has a leading franchise in offering crypto-based services to a large number of retail and institutional customers and has benefitted from strong revenue and earnings growth in recent periods. However, the firm's profitability and cash flow are almost entirely dependent upon the price and trading volume of cryptocurrencies, leaving it at risk of a substantial reduction in these factors. There is also fierce and growing competition in the sphere, and the potential for rapid shifts in crypto-asset regulation, as well as inherent cybersecurity risks, said Moody's. Coinbase's revenue model largely relies on transaction-based revenue (representing 95% of second quarter 2021 net revenue), which could weigh on its credit profile should there be periods of rapid declines in the price of crypto assets that are custodied and traded on its platforms (principally Bitcoin and Ethereum, each representing 26% of transaction revenue during the second quarter of 2021). Moody's said that Coinbase has a strong liquidity profile with around $4.4 billion in cash on hand, which will be supplemented by the net proceeds of its proposed $1.5 billion senior guaranteed notes issuance. Pro forma the proposed debt issuance, Moody's expects Coinbase's debt leverage metric to increase to around 1.3x, from 0.7x for the trailing-12 months ended June 2021. Given its relatively short track record (founded in 2012 and becoming publicly listed in April 2021) and rapid growth, Coinbase's financial policy remains unproven, however Moody's expects the firm to maintain a conservative leverage profile, broadly consistent with its current proforma level, and to not engage in significant shareholder distributions. Coinbase's $1.5 billion senior guaranteed notes' Ba1 rating is based on the application of Moody's Loss Given Default methodology and model, and is reflective of the notes' priority ranking in Coinbase's capital structure, ahead of the firm's existing $1.4 billion convertible debt notes, which don't benefit from a guarantee from the firm's operating entities. Coinbase's stable outlook reflects Moody's expectation that in pursuing growth opportunities, Coinbase will commit to maintaining a well-balanced approach towards the consideration of creditor and shareholder interests. The stable outlook is also reflective of Coinbase's rating having been established at a level that considers the inherent volatility in cryptocurrency pricing and volumes, and the generally nascent stage of the regulatory environment, changes in which could present both opportunities and threats to incumbents like Coinbase. Social risks are highly relevant for Coinbase because of the digital nature of its activities and handling of large amounts of customer data, crypto assets and funds. Robust cybersecurity and operational controls ensuring asset and data security are critical for its business model. Coinbase has made sizeable technology investments and related operational risk management and controls to mitigate these risks. Governance is highly relevant for Coinbase, as it is to all firms operating in the financial services industry. Corporate governance weaknesses can lead to a deterioration in a company's credit quality, while governance strengths can benefit its credit profile. Governance risks are largely internal rather than externally driven. There is key person risk associated with the concentration of ownership and leadership in Mr. Brian Armstrong, Coinbase's co-founder and CEO. This risk is reflected in Moody's combined assessment of Coinbase's financial profile and operating environment, and corporate governance remains a key credit consideration that requires ongoing monitoring. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Coinbase's ratings could be upgraded if there were (1) Increased clarity and certainty of the regulatory framework surrounding Coinbase's product offerings and crypto assets generally (2) Significant expansion in Coinbase's subscription-based revenue and the development of profitable new revenue streams not tied to trading volumes or crypto asset prices, resulting in greater revenue diversification without adding significant credit risk and (3) Demonstration of a careful balance between cost growth in support of the firm's rapid growth rate and expense flexibility during a crypto asset downturn. Coinbase's ratings could be downgraded if there were (1) An operational failure or cybersecurity breach leading to service disruption or substantial financial losses (2) Regulatory or crypto asset market structure changes resulting in lower trading volumes, transaction revenue or regulatory fines, or (3) A shift in financial policy (buybacks, large acquisitions) that significantly increases leverage without clear visibility about subsequent de-leveraging and with a corresponding deterioration in financial metrics (debt/EBITDA, EBITDA/interest expense). The principal methodology used in these ratings was Securities Industry Service Providers Methodology published in November 2019. COINBASE GLOBAL: S&P Assigns 'BB+' ICR, Outlook Stable ------------------------------------------------------ On Sept. 13, 2021, S&P Global Ratings assigned its 'BB+' issuer credit rating to Coinbase Global Inc. The outlook is stable. S&P also assigned a 'BB+' issue rating to Coinbase's planned $1.5 billion senior unsecured notes. Rationale S&P's ratings on Coinbase reflect the company's very low leverage, strong liquidity, significant scale with a solid share of crypto assets on its platform, and strong track record of avoiding security breaches since inception. However, the ratings are constrained by heavy reliance on transaction revenue and volatility in earnings linked to significant variation in crypto asset trading volumes. In addition, Coinbase currently has a relatively short track record operating at such high volumes and avoiding security breaches at elevated volume levels, which also weighs on the rating. Founded in 2012, Coinbase is a provider of end-to-end financial infrastructure and technology for the cryptoeconomy. Coinbase ranks in the top five crypto exchanges globally and is the largest in the U.S. by traded volumes. Coinbase has significant scale, with its market share of crypto market capitalization increasing to 11.2% as of June 30, 2021, up from 8.3% and 4.5% at year-end 2019 and 2018, respectively. The company provides its products and services across three customer channels: Retail: It has a platform to facilitate trading in (and sending/receiving) cryptocurrencies through Coinbase.com, Coinbase app, and Coinbase Pro (for more active traders), as well as Coinbase Wallet to self-custody crypto assets Institutional: Through Coinbase prime broker, the company offers smart order routing capabilities to hedge funds, corporates, and money managers to access liquidity (to ensure best execution of orders) from multiple trading venues in addition to its own exchange. It also provides custody services through cold storage solutions. Ecosystem partners: Enables asset issuers to distribute new crypto assets by leveraging the vast network of retail users, merchants to accept cryptocurrency payments, and provide developer tools for building applications like adding digital currency to mobile apps. S&P said, "We view negatively the reliance on transaction-based revenues in a nascent asset class prone to volatility. In the first half of 2021, the company's revenue sources included retail transaction revenue (90%), institutional transaction services (5%), subscription and services revenue (4%, of which "staking" revenues that are generated when stakers validate transactions, and custody revenues), and crypto asset sales revenue (1%). Retail engagement can fluctuate significantly depending on crypto asset prices and volatility. This has resulted in significant volatility in earnings. Although we expect the S&P Global Ratings adjusted EBITDA margin to remain above 50% in 2021, we view the earnings quality as low because of the significant amount of add-back related to stock-based compensation expense. In computing the S&P Global Ratings adjusted EBITDA margin, we net out transaction expenses from revenues (as we do for all exchanges) and we net out the cost of crypto assets sold to fulfill customer orders against reported revenues (Coinbase acts largely as a pure agent where buyers and sellers meet on its platforms, but occasionally, like during periods of system outages, Coinbase may meet customers' demands through its own balance sheet). "We view positively the management's strategy to grow subscription and services revenue and expand revenue internationally (83% of revenue from U.S. with the remaining from other countries in the first half of 2021). We expect custodial fee revenues to benefit as more institutions allocate capital to crypto, staking revenue to grow owing to the increasing acceptance of a more energy-efficient "proof-of-stake" model from an energy-intensive "proof-of-work" model (a transition that is currently ongoing for Ethereum, the second largest coin by market cap and other cryptocurrencies), and interest income to increase on growth in loans to retail and institutional users. In the event of rising interest rates, interest income on customers' fiat currency deposits on their Coinbase accounts (about $9 billion at the end of June 2021) would also increase. "We believe the company's competitive advantage stems notably from its strong track record of securing assets safely through its cold storage custody solutions. So far, customers have not lost any funds because of a security breach of Coinbase's platform, as the vast majority of the customer crypto assets are held in offline computers or hard drives that are not connected to the internet (referred to as "cold storage"). Only a small percentage of the customer crypto assets are held in "hot wallets" connected to the internet and therefore susceptible to a security breach. To mitigate the risk of a hot wallet breach, the company has strong cyber-risk safeguards, an insurance policy, and maintains inventories of crypto assets on its balance sheet that could be used to indemnify clients. Contrary to some global crypto exchange peers operating from offshore and subject to less stringent regulatory requirements, Coinbase has a proactive approach to regulatory compliance and strong operational controls. In the U.S., the company has a BitLicense from the New York State Department of Financial Services (NYDFS) and a money transmission license in 43 states. Similarly, the company seeks to obtain regulatory licenses before entering any foreign market. S&P views this as a competitive advantage, notably in the custody space with institutional investors. S&P said, "However, we believe the regulatory framework around crypto exchanges in the U.S. is still evolving, and whether or not such exchanges could be subject to the SEC's regulatory oversight remains uncertain. While the SEC has stated that certain digital assets (like a token issued in an initial coin offering) meet the definition of a "security" under U.S. laws, currently we believe the status of any crypto asset as a security is not final. Coinbase lists crypto assets that it believes do not meet the definition of a security, using its own risk-based assessment. Our base case presumes potentially higher regulatory scrutiny on the crypto sector and is likely to be on balance manageable for Coinbase, but we acknowledge this area is evolving and somewhat uncertain." Conversely, more intrusive regulation could slow growth (limit amount of products they could list on their platforms or cap the expansion of the "lend" program to retail customers). However, more regulation could create a safer environment and attract more participants to regulated exchanges like Coinbase. While the company's pricing in its retail channel is largely comparable to its closest peers--Paypal and Square's Cash App--that offer overlapping and limited features, it is higher than brokerage firms like Robinhood offering zero commission trading in cryptocurrencies, and large cryptocurrency exchanges like Binance. Although not imminent, S&P believes the company could face margin compression as the industry matures and players (including decentralized or De-Fi exchanges) compete for market share. S&P believes the management team, led by founder Brian Armstrong, has strong technological abilities with the sole focus on cryptocurrencies and developing cryptoeconomy. The company posted solid results in the first half of 2021, with trading volumes increasing to $796 billion, compared with $59 billion in the prior year period owing to elevated crypto asset volatility. As a result, S&P Global Ratings adjusted EBITDA increased to $2.2 billion from $110 million in the prior year period. S&P said, "We expect the company to make significant investments in the second half of 2021 to increase platform reliability, support new product launches, spend on brand marketing, and expand into new geographies. Because of this and assuming crypto asset volatility and volumes slow from the first half of 2021, we project S&P Global Ratings adjusted EBITDA of $2.2-$2.6 billion for the full year 2021." Coinbase's gross debt of $1.5 billion as of June 30, 2021, consisted of: -- $1.4 billion convertible senior notes due 2026 -- $113.2 million of operating lease liabilities -- $20 million of short-term borrowings Against this, Coinbase held $4.4 billion of cash and cash equivalents at the same date. S&P said, "This excludes crypto assets of $222.7 million on balance sheet that we do not treat as cash and cash equivalents because of the significant volatility in prices of these assets. Of the $4.4 billion in cash and cash equivalents, we deduct cash we consider restricted as it corresponds to cash kept by the company to address working capital needs like pre-fund institutional customers as part of its post trade credit offering and pre-fund service providers like PayPal (to enable retail customers to buy and sell through the PayPal interface)." Restricted cash also includes cash used to mitigate a potential hot wallet breach (e.g. purchase of an insurance policy) and grow products and headcount during periods of slow earnings (crypto winters). Still, Coinbase's net debt to adjusted EBITDA was 0.0x at the end of June 30, 2021. S&P said, "We also expect Coinbase to operate with adjusted debt to EBITDA of 0.0x by the end of 2021. This factors in the $1.5 billion debt issuance, the investment of $500 million and 10% of quarterly profits going forward in cryptocurrencies, modest mergers and acquisitions, capital expenditures in line with previous year, and our assumption that the company will not undertake any share repurchases and dividends in line with its guidance to reinvest earnings towards growth." S&P said, "We believe Coinbase's credit risk exposure stemming from extending secured loans to its granular retail customer base and institutional clients is managed well. Retail lending (users can borrow up to $100,000 using their crypto assets as collateral) is subject to a 40% loan to value maximum that is maintained at all times through margin calls (if necessary), a strong risk mitigant in our view. The company also incurs credit risk from institutional investors as part of its post-trade settlement services, advancing funds to customers to enable the purchase of crypto assets or lending them out crypto assets (on Coinbase' s own balance sheet or borrowed from the street) to cover short positions. Such transactions are fully collateralized, mitigating risks in our view. "We view Coinbase Global Inc. as a nonoperating holding company with regulated subsidiaries accounting for the vast majority of EBITDA. However, contrary to traditional exchanges or clearinghouses, we believe the risk of regulatory interference in upstreaming dividends to the parent from the operating entities is lower. Therefore, we rate the holding company in line with the 'bb+' group credit profile. We rate the company's senior unsecured notes at the same level as the issuer credit rating." Outlook S&P said, "The stable outlook reflects our expectation that over the next 12 months Coinbase will operate with net debt to EBITDA of less than 1.5x, while maintaining strong liquidity. The stable outlook also indicates our expectation that Coinbase will continue to grow its non-transaction revenues and maintain its reputation as a leading custodian of cryptocurrency assets." Downside scenario S&P said, "We could lower our ratings on Coinbase over the next year if net debt to EBITDA increases above 1.5x because of a large cash or debt financed acquisition, or if an unexpected operational risk event significantly damages the franchise. We could also lower the rating if increased regulation and oversight proves disruptive for its business model, or if credit risk grows much faster than we anticipate." Upside scenario An upgrade is unlikely over the next 12 months. Over time, S&P could raise the rating if Coinbase establishes a longer track record operating at such high volumes while avoiding security breaches, diversifies its revenue away from transaction-based revenues, resulting in lower volatility of profitability. Ratings Score Snapshot Issuer Credit Rating: BB+/Stable/-- Business risk: Fair Country risk: Very Low Industry risk: Low Competitive position: Fair Financial risk: Minimal Preliminary anchor: bbb- Clearing and settlement risk: 0 Modifiers Diversification/Portfolio effect: Neutral (no impact) Capital structure: Neutral (no impact) Liquidity: Strong (no impact) Financial policy: Neutral (no impact) Management and governance: Fair (no impact) Comparable rating analysis: Negative (-1 notch) Group credit profile: bb+ Ratings List NEW RATING COINBASE GLOBAL, INC. Senior Unsecured BB+ NEW RATING; OUTLOOK ACTION COINBASE GLOBAL, INC. Issuer Credit Rating BB+/Stable/-- COLOGIX HOLDINGS: S&P Ups ICR to 'B' on Improved Business View -------------------------------------------------------------- S&P Global Ratings raised all ratings one notch, including its issuer credit rating to 'B' from 'B-', on U.S.-based data center operator Cologix Holdings Inc. The stable outlook indicates that the company will continue to profitably monetize large investments, such that leverage continues to decline to levels more appropriate for the rating over the next year. S&P said, "We believe Cologix's ecosystem of carrier hotels and connection hubs offers a differentiated product in tier II and III cities, and will continue to drive strong growth in colocation and interconnection revenue. Carrier hotels and cloud on-ramps enable Cologix to drive roughly 23% of its revenue from interconnection, creating a hard-to-replicate network effect differentiating the company's product offering from other commodity-like colocation data center operators. Furthermore, we view interconnection revenue favorably due to its high-margin economics and resulting sticky customer base." Additionally, Cologix's revenue percentage from cross connects is well ahead of some of its larger-scale peers such as Flexential Intermediate Corp., Cequel Data Centers L.P., and Cyxtera Technologies Inc. Cologix effectively monetizes its interconnected ecosystem. Cologix's connection hubs, which include carrier hotels in seven of its 10 markets, six internet exchanges, over 570 network providers and 250 cloud service providers (including four hyperscale cloud providers), provide a networking advantage to customers relative to pure colocation providers. Interconnected data centers have become an important destination for cloud-service providers (CSPs) searching for access to a variety of communications networks, and the presence of these CSPs in turn attracts large enterprises seeking to establish direct, secure, low-latency connections. As a result, Cologix is able to charge a price premium for colocation and cross connects, while also reducing churn. This is evidenced by organic revenue growth north of 10% compared with an average growth rate in the low- to mid-single-digit-percentage range for Cequel and Flexential. Cologix's carrier-neutral facilities drive not only good revenue growth, but also the strongest margins among rated data center peers. S& said, "We expect the company to report solid organic growth in colocation and interconnection sales, driven by strong secular industry tailwinds that will lead to an increase in customer deployments and cross connects. In our view, heightened demand will come from increasing network traffic and capacity requirements, as well as enterprise customers relocating out of in-house facilities. Customer concentrations are weighted toward network operators and cloud service providers, from which we project accelerated timetables and increased needs. We expect EBITDA to grow, at the minimum, in the high-single-digit-percent area in the coming few years, outpacing other U.S. data center operators that are growing in the mid-single-digit percentages, such as Cyxtera DC Holdings Inc., Flexential Intermediate Corp., and Cequel Data Centers L.P. Interconnection revenue is highly profitable as cross connects require immaterial capital expenditures (capex) to install and have an operating margin of about 95%. We expect EBITDA margin to improve to the low-60% area, which compares well even with much larger and stronger peers like Equinix and Switch that operate in the low- to mid-50% range." The company is still a small player in comparison to several data center peers, however minimal exposure to small- and medium-size businesses (SMBs) and lack of exposure to volatile managed services revenue help provide greater earnings stability. S&P said, "We view Cologix as a small player within the highly fragmented data center business, with a growing but still small revenue base of under $300 million. However, Cologix's monthly churn has averaged 0.7% over the last few years, which is favorable and lower relative to similarly sized data center operators, which stems from the company's favorable contract terms and product stickiness of interconnection revenue streams. Furthermore, Cologix has minimal exposure to SMBs and is not exposed to managed services like other data center peers we rate. Flexential and Cequel have a sizable SMB customer base and managed services and cloud services contribute about 25% and 50% to total revenue, respectively. We view managed services less favorably than colocation because it is easier to churn since customers do not own the equipment." Although not transformational, recent acquisitions and capacity expansions bode well for growth, while providing modest geographic diversification. The July 2021 and April 2021 acquisitions added one data center each, increasing the company's portfolio to 35 facilities. The July 2021 acquisition of a Vancouver, Canada-based data center from Zayo (expected to close in the second half of this year) is a 65,000-square-foot facility adding 4.2 megawatts of additional capacity. The Santa Clara, Calif.-based site acquisition in April 2021 includes a 9-megawatt data center spanning 84,000 square feet, with room to add another 10 megawatts. By tethering the acquired data centers to its existing footprint and increasing the array of public CSPs it can offer to current and future enterprise customers, the combined ecosystem becomes inherently more valuable from a customer retention and product offering standpoint. S&P said, "Despite expected earnings growth, we expect leverage to remain elevated given the company's private equity ownership by Stonepeak. With the company now having decent capacity, with utilization approaching the mid-70% area at its facilities, we anticipate continued improvement in revenue and EBITDA margins. Although we expect continued deleveraging in our base case, rating upside may be limited, given our belief the sponsor could add leverage to the business to fund continued growth or distributions that are not factored into our base case. "The stable outlook indicates that the company will continue to profitably monetize large investments, such that leverage continues to decline to levels more appropriate for the rating over the next year. "We could lower our rating on Cologix if operational performance weakens, potentially due to increasing competition worsening margins, utilization, and churn. We could also lower ratings if leveraging actions taken by the sponsor result in leverage sustained above 8.5x. "While unlikely over the next year, given our belief that the sponsor is likely to lever up the business to fund growth or a distribution at some point, we could raise our rating on Cologix if we believed it would maintain leverage below 7x." COLORADO PROPERTY: Taps Shloss Law Office as Bankruptcy Counsel --------------------------------------------------------------- Colorado Property Associates, LLC seeks approval from the U.S. Bankruptcy Court for the District of Colorado to hire Shloss Law Office, LLC to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) providing the Debtor with legal advice with respect to its powers and duties; (b) aiding the Debtor in the development of a plan of reorganization under Chapter 11; (c) filing legal papers; (d) taking necessary actions to enjoin and stay until final decree the continuation of pending proceedings and to enjoin and stay until a final decree the commencement of lien foreclosure proceedings and all matters as may be provided under Section 362 of the Bankruptcy Code; and (e) performing all other necessary legal services. Benjamin Shloss, Esq., the firm's attorney who will be providing the services, will be paid an hourly rate of $350. The Debtor paid $10,000 to the law firm as a retainer fee. Mr. Shloss 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: Benjamin H. Shloss, Esq. Shloss Law Office, LLC PO Box 202227 Denver, CO 80220 Tel.: (720) 504-5997 Email: shlosslaw@gmail.com About Colorado Property Associates Denver-based Colorado Property Associates, LLC filed a petition for Chapter 11 protection (Bankr. D. Colo. Case No. 21-14645) on Sept. 8, 2021, disclosing up to $10 million in assets and up to $1 million in liabilities. Teresa Immel, president and managing member of Colorado Property Associates, signed the petition. Judge Joseph G. Rosania Jr. oversees the case. The Debtor tapped Shloss Law Office, LLC as legal counsel. CONNECTWISE LLC: Fitch Assigns FirstTime 'B+' LongTerm IDR ---------------------------------------------------------- Fitch Ratings has assigned a first-time Long-Term Issuer Default Rating (IDR) of 'B+' to ConnectWise Holdings, LLC and ConnectWise, LLC (dba ConnectWise). The Rating Outlook is Stable. Fitch has also assigned a 'BB+'/'RR1' rating to ConnectWise's $70 million secured revolving credit facility (RCF) and $1.05 billion first-lien secured term loan. ConnectWise, LLC is the issuer of debt. The proceeds will be used to fully repay ConnectWise's existing $1.029 billion debt. Thoma Bravo acquired ConnectWise in February 2019. The ratings are supported by ConnectWise's industry-leading software solutions for Managed Service Providers (MSPs) and Technology Success Providers (TSPs). The company's growth strategy and private equity ownership could limit deleveraging despite the FCF generation projected for the company. Fitch expects the company to prioritize tuck-in acquisitions as part of its growth strategy over accelerated deleveraging, and 2021 Fitch adjusted gross leverage to be above 4.5x, trending toward 4x by 2023 primarily driven by EBITDA growth. KEY RATING DRIVERS Industry Tailwind Supports Growth: ConnectWise's end-markets are small- and medium-sized businesses (SMBs) that lack IT resources and look to MSPs and TSPs to provide technology solutions. The managed services market is estimated to grow in the low-teens supported by increasing dependence of businesses on technology for all aspects of operations. In addition, the migration to cloud services and hybrid IT services further increases complexity in management of IT resources that creates further incremental demand. Fitch believes these factors serve as underlying demand growth drivers for managed services resulting in greater demand for ConnectWise's products. High Levels of Recurring Revenues and Revenue Retention: Recurring revenue represents over 95% of total revenue, while net retention rate has sustained over 100%. Pro forma quarterly software annual recurring revenue (ARR) growth has remained above 10% since being acquired by Thoma Bravo. These attributes provide significant visibility into future revenue streams and profitability. Diversified Customer Base with SMB Exposure: ConnectWise serves over 35,000 customers globally. During 2020, no single customer represented over 1% of ARR. While ConnectWise's customers are concentrated in MSPs and TSPs, the end-markets represent a diverse cross-section of industries. In Fitch's view, the diverse set of customers and industry verticals in the end-markets should minimize idiosyncratic risks that may arise from customers or industry concentration. Through the MSPs and TSPs, ConnectWise is indirectly exposed to the SMB market segment as SMBs lack sophisticated IT resources to manage the increasingly complex IT environment and leverage services provided by MSPs and TSPs. Cross-Selling Opportunities: ConnectWise's software ARR growth has outpaced customer growth, demonstrating growth in revenue per customer. This is attributed to its broad product portfolio and its ability to increase product penetration into existing customer base. In addition to supporting revenue growth, Fitch believes ConnectWise also benefits through greater customer retention as the products become more integrated with the customers' operations. M&A Central to Product Strategy: The company is active in M&As as a strategy to expand product offerings. Since 2015, ConnectWise has acquired Screen Connect, HTG, ITBoost, BrightGauge, Continuum, Service Leadership, Perch Security and Stratozen. These acquisitions expanded ConnectWise's offerings in the three products areas of Business Management, Security Management and Unified Management. Despite the acquisitive nature of the company, its net leverage has historically reverted back to 4x-5x within twelve months after temporary increases. Narrow Niche Market Focus: ConnectWise's software solutions cater primarily to the MSP and TSP market. The company provides broad solutions that facilitate their customers' operations in support of the SMB end-market. In Fitch's view, the narrow market focus is effectively mitigated given the broader end-market. However, the narrow focus in serving the MSP and TSP market does expose ConnectWise to systemic risks associated with the specific market. Moderate Financial Leverage: Fitch estimates gross leverage to be 4.8x in 2021 with capacity to delever over the rating horizon supported by strong FCF generation. However, given the private equity ownership that is likely to prioritize ROE, Fitch believes accelerated debt repayment is unlikely. Fitch expects excess capital to be used for acquisitions to accelerate growth or for dividends to equity owners with financial leverage remaining at moderate levels. DERIVATION SUMMARY ConnectWise is a leader in the fragmented niche market of mission-critical software solutions that supports the MSPs and TSPs. The products facilitate their customers ongoing operations in areas of Business Management, Security Management, and Unified Management in serving the SMB end-markets. ConnectWise's recurring revenue represents over 95% of total revenue and net retention rates have sustained over 100% in recent years. It serves over 35,000 customers with no single customer representing more than 1% of revenue. The MSP and TSP markets are projected to grow in the low-teens supported by the increasing complexity in IT infrastructure and applications. ConnectWise's revenue visibility, profitability, financial structure and liquidity compare well against vertical industry software peers in the 'B' category. Consistent with other private equity-owned software peers, the ownership structure could optimize ROE limiting the prospect for accelerated deleveraging. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: -- Revenue growth in the high-single-digits; -- EBITDA margins remaining stable in the low-40's; -- Capex intensity 2.5%-4.0% of revenue; -- Debt repayment limited to mandatory amortization; -- Aggregate acquisitions of $200 million through 2024; -- No dividend payments through 2024. KEY RECOVERY RATING ASSUMPTIONS -- The recovery analysis assumes that ConnectWise would be reorganized as a going-concern in bankruptcy rather than liquidated; -- Fitch has assumed a 10% administrative claim. Going-Concern (GC) Approach -- In the event of distress, Fitch assumed that the company would suffer greater customer churn resulting in a combination of revenue decline and EBITDA margin compression resulting in going concern EBITDA that is approximately 15% below 2021 level; -- Fitch assumes an adjusted distressed enterprise valuation of $1.3 billion using approximately $185 million in going-concern EBITDA; Fitch assumes that ConnectWise will receive a going-concern recovery multiple of 7.0x. The estimate considers several factors, including the highly recurring nature of the revenue, the high customer retention, the secular growth drivers for the sector, the company's strong FCF generation and the competitive dynamics. The EV multiple is supported by: -- The historical bankruptcy case study exit multiples for technology peer companies ranged from 2.6x-10.8x; -- Of these companies, only three were in the Software sector: Allen Systems Group, Inc., Avaya, Inc. and Aspect Software Parent, Inc., which received recovery multiples of 8.4x, 8.1x and 5.5x, respectively; -- The highly recurring nature of ConnectWise's revenue and mission critical nature of the product support the high-end of the range. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Fitch's expectation of gross leverage (total debt with equity credit/operating EBITDA) sustaining below 4.0x; -- (cash from operations - capex)/total debt with equity credit ratio sustaining near 10%; -- Organic revenue growth sustaining above the high single digits; -- Diversification of product focus. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Fitch's expectation of gross leverage sustaining above 5.5x; -- (cash from operations - capex)/total debt with equity credit ratio sustaining below 7.5%; -- Organic revenue growth sustaining near 0%. 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: The company's liquidity is projected to be adequate, supported by its FCF generation and an undrawn $70 million RCF, and readily available cash and cash equivalents. Fitch forecasts ConnectWise's FCF margins to remain above 20% through 2024 supported by EBITDA margin in the 40% range. Debt Structure: ConnectWise has $1.05 billion of secured first lien debt due 2028. Given the recurring nature of the business and adequate liquidity, Fitch believes ConnectWise will be able to make its required debt payments. 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. ISSUER PROFILE ConnectWise is a provider of software solutions for IT Managed Service Providers (MSPs) and Technology Success Providers (TSPs) encompassing the full scope of business activities including Business Management, Security Management and Unified Management. CONNECTWISE LLC: Moody's Assigns First Time B2 Corp. Family Rating ------------------------------------------------------------------ Moody's Investors Service assigned first-time ratings to ConnectWise, LLC, including a B2 Corporate Family Rating, B2-PD Probability of Default Rating and B2 ratings to the proposed $1,050 million senior secured first lien term loan and $70 million revolving credit facility. The rating outlook is stable. Net proceeds from the first lien term loan will be used to repay existing debt of the company. The ratings are subject to the transaction closing as proposed and receipt and review of the final documentation. The following ratings were assigned: Assignments: Issuer: ConnectWise, LLC Probability of Default Rating, Assigned B2-PD Corporate Family Rating, Assigned B2 Senior Secured Bank Credit Facility, Assigned B2 (LGD4) Outlook Actions: Issuer: ConnectWise, LLC Outlook, Assigned Stable RATINGS RATIONALE ConnectWise's B2 CFR reflects the company's large customer base of more than 35,000 partners (of which 18,000 are managed service providers (MSPs)) and solid market position in the MSP software platform space. ConnectWise's organic revenue growth has been strong, in the low teens percentage range over the past two years, supported by expansion with existing partners and acquisition of new logos. Moody's expects the company to continue to benefit from the growth of its addressable market, which is driven by the increasing reliance of small and medium size enterprises (SMEs) on IT service providers to manage their IT environments. Also supporting the rating are ConnectWise's strong net retention rates above 100%, that combined with a highly recurring revenue base, provide good revenue visibility and cash flow predictability. The rating is constrained by ConnectWise's high initial leverage of 6.2x debt/EBITDA as of the LTM period ended June 30, 2021 (Moody's adjusted and excluding unrealized synergies and certain one-time expenses or 5.7x with synergies), moderate operating scale, limited product diversity and exposure to the fragmented and highly competitive software solutions market. Governance considerations also constrain the rating and include the company's private equity ownership and expectations of aggressive financial policies. Following the LBO by private equity firm, Thoma Bravo in 2019, ConnectWise has completed several M&A transactions that enhanced the company's software platform by adding new tools in cybersecurity and monitoring; however, they resulted in elevated restructuring and integration expenses. Moody's anticipates that ConnectWise will continue to seek new debt-funded M&A opportunities to add new tools and products to its software platform, which will likely limit the potential for deleveraging. Moody's expects that ConnectWise will maintain a very good liquidity over the next 12-18 months. Pro forma for the proposed transaction, liquidity will be supported by an unrestricted cash balance of around $70 million, expectations for strong annual free cash flow generation in excess of $80 million, and an undrawn $70 million revolving credit facility due 2026. The revolving facility is expected to contain a springing maximum first lien net leverage ratio covenant of 7.75x (tested only when 35% drawn). Moody's expects the company to maintain a sufficient cushion over the next 12-18 months. The stable outlook reflects Moody's expectation that ConnectWise will generate at least high single digit organic revenue growth over the next 12 months, while maintaining leverage under 6x. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if ConnectWise continues to grow organically, the company and financial sponsor demonstrate a strong commitment to conservative financial policies and leverage is expected to remain below 5x debt/EBITDA. The ratings could be downgraded if ConnectWise pursues aggressive financial policies (e.g., debt funded M&A or dividend payments) that result in increased leverage above 6.5x debt/EBITDA (on a Moody's adjusted basis), or if free cash flow to debt is expected to be sustained below 5%. STRUCTURAL CONSIDERATIONS The B2 rating on ConnectWise's senior secured bank credit facilities reflects the company's single class debt structure and Moody's expectations for average recovery in a default scenario as reflected by the B2-PD Probability of Default Rating (PDR). As proposed, the new credit facilities are expected to provide covenant flexibility, that if utilized, could negatively impact creditors. Notable terms include the following: Incremental first lien debt capacity up to the greater of TTM EBITDA at issuance and 100% of consolidated pro forma TTM EBITDA, plus unused capacity reallocated from the general debt and lien baskets, plus any available restricted payment capacity, plus unlimited amounts subject to 5x first lien net leverage ratio. Amounts up to the greater of TTM EBITDA at issuance and 100% of pro forma TTM EBITDA may be incurred with an earlier maturity date than the initial term loan. There are no express "blocker" provisions which prohibit the transfer of specified assets to unrestricted subsidiaries; such transfers are permitted subject to carve-out capacity and other conditions. Non-wholly-owned subsidiaries are not required to provide guarantees; dividends or transfers resulting in partial ownership of subsidiary guarantors could jeopardize guarantees, with no explicit protective provisions limiting such guarantee releases. There are no express protective provisions prohibiting an up-tiering transaction. The proposed terms, the final terms of the credit agreement may be materially different. The principal methodology used in these ratings was Software Industry published in August 2018. Headquartered in Tampa, Fl, ConnectWise, LLC is a provider of software solutions that enable MSPs to serve their SME end customers. ConnectWise's portfolio consists of three solutions: unified management (remote monitoring and management), business management (professional service automation) and security management. In the LTM period ended June 30, 2021, ConnectWise generated $500 million of revenue. The company is owned by private equity firm, Thoma Bravo. CREATION TECHNOLOGIES: Moody's Assigns First Time 'B3' CFR ---------------------------------------------------------- Moody's Investors Service assigned first time ratings to Creation Technologies Inc., including a B3 Corporate Family Rating, B3-PD Probability of Default Rating, and a B3 rating on the proposed $455 million first lien term loan due 2028. The outlook is positive. Net proceeds from the $455 million first lien term loan will be used in conjunction with an unrated $90 million asset-based revolving credit facility due 2026 (expected to be undrawn at close) and cash from the balance sheet to support Creation's $242 million acquisition of IEC Electronics Corporation ("IEC"), refinance $212 million of Creation's existing first lien debt and repay a short term bridge loan of approximately $10 million. Creation was acquired by private equity firm Lindsay Goldberg ("Sponsor") in August 2019 and has executed two acquisitions prior to IEC. The most recent, Computrol, Inc. ("Computrol"), was acquired in September 2021 under the previous capital structure using new Sponsor equity and the aforementioned $10 million short term bridge loan. Computrol will be included in the pro forma restricted group and provides support to the credit group. Computrol and IEC will contribute approximately 9% and 22% to the pro forma revenue base, respectively. Moody's views the integration risks of simultaneously onboarding two sizable companies amid industry-wide supply chain disruptions and labor shortages as high. This risk is further complicated by standalone IEC rolling off integration pressures of its own as it transitions operations to a new, but near-by, facility while onboarding two large contracts. Operational pressures when onboarding new projects are typical for tier-2, non-traditional EMS providers like Creation due to the complexity of the projects they undertake, and Moody's believes these pain-points are mostly behind IEC. The company will retain McKinsey & Co. to augment internal integration efforts. However, Moody's believes the addition of IEC and Computrol will bring strategic benefits to Creation's credit profile over the next 12-18 months by increasing its scale, manufacturing capacity, and end-market diversity. Relative to standalone Creation, the pro forma entity will increase its revenue base by roughly 30%, add five additional manufacturing facilities and increase operating square footage by roughly 42% to 1.4 million sq. ft. from 990 thousand sq. ft., and diversify revenue exposure within the Industrial Tech, Aerospace and Defense ("A&D"), and Medical end-markets. Assignments: Issuer: Creation Technologies Inc. Probability of Default Rating, Assigned B3-PD Corporate Family Rating, Assigned B3 Senior Secured Term Loan, Assigned B3 (LGD4) Outlook Actions: Issuer: Creation Technologies Inc. Outlook, Assigned Positive RATINGS RATIONALE The B3 CFR reflects Creation's high closing debt/EBITDA of 6.1x (pro forma for the proposed capital structure, Computrol, and IEC), moderate customer concentration with the top 10 customers accounting for 35% of pro forma revenue, and its niche business currently concentrated on the industrial, medical and aerospace and defense ("A&D") end markets. Furthermore, the rating reflects the ongoing supply chain disruptions and component shortages and the uncertainty of when these industry-wide headwinds will subside. Moody's projects the supply chain disruptions will pressure Creation's credit profile through the end of calendar 2021. The electronic manufacturing services ("EMS") industry is categorized by its high working capital intensity, long ramp times to onboard new programs, moderate-to-high customer concentration risk, and low EBITDA margins as a result of high competition and low bargaining power with customers. Providers often have limited visibility into customer orders beyond the near term adding to revenue volatility and unused capacity. As a result, Moody's has a lower tolerance for financial leverage metrics for providers in this industry relative to many other industries within the same broader rating category. Moody's views Creation's 6.1x debt/EBITDA (inclusive of Moody's standard adjustments) as high for an EMS provider, and the integration risks associated with simultaneously acquiring two sizable companies amid industry-wide supply chain disruptions and labor shortages constrain the rating due to their potential to delay meaningful deleveraging and negatively impact cash flow generation. The modest closing cash balance of approximately $16 million provides limited cushion against unforeseen integration issues and/or sustained supply chain headwinds beyond Q1 2022. Creation's $90 million ABL will provide ample external liquidity to support operations through this period of stress, but excessive draws could impede deleveraging efforts. Additionally, the potential for another debt financed acquisition that prevents sustained deleveraging is also a rating consideration. The ratings are supported by the specialty nature of Creation's high-mix, low-to-mid volume assembly services, which support EBITDA margins that are well above its larger Tier 1 EMS peers and typical for tier 2 providers, as well as the company's long-term, strategic relationships with core customers. Creation currently benefits from its ability to leverage client relationships and receive cash advances from customers to finance working capital needs, providing a partial mitigant against current supply chain headwinds that are projected to persist through Q4 2021. The positive outlook reflects Moody's expectation for debt/EBITDA to decline below 5x over the next 12-18 months due to organic revenue growth and the realization of $9.5 million in cost synergies. Additionally, the expectation for improved working capital conditions should lead to strong free-cash-flow/debt in FY 2022 as pent-up inventory unwinds before moderating thereafter. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Creation sustains organic revenue growth, enhances its liquidity profile, and expands EBITDA such that adjusted debt/EBITDA is expected to be sustained at around 5.0x and free-cash-flow/debt at 5%, respectively. The ratings could be downgraded if Creation's liquidity profile diminishes, is unable to grow revenue on an organic basis, debt/EBITDA remains elevated, or if free-cash-flow/debt declines on a more than temporary basis. The ratings could also be downgraded if the company adopts more aggressive financial policies. Creation's liquidity profile is adequate but is expected to remain pressured over the short-term from working capital stress stemming from ongoing supply chain disruptions and one-time cash integration costs. The company maintains a $90 million asset-based revolving credit facility due 2026 to support and is expected to have a borrowing base of at least $50 million through Q2 2022. However, Moody's projects the company will benefit from a large, reciprocal cash inflow once supply chain pressures ease and inventory unwinds during 2022, which will support strong free-cash-flow and allow for revolver repayment should the company carry a balance shortly after close. Both standalone Creation and IEC have expanded their manufacturing capacity over the last twelve months and the pro forma company will not require additional growth capital expenditures to support projected revenue growth over the next 12-18 months. Moody's expects the company will generate approximately $35 million of annual free-cash-flow in a normalized operating environment. Creation is exposed to governance risks typical of private-equity ownership, given that financial sponsors, including Lindsay Goldberg, look to enhance equity returns through distributions or debt financed acquisitions. Accordingly, Moody's views Creation's financial policy to be somewhat aggressive given the private-equity ownership, high closing leverage, and the potential for debt financed distributions or acquisitions to enhance equity returns. Lack of public financial disclosure and the absence of board independence are also governance risks. Preliminary terms in the first lien credit facility contain provisions for incremental facility capacity up to the greater of (i) 100% of Closing Date EBITDA and (ii) 100% of LTM EBITDA; plus unlimited amounts (i) up to closing date First Lien Net Leverage if secured equally and ratably, (ii) if secured on a junior lien basis, up to 0.25x above closing date Secured Net Leverage or 2.00x Interest Coverage Ratio, or (iii) if unsecured debt, up to 0.75x above closing Leverage or 2.00x Interest Coverage. Wholly-owned material U.S. or Canadian subsidiaries must provide guarantees, provided that such guarantees will not be required to the extent it would result in a material adverse tax consequence. There are leverage-based step-downs in the asset sale prepayment requirement to 50% and 0% if the First Lien Net Leverage Ratio is within 0.5x and 1.0x, respectively, of the Closing Date First Lien Net Leverage Ratio. The proposed terms and the final terms of the credit agreement can be materially different. The principal methodology used in these ratings was Distribution & Supply Chain Services Industry published in June 2018. Creation Technologies Inc., founded in 1991 and headquartered in Boston, MA, is a tier-2 EMS provider, offering OEMs end-to-end services and advanced design and manufacturing capabilities for high complexity, low-to-medium volume electronic systems. The Company specializes offers product development and engineering, prototyping, lean manufacturing, logistics and aftermarket services with a focus in the Tech Industrial, Medical and Aerospace & Defense end markets. Pro forma revenue for the twelve months ending June 2021 was approximately $915 million. CREATION TECHNOLOGIES: S&P Assigns 'B' ICR, Outlook Stable ---------------------------------------------------------- S&P Global Ratings assigned electronic manufacturing services (EMS) provider Creation Technologies a 'B' issuer credit rating. At the same time, S&P assigned its $455 million first-lien term loan its 'B' issue-level and '3' recovery ratings. S&P said, "The stable outlook reflects our expectation that Creation Technologies will be able to keep its business operations stable through its two acquisitions and supply chain issues, mainly the semiconductor shortage. We expect strong demand for Creation's EMS services will help generate good growth such that leverage will improve to the low-5x area in 2022." Creation has shown an aggressive financial policy with its acquisition strategy. Creation Technologies is owned by the affiliates of the financial sponsor Lindsey Goldberg. Given the financial sponsor ownership, Creation has exhibited a more aggressive financial policy than other technology hardware companies. Over a one-month period in June 2021, Creation entered into exclusivity to acquire two complimentary businesses in the broader EMS space. One transaction closed in September, while the other is expected to close in October 2021. Creation will double the amount of debt on its balance sheet once both acquisitions close. It also acquired EMS provider ATS in May 2020. Creation's starting leverage pro forma the acquisitions will be in the low-6x area. However, S&P expects good growth projections and improving EBITDA margins will help drive leverage to the low-5x area by year-end 2022. S&P said, "While there is the potential for headwinds to Creation's operating performance, we believe that its end-market customers will continue to drive good demand for its services. Due to strengthening demand following a macroeconomic recovery and pent-up demand from delayed purchases due to the COVID-19 pandemic, there is currently a semiconductor supply shortage that is affecting the top line of all EMS companies. While we believe that the demand for EMS services is there, many EMS providers are having a hard time securing enough semiconductor chips to satisfy demand, creating missed revenue opportunities. "Despite the semiconductor supply shortage headwinds, we believe Creation will generate strong top-line growth over the next couple of quarters. The company's EMS customers are more quality and reliability sensitive than traditional cost-focused segments such as consumer electronics. We believe that the company can pass through some of these unfavorable prices to its customers such that the top line will continue to see strong growth. We project that Creation can generate more than 10% growth in 2021 and mid-single-digit percent growth in 2022. Due to its end-market product mix, Creation has stronger EBITDA margins than other EMS providers. Creation is focused on the industrial technology, medical, and A&D end markets. Products for these end markets are generally highly complex with longer lead production times. This creates a sticky relationship between the company and its end-market customers because it is hard to leave the company to start a new production line with another competitor. After the two acquisitions, Creation's revenue from medical and A&D products will increase by almost 50%. The company is able to generate high-single-digit percent EBITDA margins given its end-product focus. The company will also be able to extract some cost savings from the acquisitions tied to operating costs and materials purchasing, which will improve EBITDA margins in 2022. Even though Creation has limited scale and operates in a highly fragmented and competitive EMS market, Creation has shown a good ability to compete. Creation is focused on high complexity but low-to-medium volume electronic products. Creation's program lines are all less than 10% of revenue. While this helps keep the larger EMS players away from the niche market that Creation operates in given the lower revenue, it does limit Creation's scale compared with higher-rated EMS providers. Creation also operates in a highly competitive and fragmented EMS market with larger-scaled and better-capitalized competitors such as Jabil Inc., Flex Ltd., and Sanmina Corp., and niche EMS competitors such as Neo Tech. However, even with those business risks, Creation has shown the ability to compete in this EMS market. Creation started operations in 1991, so it has existed for about 30 years and has experience with many different EMS cycles. After the acquisitions close, Creation will have more than 125 customers that contribute over a $1 million revenue to its overall top-line performance. S&P expects Creation will continue to be able to compete in this market such that it has mid-single-digit growth moving forward. S&P said, "The stable outlook reflects our expectation that Creation Technologies will be able to keep its business operations stable through its two acquisitions and supply chain issues, mainly the semiconductor shortage. We expect strong demand for Creation's EMS services will help generate good growth such that leverage will improve to the low-5x area in 2022. "We could lower our rating on Creation Technologies if we believed it would sustain leverage above the 6x area or free operating cash flow (FOCF) to debt below 5%. This could occur if Creation experienced acquisition-related business disruptions, a worsening semiconductor shortage that hampered revenue, customer losses due to competition, or if Creation pursued additional debt-funded acquisitions or shareholder returns. "We could raise our rating on Creation Technologies if we believed that Creation would sustain leverage below the 5x area and generate more than $50 million in unadjusted FOCF, including debt-funded acquisitions or shareholder returns. This could occur if Creation could fully achieve its acquisition-related cost-savings plan and the demand for its EMS products continued." DAME CONTRACTING: Seeks Cash Collateral Access Thru Oct. 2021 ------------------------------------------------------------- Dame Contracting, Inc. asks the U.S. Bankruptcy Court for the Eastern District of New York for authority to use cash collateral and provide adequate protection to the U.S. Internal Revenue Service, the first priority secured creditor, in the form of a replacement lien. The IRS holds federal tax liens in the aggregate amount of not less than $1,378,000. Immediately upon filing of the bankruptcy petition, the Debtor sought to communicate with the IRS in order to begin discussions and negotiations concerning the consensual use of the Cash Collateral. The Debtor anticipates it will enter a customary stipulation with the IRS concerning the use of cash collateral, which will be submitted to the Court for its consideration on or before, or promptly following, the hearing date in connection with this Motion. The Debtor's proposed budget which it intends to memorialize in a stipulation seeks the Debtor's use of the Cash Collateral through October 2021. The Debtor requires the use of cash collateral to pay for ordinary, necessary, and reasonable operating expenses, including, but not limited to, certain officer, management and employee wages, cost of goods and materials, vehicle related costs, insurance, utilities, maintenance, and goods and services incidental to the Debtor's business. The Debtor's Chapter 11 filing was precipitated by, among other things, the tax lien and levy that were being enforced by the IRS. Moreover, certain clients had failed to fund ongoing projects in a timely manner. Subsequently, the covid pandemic began, which delayed job progress due to lack of clarity regarding "essential services," illness, and the quarantining of the Debtor's staff and neighboring trade workers. Additionally, prior contract rates remained as written despite delays and excessive costs. The pandemic caused further delays concerning the Debtor's receipt of materials and supplies, and the Debtor suffered extreme cost increases for building materials, some as much as 300%. The Debtor believes that based upon the current evaluation of its assets, there will be sufficient funds to make a distribution to unsecured creditors. As adequate protection for the Debtor's use of cash collateral, the Debtor proposes to grant the IRS a replacement lien against and security interest in all assets of the Debtor (excluding Chapter 5 causes of action and recoveries, if any), to the extent that such liens existed immediately prior to the Filing Date and for any diminution in value. Such replacement lien provides the IRS with adequate protection. To the extent such post-petition collateral consists of the proceeds of the Debtor's construction contracts, the Replacement Liens shall be subordinate to the payment of all valid Article 3-A trust fund obligations with respect to such projects. The Debtor further submits that based upon the value of the Debtor's assets, there is and/or will be sufficient equity in such assets (which includes new construction jobs) over and above the secured lien. Accordingly, the Debtor submits that the IRS is adequately protected. Notwithstanding, the Debtor presently has no available funds to make monthly adequate protection payments, consensual or otherwise. A copy of the motion is available at https://bit.ly/3ll2QiJ from PacerMonitor.com. About Dame Contracting, Inc. Dame Contracting, Inc. is a New York corporation founded in 1996 as a small family-owned construction business. The Company has been operated and managed by James Connolly and Lara McNeil. Mr. Connolly is the sole shareholder and the President. Ms. McNeil is the Vice President and Secretary. Dame Contracting is engaged in carpentry construction for private and municipal jobs, ranging from retain stores and restaurants to schools and other municipal structures. Dame Contracting sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.Y. Case No. 21-71627) on September 13, 2021. In the petition signed by James Connolly, president, the Debtor disclosed up to $10 million in both assets and liabilities. Adam P. Wofse, Esq., at Lamonica Herbest & Maniscalco, LLP, is the Debtor's counsel. DANA INC: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable ---------------------------------------------------------- Fitch Ratings has affirmed Dana Incorporated's (Dana) Long-Term Issuer Default Rating (IDR) at 'BB+'. In addition, Fitch has affirmed Dana's secured revolver and term loan B ratings at 'BBB-'/'RR1', as well as the 'BB+'/'RR4' ratings on the senior unsecured notes issued by Dana and its Dana Financing Luxembourg S.a.r.l. (Dana Financing) subsidiary. The affirmation of the security ratings is consistent with Fitch's revised "Corporates Recovery Ratings and Instrument Ratings Criteria," dated April 9, 2021, and Fitch has removed Dana from Under Criteria Observation (UCO). Fitch's ratings apply to a $1.15 billion secured revolver, $349 million in secured term loan borrowings and $2.0 billion in senior unsecured notes. The Rating Outlook is Stable. KEY RATING DRIVERS Ratings Overview: Dana's ratings are supported by the company's market position as a top global supplier of driveline components for light, commercial and off-road vehicles, as well as sealing and thermal products. Although the company's performance in 2020 was significantly affected by the steep downturn in global light, commercial and off-highway vehicle production resulting from the coronavirus pandemic, Dana's strong liquidity position and financial flexibility helped it manage through the worst of the crisis relatively well. EBITDA declined, but Dana was able to achieve an EBITDA margin (according to Fitch's methodology) of nearly 8%, and FCF was positive for the full year. Dana's ratings also incorporate the expected improvement in global end-market conditions as the effects of the coronavirus pandemic wane, as well as steps that the company has taken to reduce debt, increase margins and grow FCF. Although some lingering effects of the pandemic are likely to affect Dana's business in 2021, particularly supply shortages of semiconductor chips, the company has been relatively less affected than some other suppliers. This is largely due to the company's focus on the commercial vehicle, off-highway and full-frame light truck end-markets. Although these end-markets have not been immune to the chip shortage, they have been relatively less affected, either because of the types of chips used in their production or, in the case of full-frame light trucks, original equipment manufacturers' (OEMs') prioritization of these vehicles in the face of tight chip supplies. Diversified Product Portfolio: The diversification of Dana's product portfolio is a credit strength, limiting its exposure to any single-end market. The company's light vehicle business is primarily weighted toward full-frame pickups and sport utility vehicles (SUVs) in North America, and the relative strength of these sales compared with other light vehicle classes throughout the pandemic has supported demand for Dana's products. The company also continues to invest in products for electrified powertrains, primarily in the commercial vehicle and off-highway segments, and Fitch believes the company has solid longer-term growth prospects in these areas as demand from OEMs for electrification technologies increases. Focus on Debt Reduction: Debt reduction has been a key focus for Dana over the past several years as the company looks to achieve a credit profile consistent with investment-grade ratings. The company has a net leverage target (net debt/adjusted EBITDA, according to its calculation methodology) of about 1.0x, which it hopes to achieve within the next several years. Although Dana engaged in two refinancing transactions in the first half of 2021 that reduced debt by $15 million, Fitch expects the company to look for more significant opportunities to use FCF to reduce debt over the intermediate term. Solid FCF: Fitch expects Dana's FCF to increase significantly in 2021, even with the reinstatement of common dividends in 1Q21 and higher planned capex. Fitch expects Dana's post-dividend FCF margin (as calculated by Fitch) to rise above 2.0% in 2021 and to rise toward 2.5% in 2022 as EBITDA increases and cash interest expense declines. Fitch expects capex as a percentage of revenue to run in the 4.0% to 4.5% range over the next several years, with capex at the higher end of that range in 2021. FCF in 2020 was positive, but the FCF margin was only 0.4%, as operating cash flow declined significantly during the weakest period of the pandemic. Declining Leverage: As a result of improving end-market conditions and debt reduction, Fitch expects Dana's gross EBITDA leverage (gross debt/EBITDA as calculated by Fitch) to decline toward the low-2x range by YE 2021 after rising to 4.2x at YE 2020. Consistent with the company's stated target of reducing net leverage to about 1.0x, Fitch expects the company will target excess cash toward debt reduction over the next several years. Fitch expects FFO leverage to decline below 3.0x by YE 2021, and potentially to below 2.5x by YE 2022, after rising to 5.6x at YE 2020. Improving Coverage Metrics: Fitch expects Dana's FFO interest coverage to rise toward 8.0x by YE 2021, driven by lower cash interest expense following the refinancing transactions in 1H21, after falling to 3.4x at YE 2020. Fitch expects FFO interest coverage to rise further, above 8.0x, by YE 2022, on a combination of higher FFO and declining interest expense as the company looks for opportunities to reduce debt. DERIVATION SUMMARY Dana has a relatively strong competitive position focusing primarily on driveline systems for light, commercial and off-road vehicles. It also manufactures sealing and thermal products for vehicle powertrains and drivetrains. Dana's driveline business competes directly with the driveline businesses of American Axle & Manufacturing Holdings, Inc. and Meritor, Inc. (BB-/Stable), although American Axle focuses on light vehicles, while Meritor focuses on commercial and off-road vehicles. From a revenue perspective, Dana is similar in size to American Axle, although American Axle's driveline business is a little larger than Dana's light vehicle driveline business. Compared with Meritor, Dana has roughly twice the annual revenue overall, and Dana 's commercial vehicle and off-highway vehicle segments combined are a little larger than Meritor's overall business. Dana's EBITDA margins are typically in line with auto suppliers in the low 'BBB' range. However, EBITDA leverage is more consistent with auto and capital goods suppliers in the 'BB' range, such as Allison Transmission Holdings, Inc. (BB/Stable), Meritor or The Goodyear Tire & Rubber Company (BB-/Stable). Dana guarantees the senior unsecured notes issued by Dana Financing, and both entities' senior unsecured notes are rated the same at 'BB+'/'RR4'. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Global light vehicle production rises about 6% in 2021, including an 8% increase in the U.S., with further growth seen in subsequent years; -- The global commercial vehicle and off-highway markets recover in the mid- to high-single digit range in 2021, with a somewhat mixed outlook that varies by region and end-market, and further recovery is seen in subsequent years; -- Capex runs at about 4.0%-4.5% of revenue over the next several years, which is relatively consistent with historical levels; -- Post-dividend FCF margins generally run in the 2.0%-3.5% range over the next several years, despite reinstatement of the common dividend; -- The company primarily applies excess cash toward debt reduction over the next few years; -- The company maintains a solid liquidity position, including cash and credit facility availability. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Sustained gross EBITDA leverage below 2.0x; -- Sustained post-dividend FCF margin above 2.0%; -- Sustained FFO leverage below 2.5x; -- Sustained FFO interest coverage above 5.5x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A severe decline in global vehicle production that leads to reduced demand for Dana's products; -- A debt-funded acquisition that leads to weaker credit metrics for a prolonged period; -- Sustained gross EBITDA leverage above 2.5x; -- Sustained FCF margin below 1.0%; -- Sustained EBITDA margin below 10%; -- Sustained FFO leverage above 3.5x; -- Sustained FFO interest coverage below 3.0x. 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: As of June 30, 2021, Dana had $443 million of cash, cash equivalents and marketable securities. In addition to its cash on hand, Dana maintains additional liquidity through a $1.15 billion secured revolver that is guaranteed by the company's wholly owned U.S. subsidiaries. The revolver is secured by substantially all of the assets of Dana and its guarantor subsidiaries and expires in 2026. As of June 30, 2021, there were no borrowings on the revolver, but $21 million of the available capacity was used to back LOCs, leaving $1.13 billion in availability. Based on the seasonality in DAN's business, as of June 30, 2021, Fitch has treated $100 million of Dana's cash and cash equivalents as not readily available for the purpose of calculating net metrics. This is an amount that Fitch estimates Dana would need to hold to cover seasonal changes in operating cash flow, maintenance capex and common dividends without resorting to temporary borrowing. Debt Structure: Dana's debt structure primarily consists of senior unsecured notes issued by both Dana and its Dana Financing subsidiary, as well as borrowings on its term loan B. ISSUER PROFILE Dana is an automotive and capital goods supplier focused on the full-frame light truck, off-highway and commercial truck end-markets. The company is headquartered in the U.S., and it has operations in North America, Europe, South America, and the Asia Pacific region. Dana's Light Vehicle segment (about 43% of revenue) focuses on driveline products primarily for full-frame pickups and SUVs, while its Off-Highway segment (about 28% of revenue) produces drive and motion products for agricultural, mining, construction and other off-highway vehicles. Dana's Commercial Vehicle segment (about 17% of revenue) produces driveline products for medium- and heavy-duty commercial trucks, and its Power Technologies segment (about 13% of revenue) supplies thermal and sealing products across all of the company's end-markets. In addition to products for vehicles with internal combustion engines, all four segments are increasingly focused on systems and components for electrified vehicles. 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. DANE HEATING: Seeks to Hire Springer Larsen Greene as Legal Counsel ------------------------------------------------------------------- Dane Heating & Air Conditioning, Inc. seeks approval from the U.S. Bankruptcy Court for the Northern District of Illinois to hire Springer Larsen Greene, LLC to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) consulting with the Debtor concerning its powers and duties, the continued operation of its business and management of the financial and legal affairs of its estate; (b) consulting with the Debtor and with other professionals concerning the negotiation, formulation, preparation and prosecution of a Chapter 11 plan and disclosure statement; (c) conferring and negotiating with creditors and other parties in interest concerning the Debtor's financial affairs and property, Chapter 11 plans, claims, liens, and other aspects of the case; (d) appearing in court and preparing legal papers; and (e) providing other necessary legal services. The firm's hourly rates are as follows: Richard G. Larsen, Esq. $440 per hour David R. Brown, Esq. $455 per hour Joshua D. Greene, Esq. $440 per hour Thomas E. Springer, Esq. $455 per hour The Debtor paid $10,000 to the law firm as a retainer fee. Richard Larsen, 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: Richard Larsen, Esq. Springer Larsen Greene, LLC 300 S. County Farm Road, Suite, Suite G Wheaton, IL 60187 Tel: 630-510-0000 Email: rlarsen@springerbrown.com About Dane Heating & Air Conditioning Inc. Dane Heating & Air Conditioning, Inc. filed a petition under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 21-09701) on Aug. 18, 2021, listing up to $500,000 in assets and up to $1 million in liabilities. Ken Novak has been appointed Subchapter V trustee for the Debtor. Judge Deborah L. Thorne oversees the case. Springer Larsen Greene, LLC serves as legal counsel for the Debtor. DCR ENGINEERING: Unsecureds Will be Paid in Full in Plan -------------------------------------------------------- DCR Engineering Services, Inc., submitted a Plan and a Disclosure Statement. In order to successfully reorganize, the Debtor will activate its business and offer full engineering, construction management, consulting, fabrication, electrical, instrumentation, mechanical and general construction services by contracting, subcontracting, partnering, joint ventures and acquisitions as required to meet the customers project requirements. Additionally, the Debtor will assume its license agreement related to the Mach Alert Software and assume its sublicense agreement with Motorola. The extent of such operations and services depends, in part, on pending legal claims related, in large part, to the legal impact of the attempted UCC sale and purported transfer of the Debtor's assets. Holders of Class 8 Allowed General Unsecured Claims will receive 50% of the Debtor's net income on a quarterly basis with payments commencing the first quarter after the Effective Date, until all Allowed Unsecured Claims are paid in full. Class 8 is impaired. Funds generated from operations through the Effective Date will be used for Plan Payments; however, the Debtor's cash on and as of Confirmation will be available for payment of Administrative Expenses. Counsel for the Debtor: JUSTIN M. LUNA, ESQ. DANIEL VELASQUEZ, ESQ. BENJAMIN R. TAYLOR, ESQ. LATHAM, LUNA, EDEN & BEAUDINE, LLP 201 SOUTH ORANGE AVE., SUITE 1400 ORLANDO, FLORIDA 32801 A copy of the Disclosure Statement dated September 8, 2021, is available at https://bit.ly/3E1uBFD from PacerMonitor.com. About DCR Engineering Services DCR Engineering Services, Inc., provided full-service project engineering, design/build services and automated control system solutions, among other services, to the industrial marketplace. DCR is a Florida corporation formed on June 26, 1995, which has its principal place of business located in Mulberry, Florida. It is controlled by Dale C. Rossman, by and through DCR Services, Inc., who is the President and sole Director of the Debtor. DCR Engineering Services, Inc., filed a Chapter 11 bankruptcy petition (Bankr. M.D. Fla. Case No. 21-02316) on May 5, 2021. The Debtor estimated assets and liabilities of $10 million to $50 million as of the bankruptcy filing. LATHAM LUNA EDEN & BEAUDINE LLP, led by Justin M. Luna, is the Debtor's counsel. DELTA MATERIALS: Plan & Disclosure Hearing Continued to Sept. 22 ---------------------------------------------------------------- Delta Materials, LLC and Delta Aggregate, LLC (the "Debtors") filed with the U.S. Bankruptcy Court for the Southern District of Florida an Ex Parte Motion to Continue Confirmation Hearing and Extend Certain Related Deadlines (the "Motion"). On Sept. 9, 2021, Judge Erik P. Kimball granted the motion and ordered that: * The consolidated hearing on final approval of the Debtors' Disclosure Statement, confirmation of the Debtors' First Amended Chapter 11 Plan and consideration of fee applications is continued to September 22, 2021, at 2:00 P.M. * The deadline for the Debtors to file the report of plan proponent(s) and confirmation affidavit is extended to September 20, 2021. A copy of the order dated September 9, 2021, is available at https://bit.ly/3llEJ3l from PacerMonitor.com at no charge. Attorneys for Debtors: Bradley S. Shraiberg, Esq. Patrick Dorsey, Esq. Shraiberg, Landau & Page, P.A. 2385 NW Executive Center Drive, Ste. 300 Boca Raton, FL 33431 Telephone: (561) 443-0800 Facsimile: (561) 998-0047 Email: bshraiberg@slp.law Email: pdorsey@slp.law About Delta Materials Delta Materials, LLC and Delta Aggregate, LLC, are in the business of aggregate mining, in which material such as crushed stone, gravel, sand and clay is sold for use in construction. Delta Aggregate owns the quarry a street address of 9025 and 9775 Church Road, Felda, Hendry County, Florida. Delta Materials is the lessee or owner of various pieces of mining equipment. Delta Materials and Delta Aggregate filed voluntary petitions seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Lead Case No. 19-13191) on March 12, 2019. Delta Aggregate owns a property located at 9025 Church Road, Felda, Fla., having an appraised value of $22 million. At the time of filing, Delta Materials' assets totaled $22,006,491 and liabilities totaled $10,377,363. Delta Aggregate had total assets of $22,006,491 and total liabilities of $10,377,363. Judge Erik P. Kimball oversees the cases. The Debtors' counsel is Bradley S. Shraiberg, Esq., at Shraiberg Landau & Page, PA, in Boca Raton, Fla. DEXKO GLOBAL: Moody's Assigns B2 CFR & Rates First Lien Debt B1 --------------------------------------------------------------- Moody's Investors Service assigned a B2 corporate family rating and B2-PD probability of default rating to DexKo Global, Inc. (NEW). Concurrently, Moody's assigned B1 ratings to the company's proposed first lien credit facilities and a Caa1 rating to its proposed senior unsecured notes. The outlook is negative. The first lien credit facilities consist of a $200 million revolver, $800 million term loan and EEUR950 million term loan. The facilities also provide for delayed draw term loans for an additional $160 million and EUR100 million, respectively. Proceeds from the first lien term loans and unsecured notes along with common equity will be used to finance the purchase of DexKo by Brookfield Business Partners L.P. in a transaction valued at approximately $3.4 billion. Following the close of this transaction, existing debt currently rated at DexKo Global Inc. will be repaid and those ratings will be subsequently withdrawn. Assignments: Issuer: AL-KO Vehicle Technology Group Senior Secured First Lien Term Loan B, Assigned B1 (LGD3) Senior Secured First Lien Delayed Draw Term Loan, Assigned B1 (LGD3) Issuer: DexKo Global, Inc. (NEW) Probability of Default Rating, Assigned B2-PD Corporate Family Rating, Assigned B2 Senior Secured First Lien Revolving Credit Facility, Assigned B1 (LGD3) Senior Secured First Lien Term Loan B, Assigned B1 (LGD3) Senior Secured First Lien Delayed Draw Term Loan, Assigned B1 (LGD3) Senior Unsecured Notes, Assigned Caa1 (LGD5) Outlook Actions: Issuer: AL-KO Vehicle Technology Group Outlook, Assigned Negative Issuer: DexKo Global, Inc. (NEW) Outlook, Assigned Negative RATINGS RATIONALE DexKo's ratings reflect the company's high financial leverage, exposure to cyclical end markets, and a relatively aggressive acquisition strategy. Following the buyout by Brookfield and acquisition of European-based Brink, DexKo's debt/EBITDA is expected to peak at about 7.5x at the end of 2021, which is elevated for the current rating. Moody's expects DexKo's financial leverage to improve to 6.5x through 2022 while the company remains active in pursuing acquisitions. Moody's expects the company to utilize the capacity of its proposed delayed draw term loans and excess cash to fund acquisitions over the next year. Beyond 2022, Moody's believes DexKo's debt/EBITDA will likely stay around 6x as acquisitions remain an integral part of DexKo's strategy, especially given the fragmented nature of its competitive markets. DexKo's credit profile benefits from the company's good earnings margin, diverse end-uses for its products and strong free cash flow. The company's products, primarily focused on axles, chassis and related components, are used for towing applications across a wide range of end-uses. Many of the company's end-markets, including construction, industrial, and agriculture sectors as well as the more consumer-driven market of recreational vehicles, are expected to sustain favorable demand tailwinds into 2022. Moody's expects DexKo to maintain Moody's-adjusted EBITA margins of about 13% to 14% in 2021 and 2022 as the company is able to effectively offset increased costs with pricing actions. In addition, DexKo maintains a highly variable cost structure, which it is able to flex during downturns given the cyclicality of its end markets. The negative outlook reflects Moody's view that DexKo's debt/EBITDA will remain elevated above 6.5x through 2022 if the company fails to generate higher earnings on increased volumes or undertakes excessive debt-funded acquisitions. Moody's expects DexKo to maintain good liquidity. The company's liquidity position is supported by its strong free cash flow, which Moody's expects to continue in 2022 with free cash flow to adjusted debt of at least 5%. DexKo's consistent free cash flow reflects its efficient working capital management that is driven by its relatively short lead times for production, as well as low maintenance capex. Moody's expects DexKo to deploy the majority of its free cash flow towards acquisitions. The proposed $200 million cash flow revolving credit facility and $150 asset-based lending (ABL) facility (both due 2026) are expected to remain largely undrawn over the next twelve months, except for modest seasonal usage for working capital needs. The B1 rating on the first-lien senior secured facilities is one notch above the B2 CFR. This reflects the priority position of these facilities ahead of the senior unsecured notes and non-debt liabilities, but behind the ABL, which has a first priority lien on specific current assets. The Caa1 rating on the unsecured notes reflects its subordinated position in the capital structure. FACTORS THAT COULD LEAD TO A DOWNGRADE OR UPGRADE OF THE RATINGS The ratings could be downgraded if DexKo is unable to reduce leverage to below 6.5x debt/EBITDA in 2022, either through an inability to drive earnings growth or an aggressive use of debt to fund acquisitions. In addition, a weakening in EBITA margins toward 12% could pressure the rating. A deterioration in the company's liquidity position, including a material reduction in cash, or free cash flow to debt that is maintained below 5%, could result in a downgrade. The ratings are unlikely to be upgraded in the near-term. Over time, the ratings could be upgraded if DexKo maintains a financial policy that supports a leverage profile of below 5x debt/EBITDA on a sustained basis. In addition, maintaining good liquidity with free cash flow to debt approaching 10% could support an upgrade. DexKo Global, Inc. (NEW), headquartered in Novi, Michigan, is a global manufacturer and distributor of engineered components for towable and related applications primarily in North America and Europe. The company serves a variety of markets including agriculture, commercial, construction, general industrial, livestock, landscaping, marine, military, energy, residential, recreation vehicle and many other specialized end-use segments. Revenue for the twelve months ended June 30, 2021 was approximately $2 billion. The principal methodology used in these ratings was Manufacturing published in September 2021. DEXKO GLOBAL: S&P Affirms 'B-' ICR on Sale to New Sponsor --------------------------------------------------------- S&P Global Ratings affirmed its 'B-' issuer credit rating on DexKo Global Inc. and subsidiary Dexter Axle Co. S&P said, "We assigned our 'B-' issue-level and '3' recovery ratings to DexKo's proposed bank credit facility (consisting of the revolving facility, term loans, and delayed-draw term loans). We also assigned our 'CCC' issue-level and '6' recovery ratings to the proposed $665 million senior unsecured notes. "The stable outlook reflects our view that while leverage will increase because of higher debt in the capital structure, the company will continue to experience good demand for its products and maintain good profitability and liquidity, with S&P Global Rating-adjusted leverage remaining below 8x. "We believe DexKo can sustainably operate at this new capital structure, despite adding roughly $700 million of new debt as part of the sponsor-to-sponsor sale. We estimate DexKo's S&P Global Ratings-adjusted leverage including the transaction will be about 7.8x by the end of fiscal 2021. This level of debt leverage is a marked rise from 5.7x as of June 30, 2021. Still, the company has operated with high debt leverage in the past and we expect that over the next 12 months, the company's overall operating performance will continue to improve on organic revenue growth, contributions from its completed and future acquisitions (and their realizable synergies), and price increases. We also expect the company will generate solid free cash flow, which should help to decrease leverage to the low-7x area in 2022." The company's increased scale should support solid organic revenue growth in 2021 driven by do-it-yourself and outdoor recreation-related activities that are skewing consumer spending habits toward DexKo's towable and RV-related components. DexKo's industrial/utility, hydraulic, and heavy-duty end markets have also benefited from favorable demand trends as the economy recovers. In addition, recently completed acquisitions will give the company additional aftermarket exposure across the U.S. and Europe which will somewhat improve its revenue cyclicality and further solidify its strong market share for its products. S&P expects revenue growth to moderate in 2022 from strong 2021 levels. S&P said, "We forecast a modest contraction of S&P Global Ratings-adjusted EBITDA margins this year as DexKo combats cost inflation but we expect margin expansion in 2022. During 2021, we believe that solid demand, cost-reduction efforts, and meaningful pricing actions will allow DexKo to partially offset the impact of raw material inflation and supply chain-related headwinds as well as costs from the ramp up of recently completed acquisitions. As a result, we expect its S&P Global Ratings-adjusted EBITDA margins will contract slightly but remain in the 16% area. Over the next 12 to 18 months, we anticipate margins will approach 17% if the company can continue to improve its product mix, successfully integrate its acquisitions, and realize associated synergies from further efficiency improvements, however a prolonged impact from raw material cost inflation could also pose a headwind to margins in 2022. Additional margin improvements could be achieved if the company can reduce its restructuring and acquisition-related costs; however, we expect these costs to recur given the company's tendency to make opportunistic acquisitions. "M&A activity is likely to remain high over the next 12 to 18 months given our expectations of solid free cash flow generation and additional liquidity sources. We forecast DexKo's average margins and capital expenditure (capex)-lite business model will support solid annual free cash flow generation between $150 million to $200 million on an S&P Global Ratings-adjusted basis. We believe acquisition activity will be the primary use of free cash flow given an active acquisition history--the company made about 26 acquisitions since 2012. We believe the company's acquisition strategy will remain aggressive as the company grows its EBITDA, but should support some deleveraging. We expect the company will utilize its cash generation and delayed draw facilities to fund opportunistic acquisitions over the next 12 to 18 months. "The stable outlook on DexKo reflects our expectation that debt leverage will remain very high, but that end-market demand will remain good and EBITDA will increase over the next 12 months, driving a modest reduction in leverage toward 7.0x. This will allow the company will continue to comfortably cover debt service requirements while maintaining adequate liquidity." S&P could lower its rating on DexKo over the next 12 months if: -- The company materially underperformed S&P's base-case expectations for sales and earnings, resulting in break-even or negative free operating cash flow (FOCF) and rising leverage, such that its capital structure became unsustainable; or -- The company's liquidity sources (including cash and revolver availability) materially declined because of a weakened operating performance, large debt-financed acquisitions or dividends. S&P could raise its rating on DexKo if: -- It improves and sustains S&P Global Ratings-adjusted debt to EBITDA of less than 7.0x through a cycle; -- Free cash flow generation is consistently positive; and -- S&P would also require the company to demonstrate its commitment to maintaining this level of leverage even when incorporating potential shareholder-return activity and acquisitions. DIAMOND (BC) BV: Moody's Rates New $500MM Unsecured Notes 'Caa1' ---------------------------------------------------------------- Moody's Investors Service assigned a Caa1 rating to Diamond (BC) B.V. (Diversey)'s proposed $500 million new senior unsecured 8 year notes due in 2029. Proceeds will be used to repay the existing senior unsecured notes due 2025. 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, combined with the recent new term loan refinancing, is virtually net leverage neutral and improves the company's debt profile with its next debt maturity not until 2028. The Caa1 rating on the new senior unsecured notes, two notches below the B2 CFR, reflects subordination to the substantial amount of secured TL debt in the capital structure" Princiotta added. Assignments: Issuer: Diamond (BC) B.V. Senior Unsecured Regular Bond/Debenture, Assigned Caa1 (LGD5) RATINGS RATIONALE On March 25, 2021, Moody's upgraded Diversey's ratings 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. Moody's expects Diversey 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 B2 CFR rating is 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 and created opportunities 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 roughly in the mid-to-high 70% range post IPO, the IPO created a publicly-traded float and expands the pool of equity holders that provides improved public oversight and enhances the company's disciplined financial policy and transparency and better balances 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 including $70.7 million in cash at June 30, 2021 and $450 million committed 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 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; second half 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 reflects 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 earnings growth, cost reduction actions, contributions from bolt-on acquisitions, and reduced cash usage for transition & transformation, dosing & dispensing, restructuring and the resulting collective 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 Rates New $500MM Senior Unsecured Notes 'B' ---------------------------------------------------------------- S&P Global Ratings assigned its 'B' issue-level rating and '4' recovery rating to Diamond (BC) B.V.'s proposed $500 million senior unsecured notes. The '4' recovery rating indicates its expectation for average (30%-50%; rounded estimate: 30%) recovery in the event of a payment default. S&P expects the company to use the proceeds from these notes to redeem its existing 5.625% senior notes due 2025. Its ratings are based on the preliminary terms and conditions of the issuance. S&P's 'B' issuer credit rating and positive outlook on Diamond, as well as all of its other existing ratings on the company, are unchanged. DIFFUSION PHARMACEUTICALS: Issues Letter to Shareholders -------------------------------------------------------- Robert Cobuzzi, Jr., Ph.D., chief executive officer of Diffusion Pharmaceuticals Inc., has issued a letter to shareholders providing an update on recent events and outlook for the remainder of 2021 and early 2022. The full text of the letter follows: September 9, 2021 Dear Fellow Stockholders, I assumed the role of President and CEO at Diffusion Pharmaceuticals one year ago, in September 2020. Since that time, we have made many organizational and strategic advances and have endeavored to regularly communicate our progress. The purpose of this letter is to summarize these changes, highlight the data obtained from our clinical trials and describe how we plan to use the data to direct our development strategy for our lead product candidate, trans sodium crocetinate (TSC). Over the coming weeks and months, we will continue to communicate our plans and progress through our usual channels, including press releases, investor conference presentations, media interviews and SEC filings. We also will seek to expand the depth and breadth of information available about our development activities through a series of podcasts featuring our Chief Medical Officer, Chris Galloway, M.D and me. The first episode of this podcast series, entitled "The Science of Solving for Hypoxia" is available through the Diffusion website at www.diffusionpharma.com. 1. Organizational Changes The story of every organization is primarily about its people, so let's start there. Since last September, there has been significant change at every level of our organization, from the Board of Directors (Board) to the management team and to our operating team. We have implemented these changes to most effectively position us for short and longer term success. I joined the Diffusion Board in January 2020 and was appointed CEO in September 2020. My scientific training and expertise, coupled with my significant biopharmaceutical industry experience in drug development and business development, match well with the current needs of Diffusion. Bill Hornung, our Chief Financial Officer since late 2018, is another industry veteran. Bill has been a great partner to me, both to provide historical context and in helping to shape Diffusion for the future. Last fall we further enhanced our management team with the addition of two very skilled leaders: our General Counsel, Bill Elder, and our Chief Medical Officer, Dr. Chris Galloway. In addition to management team talent, we also have added accomplished individuals throughout the organization, including in our administration, clinical operations, finance, quality assurance, and chemistry, manufacturing and controls (CMC) functions. As we move forward, we plan to continue to grow and supplement our team as Diffusion continues to mature. At the Board level, Jane Hollingsworth, who joined the Board in August 2020, was appointed our new Board Chair in June 2021, bringing more than 25 years of experience founding and leading life sciences companies. Diana Lanchoney, M.D., and Eric Francois – both elected to the Board in June 2021 - bring extensive technical expertise and many years of biopharmaceutical company leadership experience to the Board. Jane, Diana and Eric add meaningful new perspectives to our Board, enhancing the skills available to support the organization. Collectively, these changes already have had a meaningful, positive impact on our ability to refine and execute our strategy, which I believe position us well for future success. 2. Development Strategy Changes Let's talk more about the changes to our development strategy over the last 12 months. Since the founding of Diffusion, the focus has been on developing TSC as a platform therapeutic that can be used to enhance standard-of-care treatment for conditions complicated by hypoxia. Today, the development of TSC remains the cornerstone of our strategy. Over time, we have generated a substantial amount of data on TSC. This includes data on CMC, preclinical safety and efficacy data in a wide array of experimental models, clinical data on single dose safety, tolerability, and pharmacokinetics in healthy volunteers, and clinical safety and efficacy data evaluating TSC as an adjuvant therapy in the treatment of a variety of indications, as noted below. GBM and Stroke Data In late 2017, a Phase 2/3 follow-on study in GBM patients initiated, and in late 2019 a Phase 2 clinical study in acute stroke patients was initiated. However, both of these studies were terminated prior to completion due to non-clinical factors, including a lack of adequate financial resources and, in the case of the stroke study, the onset of the COVID-19 pandemic in early 2020. COVID-19 Data In April 2020, due to the anticipated persistence of the COVID-19 pandemic coupled with the strong belief in the potential of TSC to improve low tissue oxygen levels, we announced a clinical research program evaluating TSC in patients with COVID-19. This program led to our recently completed Phase 1b clinical study evaluating TSC in COVID-19 patients. The 24 patient, Phase 1b COVID-19 trial was completed in February 2021. This study evaluated the safety and pharmacokinetics of ascending doses of TSC administered every six hours for at least five and up to 15 days, which was a more frequent dosing regimen than had been used in previous clinical studies. Topline results from primary endpoint data, announced shortly after study completion in February 2021, indicated TSC was safe and well-tolerated when administered using the more frequent dosing regimen. Secondary and exploratory endpoint data, announced in May 2021, indicated that patients receiving the highest TSC dose tested, 1.5 mg/kg, had (i) faster time to improvement in World Health Organization ordinal scale by day 7 and through day 29, (ii) reduced time on oxygen supplementation, and (iii) reduced hospital length of stay compared to those receiving lower doses. It is important to recall that the COVID-19 trial was designed as a safety and tolerability study only and was not designed or powered to evaluate TSC's efficacy as a treatment for COVID-19. Focused new development strategy Last fall, we took the opportunity to conduct a thorough analysis of all available data to map a strategy for future success. The available data at that point supported TSC's potential to enhance the standard-of-care for many hypoxia-related indications but did not yet provide direct evidence of TSC's ability to enhance oxygenation in humans nor did it yet demonstrate the safest and most effective doses to produce this oxygenation effect. In order to address these outstanding questions, in November 2020 we announced our plan to conduct a trilogy of short-term, clinical studies – collectively referred to as the Oxygenation Trials – utilizing three different experimental clinical models of oxygenation: * The TCOM Trial was the first of our three Oxygenation Trials. In short, it was designed to measure the direct effects of TSC on peripheral tissue oxygenation (tcpO2) in healthy normal volunteers using a device called a transcutaneous oximeter (TCOM) that measures the release of oxygen from blood vessels through the skin. This study was completed in March 2021 and is described in more detail below. * The Altitude Trial, which we expect to initiate in the fourth quarter of this year, is designed to measure the effects of TSC on maximal oxygen consumption and partial pressure of blood oxygen in healthy normal volunteers exercising under conditions that simulate altitude and induce hypoxia. * The ILD-DLCO Trial, which we expect to initiate in the late fourth quarter of this year, is designed to measure the effects of TSC on the diffusion of carbon monoxide through the lungs (DLCO) as a surrogate measure of oxygen transfer efficiency, or uptake, from the alveoli of the lungs, through the plasma, and onto hemoglobin within red blood cells, in patients previously diagnosed with interstitial lung disease (ILD). * The TCOM Study The topline results of the TCOM study were announced in the second quarter of 2021. In this study, TSC was observed to be safe and well-tolerated at all doses tested with no serious adverse events or dose-limiting toxicities. Analysis of the primary endpoint data indicated a positive dose-response trend in TCOM readings with TSC as compared to placebo that persisted through the measurement period. Due in part to the small number of subjects in each cohort, and the inherent variability of tcpO2 measurement, the magnitude of effect was not statistically significant; however, the trends in the primary endpoint data indicated an improvement in peripheral oxygenation with TSC with no evidence of hyperoxygenation, a potentially toxic condition. The figure below was created by subtracting the median response observed in the TCOM Trial's placebo group from the median response observed in each TSC dosage group at each of the measurement times during the one-hour period following dosing. As you can see, these data show increasing peripheral tissue oxygenation following TSC administration that persisted through the one-hour measurement period, particularly at the two highest doses tested (2.0 mg/kg and 2.5 mg/kg). We believe the TCOM Trial provides clinical evidence of exactly the outcomes we were hoping to see - that TSC facilitates the passive diffusion of oxygen from areas of high concentration to areas of low concentration without causing hyperoxygenation. While the results of the TCOM study were not statistically significant - due we believe to the small sample size and the innovative trial design - they represent a positive and meaningful step towards the accomplishment of the strategic objectives of our Oxygenation Trials. Moreover, the 2.0 mg/kg and 2.5 mg/kg doses at which the effects of TSC were observed in the TCOM study are higher than the doses tested in any of the recent clinical trials of TSC. Therefore, in addition to providing evidence of a direct effect of TSC on oxygenation, these results help inform dose selection for future trials. 3. Looking Ahead The body of data we have amassed to date makes us optimistic about the broad therapeutic potential of TSC. We believe the two remaining Oxygenation Trials – our Altitude and ILD-DLCO Trials – will answer additional outstanding questions, providing important additional data related to TSC dose and oxygenation as well as the mechanism of action. This information will guide our selection of the initial TSC indication to be studied for regulatory approval, which we expect to announce in the fourth quarter of this year. Perhaps equally important to the progress we have made in our clinical program, as of June 30, 2021, we believe we have sufficient cash resources to fund our planned clinical trials and other operational needs through 2023. This includes the capacity to fully fund a Phase 2b clinical study evaluating TSC in the initial indication we will choose and identify in the fourth quarter of 2021 and expect to commence in the first half of 2022. Looking forward, our team is committed to maximum effort, good planning, and strong execution as we strive to realize the potential of TSC for patients and for you, our stockholders. We are excited about Diffusion’s prospects for the future and remain focused on executing the plan we have designed to develop TSC. We will continue to endeavor to win your confidence, successfully demonstrate the clinical value of TSC, and build a foundation for the future growth of Diffusion. On behalf of the entire Diffusion team, I thank you for your continued support. Best wishes for your health and safety, Robert J. Cobuzzi Jr., Ph.D. President and CEO Diffusion Pharmaceuticals Inc. About Diffusion Pharmaceuticals Diffusion Pharmaceuticals Inc. is an innovative biotechnology company developing new treatments that improve the body's ability to bring oxygen to the areas where it is needed most, offering new hope for the treatment of life-threatening medical conditions. Diffusion's lead drug TSC was originally developed in conjunction with the Office of Naval Research, which was seeking a way to treat hemorrhagic shock caused by massive blood loss on the battlefield. Diffusion reported a net loss of $14.18 million for the year ended Dec. 31, 2020, compared to a net loss of $11.80 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $52.71 million in total assets, $2.54 million in total liabilities, and $50.17 million in total stockholders' equity. EVERGREEN GARDENS: Case Summary & 50 Largest Unsecured Creditors ---------------------------------------------------------------- Two affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- Evergreen Gardens I LLC 21-11609 199 Lee Avenue, #693 Brooklyn, New York 11211 Evergreen Gardens II LLC 21-11610 199 Lee Avenue, #693 Brooklyn New York 11211 Business Description: The Debtors are engaged in activities related to real estate. Chapter 11 Petition Date: September 14, 2021 Court: United States Bankruptcy Court Southern District of New York Judge: Hon. Martin Glenn Debtors' Counsel: Gary T. Holtzer, Esq. Jacqueline Marcus, Esq. Matthew P. Goren, Esq. WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Tel: (212) 310-8000 Fax: (212) 310-8007 Email: gary.holtzer@weil.com jacqueline.marcus@weil.com matthew.goren@weil.com Debtors' Financial Advisor: COHNREZNICK LLP 1301 Avenue of the Americas New York, NY 10019 Debtors' Claims, Noticing & Solicitation Agent: DONLIN RECANO & COMPANY, INC. 6201 15th Ave Brooklyn, NY 11219 Estimated Assets (on a consolidated basis): $100 million to $500 million Estimated Liabilities (on a consolidated basis): $100 million to $500 million The petitions were signed by Assaf Ravid, authorized signatory. Full-text copies of the petitions are available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/EY7BAXA/Evergreen_Gardens_I_LLC__nysbke-21-11609__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/B7KF2PQ/Evergreen_Gardens_II_LLC__nysbke-21-11610__0001.0.pdf?mcid=tGE4TAMA List of Evergreen Gardens I's 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Melrose Noll Brooklyn LLC Unpaid $6,000,000 Treff & Lowy PLLC Settlement 481 Wythe Ave 2nd FL Brooklyn, NY 11249 Joeseph Treff Tel: 718-599-3500 Ext. 201 Fax: 718-387-6282 Email: joe@trefflowy.com 2. MPI Plumbing Corp Trade Debt $609,577 670 Myrtle Ave #234 Brooklyn, NY 11205 Tel: 718-925-2400 Email: billing@mpiplumbingcorp.com 3. Con Edison Utility $263,515 4 Irving PL Rm 1875 New York NY 10003 Email: zuckermanr@coned.com; weberm@coned.com; franklinv@coned.com; donnleyd@coned.com 4. Dynamic Building Trade Debt $222,904 Services Inc. 4403 15th Ave Ste 409 Brooklyn, NY 11219 Joel Berkovic Tel: 718-484-1998 Fax: 718-484-1997 Email: jb@pbsfacilityservice.com 5. Beyond Concrete Trade Debt $114,513 36 Industrial Dr Keyport, NJ 07735 Tel: 732-441-2500 Fax: 732-441-3318 Email: sales@beyondconcrete.com 6. Lily Contracting/ Trade Debt $101,265 Consulting LLC 128 Park St Woodmere NY 11598 Tel: 917-916-6255 Email: Jhametz@gmail.com 7. Smart Management NY Inc Trade Debt $51,480 735 Bedford Ave Brooklyn NY 11205 Tel: 718-623-9430 Fax: 718-623-9431 Email: david@allyearmgt.com 8. Sunbelt Rentals Trade Debt $37,026 150 Nassaue Ave Islip NY 11751 Joseph Pennachio Tel: 631-224-5000 Fax: 631-224-5180 Email: pcm668@sunbeltrentals.com 9. Kramer Levin Naftalis Trade Debt $34,163 and Frankel LLP 1177 Ave of the Americas New York NY 10036-2714 Adam Taubman Tel: 212-715-9377 Fax: 212-715-8378 Email: ataubman@kramerlevin.com 10. EXP Group Companies LLC Trade Debt $30,071 160 Havemeyer St Store 7 Brooklyn NY 11211 Tel: 212-991-8983 Email: j@exprny.com 11. B&S Enterprises USA Inc. Trade Debt $29,673 715 Myrtle Ave Brooklyn NY 11205 Yoel Korenbly Tel: 718-855-8100 Email: sales@buysaveappliances.com 12. NYEG Trade Debt $28,630 100A Broadway Ste 429 Brooklyn NY 11249 Moshe Cohen Tel: 347-406-2067 Email: info@nyegcorp.com 13. MPFP PLLC Trade Debt $24,815 120 Broadway FL 20 New York NY 10271 Tel: 212-477-6366 Fax: 212-477-6548 Email: accounting@mpfp.com 14. Pine New York Trade Debt $24,103 222 Broadway FL19 New York NY 10038 Avi Barkai Tel: 646-553-5888 Fax: 646-553-2979 Email: avi@pineny.com 15. Dynamic Electrical Trade Debt $24,000 Contractors 1046 Winthrop St Brooklyn NY 11212 Tel: 917-468-0261 Email: Dynamicnyc1@gmail.com 16. The Pinball Company Trade Debt $22,640 6000 S Sinclair Rd Columbia MO 65203 Nic Parks Tel: 573-234-2234 Fax: 573-234-2241 Email: support@pinballco.com 17. Chutes Enterprises Trade Debt $19,494 1011 Westwood Ave Staten Island NY 10314 Tel: 718-494-2247 Fax: 718-494-2257 Email: info@chutesenterprises.com 18. Metro High Tech Steel Trade Debt $17,957 and Builders 1087 Flushing Ave Brooklyn NY 11237 Tel: 917-681-7190 Email: metsteelbuilders@gmail.com 19. Carvart CNC Inc Trade Debt $16,460 5606 Cooper Ave Ridgewood NY 11385 Tel: 917-549-6288 Email: info@cncnewyork.com 20. Home Tyle Trade Debt $12,460 5816 New Utrecht Ave Brooklyn NY 11219 Tel: 718-215-5966 Email: Office@HomeTyles.com 21. Mike Brick Layer and Trade Debt $12,375 Construction 94 Thomas St Brooklyn NY 11237 Tel: 347-247-0822 Email: mikeconstruction47@yahoo.com 22. PBS SVC Inc Trade Debt $11,666 4403 15th Ave Ste 409 Brooklyn NY 11219 Tel: 718-484-1998 Fax: 718-484-1997 Email: info@pbsfacilityservice.com 23. Loothrop Associates LLC Trade Debt $11,331 333 Westchester Ave White Plains NY 10604 Tel: 914-741-1115 Email: info@lothropassociates.com 24. CP Steel Erectors LLC Trade Debt $10,900 206 Hindsdale St Brooklyn NY 11207 Tel: 347-965-3458 Email: Silvio@cpsteelerectors.com 25. Elite Pool and Fitness Trade Debt $8,989 Management, Inc. 129-09 26th Ave Ste 403 Flushing NY 11354 Nick Chavez Tel: 718-746-3720 Fax: 718-746-3726 Email: ContactUs@eliteamenity.com, nickchavez@eliteamenity.com 26. Classic Touch Trade Debt $8,910 183 Wilson #113 Brooklyn NY 11211 Tel: 917-941-2747 Email: joelbiner@gmail.com 27. Consolidated Brick and Trade Debt $7,765 Building Supplies 650 Bodwell St EXT Avon MA 02322 Tel: 800-321-0021 Fax: 508-559-8910 Email: pmeade@consolidatedbrick.com 28. Able Fencing Inc Trade Debt $7,666 59 Collins Ave Spring Valley NY 10977 Tel: 845-371-2253 Email: office@ablefencing.net 29. Safety Fire Sprinkler Corp Trade Debt $7,400 1070 38th St Brooklyn NY 11219 Tel: 718-633-3036 Fax: 718-633-4593 Email: info@safetyfiresprinkler.com 30. Rollhuas Seating Trade Debt $6,723 Products, Inc. 43-10 21st St 2nd FL Long Island City NY 11101 Tel: 718-729-9111 Email: rollhausproducts@gmail.com List of Evergreen Gardens II's 50 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Melrose Noll Brooklyn LLC Unpaid $6,000,000 Treff & Lowy PLLC Settlement 481 Wythe Ave 2nd FL Brooklyn NY 11249 Joeseph Treff Tel: 718-599-3500 Ext. 201 Fax: 718-387-6282 Email: Joe@trefflowy.com 2. EXR Group Companies LLC Trade Debts $337,900 160 Havemeyer St Store 7 Brooklyn NY 11211 Tel: 212-991-8983 Email: j@exrny.com 3. Lily Contracting/ Trade Debts $101,265 Consulting LLC 128 Park St Woodmere NY 11598 Tel: 917-916-6255 Email: Jhametz@gmail.com 4. Dynamic Building SVC Trade Debts $82,910 4403 15th Ae Ste 409 Brooklyn NY 11219 Joel Berkovic Tel: 718-484-1998 Fax: 718-484-1997 Email: jb@pbsfacilityservice.com 5. Con Edison Utility $55,504 4 Irving PL RM 1875 New York NY 10003 Tel: 800-752-6633 Email: zuckermanr@coned.com; weberm@coned.com; franklinv@coned.com; donnleyd@coned.com 6. Isseks Bros Inc. Trade Debts $39,425 298 Broome St New York NY 10002 Tel: 212-267-2688 Email: Info@Isseks.com 7. Elite Pool and Fitness Trade Debts $8,989 Management, Inc. 129-09 26th Ave Ste 403 Flushing NY 11354 Nick Chavez Tel: 718-746-3720 Fax: 718-746-3726 Email: ContactUs@eliteamenity.com, nickchavez@eliteamenity.com 8. Tri State Fire Trade Debts $5,215 Sprinklers 1237 39th St Brooklyn NY 1118 Tel: 718-237-1100 Email: info@tristatefiresprinklers.com 9. National Grid Trade Debts $5,150 Customer Correspondence One Metrotech Ctr 16th FL Brooklyn NY 11201 Tel: 718-643-4050 10. Reliable Masonry Corp Trade Debts $4,984 5314 16th Ave Ste #251 Brooklyn NY 11204 Tel: 718-854-1150 Email: jacob@reliablemasonrycorp.com 11. Rotavele Elevator Trade Debts $4,921 Construction Inc Alan Zaretsky 414 Seneca Ave Ridgewood NY 11385 Tel: 718-386-3000 Fax: 718-386-4366 Email: annp@contractor-services.net 12. Silverman Shin and Trade Debts $4,676 Byene PLLC Gerard J Crowe 88 Pine St 22nd FL New York NY 10005 Tel: 212-779-8600 Fax: 212-779-8858 Email: gcrowe@silverfirm.com 13. Horowitz, Sarah Former Tenant $4,200 54 Noll St Brooklyn NY 11206 14. Yang, Yi Chien Former Tenant $4,041 54 Noll St Brooklyn NY 11206 15. Bouzaglou, Oriel Former Tenant $4,000 54 Noll St Brooklyn NY 11206 16. Billy Enterprises Inc. Trade Debts $3,800 36 Cypress Ave Brooklyn NY 11237 Tel: 347-894-6557 and/or 914-648-5311 Email: billyenterprisesinc@gmail.com 17. Cao, Yuxi Former Tenant $3,500 54 Noll St Brooklyn NY 18. Bryant, Paul Former Tenant $3,400 54 Noll St Brooklyn NY 11206 19. Dalisay, Angelo Former Tenant $3,400 54 Noll St Brooklyn NY 11206 20. McLoughlin, Matthew Former Tenant $3,400 54 Noll St. Brooklyn NY 11206 21. McDaniel, Katherine Former Tenant $3,325 54 Noll St Brooklyn NY 11206 22. Tsang, Stella Former Tenant $3,325 54 Noll St Brooklyn NY 11206 23. Heng, James Former Tenant $3,300 54 Noll St Brooklyn NY 11206 24. Paez, Victoria Former Tenant $3,250 54 Noll St Brooklyn NY 11206 25. Aldana, Gabriel Former Tenant $3,225 54 Noll St Brooklyn NY 11206 26. Garza, Richardo Former Tenant $3,200 54 Noll St Brooklyn NY 11206 27. Niemeyer, Jordan Former Tenant $3,200 54 Noll St Brooklyn NY 11206 28. Blondie's Treehouse Inc. Trade Debts $3,183 431 Fayette Ave Mamaroneck NY 10543 Tel: 646-649-9298 Email: josh@blondiestreehouse.com 29. Racine, Pamela Former Tenant $3,100 54 Noll St Brooklyn NY 11206 30. Robinson, Brody Former Tenant $3,075 54 Noll St Brooklyn NY 11206 31. Hivolts Electrical Inc. Mechanics Lien $1,419,981* 185 Spencer St Brooklyn NY 11205 Tel: 718-855-4346 Email: mail@hivoltselectrical.com 32. Berry's Cooling and Mechanics Lien $956,219* Heating LLC 15 Meadow St Brooklyn NY 11206 Tel: 718-782-9127 Fax: 718-782-5616 Email: sales@berryscooling.com 33. Dynamic Building SVC Mechanics Lien $832,924* 4403 15th Ave Ste 409 Brooklyn NY 11219 Joel Berkovic Tel: 718-484-1998 Fax: 718-484-1997 Email: jb@pbsfacilityservice.com 34. United Panel Mechanics Lien $800,113* Technologies Corp 611 Old Willets Path Hauppage NY 11718 Tel: 631-232-1757 Fax: 631-232-1260 Email: mcames@unitedpaneltech.com 35. Big Apple Designers Inc. Mechanics Lien $746,979* 694 Myrtle Ave Brooklyn NY 11205 Shlomie Fader Tel: 718-853-6734 Email: Pessy@bigappledesigners.com 36. Supreme Wood Floors Inc. Mechanics Lien $570,493* 1072 Madison Ave Lakewood NJ 08701 Tel: 732-942-8021 Fax: 732-942-7329 Email: ar@supremeflooring.com 37. Rotavelle Elevator Mechanics Lien $290,517* Construction Inc. 414 Seneca Ave Ridgewood NY 11385 Alan Zaretsky Tel: 718-386-3000 Fax: 718-386-4366 Email: annp@contractor-services.net 38. PBS SVC Inc Mechanics Lien $256,734* 4403 15th Ave Brooklyn NY 11219 Tel: 718-484-1998 Fax: 718-484-1997 Email: info@pbsfacilityservice.com 39. Aurora Electrical Supply Inc Mechanics Lien $249,067* 1355 60th St Brooklyn NY 11219 Tel: 718-436-6000 Fax: 718-972-2657 Email: richard@aura-electric.com 40. Safety Fire Sprinkler Corp Mechanics Lien $203,000* 1070 38th St Brooklyn NY 11219 Tel: 718-633-3036 Fax: 718-633-4593 Email: info@safetyfiresprinkler.com 41. 1 Seal USA LLC Mechanics Lien $151,502* 544 Pk Ave Brooklyn NY 11205 Tel: 212-302-6688 Fax: 718-858-7851 Email: info@1sealusa.com 42. MPI Plumbing Corp Mechanics Lien $134,265* 670 Myrtle Ave #234 Brooklyn NY 11205 Tel: 718-925-2400 Email: billing@mpiplumbingcorp.com 43. 20/20 Inspections Inc Mechanics Lien $125,303* 3716 Fort Hamilton Pkwy Brooklyn NY 11218 Tel: 800-819-7788 Email: suriw@2020inspections.com 44. Security Shield USA Inc. Mechanics Lien $119,397* 314 Penn St Brooklyn NY Tel: 718-388-3725 Fax: 718-384-3831 Email: chany@security-shield.com 45. Worldwide Plumbing Mechanics Lien $85,495* Supply Inc 4002 15th Ave Brooklyn NY 11218 Tel: 718-853-3000 Fax: 718-853-3056 Email: joel@wwps.co 46. E-J Electric Mechanics Lien $75,000* Installation Co 4641 Vernon Blvd Long Island City NY 11101 Tel: 718-392-3928 Fax: 718-392-3985 Email: pcutrone@ej1899.com 47. Complete Window Mechanics Lien $58,875* Treatment 5217 20th Ave Brooklyn NY 11204 Tel: 718-887-4892 Email: eli@completewindowtreatmetn.com 48. HI-I LLC Mechanics Lien $34,226* 65 Croton PL Paramus NJ 07652 Tel: 201-503-0393 Email: ittai@hiiusa.com 49. Pool Docs of NJ Mechanics Lien $26,636* 525 Oberlin Ave S Lakewood NJ 08701 Tel: 732-300-2481 Fax: 732-276-2266 Email: kait@pooldocs.com 50. Thomas Tiles Inc. Mechanics Lien $1,906* 1438 Ovington Ave Brooklyn NY 11219 Tel: 347-597-3176 Email: thomasny7@gmail.com *Claimant has asserted a mechanic's, materialman's or similar lien claim which is junior in priority to the secured claims of the Series E Noteholders. As the proposed sale of the Denizen to the Purchaser and allocation of EG II Sale Proceeds will not yield sufficient funds to pay the claims of the Series E Noteholders in full, the Subsidiary Debtors believe that any asserted mechanic's, materialman's, or similar claims are wholly unsecured. The Debtors request entry of an order directing joint administration of their Chapter 11 Cases for procedural purposes only under the bankrupty case of Evergreen Gardens Mezz LLC (Bankr. S.D.N.Y. Case No. 21-10335). FRALEG GROUP: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Fraleg Group Inc. 931 Lincoln Place Brooklyn NY 11213 Business Description: Fraleg Group is part of the residential building construction industry. Chapter 11 Petition Date: September 14, 2021 Court: United States Bankruptcy Court Eastern District of New York Case No.: 21-42322 Judge: Hon. Jil Mazer-Marino Debtor's Counsel: Francis E. Hemmings, Esq. LAW OFFICES OF FRANCIS E. HEMMINGS PLLC 228-18 Mentone Avenue Laurelton, NY 11413 Tel: 718-808-3779 Email: general@hemmingssnell.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Andre Juman, vice president/secretary. The Debtor stated it has no creditors holding unsecured claims. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/OXWOGMA/Fraleg_Group_inc__nyebke-21-42322__0001.0.pdf?mcid=tGE4TAMA GAP INC: Moody's Affirms Ba2 CFR & Rates New Unsecured Notes Ba3 ---------------------------------------------------------------- Moody's Investors Service affirmed Gap, Inc.'s (The) corporate family rating at Ba2 and its probability of default rating at Ba2-PD. At the same time, Moody's assigned a Ba3 rating to Gap's proposed senior unsecured notes and changed the outlook to positive from stable. The speculative grade liquidity rating remains SGL-1. The net proceeds from the company's $1.5 billion proposed senior unsecured notes and cash on hand will be used to tender for its senior secured notes. Its Ba2 senior secured rating will be withdrawn upon full repayment of these notes outstanding. "The change in outlook to positive from stable reflects governance considerations including Gap's intention to repay approximately $750 million of debt and its conservative financial strategy which has targeted a smaller dividend than prior to the pandemic and its continued high cash balances," said Senior Vice President Christina Boni. "Gap also continues to achieve significant improvement in its earnings as it recovers from the impact of the pandemic. A better than expected sales trajectory has been experienced in 2021 at all of Gap's major brands with positive comparable sales at the Old Navy, Gap and Athleta brands relative to 2019," Boni added. Affirmations: Issuer: Gap, Inc. (The) Corporate Family Rating, Affirmed Ba2 Probability of Default Rating, Affirmed Ba2-PD Assignments: Issuer: Gap, Inc. (The) Senior Unsecured Regular Bond/Debenture, Assigned Ba3 (LGD4) Outlook Actions: Issuer: Gap, Inc. (The) Outlook, Changed To Positive From Stable RATINGS RATIONALE The Gap, Inc.'s Ba2 corporate family rating reflects governance considerations which includes the planned repayment of $750 million of debt, the suspension of its common dividends as well as share repurchases at the onset of the pandemic and its historically conservative level of funded debt to cash balances. The company has reinstated a common dividend at approximately 50% of its historical level (approximately $180 million annually) and has announced a return to modest share repurchases. The rating is also supported by its solid market position in the specialty apparel market with its ownership of leading specialty apparel brands (Old Navy, Gap, Banana Republic, and Athleta). The relatively shorter term of its store leases (approximately five years) has enabled the right sizing of its mature brands (Gap and Banana Republic) while continuing to add stores to its higher growth concepts (Old Navy and Athleta). Investments in its online and mobile business have also strengthened its operational profile and improved its customer experience. The company has managed the disruption posed by the COVID-19 pandemic effectively returning most of its major brands to growth relative to 2019 (with the exception of Banana Republic). Continued integration of its online and store experiences also supports its efforts to increase customer conversion. Gap's speculative grade liquidity rating of SGL-1 reflects its very good liquidity evidenced by its $2.7 billion of cash and short-term investments at the end of the second quarter of 2021, significant free cash flow generation which was supported by solid inventory and cost management and no borrowings under its $1.85 billion asset based revolving credit facility. The company enhanced its liquidity in May 2020 by securing a $1.9 billion asset based revolving credit facility and utilizing a significant portion of its unencumbered real estate assets and intellectual property to secure its $2.25 billion of senior secured notes. The proposed retirement of these senior secured notes would release the associated collateral. Given its intended repayment $750 million of debt post the proposed transactions, Moody's expect leverage to return to approximately under 2.5x in 2021 as the business continues to recover. The positive outlook reflects Gap's success at resetting its cost base while stabilizing its operating performance and maintaining very good liquidity. The outlook also reflects that Gap will maintain a conservative financial strategy. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade would require consistency of performance at all its major brands, continued margin expansion and very good liquidity, as well as a conservative financial strategy. Quantitatively, debt/EBITDA would need to be sustained below 3.5x and EBIT/Interest above 3.5x. Ratings could be downgraded should operational performance weaken and not be poised to return to 2019 levels or liquidity deteriorates for any reason. Ratings could also be downgraded if debt/EBITDA is sustained above 4.0 or EBIT/Interest is sustained below 2.5x. Headquartered in San Francisco, California, The Gap, Inc. is a leading global retailer offering clothing, and accessories for men, women, and children under the Gap, Banana Republic, Old Navy, and Athleta. LTM net sales were approximately $16.6 billion. The Gap, Inc. products are available for purchase in more than 90 countries worldwide through 2,937 company-operated stores, 557 franchise stores, and e-commerce sites The principal methodology used in these ratings was Retail Industry published in May 2018. GAP INC: S&P Assigns 'BB' Rating on New $1.5BB Sr. Unsecured Notes ------------------------------------------------------------------ S&P Global Ratings assigned its 'BB' issue-level rating and '3' recovery rating to San Francisco-based The Gap Inc.'s proposed $1.5 billion senior unsecured notes issued in two tranches. The '3' recovery rating reflects its expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of default. The company plans to use the net proceeds, along with cash on hand, to fund a tender offer launched for its $2.25 billion outstanding senior secured notes due 2023-2027. S&P views the transaction positively since S&P expects it will reduce Gap's funded debt levels, lower interest expense, and extend the company's debt maturity profile. All of the other ratings on Gap Inc. are unchanged. ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors -- S&P's recovery analysis for Gap Inc. simulates a default in 2026 because of a steep decline in revenue and EBITDA, due to weak economic conditions contributing to depressed consumer spending levels. -- In the event of a bankruptcy, S&P believes value would be maximized if Gap Inc. reorganized, given its global brand recognition, supply chain capabilities, and operating scale. -- The company's $1.8675 billion asset-based lending facility, which is not rated, is secured by a first-priority interest in accounts receivable and inventories and would rank ahead of the proposed senior unsecured notes claims in bankruptcy. -- Although recovery prospects for the proposed senior unsecured notes are above 70% under S&P's waterfall analysis, it applies an unsecured debt rating cap as it assumes that the size and ranking of debt and nondebt claims will change before the hypothetical default. The recovery rating is generally capped at '3' for the 'BB' rating category, as S&P assumes additional secured debt would be added to the capital structure on the path to default. Simulated default assumptions -- Simulated year of default: 2026 -- EBITDA at emergence: $492 million -- Implied enterprise value (EV) multiple: 6x -- Estimated gross EV at emergence: $3 billion Simplified waterfall -- Net EV after 5% administrative costs: $2.8 billion -- Valuation split (obligors/nonobligors): 90%/10% -- ABL secured claims: $1 billion -- Senior unsecured debt claims: $1.5 billion --Recovery expectations: 50%-70% (rounded estimate: 65%) *All debts amounts include six months of prepetition interest. GATEWAY RADIOLOGY: Amended Reorganizing Plan Confirmed by Judge --------------------------------------------------------------- Judge Michael G. Williamson has entered findings of fact, conclusions of law and order confirming the Amended Plan of Reorganization as Modified of Gateway Radiology Consultants P.A. All requirements for confirmation of the Plan have been satisfied. On September 7, 2021, and pursuant to Local Rule 3020-1 (a), the Debtors filed a fully integrated Modified Debtors' Amended Joint Plan of Reorganization (the "Integrated Plan") that incorporates all of the modifications: * Article 3.2 of the Plan is clarified to confirm that all awarded fees and costs to the Debtors' professionals will be deferred and paid post effective date on terms in accordance with an agreement with the Debtors. Payment is not a requirement of confirmation. * Article 8.2 of the Plan shall be deleted and replaced with the following: "Effective Date of Modified Plan. The Effective Date of this Plan shall be the date which is five days after the entry of an order confirming this Plan becomes final and non appealable; assuming, however, each of the Parties to the Settlement Agreement have complied with each of the terms and conditions of the Settlement Agreement, including the delivery of the required releases to Philips. If, however, a stay of the confirmation order is in effect on that date, the Effective Date will be the first business day after the date on which the stay of the confirmation order expires or is otherwise terminated." Gateway Radiology Consultants P.A. and PM Radiology, LLC Omnibus Objection to Claims to Philips Medical, LLC and Philips Healthcare, a division of Philips North America is withdrawn. Landlord KK Real Estate V, LLC's Motion for Allowance and Payment of Administrative Claim is allowed in the amount of $96,705.02; provided, however, KK Real Estate V, LLC and Philips shall execute a Joint Stipulation for Dismissal with Prejudice of the action pending between them before the Circuit Court of the Tenth Judicial Circuit in and for Polk County, Florida, Case No 2018-CA-004451 in the form provided by Philips prior to payment. A copy of the Plan Confirmation Order dated September 9, 2021, is available at https://bit.ly/3k5hOKj from PacerMonitor.com at no charge. Counsel for the Debtors: Joel M. Aresty, Esq. JOEL M. ARESTY, P.A. Board Certified Business Bankruptcy Law 309 1st Ave S Tierra Verde FL 33715 Phone: 305-904-1903 Fax: 800-559-1870 E-mail: Aresty@Mac.com About Gateway Radiology Consultants Saint Petersburg, Fla.-based Gateway Radiology Consultants P.A. filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 19-04971) on May 28, 2019. In the petition signed by Gateway Radiology President Gagandeep Manget M.D., the Debtor disclosed $1.2 million in assets and $14.9 million in liabilities. Judge Michael G. Williamson oversees the case. Joel M. Aresty, P.A., serves as the Debtor's bankruptcy counsel. The Debtor also tapped Beighley Myrick Udell + Lynne, PA, Paul C. Jensen Attorney-At-Law, and Netherlands-based Marxman Advocaten as special counsel. GBT TECHNOLOGIES: Board Approves Reverse Common Stock Split ----------------------------------------------------------- The Board of Directors of GBT Technologies Inc. approved a reverse stock split of all of the Company's Common Stock, pursuant to which every 50 shares of Common Stock of the Company shall be reverse split, reconstituted and converted into one share of Common Stock of the Company. To effectuate the Reverse Stock Split, the Company filed on Sept. 10, 2021 a Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209 with the Secretary of State of the State of Nevada subject to FINRA approval. The Reverse Stock Split will not alter any existing shareholder's percentage interest in the Company's equity, except to the extent that the Reverse Stock Split results in any of the Company's existing shareholders owning a fractional share. No fractional shares shall be issued. In lieu of issuing fractional shares, the Company will issue to any shareholder who otherwise would have been entitled to receive a fractional share as a result of the Reverse Split an additional full share of its common stock. Under Nevada law, because the Reverse Stock Split was approved by the Board of Directors of the Company in accordance with NRS Sections 78.207 and 78.209, no stockholder approval was required. The Company submitted an Issuer Company Related Action Notification regarding the Reverse Stock Split to FINRA on Sept. 13, 2021. FINRA has not yet declared an effective date for the Reverse Stock Split. About GBT Headquartered in Santa Monica, CA, GBT Technologies, Inc. is targeting growing markets such as development of Internet of Things (IoT) and Artificial Intelligence (AI) enabled networking and tracking technologies, including wireless mesh network technology platform and fixed solutions, development of an intelligent human body vitals device, asset-tracking IoT, and wireless mesh networks. The Company derived revenues from the provision of IT services. The Company is seeking to generate revenue from the licensing of its technology. GBT Technologies reported a net loss of $17.99 for the year ended Dec. 31, 2020, compared to a net loss of $186.51 for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $3 million in total assets, $34.15 million in total liabilities, and a total stockholders' deficit of $31.15 million. Lakewood, CO-based BF Borgers CPA PC, the Company's auditor since 2017, issued a "going concern" qualification in its report dated March 31, 2021, citing that the Company's significant operating losses raise substantial doubt about its ability to continue as a going concern. GENWORTH LIFE: A.M. Best Affirms B(Fair) Financial Strength Rating ------------------------------------------------------------------ AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of "bb+" (Fair) of Genworth Life and Annuity Insurance Company (GLAIC) (Richmond, VA). The outlook of the FSR is stable. Concurrently, AM Best has affirmed the FSR of C++ (Marginal) and the Long-Term ICRs of "b" (Marginal) of Genworth Life Insurance Company (GLIC) (Wilmington, DE) and Genworth Life Insurance Company of New York (GLICNY) (New York, NY). Additionally, AM Best has affirmed the Long-Term ICRs of "b" (Marginal) of Genworth Financial, Inc. (Genworth) [NYSE: GNW] and Genworth Holdings, Inc. (both domiciled in Delaware), as well as their Long-Term Issue Credit Ratings (Long-Term IR). The outlook of these Credit Ratings (ratings) is stable. The ratings of GLAIC reflect its balance sheet strength, which AM Best assesses as adequate, as well as its weak operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings of GLAIC also reflect its adequate balance sheet strength, including the level and quality of capital, and the quality of its asset portfolio. The revision of the Long-Term ICR outlook to negative reflects pressure on the company's risk-adjusted capitalization in recent years, as well as increased losses over this period. Absolute and risk-adjusted capital, as measured by Best's Capital Adequacy Ratio (BCAR), decreased in 2020, mainly driven by revised interest rate assumptions within the universal life with secondary guarantee block. Results for 2020 were negative with a $182 million statutory loss driven by changes in reserves in the universal life with secondary guarantee block as well as higher mortality due to the COVID-19 pandemic. GLAIC calculated its risk-based capital (RBC) level at 424% at the end of 2020; it has been in the 400% - 450% range for the past four years. The ratings of GLIC and GLICNY reflect the group's balance sheet strength, which AM Best categorizes as weak, as well as its weak operating performance, limited business profile and appropriate ERM. The ratings of GLIC and GLICNY reflect AM Best's view of their balance sheet strength and operating performance. Risk-adjusted capitalization, as measured by BCAR and other capital metrics, is low, in line with 2019. A strong offsetting factor is management's focused strategy of garnering actuarially supported premium rate increases on in-force, long-term care policies. Management identified the need for these increases several years ago, took corrective action and has achieved meaningful results. GNW has demonstrated success at achieving premium rate increases in the past. The impact and timing of the approval and receipt of those rate increases remain uncertain. GLIC calculated its RBC level at 229% at the end of 2020, an increase from the prior-year RBC score of 213%, while GLICNY's RBC deteriorated to 200% from 291% in 2019. The rating affirmations of the two holding companies, Genworth and Genworth Holdings, Inc., as well as their associated debt, reflect the ongoing challenges the operating companies face, their debt obligations and secured promissory note to settle a recent dispute. Genworth has shown financial flexibility navigating through those complications, including the sale of Genworth's stake in Genworth MI Canada, Inc. in 2019 and a potential 19.9% initial public offering of Enact, the U.S. mortgage insurance business. More recently, the company sold its interest in Genworth Mortgage Insurance Australia Limited for total proceeds of $370 million. This has alleviated pressure on a September 2021 maturity that was retired in early July, as well as AXA liabilities. Earlier this year, the company announced the termination of the merger agreement with China Oceanwide Holdings Group Co. Ltd. GIP II BLUE: Moody's Assigns First Time B1 Corporate Family Rating ------------------------------------------------------------------ Moody's Investors Service assigned first time ratings to GIP II Blue Holding, L.P. (HESM Holdco), including a B1 Corporate Family Rating and a B1 rating to its proposed $750 million senior secured term loan. The rating outlook is stable. HESM Holdco is a newly formed subsidiary of sponsor Global Infrastructure Partners (GIP, unrated) and has proposed issuing a $750 million senior secured term loan backed by its equity ownership interests in Hess Midstream LP (HESM, unrated) and its operating subsidiary, Hess Midstream Operations LP (HESM Opco, Ba2 stable). Proceeds from the transaction will be used to fund a distribution to the sponsor. "HESM Holdco's B1 rating reflects its structural subordination to debt at HESM Opco and its complete reliance on distributions from Hess Midstream to cover its debt-service obligations," commented Pete Speer, Moody's Senior Vice President. "The rating is supported by HESM Opco's stable and rising cash flow underpinned by long-term contracts and GIP's substantial ownership stake and strong contractual rights to participate in key governance decisions for Hess Midstream." Assignments: Issuer: GIP II Blue Holding, L.P. Probability of Default Rating, Assigned B1-PD Corporate Family Rating, Assigned B1 Senior Secured Term Loan, Assigned B1 (LGD4) Outlook Actions: Issuer: GIP II Blue Holding, L.P. Outlook, Assigned Stable RATINGS RATIONALE HESM Holdco's B1 CFR reflects the stable nature of its cash flow to be derived from its roughly 45% equity ownership in HESM and HESM Opco on a consolidated basis. HESM Opco is the wholly-owned operating subsidiary of HESM and owns all of the entity's operating assets and issues all of its debt. Hess Corporation (Hess, Ba1 stable) and Global Infrastructure Partners (GIP, unrated) each own 50% of HESM's non-economic general partner and around 45% each the equity ownership in HESM and HESM Opco on a consolidated basis, with about 10% owned by the public following an August 2021 equity repurchase by HESM. HESM provides natural gas and crude oil gathering and pipelines, processing and storage, terminals and rail connectivity, and water gathering and disposal services to its primary customer, Hess, in its Bakken Shale operations. Due to the nature of HESM's contracts and reduced capital investment requirements, Moody's expects HESM to continue to comfortably cover its distributions, including those made to HESM Holdco. Midstream services are fully contracted and 100% fee-based and structured to minimize commodity price and volume risk, supporting long term cash flow and distribution visibility. HESM Holdco's term loan debt service is reliant on HESM's distributions and the term loan debt is subordinated to HESM Opco's existing and future potential indebtedness. The term loan benefits from structural enhancement in the form of an excess cash flow sweep, which takes effect in the second half of 2022 with a 50% excess cash flow sweep when leverage is above 3.5x, stepping down to 25% when leverage is above 2.5x, and 0% when below 2.5x through 2024. From 2025 through 2028, there is a 75% excess cash flow sweep when leverage is above 3.5x, stepping down to 50% when leverage is above 2.5x, and 25% when leverage is above 1.5x. HESM Holdco's standalone financial leverage (Debt/EBITDA) based on its distributions received is initially a little over 3x on an annualized basis but should decline slowly going forward based on HESM's distribution growth guidance. Stand-alone interest coverage is sound at about 6x while the initial loan to value of the underlying equity units pledged is around 25%. The stable outlook reflects Moody's expectation that the projected volume and earnings growth of HESM will lead to improved cash flow and leverage at both HESM Opco and HESM Holdco. HESM Holdco will maintain adequate liquidity. The company's sole source of cash flow is the distributions it will receive from its equity ownership in HESM and HESM Opco. These distributions will comfortably cover the HESM Holdco's debt service requirements, which includes interest payments and 1% mandatory amortization per annum. Per the term loan credit agreement, the company is required to maintain a debt service coverage ratio in excess of 1.05x. The company will remain well in compliance with this covenant through 2022. HESM Holdco's $750 million senior secured term loan is rated B1, the same as the CFR reflecting the fact that it is the only debt in the holding company's capital structure. The new credit facility is expected to provide covenant flexibility, that if utilized, could negatively impact creditors. Notable terms include the following: The proposed incremental first lien debt capacity up to $100 million. No portion of the incremental may be incurred with an earlier maturity than the initial term loans. The credit agreement does not permit the designation of unrestricted subsidiaries, preventing collateral "leakage" through the transfer of assets to unrestricted subsidiaries. There are no guarantors, so the only obligor is HESM Holdco. There are no express protective provisions prohibiting an up-tiering transaction. The agreement allows for sales of pledged equity units and requires that 100% of the sales proceeds above an agreed upon amount be applied to term loan repayment; however, that requirement steps down to 50% at a net leverage ratio of less than or equal to 3.5x. The above are 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 HESM Holdco's ratings could be upgraded if HESM Opco was upgraded and HESM Holdco maintained stand-alone leverage and coverage metrics consistent with present levels. The ratings could be downgraded if HESM Opco is downgraded. HESM Holdco could also be downgraded if its stand-alone financial leverage were to rise above 4x, or if its liquidity weakens. The principal methodology used in these ratings was Midstream Energy published in December 2018. GIP II Blue Holding, L.P. is an entity owned by Global Infrastructure Partners that owns general partner and equity unit ownership interests in Hess Midstream LP and its operating subsidiary, Hess Midstream Operations LP. GIP II BLUE: S&P Assigns BB- Issuer Credit Rating, Outlook Stable ----------------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issuer credit rating to GIP II Blue Holding L.P. (HESM HoldCo) and its 'BB-' issue-level rating and '3' recovery rating to its senior secured term loan B. The '3' recovery rating indicates its expectation of meaningful (50%-70%; rounded estimate: 55%) recovery in the event of a payment default. S&P said, "The stable outlook reflects our expectation that HESM will increase its distributions by at least 5% annually, which will lead HESM HoldCo to sustain a leverage ratio of 3x and an EBITDA interest coverage ratio above 6x in 2022. "Our 'BB-' issuer credit rating on HESM HoldCo reflects the difference in its credit quality relative to that of HESM. HESM HoldCo relies exclusively on distributions from HESM to service its term loan because it does not have any other substantive assets. Therefore, we rate HESM HoldCo under our noncontrolling equity interest (NCEI) criteria. Because of this, the rating incorporates our view of HESM's cash flow stability, as well as HESM HoldCo's financial ratios, its ability to influence HESM's financial policy, as well as its ability to liquidate its investment in HESM to repay its $750 million senior secured term loan. "We expect the company to receive a steadily rising level of distributions from HESM over the life of the term loan. HESM's cash flows and contract profile are above-average compared with those of its midstream energy peers. Its cash flows are largely fee-based and highly stable with limited direct commodity price exposure. In addition, the majority of its cash flows are supported by minimum volume commitments (MVCs), which we forecast will account for approximately 95% of its revenue through 2022. These MVCs, which are set on a three-year rolling basis, provide HESM with a base level of cash flow through various commodity cycles. The company's fees are redetermined annually to achieve its contractual return on capital deployed and escalate each year at the same rate as the U.S. Consumer Price Index (CPI). We forecast that HESM will receive practically all of its revenue from Hess Corp., which we rate in the investment-grade category. Despite having an above-average contract profile, HESM lacks geographic diversity because its assets are concentrated in the Bakken shale, which features a higher break-even drilling cost than other regions, such as the Permian Basin. "We believe HESM HoldCo has substantial governance rights over HESM given its shared control of the partnership. On its own, GIP--through its ownership of HESM HoldCo--does not control HESM but we believe the 50/50 structure and shared control with Hess incentivizes HESM to distribute all of its available cash to its sponsors and public unitholders on a quarterly basis. We anticipate the strong contractual agreements with HESS will enable it to generate surplus free operating cash, which we believe will lead to a further increase in its distributions. During its previous earnings call, HESM raised its EBITDA forecast, announced an increase in its distribution, and reaffirmed its guidance for an at least 5% improvement in its annual distributions through 2023. Any change to the company's distribution policy would require GIP's approval. Hess controls HESM's day-to-day operations, though certain actions require GIP's approval through its ownership of HESM HoldCo. These include, but are not limited to, changes to its distribution policy, the modification or termination of its existing commercial agreements with Hess, issuing debt or equity securities, and approving a reorganization, consolidation, or merger. We expect HESM to target a distribution coverage ratio of at least 1.4x. While this level is not as robust as those of certain of its peers, the company has increased its distributions annually since its inception and has not cut its distribution as certain of its midstream peers have. These characteristics support our positive cash flow stability assessment. "The stable outlook on HESM HoldCo reflects our expectation for leverage of about 3x and EBITDA interest coverage ratio above 6x in 2022 given our forecast that HESM will increase its distributions by at least 5% annually. "We could lower our rating on HESM HoldCo if its leverage deteriorates above 4x. We could also lower our rating if HESM's credit quality deteriorated such that it sustained leverage of more than 4x. "Even if HESM Holdco materially reduced total leverage, it is unlikely we would raise its ratings due to the view that it is structurally subordinated to HESM. We could however consider a positive rating action on HESM HoldCo if we raised our ratings on HESM which could occur if it significantly improves its scale and diversity while maintaining S&P Global Ratings-adjusted leverage of less than 3.5x." GLOBAL ACADEMY: S&P Rates 2021A-B Revenue and Refunding Bonds 'BB' ------------------------------------------------------------------ S&P Global Ratings assigned its 'BB' rating to the City of Independence, Minn.'s $13.015 million series 2021A and $500,000 series 2021B charter school lease revenue and refunding bonds issued for Global Academy ABC, a Minnesota nonprofit corporation and 501(c)(3) organization. The outlook is stable. Global Academy ABC is the company that owns the charter school building and leases the building to Global Academy Inc. (the school), a Minnesota nonprofit corporation. S&P said, "We assessed the school's enterprise profile as adequate, with a small enrollment base, bolstered by its high-performing academics, robust waitlist and retention numbers, and stable enrollment trends. Our view of the enterprise profile is constrained by lack of independence at the board level and our assessment of management as vulnerable. We assessed its financial profile as weak, characterized by slim-but-improving cash reserves, an elevated debt profile and decent pro-forma maximum annual debt service (MADS) coverage." The rating also reflects: -- High debt per student; -- Days' cash on hand that has been very weak for the past three years, with the exception of fiscal 2021, when cash has improved; -- Variable net income percentages, although S&P expects operations will be positive in fiscal 2022; and -- The inherent uncertainty associated with charter renewals and elevated charter sector risk, given that the final maturity on the loan exceeds the length of the existing charter, which expires June 30, 2023. Offsetting the above weaknesses are the school's: -- High student waitlist, which provides stability to the school's operations; and -- Successful academics compared with peers, which serves as a draw among its target population. S&P said, "The school is subject to elevated governance risk, in our opinion, due to lack of board independence characterized by a teacher-majority board with five out of nine board members employed by management. We also view the risks posed by COVID-19 to public health and safety as an elevated social risk for the charter sector under our ESG factors. We believe this is a social risk for the school due to possible impacts on enrollment and mode of instruction going into fall 2021 prompted by the pandemic. We consider the school's environmental risks as in line with our view of the sector." "The stable outlook reflects our expectation that enrollment will remain stable, supported by solid demand metrics; and the school will at least maintain reserves and MADS coverage near current levels, while at the same time, not increasing its debt," said S&P Global Ratings credit analyst Natalie Fakelmann. S&P said, "We could consider a negative rating action if the school's enrollment profile were to deteriorate, if its reserves did not hold near current levels, or if MADS coverage were to weaken materially. "We could consider a positive rating action if the school improves operations such that its reserve position and MADS coverage improve to levels commensurate with those of higher-rated peers, while at the same time moderating its debt profile." GLOBAL MEDICAL: $300MM Loan Add-on No Impact on Moody's B2 CFR -------------------------------------------------------------- Moody's Investors Service said that Global Medical Response, Inc.'s ("GMR") decision to raise approximately $300 million as a fungible add-on to its existing $1.455 billion senior secured term loan due March 2025 is slightly credit negative but will not impact the company's ratings or outlook. According to the company, the proceeds from the add-on financing will be used to partially pay down preferred equity capital raised at the time of combining Air Medical Group Holdings LLC and AMR Holdco, Inc. under GMR. The transaction has no impact on the company's B2 corporate family rating, B2-PD probability of default rating, or stable outlook. There is also no change to the B2 ratings on senior secured debt or the Caa1 rating on the unsecured debt. The outlook remains stable. Moody's estimates that GMR's debt/EBITDA was approximately 6.0 times at the end of June 30, 2021. The company's leverage will increase slightly to -6.3 times after the add-on transaction, a credit negative. However, the use of proceeds to pay down higher cost capital would result in savings which will benefit the company in longer term. Moody's expect that the company will be able to maintain its leverage below 6.5 times in the next 12 months if no more debt is raised and mandatory senior secured debt amortization is executed according to the credit agreement. Global Medical Response, Inc provides air, ground, specialty and residential fire services, and managed medical transportation through its wholly-owned subsidiaries -- Air Medical Group Holdings LLC and AMR Holdco, Inc. The company is owned by Kohlberg Kravis Roberts & Co. L.P (KKR). Net revenues were approximately $4.5 billion for the last twelve months ended June 30, 2021. GPSPRO LLC: Seeks Cash Collateral Access ---------------------------------------- GPSPRO, LLC asks the U.S. Bankruptcy Court for the District of Nevada for entry of an order determining the extent of cash collateral and authorizing the Debtor's use of cash collateral. No creditor had possession or control over the Debtor's cash, cash equivalents or deposit accounts, and had a perfected security interest in revenues. To the extent that any creditor had a valid and perfected interest in the Debtor's Revenues, the Debtor seeks authorization to use the Cash Collateral to pay the ordinary course administrative expenses of the Debtor's estate in accordance with the proposed budget. The Debtor proposes that it be permitted a 15% variance to account for the inherent fluctuations in monthly expenses such as utilities and maintenance repairs. Similarly. Debtor requests that it be authorized to use any positive variance in subsequent weeks. First Corporate Solutions, as Representative, filed a UCC Financing Statement against the Debtor with the Wyoming Secretary of State on June 18, 2018, asserting a lien on all present and future assets of the Debtor. C T Corporation System, as Representative, filed a UCC Financing Statement against the Debtor with the Nevada Secretary of State on August 29, 2018. Kash Capital filed a UCC Financing Statement against the Debtor with the Nevada Secretary of State on February 4, 2019. Corporation Service Company, as Representative, filed a UCC Financing Statement against Debtor with the Nevada Secretary of State on March 12, 2020. The U.S. Small Business Administration filed a UCC Financing Statement with the Nevada Secretary of State on June 9, 2020. Because CT, Kash, CSC, and the SBA filed their UCC Financing Statements in Nevada, not in Wyoming -- the Debtor's state of organization -- the Debtor contends CT, Kash, CSC, and the SBA are unsecured, and the Debtor anticipates filing adversary proceeding to avoid their security interest in the Debtor's collateral. The Debtor asserts even if any secured creditors was actually undersecured, it would not be entitled to adequate protection because, as demonstrated by the Budget, the operating shortfall is paid for, and any secured creditor's collateral is not depreciating in value. A copy of the Debtor's motion is available at https://bit.ly/3C8O9pH from PacerMonitor.com. About GPSPRO LLC GPSPRO, LLC is a Wyoming limited liability company that develops and provides GPS tracking and dispatching software and telematics devices for the management of fleet vehicles. It operates the network and develops the software from the viewpoint of its customers. GPSPRO, LLC's devices include features to help businesses including real-time vehicle monitoring, motor club digital integration, alter configuration console, live tow ETA, customized report management, PTO, idle time, landmark, speeding, and odd-hours alerts, and activity daily reports, and allows customers to manage and dispatch from their Android/IOS mobile devices. The Debtor filed a Chapter 11 bankruptcy petition (Bankr. D. Nev. Case No. 21-13055) on June 16, 2021, disclosing total assets of up to $50,000 and total liabilities of up to $1 million. The Debtor is represented by Garman Turner Gordon, LLP. GYPSUM RESOURCES: Missed Chapter 11 Payments, Says Rep-Clark ------------------------------------------------------------ Rep-Clark, LLC, objects to Gypsum Resources Materials, LLC, f/d/b/a High Grade Gypsum, LLC' Motion for Order Approving Adequacy of Disclosure Statement and Granting Related Relief. Rep-Clark points out that the Debtors did not pay estate professionals for nearly two years, did not pay U.S. Trustee fees for nearly two years, and did not make any payments to Rep-Clark for nearly two years. The evidentiary hearing on Rep-Clark's Trustee Motion was the reason an affiliate of the Debtors paid millions of dollars of the Debtors' expenses. Without the filing of the Trustee Motion, no one knows how long the Debtors would have placed the financial cost of the Debtors' Chapter 11 on the estate professionals. According to Rep-Clark, as set forth in a variety of the Debtors' pleadings, the Debtors have been unable to secure third-party exit financing after contacting over 2,000 prospective lenders and investors. The Debtors last resort for exit financing may be from the proceeds of a possible settlement or a litigation win over Clark County. The Debtors seem to prefer remaining in Chapter 11 until that time. Rep-Clark asserts that the Debtors' current source of immediate financial stress is the obligation owing to Casa Lender which is secured by nearly all of the Debtors' real and personal property assets and which matures on December 31, 2021. To eliminate this current source of immediate financial stress, the Debtors filed sale motion to sell the 90-acre Industrial Parcel and the 88-acre Residential Parcel which, in theory, could result in net sale proceeds sufficient to extinguish the Casa Lender debt by October of 2021. Once the Debtors have satisfied the Casa Lender obligation, the Debtors may have a period of time where no sources of immediate financial stress exist. If true, the Debtors could remain in Chapter 11 and wait to file their real plan once the Clark County litigation concludes. Rep-Clark points out that the Debtors likely believe (a) that their time in Chapter 11 is boundless, (b) that they will be under no immediate financial stresses once they satisfy the Casa Lender obligation, and (c) that they will have opportunities to file new plans of reorganization in 2022. The Debtors' risk is that the Court may appoint a Chapter 11 trustee, sua sponte, or that the Court may convert the case to a Chapter 7 liquidation. Currently, the Debtors may believe that the risk of the Court appointing a trustee, sua sponte, is minimal. Attorneys for Rep-Clark, LLC: Robert R. Kinas Charles E. Gianelloni Aleem A. Dhalla SNELL & WILMER L.L.P. 3883 Howard Hughes Parkway, Suite 1100 Las Vegas, NV 89169 Telephone: (702) 784-5200 Facsimile: (702) 784-5252 E-mail: rkinas@swlaw.com cgianelloni@swlaw.com adhalla@swlaw.com About Gypsum Resources Materials Based in Las Vegas, Gypsum Resources Materials, LLC, a privately held company in the gypsum mining business, and its affiliate Gypsum Resources, LLC filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Lead Case No. 19-14799) on July 26, 2019. The petitions were signed by James M. Rhodes, president of Truckee Springs Holdings, LLC, manager of Gypsum Resources, LLC. At the time of the filing, Gypsum Resources Materials had between $10 million and $50 million in both assets and liabilities. Meanwhile, Gypsum Resources, LLC had between $50 million and $100 million in both assets and liabilities. The Debtors tapped Fox Rothschild LLP as bankruptcy counsel, Hill Farrer & Burrill LLP as special counsel, and Conway MacKenzie, Inc. and Sonoran Capital Advisors, LLC as financial advisors. The U.S. Trustee for Region 17 appointed an official committee of unsecured creditors on Aug. 30, 2019. The committee is represented by Goldstein & McClintoc, LLLP. HELIUS MEDICAL: Appoints Paul Buckman to Board of Directors ----------------------------------------------------------- Helius Medical Technologies, Inc. has appointed Paul Buckman to its Board of Directors, effective Sept. 10, 2021. Mr. Buckman will serve as Chair of the Company's Audit Committee and as a member of its Compensation and Nominating and Governance Committees. "Paul is a highly accomplished executive with more than 30 years of experience in the medical device sector, including senior leadership positions at some of the most well-regarded companies in the industry," said Blane Walter, Chairman of Helius' Board of Directors. "I am pleased to welcome him to the Helius Board of Directors and look forward to his contributions as we pursue our next phase of growth and development." "I am excited to join the Helius Board of Direction at such an important stage in the Company's history," said Mr. Buckman. "I believe Helius is uniquely positioned in the market, with a novel and truly differentiated approach to treating underserved patients suffering from chronic, neurological conditions, leveraging its U.S. de novo classification and clearance for the treatment of patients with Multiple Sclerosis and the recent receipt of FDA Breakthrough Device Designation for stroke-induced gait and balance deficits. I look forward to working with my fellow Directors and the Helius leadership team as we build upon the Company's recent progress and position it for long-term growth and value creation." Mr. Buckman is currently the president, North America for LivaNova, PLC (Nasdaq: LIVN), a global medical technology company that designs, develops, manufactures and sells innovative therapeutic solutions in the fields of neuromodulation and cardiovascular disease, a position he has held since 2017. In addition, he currently serves on the Board of Directors of several public and private medical device companies. Prior to joining LivaNova, Mr. Buckman served as chief executive officer of Conventus-Flower Orthopedics, a privately-held medical device company specializing in orthopedic and wound care products from September 2013 to March 2017. During the course of his 30+ year career in the medical device industry, Mr. Buckman has led numerous companies as the chief executive officer of SentreHEART, Inc., Pathway Medical Technologies, Inc., Devax, Inc., ev3, LLC, and also served as president of the Cardiology division at both St. Jude Medical, Inc. and Boston Scientific Corporation. Mr. Buckman received a B.B.A. and a M.B.A. from Western Michigan University in Kalamazoo, Michigan. About Helius Medical Helius Medical Technologies -- http://www.heliusmedical.com-- is a neurotech company focused on neurological wellness. Its purpose is to develop, license or acquire non-invasive technologies targeted at reducing symptoms of neurological disease or trauma. Helius Medical reported a net loss of $14.13 million for the year ended Dec. 31, 2020, compared to a net loss of $9.78 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $10.72 million in total assets, $2.35 million in total liabilities, and $8.37 million in total stockholders' equity. Philadelphia, Pennsylvania-based BDO USA, LLP issued a "going concern" qualification in its report dated March 10, 2021, citing that the Company has incurred substantial net losses since its inception, has an accumulated deficit of $118.9 million as of Dec. 31, 2020 and the Company expects to incur further net losses in the development of its business. These conditions raise substantial doubt about its ability to continue as a going concern. HOTEL OXYGEN: Unsecureds to Get Pro Rata Payments in Plan --------------------------------------------------------- Hotel Oxygen Palm Springs, LLC, et al. and its Official Committee of Unsecured Creditors submitted a First Amended Joint Disclosure Statement. The Plan proposes an initial distribution on Allowed Claims on the Effective Date and a subsequent final distribution upon liquidation of all Claims or Litigation held by the Debtors or the Debtors' bankruptcy estates. On the Effective Date, or as soon thereafter as reasonably practical, the Liquidating Trustee will pay all Allowed Priority and Allowed Administrative Claims and will make an initial pro rata distribution of no less than 50% of the funds on hand in the estate after all Allowed Administrative Claims and Allowed Priority Claims are paid, to Allowed General Unsecured Creditors. The Plan proposes to consolidate the bankruptcy estate of AGHCA with that of HOMS. The practical impact of this consolidation is that claims against AGHCA and HOMS will share pro rata from one source of funds. As a result, a vote in favor of the Plan is a vote in favor of substantive consolidation of the bankruptcy estate of AGHCA with that of HOMS. The Effective Date payments will be funded from the funds presently held by the Debtors' counsel as a result of the sale of the Hotel located at 3600 N. 2nd Ave., Phoenix, AZ which was previously known as a Wyndham Hotel (the "Wyndham Hotel"). Upon liquidation of all other assets of value, including Claims and Litigation, if any, a final pro-rata distribution will be made to all Allowed Unsecured Creditors. Upon forming HOMS and AGHCA, the owner of the Debtors intended for HOMS to hold the ground lease for the real property where the Wyndham Hotel was located and for AGHCA to be the operating entity and hold the contracts related to operating the Wyndham Hotel. In practice however, some operational expenses were paid by each of the Debtors and there was no true separation between the Debtors. Further, many creditors did business with the Wyndham Hotel and were unaware of the distinction between entities. Accordingly, the Plan Proponents propose to substantively consolidate the Debtors through the Plan so that the assets of the Debtors are pooled, and the Claims against the Debtors will be likewise pooled and share pro-rata with all other equally situated Claims. The right to dispute any Claim by an objection to Claim is preserved for all creditors, the Plan Proponents, and the Liquidating Trustee as each may see fit to bring. Certain Secured Claims and Administrative Claims were paid upon the sale of the Wyndham Hotel, as authorized in the Order Granting Second Motion to Approve Purchase Contract and Authorize Sale of Real Property Free and Clear of Liens, Claims and Interests. This Plan anticipates payment in full of all Allowed Priority Claims and all Allowed Administrative Claims and pro-rata payments on Allowed Unsecured Claims. The Plan Proponents do not anticipate sufficient funds to allow for a distribution to holders of Interests. Counsel for Debtors: D. Lamar Hawkins 402 E. Southern Ave. Tempe, AZ 85282 Telephone: (602) 888-9229 Facsimile: (480) 725-0087 E-Mail: lamar@guidant.law Counsel for the Joint Committee of Unsecured Creditors: Craig Solomon Ganz Katherine Anderson Sanchez Ballard Spahr LLP 1 E. Washington Street, Suite 2300 Phoenix, AZ 85004-2555 Telephone: 602.798.5400 Facsimile: 602.798.5595 ganzc@ballardspahr.com andersonsanchezk@ballardspahr.com A copy of the Disclosure Statement dated September 8, 2021, is available at https://bit.ly/3E1FOGd from PacerMonitor.com. About Hotel Oxygen Midtown I Hotel Oxygen Midtown, I, LLC, and Hotel Oxygen Palm Springs, LLC, are affiliate companies which operate hotels in Phoenix, Ariz. The companies are wholly owned subsidiaries of Oxygen Hospitality Group, Inc., an owner-operator hospitality company that acquires, renovates and manages a portfolio of mid-to upper scale branded and independent hotel assets in the U.S. Founded in 2017, Oxygen Hospitality is privately held and is headquartered in Phoenix, Ariz. Hotel Oxygen Midtown, I and its affiliates, Hotel Oxygen Palm Springs, A Great Hotel Company, Arizona LLC, and A Great Hotel Company, LLC, filed Chapter 11 petitions (Bankr. D. Ariz. Lead Case No. 19-14399) on Nov. 12, 2019. In the petitions signed by David Valade, chief financial officer, Hotel Oxygen Midtown was estimated to have assets of $1 million to $10 million and liabilities of $100,000 to $500,000. Judge Paul Sala oversees the cases. Guidant Law, PLC, is the Debtors' legal counsel. The Office of the U.S. Trustee appointed a committee of unsecured creditors. The committee is represented by Dickinson Wright PLLC. INKSTER, MI: S&P Cuts GO Debt Rating to 'BB+' on Governance Risks ----------------------------------------------------------------- S&P Global Ratings lowered its rating on general obligation (GO) debt issued by and for Inkster, Mich. three notches to 'BB+' from 'BBB+'. The outlook is negative. S&P continues to rate the city's limited-tax GO debt at the same level as its unlimited-tax GO pledge, as the debt is a first budget obligation and it believes the city has fungible resources available to service its debt. "The downgrade reflects significant turnover in management and our view of elevated governance risks over the past year," said S&P Global Ratings credit analyst John Sauter. "In our opinion, these factors contributed to rapid deterioration in the city's financial position and might inhibit its ability to restore structural balance over the near term." There has been regular turnover in key administrative positions over the last two years, notably in the treasury office, as the city has had three treasurers in the past year. As a result, in S&P's opinion, management's institutional knowledge and understanding of its current financial position is limited, which increases risk, particularly for a credit experiencing structural imbalance. Additionally, the city's last two audits, which were both late, contained findings on weak internal controls and noted substantial negative budget-to-actual variance. S&P said, "In our view, the city has demonstrated a lack of relevant management skills and under our criteria, this is consistent with a very weak management score and caps the rating at no higher than a 'BBB-'. Our view of the governance risks together with the city's lack of budget flexibility are indicative of credit vulnerabilities consistent with ratings in the 'BB' category. However, the city has sufficient liquidity, as it closed fiscal 2020 with $20 million in total government cash (compared to $3.8 million in total annual debt service) and is set to receive $2.3 million in stimulus funds, which, while not available for debt service, should provide a short-term bridge as the city works to regain balance. "The negative outlook reflects our view of at least a one-in-three chance that we could lower the rating further if management conditions do not improve or if the city does not return to structural balance, or if its liquidity position significantly deteriorates. Improvement could be evidenced by less turnover and a better ability to provide transparency on the city's ongoing financial position." Additional factors supporting the 'BB+' rating include our view of Inkster's: -- Very weak management; -- Weak budgetary performance; -- Very weak budgetary flexibility; -- Weak debt and contingent liability profile; -- Very weak economy; and -- Strong institutional framework score. S&P said, "We consider governance risks elevated and a direct contributor to the rating action, particularly regarding risk management and internal controls. We also consider social risks elevated, as the city's tax base is mature and built out, with an aging population that has weaker income earnings, all of which constrain revenue-raising ability. We do not consider environmental risks elevated but note there have been sporadic cases of flooding in localities throughout Wayne County, including recently in Inkster. "We could lower the rating within the next year if the city's financial position continues to deteriorate or if our view of management conditions diminishes further due to continued turnover or a persistent inability to provide sufficient financial updates and understanding of the current position. A sharp decline in liquidity could also result in a lower rating. "We could revise the outlook to stable if the structural imbalance is addressed and reserves and liquidity demonstrate stability. To revise the outlook back to stable, we would expect to see that the city's management team stabilizes and experiences faces less frequent turnover." JDUB'S BREWING: Court Modifies and Confirms Plan ------------------------------------------------ Judge Michael G. Williamson of the U.S. Bankruptcy Court for the Middle District of Florida entered an amended order confirming the Third Amended Plan of Reorganization of JDub's Brewing Company, LLC. The Court sustained the objection of the U.S. Trustee to the exculpatory provision of the Plan, striking that provision. The Court also sustained the objections of American Momentum Bank and the U.S. Trustee with respect to the Professional Fee Lien, with the Court disallowing such Professional Fee Lien. Accordingly, the Court confirmed the Plan, as modified. The Court will conduct a post-confirmation status conference on November 17, 2021 at 9:30 a.m. About JDub's Brewing Company JDub's Brewing Company, LLC, a Sarasota, Fla.-based company in the beverage manufacturing industry, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 20-02926) on April 6, 2020, listing $697,542 in assets and $1,687,781 in debt. Judge Michael G. Williamson oversees the case. Daniel Etlinger, Esq., at David Jennis, PA, doing business as Jennis Law Firm, serves as the Debtor's legal counsel. On July 6, 2021, Judge Williamson confirmed the Debtor's Chapter 11 plan of reorganization. KANSAS CITY UNITED: Seeks to Hire Gilmore & Bell as Special Counsel ------------------------------------------------------------------- Kansas City United Methodist Retirement Home, Inc. seeks approval from the U.S. Bankruptcy Court for the Western District of Missouri to hire Gilmore & Bell, P.C. as special counsel. The Debtor needs the firm's legal advice concerning the proposed issuance of a series of revenue bonds and related documentation necessary to restructure the revenue bonds issued by The Industrial Development Authority to finance the Debtor's senior living facility in Kansas City, Mo. Gilmore & Bell firm will receive a flat fee of $193,500 for its services and reimbursement of up to $5,000. Scott Waller, Esq., Gilmore & Bell's director and shareholder, 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: Scott P. Waller, Esq. Gilmore & Bell, P.C. 2405 Grand Boulevard, Suite 1100 Kansas City, MO 64108-2521 Main: (816) 221-1000 Direct: (816) 218-7591 Fax: (816) 221-1018 Email: swaller@gilmorebell.com About Kansas City United Methodist Retirement Home Inc. Kansas City United Methodist Retirement Home, Inc., doing business as Kingswood Senior Living Community, operates a continuing care retirement community and assisted living facility for the elderly in Kansas City, Mo. Kansas City United Methodist Retirement Home sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Mo. Case No. 21-41049) on Aug. 18, 2021, disclosing up to $50 million in assets and up to $100 million in liabilities. Judge Cynthia A. Norton oversees the case. McDowell, Rice, Smith & Buchanan, PC serves as the Debtor's bankruptcy counsel while Gilmore & Bell, P.C. serves as special counsel. UMB Bank, N.A., the bond trustee, is represented by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. KANSAS CITY UNITED: Taps McDowell Rice as Bankruptcy Counsel ------------------------------------------------------------ Kansas City United Methodist Retirement Home, Inc. seeks approval from the U.S. Bankruptcy Court for the Western District of Missouri to hire McDowell, Rice, Smith & Buchanan, P.C. to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) advising the Debtor with respect to its power and duties in the continued management and operation of its business and properties; (b) attending meetings and negotiating with representatives of creditors and other parties in interest on matters affecting the Debtor's business operations, claims by and against the estate, and issues relating to its reorganization; (c) preparing legal documents; (d) taking all necessary action to protect and preserve the Debtor's estate including the prosecution of actions on its behalf, the defense of any actions commenced against the Debtor or the estate, negotiations concerning litigation in which the Debtor may be involved, and objections to claims filed against the estate; (e) negotiating the restructuring of the Debtor's bond obligations and working on the documentation and implementation of the bond restructuring; (f) attending all hearings and advocating the Debtor's positions on the applicable issues; (g) advising the Debtor on all operational matters as needed; (h) negotiating and prosecuting on the Debtor's behalf the use of cash collateral, debtor-in-possession financing, sales of assets, contracts and lease agreements, and all necessary agreements or documents; (i) formulating, negotiating and seeking approval of a disclosure statement and plan of reorganization; (j) handling all appeals of the Debtor and appearing before any appellate courts; (k) addressing all requirements of the Office of the U.S. Trustee; and (l) performing all other necessary legal services. The firm's hourly rates are as follows: Shareholders $220 - $560 per hour Associates $150 - 175 per hour Paralegals $90 - $150 per hour Jonathan Margolies, Esq., a shareholder of McDowell, 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: Jonathan A. Margolies, Esq. McDowell, Rice, Smith & Buchanan, P.C. 605 W. 47th Street, Suite 350 Kansas City, MO 64112 Tel.: (816) 753-5400 Fax: (816) 753-9996 Email: jmargolies@mcdowellrice.com About Kansas City United Methodist Retirement Home Inc. Kansas City United Methodist Retirement Home, Inc., doing business as Kingswood Senior Living Community, operates a continuing care retirement community and assisted living facility for the elderly in Kansas City, Mo. Kansas City United Methodist Retirement Home sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Mo. Case No. 21-41049) on Aug. 18, 2021, disclosing up to $50 million in assets and up to $100 million in liabilities. Judge Cynthia A. Norton oversees the case. McDowell, Rice, Smith & Buchanan, PC serves as the Debtor's bankruptcy counsel while Gilmore & Bell, P.C. serves as special counsel. UMB Bank, N.A., the bond trustee, is represented by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. KISSMYASSETS LLC: Nov. 9 Plan Confirmation Hearing Set ------------------------------------------------------ On Sept. 7, 2021, debtor Kissmyassets, L.L.C., filed with the U.S. Bankruptcy Court for the Eastern District of North Carolina a disclosure statement and plan. The Plan contemplates a reorganization of debts and continuation of the Debtor's business. In accordance with the Plan, the Debtor intends to satisfy certain creditor claims from the sale of the Debtor's real property asset. The approximate total of general unsecured claims and known deficiency claims in Class 5 based on claims filed or scheduled as of the date of the filing of this Plan is $35,020. In accordance with the liquidation analysis, the Debtor shall pay allowed general unsecured claims from the sale of its real property, after payment in full of all administrative claims and senior claims. Allowed claims shall accrue interest at the rate of three percent per annum until payments are made from the sale proceeds. All payments to this class shall be distributed pro rata. Total insider claims are $24,033 as of the date of the filing of this Plan. The Debtor proposes to pay insider claims in full in accordance with the liquidation analysis after payment to all other creditors. Interest shall accrue on these claims at the rate of 1.5 percent per annum. The equity security holder shall retain his ownership interest upon confirmation of the Plan. The Plan contemplates a reorganization of debts and continuation of the Debtor's business. In accordance with the Plan, the Debtor intends to satisfy certain creditor claims from the sale of the Debtor's real property asset. A copy of the Disclosure Statement dated September 7, 2021, is available at https://bit.ly/2VAaz3B from PacerMonitor.com at no charge. Disclosure Order On Sept. 9, 2021, Judge Stephani W. Humrickhouse conditionally approved the disclosure statement and ordered that: * Oct. 27, 2021, is fixed as the last day for filing and serving written objections to the disclosure statement. * Nov. 9, 2021, at 11:00 a.m., in 1003 S. 17th Street, Room 118, Wilmington, NC 28401 is the hearing on confirmation of the plan. * Oct. 27, 2021, is fixed as the last day for filing written acceptances or rejections of the plan. * Oct. 27, 2021, is fixed as the last day for filing and serving written objections to confirmation of the plan. A copy of the order dated Sept. 9, 2021, is available at https://bit.ly/3z7hxe0 from PacerMonitor.com at no charge. Attorneys for the Debtor: The Law Offices of Oliver & Cheek, PLLC George Mason Oliver N.C. State Bar No. 26587 Email: george@olivercheek.com Ciara L. Rogers N.C. State Bar No. 42571 Email: ciara@olivercheek.com Post Office Box 1584 New Bern, North Carolina 28563 Telephone: (252) 633-1930 Facsimile: (252) 633-1950 About Kissmyassets LLC Kissmyassets, LLC, owns a unit in a commercial shopping center located at 419 S. College Road Unit 39, in Wilmington, N.C. Kissmyassets filed a petition for Chapter 11 protection (Bankr. E.D.N.C. Case No. 21-01316) on June 8, 2021, disclosing total assets of up to $500,000 and total liabilities of up to $50,000. Judge Stephani W. Humrickhouse oversees the case. The Law Offices of Oliver & Cheek, PLLC and Atlantic Tax & Accounting, Inc. serve as the Debtor's legal counsel and accountant, respectively. KTR GLOBAL: Unsecs. to Split Residual Distribution Fund Pro Rata ---------------------------------------------------------------- KTR Global Partners LLC filed with the U.S. Bankruptcy Court for the District of Arizona a second amendment to its Subchapter V Plan of Reorganization. The Class 5 Claim of JP Morgan Chase/U.S. Small Business Administration shall be paid on a monthly basis according to the terms of the related note, which shall terminate in 2025. Class 6 General Unsecured Claims shall be paid on a pro rata basis from funds paid by the Debtor to the Trustee and placed in the Allowed Claims Distribution Fund. The Trustee shall disburse funds to Class 6 quarterly and in the same fashion as to senior classes of claims and only after all such claims are paid in full. The Debtor said that its financial projections show that it is capable of generating sufficient excess income per month over a five-year period to pay in full all claims in Class 1 (Administrative Claims), Class 2 (Governmental Unit Claims) and Class 3 (Landlord Arrearage Claim) in approximately three years, Class 4 (Claim of Franchisor) within a year thereafter, with the balance of payments to be made before the five-year period ends to provide a full or substantial dividend to unsecured creditors in Class 6. The Plan did not quantify the amount of claims against the Debtor. The hearing to consider confirmation of the Plan will be held on September 22, 2021 at 1:30 p.m. Objections are due by September 15. A copy of the Plan, as amended, is available for free at https://bit.ly/2Xh3y8C from PacerMonitor.com. Counsel for the Debtor: Gerald L. Shelley, Esq. Fennemore Craig, P.C. 2394 East Camelback Rd., Suite 600 Phoenix, AZ 85016-3429 Telephone: (602) 916-5000 Email: gshelley@fclaw.com About KTR Global Partners KTR Global Partners, LLC owns and operates an indoor action sports playground serving kids of all ages and abilities. KTR Global Partners sought Chapter 11 protection (Bankr. Ariz. Case No. 20-08282) on July 16, 2020. At the time of the filing, the Debtor disclosed total assets of $1,294,450 and total liabilities of $1,533,572. Judge Brenda K. Martin oversees the case. Fennemore Craig, P.C. is Debtor's legal counsel. LATAM AIRLINES: Taps PwC Auditores Independentes as Auditor ----------------------------------------------------------- LATAM Airlines Group S.A. seeks approval from the U.S. Bankruptcy Court for the Southern District of New York to hire PricewaterhouseCoopers Auditores Independentes, an audit firm based in Sao Paulo, Brazil. The firm's services include: (a) auditing the balance sheets of TAM S.A., TAM Linhas Aereas S.A. and ABSA Aerolinhas Brasileiras S.A. as of Dec. 31, 2021 and the related statements of income, comprehensive income, changes in equity and cash flows for the year then ending, as well as the consolidated balance sheets of TAM S.A., TAM Linhas and their subsidiaries as of Dec. 31, 2021; and (b) issuing and sending to TAM S.A., TAM Linhas and ABSA the independent auditors' reports on the financial statements. The firm's hourly rates are as follows: Partner $385 per hour Senior Manager $162 per hour Manager $101 per hour Senior $53 per hour Assistant $36 per hour Daniel Vinicius Fumo, a partner at PwC, 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: Daniel Vinicius Fumo, Esq. PricewaterhouseCoopers Auditores Independentes Av. Francisco Matarazzo 1400, T. Torino 14Th Sao Paulo, Brazil 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. LFS TOPCO: Fitch Assigns 'B' LongTerm IDR, Outlook Stable --------------------------------------------------------- Fitch Ratings has assigned LFS Topco, LLC (Lendmark) a 'B' Long-Term Issuer Default Rating (IDR), and an expected rating of 'B(EXP)' for its proposed senior unsecured debt offering, with a Recovery Rating of 'RR4'. Fitch has also assigned a 'CCC+' rating to Lendmark's subordinated debt outstanding with a Recovery Rating of 'RR6'. The Rating Outlook is Stable. KEY RATING DRIVERS IDRs AND SENIOR DEBT Lendmark's ratings reflect its modest but growing market position in the U.S. personal installment lending industry, robust risk-adjusted yields, relatively solid credit quality, and an increasingly diversified funding profile. The ratings also reflect Lendmark's monoline business model, higher risk appetite reflecting a heightened exposure to subprime borrowers, elevated leverage metrics and its partial private equity ownership, which increases the possibility of shareholder-friendly actions and adds long-term strategic uncertainty. Lendmark has increased its market share in recent years in part due to its acquisition of 127 branches from Springleaf in 2016, which drove its expansion into seven new states, as well as its de novo branch growth strategy and product expansion into auto lending. Specifically, direct auto loans comprised 24% of the portfolio at 2Q21 compared to 11% in 2017. Fitch views the company's increasing product diversification favorably. Despite the adverse impacts of the pandemic, Lendmark's credit quality improved over the past year as unprecedented government stimulus and monetary easing helped offset a sharp rise in U.S. unemployment levels. Net charge-offs fell to 6% in 2Q21 compared to 9.7% in the prior year period. Total delinquencies (30+ days) as a percentage of gross receivables also improved to 3.2% at 2Q21 compared to 3.8% at YE20 and 6.1% at YE19. In addition to the government stimulus, Fitch believes widespread lender forbearance programs likely also contributed to Lendmark's recent strong credit performance. Fitch expects Lendmark's asset quality to normalize towards historical levels as the effects of government stimulus and excess savings built up during the pandemic reduce. Lendmark's earnings in 2020 were adversely affected by a slowdown in loan growth following the onset of the pandemic, as well as elevated provisioning in anticipation of heightened credit losses. On a GAAP basis, net income in 2020 declined to $1.3 million compared to $97 million in 2019, which was largely a function of an elevated loan loss provision of $207 million last year. However, as the economic effects from the pandemic proved to be more benign than initially expected, the company began releasing reserves, which drove strong earnings of $36 million in 2Q21. Fitch expects Lendmark's earnings to be supported by low double-digit receivables growth and stable yields, partially offset by higher reserve builds. Lendmark's leverage has trended higher in recent years and is viewed as a rating constraint. Debt to tangible equity, as calculated by Fitch, stood at 7.8x in 2Q21, benchmarking to 'b and below' category on Fitch's quantitative benchmark matrix for high balance sheet usage finance and leasing companies, compared to 6.3x at YE19 and 5.3x at YE 2018, and is above its closest peers after adjusting for the Current Expected Credit Loss (CECL) accounting standard, which Lendmark has not yet adopted. The leverage increase was largely driven by goodwill/intangibles created from the company's sale to Lightyear Capital and Ontario Teachers in 2019. Management expects leverage to decline over the next few years as earnings are accreted into capital and is targeting a leverage ratio of 6.0x to 7.0x, which Fitch views as high given the higher risk profile of its loan portfolio. Lendmark's funding profile is largely secured, which although non-recourse to Lendmark, Fitch views less favorably due to the encumbrance of assets, which provides less financial flexibility during periods of stress. To the extent Lendmark is able to complete its proposed $300 million inaugural senior unsecured debt offering, and increase unsecured funding to a pro forma 14% of total funding sources from 7% currently, Fitch would view the increase in funding diversification and increase in unencumbered assets as incrementally positive. The issuance would result in an implied funding, liquidity and coverage score that maps to the 'bb' category within Fitch's quantitative benchmark matrix, compared to a current implied score of 'b and below'. Fitch views Lendmark's cash liquidity of $101 million at 2Q21 as sufficient to support its operations and near-term funding obligations. Lendmark did not have any near-term unsecured debt maturities as of June 30, 2021. The Stable Outlook reflects the maintenance of strong risk-adjusted returns, sound credit quality and prudent balance sheet growth The expected rating on Lendmark's proposed senior unsecured debt is equalized with the Long-Term IDR, reflecting Fitch's expectation of average recovery prospects and structural seniority of the notes. The subordinated debt rating reflects Fitch's expectation of poor recovery prospects and structural subordination of the notes. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- A sustained decline in leverage below 6x, an increase in the proportion of unsecured funding to at least 20% of total debt, an ability to sustain charge-offs within management's targeted range through credit cycles, and further diversification of the business model either through product or geographical expansion or revenue streams. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Meaningful deterioration in credit quality relative to peers and above Lendmark's targeted range of 5% to 8%, an inability to reduce leverage toward its targeted 6.0x-7.0x range over the Outlook horizon, and/or the imposition of new and more onerous regulations that negatively impact Lendmark's ability to execute its business model. SENIOR UNSECURED DEBT The senior unsecured debt ratings are primarily sensitive to changes in Lendmark's Long-Term IDR and the availability of unencumbered assets. SUBORDINATED DEBT The subordinated debt ratings are primarily sensitive to changes in Lendmark's Long-Term IDR and the availability of unencumbered assets. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance ESG CONSIDERATIONS Lendmark has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to the importance of fair collection practices and consumer interactions and the regulatory focus on them, which has a negative impact on the credit profile, and is relevant to the ratings in conjunctions with other factors. Lendmark has an ESG Relevance Score of '4' for Governance Structure due to the presence of private equity ownership, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. LFS TOPCO: Moody's Assigns First Time 'B1' Corporate Family Rating ------------------------------------------------------------------ Moody's Investors Service has assigned first-time a B1 corporate family rating to LFS TopCo, LLC (Lendmark), the indirect, holding company of Lendmark Financial Services, LLC, a US non-prime consumer lender. In addition, Moody's has assigned a B1 long-term unsecured debt ratings to the company's proposed $300 million unsecured bond issuance maturing in 2026. The outlook is stable. Assignments: Issuer: LFS TopCo, LLC Corporate Family Rating, Assigned B1 Senior Unsecured Regular Bond/Debenture, Assigned B1 Outlook Actions: Issuer: LFS TopCo, LLC Outlook, Assigned Stable RATINGS RATIONALE The assignment of the B1 CFR reflects the company's solid profitability and capitalization along with its stronger than peer average liquidity runway compared to single-B rated companies. Partly offsetting the benefits from these positive credit attributes is the refinancing risk stemming from the company's high levels of secured funding and the resulting low levels of unencumbered assets that it could use to access alternate liquidity sources should an unexpected need arise. Lendmark's ratings also reflect the elevated credit risk associated with lending to consumers with primarily non-prime, subprime credit profiles. Although US unemployment is still well above the pre-pandemic level of 3.5%, like other consumer lenders, Lendmark's credit metrics have improved as consumers have benefitted from exceptionally large US government fiscal stimulus, resulting in an increase in personal income, along with payment and eviction moratoriums. As a result, Lendmark has seen a drop off in delinquency and charge-off rates. Moody's expects consumer asset quality to weaken over the coming quarters and revert to pre-pandemic levels in late 2022 to early 2023 as the benefits from fiscal stimulus and consumer support measures fade; from 2016 to 2020 net charge-offs ranged from around 7% to 8%. Lending to consumers with primarily non-prime/subprime credit profiles entails high credit risk. While Lendmark's higher portfolio yield, which was 26% in the second quarter of 2021, compensates for this risk, the underlying characteristics of the portfolio indicate high expected asset quality volatility. Partially mitigating this credit challenge is the fact that around half of Lendmark's loan portfolio as of June 30, 2021 was secured, with the underlying collateral providing at least some recovery in the event of a loss. Lendmark is the second largest branch-based consumer finance company in the US, with more than 400 branches in 19 states. Lendmark provides origination, underwriting and servicing of personal and auto loans, primarily to non-prime customers. At June 30, 2021, Lendmark reported $2.8 billion of assets. The company was founded in 1996 and is currently owned by Lightyear Capital LLC and Ontario Teachers' Pension Plan since their acquisition of the Company from The Blackstone Group L.P. in 2019. Moody's has rated the planned senior unsecured notes maturing in 2026 B1, based on Lendmark's B1 corporate family rating and the application of its Loss Given Default (LGD) for Speculative-Grade Companies methodology and model, which incorporate their priority of claim and strength of asset coverage. The stable outlook reflects Moody's expectations that the company's financial profile will remain consistent over the next 12-18 months. Moody's said governance is highly relevant for Lendmark, as it is to all participants in the finance company sector. While Moody's does not have any particular concerns around Lendmark's corporate governance practices, corporate governance remains a key credit consideration and requires ongoing monitoring, as is the case for all financial institutions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Lendmark's ratings could be upgraded if it reduces its reliance on secured corporate funding, strengthened its capitalization levels, or increased its liquidity runway while continuing to maintain similar levels of asset quality and its solid profitability. Lendmark's ratings could be downgraded if its financial performance deteriorates such that profitability as measured by net income to average assets declined and Moody's expected it to remain below 1.75%, capitalization declined such that tangible common equity (TCE) to tangible managed assets dropped below, and was expected to remain below, 9.5%, asset quality deteriorated such that net charge-offs rose and were expected to remain above 8%, or its liquidity runway declined and was expected to remain below 15 months. The principal methodology used in these ratings was Finance Companies Methodology published in November 2019. MALLINCKRODT PLC: Creditors' Release Not Consensual, SEC Says ------------------------------------------------------------- The Securities and Exchange Commission filed a supplemental objection to confirmation of the Joint Chapter 11 Plan of Reorganization of Mallinckrodt PLC and its affiliated debtors to address the Debtors' claim that the release by the Debtors' public shareholders in Class 14 and the holders of subordinated claims in Class 13 is consensual. The SEC has argued in its preliminary objection that the release by the Class 14 public shareholders and Class 13 claimants was not consensual because both classes, which were deemed to reject the Plan, are nonetheless required to affirmatively opt out of the release. The SEC pointed out that the Debtors, in reply to the SEC's objection, disregarded the analysis in Emerge Energy Services, Washington Mutual, In re Zenith Electronics Corp., RTW Retailwinds, Inc., Cloud Peak Energy where the court denied confirmation of plan where third party releases bound creditors and interest holders who did not return a ballot or opt-out form; releases were held to be non-consensual in these cited cases, where the court concluded that the opt out mechanism is not sufficient to support the third party releases particularly with respect to parties who do not return a ballot, or are not entitled to vote in the first place. The Debtors, instead, rely heavily on the published decision of In re Indianapolis Downs, LLC to support their argument -- that the third party release is consensual and that the opt-out mechanism is consistent with applicable law -- which citation, according to the SEC do not address the current circumstance where the class is deemed to reject a plan and receives no consideration but is nonetheless required to affirmatively opt out of a third party release in order to avoid being bound. Accordingly, the SEC asked the Court to deny confirmation of the Debtors' Plan unless the Plan is amended to provide that Mallinckrodt's public shareholders and holders of subordinated claims be carved out of the releases or be required to opt-in to the releases in order to be bound. A copy of the objection is available for free at https://bit.ly/2XhlwrA from Prime Clerk, claims agent. The Court will consider the objection at the on September 21, 2021. About Mallinckrodt PLC Mallinckrodt is a global business consisting of multiple wholly-owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. The company's Specialty Brands reportable segment's areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics; and gastrointestinal products. Its Specialty Generics reportable segment includes specialty generic drugs and active pharmaceutical ingredients. On Visit http://www.mallinckrodt.com/ On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates sought Chapter 11 protection in Delaware in the U.S. (Bankr. D. Del. Lead Case No. 20-12522) to seek approval of a restructuring that would reduce total debt by $1.3 billion and resolve opioid-related claims against them. Mallinckrodt plc disclosed $9,584,626,122 in assets and $8,647,811,427 in liabilities as of Sept. 25, 2020. Judge John T. Dorsey oversees the cases. The Debtors tapped Latham & Watkins LLP and Richards, Layton & Finger P.A. as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray LLP as litigation counsel; Torys LLP as CCAA counsel; Guggenheim Securities LLC as investment banker; and AlixPartners LLP as restructuring advisor. Prime Clerk, LLC is the claims agent. The official committee of unsecured creditors retained Cooley LLP as its legal counsel, Robinson & Cole LLP as co-counsel, and Dundon Advisers LLC as its financial advisor. On Oct. 27, 2020, the U.S. Trustee for Region 3 appointed an official committee of opioid related claimants. The OCC tapped Akin Gump Strauss Hauer & Feld LLP as its lead counsel, Cole Schotz as Delaware co-counsel, Province Inc. as financial advisor, and Jefferies LLC as investment banker. The Debtors filed their plan of reorganization and disclosure statement on April 20, 2021. MALLINCKRODT PLC: U.S. Gov't. Says Third Party Releases, Overbroad ------------------------------------------------------------------ The United States of America, on behalf of the Internal Revenue Service, opposed the Joint Plan of Reorganization of Mallinckrodt PLC and debtor-affiliates, on grounds, among others, that the third-party releases and injunction provisions are overbroad. The U.S. government argued that the Anti-Injunction Act, Section 7421(a) of Title 26 of the U.S. Code, provides that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." Elisabeth Bruce, Trial Attorney, Tax Division and counsel for the United States government, emphasized that the Anti-Injunction Act deprived bankruptcy court of subject matter jurisdiction to confirm plan enjoining IRS from collecting from debtor's officers and directors. Accordingly, the Plan cannot be confirmed with such expansive Release, Injunction, and Related Provisions as they implicate, Ms. Bruce asserted. The United States also complained that (i) the Plan improperly curtails the United States' setoff and recoupment rights; (ii) the Plan impermissibly deprives the United States of interest on its administrative claims; and (iii) the compromise and settlement provisions are inappropriate. The United States has filed the following proofs of claim against the Debtors: * an administrative claim for $6,112,760 against Mallinckrodt Enterprises LLC for unpaid employer FICA taxes under the CARES Act; * an administrative claim amounting to $6,072,680 against ST Shared Services LLC for unpaid employer FICA taxes under the CARES Act; * a general unsecured claim for $155,930 against ST US Holdings LLC for interest on 2014 income tax; and * a general unsecured claim for $2,693 against Mallinckrodt Critical Care Finance LLC for penalties. A copy of the objection is available for free at https://bit.ly/3k1V0eG from Prime Clerk, claims agent. The objection will be heard on September 21, 2021 at 10 a.m. Counsel for the United States of America, on behalf of the Internal Revenue Service: Elisabeth Bruce Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 227 Washington, D.C. 20044 Telephone: 202-598-0969 Facsimile: 202-514-6866 Email: Elisabeth.M.Bruce@usdoj.gov About Mallinckrodt PLC Mallinckrodt is a global business consisting of multiple wholly-owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. The company's Specialty Brands reportable segment's areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics; and gastrointestinal products. Its Specialty Generics reportable segment includes specialty generic drugs and active pharmaceutical ingredients. On Visit http://www.mallinckrodt.com/ On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates sought Chapter 11 protection in Delaware in the U.S. (Bankr. D. Del. Lead Case No. 20-12522) to seek approval of a restructuring that would reduce total debt by $1.3 billion and resolve opioid-related claims against them. Mallinckrodt plc disclosed $9,584,626,122 in assets and $8,647,811,427 in liabilities as of Sept. 25, 2020. Judge John T. Dorsey oversees the cases. The Debtors tapped Latham & Watkins LLP and Richards, Layton & Finger P.A. as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray LLP as litigation counsel; Torys LLP as CCAA counsel; Guggenheim Securities LLC as investment banker; and AlixPartners LLP as restructuring advisor. Prime Clerk, LLC is the claims agent. The official committee of unsecured creditors retained Cooley LLP as its legal counsel, Robinson & Cole LLP as co-counsel, and Dundon Advisers LLC as its financial advisor. On Oct. 27, 2020, the U.S. Trustee for Region 3 appointed an official committee of opioid related claimants. The OCC tapped Akin Gump Strauss Hauer & Feld LLP as its lead counsel, Cole Schotz as Delaware co-counsel, Province Inc. as financial advisor, and Jefferies LLC as investment banker. The Debtors filed their plan of reorganization and disclosure statement on April 20, 2021. MALLINCKRODT PLC: Unregistered Shareholders Oppose Plan ------------------------------------------------------- Certain unregistered shareholders holding shares of Mallinckrodt PLC (through brokers VTB Bank and Tinkoff Bank, located in the cities of Saint Petersburg and Moscow, in the Russian Federation) filed an objection to the Plan of Reorganization of Mallinckrodt PLC and its affiliated debtors. The unregistered holders disclosed that they have intended to avail of the Master opt out for nominee of beneficial holders of Class 14 equity interest but said they were refused by their brokers because the brokers have not received notifications of corporate action on Mallinckrodt PCL securities, including the Master opt out form. The shareholders asserted that "their enforced silence" should not be used as a consensual agreement on third-party releases to non-debtors. A copy of the objection is available for free at https://bit.ly/3A0TsXT from Prime Clerk, claims agent. About Mallinckrodt PLC Mallinckrodt is a global business consisting of multiple wholly-owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. The company's Specialty Brands reportable segment's areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics; and gastrointestinal products. Its Specialty Generics reportable segment includes specialty generic drugs and active pharmaceutical ingredients. On Visit http://www.mallinckrodt.com/ On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates sought Chapter 11 protection in Delaware in the U.S. (Bankr. D. Del. Lead Case No. 20-12522) to seek approval of a restructuring that would reduce total debt by $1.3 billion and resolve opioid-related claims against them. Mallinckrodt plc disclosed $9,584,626,122 in assets and $8,647,811,427 in liabilities as of Sept. 25, 2020. Judge John T. Dorsey oversees the cases. The Debtors tapped Latham & Watkins LLP and Richards, Layton & Finger P.A. as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray LLP as litigation counsel; Torys LLP as CCAA counsel; Guggenheim Securities LLC as investment banker; and AlixPartners LLP as restructuring advisor. Prime Clerk, LLC is the claims agent. The official committee of unsecured creditors retained Cooley LLP as its legal counsel, Robinson & Cole LLP as co-counsel, and Dundon Advisers LLC as its financial advisor. On Oct. 27, 2020, the U.S. Trustee for Region 3 appointed an official committee of opioid related claimants. The OCC tapped Akin Gump Strauss Hauer & Feld LLP as its lead counsel, Cole Schotz as Delaware co-counsel, Province Inc. as financial advisor, and Jefferies LLC as investment banker. The Debtors filed their plan of reorganization and disclosure statement on April 20, 2021. MEDAILLE COLLEGE: S&P Affirms 'BB' Rating on 2013 Revenue Bonds --------------------------------------------------------------- S&P Global Ratings revised the outlook to stable from negative and affirmed its 'BB' rating on Buffalo & Erie County Industrial Land Development Corp., N.Y.'s $9.35 million series 2018 revenue bonds, issued for Medaille College. "The rating affirmation and outlook revision to stable reflect our expectation of breakeven to slightly positive operations in fiscals 2021 and 2022," said S&P Global Ratings credit analyst James Gallardo. "The rating further reflects our view that due in part to federal grant revenue provided through Higher Education Emergency Relief Fund II and III and FEMA grants, which should result in maintenance of the available resources ratios at least at the current levels," Mr. Gallardo added. Medaille College, in Buffalo, was founded in 1875 by the Sisters of St. Joseph as an institute to prepare religious educators to staff Catholic schools. Medaille offers 19 bachelor degree programs, 13 master's degree programs, one doctoral program, 12 online degrees, nine certificate programs, and six advanced certificate programs. MY FL MANAGEMENT: Court Confirms Amended Plan --------------------------------------------- Judge Scott M. Grossman of the U.S. Bankruptcy Court for the Southern District of Florida confirmed the Amended Chapter 11 Plan of Reorganization of MY FL Management LLC. The Court scheduled an in-person post-confirmation status conference for September 29, 2021 at 1:30 p.m. Any interested party, however, may choose to attend the hearing remotely via Zoom. A copy of the order is available for free at https://bit.ly/2Vyo7g8 from PacerMonitor.com. About Royal Beach Palace MY FL Management LLC, owns Royal Beach Palace, a hotel located in the residential Lauderdale-by-the-Sea, about a 10-minute walk to the beach. Fort Lauderdale, Florida-based MY FL Management LLC sought Chapter 11 protection (Bankr. S.D. Fla. Case No. 21-11028) on Feb. 2, 2021. The Debtor estimated assets and debt of $1 million to $10 million as of the bankruptcy filing. Edelboim Lieberman Revah Oshinsky PLLC, led by Brett Lieberman, is the Debtor's counsel. N.G. PURVIS: Nov. 9 Plan Confirmation Hearing Set ------------------------------------------------- On Sept. 3, 2021, debtor N. G. Purvis Farms, Inc. filed with the U.S. Bankruptcy Court for the Eastern District of North Carolina a disclosure statement and plan. On Sept. 9, 2021, Judge Stephani W. Humrickhouse conditionally approved the disclosure statement and ordered that: * Oct. 27, 2021, is fixed as the last day for filing and serving written objections to the disclosure statement. * Nov. 9, 2021, at 11:30 a.m. in 1003 S. 17th Street, Room 118, Wilmington, NC 28401 is the hearing on confirmation of the plan. * Oct. 27, 2021, is fixed as the last day for filing written acceptances or rejections of the plan. * Oct. 27, 2021, is fixed as the last day for filing and serving written objections to confirmation of the plan. A copy of the order dated September 9, 2021, is available at https://bit.ly/2VCcyVf from PacerMonitor.com at no charge. About N.G. Purvis Farms N.G. Purvis Farms, Inc., operates throughout the Southeast as a farrow-to-finish pork producer, which breeds, farrows, weans, and raises weaner pigs, feeder pigs and market hogs, and then sold to pork processors. It owns and operates 12 farms in North Carolina and two farms in Georgia, together with associated facilities, on which it maintains herds of sows, breeds piglets, and raises market hogs. It contracts with numerous independent growers to feed and finish at their facilities weaned pigs and feeder pigs furnished and owned by the company into market hogs. N.G. Purvis Farms sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.C. Case No. 21-01068) on May 6, 2021. In the petition signed by Jerry M. Purvis, Sr., president, the Debtor disclosed $34,268,361 in assets and $53,126,237 in liabilities. Judge Stephani W. Humrickhouse oversees the case. The Debtor tapped Butler & Butler, LLP and Hendren, Redwine, Malone PLLC as bankruptcy counsel, Robbins May & Rich LLP as special counsel, Frost PLLC as accountant, and NutriQuest Business Solutions LLC as restructuring advisor. Steve Weiss of NutriQuest Business Solutions serves as the Debtor's chief restructuring officer. On May 27, 2021, the U.S. Bankruptcy Administrator for the Eastern District of North Carolina appointed an official committee of unsecured creditors. The committee tapped Waldrep Wall Babcock & Bailey, PLLC as legal counsel and Dundon Advisers, LLC as financial advisor. NASSAU BREWING: Gets OK to Hire Goldberg Weprin as Legal Counsel ---------------------------------------------------------------- Nassau Brewing Company Landlord, LLC received approval from the U.S. Bankruptcy Court for the Eastern District of New York to hire Goldberg Weprin Finkel Goldstein, LLP to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) providing the Debtor with all necessary representation in connection with the case as well as the Debtor's responsibilities under the Bankruptcy Code; (b) representing the Debtor in all proceedings before the bankruptcy court and the Office of the U.S. Trustee; (c) preparing legal papers, including motions to obtain approval for debtor-in-possession financing and sales procedures; (d) rendering all other legal services required by the Debtor toward the goal of confirming a plan of reorganization. The firm's hourly rates are as follows: Partners $685 per hour Associates $275 - $500 per hour The Debtor paid $25,000 to the law firm as a retainer fee. Kevin Nash, Esq., a member of Goldberg, 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: Kevin J. Nash, Esq. Goldberg Weprin Finkel Goldstein, LLP 1501 Broadway, 22nd Floor New York, NY 10036 Tel: (212) 301-6944 Email: knash@gwfglaw.com About Nassau Brewing Co. Nassau Brewing Company Landlord, LLC is a New York limited liability company organized in 2015 to acquire a property at 945 Bergen Avenue, Brooklyn, N.Y. Nassau Brewing Co. filed a petition for Chapter 11 protection (Bankr. E.D.N.Y. Case No. 21-41852) on July 16, 2021, listing as much as $50 million in both assets and liabilities. Sean Rucker, manager, signed the petition. The case is handled by Judge Jil Mazer-Marino. Kevin J. Nash, Esq., at Goldberg Weprin Finkel Goldstein, LLP is the Debtor's legal counsel. NESV ICE: Gets Approval to Employ Hollis Meddings Group ------------------------------------------------------- NESV Ice, LLC and affiliates received approval from the U.S. Bankruptcy Court for the District of Massachusetts to hire Hollis Meddings Group, Inc. as accountant and financial advisor. The firm's services include: (a) assisting the Debtors in the management of the bankruptcy process and business operations; (b) assisting with the Chapter 11 reporting requirements and filings, including cash flow budget to actuals, and preparing the necessary bankruptcy schedules and budgets; (c) assisting in obtaining debtor-in possession financing, if required; (d) assisting the Debtors in every step of the bankruptcy reorganization process, with the goal of obtaining court approval of their reorganization plan; and (e) assisting the Debtors in other areas as required. The firm's hourly rates are as follows: Managers and Principals $325 - $375 per hour Analysts and Consultants $275 - $300 per hour Administrative support staff $150 per hour The Debtor paid $15,000 to the firm as a retainer fee. Joseph Meddings, a principal at Hollis Meddings Group, 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: Joseph D. Meddings, C.P.A. Hollis Meddings Group, Inc. 1481 Wampanoag Trail, Suite 3 Providence, RI 02915 Tel: (401) 421-3330 Email: jmeddings@hollismeddings.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. On Aug. 26, 2021, NESV Ice and its affiliates sought protection under Chapter 11 of Bankruptcy Code (Bankr. D. Mass. Lead Case No. 21-11226). In the petition signed by its manager, Stuart Silberberg, NESV Ice listed as much as $50 million in both assets and liabilities. Judge Christopher J. Panos oversees the cases. Downes McMahon, LLP is the Debtors' legal counsel while Hollis Meddings Group, Inc. serves as the Debtors' accountant and financial advisor. NEW YORK INN: Seeks to Hire Joyce W. Lindauer as Bankruptcy Counsel ------------------------------------------------------------------- New York Inn Inc. seeks approval from the U.S. Bankruptcy Court for the Northern District of Texas to hire Joyce W. Lindauer Attorney, PLLC to serve as legal counsel in its Chapter 11 case. The firm's hourly rates are as follows: Joyce W. Lindauer, Esq. $450 per hour Kerry S. Alleyne, Esq. $300 per hour Guy H. Holman, Esq. $250 per hour Paul B. Geilich, Esq. $395 per hour Dian Gwinnup $125 per hour The Debtor paid $5,000 to the law firm as a retainer fee. Joyce Lindauer, Esq., owner of the firm, disclosed in a court filing that she is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Joyce W. Lindauer, 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 New York Inn A group of creditors including AP Interior, Prateek Desai and Wajattat Ali Khan filed an involuntary Chapter 11 petition against Arlington, Texas-based New York Inn Inc. (Bankr. N.D. Texas Case No. 21-30958) on May 21, 2021. The creditors are represented by Bill Rielly, Esq. Judge Michelle V. Larson oversees the case. New York Inn tapped Joyce W. Lindauer Attorney, PLLC as bankruptcy counsel. OFS INTERNATIONAL: Taps Gordon Brothers as Appraiser ---------------------------------------------------- OFS International, LLC and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of Texas to hire Gordon Brothers Asset Advisors, LLC to conduct an appraisal of their machinery, equipment and inventory. The firm will be paid a flat fee of $32,500 and a retainer fee of $16,250. Aaron Walton, managing director at Gordon Brothers, 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: Aaron Walton Gordon Brothers Asset Advisors, LLC 800 Boylston Street, 27th Floor Boston, MA 02199 Tel.: (888) 424-1903 Email: info@gordonbrothers.com About OFS International OFS International, LLC is a provider of oil and gas production and processing equipment and services, with its headquarters in Houston, Texas, and operations in the Permian, Barnett and Marcellus regions. It provides field services, inspections, couplings, threading and accessories to the oil and gas industry. OFS International and affiliates, OFSI Holding LLC and Threading and Precision Manufacturing LLC, sought Chapter 11 protection (Bankr. S.D. Texas Lead Case No. 21-31784) on May 31, 2021. In the petition signed by chief financial officer Alexey Ratnikov, OFS International disclosed assets of up to $50 million and liabilities of up to $100 million. The cases are handled by Judge David R. Jones. The Debtors tapped Porter Hedges, LLP as bankruptcy counsel, Ahmad Zavitsanos Anaipakos Alavi & Mensing, P.C. as special counsel, and Chiron Financial, LLC as investment banker and financial advisor. BMC Group, Inc. is the Debtors' claims agent, while Gordon Brothers Asset Advisors, LLC is the Debtor's machine and equipment inventory appraiser. Sandton Capital Solutions Master Fund V, LP, the Debtors' DIP lender, is represented by McGuirewoods, LLP. ORCHARD PLAZA: Shopping Center to Be Auctioned on Oct. 28 --------------------------------------------------------- Fine & Company LLC will hold a public auction on Oct. 28, 2021, for the sale of Orchard Plaza Shopping Center's 42,452 sq. ft. shopping center located at 93 Skokie Blvd., Skokie, Illinois. Bids are to be delivered to Fine & Company LLC via email to info@fineandcompany.com on or before 2:00 p.m. local time on the date of the auction. Further information on the sale, contact Fine & Company at 312-278-0600 extension 101. Bids received after the bid deadline will not be eligible for consideration and will be returned to the sender. Fine & Company LLC can be reached at: Fine & Company LLC Attn: Michael A. Fine, Managing Broker 899 Skokie Blvd., Suite 100 Northbrook, IL 60062 Tel: 312-278-0600 Email: michael@fineandcompany.com PATH MEDICAL: Seeks to Hire Foley & Lardner as Special Counsel -------------------------------------------------------------- Path Medical Center Holdings, Inc. and Path Medical, LLC seek approval from the U.S. Bankruptcy Court for the Southern District of Florida to hire Foley & Lardner, LLP as special counsel. The Debtor needs the firm's legal assistance in all matters related to State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company as well as in all healthcare and related regulatory matters. The firm's hourly rates are as follows: Partners $715 - $935 per hour Senior Counsel/Of Counsel $475 - $610 per hour Associates $305 - $480 per hour Paraprofessionals $180 - $300 per hour Project Assistants/Researchers $195 per hour The Debtor paid $100,000 to the law firm as a retainer fee. Mark Wolfson, Esq., a partner at Foley & Lardner, 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: Mark J. Wolfson, Esq. Foley & Lardner LLP 100 North Tampa Street, Suite 2700 Tampa, FL 33602 Tel.: 813.225.4119 Email: mwolfson@foley.com About Path Medical Path Medical Center Holdings, Inc. and Path Medical, LLC filed their voluntary petitions for Chapter 11 protection (Bankr. S.D. Fla. Lead Case No. 21-18339) on Aug. 28, 2021. Manual Fernandez, chief executive officer, signed the petitions. At the time of filing, Path Medical Center listed $220,060 in assets and $76,988,419 in liabilities while Path Medical listed $30,047,477 in assets and $86,494,715 in liabilities. Judge Scott M. Grossman oversees the cases. Brett Lieberman, Esq., at Edelboim Lieberman Revah Oshinsky, PLLC represents the Debtors as bankruptcy counsel while Foley & Lardner LLP serves as special counsel. PENNYMAC FINANCIAL: Moody's Rates New $500MM Unsecured Notes 'B1' ----------------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to PennyMac Financial Services Inc.'s (PFSI) proposed $500 million backed long-term senior unsecured notes offering maturing 2031. The notes will be guaranteed on an unsecured senior basis by each of PFSI's existing and future domestic subsidiaries, including Private National Mortgage Acceptance Co, LLC and PennyMac Loan Services, LLC, subject to certain exclusions. The company intends to use net proceeds from the offering to pay down its mortgage loan repurchase facilities and for general corporate purposes. PFSI's outlook is positive. Assignments: Issuer: PennyMac Financial Services Inc. Backed Senior Unsecured Regular Bond/Debenture, Assigned B1 RATINGS RATIONALE PFSI's Ba3 corporate family rating (CFR) reflects the company's solid track record of operational performance, solid profitability, strong capital levels and a strengthening funding profile. The CFR also reflects PFSI's solid and strengthening franchise in the US mortgage market as the largest correspondent mortgage originator in 2020, and a top five overall US residential mortgage originator with a market share of approximately 5.0% for 2020. PFSI's B1 backed long-term senior unsecured rating is based on the company's Ba3 CFR and the application of Moody's Loss Given Default (LGD) for Speculative-Grade Companies methodology and model. The one-notch differential between PFSI's B1 backed long-term senior unsecured rating and Ba3 CFR is reflective of the ranking of senior unsecured obligations in PFSI's capital structure. PFSI's positive rating outlook reflects Moody's expectation that PFSI will be able to maintain its strong financial performance, minimize operational risk from rapid growth and maintain solid capital levels, while continuing to strengthen its franchise positioning and improve its liquidity profile over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The ratings could be upgraded if PFSI continues to demonstrate its strong financial performance, whereby Moody's expects that long-term through the cycle profitability as measured by net income to average assets will average at least 4.0%. The company would however need to maintain solid capital levels such as if tangible common equity to adjusted tangible assets remains around 20.0%, as well as continue to strengthen its franchise positioning and maintain unsecured debt at around 50% of total corporate debt. Given the positive outlook, a ratings downgrade is unlikely over the next 12-18 months. Downward rating pressure could occur if financial performance deteriorates - for example, if net income to managed assets falls consistently below and is expected to remain below 3.0% or if leverage increases such that PFSI's tangible common equity to adjusted assets falls below, and Moody's expects it to remain below 17.5%. In addition, PFSI's unsecured bond rating could be downgraded to B2 from B1 if the portion of unsecured debt to total corporate debt falls and remains below 45%; under this scenario, Moody's expects the loss on senior unsecured obligations in the event of default would be materially higher. The principal methodology used in this rating was Finance Companies Methodology published in November 2019. PENNYMAC FINANCIAL: S&P Affirms 'BB-' ICR, Outlook Stable --------------------------------------------------------- S&P Global Ratings affirmed its 'BB-' issuer credit rating on PennyMac Financial Services Inc. The outlook remains stable. S&P said, "At the same time, we assigned our 'BB-' issue rating to the company's proposed $500 million senior unsecured notes due 2031. The recovery rating on the debt is '4', reflecting our expectation of average recovery (30%-50%; rounded estimate: 35%) in a simulated default scenario. "The rating affirmation reflects our expectation that PFSI's credit metrics will remain below our previously stated downside triggers even after the issuance of the proposed $500 million senior unsecured notes. We expect the company will use the proceeds for general corporate purposes, which may include paying down existing secured warehouse borrowings. Our base case remains that the company will operate with debt to EBITDA of 2.0x-3.0x and debt to tangible equity below 1.0x over the longer term. Pro forma for the transaction, the debt-to-EBITDA ratio is 1.28x as of June 30, 2021, while debt to tangible equity is 0.93x, in line with our base-case projections. "Our rating on PFSI reflects its favorable market position as one of the nation's top 10 nonbank mortgage originators and servicers, its relatively low leverage, and its mortgage servicing right (MSR) hedging strategy, which has helped offset substantial impairment losses. Conversely, our rating also reflects the company's concentration in the cyclical residential real estate industry, its dependence on warehouse funding, and its volatile earnings. "We expect PFSI to maintain adequate liquidity to meet forbearance requests. As of June 30, 2021, the company had about 4.9% of unpaid principal balance, down from 12.4% the previous year. We project profitability from the originations segment will decline in 2021. We think a decline in origination volume and compression in the gain on sale margin will likely lead to lower overall profitability than in the prior year, although we still expect earnings to be strong relative to historical levels. "We expect EBITDA to remain highly volatile, which is a risk to leverage. Our base case assumes that as refinancing volume declines and the gain on sale margin compresses, PFSI will still operate with leverage of 1.0x-2.0x in the next 12 months. Thereafter, we expect the company to operate with leverage of 2.0x-3.0x. "The stable outlook reflects our expectation that leverage, as measured by debt to EBITDA, will remain below 2.0x over the next 12 months and below 3.0x thereafter. Our rating incorporates our expectation that EBITDA will remain somewhat volatile, though this should be partly offset by strong cash flow from the company's servicing business and associated hedging strategies." S&P could lower the rating over the next 12 months if: -- Earnings deteriorate beyond our expectations; -- S&P anticipates PFSI will operate with sustained leverage above 3.0x; or -- Debt to tangible equity increases above 1.5x. S&P views an upgrade as unlikely at this time. -- S&P simulated a default scenario for the company occurring in 2025, resulting from reduced origination volumes and rapid prepayments of mortgages. -- Eventually, PFSI's liquidity and capital resources could become strained so that it cannot continue to operate without an equity infusion or bankruptcy filing. -- S&P believes creditors would place the most value on the company's MSRs. -- S&P has valued the company through a discrete asset valuation of its MSRs. -- Low interest rates leading to depressed MSR valuations -- A sustained period of rapid amortization of MSRs with limited ability to refinance the repayments -- Limited new origination activity, an increase in borrower delinquencies, and a rise in the discount rate to value MSRs -- MSR values falling below the advance rate on the secured funding facilities, leading to a breach in covenants and, as a result, all cross-default provisions being exercised with the company entering a liquidation process -- Net enterprise value (after 5% administrative costs): $2.03 billion -- Priority claims: $1.37 billion -- Collateral value available to senior unsecured creditors: $662 million -- Senior unsecured debt: $1.84 billion --Recovery expectations: 35% Note: All debt amounts include six months of prepetition interest. PEORIA DAY SURGERY: Seeks to Hire Eide Bailly as Accountant ----------------------------------------------------------- Peoria Day Surgery Center, Ltd. seeks approval from the U.S. Bankruptcy Court for the District of Puerto Rico to hire Eide Bailly, LLP to prepare its tax return filings. The firm will be paid a flat fee of $3,727.50 for the 2019 Form 1120 S preparation and filing and some background work on potential forgiven debt for that year, and another flat fee of $2,396.25 for the 2020 Form 1120 S return preparation and filing. Jonna Meehan, manager of Eide Bailly, 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: Jonna Meehan, CPA Eide Bailly LLP 200 E. 10th Street, Suite 500 Sioux Falls, SD 57117 Tel: (605) 339-1999 About Peoria Day Surgery Center Peoria Day Surgery Center, Ltd. -- http://www.peoriadaysurgerycenter.com/-- is a surgery center in Peoria, Ill., serving patients who require surgical treatment. PDSC uses the same surgical, anesthesia, and recovery room procedures that are found in a hospital. However, unlike most hospital procedures, the patient is usually allowed to return home after surgery, making recovery easier and more comfortable. Founded in 1978 and formerly known as Peoria Day Surgery Center, S.C., PDSC is licensed with the State of Illinois, certified by Medicare and IDPH, and accredited with the AAAHC. It participates in Caterpillar, United Healthcare, BC/BS, Health Alliance/Cat, PHCS and many other insurance plans. Peoria Day Surgery Center filed a Chapter 11 petition (Bankr. C.D. Ill. Case No. 18-81615) on Oct. 29, 2018, disclosing up to $1 million in total assets and up to $10 million in total debt. Justin R. Ahlman, president of Peoria Day Surgery Center, signed the petition. Judge Thomas L. Perkins oversees the case. Sumner Bourne, Esq., at Rafool, Bourne & Shelby, P.C., serves as the Debtor's legal counsel. The Debtor tapped Eide Bailly, LLP and Heinold-Banwart Ltd. as accountant. PHARMHOUSE INC: CCAA Case to End; RIV Gets $6.5M ------------------------------------------------ RIV Capital Inc. on Sept. 13, 2021, disclosed that it has received a cash distribution of approximately $6.5 million and that termination of PharmHouse Inc.'s ("PharmHouse") proceedings under the Companies' Creditors Arrangement Act (Canada) (the "CCAA Proceedings") and PharmHouse's assignment into bankruptcy under the Bankruptcy and Insolvency Act (Canada) is expected imminently. Pursuant to orders granted by the Ontario Superior Court of Justice (Commercial List) in the CCAA Proceedings, RIV Capital was entitled to the cash remaining in PharmHouse. The receipt of this cash distribution concludes the Company's relationship with PharmHouse in all material respects. About RIV Capital RIV Capital (CSE: RIV) (OTC: CNPOF) is an operating and brand platform that aims to acquire, invest in, and develop U.S. cannabis companies to build the cannabis industry of tomorrow, today. By bringing together people, capital, and ideas, it aims to provide shareholders with exposure to exceptional cannabis companies in strategically attractive states poised for significant growth. Backed by its in-house expertise and cannabis domain knowledge, it aims to develop operators and brands who can build market share while it expands the geographic and strategic scope of its multistate platform. RIV Capital also has a strategic relationship with The Hawthorne Collective, a subsidiary of The Scotts Miracle-Gro Company, pursuant to which RIV Capital is the Hawthorne Collective's preferred vehicle for cannabis-related investments not under the purview of other ScottsMiracle-Go subsidiaries. About PharmHouse Inc. PharmHouse Inc. operates as a pharmaceutical company. PharmHouse Inc. commenced court-supervised restructuring proceedings under the CCAA. Ernst & Young Inc. has been appointed as monitor for the Company's CCAA proceedings pursuant to the Order of the Ontario Superior Court of Justice (Commercial List) made on Sept. 15, 2020. PHUNWARE INC: To Acquire Lyte Tech for $10.3 Million ---------------------------------------------------- Phunware, Inc. has executed a definitive agreement to acquire Lyte Technology. The accretive transaction contemplates up to a $10.32M total purchase price in cash and stock, with $3.32M cash at closing and the remaining $7.00M subject to both time and financial performance requirements for the one year period post-closing. The maximum amount of stock issuable post closing would constitute $2.25M over 12 months and an additional $1.25M contingent upon generating $12M for the one-year period post closing. The Company maintains options against future payments in order to proactively minimize dilution while maximizing financial performance. "We are extremely excited to announce our first acquisition since going public, adding not only talent and profitable revenue to our P&L, but also a key strategic distribution network for our blockchain initiatives," said Alan S. Knitowski, president, CEO and co-founder of Phunware. "Although we just recently launched PhunCoin and PhunToken, this acquisition is an important first step in achieving our longer-term strategy of activating a worldwide distributed network of high-end computer systems that can serve as decentralized oracles, validators and nodes that efficiently bridge the gap between external data on the existing web and blockchain-based applications on mobile." Founded only two years ago, Lyte Technology is a profitable, rapidly-growing computer company that specializes in marketing and distributing custom, high-end computer systems off-the-shelf with advanced graphic processing units for gaming, streaming and cryptocurrency mining. Currently located in Illinois, Lyte employs over 25 people and ships thousands of computer systems per month to a unique customer network that has largely been built through word-of-mouth. These customers represent gamers, developers, content creators and crypto enthusiasts alike and will facilitate the early adoption and scale of our innovative new data economy. "I am looking forward to joining Phunware to further resource and scale my fast-growing business as part of a unique public company with a strategic focus on the global data economy," said Caleb Borgstrom, founder and CEO of Lyte Technology. "Since inception, our demand has always outpaced our available supply. As a result, I expect that me and my team will be able to materially contribute to Phunware's operational and financial success while leveraging a worldwide network of high-end computer systems to accelerate Phunware's plans for a blockchain-enabled, environmentally-friendly and truly decentralized consumer data platform." The acquisition is expected to formally close within the next 30 to 45 days when customary closing conditions are fulfilled by both parties. Upon closing, Lyte Technology's operations and leadership will relocate to Austin, Texas. About Phunware Headquartered in Austin, Texas, Phunware, Inc. -- http://www.phunware.com-- offers a fully integrated software platform that equips companies with the products, solutions and services necessary to engage, manage and monetize their mobile application portfolios globally at scale. Phunware reported a net loss of $22.20 million for the year ended Dec. 31, 2020, compared to a net loss of $12.87 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $34.21 million in total assets, $23.73 million in total liabilities, and $10.48 million in total stockholders' equity. POWAY PROPERTY: Case Summary & 12 Unsecured Creditors ----------------------------------------------------- Debtor: Poway Property, LP 13772 Paseo Valle Alto Poway, CA 92064 Business Description: Poway Property is a Single Asset Real Estate debtor (as defined in 11 U.S.C. Section 101(51B)). Chapter 11 Petition Date: September 13, 2021 Court: United States Bankruptcy Court Southern District of California Case No.: 21-03654 Debtor's Counsel: David L. Speckman, Esq. SPECKMAN LAW FIRM 1350 Columbia St., Ste. 503 San Diego, CA 92101 Tel: 619-696-5151 E-mail: speckmanandassociates@gmail.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $10 million to $50 million The petition was signed by David Hall, director. A full-text copy of the petition containing, among other items, a list of the Debtor's 12 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/JCZW2BA/Poway_Property_LP__casbke-21-03654__0001.0.pdf?mcid=tGE4TAMA PRIMARIS HOLDINGS: Lender Seeks to Prohibit Cash Collateral Use --------------------------------------------------------------- The Bank of Missouri asks the U.S. Bankruptcy Court for the Western District of Missouri to prohibit Primaris Holdings, Inc. from using cash collateral and to account for cash collateral. TBOM is the holder of secured claims against the Debtor. Approximately $2.3 million of the debt is secured by accounts receivable. The Debtor has remained in possession of its property and has continued to operate its business, although severely dwindling. In the course of its operation, the Debtor collects the accounts receivable. The Debtor would normally use these collateral proceeds for general operating purposes but has some restriction as per the Court’s Order permitting such use. According to TBOM, on April 26, 2021, at the request of the Debtor, the bank allowed the extension of the interim Cash Collateral Order, the terms of which call for an extended deadline for said use to June 1, 2021. No further extensions were granted nor ordered. Since that date, the Debtor has not been segregating the amounts as required by 11 U.S.C. section 363(c)(4). The bank says the Debtor has not provided adequate protection nor proper accounting. Despite the Court's Order for Use of Cash Collateral, the Debtor has not provided weekly reports. The Debtor also has not sought permission to use cash collateral following the expiration of the most recent order and TBOM has not consented to the continued use of cash collateral. Unless the Court orders the Debtor to cease the spending of the proceeds and, to segregate and account for the cash collateral in its possession, custody or control, TBOM says it will suffer irreparable damage and will be left without certain security for the underlying indebtednesses. Additionally, the Debtor should be ordered to remove from its operating account and to place in a segregated account of some sufficient to cover proceeds of TBOM's collateral which heretofore has been dissipated by the Debtor post-petition without the benefit of court order. The Lender also requests the Court to grant it an administrative expense claim with priority to the extent that the Debtor has used such funds after June 1, 2021. A copy of the motion is available at https://bit.ly/3Eh8US0 from PacerMonitor.com. About Primaris Holdings Primaris Holdings, Inc. is a Columbia, Mo.-based privately held company in the healthcare consulting business. It leads and supports systems and clinicians in implementing solutions that improve healthcare quality and reduce costs. Primaris Holdings sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Mo. Case No. 20-20773) on Nov. 19, 2020. Richard A. Royer, chief executive officer, signed the petition. At the time of filing, the Debtor had total assets of $3,170,289 and liabilities of $5,203,068. The Olsen Law Firm, LLC and Foley Law serve as the Debtor's legal counsel. Mueller Prost LC is the Debtor's accountant. Bank of Missouri, as lender, is represented by: Paul H. Berens, Esq. Bradshaw, Steele, Cochrane, Berens and Billmeyer, LC 3113 Independence, P.O. Box 1300 Cape Girardeau, MO 63702-1300 Tel: (573) 334-0555 Fax: (573) 334-2947 E-mail: PaulB@BradshawSteele.com PRIMARIS HOLDINGS: Taps Black & Gold as Auctioneer -------------------------------------------------- Primaris Holdings, Inc. seeks approval from the U.S. Bankruptcy Court for the Western District of Missouri to hire Black & Gold Auctions, LLC to conduct an auction of its remaining personal properties at its office premises in Columbia, Mo. The Debtor will pay a 35 percent commission to the firm. Adam Rau, owner of Black & Gold Auctions, 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: Adam Rau Black & Gold Auctions, LLC 902 Manhattan Drive Columbia MO 65201 Tel: 573-545-5000 Email: info@adamrau.com About Primaris Holdings Primaris Holdings, Inc. is a Columbia, Mo.-based privately held company in the healthcare consulting business. It leads and supports systems and clinicians in implementing solutions that improve healthcare quality and reduce costs. Primaris Holdings filed a petition for Chapter 11 protection (Bankr. W.D. Mo. Case No. 20-20773) on Nov. 19, 2020, listing total assets of $3,170,289 and total liabilities of $5,203,068. Richard A. Royer, chief executive officer, signed the petition. Judge Dennis R. Dow oversees the case. The Olsen Law Firm, LLC and Foley Law serve as the Debtor's legal counsel. Mueller Prost LC is the Debtor's accountant. QUTOUTIAO INC: Incurs RMB209.5 Million Net Loss in 2nd Quarter -------------------------------------------------------------- Qutoutiao Inc. reported a net loss of RMB209.49 million on RMB1.20 billion of net revenues for the three months ended June 30, 2021, compared to a net loss of RMB222.10 million on RMB1.44 billion 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 RMB358.53 million on RMB2.49 billion of net revenues compared to a net loss of RMB753.92 million on RMB2.85 billion of net revenues for the same period during the prior year. Mr. Eric Siliang Tan, chairman and chief executive officer of Qutoutiao, commented, "We will continue to run a balanced strategy with our overall business, investing into promising growth initiatives while optimizing the financial position of the more mature segments. We will maintain the highest standard of compliance and continue to make positive contributions to the future growth of a dynamic industry and the wider society." As of June 30, 2021, the Company had RMB2.94 billion in total assets, RMB3.37 billion in total liabilities, RMB1.13 billion in total redeemable non-controlling interests, and a total deficit of RMB1.56 billion. As of June 30, 2021, the Company had cash, cash equivalents, restricted cash and short-term investments of RMB1,021.8 million (US$158.3 million), compared to RMB985.8 million as of Dec. 31, 2020. Net operating cash outflow during the second quarter of 2021 was RMB15.0 million. While the Company continues to execute business plans to improve their liquidity position, the Convertible Loan which the Company issued with principal amounting to US$171.1 million (RMB1,180.6 million) will mature in April 2022 and has been classified as a current liability as of June 30, 2021. Given the significance of the loan, the Company said there is uncertainty regarding the Company's ability to repay the Convertible Loan upon maturity, which raises substantial doubt about the Company's ability to continue as a going concern. The second quarter 2021 unaudited financial information does not include any adjustment that is reflective of this uncertainty. A full-text copy of the press release is available for free at: https://www.sec.gov/Archives/edgar/data/1733298/000156459021047208/qtt-ex991_6.htm About Qutoutiao Inc. Qutoutiao Inc. -- https://ir.qutoutiao.net -- operates innovative and fast-growing mobile content platforms in China with a mission to bring fun and value to its users. The eponymous flagship mobile application, Qutoutiao, meaning "fun headlines" in Chinese, applies artificial intelligence-based algorithms to deliver customized feeds of articles and short videos to users based on their unique profiles, interests and behaviors. Qutoutiao reported a net loss of $1.10 billion in 2020, a net loss of $2.68 billion in 2019, and a net loss of $1.94 billion in 2018. RIZZO & RESTUCCIA: Taps Margaret Hinkle of JAMS Boston as Mediator ------------------------------------------------------------------ Rizzo & Restuccia, P.C. seeks approval from the U.S. Bankruptcy Court for the District of Massachusetts to hire Margaret Hinkle of JAMS Boston to mediate dispute involving H&R Block Tax Services, LLC, a creditor in its Subchapter V Chapter 11 case. Both the Debtor and H&R have agreed to engage the services of a mediator to facilitate a possible settlement of their claims filed in the bankruptcy case and in the adversary proceeding (Case No. 21-04008-CJP) commenced by the Debtor against H&R. Ms. Hinkle will paid at an hourly rate of $550. In a court filing, Ms. Hinkle disclosed that she is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Ms. Hinkle can be reached at: Margaret R. Hinkle JAMS Boston One Beacon Street, Suite 2210 Boston, MA 02108 Tel: (617) 285-1764/(617) 228-9138 Fax: 617-228-0222 Email: ABlake@jamsadr.com About Rizzo & Restuccia Rizzo & Restuccia, P.C., a Massachusetts-based accounting firm, filed a petition for Chapter 11 protection (Bankr. D. Mass. Case No. 21-40188) on March 16, 2021, listing under $1 million in both assets and liabilities. Judge Christopher J. Panos oversees the case. The Law Offices of John F. Sommerstein represents the Debtor as legal counsel. RMS HOLDING: S&P Affirms 'B-' ICR, Outlook Stable ------------------------------------------------- S&P Global Ratings affirmed the 'B-' issuer credit rating on San Diego, Calif.-based in-home care provider RMS Holding Co. LLC (doing business as TEAM Services Group) and at the same time, S&P affirmed a 'B-' issue-level rating and '3' recovery rating to the first-lien credit facilities, and a 'CCC' issue-level rating and '6' recovery rating to the second-lien credit facility. S&P said, "Our stable outlook reflects our expectation for mid- to high-single-digit percentage organic revenue growth in 2022 as patient volumes and Medicaid rates increase. We also expect steadily growing free cash flow and stabilizing adjusted EBITDA margins to about 12%-13% as a result of organic and inorganic growth. It also reflects our expectation of a continued aggressive acquisition strategy that will likely keep leverage above 7x for the next couple years." On August 31, 2021, TEAM signed a purchase agreement to acquire 24Hr HomeCare LLC, a provider of nonmedical home care to seniors and individuals with intellectual and developmental disabilities throughout California, as well as in select markets in Arizona and Texas. TEAM will issue a $90 million fungible incremental first-lien term loan B and $20 million fungible incremental second-lien term loan to facilitate the acquisition and pay for related fees and expenses. S&P said, "The affirmation reflects our view that the company's leverage is high, cash flow generation remains minimal, and its scale is limited. We believe the industry's barriers to entry are low and other home-health providers--as well as non-health-care companies, such as staffing companies and payroll processors--could offer some of the services TEAM provides. We expect margins will stabilize at around 12% as some of its major states are finally implementing Medicaid rate hikes, offset by labor inflation pressures, resulting in around 7.5x leverage and minimal cash flow generation (after shareholder tax distributions and transaction expenses) for the next 12 months." TEAM benefits from several favorable industry trends and characteristics, such as a growing aging population who prefer to have personal care at home and an increased focus on serving disabled individuals in their communities, reflecting both family preferences and payors push for lower cost models. In addition, S&P expects that even as the COVID-19 pandemic continues, it expects the company will continue to grow (albeit at a moderated pace), as home care is perceived to be a safer alternative to institutional settings. The home care/post-acute care industry is attractive and growing quickly as health care systems are trying to reduce acute care expenses. S&P said, "However, we also believe the industry is competitive and highly fragmented, and the company competes with much bigger players such as Gentiva (BB+/Stable/--) and Addus (not rated). However, TEAM will continue to face limited competition in its Risk Management Division (RMS; which provides services to fiduciaries of primarily special needs trusts) given its system integration with the banks and trusts and the risk-averse mindsets of the clients. Still, we expect the TEAM Public Choices (TPC) Division would continue to face reimbursement risks given budget deficits in certain states during the pandemic. This division, which relies more on typically lower-skilled employees, faces rising wage pressures. The company typically gives wage increases ahead of the Medicaid rate increase in order to attract talent in the tight labor market, but this could decrease margins if states' rate increases do not follow in a timely manner. We also believe the continued pandemic could cause operational issues including delays in onboarding new clients and hindering marketing efforts." TEAM primarily operates as an employment administration outsourcer providing home care services for seniors and individuals with long-term disabilities. Within this niche, TEAM focuses on providing these services for beneficiaries who choose their own caretaker. TEAM operates through two divisions: RMS, accounts for about 10% of net revenue and TPC, accounts for about 90% of net revenue with the acquisition of 24Hour Homecare. The RMS business serves care recipients nationwide who are typically beneficiaries of trusts while the TPC business serves beneficiaries of state-sponsored disability and aging programs in 24 states. The RMS business acts as the employer of record for care trusts (most frequently for individuals with disabilities), eliminating the potential for employment-related liabilities for both the trust and the Trustee Bank and alleviating administrative burdens that come with employing staff. This business has very high client retention rates and pricing increases have been small but stable. Barriers to entry are low, though TEAM's relatively high client retention offers stability. The TPC business supports beneficiaries receiving state aid through two models. About half of revenue in this segment is where the beneficiary is the employer (Fiscal Intermediary) and TPC earns a fee for its services. The other half is for services where TPC is the employer (Agency) where the company earns a spread between Medicaid reimbursement and the cost of providing services. This portion of the business faces reimbursement risk. The company's client base is diverse, with the largest client representing about 8% of revenue and top five customers are only 26% of revenue before the Alliance and 24Hour HomeCare acquisitions. S&P expects client concentration will improve slightly once the transactions are closed. There is some state concentration in Colorado (15%), Georgia (15%), Pennsylvania (14%), Louisiana (9%), and California (8%) before the two recent acquisitions. S&P said, "We expect the company will continue to grow through debt-financed acquisitions with support from mid- to high-single-digit organic revenue growth for the next couple years. We also expect EBITDA margins will stabilize around 12%-13% as the company increases scale and Medicaid rates increase, offset by labor inflation costs. Given its debt-financed growth strategy, we expect adjusted leverage will be above 8x for 2021 and around 7.5x for 2022, and that discretionary free cash flow (after shareholder tax distributions) will be about $10 million-$15 million in 2022. "The stable outlook reflects our expectation that TEAM will continue to earn double-digit percentage revenue growth through a combination of organic and acquisition-related growth as well as stabilizing EBITDA margins. At the same time, we expect the company's aggressive debt-financed growth strategy will lead to leverage remaining higher than 7x for the next couple years. "We could lower the rating if TEAM's free cash flow is not able to cover fixed charges, including debt amortization. This could happen if the company experiences slowing revenue growth and a 200-basis-point decrease in gross margins as a result of increasing competition, integration challenges, reimbursement pressure rate cuts, a failure to successfully negotiate for price increases, or acquisition-multiple increases. "Although unlikely in the next 12 months, we could raise the rating if we expect the company's discretionary free cash flow after shareholder tax distribution to be sustained above 3% of debt (or about $15 million)." SABRE OXIDATION: Auction for Inventory, Equipment Set for Sept. 22 ------------------------------------------------------------------ Sabre Holdco LLC ("secured party") will sell at foreclosure to one or more pre-qualified bidders certain of the assets of Sabre Oxidation Technologies Incorporated by public auction to be held on Sept. 22, 2021. The collateral includes, without limitation: (i) Debtor's inventory, accounts, equipment, fixtures, investment property, deposit accounts, general tangibles, documents, instruments, chattel paper, commercial tort claims, letter-of-credit rights, supporting obligations, money and other personal property and (ii) all products and proceeds of the foregoing. All inquiries with respect to the auction must be directed to the secured party's counsel: Roger G. Jones Bradley Arant Boult Cummings LLP Tel: (615) 252-2323 Email: rjones@bradley.com Sabre Oxidation Technologies Incorporated sells chlorine dioxide for water treatment in the oil and gas industry and the decontamination of equipment, large facilities and water in the food plant and industrial sectors. SALEM MEDIA: S&P Assigns 'B' Rating on Super Senior Secured Notes ----------------------------------------------------------------- S&P Global Ratings assigned its 'B' issue-level rating and '1' recovery rating to U.S.-based multimedia company Salem Media Group Inc.'s $114.7 million super senior secured notes due 2028. The '1' recovery rating indicates its expectation for very high (90%-100%; rounded estimate: 95%) recovery for lenders in the event of a payment default. S&P said, "The company plans to use the proceeds to repay approximately $112 million of its existing $216 million senior secured notes due 2024. We expect the company to have about $104 million outstanding under its 2024 notes following the transaction. As part of the transaction, the company will also have access to $50 million of super senior-secured delayed-draw notes (unrated), available upon the company meeting certain financial obligations. The proceeds from the delayed-draw notes are only allowed to be used toward repayment of the company's current outstanding 2024 senior notes. "The new 2028 notes will have a priority lien over the company's existing 2024 senior notes and substantially all of the company's assets, except for the ABL collateral for which they will have a second lien. Given the lower amount of collateral available to the 2024 noteholders, we revised our recovery rating on the company's 2024 senior secured notes to '5' from '3' and lowered our issue-level rating on the notes to 'CCC' from 'CCC+'. Salem had approximately $20 million of cash on its balance sheet as of June 30, 2021, that could potentially be used for debt repayment. "Our 'CCC+' issuer credit rating and stable outlook on Salem are unaffected because the transaction is leverage neutral. While the transaction reduces near-term refinancing risk, a higher rating remains dependent on S&P Global Ratings-adjusted gross leverage declining to 5x or below. Salem's S&P Global Ratings-adjusted gross leverage was about 6x for the last 12 months ending June 30, 2021." ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors: -- Salem's pro forma capital structure consists of a $30 million unrated ABL facility due 2024, $114.7 million super senior secured notes due 2028, and $104 million 6.75% senior secured notes due in 2024. Our recovery analysis assumes the $50 million delayed-draw notes are undrawn. -- Salem's debt is guaranteed by its subsidiaries and secured by substantially all the company's assets and those of its guarantors (with certain exceptions including U.S. Federal Communications Commission licenses). The super senior secured notes have priority over the collateral, with the exception of the ABL facility that has a first-priority lien on Salem's accounts receivable, inventory, deposit and securities accounts, certain real estate and related assets, and those of its guarantors. Simulated default assumptions: -- S&P's simulated default scenario contemplates a default in 2023 due to competitive pressure from alternative media and a cyclical downturn in advertising, resulting in sustained client losses. Eventually, Salem's liquidity becomes strained to the point it cannot cover its fixed charges (including interest and maintenance capex). -- S&P assumes Salem's $30 million ABL facility will be up to 60% drawn at default and that all debt includes six months of prepetition interest. -- S&P values the company on a going-concern basis and apply a 6x EBITDA multiple to value it in a default scenario. The valuation multiple is comparable to multiples we use for other radio companies. Simplified waterfall: -- EBITDA at emergence: $29 million -- EBITDA multiple: 6x -- Gross recovery value: $174 million -- Net enterprise value (after 5% administrative costs): about $166 million -- Estimated priority claims: about $18 million -- Value available to super senior secured notes: about $147 million -- Estimated super senior secured notes: about $119 million --Recovery expectations: 90%-100%; rounded estimate: 95% -- Value available to senior secured notes: about $28 million -- Estimated senior secured notes: about $107 million --Recovery expectations: 10%-30%; rounded estimate: 25% SALINE LODGING: Taps Darnell Law Office as Bankruptcy Counsel ------------------------------------------------------------- Saline Lodging Group seeks approval from the U.S. Bankruptcy Court for the Eastern District of Michigan to hire Darnell Law Office to serve as legal counsel in its Chapter 11 case. Darnell Law Office will bill $300 per hour for its services. Donald Darnell, Esq., at Darnell Law Office, disclosed in a court filing that his firm is a disinterested person pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: Donald Darnell, Esq. Darnell Law Office 8080 Grand St. Dexter, MI 48130 Tel: 734-424-5200 Fax: 734-786-1605 Email: dondarnell@darnell-law.com About Saline Lodging Group Saline, Mich.-based Saline Lodging Group filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 21-47210) on Sept. 6, 2021, listing as much as $10 million in both assets and liabilities. Judge Maria L. Oxholm presides over the case. Donald Darnell, Esq., at Darnell Law Office represents the Debtor as legal counsel. SAVI TECHNOLOGY: Seeks Approval to Hire Special Litigation Counsel ------------------------------------------------------------------ Savi Technology, Inc. seeks approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire Wrobel Markham, LLP and Weiner Brodsky Kider, PC to serve as its special litigation counsel. The Debtor needs legal assistance from the firm to litigate the amount of DKP MFG, Inc.'s claim, if any, and to pursue its claims against DKP. Wrobel Markham's hourly rates range from $380 to $600 while Weiner Brodsky's hourly rates range from $345 to $810. The Debtor paid $50,000 to Wrobel Markham as a retainer fee. Jason McElroy, Esq., and Daniel Markham, Esq., partners at Weiner Brodsky and Wrobel Markham, respectively, disclosed in court filings that they are "disinterested persons" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Jason W. McElroy, Esq. Weiner Brodsky Kider PC 1300 19th Street NW, 5th Floor Washington DC 20036 Tel: 202 628 2000 Email: McElroy@thewbkfirm.com -- and -- Daniel F. Markham, Esq. Wrobel Markham LLP 1407 Broadway, Suite 4002 New York, NY 10018 Tel.: (212) 421-8100 Fax: (212) 421-8170 Email: mcelroy@thewbkfirm.com About Savi Technology Alexandria, Va.-based Savi Technology, Inc. filed a petition for Chapter 11 protection (Bankr. E.D. Pa. Case No. 21-11369) on Aug. 4, 2021, disclosing up to $10 million in assets and up to $50 million in liabilities. Rosemary Johnston, acting president and chief executive officer of Savi Technology, signed the petition. Judge Brian F. Kenney oversees the case. The Debtor tapped Benjamin P. Smith, Esq., at Shulman, Rogers, Gandal, Pordy & Ecker, P.A. as bankruptcy counsel. Wrobel Markham, LLP and Weiner Brodsky Kider, PC serve as the Debtor's special litigation counsel. SENSEONICS HOLDINGS: Incurs $180.3-Mil. Net Loss in Second Quarter ------------------------------------------------------------------ Senseonics Holdings, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $180.31 million on $3.29 million of total revenue for the three months ended June 30, 2021, compared to a net loss of $7.52 million on $261,000 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 $429.82 million on $6.14 million of total revenue compared to a net loss of $50.11 million on $297,000 of total revenue for the six months ended June 30, 2020. As of June 30, 2021, the Company had $235.13 million in total assets, $547.77 million in total liabilities, and a total stockholders' deficit of $312.64 million. Sensionics stated, "From our founding in 1996 until 2010, we devoted substantially all of our resources to researching various sensor technologies and platforms. Beginning in 2010, we narrowed our focus to developing and refining a commercially viable glucose monitoring system. However, to date, we have not generated any significant revenue from product sales. We have incurred substantial losses and cumulative negative cash flows from operations since our inception in October 1996. We have never been profitable and our net losses were $175.2 million, $115.5 million, and $94.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. As of June 30, 2021, we had an accumulated deficit of $1.1 billion. To date, we have funded our operations principally through the issuance of preferred stock, common stock, convertible note issuance and debt. As of June 30, 2021, we had cash, cash equivalents and marketable debt securities of $215.0 million." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1616543/000155837021010992/sens-20210630x10q.htm About Senseonics Headquartered in Germantown, MD, Senseonics Holdings, Inc. -- www.senseonics.com -- is a medical technology company focused on the design, development and commercialization of transformational glucose monitoring products designed to help people with diabetes confidently live their lives with ease. Senseonics' CGM systems, Eversense and Eversense XL, include a small sensor inserted completely under the skin that communicates with a smart transmitter worn over the sensor. The glucose data are automatically sent every 5 minutes to a mobile app on the user's smartphone. SILVER PLAZA: Taps Vortman & Feinstein as Bankruptcy Counsel ------------------------------------------------------------ Silver Plaza, LLLP seeks approval from the U.S. Bankruptcy Court for the Western District of Washington to hire Vortman & Feinstein to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) taking all actions necessary to protect and preserve the Debtor's bankruptcy estate, including the prosecution of actions on the Debtor's behalf. (b) preparing legal papers. (c) negotiating with creditors concerning a Chapter 11 plan, preparing the plan and related documents, and taking the steps necessary to confirm and implement the plan; and (d) providing other necessary legal services. Larry Feinstein, Esq., the firm's attorney who will be providing the services, will be paid at an hourly rate of $425. The Debtor paid $6,500 to the law firm as a retainer fee. Mr. Feinstein 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: Larry B. Feinstein, Esq. Vortman & Feinstein 2033 Sixth Avenue, Suite 251 Seattle, WA 98121 Tel: 425-643-9595/206-223-9595 Fax: 206-386-5355 Email: 1947feinstein@gmail.com About Silver Plaza Everett, Wash.-based Silver Plaza, LLLP filed a petition for Chapter 11 protection (Bankr. W.D. Wash. Case No. 21-11592) on Aug. 19, 2021, listing $4,023,261 in assets and $6,556,398 in liabilities. Rongfang Chan, as managing partner, signed the petition. Judge Marc Barreca oversees the case. The Debtor tapped Vortman & Feinstein as legal counsel. SMG INDUSTRIES: Units Sign $12.7M Loan Agreement With Amerisource ----------------------------------------------------------------- 5J Trucking LLC, 5J Oilfield Services LLC, 5J Transportation LLC, 5J Brokerage LLC, and 5J Specialized LLC entered into a loan agreement and security agreement with Amerisource Funding Inc. in the total amount of $12,740,000. Pursuant to the terms of the loan agreement, $6,400,000 was initially funded on Sept. 7, 2021 and the remaining $6,340,000 is to be funded on or before Oct. 31, 2021. In connection with the loan agreement, the 5J entities issued a commercial promissory note to Amerisource in the initial principal amount of $6,400,000. Pursuant to the terms of the promissory note, the 5J entities will pay interest only on a monthly basis through Oct. 1, 2022 and principal and interest thereafter over the remaining term through Sept. 7, 2026. The promissory note bears interest at a rate of 12.0% per annum and may be prepaid early at any time without penalty. The 5J entities will also pay an annual collateral management fee to Amerisource in the amount of 0.40% of the total loan amount. Pursuant to the terms of the security agreement, the 5J entities granted a security interest in all of their assets to Amerisource as collateral for the repayment of the Amerisource loan, however, until such time as Utica Leaseco LLC has been paid in full pursuant to the master lease agreement entered into by and between 5J Trucking and 5J Oilfield with Utica on Feb. 27, 2020, Utica will continue to have a priority security interest in a significant portion of the 5J entities assets. In connection with the loan agreement, SMG Industries Inc., the parent company of each of the 5J entities, entered into a pledge agreement pursuant to which the company has granted a security interest in all of its assets to Amerisource and a guaranty agreement pursuant to which the company has guaranteed the timely payment of all amounts due under the loan agreement. The proceeds from the issuance of the promissory note were used to pay down $6.4 million of the outstanding balance owed to Utica pursuant to a Second Forbearance Agreement entered into by and between 5J Trucking and 5J Oilfield with Utica on Sept. 7, 2021. Pursuant to the terms of the Forbearance Agreement, 5J Trucking and 5J Oilfield have the right to prepay the entire remaining balance due to Utica at a reduced amount of $6.34 million on or before Nov. 1, 2021. About SMG Industries Headquartered in Houston, Texas, SMG Industries Inc. -- www.SMGIndustries.com -- is a growth-oriented transportation services company focused on the domestic logistics market. SMG Industries reported a net loss of $15.87 million for the year ended Dec. 31, 2020, compared to a net loss of $3.98 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $30.38 million in total assets, $43.93 million in total liabilities, and a total stockholders' deficit of $13.55 million. Houston, Texas-based MaloneBailey, LLP, the Company's auditor since 2017, issued a "going concern" qualification in its report dated April 19, 2021, citing that the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. SMG US MIDCO 2: Moody's Ups CFR to B3 & Alters Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service upgraded the Corporate Family Rating of SMG US Midco 2, Inc. ("ASM Global") to B3 from Caa1 and upgraded the senior secured ratings on the company's first lien credit facilities including the $589 million term loan to B3 from Caa1. The senior secured first lien revolving credit facility was also upgraded to B3 from Caa1 for SMG Holdings, LLC (SMG Holding). The outlook was changed to stable from negative. The rating actions reflect Moody's expectation for continued recovery in demand for in-person live events, particularly in the U.S. that would improve operating and credit metrics for the company. The operating impact from the coronavirus pandemic is a key driver of the rating actions and is considered a social risk since the ability of the company to generate revenue is dependent on the ability to hold live in-person events. A summary of the actions follows: Upgrades: Issuer: SMG Holdings, LLC Gtd Senior Secured First Lien Bank Credit Facility, Upgraded to B3 (LGD3) from Caa1 (LGD3) Issuer: SMG US Midco 2, Inc. Corporate Family Rating, Upgraded to B3 from Caa1 Probability of Default Rating, Upgraded to B3-PD from Caa1-PD Gtd Senior Secured First Lien Bank Credit Facility, Upgraded to B3 (LGD3) from Caa1 (LGD3) Outlook Actions: Issuer: SMG Holdings, LLC Outlook, Changed To Stable From Negative Issuer: SMG US Midco 2, Inc. Outlook, Changed To Stable From Negative RATINGS RATIONALE The change in the outlook to stable reflects an improving environment for live events and venue management, particularly in the U.S. where ASM Global generates two thirds of its earnings. In the U.S. 85% of venues managed by ASM are open with the majority of those venues operating at full capacity. Organizers for events including concerts, sports and conventions have been calendaring events and Moody's expects pent up demand from consumers to drive events activity. Although international events will likely be limited for the next few quarters, domestic events will continue to be initiated within borders given vaccination rates in the largest markets for ASM Global. Revenue for the past two quarters increased sequentially as venues in the U.S. hosted events. In addition, in the U.K. where the company has a large presence, events are expected to operate under little restrictions later this year. Moody's expects this momentum to continue because event scheduling and on sales are improving and activities scheduled for 2022 have been strong. As P&L accounts start to hold events, Moody's expects earnings to gain meaningfully. Moody's expects revenue for 2022 to approach pre-pandemic levels based on current trends. The year 2022 will also include contributions from the venues acquired as part of the acquisition of AEG Facilities that closed in early October 2019. Margins are expected to benefit from the cost cutting measures that the company executed during the past year. Earnings will also increase from new contracts and partnerships that the company gained. Moody's expects credit metrics to improve with leverage improving to around 8.0x over the next twelve months. Free cash flow to debt will also be in the 10% area. ASM Global benefits from its leading position with over 322 properties in 21 countries and improved diversity across geographies, venues and contract types. The credit is supported by the company's long-term contracts with retention rate of above 90% and increasing trends of outsourcing of facilities by municipalities. Moody's expects ASM Global to maintain a conservative financial policy until operations and credit metrics stabilize. Financial metrics are supported by historically attractive adjusted EBITDA margins and minimal capex needs, leading to good conversion of EBITDA to free cash flow. Nevertheless, there is the potential that variant forms of COVID-19 could delay the company's full recovery and the positive trends in advance ticket sales and planned events are reversed. ASM's liquidity is good and consists of its unrestricted cash position of $272 million as of June 30, 2021 and the company's $96 million revolver that is almost fully drawn. The company's liquidity level has been improving as advanced ticket sales balances increase. The revolver matures in 2024. There are no significant debt maturities until 2025 and the credit facilities only require a 1% annual amortization on the first lien term loan. Moody's expects adequate coverage of the required term loan amortization. The revolver is currently subject to one financial maintenance covenant that is a minimum liquidity covenant of $20 million, tested monthly. Starting in 1Q 2022 the company will be subject to a maximum first lien net leverage covenant. Moody's expects the company to be able to comply with the financial maintenance covenant over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook for ASM Global is driven by the expected recovery in demand for in-person live events, particularly in the U.S. Moody's expects the recovery will continue to expand beyond the U.S. with further relaxing of restrictions on attendance at sporting, entertainment and convention events. The outlook incorporates Moody's expectations for improving liquidity as the company continues to grow its top line. The outlook assumes no distributions or acquisitions that would erode liquidity or increase debt. The ratings could be downgraded if revenue and EBITDA decline or do not improve as expected, whether as a result of a suspension of live events, loss of customers, competition or any other factor, resulting in worse than expected or negative free cash flow. The ratings could also be downgraded if liquidity deteriorates. Ratings could be upgraded if demand for in-person live events continues to recover, leading to consistent top line growth, leverage sustained below 6.5x and free cash flow to debt sustained above 5%. ASM Global would also need to maintain good liquidity (net of payments due to promotors) via free cash flow generation. ASM Global is a leading venue management company including arenas, convention centers, stadiums and theaters. The company typically assumes full managerial responsibility for all aspects of facility operations, including event booking and event management, and may also provide certain ancillary services such as food and beverage service. ASM Global generated $139 million in revenue for the LTM period ended June 30, 2021. ASM is co-owned by funds affiliated with Onex Partners and AEG Venue Management Holdings, LLC. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. SUFFERN PARTNERS: Court Sets Confirmation Hearing for October 14 ---------------------------------------------------------------- Judge Sean H. Lane of the U.S. Bankruptcy Court for the Southern District of New York approved the Disclosure Statement of Suffern Partners, LLC. Ballots accepting or rejecting the Plan must be actually received on or before 5 p.m. (prevailing Eastern Time) on October 5, 2021 in order to be counted. The hearing to consider confirmation of the Debtor's Plan shall commence on Oct. 14, 2021 at 2 p.m. (prevailing Eastern Time). The deadline to file objections to Plan confirmation is 4 p.m. (prevailing Eastern Time) on Oct. 5. A copy of the order is available for free at https://bit.ly/3jZRrp3 from PacerMonitor.com. About Suffern Partners Suffern Partners, LLC, is a single asset real estate debtor based in Suffern, N.Y. It is the fee simple owner of a property located at 25 Old Mill Road, Suffern, N.Y., valued at $52.5 million. Suffern Partners filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 21-22280) on May 16, 2021. Isaac Lefkowitz, chief executive officer, signed the petition. In its petition, the Debtor disclosed $58 million in assets and $48.72 million in liabilities. Judge Sean H. Lane presides over the case. The Debtor tapped Davidoff Hutcher & Citron, LLP as its bankruptcy counsel. Thompson Coburn Hahn & Hessen, Stavitsky & Associates, LLC and Oved & Oved, LLP serve as the Debtor's special counsel. SWF HOLDINGS I: Moody's Rates New $625MM Unsecured Notes 'Caa2' --------------------------------------------------------------- Moody's Investors Service assigned a Caa2 rating to SWF Holdings I Corp.'s (Springs Window or Springs) proposed $625 million senior unsecured notes due 2029. Proceeds from the proposed senior unsecured notes along with the recently rated credit facilities and new common equity contribution from Clearlake Capital Group, L.P. (Clearlake) will fund Clearlake's leveraged buyout (LBO) of Springs. The transaction is valued at $3.4 billion, including the repayment of Springs' existing debt. This ratings action follows Moody's September 8th assignment of Springs' Corporate Family Rating (CFR) of B3 and Probability of Default Rating (PDR) of B3-PD. 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. A stable rating outlook was also assigned. 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. The Caa2 rating on the proposed senior unsecured notes reflects the notes effective subordination to the company's senior secured credit facilities, which include a $150 million asset based lending revolver due 2026, a $125 million first lien revolver due 2026, and a $1,625 million first lien term loan due 2028. Assignments: Issuer: SWF Holdings I Corp. Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD5) 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. 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. 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 this rating was Consumer Durables published in September 2021. SWF HOLDINGS: S&P Rates New $625MM Senior Unsecured Notes 'CCC' --------------------------------------------------------------- S&P Global Ratings assigned its 'CCC' issue-level rating to SWF Holdings I Corp.'s (initially, SWF Escrow Issuer Corporation, and post transaction close, a borrower and parent of SIWF Holdings Inc.) proposed $625 million senior unsecured notes due 2029. The '6' recovery rating indicates S&P's expectation of negligible (0%-10%, rounded estimate: 0%) recovery in the event of a payment default. The company plans to use the proceeds in combination with $1.625 billion of proposed term loans launched on Sept. 7, 2021, and equity contributions to fund Clearlake Capital Group L.P.'s leveraged buyout of SIWF Holdings (Springs Window Fashions, a U.S. based manufacturer of window coverings and blinds). TEAM HEALTH: Fitch Affirms 'CCC+' LongTerm IDR, Outlook Positive ---------------------------------------------------------------- Fitch Ratings has affirmed the ratings of Team Health Holdings, Inc., including the Long-Term Issuer Default Rating (IDR) at 'CCC+'. Fitch has assigned a Positive Rating Outlook to reflect stabilizing operating fundamentals, better visibility into the manageable implications of Surprise Billing legislation and a commercial payor dispute, and sufficient FCF for voluntary debt repayment. KEY RATING DRIVERS Leading Position in Staffing Industry: Team Health is one of only a handful of national providers of outsourced healthcare staffing, providing scale and scope for contracting with consolidating acute care hospital systems and commercial health insurers. Leading scale affords opportunities to grow the number of and size of contracted relationships, both organic and inorganic in nature. Nearly all of Team Health's revenues are sourced from contracted physician and other healthcare services. However Fitch assumes growth will be constrained, in part but not in whole, by their concentration in the emergency department (ED) staffing services where patient volumes have been soft across the physician staffing industry since 2017 because of ongoing secular headwinds to volumes of lower acuity ED visits, including scrutiny by health insurers, more competition from alternative settings like urgent care clinics, and increased cost sharing for patients with high deductible health insurance plans. Coronavirus Impact Normalizing: Pandemic-related business disruption (i.e. depressed volumes of elective healthcare procedures and ED patient visits) are showing signs of stabilization. Revenues before federal grant monies grew yoy in 2Q21 but remain about 4% below the pre-pandemic run-rate. Fitch assumes operating volumes will be more durable going forward than they were in 2020 over the course of the pandemic as fewer restrictions are imposed on healthcare providers and restoration in daily activities (e.g. school, sports, travel) are the catalyst for more normalized emergency volumes. Nonetheless, Fitch's forecasts assume Team Health's revenues will not exceed pre-pandemic levels until 2024 reflecting both slightly lower volumes and the dispute with UnitedHealth (described below). Similarly, Fitch assumes improvements in operating margins will stabilize around pre-pandemic levels after being severely impacted in 2020 by the need to maintain staffing readiness in the ED despite lower patient volumes, which is characteristic of the physician staffing business model. Uncertainties Diminishing: The downside risk to Team Health's long-term profitability and cashflows posed by the dispute with a large, commercial payor (UnitedHealth) and Surprise Billing legislation became clearer over the past year and appear manageable. Team Health is now out-of-network with UnitedHealth after the insurer unilaterally reduced its reimbursement rates and both parties entered into litigation. Fitch does not assume the dispute will be resolved during the forecast period and thus assumes no changes to payor mix, reduction in litigation expenses or one-time cash inflows/outflows related to settlements. Regarding surprise billing, Team Health has publicly stated that it does not balance bill and thus the No Surprises Act should not have a material direct impact on Team Health's billings. Persistently High Leverage Ahead of Maturities: Fitch assumes Team Health's leverage (gross debt / operating EBITDA) will normalize around 9x pro forma for the repayment of the revolving credit facility in 3Q21. Leverage could improve further and refinancing risk diminish should Team Health voluntarily repay additional amounts of debt with cash on hand and FCF, though Fitch has not assumed as much. Fitch views leverage to be high ahead of the revolving credit facility maturity (currently undrawn) in 2023, the term loans due 2024 and the unsecured notes due 2025. Decent FCF Generation: Cash generation is expected to be decent for the 'CCC+' rating category, with FFO fixed charge coverage sustained above 1.5x through the forecast period and $100 million to $150 million of FCF per year before acquisitions. Low working capital and capital spending requirements and the expectation of no dividend payments to the private equity owner in the near-term support this relatively strong FCF. DERIVATION SUMMARY Team Health's 'CCC+' rating reflects the company's high financial leverage, secular headwinds to growth in ED patient volumes, and lingering challenges integrating a large acquisition in the post-acute care segment that dates back to 2015. Team Health's credit profile benefits from good depth and competitive scale relative to peers Mednax (not rated) and Envision Healthcare Corp. (not rated) in service lines where physician staffing companies have a large presence, including emergency medicine and anesthesia. The financial profiles of Team Health and some of its peers reflect private equity investment in the physician staffing segment. Team Health is owned by Blackstone following a 2017 leveraged buyout, and Envision was purchased by KKR & Co. in 2018. Fitch thinks Team Health's credit profile benefits from more consistent and stable FCF generation than healthcare providers generally due to lower capex and working capital requirements in the physician staffing segment. This better FCF generation supports an expectation that the company has the ability to reduce leverage through debt pay down without compromising investment in the business. In addition to the ability to reduce leverage, the rating also reflects Fitch's view that the company and the private equity owner have the willingness to use the aforementioned FCF to reduce debt before they need to refinance the capital stack. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Revenues grow in the low-single digits per year through 2024 and surpass pre-pandemic levels in 2024; -- EBITDA margins rebound in 2021 between 8%-9% and are generally stable thereafter; -- No material changes to operating cashflows from the dispute with UNH; -- Acquisitions totalling $50 million per year starting 2022; no shareholder returns and no debt repayments beyond required term loan amortization. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Gross debt to EBITDA after dividends to associates and minorities sustained below 8.0x; -- FFO fixed charge coverage sustained above 1.5x; -- Profit margin stabilization due to effective cost management strategies to address soft organic operating trends; -- At least break-even FCF generation. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- FFO fixed charge coverage sustained below 1.0x; -- FCF deficit that requires incremental debt funding; -- Violation of the debt agreement financial maintenance covenant and unable to secure relief from lenders; -- Unable to refinance revolving credit facility due in 2023 or secure alternative sources of liquidity. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Sources of Liquidity: Sources of liquidity include pro forma cash on hand of $471 million and an undrawn revolver of $300 million as of June 30, 2021 (TMH reported $856 million of cash on hand as of June 30, 2021 but fully repaid $385 million of then outstanding revolver borrowings in July and subsequently amended the credit agreement). LTM FCF at Dec. 31, 2020 was $190 million, representing a 4.5% FCF margin. TMH has historically generated positive FCF, supported by low working capital and capex requirements. Fitch expects Team Health to post negative FCF in 2021 due to the unwinding of certain benefits received under the CARES Act but forecasts the FCF margin to rebound to 3.3% in 2022. The next significant debt maturity is the term loans in 2024. Term loan amortization is 1% or about $29 million per year. Debt Instrument Notching: The 'B'/'RR2' ratings for Team Health's senior secured revolver and senior secured term loan reflect Fitch's expectation of recovery of outstanding principal in the 71%-90% range under a bankruptcy scenario. The 'CCC-'/'RR6' rating on the senior unsecured notes reflect Fitch's expectation of recovery in the 0%-10% range. The recovery assumed for the senior unsecured notes is due to a concession payment by the senior secured creditors. Fitch estimates an enterprise value (EV) on a going concern basis of $2.4 billion for Team Health, after a deduction of 10% for administrative claims. The EV assumption is based on post-reorganization EBITDA after dividends to associates and minorities of $374 million and a 7x multiple. The post-reorganization EBITDA estimate is 6% lower than Fitch calculated 2019 EBITDA for Team Health, which is pre-pandemic. The primary drivers of this estimate are negative implications of commercial payor contract disputes and assumed ongoing deterioration in the profitability of the hospitalist business. To date, Fitch does not believe that the coronavirus pandemic has changed the longer-term valuation prospects for the healthcare services industry and Team Health's going-concern EBITDA and multiple assumptions are unchanged from the last ratings review. The 7x multiple used for Team Health reflects a stressed multiple versus the approximately 11x EBITDA Blackstone paid for the company in 2017. More recently, KKR paid about 10x EBITDA for Team Health's staffing industry peer, Envision Healthcare Corp. The 7x multiple is closely aligned with historical observations of healthcare industry bankruptcy emergence multiples. In a recent study, Fitch determined that the median exit multiple historical healthcare and pharmaceutical industry bankruptcies was 6.5x. The recovery analysis assumes the $300 million available on the revolver is fully drawn and includes this amount in the senior secured claims. Senior secured claims of $3.1 billion also include approximately $216 million of private term loans that rank pari passu with the term loan B maturing 2024 including to-be-accrued PIK interest. ESG CONSIDERATIONS Team Health has an ESG Relevance Score of '4' for Exposure to Social Impacts due to societal and regulatory pressures to constrain growth in healthcare spending in the U.S. This dynamic has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. ISSUER PROFILE Team Health Holdings, Inc. is a U.S.-based national healthcare outsourcing company that supports more than 2,800 civilian and military hospitals, clinics, and physician groups in 48 states by providing staffing, administrative and consulting services. TMH was taken private in an LBO sponsored by Blackstone in February 2017. TRI-WIRE ENGINEERING: Seeks Cash Collateral Access -------------------------------------------------- Tri-Wire Engineering Solutions, Inc. asks the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, for authority to use cash collateral and obtain post-petition secured financing from JPMorgan Chase Bank, N.A., the senior secured lender, in accordance with the budget. The Debtor requires immediate authority to use cash collateral to fund its ongoing, ordinary course business obligations, including employee payroll to be paid September 17, 2021, that must be funded through a deposit into the Debtor's payroll account maintained with JPM by no later than 2 pm on September 15. In addition to the authorized use of Cash Collateral, the Bank agrees the Debtor may request, and the Bank will make post-petition loan advances in increments of $10,000 and in an aggregate amount not to exceed $1,000,000 pursuant to a post-petition loan facility to be made available to the Debtor, for the purpose of enabling the Debtor to pay its operating and administrative expenses in accordance with the Budget. The Debtor may not utilize Post-petition Financing except to pay expenses substantially in accordance with the Budget and the permitted variances therefrom set forth in the Interim Order. The Debtor currently expects that, so long as the Proposed Sale is approved by the Court by October 27, 2021, the Post-petition Financing will be sufficient to pay its operating expenses and Chapter 11 administrative expenses at least through that date. Since December 2016, the Debtor has been employee-owned through an employee stock ownership plan. The equity interests in the Debtor, which were acquired from John R. Wade, III, the Debtor's former sole stockholder, in the December 2016 transaction, are held by the Tri-Wire Employee Stock Ownership Trust for the benefit of employees, whose beneficial interests are determined through the governing agreements based on factors such as duration of employment, compensation level, and employee contributions. The ESOP Transaction was financed with loans and credit facilities provided by JPMorgan Chase Bank, N.A. and Massachusetts Capital Resource Company in the aggregate amount of approximately $28.5 million. Of that amount, $20.5 million was advanced by the Debtor to the ESOP Trust, and thereafter paid to Mr. Wade as the purchase price for the Debtor's stock; the balance was an $8 million revolving line of credit made available by JPM to support the Debtor’s working capital needs. These loans, and the term loan, are secured by security interests in all of the Debtor's assets, with JPM's liens having priority over MCRC's liens. As of the Petition Date, the Debtor owes JPM approximately $10.7 million -- excluding an additional $6.2 contingent liability on letters of credit issued by JPM for the Debtor's benefit -- and MCRC approximately $7.4 million. The Debtor also owes approximately $870,000 to Massachusetts Growth Capital Corporation for a working capital loan made in winter 2020; this loan is also secured by an all-asset lien subordinate to those held by JPM and MCRC. In addition to this secured indebtedness, the Debtor has approximately $27 million in unsecured liabilities, including approximately $24.4 million in stock redemption debt owed to Mr. Wade in connection with the redemption of shares not sold to the ESOP Trust at the time of the ESOP Transaction and approximately $2.6 million in accounts payable owed to trade creditors and contract parties. The Debtor's substantial debt obligations, combined with onerous workers' compensation and automobile insurance expenses, have created a substantial burden on the Debtor's cash flow and consequently have substantially impaired the Debtor's ability to react both to the stresses of the COVID-19 pandemic and to the competitive factors in its industry. Customer forecasts following the pandemic were overly ambitious, and the missed forecasts resulted in lower than projected revenues for the Debtor. Supply chain disruptions and associated shortages of needed materials, as well as severe weather in the first quarter of 2021, hindered the completion of construction projects. In addition to these economic challenges, the Debtor faced stiff competition from similarly situated employers—in the current tight labor market, competitors have offered higher and faster payment terms to contractors making it more costly (and difficult) for the Debtor to retain the technicians required to fulfill its obligations to its customers. Finally, the Debtor's lack of working capital has slowed the development of the Debtor's FTTH and construction business, which the Debtor considers its most significant opportunity for future growth and profitability. In July 2021, the Debtor, responding to its increasing financial difficulties, retained SSG Advisors, LLC, a well-known investment banking firm with a specialization in marketing distressed companies, to conduct an expedited sale process for the Debtor's business. That process led to negotiations with an interested bidder, ITG Communications, LLC, whereby ITG has agreed to purchase substantially all of the Debtor's assets on a going concern basis pursuant to Section 363 of the Bankruptcy Code, subject to higher or better offers (including from ITG itself) as may be made through a competitive sale process to be authorized by the Bankruptcy Court. The Debtor has filed the Chapter 11 case to effect the Proposed Sale. The Debtor obtained financing for the ESOP Transaction from JPM, which provided a senior secured loan facility that included a term loan in the amount of $15,500,000 and a revolving credit commitment of $8,000,000 used for working capital needs and letters of credit, which loan facility was provided through and evidenced by a series of agreements and instruments dated as of December 30, 2016. The Debtor advanced the proceeds of the JPM term loan to the ESOP Trust to pay a portion of the purchase price for Mr. Wade's shares acquired by the ESOP Trust. To finance the balance of the price for the stock purchased in the ESOP Transaction, the Debtor obtained $5,000,000 in mezzanine financing from the Massachusetts Capital Resource Company. In connection with the Mezzanine Financing, MCRC received a warrant for the purchase of 31,417.62 shares of the Debtor's common stock. The Mezzanine Financing is secured by second-priority liens and security interests in all of the Debtor's assets. Around February, 2020, the Debtor also obtained $1,000,000 in additional financing to support its working capital needs from the Massachusetts Growth Capital Corporation. To secure this loan, the Debtor granted MGCC a third-priority perfected interest on all of its assets. As adequate protection for the Debtor's use of cash collateral, the Debtor proposes to grant JPM post-petition replacement liens in all of the Debtor's assets generated in the postpetition period that would have, absent the Chapter 11 filing, constituted collateral subject to JPM's perfected, prepetition liens and security interests, which Adequate Protection Liens will have the same priority as the Prepetition Liens. The Adequate Protection Liens will (i) be supplemental to and in addition to the Prepetition Liens, (ii) attach with the same priority as enjoyed by the Prepetition Liens immediately prior to the Petition Date, (iii) be deemed to be legal, valid, binding, enforceable, perfected liens, not subject to subordination or avoidance, for all purposes in the Chapter 11 case, (iv) be deemed to be perfected automatically upon the entry of the Interim Order, without the necessity of filing of any documents as required by law, and (v) be subject to the Carve-Out. The Adequate Protection Liens, and the Prepetition Liens will be subject to the payment of (i) the unpaid and outstanding fees and expenses actually incurred on or after the Petition Date and prior to the Trigger Date, (ii) those fees, costs and expenses incurred by the Professionals after the Trigger Date and subsequently allowed by order of the Court in an amount not to exceed $275,500 in the aggregate, plus (iii) fees required to be paid to the Clerk of the Court and to the U.S. Trustee pursuant to 28 U.S.C. section 1930. A copy of the motion is available at https://bit.ly/3lmxUPl from PacerMonitor.com. About Tri-Wire Engineering Solutions, Inc. Tri-Wire Engineering Solutions, Inc. -- https://www.triwire.net/ -- provides installation, construction, maintenance and other technical support services to cable and telecommunications companies throughout North America. Tri-Wire Engineering was formed in 1999 and is headquartered in Tewksbury, Mass. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Mass. Case No. 21-11322 on September 13, 2021. In the petition filed by Ruben V. Klein, president, the Debtor disclosed up to $10 million in assets and up to $50 million in liabilities. Casner & Edwards, LLP is the Debtor's counsel. Gentzler Henrich & Associates LLC is the financial advisor and turnaround consultant. SSG Advisors, LLC serves as investment banker. TUKHI BUSINESS: Seeks Cash Collateral Use ----------------------------------------- Tukhi Business Group, LLC asks the U.S. Bankruptcy Court for the Central District of California, Santa Ana Division, for authority to use cash collateral in accordance with the proposed budget, with a 10% variance. The Debtor requires the use of cash collateral to pay ordinary and necessary expenses to continue to operate the Debtor's Business. The Debtor has a single secured creditor as of the date of filing, Joseph S. Cerni, who is owed $639,822. That obligation is secured by the Debtor's Real Property located at 11332 N. Hewes Street, Orange, CA 92869 which is a Duplex Family Residential property. The Debtor estimates that the subject property value is $1,000,000 based on comparable sales and the Debtor's knowledge of area. The Debtor's Real property is fully occupied and generate $5,200 every month as rental income. As adequate protection to the Secured Creditor, the Debtor offers (a) the equity in the collateral above each respective lien; (b) the maintenance of the property and (c) payments in these amounts to the creditors: First Lien Holder $2,000.00 Property Taxes $682.66 Property Insurance $112.50 Maintenance of Collateral $500.00 Utilities $400.00 Administrative fees $1,000.00 ---------- Total monthly payment offered $4,695.16 The proposed monthly budget through the date of confirmation of a Chapter 11 plan or dismissal of the case. As some expenses, such as insurance, may not be required to be paid every month, to the extent that the amount allotted to a particular expense in a particular month is not used during that month, the Debtor requests permission to use that unused amount in subsequent months in payment of that particular expense for the duration of the period in which the Debtor is granted the use of Cash Collateral. A copy of the order and the Debtor's budget for August to November 2021 is available at https://bit.ly/3lgdXJS from PacerMonitor.com. The Debtor projects $20,800 in total income and $18,780.64 in total expenses for September to November. About Tukhi Business Group, LLC Tukhi Business Group, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 21-12090) on August 27, 2021. In the petition filed by Ahmad J. Tukhi, manager/agent for service of process, the Debtor disclosed up to $1 million in both assets and liabilities. Onyinye N. Anyama, Esq., at Anyama Law Firm, A Professional Corporation, represents the Debtor as counsel. US ANESTHESIA: Moody's Affirms B3 CFR & Rates 1st Lien Loans B2 --------------------------------------------------------------- Moody's Investors Service affirmed the B3 Corporate Family Rating and B3-PD Probability of Default Rating of U.S. Anesthesia Partners, Inc. ("USAP"). Moody's also assigned B2 rating to the company's new senior secured first lien credit facilities and Caa2 rating to its new secured second lien term loan. The outlook remains stable. USAP intends to refinance its existing debt with a new $1.6 billion senior secured 1st lien term loan, a new $250 million senior secured 1st lien revolver (undrawn at the close of refinancing transaction) and a new $350 million secured 2nd lien term loan. The proceeds from the new term loans and approximately $326 million internal cash will be used to refinance all outstanding debt, fund a $400 dividend to shareholders and transaction fees/expenses. The rating affirmation reflects the company's improving operating performance after almost full recovery from coronavirus pandemic and very good liquidity supported by substantially longer debt maturities after the refinancing transaction. The affirmation also reflects Moody's expectations the company's financial policies will remain aggressive as it has a track record of significant distributions over the past few years. Ratings Affirmed: Issuer: U.S. Anesthesia Partners, Inc. Corporate Family Rating at B3 Probability of Default Rating at B3-PD Ratings Assigned: Issuer: U.S. Anesthesia Partners, Inc. $250 million Senior Secured First Lien Revolving Credit Facility expiring in 2026 at B2 (LGD3) $1,600 million Senior Secured First Lien Term Loan due 2028 at B2 (LGD3) $350 million Senior Secured Second Lien Term Loan due 2029 at Caa2 (LGD6) Outlook Actions: Outlook remains stable The following ratings on USAP's existing debt remain unchanged and will be withdrawn upon close of the refinancing transaction. $200 million Senior Secured First Lien Revolving Credit Facility expiring in 2022 at B2 (LGD3) $1,615 million Senior Secured First Lien Term Loan due 2024 at B2 (LGD3) $300 million ($284 million outstanding) Senior Secured Second Lien Term Loan due 2025 at Caa2 (LGD6) RATINGS RATIONALE USAP's B3 CFR reflects Moody's expectations that the company's debt/EBITDA will remain in 6.0x - 7.5x range in the next 12-18 months. The company's debt/EBITDA was approximately 6.8 times for the twelve months ended June 30, 2021 and will modestly rise after the refinancing transaction. The ratings also reflect USAP's geographic concentration, as it operates in nine states, with a vast majority of revenues derived from Texas, Florida and Colorado. USAP remains out of network with UnitedHealth Group Incorporated ("UnitedHealth") (A3 long-term issuer rating) in Texas, Colorado and Washington states. Moody's expects that the recently passed No Surprise Act will be less onerous for providers like USAP than other previous legislative proposals focused on in-network median reimbursement rates. Moody's also expects that the No Surprise Act will raise the incentives for both payors and providers to go in-network. The rating incorporates the benefits of USAP's ownership model, in which the physicians own a 45% stake in the company. This results in high alignment between the company and its physician-owners. There is also a high degree of variability in USAP's physician compensation, which helps mitigate the impact on earnings of rate or volume pressures. However, these benefits are partially offset by the risk that the company (which is a non-public company) will need to "buy out" physicians who seek to retire or otherwise leave the organization, possibly by issuing debt. The rating also reflects the company's very good liquidity profile. As proposed, the credit facilities are expected to contain covenant flexibility for transactions that could adversely affect creditors, including the ability to incur incremental term loan facilities in an aggregate amount not to exceed the greater of $300 million and 100% of TTM EBITDA, plus amounts reallocated from the general debt basket, plus an additional amount subject to either a 5.50x pro forma first lien net leverage ratio or the ratio immediately prior to such incurrence (if pari passu with first lien secured debt). Amounts up to the greater of $450 million and 150% of TTM EBITDA may be incurred with an earlier maturity date than the initial term loans. The credit facilities also include provisions allowing the transfer of assets to unrestricted subsidiaries, subject to carve-out capacities, with no additional express "blocker" provisions restricting such transfers of specified assets to unrestricted subsidiaries; and the requirement that only wholly-owned subsidiaries act as subsidiary guarantors, raising the risk that guarantees may be released following a partial change in ownership, with no explicit protective provisions limiting such guarantee releases. There are no express protective provisions prohibiting an up-tiering transaction. The above are proposed terms and the final terms of the credit agreement may be materially different. Social and governance considerations are material to the rating, given the substantial implications for public health and safety. The company was heavily impacted by the coronavirus outbreak last year and the recovery is still ongoing. As a provider of emergency medicine physician staffing, USAP faces high social risk. The No Surprise Act, which was signed into law in December 2020, will take the patient out of the provider/payor dispute. The extent to which each company will get impacted will depend on the percentage of out-of-network patients they treat, specific billing and collections practices, as well as arbitration process (which is still a work-in-progress). The company's financial policies are expected to remain aggressive reflecting its partial ownership by private equity investors (Welsh Carson Anderson & Stowe, Berkshire Partners, GIC, LP, and Heritage Group). FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be downgraded if the company's operating performance weakens for reasons including loss of profitable contracts, or if unfavorable regulatory changes significantly impact the company. Ratings could also be downgraded if the company's financial policies become more aggressive or if the company's liquidity profile weakens. Ratings could be upgraded if the company executes its growth strategy, resulting in greater scale and geographic diversification. Ratings could also be upgraded if the company's financial policies become more conservative, such that debt/EBITDA is sustained below 6 times. U.S. Anesthesia Partners, Inc. provides anesthesia services through around 4,500 anesthesia providers in roughly 1,100 facilities in 12 major geographies across 9 US states. Net revenues were approximately $1.7 billion for the last twelve months ended September 30, 2020. The company is 45% owned by approximately 1,500 physician partners and management. The remaining share of the company is owned by Welsh Carson Anderson & Stowe (23%), Berkshire Partners (20%), GIC, LP (11%), and Heritage Group (1%). The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. VANDEWATER INTERNATIONAL: Taps Faegre Drinker as Special Counsel ---------------------------------------------------------------- Vandewater International, Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to hire Faegre Drinker Biddle & Reath, LLP as special counsel. The Debtor needs legal assistance from the firm to prosecute its appeal of the 2018 scope ruling from the U.S. Department of Commerce. In its 2018 ruling, the U.S. Department of Commerce concluded that certain types of welded outlets previously imported by the Debtor from China fall within the scope of an antidumping duty order for "Certain Carbon Steel Butt-weld Pipe Fittings from the People's Republic of China," promulgated by the agency in 1992. Faegre will be paid for its services at hourly rates ranging from $665 to $875. Douglas Heffner, Esq., a partner at Faegre, 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: Douglas J. Heffner, Esq. Faegre Drinker Biddle & Reath LLP 1500 K Street NW, Suite 1100 Washington, DC 20005 Tel: +1 202 842 8800 Fax: +1 202 842 8465 Email: douglas.heffner@faegredrinker.com About Vandewater International Plantation, Fla.-based Vandewater International, Inc. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-14098) on April 28, 2021, disclosing assets of $1,467,519 and liabilities of $2,203,922. Neil Ruebens, president of Vandewater, signed the petition. Judge Erik P. Kimball oversees the case. Shraiberg Landau & Page, P.A. is the Debtor's bankruptcy counsel while Faegre Drinker Biddle & Reath, LLP serves as its special counsel. WASHINGTON PRIME: Second Revised Plan Confirmed, Disclosures OK'd ----------------------------------------------------------------- Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas confirmed the Second Amended Joint Chapter 11 Plan of Reorganization of Washington Prime Group Inc. and its debtor affiliates and approved the Debtors' Disclosure Statement. A copy of the order is available for free at https://bit.ly/3E2CpqB from Prime Clerk, claims agent. About Washington Prime Group Washington Prime Group Inc. (NYSE: WPG) -- http://www.washingtonprime.com/-- is a retail REIT and a recognized leader in the ownership, management, acquisition and development of retail properties. It combines a national real estate portfolio with its expertise across the entire shopping center sector to increase cash flow through rigorous management of assets and provide new opportunities to retailers looking for growth throughout the U.S. Washington Prime Group and its affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 21-31948) on June 13, 2021. At the time of the filing, Washington Prime Group's property portfolio consists of material interests in 102 shopping centers in the United States totaling approximately 52 million square feet of gross leasable area. The company operates 97 of the 102 properties. As of March 31, 2021, Washington Prime Group had total assets of $4.029 billion against total liabilities of $3.471 billion. Judge Marvin Isgur oversees the cases. The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis International, LLP as lead bankruptcy counsel; Jackson Walker, LLP as co-counsel; Alvarez & Marsal North America, LLC as restructuring advisor; Guggenheim Securities, LLC as investment banker; Deloitte Tax, LLP as tax services provider; and Ernst & Young, LLP as auditor. Prime Clerk LLC is the claims agent, maintaining the page http://cases.primeclerk.com/washingtonprime SVPGlobal, the Debtors' lender, tapped Davis Polk & Wardwell, LLP and Evercore Group, LLC as its legal counsel and investment banker, respectively. The U.S. Trustee for Region 6 appointed an official committee of unsecured creditors in the Debtors' cases on June 25, 2021. Greenberg Traurig, LLP and FTI Consulting, Inc. serve as the committee's legal counsel and financial advisor, respectively. On July 15, 2021, the U.S. Trustee appointed an official committee of equity security holders. The equity committee tapped Porter Hedges, LLP and Brown Rudnick, LLP as legal counsel; Province, LLC, as financial advisor; and Newmark Knight Frank Valuation & Advisory, LLC as real estate appraiser and valuation advisor. ********* 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. 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