/raid1/www/Hosts/bankrupt/TCR_Public/211206.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, December 6, 2021, Vol. 25, No. 339
Headlines
1121 PIER VILLAGE: City of Philadelphia Says Plan Not Feasible
1121 PIER VILLAGE: Henry J. Stewart Says Disclosures Inadequate
1121 PIER VILLAGE: Sharestates Investments Says Plan Unconfirmable
25-16 37TH AVE: Dec. 31 Claim Filing Deadline Set
2999TC ACQUISITIONS: Seeks to Hire Joyce W. Lindauer as Counsel
ABG INTERMEDIATE: Moody's Rates New $1.675BB First Lien Loan 'B1'
AIR FORCE VILLAGES: Fitch Affirms 'BB+' Rating, Outlook Stable
AIT WORLDWIDE: Moody's Upgrades CFR to B2 & First Lien Debt to B1
ALIERA COMPANIES: Involuntary Chapter 11 Case Summary
ALTO MAIPO: Seeks Approval to Hire Lazard as Investment Banker
ALTO MAIPO: Seeks to Hire AlixPartners LLP as Financial Advisor
ALTO MAIPO: Seeks to Hire Nelson Contador as Local Chilean Counsel
ALTO MAIPO: Seeks to Tap Prime Clerk as Administrative Advisor
ALTO MAIPO: Taps Cleary Gottlieb Steen & Hamilton as Legal Counsel
ALTO MAIPO: Taps Young Conaway Stargatt & Taylor as Legal Counsel
APP REALTY: Asset Sale Proceeds to Fund Plan Payments
ARCHBISHOP OF AGANA: Creditors' Committee Files Competing Plan
ASHFIELD ACTIVE: Fitch Alters Outlook on 'BB-' IDR to Stable
AUTO-SWAGE PRODUCTS: Auction of Shelton Property Set for Dec. 7
BEACON ORGANICS: Public Sale Set for Dec. 3
BELVIEU BRIDGE: Wins Cash Collateral Access Thru Dec 31
BGT INTERIOR: Amends Several Secured Claims Pay Details
BOREAL CAPITAL: To Restructure Under CCAA Proceedings
BRAZOS ELECTRIC: Shearman Updates on NRG Energy, 4 Others
BRETHREN VILLAGE: Fitch Affirms 'BB+' IDR, Outlook Stable
BW HOLDING: Moody's Assigns First Time B3 Corporate Family Rating
CALUMET PAINT: Gets Cash Collateral Access Thru Jan 2022
CASA SYSTEMS: S&P Affirms B- Issuer Credit Rating, Outlook Stable
CAST & CREW: S&P Rates Incremental $250MM Secured Term Loan B 'B'
CAST & CREW: Team Transaction No Impact on Moody's 'B3' CFR
CERTARA HOLDCO: Moody's Upgrades CFR & Senior Secured Debt to B1
CG ACQUISITIONS: Gets OK to Hire Winegarden as Legal Counsel
CIRCOR INTERNATIONAL: S&P Affirms 'B-' Issuer Credit Rating
CITE LLC: Case Summary & 8 Unsecured Creditors
CLEARWAY ENERGY: S&P Affirms 'BB' ICR, Outlook Stable
COLLECTIVE HOLDCO: Public Sale Auction Set for January 2022
COWEN INC: Moody's Affirms Ba3 CFR Following Portico Transaction
CYBER LITIGATION: Unsecureds to Recover 100% in Liquidating Plan
DRI HOLDING: Moody's Assigns 'B3' CFR & Rates 1st Lien Loans 'B2'
DULING SONS: Case Summary & 3 Unsecured Creditors
EAST PENN CHILDREN'S: U.S. Trustee Opposes Amended Plan
ENERMEX INTERNATIONAL: Creditors to Get Proceeds From Liquidation
EXSCIEN CORP: Says Mediation w/ the Cumbies & Ferguson Unsuccessful
FINDLAY ESTATES: Seeks to Tap Rockland New York as Managing Agent
FLEXIBLE FUNDING: Sale of All Instapay Assets to eCapital Approved
FLOREK & MORGAN: Seeks to Hire Carmody MacDonald as Legal Counsel
GLOBAL IID: Moody's Assigns B3 CFR & Rates $40MM 1st Lien Debt B2
GREEN GROUP: Amends Florida Corporate Claim Pay Details
GRUPO POSADAS: Updates Compensation Agreement Details
HAVERLAND CARTER: Fitch Affirms 'BB+' IDR, Outlook Stable
HAWAIIAN VINTAGE: Unsecureds to Recover 100% in Prepackaged Plan
HCA WEST: Files Amended Plan; Confirmation Hearing Feb. 10, 2022
HCA WEST: Further Fine-Tunes Plan Documents
HENRY FORD VILLAGE: Updates Liquidating Plan Disclosures
HERMELL PRODUCTS: Has Interim Cash Collateral Access Thru Feb 2022
HESS CORP: Moody's Alters Outlook on Ba1 CFR to Positive
ICU MEDICAL: S&P Assigns 'BB' Issuer Credit Rating, Outlook Stable
IGLESIAS DIOS: Seeks to Hire Gerardo Santiago Puig as Counsel
II-VI INC: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
II-VI INC: S&P Rates New $990MM Senior Unsecured Notes 'B+'
INGENOVIS HEALTH: $100MM Loan Add-on No Impact on Moody's B2 CFR
INSTALLED BUILDING: Moody's Ups CFR to Ba2 & Rates $500MM Loan Ba2
INTELSAT SA: Jones Day 3rd Update on Jackson Crossover Group
INTELSAT SA: Strook, Boies & Nelson Update on Noteholders Group
INVO BIOSCIENCE: Amends SPA With Paradigm to Extend Closing Date
IRB HOLDING: S&P Upgrades ICR to 'B+' on Good Integration Progress
JACKSON FINANCIAL: Fitch Rates Series A Preferred Stock 'BB+'
JACKSON FINANCIAL: Moody's Gives 'Ba1(hyb)' to New Preferred Stock
JAMES C. GAYLER III: Sale of Minisink Property for $49K Approved
JEFFREY A ROTH: $1.3M Sale of Brooksville Property to Wardlows OK'd
JOHN DAUGHERTY: Combined Plan and Disclosures Approved by Judge
JUBILEE ACADEMIC: S&P Raises 2016/7 Revenue Bonds Rating to 'BB+'
KNIGHT HEALTH: S&P Assigns 'B' ICR, Outlook Stable
LAPEER AVIATION: Gets OK to Hire Winegarden as Legal Counsel
MA REAL ESTATE: Unsecured Creditors to be Paid in Full in Plan
MADISON SAFETY: Moody's Assigns B2 CFR & Rates $925MM Term Loan B1
MALCOLM MARK MATHIS: Sale of Peterbilt for At Least $50K Approved
MARYMOUNT UNIVERSITY: S&P Affirms 'BB+' LT Rating on Revenue Bonds
MASTER TECH: Unsec. Creditors Will Get 25% of Claims in 60 Months
MDEV12 LLC: Proposed Sale of Plantation Property to Levy Approved
MERLIN ACQUISITION: Moody's Assigns First Time 'B3' CFR
MKS GROUP: Seeks to Hire Allegiant Law as Bankruptcy Counsel
MOON GROUP: Auction of Substantially All Assets Set for Dec. 8
MVK INTERMEDIATE: Moody's Cuts CFR to Caa1 & Alters Outlook to Neg.
N.G. PURVIS: $180K Sale of Bear Creek Property to Chatham Approved
OECONNECTION LLC: Moody's Affirms 'B3' CFR, Outlook Remains Stable
ON SEMICONDUCTOR: S&P Affirms 'BB+' ICR, Outlook Stable
PCDM PROPERTIES: Gulf Coast Bank Says Disclosures Insufficient
PEAK PROPERTY: $340K Sale of Rubio Property Denied W/o Prejudice
PETROTEQ ENERGY: Bellridge Capital Reports 4.7% Equity Stake
PHRG INTERMEDIATE: Moody's Gives First Time B1 CFR, Outlook Stable
PODS LLC: $150MM Term Loan Add-on No Impact on Moody's B2 CFR
PRE-PAID LEGAL: Moody's Affirms B2 CFR & Rates New 1st Lien Debt B1
PUBLIUS VALERIUS: Unsecureds Will Get 100% of Claims in Plan
REHOBOTH PIPELINE: Case Summary & 20 Largest Unsecured Creditors
REVINT INTERMEDIATE: Incremental Debt No Impact on Moody's B3 CFR
RIVERROCK RECYCLING: Wins Cash Collateral Use Thru Jan 2022
ROBERT D. SPARKS: $181K Sale of Two Tracts of Property Approved
SEARS HOLDINGS: $306K Sale of Cheboygan Property to Princess Okayed
SECURE ACQUISITION: Moody's Assigns 'B3' CFR, Outlook Stable
SEQUENTIAL BRANDS: $48.5M Sale of Assets to Centric Brands Approved
SEQUENTIAL BRANDS: $48.5MM Sale of All Assets to JJWHP Approved
SEQUENTIAL BRANDS: $65MM Sale of Assets to With You Inc. Approved
SEQUENTIAL BRANDS: Proposed Sale of Assets to Gainline Galaxy OK'd
SHARP MIDCO: Moody's Assigns B3 CFR & Rates New First Lien Debt B2
STARWOOD PROPERTY: Fitch Gives 'BB+(EXP)' to $400MM Unsec. Notes
STARWOOD PROPERTY: Moody's Rates New Unsec. Notes Due 2024 'Ba3'
STARWOOD PROPERTY: S&P Rates $400MM Senior Unsecured Bonds 'B+'
STONEMOR INC: S&P Affirms 'CCC+' Long-Term Issuer Credit Rating
TABULA RASA: Voluntary Chapter 11 Case Summary
TRITON WATER: Moody's Affirms 'B2' CFR, Outlook Remains Stable
UGI INT'L: Fitch Gives Final 'BB+' Rating on EUR400MM Unsec. Notes
US RADIOLOGY: $450MM Term Loan Add-on No Impact on Moody's B3 CFR
VERITEXT: $150MM Term Loan Add-on No Impact on Moody's 'B3' CFR
WIDEOPENWEST FINANCE: Moody's Raises CFR to B1, Outlook Stable
ZEP INC: Moody's Confirms 'Caa1' CFR & Alters Outlook to Stable
[^] BOND PRICING: For the Week from Nov. 29 to Dec. 3, 2021
*********
1121 PIER VILLAGE: City of Philadelphia Says Plan Not Feasible
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The City of Philadelphia, a secured creditor, objects to the Joint
Disclosure Statement and Joint Plan of Reorganization filed by 1121
Pier Village LLC and its affiliates.
The City points out that the Disclosure Statement lacks cashflow
projections and any specificity as to the amount of the anticipated
sales and the liens paid from the sales. Without this information,
the City cannot determine the plan feasibility.
The City's realty transfer tax is likely such a transfer tax.
However, the tax exemption pursuant to 11 U.S.C. § 1146(a) is
limited to sales that happen after plan confirmation. Thus, the
City would request that the language in the Disclosure Statement be
appropriately narrowed.
The City claims that the Plan fails to classify the water debt and
L&I debt as the only possible class for the City's secured pre
petition claims is Class 2. Class 2 is limited to Secured Claims of
"Priming Lien Creditors," which is defined only as "creditors
holding a secured claim based upon a statutory real estate tax lien
or a mechanic's lien." The City's L&I and water debt pre-petition
claims are not included in the definition of claims held by
"Priming Lien Creditors" and thus, are not classified in Class 2.
Moreover, the Plan does not provide for the payment of the City's
post-petition administrative expense claims including: 1) the
City's significant post-petition claims for work done with respect
to the property owned by Penn Treaty Homes, LLC including fencing
work of approximately $18,000 and demolition of the vertical
structure of over $296,000; 2) City's postpetition water debt; and
3) the 2022 real estate taxes as it seems the sales of the Debtors'
real property will not close, if at all, until 2022.
In addition, the Debtors' Plan have the following issues that must
be addressed:
* The Plan identifies that the Class 2 claims of the Priming
Lien Creditors will receive applicable interest if not paid in full
on the Effective Date, however the Plan does not identify the rate
of interest.
* The Plan has no default language or any specificity as to
what happens if the Debtors are unable to complete the anticipated
sales.
* The Plan may violate the absolute priority rule.
A full-text copy of the City of Philadelphia's objection dated Nov.
30, 2021, is available at https://bit.ly/3EonK9d from
PacerMonitor.com at no charge.
Attorney for the City of Philadelphia:
PAMELA ELCHERT THURMOND
Deputy City Solicitor
PA Attorney I.D. 202054
City of Philadelphia Law Department
Municipal Services Building
1401 JFK Boulevard, 5th Floor
Philadelphia, PA 19102-1595
215-686-0508 (phone)
Email: Pamela.Thurmond@phila.gov
About 1121 Pier Village
Philadelphia, Pa.-based 1121 Pier Village, LLC and its affiliates
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
E.D. Pa. Lead Case No. 21-11466) on May 23, 2021. Alex Halim,
operating manager, signed the petitions. At the time of the filing,
1121 Pier Village disclosed between $10 million and $50 million in
both assets and liabilities.
Judge Eric L. Frank oversees the cases.
The Debtors tapped Bielli & Klauder, LLC as legal counsel;
Obermayer Rebmann Maxwell & Hippell LLP as special counsel;
Asterion, Inc. as accountant and financial advisor; and Keen Summit
Capital Partners, LLC as real estate advisor.
1121 PIER VILLAGE: Henry J. Stewart Says Disclosures Inadequate
---------------------------------------------------------------
Henry J. Stewart, as trustee under Section Fourth of the Will of
Henry B. Stewart, Deceased, f/b/o Henry J. Stewart (the "Trust"),
as the seller of certain tracts of parcels of land situated in
Philadelphia, PA, commonly known as 1121-1129 and 1131-1141 North
Delaware Avenue (the "Pier Village"), objects to the Joint
Disclosure Statement filed by 1121 Pier Village LLC and its
affiliates.
On September 1, 2021, the Debtors filed several motions
(collectively, the "Substantive Motions") intended to form the
Debtors' blueprint for the sale of the Debtors' properties,
including the financing of those sale processes.
Stewart claims that regardless of the reasons for filing the
Disclosure Statement, the blueprint has not come to fruition, as no
sale process has moved forward. In fact, since the filing of the
Disclosure Statement, all dates and deadlines set forth in the sale
and financing Motions have passed and the Debtors are no closer to
a confirmable Plan since the inception of these cases.
Stewart points out that even if the Debtors' cases do remain cases
under Chapter 11 of the Bankruptcy Code following a hearing on the
Motions to Convert, the Disclosure Statement is facially
inadequate. In addition, to the extent it ever provided adequate
information (which the Trust does not concede) it is now hopelessly
outdated.
Presently, voters cannot make an informed decision on the proposed
Plan, because the Disclosure Statement is nothing more than a
description of a blueprint that has not come to fruition, based on
relief that has not been entered.
In addition, while the feasibility of a plan is most often a
determination made at the confirmation hearing, a bankruptcy court
should not approve a disclosure statement related to a plan which
is patently not feasible. At the November 4 hearing before this
Court, the Debtors acknowledged that Substantive Motions that form
the basis of the Plan will need to be amended if these cases are to
move forward. Without a clear path forward in these cases, the
Debtors cannot propose a confirmable plan.
A full-text copy of Henry J. Stewart's objection dated Nov. 30,
2021, is available at https://bit.ly/3okOdPk from PacerMonitor.com
at no charge.
Henry J. Stewart is represented by:
ROBINSON & COLE LLP
Rachel Jaffe Mauceri
1650 Market Street Suite 3600
Philadelphia, PA 19103
Telephone: 215-389-0556
Facsimile: 215.827.5982
E-mail: rmauceri@rc.com
- and –
James F. Lathrop, Esq.
1201 North Market Street, Suite 1406
Wilmington, DE 19801
Telephone: 302.516.1713
Facsimile: 302.516.1699
E-mail: jlathrop@rc.com
About 1121 Pier Village
Philadelphia, Pa.-based 1121 Pier Village, LLC and its affiliates
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
E.D. Pa. Lead Case No. 21-11466) on May 23, 2021. Alex Halim,
operating manager, signed the petitions. At the time of the filing,
1121 Pier Village disclosed between $10 million and $50 million in
both assets and liabilities.
Judge Eric L. Frank oversees the cases.
The Debtors tapped Bielli & Klauder, LLC as legal counsel;
Obermayer Rebmann Maxwell & Hippell LLP as special counsel;
Asterion, Inc. as accountant and financial advisor; and Keen Summit
Capital Partners, LLC as real estate advisor.
1121 PIER VILLAGE: Sharestates Investments Says Plan Unconfirmable
------------------------------------------------------------------
Sharestates Investments, LLC, on behalf of itself and in its
capacity as servicer under various loans made to one or more of the
debtors, objects to the Joint Disclosure Statement filed by 1121
Pier Village, LLC and its affiliates.
Sharestates claims that the Disclosure Statement includes
inaccurate and misleading information pertaining to the Debtors'
anticipated administrative expenses, including $200,000 in
professional fees for Obermayer Rebmann Maxwell & Hippell LLP (the
"Obermayer Firm") which withdrew its application to be appointed as
counsel to the Debtors on the eve of an evidentiary hearing on the
application after significant questions were raised about whether
they qualified as "disinterested" under Section 327 of the
Bankruptcy Code.
Sharestates points out that the Disclosure Statement fails to
adequately disclose the issues facing the Adversary Action or the
risks to the Proposed Plan in the event that the Adversary Action
is not successful. In this way, it fails to satisfy Section 1125.
Sharestates says that even were the Disclosure Statement not
woefully deficient in its lack of disclosure and its inclusion of
inaccurate and misleading information, the Proposed Plan is
unconfirmable without the support of Sharestates and the Stewart
Trust. For each of the Debtors, Sharestates holds secured claims
against the Debtors assets that exceed the value of those assets.
Sharestates' deficiency claims, in turn, are large enough to
control each of the unsecured creditor classes. In addition, with
respect to Frankford, 193 Hancock, 285 Kingsland and 231 E 123,
those Debtors have virtually no creditors other than Sharestates,
and their cases are classic two-party disputes involving a single
asset real estate debtor and their mortgagee/lender.
Sharestates asserts that the Plan proposed by the Debtors is
patently not feasible and this Court should not approve the
Disclosure Statement. Among other things, they Debtors have no
source of funding apart from the highly-speculative Adversary
Action which is subject to a pending motion to dismiss.
Finally, the Proposed Plan is conditioned upon the Sale Motions,
which are no longer viable. In light of the foregoing, there is no
legitimate reason for approving the Disclosure Statement when the
Proposed Plan is facially unconfirmable.
A full-text copy of Sharestates' objection dated Nov. 30, 2021, is
available at https://bit.ly/3pnZxtm from PacerMonitor.com at no
charge.
Counsel for Sharestates Investments:
REED SMITH LLP
Joseph J. Tuso, Esq.
Lauren S. Zabel, Esq.
Three Logan Square
1717 Arch Street, Suite 3100
Philadelphia, PA 19103
- and -
Ann E. Pille
REED SMITH LLP
10 South Wacker Drive, 40th Floor
Chicago, Illinois 60606
Tel: (312) 207-1000
Fax: (312) 207-6400
E-mail: apille@reedsmith.com
About 1121 Pier Village
Philadelphia, Pa.-based 1121 Pier Village, LLC and its affiliates
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
E.D. Pa. Lead Case No. 21-11466) on May 23, 2021. Alex Halim,
operating manager, signed the petitions. At the time of the filing,
1121 Pier Village disclosed between $10 million and $50 million in
both assets and liabilities.
Judge Eric L. Frank oversees the cases.
The Debtors tapped Bielli & Klauder, LLC as legal counsel;
Obermayer Rebmann Maxwell & Hippell LLP as special counsel;
Asterion, Inc. as accountant and financial advisor; and Keen Summit
Capital Partners, LLC as real estate advisor.
25-16 37TH AVE: Dec. 31 Claim Filing Deadline Set
-------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of New York set
Dec. 31, 2021, as the last date for each person or entity to file
proofs of claim against 25-16 37th Ave Owners LLC. The Court also
set April 18, 2022, as the deadline for governmental units to file
their claims against the Debtor.
All proofs of claim must be filed electronically on the Court's
case management/electronic case ("CM/ECF") file system. Those
without accounts to the CM/ECF shall file their claims by mailing
or delivering the original proof of claim to the Court at:
U.S. Bankruptcy Court
for the Eastern District of New York
Attn: Conrad B. Duberstein
U.S. Bankruptcy Courthouse
311 Cadman Plaza East, Suite 1595
Brooklyn, NY 11201-1800
About 25-16 37th Ave Owners LLC
Hollywood, Fla.-based 25-16 37th Ave Owners, LLC, is a single asset
real estate debtor (as defined in 11 U.S.C. Section 101(51B)).
25-16 37th Ave Owners filed its voluntary petition for Chapter 11
protection (Bankr. E.D.N.Y. Case No. 21-42662) on Oct. 19, 2021,
listing $250,000 in assets and $18,437,803 in liabilities. Judge
Jil Mazer-Marino presides over the case.
Joel M. Shafferman, Esq., at Shafferman & Feldman, LLP represents
the Debtor as legal counsel.
2999TC ACQUISITIONS: Seeks to Hire Joyce W. Lindauer as Counsel
---------------------------------------------------------------
2999TC Acquisitions, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Texas to employ Joyce W.
Lindauer Attorney, PLLC as its legal counsel.
The Debtor requires legal assistance to effectuate a
reorganization, propose a plan of reorganization and effectively
move forward in its bankruptcy proceeding.
The hourly rates of the firm's attorneys and staff are as follows:
Joyce W. Lindauer, Esq. $450 per hour
Dian Gwinnup, Paralegal $125 per hour
Other Paralegals $65 - $125 per hour
Legal Assistants $65 - $125 per hour
In addition, the firm will seek reimbursement for out-of-pocket
expenses incurred.
The firm received a retainer of $11,000, which included the filing
fee of $1,738.
Joyce Lindauer, Esq., the owner of the firm, disclosed in a court
filing that her firm is a "disinterested person" as defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Joyce W. Lindauer, Esq.
Joyce W. Lindauer Attorney, PLLC
1412 Main Street, Suite 500
Dallas, TX 75202
Telephone: (972) 503-4033
Facsimile: (972) 503-4034
Email: joyce@joycelindauer.com
About 2999TC Acquisitions
Dallas, Texas-based 2999TC Acquisitions, LLC filed its voluntary
petition for Chapter 11 protection (Bankr. N.D. Texas Case No.
21-31954) on Oct. 29, 2021, listing up to $100 million in assets
and up to $50 million in liabilities. Tim Barton, president of
2999TC Acquisitions, signed the petition. Judge Harlin Dewayne Hale
oversees the case. Joyce W. Lindauer, Esq., serves as the Debtor's
legal counsel.
ABG INTERMEDIATE: Moody's Rates New $1.675BB First Lien Loan 'B1'
-----------------------------------------------------------------
Moody's Investors Service assigned ratings on ABG Intermediate
Holdings 2 LLC's (dba Authentic Brands; "ABG") proposed credit
facilities, including a B1 rating on its proposed $1.675 billion
first lien term loan due 2028 and Caa1 rating on its proposed $500
million second lien term loan due 2029. Moody's also upgraded the
company's existing first lien credit facilities to B1 from B2, and
affirmed its B2 corporate family rating and B2-PD probability of
default rating. The outlook was changed to positive from stable.
Proceeds from the new term loans will be used to finance the
acquisitions of Reebok and other intellectual property and support
the recapitalization associated with the sale of a minority equity
stake. As part of the transaction, the company will increase the
size of its revolving credit facility to $150 million from $100
million. The ratings are subject to the transactions closing as
proposed and review of final documentation.
The affirmation of ABG's B2 CFR reflects governance risks,
including financial and M&A strategies that have led to high
leverage driven by both its acquisitive nature and financial
sponsor ownership. As ABG's largest acquisition to date, the Reebok
acquisition is not only sizeable, it will increase integration and
execution risk and result in a significant increase in pro forma
financial leverage. However, ABG has maintained profitable growth
with strong margins and free cash flow in a very challenging
environment over the past few years. This has resulted in a
significant reduction in leverage to historically low levels. As of
September 2021, ABG's debt-to-EBITDA was around 3.8 times and its
EBITA coverage of interest exceeded 5 times. Pro forma for the
proposed transactions, Moody's expects leverage to slightly exceed
5 times and interest coverage to fall below 4 times. The outlook
change to positive reflects Moody's expectation that this increase
in leverage is only temporary and that ABG will quickly de-lever
through continued earnings growth, debt reduction and potential
future cash-funded acquisitions. The outlook change to positive
reflects that Moody's expects ABG will maintain leverage below 5
times and EBITA-to-interest above 3 times going forward.
The upgrade of ABG's existing first lien secured credit facilities
to B1, and the B1 rating assignment on the proposed first lien
credit facility, reflect the addition of a material amount of
junior support in the capital structure in the form of the proposed
$500 million second lien term loan. The Caa1 rating assigned to the
proposed second lien term loan reflects its junior position to the
sizeable amount of more senior debt in the capital structure.
Affirmations:
Issuer: ABG Intermediate Holdings 2 LLC
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Upgrades:
Issuer: ABG Intermediate Holdings 2 LLC
Senior Secured 1st Lien Term Loan due 2024, Upgraded to B1 (LGD3)
from B2 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility due 2024 (to be
upsized by $50 million), Upgraded to B1 (LGD3) from B2 (LGD3)
Senior Secured Delayed Draw Term Loan B due 2024, Upgraded to B1
(LGD3) from B2 (LGD3)
Assignments:
Issuer: ABG Intermediate Holdings 2 LLC
Senior Secured 1st Lien Term Loan due 2028, Assigned B1 (LGD3)
Senior Secured 2nd Lien Term Loan due 2029, Assigned Caa1 (LGD6)
Outlook Actions:
Issuer: ABG Intermediate Holdings 2 LLC
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
Authentic Brands B2 CFR reflects governance risks, including
financial and M&A strategies that have led to high leverage driven
by both its acquisitive nature and financial sponsor ownership.
While Moody's-adjusted debt-to-EBITDA is currently strong, at
around 3.8 times as of September 2021, the proposed acquisitions
and recapitalization will result in this metric weakening to
slightly over 5 times pro forma. The company also has moderate
brand and licensee concentrations, and the potential exists for
execution challenges associated with its acquisition-based growth
strategy -- for example, in the case of its planned acquisition of
Reebok, whose sales growth has consistently lagged behind that of
adidas AG and the brand's turnaround, launched in 2016, is still
ongoing.
The company benefits from the relatively stable and predictable
revenue and cash flow streams it receives in the form of royalty
payments from its licensees, which include significant
contractually guaranteed minimums and potential overages (payments
made in excess of those amounts). ABG has exhibited steady
operating performance over the past few years, including
demonstrated resilience through the coronavirus pandemic in 2020,
having grown full year revenue and earnings growth over 2019 due to
collections on a large portion of guaranteed minimum royalties from
licensees, e-commerce growth, effective expense management
initiatives, and acquisitions. Also, its inherently asset-light
licensor business model carries low fixed overhead costs and
supports the company's strong operating margins and associated free
cash flow generation. The company is also expected to maintain a
good liquidity profile, supported by balance sheet cash, ample free
cash flow and excess revolver availability.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The positive outlook reflects Moody's expectation for consistent
operating performance over the next 12-18 months, driven by
low-to-mid single-digit top-line organic revenue growth, high
margins and strong positive free cash flow. The positive outlook
also reflects that Moody's expects the company to materially
improve its leverage through earnings growth, debt reduction and
potential future acquisitions using cash and to sustain
debt-to-EBITDA below 5.0x going forward.
The ratings could be upgraded if the company maintains its
operating performance and more conservative financial policies
through a demonstrated willingness to sustain debt-to-EBITDA below
5.0 times and EBITA-to-interest expense above 2.75 times.
The ratings could be downgraded if the company experiences weaker
than anticipated operating performance resulting from challenges in
integrating acquired brands, the non-renewal of licenses, or
renewals of its licenses at materially lower revenue streams.
Specific metrics include debt-to-EBITDA sustained above 6.5 times
or EBITA-to-interest sustained below 2.25 times. In addition, a
modest reduction in the proposed second lien term loan amount could
result in a downgrade to the first lien credit facility ratings.
The principal methodology used in these ratings was Apparel
published in June 2021.
Headquartered in New York, NY, ABG Intermediate Holdings 2 LLC is
the borrowing entity for holding company Authentic Brands Group
LLC. Authentic Brands is a brand management company with a
portfolio of over 50 brands. The company also has control over the
use of the name, image and likeness of several celebrities. The
company is majority owned by private equity firms and other
co-investors, with affiliates of BlackRock being the largest
shareholders. Authentic Brands is privately owned and does not
publicly disclose its financial information. Annual revenue exceeds
$600 million.
AIR FORCE VILLAGES: Fitch Affirms 'BB+' Rating, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has assigned its 'BB+' rating to Air Force Villages
dba Blue Skies of Texas (BST) and affirmed the 'BB+' rating
assigned to the $117,000,000 Tarrant County Cultural Education
Facilities Finance Corporation retirement facility revenue bonds
series 2016 issued on behalf of BST.
The Rating Outlook is Stable.
SECURITY
The series 2016 bonds are secured by a gross revenue pledge,
mortgage pledge and debt service reserve fund.
ANALYTICAL CONCLUSION
The 'BB+' rating reflects the resilience of BST's financial profile
through Fitch's forward-looking scenario analysis with good maximum
annual debt service (MADS) coverage and stable liquidity, which
Fitch expects will be sustained due to good cost management,
despite BST's history of soft demand. The midrange revenue
defensibility reflects BST's modest national draw and aggressive
marketing balanced against consistently soft occupancy. Similarly,
the midrange operating risk assessment shows good expense
management practices balanced against a somewhat elevated average
age of plant. Management has demonstrated creativity and
flexibility by considering non-traditional partnerships on its
extensive campus.
KEY RATING DRIVERS
Revenue Defensibility: 'bbb'
Weak Occupancy Balanced Against Tenacious Marketing
BST operates two life plan communities (LPCs): BST Senior Living
East (BST East) and BST Senior Living West (BST West). Occupancy at
BST East continues to be challenged following a repositioning
project that was completed in 2012. Occupancy at BST East ranged
from 66% to 69% over the past several quarters, which is consistent
with occupancy for the past several years. Independent living (IL)
occupancy at BST West has been stronger, near 85%, but still soft.
Healthcare occupancy has been consistently weak as well, in the 70%
range in assisted living, 60% range in memory care and in the high
50%, low 60% range in skilled nursing. Management is considering
consolidating healthcare services to better align with market
demand. Management has responded to occupancy challenges by hiring
additional sales staff and contracting with a consultant to provide
sales and marketing services. While the soft occupancy remains a
concern, Fitch believes BST's demand indicators are solid and
should support adequate census levels over the longer term in the
IL units (ILUs). The weighted average entrance fee is below local
home values and rate increases occur regularly, supporting the
midrange assessment.
The local market is competitive and the location of BST East
results in competition with local for-profit rental facilities,
while BST West competes with other not-for-profit retirement
communities in the area that offer the full continuum of care.
Furthermore, BST differentiates itself with its military
affiliation, attracting former military personnel from across the
country.
Operating Risk: 'bbb'
Good Expense Management, Strategic CapEx
BST's midrange operating risk assessment reflects a history of good
operations and adequate capital related metrics balanced against
elevated capex requirements. Fitch attributes this performance to
good expense management practices and a predominantly type-B
contract type. The fee for service contract allows BST to pass most
healthcare costs on to residents.
BST's management team continues to focus on strengthening
operations by improving occupancy and expense management. The
community's five-year average (including the first quarter of
fiscal 2022) operating ratio, NOM and NOMA were 97.7%, 11.8 and
22%, respectively, which support the midrange operating risk
assessment.
BST has shown limited capital spending with average capex near 80%
of depreciation over the past five years and a relatively elevated
age of plant of approximately 15 years. Though capital spending has
been below depreciation, it has been strategic. Management
underwent a revitalization program on campus. At BST West, the
Lakes neighborhood was remodeled incrementally as units become
available and in pace with presales. This strategy was applied to
other ILUs on the BST West Campus as well. As of the end of
September 2021, nearly all of the refurbished units are full. As of
the date of this publication, management has reported no final
decisions have been made as to the scale or timing of the potential
downsizing of its healthcare units.
Most capital-related metrics have been adequate with revenue-only
MADS coverage averaging 1.1x and MADS averaging 15.5% of revenue
over the past five years, including the first quarter of fiscal
2022. Debt to net available averaged a weaker 8.7x reflecting BST's
somewhat elevated debt burden.
Financial Profile: 'bb'
Stabile Financial Profile
Fitch expects BST will maintain a financial profile that is
consistent with the 'bb' assessment even during the economic and
financial volatility assumed in Fitch's stress case scenario,
within the context of BST's midrange revenue defensibility and
operating risk assessments. MADS coverage has been stronger than
the weak assessment, averaging 1.8x over the past five years. BST's
balance sheet has been stable and consistent with unrestricted cash
and investments at $45 million in 2021, or 46% cash-to-adjusted
debt at YE 2021. Unrestricted cash represented 379 days cash on
hand (DCOH) in 2021, which is neutral to the assessment of BST's
financial profile. BST's financial profile remains consistent with
these levels with cash-to -adjusted debt of roughly 40% in the
recovery years of Fitch's stress case.
Asymmetric Additional Risk Considerations
No asymmetric risk considerations were relevant to the rating
determination.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- A return to an investment-grade rating or Positive Outlook
will be dependent on growing liquidity with cash to adjusted
debt sustained above 60%, while maintaining debt service
coverage around 2x.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Fitch expects BST will maintain a 'BB+' rating through the
stress case scenario, but deterioration in core profitability
to operating ratios above 100%, or depletion of liquidity such
that cash to adjusted debt falls below 30%, would negatively
pressure the rating.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
BST operates two LPCs, BST East and BST West, located in San
Antonio, TX. BST East opened in 1970 and BST West opened in 1987,
and both communities historically served retired officers of all
uniformed services and spouses, widows or widowers. The board
approved the expansion of eligibility to individuals with no prior
military affiliation as of November 2013.
The organization changed its name in May 2014 and the official
launch of a rebranding campaign began in October 2014. BST
predominately offers a Type B contract but also has a small number
of residents in Type A and rental contracts. The large majority of
residents at BST are in Type B non-refundable contracts that
amortize over 42 months. BST had a total of 729 ILUs, 57 assisted
living units (ALUs), 72 memory care units, and 127 skilled nursing
facility (SNF) beds as of September 2021. BST had $50 million in
total revenue in fiscal 2021 (FYE June 30; audited).
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.
AIT WORLDWIDE: Moody's Upgrades CFR to B2 & First Lien Debt to B1
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of AIT Worldwide
Logistics Holdings, Inc. including its corporate family rating to
B2 from B3, its probability of default rating to B2-PD from B3-PD,
and its first lien senior secured credit facilities rating to B1
from B2. The outlook is stable.
The ratings upgrade reflects Moody's expectation that AIT's
improving operating performance and credit metrics will be
sustained through at least 2022 as favorable industry conditions
persist for the third-party logistics provider ("3PL"). In
particular, Moody's expects AIT to maintain debt/EBITDA at about 5x
and produce free cash flow to debt of at least 5% in 2022 as
organic growth remains strong and the company continues an active
acquisitions strategy.
The upgrade reflects:
Upgrades:
Issuer: AIT Worldwide Logistics Holdings, Inc.
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Senior Secured 1st Lien Bank Credit Facility, Upgraded to B1
(LGD3) from B2 (LGD3)
Outlook Actions:
Issuer: AIT Worldwide Logistics Holdings, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
AIT's ratings reflect the company's high financial leverage and
aggressive strategy for debt-funded acquisitions as well as its
moderate, yet growing scale, within a very competitive industry.
Following the company's leveraged buy-out in April 2021 by private
equity firm The Jordan Company, AIT has demonstrated significant
earnings growth. This has helped reduce pro-forma financial
leverage from about 6.5x debt/EBITDA to Moody's expectation for
just under 5x by the end of 2021 (inclusive of acquisition
earnings). Moody's expects that AIT will be able to maintain
debt/EBITDA at around 5x through 2022 as the company balances
steady earnings growth with future debt-funded acquisitions.
AIT's credit profile benefits from the company's capabilities in
providing varied modes of freight forwarding -- including air,
ocean and ground -- a largely international presence to support
global trade and customs brokerage, and a very diverse set of
customers and transportation providers. AIT provides services for
customers operating in end markets with favorable growth prospects.
These include e-commerce, life sciences, and technology. The
company also caters to shipping goods that require a higher-touch
service, including bulky items such as furniture and appliances,
which has contributed to a stronger margin profile for AIT compared
to peers.
Moody's expects liquidity to be adequate as AIT maintains a
moderate level of cash and its $80 million revolver remains largely
undrawn. Moody's expects that free cash flow will be moderately
positive in 2022 as earnings remain strong and capital expenditure
requirements remain low given the asset-light nature of the
business. Moody's anticipates that AIT will apply the majority of
free cash flow toward acquisitions and periodically will utilize
the revolver for inorganic growth, which will at times reduce the
company's liquidity.
In terms of corporate governance, event risk remains high for
aggressive financial policies given private equity ownership and
the company's acquisitive nature. Given the fragmented nature of
the industry, Moody's expects AIT to make further acquisitions,
which could increase leverage or weaken liquidity depending on the
pace and size.
The stable outlook reflects Moody's expectation for AIT to maintain
debt/EBITDA around 5x while continuing a prudent inorganic growth
strategy. The outlook also anticipates that AIT will maintain an
adequate liquidity profile, including moderately positive free cash
flow.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if AIT sustains its strong operating
performance and demonstrates conservative financial policies.
Debt/EBITDA being sustained near 4.5x with free cash flow to debt
approaching 10% could also support an upgrade
The ratings could be downgraded if operating performance
deteriorates, perhaps due to a loss of customers or from weak
execution. Ratings could also be downgraded if AIT sustains
debt/EBITDA in excess of 6x. Further, the ratings could be
downgraded if AIT's free cash flow approaches breakeven or
availability on its revolving credit facility is materially
reduced.
AIT Worldwide Logistics Holdings, Inc., based in Chicago, IL, is a
global third party logistics company providing end-to-end supply
chain services, including air and ocean freight forwarding,
expedited ground, truck brokerage, residential delivery, customs
brokerage, and other value-added logistics services. Pro forma
gross revenue was approximately $1.7 billion for the twelve months
ended September 30, 2021.
The principal methodology used in these ratings was Surface
Transportation and Logistics published in May 2019.
ALIERA COMPANIES: Involuntary Chapter 11 Case Summary
-----------------------------------------------------
Alleged Debtor: The Aliera Companies Inc.
990 Hammond Drive, Suite 700
Atlanta, GA 30328
Business Description: The Aliera Companies is a provider of
innovative solutions, from IT platforms to
health care delivery systems.
Involuntary Chapter
11 Petition Date: December 3, 2021
Court: United States Bankruptcy Court
District of Delaware
Case No.: 21-11548
Petitioners' Counsel: Joseph H. Huston, Jr., Esq.
STEVENS & LEE, P.C.
919 North Market Street, Suite 1800
Wilmington, Delaware 19801
Tel: (302) 425-3310
Email: joseph.huston@stevenslee.com
A full-text copy of the Involuntary Petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/ANRXOMQ/The_Aliera_Companies_Inc__debke-21-11548__0001.0.pdf?mcid=tGE4TAMA
Alleged creditors who signed the petition:
Petitioner Nature of Claim Claim Amount
---------- --------------- ------------
1. Austin Willard Judgment $16,255
2. Hanna Albina and Judgment $4,679,868
Austin Willard, on
behalf of all persons
who, while a Kentucky
resident, purchased or
were covered by a plan
from The Aliera
Companies Inc. and
Sharity Ministries, Inc.,
which purported to be a
"health care sharing
ministry"
3. Gerald and Roslyn Judgment $12,582
Jackson
4. Dean Mellom Judgment $3,692
5. Gerald Jackson, Roslyn Judgment $21,352,827
Jackson, and Dean
Mellom, on behalf of all
Washington residents
who acquired plans
from or through The
Aliera Companies Inc.,
Aliera Healthcare, Inc.,
and Sharity Ministries,
Inc. or any of those
entities' subsidiaries
that purported to be
"health care sharing
ministry" plans at any
time from June 27, 2018
to July 8, 2021
ALTO MAIPO: Seeks Approval to Hire Lazard as Investment Banker
--------------------------------------------------------------
Alto Maipo Delaware LLC and Alto Maipo SpA seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ Lazard
Freres & Co., LLC and Lazard Chile, SpA as their investment
banker.
The firm's services include:
(a) reviewing and analyzing the Debtors' business, operations
and financial projections;
(b) reviewing and analyzing the Debtors' near-term and
long-term cash flow forecasts provided by the Debtors' management;
(c) reviewing and analyzing the Debtors' existing obligations
in order to propose and assess restructuring alternatives;
(d) evaluating the Debtors' potential debt capacity in light
of their projected cash flows;
(e) assisting in the determination of a capital structure for
the Debtors;
(f) assisting in the determination of a range of values for
the Debtors on a going concern basis;
(g) advising the Debtors on tactics and strategies for
negotiating with the stakeholders;
(h) rendering financial advice to the Debtors and
participating in meetings or negotiations with the stakeholders,
rating agencies or other appropriate parties in connection with any
restructuring;
(i) advising the Debtors on the timing, nature, and terms of
new securities, other consideration or other inducements to be
offered pursuant to any restructuring;
(j) assisting the Debtors in preparing materials or other
documentation within Lazard's area of expertise that is required in
connection with any restructuring;
(k) attending meetings of the board of directors of the
Debtors, if necessary;
(l) providing testimony, if necessary, in any proceeding
before the bankruptcy court; and
(m) providing the Debtors with other financial restructuring
advice.
Lazard will be compensated based on the following:
(a) a monthly fee of $150,000;
(b) a restructuring fee equal to 0.25 percent of the face
amount of existing obligations that are subject to such
restructuring, with a minimum amount of $5.25 million;
(c) a timing incentive fee equal to 0.05 percent of the face
amount of existing obligations that are subject to the
restructuring;
(d) a discretionary fee of up to 0.10 percent of the face
amount of existing obligations that are subject to the
restructuring; and
(e) reimbursement for out-of-pocket expenses incurred.
Ari Lefkovits, a managing director at Lazard Freres & Co. LLC,
disclosed in a court filing that the firm and Lazard Chile SpA are
"disinterested persons" as defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Ari Lefkovits
Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, NY 10020
Telephone: (212) 632-6000
About Alto Maipo
Alto Maipo owns the Alto Maipo Hydroelectric Project, outside
Santiago, Chile, which is currently under construction. The project
comprises two run-of-the-river plants with a combined installed
capacity of 531 megawatts. The run-of-the-river project is a joint
venture between U.S. utility subsidiary AES Gener and Chilean
mining company Antofagasta Minerals (AMSA).
Alto Maipo Delaware LLC and Alto Maipo SpA sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11507) on Nov. 17,
2021. Javier Dib, board president and chief restructuring officer,
signed the petitions. At the time of the filing, Alto Maipo
Delaware LLC estimated between $1 billion and $10 billion in both
assets and liabilities.
The cases are handled by Judge Karen B. Owens.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP and Cleary
Gottlieb Steen & Hamilton LLP as legal counsel; Nelson Contador
Abogados & Consultores SpA as local Chilean counsel; AlixPartners,
LLP as financial advisor; and Lazard Freres & Co. LLC and Lazard
Chile SpA as investment banker. Prime Clerk, LLC is the claims,
noticing and administrative agent.
ALTO MAIPO: Seeks to Hire AlixPartners LLP as Financial Advisor
---------------------------------------------------------------
Alto Maipo Delaware, LLC and Alto Maipo SpA, seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ
AlixPartners, LLP as their financial advisor.
The firm's services include:
(a) assisting the Debtors with the development of their
rolling 13-week cash receipts and disbursements forecasting tool
designed to provide on-time information related to the Debtors'
liquidity;
(b) assisting the Debtors with the development and
implementation of cash management strategies, tactics and
processes;
(c) providing assistance to the management in connection with
the Debtors' development of their business plan, and such other
related forecasts as may be requested by the Debtors;
(d) assisting the management and the Debtors' other advisors
in the design and implementation of a Chapter 11 plan of
reorganization;
(f) providing assistance in such areas of testimony before the
bankruptcy court on matters that are within AlixPartners' area of
expertise;
(e) assisting the Debtors with their communications or
negotiations with outside parties; and
(f) assisting the Debtors with such other matters as may be
requested that fall within AlixPartners' expertise and that are
mutually agreeable between the parties.
AlixPartners received a retainer in the amount of $255,000 from the
Debtors.
The hourly rates of AlixPartners' professionals are as follows:
Managing Director $1,030 – $1,295 per hour
Director $825 - $980 per hour
Senior Vice President $665 – $755 per hour
Vice President $485 – $650 per hour
Consultant $180 – $480 per hour
Paraprofessional $305 – $325 per hour
Intern $70 – $105 per hour
Developer $285 – $650 per hour
In addition, the firm will seek reimbursement for expenses
incurred.
Thomas Osmun, a managing director at AlixPartners, disclosed in a
court filing that his firm is a "disinterested person" as defined
in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Thomas Osmun
AlixPartners, LLP
909 Third Avenue, Floor 30
New York, NY 10022
Telephone: (212) 490-2500
Facsimile: (212) 490-1344
Email: tosmun@alixpartners.com
About Alto Maipo
Alto Maipo owns the Alto Maipo Hydroelectric Project, outside
Santiago, Chile, which is currently under construction. The project
comprises two run-of-the-river plants with a combined installed
capacity of 531 megawatts. The run-of-the-river project is a joint
venture between U.S. utility subsidiary AES Gener and Chilean
mining company Antofagasta Minerals (AMSA).
Alto Maipo Delaware LLC and Alto Maipo SpA sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11507) on Nov. 17,
2021. Javier Dib, board president and chief restructuring officer,
signed the petitions. At the time of the filing, Alto Maipo
Delaware LLC estimated between $1 billion and $10 billion in both
assets and liabilities.
The cases are handled by Judge Karen B. Owens.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP and Cleary
Gottlieb Steen & Hamilton LLP as legal counsel; Nelson Contador
Abogados & Consultores SpA as local Chilean counsel; AlixPartners,
LLP as financial advisor; and Lazard Freres & Co. LLC and Lazard
Chile SpA as investment banker. Prime Clerk, LLC is the claims,
noticing and administrative agent.
ALTO MAIPO: Seeks to Hire Nelson Contador as Local Chilean Counsel
------------------------------------------------------------------
Alto Maipo Delaware, LLC and Alto Maipo, SpA seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ Nelson
Contador Abogados & Consultores, SpA as their local Chilean
counsel.
The firm's services include:
(a) advising the Debtors and Cleary Gottlieb Steen & Hamilton,
LLP on Chilean law issues relating to or arising from their Chapter
11 cases, and to prevent the occurrence of contingencies or
personal liability;
(b) analyzing the Debtors' assets to avoid potential
bankruptcy revocation actions in Chile;
(c) reviewing accounting and financial information to provide
advice to the Debtors on Chilean law issues relating to or arising
from their Chapter 11 cases;
(d) reviewing agreements relating to the Debtors' debts and
assets from a Chilean law perspective;
(e) preparing meeting minutes and reports that the Debtors or
Cleary Gottlieb Steen & Hamilton deems necessary and within
expertise of Nelson Contador; and
(f) reviewing Chilean law aspects of the Debtors' plan of
reorganization under Chapter 11 of the Bankruptcy Code, or
preparing and drafting supporting documents required under Chilean
law for the Debtors' plan of reorganization.
Nelson Contador will be compensated by a single monthly consulting
fee of 130 Chilean unidades de foment or approximately $5,000.
In addition, the firm will seek reimbursement for out-of-pocket
expenses.
Nelson Jorge Contador Rosales, a partner at Nelson Contador
Abogados & Consultores, disclosed in a court filing that his firm
is a "disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Nelson Jorge Contador Rosales
Nelson Contador Abogados & Consultores, SpA
Alonso de Cordova Avenue, 5870, 15th Floor
Las Condes, Santiago
Telephone: (56 2) 2699 1190
Email: ncontador@ncrabogados.cl
About Alto Maipo
Alto Maipo owns the Alto Maipo Hydroelectric Project, outside
Santiago, Chile, which is currently under construction. The project
comprises two run-of-the-river plants with a combined installed
capacity of 531 megawatts. The run-of-the-river project is a joint
venture between U.S. utility subsidiary AES Gener and Chilean
mining company Antofagasta Minerals (AMSA).
Alto Maipo Delaware LLC and Alto Maipo SpA sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11507) on Nov. 17,
2021. Javier Dib, board president and chief restructuring officer,
signed the petitions. At the time of the filing, Alto Maipo
Delaware LLC estimated between $1 billion and $10 billion in both
assets and liabilities.
The cases are handled by Judge Karen B. Owens.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP and Cleary
Gottlieb Steen & Hamilton LLP as legal counsel; Nelson Contador
Abogados & Consultores SpA as local Chilean counsel; AlixPartners,
LLP as financial advisor; and Lazard Freres & Co. LLC and Lazard
Chile SpA as investment banker. Prime Clerk, LLC is the claims,
noticing and administrative agent.
ALTO MAIPO: Seeks to Tap Prime Clerk as Administrative Advisor
--------------------------------------------------------------
Alto Maipo Delaware, LLC and Alto Maipo, SpA seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ Prime
Clerk LLC as their administrative advisor.
The firm's services include:
(a) assisting with, among other things, solicitation,
balloting and tabulation of votes, preparing any related reports in
support of confirmation of a Chapter 11 plan, and processing
requests for documents;
(b) preparing an official ballot certification and, if
necessary, testifying in support of the ballot tabulation results;
(c) assisting with the preparation of the Debtors' schedules
of assets and liabilities and statements of financial affairs and
gathering data in conjunction therewith;
(d) providing a confidential data room, if requested;
(e) managing and coordinating any distributions pursuant to a
Chapter 11 plan; and
(f) providing such other processing, solicitation, balloting
and other administrative services.
Prior to the petition date, Prime Clerk received an advance
retainer of $25,000 from the Debtors.
Prime Clerk will bill the Debtors no less frequently than monthly
and will seek reimbursement for out-of-pocket expenses.
Benjamin Steele, a managing director at Prime Clerk, disclosed in a
court filing that his firm is a "disinterested person" as defined
in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Benjamin J. Steele
Prime Clerk, LLC
One Grand Central Place
60 East 42nd Street, Suite 1440
New York, NY 10165
Telephone: (212) 257-5490
Email: bsteele@primeclerk.com
About Alto Maipo
Alto Maipo owns the Alto Maipo Hydroelectric Project, outside
Santiago, Chile, which is currently under construction. The project
comprises two run-of-the-river plants with a combined installed
capacity of 531 megawatts. The run-of-the-river project is a joint
venture between U.S. utility subsidiary AES Gener and Chilean
mining company Antofagasta Minerals (AMSA).
Alto Maipo Delaware LLC and Alto Maipo SpA sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11507) on Nov. 17,
2021. Javier Dib, board president and chief restructuring officer,
signed the petitions. At the time of the filing, Alto Maipo
Delaware LLC estimated between $1 billion and $10 billion in both
assets and liabilities.
The cases are handled by Judge Karen B. Owens.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP and Cleary
Gottlieb Steen & Hamilton LLP as legal counsel; Nelson Contador
Abogados & Consultores SpA as local Chilean counsel; AlixPartners,
LLP as financial advisor; and Lazard Freres & Co. LLC and Lazard
Chile SpA as investment banker. Prime Clerk, LLC is the claims,
noticing and administrative agent.
ALTO MAIPO: Taps Cleary Gottlieb Steen & Hamilton as Legal Counsel
------------------------------------------------------------------
Alto Maipo Delaware, LLC and Alto Maipo, SpA seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ Cleary
Gottlieb Steen & Hamilton, LLP as their legal counsel.
The firm's services include:
(a) advising the Debtors regarding their powers and duties in
the continued operation of their business and the management of
their property;
(b) taking necessary or appropriate action to protect and
preserve the Debtors' estates;
(c) preparing legal papers;
(d) representing the Debtors in negotiations with creditors,
equity holders and parties-in-interest;
(e) advising the Debtors with respect to cross-border aspects
of their Chapter 11 cases and coordinating its advice regarding
Chilean law interactions or impacts with any other law firm or
professional appointed by the Debtors;
(f) reviewing the Debtors' current debt and equity contractual
structure, advising with the necessary legal strategy, and
negotiating and preparing on behalf of the Debtors a plan of
reorganization and all related documents;
(g) conducting or responding to any necessary due diligence in
connection with the reorganization;
(h) advising current or potential financial advisors or other
experts hired by the Debtors in connection with the reorganization,
and participating, as requested, in meetings of the Board of
Directors; and
(i) performing other necessary legal services in connection
with the Debtors' Chapter 11 cases.
Cleary Gottlieb received an initial retainer in the amount of $1.75
million and an additional $939,085 evergreen retainer payment in
connection with the planning and preparation of initial documents
and its proposed post-petition representation of the Debtors.
The hourly rates of Cleary Gottlieb's attorneys and staff are as
follows:
Partners $1,115 – $1,650 per hour
Counsel $1,040 – $1,270 per hour
Senior Attorneys $1,015 – $1,185 per hour
Associates $595 – $1,005 per hour
International Lawyers $595 per hour
Law Clerks $485 per hour
Summer Associates $480 per hour
Paralegals $325 – $375 per hour
In addition, the firm will seek reimbursement for expenses
incurred.
Cleary Gottlieb also provided the following responses to the
questions set forth in Part D of the Revised U.S. Trustee
Guidelines:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: Cleary Gottlieb has not agreed to a variation of its
standard or customary billing arrangements for this engagement.
Question: Do any of the professionals included in this engagement
vary their rate based on the geographic location of the bankruptcy
case?
Response: None of the firm's professionals included in this
engagement have varied their rate based on the geographic location
of the Chapter 11 cases;
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference.
Response: Cleary Gottlieb was retained by the Debtors pursuant to
the engagement agreement dated Oct. 20, 2021. The billing rates and
material terms of the pre-bankruptcy engagement are the same as the
rates and terms currently proposed by the firm.
Question: Has your client approved your prospective budget and
staffing plan, and, if so for what budget period.
Response: The Debtors have approved or will be approving a
prospective budget and staffing plan for Cleary Gottlieb's
engagement for the post-petition period as appropriate. In
accordance with the United States Trustee Guidelines, the budget
may be amended as necessary to reflect changed or unanticipated
developments.
Luke Barefoot, Esq., a partner at Cleary Gottlieb Steen & Hamilton,
disclosed in a court filing that his firm is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Richard J. Cooper, Esq.
Luke A. Barefoot, Esq.
Jack Massey, Esq.
Cleary Gottlieb Steen & Hamilton, LLP
One Liberty Plaza
New York, NY 10006
Telephone: (212) 225-2000
Facsimile: (212) 225-3999
Email: rcooper@cgsh.com
lbarefoot@cgsh.com
jamassey@cgsh.com
About Alto Maipo
Alto Maipo owns the Alto Maipo Hydroelectric Project, outside
Santiago, Chile, which is currently under construction. The project
comprises two run-of-the-river plants with a combined installed
capacity of 531 megawatts. The run-of-the-river project is a joint
venture between U.S. utility subsidiary AES Gener and Chilean
mining company Antofagasta Minerals (AMSA).
Alto Maipo Delaware LLC and Alto Maipo SpA sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11507) on Nov. 17,
2021. Javier Dib, board president and chief restructuring officer,
signed the petitions. At the time of the filing, Alto Maipo
Delaware LLC estimated between $1 billion and $10 billion in both
assets and liabilities.
The cases are handled by Judge Karen B. Owens.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP and Cleary
Gottlieb Steen & Hamilton LLP as legal counsel; Nelson Contador
Abogados & Consultores SpA as local Chilean counsel; AlixPartners,
LLP as financial advisor; and Lazard Freres & Co. LLC and Lazard
Chile SpA as investment banker. Prime Clerk LLC is the claims,
noticing and administrative agent.
ALTO MAIPO: Taps Young Conaway Stargatt & Taylor as Legal Counsel
-----------------------------------------------------------------
Alto Maipo Delaware, LLC and Alto Maipo, SpA seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ Young
Conaway Stargatt & Taylor, LLP as co-counsel with Cleary Gottlieb
Steen & Hamilton, LLP.
The firm's services include:
(a) advising the Debtors regarding local rules, practices and
procedures and how to accomplish their goals in connection with the
prosecution of their Chapter 11 cases;
(b) reviewing, commenting or preparing drafts of documents to
be filed with the bankruptcy court;
(c) appearing in court and at any meeting with the U.S.
trustee and any meeting of creditors at any given time; and
(d) performing various services in connection with the
administration of the Chapter 11 cases.
Young Conaway received a retainer of $250,000 in connection with
the planning and preparation of initial documents and its proposed
post-petition representation of the Debtors.
The hourly rates of Young Conaway's attorneys and staff are as
follows:
Pauline K. Morgan $1,075 per hour
Sean T. Greecher $765 per hour
S. Alexander Faris $485 per hour
Heather P. Smillie $400 per hour
Debbie Laskin, Paralegal $320 per hour
In addition, the firm will seek reimbursement for expenses
incurred.
Young Conaway also provided the following responses to the
questions set forth in Part D of the Revised U.S. Trustee
Guidelines:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: Young Conaway has not agreed to a variation of its
standard or customary billing arrangements for this engagement.
Question: Do any of the professionals included in this engagement
vary their rate based on the geographic location of the bankruptcy
case?
Response: None of the firm's professionals included in this
engagement have varied their rate based on the geographic location
of the Chapter 11 cases.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference.
Response: Young Conaway was retained by the Debtors pursuant to
an engagement agreement dated as of Oct. 21, 2021. The billing
rates and material terms of the pre-bankruptcy engagement are the
same as the rates and terms currently proposed by the firm.
Question: Has your client approved your prospective budget and
staffing plan, and, if so for what budget period.
Response: The Debtors will be approving a prospective budget and
staffing plan for Young Conaway's engagement for the post-petition
period as appropriate. In accordance with the U.S. Trustee
Guidelines, the budget may be amended as necessary to reflect
changed or unanticipated developments.
Sean Greecher, Esq., a partner at Young Conaway Stargatt & Taylor,
disclosed in a court filing that the firm is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Pauline K. Morgan, Esq.
Sean T. Greecher, Esq.
S. Alexander Faris, Esq.
Young Conaway Stargatt & Taylor, LLP
Rodney Square
1000 North King Street
Wilmington, DE 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
Email: pmorgan@ycst.com
sgreecher@ycst.com
afaris@ycst.com
About Alto Maipo
Alto Maipo owns the Alto Maipo Hydroelectric Project, outside
Santiago, Chile, which is currently under construction. The project
comprises two run-of-the-river plants with a combined installed
capacity of 531 megawatts. The run-of-the-river project is a joint
venture between U.S. utility subsidiary AES Gener and Chilean
mining company Antofagasta Minerals (AMSA).
Alto Maipo Delaware LLC and Alto Maipo SpA sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11507) on Nov. 17,
2021. Javier Dib, board president and chief restructuring officer,
signed the petitions. At the time of the filing, Alto Maipo
Delaware LLC estimated between $1 billion and $10 billion in both
assets and liabilities.
The cases are handled by Judge Karen B. Owens.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP and Cleary
Gottlieb Steen & Hamilton LLP as legal counsel; Nelson Contador
Abogados & Consultores SpA as local Chilean counsel; AlixPartners,
LLP as financial advisor; and Lazard Freres & Co. LLC and Lazard
Chile SpA as investment banker. Prime Clerk LLC is the claims,
noticing and administrative agent.
APP REALTY: Asset Sale Proceeds to Fund Plan Payments
-----------------------------------------------------
APP Realty, LLC, submitted a Disclosure Statement on Nov. 30, for
the Amended Plan of Liquidation dated July 28, 2021.
The Debtor owns land and a building housing a car wash located in
the City of Chicago, Cook County, Illinois (the "Property").
The Plan is a "waterfall" liquidating plan. The Plan proposes to
sell all Assets of the Debtor for fair market value and use the
proceeds to pay Allowed Claims in the order of priority authorized
under the Bankruptcy Code, to the extent cash is available. The
sale of the Debtor's Assets will be completed no later than 4
months after the Effective Date, and distributions to Creditors
will be made at that time. Should the Debtor be unable to sell its
Assets within that time period, it will seek to dismiss this Case
and allow Creditors to pursue their pre-Petition Date remedies.
The Debtor's Plan provides for the sale of all its Assets to fund
the Plan. The sale is expected to close no later than 4 months
following the Effective Date. Except for Administrative and
ordinary operating expenses, no distributions will be made until
the sale closes. The Debtor will continue to operate its business
until the sale closes but such operations will not generate revenue
over and above the operating expenses that will need to be paid.
The Plan will treat claims as follows:
* Class 2 shall consist of the Allowed Secured Claim of the
City of Chicago Dept. of Law - Bankruptcy. This Claim shall be paid
in one lump sum payment out of the proceeds of the sale of the
Debtor's Assets no later than 4 months after the Effective Date, to
the extent cash is available after payment of Class 1 Claims. This
Claim is Impaired and the Claimant in this Class is entitled to
vote to accept or reject the Plan.
* The Class 3 Allowed Secured Claim of First Midwest Bank
shall be paid in one lump sum payment out of the proceeds of the
sale of the Debtor's Assets no later than 4 months after the
Effective Date to the extent cash is available after payment of
Class 1 and 2 Claims. The Debtor and its affiliate APP Car Wash,
LLC, also a debtor in this jointly-administered case, shall be
jointly and severally responsible for payment of this Claim. This
Class is Impaired and the Claimant in this Class is entitled to
vote to accept or reject the Plan.
* Class 4 shall consist of Allowed Unsecured Claims, other
than the Claims of Insiders. These Claims shall be paid pro-rata in
one lump sum payment out of the proceeds of the sale of the
Debtor's Assets no later than 4 months after the Effective Date, to
the extent cash is available after payment of Class 1, 2 and 3
Claims. This Class is Impaired and any holder of a Claim in this
class is entitled to vote to accept or reject the Plan.
* Class 5 shall consist of the Allowed Claims of Insiders of
the Debtor. These Claims shall be paid to the extent cash is
available after payment of Class 1, 2, 3 and 4 Claims. Class 5
Claimants are Impaired and are entitled to vote on the Plan, but
their Claims will not be counted for or against Confirmation.
* All Equity Interests in the Debtor shall be deemed cancelled
on the Effective Date. This Class is Impaired and is deemed to have
rejected the Plan.
The Plan is a waterfall liquidating plan. Under the Plan, the
Debtor will sell all its Assets for fair market value and use the
proceeds to pay Allowed Claims in the order of priority authorized
under the Bankruptcy Code, to the extent cash is available. The
sale of the Debtor's Assets will be completed no later than 4
months after the Effective Date, and distributions to Creditors
will be made at that time. Should the Debtor be unable to sell its
Assets within that time period, it will immediately dismiss this
Case and allow Creditors to pursue their pre-Petition Date remedies
without further leave of court or relief from the automatic stay.
If the sale does not occur within 4 months from the Effective Date
then Creditors shall be free to exercise all their remedies under
the pre-Petition Date loan agreements with the Debtors.
A full-text copy of the Disclosure Statement dated Nov. 30, 2021,
is available at https://bit.ly/3okeZaq from PacerMonitor.com at no
charge.
Attorneys for the Debtor:
Joyce W. Lindauer
Kerry S. Alleyne
Guy H. Holman
Joyce W. Lindauer Attorney, PLLC
1412 Main Street, Suite 500
Dallas, Texas 75202
Telephone: (972) 503-4033
Facsimile: (972) 503-4034
Paul M. Bauch
Kenneth A. Michaels, Jr.
Carolina Y. Sales
Bauch & Michaels, LLC
53 W. Jackson Blvd., Suite 1115
Chicago, Illinois 60604
Telephone: 312-588-5000
Facsimile: 312-427-5709
About APP Realty and APP Car Wash
APP Realty, LLC, owns land and a building housing a car wash
located in the City of Chicago, Cook County, Illinois.
APP Realty, LLC, a Chicago-based company, sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No.
21-03839) on March 24, 2021. The case is jointly administered with
the Chapter 11 case filed by an affiliate, APP Car Wash, LLC, on
May 20, 2021 (Bankr. N.D. Ill. Case No. 21-06550). Judge Lashonda
A. Hunt oversees the cases.
At the time of the filing, APP Realty had total assets of
$1,226,027 and total liabilities of $1,028,763. Meanwhile, APP Car
Wash disclosed total assets of up to $1 million and total
liabilities of up to $10 million.
Joyce W. Lindauer Attorney, PLLC and Bauch & Michaels, LLC serve as
the Debtors' bankruptcy counsel and local counsel, respectively.
ARCHBISHOP OF AGANA: Creditors' Committee Files Competing Plan
--------------------------------------------------------------
The Official Committee of Unsecured Creditors (the "Committee"),
which consists of 7 individuals who hold Tort Claims against Debtor
Archbishop of Agana, submitted a Disclosure Statement in connection
with the Plan of Reorganization dated Nov. 30, 2021.
The Plan is based on four methods of funding. The first method of
funding is through the sale of Archbishop real property. The
Archbishop has previously sold the Accion Hotel, for which proceeds
of approximately $5.2 million remain in a separate account.
The Committee further proposes to sell additional real property.
The real property will consist of two groups. The first is the real
property indisputably owned by the Debtor, which, including the
proceeds of the Accion, the Committee estimates is worth
approximately $9 million. The second is the real property in which
the Parishes and Schools allegedly hold an equitable interest, and
which is subject to litigation with the Committee, Adv. P. No.
19-00001 (Bankr. D Guam). The Committee estimates this second group
of property has a value in the amount of roughly $26 million.
Secondly, the Debtor will contribute $8 million in cash currently
held in bank accounts held in its own name, and which does not
include the Accion sale proceeds. The Debtor also alleges it hold
several million dollars for the benefit of the Parishes and
Schools, which amounts are also which is subject to litigation with
the Committee, Adv. P. No. 19-00001 (Bankr. D Guam). The Committee
proposes $1,538,437.46 of the disputed cash be used to fund the
Plan.
Third, the Plan requires the Reorganized Debtor continue to pay
creditors $1,000,000 per year for five years after the Plan is
Confirmed.
Fourth, the Pan will be funded by the Debtor's insurance companies.
Either the Debtor will transfer its rights to insurance to a rust
established for Tort Claimants and the Trust will litigate to
obtain judgments against the insurance companies or the insurance
companies will settle with the Trust for up to $45 million related
to the Debtor's direct insurance policies and $55 million related
to policies issued to the Boy Scouts of America, but in which the
Debtor hold a separate, independent right from the Boy Scouts of
America as an insured.
Thus, between the three forms of funding the Plan, it is expected
the Tort Claimants will receive the grand total sum of between
$23,000,000 and $141,538,437.46, which will be payable to the trust
set up through the Plan and Disclosure Statement process. These
funds will be allocated pursuant to the Trust Distribution
Protocols. In addition, a fund in an amount to be determined will
be established by the Reorganized Debtor to pay Unknown Tort
Claimants pursuant to the Plan, the Trust Distribution Protocols,
and the Trust.
Class 3 consists of Tort Claims Other Than Unknown Tort Claims. The
Plan creates a Trust to fund payments to Class 3 Claimants entitled
to such payments under the Plan, Trust Agreement, and Trust
Distribution Plan. The Trust will be funded by contributions from
the Archdiocese and others and the assignment of the Transferred
Insurance Interests. The Trust will make distributions to the Class
3 Claimants, as provided by this Plan, the Trust Agreement, and the
Trust Distribution Plan, which will represent the sole recovery
available to Class 3 Claimants in respect to any obligation owed by
Settling Insurers.
Class 4 consists of Unknown Tort Claims. The Reorganized Debtor
will assume liability for Unknown Tort Claims and establish the
Unknown Tort Claim Reserve Fund in the amount of the greater of (i)
$500,000.00 or (ii) the amount designated by the Unknown Tort Claim
Representative. The Reorganized Debtor will make distributions to
the Class 4 Claimants, as provided in Trust Distribution Plan, up
to the amount of the Unknown Tort Claim Reserve Fund, which fund
will represent the sole recovery available to Class 4 Claimants in
respect to any obligation owed by the Settling Insurers.
Class 5 consists of General Unsecured Claims. Each holder of a
Class 5 Claim will receive, directly from the Reorganized Debtor,
payment in full of such allowed Class 5 Claim, without interest, on
the Effective Date.
The means of implementing the Plan will depend on the outcome of
the pending litigation captioned Official Committee of Unsecured
Creditors v. Archbishop of Agana, 19-ap-00001 (Bankr. D. Guam).
Should the Official Committee of Unsecured Creditors prevail and
the Court enter judgment affirming that the Debtor holds legal and
equitable title to certain disputed property, then the Plan will be
implemented (Option 1). If, however, the Court finds that the
Debtor does not hold an equitable interest in certain of the
disputed property, the Plan will be implemented (Option 2).
Option 1: Trust Formation and Funding. The Trust will be
established for the purpose of receiving, liquidating, and
distributing Trust Assets in accordance with this Plan and the
Trust Distribution Plan. Cash and other assets will be paid or
transferred, as applicable, to the Trust Account as provided in the
Plan. The Debtor will transfer $9,538,437.46 to the Trust. For five
years following the Effective Date, the Reorganized Debtor will pay
the Trust $1,000,000.00 on the anniversary date of the Effective
Date, for a total cash contribution following the Effective Date of
$5,000,000.00.
Option 2: Trust Formation and Funding. The Trust will be
established for the purpose of receiving, liquidating, and
distributing Trust Assets in accordance with this Plan and the
Trust Distribution Plan. Cash and other assets will be paid or
transferred, as applicable, to the Trust Account as provided in the
Plan. The Debtor will transfer $8,000,000.00 to the Trust. For five
years following the Effective Date, the Reorganized Debtor will pay
the Trust $1,000,000.00 on the anniversary date of the Effective
Date, for a total cash contribution following the Effective Date of
$5,000,000.00.
A full-text copy of the Disclosure Statement dated Nov. 30, 2021,
is available at https://bit.ly/3lziPdZ from PacerMonitor.com at no
charge.
Attorneys for the Official Committee of Unsecured Creditors:
STINSON, LLP
Robert T. Kugler
Edwin H. Caldie
Andrew J. Glasnovich
50 South Sixth Street, Suite 2600
Minneapolis, MN 55402
Telephone: 612-335-1500
Facsimile: 612-335-1657
E-mail: robert.kugler@stinson.com
ed.caldie@stinson.com
drew.glasnovich@stinson.com
About Archbishop of Agana
Roman Catholic Archdiocese of Agana --https://www.aganaarch.org/--
is an ecclesiastical territory or diocese of the Catholic Church in
the United States. It comprises the United States dependency of
Guam. The Diocese of Agana was established on Oct. 14, 1965, as a
suffragan of the Archdiocese of San Francisco, California. It is a
tax-exempt entity (as described in 26 U.S.C. Section 501).
The Archbishop of Agana, also known as the Roman Catholic
Archdiocese of Agana, sought Chapter 11 protection (D. Guam Case
No. 19-00010) on Jan. 16, 2019. Rev. Archbishop Michael Jude
Byrnes, S.T.D., Archbishop of Agana, signed the petition. The
Archdiocese scheduled $22,962,686 in assets and $45,662,941 in
liabilities as of the bankruptcy filing.
The Hon. Frances M. Tydingco-Gatewood is the case judge.
The Archdiocese tapped Elsaesser Anderson, Chtd., as bankruptcy
counsel, and John C. Terlaje, Esq., as special counsel.
The Office of the U.S. Trustee appointed an official committee of
unsecured creditors on March 6, 2019. The Committee retained
Stinson Leonard Street LLP as bankruptcy counsel, and The Law
Offices of William Gavras as local counsel.
ASHFIELD ACTIVE: Fitch Alters Outlook on 'BB-' IDR to Stable
------------------------------------------------------------
Fitch Ratings has downgraded the rating on the $118 million
Industrial Development Authority of the City of Kirkwood, Missouri
bonds issued on behalf of Ashfield Active Living and Wellness
Communities, Inc. d/b/a Aberdeen Heights (Aberdeen) series 2017A to
'BB-' from 'BB'. Fitch has also assigned a 'BB-' Issuer Default
Rating (IDR).
The Rating Outlook is revised to Stable from Negative.
SECURITY
The bonds are secured by a pledge of unrestricted receivables, a
first deed of trust lien on certain property and a debt service
reserve fund.
ANALYTICAL CONCLUSION
The downgrade to 'BB-' reflects the continued deterioration in
independent living unit (ILU) occupancy which has pressured
profitability and coverage ratios. Although the community has
historically enjoyed strong occupancy in all levels of care since
opening in 2011, ILU occupancy has declined in each of the last
four years due to heightened resident turnover and disruptions to
move-ins and marketing efforts stemming from the pandemic. Despite
significant government relief funding and a sizeable transfer from
the parent company, maximum annual debt service (MADS) coverage
fell to 1.1x in fiscal 2021, below the 1.2x covenant. Move-in
activity has picked up in recent months, but resident turnover
could remain elevated over the near-term which would pressure
Aberdeen's ability to rebuild occupancy.
The Stable Outlook reflects Fitch's opinion that the community's
still solid operating profitability and the demonstrated financial
support from the parent partially mitigate the risks posed by the
weak ILU occupancy and high-debt burden at the lower rating level.
KEY RATING DRIVERS
Revenue Defensibility: 'bb'
Weakened ILU Occupancy
Fitch assesses Aberdeen's revenue defensibility as weak, which
reflects the trend of weakening ILU occupancy over the last few
years. After averaging close to 96% in prior years, ILU occupancy
began declining in 2017 due to heightened transitions through the
continuum of care. Occupancy further deteriorated through the
pandemic due to restrictions on move-ins and potential new resident
visits, falling to 81% in fiscal 2021. Although move-ins have
picked up since restrictions were lifted, transitions through the
continuum remain elevated which will pressure Aberdeen's ability to
rebuild ILU occupancy over the near-term.
Aberdeen operates in a highly competitive market with eight other
continuing care retirement communities (CCRCs) in its primary
marketing area (PMA), along with a number of standalone ILUs,
assisted living units (ALUs), and skilled nursing facilities (SNF).
However, most of the retirement communities in the PMA are highly
occupied at or near capacity. In order to address competitive
concerns and to improve ILU occupancy, management is exploring
changes to the contract pricing structure.
Operating Risk: 'bb'
Solid Operations; Weak Capital-Related Metrics
Despite historically strong operating performance, Fitch assesses
Aberdeen's operating profile as weak, which primarily reflects the
very high-debt burden. Profitability remained adequate in fiscal
2021, supported by over $3 million in COVID-19 relief and Paycheck
Protection Program funding. Further operational support came from a
$2 million contribution from Presbyterian Manors of Mid-America
Inc. (PMMA), which helped stabilize operating revenues that were
pressured by low ILU occupancy. With these additional funds, the
operating ratio and net operating margin remained solid in fiscal
2021 (YE September 30; unaudited) at 94.6% and 24.5%,
respectively.
However, due to higher than expected turnover, net entrance fee
receipts were a negative $1.1 million resulting in a net operating
margin-adjustment of 20.6%, well below the historical average. As a
result of the weaker cash flows in fiscal 2021, Aberdeen's already
weaker capital-related metrics deteriorated further. Revenue-only
MADS coverage was solid at 1.2x due to the relief funds but debt to
net available was very weak at 13.7x and MADS was a very weak 28.2%
of fiscal 2021 revenues. MADS coverage of 1.1x was also below the
1.2x debt service covenant which triggered a management report.
While Fitch expects profitability and coverage ratios to improve
over the medium-term as ILU occupancy recovers, near-term operating
pressures could lead to another violation in fiscal 2022.
Aberdeen's potential expansion plans are on hold for at least one
to two years until occupancy recovers. The entity will primarily
focus on its marketing efforts with the goal of increasing existing
ILU occupancy. Any IL future expansion would be limited to a
maximum of 14 cottages and it is likely that Aberdeen would fund
the project with initial entrance fees, temporary debt or some
combination of the two sources. Aberdeen is also exploring adding
more skilled nursing and memory care units (MCUs) to address strong
demand for those service lines. Fitch notes Aberdeen has no
long-term debt capacity at the current rating level and debt
issuance associated with an expansion could pressure the rating.
Financial Profile: 'bb'
Weak Financial Profile
Fitch assesses Aberdeen's financial profile as 'bb' in the context
of its 'bb' revenue defensibility and 'bb' operating risk
assessments. The community's $28.4 million in unrestricted cash and
investments translates into 477 days cash on hand and 24.2%
cash-to-adjusted debt as of Sept. 30, 2021 (unaudited).
Through Fitch's baseline scenario, or Fitch's best estimate of the
most likely scenario of financial performance over the next five
years given current economic expectations, Fitch expects that
Aberdeen's cash-to-adjusted debt metric will gradually improve as
ILU occupancy recovers.
Fitch's stress scenario assumes both a significant economic stress
(to reflect market volatility) and business cycle stress, followed
by a recovery and then stability. Through the stress,
cash-to-adjusted debt recovers to close to 25% by year four and
MADS coverage recovers to 1.4x.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- A recovery in ILU occupancy to above 90%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A failure to improve ILU occupancy to close to 86% over the
next two years;
-- A weakening in operating performance or an indication that
support from the parent is considered unlikely where MADS
coverage is below 1.0x;
-- An unexpected decline in liquidity or a permanent debt
issuance that leads to cash/debt falling below 20%.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
Aberdeen is a Type-A CCRC located on a 21.7-acre site in Kirkwood,
MO. Aberdeen's current unit mix consists of 234 ILUs, 30 ALUs, 15
MCUs, and 38 SNF beds. Most resident agreements include 90%-95%
refundable entrance fee contracts. The refundable portion of the
entrance fee is refunded upon re-occupancy of the unit and receipt
of sufficient proceeds from re-sale.
Aberdeen is a controlled affiliate of PMMA. Presbyterian Manors,
Inc. (PMI) is another controlled affiliate of PMMA, which owns 15
of the PMMA managed communities and two hospices. The Salina
Presbyterian Manor Endowment Fund is also under the PMI structure.
Fitch views the affiliation favorably and believes it provides
Aberdeen with a breadth of resources not typically available to a
single-site community. Day-to-day supervision and management of the
community transitioned from Greystone Management Services Company,
LLC to PMMA, with a new management team taking over in July 2019.
Aberdeen had total revenues of $27.5 million in fiscal 2021
(unaudited).
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.
AUTO-SWAGE PRODUCTS: Auction of Shelton Property Set for Dec. 7
---------------------------------------------------------------
Judge Julia A. Manning of the U.S. Bankruptcy Court for the
District of Connecticut authorized Auto-Swage Products, Inc., to
enter into the Stalking Horse Agreement with Mianus Holdings, LLC,
in connection with the sale of the real property known as 726 River
Road, situated in the City of Shelton, State of Connecticut, and
all improvements situated thereon, for $1.125 million, subject to
overbid.
Hearings on the Motion were held on Oct. 28, 2021, and Nov. 1,
2021.
The Bid Procedures are approved and will govern all bids and bid
proceedings relating to the sale of the Debtor's Property. The
Debtor is authorized to take any and all actions necessary or
appropriate to implement the Bid Procedures, provided that any such
actions must be consistent with the Bid Procedures.
The form and manner of service of the Notice of Auction and Sale
described in the Motion is approved.
The Bid Deadline was Dec. 3, 2021, at 4:00 p.m. (ET). The Stalking
Horse Buyer will constitute a Qualified Bidder for all purposes and
in all respects with regard to the Bid Procedures. If the Debtor
receives an additional bid by the Bid Deadline, the Court will
conduct a hearing to determine whether such bid or bids constitute
a Qualified Bid, on Dec. 7, 2021, at 2:00 p.m. (ET). If the Court
determines that such additional bid or additional bids constitute a
Qualified Bid, an Auction will be held in the presence of the
Court, the Honorable Julie A. Manning presiding, over the ZoomGov
platform on Dec. 9, 2021, commencing at 10:00 a.m. (ET).
The minimum bid is $1.24 million payable in cash and includes a
credit to the Seller at the time of closing that is equivalent to
the amount held in escrow for the State of Connecticut for
environmental remediation, which is presently approximately
$51,207.93. The cash deposit require is in an amount equal to 10%
of the cash purchase price of such bid. Bidding will commence with
the Opening Bid and thereafter will be conducted in increments of
not less than $10,000.
Objections to the Sale Transaction is due Dec. 7, 2021, at by 12:00
noon (ET). Objections directly related to matters concerning the
Auction (if held) is due Dec. 10, 2021, at by 5:00 p.m. (ET).
The Sale Hearing, at which the Debtor will seek approval of the
Highest Bid, will be held in the Court on Dec. 14, 2021, commencing
at 3:00 p.m. (ET) and continuing, if necessary, on Dec. 15, 2021,
commencing at 10:00 a.m. (ET). All witnesses and exhibit lists
will be filed on Dec. 13, 2021, by 12:00 noon (ET). If the court
approves the sale transaction, a closing thereon will occur no
later than Dec. 17, 2021.
The Break-Up Fee in the amount of $37,500 is approved.
The Debtor is authorized to enter into the Real Estate Purchase and
Sale Agreement dated June 21, 2021, as amended.
A copy of the Bidding Procedures and PSA is available at
https://tinyurl.com/5exev2a2 from PacerMonitor.com free of charge.
About Auto-Swage Products
Auto-Swage Products, Inc., is a Connecticut corporation engaged in
metal finishing operations. The Debtor sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Conn. Case No. 21
50502) on Aug. 7, 2021, disclosing $626,883 in total assets and
$1,239,385 in total liabilities. Judge Julie A. Manning oversees
the case. Jeffrey M. Sklarz, Esq., at Green & Sklarz, LLC serves
as the Debtor's legal counsel.
BEACON ORGANICS: Public Sale Set for Dec. 3
-------------------------------------------
Aion Acquisition LLC ("secured party") will sell a total of
2,251,566 uncertified A units, including certain attendant rights
("units"), in Beacon Organics LLC to the highest qualified bidder
in a public sale on Dec. 3, 2021, at 10:00 a.m. local time in David
Graham & Stubbs LLP, 1550 17th Street, Suite 500 in Denver,
Colorado 80202.
According to the information available to the secured party, the
units represent 59.8% of the A units of Beacon and a 43.4%
ownership interest in Beacon across all classes of equity. The
units consist of (i) 1,599,393 A units held by Jayme Bella, and
(ii) 652,173 A units held by Sharon Neiburg. Bella and Neiburg
pledged the Bella units and Neigburg units, respectively, to secure
repayment of loans extended by the secured party to Beacon and its
subsidiaries.
Further information on regarding the sale, contact the counsel for
the secured party in writing:
Adam Hirsch
Kyler Burgi
Davis Graham & Stubbs LLP
1550 17th Street, Suite 500
Denver, CO 80202
Email: adam.hirsch@dgslaw.com
kyler.burgi@dgslaw.com
Beacon Organics engages in manufacturing and marketing organic
consumer products.
BELVIEU BRIDGE: Wins Cash Collateral Access Thru Dec 31
-------------------------------------------------------
Judge David E. Rice of the U.S. Bankruptcy Court for the District
of Maryland authorized Belvieu Bridge Properties Group, LLC to use
cash collateral on an interim basis. U.S. Bank National
Association, as Trustee for Velocity Commercial Capital Loan Trust
2017-2, agreed to such use.
Before the Petition Date, the Debtor borrowed from Velocity
Commercial under two loans: (1) for $1,500,000, evidenced by a
Semi-Annual Adjustable Term Note (Belvieu Note), and (2) for
$1,176,000, evidenced by a Semi-Annual Adjustable Term Note
(Lakeview Note). The Belvieu Note and Lakeview Note are secured,
as applicable, by Purchase Money Deeds of Trust, Security Agreement
and Assignment of Leases and Rents on the Belvieu Property and
Lakeview Property.
The Debtor is permitted to make payments slated in the order and to
pay reasonable and ordinary operating expenses in conformity with
and not to exceed the amounts set forth on the budget. The
authorization to use Cash Collateral pursuant to the Court order
shall terminate upon the earlier of (a) December 31, 2021, or (b)
the date on which the Lender serves and files a notice of an Event
of Default under the terms of the order. The Debtor's ability to
use Cash Collateral may be further extended by either written
agreement between the Debtor and the Lender or further Court order.
The Debtor may expend amounts in excess of those shown on the
attached budget only on written consent of Lender or further Court
order.
The Debtor will, subject to Court approval, employ a property
manager acceptable to the Lender. The Lender and the Debtor consent
to the Debtor's employment of Pecovic Properties LLC as the
Property Manager.
The Debtor will cooperate with the Property Manager in making
decisions regarding the management and operation of the Properties
and will not interfere in any material way with the Property
Manager's management of the Properties.
Within three business days of entry of the order, the Debtor will
open two new DIP accounts, an operating account and a tenant
deposit account. Within three business days after Court approval of
employment of the Property Manager, the Debtor will add designated
employees of the Property Manager as signatories on the Accounts
with authority to make deposits and withdrawals. The Property
Manager and the Debtor will have full and equal access to the
Accounts. All disbursements from the Accounts will be signed or
approved by both the Property Manager and the Debtor, which
approval, consistent with the foregoing paragraphs, will not
unreasonably be withheld.
All rents collected from tenants of the Properties will be
deposited in the Operating Account. Expenses of the operation of
the Properties will be paid from the Operating Account.
Once opened, the Debtor will immediately transfer to the Operating
Account an amount equal to (a) $25,000 plus (b) all rents received
from tenants of the Properties less expenditures made for the
Properties subsequent to October 31, 2021, and will simultaneously
provide Lender with an accounting showing the calculation of the
amount so transferred. The Debtor will promptly transfer the
security deposits that it is holding from tenants of the Properties
to the Security Deposit Account.
These events constitute an "Event of Default:"
a. The Debtor fails to make when due any payment to the Lender
required by the order;
b. The Debtor uses cash collateral other than in accordance
with the terms of the order;
c. The Debtor fails timely to provide to the Lender the
schedules and reports required by the order;
d. The Debtor fails to reasonably cooperate with the Property
Manager, open the Accounts or transfer the monies as required by
this order;
e. The Debtor fails to provide Lender with access to the
Debtor's books and records as required by the order; or
f. The Debtor fails to maintain insurance on the property.
A copy of the consent order is available for free at
https://bit.ly/31hfKsk from PacerMonitor.com.
About Belvieu Bridge Properties Group
Baltimore, Md.-based Belvieu Bridge Properties Group, LLC is the
owner of multi-unit residential apartment buildings located at 3915
Belvieu Avenue & 4610 Wallington Avenue, Baltimore, MD 21215; and
2427-2429 & 2431-2433 Lakeview Avenue, Baltimore, MD 21217. The
company is the owner of fee simple title to the properties, having
a current value of $2.93 million.
Belvieu Bridge Properties Group filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case
No. 21-11452) on March 9, 2021. Zenebe Shewayene, managing member,
signed the petition. At the time of the filing, the Debtor
disclosed total assets of $3,115,322 and total liabilities of
$3,108,307.
Judge David E. Rice oversees the case. The Weiss Law Group, LLC
serves as the Debtor's legal counsel.
James C. Olson, Esq., represents lender U.S. Bank National
Association, as Trustee for Velocity Commercial Capital Loan Trust
2017-2.
BGT INTERIOR: Amends Several Secured Claims Pay Details
-------------------------------------------------------
BGT Interior Solutions, Inc., submitted an Amended Chapter 11 Plan
of Reorganization dated Nov. 30, 2021.
The company filed this Chapter 11 bankruptcy case seeking to
reorganize its business. BGT ultimately determined that the most
prudent course of action to maximize distributions to Creditors in
this case was to cease operations and liquidate its assets, with
the net balance of the receipts to be utilized to help fund the
payments contemplated by the Plan.
Class 6 consists of the secured claim of the U.S. Small Business
Administration for funding pursuant to the Economic Injury Disaster
Loan program. As of the filing of the Plan, the debt owed to the
U.S. Small Business Administration was $150,000.00. The Class 6
claim shall be paid in full from the proceeds of the sale. To the
Extent a Holder of a Secured Claim is undersecured, any deficiency
balance that is due and owing will be treated as a Class 11 Claim.
A Holder of such claim must amend its proof of claim no later than
60 days after the Effective Date. Failure to amend a Claim will
result in disallowance of any deficiency claim.
Class 9 consists of the Secured Tax Claims held in favor of Harris
County, Cypress Fairbanks ISD, and Travis County taxing authorities
for 2021 estimated taxes. Such Secured Tax claims will be paid in
Cash and in fully by the Debtor on the later of (1) theEffective
Date, (ii) the date on which such Priority Tax Claim becomes an
Allowed Claim; or (iii) such other date as the Debtor and the
holder of the Allowed Priority Tax Claim shall agree.
* Notwithstanding anything in the Plan or this Confirmation
Order to the contrary, any and all tax liens securing the
prepetition and post-petition ad valorem taxes of Harris County and
Cypress-Fairbanks ISD are retained, whether for pre-petition tax
years or for the current tax year, on any property of the Debtor
until paid in full. The claims of Harris County and
CypressFairbanks ISD shall each accrue interest at the rate of 12%
per annum from the Petition Date through and including the
Confirmation Date, and thereafter, Plan interest shall accrue at
12% per annum on the entire balances until the tax claims are paid
in full.
* The Debtor shall pay all taxes owed for prepetition tax
years, including 2019 and 2020, in full on the Effective Date. The
Debtor shall pay the 2021 taxes owed to Harris County and Cypress
Fairbanks ISD in the ordinary course of business and prior to
delinquency under Texas law. In the event the 2021 taxes are not
paid prior to delinquency as required under Texas law, interest
shall accrue as provided under Texas law and Harris County and
Cypress-Fairbanks ISD are each authorized to immediately commence
any and all collection actions authorized under Texas law, in state
court without further order of this Court.
* Debtor or Purchaser shall pay all post-petition ad valorem
tax liabilities (tax year 2022 and subsequent tax years) owing
Harris County and Cypress-Fairbanks ISD in the ordinary course of
business as such tax debt comes due and prior to said ad valorem
taxes becoming delinquent without the need of Harris County and
Cypress-Fairbanks ISD to file any administrative expense claims
and/or requests for payment. Harris County and Cypress-Fairbanks
ISD reserve the right to amend their claims to reflect the final
2021 tax amounts and is not capped by the amounts set forth in the
Plan.
Class 10 consists of the Claims of the Texas Comptroller, Texas
Workforce Commission, US Customs and Border Protection ("CBP"), and
any other applicable taxing authorities. Allowed Priority Tax
Claims that are secured claims shall be entitled to interest at the
rate provided by applicable law.
* Priority tax claims owed to CBP shall be paid through an
offset of $100,000.00 from a refund owed to the Debtor plus a
payment of $50,000.00 from the closing of the sale, which will
occur no later than January 31, 2022. The balance of the CBP claim
shall be paid by the Purchaser in equal monthly installments of
principal and interest no later than 60 months of the Debtor's
bankruptcy petition date or as otherwise agreed to by CBP. The CBP
priority tax claims shall accrue interest at the interest rate of
3.0% per annum from the Plan's Effective Date until paid in full.
* Priority tax claims owed to the Texas Comptroller shall be
paid in full: (1) on the Effective Date; (2) in equal monthly
installments of principal and interest no later than 60 months of
the Debtor's bankruptcy petition date; or (3) as otherwise agreed
to by the Comptroller. The Comptroller's priority tax claims shall
accrue interest at the statutory rate of interest currently 4.25%
per annum, from the Plan's Effective Date until paid in full. The
Debtor anticipates payment of the Texas Comptroller's claim through
a down payment of $450,000.00 with the remaining balance being paid
in full no later than the 60th month following the Petition Date.
Following the sale of assets, the obligations owed to the Texas
Comptroller shall become the obligation of the Purchaser.
Class 11 consists of the allowed general unsecured claims of the
unsecured creditors in this Estate. The deadline for filing proofs
of claim is October 25, 2021. After payment in full of all Allowed
Class 1 and Class 2 claims, the payment of $150,000.00 to Class 6,
the payment of $50,000 to CBP in Class 10, and the payment of
$450,000.00 to the Texas Comptroller in Class 10, Holders of
Allowed Class 11 Unsecured Claims will receive a Pro Rata share of
remaining net sales proceeds until all Class 11 Claims are paid in
full or the net sales proceeds are depleted. Any distribution owed
to the holder of a claim which is disputed, unliquidated, or
contingent, shall be held by the Debtor in a Disputed Claims
Reserve account until such time as the claim is fully resolved with
a final order or other mutually agreeable settlement agreement.
Class 12 consists of the ownership interest in the Debtor and all
unsecured claims held by Keith Wagner, the sole shareholder of the
Debtor. These parties shall receive nothing under the Plan unless
and until all other classes are paid in full.
The Debtor intends to sell all of its assets including, but not
limited to, the name BGT Interior Solutions, Inc., the equipment,
furniture, fixtures, accounts receivables, open contracts, works in
progress, intellectual property, inventory, claims, and causes of
action to a new company known as BGT Interiors, Inc., ("Purchaser")
for a gross purchase price of $1,000,000.00 ("Purchase Price"),
with such sale being subject to the claims of Veritex Community
Bank, the US Small Business Administration, CIT, and the Texas
Comptroller.
Incident to the sale, the Debtor may change its name with the Texas
Secretary of State to Builders Granite & Tile, Inc. Following
receipt of the Purchase Price, the Debtor's review of all claims,
and the resolution of any objections to improperly filed claims,
the Debtor will pay creditors as outlined herein. The closing of
the sale contemplated shall occur on or before January.
A full-text copy of the Amended Plan of Reorganization dated Nov.
30, 2021, is available at https://bit.ly/3Ijrk6N from
PacerMonitor.com at no charge.
Counsel for the Debtor:
Kimberly A. Bartley, Esq.
Waldron & Schneider, PLLC
15150 Middlebrook Drive
Houston, TX 77058
Tel: (281) 488-4438
Fax: (281) 488-4597
Email: kbartley@ws-law.com
About BGT Interior Solutions
BGT Interior Solutions, Inc. owns and operates a business known as
BGT Interior Services, Inc., which provides multi-family luxury
interior finish packages to the construction industry in Texas and
nationwide. The company specializes in custom turn-key flooring and
countertop packages to fit a variety of multi-family, hospitality,
or commercial settings. The company offers custom design services
and interior finish packages, providing its customers a single
point of contact from fabrication to installation.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-32124) on June 23,
2021. In the petition signed by Robert Wagner, vice president and
director, the Debtor disclosed up to $50,000 in both assets and
liabilities.
Judge Eduardo V. Rodriguez oversees the case.
Kimberly A. Bartley, Esq., at Waldron & Schneider, L.L.P. is the
Debtor's counsel.
Veritex Community Bank, as creditor, is represented by Crady Jewett
McCulley & Houren LLP.
BOREAL CAPITAL: To Restructure Under CCAA Proceedings
-----------------------------------------------------
Boreal Capital Partners Ltd., JRB-331 Sheddon Holdings Ltd.,
2123068 Ontario Limited, JRB-109 Reynolds Holdings Ltd., JRB-339
Church Holdings Ltd. and JRB-147 Church Holdings Ltd. brought an
application before the Ontario Superior Court of Justice
(Commercial List) under the Companies' Creditors Arrangement Act
to, among other things, obtain a stay of proceedings to allow them
an opportunity to restructure their business and affairs.
The Court granted an Initial Order in these CCAA proceedings that,
among other things, appointed Ernst & Young Inc. as monitor of the
Companies, ordered a stay of proceedings in favor of the Companies
until Dec. 3, 2021, and appointed Kesmark Estates Ltd. as Chief
Restructuring Officer.
The Companies said they are currently requesting an extension of
the stay order period until Feb. 18, 2021. The Companies require
the extension in order to (i) continue the development of certain
active projects; (ii) conduct the investigation; and (iii) develop
a viable restructuring plan. The Companies noted that they have
continued to operate in good faith and with due diligence since the
date of the initial order.
The monitor has set a case website at https://www.ey.com/ca/Boreal
to disseminate information to stakeholders. In addition to case
website, the monitor has set up an email address,
BorealCapital.Monitor@ca.ey.com, and hotline phone number,
1-844-201-1547, that are specific to these CCAA proceedings in
order to respond to inquiries from creditors and other
stakeholders.
Lawyers for the Companies:
Thornton Grout Finnigan LLP
TD West Tower, Toronto-Dominion Centre
100 Wellington Street West, Suite 3200
Toronto, ON M5K 1K7
Fax: (416) 304-1313
Rebecca L. Kennedy
Email: rkennedy@tgf.ca
Tel: (416) 304-0603
Rachel (Bengino) Nicholson
Email: rnicholson@tgf.ca
Tel: (416) 304-1153
Puya Fesharaki
Email: pfesharaki@tgf.ca
Tel.: (416) 304-7979
Court-appointed Monitor:
Ernst & Young Inc.
EY Tower, 100 Adelaide Street West
Toronto, ON M5H 0B3
Alex Morrison
Email: alex.f.morrison@ca.ey.com
Tel: (416) 941-7743
Greg Adams
Email: Greg.J.Adams@parthenon.ey.com
Tel: (613) 598-4350
Daniel Taylor
Email: Daniel.Taylor@parthenon.ey.com
Tel: (416) 932-6008
Lawyers for the Court-appointed Monitor:
Lenczner Slaght LLP
130 Adelaide Street West
Suite 2600
Toronto, ON M5H 3P5
Fax: (416) 865-9010
Peter J. Osborne
Email: posborne@litigate.com
Tel: (416) 865-3094
Sarah Bittman
Email: sbittman@litigate.com
Tel: (416) 865-9673
Lawyers for the DIP Lender, Halmont Properties Corporation
Wildeboer Dellelce LLP
Wildeboer Dellelce Place
Suite 800, 365 Bay Street
Toronto, ON M5H 2V1
Daniel Shapira
Email: dshapira@wildlaw.ca
Tel: (416) 847-6910
Jessica Sorbara
Email: jsorbara@wildlaw.ca
Tel: (416) 847-6925
The Boreal Entities develops residential and commercial real estate
projects in and around Oakville, Ontario, including multifamily
residential condominium projects. Five projects are underway and
one multifamily project at 331 Sheddon Avenue, Oakville is
currently at an advanced stage of construction.
BRAZOS ELECTRIC: Shearman Updates on NRG Energy, 4 Others
---------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Shearman & Sterling LLP submitted a supplemental
verified statement to provide an updated list of Claimants that it
is representing in the Chapter 11 cases of Brazos Electric Power,
Cooperative, Inc.
Each of the Claimants has retained Shearman & Sterling as its
attorney in connection with certain matters arising in the chapter
11 case of the above-captioned Debtor.
Shearman & Sterling does not represent the Claimants as a
"committee" as such term is used in Bankruptcy Code and Bankruptcy
Rules and does not undertake to represent the interests of, and is
not a fiduciary for, any creditor, party in interest, or other
entity that has not signed a retention agreement with Shearman &
Sterling.
As of Nov. 30, 2021, each Claimants and their disclosable economic
interests are:
NRG Energy, Inc.
804 Carnegie Center
Princeton, NJ 08540
* Claim No. 415
ENGIE Energy Marketing NA, Inc.
1360 Post Oak Boulevard
Suite 400
Houston, TX 77056
* Claim No. 416
Talen Energy Supply, LLC
1780 Hughes Landing Blvd. Suite 800
The Woodlands, TX 77380
* Claim No. 397
NextEra Energy Marketing, LLC
700 Universe Blvd.
Juno Beach, FL 33408
* Claim Nos.: 328, 329, 330, 331, 332, 333, 334, 338, 339, 340,
341, 342 and 345.
Vitol Inc.
2925 Richmond Ave, 11th Floor
Houston, TX 77098
* Unliquidated, including without limitation for contingent Uplift
Charges
Shearman & Sterling reserves the right to amend and/or supplement
this Statement in accordance with the requirements of Bankruptcy
Rule 2019 at any time in the future.
Counsel for NRG Energy, Inc., et. al can be reached at:
SHEARMAN & STERLING LLP
C. Luckey McDowell, Esq.
Ian E. Roberts, Esq.
2828 North Harwood Street
Dallas, TX 75201
Tel.: 214-271-5350
E-mail: luckey.mcdowell@shearman.com
ian.roberts@shearman.com
Joel Moss, Esq.
535 Mission Street
24th Floor
San Francisco, CA 94105
Tel.: 212-848-4693
E-mail: joel.moss@shearman.com
- and -
Jonathan M. Dunworth, Esq.
599 Lexington Avenue
New York, NY 10022
Tel.: 212-848-5288
E-mail: jonathan.dunworth@shearman.com
A copy of the Rule 2019 filing is available at
https://bit.ly/3dq1pff at no extra charge.
About Brazos Electric Power Cooperative
Brazos Electric Power Cooperative Inc. is a 3,994-megawatt
transmission and generation cooperative which members' service
territory covers 68 counties from the Texas Panhandle to Houston.
It was organized in 1941 and the first cooperative formed in the
Lone Star state with the primary intent of generating and supplying
electrical power. At present, Brazos Electric is the largest
generation and transmission cooperative in the state and is the
wholesale power supplier for its 16 member-owner distribution
cooperatives and one municipal system.
Before the severe cold weather that blanketed Texas with
sub-freezing temperatures February 2021, Brazos Electric was in all
respects a financially robust, stable company with a strong "A" to
"A+" credit rating. But Brazos Electric Power Cooperative ended up
in Chapter 11 bankruptcy in Texas after racking up an estimated
$2.1 billion in charges from Electric Reliability Council of Texas
(ERCOT) over seven days of the freeze.
Brazos Electric filed a voluntary petition for relief under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-30725)
on March 1, 2021. At the time of the filing, the Debtor disclosed
assets of between $1 billion and $10 billion and liabilities of the
same range.
Judge David R. Jones oversees the case.
The Debtor tapped Norton Rose Fulbright US, LLP and O'Melveny &
Myers LLP as bankruptcy counsel; Foley & Lardner LLP and Eversheds
Sutherland US LLP as special counsel; Collet & Associates LLC as
investment banker; and Berkeley Research Group, LLC as financial
advisor. Ted B. Lyon & Associates, The Gallagher Law Firm, West &
Associates LLP, Butch Boyd Law Firm and Boyd Smith Law Firm, PLLC
serve as special litigation counsel and McKool Smith PC serves as
special conflicts counsel. Stretto is the claims and noticing
agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtor's case on March 15, 2021. The
committee is represented by the law firms of Porter Hedges, LLP and
Kramer, Levin, Naftalis & Frankel, LLP. FTI Consulting, Inc. and
Lazard Freres & Co. LLC serve as the committee's financial advisor
and investment banker, respectively.
BRETHREN VILLAGE: Fitch Affirms 'BB+' IDR, Outlook Stable
---------------------------------------------------------
Fitch Ratings has assigned a 'BB+' Issuer Default Rating (IDR) and
affirmed the 'BB+' rating on the following bonds issued by
Lancaster County Hospital Authority (PA) on behalf of Brethren
Village (BV):
-- $88.39 million revenue bonds, series 2017;
-- $8.97 million revenue bonds, series 2015.
The Rating Outlook is Stable.
SECURITY
The bonds are secured by a mortgage on BV's main campus, a security
interest in pledged assets (including gross receipts) and debt
service reserve funds.
ANALYTICAL CONCLUSION
The affirmation of the 'BB+' rating reflects BV's continued stable
demand for independent living units (ILUs) and still solid,
although slightly softer, census for assisted living units (ALUs)
through the pandemic, reflecting BV's favorable service area, long
operating history and expansive service offerings. Despite pandemic
pressures, good cost management and solid IL occupancy, federal
relief funding helped keep operating metrics consistent with the
mid-range operating risk assessment. Leverage remains high but BV
demonstrates adequate financial flexibility through Fitch's
forward-looking scenario analysis with adequate maximum annual debt
service (MADS) coverage and ample liquidity that support the 'BB+'
rating.
KEY RATING DRIVERS
Revenue Defensibility: 'bbb'
Stable Demand Profile
BV's expansive service offerings, favorable service area and long
operating history have translated into strong demand across all
service lines despite a competitive market area. BV differentiates
itself from the competition by targeting various price points, a
solid reputation for health care and nursing, resident engagement
and a favorable location within the service area. BV has a history
of regular fee increases, and weighted-average entrance fees are
consistent with prevailing housing prices in the market.
Operating Risk: 'bbb'
Good Expense Management with Mixed Capital Related Metrics
BV's mid-range operating risk assessment reflects somewhat weak
capital related metrics offset by a history of good operations and
moderate capital needs.
Financial Profile: 'bb'
Elevated Debt Burden
BV's debt burden remains elevated given capital projects in recent
years funded with bond proceeds. MADS coverage has averaged 1.5x
over the past five years and unrestricted cash and investments at
close to $43 million represents 37% cash-to-debt at YE 2021.
Unrestricted cash represented 387 days cash on hand in 2021, which
is neutral to the assessment of BV's financial profile.
Asymmetric Additional Risk Considerations
No asymmetric factors were applied in this rating determination.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Improved, sustained operating performance that results in an
operating ratio of 95%-97% and net operating margin-adjusted
(NOMA) of 23%-25%;
-- While Fitch believes this would take several years, reaching
65%-70% cash-to-adjusted debt.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A significant decline in unrestricted liquidity due to
underperforming operations, resulting in DCOH falling below
250 and cash-to-debt dipping below 25%;
-- Unexpectedly high turnover of ILUs covered under refundable
2009 contracts coupled with lower-than-expected sales to
refill vacated units that results in prolonged debt service
coverage violations.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
BV operates a life plan community with 577 ILUs, 141 ALUs, 120
skilled nursing facility (SNF) beds, and a 20-bed short-stay
rehabilitation center. It is located on a 96-acre campus in Manheim
Township, PA, about four miles north of the city of Lancaster. BV
currently offers 90% refundable and non-refundable entrance fee
residency agreements, with three types of contracts for its ILU
residents: fee-for-service, modified lifecare and lifecare. A
majority of ILU residents have non-refundable entrance fee
agreements and about 92% of units are on fee-for-service
contracts.
In addition to BV, Rehabilitation Center at Brethren Village, a
limited liability company owned by BV that operates the short-stay
rehabilitation center, is a member of the obligated group. Three
other BV affiliates that operate affordable housing complexes and
own real estate are not obligated group members. The obligated
group represented about 97% of total system assets and 98% of total
system revenues in fiscal 2021 (June 30 YE).
Revenue Defensibility
Over the last three fiscal years, BV has averaged a robust 94%
occupancy in its ILUs and 93% in the ALUs. The SNF includes 120
long-term nursing beds and 20 short-term rehabilitation beds. SNF
occupancy has been under some pressure related to the pandemic but
has stabilized with 85% occupancy as of September 30 for long-term
nursing and just under 50% occupancy for the short-term
rehabilitation beds.
BV has maintained strong demand for its services despite the
presence of competition, which Fitch attributes to a good local
reputation, appealing amenities, high resident satisfaction and
desirable location within the service area. BV is located in
Lancaster, PA, with area demographics that are in line with or
slightly stronger than state and national averages, with stable
population growth. BV maintains a robust waitlist of about 570
households and demonstrated demand with the rapid fill up of 72 new
ILUs completed in fiscal 2018.
BV has a demonstrated history of regular entrance fee and monthly
rate increases with pricing that is consistent with area housing
prices, supporting the mid-range market position.
Operating Risk
BV currently offers 90% refundable and nonrefundable entrance fee
residency agreements, with three types of contracts for its ILU
residents: fee-for-service, modified lifecare and lifecare. A
majority of ILU residents have nonrefundable entrance fee
agreements and about 92% (based on units) are on fee-for-service
contracts.
BV's strong ILU and ALU demand and pricing flexibility has
supported sufficient profitability levels for its rating level in
recent years. Over the last three fiscal years, BV has averaged a
99.0% operating ratio, 10.6% NOM, and 21% NOMA, all consistent with
the mid-range operating risk assessment. SNF occupancy has
recovered some but remains below pre-pandemic levels, and labor
shortages, particularly for non-patient care positions, remains a
challenge. BV benefitted from about $4.1 million in PPP loans that
were forgiven and recognized in fiscal 2021. YTD operations remain
stable as occupancy continues to improve.
BV's capital spending has averaged about 110% of depreciation over
the last five years, peaking at over 300% in fiscal 2018 with the
ILU expansion project. While there are no major capital plans on
the horizon, BV will begin to reevaluate its capital plan as
pressures from the pandemic begin to abate, with a focus on
renovation of some of the older units and expansion and renovation
of public spaces.
Fitch expects capex to average about 100% of depreciation in the
forward look, paid for through cash flow and philanthropy. A $5.5
million capital campaign was underway but suspended due to the
pandemic and will be reviewed and resumed in the near term. The
average age of plant of just under 13 years in fiscal 2021 is on
the higher end of the mid-range assessment.
BV currently has refundable entrance fee contracts totaling $7.17
million in refund liability that were part of the 2009 campus
expansion project, with the timing of the refunds being somewhat
unpredictable as these ILUs turnover due to normal attrition. This
could cause some temporary fluctuations in cash flow and coverage
levels. However, given BV's strong demand indicators and continued
diligence in monitoring this matter, Fitch does not believe the
liability will significantly impair BV's ability to cover MADS.
However, any unexpected large call of refunds in a given period
could lead to some brief covenant violations, where coverage falls
below the required 1.2x.
Because BV's revenue only MADS coverage has averaged 1.0x over the
last five fiscal years, consistent with the mid-range assessment,
Fitch believes consistently solid core operations will mitigate
potential fluctuations in entrance fee cash flows. MADS to revenue
has averaged about 18% and debt to net available has averaged just
under 10.0x over the past five years, but these ratios should
continue to moderate as the ILU expansion project matures and the
associated debt gets paid down.
Financial Profile
Fitch's stress scenario includes a revenue and portfolio stress and
also includes the potential impact of a portion of refundable
entrance fees coming due over the next three years. Fitch expects
BV will maintain a financial profile that is consistent with the
'bb' assessment through the economic and financial volatility
assumed in Fitch's stress case scenario, within the context of
SPH's mid-range revenue defensibility and mid-range operating risk
assessments.
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.
BW HOLDING: Moody's Assigns First Time B3 Corporate Family Rating
-----------------------------------------------------------------
Moody's Investors Service assigned a first time B3 Corporate Family
Rating and B3-PD Probability of Default Rating to BW Holding, Inc.
("Brook+Whittle"). Moody's also assigned a B2 rating to the new
first lien senior secured credit facilities, including the
revolver, the first lien term loan and the delayed draw term loan,
at Brook+Whittle. These credit facilities will be initially issued
by Merion Rose Merger Sub, Inc., a special purpose vehicle for the
transaction, which will acquire and merge with Brook+Whittle. The
ratings outlook is stable.
The first lien term loan, together with the second lien term loan,
will be used to pay the purchase consideration of Brook+Whittle and
related fees and expenses. The first lien delayed draw term loan
will be used for potential future tuck-in acquisitions and general
corporate purpose. Through the transaction, Genstar Capital, a
private-equity sponsor, acquires the controlling stake of
Brook+Whittle from the existing private-equity shareholder. Genstar
will also invest in this transaction in the form of cash and
preferred equity, together with a minority investment by
management.
"The B3 corporate family rating considers Brook+Whittle's focus on
premium labels with complex decoration and strong profitability,
counterbalanced with elevated leverage after being acquired by the
new private equity sponsor, and its limited scale," said Motoki
Yanase, VP - Senior Credit Officer at Moody's.
Moody's took the following actions:
Assignments:
Issuer: BW Holding, Inc.
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured 1st Lien Term Loan B, Assigned B2 (LGD3)
Senior Secured 1st Lien Delayed Term Loan B, Assigned B2 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Assigned B2
(LGD3)
Outlook Actions:
Issuer: BW Holding, Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
The B3 corporate family rating reflects Brook+Whittle's focus on
premium labels with complex decoration, with increasing capability
with digital printing technology. Moody's expects that the
company's strategy to focus on niche but growing end markets will
support its organic growth and improve profitability during the
next several years. The company recorded EBITDA margin close to 20%
for the twelve months to September 2021 (LTM 9/2021), which the
rating agency expects to improve by 2-3% over the course of next
several years. The rating also takes into consideration the
company's focus on increasing recyclable products, which also helps
to differentiate its products and forge customer relationships.
These strengths in Brook+Whittle's credit profile are
counterbalanced with high leverage of over 9x after being acquired
by Genstar Capital. The rating is also constrained by the company's
growing but small operational scale, limited history of free cash
flow generation, and limited geographic diversification operating
within the United States. Moody's projects leverage to improve to
less than 7x by the end of 2022, positioning the company in line
with the similarly rated packaging peers.
Moody's expects Brook+Whittle to maintain a good liquidity profile
over next 12 months. After the proposed leveraged buyout
transaction, Moody's expect the company to have limited cash on
hand, but Moody's expect liquidity to be supplemented by positive
free cash flow generation in 2022, full availability on the $50
million revolver, $100 million first lien delayed draw term loan
and $25 million second lien delayed draw term loan (unrated).
The revolver expires in 2026 and the first lien term loan expires
in 2028. The revolver has a springing covenant of maximum first
lien net leverage ratio when utilization exceeds 35%. There are no
financial covenants for the term loans. The term loan amortization
is 1% a year. Most of assets are fully encumbered by the senior
secured credit facilities limiting alternative liquidity sources.
The proposed first lien credit facilities, including the revolver,
the term loan and the delayed draw term loan, are rated B2,
one-notch above the corporate family rating. The higher ratings
reflect the priority position of the debt in the capital structure
and loss absorption provided by the second lien term loan. The
revolver and the term loan are secured by a first priority lien on
substantially all the company's assets and stock of the borrower
(initially Merion Rose Merger Sub, Inc., to be merged with
Brook+Whittle after the acquisition), its direct and indirect
parents (Merion Rose Holdings, Inc. and Merion Rose, Inc.,
respectively), and its guarantor subsidiaries, subject to certain
exceptions. The loans are guaranteed by the direct and indirect
parents and the borrower's existing and subsequently acquired
material and wholly-owned domestic subsidiaries.
As for the environmental, social and governance (ESG) factors
considered in the rating, Brook+Whittle will be privately owned by
Genstar Capital, a private equity firm, after the proposed
acquisition. Genstar controls Brook+Whittle's financial policy,
which could result in actions that favors shareholders over
creditors.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that
Brook+Whittle's focus on premium products will support improvement
of its profitability, which will in turn help generate free cash
flow and realize meaningful deleverage during the next several
years.
Moody's could upgrade Brook+Whittle's ratings if the company
expands its customer base and operations, continues to improve its
profitability, and pay down debt. Specifically, Moody's could
upgrade the ratings if debt/EBITDA is sustained below 5.5x and free
cash flow/debt is sustained above 3.5%, while maintaining good
liquidity.
Moody's could downgrade the ratings if the company loses its
customers and fails to expand its business, leading to weaker
credit metrics and liquidity. Specifically, Moody's could downgrade
the ratings if debt/EBITDA rises above 6.5x, EBITDA/interest
coverage is below 2.0x, or liquidity deteriorates.
As proposed, the new first lien term loans are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
Incremental debt capacity for the first lien facilities up to the
greater of the provided amount of EBITDA and 100% of consolidated
EBITDA, plus unlimited amounts subject to the first lien net
leverage ratio at the closing date.
Amounts up to the greater of the provided amount of EBITDA and
100% of consolidated EBITDA may be incurred with an earlier
maturity date than the initial term loans, together with customary
bridge loans and customary term A loans.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, with no
explicit protective provisions limiting such guarantee releases.
The proposed terms and the final terms of the credit agreement may
be materially different.
Headquartered in Guilford, Connecticut, Brook+Whittle is a
manufacturer of premium pressure sensitive labels, shrink sleeves,
flexible packaging, and heat transfer labels in the United States.
Brook+Whittle will be controlled by Genstar Capital after it
acquires a substantial part of the shareholdings from another
private equity sponsor in December 2021.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers Methodology
published in September 2020.
CALUMET PAINT: Gets Cash Collateral Access Thru Jan 2022
--------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois,
Eastern Division, has authorized Calumet Paint & Wallpaper, Inc. to
use cash collateral on an interim basis and provide related relief
through January 31, 2022.
In return for the Debtor's continued interim use of cash
collateral, Pratt & Lambert United, Inc. and PPG Architectural
Finishes, Inc. are granted the following as adequate protection for
the diminution in value of their purported secured interests:
1. The Debtor will permit the Secured Creditors to inspect,
upon reasonable notice, within reasonable hours, the Debtor's books
and records;
2. The Debtor will maintain and pay premiums for insurance to
cover all of its assets from fire, theft and water damage;
3. The Debtors will, upon reasonable request, make available
to the Secured Creditors evidence of that which constitutes their
collateral or proceeds;
4. The Debtor will properly maintain its assets in good repair
and properly manage its business;
5. The Secured Creditors will be granted valid, perfected,
enforceable security interests in and to the Debtor's post-petition
assets, including all proceeds and products which are now or
hereafter become property of this estate to the extent and priority
of their alleged pre-petition liens, if valid, but only to the
extent of any diminution in the value of such assets during the
period from the commencement of the Debtor's Chapter 11 case
through January 31, 2022.
A further hearing on the Motion is scheduled for January 24 at 1:30
p.m.
A copy of the order is available at https://bit.ly/31n4PNg from
PacerMonitor.com.
About Calumet Paint & Wallpaper, Inc.
Calumet Paint & Wallpaper, Inc. is an Illinois corporation
operating from leased premises at 12120 Western Avenue, Blue
Island, Illinois. Calumet Paint has been in business since 1957 and
is currently an authorized Benjamin Moore retailer specializing in
the sale of interior and exterior paints, stains and related
supplies. Calumet Paint sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 21-11709 on October
13, 2021. In the petition signed by Mark R. Lavelle, president, the
Debtor disclosed up to $1 million in both assets and liabilities.
Judge Timothy A. Barnes oversees the case.
David K. Wench, Esq., at Burke, Warren, MacKay and Serritella, PC
is the Debtor's counsel.
CASA SYSTEMS: S&P Affirms B- Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' rating on Casa Systems Inc.
The stable outlook reflects its view that the relative stability in
Casa's cable segment and revenue from its wireless and fixed-line
broadband segments will generate satisfactory FOCF in 2021 and
2022. In addition, the company's $156 million cash balance as of
Sept. 30, 2021, provides sufficient liquidity to continue
operations if supply chain headwinds persist longer than expected,
or if customer spending declines from a period of capacity
digestion.
S&P said, "We expect supply chain headwinds to limit Casa's revenue
growth to 1% in 2021, with expected improving conditions in 2022
enabling 3% revenue growth. Although management lowered its
full-year revenue (midpoint: to $399 million from $435 million) and
EBITDA (midpoint: to $48.5 million from $65 million) guidance on
its Nov. 2, 2021, earnings call, we view this differently than when
Casa revised guidance throughout 2019. Had supply chain and
logistics issues not been an issue, we believe Casa would likely
have executed on its 2021 guidance. This contrasts to the 2019
underperformance, which was primarily related to aggressive
assumptions on the pace of adoption of next-generation distributed
access architecture technology, which management has now tempered
when giving guidance. Due to the current headwinds, which
management believes will extend into the first half of 2022, we
expect revenue growth to be about 3% in 2022.
"The cable segment is facing the majority of the supply chain
component issues. This has affected Casa's September 2021 quarter
by about $11 million and we expect this to be a headwind in its
December 2021 quarter and into fiscal 2022. Absent these issues, we
believe demand for Casa's cable products remains stable. We believe
cable revenue should be able to return to past quarterly levels of
about $40 million-$45 million in the second half of 2022 and expect
this revenue to be flat to 1% in 2022 (-11% in 2021). Should the
supply chain issue improve sooner than expected, we believe upside
exists in this segment.
"We expect revenue lumpiness in the fixed telco segment to continue
while Casa builds up this customer base. As this technology is
adopted by additional fixed telco service providers and Casa
decreases customer concentration, we believe this segment will
become less volatile over time and won't be subject to any
particular customers adoption and digestion cycles. We expect
revenue to decline about 25% in 2021, with growth of around 2% in
2022.
"The wireless segment is being driven by its customers' investments
in 5G as well as adding capacity to existing 4G networks, along
with fixed wireless access devices. We expect this segment to grow
in 2022, with backlog currently over $100 million. We expect
revenue to increase about 40% in 2021, and around 5%-6% in 2022.
"We expect Casa's September 2021 leverage of 4.5x to increase to
about 6x by the end of 2021 as supply chain affects performance.
The telecom industry is characterized by volatile customer spending
patterns, and Casa's segment performance can vary quarter to
quarter. In aggregate across all Casa's product segments, we
believe there is a certain steady state of revenue that serves as a
baseline, from which we expect revenue will fluctuate up and down.
Casa's credit metrics began to meet our upgrade thresholds
beginning with its September 2020 quarter, with leverage improving
to 5.7x (8.6x at June 2020) and FOCF to debt of 14%. As is the case
with other rated issuers operating in cyclical industries, we
prefer a sufficient cushion to develop that can absorb any
fluctuations prior to an upgrade.
"We attribute the improved credit metrics in 2020 to Casa's strong
performance in its fixed telecom segment and wireless segment,
which addressed capacity needs as the shift to working from home
arising from the pandemic strained existing network bandwidth,
along with 5G buildouts. These trends continued for the next
several quarters, enabling leverage to improve to 4x as of its
March 2021 quarter (FOCF to debt 5.7%). Despite the 2x leverage
cushion, we viewed Casa's recent revenue and EBITDA to be at a
relative peak and not necessarily sustainable at those levels.
Leverage has since risen to 4.5x as of September 2021, and we
expect it will increase to about 6x by year-end. In this instance,
the increasing leverage is driven primarily by supply issues, and
not cyclical demand issues as is typically the case. We view the
supply chain challenges as relatively easier to remediate as
opposed to demand. Casa continues to receive orders and backlog
remains strong, an indication that its products are still in
demand. We view the component and freight constraints as temporary,
though visibility into when this will return to normal levels is
lacking and is likely to continue to weigh on performance in the
first half of 2022. Should these issues clear up sooner than
expected, we believe leverage can potentially improve better than
our high-5x forecast for 2022.
"We view Casa's September 2021 cash balance of $156 million as
significant and a credit positive, offsetting its exposure to the
volatile telecom industry. We would view a material reduction in
Casa's cash balances as a credit negative should it be used for
shareholder returns. We assume Casa does not repurchase any
additional shares under its $75 million stock repurchase program
(announced February 2019), of which it has $70.2 million remaining
(fourth-quarter 2019, $1.8 million; first-quarter 2020, $3 million)
given the uncertainty around timing and size. The program does not
have an expiration date and is subject to management's discretion.
The plan is similar to the $75 million plan Casa announced in
August 2018, of which it repurchased $46 million in third-quarter
2018 and $29 million in fourth-quarter 2018. We believe
management's preferred minimum cash balance to be about $100
million as indicated during its Nov. 19, 2021, investor day, though
we don't expect management will lower its cash balances in the near
term. However, with the overall business appearing to be less
volatile and returning to positive FOCF in 2020, with expected
positive FOCF in 2021 and 2022, management might repurchase shares
or fund acquisitions given its current cash position. Lastly, we no
longer consider Casa to be financial sponsor controlled, given
Summit Partners' roughly 39% percentage ownership and our view that
Summit is a passive investor and doesn't exercise control of the
company.
"The stable outlook reflects our view that the relative stability
in Casa's cable segment and revenue from its wireless and
fixed-line broadband segments will generate satisfactory FOCF in
2021 and 2022. In addition, the company's $156 million cash balance
as of Sept. 30, 2021, provides sufficient liquidity to continue
operations if supply chain headwinds persist longer than expected,
or if customer spending declines from a period of capacity
digestion.
"We could raise the rating if Casa's improved revenue
diversification from its wireless and fixed-line broadband segments
contributes to ongoing organic revenue growth, such that leverage
can be sustained below 6x and FOCF to debt approaches 5%.
"We could lower the rating if Casa's FOCF becomes weaker through
further deterioration in its cable segment or aggressive
shareholder returns that deplete its cash balance, such that we
believe the company's ability to continue operations is weakened
and view the capital structure as unsustainable."
CAST & CREW: S&P Rates Incremental $250MM Secured Term Loan B 'B'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '2'
recovery rating to Burbank, Calif.-based payroll solutions provider
Cast & Crew Payroll LLC's incremental $250 million senior secured
term loan B due 2029. The '2' recovery rating indicates its
expectation for substantial (70%-90%; rounded estimate: 75%)
recovery in the event of a payment default. The company will use
the proceeds from this incremental term loan to fund its
acquisition of TEAM, a payroll solutions provider for the
advertising and entertainment industries.
S&P said, "We view the transaction as neutral from a ratings
perspective. Although we expect the company to benefit from solid
entertainment industry wage volumes due to the heavy level of
investment in new streaming content, its pro forma leverage for the
12 months ended Sept. 30, 2021, was about 7x, which we view as very
high. We believe Cast & Crew will continue to expand its business
through debt-funded acquisitions, which could cause its leverage to
remain about 7x on a sustained basis."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P's simulated default scenario contemplates a default
occurring in 2023 stemming from major reputational damage that
results in the loss of key studio relationships. Given this
scenario, the company's revenue and earnings would decline to
levels that require it to fund its debt service and operating
losses with available cash and, to the extent available, revolver
borrowings. This would ultimately strain its capital resources to
the point of default.
-- S&P continues to value the company on a going-concern basis
using projected emergence EBITDA of $155 million and a 6.5x
multiple, which reflects the company's strong market position
relative to that of its peers.
Simulated default assumptions
-- Simulated year of default: 2023
-- Enterprise valuation multiple: 6.5x
-- EBITDA at emergence: $131 million
-- Jurisdiction: U.S.
Simplified waterfall
-- Net enterprise value at default (after 5% administrative
costs): $960 million
-- Collateral value available to secured creditors: $960 million
-- First-lien secured debt: $1,270 million
--Recovery expectations: 70%-90% (rounded estimate: 75%)
Note: Estimated claim amounts include about six months of accrued
but unpaid interest.
CAST & CREW: Team Transaction No Impact on Moody's 'B3' CFR
-----------------------------------------------------------
Moody's Investors Service said Cast & Crew Payroll, LLC's announced
plan to purchase The Team Companies ("TEAM"), a smaller competitor,
primarily with the net proceeds of a proposed $250 million add-on
to its existing senior secured first lien term loan is a negative
credit development. Despite the strategic benefits of the asset
purchase, which bolsters Cast & Crew's product capabilities
particularly in the advertising, live events, and music segments of
the entertainment sector, the incremental debt issuance will result
in an increase in the company's debt leverage to a relatively high
level.
However, despite the increase in debt leverage, Moody's considers
Cast & Crew well positioned within the B3 rating category. Moody's
expects Cast & Crew's revenues and EBITDA will expand organically
at a solid pace over the coming 12 months, resulting in debt/EBITDA
contracting to more moderate levels while the company sustains
healthy cash flow trends (exclusive of unusual working capital
fluctuations). Therefore, the B3 corporate family rating ("CFR")
and stable outlook are not affected at this time. All other
ratings, including the B3-PD probability of default rating and the
B2 senior secured first lien bank loan ratings, also remain
unchanged.
Cast & Crew, owned by affiliates of EQT ("EQT"), is a leading
provider of technology-enabled payroll processing, production
accounting software, workers' compensation coverage, and related
value-added services to clients across the entertainment industry.
CERTARA HOLDCO: Moody's Upgrades CFR & Senior Secured Debt to B1
----------------------------------------------------------------
Moody's Investors Service upgraded Certara Holdco, Inc.'s Corporate
Family Rating to B1 from B2, Probability of Default Rating to B1-PD
from B2-PD, and senior secured credit facility rating to B1 from
B2. The Speculative Grade Liquidity (SGL) rating of SGL-1 remains
unchanged. The outlook is stable.
The ratings upgrade reflects Moody's expectation that Certara will
maintain improved credit metrics following very strong operating
performance and debt repayments since its IPO in December 2020.
Certara generated very high year-over-year revenue and management's
adjusted EBITDA growth of 18% and 15%, respectively, for the nine
months ended September 30, 2021. The stellar performance was driven
by growing biopharmaceutical R&D spend and increasing demand for
biosimulation software and regulatory services.
Certara's leverage is estimated at around 3.9x debt/EBITDA (pro
forma for the Pinnacle 21 acquisition and expensing stock based
comp and software development costs) for the LTM ended September
30, 2021. Given that Certara's bookings were up 18% (trailing 12
months through October 2021), Moody's projects the company's
revenue growth will be at least mid-teens for the next 12 to 18
months, which will support further leverage reduction toward 3.5x
debt/EBITDA. The upgrade also reflects Moody's expectation that
Certara will adhere to more conservative financial policies and
maintain strong financial flexibility.
Upgrades:
Issuer: Certara Holdco, Inc.
Corporate Family Rating, Upgraded to B1 from B2
Probability of Default Rating, Upgraded to B1-PD from B2-PD
Gtd Senior Secured Bank Credit Facility, Upgraded to B1 (LGD3)
from B2 (LGD3)
Outlook Actions:
Issuer: Certara Holdco, Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
The B1 CFR reflects Certara's leading market position in the niche
biosimulation software and regulatory services market, stable free
cash flow generation and positive secular trends in drug
development and associated services. Certara's biosimulation
modeling software allows for a strong competitive advantage through
its proprietary modeling data used by pharmaceutical companies in
various stages of the drug development process. In addition, global
regulatory agencies, including the FDA, use Certara's software to
review regulatory submissions. The company also benefits from
highly visible revenue, which is supported by strong renewal rates
in the low-90% range for software products (about 30% of revenue)
and net revenue repeat rate of over 100% for services (70% of
revenue).
At the same time, Certara's rating is constrained by the company's
small scale and concentrated end market exposure. Certara's service
business operates in a highly competitive market with the presence
of smaller providers, internal operations at pharmaceutical
companies and contract research organizations. Additionally,
Certara has a record of inorganic growth strategies which can
increase operational and integration risks.
Governance considerations are credit positive. Following its IPO in
December 2020, Certara benefited from improved public oversight and
transparency, as well as access to public equity markets. Although
private equity sponsor EQT maintains about 24% ownership, Moody's
expects that EQT's stake will continue to reduce over time. Moody's
also expects that Certara will follow a more disciplined financial
policy, balancing interests of creditors and shareholders.
The stable outlook reflects Moody's expectation that Certara's
credit metrics will continue to strengthen from sizable revenue
growth in the mid-teen digit range and free cash flow growth. Over
the next 12 to 18 months, Moody's expects debt/EBITDA (Moody's
adjusted) will decline toward 3.5x and free cash flow to debt
(Moody's adjusted) will increase to 20%.
The SGL-1 rating reflects Moody's expectation that Certara will
maintain very good liquidity through at least the end of 2022. Pro
forma for the acquisition of Pinnacle 21, Certara will have about
$167 million in cash. Moody's expects the company will produce over
$65 million in free cash flow in 2022. The company's liquidity is
also supported by a $100 million revolving credit facility due
August 2025, which has a springing first lien leverage covenant
triggered at 35% revolver utilization. Moody's anticipates Certara
will maintain good cushion under this covenant for at least the
next 12 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given Certara's modest scale a ratings upgrade is unlikely in the
near term. The ratings could be upgraded over time if Certara
continues to grow organically and increase in scale, while
sustaining leverage below 3.5x and demonstrating a commitment to
conservative financial policies.
The ratings could be downgraded if Certara's operating performance
or liquidity weakens, such that debt/EBITDA (Moody's adjusted) is
expected to be sustained above 4.5x or free cash flow to debt
(Moody's adjusted) is less than 10%.
The B1 rating of the senior secured credit facility reflects a
single class debt structure consistent with the B1 CFR.
The principal methodology used in these ratings was Software
Industry published in August 2018.
Headquartered in Princeton, NJ, Certara Holdco, Inc. ("Certara") is
a leading provider of drug development simulation software and
regulatory science publication software and services. The company
reported revenues of about $275 million in the twelve month period
ending September 30, 2021. Private equity group EQT owns
approximately 24% of Certara's shares.
CG ACQUISITIONS: Gets OK to Hire Winegarden as Legal Counsel
------------------------------------------------------------
CG Acquisitions, LLC received approval from the U.S. Bankruptcy
Court for the Eastern District of Michigan to employ Winegarden,
Haley, Lindholm, Tucker & Himelhoch, PLC to handle its Chapter 11
case.
The hourly rates of the firm's attorneys and staff are as follows:
Zachary R. Tucker $275 per hour
Rita M. Lauer $280 per hour
John R. Tucker $325 per hour
Dennis M. Haley $385 per hour
In addition, the firm will seek reimbursement for expenses
incurred.
The firm holds a retainer of $2,957.
John Tucker, Esq., a member of Winegarden, disclosed in a court
filing that his firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
John R. Tucker, Esq.
Winegarden, Haley, Lindholm, Tucker & Himelhoch, PLC
9460 S. Saginaw Road, Suite A
Grand Blanc, MI 48439
Telephone: (810) 579-3600
Email: jtucker@winegarden-law.com
About CG Acquisitions
CG Acquisitions, LLC filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mich. Case No.
21-31511) on Nov. 9, 2021, listing under $1 million in both assets
and liabilities. Gene Kopczyk, member, signed the petition. Judge
Joel D. Applebaum oversees the case. Winegarden, Haley, Lindholm,
Tucker & Himelhoch, PLC serves as the Debtor's counsel.
CIRCOR INTERNATIONAL: S&P Affirms 'B-' Issuer Credit Rating
-----------------------------------------------------------
S&P Global Ratings revised its outlook on Burlington, Mass.-based
flow control solutions provider CIRCOR International Inc. to stable
from positive and affirmed its 'B-' issuer credit rating. At the
same time, S&P assigned its 'B-' issue-level rating and '3'
recovery rating to the company's proposed first-lien credit
facilities.
The stable outlook reflects S&P's expectation that, although its
S&P Global Ratings-adjusted debt leverage will likely remain above
6x over the next 12 months, the company will improve its operating
performance by increasing its revenue and free operating cash flow
(FOCF) generation.
S&P said, "We now project CIRCOR will end 2021 with S&P Global
Ratings-adjusted leverage in the mid-7x area, which compares with
our prior forecast for leverage of 6.0x-6.5x, due to the effects of
increased supply chain challenges on both its costs and delivery
timelines. Although the company's end-market prospects remain
broadly favorable, it is experiencing a delay in its revenue
realization due to supply chain and logistics challenges and cost
inflation. To combat this, CIRCOR has continued to implement price
increases and arrange for alternate suppliers and materials, though
we expect the benefits of these supply chain actions will take some
time to flow through. Therefore, we have lowered our forecast for
the company's 2021 revenue, EBITDA, and free cash flow and now
expect its S&P Global Ratings-adjusted leverage to remain in the
7x-8x range through the end of the year.
"The ongoing supply chain disruptions will likely persist into next
year, though we expect the benefits from CIRCOR's price increases
to mitigate its raw material inflation over the next 12 months.
Overall, we expect the company to report a moderate improvement in
its EBITDA margins in 2022 supported by an easing of its supply
chain constraints in the second half of the year and the
realization of benefits from its price increases. We believe
CIRCOR's higher earnings will enable it to reduce its leverage to
the low 6x area over the next 12 months.
"We expect that CIRCOR's liquidity will remain adequate over the
coming 12 months. We expect the company to maintain adequate
sources of liquidity over the coming 12 months supported by a
combination of cash, positive funds from operations, and material
availability under its new $100 million revolving credit facility.
We believe these liquidity sources are sufficient to meet CIRCOR's
expected uses of liquidity, which primarily include working capital
and capital expenditure.
"The stable outlook on CIRCOR reflects our expectation that,
although its S&P Global Ratings-adjusted leverage will likely
remain above 6x over the next 12 months, it will improve its
operating performance by increasing its revenue and FOCF
generation.
"We could raise our rating on CIRCOR over the next 12 months if it
is able to overcome its supply chain challenges and increase its
earnings such that its S&P Global Ratings-adjusted leverage
declines below 6x and remains at that level."
S&P could lower its rating on CIRCOR over the next 12 months if:
-- The company's liquidity position deteriorates, either due to
consistently negative FOCF generation or a decline in its covenant
headroom to less than 10%; or
-- S&P believes its access to the capital markets has worsened,
which could occur--for instance--if its leverage increases and
remains persistently high.
CITE LLC: Case Summary & 8 Unsecured Creditors
----------------------------------------------
Debtor: Cite LLC
505 N. Lakeshore Drive
Chicago, IL 60611
Business Description: Cite LLC is in the American restaurant
business.
Chapter 11 Petition Date: December 3, 2021
Court: United States Bankruptcy Court
Northern District of Illinois
Case No.: 21-13730
Judge: Hon. Janet S. Baer
Debtor's Counsel: Richard N. Golding, Esq.
THE GOLDING LAW OFFICES, P.C.
500 N. Dearborn St., 2nd Flr.
Chicago, IL 60654
Tel: (312) 832-7885
Fax: (312) 755-5720
E-mail: rgolding@goldinglaw.net
Total Assets: $5,517,547
Total Liabilities: $7,945,223
The petition was signed by Evangeline Gouletas as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's eight unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/PJNIDTQ/Cite_LLC__ilnbke-21-13730__0001.0.pdf?mcid=tGE4TAMA
CLEARWAY ENERGY: S&P Affirms 'BB' ICR, Outlook Stable
-----------------------------------------------------
S&P Global Ratings affirmed the 'BB' issuer credit rating on
Clearway Energy Inc. (CWEN).
S&P said, "We also affirmed the 'BB' issue ratings on its senior
unsecured debt and revised the recovery rating to '4' from '3'
given the addition of the secured bridge loan. We expect to revise
the recovery rating back to '3' when the bridge loan is repaid.
The stable outlook is based on our view that credit metrics will be
stressed through the first half 2022 but return to historical norms
once the district thermal transaction is completed and the bridge
loan is repaid. We expect Clearway to continue acquiring contracted
renewable assets with a balanced mix of funding, leading to
long-term S&P Global Ratings-adjusted leverage in the 4.5x-5x range
while funds from operations (FFO) to debt averages 16% based on P75
performance."
CWEN announced that through its affiliate that it has entered into
a $335 million secured bridge loan facility to finance its purchase
of its 50% interest in Utah Solar. The bridge facility will be
repaid using proceeds from its district thermal transaction, which
we expect to close in the first half of 2022.
S&P said, "We expect Clearway will have elevated leverage over the
next few quarters.
"The company has issued a bridge loan to close its Utah Solar
acquisition and will likely rely on its revolver to fund growth
over the short term. When Clearway closes its district thermal
sale, which we assume occurs in the second quarter of 2022, it will
utilize part of the proceeds to repay debt. While forecast credit
metrics are stressed during this period, we expect they will revert
to long-term levels, including S&P adjusted leverage of about
4.5x-5x, that support the 'BB' rating. The company has also agreed
with its banking group to temporarily increase the leverage
covenant under its revolving credit facility to 6.5x under certain
conditions, allowing them sufficient headroom while the transaction
receives regulatory approvals."
S&P thinks the district thermal sale supports creditworthiness.
The sale of their district thermal platform will generate about
$1.3 billion cash proceeds after adjusting for project-level debt
and other transaction related costs. CWEN will use some of this
cash inflow to repay debt and keep the residual amount on hand to
fund acquisitions. As a result, S&P expects the company to increase
its corporate-level EBITDA base above $450 million over the next
few years with minimal need to access the capital markets.
Under S&P's base-case scenario, it expects the district thermal
sale to close in the first half of 2022.
S&P said, "Based on our assessment of similar transactions, we
don't think obtaining regulatory approvals will be overly
burdensome and think the deal is likely to close by mid 2022. If
the transaction does not close, we expect Clearway to moderate
leverage by leveraging underlying projects, issuing equity, or a
combination. Currently, we do not add any project level debt in our
analysis of Clearway."
S&P expects Clearway's growth trajectory to remain supportive of
the rating.
This reflects the announced acquisitions, the dropdown pipeline,
and CWEN's cash position pro forma for the district thermal
transaction close. It's worth noting that the Utah Solar
acquisition should compensate for a good portion of the lost cash
available for distribution (CAFD) from the district thermal sale,
steadying near-term CAFD expectations. Business risk is stable
given the company's strategic focus on long-term contracted
renewable assets. The company has also signed new contracts on
Marsh Landing and Walnut Creek, stabilizing cash flows from two of
its larger conventional assets.
S&P said, "The stable outlook on CWEN captures our view that credit
metrics will be stressed for the next several quarters but return
to historical levels in the second half of 2022 and beyond. We
expect the developer to close its district thermal sale in the
second quarter of 2022 and use some of the proceeds to deleverage.
We assume the renewable assets perform roughly in line with P75
performance while the company uses cash from operations and asset
sales to acquire fully developed projects backed by long-term
contracts and fund the growing dividend.
"We could lower the rating on CWEN if leverage increases such that
debt to EBITDA remains higher than 5x and FFO to debt trends toward
12% through 2022 and 2023. This could occur if the projects
underperform based on resource or operational risk or CWEN receives
materially less distributions from them for any other reason. We
could also consider a negative rating action if we lost confidence
in the plan to repay the bridge loan on time, although we consider
this unlikely.
"We could consider a positive rating action if we think credit
metrics will improve, such that debt to EBITDA will fall and remain
below 4x. This would most likely occur if CWEN alters its financial
policy to prioritize deleveraging over growth and equity
distributions."
COLLECTIVE HOLDCO: Public Sale Auction Set for January 2022
-----------------------------------------------------------
In accordance with applicable provisions of the Uniform Commercial
Code as enacted in New York, Gamma NY 555 Broadway LLC ("secured
party") will sell all of the limited liability company interest of
Collective 545 Broadway LLC ("pledged entity") held by Collective
Holdco 545 Broadway LLC to the highest qualified bidder at a public
sale to take place on Jan. 12, 2021, at 11:00 a.m., via web-based
video conferencing and telephonic conferencing program selected by
the secured party.
Remote log in credentials will be provided to registered bidders.
Secured party's understanding is that the principal asset of the
pledged entity is the parcels or real property commonly known as
555 Broadway, Brooklyn, New York, and 24 Boerum Street, Brooklyn,
New York (Block 3076, Lots 40, 22, 118, 18 and 101, respectively.
Interested parties who intend to bid on the collateral must contact
Daniel O'Brien of Cushman & Wakefield at 212-698-5584 or
dan.obrien@cushwake.com, to receive the bidding procedures.
COWEN INC: Moody's Affirms Ba3 CFR Following Portico Transaction
----------------------------------------------------------------
Moody's Investors Service affirmed Cowen Inc.'s Ba3 Corporate
Family Rating and B1 Bank Credit Facility ratings. The rating
affirmation follows Cowen's announcement[1] of its planned
acquisition of Portico Capital Advisors, an M&A advisory firm, and
Cowen's proposed $150 million add-on to its $300 million term loan
due March 2028. Moody's said Cowen's outlook remains stable.
Issuer: Cowen Inc.
Corporate Family Rating, Affirmed Ba3
Senior secured 1st lien term loan, Affirmed B1
Senior secured 1st lien revolving credit facility, Affirmed B1
Outlook actions:
Issuer: Cowen Inc.
Outlook, Stable
RATINGS RATIONALE
Moody's said the rating action reflects Cowen's improving
profitability following a favorable operating environment,
particularly in M&A and capital markets advisory. The ratings
affirmation also reflects the prudent structure of the acquisition.
Similar to other Cowen transactions, it will include a mix of cash
and stock in the upfront payment followed by subsequent payments
contingent on Portico's performance, as well as retention
agreements for key staff. Cowen's financial profile is supported by
a strong yet niche capital markets franchise in underwriting,
brokerage, advisory and investment management in the key sectors it
serves. In particular, said Moody's, Cowen's healthcare sector
activities provide it with a core differentiating strength,
especially in the current pandemic environment and considering the
ongoing increased emphasis on innovation in the sector, that can
drive capital markets activity. Moody's said that Cowen's
acquisition of Portico would continue to expand Cowen's sector
coverage into automotive technology, fintech, risk, compliance and
regtech.
Cowen's stable outlook reflects its healthy capital and liquidity
position, and incorporates Moody's expectation of potential revenue
volatility, stemming from fair value marks on Cowen's investments
and the possibility of reduced revenue due to the cyclical nature
of capital markets activities. The stable outlook also reflects
Cowen's variable compensation model, which Moody's expects to help
ameliorate a portion of the revenue pressures that could arise due
to a potential adverse impact from lower capital markets activity.
Cowen's senior secured loan has a B1 rating. This is one notch
below Cowen's Ba3 corporate family rating, because obligations at
the holding company (the debt issuer) are structurally subordinated
to Cowen's operating companies, where the preponderance of the
group's debt and debt-like obligations reside. Cowen plans on using
the net proceeds from its proposed $150 million senior secured term
loan add-on to help fund the Portico acquisition and retain as cash
on-hand the excess net proceeds for general corporate purposes.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Cowen's ratings could be upgraded should its revenue growth move
towards more stable and less capital intensive streams; grow
profitability in its core revenue lines (excluding incentive fees
and investment income), resulting in lower pretax earnings
volatility; increase its scale via developing a more diversified
investment banking platform; and further improve its funding
profile by adding more stable funding sources and equity
retention.
Cowen's ratings could be downgraded should it suffer a significant
reduction in revenue, either due to idiosyncratic events or a
deterioration in the economic environment, not offset by a
reduction in expenses (particularly employee compensation); if its
capital base weakens or if its asset growth surpasses its equity
build resulting in a significant weakening of balance sheet
leverage; if it experiences a risk control failure or a
deterioration in liquidity; or if it demonstrates a material
increase in risk appetite, such as a more aggressive stance in
merchant banking.
The principal methodology used in these ratings was Securities
Industry Market Makers Methodology published in November 2019.
CYBER LITIGATION: Unsecureds to Recover 100% in Liquidating Plan
----------------------------------------------------------------
Cyber Litigation Inc. filed with the U.S. Bankruptcy Court for the
District of Delaware a Disclosure Statement for Chapter 11 Plan of
Liquidation dated Dec. 2, 2021.
On October 30, 2020, the Debtor filed a motion to approve bid
procedures for the sale of substantially all assets (the "Sale
Motion"), which was approved by an order entered on November 20,
2020. Ultimately, the sale process resulted in two bids for
separate groups of the Debtor's assets and the Auction, which had
been scheduled for December 7, 2020, was cancelled. The first bid
was submitted by Codium Software, LLC ("Codium") as the proposed
purchaser of substantially all assets of the Debtor other than
certain intellectual property (for a purchase price of $250,000).
The second bid was submitted by Deduce, Inc. ("Deduce") as the
proposed purchaser of certain intellectual property of the Debtor
(for a purchase price of $85,000).
The Bankruptcy Court entered orders on December 16, 2020 approving
the sales to Codium and Deduce, respectively. The two sale
transactions were consummated shortly thereafter.
The Plan is a plan of liquidation which, among other things,
provides for the transfer of the remaining assets and Causes of
Action of the Estate into the Plan Trust for the Plan Trustee to
direct the liquidation of such remaining assets and prosecution of
such Causes of Action.
The Plan Trustee would also distribute all net proceeds to
creditors, including in full payment of all Administrative Expense
Claims, Priority Tax Claims, Other Priority Claims (Class 2),
General Unsecured Claims (Class 3) and ratably in satisfaction of
Tort Damages Claims (Class 4), generally in accordance with the
priority scheme under the Bankruptcy Code. In this Chapter 11 Case,
the Debtor has already liquidated substantially all of its assets,
including, without limitation, the postpetition Bankruptcy
Court-approved sales of the Debtor's assets to Codium and Deduce,
but excluding Causes of Action and Avoidance Actions that have not
been previously settled or waived. The Debtor has also already
repaid its DIP Facility Claims in full in Cash.
The net proceeds remaining from such prior liquidations and
resolutions of certain Causes of Action and Avoidance Actions,
together with the net proceeds from sales or other disposition of
the remaining assets and prosecution of Causes of Action and
Avoidance Actions of the Estate after the Effective Date, will be
used to fund recoveries under the Plan to creditors of the Debtor.
With respect to Secured Claims (in Class 1), all such Claims will
receive the value of any collateral securing such Claims, and are
therefore are deemed Unimpaired under the Plan. For the avoidance
of doubt, the Debtor is presently unaware of any Secured Claims.
With respect to Other Priority Claims (in Class 2) and General
Unsecured Claims (in Class 3), all such claims will be paid in full
upon the Effective Date through the Plan. As such, these claims are
deemed unimpaired under the Plan.
Generally under the Plan, Tort Damages Claims (in Class 4) will
receive their Pro Rata distributions of Net Distributable Assets
from and after the Effective Date, once all such assets have been
reduced to Cash. The Net Distributable Assets are net of amounts
necessary to fund the payment of, as applicable and except as
otherwise agreed by the Holders of such Claims, Allowed
Administrative Expense Claims, Priority Tax Claims, Other Priority
Claims, General Unsecured Claims and Trust Expenses of the Debtor,
and/or any reserves established for the foregoing.
Lastly, the Interests (in Class 5) will not likely receive any
distributions or property under the Plan.
Class 3 consists of the General Unsecured Claims. Each Holder of an
Allowed Class 3 Claim will receive in full satisfaction,
settlement, discharge and release of, and in exchange for, such
Allowed Class 3 Claim, at the election of the Plan Trustee: (A)
Cash equal to the amount of such Allowed Class 3 Claim plus
Postpetition interest paid at the Federal Judgment Rate accrued
from the Petition Date to the later of (x) the Effective Date or
(y) the date a Disputed Claim becomes an Allowed Claim; (B) such
other less favorable treatment as to which the Debtor or the Plan
Trustee and the Holder of such Allowed Class 3 Claim have agreed
upon in writing; or (C) such other treatment such that it will not
be impaired pursuant to section 1124 of the Bankruptcy Code. This
Class has $661,000 estimated claim amount. This Class will receive
a distribution of 100% of their allowed claims. Class 1 is an
Unimpaired Class.
Class 4 consists of the Tort Damages Claims. On or as soon as
practicable after the Effective Date, each Holder of an Allowed
Tort Damages Claim against the Debtor shall receive, as the sole
distribution or dividend by the Debtor or its Estate under thePlan
on account of such Allowed Tort Damages Claim, a Pro Rata share of
the Plan Trust Interest in the Plan Trust. This Class has
$135,645,000 esimated claim amount. This Class will receive a
distribution of 21-33% of their allowed claims. Class 4 is an
Impaired Class.
The source of all distributions and payments under the Plan will be
the Distributable Assets and the proceeds thereof, including the
Debtor's Cash on hand and proceeds from the sale or other
disposition of the Debtor's assets and the Plan Trust Assets,
including the prosecution of Causes of Action. Distributions to the
Holders of Allowed Professional Fee Claims, General Unsecured
Claims, Administrative Expense Claims, Priority Tax Claims, and
Other Priority Claims will be funded by the Debtor's Estate on the
Effective Date or as soon as practicable thereafter. Allowed Tort
Damages Claims will be funded entirely from Plan Trust Assets
consisting of Net Distributable Assets.
A full-text copy of the Disclosure Statement dated Dec. 02, 2021,
is available at https://bit.ly/31mIzUf from PacerMonitor.com at no
charge.
Counsel for Debtor:
BLANK ROME LLP
Stanley B. Tarr (No. 5535)
Josef Mintz (No. 5644)
1201 N. Market St., Suite 800
Wilmington, DE 19801
Telephone: (302) 425-6400
Facsimile: (302) 425-6464
E-mail: tarr@blankrome.com
mintz@blankrome.com
– and –
John Lucian
One Logan Square
130 N. 18th Street
Philadelphia, Pennsylvania 19103
Telephone: (215) 569-5500
Facsimile: (215) 569-5555
Email: lucian@blankrome.com
– and –
COOLEY LLP
Michael Klein
Joseph Brown
Jared Kasner
55 Hudson Yards
New York, New York 10001
Telephone: (212) 479-6000
Facsimile: (212) 479-6275
E-mail: mklein@cooley.com
jbrown@cooley.com
jkasner@cooley.com
– and –
Cullen D. Speckhart
1299 Pennsylvania Avenue, NW, Suite 700
Washington, DC 20004-2400
Telephone: (202) 842-7800
Facsimile: (202) 842-7899
Email: cspeckhart@cooley.com
About NS8 Inc.
Las Vegas-based NS8 Inc. -- https://www.ns8.com -- is a developer
of a comprehensive fraud prevention platform that combines
behavioral analytics, real-time scoring, and global monitoring to
help businesses minimize risk.
NS8 sought Chapter 11 protection (Bankr. D. Del. Case No. 20 12702)
on October 27, 2020. The petition was signed by Daniel P. Wikel,
the chief restructuring officer.
The Debtor was estimated to have $10 million to $50 million in
assets and $100 million to $500 million in liabilities at the time
of the filing.
Judge Craig T. Goldblatt replaced the Honorable Christopher S.
Sontchi as the case judge. The Debtor tapped Blank Rome LLP and
Cooley LLP as its legal counsel, and FTI Consulting Inc. as its
financial advisor. Stretto is the claims agent.
* * *
The company changed its name to Cyber Litigation after selling
substantially all of its assets to Codium Software LLC in December
2020.
DRI HOLDING: Moody's Assigns 'B3' CFR & Rates 1st Lien Loans 'B2'
-----------------------------------------------------------------
Moody's Investors Service assigned DRI Holding Inc. ("Digital Room"
or "DRI") a B3 corporate family rating and a B3-PD probability of
default rating. Concurrently, Moody's assigned B2 ratings to the
company's proposed $50 million first lien senior secured revolving
credit facility and $340 million first lien senior secured term
loan. Moody's also assigned a Caa2 rating to the proposed $140
million second lien senior secured term loan. The ratings outlook
is stable.
Proceeds from the transaction will be used by new sponsor (Sycamore
Partners) to acquire Digital Room and refinance its existing credit
facilities. Moody's expects the company will employ aggressive
financial policies, which is a key ESG consideration driving the
rating.
Assignments:
Issuer: DRI Holding Inc.
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured 1st Lien Revolving Credit Facility, Assigned B2
(LGD3)
Senior Secured 1st Lien Term Loan B, Assigned B2 (LGD3)
Senior Secured 2nd Lien Term Loan B, Assigned Caa2 (LGD5)
Outlook Actions:
Issuer: DRI Holding Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
Digital Room's B3 CFR reflects the company's high financial
leverage of approximately 7.2x (Moody's adjusted for operating
leases) pro forma for the last twelve months ending September 30,
2021 as well as the company's relatively small scale, exposure to
economic cyclicality in the small and medium-sized business (SMB)
segment and potential pressures from larger competitors in the
online printing marketplace. Moody's also takes into consideration
the concentrated private equity ownership, which presents material
corporate governance risks with respects to potentially aggressive
financial strategies, particularly dividend distributions and debt
financed acquisitions.
The company's credit profile is supported by Digital Room's well
diversified customer concentration (largest customer represents
less than 1% of revenue), strong presence in the online customized
marketing products segment for SMB, recurring and predictable
revenue stream, and consistent free cash flow generation. The
ratings also consider the company's favorable online position as
the printing industry gravitates away from brick and mortar.
The company's adequate liquidity reflects Moody's expectations of
nominal cash balances and free cash flow-to-debt in the
high-single-digits over the next 12-18 months. Liquidity will also
be supported by the proposed $50 million revolving credit facility
maturing in 2026 which is expected to be undrawn at close. The
revolving credit facility has a springing first lien net leverage
ratio of 6.9x triggered when drawn is greater than 35%.
As proposed, the new credit facilities are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include incremental first lien facilities
debt capacity up to the greater of $77 million and 100% of
consolidated EBITDA, plus unused amounts of the general debt
basket, plus unused amounts of the general restricted payments
basket, plus additional amounts subject to 4.5x first lien secured
leverage ratio (if pari passu secured to the first lien, or an
amount pari passu to the second lien subject to a ratio test to be
agreed). Amounts up to the greater of $77 million and 100% of
consolidated EBITDA may be incurred with an earlier maturity date
than the initial term loans. The credit agreement permits the
transfer of assets to unrestricted subsidiaries, up to the
carve-out capacities, subject to "blocker" provisions which
prohibit (x) the transfer of material intellectual property to
unrestricted subsidiaries; and (y) the ownership by unrestricted
subsidiaries (or possession of exclusive licenses in) any material
intellectual property. Non-wholly-owned subsidiaries are not
required to provide guarantees; dividends or transfers resulting in
partial ownership of subsidiary guarantors could jeopardize
guarantees subject to protective provisions which only permit
guarantee releases if they are a result of a transaction with an
affiliate for a bona fide business purpose and not solely for the
purpose of releasing the guarantee. The credit agreement provides
some limitations on up-tiering transactions, including the
requirement that each first lien lender directly and adversely
affected consent to subordination in right of payment of the
obligations to any other payment obligations.
The proposed terms and the final terms of the credit agreement may
be materially different.
The B2 rating on the first lien revolving credit facility and term
loan are one notch above the CFR, reflecting the priority lien with
respect to substantially all assets of the company relative to the
second lien term loan, which is rated Caa2, two notches below the
CFR. The B3-PD Probability of Default Rating is in line with the B3
CFR, reflecting Moody's expectation for an average family recovery
level.
The stable outlook incorporates Moody's expectations that the
company will grow in the high-single-digits, primarily from
acquiring new customers, while proactively repaying debt such that
debt/EBITDA improves below 6x by the end of 2022.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider an upgrade if Digital Room meaningfully
improves its total revenue while operating with debt/EBITDA
(Moody's adjusted) below 6.0x and free cash flow-to-debt
approaching 10%. Concurrently, an improvement in overall liquidity
would also generate upward pressure.
Conversely, Moody's would consider downgrading the ratings if the
company adopts a more aggressive financial policy including debt
financed acquisitions or debt financed dividends, preventing
material deleveraging. Also, the ratings would have downwards
pressure if the company were to incur free cash flow deficits for
an extended period of time, deterioration of liquidity and weaking
competitive position.
Digital Room is a leading e-commerce provider of custom branded
consumable marketing products for SMBs. Moody's forecasts Digital
Room to generate revenues exceeding $300 million in 2021.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
DULING SONS: Case Summary & 3 Unsecured Creditors
-------------------------------------------------
Debtor: Duling Sons, Inc.
34122 SD Highway 44
Gregory, SD 57533-5100
Chapter 11 Petition Date: December 3, 2021
Court: United States Bankruptcy Court
District of South Dakota
Case No.: 21-30026
Judge: Hon. Charles L Nail, Jr.
Debtor's Counsel: Clair R. Gerry, Esq.
GERRY & KULM ASK, PROF. LLC
PO Box 966
Sioux Falls, SD 57101-0966
Tel: (605) 336-6400
E-mail: gerry@sgsllc.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Raymond Joseph Duling as president.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/VHPLUGI/Duling_Sons_Inc__sdbke-21-30026__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's Three Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Advantage Land $0
Co., LLC
517 6th St
Brookings, SD
57006-143
2. Daniel Duling $0
34124 SD Highway 44
Gregory, SD
57533-5100
3. MetLife Investment $0
Management, LLC
Roberta Black
10801 Mastin St Ste 700
Overland Park, KS
66210-167
EAST PENN CHILDREN'S: U.S. Trustee Opposes Amended Plan
-------------------------------------------------------
The United States trustee for Region 3 (the "U. S. trustee")
objects to confirmation of the Second Amended Chapter 11 Subchapter
V Plan of Reorganization filed by East Penn Children's Learning
Academy, LLC.
On October 12, 2021 the Debtor filed its Second Amended Chapter 11
Subchapter V Plan of Reorganization. On the same date an order was
entered requiring, inter alia, that counsel for the Debtor serve
the Plan on all parties in interest on or before October 18, 2021,
and thereafter promptly file a certificate of service with the
Court. To date, a certificate of service of the Plan has not been
filed, and it is therefore impossible to determine whether the Plan
was served.
The United States Trustee asserts that the Plan contains incomplete
sentences and/or provisions which maybe material to the proposed
treatment of claims.
The United States Trustee further asserts that the Plan does not
appear to comply with the provisions of section 1191 of the
Bankruptcy Code, including, but not necessarily limited to the
following:
* The Debtor may not be applying all of its disposable income
to make payments under the Plan as required under section
1191(c)(2)(A) as it appears, inter alia, that upon confirmation the
Debtor will begin to make substantial payments described as
"Owner's Distribution. " These distributions do not appear on the
Debtor's monthly operating reports, nor was any compensation to the
Debtor's owner disclosed as required under LBR 4002- 1.
* Neither the Court nor creditors can determine whether the
Debtor will be able to make all payments under the Plan as required
under section 1191(c)(3)(A) as the Debtor has not remained current
with the filing of its monthly operating reports, and most of the
reports it has filed show either net losses or insufficient net
income to make the payments proposed under its Plan.
* The Plan does not provide appropriate remedies to protect
the holders of claims or interests in the event that the payments
proposed under the Plan are not made as required under section
1191(c)(3)(B).
In addition, it is unclear from the Plan and attachments thereto
whether the Debtor or the Subchapter V trustee will be responsible
for making distributions under the Plan.
A full-text copy of the U.S. Trustee's objection dated Nov. 30,
2021, is available at https://bit.ly/3DsjeVI from PacerMonitor.com
at no charge.
About East Penn Children's Learning Academy
East Penn Children's Learning Academy, LLC, is a Pennsylvania
limited liability corporation with a registered address at 49 W.
Penn Avenue, Alburtis, Pennsylvania. The Debtor filed a Chapter 11
bankruptcy petition (Bankr. E.D. Pa. Case No. 20-14646) on Dec. 4,
2020. The Debtor hired The Law Office of Robert J. Birch, as
counsel.
ENERMEX INTERNATIONAL: Creditors to Get Proceeds From Liquidation
-----------------------------------------------------------------
Enermex International Inc. filed with the U.S. Bankruptcy Court for
the Southern District of Texas a Combined Plan and Disclosure
Statement dated Nov. 30, 2021.
The Debtor owns a light manufacturing and welding facility in East
Houston. Its only assets are the facility and its contents located
at 12543 Unison Road, Houston, TX 77044 ("Facility") and an
unimproved piece of property at 12520 Unison Road, Houston, TX
77044 ("Unimproved Lot" and collectively "Property"). The Property
is currently listed for sale for $4.5 million.
Enermex purchased the Property in 2016 with funding by Mercantil
Commercebank, N.A and an SBA loan. Amerant Bank, NA ("Amerant") is
the successor in interest to Mercantil Commercebank and thus holds
a first lien mortgage against the Property and the SBA holds a
second lien against the property. Amerant has filed a claim
asserting it is owed $1.66 million on its loan and the SBA is owed
approximately $920,000. Various taxing authorities have filed
claims asserting that property taxes are due which by statute have
a higher priority than the Amerant lien.
Additionally, FJ Salinas Holdings, LLC ("FJ Salinas") filed a claim
asserting a $350,000 secured claim, the IRS has filed a claim
asserting a $80,000 secured tax lien and various parties have filed
Abstracts of Judgments and M&M liens against the Facility or the
Property. The secured claims total approximately $3.15 million.
There are approximately $660,000 in unsecured claims.
In general, the Plan provides for the liquidation of the Property
in satisfaction of the secured debts and, to the extent funds are
available, pro rata payments to general unsecured creditors.
The Plan will treat claims as follows:
* Class 1 claims total $41,964.96 and are comprised of the
claims of all taxing authorities owed property taxes by Enermex
that are secured by a valid statutory lien on the Property.
Property Tax Claimants' Allowed Claims will be paid in full in
connection with the sale of the Property. Class 1 Property Tax
Claimants shall retain their statutory lien securing their pre
petition and post-petition tax debts until such time as the tax
debt is paid in full.
* Class 2 is comprised of the secured claim of Amerant Bank
which filed a proof of claim for $1,660,398.10 including pre
petition interest, late fees and attorney's fees. Amerant Bank also
asserts it is entitled to post-petition interest and attorney's
fees. Amerant Bank's Allowed Claim will be paid in full in
connection with the sale of the Property. The Debtor believes that
the sale will provide sufficient funds to pay Amerant Bank in full.
However, to the extent that the sales proceeds are not sufficient
to pay the Secured Claims in full, the Secured Claims will be paid
in order of priority of liens. This class is impaired.
* Class 3 is comprised of the approximately $920,000 secured
claim of the SBA. The SBA's Allowed Claim will be paid in full in
connection with the sale of the Property. The Debtor believes that
the sale will provide sufficient funds to pay the SBA in full.
However, to the extent that the sales proceeds are not sufficient
to pay the Secured Claims in full, the Secured Claims will be paid
in order of priority of liens. This class is impaired.
* Class 4 is comprised of the secured claim of FJ Salinas
which filed a proof of claim for $350,000. FJ Salinas' Allowed
Claim will be paid in full in connection with the sale of the
Property. The Debtor believes that the sale will provide sufficient
funds to pay FJ Salinas in full. However, to the extent that the
sales proceeds are not sufficient to pay the Secured Claims in
full, the Secured Claims will be paid in order of priority of
liens. This class is impaired.
* Class 5 is comprised of any secured Mechanic and Materialmen
Lien Claims ("M&M Lien Claims"), the IRS Secured Claim and any
Judgment Lien Claims. The potential Other Secured Claims, the
amount of the claims and whether they filed a proof of claim are
included on the Summary of Claims and Classification attached to
this Plan. Some of the M&M Lien Claims or Judgment Lien Claims may
have been satisfied or are no longer valid liens. However, any
Allowed Other Secured Claims will be paid in full in connection
with the sale of the Property. The Debtor believes that the sale
will provide sufficient funds to pay the Allowed Other Secured
Claims in full. However, to the extent that the sales proceeds are
not sufficient to pay the Secured Claims in full, the Secured
Claims will be paid in order of priority of liens. This class is
impaired.
* Class 6 is comprised of the Unsecured claims listed on the
Debtor's schedules and the filed unsecured claims. The Debtor
estimates that there are approximately $660,000 in Unsecured
Creditors. The Unsecured Creditors will receive a pro rata
distribution of any funds available after all Administrative Claims
and Secured Claims are paid in full. The Unsecured Creditor
distribution will be made by the Debtor after all administrative
matters have been addressed and after all Administrative Claims and
Secured claims have been paid. This class is impaired.
* Class 7 is comprised of Edgar Padilla's ownership interest
in Enermex. Mr. Padilla is the sole shareholder and will only
receive a distribution if there are funds remaining from the sale
of the Property and all other classes are paid in full. This class
is impaired.
The Plan proposes that Enermex market and sell the Property to
satisfy its administrative expenses and secured claims and to the
extent funds are available, unsecured claims will be paid pro rata.
If the sale price of the Property is not sufficient to pay the
secured claims in full after payment of administrative claims, the
secured claims will be paid in order of priority to the extent
funds are available.
When Enermex enters into a contract for sale of the Facility,
Unimproved Lot or the Property, Enermex will file a Notice of Sales
Contract summarizing the significant terms of the proposed sale
including the purchase price, the purchaser, whether the purchaser
is paying cash or financing the purchase, any feasibility period,
and the anticipated closing date. The Notice will be sent to the US
Trustee, all secured creditors and all parties or counsel
requesting notice. The parties will have 30 days to file an
objection to the sale. If no creditor timely objects to the sale,
Enermex may complete the sale on the terms stated in the Notice
without further Order of the Court. If a creditor files an
objection timely, Enermex will attempt to resolve the objection or
may seek a hearing.
Enermex will have 9 months from the Effective Date to enter into a
contract and send out a Notice of Sale Contract. If Enermex fails
to do so, this case will automatically convert to Chapter 7.
A full-text copy of the Combined Plan and Disclosure Statement
dated Nov. 30, 2021, is available at https://bit.ly/3pG6Uwr from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
COPLEN & BANKS PC
JOHN AKARD JR.
Texas Bar No. 00790212
11111 McCracken Dr., Suite A
Cypress, Texas 77429
Telephone: (832) 237-8600
Facsimile: (832) 202-2088
Email: JohnAkard@Attorney-CPA.com
And
SMITH & CERASUOLO, LLP
GARY F. CERASUOLO
Texas Bar No. 00789927
7500 San Felipe, Suite 777
Houston, Texas 77063
Telephone: 713-787-0003
Facsimile: 713-782-6785
Email: gary.cerasuolo@gmail.com
About Enermex International
Houston-based Enermex International Inc. filed a voluntary petition
for Chapter 11 protection (Bankr. S.D. Texas Case No. 21-32619) on
Aug. 2, 2021, listing as much as $10 million in both assets and
liabilities. Enermex President Edgar Padilla signed the petition.
Judge Jeffrey Norman oversees the case.
The Debtor tapped Coplen & Banks, PC as bankruptcy counsel and
Hrbacek Law Firm, PC as special counsel.
EXSCIEN CORP: Says Mediation w/ the Cumbies & Ferguson Unsuccessful
-------------------------------------------------------------------
Exscien Corporation submitted a Second Amended Disclosure Statement
for the Plan of Liquidation dated Nov. 30, 2021.
The current and/or former officers and directors of the Debtor have
conflicting narratives as to the circumstances leading to the
filing of the Bankruptcy Case. In order to provide creditors with
full disclosure, the Debtor submits both narratives for its
creditors to consider.
The current officers and directors of the Debtor, Steven and
Christine Cumbie (the "Cumbies"), assert the following facts:
* In 2015, the Debtor's former CEO, William Ker Ferguson
("Ferguson"), developed conflict(s) with the Debtor's Principal
Investigators, Dr. Mark Gillespie and Dr. Glenn Wilson (the
"Principal Investigators"). Notwithstanding such conflict, the
Debtor's Mobile Lab continued to produce valuable research and
develop a performing protein (the "Exscien Protein"). Thereafter,
in the fall of 2015, Ferguson opened a second laboratory in
Louisville, Kentucky (the "Louisville Lab"), purportedly to produce
the Exscien Protein developed in the Mobile Lab. However,
unbeknownst to the Debtor's board of directors and its Principal
Investigators, Ferguson actually focused the Louisville Lab on a
different product, only providing production of the Exscien Protein
as a secondary, non-performing effort. When such conduct was
disclosed and investigated in February 2018, the Debtor discovered
further breaches of Ferguson's fiduciary duties and other wrongful
conduct (all together, the "Ferguson Malfeasance"), leading to its
termination of Ferguson's employment.
* The Ferguson Malfeasance led to the Debtor's financial and
operational demise. The Louisville Lab did not produce any viable
protein during its operation for either of the grants obtained to
operate the Lab. The Debtor filed civil suit against Ferguson in
Mobile County, Alabama, on July 13, 2018, which suit led to
arbitration proceedings and was followed by related litigation
filed by Ferguson in Mobile and in Jefferson County, Kentucky. Such
litigation remained ongoing as of the Petition Date.
The former President and CEO of the Debtor, Dr. William Ker
Ferguson, asserts the following facts:
* From March 18, 2015, until the fall of 2018, Ferguson served
as the CEO and President of the Debtor until he was wrongfully
dismissed. During such time that Ferguson was acting in his
capacity as President and CEO, he learned of an opportunity to
obtain a $500,000 small business innovation research matching grant
from the Commonwealth of Kentucky. To qualify for such grant, the
Debtor's operations had to be located in Kentucky and 51% of the
assets and employees had to be based in Kentucky. Ferguson
discussed this opportunity with the Cumbies and the Principal
Investigators, and the decision was made to apply for the grant and
move the operations of the Debtor to Kentucky. Ferguson moved his
residence to Louisville, Kentucky, to oversee the operations. The
Debtor was successful in obtaining the grant. Under the terms of
the grant, the Debtor was to remain in Kentucky until June 5, 2022.
* The Debtor's laboratory in Louisville was more successful in
advancing commercialization of discoveries than its lab at the
University of South Alabama ("USA"), where the work had previously
been done. Notwithstanding the progress and success made possible
by Ferguson's leadership, the Debtor's Mobile lab had to be closed
because of a long-standing dispute between the Debtor and USA
concerning a sublicense agreement that came to head in the Spring
of 2018.
* On June 20, 2018, the Cumbies, as directors of the Debtor,
attempted to remove Ferguson from his position as President of
Exscien. Ferguson opposed these retaliatory tactics by refusing to
accept the removal or to resign. In turn, Ferguson referred his
dispute to the American Arbitration Association for arbitration in
accordance with the terms of his employment agreement. The Cumbies
terminated Ferguson's access to the Debtor's funding and his
ability to pay bills. No payroll was made in September of 2018.
False statements were made to the employees as to why they were not
receiving their checks.
* As a result, the Debtor defaulted on the Kentucky grant,
causing the Debtor to owe the Commonwealth of Kentucky $500,000
plus 14% interest until the funds are repaid in full. The
Commonwealth of Kentucky eventually obtained a default judgment
against the Debtor for the $500,000 due under the grant because the
Debtor had ceased operations in Kentucky by the Cumbies. Such
actions caused the stock in the Debtor to become worthless.
Ferguson asserts that all of this could have been avoided, but for
the breach of fiduciary duty by the Cumbies acting in their
capacity as directors of the Debtor. As a result, the Ferguson
Family Trust was damaged through the unlawful actions of the
Cumbies, acting in their fiduciary capacity.
* On February 2, 2019, Ferguson, as Trustee of the Ferguson
Family Trust, instituted a double-derivative suit pursuant to KRS
§ 23A.010(1) against the Debtor and the Cumbies in the Jefferson
Circuit County of Louisville, Kentucky, Case No. 19-CI-000749 (the
"Shareholder Derivative Lawsuit"), for the ultimate benefit of the
Debtor and its creditors. The Cumbies sought to have the suit
dismissed on the basis that the Court lacked in personam
jurisdiction over them. On March 12, 202, Judge Annie O'Connell
denied that Motion. The case is now stayed pursuant to this
bankruptcy filing by the Debtor.
On July 10, 2020, the Debtor filed a Sale Motion seeking approval
for the sale of the Purchased Assets to USA. On September 2, 2020,
the Bankruptcy Court entered the Sale Order approving the
transaction. The sale transaction closed on October 7, 2020,
leaving only cash and intangible Asset(s) in the Estate.
The remaining intangible Asset(s) are potential choses in action,
i.e. alleged claims against insiders of the Debtor. The Debtor
attempted to mediate such claims with the Cumbies and Ferguson on
September 13, 2021, but mediation was unsuccessful. The Plan, in
its current form, seeks to provide a framework for liquidating the
remaining intangible Assets and distribute all the remaining Assets
for the benefit of Allowed Claims.
The Amended Disclosure Statement does not alter the proposed
treatment for unsecured creditors and the equity holder:
* Class 3 consists of all Allowed Unsecured Claims against the
Debtor not otherwise specifically classified in the Plan. Each
Holder of an Allowed Class 3 Unsecured Claim shall receive a pro
rata share of the Assets of the Estate remaining after payment of:
(a) all Allowed Administrative Expense Claims, including
Professional Fees and fees; (b) all Allowed Priority Tax Claims;
(c) all Allowed Priority Claims; and (d) all Allowed Secured Tax
Claims.
* Class 4 consists of all Allowed Unsecured Claims against the
Debtor asserted by direct or indirect Equity Holders of the Debtor,
including but not limited to William Ker Ferguson, Christine C.
Cumbie, and the Ferguson Family Trust. Each Holder of an Allowed
Class 4 Unsecured Claim, if any, shall receive a pro rata share of
the Assets of the Estate remaining after payment of: (a) all
Allowed Administrative Expense Claims, including Professional Fees
and fees; (b) all Allowed Priority Tax Claims; (c) all Allowed
Priority Claims; and (d) all Allowed Secured Tax Claims.
* Class 5 consists of all Equity Interests. On the Effective
Date, the Equity Interests shall be cancelled and extinguished.
Class 5 is deemed to have rejected the Plan and is therefore not
entitled to vote to accept or reject the Plan.
The Debtor determined that it would be in the best interests of its
creditors and the estate to maximize the value of its remaining
Unliquidated Assets through a sale pursuant to this Plan.
The Debtor proposes to sell the Unliquidated Assets to Christine
Cumbie free and clear of any and all Liens, Debts, obligations,
Claims, Cure Claims, Liabilities, encumbrances, and all other
interests of every kind and nature, in exchange for (i) the
withdrawal of Claim No. 9 in the amount of $30,000.00, and (ii) a
cash payment of $20,000.00, payable within 10 business days of
entry of a final, non appealable Confirmation Order (the "Cumbie
Offer").
The Cumbie Offer has been accepted by the Debtor subject to higher
and better bids made pursuant to the terms. If no higher and better
bid is made, the Cumbies shall tender to the Debtor's undersigned
attorneys a cashier's or certified check made payable to the Debtor
in the amount of Twenty Thousand Dollars ($20,000.00) no later than
3 business days prior to the Confirmation Hearing.
A full-text copy of the Second Amended Disclosure Statement dated
Nov. 30, 2021, is available at https://bit.ly/3prE3eU from
PacerMonitor.com at no charge.
Counsel for Debtor:
Jodi Daniel Dubose, Esq.
STICHTER RIEDEL BLAIN & POSTLER, P.A.
41 N. Jefferson Street, Suite 111
Pensacola, FL 32501
Tel: (850) 637-1836
Fax: (850) 791-6545
E-mail: jdubose@srpb.com
About Exscien Corporation
Exscien Corporation filed a Chapter 11 bankruptcy petition (Bankr.
S.D. Ala. Case No. 20-11364) on May 18, 2020, disclosing under $1
million in both assets and liabilities. Jodi Daniel Dubose, Esq.,
at Stichter Riedel Blain & Postler, P.A., is the Debtor's counsel.
FINDLAY ESTATES: Seeks to Tap Rockland New York as Managing Agent
-----------------------------------------------------------------
Findlay Estates, LLC seeks approval from the U.S. Bankruptcy Court
for the Southern District of New York to employ Rockland New York
Management Corp. as its managing agent for its property located at
1056, 1060 and 1064 Findlay Ave., Bronx, N.Y.
The firm's services include:
(a) collecting rent;
(b) managing the property;
(c) attending to repairs;
(d) responding to the tenants, if necessary;
(e) reviewing bills which are approved in accordance with the
budget;
(f) preparing and filing reports required by the U.S. trustee;
and
(g) conducting all duties typically required by a managing
agent.
The firm will receive 5.5 percent of collected rents as payment for
its services.
In addition, the firm will seek reimbursement for expenses
incurred.
Abe Pollack, the owner of Rockland New York Management, disclosed
in a court filing that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Abe Pollack
Rockland New York Management Corp.
11 Ternure Ave.
Spring Valley, NY 10977
About Findlay Estates
Findlay Estates, LLC owns and operates a 27-unit residential rental
building located at 1056-1064 Findlay Ave., Bronx, N.Y.
Findlay Estates filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No.
21-22647) on Nov. 16, 2021, listing as much as $10 million in both
assets and liabilities. Sheindy Grunhut, sole member-manager,
signed the petition.
Judge Robert D. Drain oversees the case.
Leo Fox, Esq., an attorney practicing in New York, serves as the
Debtor's legal counsel. Rockland New York Management Corp. is the
managing agent
FLEXIBLE FUNDING: Sale of All Instapay Assets to eCapital Approved
------------------------------------------------------------------
Judge Mark X. Mullin of the U.S. Bankruptcy Court for the Northern
District of Texas authorized Flexible Funding Ltd. Liability Co.
and Instapay Flexible LLC to sell substantially all of Instapay's
assets to eCapital Freight Factoring Corp.
On the closing date, the Sellers will deliver to the Purchaser
copies of the Data Tapes for the purpose of determining the
Purchase Price. Based on the Data Tapes and any other date agreed
upon by the parties at such time, the parties will prepare and
execute a Purchase Price Certificate substantially in the form of
Exhibit A reflecting the Purchase Price as calculated on the
Closing Date.
The APA and all other ancillary documents, and all of the terms of
terms and conditions thereof are approved.
The sale is "as is, where is, and with all faults," and free and
clear of all Encumbrances except any Assumed Liabilities.
The Debtors are authorized and directed to assume and assign each
of the Assigned Contracts to the Purchaser.
If the Purchaser fails to close on the sale of the purchased assets
as provided in the APA, then the sale to the Backup Bidder, Encore
Funding LLC, pursuant to the terms of the Backup Bidder APA is
approved.
Upon the closing, the actual amount of the "Gross Cash Proceeds
Available at Close" will be determined at closing and will be
disbursed as follows: (i) $492,843 will be disbursed to Forshey
Postrok, LLP to be held in its IOLTA Account and thereafter paid to
Candlewood Partners, LLC upon entry of the order approving
Candlewood Fees; (ii) $7,084,047 will be disbursed to the Debtors
and will be subject to the terms of the Cash Collateral Order; and
(iii) the balance of actual Gross Cash Proceeds Available at Close
will be disbursed to the Closing Agent on behalf of the Lenders to
be applied to the Pre-Petition Indebtedness.
Pursuant to Bankruptcy Rules 7062, 9014, 6004(h), and 6006(d), the
Order will be effective immediately upon entry, and the Debtors and
the Purchaser are authorized to close the sale immediately upon
entry of the Order.
A copy of the APA and Exhibit A is available at
https://tinyurl.com/n8ayr2ps from PacerMonitor.com free of charge.
About Flexible Funding Ltd.
Flexible Funding Ltd. sought Chapter 11 protection (Bankr. N.D.
Tex. Case No. 21-42215) on Sept. 19, 2021. In its petition,
Flexible estimated assets of between $100 million and $500 million
and estimated liabilities between $100 million and $500 million.
Affiliate Instapay Flexible LLC also sought Chapter 11 bankruptcy
(Case No. 21-42214).
The Debtors' counsel:
Jeff P. Prostok
Forshey & Prostok, LLP
Tel: 817-877-8855
E-mail: jprostok@forsheyprostok.com
Lynda L. Lankford
Forshey & Prostok, LLP
Tel: 817-878-2022
E-mail: llankford@forsheyprostok.com
FLOREK & MORGAN: Seeks to Hire Carmody MacDonald as Legal Counsel
-----------------------------------------------------------------
Florek & Morgan, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of Missouri to employ Carmody MacDonald,
PC as its legal counsel.
The firm's services include:
(a) advising the Debtor regarding its powers and duties in its
Chapter 11 case;
(b) assisting the Debtor in its consultations with any
appointed committee relative to the administration of the case;
(c) assisting the Debtor in analyzing the claims of creditors
and negotiating with such creditors;
(d) assisting in investigating the Debtor's assets,
liabilities and financial condition, and reorganizing the Debtor's
business;
(e) advising the Debtor in connection with the sale of its
assets or business;
(f) assisting the Debtor in its analysis of and negotiation
with any appointed committee or any third-party concerning matters
related to, among other things, the terms of a plan of
reorganization;
(g) advising the Debtor with respect to any communications
with the general creditor body regarding significant matters in
this Chapter 11 case;
(h) commencing and prosecuting necessary and appropriate
actions or proceedings on behalf of the Debtor;
(i) preparing legal papers;
(j) representing the Debtor at all hearings and other
proceedings;
(k) conferring with other professional advisors in providing
advice to the Debtor;
(l) advising the Debtor regarding pending arbitration and
litigation matters in which itr may be involved; and
(m) performing all other necessary legal services.
The hourly rates of Carmody MacDonald's attorneys and staff are as
follows:
Partners $305 - $425 per hour
Associates $225 - $275 per hour
Paralegals/Law Clerks $150 - $195 per hour
In addition, the firm will seek reimbursement for expenses
incurred.
The firm has been paid the sum of $22,491 for services performed
through the petition date.
Robert Eggmann, Esq., a partner at Carmody MacDonald, disclosed in
a court filing that his firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Robert E. Eggmann, Esq.
Thomas H. Riske, Esq.
Dormie Yu Heng Ko, Esq.
Carmody MacDonald PC
120 S. Central Avenue, Suite 1800
St. Louis, MO 63105
Telephone: (314) 854-8600
Facsimile: (314) 854-8660
Email: ree@carmodymacdonald.com
thr@carmodymacdonald.com
dko@carmodymacdonald.com
About Florek & Morgan
Florek & Morgan, LLC, a limited liability company that operates a
law firm in Clayton, Mo., sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. E.D. Mo. Case No. 21-44308) on Nov.
24, 2021. In the petition signed by Thomas Florek, authorized
representative, the Debtor disclosed up to $10 million in both
assets and liabilities.
Judge Bonnie L. Clair oversees the case.
Robert E. Eggmann, Esq. at Carmody MacDonald PC is the Debtor's
legal counsel.
GLOBAL IID: Moody's Assigns B3 CFR & Rates $40MM 1st Lien Debt B2
-----------------------------------------------------------------
Moody's Investors Service assigned Global IID Parent, LLC ("Smart
Start") a B3 corporate family rating and a B3-PD probability of
default rating. Concurrently, Moody's assigned B2 ratings to the
company's proposed $40 million first lien senior secured revolving
credit facility and $385 million first lien senior secured term
loan. Moody's also assigned a Caa2 rating to the proposed $80
million second lien senior secured term loan. The ratings outlook
is stable.
Proceeds from the transaction will be used in conjunction with new
cash and rolled equity, mainly from Apollo Global Management, LLC
("Apollo"), to acquire Smart Start. As part of the transaction,
existing debt at Smart Start will be repaid. Moody's will withdraw
all ratings associated with 1A Smart Start LLC, the current debt
issuing entity.
Assignments:
Issuer: Global IID Parent, LLC
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured First Lien Term Loan, Assigned B2 (LGD3)
Senior Secured First Lien Revolving Credit Facility, Assigned B2
(LGD3)
Senior Secured Second Lien Term Loan, Assigned Caa2 (LGD6)
Outlook Actions:
Issuer: Global IID Parent, LLC
Outlook, Assigned Stable
RATINGS RATIONALE
Smart Start's B3 CFR reflects the company's high financial leverage
of approximately 7.0x (Moody's adjusted for operating lease) pro
forma for the last twelve months ending September 30, 2021 as well
as the company's relative small scale and narrow product offering.
Additionally, the company's majority ownership by Apollo presents
corporate governance concerns regarding Smart Start's financial
strategies given the potential for debt-funded acquisitions and
distributions.
The company's credit profile is supported by Smart Start's strong
market position, legislative tailwinds and solid profitability as
one of the world's largest providers of ignition interlock devices
("IID") or car breathalyzers for DUI offenders that prevent the
vehicle from starting if the driver is intoxicated. The ratings
also take into consideration the re-opening of courts and DMVs, the
company's footprint expansion as a contracted sole source, cost
cutting initiatives with Flex device and Flex pay, and continued
legislative tailwinds over the past few quarters that will drive
increased demand.
The company's good liquidity is supported by Moody's expectations
of ample cash reserves and free cash flow generation in the $20-40
million range. Liquidity will also be bolstered by the company's
undrawn $40 million revolving credit facility, expiring in 2026,
with a springing first lien net leverage ratio, triggered at 35%
usage. Moody's does not expect Smart Start to utilize the revolver
over the next 12 to 15 months.
The B2 rating on the first lien revolving credit facility and term
loan are one notch above the CFR, reflecting the priority lien with
respect to substantially all assets of the company relative to the
second lien term loan, which is rated Caa2, two notches below the
CFR. The B3-PD Probability of Default Rating is in line with the B3
CFR, reflecting Moody's expectation for an average family recovery
level.
As proposed, the new credit facility is expected to contain
covenant flexibility provisions that could adversely impact
creditors. Notable terms include: incremental debt capacity up to
the greater of $75 million and 1.00x of EBITDA, plus amounts
permitted under the general debt carve-out, plus additional amounts
subject to a first lien net leverage ratio 0.25x above the closing
date net first lien leverage ratio (if pari passu secured to the
first lien, or a secured net leverage ratio 0.25x above the closing
date secured net leverage ratio. Leverage ratios exclude revolving
debt incurred for working capital purposes or incurred concurrently
with the incremental. Amounts up to the greater of $75m and 1.00x
of EBITDA may be incurred with an earlier maturity date than the
initial first lien term loans (increased to the greater of $94m and
1.25x EBITDA for the second lien loans) . 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 revolving loans are subject to a
financial maintenance covenant of 8.2x leverage ratio, tested when
funded revolving loan debt exceeds 35% of commitments.
The stable outlook reflects Moody's expectations of sustained
revenue and earnings growth, deleveraging the business to below
7.0x over the next 12 to 18 months. The stable outlook also
reflects positive regulatory trends, footprint expansion while
sustaining solid credit metrics.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider an upgrade if Smart Start sustains free cash
flow as a percentage of debt above 5% and debt/EBITDA below 6x.
Concurrently, a meaningful increase in scale and product diversity,
without sacrificing profitability would generate upward pressure as
well.
Conversely, Moody's would consider downgrading the ratings if the
company starts demonstrating revenue contraction, financial
leverage above 7.5x and break even free cash flow. Moody's would
also consider a downgrade in case the company adopts a more
aggressive financial policy, characterized by debt-financed
acquisitions and distributions.
Headquartered in Grapevine, Texas, Smart Start is the world's
leading provider of alcohol monitoring solutions utilizing IIDs,
which prevent driving under the influence. The company provides
alcohol monitoring services (using its devices) to individuals and
commercial customers. Its products include IIDs and remote alcohol
monitoring devices. The company's IIDs are installed in vehicles
owned by people who typically have been convicted of DUIs or
similar types of offenses or in vehicle fleets operated by
commercial and governmental entities.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
GREEN GROUP: Amends Florida Corporate Claim Pay Details
-------------------------------------------------------
Florida Corporate Funding, Inc., submitted a Third Amended
Disclosure Statement in connection with the Amended Plan of
Liquidation for debtor Green Group 11 LLC dated Dec. 2, 2021.
The Debtor owns the real property at 220 Greene Avenue, Brooklyn,
New York 11238 (the "Property"). The Debtor has no reorganization
prospects if all scheduled and filed Claims are Allowed. The
Property is deeply underwater and the Debtor has very little
money.
In addition, there are pending disputes regarding the allowance and
priority of various claims, which are obstacles to a sale outside
of Bankruptcy Court. The Debtor, FCF, Truman, Charles Zizi and
Michael Kandhorov engaged in mediation to resolve the claims
disputes. The Plan proposed represents the agreement of certain of
the parties during the mediation to sell the Property under a
Chapter 11 Plan. To determine the distribution of the sale
proceeds, the Bankruptcy Court ordered, and the Plan provides for
further mediation.
Class 2 consists of the Claim of Florida Corporate Funding, Inc.
Judgment Lien Claim totals approximately $2,983,749 as of the
Petition Date. Payment of available Cash up to Allowed Amount of
Class 2 Claim, after payment of costs of sale, Administrative
Expenses, Priority Tax Claims, Class 1 Claims and Class 4 Claims,
Plan Administrator costs as provided for in the Plan, and up to
$20,000 to be paid pro-rata to Class 5 General Unsecured
Creditors.
Under a pre-petition settlement agreement between the Plan
proponent and Zizi entered before a different court into on March
29, 2018 as modified by separate agreement on that same date (the
"Zizi Settlement"), any economic benefit resulting from Zizi's
economic interest in the Debtor was assigned to the Proponent. In
exchange for the assignment of Zizi's claim to the Proponent and
the withdrawal of all objections to the Plan and Disclosure
Statement and the withdrawal of Zizi's motion to, among other
things, dismiss the Debtor's case or appoint a receiver, the terms
of the Zizi Settlement are incorporated into the Plan and ratified
by the parties.
The Zizi Settlement provides that upon the sale of the Debtor's
Real Property, the Proponent shall pay to Zizi the sum of
$200,000.00 set forth in the Zizi Agreement (less any credits as
agreed between Zizi and Proponent) within three (3) business days
of the closing on the sale of the Property directly from Florida
Corporate Funding's portion of the sale proceeds. Florida Corporate
Funding confirms that the condition precedent of the delivery of
the deed for 850 Greene Avenue has already occurred, along with all
other conditions of the Zizi Settlement.
Like in the prior iteration of the Plan, Class 5 consists of
General Unsecured Claims. Claims total approximately $3,000,000
based upon filed and scheduled Claims of approximately $4,700,000,
less the $1,784,000 value of the Property under Truman's appraisal.
Payment of available Cash up to Allowed Amount of the Class 5
Claims, after payment of costs of sale, Administrative Expenses,
Priority Tax Claims, Class 1, 2, 3, and Class 4 Claims, and Plan
Administrator costs as provided for in the Plan If no Cash is
available from the sale proceeds, to pay Class 5 Claims, up to
$20,000 shall be paid pro-rata to Class 5 General Unsecured
Creditors from funds that would otherwise be paid to Class 2 and/or
Class 3. For the avoidance of doubt, with respect to General
Unsecured Creditors, if, as projected, the sale proceeds are
insufficient to make a $20,000 payment, the Plan provides for a
carve-out of up to $20,000 to ensure a minimum $20,000 payment to
be distributed pro-rata to holders of Allowed General Unsecured
Claims.
Means for Implementation
Payments under the Plan will be paid from the Property Sale
Proceeds. If the Sale Proceeds are insufficient to pay costs of
sale, Administrative Expenses, Priority Tax Claims, Class 1, 2, 3
and Class 4 Claims, and Plan Administrator costs as provided for in
the Plan to pay Class 5 Claims, FCF and/or Truman shall carve out
sufficient funds to pay the costs of sale, Administrative Expenses,
Priority Tax Claims, Class 1 Claims, Class 4 Claims, Plan
Administrator costs as provided for in the Plan, and up; to $20,000
to be paid pro-rata to Class 5 General Unsecured Creditors.
For the avoidance of doubt, with respect to General Unsecured
Creditors, if, as projected, the sale proceeds are insufficient to
make a $20,000 payment, the Plan provides for a carve-out of up to
$20,000 to ensure a minimum $20,000 payment to be distributed pro
rata to holders of Allowed General Unsecured Claims.
In the event the Property Sale Proceeds are not sufficient to pay
all Claims in full with interest from the Petition Date, the
proceeds of the prosecution of the Causes of Action by the Plan
Administrator shall be an additional potential source of Cash to be
distributed under the Plan, net of payment of Plan Administrator
fees and expenses. Such net proceeds of Causes of Action proceeds
will first be used for unpaid Plan Administrator fees and expenses,
then to reimburse Proponent for Cash paid to fund the Plan, and
then paid to Creditors in the order of priority provided for in the
Plan. The parties shall engage in at least one further mediation
session before engaging in litigation over Claims.
A full-text copy of the Third Amended Disclosure Statement dated
Dec. 02, 2021, is available at https://bit.ly/31y9Oup from
PacerMonitor.com at no charge.
Counsel for Florida Corporate Funding, Inc., Plan proponent:
Mark A. Frankel
Backenroth Frankel & Krinsky, LLP
800 Third Avenue
New York, NY 10022
Telephone: (212) 593-1100
Facsimile: (212) 644-0544
About Green Group 11
Green Group 11, LLC, is the owner and operator of a grocery store
located at 220 Greene Ave., Brooklyn, N.Y.
Green Group 11 filed a Chapter 11 petition (Bankr. E.D.N.Y. Case
No. 19-40115) on Jan. 8, 2019. In the petition signed by Michael
Kandhorov, manager, the Debtor disclosed $6,000 in assets and
$1,895,562 in liabilities. Judge Nancy Hershey Lord oversees the
case.
The Debtor tapped the Law Office of Ira R. Abel as bankruptcy
counsel, Jacobs PC as special counsel, and Spiegel, LLC as
accountant.
GRUPO POSADAS: Updates Compensation Agreement Details
-----------------------------------------------------
Grupo Posadas S.A.B. de C.V. and affiliate Operadora del Golfo de
Mexico, S.A. de C.V. submitted a Revised Joint Prepackaged Chapter
11 Plan dated Nov. 30, 2021.
The Revised Joint Prepackaged Plan discusses the alterations made
in the Incentive Plans and Employee and Retiree Benefits.
* The Compensation Agreements shall be neither assumed nor
rejected. Rather, the Compensation Agreements and the Debtors'
benefits and obligations thereunder shall be deemed to ride through
the Chapter 11 Cases unaffected by the Chapter 11 Cases and shall
remain as benefits and obligations of the Reorganized Debtors after
the Plan Effective Date. Until after the Plan Effective Date,
consistent with the Final Order (I) Authorizing the Debtors to (A)
Pay Certain Employee Wages and Other Compensation and Related
Obligations and (B) Maintain and Continue Employee Benefits and
Programs in the Ordinary Course, and (II) Authorizing and Directing
Applicable Banks to Honor All Checks and Transfers Related to Such
Obligations, the Debtors and Reorganized Debtors shall make no
payments on account of, nor be liable for, any severance, bonus or
special incentive payments under the Compensation Agreements that
are covered by section 503(c) of the Bankruptcy Code without the
approval of the Bankruptcy Court.
* All other employment, confidentiality and non-competition
agreements, offer letters, vacation, holiday pay, retirement,
supplemental retirement, indemnity, executive retirement, pension,
deferred compensation, medical, dental, vision, life and disability
insurance, flexible spending account and other health and welfare
benefit plans, programs, agreements and arrangements, and all other
wage, compensation, employee expense reimbursement and other
benefit obligations, are deemed to be, and shall be treated as,
Executory Contracts under the Plan and, on the Plan Effective Date,
shall be deemed assumed pursuant to sections 365 and 1123 of the
Bankruptcy Code.
The Revised Plan does not alter the proposed treatment for
unsecured creditors and the equity holder:
* Each Holder of an Allowed General Unsecured Claim in Class 4
shall, at the election of the applicable Debtor or Reorganized
Debtor, (i) have the legal, equitable and contractual rights of
such Holder Reinstated or (ii) receive Cash in an amount equal to
such Allowed General Unsecured Claims.
* Class 6 consists of all Allowed Interests. On the Plan
Effective Date, each Allowed Interest shall be Reinstated.
If the sale of the Tulkal Assets closes after the Petition Date,
but prior to the Plan Effective Date, then the proceeds of such
sale shall be placed in a segregated account, subject to the
approval of the Bankruptcy Court, and on the Plan Effective Date,
such proceeds shall be applied in accordance with the Collateral
Asset Sale Waterfall. If the sale of the Tulkal Assets closes after
the Plan Effective Date, then the proceeds of such sale shall be
distributed in accordance with the Collateral Asset Sale Waterfall;
provided that if, for any reason, the sale of the Tulkal Assets has
been terminated or abandoned by any party to such sale and such
sale has not been consummated in accordance with the terms of the
contract of sale, and the Debtors have had an opportunity to pursue
remedies to enforce the contract of sale then on the Plan Effective
Date, after terminating any existing agreements, the Tulkal Assets
shall be pledged to the New Notes Trustee with a first lien
attaching to such assets, the Tulkal Assets shall become collateral
in the Collateral Annex Summary and the Company shall take all
steps necessary to perfect such lien as soon as practicable.
All Cash consideration necessary for the Reorganized Debtors to
make payments or distributions pursuant to this Plan shall be
obtained from Cash on hand from the Debtors, including Cash from
business operations. Further, the Debtors and the Reorganized
Debtors will be entitled to transfer funds between and among
themselves as they determine to be necessary or appropriate to
enable the Reorganized Debtors to satisfy their obligations under
the Plan. Any changes in intercompany account balances resulting
from such transfers will be accounted for and settled in accordance
with the Debtors' historical intercompany account settlement
practices and will not violate the terms of the Plan or the New
Notes Documents.
Counsel to the Debtors:
CLEARY GOTTLIEB STEEN & HAMILTON LLP
One Liberty Plaza
New York, New York 10006
Telephone: (212) 225-2000
Facsimile: (212) 225-3999
Richard J. Cooper
Jane VanLare
About Grupo Posadas
Posadas is the leading hotel operator in Mexico and owns, leases,
franchises and manages 185 hotels and 28,690 rooms in the most
important and visited urban and coastal destinations in Mexico.
Urban hotels represent 87% of total rooms and coastal hotels
represent 13%. Posadas operates the following brands: Live Aqua
Beach Resort, Live Aqua Urban Resort, Live Aqua Boutique Resort,
Grand Fiesta Americana, Curamoria Collection, Fiesta Americana, The
Explorean, Fiesta Americana Vacation Villas, Live Aqua Residence
Club, Fiesta Inn, Fiesta Inn LOFT, Fiesta Inn Express, Gamma, IOH
Hotels, and One Hotels. Posadas has traded on the Mexican Stock
Exchange since 1992.
Grupo Posadas S.A.B. de C.V. and affiliate Operadora del Golfo de
Mexico, S.A. de C.V. sought Chapter 11 protection (Bankr. S.D.N.Y.
Case No. 21-11831) on October 26, 2021.
The cases are handled by Honorable Judge Sean Lane.
The Company tapped Cleary Gottlieb Steen & Hamilton LLP as
international legal counsel; Ritch, Mueller y Nicolau, S.C. and
Creel, Garcia-Cuellar, Aiza y Enriquez SC, as Mexican legal
counsel; and DD3 Capital Partners as financial advisor. Prime
Clerk LLC is the claims agent.
HAVERLAND CARTER: Fitch Affirms 'BB+' IDR, Outlook Stable
---------------------------------------------------------
Fitch Ratings has affirmed the 'BB+' Issuer Default Rating (IDR)
and revenue bond rating on various series of debt issued by the New
Mexico Hospital Equipment Loan Council and Oklahoma Development
Finance Authority on behalf of members of the Haverland Carter
Obligated Group (OG). Fitch affirmed its 'BB+' rating on $6 million
in subordinate senior living revenue bonds series 2017B guaranteed
debt obligations issued by the Colorado Health Facilities Authority
on behalf of Haverland Carter Ralston Creek, LLC (HCRC).
Fitch has also assigned an 'BB+' rating to the series 2022 bonds
issued by the New Mexico Hospital Equipment Loan Council.
The Rating Outlook is Stable.
The series 2022 bond proceeds will be used to refund the series
2012 bonds. The OG will utilize a forward settle and the bonds will
be issued on a tax-exempt basis.
SECURITY
The bonds issued on behalf of the OG are secured by a first
mortgage on the OG's properties, a pledge of the OG's gross
revenues and debt service reserve funds.
The series 2017B bonds are secured by a pledge of gross revenues of
HCRC and a guaranty agreement by the OG. Under the guaranty
agreement, the OG guarantees the payment of P&I on HCRC's 2017B
bonds. There is no debt service reserve fund supporting the 2017B
bonds.
ANALYTICAL CONCLUSION
The assignment of the 'BB+' rating to the series 2022 bonds and the
affirmation of the 'BB+' IDR and outstanding debt ratings reflects
the OG's and HCRC's weaker occupancy and profitability due to
COVID-19 operating pressures as well as the continual pressure from
increased expenses resulting from management's decision to relocate
some of La Vida Llena's (LVL) health care residents to allow for
the health care repositioning project to be completed one year
ahead of schedule. HCRC is not in the OG, but its weak operations
have required the OG to provide continual financial support that
has inhibited the OG's ability to improve its balance sheet. Fitch
expects additional financial support will be necessary in fiscal
2022 as HCRC had only 37 days cash on hand (DCOH) as of Sept. 30,
2021 and generated a $1.7 million operating loss through the first
six months of fiscal 2022.
In addition to core operating weakness, LVL's weak presales (33%
which amounts to approximately $7 million in entrance fees) for its
new independent living units (ILU) is a risk, as the expansion
project was funded with $18.5 million in temporary debt that will
require every unit in the expansion project to be sold to raise
enough funds from new entrance fees to redeem the temporary debt.
While LVL has exhibited strong demand in the past as the only
Type-A life care provider in its primary service area and
management has revamped its digital sales and marketing strategy,
uncertainty around the coronavirus and its effects on the ability
to accelerate marketing/sales remains.
KEY RATING DRIVERS
Revenue Defensibility: 'bbb'
Solid Historical Demand and Market Position
The OG's revenue defensibility is assessed as 'bbb' reflecting its
good historical demand indicators as well as LVL's solid position
in its primary service area as the only Type-A life care provider
in Albuquerque, NM. LVL has experienced census softening over the
last 12 months and Fitch expects gradual census growth as sales
traction from traditional marketing channels improves and
management executes on a revamped sales and marketing plan. The
Neighborhood in Rio Rancho (NIRR) has seen an improvement in
occupancy from 89% in fiscal 2020 to 92% in fiscal 2021, which is
viewed favorably.
Operating Risk: 'bbb'
Operations Pressured by Pandemic; Elevated Debt Burden
The OG's operating risk is assessed at 'bbb' reflecting coronavirus
related pressures on operations, its elevated debt burden and the
ongoing marketing and sales challenges associated with the
expansion project at LVL. Due to elevated expenses related to the
relocating of half of LVL's assisted living and all of LVL's memory
care residents and coronavirus related disruptions to census, the
OG reported a weak 103.2% operating ratio in fiscal 2021. However,
Fitch notes that LVL's new expansion project will add 40 additional
ILU, 36 assisted living units (ALUs), 18 memory care units (MCUs)
and repositioning the existing health care facility to become 56
beds in a mix of three semi-private rooms and 50 private rooms.
Successful completion and fill of the new and renovated units are
expected to be accretive to the OG's operating profile.
Financial Profile: 'bb'
Financial Profile Improvement Expected if Management Can Fill
Project
In context of its 'bbb' revenue defensibility and operating risk
assessments, the OG's financial profile is currently assessed as
'bb' reflecting a sufficient liquidity position and the expectation
for adequate debt service coverage levels (at or above 1.2x)
following completion of its capital project. At Sept. 30, 2021, the
OG had approximately $49 million of unrestricted cash and
investments, which translates into a good DCOH of 475, but a weak
30% cash to adjusted debt.
ESG - Group Structure: The OG has an ESG Relevance Score of '4' for
Group Structure due to its consistent support of non-OG entities,
which dampens its financial profile, has a negative impact on the
credit profile and is relevant to the rating in conjunction with
other factors.
Asymmetric Additional Risk Considerations
In addition to LVL's lack of presales for its ILU expansion
project, the OG's ongoing financial support for HCRC is an
asymmetric additional risk consideration that is incorporated in to
the current 'BB+' rating. The OG guarantees payment on HCRC's
series 2017B subordinate bonds, which are interest only for 10
years with a $6 million bullet payment in 2028.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Improvement of census across campuses, coupled with the
project remaining on track;
-- Successful payoff of temporary debt associated with LVL's new
ILUs;
-- Improvement of cash to adjusted debt to be consistently above
50% in Fitch's stress case.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Prolonged weak census levels at the OG and/or HCRC resulting
in weaker operational performance and/or deterioration in
liquidity;
-- Any significant project execution issues such as construction
delays, cost overruns, or slow fill-up that negatively impact
the OG's operating or financial profile or its ability to
adequately cover its debt service payments.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CREDIT PROFILE
The OG consists of Haverland Carter Lifestyle Group (HCLG), LVL,
the NIRR and Sommerset Neighborhood, Incorporated (Sommerset). HCLG
is the parent company and the sole member of LVL, NIRR and
Sommerset.
LVL is a Type-A life plan community located in Albuquerque, NM and
consists of 320 ILUs, 15 MCUs, 40 ALUs and 35 SNF beds.
NIRR is a Type-A life plan community located in Rio Rancho, NM and
consists of 90 ILUs, 48 ALUs, 24 MCUs and 48 SNF beds.
LVL and NIRR offer fully amortizing and 50% refundable contract
options. Over 90% of the residents at LVL and NIRR have chosen the
fully amortizing plan.
Sommerset is located in Oklahoma City, OK and consists of 106 ALUs
and 20 MCUs. In fiscal 2021, the OG generated $50 million in total
revenues.
Non-obligated group affiliates include HCRC and Del Corazon
Hospice, LLC that was acquired in April 2019.
Revenue Defensibility
The OG's demand characteristics are midrange, reflecting strong
historical occupancy that has been negatively pressured by pandemic
related sales and marketing challenges. LVL's average ILU occupancy
fell to 87% in fiscal 2021 and was most recently only 82% at Sept.
30, 2021. Furthermore, occupancy across all of the OG's service
lines weakened from fiscal 2020 to fiscal 2021, except NIRR's ILU
occupancy, which averaged 89% in fiscal 2020 and 92% in fiscal 2021
and LVL's assisted living occupancy, which averaged 79% in fiscal
2020 and 98% in fiscal 2021. Though Fitch believes that the OG will
gradually improve its occupancy through its revamped sales and
marketing efforts, ILU occupancy at LVL and the OG's health care
units are expected to continue to remain pressured in fiscal 2022.
The OG's operations have historically been anchored by LVL's strong
position in its primary service area as the only Type-A life care
provider in Albuquerque, NM. This contributed to favorable ILU
occupancy that had been consistently above 90% before the
coronavirus pandemic. NIRR is also the only Type-A life care
provider in its primary market area. Both communities primarily
compete against rental communities that do not provide the
combination of an entrance fee contract and the full continuum of
care, which Fitch views as a major differentiating factor.
Albuquerque's demographic indicators show limited population growth
and weak median household income (MHI) compared to national
averages while Rio Rancho has very good population growth and MHI
that exceeds national averages. Given the lack of life care
competition for both communities, Fitch believes demand for both
communities should remain stable.
The OG's communities have a track record of annual increases to
entrance fee and monthly service fees. LVL and NIRR's entrance fees
were increased by 3.45% in 2021 and are budgeted to increase by
2.95% and 3.45%, respectively, in 2022. Monthly service fee
increases have ranged from 2.5%-3.5% in each of the last two years.
The OG's weighted average entrance fee of approximately $261
thousand is on par with the $267 thousand average home price of
Albuquerque, NM and $260 thousand average home price of Rio Rancho,
NM, (according to Zillow), supporting Fitch's view of affordable
pricing.
Though the LVL has a solid market position and has exhibited strong
ILU demand in the past, the lack of presales for the community's 40
new ILUs is a risk. The new ILUs are currently only 42% presold and
are expected to complete construction by early December. The
current project was funded with $18.5 million in temporary debt
that is expected to be paid down from initial entrance fees, which
are estimated to amount to $18.7 million and unspent construction
contingency of $1.5 million. If construction completes by December,
management will have approximately 2.5 years to sell the remaining
23 units to pay off the temporary debt by maturity, which Fitch
still believes is likely given LVL's niche market position.
Operating Risk
LVL and NIRR provide type-A lifecare contracts, which implies
higher operating risk due to the health care liability resting
solely with the communities. However, both communities have low
refund liabilities, as over 90% of the contracts are non-refundable
plans, limiting the risk of cash flow volatility as units turn
over.
The OG demonstrates midrange operating performance for a type-A
provider. Profitability has been softer than expected in fiscal
2020 and 2021 primarily due to lower than budgeted
residential/health care revenues and management's decision to lease
two self-contained, off-site buildings and relocate approximately
half of assisted living and all memory care residents. Overall, the
OG has produced a 103.9% operating ratio, 5.5% net operating margin
(NOM) and 19.4% NOM-adjusted over the past two fiscal years. Fitch
expects these metrics to improve over time as occupancy improves,
the new ILUs are filled and the relocation expenses related to the
ALU/MCU relocation costs are removed -- $539 thousand in offsite
housing costs are budgeted for fiscal 2022 and the related project
is expected to be completed by the end of fiscal 2022, on time and
under budget by about $1.5 million
The OG has been spending significantly over the past two years on
LVL's expansion/renovation project and NIRR's campus is relatively
new. Capex that has averaged 290.6% from fiscal years 2020-2021 and
was 348% of depreciation through six months of fiscal 2022. The
OG's average age of plant of 11 years is good and should move lower
as the new construction projects at LVL are completed.
Fitch views the OG's capital-related metrics as weak, with
revenue-only maximum annual debt service (MADS) coverage of 1.2x,
debt-to-net available of 15.2x and MADS at a high 18% of revenues
in fiscal 2021. These calculations include the benefit of $3.37
million in PPP loans and $1.71 million in stimulus that was
recognized in fiscal 2021. Without the benefit of additional
stimulus funds, the OG will have to increase overall occupancy to
generate sufficient revenues to adequately service its debt. Debt
service coverage was below the required 1.2x as of Sept. 30, 2021.
Based on bond documents, coverage is measured on an annual basis.
Management fully expects to comply at the end of the fiscal 2022
and has implemented several initiatives recently that should help
the OG achieve 1.2x coverage. If coverage drops below 1.2x
management is required to call in a consultant.
Financial Profile
Despite the OG's weak core operations, unrestricted cash and
investments have been relatively stable. The OG's $51.7 million of
liquidity as of March 31, 2021 equated to only 30.8% of debt, which
is in line with a 'bb' financial profile especially given the
recent weakness in occupancy/profitability, lack of presales for
the current ILU project, as well as the continual financial support
of HCRC that has limited the OG's cash growth.
While MADS coverage was 1.2x in fiscal 2021, coverage would have
been below 1.0x without the support of the stimulus funds and PPP
loans, which highlights the need to accelerate move-ins into the
OG's campuses. Unrestricted cash represented 462 DCOH as of March
31, 2021, which is neutral to the assessment of the OG's financial
profile.
Fitch's baseline scenario, which is a reasonable forward look of
financial performance over the next five years given current
economic expectation, incorporates a gradual improvement of the
OG's core operating profitability, consistent generation net
entrance fees in line with historical averages and a successful
sale LVL's new ILUs by the July 1, 2024 final maturity of series
2019C temporary debt. With these assumptions, the OG's leverage
metrics show gradual improvement, but cash to adjusted debt remains
below the 'bbb' financial profile expectations for the majority of
the five-year forward-looking base case scenario.
The stress case assumes an economic stress (to reflect both
operating and investment portfolio volatility). The investment
portfolio stress is specific to the OG's asset allocation. Though
the OG's financial profile improves in the stress scenario, MADS
coverage hits a low of 1.2x and cash to adjusted debt remains below
50% in all five years of the scenario, which Fitch believes is
reflective of a 'bb' financial profile.
Asymmetric Additional Risk Considerations
In addition to LVL's lack of presales for its ILU expansion
project, the OG's ongoing financial support for HCRC is an
asymmetric additional risk consideration that is incorporated in to
the current 'BB+' rating. The OG guarantees payment on HCRC's
series 2017B subordinate bonds, which are interest only for 10
years with a $6 million bullet payment in 2028. HCRC has struggled
to achieve a consistent census level that is adequate to cover
expenses and pay annual debt service and produced only 0.54x
coverage on its $2.8 million annual debt service through four
quarters ending Sept. 30, 2021.
In addition, HCRC has minimal liquidity with only 37 DCOH as of
June 30, 2021. As a result of the weak operations and light
liquidity, the OG provided over $2 million in financial support
from June 30, 2020 to Sept. 30,2021 and extended a $3 million
internal line of credit to its affiliates that has not been drawn
upon yet. Fitch expects that continued liquidity support will
temper the OG's ability to improve its balance sheet in fiscal 2022
and this will remain an ongoing financial risk to the OG as long as
HCRC cannot sustain positive operating profitability that is
sufficient enough to both build its balance sheet and pay debt
service.
ESG CONSIDERATIONS
Haverland Carter Obligated Group (NM) has an ESG Relevance Score of
'4' for Group Structure due to transfers outside of the OG that
have hindered the OG's liquidity growth,, which has a negative
impact on the credit profile, and is relevant to the rating[s] 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.
HAWAIIAN VINTAGE: Unsecureds to Recover 100% in Prepackaged Plan
----------------------------------------------------------------
Hawaiian Vintage Chocolate Company, Inc., filed with the U.S.
Bankruptcy Court for the Northern District of Texas a Disclosure
Statement for Prepackaged Chapter 11 Plan dated Nov. 30, 2021.
The Plan provides a significant recovery to all Allowed Claims
against and Equity Interests in the Debtor's Estate through (i)
distribution of shares in the Reorganized Debtor and the
Reorganized Debtor's proposed newly formed subsidiary; and (ii) the
proposed merger of the Reorganized Debtor with AZOTH, Inc., and the
new subsidiary with Inner State Health, Inc.
The Debtor's Lender agreed to fund the proposed bankruptcy process
with up to $150,000 in post-petition financing, enabling the Debtor
to effectuate the proposed mergers and reorganization to bring
value to the Debtor's Claim Holders and Interest Holders, one of
which is Lender. The Lender is the Debtor's largest prepetition
non-insider creditor, a Delaware merchant bank established in 1998.
The Lender's past dealings with Debtor include accounts receivable
financing and bridge loans, from which Lender holds the largest
non-insider pre-petition unsecured Claim against the Estate.
The Lender is funding the Chapter 11 case's administrative
expenses, priority claims and other cash needs and has agreed to
convert its prepetition unsecured Claims and post-petition
financing claim into shares of new common stock the Reorganized
Debtor issues pursuant to the Plan. The filing of the Chapter 11
case and proposed mergers present the only feasible means for
satisfying the Lender's pre-petition Claim or otherwise providing
any meaningful value to creditors.
The Debtor ceased active business operations, presents no
significant going concern value and only liquidation value for its
agricultural IP and related process assets; however, by merging
with existing operating entities and combining the Debtor's unique
assets with the merger targets, the Reorganized Debtor and its
proposed subsidiaries present the opportunity to return significant
value to Claim Holders and Interest Holders by issuing new stock in
exchange for prepetition Claims and Equity Interests. The Plan
proposes two key value focused transactions, the Azoth, Inc. merger
and the Inner State, Inc. merger (together, the "Mergers").
Azoth, Inc. Merger - The Plan proposes for the Reorganized Debtor
to merge with Azoth, Inc. ("Azoth"), with the post-merger
Reorganized Debtor changing its name to KIMO, Inc. (the "Azoth
Merger"). Azoth holds three separate operating units, DWLL LLC
("DWLL Sub"), Surf City Still Works LLC ("Surf City Sub"), and Kimo
Sabe S.A.P.I. de CV ("Kimo Sabe Sub", together with the DWLL Sub
and the Surf City Sub, the "Target Subs"). The Reorganized Debtor
will own the Target Subs and deploy the Debtor's agricultural IP
for upgrading agave cultivation methods, applying the Debtor's
cloning and field engineering techniques.
Inner State Inc. Merger – The Plan also proposes for the
Reorganized Debtor to form a wholly owned subsidiary - in addition
to the Target Subs - called Inner State Health, Inc. (the "ISH
Sub") to merge (the "ISI Merger") with Inner State, Inc. ("ISI").
The ISI Merger permits the ISH Sub to incorporate the Debtor's
field-tested growing and hybridization system to advance its grow
house technology, lower its costs, and increase the company's
branded products efficacy. The ISH Sub will also issue new shares
of stock directly to the Debtor's Claim Holders and Interest
Holders, in addition the indirect benefit they receive from the
Reorganized Debtor's ownership share of ISH Sub.
The Debtor believes the pool of General Unsecured Claims will total
approximately $1,016,039. The Debtor is not aware of any secured
claims, as all filed liens have expired under the applicable state
laws.
Class 4 consists of General Unsecured Claims with $1,016,039
estimated amount of claims. This Class will receive a distribution
of 100% of their allowed claims. Each Holder of an Allowed General
Unsecured Claim shall receive, in full satisfaction of such Claim,
a Pro Rata share of the following:
* 100,969 shares KIMO Class B Common Stock
* 20,000 KIMO Six Month Warrant
* 30,000 KIMO Twelve Month Warrants
* 30,000 KIMO Twenty-Four Month Warrants
* 37,500 shares ISH Class B Common Stock
* 20,000 ISH Six Month Warrants
* 20,000 ISH Twelve Month Warrants
* 20,000 ISH Twenty-Four Month Warrants
The Debtor estimates that a Holder of Allowed Equity Interests will
receive approximately 5 shares of KIMO Class B Common Stock, 1 KIMO
Twelve Month Warrant, and 2 KIMO Twelve Month Warrants and KIMO
Twenty-Four Month Warrants for every 100 shares of the Debtor's
common stock the Holder owned on the Petition Date. Equity
Interests are Impaired under the Plan. Holders of Equity Interests
may vote.
On the Effective Date, the Debtor shall enter into any transaction
and shall take any actions as may be necessary or appropriate to
effect the Azoth Merger and the Inner State Inc. Merger, including
issuance of all securities, notes, instruments, certificates, and
other documents required to be issued pursuant to the Plan, and one
or more transactions consisting of inter-company mergers,
consolidations, amalgamations, arrangements, continuances,
restructurings, conversions, dissolutions, transfers, liquidations,
or other corporate transactions.
KIMO Ownership - On the Effective Date, the Reorganized Debtor's
new organizational documents will authorize issuance of up to
100,000,000 shares of KIMO Common Stock. The Plan distributes over
one million shares of the Reorganized Debtor's KIMO Class A Common
Stock to the Debtor's Claim Holders and Interest Holders. Azoth,
Inc.'s existing shareholders will receive approximately 24 million
shares of KIMO Common Stock, with approximately 12 million KIMO
Class A Common Stock shares issued to Azoth's existing class A
shareholders. In addition to the shares of KIMO Class B Common
Stock the Plan distributes Claim Holders and Interest Holders, they
also receive a Pro Rata distribution of KIMO Warrants of varying
exercise prices and expirations for additional opportunities to
benefit from KIMO's expected growth.
ISH Ownership - On the Effective Date, the Reorganized Debtor shall
incorporate ISH as Delaware corporation and wholly owned subsidiary
of the Reorganized Debtor. ISH will merge with ISI and the
Reorganized Debtor will spinoff ISH as a separate free standing
public entity. The Plan authorizes ISH to issue up to 75 million
shares of ISH Common Stock, of which the Plan allocates
approximately 2 million ISH Class B Common Stock shares to Claim
Holders and Interest Holders of the Debtor. ISI's existing
shareholders will receive approximately 9.6 million shares of ISH
Common Stock, with approximately 8 million ISH Class A Common Stock
shares issued to ISI's existing class A shareholders. In addition
to the shares of ISH Class B Common Stock the Plan distributes
Claim Holders and Interest Holders, they also receive a Pro Rata
distribution of ISH Warrants of varying exercise prices and
expirations for additional opportunities to benefit from ISH's
expected growth.
A full-text copy of the Disclosure Statement dated Nov. 30, 2021,
is available at https://bit.ly/3DjGVzm from PacerMonitor.com at no
charge.
Proposed Counsel for Debtor:
WICK PHILLIPS GOULD & MARTIN, LLP
Jason M. Rudd, Tex. Bar No. 24028786
Scott D. Lawrence, Tex. Bar No. 24087896
Catherine A. Curtis, Tex. Bar No. 24095708
3131 McKinney Ave, Suite 500
Dallas, Texas 75204
Telephone: 214-692-6200
jason.rudd@wickphillips.com
scott.lawrence@wickphillips.com
catherine.curtis@wickphillips.com
About Hawaiian Vintage Chocolate
Hawaiian Vintage Chocolate Company, Inc. offers chocolate and cocoa
products. The Debtor filed Chapter 11 Petition (Bankr. N.D. Tex.
Case No. 21-32112) on November 30, 2021.
Jason M. Rudd, Esq. of WICK PHILLIPS GOULD & MARTIN, LLP is the
Debtor's Counsel. In the petition signed by James Walsh, CEO, the
Debtor disclosed $100,000 to $500,000 in assets and $1 million to
$10 million in liabilities.
HCA WEST: Files Amended Plan; Confirmation Hearing Feb. 10, 2022
----------------------------------------------------------------
HCA West Inc., and its Debtor Affiliates submitted a Third Amended
Disclosure Statement in support of Third Amended Joint Chapter 11
Plan of Liquidation dated Dec. 2, 2021.
The Bankruptcy Court has scheduled the confirmation hearing for
February 10, 2022 at 10:30 a.m. Objections to confirmation of the
Plan must be filed and served on the Debtors and certain other
parties, by no later than January 13, 2022 at 5:00 p.m.
All ballots must be actually sent to the Debtors so as to be
received, or postmarked if sent by first class mail, on or before
January 6, 2022.
The Debtors propose the Plan for the resolution and satisfaction of
all Claims against and Interests in the Debtors. The Plan
contemplates the substantive consolidation of the Estates into a
single Estate for all purposes associated with confirmation and
consummation.
The Plan also provides for the establishment of a Liquidation Trust
on the Effective Date for the primary purpose of administering and
liquidating the Liquidation Trust Assets and for the secondary
purposes of, inter alia, (a) collecting accounts receivable, (b)
resolving all Administrative Expense Claims, Professional Fee
Claims, and Claims, and (c) making all Distributions provided for
under the terms of the Plan. The Liquidation Trust shall be under
the direction and control of the Liquidation Trustee, as trustee of
the Liquidation Trust. On the Effective Date, all of the Estates'
Assets, which are principally Cash and Causes of Action, shall vest
in the Liquidation Trust.
The Plan contemplates monetization of these Assets and the
distribution of the net proceeds thereof to Holders of Allowed
Administrative Expense Claims, Allowed Professional Fee Claims, and
Allowed Claims in order of their payment priority as prescribed by
the Plan in satisfaction of the Debtors' obligations. The Debtors
believe that the Plan represents a fair and equitable allocation of
the Debtors' assets among creditors.
Notably, the Plan effectuates a global settlement of the claims by
and between the Debtors, certain Insiders of the Debtors, and
Motorola – which filed the largest unsecured claim in the Chapter
11 Cases. Under the proposed settlement, as effectuated by the
Plan, (a) Holders of Class 4 Claims (Non-Motorola General Unsecured
Claims) will receive their pro rata share of $2 million (the
"NonMotorola GUC Fund"), which will be funded, in part, by a
$200,000 contribution from the Insiders, (b) Holders of Class 5
Claims (Motorola General Unsecured Claims) will receive their pro
rata share of the remaining assets of the Debtors, after payment of
Administrative Claims and the Non-Motorola GUC Fund, (c) the
Insiders will waive and release any claims against the Debtors, and
(d) the Debtors will waive and release any and all claims against
Motorola and the Insiders relating to the Debtors.
As a result of the global settlement embodied in the Plan, the
Debtors estimate that Holders of Class 4 Claims (Non-Motorola
General Unsecured Claims) will recovery 47% to 73% under the Plan,
which is dramatically better than the approximate 2.1% that may be
recovered in chapter 7.
Like in the prior iteration of the Plan, Class 4 consists of all
Non-Motorola General Unsecured Claims, including, for the avoidance
of doubt, Insider Claims. Each Holder of an Allowed Class 4 Claim
will receive its Pro Rata share of the Class 4 Fund as soon as
practicable as determined by the Liquidation Trustee in accordance
with the Liquidation Trust Agreement; provided, however, the
Liquidation Trustee shall distribute $2 million to Holders of
Allowed Class 4 Claims no later than 7 calendar days after the
Effective Date.
Class 5 consists of the Motorola General Unsecured Claims. On the
Effective Date, the Motorola General Unsecured Claims shall be
Allowed in the amount of $596,613,891.00 (the "Allowed Class 5
Claims") against each Debtor. Each Holder of an Allowed Class 5
Claim will receive its Pro Rata share of the Distributable Cash as
soon as practicable as determined by the Liquidation Trustee in
accordance with the Liquidation Trust Agreement; provided, however,
the Liquidation Trustee shall distribute at least $13 million to
Holders of Allowed Class 5 Claims no later than 7 calendar days
after the Effective Date.
The sources of all distributions and payments under the Plan are
the Liquidation Trust Assets (or proceeds of any Liquidation Trust
Assets), including without limitation Cash and Distributable Cash,
proceeds of all Causes of Action, and proceeds of or recoveries
from any other remaining property of the Debtors and their
Estates.
A full-text copy of the Third Amended Disclosure Statement dated
Dec. 02, 2021, is available at https://bit.ly/3lxkhxl from
PacerMonitor.com at no charge.
Counsel to Debtors:
John W. Lucas, Esq.
Ira D. Kharasch, Esq.
Victoria A. Newmark, Esq.
Jason H. Rosell, Esq.
Pachulski Stang Ziehl & Jones LLP
650 Town Center Drive, Suite 1500
Santa Ana, CA 92626
Telephone: (714) 384-4740
Facsimile: (714) 384-4741
E-mail: ikharasch@pszjlaw.com
jlucas@pszjlaw.com
vnewmark@pszjlaw.com
jrosell@pszjlaw.com
About Hytera Communications America
HCA West Inc., previously known as Hytera Communications America
(West), Inc. -- https://www.hytera.us/ -- is a global company in
the two-way radio communications industry. It has 10 international
R&D Innovation Centers and more than 90 regional organizations
around the world. Forty percent of Hytera employees are engaged in
engineering, research, and product design. Hytera has three
manufacturing centers in China and Spain.
On May 26, 2020, Hytera sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Lead Case No. 20-11507). At the
time of the filing, the Debtor estimated assets of between $10
million and $50 million and liabilities of between $500 million and
$1 billion.
Judge Erithe A. Smith oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Steptoe & Johnson, LLP as corporate and special counsel;
Imperial Capital, LLC as financial advisor; and David Stapleton of
Stapleton Group as a chief restructuring officer.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on June 15, 2020. The committee is represented by Levene
Neale Bender Yoo & Brill, LLP.
HCA WEST: Further Fine-Tunes Plan Documents
-------------------------------------------
HCA West Inc., and its Debtor Affiliates submitted a Second Amended
Disclosure Statement in support of Second Amended Joint Chapter 11
Plan of Liquidation dated Nov. 30, 2021.
The Debtors propose the Plan for the resolution and satisfaction of
all Claims against and Interests in the Debtors. The Plan
contemplates the substantive consolidation of the Estates into a
single Estate for all purposes associated with confirmation and
consummation.
The Plan also provides for the establishment of a Liquidation Trust
on the Effective Date for the primary purpose of administering and
liquidating the Liquidation Trust Assets and for the secondary
purposes of, inter alia, (a) collecting accounts receivable, (b)
resolving all Administrative Expense Claims, Professional Fee
Claims, and Claims, and (c) making all Distributions provided for
under the terms of the Plan. The Liquidation Trust shall be under
the direction and control of the Liquidation Trustee, as trustee of
the Liquidation Trust. On the Effective Date, all of the Estates'
Assets, which are principally Cash and Causes of Action, shall vest
in the Liquidation Trust.
The Plan contemplates monetization of these Assets and the
distribution of the net proceeds thereof to Holders of Allowed
Administrative Expense Claims, Allowed Professional Fee Claims, and
Allowed Claims in order of their payment priority as prescribed by
the Plan in satisfaction of the Debtors' obligations. The Debtors
believe that the Plan represents a fair and equitable allocation of
the Debtors' assets among creditors.
Notably, the Plan effectuates a global settlement of the claims by
and between the Debtors, certain Insiders of the Debtors, and
Motorola – which filed the largest unsecured claim in the Chapter
11 Cases. Under the proposed settlement, as effectuated by the
Plan, (a) Holders of Class 4 Claims (Non-Motorola General Unsecured
Claims) will receive their pro rata share of $2 million (the
"NonMotorola GUC Fund"), which will be funded, in part, by a
$200,000 contribution from the Insiders, (b) Holders of Class 5
Claims (Motorola General Unsecured Claims) will receive their pro
rata share of the remaining assets of the Debtors, after payment of
Administrative Claims and the Non-Motorola GUC Fund, (c) the
Insiders will waive and release any claims against the Debtors, and
(d) the Debtors will waive and release any and all claims against
Motorola and the Insiders relating to the Debtors.
As a result of the global settlement embodied in the Plan, the
Debtors estimate that Holders of Class 4 Claims (Non-Motorola
General Unsecured Claims) will recovery 47% to 73% under the Plan,
which is dramatically better than the approximate 2.1% that may be
recovered in chapter 7.
The Plan provides for the substantive consolidation of the Estates
into a single Estate for all purposes associated with confirmation
and consummation. As a result of the substantive consolidation of
the Estates, each Class of Claims and Interests will be treated as
against a single consolidated Estate without regard to the separate
identification of the Debtors, and all Claims filed against more
than one Debtor either on account of joint and several liability or
on account of the same debt shall be deemed a single Claim against
the consolidated Estates.
The Amended Disclosure Statement does not alter the proposed
treatment for unsecured creditors and the equity holder:
* Class 4 consists of all Non-Motorola General Unsecured
Claims, including, for the avoidance of doubt, Insider Claims. Each
Holder of an Allowed Class 4 Claim will receive its Pro Rata share
of the Class 4 Fund as soon as practicable as determined by the
Liquidation Trustee in accordance with the Liquidation Trust
Agreement; provided, however, the Liquidation Trustee shall
distribute $2 million to Holders of Allowed Class 4 Claims no later
than 7 calendar days after the Effective Date.
* Class 5 consists of the Motorola General Unsecured Claims.
On the Effective Date, the Motorola General Unsecured Claims shall
be Allowed in the amount of $596,613,891.00 (the "Allowed Class 5
Claims") against each Debtor. Each Holder of an Allowed Class 5
Claim will receive its Pro Rata share of the Distributable Cash as
soon as practicable as determined by the Liquidation Trustee in
accordance with the Liquidation Trust Agreement; provided, however,
the Liquidation Trustee shall distribute at least $13 million to
Holders of Allowed Class 5 Claims no later than 7 calendar days
after the Effective Date.
* Class 6 consists of all Interests in the Debtors. On the
Effective Date, all Interests in the Debtors shall be canceled, and
the Holders of Class 6 Interests shall not be entitled to, and
shall not receive or retain, any property on account of such
Interests under the Plan.
The sources of all distributions and payments under the Plan are
the Liquidation Trust Assets (or proceeds of any Liquidation Trust
Assets), including without limitation Cash and Distributable Cash,
proceeds of all Causes of Action, and proceeds of or recoveries
from any other remaining property of the Debtors and their
Estates.
A full-text copy of the Second Amended Disclosure Statement dated
Nov. 30, 2021, is available at https://bit.ly/3ddWZbx from
PacerMonitor.com at no charge.
Counsel to Debtors:
John W. Lucas, Esq.
Ira D. Kharasch, Esq.
Victoria A. Newmark, Esq.
Jason H. Rosell, Esq.
Pachulski Stang Ziehl & Jones LLP
650 Town Center Drive, Suite 1500
Santa Ana, CA 92626
Telephone: (714) 384-4740
Facsimile: (714) 384-4741
E-mail: ikharasch@pszjlaw.com
jlucas@pszjlaw.com
vnewmark@pszjlaw.com
jrosell@pszjlaw.com
About Hytera Communications America
HCA West Inc., previously known as Hytera Communications America
(West), Inc. -- https://www.hytera.us/ -- is a global company in
the two-way radio communications industry. It has 10 international
R&D Innovation Centers and more than 90 regional organizations
around the world. Forty percent of Hytera employees are engaged in
engineering, research, and product design. Hytera has three
manufacturing centers in China and Spain.
On May 26, 2020, Hytera sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Lead Case No. 20-11507). At the
time of the filing, the Debtor estimated assets of between $10
million and $50 million and liabilities of between $500 million and
$1 billion.
Judge Erithe A. Smith oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Steptoe & Johnson, LLP as corporate and special counsel;
Imperial Capital, LLC as financial advisor; and David Stapleton of
Stapleton Group as a chief restructuring officer.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on June 15, 2020. The committee is represented by Levene
Neale Bender Yoo & Brill, LLP.
HENRY FORD VILLAGE: Updates Liquidating Plan Disclosures
--------------------------------------------------------
Henry Ford Village, Inc., submitted a First Amended Combined
Disclosure Statement and Chapter 11 Liquidating Plan dated Nov. 30,
2021.
HFV was incorporated in 1992 as a Michigan nonprofit charitable
corporation for the purpose of providing housing, healthcare and
other related services to the elderly. It has had an independent
active volunteer board of directors, all of whom served without
compensation except reimbursement for reasonably incurred expenses
of a director while acting in such capacity.
All except for two out of the eight board members as of the
Petition Date, were either residents or the relatives of current or
former residents of the independent living portion of the Facility.
The board of directors as of the filing of this Disclosure
Statement were as follows:
Falzon, Peter Relative of Resident
Jesmore, Donald Resident
Hiveley, Linda Resident
Posa, Mary Lou Relative of Resident
Talamonti, Dr. Walter Relative of Resident
Byrne, John Relative of Former Resident
Ross, Karen None
Yun, Curt None
This is a liquidating Chapter 11 Plan. The Plan contemplates the
creation of a Liquidating Trust to liquidate any remaining assets
of the Debtor's Estate and to coordinate distribution of the cash
in the Estate and any other proceeds of the Liquidating Trust to
Holders of Allowed Claims.
All of the Debtors assets constituting the Liquidating Trust Assets
will be transferred to a Liquidating Trust to be administered by an
independent Liquidating Trustee under the oversight of the
Liquidating Trust Oversight Committee. The remaining assets of the
Debtor consists of remaining cash from the Sale after payment of
certain obligations arising during the Chapter 11 Case and Rights
of Action, all of which are addressed in the Plan.
Like in the prior iteration of the Plan, each Holder of an Allowed
General Unsecured Claim in Class 2, in exchange for such Allowed
General Unsecured Claim, shall receive a beneficial interest in the
Liquidating Trust entitling such Holder to receive on account of
such Claims pro rata Distributions from the Liquidating Trust
Assets. This Class will receive a distribution of 24%-40% of their
allowed claims.
The Plan provides for all of the Debtor's assets that constitute
Liquidating Trust Assets to be conveyed to a Liquidating Trust to
be administered by a Liquidating Trustee.
On May 6, 2021, Debtor filed its notice of auction results (the
"Auction Results Notice") and proposed sale of assets to the
successful bidder HFV OPCO, LLC, an affiliate of Sage Healthcare
Partners, which provided a cash bid in the amount of $76,355,000
and other consideration associated with the treatment of Current
Resident contracts as set forth in the Auction Results Notice,
which contained a side-by-side analysis of the Stalking Horse
Bidder's Bid against the ultimate Purchaser's bid as set forth in
its asset purchase agreement. The Sale Closing Date to the
Purchaser (doing business as "Allegria" and/or "Allegria Village")
occurred on September 30, 2021.
A full-text copy of the First Amended Combined Plan and Disclosure
Statement dated Nov. 30, 2021, is available at
https://bit.ly/3EnoFqo from Kurtzman Carson Consultants, claims
agent.
Counsel for Debtor:
Sheryl L. Toby, Esq.
Jong-Ju Chang, Esq.
DYKEMA GOSSETT PLLC
39577 Woodward Avenue, Suite 300
Bloomfield Hills, MI 48304
Tel: (248) 203-0700
Fax: (248) 203-0763
E-mail: SToby@dykema.com
JChang@dykema.com
About Henry Ford Village
Henry Ford Village, Inc., is a non-profit, non-stock corporation
established to operate a continuing care retirement community
located at 15101 Ford Road, Dearborn, Mich. It provides senior
living services comprised of 853 independent living units, 96
assisted living units and 89 skilled nursing beds.
Henry Ford Village sought Chapter 11 protection (Bankr. E.D. Mich.
Case No. 20-51066) on Oct. 28, 2020. In the petition signed by CRO
Chad Shandler, Henry Ford Village was estimated to have $50 million
to $100 million in assets and $100 million to $500 million in
liabilities.
The Hon. Mark A. Randon is the case judge.
The Debtor has tapped Dykema Gossett PLLC as its legal counsel, and
FTI Consulting, Inc., as its financial advisor. Kurzman Carson
Consultants, LLC, is the claims agent.
HERMELL PRODUCTS: Has Interim Cash Collateral Access Thru Feb 2022
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Connecticut has
authorized Hermell Products, Inc. to use cash collateral from the
date of entry of the current preliminary order until the earlier of
(a) February 4, 2022, or (b) the occurrence of a termination event,
to pay actual, necessary ordinary course operating expenses, as
budgeted.
Parties claiming an interest in the cash collateral -- (i) Windsor
Federal Savings and Loan Association, (ii) The Business Backer,
LLC, (iii) Celtic Bank/Kabbage Funding, (iv) State of Connecticut
Department of Economic and Community Development and (v) the United
States Small Business Administration -- assert valid lien and
security interest in the Debtor's personal property. Windsor
Federal holds a first priority lien status among the Claimants.
As adequate protection for the Debtor's use of cash collateral, the
Claimants are granted senior security interests in all personal
property and real estate of the Debtor, to attach with same
validity, extent, and priority that the Claimants possessed as to
said liens on the Petition Date.
The Claimants will also have allowed administrative expense claims
senior to all other administrative expense claims to the extent of
post-petition Diminution in Value of their interest in the
collateral, as further adequate protection.
The Replacement Liens and the Administrative Claims will be subject
and subordinate to. in right and payment, to the Carve Outs which
are (i) any fees payable to the Clerk of the Court: (ii) liens for
taxes owed to governmental entities, including sales and
withholding taxes to the extent such liens have priority over the
liens and Replacement Liens of the Claimants under applicable non
-bankruptcy law; (iii) approved fees and expenses of the
Sub-Chapter V Trustee; and (iv) the allowed administrative claims
of attorneys and other professionals retained by the Debtor in this
Chapter 11 case pursuant to Bankruptcy Code section 327 accrued
during any cash collateral periods, in the amount of $20,000; and
(v) amounts due and owing to the Debtor's employees for
post-petition wages, accrued during all cash collateral periods.
The Court will consider the final use of cash collateral at a
hearing on February 18, 2022, at 11 a.m.
A copy of the order and the Debtor's budget for December 2020 to
February 2022 is available for free at https://bit.ly/3xN2qaR from
PacerMonitor.com.
The Debtor projects $133,949 in total sales and $43,648 in total
expenses for December 2021.
About Hermell Products
Hermell Products, Inc. -- https://www.hermell.com/ -- offers
comfortable and supportive medical equipment including, orthopedic
supports, slings, cervical and lumbar cushions, foot care products,
decubitus care products, wheelchair and seating cushions, and a
collection of products for the bed.
Hermell Products sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Conn. Case No. 21-20284) on March 25,
2021. In the petition signed by Ronald G. Pollack, president, the
Debtor disclosed $710,254 in assets and $2,125,418 in liabilities.
Judge James J. Tancredi oversees the case.
The Debtor tapped Novak Law Office, P.C. as its legal counsel and
Bardaglio Hart & Shuman, LLC as its accountant.
Timothy Miltenberger has been appointed Sub-chapter V Trustee of
the estate.
HESS CORP: Moody's Alters Outlook on Ba1 CFR to Positive
--------------------------------------------------------
Moody's Investors Service changed Hess Corporation's outlook to
positive from stable. Moody's also affirmed Hess' ratings,
including its Ba1 Corporate Family Rating and Ba1 senior unsecured
ratings. Hess' Speculative Grade Liquidity (SGL) Rating remains
unchanged at SGL-1.
"The positive outlook on Hess recognizes its clear line of sight to
substantial production growth at competitive costs funded through
internal cash flow and its large cash balance," commented Pete
Speer, Moody's Senior Vice President. "This growth in productive
capacity and asset value, led by its Guyana development, combined
with further debt reduction will provide the company with
sufficient portfolio durability and financial resilience to support
an investment grade Baa3 rating."
Affirmations:
Issuer: Hess Corporation
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba1 (LGD4)
Outlook Actions:
Issuer: Hess Corporation
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
Hess' production volumes will grow meaningfully in 2022 and 2023
aided by the startup of Liza Phase 2 in Guyana in the first quarter
of 2022 (anticipated 220,000 barrels of oil per day of production
gross, 30% net to Hess) and a resumption of growth in its core
onshore Bakken Shale asset that could return to optimal production
levels of 200,000 BOE per day in 2023 after being allowed to
decline in 2020-21 in response to low oil prices. Strong oil and
gas prices in 2021 have enabled Hess to fund its ongoing Guyana
development and exploration expenditures with cash flow and
generate free cash flow overall, which combined with some
monetization of its ownership interests in Hess Midstream LP and
Hess Midstream Operations LP (Ba2 stable), has given the company
the flexibility to early repay $500 million of its term loan and
increase its cash balance to over $2.4 billion at the end of
September 2021.
Looking forward to 2022, a favorable commodity price outlook and an
active hedging program to reduce downside price risk provides the
company with flexibility to redeem the remaining $500 million
outstanding on its term loan. This term loan was issued during the
onset of the coronavirus pandemic to bolster the company's
liquidity to ensure it could sustain its required capital
development in the massive Guyana discovery that is operated by
Exxon Mobil Corporation (Aa2 stable). Based on Moody's current
forecasts and commodity price assumptions, Hess could end 2022 with
a still sizable cash balance that would enable the company to fund
its share of Guyana capital investment to the expected commencement
of production from the Payara development in 2024, resulting in
another substantial increase in production and ability to fund its
ongoing growth capital thereafter with cash flow from Guyana. This
positions Hess to have a low cost structure and breakeven for its
ongoing capital investment such that it can generate free cash flow
through price cycles and have substantial portfolio resilience to
carbon transition risks.
Hess' Ba1 CFR reflects its geographically diversified, oil-weighted
production and reserve base of short-cycle producing assets,
principally the Bakken Shale where Hess is among the largest
producers, and long-cycle projects. Its Bakken production is low
cost and is concentrated in the core of the most productive acreage
in the formation. Hess produced first oil from its Guyana offshore
development (in which it has a 30% non-operated interest) in late
2019 and the company will bring on additional production in the
first quarter of 2022. With line of sight to a third and fourth
development starting up in 2024 and 2025 and multiple developments
progressing roughly annually thereafter based on estimated
resources of 10 billion BOE, this asset is likely to be
transformational to the company's scale, operating profile and
long-term portfolio resilience. Hess also has operations in the US
Gulf of Mexico and Malaysia/Thailand that provide further
diversification and operational control. This gives the company
flexibility to manage spending levels through commodity price
volatility by adjusting short-cycle spending in the Bakken and
avoiding long-cycle developments in the US GOM by focusing on
incremental developments that tie back to existing infrastructure.
This combined with maintaining ample cash helps Hess fund its large
long-cycle development in Guyana.
Hess' excellent liquidity management, focus on cost reduction,
investment in assets with low breakeven costs like Guyana, debt
reduction and caution in boosting returns to shareholders have the
potential to bolster its capacity to withstand negative credit
impacts from carbon transition risks. While the financial
performance of Hess will continue to be influenced by industry
cycles, compared to historical experience, Moody's expects future
profitability and cash flow in this sector to be less robust at the
cycle peak and worse at the cycle trough because global initiatives
to limit adverse impacts of climate change will constrain the use
of hydrocarbons and accelerate the shift to less environmentally
damaging energy sources.
Hess has very good liquidity through 2022, supporting its SGL-1
rating. Its cash balance at September 2021 was around $2.4 billion.
Hess' $3.5 billion unsecured revolving credit facility, scheduled
to mature in May 2024, is undrawn and Moody's expects it to remain
undrawn as potential negative free cash flow will be well covered
by its cash balance. Hess' next upcoming debt maturity is the
remaining $500 million balance on its term loan that matures in
2023 and $300 million of senior notes due 2024. There are no other
senior notes maturities until 2027, and Moody's expects the company
to repay its term loan in 2022. Hess' primary debt covenant limits
its debt to capitalization to 65%, and Moody's expects the company
to maintain meaningful headroom for future compliance through 2022.
Hess has put on sizable hedges for 2022 using collars to reduce
some of its downside exposure should oil prices fall
substantially.
Hess' senior notes are rated Ba1, the same as the CFR, based on all
of its debts being unsecured and having no subsidiary guarantees.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Hess' rating could be upgraded to Baa3 if it reduces debt as
expected, is prudent in managing shareholder returns and the Guyana
development continues to progress as expected. If the company
maintains a sufficiently large cash balance to fund the Payara
development with no increases in debt under various commodity price
scenarios, RCF/Debt approaches 40% and the leveraged full cycle
ratio (LFCR) is sustained above 1.5x, then the ratings could be
upgraded.
Hess' rating could be downgraded if RCF/debt falls below 20%, if
the LFCR falls below 1x or if delays and cost overruns in Guyana
materially erode cash balances or require additional borrowings to
fund that development.
The principal methodology used in these ratings was Independent
Exploration and Production published in August 2021.
Hess Corporation is a global independent exploration and production
company headquartered in New York, New York. It also owns around
44% of Hess Midstream LP, on a consolidated basis.
ICU MEDICAL: S&P Assigns 'BB' Issuer Credit Rating, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issuer credit rating to
intravenous (IV) therapy products manufacturer ICU Medical Inc.
(ICU). S&P also assigned its 'BB' issue-level rating and '3'
recovery rating to ICU's proposed senior secured term loan B,
indicating its expectations for meaningful recovery (50%-70%;
rounded estimate: 60%) in the event of a default.
S&P said, "Our stable outlook reflects ICU Medical's solid
competitive position in the infusion therapy consumables, hardware,
and solutions market. We expect this, along with improving EBITDA
margins, to enable the company to maintain leverage in the 3x-4x
range in 2022-2023 and start generating positive free cash flows in
2023, while pursuing its business development strategy and
integration of Smiths' medical division.
"Our rating reflects the company's therapeutic concentration in IV
therapy products and below-average EBITDA margin (average EBITDA
margins for medical device companies are about 22%-35%), partially
offset by its strong position in IV consumables. The combination of
ICU Medical and Smiths Medical joins two complementary portfolios
to create a one-stop shop for diverse IV therapy offerings. It
creates a scaled global company with increased geographic
diversity, product portfolio expansion into new addressable
markets, and alternate sites of care. Both companies, however, face
significant competition from large and financially stronger
competitors (i.e., Becton Dickinson & Co., Baxter International
Inc., and B. Braun Medical Inc.) as well as smaller competitors.
"We estimate the company is one of the top three in various product
categories such as IV sets, connectors, IV oncology, infusion
pumps, and IV solutions within IV therapy. Pro forma for the
transaction, 85% of revenue will stem from disposable products and
15% from hardware. We expect consumables, a segment that includes
IV therapy and peripherally inserted venous catheters (PIVC), to
make up about 35% of the new company. Systems, including large
volume pumps (LVP), ambulatory and syringe pumps, and fluid warming
systems, make up another 35%. The final 30% will stem from vital
care, which includes critical care, respiratory and anesthesia,
monitoring devices and IV solutions.
"We consider the acquisition of the Smiths Medical division to be a
good strategic fit. Smiths Medical's offerings complement ICU
Medical's with products designed specifically for highly
specialized clinical niches, such as pediatrics and
non-ambulatory." For example, while ICU Medical offers certain
products for pediatric and newborn intensive care unit patients,
such as custom IV sets and connectors with minimal flushing
volumes, Smiths adds pediatric syringe pumps, airway management,
and PIVC catheters with low fluid volume flow. Smiths' products
such as its ambulatory pumps allow patients to receive care outside
of the hospital, another area of potential growth. They also
complement ICU's offerings in high-growth applications such as
oncology. While ICU had only 30% of revenue stemming from outside
the U.S., Smiths Medical has a more global reach, increasing that
to 40% as well as the number of manufacturing sites. At the same
time, the greater scale and added products should allow the company
to compete more efficiently with some of its U.S. peers.
The impact from the COVID-19 pandemic is approximately neutral. The
company's products are tied to hospital census and elective
procedure volumes, and ICU's demand initially dipped. However,
products such as low-margin IV solutions and higher-margin IV sets
and connectors are medically essential for hospitalized patients.
Many other products are used in the treatment of COVID-19. Also,
the company supplied customers reliably. As a result, the net
impact is approximately neutral.
Both companies have incurred significant restructuring costs over
the past several years, as Hospira Infusion Systems lost almost
half of its market share in IV pumps prior to the 2017 acquisition
by ICU Medical. Historically, most of ICU's product lines were in
its core large volume infusion pumps (LVP), with the Plum LVP pump
being the primary product line. While the Hospira acquisition
significantly expanded ICU's product portfolio, the company spent a
lot of time and resources on the integration. This included
expenses for the migration of information technology systems,
facility closure costs, and supply chain restructuring. S&P expects
some integration risks associated with acquiring Smiths Medical,
including remediating its open recalls and obtaining any necessary
regulatory approvals on its syringe pumps and software.
S&P said, "We expect the company to maintain leverage of 3x-4x in
2022-2023 and generate at least $150 million in annual FOCF from
2023. We project EBITDA margin will temporarily decline in 2022
given the cost of integration and restructuring, leading to S&P
Global Ratings-adjusted leverage of about 4x by the end of 2022. We
expect EBITDA margin to improve in 2023 as one-time costs taper off
and the company begins to realize some synergies, reducing leverage
to about 3x.
"Our stable outlook reflects ICU Medical's solid competitive
position in the infusion therapy consumables, hardware, and
solutions market. We expect this, along with improving EBITDA
margins, to enable the company to maintain leverage of 3x-4x in
2022-2023, start generating positive free cash flows in 2023, and
pursue its business development strategy and integration of Smiths'
medical division."
S&P could lower the rating if operating performance meaningfully
falls short of our expectations, with sustained leverage above 4x.
This could occur if:
-- Pricing pressures stemming from intensifying competition,
labor, and raw material inflation contract EBITDA margin;
-- The company has trouble integrating Smiths, such as the
target's customer disruptions continue, quality issues, and other
degradation, causing restructuring charges to exceed our base case;
or
-- It deviates from its financial policy and accelerates merger
and acquisition activity with material debt-financed acquisitions.
While unlikely over the next two years, S&P would consider an
upgrade if:
-- The company reduces and sustains adjusted leverage at less than
3x; and
-- S&P expects organic growth in its business.
IGLESIAS DIOS: Seeks to Hire Gerardo Santiago Puig as Counsel
-------------------------------------------------------------
Iglesias Dios Es Amor, Inc. seeks approval from the U.S. Bankruptcy
Court for the District of Puerto Rico to employ Gerardo Santiago
Puig, Esq., an attorney practicing in San Juan, Puerto Rico, to
handle its Chapter 11 case.
Mr. Puig will render these legal services:
(a) prepare pleading and applications and conduct examinations
incidental to administration;
(b) develop the relationship of the status of the Debtor to
the claims of creditors in this case;
(c) advise the Debtor of its rights, duties, and obligations
as Debtor operating under Chapter 11 of the Bankruptcy Code;
(d) take any and all other necessary action incident to the
proper preservation and administration of this Chapter 11 estate;
and
(e) advise and assist the Debtor in the formulation and
presentation of a Chapter 11 plan, the disclosure statement and
concerning any and all matters relating thereto.
The Debtor has agreed with Mr. Puig to pay in advance the retainer
fee of $7,000.
The attorney will be paid at his hourly rate of $200 for his
services.
Mr. Puig disclosed in a court filing that he is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The attorney can be reached at:
Gerardo L. Santiago Puig, Esq.
Santiago Puig Law Offices
Doral Bank Plaza
33 Resolucion St.
San Juan, PR 00920
Telephone: (787) 777-8000
Facsimile: (787) 767-7107
Email: gsantiagopuig@gmail.com
About Iglesias Dios Es Amor
Iglesias Dios Es Amor, Inc. filed its voluntary petition for relief
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.P.R. Case
No. 21-03508) on Nov. 29, 2021, listing under $1 million in both
assets and liabilities. Elias Reyes Ortiz, president, signed the
petition. Gerardo L. Santiago Puig, Esq., at Santiago Puig Law
Offices serves as the Debtor's legal counsel.
II-VI INC: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
----------------------------------------------------------
Fitch Ratings has affirmed II-VI Inc.'s 'BB' Long-Term Issuer
Default Rating. Fitch has also affirmed II-VI's 'BBB-'/'RR1' senior
first lien facilities and assigned the 'BBB-'/'RR1' rating to the
proposed senior first lien secured revolving credit facility and
TLB which along with the unrated new TLA, will be used to repay
II-VI's existing TLA. II-VI's existing revolving credit facility
will be terminated and replaced with the new proposed revolving
credit facility, which is expected to be undrawn. Fitch has also
affirmed the existing senior unsecured convertible debt at
'BB'/'RR4'. The Rating Watch Negative has been removed and a Stable
Rating Outlook has been assigned.
The rating and Outlook reflect that the Coherent transaction
diversifies II-VI's end-market exposure and increases scale
relative to photonics market competitors while providing sizable
synergy opportunities. II-VI has demonstrated its track record in
delivering on comparable synergy targets with its prior Finisar
acquisition. Fitch has not contemplated revenue synergies while
acknowledging complementary technology platforms, exposure to key
secular trends and a broader geographic sales footprint.
Fitch sees some risk that II-VI's business case for Coherent could
be delayed by a year. Fitch stress-tested its base case assumptions
for a calendar year 2023 downturn on the order of 2020 given our
assumptions for broader end markets, particularly those exposed to
the semiconductor cycle. This could delay attainment of sub-3.5x
gross leverage (by Fitch's calculation). A through-the-cycle-view,
however, would continue to expect the company is able to maintain
gross leverage of 3.0x or below on a normalized basis and see
strong cash flow generation as a result of the benefits of
diversification, scale and realized synergies.
The senior secured issue level ratings reflect Fitch assessment of
the first lien to be Category 1 (which are typically assigned 'RR1'
ratings and +2 notching, reserved for U.S.-based borrowers which do
not feature any limitations in Category 2 on a current or projected
basis) given our belief that a majority of the combined pro forma
entity's enterprise value is inside of the U.S.
KEY RATING DRIVERS
Compelling Combination: The combination of II-VI and Coherent
improves II-VI's end-market diversification, which had become
concentrated in communications applications following the Finisar
merger. Communications revenue will decrease by about 20 points,
driven by 3to 8 percentage point increases in life sciences,
materials processing and semicap end-market applications. Greater
diversification will reduce earnings volatility and de-risk the
revenue base relative to specific product and end-market cycles.
II-VI combined with Coherent will enjoy scale that is approximately
1.5x to 3.5x greater than its principal competitors. Increased
scale will lead to higher manufacturing efficiency, enhanced supply
chain procurement, and the benefits of infeed -- reflected in
structurally higher gross margins. Additionally, R&D scale which is
that is two-and-a-half to three-and-a-half greater than main
competitors (based on pro forma combined R&D expense, pre-synergy)
will enable II-VI to not only achieve greater development
efficiencies but also position the combined entities to benefit
from key secular trends.
Synergy Potential: II-VI targets achieving $250 million in cost
synergies within three years enabling the company on a combined
basis to increase its operating EBITDA margin from approximately
25% to the 27%-29% range over the forecast horizon. II-VI is
targeting 60% of the synergies from gross margin improvement via
procurement, infeed and supply chain functional savings, and the
balance of 40% through R&D efficiencies and consolidation of
corporate and functional operating expense. II-VI has a
demonstrated track record of exceeding its synergy targets with the
Finisar transaction.
With Finisar, the company originally projected $150 million in cost
savings within 36 months, ultimately increasing its synergy target
to $200 million overall, having achieved $180 million on a run rate
basis in two years. The company is delivering on these goals
despite the impacts of COVID-19, trade bans impacting large
customers, including Huawei and ZTE, and delayed qualification of a
key 3D sensing facility.
Leverage Profile: II-VI's gross leverage pro forma to the proposed
debt transactions is 4.7x at Sept. 30, 2021 by Fitch's calculation,
excluding the targeted $250 million in synergies. Fitch expects
II-VI will reduce its leverage to below 3.0x within two years under
base case revenue, margin and synergy assumptions, which are
conservative to management, providing reasonable headroom to our
3.5x negative leverage sensitivity. To that end, II-VI has
committed to achieving 2.5x gross leverage (by its definition)
within two years of the transaction close.
II-VI initially committed to achieving 3.0x gross leverage but
subsequently revised its target downwards in addition to reducing
its proposed debt quantum by $135 million. Fitch sees some risk
that end-market demand could attenuate from very strong levels at
present, albeit tempered by supply constraints, leading to a
cyclical downturn in CY23. We could see this delaying II-VI's
deleveraging timeline by up to a year to the extent a cyclical
downturn is more severe in nature (approaching that seen during
CY20). However, examining historical pro forma combined results of
II-VI, Finisar, and Coherent suggests the combined entities'
cyclicality could be more measured, particularly relative to
Coherent's standalone cyclicality.
Integration Risk: Given the delayed closing, there will be
materially less integration overlap between Finisar and Coherent.
II-VI has already delivered on approximately 90% of run rate cost
savings as of Sept. 30, 2021. Fitch believes II-VI's track record
integrating Finisar serves as a blueprint for integrating Coherent.
The company's revenue and margin profile are roughly comparable to
Finisar's at the time of its acquisition. Fitch sees exogenous
shocks as the greatest risk, as borne out following the Finisar
acquisition.
While II-VI's performance in FY21 is approximately 20% weaker on
top line and 35% weaker on margin relative to expectations at the
time of the Finisar transaction, the company's disciplined
management led to cash flow from operations being only 10% weaker
than forecast and FCF being 16% stronger. Underperformance has been
largely due to external factors, as discussed above including
trading bans with key global customers as well as the coronavirus
pandemic. To the extent Coherent's business case takes longer to
perform or there are additional exogenous shocks, II-VI will may be
unable to achieve its leverage target, pressuring credit protection
metrics.
DERIVATION SUMMARY
II-VI compares with direct competitor MKS Instruments (BB+/Stable)
with its acquisition of Atotech Limited. The two companies will
have similar revenue scale and the companies are targeting
comparable pro forma operating EBITDA margins. Gross leverage of
the two companies will also be similar. II-VI compares with Viavi
Solutions (BB/Stable) which produces optical filters for 3D
sensing. Viavi has smaller revenue scale, comparable operating
EBITDA margin, and lower gross leverage (owing to II-VI's
acquisition of Coherent).
Broadcom (BBB-/Stable) is a direct competitor with II-VI in
semiconductor diodes for industrial and consumer markets. Broadcom
has substantially greater revenue scale, comparable operating
EBITDA margin, and lower gross leverage. The company also has
diversified its portfolio to include enterprise software.
Fitch assigns 0% equity credit to the company's convertible debt
notes. Fitch assigns 100% equity credit to mandatorily convertible
preferred stock. Fitch does not consider II-VI's redeemable
convertible preferred stock held by an affiliate of strategic
investor Bain Capital Private Equity, LP to be debt. No
parent-subsidiary linkage or operating environment factor was in
effect for these ratings.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Transaction close in calendar Q1 2022 with full year
contribution of Coherent in fiscal 2023;
-- Low double-digit II-VI standalone revenue growth in fiscal
2023 and fiscal 2024 decelerating to mid- to high-single digit
thereafter with relatively constant standalone operating
EBITDA margin of between 25% and 26%;
-- Coherent standalone revenue growth of mid- to high-single
digit and operating EBITDA margin of 22% to 23% on average
before contemplation of cost synergies;
-- Assumed $220 million of cost synergies realized by FY26 (third
full-year), just under 90% of management target, with a near
equal cadence of completion;
-- Attainment of 2.5x gross leverage target (by II-VI's
calculation) within two years post-close;
-- Between $500 million and $550 million capex annually; No share
repurchases or additional M&A contemplated over the rating
horizon.
RATING SENSITIVITIES
Factors that Could, individually or collectively, lead to positive
rating action/upgrade:
-- Total debt with equity credit/operating EBITDA sustained below
2.5x;
-- FCF margin sustained above 5%;
-- Demonstrated traction in key growth businesses;
-- Commitment to a more conservative financial policy.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Total debt with equity credit/operating EBITDA sustained above
3.5x;
-- FCF margin approaching neutral;
-- Near-term growth market challenges;
-- Shift to a more aggressive financial policy.
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
II-VI is expected to have $918 million of cash at Sept. 30, 2021
pro forma to the acquisition and financing. The company expects to
operate with at least $500 million of cash upon completion of the
Coherent transaction, above the $300 million-$400 million in cash
as is the normal course of business. Liquidity is further supported
by the proposed $350 million senior secured revolving credit
facility, which is expected to be undrawn at close.
ISSUER PROFILE
II-VI is a vertically-integrated manufacturing company that
develops, manufactures and markets engineered materials and
optoelectronic components and devices for use in industrial
materials processing, optical communications, aerospace and
defense, consumer electronics, semiconductor capital equipment,
life sciences and automotive applications.
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.
II-VI INC: S&P Rates New $990MM Senior Unsecured Notes 'B+'
-----------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue-level rating and '5'
recovery rating to Saxonburg, Pa.-based optical materials and
semiconductor manufacturer II-VI Inc.'s proposed $990 million
senior unsecured notes. The '5' recovery rating indicates S&P's
expectation for average (10%-30%; rounded estimate: 15%) recovery
in the event of a payment default.
The company plans to use the proceeds from these notes to fund its
acquisition of Coherent Inc. S&P's 'BB-' issuer credit rating and
stable outlook on II-VI Inc. remain unchanged.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P rates the company's senior secured debt 'BB-' with a '3'
recovery rating, which indicates its expectation for meaningful
(50%-70%; rounded estimate: 65%) recovery in the event of a payment
default.
-- S&P rates the company's proposed $990 million senior unsecured
notes 'B+' with a '5' recovery rating, which indicates its
expectation for average (10%-30%; rounded estimate: 15%) recovery
in the event of a payment default.
-- S&P's simulated default scenario assumes a default occurring in
2025 due to heightened competition, lower demand for the company's
products, or failed mergers and acquisitions. A 6x multiple is
consistent with the multiples it uses for other hardware companies.
S&P also assumes bankruptcy administrative expenses of 5%.
Simulated default assumptions
-- Simulated year of default: 2025
-- EBITDA at emergence: $482 million
-- EBITDA multiple: 6x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $2.75
billion
-- Valuation split (obligors/nonobligors): 50%/50%
-- Senior secured debt claims: $3.8 billion
-- Value available to first-lien debt claims: $2.56 billion
--Recovery expectations: 50%-70% (rounded estimate: 65%)
-- Value available to senior unsecured debt claims: $190 million
-- Unsecured debt claims: $1.01 billion
--Recovery expectations: 10%-30% (rounded estimate 15%)
INGENOVIS HEALTH: $100MM Loan Add-on No Impact on Moody's B2 CFR
----------------------------------------------------------------
Moody's Investors Service said Ingenovis Health, Inc.'s
("Ingenovis", formerly CCRR Parent, Inc.) B2 corporate family
rating, B2-PD probability of default rating and B2 senior secured
ratings remain unchanged following proposed incremental borrowings
of $100 million under its first lien term loan due 2028 (bringing
the total to about $625 million). Proceeds, together with balance
sheet cash and rollover equity, will be used to fund the
acquisition of HealthCare Support Staffing, Inc. ("HCS"). The
outlook is unchanged at stable.
Pro-forma for the transaction as of Q2/21, Moody's adjusted
debt/EBITDA will increase to around 3.7x (from 3.4x) before
declining back to under 3.5x by year end 2021. Moody's expects
deleveraging to initially be swift amid high bill rates during the
second half of 2021 given an intensifying nursing supply/demand
imbalance moving into 2022; however, Moody's expects leverage to
increase again towards 4x longer-term as bill rates retreat from
current highs. HCS will increase customer diversification and
provide exposure across a wide array of non-clinical care settings
and allied services, and expand the company's recruiter base. The
acquisition involves execution risks because Ingenovis is still in
the process of integrating Trustaff and Healthcare Staffing
Solutions. However, risks are partially mitigated because of the
company's management of each of its lines of business as standalone
brands with existing management teams and corporate offices intact,
and strong business momentum coming from industry tailwinds created
by labor market pressures in the US.
Ingenovis's pro-forma liquidity is good. Sources total close to
$200 million, supported by cash on hand of about $60 million
pro-forma for the transaction, full availability under the upsized
$70 million committed revolving credit facility (due 2026) and
positive free cash flow in excess of $70 million during 2022. Uses
are limited to about $6 million in mandatory debt amortizations,
prior to consideration of the 50% excess cash flow sweep. The
secured revolver is subject to a springing first lien net leverage
covenant of 7.5x when more than 35% drawn. Although Moody's do not
expect Ingenovis to rely on the facility, the company would have a
comfortable cushion if triggered. The company has limited capacity
to sell assets to raise cash.
Ingenovis, with operating head offices in Ohio and Colorado, is a
temporary healthcare staffing agency providing nurses and allied
professionals on assignments to hospitals and medical centers,
including both traditional and fast response staffing, across the
US. The company also supplies nurses during strikes and provides
interventional cardiologists for regional hospitals. Ingenovis is
majority owned by Cornell and Trilantic Capital Partners. Pro-forma
for the HCS acquisition, Moody's estimates that Ingenovis will
generate about $1.4 billion in revenues during 2021.
INSTALLED BUILDING: Moody's Ups CFR to Ba2 & Rates $500MM Loan Ba2
------------------------------------------------------------------
Moody's Investors Service upgraded Installed Building Products
Inc.'s (IBP) Corporate Family Rating to Ba2 from Ba3 and
Probability of Default Rating to Ba2-PD from Ba3-PD. Moody's also
assigned a Ba2 rating to IBP's proposed $500 million senior secured
term loan, which is replacing the company's current $200 million
senior secured term loan maturing 2025 and will have similar terms
and conditions. The balance of proceeds from the company's new term
loan will be used for general corporate purposes, including bolt-on
acquisitions to expand product offerings and branch locations.
Moody's affirmed the Ba2 rating on IBP's existing senior secured
term loan maturing 2025 and will withdraw this rating upon the
close of the refinancing. Finally, Moody's affirmed the B1 rating
on IBP's senior unsecured notes due 2028. The SGL-1 Speculative
Grade Liquidity Rating is maintained. The outlook is stable.
The upgrade of IBP's CFR to Ba2 from Ba3 reflects Moody's
expectation that the company will benefit from end market dynamics
that support growth. Moody's forecasts healthy operating
performance that will result in adjusted debt-to-EBITDA of about
2.5x at year end 2022 versus pro forma 3.2x at December 31, 2021.
"The upgrade of Installed Building Products' CFR reflects Moody's
expectation of ongoing conservative financial policies and strong
credit metrics over the next two years," said Peter Doyle, Vice
President at Moody's. "IBP will benefit from growth in end market
demand and expansion of product offerings, while maintaining its
strong market share for installing insulation."
The following ratings are affected by the action:
Upgrades:
Issuer: Installed Building Products Inc.
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD
Assignments:
Issuer: Installed Building Products Inc.
Senior Secured 1st Lien Term Loan B, Assigned Ba2 (LGD3)
Affirmations:
Issuer: Installed Building Products Inc.
Senior Secured 1st Lien Term Loan, Affirmed Ba2 (LGD3)
Gtd Senior Unsecured Global Notes, Affirmed B1 (LGD5)
Outlook Actions:
Issuer: Installed Building Products Inc.
Outlook, Remains Stable
RATINGS RATIONALE
IBP's Ba2 CFR reflects Moody's expectation that the company will
benefit from expansion in new home construction, the main driver of
IBP's revenue. Moody's projects that IBP will maintain solid credit
metrics, including adjusted free cash flow-to-debt sustained above
15% beginning in 2022. Moody's also forecasts healthy operating
performance with adjusted EBITDA margin approaching 16% by late
2023, which is slightly better than the company's EBITDA margin of
15.2% for the last twelve months ending September 30, 2021.
However, IBP faces intense competition and remains heavily exposed
to the domestic homebuilding industry, which has experienced
significant volatility in the past. IBP will likely distribute a
variable dividend each year beginning in 2022, which adds some
volatility to cash flow.
The stable outlook reflects Moody's expectation that IBP will
maintain conservative financial policies, including preserving very
good liquidity.
IBP's SGL-1 Speculative Grade Liquidity Rating reflects Moody's
view that the company will maintain very good liquidity over the
next two years, generating free cash flow throughout the year.
Moody's project that IBP will generate in excess of $150 million of
free cash flow (inclusive of a variable dividend) in 2022 and 2023.
IBP generates positive cash flow from operations in each quarter
despite seasonality. Cash on hand ($191.4 million at September 30,
2021) is more than sufficient to meet working capital needs due to
seasonal demands.
The Ba2 rating on IBP's senior secured term loan, the same rating
as the Corporate Family Rating, results from its position as the
preponderance of debt in IBP's capital structure. The term loan has
a first lien on substantially all noncurrent assets and a second
lien on assets securing the company's asset based revolving credit
facility (ABL priority collateral). The B1 rating on the company's
senior unsecured notes, two notches below the Corporate Family
Rating, results from their subordination to IBP's secured debt.
The senior secured term loan is expected to contain certain
covenant flexibility for transactions that can adversely affect
creditors. Notable terms include incremental first lien debt
capacity up to the greater of 100% Consolidated EBITDA and $315
million; plus additional amounts subject to 3.75x consolidated
senior secured net leverage ratio (if pari passu secured).
Incremental first lien debt may not be incurred with an earlier
maturity date than the initial term loan. Collateral leakage is
permitted through the transfer of assets to unrestricted
subsidiaries, subject to carve-out capacity and other conditions;
there are no express "blocker" provisions which prohibit the
transfer of specified assets to unrestricted subsidiaries.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors that 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 and the final terms of
the credit agreement may be materially different.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of IBP's ratings could ensue if end markets remain
supportive of organic growth and the company sustains adjusted
debt-to-EBITDA of around 2.0x while preserving very good liquidity.
The CFR could be downgraded if IBP's adjusted debt-to-EBITDA is
sustained above 3.25x or EBITDA margin contracts towards 13%. A
deterioration in liquidity, an aggressive acquisition with
additional debt or divergence form conservative financial policies
could result downward rating pressure as well.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
Installed Building Products Inc., headquartered in Columbus, Ohio,
installs insulation and other products for residential and
commercial builders throughout the United States.
INTELSAT SA: Jones Day 3rd Update on Jackson Crossover Group
------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Jones Day submitted a third amended verified
statement to provide an updated list of Jackson Crossover Group
that it is representing in the Chapter 11 cases of Intelsat S.A.,
et al.
The certain beneficial holders and/or investment advisers or
managers for certain beneficial holders of:
(a) the 5.5% Senior Notes due 2023 issued under that certain
Indenture, dated as of June 5, 2013, by and among Intelsat
Jackson Holdings S.A., as issuer, U.S. Bank, National
Association, as trustee, and certain guarantors party
thereto,
(b) the 8.5% Senior Notes due 2024 issued under that certain
Indenture, dated as of September 19, 2018, by and among
Intelsat Jackson Holdings S.A., as issuer, U.S. Bank,
National Association, as trustee, and certain guarantors
party thereto,
(c) the 9.75% Senior Notes due 2025 issued under that certain
Indenture, dated as of July 5, 2017, by and among Intelsat
Jackson Holdings S.A., as issuer, U.S. Bank, National
Association, as trustee, and certain guarantors party
thereto,
(d) the term loans under that certain Credit Agreement, dated
as of January 12, 2011 among Intelsat Jackson Holdings
S.A., as borrower, Intelsat Connect Finance S.A., as
Parent guarantor, the other guarantors from time to time
party thereto, Bank of America, N.A., as administrative
agent, and the lenders from time to time party thereto,
(e) the 9.5% Senior Secured Notes due 2022 issued under that
certain Indenture, dated as of June 30, 2016 by and among
Intelsat Jackson Holdings S.A., as issuer, Wilmington
Trust, National Association, as trustee, and certain
guarantors party thereto, and
(f) the 8.0% Senior Secured Notes due 2024 issued under that
certain Indenture, dated as of March 29, 2016 by and among
Intelsat Jackson Holdings S.A., as issuer, Wilmington
Trust, National Association, as trustee, and certain
guarantors party thereto.
As of Dec. 2, 2021, members of the Intelsat Jackson Crossover Ad
Hoc Group and their disclosable economic interests are:
AllianceBernstein L.P.
1345 6th Avenue
New York, NY 10105
* Jackson Unsecured Notes: $59,522,000
Avenue Capital Group
11 West 42nd Street, 9th Floor
New York, NY 10036
* Jackson Unsecured Notes: $54,000,000
* 2023 ICF Notes: $6,250,000
Capital Research and Management Company
333 South Hope St. 55th Floor
Los Angeles, CA 90071
* Jackson Unsecured Notes: $88,545,000
* Jackson Term Loans: $81,540,000
* Jackson Secured Notes: $96,190,000
* DIP Loans: $56,724,625.18
CarVal Investors, LP
1601 Utica Avenue South Suite 1000
Minneapolis, MN 55416
* Jackson Unsecured Notes: $521,107,000
* DIP Loans: $27,854,851.97
CI Global Asset Management
2 Queen Street East
Toronto, Ontario M5C 3G7
* Jackson Unsecured Notes: $14,428,000
* Jackson Term Loans: $500,000
* Jackson Secured Notes: $2,019,000
Davidson Kempner Capital Management LP
520 Madison Avenue
30th Floor
New York, NY 10022
* Jackson Unsecured Notes: $542,406,500
* Lux Notes: $142,849,000
* 2025 Convertible Notes: $5,000,000
* DIP Loans: $6,843,257
* Intelsat S.A. Common Shares: 1,508,803 shares
Deutsche Bank Securities Inc. and
Deutsche Bank AG Cayman Islands Branch
60 Wall Street, 3rd Floor
New York, NY 10005
* Jackson Unsecured Notes: $115,850,000
* Jackson Term Loans: $2,014,423
* 2023 ICF Notes: $3,018,000
* DIP Loans: $2,022,329
* Lux Notes: $781,000
* DIP Loans: $8,735,717
Fidelity Management & Research Co.
88 Black Falcon Avenue, Suite 167
V13H Boston, MA 02210
* Jackson Unsecured Notes: $72,305,000
Glendon Capital Management L.P.
2425 Olympic Blvd, Suite 500E
Santa Monica, CA 90404
* Jackson Unsecured Notes: $241,952,000
* Jackson Secured Notes: $2,000
J.P. Morgan Investment Management Inc. and
J.P. Morgan Chase Bank, N.A.
1 E Ohio St.
Floor 6
Indianapolis, IN 46204
* Jackson Unsecured Notes: $427,999,000
* Jackson Term Loans: $35,613,000
* Jackson Secured Notes: $93,982,000
* DIP Loans: $49,678,682.99
Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA 92660
* Jackson Unsecured Notes: $2,326,059,000
* Jackson Term Loans: $498,979,829.01
* Jackson Secured Notes: $279,322,000
* 2023 ICF Notes: $77,948,000
* Lux Notes: $291,522,000
* DIP Loans: $488,163,904.23
PGIM Inc.
P.O. Box 32339
Newark, NJ 07102
* Jackson Unsecured Notes: $439,146,000
* DIP Loans: $64,849,694.33
Solus Alternative Asset Management
410 Park Avenue
New York, NY 10022
* Jackson Unsecured Notes: $29,720,000
* Jackson Term Loans: $12,484,621.14
The TCW Group, Inc.
865 S. Figueroa St.
Los Angeles, CA 90017
* Jackson Unsecured Notes: $401,231,000
* Jackson Term Loans: $40,488,924
* Lux Notes: $2,720,000
* DIP Loans: $51,598,656
On June 30, 2020, Jones Day filed the Verified Statement of the
Intelsat Jackson Crossover Ad Hoc Group Pursuant to Bankruptcy Rule
2019 [Docket No. 415]. On March 9, 2021, Jones Day filed the
Amended Verified Statement of the Intelsat Jackson Crossover Ad Hoc
Group Pursuant to Bankruptcy Rule 2019 [Docket No. 1585]. On August
31, 2021, Jones Day filed the Second Amended Verified Statement of
the Intelsat Jackson Crossover Ad Hoc Group Pursuant to Bankruptcy
Rule 2019 [Docket No. 2765]. This Third Amended Statement amends
and replaces the Second Amended Statement.
Jones Day continues to represent each Jackson Debtholder in
connection with the above-captioned chapter 11 cases. Jones Day
does not represent or purport to represent any other person or
entity with respect to these chapter 11 cases. Jones Day does not
represent the Jackson Debtholders as a "committee" and does not
undertake to represent the interests of, and is not a fiduciary
for, any other creditor, party in interest, or other entity. In
addition, as of the date of this Third Amended Statement, no
Jackson Debtholder represents or purports to represent any other
entity in connection with these chapter 11 cases, other than as set
forth herein. Moreover, no Jackson Debtholder has, or is a party
to, any agreement to act as a group or in concert with respect to
its interests in the Debtors, and each Jackson Debtholder has the
unrestricted right to act as it chooses in respect of such
interests without respect to the actions or interests of any other
party.
Jones Day reserves the right to further amend or supplement this
Third Amended Statement in accordance with the requirements of
Bankruptcy Rule 2019 with any additional information that may
become available.
Counsel to the Intelsat Jackson Crossover Ad Hoc Group can be
reached at:
J. Ryan Sims, Esq.
JONES DAY
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
Tel: (202) 879-3939
Fax: (202) 626-1700
E-mail: rsims@jonesday.com
Bruce Bennett, Esq.
JONES DAY
555 South Flower Street
Fiftieth Floor
Los Angeles, CA 90071
Tel: (213) 489-3939
Fax: (213) 243-2539
E-mail: bbennett@jonesday.com
- and -
Michael Schneidereit, Esq.
C. Lee Wilson, Esq.
Nicholas J. Morin, Esq.
JONES DAY
250 Vesey Street
New York, NY 10281
Tel: (212) 326-3939
Fax: (212) 755-7306
E-mail: mschneidereit@jonesday.com
clwilson@jonesday.com
nmorin@jonesday.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3rK98gy
About Intelsat S.A.
Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held
operator of satellite services businesses, which provides a diverse
array of communications services to a wide variety of clients,
including media companies, telecommunication operators, internet
service providers, and data networking service providers. The
Company is also a provider of commercial satellite communication
services to the U.S. government and other select military
organizations and their contractors. The Company's administrative
headquarters are in McLean, Virginia, and the Company has extensive
operations spanning across the United States, Europe, South
America, Africa, the Middle East, and Asia.
Intelsat S.A. and its debtor-affiliates concurrently filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Va. Lead Case No. 20-32299) on May 13, 2020. The
petitions were signed by David Tolley, executive vice president,
chief financial officer, and co-chief restructuring officer. At
the time of the filing, the Debtors disclosed total assets of
$11,651,558,000 and total liabilities of $16,805,844,000 as of
April 1, 2020.
Judge Keith L. Phillips oversees the cases.
The Debtors tapped Kirkland & Ellis LLP and Kutak Rock LLP as legal
counsel; Alvarez & Marsal North America, LLC as restructuring
advisor; PJT Partners LP as financial advisor & investment banker;
Deloitte LLP as tax advisor; and Deloitte Financial Advisory
Services LLP as fresh start accounting services provider. Stretto
is the claims and noticing agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on May 27, 2020. The committee tapped Milbank LLP and
Hunton Andrews Kurth LLP as legal counsel; FTI Consulting, Inc., as
financial advisor; Moelis & Company LLC as investment banker; Bonn
Steichen & Partners as special counsel; and Prime Clerk LLC as
information agent.
INTELSAT SA: Strook, Boies & Nelson Update on Noteholders Group
---------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Stroock & Stroock & Lavan LLP, Boies Schiller
Flexner LLP and Nelson Mullins Riley & Scarborough LLP submitted an
amended verified statement to provide an updated list of Ad Hoc
Group of Convertible Noteholders that they are representing in the
Chapter 11 cases of Intelsat S.A., et al.
In November 2020, the Ad Hoc Group of Convertible Noteholders was
formed by the initial members and retained Stroock and Boies as
co-counsel in connection with the above captioned chapter 11 cases.
The Ad Hoc Group of Convertible Noteholders has also retained
Nelson Mullins as local counsel. In January 2021, certain
additional noteholder parties joined the Ad Hoc Group of
Convertible Noteholders.
On January 25, 2021, Counsel filed the Verified Statement of the Ad
Hoc Group of Convertible Noteholders Pursuant to Bankruptcy Rule
2019 [Docket No. 1376]. This Amended Verified Statement amends and
replaces the Verified Statement.
Counsel represent only the Ad Hoc Group of Convertible Noteholders
and do not represent or purport to represent any persons or
entities other than the Ad Hoc Group of Convertible Noteholders in
connection with the Chapter 11 Cases. In addition, as of the date
of this Amended Verified Statement, neither the Ad Hoc Group of
Convertible Noteholders nor its members represent or purport to
represent any other entities in connection with the Chapter 11
Cases. No member of the Ad Hoc Group of Convertible Noteholders has
or is a party to any agreement to act as a group or in concert with
respect to the common stock of Intelsat S.A. or other equity
securities of the Debtors.
As of Dec. 2, 2021, members of the Ad Hoc Group of Convertible
Noteholders and their disclosable economic interests are:
Anchorage Capital Group LLC
610 Broadway 6th Floor
New York, NY 10012
* Convertible Notes: $58,637,000
* Lux Notes: $27,656,000
* ICF Notes: $11,000,000
* Jackson Unsecured Notes: $124,312,000
Brean Asset Management, LLC
3 Times Square 14th Floor
New York, NY 10036
* Convertible Notes: $4,700,000
* Lux Notes: $36,000,000.00
* ICF Notes: $5,000,000
Cristallin Management Inc.
1002 rue Sherbrooke Ouest Montréal
Canada H3A 3L6
* Convertible Notes: $2,947,000
* Lux Notes: $2,000,000
* ICF Notes: $1,000,000
Cyrus Capital Partners, L.P.
65 East 55th Street
35th Floor
New York, NY 10022
* Convertible Notes: $120,827,000
* Jackson Unsecured Notes: $183,996,000
* Common Stock: 10,766,504
Discovery Capital Management, LLC
20 Marshall Street
Suite 310
South Norwalk, CT 06854
* Convertible Notes: $28,608,000
* Lux Notes: $5,892,000
Goldman Sachs Asset Management, L.P.
200 West Street
35th Floor
New York, NY 10282
* Convertible Notes: $21,468,000
* Lux Notes: $43,115,000
* Jackson Unsecured Notes: $89,241,000
* Jackson Secured Notes: $ $14,575,000
* Jackson Term Loans: $17,145,566.00
Whitebox Advisors LLC
3033 Excelsior Blvd.
Suite 500
Minneapolis, MN 55416
* Convertible Notes: $26,589,000
* Jackson Unsecured Notes: $23,640,000
Counsel for the Ad Hoc Group of Convertible Noteholders can be
reached at:
NELSON MULLINS RILEY & SCARBOROUGH LLP
H. Jason Gold, Esq.
Dylan G. Trache, Esq.
101 Constitution Ave. NW, Suite 900
Washington, DC 20001
Telephone: (202) 689-2800
E-mail: jason.gold@nelsonmullins.com
dylan.trache@nelsonmullins.com
- and -
STROOCK & STROOCK & LAVAN LLP
Kristopher M. Hansen, Esq.
Daniel A. Fliman, Esq.
Sayan Bhattacharyya, Esq.
Isaac S. Sasson, Esq.
180 Maiden Lane
New York, NY 10038
Telephone: (212) 506-5400
E-mail: khansen@stroock.com dfliman@stroock.com
sbhattacharyya@stroock.com
isasson@stroock.com
- and -
BOIES SCHILLER FLEXNER LLP
Duane L. Loft Esq.
55 Hudson Yards
New York, NY 10001
Telephone: (212) 446-2300
E-mail: dloft@bsfllp.com
Marc V. Ayala, Esq.
333 Main Street
Armonk, NY 10504
Telephone: (914) 749-8200
E-mail: mayala@bsfllp.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3lDAT6V
About Intelsat S.A.
Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held
operator of satellite services businesses, which provides a diverse
array of communications services to a wide variety of clients,
including media companies, telecommunication operators, internet
service providers, and data networking service providers. The
Company is also a provider of commercial satellite communication
services to the U.S. government and other select military
organizations and their contractors. The Company's administrative
headquarters are in McLean, Virginia, and the Company has extensive
operations spanning across the United States, Europe, South
America, Africa, the Middle East, and Asia.
Intelsat S.A. and its affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. E.D. Va. Lead Case No. 20-32299) on May 13, 2020. The
petitions were signed by David Tolley, executive vice president,
chief financial officer, and co-chief restructuring officer. At
the time of the filing, the Debtors disclosed total assets of
$11,651,558,000 and total liabilities of $16,805,844,000 as of
April 1, 2020.
Judge Keith L. Phillips oversees the cases.
The Debtors tapped Kirkland & Ellis LLP and Kutak Rock LLP as legal
counsel; Alvarez & Marsal North America, LLC, as restructuring
advisor; PJT Partners LP as financial advisor & investment banker;
Deloitte LLP as tax advisor; and Deloitte Financial Advisory
Services LLP as fresh start accounting services provider. Stretto
is the claims and noticing agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on May 27, 2020. The committee tapped Milbank LLP and
Hunton Andrews Kurth LLP as legal counsel; FTI Consulting, Inc., as
financial advisor; Moelis & Company LLC as investment banker; Bonn
Steichen & Partners as special counsel; and Prime Clerk LLC as
information agent.
INVO BIOSCIENCE: Amends SPA With Paradigm to Extend Closing Date
----------------------------------------------------------------
INVO Bioscience, Inc. and Paradigm Opportunities Fund, LP amended
that certain stock purchase agreement they entered into on Oct. 1,
2021, which extended the closing date to Dec. 31, 2021.
Under the original agreement, INVO Bioscience agreed to sell
Paradigm 600,703 shares of the company's common stock, par value
$0.0001 per share for a purchase price of $3.329 per share for an
aggregate purchase price of $1,999,740.29 with a closing date of
Nov. 30, 2021.
About INVO Bioscience
Sarasota, Florida-based INVO Bioscience, Inc. --
http://invobioscience.com-- is a medical device company focused on
creating simplified, lower-cost treatments for patients diagnosed
with infertility. The Company's solution, the INVO Procedure, is a
revolutionary in vivo method of vaginal incubation that offers
patients a more natural and intimate experience. Its lead product,
the INVOcell, is a patented medical device used in infertility
treatment and is considered an Assisted Reproductive Technology
(ART).
Invo Bioscience reported a net loss of $8.35 million in 2020, a net
loss of $2.16 million on $1.48 million in 2019, a net loss of $3.07
million in 2018, and a net loss of $702,163 in 2017. As of June
30, 2021, the Company had $9.93 million in total assets, $5.57
million in total liabilities, and $4.36 million in total
stockholders' equity.
IRB HOLDING: S&P Upgrades ICR to 'B+' on Good Integration Progress
------------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Atlanta-based
restaurant franchisor and operator IRB Holding Corp. (Inspire) to
'B+' from 'B'.
S&P said, "At the same time, we raised our issue-level ratings on
the company's senior secured facilities to 'B+' from 'B'; the '3'
recovery rating is unchanged. We also raised our issue-level rating
on its unsecured notes to 'B-' from 'CCC+'; the '6' recovery rating
is unchanged.
"The stable outlook reflects our expectation for modest top-line
growth and sustained profit margins over the next 12 months.
"The upgrade reflects our view that execution risks related to the
Dunkin' acquisition have subsided and Inspire will realize
cost-saving synergies over the next 12 months. The company has
progressed largely in line with its integration plan following its
acquisition of Dunkin' about a year ago. We believe that execution
risks arising from its high debt burden and increasingly complex
platform have meaningfully subsided because the most crucial period
of integrating Dunkin' into the Inspire platform has been
completed. Meanwhile, all the company's concepts continued to
perform in line with or better than our prior forecast over the
past year. Its topline growth and management's steadfast approach
to managing expenses has led us to revise our EBITDA margin
forecast upward for 2021 by over 100 basis points (bps), despite
industry-wide cost pressures in the second half. Based on its solid
performance and our view that execution risks related to its
acquisition of Dunkin' have tapered, we revised our comparable
ratings analysis modifier to neutral from negative.
"We anticipate the company will continue to invest in its
integration efforts and while it has already achieved a portion of
its target, we expect most of its $220 million cost synergy target
to be achieved by 2022. These cost savings are largely enabled by
leveraging its large platform of multiple concepts to create
efficiencies in marketing, technology, supply chain, and general
and administrative functions. Absent other factors, we anticipate
approximately 200 bps of EBITDA margin benefit relative to 2021
because of these synergies and lower integration-related expenses.
"We forecast supply chain and labor inflation pressures will offset
margin benefits from realized cost synergies in 2022. While more
than 90% of Inspire's restaurants are franchised, company-operated
units remain a significant contributor to EBITDA (about 30%) and
expose it to fluctuating labor and commodity costs. Notably, its
company-operated restaurants have recently faced rapid cost
inflation related to commodities such as beef, chicken, and pork,
as well as higher freight and labor costs. Restaurant level EBITDA
margins shrunk by over 300 bps in the third quarter relative to the
prior year. In our view, the current environment of elevated costs
is likely to persist well into 2022. We expect operators across the
restaurant industry to continue to take incremental pricing action
to partially offset rising costs. Price increases in line with the
competition should allow Inspire to maintain its relative value
positioning, though will likely not be sufficient to fully recover
its profit margin.
"We forecast headwinds related to labor and commodity prices will
place downward pressure on EBITDA margin of 150-250 bps in 2022.
Nevertheless, we expect overall profitability to be buoyed by cost
savings from its recent integration efforts, resulting in margin
and cash generation about unchanged relative to 2021. Still,
Inspire's sizable platform should allow the company to successfully
negotiate favorable terms with its vendors while collaboration
among managers of its various concepts may also enable it to
continually improve execution, which could unlock expanding
profitability over time. As the inflationary environment normalizes
and pricing actions offset higher costs, we believe EBITDA margin
could expand by around 200-300 bps in 2023.
"Inspire's private-equity sponsor maintains a highly aggressive
financial policy, and we anticipate leverage sustaining above 8x.
The company has displayed a track record of highly aggressive
financial policy, including opportunistically increasing its
securitized debt commensurate with EBITDA growth to fund a $1.5
billion dividend in the fourth quarter of this year. We now expect
S&P Global Ratings-adjusted consolidated debt to EBITDA to be
maintained in the 9x area in 2021 and 2022, declining toward 8x
over the longer term as industrywide cost pressures abate and
anticipated synergies are fully realized. We expect the company to
maintain about this level of leverage until the sponsor pursues an
exit through an IPO.
"Still, we believe Inspire's highly franchised business model
supports higher levels of debt compared to traditional restaurant
operators. This is illustrated by its good free operating cash flow
(FOCF) generation and our forecast for EBITDA interest coverage
ratio maintained above 2x on an S&P Global Ratings-adjusted basis.
Despite industrywide headwinds that we expect will constrain
profitability over the next 12 months, Inspire should continue to
generate good FOCF. We anticipate capital expenditures to be
elevated in 2022 at around $300 million, which may limit FOCF to
below $500 million. However, as capital spending and supply chain
disruptions normalize, we forecast FOCF to expand well above $600
million by 2023.
"The stable outlook reflects our expectation for persistent
industrywide cost pressures in 2022 to be largely offset by
realized cost synergies related to its Dunkin' acquisition,
resulting in overall profitability and cash generation about in
line with 2021 levels and S&P Global Ratings-adjusted leverage
maintained in the low-9x area. It also reflects our expectation for
FOCF generation of around $450 million-$500 million while capital
spending remains elevated over the next 12 months."
S&P could lower its rating on Inspire if:
-- Operating performance deteriorates such that the company is
unable to maintain profitability in line with S&P's forecast,
leading to weaker cash flow generation; or
-- S&P expects EBITDA interest coverage ratio to decline to about
2.0x.
Although unlikely over the next 12 months, S&P could raise its
rating on Inspire if:
-- It pursues a less aggressive financial policy such that we
expect S&P Global Ratings-adjusted leverage below 5.5x, perhaps
following an initial public offering; or
-- It continues to grow unit count and systemwide sales across its
various concepts, expanding scale and establishing a more
significant international presence while demonstrating
strengthening profitability.
JACKSON FINANCIAL: Fitch Rates Series A Preferred Stock 'BB+'
-------------------------------------------------------------
Fitch Ratings has assigned a rating of 'BB+' to Jackson Financial
Inc.'s (Jackson) issuance of Series A non-cumulative perpetual
preferred stock. The ratings previously assigned to Jackson and its
insurance operating subsidiaries are unaffected by today's rating
action.
KEY RATING DRIVERS
The issue is notched two below Jackson's IDR based on 'Poor'
recovery expectations, with one additional notch for 'minimal'
non-performance risk. Fitch's approach for notching reflects the
regulatory environment of the U.S., which we assess as 'Effective'
and classify as following a ring-fencing approach.
Based on Fitch's insurance rating criteria, the Series A
non-cumulative perpetual preferred stock is expected to receive
100% equity credit in evaluating financial leverage.
The Series A preferred stock has no maturity, dividends are
noncumulative, and the company has the option to defer them at
their discretion. Proceeds from the issuance will be used towards
repaying the $750 million of borrowings outstanding under the
company's 2023 delayed draw term loan facility, the proceeds of
which were contributed to its primary operating subsidiary Jackson
National Life Insurance Co. for general corporate purposes.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Significant diversification of Jackson's liability profile;
-- Improved capital metrics for Jackson, as measured by a Prism
capital score consistently above 'Strong'.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- An increase in the degree of reported financial performance
volatility driven by equity market volatility, a low-for-long
interest rate environment and broader macroeconomic-related
headwinds;
-- A decline in Jackson's Prism capital-model output consistently
below 'Strong', along with declines in reported risk-based
capital ratio and profitability;
-- Financial leverage consistently in excess of 25%;
-- Fixed charge coverage that consistently falls below 7.0x;
-- Unexpected economic or operational disruptions as a result of
Jackson's transition to a standalone company.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. 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.
JACKSON FINANCIAL: Moody's Gives 'Ba1(hyb)' to New Preferred Stock
-------------------------------------------------------------------
Moody's Investors Service has assigned a Ba1 (hyb) rating to
Jackson Financial, Inc.'s (Jackson - senior Baa2, negative)
anticipated issuance of up to $750 million of Series A fixed rate
reset non-cumulative perpetual preferred stock. The notes are being
offered to qualified institutional investors under Rule 144A of the
Securities Act of 1933, and the net proceeds from the offering will
be used towards repayment of its outstanding borrowings on a senior
unsecured delayed draw term loan facility that matures in February
2023 (2023 DDTL Facility). The new preferred securities are
perpetual and are redeemable by Jackson after five years under
certain conditions. The rating outlook on Jackson is unchanged at
negative.
RATINGS RATIONALE
The Ba1 (hyb) rating on the preferred stock rating of Jackson
reflects the expectation that the company will use the net proceeds
from the offering towards repayment of the $750 million of debt
outstanding under its 2023 DDTL Facility following the closing of
this offering. Moody's said that the rating on the preferred
securities also reflects Moody's typical notching for instruments
issued by insurers relative to their IFS and senior debt ratings.
Because of equity-like features contained in the preferred stock,
the security will receive partial equity treatment in Moody's
leverage calculation and adjusted leverage will improve as a result
of the transaction.
Jackson's preferred stock ratings reflects its leading position in
the US asset accumulation business, as well as its multiple
distribution channels, and efficient back office infrastructure.
Jackson has strong asset quality, and good historical profitability
and capitalization. However, it has significant exposure to
earnings and capital volatility from equity markets and must manage
hedging and capital requirements that are sensitive to policyholder
behavior, equity market returns, and interest rates.
The negative outlook reflects the challenges the company faces in
building capital, lowering proforma leverage and diversifying an
inforce block of liabilities concentrated in variable annuities
(VA). A higher level of regulatory and economic capital is needed
to offset the potential volatility in earnings and capital due to
the high concentration in VA, as well as the economic exposure to
interest rate risk.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Given the negative outlook, there is limited upward pressure on
Jackson's ratings. A combination of the following drivers could
return Jackson's outlook to stable: 1) Successful execution of the
operation of the US business as a standalone entity, reflected by
sustained sales and more balanced growth in new product sales with
less emphasis on VAs with living benefits, 2) Strong
capitalization, with demonstrated resilience / protection of
economic and regulatory capital ratios following a stress scenario,
3) VAs, excluding those with no guarantees or only return of
premium death benefit guarantees, becoming less than 50% of
company's total statutory liabilities (metric adjusted for equity
market movements and reflecting mix of liabilities between VAs
with/without guaranteed benefits - products with fewer/less risky
guarantees place less negative pressure on the company's risk
profile), and 4) Adjusted financial leverage ratio (excluding AOCI)
consistently around or less than 20%.
The following factors could result in a downgrade of Jackson's
ratings: (1) NAIC RBC ratio falling below 425% at Jackson,
excluding VOBA, and reduced capitalization leading to the inability
to withstand a stress scenario associated with the VA business, 2)
VAs, excluding those with no guarantees or only return of premium
death benefit guarantees, becoming greater than 60% of the
company's total statutory liabilities (metric adjusted for equity
market movements and reflecting mix of liabilities between VAs
with/without guaranteed benefits - products with fewer/less risky
guarantees place less negative pressure on the company's risk
profile), or 3) Adjusted financial leverage ratio (excluding AOCI)
consistently above 25%.
Rating actions:
Issuer: Jackson Financial, Inc.
Series A Non-Cumulative Perpetual Preferred Stock: Assigned at Ba1
(hyb)
The outlook on Jackson Financial, Inc. is unchanged at negative.
Jackson National Life Insurance Company, the primary operating
company of Jackson, provides insurance protection, retirement, and
investment products in the United States. As of September 30, 2021,
the company reported statutory assets of $292.7 billion and
statutory capital and surplus of $6.3 billion.
The principal methodology used in this rating was Life Insurers
Methodology published in September 2021.
JAMES C. GAYLER III: Sale of Minisink Property for $49K Approved
----------------------------------------------------------------
Judge Vincent F. Papalia of the U.S. Bankruptcy Court for the
District of New Jersey authorized James C. Gayler, III's sale of
the real property identified on the official tax map of the Town
Minisink, County of Orange, State of New York, as ID# 3-1-18.2 to
James Clemons Gayler IV and Leanne Nicole Gayler for $49,000, free
and clear of liens, on the terms and conditions of the Contract of
Sale and any Addendums.
The net proceeds of sale, after ordinary and customary closing
costs, will be paid to the first mortgage holder CitiMortgage who
will be paid in full at closing pursuant to the Oct. 20, 2021,
payoff letter issued by CitiMortgage.
The Federal Tax Liens and any Tax Liens held by the State of New
York will retain in full their liens on the property identified on
the official tax map of the Hamlet of Westtown, County of Orange,
State of New York as: ID# 7-1-48.222 ("Westtown Tract").
Other reasonable and customary closing fees and expenses payable by
the Debtor may be satisfied or made from the proceeds of sale
and/or adjustments to the price at closing, as provided for in the
contract of sale.
A copy of the HUD settlement statement will be forwarded to the
Office of the United States Trustee and Subchapter V Trustee within
five days after closing.
A copy of the Order will be attached to and recorded with the Deed
of Sale.
James C. Gayler, III sought Chapter 11 protection (Bankr. D.N.J.
Case No. 21-13399) on April 26, 2021. The Debtor tapped Scott
Sherman, Esq., as counsel.
JEFFREY A ROTH: $1.3M Sale of Brooksville Property to Wardlows OK'd
-------------------------------------------------------------------
Judge Catherine Peek McEwen of the U.S. Bankruptcy Court for the
Middle District of Florida authorized Jeffrey Allen Roth and Dawn
Marie Roth to sell the real property located at 5071 Cedar Ridge
Drive, in Brooksville, Florida 34601, and more particularly
described as Lot 26, Block 13, Southern Hill Plantation, Phase 2,
as per plat thereof recorded in Plat Book 36, Pages 40-67, Public
Records of Hernando County, Florida, to Rob Wardlow and Angela K.
Wardlow for the sum of $1.3 million.
The Debtors are authorized to pay all broker's fees, liens, and all
ordinary and necessary closing expenses normally attributed to a
seller of real estate at closing.
The claims of creditors with liens attaching to the Real Property,
including Wells Fargo Bank, N.A. and Central Bank, will be paid in
full at the closing of the sale of the Real Property.
The Mortgage Holders' claims will be paid in full based on an
updated payoff quote as of the closing date of the sale (or
pursuant to a short sale approval letter from Mortgage Holders, if
any). The Debtors will contact Central Bank's counsel of record for
a payoff quote. The Mortgage Holders will be paid directly through
the escrow company within 48 hours of closing.
The Mortgage Holders' claims will not be surcharged in any way with
the costs of the sale, broker commissions, attorneys' fees, trustee
fees, or any other administrative claims, costs or expenses in
connection with the sale of the Real Property.
In the event that the sale of the Real Property is not completed or
funds are not received by the Mortgage Holders to satisfy their
claims in full after closing, the Mortgage Holders will retain
their liens for the full amount due under their respective notes.
The net sale proceeds, after payment of the secured claims and
closing costs, will be paid directly to the Debtors.
The Debtor will provide a copy of the closing statement from the
sale of the property to the office of the United States Trustee
within five days of the closing date.
The 14-day stay required under Bankruptcy Rule Section 6004(h) is
waived.
The Order will be void if the sale of the Real Property and payment
in full of the Mortgage Holders' claims does not occur within 90
days from the date this order is entered.
Jeffrey Allen Roth and Dawn Marie Roth sought Chapter 11 protection
(Bankr. M.D. Fla. Case No. 19-02338) on March 19, 2019. The Debtors
tapped Buddy D. Ford, Esq., at Buddy D. Ford, P.A. as counsel.
JOHN DAUGHERTY: Combined Plan and Disclosures Approved by Judge
---------------------------------------------------------------
Judge Christopher Lopez has entered findings of fact, conclusions
of law and order approving the Combined Disclosure Statement and
Chapter 11 Plan of Liquidation filed by John Daugherty Real Estate,
Inc. ("Debtor") and the Official Committee of Unsecured Creditors
(collectively, the "Plan Proponents").
On September 7, 2021, John A. Daugherty, Jr. ("Daugherty"), and
Deer Point Acres, Ltd. ("Deer Point") filed an objection to the
Disclosure Statement and Plan. Additionally, on September 7, 2021,
Prosperity Bank filed an objection to the Plan.
On November 17, 2021, the Court entered an order approving a claim
compromise with Prosperity Bank, Daugherty, and Deer Point. The
order approving the claim compromise with Prosperity Bank,
Daugherty, and Deer Point attached a mediation term sheet (the
"Term Sheet") and incorporated the same for all purposes. To the
extent the provisions of the Term Sheet impacted and/or altered the
provisions and mandates of the Plan, the Plan Proponents addressed
such changes via a second motion seeking non material modifications
of the Plan (the "Motion to Modify").
On November 29, 2021, Prosperity Bank withdrew its objection to
confirmation of the Plan.
As a result of the claim compromise effectuated with Griffin and
the claim compromise effectuated with Prosperity Bank, Daugherty,
and Deer Point, the Plan Proponents resolved all previously
asserted opposition to the Disclosure Statement and the Plan. No
other objections to final approval of the Disclosure Statement
and/or confirmation of the Plan were filed or otherwise expressed.
The Court finds that the Debtor has complied with all applicable
provisions of 11 U.S.C. Section 1129(a). The Court finds that the
Debtor has complied with all applicable provisions of the
Bankruptcy Code and any objections filed or made to confirmation of
the Plan have been withdrawn and/or otherwise resolved.
A full-text copy of the Plan Confirmation Order dated Nov. 30,
2021, is available at https://bit.ly/3DsKp2x from PacerMonitor.com
at no charge.
General Counsel for John Daugherty Real Estate:
Ronald J. Sommers
Heather R. Potts
NATHAN SOMMERS JACOBS
2800 Post Oak Blvd. 61st Floor
Houston, TX 77056
Tel: (713) 960-0303
Fax: (713) 892-4800
E-mail: rsommers@nathansommers.com
hpotts@nathansommers.com
Attorneys for the Official Committee of Unsecured Creditors:
HASELDEN FARROW PLLC
Melissa Haselden
State Bar No. 00794778
700 Milam, Suite 1300
Pennzoil Place
Houston, Texas 77002
Telephone: (832) 819-1149
Facsimile: (866) 405-6038
mhaselden@haseldenfarrow.com
About John Daugherty Real Estate
John Daugherty Real Estate, Inc. -- https://www.johndaugherty.com/
-- is a licensed real estate broker in Houston, Texas. It sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Tex. Case No. 20-31293) on February 27, 2020. The petition was
signed by John A. Daugherty, Jr., its chief executive officer. At
the time of the filing, the Debtor was estimated to have assets of
between $1 million and $10 million and liabilities of the same
range.
Hon. Christopher M. Lopez oversees the case.
The Debtor hired Nathan Sommers Jacobs, a professional corporation,
as its counsel.
JUBILEE ACADEMIC: S&P Raises 2016/7 Revenue Bonds Rating to 'BB+'
-----------------------------------------------------------------
S&P Global Ratings raised its rating to 'BB+' from 'BB' on the New
Hope Cultural Education Finance Corp., Texas' (NHCEFC) series 2016A
and 2017A tax-exempt revenue bonds, issued for Jubilee Academic
Center Inc. (Jubilee). At the same time, S&P assigned its 'BB+'
long-term rating to the NHCEFC's $129.3 million series 2021A and
2021B revenue bonds issued for Jubilee. The outlook on all ratings
is stable.
"The upgrade reflects our view of Jubilee's improved pro forma
lease-adjusted maximum annual debt service coverage as a result of
the series 2021 financing, moderating pro forma debt burden, and a
four-year track record through fiscal year 2021 of positive
operating performance and sustained days' cash on hand," said S&P
Global Ratings credit analyst Alexander Enriquez.
The improvement in financial metrics, combined with the school's
good enrollment size despite fluctuations, along with its stable
management team provide cushion at the current rating. S&P said,
"For fiscal year 2022, we expect Jubilee will sustain its financial
profile, given steady per-pupil funding and enrollment,
management's continued cost-saving efforts, and additional revenues
from several recently awarded grants for its educational programs
that will be allocated over the next few years. We also anticipate
federal relief through Elementary and Secondary School Emergency
Relief (ESSER) funding to support operations over the outlook.
Jubilee maintains a positive relationship with the Texas Education
Agency (TEA), its authorizer, and we expect stability in its
charter through the expiration in 2025."
S&P said, "In our view, Jubilee faces somewhat elevated governance
risk, given the small operating size of the governing board, which
includes the CEO, and which we believe will continue through the
near term. We believe lean management structures can limit
oversight, especially during an enrollment growth phase.
"We view the risks posed by COVID-19 to public health and safety as
an elevated social risk for all charter schools under our
environmental, social, and governance (ESG) factors, given the
potential for shifts in modes of instruction or an impact on state
funding, on which charter schools depend to support operations. For
Jubilee, despite enrollment declines tied to the pandemic,
per-pupil funding has been stable, with expectations of improved
enrollment through the outlook, which, in our view, mitigates some
near-term risk. Despite the elevated social and governance risks,
we consider the school's environmental risks to be in line with our
view of the sector as a whole.
"We could lower the rating if enrollment does not meet projections
and falls further, translating to weakness in operations or cash on
hand, or maximum annual debt service (MADS) coverage that is
inconsistent with the current rating. In our opinion, any
additional debt or lease obligations Jubilee incurs, without a
material increase in total revenue or enrollment, could stress the
rating.
"In our view, a positive rating action is unlikely during the
outlook period due to the school's modest days' cash on hand,
elevated debt, and decreasing enrollment. However, we could raise
the rating if the school were to demonstrate full-accrual positive
operations, further improved MADS coverage, and liquidity to levels
we consider more consistent with those of higher-rated peers, while
growing enrollment and sustaining a waitlist."
KNIGHT HEALTH: S&P Assigns 'B' ICR, Outlook Stable
--------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to Knight
Health Holdings LLC (d/b/a ScionHealth). At the same time, S&P
assigned its 'B' issue-level and '3' recovery ratings to the
company's senior secured debt, indicating its expectation for
meaningful (50%-70%; rounded estimate: 60%) recovery in the event
of default.
S&P said, "Our stable outlook reflects our expectations for modest,
but steady patient volume growth in each business as the
coronavirus pandemic eases, leading to low-single-digit organic
revenue growth over the next two years. We expect revenue growth to
be constrained in 2022 as currently high patient acuity and patient
service mix continue to trend back closer to historical levels.
"Our rating reflects the company's slow but stable revenue growth
and modest cash flow generation. Knight Health's LTAC business,
which will account for about 60% of its revenue, is a slow growing,
mature business. Over the past several years, excess industry
capacity has been reduced through the active closure or conversion
of facilities by several industry participants, resulting in a
financially healthier marketplace. In 2016, the Centers for
Medicare and Medicaid Services (CMS) introduced the LTAC Criteria
which requires patients to have spent three (3) days in an
intensive care unit (ICU) or four (4) days on a ventilator for the
provider to receive the full LTAC reimbursement. All other patients
would be considered "site-neutral" which generates significantly
lower reimbursement. The company's LTAC strategy focuses on
accepting almost exclusively LTAC compliant patients. Although this
strategy results in higher reimbursement and margins, it limits
revenue growth. Knight's LTAC patient compliant requirement became
effective in late 2020.
"The 18 STAC hospitals are located primarily in smaller rural
markets that typically experience slow growth or flat admissions
trends. However, we believe that under the new management team,
these STACs could receive more focused managerial support that
could include additional capital investment, potentially leading to
improved operational efficiencies and expanded patient services
that could support strong revenue growth and better margins.
Further, in the 16 markets that these STACs serve, they are the
only hospital in eight of these markets, thereby providing some
stability in patient volume.
"We expect acuity levels and patient service mix to moderate in
2022 as the pandemic eases, which could constrain revenue and
margins. Both the LTACs and STACs experienced higher acuity cases
and unusually favorable patient service mix due to the impact of
the pandemic on patient patterns and reimbursement leading to very
elevated revenue per adjusted admission. During the pandemic, the
company has been receiving enhanced reimbursement rates from the
government for treating Medicare patients with COVID-19, and also
has benefitted from the temporary suspension of the 2% Medicare
sequestration cut. However, we expect acuity, and revenue per
adjusted admission, to moderate in 2022 as lower acuity patient
volume continue to increase in numbers and as the payor mix shifts
closer to historical levels. We also believe government
reimbursement risk for LTACs are subject to less volatility due to
the very recent implementation of the LTAC criteria.
"We expect the company to be highly leveraged and cash flow
generation to be modest in 2022 and 2023.We forecast S&P Global
Ratings-adjusted leverage will be around 5.3x and 5.0x (about 4.1x
and 3.8x excluding the Class B preferred equity) in 2022 and 2023,
respectively. We expect only modest cash flow generation over this
time period. All CARES Act-related Medicare advanced payments and
deferred payroll taxes will be repaid before the closing of this
transaction, hence it will not affect cash flow in 2022.
"The company generates lower margins than comparable peers. We
expect Knight Health's adjusted EBITDA margin to be around 9%-10%
in 2022 and 2023, whereas comparable peer LTAC and for-profit STAC
hospital companies generate margins in the low-double digits to
midteens percentage range. We think margins could improve under the
new management team with additional capital investment and renewed
operational focus. However, we expect margins will continue to be
pressured by ongoing elevation in labor costs relative to
pre-pandemic levels."
There are limited market synergies between the STACs and LTACs. The
18 STAC hospitals and 61 LTACs facilities are located across 25
states, providing some geographic diversity. However, there is
overlap in only four states resulting in limited market synergies.
The stable rating outlook reflects S&P Global Ratings' expectations
for modest, but steady patient volume growth as the coronavirus
pandemic eases, leading to low-single-digit organic revenue growth
over the next two years. S&P said, "We expect the currently higher
acuity and patient service mix to begin to trend back down to
historical levels in 2022. However, we believe some risk to our
base case exists due to the uncertainty around the lingering
effects of the pandemic, including higher operating costs and
challenges to adequately staff skilled personnel."
S&P said, "We could lower our rating if Knight Health's margins
fall short of our base-case scenario such that the company
generates cash flow deficits. In our view, this could happen if
there is a sizable cut in reimbursement rates, weaker-than-expected
patient volume, or potential integration or other operational
challenges leading to higher costs.
"We will consider an upgrade if the company reduces adjusted
debt-to-EBITDA leverage to below 5x on a sustained basis and is
able to achieve sustained annual discretionary cash flow over $50
million."
LAPEER AVIATION: Gets OK to Hire Winegarden as Legal Counsel
------------------------------------------------------------
Lapeer Aviation, Inc. received approval from the U.S. Bankruptcy
Court for the Eastern District of Michigan to employ Winegarden,
Haley, Lindholm, Tucker & Himelhoch, PLC to handle its Chapter 11
case.
The hourly rates of the firm's attorneys and staff are as follows:
Zachary R. Tucker $275 per hour
Rita M. Lauer $280 per hour
John R. Tucker $325 per hour
Dennis M. Haley $385 per hour
In addition, the firm will seek reimbursement for expenses
incurred.
The firm holds a retainer of $6,282.
John Tucker, Esq., a member of Winegarden, Haley, Lindholm, Tucker
& Himelhoch, disclosed in a court filing that his firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
John R. Tucker, Esq.
Winegarden, Haley, Lindholm, Tucker & Himelhoch, PLC
9460 S. Saginaw Road, Suite A
Grand Blanc, MI 48439
Telephone: (810) 579-3600
Email: jtucker@winegarden-law.com
About Lapeer Aviation
Lapeer Aviation, Inc. filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mich. Case No.
21-31500) on Nov. 5, 2021, listing under $1 million in both assets
and liabilities. Gene Kopczyk, president, signed the petition.
Judge Joel D. Applebaum oversees the case. Winegarden, Haley,
Lindholm, Tucker & Himelhoch, PLC serves as the Debtor's legal
counsel.
MA REAL ESTATE: Unsecured Creditors to be Paid in Full in Plan
--------------------------------------------------------------
MA Real Estate and Investments, LLC filed with the U.S. Bankruptcy
Court for the Eastern District of Michigan a Combined Plan and
Disclosure Statement dated Nov. 30, 2021.
This case was initiated to stop a foreclosure sale by Wildfire with
respect to all of the real estate operated by the Debtor.
Prepetition, the Debtor operated four commercial properties. These
buildings are commonly known as the LaPorte Building, 306 Fifth
Street, Bay City, Michigan, 816 and 818 Washington Avenue, Bay
City, Michigan and 810 Washington Avenue, Bay City, Michigan (the
"Knepp Building").
The goal of the Debtor during this Chapter 11 proceeding has been
to add tenants to the Debtor's real estate and sell the Debtor's
real estate. Tenants have been added and existing tenants have
increased the amount of rent paid. In addition, the Debtor has
entered into a purchase agreement for the sale of the Knepp
Building for a purchase price of $370,000.00. The Debtor will be
filing a motion to approve this sale.
In addition, it is believed that a tenant, Emerald Bay
Provisionary, LLC, desires to exercise its option to purchase 816
Washington Avenue, Bay City, Michigan for $380,000.00. This sale
will probably occur after the confirmation of this Plan.
The Debtor will continue to add tenants to the premises and market
and sell the balance of its real estate, but if the sale does not
occur within three years of confirmation of this Plan, the Debtor
will obtain financing to fully pay all of the Classes under this
Plan of Reorganization.
Class 5 consists of General Unsecured Claims. This Class consists
of the claims of unsecured creditors in the Debtor's schedule in
the approximate amount of $86,788.92. The amount of each respective
creditor, as provided in the Debtor's schedule, or in any proof of
claim filed by the bar date, will be fully paid from the sale of
the Debtor's real estate after payment of Classes 1 through 4, but
in any event not later than three years from the date of
confirmation of this Plan. This claim will be fully paid. This
Class is impaired.
Class 6 consists of Subordinated Claims of Insiders. Claims held by
insiders of the Debtor will not be paid until all creditors in
Classes 1-5 are paid in full. This Class is not entitled to vote on
the plan.
Class 7 consists of Equity Interests. The equity holders of the
Debtor will retain their equity interests. This Class is not
entitled to vote under the plan.
The Debtor will continue operation of its business in its current
location and will continue to sell its real estate to fund this
Plan of Reorganization.
A full-text copy of the Combined Plan and Disclosure Statement
dated Nov. 30, 2021, is available at https://bit.ly/3G9qGGV from
PacerMonitor.com at no charge.
Attorneys for Debtor:
Susan M. Cook, Esq.
Warner Norcross & Judd, LLP
715 E. Main Street, Suite 110
Midland, MI 48640
Tel: 989-698-3700
989-698-3759
Email: smcook@wnj.com
About MA Real Estate and Investments
MA Real Estate and Investments, LLC is primarily engaged in renting
and leasing real estate properties.
MA Real Estate and Investments filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mich.
Case no. 20-21715) on Dec. 10, 2020. The petition was signed by
Michael Reid, attorney-in-fact for Thomas P. LaPorte, managing
member.
At the time of the filing, the Debtor estimated $1 million to $10
million in both assets and liabilities.
Judge Daniel S. Oppermanbaycity oversees the case. Warner Norcross
& Judd, LLP represents the Debtor as counsel.
MADISON SAFETY: Moody's Assigns B2 CFR & Rates $925MM Term Loan B1
------------------------------------------------------------------
Moody's Investors Service has assigned initial ratings to Madison
Safety & Flow LLC, including a corporate family rating of B2 and a
probability of default rating of B2-PD. Concurrently, Moody's
assigned a B1 rating to the company's proposed senior secured first
lien revolver ($120 million) and first lien term loan ($925
million). Moody's also assigned a Caa1 rating to the company's
proposed second lien term loan ($275 million). The ratings outlook
is stable.
Proceeds from the proposed debt facilities, in addition to new and
rollover equity, will be used to fund the acquisition of Safe Fleet
Holdings LLC (currently owned by Oak Hill Capital Partners) by
Madison Safety for $1.53 billion.
Assignments:
Issuer: Madison Safety & Flow LLC
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Secured 1st Lien Revolving Credit Facility, Assigned B1
(LGD3)
Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3)
Senior Secured 2nd Lien Term Loan, Assigned Caa1 LGD6)
Outlook Actions:
Issuer: Madison Safety & Flow LLC
Outlook, Assigned Stable
RATINGS RATIONALE
Madison Safety's B2 CFR is constrained by its high financial
leverage and modest (albeit increasing) revenue scale. Pro forma
for the acquisition, debt/EBITDA approximates 6.8x (including
Moody's standard adjustments). Moody's expects that the company
will de-leverage primarily through earnings growth and to a lesser
extent, debt reduction. Moody's expects earnings growth to be
driven by expansion in demand for safety related products, price
increases and cost saving and efficiency actions. The high level of
initial leverage signals an aggressive financial policy and
corporate governance given private ownership. That said, Moody's
recognizes the meaningful equity contribution being made as part of
the transaction.
Acquisition integration risk is a consideration given the sizable
nature of the acquisition for Madison Safety, almost tripling the
company's revenue size and expanding into additional safety-related
products. In addition, the company is not immune to supply chain
and inflationary cost headwinds affecting the broader manufacturing
industry. Lastly, the company has exposure to municipal spending in
certain end markets.
At the same time, the B2 CFR is supported by Moody's expectation
that the company will maintain healthy EBITDA margins and strong
free cash flow going forward. Madison Safety's healthy EBITDA
margins are reflective of its brand strength and focus on products
that are deemed essential for safety by its customers. Madison
Safety's products are geared towards first responder solutions,
which will be complemented by the addition of Safe Fleet's products
for fleets ranging from commercial vehicles to fire & EMS to school
buses. Further, the company benefits from a meaningful aftermarket
business which adds a stable, recurring revenue stream. Moody's
expects that the combined company's well-diversified end markets
and customers and broad product offering will support its
performance through economic cycles.
Moody's expects that Madison Safety will maintain very good
liquidity over the next twelve to eighteen months, underscored by
strong free cash flow, good availability under the company's
proposed $120 million revolving credit facility and good covenant
compliance.
The proposed first-lien debt's B1 rating, one notch above the
company's B2 CFR reflects its priority in the capital structure
above the second lien term loan. The Caa1 rating on the company's
second lien term is two notches below the B2 CFR, reflecting its
effective repayment subordination to the company's first-lien
revolving credit facility and term loan.
As proposed, the new first and second lien credit facilities are
expected to provide covenant flexibility that if utilized could
negatively impact creditors. Notable terms include the following:
Incremental debt capacity up to the sum of the greater of EBITDA at
transaction close and 100% of trailing four quarter EBITDA, plus
unused amounts under the general debt basket, plus additional
amounts subject to the closing date First Lien Leverage Ratio (if
pari passu secured to the first lien, or amounts not greater than
the closing date Senior Secured Leverage Ratio, if secured on a
pari passu basis with the second lien). Amounts up to EBITDA at
transaction close and 100% of trailing four quarter EBITDA can be
incurred with an earlier maturity date after transaction close.
The credit agreement permits the designation of unrestricted
subsidiaries. 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.
Subsidiaries are only required to provide guarantees if they are
wholly-owned domestic guarantors. This raises the risk that a sale
or disposition of partial equity interests could trigger a
guarantee release, with no explicit protective provisions limiting
such guarantee releases.
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.
The stable outlook is based on Moody's expectation that the
company's revenue and earnings will grow over the next 12 to 18
months, resulting in significant deleveraging versus current
levels. The outlook also reflects Moody's expectation that the
company will maintain very good liquidity including strong free
cash flow and full revolver availability.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if the company continues to grow revenues
organically while maintaining healthy EBITDA margins as it
integrates the acquisition of Safe Fleet. In addition, the
maintenance of very good liquidity, debt-to EBITDA sustained below
5.0x and consistent free cash flow-to-debt above 10% could also
result in a rating upgrade.
Conversely, ratings could be downgraded if revenue or earnings
decline such that Moody's-adjusted debt-to-EBITDA is expected to
remain above 6.5x. A deterioration in liquidity, debt-funded
acquisitions or special dividends, or a meaningful decline in free
cash flow could also lead to a downgrade.
Headquartered in Chicago, IL, Madison Safety & Flow LLC
manufactures products focused on safety including the rescue tool,
reel, firefighting, municipal water and industrial tool markets.
Products include different types of reels, valves and rescue tools,
among other products. Through its combination with Safe Fleet, it
also provides safety and productivity products for fleet vehicles
including school and transit buses, fire EMS and law enforcement
vehicles, among others. Annual revenue, on pro forma combined
basis, exceeds $770 million.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
MALCOLM MARK MATHIS: Sale of Peterbilt for At Least $50K Approved
-----------------------------------------------------------------
Judge Katharine M. Samson of the U.S. Bankruptcy Court for the
Southern District of Mississippi authorized Malcolm Mark Mathis to
sell the 2016 Peterbilt 389, Vin # 4613 ("Peterbilt") with PACCAR
for at least $50,000.
The sale will be free and clear of liens or encumbrances.
The Debtor is authorized to apply the proceeds of the sale to the
secured debt with PACCAR via wire transfer to complete the payoff
on their account including fees and costs in accordance with
Section 506(b). He will place all excess proceeds from the sale
into his DIP account.
Pursuant to Fed. R. Bankr. P. 6004(f)(1), the Debtor will file with
the Court a Report of Sale with a copy of the settlement, bill of
sale, or auctioneer's report within 14 days after the proposed sale
of the Peterbilt closes.
Malcolm Mark Mathis sought Chapter 11 protection (Bankr. S.D. Miss.
Case No. 21-50642) on May 28, 2021. The Debtor tapped Douglas
Engell, Esq., at Doug Engell as counsel.
MARYMOUNT UNIVERSITY: S&P Affirms 'BB+' LT Rating on Revenue Bonds
------------------------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative and
affirmed its 'BB+' long-term rating on the Virginia College
Building Authority's series 2015A and 2015B revenue bonds issued
for Marymount University (MU). Securing the bonds is a general
obligation of the university.
"The revised outlook and affirmed rating reflect the university's
relatively stable full-time equivalent based enrollment and a
return to positive financial operating performance on a full
accrual basis in the fiscal year ended June 30, 2021, with
expectations of positive performance in the current fiscal year
after recording three years of minor operating deficits," said S&P
Global Ratings credit analyst Ken Rodgers. "A high debt burden and
only modest available resources continue to weigh heavily on our
view of the university's credit quality."
MASTER TECH: Unsec. Creditors Will Get 25% of Claims in 60 Months
-----------------------------------------------------------------
Master Tech Service Corp. filed with the U.S. Bankruptcy Court for
the Northern District of Texas a Plan of Reorganization under
Subchapter V dated Nov. 30, 2021.
The Debtor is a full-service mechanical contractor offering
residential and commercial air conditioning and heating unit
installation and repair and full plumbing repairs and services
located in Dallas, Texas.
The Debtor's revenue has declined during the COVID-19 pandemic,
which led to the Debtor's inability to fully service its debt and
ultimately the filing of this Case. The Debtor is also experiencing
issues with supply chain problems since the vast majority of the
parts it uses come from outside the United States. The Debtor did
not have an extensive inventory of parts when it filed this case.
According to the Debtor's Schedules its liabilities (excluding
Administrative Expense Claims) totaled $3,631,048.71 as of the
Petition Date.
General Unsecured Claims include Ferguson Enterprises, LLC which
filed an Unsecured Proof of Claim for $65,486.59. The Debtor
scheduled other Unsecured Claims in the total amount of
$1,048,540.40.
Class 1 consists of Allowed Secured Claim of Carrollton-Farmers
Branch ISD. This Claim shall be paid in full on the Effective Date
of the Plan with interest thereon at the rate of 12% per annum.
Interest shall begin to accrue as of the Petition Date. This claim
is not Impaired.
Class 2 consists of Allowed Secured Claim of Dallas County. This
Claim shall be paid in full on the Effective Date of the Plan with
interest thereon at the rate of 12% per annum. Interest shall begin
to accrue as of the Petition Date. This claim is not Impaired.
Class 3 consists of Allowed Secured Claim of Home Trust Bank (SBA
loan). This Claim shall be paid in full in equal monthly
installments of principal and interest over 120 months from the
Effective Date. Interest shall accrue at the rate of 5% per annum
commencing on the Effective Date. This claim is secured and the
Allowed Secured Claim shall retain its liens until paid in full.
This Claim is impaired.
Class 4 consists of Allowed Secured Claim of Home Trust Bank (line
of credit). This Claim shall be paid in full in equal monthly
installments of principal and interest over 120 months from the
Effective Date. Interest shall accrue at the rate of 5% per annum
commencing on the Effective Date. This claim is secured and the
Allowed Secured Claim shall retain its liens until paid in full.
This Claim is impaired.
Class 5 consists of Allowed Secured Claims of Chrysler Capital.
These Claims are divided into the following sub-classes: Class 5A
– Claim No. 5 secured by 2019 Dodge Promaster; Class 5B - Claim
No. 6 secured by 2019 Dodge Promaster; and Class 5B - Claim No. 7
secured by 2020 Ram Promaster. Each of these Claims shall be paid
in full in equal monthly installments of principal and interest
over 60 months from the Effective Date. Interest shall accrue at
the rate of 5% per annum commencing on the Effective Date. These
claims are secured and the Allowed Secured Claims shall retain
their liens until paid in full. These Claims are impaired.
Class 6 consists of Allowed Secured Claims of Ally Bank. These
Claims are divided into the following sub-classes: Class 6A –
Claim secured by 2018 Dodge Ram 1500; and Class 6B - Claim secured
by 2017 Ford Transit Cutaway. Each of these Claims shall be paid in
full in equal monthly installments of principal and interest over
60 months from the Effective Date. Interest shall accrue at the
rate of 5% per annum commencing on the Effective Date. These claims
are secured and the Allowed Secured Claims shall retain their liens
until paid in full. These Claims are IMPAIRED.
Class 7 consists of Allowed Secured Claim of Wells Fargo Bank. This
Claim shall be paid in full in equal monthly installments of
principal and interest over 60 months from the Effective Date.
Payments shall commence on the first day of the first month
following the Effective Date and continue on the first day of each
month thereafter. Interest shall accrue at the rate of 5% per annum
commencing on the Effective Date. This claim is secured and the
Allowed Secured Claim shall retain its liens until paid in full.
This Claim is impaired.
Class 8 consists of Allowed Unsecured Claims. These Claimants shall
receive 25% of their Allowed Claims in equal monthly installments
of principal and interest over 60 months from the Effective Date.
Payments shall commence on the first day of the first month
following the Effective Date and continue on the first day of each
month thereafter. These Claims are impaired.
In the alternative, if the Plan is determined to be a "non
consensual" plan under Bankruptcy Code Section 1191(b), all of the
Debtor's disposable income will be paid pro-rata to Class 8
Claimants on a monthly basis over 36 months. "Disposable income"
shall mean all income remaining after the Debtor's payment of its
reasonable and necessary expenses, less a reserve of $25,000 to be
built by the Debtor's retention of $10,000.00 per month for the
first two and 1/2 months following the Effective Date.
Class 9 consists of Equity Interests. Class 9 Equity Interests
shall be retained. This Class is not Impaired.
The Debtor intends to make all payments required under the Plan
from its ordinary operating revenue.
A full-text copy of the Plan of Reorganization dated Nov. 30, 2021,
is available at https://bit.ly/3EplM8q from PacerMonitor.com at no
charge.
Attorneys for the Debtor:
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 Master Tech Service Corp.
Dallas, Texas-based Master Tech Service Corp. is a full-service
mechanical contractor, offering residential and commercial
companies quality air conditioning, heating unit installation,
repair and full plumbing repairs and services.
Master Tech Service sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Texas Case No. 21-42102) on Sept. 1,
2021, listing up to $1 million in assets and up to $10 million in
liabilities. Judge Edward L. Morris oversees the case. Joyce W.
Lindauer Attorney, PLLC is the Debtor's legal counsel.
MDEV12 LLC: Proposed Sale of Plantation Property to Levy Approved
-----------------------------------------------------------------
Judge Scott M. Grossman of the U.S. Bankruptcy Court for the
Southern District of Florida authorized MDEV12, LLC's sale of the
real property located at 10731 Hawks Vista St., in Plantation,
Florida 3332, to Rachel Levy, in accordance with the Purchase and
Sale Contract.
The property is more particularly described as: "Lot 339, Hawks
Landing, as described in the Sixth Amendment to Declaration of
Covenants and Restrictions for Hawks Landing, recorded in Official
Records Book 30209, at Page 683, of the Public records of Broward
County, Florida. That portion of Tract B, according to the plat of
The Enclave 2nd Section, as recorded in Plat Book 156 at Page 8 of
the Public Records of Broward County, Florida, described as
follows: Commencing at the Northwest corner of said Tract B; thence
run North 89° 27' 03" East (on a plat bearing) 1753.58 feet along
the North boundary of said Tract 13; thence run South 00° 32' 57"
East 1669.17 feet to the Point of Beginning; thence run South 49°
46' 47" East 190 feet to an intersection with the arc of a curve
running Southwesterly to the right; thence along the arc of said
curve to the right (the Northwesterly projection of the last
described course being radial to said curve), having a radius of
975 feet and a central angle of 06° 10' 13", run Southwesterly 105
feet; thence run North 43° 30' 30" East 100.47 feet to the Point
of Beginning. Parcel No. 50-41-07-17-3390."
The sale is free and clear of all liens and encumbrances, with all
such encumbrances, if any, to attach to the proceeds of the
transaction(s) arising from the Sale.
The Sale must take place within five days after entry of the
Court's Order. Mortgagee WBL SPO I, LLC must receive the total sum
of $1.5 million at least two business days before a foreclosure
sale of the Property.
Daniel Minkowitz, individually, will be responsible for paying all
closing costs in connection with the Sale of the Property, and none
of the proceeds from the Sale will be used to pay closing costs.
The gross proceeds of the Sale of the Property will be distributed
as follows:
a. First, Broward County will be paid a total of $71,520.56 in
unpaid taxes.
b. Second, Mortgagee will be paid a total of $1,428,479.44.
Daniel Minkowitz, individually, will also be responsible for paying
any and all amounts left owing to the Mortgagee and HOA, on the day
of closing on the Sale of the Property, after distribution of the
gross sale proceeds to pay Taxes and the Mortgagee in accordance
with the preceding paragraph of the Order, as follows:
a. $71,520.56 will be paid to Mortgagee.
b. $11,010.80 will be paid to the HOA.
The Mortgagee will be paid in accordance with ACH or wire
instructions to be provided by its counsel of record upon three
business days' notice prior to the Sale.
The proceeds of the sale, along with all funds available for
disbursement, totaling $1,582,531.36, will be held in the trust
account of the title agent's firm (Moskowitz, Mandell, Salim &
Simowitz, P.A. in Fort Lauderdale, FL) overseeing the closing of
the Sale. No disbursement to either the Mortgagee, the Taxes nor
the HOA will take place prior to an order being entered granting
dismissal of the Chapter 11 bankruptcy case.
In the event there is no failure or omission of any term or
provision of the Order, and the Mortgagee receives $1.5 million no
later than two business days prior to a foreclosure sale of the
Property, the Mortgagee's claim against the Debtor and other
judgment debtors will be satisfied.
Nothing in the Order will be deemed to have any effect whatsoever
on the rights, remedies, privileges and powers of any party outside
of this bankruptcy proceeding. By way of example only, the
Mortgagee has been granted relief from the automatic stay and may
proceeding with a foreclosure sale of the Property in the
Mortgagee's foreclosure case pending in the Circuit Court in and
for Broward County, Florida, captioned WBL SPO I LLC vs. MDEV
DEVELOPMENT GROUP LLC, et al (Case# CACE-20-011938).
About MDVE12 LLC
Plantation, Fla.-based MDVE12, LLC filed its voluntary petition
for
Chapter 11 protection (Bankr. S.D. Fla. Case No. 21-18843) on
Sept.
13, 2021, listing as much as $10 million in both assets and
liabilities. Judge Scott M Grossman oversees the case. Chad T.
Van Horn, Esq., at Van Horn Law Group, P.A. represents the Debtor
as legal counsel.
MERLIN ACQUISITION: Moody's Assigns First Time 'B3' CFR
-------------------------------------------------------
Moody's Investors Service assigned first time ratings to Merlin
Acquisition Corporation (parent company of Bettcher Industries,
Inc.), including a B3 corporate family rating and a B3-PD
probability of default rating. Concurrently, Moody's assigned a B2
rating to the company's proposed $300 million first lien senior
secured term loan and $60 million revolving credit facility and a
Caa2 rating to the $85 million second lien term loan. Proceeds from
the term loans, along with new equity from Kohlberg Kravis Roberts
& Co. L.P. (KKR), will fund the acquisition of Bettcher Industries,
Inc. from MPE Partners. The outlook is stable.
Assignments:
Issuer: Merlin Acquisition Corporation
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Gtd. Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
Gtd. Senior Secured Revolving Credit Facility, Assigned B2 (LGD3)
Gtd. Senior Secured 2nd Lien Term Loan, Assigned Caa2 (LGD6)
Outlook Actions:
Issuer: Merlin Acquisition Corporation
Outlook, Assigned Stable
RATINGS RATIONALE
Merlin Acquisition Corporation's B3 CFR reflects the company's high
adjusted debt-to-EBITDA (leverage) of around 7.0x pro forma for the
leveraged buyout and its modest revenue base. With under $200
million of revenue, Merlin Acquisition is smaller than most rated
manufacturing peers. The company also has product and end market
concentration, with about three quarters of its profits generated
from a small number of semi-automated hand tools and associated
replacement parts used to process beef, pork and poultry. Customer
concentration is also high with the top ten customers accounting
for about 40% of sales. Near-term risks relate to the on-going
labor shortage which will pressure the aftermarket business as a
higher proportion of installed tools are idle. Moody's expects
financial polices to be aggressive, with a high tolerance for
leverage, given the private equity ownership.
The rating is supported by Merlin's defensible market position as
the company's cutting tools are used by most of the major global
protein processing companies and benefit from patent protection.
The company has a high installed base of cutting tools and
long-term relationships with its customers. These attributes are
reflected in Merlin's strong profitability with adjusted EBITDA
margins in excess of 30%. The installed base of tools gives rise to
a significant aftermarket recurring revenue stream given the
frequent need for customers to replace blades and other parts.
The stable outlook reflects Moody's expectation that strong
continued demand for protein will drive Merlin's earnings growth
and sustain positive free cash flow.
.
The first lien credit agreement contains provisions for incremental
debt capacity up to the greater of $60 million and 100% of trailing
four quarter consolidated EBITDA plus additional amounts subject to
5.00x pro forma first lien net leverage (if pari passu secured).
The first lien credit facility also includes provisions allowing
early maturity indebtedness up to the greater of $120 million and
200% of consolidated EBITDA. There are no financial covenants on
the first or second lien term loans and a springing covenant of
8.35x when there is a draw down of more than 40% of the total
facility. Expected terms allow the release of guarantees when any
subsidiary ceases to be wholly owned; asset transfers to
unrestricted subsidiaries are permitted, subject to the carve-outs
and there are no anticipated "blocker" provisions providing
additional restrictions on such transfers.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Rating could be upgraded if Merlin expands its revenue base and
diversifies through new product offerings or market adjacencies
while maintaining strong profitability. In addition, adjusted
debt-to-EBITDA sustained below 5.0x and free cash flow-to-debt in
the high single digits range could lead to an upgrade.
Ratings could be downgraded should there be a sustained decline in
earnings due to competitive factors or unfavorable market dynamics.
Weakening liquidity or an increasingly aggressive financial policy,
including debt-financed dividends or sizeable acquisitions could
also result in a downgrade.
Merlin Acquisition Corporation designs and manufacturers cutting
tools and processing equipment for the meat, pork and poultry
industries. Revenue for last twelve months ended September 2021 was
$183 million.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
MKS GROUP: Seeks to Hire Allegiant Law as Bankruptcy Counsel
------------------------------------------------------------
MKS Group, LLC seeks approval from the U.S. Bankruptcy Court for
the Eastern District of Virginia to employ Allegiant Law, PC as its
legal counsel.
The firm's services include:
(a) preparing legal papers and advising the Debtor in the
reorganization of its financial affairs or the liquidation of its
assets;
(b) representing the Debtor's interests in all contested
matters, adversary proceedings, and other motions and applications
related to its Chapter 11 case;
(c) advising the Debtor concerning the administration of the
estate, the rights and remedies with regard to the Debtor's assets;
and the claims of creditors and other parties-in-interest;
(d) investigating the existence of other assets of the estate;
and
(e) preparing a disclosure statement and plan of
reorganization for the Debtor, negotiating with all creditors and
other parties-in-interest who may be affected thereby, seeking a
confirmation of a plan of reorganization, and perform all acts
reasonably calculated to permit the Debtor to perform such acts and
consummate the plan.
Allegiant Law has been paid $25,000 for pre-bankruptcy fees.
John Barrett, Esq., an attorney at Allegiant Law, will be paid at
his hourly rate of $395. In addition, his firm will receive
reimbursement for out-of-pocket expenses incurred.
Mr. Barrett disclosed in a court filing that his firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
John M. Barrett, Esq.
Allegiant Law, PC
200 South Kellam Road
Virginia Beach, VA 23462
Telephone: (757) 456-5297
Email: johnbarrett@lawyer.com
About MKS Group
MKS Group, LLC, a franchisee of Maryland-based breakfast chain
Eggspectation, sought Chapter 11 protection (Bankr. E.D. Va. Case
No. 21-33288) on Nov. 2, 2021. In the petition signed by Vishal
Patel, manager and chief executive officer, the Debtor disclosed
between $1 million and $10 million in assets and between $100,000
and $500,000 in liabilities.
John M. Barrett, Esq., at Allegiant Law, PC serves as the Debtor's
legal counsel.
MOON GROUP: Auction of Substantially All Assets Set for Dec. 8
--------------------------------------------------------------
Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the
District of Delaware authorized the bidding procedures proposed by
Moon Group, Inc., and its affiliates in connection with the auction
sale of substantially all assets.
The Debtors are authorized to take any and all actions necessary or
appropriate to implement the Bidding Procedures.
The Sale Notice and the Assumption Notice as if fully set forth in
the Order are approved.
The Debtors, in consultation with the Committee's professionals,
may (a) select one or more parties to act as a Stalking Horse
Purchaser for all or substantially all of the Assets, (b) may
negotiate the terms of and enter into one or more purchase
agreements with any Stalking Horse Purchaser subject to higher or
better bids, and (c) may agree to provide certain bid protections
to such Stalking Horse Purchaser, subject to approval of the Court
after notice and an opportunity to object.
The Debtors will conduct the Auction if at least two Qualifying
Bids are timely received. The Auction will be held on Dec. 8,
2021, at 10:00 a.m. (ET) at the offices of Sullivan Hazeltine
Allinson LLC, 919 North Market Street, Suite 420, Wilmington, DE
19801.
The Bid Requirements are:
a. Initial Minimum Overbid - Equal or exceed the sum of the
amount of (A) the purchase price under the Stalking Horse
Agreement, plus (B) any break-up fee, expense reimbursement, or
other bid protection provided under the Stalking Horse Agreement,
plus (C) $50,000
b. Deposit - 10% of the Purchase Price
c. Credit Bid - Any party that wishes to submit a credit bid
either as a component or as the entirety of the consideration for
its bid will identify the amount of the claim and the nature,
extent and priority of the lien upon which its credit bid is
premised.
d. $50,000
The Debtors will file a Notice with the Bankruptcy Court
identifying the Prevailing Bidder or Bidders (if more that one) and
the Back-Up Bidder or Bidders (if ther is more than one) at the
Auction and the amount of their bids and, if any portion of the
winning bid or back up bid is a credit bid, the amount that is a
credit bid, not later than two hours after the close of the
Auction.
The Debtors will serve any party making a Request for Adequate
Assurance Information by email and/or overnight delivery with the
Adequate Assurance Information by the later of (i) Dec. 7, 2021 and
(ii) one business day after receipt of the Request for Adequate
Assurance Information.
The following deadlines are approved:
a. Sale Objection Deadline - Dec. 3, 2021, at 4:00 p.m.
b. Bid Deadline (non-credit bid) - Dec. 6, 2021, at 4:00 p.m.
c. Bid Deadline (credit bid) - Dec. 7, 2021, at 12:00 p.m.
(ET)
d. Deadline to serve Adequate Assurance Information to
counterparties that make a Request for Adequate Assurance
Information - Dec. 7, 2021
e. Auction - Dec. 8, 2021, at 10:00 a.m.
f. Deadline to File and Serve Notice of Successful Bidder and
Backup Bidder, and Amounts of Bids - No later than 2 hours
following the conclusion of the Auction
g. Deadline to file Purchase Agreement, including Exhibits and
Schedules, with Successful Bidder and form of Proposed Sale Order,
with Redlines of the same Against Forms attached to the Motion -
Dec. 9, 2021 at 6 p.m.
h. Deadline for Counterparties to object to adequate assurance
of future performance - At the Sale Hearing
i. Deadline to object to conduct of Auction and sale to any
bidder other than a Stalking Horse Purchaser - At the Sale Hearing
j. Sale Hearing - Dec. 10, 2021, at 10:00 a.m.
The Debtors' claims agent will post the Sale Motion, together with
all exhibits, the Order, the Sale Notice and the Assumption Notice,
as well as any Stalking Horse Motion or Stalking Horse Notice, on
its website for the Debtors’ cases, and will provide a separate
tab or link through which to access such documents and all other
sale related filings.
Notwithstanding the possible applicability of Bankruptcy Rules
6004(h), 7062, 9014 or otherwise, the terms and conditions of the
Order will be immediately effective and enforceable upon its entry.
About Moon Group Inc.
Moon Group, Inc. and its affiliates filed their voluntary
petitions
for Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-11140)
on Aug. 12, 2021, listing up to $50,000 in assets and up to $50
million in liabilities. John D. Pursell, Jr., chief executive
officer, signed the petitions.
Judge Christopher S. Sontchi oversees the cases.
The Debtors tapped Sullivan Hazeltine Allinson, LLC and Kurtzman
Steady, LLC as bankruptcy counsel; Silverang Rosenzweig &
Haltzman,
LLC as special litigation counsel; and SC&H Group, Inc. as
investment banker. Stretto is the claims and noticing agent.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors on Aug. 30, 2021. Lucian Borders Murley,
Esq.,
at Saul Ewing Arnstein & Lehr, LLP and Gavin/Solmonese, LLC serve
as the committee's legal counsel and financial advisor,
respectively.
MVK INTERMEDIATE: Moody's Cuts CFR to Caa1 & Alters Outlook to Neg.
-------------------------------------------------------------------
Moody's Investors Service downgraded MVK Intermediate Holdings,
LLC's Corporate Family Rating to Caa1 from B3 and Probability of
Default Rating to Caa1-PD from B3-PD. Moody's additionally
downgraded the company's senior secured first lien revolving credit
facility and $335 million first lien secured term loan ratings to
Caa1 from B3. The outlook is negative. The rating actions conclude
the review for downgrade initiated on October 28th, 2021.
The downgrade reflects MVK's weaker than expected financial results
for the third quarter ended September 30, 2021 and concerns
regarding potential liquidity needs in Fiscal 2022. Given the
seasonality of the stone fruit business, MVK's generates the
majority of its earnings and cash flow in the third quarter. Last
year the company was negatively impacted in its third quarter by a
voluntary recall related to a potential salmonella outbreak. This
year, the company also had a challenging third quarter. Stone fruit
pricing was lower than anticipated as a national bumper crop season
for stone fruit resulted in a larger than anticipated supply of
stone fruit. In addition, high freight costs resulted in higher
stone fruit prices for MVK's customers on the east coast, who were
responsible for paying the shipping cost. As such, MVK's stone
fruit was economically less desirable than stone fruit grown in the
Northeast. Lastly, the company faced lingering challenges from last
year's voluntary recall as it experienced interruptions with a few
large customers.
Given the challenging quarter, MVK ended 3Q21 with LTM
debt-to-EBITDA of 10.9x on a Moody's adjusted basis, which was
higher than what Moody's had forecasted for the B3 CFR. Free cash
flow will be negative in 2021 following a cash burn in 2020, partly
driven by re-investment in the Company through redevelopment
efforts increasing stone fruit producing acreage . The company
funded its cash needs in part through asset sales which lead to
higher debt and a smaller asset base. While earnings in each
growing season is independent, the combination of higher debt and
fewer assets generating earnings will lead to higher leverage even
if earnings recover somewhat in 2022. Moody's believes that MVK's
debt-to-EBITDA is likely to remain above 9x in the next 12 to 18
months with high leverage constraining the company's financial
flexibility and increasing default risk.
At the end of 3Q21, MVK had $25 million in cash and full
availability on its undrawn $61.25 million revolving credit
facility that is due September 2024. The liquidity sources could
create challenges for the company to fund its normal off season
cash needs that have ranged from $70-$100 million in recent years.
The company has access to various alternatives to raise liquidity
and is implementing an array of operational and cash preservation
initiatives to carefully manage its cash needs.
The following ratings/assessments are affected by the action:
Downgrades:
Issuer: MVK Intermediate Holdings, LLC
Corporate Family Rating, Downgraded to Caa1 from B3
Probability of Default Rating, Downgraded to Caa1-PD from B3-PD
Senior Secured 1st Lien Term Loan, Downgraded to Caa1 (LGD4) from
B3 (LGD4)
Senior Secured 1st Lien Revolving Credit Facility, Downgraded to
Caa1 (LGD4) from B3 (LGD4)
Outlook Actions:
Issuer: MVK Intermediate Holdings, LLC
Outlook, Changed To Negative From Rating Under Review
RATINGS RATIONALE
MVK's Caa1 CFR reflects the company's high debt-to-EBITDA of 10.9x
(Moody's adjusted) for the LTM period ended September 30, 2021,
cash flow volatility due to seasonality of business, relatively
small scale with desirable but concentrated growing acreage in
California's San Joaquin Valley, and customer concentration with
nearly 50% of sales generated from its top five customers. The
stone fruit business is also subject to significant
season-to-season volatility from weather-dependent growing
conditions, competition for distribution and shelf space with
retailers, and fluctuating fruit prices. Moody's believes that MVK
needs to maintain good liquidity to weather the typical variations
in operating performance. Negative free cash flow in 2020 and 2021
raises the debt burden (including lease liabilities) while the sale
of the citrus operations in early 2021 reduced the company's
earnings base. These factors create upward pressure on leverage.
Moody's projects improved earnings to reduce leverage to a high 9x
range in 2022 following the weaker earnings levels experienced in
2020 and 2021.
The Caa1 rating is supported by the company's strong position in
the US conventional and organic stone fruit market (primarily
peaches and nectarines), positive secular trends in organic and
healthy living, and good profit margins.
Liquidity is weak because of the high seasonal cash needs relative
to cash of $25 million as of September 2021 and capacity under the
$61.25 million revolver that was undrawn as of the end of
September. In the event MVK draws in excess of 37.5% of revolving
availability and the springing maximum 5.7x net debt-to-EBITDA
leverge covenant is triggered, covenant cushion on the revolver's
leverage covenant will likely be modest. Moody's forecasts MVK to
incur a free cash flow deficit of $45-$50 million in 2021 and free
cashflow of $20-$25 million in 2022, before any cost savings,
liquidity or cash preservation initiatives.
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, its continuation will be closely tied to containment of
the virus. As a result, there is uncertainty around Moody's
forecasts. Moody's regards the coronavirus outbreak as a social
risk under its ESG framework, given the substantial implications
for public health and safety. Notwithstanding, MVK and many other
protein & agriculture companies are likely to be more resilient
than companies in other sectors, although some volatility can be
expected through 2022 due to uncertain demand characteristics,
channel shifting, and the potential for supply chain disruptions
and difficult comparisons following these shifts.
Environmental risks are high for agricultural companies with
significant land, water, chemicals and energy usage that
contributes to high costs. The company carefully manages its land
to minimize the environmental effects and ensure strong and
sustainable future harvests.
Moody's views MVK's governance risk as high given its private
equity ownership by Paine Schwartz Partners and its aggressive
financial strategies as evidenced by high financial leverage from
the buyout of the company and merger with Gerawan in 2019.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects Moody's concerns regarding MVK's
liquidity needs in the next 12 to 18 months. Although the company
ended 3Q21 with $25 million in cash and full availability on its
undrawn $61.25 million revolving credit facility, MVK's normal off
season cash flow needs have ranged from $70 to $100 million. As
such, Moody's will be closely monitoring the company's plans for
liquidity in the next 12 to 18 months.
The ratings could be downgraded if stone fruit pricing and volume
is weaker than expected in Fiscal 2022, MVK's operating margin
declines, market share declines, free cash flow remains weak or
negative, or liquidity deteriorates.
The ratings could be upgraded if the company improves revenues and
reduces leverage such that debt to EBITDA is sustained below 7x.
The company would also need to sustain positive free cash flow
generation and exhibit meaningful liquidity throughout the fiscal
year to be considered for an upgrade.
The principal methodology used in these ratings was Protein and
Agriculture published in November 2021.
Headquartered in Fresno, California, MVK Intermediate Holdings, LLC
(MVK) is the holding company of Wawona Packing Company, LLC and
subs (owning the operating assets), and Wawona FarmCo, LLC (owning
the farmland and trees). In September 2019, legacy companies,
Wawona Packing Company (Wawona) and Gerawan Farming (Gerawan),
merged their businesses into MVK, which is majority owned and
controlled by private equity firm Paine Schwartz Partners with
minority ownership by Dan Gerawan. Wawona (founded in 1948) and
Gerawan (founded in 1938) are growers, packers and suppliers of
organic and conventional stone fruit including peaches, nectarines,
plums, tree nuts and citrus. The combined company generates
pro-forma revenue of approximately $300 million per year.
N.G. PURVIS: $180K Sale of Bear Creek Property to Chatham Approved
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Judge Stephani W. Humrickhouse of the U.S. Bankruptcy Court for the
Eastern District of North Carolina authorized N.G. Purvis Farms,
Inc.'s private sale of approximately 12 acres of vacant land
generally located at 5223 Bonlee Bennet Road, in Bear Creek,
Chatham County, North Carolina, to 130 of Chatham, LLC, or assigns
for $180,000.
The sale is free and clear of all liens, interests, and other
claims, excluding the Excluded Claims, with such liens, interests,
and claims to be transferred and to attach to the net sales
proceeds.
Pursuant to 11 U.S.C. Sections 328 and 506(c), the sales proceeds
from the sale of the Property will be subject to the reasonable and
necessary costs and expenses of preserving and disposing of the
Property to the extent of the benefit to the holders of claims
secured by the property, with such costs and expenses benefitting
such holders to include all ordinary, reasonable and necessary
closing costs, including filing fees, revenue stamps, and
attorneys' fees and expenses allowed to the attorneys for the
Debtor which will be subject to determination after further
application to and allowance by the Court.
The Debtor is authorized to disburse the net proceeds from the sale
of the Property, after payment of all ordinary, reasonable and
necessary closing costs, towards the valid liens against the
Property in the order of their priority.
The order authorizing the sale is not stayed pursuant to Bankruptcy
Rule 6004(h) but is immediately effective.
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. Professional Swine Management, LLC and Dr. Attila Farkas
of Carthage Veterinary Service, Ltd. are the Debtor's consultants.
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.
OECONNECTION LLC: Moody's Affirms 'B3' CFR, Outlook Remains Stable
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Moody's Investors Service affirmed OEConnection LLC's ("OEC") B3
corporate family rating and B3-PD probability of default rating
following the company's announcement that it will upsize its senior
secured first lien and senior secured second lien credit facilities
by $120 million each. Moody's also affirmed the B2 rating on the
senior secured first lien credit facilities and the Caa2 rating on
the senior secured second lien credit facility. The outlook is
stable.
Proceeds from the proposed incremental first lien and second lien
debt, along with a full draw on the company's $50 million first
lien delayed draw term loan, the issuance of $100 million in
perpetual preferred equity, as well as cash on hand, will be used
to 1) purchase OPSTrax ("OPS"), a provider of parts procurement and
logistics software; 2) acquire Assured Performance Network ("APN")
and Verifacts Automotive ("Verifacts"), providers of repair shop
certification and network management solutions; and 3) pay
transaction fees and expenses. The acquisitions of Verifacts and
APN closed in October 2021 and November 2021, respectively, whereas
the purchase of OPS is expected to close in January 2022.
Affirmations:
Issuer: OEConnection LLC
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Gtd Senior Secured 1st Lien Term Loan, Affirmed B2 (LGD3)
Gtd Senior Secured 1st Lien Delayed Draw Term Loan, Affirmed B2
(LGD3)
Gtd Senior Secured 1st Lien Revolving Credit Facility, Affirmed B2
(LGD3)
Gtd Senior Secured 2nd Lien Term Loan, Affirmed Caa2 (LGD5)
Outlook Actions:
Issuer: OEConnection LLC
Outlook, Remains Stable
RATINGS RATIONALE
OEC's B3 CFR reflects the company's small scale, with roughly $275
million of expected annual revenue in 2021E, pro forma with the
acquisitions of OPS, Verifacts, APN and other recent acquisitions,
aggressive financial policies and elevated financial leverage.
Expected 2021E debt/EBITDA is very high, around 9x, pro forma for
the proposed capital structure and acquisitions (Moody's adjusted
adding capitalized software costs as an expense and other
adjustments). OEC's revenue base is heavily dependent on its
relationships with Ford and GM (the "OEMs"), and their network of
affiliated dealerships, creating customer concentration. Moody's
expects OEC will continue to finance M&A targets with incremental
debt, which will offset the deleveraging benefit of OEC's
fast-growing revenue profile, and keep debt/EBITDA very high. The
acquisitions of OPS, Verifacts and APN enhance OEC's certified
repair network software solutions and add depth to its client base
by incorporating new revenue streams from collision shops and
aftermarket parts sales. The strategic benefits of the transaction
support OEC's strong growth profile and increase revenue
diversification, partially offsetting the negative impact of a
hefty debt burden.
Unless otherwise noted, all financial metrics cited reflect Moody's
standard adjustments. In addition, Moody's expenses capitalized
software costs.
OEC benefits from a leading position in the niche original
equipment ("OE") auto parts market in the US. A stable recurring
base of subscription revenues with high gross retention rates
around 93% and a sticky business model embedded in client workflows
support the credit profile. The recession caused by COVID-19 led to
a severe disruption to OEC's cyclical client base in 2020 (mainly
franchised dealerships and OEMs). Despite the headwinds, OEC's
subscription-based revenue model generated positive growth in 2020,
reflecting the stability of the business model. Healthy SaaS EBITDA
margins around 40% (Moody's adjusted) and low capital expenditure
requirements result in good cash flow generation, which partially
mitigates OEC's very high financial leverage. Long-standing
relationships with the OEMs, affiliated dealers and auto
repair/collision shops create barriers to entry and an attractive
network for prospective clients seeking to grow their parts and
service revenue.
OEC's liquidity profile is considered adequate, with an expected
pro forma cash balance of $34 million as of December 2021 and free
cash flow to debt metrics in the 3%-5% range over the next 12-18
months. The undrawn $50 million revolver provides additional
liquidity. Moody's anticipates OEC will be able to fund internal
obligations with operating cash flow and cash on hand. The
company's software subscription SaaS business model with monthly
billing results in minimal working capital swings and low capex,
which also supports the liquidity profile.
The ratings for the individual debt instruments incorporate OEC's
overall probability of default, reflected in the B3-PD, and the
loss given default assessments for the individual instruments. The
pro forma senior secured first lien credit facilities, consisting
of a $50 million revolver expiring in 2024, a $723 million term
loan maturing in 2026 (including the fully drawn delayed draw
commitment and the proposed incremental term loan), are rated B2,
one notch higher than the B3 CFR, with a loss given default
assessment of LGD3. The B2 senior secured first lien instrument
rating reflects their relative size and senior position ahead of
the senior secured second lien term loan, that would provide
first-loss protection and drive a higher recovery for senior
secured first lien debt holders in the event of a default. OEC's
$305 million senior secured second lien term loan, due 2027
(including the proposed incremental term loan), is rated Caa2, two
notches below the CFR, with a loss given default assessment of
LGD5. The Caa2 senior secured second lien term loan rating
acknowledges its junior ranking as well as its relative size within
the capital structure.
The revolver (only) includes a 8.0x springing maximum first lien
net leverage covenant, applicable when the revolver is at least 35%
drawn. The term loans do not include any financial covenants.
Moody's expects OEC would stay in compliance with the springing
covenant if it were to draw on the revolver, given the generous
EBITDA add-backs and Moody's current outlook. Amortization on the
first lien senior secured term loan is about $7 million annually.
The other existing terms in the credit agreement are expected to
remain unchanged.
The perpetual preferred equity instrument is considered equity
given that 1) interest payments can be paid in kind or cash at the
sole discretion of the company's board; 2) the holders do not have
the ability to put the instrument to the company; 3) there are no
cross-default or cross-acceleration terms in the event of
non-payment of the preferred interest; and 4) there is no maturity
date. That said, the expectation for aggressive financial policies
by the private equity owner could lead to further debt issuance to
finance the repayment of the preferred equity, which would pressure
the ratings. The described terms are preliminary and ratings could
change if they differ materially from the final agreement.
The stable outlook reflects Moody's expectation for high
single-digit organic growth over the next 12-18 months. EBITDA
margin is expected to decline slightly towards the 39%-40% range as
OEC integrates targets with a lower margin profile, partially
offset by the benefits from additional scale and price increases.
Debt/EBITDA will benefit from top line growth, declining towards
8.0x over the next 12-18 months, but Moody's also anticipates
incremental debt-funded transactions, which could keep leverage at
current levels.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if 1) Debt/EBITDA is expected to
remain below 6.0x; 2) FCF/debt will be sustained above 5.0%; 3)
OEC, which is private equity owned, can demonstrate a track record
of more moderate financial policies; and 4) strong revenue growth
over time enables OEC to build meaningful scale.
The ratings could be downgraded if 1) organic revenue growth is
sustained at low single-digit percentages or below, reflecting a
weaker competitive position; 2) Moody's expects debt/EBITDA will be
sustained above 8.0x without a path to deleveraging; 3) Moody's
expects FCF/debt will be around 0% or negative; or 4) liquidity
deteriorates.
The principal methodology used in these ratings was Software
Industry published in August 2018.
OEConnection LLC, controlled by affiliates of private equity
sponsor Genstar Capital, provides cloud-based SaaS software
solutions to automotive dealers, OEMs and auto repair/collision
shops, that allow them to efficiently identify, locate, and price
OE parts for the completion of repair services. OEC's product suite
also offers tools that facilitate the certification process for
dealers and repair shops that seek to become part of an OEM
network. The company generates the majority of its revenue in North
America and also operates in the United Kingdom. Pro forma revenue
as of 2021E, including recently closed and announced acquisitions,
is expected to be roughly $275 million.
ON SEMICONDUCTOR: S&P Affirms 'BB+' ICR, Outlook Stable
-------------------------------------------------------
On Dec. 2, 2021, S&P Global Ratings affirmed its 'BB+' issuer
credit rating on global analog semiconductor maker ON Semiconductor
Corp. The outlook remains stable.
The stable outlook reflects our expectation that ON Semiconductor's
performance and free cash flow will improve over the next 12
months. S&P expects the company to have enough cushion within the
rating to pursue any acquisition and shareholder return objectives
while maintaining leverage below 3x.
ON Semiconductor is a leading supplier in the power management
semiconductor market. The company benefits from good end-market
diversification and large customer and product bases. The auto and
industrial end markets represent 60% of the company's business. S&P
views the auto exposure as positive because of the long design
cycles and overall better margins. ON Semiconductor's exposure to
industrial end markets has also been growing, driven by image
sensors for machine vision and robotic applications, as well as
efficient power modules for industrial systems and industrial
internet-of-things (IoT) applications. The company reported a
record quarter ended September 2021 and guided to additional
revenue improvements in the fourth quarter. This indicates
sustained broad-based demand, which is likely to continue in 2022
as demand outpaces supply.
ON Semiconductor is improving margins by exiting lower margin and
noncore products. Historically, ON has generated about 20% of
revenues from commodity, multi-sourced products. These tend to be
standard, catalog-based, analog-integrated circuits and discrete
components with low average selling prices and limited
technological differentiation. New management is now reallocating
its capacity to strategic and margin accretive products. The
company plans to exit about $100 million of low-margin, noncore
revenues with average gross margins of 15%. S&P expects management
to continue to exit businesses with lower profitability.
At the same time, the company announced that they have acquired GT
Advanced Technologies (GTAT) for $425 million in cash, for its
expertise with silicon carbide, a material used to make high
voltage batteries for electric vehicles, charging stations, and for
renewable energy storage. The transaction does not add much revenue
in 2021, but S&P expects it to be a positive driver of revenues
over the longer term.
S&P said, "The stable outlook reflects our expectation that ON
Semiconductor's performance and free cash flow will improve over
the next 12 months. We expect the company to have enough cushion
within the rating to pursue any acquisition and shareholder return
objectives while maintaining leverage below 3x.
"Although unlikely, we could lower the rating over the next 12
months if leverage is sustained above 3x or free cash flow to debt
is sustained below 15% due to either continued semiconductor
industry downturn or large, debt-financed acquisitions.
"We could raise our ratings on ON Semiconductor if we come to
believe the company can pursue its acquisition and shareholder
return objectives and absorb a cyclical downturn while maintaining
leverage below 1.5x. Despite leverage expected to be below our
upgrade trigger, we maintain our 'BB+' rating to allow the company
cushion to pursue its M&A objectives and to absorb a cyclical
downturn."
With revenues of greater than $6.5 billion, ON Semiconductor is a
large and diversified semiconductor company and designs,
manufactures, and markets semiconductor components for electronic
systems and products worldwide. It operates in three segments:
Power Solutions Group (about 50% of revenues), Advanced Solutions
Group (about 36%), and Intelligent Sensing Group (about 14%). The
company serves end-user markets including auto, communications,
computing, consumer, medical, industrial, networking,
telecommunications, and aerospace and defense.
ON Semiconductor has a relatively diverse customer base--the top 20
customers represent about 35% of revenues. Sales to distributors
accounted for more than half of the company's revenues over the
past three years. Its distributors resell to midsize and smaller
original equipment manufacturers and electronic manufacturing
service providers. S&P views ON Semiconductor to have a strong
competitive moat, with good technical capabilities, long life cycle
products, and a broad portfolio with more than 80,000 SKUs.
-- U.S. GDP growth of 6.7% in 2021 and 3.7% in 2022.
-- Global GDP growth of 5.9% in 2021 and 4.3% in 2022.
-- Semiconductor industry revenue growth of about 16% in 2021,
slowing to the high single digits in 2022;
-- S&P expects ON Semi's 2021 revenues to grow in the 25%-30%
range, which is very strong growth following year-over-year revenue
declines in 2019 and 2020. ON's growth is better than industry
expectations, driven by strong demand for its products--both
cyclical and structural.
-- S&P expects 2022 revenue growth to be in the mid-digit
percentage, despite the divestment of about $100 million of lower
margin business. Over the longer term, it expects the company to
benefit from growth drivers within its 5G, IoT, and auto segments.
-- S&P Global Ratings-adjusted EBITDA margin sustained in the mid-
to high-20% area in 2021 and 2022.
-- Capital expenditures at 10% of revenues annually.
-- No assumptions about acquisitions because of uncertainty
related to timing and size, though we expect the company to
continue pursuing acquisitions in a consolidating industry.
Based on these assumptions, S&P arrives at the following credit
measures over the next 12 months:
-- S&P Global Ratings-adjusted net leverage improving to about 1x
or lower.
-- Unadjusted free operating cash flow (FOCF) of about $1 billion
annually.
-- S&P views ON Semiconductor's liquidity as strong. It
anticipates coverage of uses above 5x for the next 12 months and
positive net sources even if EBITDA declines 30%.
Principal liquidity sources:
-- Cash and cash equivalents of about $1.389 billion as of October
2021;
-- Full availability under its $1.97 billion revolving credit
facility expiring in 2024; and
-- Expected cash funds from operations (FFO) of $1.6 billion or
better over the next 12 months.
Principal liquidity uses:
-- Annual capital expenditures of around $700 million; and
-- Modest working capital outflows, under $50 million.
S&P said, "Despite measurable sources and uses that may suggest a
higher assessment, we limit it to strong, because we do not believe
ON Semiconductor has acted to ensure excellent liquidity in future
periods. For example, we expect the company to consider using
excess liquidity for further acquisitions or shareholder returns,
which are difficult to forecast due to uncertainty related to
timing and size."
ON Semiconductor's revolving credit facility is subject to a
maximum net leverage covenant. Its term loan and convertible notes
are not subject to financial covenants.
S&P's simulated default scenario assumes a payment default in 2026
as cash balances and profits fall because of lower demand in an
economic slowdown, as well as lower margins from increased
competition and inefficient research and development and capital
spending.
S&P values the company as a going concern using a 6x multiple of
our projected emergence EBITDA.
-- Year of default: 2026
-- EBITDA at emergence: $425 million
-- EBITDA multiple: 6x
-- Net enterprise value (after 5% administrative costs): $2.4
billion
-- Valuation split (obligors/nonobligors): 15%/85%
-- Total secured claims outstanding at default: $3.29 billion
-- Value available to secured creditors: $2.05 billion
--Recovery expectations: 50%-70% (rounded estimate: 55%)
-- Unsecured debt claims: $1.7 billion
-- Value available to unsecured debt creditors: $350 million
--Recovery expectations: 10%-30% (rounded estimate: 20%)
PCDM PROPERTIES: Gulf Coast Bank Says Disclosures Insufficient
--------------------------------------------------------------
Gulf Coast Bank ("GCB"), a secured creditor of debtor PCDM
Properties, LLC, objects to the Small Business Debtor's Combined
Plan of Reorganization and Disclosure Statement.
GCB is the holder and owner of a Promissory Note executed by the
Debtor and dated August 3, 2017 (the "Note") in the original
principal amount of $128,559.73. The Note is secured by a first
priority mortgage in 4 separate immovable properties in Lafayette
Parish located at 209 Odile Street, 303 Doc Duhon Street, 508 West
Alexander Street, and 302 Zilia Street (collectively, the "GCB
Properties").
The Debtor filed this bankruptcy on April 13, 2021, the day before
a scheduled sheriff sale on the GCB Properties. GCB has a secured
claim valued at $134,297 as of the petition date.
GCB claims that the Debtor's schedules include a tract of land
located at 1744 West Old Spanish Trail in St. Martin Parish,
Louisiana and the Debtor's disclosure statement seems to omit this
tract. In light of the Debtor's failure to disclose this asset in
its disclosure statement or deal with it in a fair and equitable
manner in its plan, the disclosure statement should not be approved
and the proposed plan should not be confirmed.
GCB asserts that the Combined Plan does not account for any
expenses other than proposed payments to secured creditors of
$4,362.94 per month and Priority Tax Claims payments of $55.67 per
month. Even if the Debtor were to have 100% occupancy and 100%
collections (which it has not done in the last year and likely has
never achieved), its Plan is bankrupt if all likely costs and
expenses are included.
GCB further asserts that the Debtor has not only failed to disclose
its necessary operational expenses in its disclosure statement, but
it has failed to account for payment of these expenses in the plan.
Given the lack of information and lack of support for feasibility,
this proposed plan should not be confirmed.
GCB points out that the plan is not fair and equitable to GCB
because the proposed interest rate does not sufficiently take the
risk of this loan into account and the plan seeks to extend the
Note 7 years. Moreover, the plan proposes a balloon payment without
evidence or indication of why that is appropriate or how the Debtor
will satisfy that balloon payment.
In addition, Penny Camel Duplechien, the sole member of the Debtor
and the guarantor of the Note, has now filed a Chapter 13 personal
bankruptcy – her second in approximately 3 months. She is
effectively seeking to obtain a discharge of her guaranty of the
Note, which places even greater risk of ultimate non-payment on the
Note and further evidences the fact that arbitrary reliance on the
original 2017 contract rate is misplaced.
GCB states that the original Note had a 5 year term that would have
matured in 2022. The Debtor proposes to cram down an additional 7
years on GCB in the midst of a period of significant financial and
inflationary uncertainty. The debtor has provided no evidence of
why a 7 year term is reasonable or appropriate. As such, the
proposed plan should not be confirmed.
Moreover, well before this case was filed, the Note payable to GCB
was in default and was incurring interest at the contract rate of
18%. As of the filing of the case, GCB's claim was $134,297. At
that time, the Debtor valued the GCB Properties at $200,000. Since
that time, the Debtor has increased the value of the GCB Properties
to $235,000. GCB is oversecured.
An oversecured creditor, like GCB, "shall be allowed" post petition
interest as provided in the contact and the attorney's fees and
expenses incurred post-petition. The Debtor has failed to provide
for payment of any post-petition amounts even though the Combined
Plan shows on its face that GCB is oversecured.
A full-text copy of GCB's objection dated Nov. 30, 2021, is
available at https://bit.ly/3okOdPk from PacerMonitor.com at no
charge.
Counsel for Gulf Coast Bank:
OTTINGER HEBERT, L.L.C.
William H.L. Kaufman – Bar Roll No. 29929
Ryan P. McAlister – Bar Roll No. 37788
P. O. Drawer 52606
1313 West Pinhook Road (70503)
Lafayette, Louisiana 70505-2606
Telephone: (337) 232-2606
Facsimile: (337) 232-9867
About PCDM Properties
PCDM Properties, LLC, filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. La. Case No. 21
50212) on April 13, 2021. At the time of filing, the Debtor
disclosed $500,001 to $1 million in assets and $100,001 to $500,000
in liabilities. The Keating Firm, APLC serves as the Debtor's
legal counsel.
PEAK PROPERTY: $340K Sale of Rubio Property Denied W/o Prejudice
----------------------------------------------------------------
Judge Kimberley H. Tyson of the U.S. Bankruptcy Court for the
District of Colorado denied without prejudice Peak Property Group,
LLC's sale of its four single-family residential properties in
Colorado and California, including 52355 Avenida Rubio, in La
Quinta, California, to Nava and Rudy Aparicio for $340,000, "as
is," and free and clear of liens.
The Court finds no evidence as to any improper motive, the
negotiations between Ms. Nava and the Debtor were conducted at
arms'-length, and accurate and reasonable notice was afforded to
all parties in interest. Based upon the apparent condition of the
Rubio Property, Ms. Nava's improvements (for which she may have an
equitable lien) and her continued occupancy, a sale of the Rubio
Property to Ms. Nava may be appropriate.
The problem is, the Court was presented with no evidence as to the
current market value of the Rubio Property which would serve as a
benchmark from which to apply any appropriate downward deviation.
While both USA Loans, LLC and Mr. Gene Haun assert the property is
worth between $380,000 and $415,000, they, too, failed to produce
any evidence to support their valuations.
The Settlement Agreement also is inextricably intertwined with the
proposed sale. In light of the Court's ruling on the Sale Motion,
the Court will not bind Ms. Nava to an agreement pursuant to which
she is burdened with the downside of her agreement without
receiving upside of obtaining ownership of the Rubio Property.
To the extent Debtor wishes to employ David Dufresne of
Solutions4realestate, Inc. to perform services in connection with
the escrow or closing of such sale, the Debtor may seek to employ
Mr. Dufresne in any renewed motion.
About Peak Property Group
Peak Property Group LLC owns four properties in Denver, Colo., and
La Quinta, Calif., having an aggregate comparable sale value of
$1.09 million.
Peak Property Group sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Colo. Case No. 20-16088) on Sept. 12,
2020. Kip Korthuis, sole member, signed the petition. At the time
of the filing, the Debtor disclosed $1,102,686 in assets and
$1,685,781 in liabilities. Judge Kimberley H. Tyson oversees the
case. Shilliday Law, PC is the Debtor's legal counsel.
PETROTEQ ENERGY: Bellridge Capital Reports 4.7% Equity Stake
------------------------------------------------------------
Bellridge Capital, LP disclosed in an amended Schedule 13G filed
with the Securities and Exchange Commission that as of Nov. 19,
2021, it beneficially owns 30,337,273 shares of common stock of
Petroteq Energy Inc., which represent 4.7 percent of the shares
outstanding. A full-text copy of the regulatory filing is
available for free at:
https://www.sec.gov/Archives/edgar/data/0001561180/000179699321000015/petroteq13Gamd.txt
About Petroteq Energy Inc.
Petroteq Energy Inc. -- www.Petroteq.energy -- is a clean
technology company focused on the development, implementation and
licensing of a patented, environmentally safe and sustainable
technology for the extraction and reclamation of heavy oil and
bitumen from oil sands and mineable oil deposits. Petroteq is
currently focused on developing its oil sands resources at Asphalt
Ridge and upgrading production capacity at its heavy oil extraction
facility located near Vernal, Utah.
Petroteq reported a net loss and comprehensive loss of $12.38
million for the year ended Aug. 30, 2020, compared to a net loss
and comprehensive loss of $15.78 million for the year ended Aug.
31, 2019.
Vancouver, British Columbia, Canada-based Hay & Watson, the
Company's auditor since 2012, issued a "going concern"
qualification in its report dated Dec. 15, 2020, citing that the
Company has had recurring losses from operations and has a net
capital deficiency, which raises substantial doubt about its
ability to continue as a going concern.
PHRG INTERMEDIATE: Moody's Gives First Time B1 CFR, Outlook Stable
------------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to the proposed
senior secured first lien credit facilities of PHRG Intermediate,
LLC (aka "Power Home Remodeling" or "Power Home"), including a $375
million first lien term loan and $25 million revolving credit
facility. In addition, Moody's assigned a B1 Corporate Family
Rating and B1-PD Probability of Default Rating to Power Home. The
outlook is stable.
The proceeds from the $375 million term loan will be used to fund a
dividend to the company's shareholders. This is the first time
Moody's has assigned ratings to Power Home Remodeling.
Assignments:
Issuer: PHRG Intermediate, LLC
Corporate Family Rating, Assigned B1
Probability of Default Rating, Assigned B1-PD
Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Assigned B1
(LGD3)
Outlook Actions:
Issuer: PHRG Intermediate, LLC
Outlook, Assigned Stable
RATINGS RATIONALE
Power Home Remodeling's B1 CFR reflects favorable fundamentals that
support investment in home improvement, including the desire to
increase home values. Moody's expect the overall building products
sector to continue to benefit from a shift in consumers'
discretionary spending to home improvement projects over the next
12 to 18 months as many employees continue to regularly work from
home as a result of the coronavirus pandemic. All of Power Home's
revenues are derived from the repair and remodel segment, where
demand tends to be less volatile through market cycles as compared
with new housing construction. The rating also reflects solid
credit metrics, including pro forma adjusted Debt/EBITDA of 3.7x
and adjusted EBITA/Interest Expense of 4.8x for the twelve month
period ended June 30, 2021. Moody's expects leverage to improve to
2.9x and interest coverage to 6.0x by year-end 2022 as a result of
earnings improvement. Moody's forecast considers the realization of
revenue currently in backlog and maturation of recently opened
territories.
These factors are offset by supply chain disruption, which can
impact project cycle times and create earnings volatility. Further
exacerbating these issues are the company's high supplier
concentration, with about 70% of product purchases coming from two
suppliers. Power Home is one of the largest customers for most of
its suppliers which provides efficiencies of scale and helps
counterbalance some of these risks. In addition, the company does
have concentration in Northeast and Midwest states, which can
create some seasonality in earnings due to inclement weather. The
company has been steadily growing in southern markets, including in
Texas and Florida, which helps offset some of this risk.
Power Home's liquidity is expected to be good over the next 12 to
18 months and considers Moody's forecast of positive free cash flow
of about $55 million in 2022 and $74 million in 2023. Liquidity is
supported by the expectation of full availability under the new $25
million revolver over Moody's forecast horizon. The revolver is
subject to a springing maximum first lien net leverage ratio to be
set at a 35% cushion to projected consolidated EBITDA, as
calculated in the sponsor's financial model. This covenant will
only be tested when revolver utilization exceeds 35%, which Moody's
does not expect the company to trigger over the next 12 to 18
months. Alternative liquidity sources are limited as the majority
of the company's assets are encumbered by secured debt.
Moody's governance considerations reflect that Power Home will
maintain a measured approach to its financial policy and not
aggressively increase leverage. The company is expected to pay out
a regular, but modest, distribution to its shareholders to cover
tax liabilities, which will be funded with free cash flow. The
company has funded discretionary one-time shareholder dividends
with debt in the past, and has a track record of repaying this
debt, and Moody's expects this trend to continue.
The B1 rating on the company's term loan and revolver is at the
same level as the CFR and results from their position as the
preponderance of debt in Power Home's capital structure.
The stable outlook reflects Moody's expectations of continued
strong demand within the repair and remodel segment of housing as
well as Power Home's maintenance of good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of the rating could result from a sustained organic
growth in revenues and earnings, EBITA margins sustained above 15%,
debt to EBITDA sustained below 4.0x and free cash flow to debt
sustained above 10%. An upgrade would also require maintenance of a
conservative financial policy and good liquidity profile.
A downgrade would likely result should the company experience
sustained revenue and EBITA margin declines, if debt to EBITDA is
sustained above 5.0x, or if the company experiences a weakening in
its liquidity profile. Ratings could also be downgraded if the
company engages in aggressive financial policies including debt
funded acquisitions and shareholder returns.
As proposed, the new first lien credit facilities are expected to
provide covenant flexibility that if utilized could negatively
impact creditors. Notable terms include the following:
Incremental Facilities
Incremental debt capacity up to the greater of $100 million and
100% of consolidated EBITDA, plus unlimited amounts subject to
4.30x first lien net leverage ratio (if pari passu secured).
Amounts up to $100 million may be incurred with an earlier maturity
date than the initial term loans.
Unrestricted Subsidiary Asset Transfers
The credit agreement permits the transfer of assets to unrestricted
subsidiaries, up to the carve-out capacities, subject to "blocker"
provisions which prohibit material intellectual property and any
material strategic assets from being transferred to unrestricted
subsidiaries.
Guarantee Releases
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.
Subordination/Anti-subordination
The credit agreement provides some limitations on up-tiering
transactions, including the requirement that each lender directly
and adversely affected consents to any amendment with respect to
contractual subordination of the credit facilities in right of
payment or of the liens on all or substantially all of the
Collateral prior to the occurrence of a bankruptcy event of
default.
The proposed terms and the final terms of the credit agreement may
be materially different.
Power Home Remodeling, headquartered in Philadelphia, PA, is an
exterior remodeling company serving 17 markets across the U.S. The
company is privately owned by the founder and co-CEOs.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
PODS LLC: $150MM Term Loan Add-on No Impact on Moody's B2 CFR
-------------------------------------------------------------
Moody's Investors Service said that PODS LLC's ratings, including
the B2 senior secured and B2 corporate family rating, and stable
outlook are unaffected at this time following the company's
proposed $150 million incremental first lien term loan. Proceeds
will be used to fund franchise acquisitions and for general
corporate purposes. Following the fungible add-on, the aggregate
size of the company's first lien term loan (due 2028) will increase
to about $1.4 billion.
Moody's views the transaction as modestly credit negative as
debt/EBITDA is expected to increase around a quarter-turn to about
4.8x on a pro forma basis (inclusive of acquired franchise
earnings) for the twelve months ended September 2021. Despite this
uptick in leverage, PODS has materially reduced leverage following
its dividend recapitalization in March 2021, which at the time
resulted in adjusted debt/EBITDA of about 6x. Stronger than
expected earnings, driven by a favorable home sales environment,
has contributed to the deleveraging.
For 2022, Moody's expects revenue growth to moderate toward the
high-single digit range and for PODS to maintain its strong margin,
as it has thus far in 2021 despite increased costs. As a result,
Moody's expects debt/EBITDA to improve to the mid-4x range by the
end of next year. In addition, Moody's anticipates PODS to maintain
adequate liquidity through 2022 with free cash flow to debt of at
least 5%.
PODS LLC (Portable On Demand Storage) is a leader in
consumer-focused containerized moving and storage. The company
offers a full range of services including moving within or between
cities, storage at a customer's site and storage at one of PODS'
warehouses. Revenue for the twelve months ended September 30, 2021
was approximately $1.06 billion.
PRE-PAID LEGAL: Moody's Affirms B2 CFR & Rates New 1st Lien Debt B1
-------------------------------------------------------------------
Moody's Investors Service affirmed Pre-paid Legal Services, Inc's
(dba "LegalShield") B2 corporate family rating and B2-PD
probability of default rating. Moody's assigned B1 ratings to the
company's proposed $75 million senior secured first lien revolver
due 2026 and $950 million senior secured first lien term loan due
2028 and a Caa1 rating to its proposed $300 million senior secured
second lien term loan due 2029. The outlook is stable.
The net proceeds from the proposed debt, in addition to cash on
hand, will be used to repay the existing rated debt and fund a $415
million distribution to equity holders. The ratings on the existing
debt will be withdrawn when they are repaid or cancelled.
The action reflects Moody's expectations of revenue growth,
improved margins and strong free cash flow that will support
deleveraging. Social and governance factors were key considerations
in the rating action. Moody's believes that increasing digitization
of legal services via online platforms will support demand for
LegalShield's products. There is social risk from the need for the
company to safeguard private and sensitive customer information; a
data breach could be financially harmful to the company. Governance
is a risk in Moody's view given the anticipation of aggressive
financial policies typical of private equity sponsor controlled
companies.
Affirmations:
Issuer: Pre-Paid Legal Services, Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Assignments:
Issuer: Pre-Paid Legal Services, Inc.
Gtd Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3)
Gtd Senior Secured 1st Lien Revolving Credit Facility, Assigned B1
(LGD3)
Gtd Senior Secured 2nd Lien Term Loan, Assigned Caa1 (LGD6)
Outlook:
Issuer: Pre-Paid Legal Services, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
LegalShield's B2 CFR reflects: 1) the company's very high financial
leverage with pro forma debt-to-EBITDA of 8.0x (Moody's adjusted
and pro forma for the contemplated transaction) for the trailing
twelve months ended September 30, 2021; 2) aggressive financial
policies given its private equity ownership, as evidenced by
frequent debt financed dividends; and 3) a relatively modest
revenue base of approximately $550 million expected for 2021.
The ratings also reflects: 1) a predictable subscription based
revenue stream from a large membership base and a business model
that is less vulnerable to a deteriorating economic environment; 2)
Moody's expectations for continued modest growth in memberships and
revenues as a result of the company's marketing and retention
strategies; 3) a diversified sales channel mix, including business
solutions, network, and consumer direct; and, 4) a track record of
solid free cash flow generation that has enabled moderate voluntary
debt repayments.
LegalShield operates in the online legal services industry and
enjoys good name recognition and brand awareness. The company has
been able to grow its membership base and has good visibility to
revenue, supported by the highly recurring subscription nature of
its revenue stream. The company has also invested in increasing the
proportion of new sales that originates from the direct-to-customer
channel and the benefits channel, which have a lower customer
acquisition cost as compared to the network channel and as a result
such subscriptions are more profitable. In the network channel
plans and supplements are sold to individuals though an independent
salesforce. In addition, the company has been able to institute
prices increases on existing customers that has so far yielded very
little churn of less than one percentage point. There is however
uncertainty that such low churn numbers will exist as the price
increases are implemented on a larger portion of its subscription
base. LegalShield also operates in an industry that includes
several service providers and barriers to entry can be low.
Although other online legal service providers tend to specialize in
certain areas, there is some overlap with LegalShield.
Moody's expects LegalShield to generate revenue growth in the
11%-14% area for the next few years while improving EBITDA margins
to the 30%+ area. The drivers for revenue growth include higher
pricing for subscription and growth in new premium sales that
exceeds any premium churn. The focus on increasing the proportion
of new premium that comes from the benefits and direct to customer
channels will also help in improving margins. Moody's expects
LegalShield to continue to generate good free cash flow, with free
cash flow as a percentage of debt maintained at or above 6% over
the next 12 to 18 months, which is strong compared to many other
services issuers also rated in the B2 CFR category and a supporting
factor for its credit profile. Provided the company refrains from a
debt funded acquisition or additional dividend recapitalization,
Moody's continues to expect financial leverage to decline to around
6.0x in 2022, driven by earnings growth and some debt repayment.
LegalShield's liquidity profile is considered as good, supported by
the proposed $75 million revolving credit facility which is
expected to be undrawn at closing and fully available, and $50
million of cash on the balance sheet pro forma for the transaction.
Cash flow from operations is expected to be in the $35 million area
for 2021 and $125 million for 2022. Free cash flow is expected to
be around $100 million over the next 12-18 months, driven by EBITDA
growth and assuming no additional distributions or acquisitions.
Moody's expects that if the company executes bolt-on acquisitions,
they would be funded primarily with cash.
Social and governance factors are key considerations in Moody's
assessment of the creditworthiness of LegalShield. Under Moody's
ESG framework, social factors such as the increasing digitization
and accessibility of services via online platforms will be
tailwinds to LegalShield since expectations for growth are
dependent on expanding this accessibility to consumers seeking
legal advice. The risks associated with having access to private
and confidential information is a credit risk in the framework.
LegalShield could suffer impairment to its earnings potential if
information leakage causes customers to cancel their subscriptions.
Moody's believes the company mitigates this risk via internal risk
management. Under Moody's governance framework there is credit risk
that stems from private equity ownership and aggressive financial
policies. Debt funded distributions and a tolerance for high
leverage are features of its financial policy that are a credit
risk in Moody's view. However, Moody's also notes that the company
has made voluntary reductions to debt in the past, beyond the
required amortization.
The ratings for the individual debt instruments incorporate
LegalShield's overall probability of default, reflected in the
B2-PD, and the loss given default assessments for the individual
instruments. The senior secured first lien credit facilities are
rated at B1, one notch higher than the B2 CFR. The B1 senior
secured first lien instrument rating reflects their relative size
and senior position ahead of the senior secured second lien term
loan that would drive a higher recovery for senior secured first
lien debt holders in the event of a default. LegalShield's senior
secured second lien term loan is rated at Caa1, which is two
notches below the B2 CFR, reflecting its junior position in the
capital structure.
As proposed, the new first lien credit facilities are expected to
provide covenant flexibility that if utilized could negatively
impact creditors. Notable terms include the following: (1)
incremental facilities up to (a) the greater of (x) $179.0 million
and (y) 100% of trailing four quarter Consolidated EBITDA; plus (b)
an amount equal to the unused portion of the general debt basket;
plus (c) additional amounts subject to first lien leverage ratio of
5.25x (if pari passu secured). In addition, amounts of up to the
greater of $358.0 million and an amount equal to 200% of
Consolidated EBITDA on a pro forma may be incurred with an earlier
maturity date than the initial term loans. (2) There are no express
"blocker" provisions which prohibit the transfer of specified
assets to unrestricted subsidiaries; such transfers are permitted
subject to carve-out capacity and other conditions. (3)
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, with no
explicit protective provisions limiting such guarantee releases.
(4) There are no express protective provisions prohibiting an
up-tiering transaction. The proposed terms and the final terms of
the credit agreement may be materially different.
The stable outlook reflects Moody's expectation that LegalShield
will maintain its solid market position and continue to achieve
revenue growth and improving margins. Churn rates are not expected
to increase significantly from historical levels as a result of
price increases and demand for legal services is expected to
continue to be stable. The outlook assumes that the company will
continue to delever as the earnings base increases, with free cash
flow to debt remaining strong over the projection period. The
stable outlook does not incorporate any additional distributions
over the projection period, whether debt funded or via cash flow,
until meaningful deleveraging has been achieved. No large
acquisitions are incorporated into the stable outlook. Importantly
the stable outlook assumes that there is no upsize to the amount of
distributions that is contemplated in the proposed transaction.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if revenue and memberships grow
solidly over a multi-year period; the company exercises
conservative financial policies with respect to shareholder
distributions; and legal and regulatory risks remain manageable.
Additionally, an upgrade would require a material improvement in
financial strength metrics, including, adjusted debt-to-EBITDA
sustained below 4.5x and free cash flow-to-debt in the high single
digits.
The ratings could be downgraded if memberships and revenues
decline, resulting in deteriorating operating performance or
liquidity and stress on key financial strength metrics, including
debt-to-EBITDA, free cash flow-to-debt, or EBITA-to-interest
coverage. Specifically, debt-to-EBITDA sustained above 6.0x,
EBITA-to-interest sustained below 1.5x, or a material deterioration
in free cash flow would cause negative rating pressure. An
acceleration of aggressive financial policies, including increases
in leverage to fund dividend payments, or legal or regulatory
developments that have a material adverse effect on the company's
business model or financial position, could also pressure the
ratings.
LegalShield, headquartered in Ada, Oklahoma, provides
subscription-based legal insurance and identity theft protection
solutions to businesses and individuals through an outsourced
distribution and service model. LegalShield is majority owned by
affiliates of private equity sponsor Stone Point Capital. The
company generated revenue of $515 million for the trailing twelve
months ended September 31, 2021.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
PUBLIUS VALERIUS: Unsecureds Will Get 100% of Claims in Plan
------------------------------------------------------------
Publius Valerius Publicola, LLC, d/b/a Howard Developments filed
with the U.S. Bankruptcy Court for the Southern District of Texas a
Disclosure Statement describing Plan of Reorganization dated Dec.
2, 2021.
Debtor is an LLC that owns some undeveloped property in Harris
County, Texas and has managed its financial affairs prior to and
during the bankruptcy. During the two years prior to the date on
which the bankruptcy petition was filed, the company has managed
its financial affairs. After the effective date of the order
confirming the Plan, it will continue to manage its own financial
affairs.
The property was listed and on the market when COVID-19 shut down
all sales opportunities. The land stayed empty throughout the
pandemic and the financier ultimately sold the note to an investor
who intended to foreclose. In the post-pandemic environment, a
viable offer was received thirty-one days after listing and is
scheduled to close at a value that fulfills all debt obligations
for the LLC.
This Plan of Reorganization proposes to pay creditors of the Debtor
from the sale of the real property located at 0 Stacy Road, Harris
County, Texas, or as follows: RES A BLK 1 STACEY ROAD STORAGE
(Parcel Number 1501510010001). This Plan provides for classes of
administrative creditors, secured creditors, priority creditors,
and unsecured creditors.
Class 3(a) – Secured Creditors:
* SV Capital Partners LLC – This creditor is owed
approximately $428,067.51 for a mortgage against the real property
located at 0 Stacy Road, Harris County, Texas, or as follows: RES A
BLK 1 STACEY ROAD STORAGE (Parcel Number 1501510010001). There
should also be additional post-petition interest owed to this
creditor at a per diem of $175.81 as of December 2, 2021. The sale
of the real property should close between December 13-18, 2021 and
this creditor will be paid in full what it is owed.
* KFW Surveying, LLC – This creditor is owed a secured claim
in the amount of $24,331.72 which includes principal and interest
and attorney’s fees as of plus post—judgment interest at the
rate of 18% per annum plus court costs. The sale of the real
property should close between December 13-18, 2021 and this
creditor will be paid in full what it is owed. This class is
impaired.
Class 3(b) consists of Secured Creditors Harris County, et al. This
creditor is owed a secured claim in the amount of $15,177.36. The
Debtor's sales contract with the Purchaser of the real property
requires the Purchaser to pay the 2021 ad valorem taxes at closing
mid-December 2021. This creditor shall retain all liens it
currently holds, whether for pre-petition tax years or for the
current tax year, on any real property of the Debtor until it
receives payment in full of all taxes and interest owed to it under
the provisions of this Plan, and its lien position shall not be
diminished or primed by any Exit Financing approved by the Court in
conjunction with the confirmation of this Plan. This class is not
impaired.
General unsecured claims are not secured by property of the estate
and are not entitled to priority under § 507(a) of the Code. The
total general unsecured claims are approximately $248,248.30. The
allowed general unsecured creditors should be paid 100% of their
claims in full after the approval of this plan and the closing on
the sale of the real property.
Payments and distributions under the Plan will be funded from the
sale of the real property located at 0 Stacy Road, Harris County,
Texas, or as follows: RES A BLK 1 STACEY ROAD STORAGE (Parcel
Number 1501510010001). As to a default under the plan, any creditor
remedies allowed by 11 U.S.C. § 1112(b)(4)(N) shall be preserved
to the extent otherwise available at law.
In addition to any rights specifically provided to a claimant
treated pursuant to this Plan, a failure by the Reorganized Debtor
to make a payment to a creditor pursuant to the terms of this Plan
shall be an event of default as to such payments if the payment is
not cured within 30 days after service of a written notice of
default from such creditor, then such creditor may exercise any and
all rights and remedies under applicable non bankruptcy law to
collect such claims or seek such relief as may be appropriate in
the United States Bankruptcy Court.
A full-text copy of the Disclosure Statement dated Dec. 2, 2021, is
available at https://bit.ly/3do7toC from PacerMonitor.com at no
charge.
Attorneys for Debtor:
Margaret M. McClure, Esq.
25420 Kuykendahl Road, Suite B300-1043
The Woodlands, TX 77375
Telephone: (713) 659-1333
Facsimile: (713) 658-0334
Email: margaret@mmmcclurelaw.com
About Publius Valerius Publicola
Publius Valerius Publicola, LLC sought protection under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Texas Case No. 21-32258) on
July 3, 2021. At the time of the filing, the Debtor disclosed total
assets of up to $1 million and total liabilities of up to $500,000.
Judge Christopher M. Lopez oversees the case. Margaret M. McClure,
Esq., serves as the Debtor's bankruptcy attorney.
REHOBOTH PIPELINE: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Rehoboth Pipeline Construction Services, LLC
2296 Flint Dr
Washington, PA 15301-7760
Business Description: Rehoboth Pipeline Construction Services
offers a comprehensive list of gas and oil
construction services.
Chapter 11 Petition Date: December 2, 2021
Court: United States Bankruptcy Court
Western District of Pennsylvania
Case No.: 21-22573
Debtor's Counsel: Renee M. Kuruce, Esq.
ROBLETO KURUCE, PLLC
6101 Penn Ave Ste 201
Pittsburgh, PA 15206-3956
Tel: (412) 925-8194
Email: rmk@robletolaw.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $1 million
The petition was signed by Christopher P. Walker as managing
member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/7YTXADQ/Rehoboth_Pipeline_Construction__pawbke-21-22573__0001.0.pdf?mcid=tGE4TAMA
REVINT INTERMEDIATE: Incremental Debt No Impact on Moody's B3 CFR
-----------------------------------------------------------------
Moody's Investors Service said that Revint Intermediate II, LLC's
("Revint", doing business as "Cloudmed") plan to raise $213 million
of incremental senior secured first-lien term loan debt due 2027 to
fund an acquisition is a credit-negative development, since it will
significantly increase Moody's-adjusted debt-to-EBITDA leverage.
However, the financing has no impact on Cloudmed's ratings,
including the B3 corporate family rating, B3-PD probability of
default rating, and B3 senior secured ratings, or the stable
outlook, at this time.
Net proceeds from the proposed add-on term loan will be used to
acquire par8o, a very small but smartly growing, complementary
revenue integrity business. par8o's initial operational impact on
Cloudmed will be minimal, given its tiny revenue scale, while the
acquisition substantially increases Moody's-adjusted pro-forma
leverage, to 7.7 times from 6.2 times as of September 30, 2021.
Moody's leverage measure is somewhat conservative in that Moody's
expense capitalized software costs. Without the expensing, leverage
measures would be a half turn better, or roughly 7.2 times
pro-forma for the par8o acquisition.
Prior to this latest acquisition, Cloudmed had delevered to right
where Moody's anticipated it to be in late 2021, after the October
2020 acquisition of similarly sized revenue integrity peer Triage
Consulting Group ("Triage") had brought leverage to close to 7.0
times. Revenue growth through 2021, meanwhile, has surpassed
Moody's expectations, and Moody's now expects Cloudmed to realize
mid-teen-percentage growth in 2022, bringing its revenue scale to
at least $400 million.
The $205 million purchase price for par8o represents an outsized
acquisition multiple for a company with barely $20 million in
revenue and approximately $10 million in EBITDA. The combination of
par8o's software with Cloudmed's platform is contemplated to
capture savings for healthcare-provider clients involved with the
Federal government's 340B program. The program ensures that drug
manufacturers who wish to participate in the Medicare program offer
discounts to certain healthcare providers such as qualifying
hospitals, children's care hospitals, and critical access
hospitals. par8o's services include reviewing contract pharmacy
claims to ensure providers are benefiting from 340B pricing.
Cloudmed has a small but quickly growing revenue scale, high but,
Moody's again expect, moderating financial leverage, and
integration risks resulting from an active, debt-driven acquisition
platform. It has largely completed the integration of its late-2020
merger with Triage. Moody's expects a slowdown in the pace of
acquisitions going forward and, accordingly, fewer addbacks to
earnings measures that have lessened Cloudmed's quality of
earnings. Additionally, acquisition-related retention bonuses and
earnout payments, neither of which Moody's include in Moody's
leverage calculation and which have cut into free cash flow in the
past, are largely behind the company.
Cloudmed's liquidity profile remains adequate, as reflected by
healthy cash balances that have averaged nearly $50 million for the
past several quarter-ends, and a $75 million revolver (expiring in
2025) that is used moderately to supplement free cash flow. There
was $27 million outstanding under the revolver as of September 30,
2021.
Atlanta, GA-based Revint Intermediate II, LLC provides revenue
cycle management services, focusing on healthcare claims management
and patient payment solutions for physicians' offices and small to
large hospitals and hospital systems. Moody's expects Revint to
generate 2022 revenues of at least $400 million, including the
par8o acquisition, representing a high-teen-percentage growth rate.
After the October 2020 closing of the merger between Revint and
Triage, the company rebranded itself as Cloudmed. Private equity
firm New Mountain Capital LLC owns Cloudmed.
RIVERROCK RECYCLING: Wins Cash Collateral Use Thru Jan 2022
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Ohio has
approved an agreement between Riverrock Recycling & Crushing, LLC
and People's United Equipment Finance Corp. that allows the Debtor
to continue using cash collateral through January 31, 2022.
The Court says the terms of a prior order entered on August 17,
2021, will remain in full force and effect.
A copy of the order is available at https://bit.ly/3xRnPzq from
PacerMonitor.com.
About Riverrock Recycling & Crushing, LLC
Riverrock Recycling & Crushing, LLC, d/b/a River Rock, is a
privately held company in the portable crushing business operating
in Dayton, Ohio. The company filed a Chapter 11 petition (Bankr.
S.D. Ohio Case No. 21-31385) on August 13, 2021.
On the Petition Date, the Debtor estimated $500,000 to $1,000,000
in assets and $1,000,000 to $10,000,000 in liabilities. The
petition was signed by Orville E. Lykins, operations manager.
Judge Guy R. Humphrey is assigned to the case. James A. Coutinho
has been appointed as Subchapter V Trustee for the Debtor.
The Law Offices of Ira H. Thomsen serves as the Debtor's counsel.
People's United Equipment Finance Corp. is represented by Mark W.
Sandretto, Esq. at Eastman & Smith Ltd.
ROBERT D. SPARKS: $181K Sale of Two Tracts of Property Approved
---------------------------------------------------------------
Judge Robert L. Jones of the U.S. Bankruptcy Court for the Northern
District of Texas authorized Robert Dial Sparks' sale of the
following described property:
1. A house and 20 acres to Mike Ware, P.O. Box 352, Farwell,
Texas 79325, and more particularly described as follows, to wit: A
20-acre tract of land out of the NE/4 of Section 3, Block A,
Capitol Syndicate Subdivision, Parmer County, Texas, described by
metes and bounds and located at 590 FM 2290, in Bovina, Texas
79009.
2. An approximate 141.37 acres of land to Jake and Tenille
Ware, 1489 CR 5, Bovina, Texas 79008, the following described
property, to wit: All of the NE/4 of Section 3, Block A, Capitol
Syndicate Subdivision, Parmer County, Texas, save and except a
20-acre tract in the NE/4 and containing 141.37 acres more or less.
The sale of the house and the 20-acre tract of land to Mike Ware
will be for $79,000 with the closing to be held at Farwell Abstract
and Title Company on Nov. 10, 2021. From the sales price there will
be deducted therefrom the cost of an owner's policy of title
insurance and the customary and usual closing costs as determined
by Farwell Abstract and Title Co.
The sale of the 141.37-acre to Jake and Tenille Ware will be for
$101,786.40, the closing to be held at Farwell Abstract and Title
Company on Nov. 30, 2021. The sales price will have deducted
therefrom the cost of an owner's policy of title insurance and the
customary and usual closing costs as determined by Farwell
Abstract. There will also be deducted from the sales price a 6%
broker's fee payable on closing to J.D. Sudderth Realty, Inc. and
Daren Sudderth.
Mr. Sparks is authorized to execute any and all instruments and
documents related to the above closings as determined to be
necessary and required by Farwell Abstract.
A hearing on the Motion was held on Nov. 3, 2021, at 2:30 p.m.
Robert Dial Sparks sought Chapter 11 protection (Bankr. N.D. Tex.
Case No. 20-50079) on May 1, 2020. The Debtor tapped Byrn R.
Bass,
Jr., Esq., as counsel.
SEARS HOLDINGS: $306K Sale of Cheboygan Property to Princess Okayed
-------------------------------------------------------------------
Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern
District of New York authorized Sears Holdings Corp. and its
affiliated debtors to sell a parcel of land commonly known as 1131
E. State Street in the City of Cheboygan, Cheboygan County,
Michigan, to Princess Riverboats, LLC, for a purchase price of
$306,000.
On Oct. 28, 2021, the Debtors hosted a telephonic auction for the
Cheboygan Property via Zoom between Princess Riverboats and Third
Avenue Associates Inc. At the conclusion of the Auction, Princess
Riverboats was named the winning bidder for the Cheboygan
Property.
Princess Riverboats is the Successful Bidder for the Cheboygan
Property, and the Debtors are authorized to take all steps
necessary to close the proposed sale to Princess Riverboats on the
terms set forth at the Auction. Such sale will be governed by the
Order establishing De Minimis Asset Sale Procedures.
About Sears Holdings Corp.
Sears Holdings Corporation (OTCMKTS:
SHLDQ)--http://www.searsholdings.com/-- began as a mail ordering
catalog company in 1887 and became the world's largest retailer in
the 1960s. At its peak, Sears was present in almost every big mall
across the U.S., and sold everything from toys and auto parts to
mail-order homes. Sears claims to be is a market leader in the
appliance, tool, lawn and garden, fitness equipment, and
automotive
repair and maintenance retail sectors.
Sears and Kmart merged to form Sears Holdings in 2005 when they
had
3,500 US stores between them. Kmart emerged in 2005 from its own
bankruptcy.
Unable to keep up with online stores and other brick-and-mortar
retailers, a long series of store closings has left it with 687
retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin
Islands as of mid-October 2018. At that time, the Company employed
68,000 individuals, of whom 32,000 are full-time employees.
As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total
assets, $11.33 billion in total liabilities and a total deficit of
$4.40 billion.
Unable to cover a $134 million debt payment due Oct. 15, 2018,
Sears Holdings Corporation and 49 subsidiaries sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15,
2018. The Hon. Robert D. Drain is the case judge.
The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel;
M-III Partners as restructuring advisor; Lazard Freres & Co. LLC
as
investment banker; DLA Piper LLP as real estate advisor; and Prime
Clerk as claims and noticing agent.
The U.S. Trustee for Region 2 appointed nine creditors, including
the Pension Benefit Guaranty Corp., and landlord Simon Property
Group, L.P., to serve on the official committee of unsecured
creditors. The committee tapped Akin Gump Strauss Hauer & Feld LLP
as legal counsel; FTI Consulting as financial advisor; and
Houlihan Lokey Capital, Inc. as investment banker.
The U.S. Trustee for Region 2 on July 9, 2019, appointed five
retirees to serve on the committee representing retirees with life
insurance benefits in the Chapter 11 cases.
* * *
In February 2019, Bankruptcy Judge Robert Drain granted Sears
Holdings approval to sell the business to majority shareholder and
CEO Eddie Lampert for approximately $5.2 billion. Lampert's ESL
Investments, Inc., has won an auction to acquire substantially all
of Sears' assets, including the "Go Forward Stores" on a
going-concern basis. The proposal will allow 425 stores to remain
open and provide ongoing employment to 45,000 employees.
SECURE ACQUISITION: Moody's Assigns 'B3' CFR, Outlook Stable
------------------------------------------------------------
Moody's Investors Service assigned a B3 Corporate Family Rating and
B3-PD Probability of Default Rating to first time issuer Secure
Acquisition Inc., d/b/a Paragon Films ("Paragon"). Moody's also
assigned a B2 to the company's proposed first lien senior secured
credit facility, consisting of a $45 million revolver, $300 million
term loan and $45 million delayed-draw term loan, and a Caa2 to the
proposed $100 million second lien senior secured term loan.
Proceeds from the proposed term loan facilities, along with common
equity, will be used to finance the acquisition of Paragon by
private equity sponsor Rhone Group and pay related fees and
expenses.
"The building of new specialized film capacity to meet market
demand elevates execution risk and capital spending over the near
term, but our stable outlook reflects this new capacity as
supportive in generating cash flow and sustaining EBITDA margins
above 20%," said Scott Manduca, Vice President at Moody's.
Assignments:
Issuer: Secure Acquisition Inc.
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured 1st Lien Revolving Credit Facilty, Assigned B2
(LGD3)
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
Senior Secured 1st Lien Delayed Draw Term Loan, Assigned B2
(LGD3)
Senior Secured 2nd Lien Term Loan, Assigned Caa2 (LGD6)
Outlook Actions:
Issuer: Secure Acquisition Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
Paragon's B3 CFR reflects the company's small scale, single product
portfolio, and customer concentration. Pro forma the acquisition by
private equity sponsor, Rhone Group, leverage is high at an
estimated 7.5x, but expected to improve to about 6.2x by year end
2022 through organic growth. Execution risk is elevated as the
company plans to build out capacity to serve market demand,
resulting in a decline of free cash flow from a higher capital
expenditure spend over the near term. However, Moody's expect these
investments to improve free cash flow once completed.
The B3 rating also reflects the specialization of Paragon's film
products that command a high EBITDA margin per pound resulting in
an overall robust EBITDA margin. The company has developed the
material science capability to increase value-added stretch and
strength qualities of its films, by using less material and
incorporating sustainable properties. The company also has long
term relationships with its customers and revenue visibility as it
generates steady year over year volume growth to stable end
markets, including food and beverage, consumer products, and
rapidly growing e-commerce.
Moody's expects liquidity to be good, with full availability of its
$45 million revolver and delayed-draw term loan, but lower free
cash flow due to growth capital expenditure initiatives over the
near term that are expected to be additive to cash flow once
completed. The $45 million first lien delayed-draw term loan
expires 24 months after the closing date of the transaction
(December 2023) and can be used to fund capital expenditures,
acquisitions, pay acquisition related expenses, and repay revolver
borrowings related to acquisition or capital expenditure financing.
Borrowings under the first lien delayed draw term loan are not
necessary for current capacity expansion plans, which the company
intends to fund through organic free cash generation, but may be
utilized for incremental projects above what is outlined already
and future acquisitions. The first lien delayed draw term loan will
have the same maturity date as the first lien term loan of seven
years post the closing date of the transaction (December 2028).
Both first lien term loan and delayed-draw term loan do not contain
financial covenants.
The B2 rating on the first lien senior secured credit facility is
one notch above the CFR reflecting its superior position in the
capital structure and the loss absorption provided by second lien
debt. The Caa2 rating assigned to the second lien senior secured
term loan reflects its effective subordination to the first lien
senior secured credit facility.
Governance is a consideration given the private equity ownership of
the company. However, Moody's recognize the company does not intend
to employ an active growth through acquisition strategy. Instead,
the focus will be to continue expanding manufacturing capacity in
the North American market in which it operates to meet demand.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade in ratings would require improvement in credit metrics,
specifically adjusted debt-to-EBITDA sustained below 5.5x, free
cash flow-to-debt sustained above 3.5%, and maintenance of good
liquidity.
A downgrade in ratings will be considered if there is deterioration
in liquidity or a display of aggressive financial policy actions,
including large debt funded acquisitions and dividends that weaken
credit metrics. Specifically, Moody's would look for adjusted
debt-to-EBITDA sustained above 6.5x and sustained adjusted
EBTIDA-to-interest coverage of less than 2.0x.
Subject to changes since the marketing term sheet is preliminary,
an incremental first lien senior secured pari passu term loan
bucket of the greater of $60 million and 100% of pro forma
consolidated adjusted EBITDA from acquisitions and other
investments is allowed. For this to occur, the first lien net
leverage ratio needs to be equal to or less than 5.0x. In the case
of incremental first lien facilities secured on a junior basis to
the first lien facilities, the secured net leverage ratio needs to
be equal to or less than 7.0x. For incremental first lien
facilities that are unsecured to be issued, the total net leverage
ratio needs to be equal to or less than 7.25x. In addition, 100% of
cash proceeds from asset sales and casualty events, in excess of
$10 million per any single transaction and $15 million on an annual
basis, can be reinvested in the business or directed toward asset
sales within 18 months of receipt, among other conditions. This
requirement steps down to 50% and 0% when the first lien net
leverage ratio is 4.5x and 4.0x, respectively. The same mandatory
prepayment terms apply to the second lien senior secured term loan.
Both the first lien and second lien senior secured term loans do
not have financial covenants.
Headquartered in Broken Arrow, Oklahoma, Secure Acquisition Inc.
(d/b/a Paragon Films) is a manufacturer of high-performance and
ultra-high performance stretch films used to palletize goods for
storage and transit. Upon close of this transaction, the company
will be owned by global private equity sponsor, Rhone Group, and
will not publicly disclose financial information.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers Methodology
published in September 2020.
SEQUENTIAL BRANDS: $48.5M Sale of Assets to Centric Brands Approved
-------------------------------------------------------------------
Judge John T. Dorsey of the U.S. Bankruptcy Court for the District
of Delaware authorized Sequential Brands Group, Inc., and
affiliates to sell all or substantially all of their assets defined
in Asset Purchase Agreement to Centric Brands LLC or Assignee.
On the terms and subject to the conditions contained in the APA,
the Purchase Price for the Purchased Assets will consist of (a) an
amount in cash that, when combined with the Cash Consideration as
defined in, and payable under, that certain Asset Purchase
Agreement, by and among JJWHP, LLC and William Rast Licensing, LLC,
dated as of Oct. 28, 2021, equals $48.5 million and (b) the
assumption of the Assumed Liabilities.
he Motion is granted as provided in the Order, and entry into and
performance under, and in respect of, the Centric APA and the
consummation of the transactions contemplated thereby, including,
without limitation, the Sale Transaction and the assumption and
assignment of the Assumed Contracts is authorized and approved.
The Centric APA, all ancillary documents, the transactions
contemplated thereby, including, without limitation, the Sale
Transaction and the assumption and assignment of the Assumed
Contracts (but subject to the Buyer's rights with respect thereto
pursuant to the Centric APA) and all the terms and conditions
thereof, are approved.
Pursuant to Bankruptcy Code sections 105(a) and 363(f), the
Purchased Assets will be sold free and clear of all Claims,
Interests, and Encumbrances (other than any Permitted
Encumbrances), including, for the avoidance of doubt, the Secured
Lenders' Liens, with all such Claims to attach to the proceeds of
the Sale Transaction to be received by the Debtors.
Except as otherwise expressly provided in the Centric APA or the
Order, upon the Closing Date, the Debtors are authorized to (a)
assume each of the Assumed Contracts and assign the Assumed
Contracts, which may be subsequently modified at any time prior to
the date that is 21 days prior to the Closing Date and upon the
Buyer's delivery of written notice to the Debtors, to add or remove
certain contracts pursuant to the terms of the Centric APA, to the
Buyer free and clear of all Claims, Interests, and Encumbrances
(other than any Permitted Encumbrances); and (b) execute and
deliver to the Buyer such documents or other instruments as may be
reasonably requested by the Buyer to assign and transfer the
Assumed Contracts to the Buyer.
Subject to the "Payment in Full" of the Prepetition BAML
Obligations, the Debtors are authorized and directed to distribute
the consideration received by the Debtors from the sale of the
Purchased Assets as follows: first, to the holders of the DIP
Obligations as of the date of the initial funding under the DIP
Credit Facility until such time as the DIP Obligations are paid in
full in cash and all commitments to lend under the DIP Loan
Documents have been terminated, and second, to the Prepetition Term
B Agent for distribution to the holders of the Prepetition Term B
Obligations as of the Petition Date in accordance with the
Prepetition Term B Credit Agreement until the Prepetition Term B
Obligations have been paid in full in cash. The application of the
consideration from the sale of the Purchased Assets pursuant to the
immediately preceding sentence complies with the requirements of
the DIP Orders and the DIP Loan Documents and is supported by good,
sufficient and sound business reasons.
Notwithstanding the provisions of Bankruptcy Rules 6004(h) and
6006(d) or any applicable provisions of the Local Rules, this Order
will not be stayed after the entry thereof, but will be effective
and enforceable immediately upon entry, and the 14-day stay
provided in Bankruptcy Rules 6004(h) and 6006(d) is expressly
waived and will not apply. Time is of the essence in closing the
Sale Transaction and the Debtors and the Buyer intend to close the
Sale Transaction as soon as practicable.
All time periods set forth in the Order will be calculated in
accordance with Bankruptcy Rule 9006(a).
About Sequential Brands Group
Sequential Brands Group, Inc. (NASDAQ:SQBG), together with its
subsidiaries, owns various consumer brands. The New York-based
company licenses its brands for a range of product categories,
including apparel, footwear, fashion accessories, and home goods.
Sequential Brands Group and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11194) on Aug. 31,
2021. The company disclosed total assets of $442,774,937 and debt
of $435,073,539 as of Aug. 30, 2021.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Gibson, Dunn & Crutcher, LLP and Pachulski
Stang
Ziehl & Jones, LLP as legal counsel. Miller Buckfire & Co. and its
affiliate, Stifel Nicolaus & Co., Inc., serve as financial advisor
and investment banker. Kurtzman Carson Consultants, LLC, is the
claims agent and administrative advisor.
King & Spalding, LLP, is counsel to the debtor-in-possession
lenders (and the consenting lenders under the restructuring
support
agreement) while Morris, Nichols, Arsht & Tunnell, LLP serve as
the
DIP lenders' local counsel.
SEQUENTIAL BRANDS: $48.5MM Sale of All Assets to JJWHP Approved
---------------------------------------------------------------
Judge John T. Dorsey of the U.S. Bankruptcy Court for the District
of Delaware authorized Sequential Brands Group, Inc. and affiliates
to sell all or substantially all of the assets of William Rast
Licensing, LLC defined in Asset Purchase Agreement, to JJWHP, LLC
or Assignee.
On the terms and subject to the conditions contained in the William
Rast APA, the purchase price for the Purchased Assets will consist
of (a) an amount in cash that, when combined with the Cash
Consideration as defined in, and payable under, that certain Second
Amended and Restated Asset Purchase Agreement, by and among Centric
Brands LLC and Joe's Holdings LLC, dated as of Oct. 28, 2021,
equals $48.5 million; and (b) the assumption of the Assumed
Liabilities.
The Motion is granted as provided therein, and entry into and
performance under, and in respect of, the William Rast APA and the
consummation of the transactions contemplated thereby, including,
without limitation, the Sale Transaction and the assumption and
assignment of the Assumed Contracts is authorized and approved.
The William Rast APA, all ancillary documents, the transactions
contemplated thereby, including, without limitation, the Sale
Transaction and the assumption and assignment of the Assumed
Contracts (but subject to the Buyer's rights with respect thereto
pursuant to the William Rast APA) and all the terms and conditions
thereof, are approved.
Pursuant to Bankruptcy Code sections 105(a) and 363(f), the
Purchased Assets will be sold free and clear of all Claims,
Interests, and Encumbrances (other than any Permitted
Encumbrances), including, for the avoidance of doubt, the Secured
Lenders' Liens, with all such Claims to attach to the proceeds of
the Sale Transaction to be received by the Debtors.
Except as otherwise expressly provided in the William Rast APA or
the Order, upon the Closing Date, pursuant to Bankruptcy Code
sections 105(a), 363, and 365, the Debtors are authorized to (a)
assume each of the Assumed Contracts and assign the Assumed
Contracts, which may be subsequently modified at any time prior to
the date that is 21 days prior to the Closing Date and upon the
Buyer's delivery of written notice to the Debtors, to add or remove
certain contracts pursuant to the terms of the William Rast APA, to
the Buyer free and clear of all Claims, Interests, and Encumbrances
(other than any Permitted Encumbrances); and (b) execute and
deliver to the Buyer such documents or other instruments as may be
reasonably requested by the Buyer to assign and transfer the
Assumed Contracts to the Buyer.
The Cure Costs (as defined in the William Rast APA) listed on the
Assumption Notice and Assumed Contracts Exhibit are the sole
amounts necessary to be paid upon assumption of the Assumed
Contracts under Bankruptcy Code sections 365(b)(1)(A) and (B) and
365(f)(2)(A).
All Cure Costs, if any, will be paid by the Buyer.
Subject to the "Payment in Full" of the Prepetition BAML
Obligations, the Debtors are authorized and directed to distribute
the consideration received by the Debtors from the sale of the
Purchased Assets as follows: first, to the holders of the DIP
Obligations as of the date of the initial funding under the DIP
Credit Facility until such time as the DIP Obligations are paid in
full in cash and all commitments to lend under the DIP Loan
Documents have been terminated, and second, to the Prepetition Term
B Agent for distribution to the holders of the Prepetition Term B
Obligations as of the Petition Date in accordance with the
Prepetition Term B Credit Agreement until the Prepetition Term B
Obligations have been paid in full in cash. The application of the
consideration from the sale of the Purchased Assets pursuant to the
immediately preceding sentence complies with the requirements of
the DIP Orders and the DIP Loan Documents and is supported by good,
sufficient and sound business reasons.
Notwithstanding the provisions of Bankruptcy Rules 6004(h) and
6006(d) or any applicable provisions of the Local Rules, this Order
will not be stayed after the entry thereof, but will be effective
and enforceable immediately upon entry, and the 14-day stay
provided in Bankruptcy Rules 6004(h) and 6006(d) is expressly
waived and will not apply. Time is of the essence in closing the
Sale Transaction and the Debtors and the Buyer intend to close the
Sale Transaction as soon as practicable.
All time periods set forth in the Order will be calculated in
accordance with Bankruptcy Rule 9006(a).
About Sequential Brands Group
Sequential Brands Group, Inc. (NASDAQ:SQBG), together with its
subsidiaries, owns various consumer brands. The New York-based
company licenses its brands for a range of product categories,
including apparel, footwear, fashion accessories, and home goods.
Sequential Brands Group and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11194) on Aug. 31,
2021. The company disclosed total assets of $442,774,937 and debt
of $435,073,539 as of Aug. 30, 2021.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Gibson, Dunn & Crutcher, LLP and Pachulski
Stang
Ziehl & Jones, LLP as legal counsel. Miller Buckfire & Co. and its
affiliate, Stifel Nicolaus & Co., Inc., serve as financial advisor
and investment banker. Kurtzman Carson Consultants, LLC, is the
claims agent and administrative advisor.
King & Spalding, LLP, is counsel to the debtor-in-possession
lenders (and the consenting lenders under the restructuring
support
agreement) while Morris, Nichols, Arsht & Tunnell, LLP serve as
the
DIP lenders' local counsel.
SEQUENTIAL BRANDS: $65MM Sale of Assets to With You Inc. Approved
-----------------------------------------------------------------
Judge John T. Dorsey of the U.S. Bankruptcy Court for the District
of Delaware authorized Sequential Brands Group, Inc., and
affiliates to sell all or substantially all of the assets defined
in Asset Purchase Agreement to With You, Inc. or Assignee.
On the terms and subject to the conditions contained herein, the
purchase price for the Purchased Assets will be equal to $65
million plus (b) the amount by which the Estimated Closing Working
Capital Amount is greater than zero (0), if any, minus (c) the
amount by which the Estimated Closing Working Capital Amount is
less than zero (0), if any (the Base Purchase Price, as adjusted
pursuant to subsections (b) and (c), if any, the "Estimated
Purchase Price").
The Sale Hearing was held on Nov. 4, 2021.
The Motion is granted as provided, and entry into and performance
under, and in respect of, the With You APA, and the consummation of
the transactions contemplated thereby, including, without
limitation, the Sale Transaction and the assumption and assignment
of the Assumed Contracts is authorized and approved.
The With You APA, all ancillary documents, the transactions
contemplated thereby, including, without limitation, the Sale
Transaction and the assumption and assignment of the Assumed
Contracts (but subject to the Buyer's rights with respect thereto
pursuant to the With You APA) and all the terms and conditions
thereof, are approved.
Pursuant to Bankruptcy Code sections 105(a) and 363(f), the
Purchased Assets will be sold free and clear of all Claims,
Interests, and Encumbrances (including the Permitted Encumbrances
set forth on Schedule 1.01 to the With You APA (but subject to
other Permitted Encumbrances)), including, for the avoidance of
doubt, the Secured Lenders' Liens, with all such Claims to attach
to the proceeds of the Sale Transaction to be received by the
Debtors.
Except as otherwise expressly provided in the With You APA or the
Order, upon the Closing Date, pursuant to Bankruptcy Code sections
105(a), 363, and 365, the Debtors are authorized to (i) assume each
of the Assumed Contracts and assign the Assumed Contracts to the
Buyer free and clear of all Claims, Interests, and Encumbrances;
and (ii) execute and deliver to the Buyer such documents or other
instruments as may be reasonably requested by Buyer to assign and
transfer the Assumed Contracts to the Buyer.
The Cure Costs listed on the Assumption Notice and Assumed
Contracts Exhibit are the sole amounts necessary to be paid upon
assumption of the Assumed Contracts under Bankruptcy Code sections
365(b)(1)(A) and (B) and 365(f)(2)(A). All Cure Costs, if any, will
be paid or otherwise satisfied by the Buyer.
Subject to the "Payment in Full" of the Prepetition BAML
Obligations, the Debtors are authorized and directed to distribute
the consideration received by the Debtors from the sale of the
Purchased Assets as follows: first, to the holders of the DIP
Obligations as of the date of the initial funding under the DIP
Credit Facility until such time as the DIP Obligations are paid in
full in cash and all commitments to lend under the DIP Loan
Documents have been terminated, and second, to the Prepetition Term
B Agent for distribution to the holders of the Prepetition Term B
Obligations as of the Petition Date in accordance with the
Prepetition Term B Credit Agreement until the Prepetition Term B
Obligations have been paid in full in cash. The application of the
consideration from the sale of the Purchased Assets pursuant to the
immediately preceding sentence complies with the requirements of
the DIP Orders and the DIP Loan Documents and is supported by good,
sufficient and sound business reasons.
Notwithstanding the provisions of Bankruptcy Rules 6004(h) and
6006(d) or any applicable provisions of the Local Rules, this Order
will not be stayed after the entry thereof, but will be effective
and enforceable immediately upon entry, and the 14-day stay
provided in Bankruptcy Rules 6004(h) and 6006(d) is expressly
waived and will not apply. Time is of the essence in closing the
Sale Transaction and the Debtors and the Buyer intend to close the
Sale Transaction as soon as practicable.
All time periods set forth in the Order will be calculated in
accordance with Bankruptcy Rule 9006(a).
About Sequential Brands Group
Sequential Brands Group, Inc. (NASDAQ:SQBG), together with its
subsidiaries, owns various consumer brands. The New York-based
company licenses its brands for a range of product categories,
including apparel, footwear, fashion accessories, and home goods.
Sequential Brands Group and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11194) on Aug. 31,
2021. The company disclosed total assets of $442,774,937 and debt
of $435,073,539 as of Aug. 30, 2021.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Gibson, Dunn & Crutcher, LLP and Pachulski
Stang
Ziehl & Jones, LLP as legal counsel. Miller Buckfire & Co. and its
affiliate, Stifel Nicolaus & Co., Inc., serve as financial advisor
and investment banker. Kurtzman Carson Consultants, LLC, is the
claims agent and administrative advisor.
King & Spalding, LLP, is counsel to the debtor-in-possession
lenders (and the consenting lenders under the restructuring
support
agreement) while Morris, Nichols, Arsht & Tunnell, LLP serve as
the
DIP lenders' local counsel.
SEQUENTIAL BRANDS: Proposed Sale of Assets to Gainline Galaxy OK'd
------------------------------------------------------------------
Judge John T. Dorsey of the U.S. Bankruptcy Court for the District
of Delaware authorized Sequential Brands Group, Inc., and
affiliates to sell the assets described in the Asset Purchase
Agreement to Gainline Galaxy Holdings LLC.
The consideration from the sale of the Transferred Assets is
comprised of, among other things, (i) $55,500,000 of cash plus any
Additional Cash Consideration (excluding, an Escrow Amount, in an
amount equal to $1,665,000 to be held in escrow pursuant to the
Purchase Agreement which escrowed amount will be applied in
accordance with the Order upon release to the Debtors, (ii)
$227,500,000 million in the form of debt issued by the Buyer as
such amount may be reduced by an amount equal to (A) any Additional
Cash Consideration and (B) the Estimated Royalty Adjustment and
(iii) 11.3% of Series A Units of Gainline Galaxy Holdings LLC which
for purposes of application to claims of the Debtors' estate will
be valued at $50,000,000, and all such consideration will be
applied in accordance with the Order and the DIP Orders.
The Motion as it pertains to the Sale Transaction and the Purchase
Agreement is approved.
Pursuant to sections 105, 363 and 365 of the Bankruptcy Code, the
Debtors are authorized to perform their obligations under and
comply with the terms of the Purchase Agreement and the Ancillary
Agreements, pursuant to and in accordance with the terms and
conditions of the Purchase Agreement, the Ancillary Agreements and
the Order.
The sale is free and clear of all Liens, with such Liens attaching
to the proceeds received by the Debtors.
With respect to Additional Assumed Contracts, the Debtors are
authorized to assume and assign the Assigned Contracts to the Buyer
free and clear of all Liens (other than Permitted Post-Closing
Encumbrances) and Liabilities (other than Assumed Liabilities), and
to execute and deliver to Buyer such documents or other instruments
as may be necessary to assign and transfer the Assigned Contracts
to Buyer as provided in the Purchase Agreement. Cure Costs will be
paid by the Debtors subject to the terms of, and in accordance
with, the terms of the Purchase Agreement and Bid Procedures
Order.
Subject to the "Payment in Full" of the Prepetition BAML
Obligations, the Debtors are authorized and directed to distribute
the consideration they received from the sale of the Transferred
Assets as follows: First, to the holders of the DIP Obligations as
of the date of the initial funding under the DIP Credit Facility
until such time as the DIP Obligations are paid in full in cash and
all commitments to lend under the DIP Loan Documents have been
terminated, and second, to the Prepetition Term B Agent for
distribution to the holders of the Prepetition Term B Obligations
as of the Petition Date in accordance with the Prepetition Term B
Credit Agreement until the Prepetition Term B Obligations have been
paid in full in cash.
Notwithstanding the provisions of Bankruptcy Rules 6004(h) and
6006(d) or any applicable provisions of the Local Rules, the Order
will not be stayed after the entry thereof, but will be effective
and enforceable immediately upon entry, and the 14-day stay
provided in Bankruptcy Rules 6004(h) and 6006(d) is expressly
waived and will not apply, and the Debtors and the Buyer are
authorized and empowered to close the Sale Transaction immediately
upon entry of the Order.
About Sequential Brands Group
Sequential Brands Group, Inc. (NASDAQ:SQBG), together with its
subsidiaries, owns various consumer brands. The New York-based
company licenses its brands for a range of product categories,
including apparel, footwear, fashion accessories, and home goods.
Sequential Brands Group and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11194) on Aug. 31,
2021. The company disclosed total assets of $442,774,937 and debt
of $435,073,539 as of Aug. 30, 2021.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Gibson, Dunn & Crutcher, LLP and Pachulski
Stang
Ziehl & Jones, LLP as legal counsel. Miller Buckfire & Co. and its
affiliate, Stifel Nicolaus & Co., Inc., serve as financial advisor
and investment banker. Kurtzman Carson Consultants, LLC, is the
claims agent and administrative advisor.
King & Spalding, LLP, is counsel to the debtor-in-possession
lenders (and the consenting lenders under the restructuring
support
agreement) while Morris, Nichols, Arsht & Tunnell, LLP serve as
the DIP lenders' local counsel.
SHARP MIDCO: Moody's Assigns B3 CFR & Rates New First Lien Debt B2
------------------------------------------------------------------
Moody's Investors Service assigned a B3 Corporate Family Rating and
a B3-PD Probability of Default Rating to Sharp Midco LLC ("Sharp"),
ahead of the planned carve-out from Nenelite Limited ("UDG
Huntsworth"). At the same time, Moody's assigned a B2 rating to
Sharp's proposed first lien senior secured credit facilities,
consisting of a $465.5 million term loan due 2028 and a $90 million
revolver expiring in 2026. The outlook is stable.
Sharp comprises the commercial packaging and clinical trial
manufacturing business of UDG Huntsworth. The company is being
"spun out" by private equity sponsor Clayton Dubilier & Rice, which
along with management will retain ownership of the company. The
transaction is expected to close in the fourth quarter of 2021.
The assignment of B3 CFR reflects Moody's view that Sharp's pro
forma debt-to-EBITDA financial leverage will be very high at
approximately 7.5x (for the LTM period ended September 30, 2021) at
the close of the transaction. However, Moody's expects the
company's high proportion of recurring revenue and favorable
industry tailwinds will support mid to high-single digit organic
revenue growth and deleveraging toward 6.5x, over the next 12-18
months. Additionally, Moody's expects that while Sharp's financial
policies will remain aggressive, the company will maintain good
liquidity, partially reflected in sustained positive free cash
flows.
ESG factors are material to the ratings assignment. Social risk
exposure for Sharp includes operating specialized facilities for
commercial and clinical packaging, and equipment for products that
require cold chain handling, along with distribution services, that
are heavily regulated by multiple government agencies. Among
governance considerations, Sharp's financial policies under private
equity ownership are aggressive, reflected in very high initial
debt levels following the carve-out of the company by its' equity
sponsor, as well as Moody's expectation that the company's strategy
will be to supplement organic growth with tuck-in acquisitions
given the very fragmented nature of the market. Moody's anticipates
the company could incur debt to fund acquisitions, if a suitable
opportunity arose.
Following is a summary of Moody's rating actions for Sharp Midco
LLC:
New Assignments:
Corporate Family Rating, assigned B3
Probability of Default Rating, assigned B3-PD
First lien senior secured revolving credit facility expiring in
2026, assigned B2 (LGD3)
First lien senior secured term loan due 2028, assigned B2 (LGD3)
Outlook Actions:
Issuer: Sharp Midco LLC:
Outlook, assigned Stable
All ratings are subject to the execution of the transaction as
currently proposed and Moody's review of final documentation. The
instrument ratings are subject to change should the proposed
capital structure get modified.
RATINGS RATIONALE
Sharp's B3 Corporate Family Rating reflects high financial
leverage, with pro forma Moody's adjusted debt/EBITDA of 7.5x. The
rating also reflects financial risks associated with private-equity
ownership, and risks associated with transitioning to a stand-alone
company. Sharp's rating is also constrained by its modest, albeit
growing scale, both on an absolute basis and relative to several
much larger competitors, as well as the risk of revenue losses due
to selective in-sourcing by customers. Sharp benefits from its
leading position among contract packaging services companies, a
relatively well diversified customer base consisting largely of
blue-chip pharmaceutical clients, and relatively good visibility
into the company's revenue streams.
Moody's expects the company's growth will continue to be supported
by favorable industry tailwinds, as the pharmaceutical industry
will continue to increase its reliance on outsourced service
providers.
The stable outlook reflects Moody's expectation that Sharp will
successfully transition to a stand-alone company, and that the
company will maintain good liquidity. However, Moody's expects
Sharp to remain highly leveraged with some modest improvement in
metrics over the next 12-18 months.
The first lien facility is rated B2, one notch above the B3
Corporate Family Rating, reflecting the priority lien on pledged
assets and the benefit of a layer of loss absorption provided by
the $157.5 million second lien term loan (unrated) due 2029.
Moody's expects Sharp to maintain good liquidity over the next 12
months. Cash levels will total approximately $20 million at the
close of the transaction, and Moody's expects that the company's
annual free cash flow will be in the range of $10-$20 million over
the next 12 to 18 months, which will be sufficient to cover
mandatory interest payments and debt amortization but is before
additional expenditures for acquisitions. Sharp's liquidity is
further supported by a $90 million revolving credit facility,
expiring in 2026, which Moody's expects will have full availability
at close of the transaction.
Following are some of the preliminary credit agreement terms, which
remain subject to market acceptance. The proposed terms and the
final terms of the credit agreement may be materially different.
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 $90 million and
100% of trailing four quarter EBITDA; plus an unlimited amount so
long as the Total First Lien Leverage Ratio does not exceed 5.25x
(if pari passu secured). Amounts up to the greater of $45 million
and 50% of pro forma EBITDA may be incurred with an earlier
maturity date than the initial term loans.
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.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if Sharp was to experience challenges
transitioning to a stand-alone company, operating disruptions, a
loss of a major contract or if financial policies became more
aggressive. A downgrade could also occur if the company's liquidity
profile were to erode, such that free cash flow was to turn
negative on a sustained basis, or interest coverage falls below one
times.
Ratings could be upgraded if Sharp can profitably grow in scale and
successfully execute the transition to a stand-alone company.
Additionally, the company will need to maintain good liquidity,
reflected in consistently positive free cash flow, and debt/EBITDA
will need to be sustained below 6.0 times, for ratings to be
upgraded.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Sharp Midco LLC ("Sharp"), headquartered in Allentown,
Pennsylvania, is a contract packaging organization, providing
outsourced primary and secondary packaging solutions, primary fill
finish through its minority ownership interest in Berkshire Sterile
Manufacturing, and cold chain storage, as well as clinical
services. Sharp generated pro forma revenues of approximately $392
million for the LTM period ending September 30, 2021. Sharp's
parent firm and issuer of the audited financial statements, Sharp
Topco LLC (guarantor of the rated debt) is majority owned by
private equity firm Clayton Dubilier & Rice, along with minority
stakes by the management team.
STARWOOD PROPERTY: Fitch Gives 'BB+(EXP)' to $400MM Unsec. Notes
-----------------------------------------------------------------
Fitch Ratings has assigned an expected rating of 'BB+(EXP)' to
Starwood Property Trust, Inc.'s (Starwood) planned issuance of $400
million of senior unsecured notes. Proceeds from the proposed
issuance are expected to be used for general corporate purposes,
including to repay $300 million of 5.00% senior unsecured notes due
December 2021 and pay down borrowings under secured repurchase
facilities.
KEY RATING DRIVERS
SENIOR DEBT
The expected rating on the new senior unsecured notes is equalized
with the ratings assigned to Starwood's existing senior unsecured
debt as the new notes will rank equally in the capital structure.
The unsecured debt rating is equalized with the Long-Term Issuer
Default Rating (IDR), reflecting the availability of unencumbered
assets and average recovery prospects for creditors in a stressed
scenario.
Starwood's leverage, calculated by Fitch as gross debt-to-tangible
equity including off-balance sheet, non-recourse funding comprised
of CLO liabilities, CRE A-Note sales and securitizations, and
residential lending securitizations, adding back accumulated
depreciation on real estate to tangible equity, was 3.6x at Sept.
30, 2021 pro forma for the sold interest in the new investment
fund. At the end of 3Q21, Starwood established a new investment
fund to hold the Woodstar affordable housing portfolio and sold a
20.6% interest in the fund for a price of $216.0 million to
third-party institutional investors.
Fitch believes it is appropriate to add accumulated depreciation on
the real estate portfolio back to tangible equity, as the firm has
a strong track record of recognizing the gross book value of the
portfolio at exit. While Starwood's baseline leverage is higher
than rated peers, Fitch notes that leverage would be considerably
lower, at 2.1x pro forma of the new investment fund, if all
non-recourse borrowings were excluded from the calculation.
Approximately 12.3% of Starwood's debt was unsecured pro forma for
the new investment fund and the issuance at Sept. 30, 2021, which
is below the peer average and at the lower-end of Fitch's 'bb'
category benchmark range of 10%-40% for finance and leasing
companies with an operating environment score of 'a'.
Fitch views Starwood's ability to access the unsecured debt markets
and extend its debt maturity profile favorably; however, unsecured
debt as a proportion of total debt will remain below-average
following the issuance. Fitch would view an increase in Starwood's
unsecured funding mix favorably as it would enhance its financial
flexibility. Still, Starwood's secured funding is diverse and
comprised of warehouse lines, repurchase facilities, mortgages and
securitizations, with a well-laddered maturity profile.
Starwood's ratings reflect the strength of its affiliation with
Starwood Capital Group (SCG) and its affiliate manager, SPT
Management, LLC. The affiliation provides access to deal flow and
deep industry and collateral expertise; a solid market position as
a commercial real estate (CRE), residential real estate and
infrastructure lender, special servicer and property investor;
diversity of its business model; strong asset quality; consistent
operating performance; relatively low leverage; appropriate
interest coverage; a diverse and well-laddered funding profile, and
solid liquidity.
Rating constraints include Starwood's primary focus on the CRE
market, which exhibits volatility through the credit cycle, a
continued challenging environment for certain CRE property types
such as office and hotel, a largely secured funding profile and
potential for margin calls on secured credit facilities, although
the exposure is more modest than peers.
The Stable Outlook for the Long-Term IDR reflects Fitch's view that
Starwood will continue to maintain strong asset quality, generate
stable and consistent operating cash flows and maintain leverage at
a level appropriate for the risk profile of the portfolio.
Additionally, Fitch believes the company will continue to
opportunistically issue unsecured debt, to enhance its funding
flexibility, and appropriately manage its debt maturity profile.
RATING SENSITIVITIES
The expected unsecured debt rating is primarily linked to changes
in the Long-Term IDR and would likely move in tandem with it.
However, an increase in secured debt and/or a sustained decline in
the level of unencumbered assets that weakens recovery prospects on
the unsecured debt could result in the unsecured debt ratings being
notched down from the IDR.
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- A sustained increase in the proportion of unsecured
approaching 40% of total debt; a reduction in margin call
exposure; and the maintenance of leverage at-or-below 2.5x on
a Fitch-calculated basis, excluding all non-recourse debt.
Positive rating action would also be conditioned on the
maintenance of strong asset quality performance, consistent
core earnings generation; and a solid liquidity profile.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- A sustained increase in Fitch-calculated leverage, excluding
all non-recourse debt, above 3.0x and/or a material increase
in total leverage; an inability to maintain sufficient
liquidity relative to near-term debt maturities, unfunded
commitments and margin call potential; a reduction in business
line diversity, material deterioration in credit performance,
a reduction in core earnings and coverage of the dividend,
and/or a sustained reduction in the proportion of unsecured
debt funding below 10% could all yield a negative rating
action.
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.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Starwood Property Mortgage, LLC is an indirect subsidiary of
Starwood.
ESG CONSIDERATIONS
The highest level of ESG credit relevance, if present, is a score
of '3'. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity(ies), either due to their
nature or to the way in which they are being managed by the
entity(ies).
STARWOOD PROPERTY: Moody's Rates New Unsec. Notes Due 2024 'Ba3'
----------------------------------------------------------------
Moody's Investors Service has assigned a Ba3 rating to Starwood
Property Trust, Inc.'s new senior unsecured notes due 2024.
Starwood's Ba2 corporate family and Ba3 long-term senior unsecured
ratings are unaffected by the new transaction. The company's
outlook is stable.
Assignments:
Issuer: Starwood Property Trust, Inc.
Senior Unsecured Regular Bond/Debenture, Assigned Ba3
RATINGS RATIONALE
The Ba3 rating Moody's has assigned to the senior unsecured notes
reflects Starwood's ba2 standalone assessment, as well as the
priority and proportion of the notes in Starwood's debt capital
structure and the strength of the notes' asset coverage. The terms
of the notes are consistent with those of Starwood's existing
senior unsecured notes. Starwood intends to use the proceeds of the
transaction to finance or refinance recently completed or future
Green and/or Social Projects, redeem $300 million senior notes due
December 2021 and for other corporate purposes including repayment
of secured debt.
Starwood's ratings are based on the company's effective credit and
liquidity risk management during the pandemic induced downturn in
the commercial real estate sector, its superior revenue diversity
compared to peers, history of strong operating performance and
affiliation with Starwood Capital Group, the well-established
commercial real estate investment and asset management firm.
Starwood's credit challenges include its high reliance on
confidence-sensitive secured funding and its high exposure to the
cyclicality of the certain commercial property segments, especially
hotels. Moody's expects that the new senior notes transaction will
have no material effect on Starwood's net debt-to-equity leverage.
To the extent that proceeds of the notes materially reduce the
company's secured debt reliance, the new issuance is a positive
development for the company's funding structure and liquidity
profile.
Starwood's outlook is stable, based on the resilience of the
company's asset performance and strong liability and liquidity
management over the past year, which Moody's expects positions the
company well to generate improving operating results even as
uncertainties regarding asset performance linger in certain
property sectors and regions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's could upgrade Starwood's ratings if the company: 1) further
diversifies its funding sources to include additional senior
unsecured debt, resulting in a ratio of secured debt to tangible
assets declining to not more than 45%; 2) maintains strong, stable
profitability and low credit losses; and 3) maintains a ratio of
adjusted debt to adjusted tangible equity of not more than 3.0x.
Starwood's ratings could be downgraded if the company: 1) increases
exposure to volatile funding sources or otherwise encounters
material liquidity challenges, 2) increases its adjusted debt to
adjusted tangible equity leverage to more than 4.5x, 3) rapidly
accelerates growth, or 4) suffers a sustained decline in
profitability.
The principal methodology used in this rating was Finance Companies
Methodology published in November 2019.
STARWOOD PROPERTY: S&P Rates $400MM Senior Unsecured Bonds 'B+'
---------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue rating to Starwood
Property Trust Inc.'s offering of $400 million of senior unsecured
sustainability bonds due 2024. The company will use the proceeds of
the offering--which will have little impact on its leverage--to
finance or refinance eligible green or social projects. Until full
allocation to such projects, the company intends to use the
proceeds to repay the remaining $300 million of senior notes due
this month.
S&P said, "We rate the bonds a notch below Starwood's issuer credit
rating of 'BB-' because of their structural subordination to the
secured debt that makes up most of the company's liabilities. But
we view favorably the use of unsecured debt because it demonstrates
Starwood's access to the capital markets and helps unencumber
assets.
"Our rating on Starwood continues to balance its strong track
record and good diversification across real estate lending,
investing and servicing against its concentration in commercial
real estate in general, and its use of repurchase facilities with
margin call provisions.
"The stable outlook reflects our expectation that, over the next
year, Starwood--helped by the growing economy--will report mostly
stable asset quality trends while maintaining adequate liquidity
and leverage of 3.0x-4.0x, as measured by debt to adjusted total
equity. Pandemic-related changes and pressures in commercial real
estate, such as in the office market, may still create challenges
for the company and other lenders in the next few years, but we
expect it to work through those over time while maintaining
adequate leverage and funding and liquidity near current levels."
STONEMOR INC: S&P Affirms 'CCC+' Long-Term Issuer Credit Rating
---------------------------------------------------------------
S&P Global Ratings affirmed its ratings on Bensalem, Penn.-based
death care company StoneMor Inc., including the 'CCC+' long-term
issuer rating.
The stable outlook reflects improving EBITDA and free cash flow
generation but remaining uncertainty of the durability of free cash
flow generation.
S&P said, "Our revision to our management and governance (M&G)
assessment reflects the favorable trajectory of the business and
control environment by the management team, which has now been at
the company for close to three years. The company has consistently
filed its financials in a timely manner, met its covenant
obligations in its debt agreements, generally met or exceeded it
targets, and generated modestly positive free cash flow in the
first three quarters of 2021. The company also successfully
refinanced its debt in 2021, improving its liquidity and financial
flexibility (removing restrictive covenants) in the transaction.
The company is implementing corrective actions to remedy its
material weakness in controls related to financial reporting, so we
think this risk is fading.
"Although we think the company's M&G has improved, in our view some
risk factors remain. For example, management has a relatively
limited track record of success and could have difficulty
forecasting performance in normal times, similar to prior
management teams, given the new team's limited experience in death
care prior to StoneMor. In addition, the company is controlled by a
single shareholder, Axar Capital Management L.P., which holds
approximately 75% of total outstanding shares. We think the
controlling shareholder has a shorter investment time horizon than
a diversified equity shareholder base and is likely to prioritize
the interests of equity holders over debtholders.
"Our long-term issuer credit rating on StoneMor is 'CCC+', with a
stable outlook. We believe the business is trending favorably, but
the company has not yet established a track record of positive free
cash flow that would warrant a higher rating.
"Our stable outlook reflects improving EBITDA and free cash flow
generation. It also reflects our expectation that liquidity will be
sufficient over the next 12 months as well as diminished covenant
violation risk.
"We could consider a lower rating if liquidity deteriorates
significantly, likely through unexpected cash flow deficits,
raising the default risk over the next 12 months.
"We could consider a higher rating if the company can demonstrate a
longer track record of generating solid EBITDA and free cash flow
in more normalized operating environment, leading us to believe the
capital structure is sustainable over the long term."
TABULA RASA: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Tabula Rasa Partners, LLC
1455 West Loop South Ste 230
Houston, TX 77027
Business Description: Tabula Rasa Partners LLC is part of the oil
and gas extraction industry.
Chapter 11 Petition Date: December 3, 2021
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 21-33859
Judge: Hon. Christopher M. Lopez
Debtor's Counsel: Aaron J. Power, Esq.
PORTER HEDGES LLP
1000 Main Street, 36th Floor
Houston, TX 77002
Tel: (713) 226-6000
Email: apower@porterhedges.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Michael R. Keener as independent
director.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/A42V5OA/Tabula_Rasa_Partners_LLC__txsbke-21-33859__0001.0.pdf?mcid=tGE4TAMA
TRITON WATER: Moody's Affirms 'B2' CFR, Outlook Remains Stable
--------------------------------------------------------------
Moody's Investors Service affirmed ratings of Triton Water
Holdings, Inc., including the B2 Corporate Family Rating, the B2-PD
Probability of Default Rating, the B1 rating on the company's
senior secured first lien term loan, and the Caa1 rating on the
unsecured notes. The capital structure also includes a $350 million
ABL revolving credit facility that is not rated by Moody's. The
outlook remains stable.
The company launched a $250 million add-on to its existing senior
secured first lien term loan, and announced its intent to enter
into a sale leaseback transaction of 20 owned properties that is
expected to generate approximately $463 million of after-tax
proceeds. Proceeds from the term loan add-on and sale leaseback
transactions will be used to fund a distribution to shareholders.
Moody's estimates that the sale leaseback transaction will add
approximately $240 million of lease related debt to Moody's debt
metrics. The increase in debt from the transactions will
meaningfully raise debt/EBITDA to 7.4x (up from 6.5x), on Moody's
adjusted basis. Moody's views these transactions as credit negative
and aggressive given shareholders are taking a sizeable dividend so
shortly after the LBO transaction, and before many of the cost
savings have been realized. In addition, Triton is still spending
on restructuring initiatives and managing cost increases for
packaging, labor and freight. Further, Moody's views the financial
policy to favor shareholders as the transactions provide no
operational benefits to the company and reduces the available
collateral to lenders.
Moody's nevertheless affirmed the B2 Corporate Family Rating and is
maintaining the stable outlook because Moody's expects free cash
flow to remain sizable and credit metrics to improve to below 6.5x
debt-to-EBITDA over the next 12 to 18 months and to approximately
6.0x by 2023. Moody's expects that deleveraging will be driven by
earnings growth as the company offsets inflation with pricing
actions, cost reduction initiatives, and benefits from
restructuring actions taken earlier this year. Specifically, Triton
completed its initial corporate reorganization to streamline the
organization to drive more than $125 million of annualized savings.
These savings were reflected in lower SG&A expenses in the third
quarter, and should support EBITDA growth in 2022. Moody's further
expects Triton to generate free cash flow of more than $100 million
over the next 12 months despite the incremental interest and rent
expense from the transactions.
Moody's took the following rating actions:
Affirmations:
Issuer: Triton Water Holdings, Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Secured 1st Lien Bank Credit Facility (term loan, including
proposed upsize), Affirmed B1 (LGD3)
Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD5)
Outlook Actions:
Issuer: Triton Water Holdings, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Triton's B2 CFR rating reflects its high financial leverage, low
product diversity, and high execution risk related to its plans to
transition the acquired carve-out business into a
stronger-performing standalone operation. The ratings are supported
by Triton's leading market position and leading regional brands in
the US retail bottled water category, which is heavily price
competitive, but also is a gradually growing, on-trend consumer
category. Triton's ReadyRefresh(R) home and office delivery
service, about 25% of sales, weakened in 2020 due to COVID-related
commercial closures, but was partially offset by strong growth in
the residential business. However, the commercial business has
begun to recover as people gradually return to their workplaces and
office demand normalizes.
ESG is an important rating factor for the bottled water sector due
to growing sustainability concerns related to the environmental and
social impacts of water and land usage, as well as plastic
pollution. Positively, the steady shift in consumer consumption
away from carbonated soft beverages in North America will continue
to benefit the bottled water industry.
Moody's notes that Triton competes against much larger, more
diversified and financially stronger companies in the North America
beverages sector that have greater capacity to fund sustainability
investments and more negotiating leverage with retailers. Triton
also faces heavy price competition from retailer and other private
label water brands.
Triton's good liquidity is supported by a sizable $435 million cash
balance as of September 2021. This, together with Moody's
expectation of free cash flow of more than $100 million over the
next 12 months provide sufficient coverage for the required 1%
mandatory amortization of its first lien term loans of
approximately $28 million, annually. Triton's liquidity is further
supported by its full access to an undrawn $350 million ABL
revolving credit facility expiring in 2026 and good cushion within
the springing minimum fixed charge coverage covenant on the
revolver that Moody's does not expect to be triggered.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that the company
will successfully transition its business to a standalone operation
and manage inflationary pressures with pricing actions and other
cost savings initiatives. Moody's also anticipates that Triton will
generate more than $100 million of annual free cash flow and reduce
debt-to-EBITDA to below 6.5x over the next 12 to 18 months.
Ratings could be upgraded if Triton successfully completes planned
restructuring activity, sustains debt/EBITDA below 6.0x, and
maintains good liquidity, including generating annual free cash
flow approaching $200 million.
Ratings could be downgraded if major operating challenges arise,
cost savings and pricing initiatives fail to offset inflationary
pressure, liquidity erodes, or if the company pursues a more
aggressive financial policy. Quantitatively, if the company fails
to reduce debt/EBITDA below 7.0x and generate at least $50 million
of free cash flow annually, a downgrade could occur.
ESG CONSIDERATIONS
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety, and the government measures put in place to contain it.
Although an economic recovery is underway, it is tenuous, and its
continuation will be closely tied to containment of the virus. As a
result, the degree of uncertainty around Moody's forecasts is
unusually high.
Governance risks are higher than average due to Triton's private
equity ownership. Moody's expects that financial policies will
remain aggressive with high leverage and the potential for debt
funded acquisitions and cash distributions. However, Moody's also
expects that Triton will benefit from One Rock's operational focus
and Metropoulos' strong track record with business
transformations.
Moody's estimates that debt/EBITDA will be approximately 7.4x after
the announced transactions are completed, based on Moody's analytic
adjustments. Moody's expects the company to reduce debt/EBITDA
below 6.5x over the next 18 months driven by earnings growth. The
pace of deleveraging will be largely dependent on Triton's ability
to manage inflation and continue to right-size and streamline
operations, which will require further cash outlays for
restructuring and other investments in the near term. Moody's
expects that free cash flow will be somewhat constrained by this
activity, but will remain comfortably positive and will rise as
transition costs normalize.
CORPORATE PROFILE
Headquartered in Stamford, Connecticut, Triton Water Holdings,
Inc., produces and sells regional spring water and purified
national water brands, through retail sales channels and through
its ReadyRefresh® direct-to-consumer and office delivery services.
Triton's key retail brands include Arrowhead, Deer Park, Ice
Mountain, Ozarka, Poland Spring, Zephyrhills, Pure Life, and
Splash. Net sales for the trailing twelve months as of September
30, 2021 were approximately $3.8 billion. The company is owned by
private equity firms One Rock Capital Partners and Metropoulos &
Co. following a $4.3 billion acquisition from Nestle in March
2021.
The principal methodology used in these ratings was Global Soft
Beverage Industry published in January 2017.
UGI INT'L: Fitch Gives Final 'BB+' Rating on EUR400MM Unsec. Notes
-------------------------------------------------------------------
Fitch Ratings has assigned UGI International, LLC's (UGII,
BB+/Stable) EUR400 million senior unsecured notes due in 2029 a
final rating of 'BB+'.
KEY RATING DRIVERS
Guaranteed Bonds: The bonds have the same guarantees by UGII's
subsidiaries (accounting for 85% of group EBITDA as of fiscal year
ended September 2021) and rank pari passu with the company's
unsecured EUR300 million loan and EUR300 million revolving credit
facility (RCF), which share the same guarantors. There is no
significant prior-ranking debt at operating companies or UGII. UGII
will fully redeem its existing EUR350 million notes and use the
remaining EUR50 million for general corporate purposes.
Solid FY21 Results: UGII posted solid FY21 results, with a 25% yoy
increase in revenues, mostly due to colder weather leading to
higher liquefied petroleum gas (LPG) consumption and higher average
LPG unit prices versus last year. However, it was also reflected in
an increase in cost of sales, which led to Fitch-estimated EBITDA
growth of 6% yoy, still fully in line with Fitch's estimates.
Flexible Dividends: UGII does not have a minimum dividend policy,
which adds to its financial flexibility. Dividend payments depend
on its deleveraging ability and market conditions. All this should
result in a healthy liquidity position to allow UGII to navigate
further potential market downturns. Fitch expects UGII to pay
around USD200 million of dividends annually.
Credit Metrics Consistent with Rating: Fitch expects UGII's average
funds from operations (FFO) adjusted net leverage to remain below
3.0x over 2022-2026. Its financial profile is underpinned by a
conservative capital structure and low target leverage of 2.0x-2.5x
debt/EBITDA. Any significant debt-financed M&A, without sufficient
EBITDA accretion or tangible support from parent UGI Corp leading
to FFO adjusted net leverage sustainably above 3.0x, would
adversely affect UGII's credit profile and ratings.
Rating on a Standalone Basis: The IDR reflects UGII's Standalone
Credit Profile (SCP), due to moderate legal, operational and
strategic ties with UGI Corp under Fitch's Parent and Subsidiary
Rating Linkage methodology. UGI Corp. is a holding company with a
diversified portfolio of energy, power and utility assets,
including AmeriGas Partners, L.P. (BB/Stable), UGI Energy Services,
LLC (BB/Stable), UGI Utilities (A-/Stable) and Mountaineer Gas
Company (BB+/Rating Watch Positive). While UGI Corp has strong
operational control over UGII, legal ties are limited, as UGII's
notes and term loan are non-recourse to the parent, with no
guarantees or cross-default provisions. Although UGII raises debt
independently, the parent has supported its growth funding.
DERIVATION SUMMARY
UGII is firmly positioned relative to its Fitch-rated peers, Vivo
Energy plc (BB+/Stable), Puma Energy Holdings Pte. Ltd (BB-/Stable)
and EG Group Limited (B-/Stable). Fitch views the less volatile
operating environment and stronger governance environment in Europe
(compared with emerging markets) for UGII as a mitigating factor
for Europe's weak demand.
UGII has a strong cash-generative profile, with a higher average
EBITDA margin than its peers. This is due to higher margins on
retail propane and LPG sales (for home heating and cooking as well
as industrial use) than Puma and Vivo, which are focused on highly
competitive and low-margin retail motor-fuel sales.
UGII is also better-positioned than its sister company, AmeriGas
Partners, L.P. (APU, BB/Stable), which is also a large propane
retailer. However, APU operates in a highly fragmented US market
with about a 15% market share. APU has much higher Fitch-estimated
leverage, but stronger EBITDA margins.
KEY ASSUMPTIONS
-- Eurozone GDP growing on average 3% and inflation of 1.6% in
2022-2023;
-- LPG volumes to remain flat in 2022-2025;
-- Flat net sales by unit in 2022-2025;
-- EBITDA on average at USD370 million in 2022-2025;
-- Average USD200 million dividends annually;
-- Annual average capex of around USD220 million in 2022-2025.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Increased scale of business while maintaining solid market
shares within the countries it operates in, and without
impairing profitability;
-- FFO adjusted net leverage sustainably below 2.0x, with FFO
fixed-charge cover above 6x for the next four years;
-- Positive free cash flow (FCF) generation with a FCF margin of
more than 5% up to 2024.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Weaker-than-Fitch-expected financial performance, due to
aggressive upstream dividend policy or mostly debt-funded M&A,
resulting in FFO adjusted net leverage persistently higher
than 3.0x and FFO fixed-charge coverage of less than 4.0x.
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
Comfortable Liquidity: UGII's liquidity is supported by internally
generated cash flow and a senior unsecured EUR300 million RCF
expiring in 2023. As of end-September 2021, UGII held cash and cash
equivalent balances of USD606 million. This compares with only
USD21 million of short-term maturities in 2022 and USD340million in
2023.
UGII's EUR400 million senior unsecured notes rank pari passu with
an unsecured EUR300 million loan with bullet repayment in 2023, and
the EUR300 million RCF available until 2023.
ISSUER PROFILE
UGII is a leading distributor of LPG in in 17 countries throughout
Europe. France represents approximately 50% of its revenue. It also
has an energy marketing business in France, Belgium, the
Netherlands and the UK.
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.
US RADIOLOGY: $450MM Term Loan Add-on No Impact on Moody's B3 CFR
-----------------------------------------------------------------
Moody's Investors Service said that US Radiology Specialists,
Inc.'s decision to raise approximately $450 million as a fungible
add-on to its existing $790 million senior secured first lien term
loan due 2027 will not impact the company's ratings or outlook.
According to the company, the proceeds from the add-on term loan
debt along with approximately $118 million in rollover equity will
be used to finance acquisition of two radiology practices. The
company expects that the two radiology practices will contribute
approximately $48 million incremental EBITDA on a pro forma basis.
The transaction has no impact on the company's B3 corporate family
rating, B3-PD probability of default rating, or stable outlook.
There is also no change to the B3 ratings on senior secured first
lien debt which will consist of a combined $1.24 billion in senior
secured first lien term loan due 2027 and a $125 million revolving
credit facility maturing in 2025. The outlook remains stable.
Moody's estimates that the company's debt/EBITDA will be in the low
7.0 times at the end of September 30, 2021, including the debt and
pro forma EBITDA related to the proposed acquisitions. Moody's
expect that the company will be able to maintain its Moody's
adjusted leverage below 7.0 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.
Headquartered in Raleigh, NC, US Radiology Specialists Holdings,
LLC is an operator of outpatient imaging centers and a provider of
radiology services in 13 states. The company operates through its
subsidiaries, US Radiology Specialists, Inc. (Moody's rated entity)
and US Outpatient Imaging Specialists, Inc. The company's estimated
pro forma revenues for 2021 (including the above two acquisitions)
will be approximately $622 million ($1.1 billion if the company's
proportionate share in joint ventures is included).
VERITEXT: $150MM Term Loan Add-on No Impact on Moody's 'B3' CFR
---------------------------------------------------------------
Moody's Investors Service said that VT Topco, Inc.'s ("Veritext")
planned $150 million add-on to its existing senior secured first
lien term loan due 2025 will weaken its credit metrics including
financial leverage and interest coverage. Therefore, Moody's
considers the transaction a negative credit development. However,
Veritext's ratings, including its B3 corporate family rating, and
stable outlook remain unaffected at this time.
The debt proceeds, along with $3 million of cash, will be used to
fund a dividend to shareholders and pay related fees & expenses.
Following the add-on, the total size of the senior secured first
lien term loan will increase to approximately $1.012 billion and
the total first lien delayed draw term loan availability will
increase by $26.3 million to $96 million.
Moody's estimates that Veritext's debt-to-EBITDA will increase to
6.6x from 5.9x pro forma for the $150 million of incremental debt
as of September 30, 2021 and EBITA-to-interest will decline to 2.5x
from 2.8x. Nonetheless, metrics remain in line with the current
ratings. Moody's expects the company will generate positive free
cash flow and maintain good liquidity during the next 12 to 18
months.
Moody's notes that this is the second debt funded shareholder
distribution completed by Veritext this year, with roughly $705
million returned in 2021. Nonetheless, the company has also been
able to reduce financial leverage through strong revenue growth of
over 57% in the LTM period ended September 30, 2021. While this
high level of growth is unsustainable because it includes the
rebound following the initial COVID-19 pandemic driven court
closures, Moody's expects that adjusted debt leverage will improve
towards 6x over the next 12 to 18 months from organic revenue
growth in the mid-single digit percentages and from acquisitions.
Demand for virtual deposition services has demonstrated resiliency
and sustainability despite a broader easing of remote working
conditions in the US and overall demand for court reporting tends
to be stable. Moody's anticipates that the company's financial
policy will emphasize the use of excess internally generated free
cash flow for small tuck-in acquisitions.
All financial metrics cited reflect Moody's standard adjustments.
Veritext, headquartered in Livingston, NJ, is the largest
deposition and litigation support solutions provider to the legal
industry. Since the August 2018 leveraged buyout transaction, the
company has been owned by affiliates of private equity sponsor
Leonard Green & Company.
WIDEOPENWEST FINANCE: Moody's Raises CFR to B1, Outlook Stable
--------------------------------------------------------------
Moody's Investors Service upgraded WideOpenWest Finance, LLC's (WOW
or the Company) Corporate Family Rating to B1, from B2, and
assigned a B1 to the Company's new $980 million Senior Secured Bank
Credit Facility, including a new 5-year $250 million Revolving
Credit Facility (RCF) due 2026 and new 7-year, $730 million Term
Loan B (TLB) due 2028 (together, the Refinancing). The outlook is
Stable. This concludes the review for upgrade initiated on July 1,
2021.
On November 1, 2021 WOW announced the completion of the sale of its
Chicago, Evansville, Indiana, and Anne Arundel, Maryland service
areas to Radiate HoldCo, LLC (B2 Stable), a telecommunications
holding company affiliated with RCN Telecom Services, LLC, Grande
Communications Networks LLC and WaveDivision Holdings, LLC
(collectively "Astound Broadband") for $661 million. The completion
of the Astound transaction follows the sale of its Cleveland and
Columbus, Ohio service areas to Atlantic Broadband, a U.S. cable
operator and subsidiary of Cogeco Communications Inc. (Cogeco,
ultimate parent of Cogeco Communications (USA) Inc., rated B1
Stable) for $1.125 billion on September 1, 2021. Combined, the five
markets sold in two transactions (the Divestitures) generated gross
proceeds of $1.786 billion. Post-close, and net of taxes, WOW used
approximately $1.5 billion of the sale proceeds plus balance sheet
cash to pay transaction fees and repay debt, leaving approximately
$729 million in debt outstanding. WOW plans to refinance the
remaining debt with a new $730 million senior secured bank credit
facility. The Company also committed to a significantly more
conservative financial policy, setting its maximum total net
leverage ratio at 3.5x (estimated to be up to .25x higher on a
Moody's adjusted basis).
Moody's views the Divestures and Refinancing transactions and shift
to a much more conservative financial policy as credit positive.
Despite a significantly smaller scale company (approximately 36%
less revenue, pro forma LTM Q3 2021), the deleveraging is
transformative, significantly strengthening the credit profile by
dramatically reducing the burden of interest and thus increasing
financial flexibility to invest in the business. Moody's expect the
leverage ratio (Moody's adjusted gross debt/EBITDA) to fall below
3x (in the high 2x range) over the next 12-18 months, down sharply
from approximately 5x at the end of the last quarter (Q3 2021). The
debt reduction will significantly lower interest cost to about 3.5%
(weighted average cost of reported debt), a savings of close to $75
million annually (on a pro-forma run-rate basis). The refinancing
also favorably improves the maturity profile, extending the new TLB
maturity by 5 years relative to the obligation to be retired. The
improved financial flexibility will also allow the company to more
comfortably ramp its capital investments to extend its footprint
and upgrade its network, accelerate its broadband-first strategy,
and still leave substantial excess free cash flow to build its
liquidity position to opportunistically pursue M&A tuck-ins to
improve the market position of the company.
Upgrades:
Issuer: WideOpenWest Finance, LLC
Corporate Family Rating, Upgraded to B1 from B2
Probability of Default Rating, Upgraded to B1-PD from B2-PD
Senior Secured 1st Lien Revolving Credit Facility, Upgraded to B1
(LGD3) from B2 (LGD3)
Senior Secured Term Loan B, Upgraded to B1 (LGD3) from B2 (LGD3)
Assignments:
Issuer: WideOpenWest Finance, LLC
Senior Secured Term Loan B, Assigned B1 (LGD3)
Senior Secured Revolving Credit Facility, Assigned B1 (LGD3)
Outlook Actions:
Issuer: WideOpenWest Finance, LLC
Outlook, Changed To Stable From Rating Under Review
RATINGS RATIONALE
WOW's B1 CFR is constrained by its small scale, low penetration
rate, and exposure to unfavorable secular trends in voice and
video. The Company operates in 14 markets across 6 states with a
high degree of regional concentration in just one state (about 45%
of homes passed, 49% of subscribers). In nearly all of its markets,
it is an overbuilder with a challenger brand evidenced by low
penetration rates (Moody's Triple Play Equivalent is 13% in the
aggregate, one of the lowest among rated issuers) and above average
capital intensity (mid 20% of revenue) which absorbs a high
percentage of operating cash flow. The Company also faces strong
competition (including Comcast or Charter in most markets), and
secular challenges in voice and video with customers turning to
cheaper streaming video options and using their wireless services
in place of wireline voice. As a result, the Company is
experiencing a high loss of video and voice subscribers in the
mid-teens percent range. Certain measures of profitability are also
relatively weak, including revenue and EBITDA to homes passed.
Supporting the credit profile is a relatively conservative
financial policy that tolerates net leverage up to 3.5x
(management's calculation, up to approximately .25x higher on a
Moody's adjusted basis), but that Moody's expect to range between
2.75-3.0x over the next 12-18 months, pro forma for the
transactions. The Company also has a very competitive hybrid
fiber-coax (HFC) network that is DOCSIS-enabled, producing industry
leading speeds of at least 1 Gbps across most of its footprint
(95%) and up to 10 gbs to commercial customers. These assets have
helped position the Company to satisfy strong and sustained
broadband demand, which is driving organic subscriber growth in the
mid-single digit percent range and supporting strong and rising
EBITDA margins approaching 40%.
The SGL-2 speculative grade liquidity rating reflects good
liquidity supported by internal sources of cash and cash flows, an
undrawn $250 million revolving credit facility, and covenant-lite
loan terms. However, alternate liquidity is limited due to the
fully secured capital structure.
The senior secured bank credit facility is rated B1 (LGD3), aligned
with the B1 CFR. The instrument ratings reflect the B1-PD
Probability of Default Rating of the Company and an average
expected family recovery rate of 50% at default given the
covenant-lite terms of the facility. Lease rejection claims and
trade payables are unrated and immaterial, and thus do not affect
the instrument level ratings.
As proposed, the new credit facility is expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
Incremental Facilities
Incremental debt capacity (aggregate principal) is permitted, equal
to the greater of $295 million and 100% of consolidated EBITDA
(free basket) plus the aggregate amount of voluntary prepayments of
TLB and revolving loans and incremental equivalent debt (voluntary
prepayment, subject to certain conditions), plus (i) unlimited
amounts of pari-passu secured incremental debt or junior secured
incremental debt when the Secured Net Leverage Ratio does not
exceed 5.0x, or 5.5x or "no worse" then the current Secured Net
Leverage Ratio when incurred in connection with a permitted
acquisition or other similar permitted investment, and (ii)
unlimited amounts of unsecured incremental debt when either (x)
Total Net Leverage Ratio does not exceed 6.5x, or if incurred in
connection with a permitted acquisition or similar permitted
investment, 7.0x or "no worse" than the current Total Net Leverage
Ratio, or (y) the fixed charge coverage ratio if incurred in
connection with a permitted acquisition or other similar permitted
investment.
The maturity date of any incremental term loan facility shall be no
earlier than the latest maturity date of existing term loans. The
maturity date of incremental revolving loans shall be the same, and
no earlier, than the latest maturity date of existing revolving
loans.
Unrestricted Subsidiary Asset Transfers
The credit agreement will permit the borrower to designate any
existing or subsequently acquired subsidiary as an unrestricted
subsidiary, subject to certain conditions. 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.
Guarantee Releases
Subsidiaries must provide guarantee if they are wholly-owned
restricted subsidiaries, subject to certain exceptions with the
ability to release a subsidiary guarantor from its guarantee as a
result of it being non-wholly-owned only if: (i) the transaction
pursuant to which such subsidiary guarantor ceased to be
wholly-owned is consummated with a bona fide third-party that is
not an affiliate of any loan party and the primary purpose of such
transaction is not the release of any guarantee or lien on any
assets or properties such subsidiary guarantor and (ii) with
respect to transactions in which Holdings retains any director or
indirect ownership of equity interests in such subsidiary, the
Borrower (or any other immediate parent of such former subsidiary
guarantor, as applicable) shall be required to have available
investment capacity to hold such remaining investment (and shall be
deemed to have made such investment as if such entity were newly
acquired) in such non-wholly-owned subsidiary.
Subordination/Anti-subordination
The credit agreement provides some limitations on up-tiering
transactions, including (i) a majority of lenders must agree to
amendments and waivers, (ii) each lender must consent to certain
changes that adversely affect their position specifically (e.g.
commitments, reductions in principal interest or fees, extensions
of scheduled amortization and pro rata payments, (iii) unanimous
consent of all lenders is required for the release of substantially
all of the aggregate value of the guarantees or modifications to
voting share and (iv) any amendments that would subordinate the
liens or obligations to any other debt (other than debt expressly
permitted to rank senior or any debtor-in-possession facility)
require all affected lender consent unless each affected lender was
offered the opportunity to participate in such other debt on a
ratable basis on the same terms and conditions.
The proposed terms and the final terms of the credit agreement may
be materially different.
The stable outlook reflects Moody's expectation that debt,
revenues, and EBITDA (Moody's adjusted) will average approximately
$760 million, $705 million, and $270 million, respectively, over
the next 12-18 months. Moody's project EBITDA margins will rise,
approaching 40% and free cash flow will rise to at least $40
million, after interest (based on weighted average borrowing cost
of about 3.5%) and CAPEX (near 27%-28% of revenue). Leverage
(Moody's adjusted debt/EBITDA) will range between 2.75x to 3.0x,
interest coverage (Moody's adjusted EBITDA-CAPEX/interest) will
average 2.5x and free cash flow to debt will increase, to about 5%.
Key assumptions include organic broadband subscriber growth in the
mid-single digit percent range, and video and voice subscriber
losses in the mid-teens percent range. Moody's expect liquidity to
remain good (SGL-2).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could consider an upgrade if the company demonstrates a
sustained track record of conservative financial policies and
revenue growth, increases diversification, with debt/EBITDA
(Moody's adjusted) sustained below 3.0x, and free cash flow to debt
(Moody's adjusted) is sustained above 6.0%. Moody's could consider
a downgrade if debt/EBITDA (Moody's adjusted) is sustained above
4.5x or free cash flow to debt (Moody's adjusted) is sustained
below 4.0%. Moody's could also consider a negative rating action if
the liquidity deteriorated, scale or diversity decreased, financial
policy turned more aggressive, or operating trends declined
materially and on a sustained basis.
The principal methodology used in these ratings was Pay TV
published in October 2021.
With its headquarters in Englewood, Colorado, WideOpenWest Finance,
LLC provides residential and commercial video, high speed data, and
telephony services to 14 markets, across 6 Midwestern and
Southeastern states in the United States. The Company passed
approximately 1.9 million homes and reported approximately 531.6
thousand subscribers and 770.5 thousand revenue generating units as
of September 30, 2021. The Company is public, but the largest
shareholder is private equity firm Crestview Partners (holding 37%
of the common stock). Revenue for the last 12 months ended
September 30, 2021 was approximately $1.15 billion.
ZEP INC: Moody's Confirms 'Caa1' CFR & Alters Outlook to Stable
---------------------------------------------------------------
Moody's Investors Service confirmed Zep Inc.'s Caa1 Corporate
Family Rating and Caa1-PD Probability of Default Rating. Moody's
also upgraded Zep's first lien senior secured revolving credit
facility and term loan ratings to B2 from B3, and the second lien
term loan rating to Caa2 from Caa3. The actions conclude the review
for upgrade initiated on September 30, 2021. The rating outlook is
stable.
Moody's originally placed Zep's ratings under review for upgrade on
September 30, 2021 based on the expectation that the Zep Vehicle
Care (ZVC) divestiture would result in meaningful cash proceeds to
Zep and that the company would use the bulk of the net proceeds for
debt repayment. Following the completion of the ZVC divestiture,
the company used the vast majority of the $371 million net sale
proceeds to repay the first lien term loan and a small amount of
the second lien term loan.
Moody's confirmed the Caa1 CFR because following the ZVC sale, the
company's debt-to-EBITDA is expected to remain above 7x through
fiscal year 2022. The divestiture of the higher growth ZVC business
reduced the scale and diversification of the remaining Zep
business. Moreover, the decline in disinfectant products sales
across the retail and industrial end markets are expected to
continue and raw material cost inflation will continue to pressure
Zep's earnings and cash flow generation over the next six to 12
months. These factors will sustain high leverage and weak free cash
flow notwithstanding the credit benefits of the divestiture
including material debt reduction and improved liquidity, and
despite the company's growth and cost mitigation strategies.
Moody's upgraded both the first lien credit facilities and second
lien term loan by one notch as the recovery prospects for both the
first lien and second lien debt under a reorganization scenario
have improved because of the material reduction in first lien debt
in the capital structure.
The following ratings are affected by the action:
Confirmations:
Issuer: Zep Inc.
Corporate Family Rating, Confirmed at Caa1
Probability of Default Rating, Confirmed at Caa1-PD
Upgrades:
Senior Secured First Lien Revolving Credit Facility, Upgraded to
B2 (LGD2) from B3 (LGD3)
Senior Secured First Lien Term Loan, Upgraded to B2 (LGD2) from B3
(LGD3)
Senior Secured Second Lien Term Loan, Upgraded to Caa2 (LGD5) from
Caa3 (LGD5)
Outlook Actions:
Issuer: Zep Inc.
Outlook, Changed To Stable From Rating Under Review
RATINGS RATIONALE
Zep's Caa1 CFR reflects its high debt-to-EBITDA leverage of 8.8x
(Moody's estimate including standard adjustments) as of the LTM
period ended August 31, 2021 and pro forma for the ZVC divestiture
and debt repayment, as well as the company's small scale low to
negative free cash flow, and exposure to volatile raw material
costs. The company's private equity ownership and aggressive
financial policies also constrain its credit profile. The company's
ratings benefit from good product and end market diversity, and
long-term relationships with top customers. Zep benefitted from an
increase in sales of its industrial disinfectant products at the
onset of the coronavirus pandemic. However, sales have declined in
the last two quarters as Zep's industrial customers have reduced
their orders and retailers and distributors continue to reduce high
levels of disinfectant inventories. Free cash flow also remains
weak despite the strong product demand with drag from investment in
capacity expansion and working capital. Moody's expects Zep's sales
and EBITDA to decline in the next few quarters because of these
headwinds as well as rising input costs, but for EBITDA to increase
overall in the fiscal year ended August 2022 through growth
initiatives, price increases and cost efficiency initiatives.
Moody's projects roughly break even free cash flow and a reduction
in debt to EBITDA below 8x in fiscal 2022.
Zep is utilizing roughly $36 million of the ZVC sale proceeds to
bolster the cash balance, which improves the company's liquidity
and reinvestment capacity. The approximate $47 million pro forma
cash balance as well as the $45 million undrawn revolver provides
good coverage of the $5.5 million of required annual term loan
amortization. Liquidity could weaken as the company utilizes the
cash for growth initiatives. The debt repayment also improved
headroom under the springing maximum 7.25x first
lien-debt-to-EBITDA covenant despite the lost ZVC earnings.
Zep is exposed to environmental risks since it produces hazardous
materials that utilize potentially toxic chemicals and petroleum
based inputs, as well as other raw materials, energy and water.
Investment is necessary to minimize such environmental risks and to
protect the labor force from adverse health effects. The company
has safety programs in place to protect the environment and the
workforce. Such actions increase costs and can reduce manufacturing
efficiency that reduce cash flow.
The coronavirus outbreak and the government measures put in place
to contain it continue to disrupt economies and credit markets
across sectors and regions. Although an economic recovery is
underway, it is tenuous, and its continuation will be closely tied
to containment of the virus. As a result, there is uncertainty
around Moody's forecasts. Moody's regard the coronavirus outbreak
as a social risk under its ESG framework, given the substantial
implications for public health and safety. Zep experienced
increased product demand because of the coronavirus but sales are
vulnerable to reductions as that elevated demand moderates.
Moody's views Zep's governance risk as high given its private
equity ownership by New Mountain Capital, LLC. Moody's expects an
aggressive financial strategy that favors shareholders. Zep's board
of directors consists of representatives from its sponsors and
management team. Financial disclosures are also more limited than
for public companies.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that Zep will
increase revenue and EBITDA, organically and through expansion
projects, resulting in debt-to-EBITDA (Moody's adjusted) falling
below 8.0x by FY2022. Moody's also expects Zep to maintain adequate
liquidity over the next 12-to-18 months.
Moody's could upgrade the ratings if the company is able to
mitigate cost pressures as well as grow revenue and earnings with
stable margins, sustainably reduce its debt-to-EBITDA (Moody's
adjusted) below 7x, and maintain at least adequate liquidity,
including positive free cash flow generation.
Moody's could downgrade the ratings if operating performance or
liquidity deteriorates, the risk of a distressed exchange or other
default increases, or debt recovery prospects weaken.
The principal methodology used in these ratings was Consumer
Packaged Goods Methodology published in February 2020.
Headquartered in Atlanta, Georgia, Zep Inc. produces chemical based
products including cleaners, degreasers, deodorizers,
disinfectants, floor finishes and sanitizers, primarily for
business and industrial use. Revenue for the 2021 fiscal year
ending August 31, 2021 was $665 million pro forma for the ZVC
divestiture. Zep has been owned by private equity firm New Mountain
Capital, LLC since 2015.
[^] BOND PRICING: For the Week from Nov. 29 to Dec. 3, 2021
-----------------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
BP Capital Markets
America Inc BPLN 3.224 100.094 4/14/2024
BP Capital Markets
America Inc BPLN 3.216 100.101 11/28/2023
BPZ Resources Inc BPZR 6.500 3.017 3/1/2049
Basic Energy Services BASX 10.750 8.831 10/15/2023
Basic Energy Services BASX 10.750 8.831 10/15/2023
Buffalo Thunder
Development
Authority BUFLO 11.000 50.000 12/9/2022
Carolina Trust
Bancshares Inc CART 6.900 95.848 10/15/2026
Diamond Sports Group
LLC / Diamond
Sports Finance Co DSPORT 6.625 25.349 8/15/2027
Diamond Sports Group
LLC / Diamond
Sports Finance Co DSPORT 6.625 25.026 8/15/2027
Endo Finance LLC ENDP 5.750 90.356 1/15/2022
Endo Finance LLC ENDP 5.750 90.356 1/15/2022
Energy Conversion
Devices Inc ENER 3.000 7.875 6/15/2013
Energy Future
Competitive
Holdings Co LLC TXU 0.988 0.072 1/30/2037
Finisar Corp IIVI 0.500 98.000 12/15/2036
GNC Holdings Inc GNC 1.500 0.561 8/15/2020
GTT Communications GTTN 7.875 13.000 12/31/2024
GTT Communications GTTN 7.875 12.250 12/31/2024
Goodman Networks Inc GOODNT 8.000 43.004 5/11/2022
Host Hotels & Resorts HST 3.750 104.226 10/15/2023
Lannett Co Inc LCI 4.500 27.500 10/1/2026
MAI Holdings Inc MAIHLD 9.500 17.365 6/1/2023
MAI Holdings Inc MAIHLD 9.500 19.125 6/1/2023
MAI Holdings Inc MAIHLD 9.500 17.365 6/1/2023
MBIA Insurance Corp MBI 11.384 9.100 1/15/2033
MBIA Insurance Corp MBI 11.384 9.591 1/15/2033
MF Global Holdings MF 9.000 14.000 6/20/2038
MF Global Holdings MF 6.750 14.000 8/8/2016
Navient Corp NAVI 6.500 102.740 6/15/2022
NextEra Energy
Capital Holdings NEE 3.150 100.082 4/1/2024
NextEra Energy
Capital Holdings NEE 3.250 100.066 4/1/2026
Nine Energy Service NINE 8.750 49.619 11/1/2023
Nine Energy Service NINE 8.750 49.442 11/1/2023
Nine Energy Service NINE 8.750 50.799 11/1/2023
OMX Timber Finance
Investments II LLC OMX 5.540 0.836 1/29/2020
Renco Metals Inc RENCO 11.500 24.875 7/1/2003
Revlon Consumer
Products Corp REV 6.250 42.740 8/1/2024
Riverbed Technology RVBD 8.875 66.501 3/1/2023
Riverbed Technology RVBD 8.875 66.501 3/1/2023
Rolta LLC RLTAIN 10.750 1.123 5/16/2018
Sears Holdings Corp SHLD 8.000 0.950 12/15/2019
Sears Holdings Corp SHLD 6.625 2.650 10/15/2018
Sears Holdings Corp SHLD 6.625 2.816 10/15/2018
Sears Roebuck
Acceptance Corp SHLD 7.000 1.260 6/1/2032
Sears Roebuck
Acceptance Corp SHLD 7.500 1.470 10/15/2027
Sears Roebuck
Acceptance Corp SHLD 6.500 1.302 12/1/2028
Sears Roebuck
Acceptance Corp SHLD 6.750 1.383 1/15/2028
Sempra Texas Holdings TXU 5.550 13.500 11/15/2014
Talen Energy Supply TLN 4.600 96.987 12/15/2021
Talen Energy Supply TLN 9.500 84.669 7/15/2022
Talen Energy Supply TLN 9.500 84.669 7/15/2022
TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019
Trousdale Issuer LLC TRSDLE 6.500 33.000 4/1/2025
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog,
Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa,
Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2021. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
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*** End of Transmission ***