/raid1/www/Hosts/bankrupt/TCR_Public/211230.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, December 30, 2021, Vol. 25, No. 363
Headlines
2123 PARTNERS: Seeks to Hire Rosenberg, Musso & Weiner as Counsel
A&M HOME SOLUTIONS: Gets OK to Hire Osipov Bigelman as Counsel
AHF PARENT: Moody's Assigns B2 CFR; Outlook Stable
ARRAY TECH: Moody's Lowers CFR to B2; Outlook Stable
ATIO USA: Involuntary Chapter 11 Case Summary
BOWLERO CORP: Moody's Alters Outlook on B2 CFR to Stable
BOY SCOUTS: Martin Harding Updates on Unsecured Claimant
BOY SCOUTS: Siegle & Sims Represents Abuse Survivors
BROWN JORDAN: Moody's Assigns B3 Rating to $100M First Lien Loan
CALVERT HEALTH: Case Summary & Unsecured Creditors
CITY BREWING: Moody's Puts B1 CFR on Review for Downgrade
COOPER-STANDARD AUTOMOTIVE: Moody's Lowers CFR to Caa1; Outlook Neg
CROCS INC: S&P Places 'BB-' Issuer Credit Rating on Watch Negative
ENTEGRIS INC: Moody's Puts Ba1 CFR on Review for Downgrade
FREEPORT-MCMORAN INC: Moody's Hikes Unsec. Notes Rating From Ba1
GRUPO AEROMEXICO: Provides Information on Public Tender Offer
HARTWICK COLLEGE: Moody's Lowers Issuer Rating to B1; Outlook Neg.
HEILUX LLC: Voluntary Chapter 11 Case Summary
HIRERIGHT HOLDINGS: Moody's Assigns B2 CFR; Outlook Stable
HORNBLOWER SUB: Moody's Hikes CFR to Caa1; Outlook Stable
IM SERVICES: Case Summary & 20 Largest Unsecured Creditors
INTELSAT SA: Bankruptcy Court Approves Reorganization Plan
ION GEOPHYSICAL: Fails to Comply With NYSE Listing Standards
JP RAMBLE: Case Summary & 2 Unsecured Creditors
KURNCZ FARMS: Taps Warner Norcross + Judd as Legal Counsel
LIQUI-BOX HOLDINGS: Moody's Affirms B3 CFR; Outlook Negative
LTL MANAGEMENT: Talc Claimants Panel Seeks to Hire Canadian Counsel
MARINER WEALTH: Moody's Affirms B1 CFR Amid New $150M 2nd Lien Loan
ODYSSEY AT PATERSON: Sale of Commercial Property to Fund Plan
PARAMOUNT RESOURCES: Moody's Hikes CFR to B1; Outlook Positive
PHILIPPINE AIRLINES: Wins U.S. Approval of Reorganization Plan
RYMAN HOSPITALITY: Moody's Affirms Ba3 CFR; Outlook Negative
S K TRANSPORT: Seeks Approval to Hire Mike McClure as Manager
SCP COLDWORKS: Amendment to Plan
UNDER ARMOUR: Moody's Hikes CFR to Ba2; Outlook Remains Positive
WATSONVILLE HOSPITAL: Seeks to Hire Force Ten Partners, Appoint CRO
WATSONVILLE HOSPITAL: Seeks to Hire Ordinary Course Professionals
WATSONVILLE HOSPITAL: Seeks to Tap Pachulski as Bankruptcy Counsel
WATSONVILLE HOSPITAL: Taps Bartko Zankel as Special Labor Counsel
WATSONVILLE HOSPITAL: Taps Cowen and Company as Investment Banker
WATSONVILLE HOSPITAL: Taps Stretto as Administrative Advisor
WHITEHORSE VII: S&P Lowers Rating on Class B-3L Notes to 'D (sf)'
WYNN RESORTS: Moody's Lowers CFR to B1; Outlook Negative
[*] Lewis J. Cohn Named to Boston Magazine's Top Lawyers List
[] Seven New Partners to Join Young Conaway Effective January 1
[^] Recent Small-Dollar & Individual Chapter 11 Filings
*********
2123 PARTNERS: Seeks to Hire Rosenberg, Musso & Weiner as Counsel
-----------------------------------------------------------------
2123 Partners LP seeks approval from the U.S. Bankruptcy Court for
the Eastern District of New York to employ Rosenberg, Musso &
Weiner, LLP as its legal counsel.
The firm will render these legal services:
(a) advise the Debtor regarding its duties and powers in the
continued operation of its business and management of its property;
and
(b) prepare legal papers; and
(c) perform all other legal services for the Debtor.
The firm received a retainer of $7,500 from Corey Berman, the
Debtor's sole partner.
To the best of the Debtor's knowledge, the firm has no connection
with the Debtor, the creditors, or any other party-in-interest, or
their respective attorneys and it represents no interest adverse to
the Debtor or the estate in the matters upon which it is to be
engaged.
The firm can be reached at:
Rosenberg, Musso & Weiner, LLP
26 Court St., Suite 2211
Brooklyn, NY 11242
Telephone: (718) 855-6840
Facsimile: 718-625-1966
Email: courts@nybankruptcy.net
About 2123 Partners
2123 Partners LP, a company that is primarily engaged in renting
and leasing real estate properties, filed its voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y.
Case No. 21-42983) on Nov. 30, 2021, listing $5,533,000 in total
assets and $3,046,630 in total liabilities. Corey M. Berman, sole
partner, signed the petition. Judge Nancy Hershey Lord oversees the
case. Rosenberg, Musso & Weiner, LLP serves as the Debtor's
counsel.
A&M HOME SOLUTIONS: Gets OK to Hire Osipov Bigelman as Counsel
--------------------------------------------------------------
A&M Home Solutions, LLC received approval from the U.S. Bankruptcy
Court for the Eastern District of Michigan to employ Osipov
Bigelman, P.C. to serve as legal counsel in its Chapter 11 case.
The hourly rates charged by the firm's attorneys and paralegals are
as follows:
Jeffrey H. Bigelman, Esq. $375/hour
Yuliy Osipov, Esq. $375/hour
Anthony Miller, Esq. $340/hour
David P. Miller, Esq. $340/hour
Thomas D. DeCarlo, Esq. $350/hour
Paralegal $125/hour
The Debtor paid a $5,262 retainer to Osipov Bigelman.
As disclosed in court filings, Osipov Bigelman's attorneys are
disinterested pursuant to Section 101(14) of the Bankruptcy Code.
Yuliy Osipov, Esq.
Osipov Bigelman, P.C.
20700 Civic Center Dr., Ste. 420
Southfield, MI 48076
Tel: (248) 663-1800
Fax: (248) 663-1801
Email: yo@osbig.com
About A&M Home Solutions
A&M Home Solutions, LLC is a Royal Oak, Mich.-based company engaged
in activities related to real estate.
A&M Home Solutions filed a petition for Chapter 11 protection
(Bankr. E.D. Mich. Case No. 21-49264) on Nov. 29, 2021, disclosing
up to $1 million in assets and up to $10 million in liabilities.
Debora Lynn Gonzalez, managing member, signed the petition.
Yuliy Osipov, Esq., at Osipov Bigelman, P.C. is the Debtor's legal
counsel.
AHF PARENT: Moody's Assigns B2 CFR; Outlook Stable
--------------------------------------------------
Moody's Investors Service assigned ratings to AHF Parent Holding,
Inc. (AHF), including a B2 Corporate Family Rating and a B2-PD
Probability of Default Rating. Concurrently, Moody's assigned a B2
rating to the company's proposed $215 senior secured first lien
term loan due 2028. The outlook is stable.
Proceeds from the proposed $215 million first lien term loan, along
with a new common equity contribution by affiliates of Paceline
Equity Partners (Paceline) will fund Paceline's leveraged buyout
(LBO) of AHF, including the repayment of AHF's existing debt.
Concurrent with the transaction, AHF is expected to enter into a
new $50 million asset-based lending (ABL) revolving facility due
2026, and the company expects to draw $8 million to help pay
transaction related fees and expenses.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: AHF Parent Holding, Inc.
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD4)
Outlook Actions:
Issuer: AHF Parent Holding, Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
AHF's B2 CFR broadly reflects its good market position in the US
hardwood flooring market, aided by its strong market leading
position in the solid wood flooring (SWF) segment, and #2 position
in engineered wood flooring (EWF). The company's large domestic
manufacturing footprint and differentiated brand portfolio are
competitive advantages, with the ability to better service national
accounts relative to smaller competitors and service distribution
partners without channel conflict. Demand for the company's
products has been high over the past 18 months, as consumers are
spending more on their homes and new home construction has been
high to meet increased housing demand starting in the second half
of 2020. AHF's financial leverage is moderate with debt/EBITDA at
4.2x pro forma for the proposed transaction and its EBIT margin is
relatively strong in the low teens as of the last twelve months
(LTM) ending 30 September 2021. Moody's projects debt/EBITDA
leverage will remain at or below 4.0x supported by solid US housing
market trends, particularly in the home repair and remodel segment.
AHF's good liquidity reflects Moody's expectations for free cash
flow of around $30 million over the next 12-18 months, and access
to a largely undrawn $50 million revolving facility due 2026 and
lack of meaningful debt maturities until the revolver expiration.
AHF's credit profile also reflects its relatively small scale with
revenue around $500 million and narrow product focus in the mature
hardwood flooring industry, with SWF and EWF products representing
90% of sales. The SWF category, which represents about 57% of AHF's
sales, continues to experience gradual declines in market
penetration, as resilient luxury vinyl tile (LVT) products continue
to gain share. The company recently entered the LVT category, but
AHF's market position in this segment is smaller and SWF and EWF
products will continue to generate the majority of revenue.
Hardwood flooring products are non-discretionary and demand is
largely driven by the highly cyclical US housing market. AHF has
increased earnings meaningfully in the last few years subsequent to
the spin-out from Armstrong Flooring Inc. in 2018. The improvement
reflects cost reductions and increased market share due to
competitors shutting hardwood flooring production capacity that
Moody's believes was motivated in part by declining hardwood share
of the flooring market. However, Moody's anticipates some of the
elevated consumer spending in home related products to gradually
shift toward other spending such as travel as the coronavirus
moderates, but to a level that still supports AHF's financial
leverage and free cash flow remaining within the projected range.
High lumber costs could also lead to increased product costs and
consumers further shifting away from hardwood flooring. Free cash
flow has been negative in recent years, but Moody's projects a much
smaller working capital investment will support positive free cash
flow in 2022. The company has high customer concentration with its
top 5 customers representing about 60% of sales.
The company relies on natural resources, primarily wood, and uses
chemicals and other raw materials as part of its manufacturing
process, and is subject to various regulations regarding wood
sourcing, emissions and waste management. AHF has a long history of
compliance with the applicable environmental laws, but a failure to
adhere to these regulations could result in financial penalties,
remediation costs, and negative effect to its brand image.
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. The company is exposed to health and
safety risks common in a manufacturing environment.
Governance risks primarily relate to the company's majority
ownership by private equity sponsors, and the inherent risk of
shareholder friendly financial policies including debt financed
dividend distribution and high financial leverage.
The B2 rating assigned to the proposed $215 million first lien term
loan due 2028 is the same as the B2 CFR and reflects that the first
lien term loan represents the preponderance of the capital
structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectations that continued
good consumer demand for the company's products will support stable
revenue and earnings over the next 12-18 months, resulting in AHF's
debt/EBITDA leverage remaining around 4.0x. Lower working capital
investment will contribute to improved free cash flow generation
that Moody's projects in the $30 million annual range. The stable
outlook also reflects Moody's expectations that the company will
maintain at least good liquidity.
Ratings could be upgraded if the company meaningfully increases it
revenue scale and product diversification, while demonstrating a
track record of consistent organic revenue growth with a stable
EBITDA margin. A ratings upgrade would also require the company to
sustain debt/EBITDA below 3.5x and free cash flow to debt above
7.5%. The company would also need to maintain at least good
liquidity, and Moody's would need to expect balanced financial
policies that support credit metrics at those levels.
Ratings could be downgraded if revenue or the EBITDA margin
deteriorates, or if debt/EBITDA is sustained above 4.5x. Ratings
could also be downgraded if liquidity deteriorates highlighted by
negative to modest free cash flow generation on an annual basis or
increased reliance on the revolver facility, or if the company
completes a debt financed acquisition or shareholder distribution
that materially increases leverage.
As proposed, the new first lien credit facilities are expected to
provide covenant flexibility that if utilized could negatively
impact creditors. Notable terms include the following: incremental
debt capacity up to the sum of the greater of $49 million and 75%
of pro forma trailing four quarter consolidated EBITDA, plus
unlimited amounts subject to first lien net leverage ratio not to
exceed closing date ratio (if pari passu secured). A to be
determined amount of incremental credit facility debt may be
incurred with an earlier maturity date than the initial term loan
subject to inside maturity basket limitations. 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 such transfer is for fair market
value or pursuant to a bona fide joint venture with a non-affiliate
and not for the purpose of causing such guarantor to cease to be a
guarantor. The credit agreement permits the transfer of assets to
unrestricted subsidiaries, up to the carve-out capacities, subject
to "blocker" provisions preventing unrestricted subsidiaries from
owning, licensing, contributing or transferring intellectual
property that is material to the borrower and its restricted
subsidiaries, taken as a whole. There are no express protective
provisions prohibiting an up-tiering transaction that weakens the
term loan's collateral position. The above are proposed terms and
the final terms of the credit agreement may be materially
different.
AHF Products manufactures and distributes hard surface flooring in
North America primarily in the solid wood flooring ("SWF") and
engineered wood flooring ("EWF") categories, as well as vinyl and
stone polymer core (SPC). The company is headquartered in
Mountville, PA, and has 7 manufacturing plants in the US and 1 in
Cambodia. Pro forma for the proposed LBO, the company is owned by
Paceline Equity. Revenue as of the LTM period ending 30 September
2021 was $446 million.
ARRAY TECH: Moody's Lowers CFR to B2; Outlook Stable
----------------------------------------------------
Moody's Investors Service affirmed the first lien senior secured
bank debt ratings of Array Tech, Inc. (Array) at B1. Concurrently,
Moody's downgraded the company's CFR and PDR by one notch to B2 and
B2-PD, respectively from B1 and B1-PD. The company's Speculative
Grade Liquidity (SGL) rating was downgraded to SGL-3 (adequate
liquidity) from SGL-2 (good liquidity). The ratings outlook is
stable.
The rating downgrades reflects risks stemming from the company's
pending acquisition of Spain-based, Soluciones Tecnicas Integrales
Norland S.L. (STI). The acquisition will result in an increase in
financial leverage at the same time that Array continues to face
its own operational challenges. The recent significant rise in
commodity prices (namely steel) and logistics costs have caused
significant margin deterioration and resulted in a degradation in
Array's cash flow. These challenges are exacerbated by Array's
inherently lumpy, project-based work, which results in significant
volatility in revenue and earnings. The STI acquisition -- while it
will increase scale and geographic diversity -- will also increase
leverage, and add integration and execution risk as it enters into
new international markets.
The acquisition purchase price of approximately EUR570 million is
being financed with both debt and equity. The cash portion of the
purchase price will be largely funded by the company's recently
issued $425 million 1% convertible senior notes due 2028 (unrated).
The remaining cash portion of the acquisition is being funded by
approximately $50 million of preferred stock. Further, up to an
additional €55 million is payable in 2022 based on the amount
that STI's full year 2021 exceeds an EBITDA threshold. The company
expects the acquisition to close during the company's first quarter
of 2022.
The affirmation of the company's B1 first lien secured bank debt,
despite the downgrade of the CFR, reflects the addition of a
meaningful amount of newly issued unsecured convertible notes to
the capital structure. The convertible notes are effectively and
structurally subordinated to the bank debt, providing increased
first loss absorption to the senior secured lenders.
The SGL-3 reflects Moody's expectation that the company will
maintain adequate liquidity. Near-term Moody's expects continued
negative free cash flow, though turning positive overall for 2022.
The acquisition of STI also reduces the availability of preferred
stock as a source of liquidity to $100 million from $150 million.
That said, liquidity will be supported by the company's cash
balances and access to a $200 million revolving credit facility
(approximately $175 million is available, net of letters of
credit). The company has no near term debt maturities, and Moody's
expects the company to be in compliance with covenants.
Moody's took the following rating actions:
Affirmations:
Issuer: Array Tech, Inc.
Senior Secured 1st Lien Bank Credit Facilities (Term Loan and
Revolver), Affirmed at B1 (LGD3)
Downgrades:
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Speculative-Grade Liquidity Rating, Downgraded to SGL-3 from
SGL-2
Outlook Actions:
Outlook, Remains Stable
RATINGS RATIONALE
Array's B2 CFR reflects inherent earnings and free cash flow
volatility as well as high financial leverage that will increase
for the STI acquisition. This is balanced against adequate
liquidity, a strong market position, patent protection and a strong
backlog that will support revenue growth in 2022 and 2023. Pro
forma for the transaction, FY 2021 debt/EBITDA (based on total debt
and including Moody's standard adjustments) will be in the 6.5x
range. Moody's expects that leverage will decline as earnings
improve, primarily in 2022, stemming from backlog conversion and
the company's recent actions to mitigate the impact of steel price
increases, logistics, supply chain and other inflationary cost
pressures.
The acquisition of STI will increase the company's revenue base to
over $1 billion, will contribute favorably to Array's margin
profile and broadens the company's global presence by adding a
presence in Europe (particularly Spain) and Brazil. That said, the
company is incurring additional debt to finance the acquisition as
it is in the midst of recovering from the negative impact of
historically high inflationary cost pressures and supply chain
headwinds on margins and cash flow. The related acquisition
integration risk is also a consideration as the company expands
into markets where it currently does not have a meaningful
presence.
The ratings outlook reflects Moody's expectation that the company
will maintain an adequate liquidity position over the next 12 to 18
months while meaningfully improving its financial leverage in 2022
primarily through earnings growth.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The company's ratings could be downgraded if margins meaningfully
deteriorate or free cash flow weakens further such that Moody's
expects debt/EBITDA to remain above 5.5x beyond 2022. A material
erosion in liquidity could also drive negative ratings pressure.
More aggressive financial policies, including use of cash towards
another meaningful acquisition or dividends rather than debt
repayment would also exert downward ratings pressure.
The ratings could be upgraded if Array successfully integrates the
STI acquisition without any material operating disruption and
restores its own profitability such that debt-to-EBITDA is
sustained below 4.5x and free cash flow to debt is sustained in the
double digits. The ratings could also be upgraded if the nature of
Array's business changes such that the company demonstrates reduced
quarterly earnings and cash flow variability.
Headquartered in Albuquerque, New Mexico, Array Technologies, Inc.,
the parent company of Array Tech, Inc., manufactures
ground-mounting systems used in solar energy projects. The company
generated revenues of approximately $821 million for the last
twelve months ended September 30, 2021.
ATIO USA: Involuntary Chapter 11 Case Summary
---------------------------------------------
Alleged Debtor: ATIO USA LLC
3055 Evercane Road
Clewistown, FL 33440
Involuntary Chapter
11 Petition Date: December 28, 2021
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 21-22014
Petitioners' Counsel: Robert C. Meyer, Esq.
MEYER & NUNEZ, P.A.
2221 Coral Way, Second Floor
Miami, FL 33145
Tel: 305-285-8838
E-mail: meyerrobertc@cs.com
A full-text copy of the Involuntary Petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/UH7LD6Q/ATIO_USA_LLC__flsbke-21-22014__0001.0.pdf?mcid=tGE4TAMA
Alleged creditors who signed the petition:
Petitioner Nature of Claim
Claim Amount
----------
--------------------- -------------------
1. Gruppo Pedercini Business Debt
$21,183
via Mascagni
Nuvolera Brescia 2508
2. Elettro2000 Srl Business Debt
$37,884
3. Elettro2000 Srl Credit Business Debt
$187,056
BOWLERO CORP: Moody's Alters Outlook on B2 CFR to Stable
--------------------------------------------------------
Moody's Investors Service affirmed Bowlero Corp.'s (Bowlero or the
Company) B2 Corporate Family Rating (CFR) and B2-PD Probability of
Default Rating (PDR). Additionally, Moody's affirmed the B2 rating
on the 1st lien senior secured term loan B issued by Bowlero's
subsidiary, Kingpin Intermediate Holdings, LLC (Kingpin) and
assigned a B2 rating to the new $165 million senior secured
revolving credit facility. The rating outlooks were changed to
stable from negative.
Bowlero's stable outlook reflects Moody's expectation for a strong
and sustained recovery in operating performance from the impact of
the pandemic. Moody's projects results will continue to exceed
pre-pandemic levels during the Company's upcoming peak operating
season due to pent up consumer demand, cost saving measures, and
ongoing investments in new and existing centers. Bowlero's
liquidity position will also improve as a portion of the De-SPAC
proceeds will add cash to the balance sheet.
Moody's assigned Bowlero a Speculative Grade Liquidity (SGL) rating
of SGL-2 which reflects access to the new revolving credit facility
and $165 million of pro forma cash on the balance sheet. The rating
on the existing revolving credit facility due 2022 will be
withdrawn in the near term.
Affirmations:
Issuer: Bowlero Corp.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Issuer: Kingpin Intermediate Holdings, LLC
Senior Secured 1st Lien Bank Credit Facility, Affirmed B2
(LGD3)
Assignments:
Issuer: Bowlero Corp.
Speculative Grade Liquidity Rating, Assigned SGL-2
Issuer: Kingpin Intermediate Holdings, LLC
Gtd. Senior Secured 1st Lien Revolving Credit Facility,
Assigned B2 (LGD3)
Outlook Actions:
Issuer: Bowlero Corp.
Outlook, Changed To Stable From Negative
Issuer: Kingpin Intermediate Holdings, LLC
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Bowlero's leverage was very high at over 10x as of the end of
September 2021 (including Moody's standard adjustments) but Moody's
projects leverage will decline substantially over the next few
quarters due to strong consumer demand, additional cost saving
actions to improve efficiency, and investments in new and existing
bowling centers. The pandemic led to bowling center closures and
operating restrictions in addition to higher amounts of debt, but
results improved quickly as health restrictions eased and consumer
demand increased for out of home entertainment. Revenues from group
events have been slower to recover, but Moody's expects this
business segment will improve further in 2022 and 2023.
Bowlero has realized substantial cost savings over the past several
years while increasing revenue, and Moody's projects the Company
will achieve additional cost savings going forward. Bowlero has
been successful increasing the number of higher margin, casual
bowlers who are likely to spend more than traditional league
bowlers. The Company has also demonstrated good discipline with its
discount policy, while raising prices and growing its group event
business. Bowlero also benefits from good geographic diversity and
size with over 300 centers (as of September 2021) which helps
offset the impact of any increase in restrictive measures imposed
by local and state regulators in response to the pandemic or
regional economic declines. Capital expenditures to upgrade current
locations have also contributed significantly to growth which will
continue in addition to acquisitions and new center development.
Results are expected to be sensitive to the trends of the pandemic
and economy, and will be seasonal with the strongest periods
occurring in the quarters ending in December and March.
Moody's considers governance risks in Bowlero's credit profile,
including the Company's relatively aggressive financial policy.
Bowlero issued $105 million in additional debt in November 2019
which was expected to be used for future acquisitions or the
renovation of bowling centers. While Bowlero benefited from the
additional liquidity of the add on term loan during the pandemic,
Moody's considers this to be indicative of a relatively aggressive
financial policy. Moody's expects Bowlero will continue to be
acquisitive as a public company. Atairos Group, Inc. (Atairos) has
a substantial ownership position in the Company.
Bowlero's SGL-2 liquidity rating reflects Moody's expectation that
Bowlero will have good liquidity over the next 12 months, with $165
million of pro forma cash as of the end of September 2021. Bowlero
will also have access to a new $165 million revolving credit
facility with $86 million drawn at closing. Capex was curtailed to
$52 million LTM September 2021 to preserve liquidity during the
pandemic, but Moody's projects Bowlero will increase capex in the
near term to fund renovations and new center developments.
The term loan B is covenant lite and the revolver is subject to a
springing first lien leverage ratio covenant of 6x when greater
than 35% of the facility is drawn. However, Bowlero previously
executed an amendment that suspends the financial covenant
applicable to the revolving facility until March 2022. The first
lien leverage ratio is 4.2x as of September 2021 and Moody's
expects Bowlero will remain well within compliance with the
financial covenant over the next twelve months.
The B2 rating on the senior secured credit facility is in line with
the B2 CFR and reflects the all-first lien debt capital structure
and covenant-lite structure of the term loan B.
The stable outlook reflects Moody's expectation that Bowlero's
results will continue to exceed pre-pandemic levels during the
Company's historically strongest operating season in the quarters
ending in December and March and that leverage will decline to the
6x range in 2022 due to continued EBITDA growth. While capex is
projected to increase to fund additional growth, Moody's projects
free cash flow as a percentage of debt will be in the low to
mid-single digit range.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Bowlero's leverage were to
decrease below 4.5x (including Moody's standard adjustments) on a
sustained basis with a free cash flow to debt percentage ratio (as
calculated by Moody's) above 5%. Positive organic revenue growth
and a good liquidity position would also be required as would
confidence that the Company would pursue a financial policy
consistent with a higher rating.
The ratings could be downgraded if Bowlero's performance improves
slower than Moody's projects and leverage was sustained above 7x. A
weakened liquidity position or the inability to refinance
approaching debt maturities in a timely manner could also pressure
the ratings.
Bowlero Corp. (fka Bowlmor AMF Corp.) is the largest bowling center
operator in the US with additional locations in Canada and Mexico.
The Company completed a De-SPAC transaction in December 2021 after
the merger with ISOS Acquisition Corporation and trades under the
ticker symbol BOWL. The Company was created following the
acquisition of AMF by Strike Holdings LLC (Bowlmor) in 2013. The
Company acquired 85 bowling centers from Brunswick Corporation in
2014. In August 2021, Bowlero acquired Bowl America for $45
million. The combined Company operates bowling centers under the
AMF, Bowlero, and Bowlmor brands. Atairos Group, Inc. acquired
majority ownership of the Company in July 2017. Revenue during the
LTM September 2021 was approximately $526 million.
BOY SCOUTS: Martin Harding Updates on Unsecured Claimant
--------------------------------------------------------
In the Chapter 11 cases of Boy Scouts of America and Delaware BSA,
LLC., the law firm of Martin, Harding & Mazzotti, LLP filed an
amended report under Rule 2019 of the Federal Rules of Bankruptcy
Procedure, to disclose that it is representing Claimant No. 58965.
The name and contact details of the Clients were redacted from
publicly available filings.
MHM has fully advised Client with respect to his representation and
Client has agreed to such representation and has requested that MHM
represent him in this case.
MHM does not hold any claims against or hold any interest in the
Debtor.
Counsel for Plaintiff can be reached at:
Thomas J. Mortati, Esq.
MARTIN, HARDING & MAZZOTTI, LLP
1 Wall Street
P.O. Box 15141
Albany, NY 12212-5141
Tel: (518) 862-1200
A copy of the Rule 2019 filing is available at
https://bit.ly/3mGJo1r at no extra charge.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC as financial advisor. Omni
Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BOY SCOUTS: Siegle & Sims Represents Abuse Survivors
----------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Siegle & Sims L.L.P. submitted a verified statement
to disclose that it is representing more than one sexual abuse
survivor creditor in the Chapter 11 cases of Boy Scouts of America
and Delaware BSA, LLC.
The names and contact details of the Clients were redacted from
publicly available filings.
Claim No: 105607
105608
105609
105610
105612
105613
105835
105767
105768
105614
All S&S Claimants have provided S&S with power of attorney
authorizing Eric W. Siegle to vote their interest to the Plan in
this Chapter 11 case. A copy of each executed power of attorney is
being filed electronically herewith.
The Claimants was referred to the firm by a former federal
prosecutor with whom they had a professional relationship. Claimant
interviewed and retained the firm to investigate a Greek Orthodox
parochial school in Jamaica, New York, claimant attended as a young
boy, where he was sexually assaulted on a number of occasions by a
teacher, Lawrence Svrcek, who was also a BSA Scoutmaster, who had
also sexually abused him in that capacity as well. Subsequently,
Claimant referred other friends whom he believed to have been
abused and their name circulated in this small Greek ethic
community resulting in the 10 survivors we represent in this
bankruptcy matter.
Each S&S Claimant has a disclosable economic interest worth in
excess of amount as against the Boy Scouts of America, as a result
of the sexual abuse suffered by them at the hands of one or more of
BSA's scoutmasters and/or assistant scoutmasters.
S&S reserves all rights to amend or supplement this Rule 2019
Statement as necessary for any reason in accordance with Bankruptcy
Rule 2019.
Counsel to the S&S Claimants can be reached at:
Eric W. Siegle, Esq.
SIEGLE & SIMS L.L.P.
217 Broadway, Suite 611
New York, NY 10007
Telephone: (212) 406-0110
Facsimile: (212) 406-5259
E-mail: e.siegle@siegleandsims.com
A copy of the Rule 2019 filing is available at
https://bit.ly/3mHGedN at no extra charge.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC as financial advisor. Omni
Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BROWN JORDAN: Moody's Assigns B3 Rating to $100M First Lien Loan
----------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to the $100 million
senior secured first lien term loan of Brown Jordan Inc. In
addition, Moody's affirmed Brown Jordan's Caa1 Corporate Family
Rating (CFR) and Caa1-PD Probability of Default Rating (PDR). The
outlook remains stable.
Proceeds from the first lien term loan and a $55 million second
lien term loan (unrated) were used to refinance the company's
existing $165 million senior secured first lien term loan due 2023.
The Caa1 rating on the existing first lien term loan will be
withdrawn.
Assignments:
Issuer: Brown Jordan Inc.
Gtd. Senior Secured 1st Lien Term Loan, Assigned B3 (LGD3)
Affirmations:
Issuer: Brown Jordan Inc.
Corporate Family Rating, Affirmed Caa1
Probability of Default Rating, Affirmed Caa1-PD
Outlook Actions:
Issuer: Brown Jordan Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Brown Jordan's Caa1 CFR continues to be constrained by very high
financial leverage, which will remain at or above 7x over the next
12 months, the highly discretionary nature of the company's
products in the consumer segment as well as the resulting
sensitivity to consumer spending levels and industry cyclicality.
The rating also considers the company's small scale relative to
industry peers, which is somewhat offset by the diversity of brands
and product price points offered as well as the multiple end
markets served, including hospitality, consumer, multifamily and
commercial sectors. Further supporting the rating is a periodic six
to seven year furniture renovation cycle in the hospitality market
that helps create recurring revenue streams and the inherent
stability in the repair and remodel segment, which tends to be less
volatile during weaker economic conditions compared to new
construction/projects. The rating also reflects Moody's
consideration of governance characteristics, including long-term
risks of possible shareholder friendly actions given private equity
ownership.
Moody's expects Brown Jordan to maintain adequate liquidity over
the next 12-15 months, which incorporates about $16 million in cash
at the end of Q3 2021 and access to the asset-based revolver that
is expected to have availability of around $22 million through the
end of 2022. Moody's also expects the company to maintain
compliance with its term loan covenants, which were amended in the
fourth quarter of 2021 to provide additional headroom by
temporarily replacing the net leverage trigger with a minimum
quarterly liquidity trigger of $15 million through Q4 2022. The net
leverage covenant will be reinstated beginning in Q1 2023 with
quarterly step downs through the end of 2023.
The B3 rating assigned to Brown Jordan's first lien term loan is
one notch higher than the Caa1 CFR, which reflects their senior
position in the capital structure relative to the second lien debt
and other junior claims including trade payables and operating
leases.
The stable outlook reflects Moody's expectation of steady recovery
within the lodging sector in 2022, particularly in the leisure
segment, as increased vaccination rates in the US lead to fewer
travel restrictions. Improvement within the hospitality sector,
which makes up roughly a third of Brown Jordan's annual revenue,
should lead to increased orders for indoor and outdoor furniture as
hotels go through the delayed renovation cycles.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded should the company reduce adjusted
debt to EBITDA below 6.25x and adjusted EBITA to interest expense
increases above 1.5x. An upgrade would also require maintenance of
adequate liquidity and positive free cash flow.
The ratings could be downgraded if adjusted debt to EBITDA is
maintained above 8.0x and adjusted EBITA to interest expense fails
to improve closer to 1.0x. Significant weakening of liquidity,
including sustained negative free cash flow, could also trigger a
downgrade. Finally, a downgrade would result if the likelihood of a
restructuring resulting in a reduction in recovery prospects for
creditors or a default increases.
Headquartered in St. Augustine, FL, Brown Jordan Inc. is a
designer, manufacturer and distributer of indoor and outdoor
furniture for both consumers and commercial markets, particularly
in the hospitality space. The company sells its products under the
brand names of Charter, Tropitone, Texacraft/Winston, Castelle, and
Brown Jordan. Since 2017, Brown Jordan is owned by private equity
firm Littlejohn and Co. In the LTM period ended October 2, 2021,
the company generated approximately $271 million in revenue.
CALVERT HEALTH: Case Summary & Unsecured Creditors
--------------------------------------------------
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case
No.
------
-------
KR Calvert Co., LLC
21-03905
DBA Caliber Care+Transport
1620 Westgate Circle, #100
Brentwood, TN 37027
Calvert Health, LLC (Lead Debtor)
21-03906
DBA Caliber Care+Transport
1620 Westgate Circle
#100
Brentwood, TN 37027
Business Description: The Debtors offer transport for wheelchair,
ambulatory,
and stretcher patients.
Chapter 11 Petition Date: December 27, 2021
Court: United States Bankruptcy Court
Middle District of Tennessee
Judge: Hon. Randal S. Mashburn
Debtors' Counsel: Henry E. ("Ned") Hildebrand, IV, Esq.
Gray Waldron, Esq.
DUNHAM HILDEBRAND, PLLC
2416 21st Ave. S. Suite 303
Nashville, TN 37212
Tel: 615-933-5851
Fax: 615-777-3765
Email: ned@dhnashville.com
gray@dhnashville.com
KR Calvert Co.'s
Estimated Assets: $0 to $50,000
KR Calvert Co.'s
Estimated Liabilities: $1 million to $10 million
Calvert Health's
Estimated Assets: $1 million to $10 million
Calvert Health's
Estimated Liabilities: $1 million to $10 million
The petitions were signed by Klein Calvert and Pamela Calvert,
members.
A full-text copy of KR Calvert Co.'s petition containing, among
other items, a list of the Debtor's four unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/4NT32AI/KR_Calvert_Co_LLC__tnmbke-21-03905__0001.0.pdf?mcid=tGE4TAMA
A full-text copy of Calvert Health's petition containing, among
other items, a list of the Debtor's seven unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/5GHVLGA/Calvert_Health_LLC__tnmbke-21-03906__0001.0.pdf?mcid=tGE4TAMA
CITY BREWING: Moody's Puts B1 CFR on Review for Downgrade
---------------------------------------------------------
Moody's Investors Service placed the City Brewing Company, LLC's
("City") ratings on review for downgrade including the company's B1
Corporate Family Rating, B1-PD Probability of Default Rating and B1
senior secured bank loan facilities rating.
The rating review will consider the extent to which supply chain
challenges and reduced demand for certain products that
materialized in 2021 will carry over into 2022 and how the lower
than expected EBITDA base this year will impact City Brewing's
ability to restore growth, achieve positive free cash flow and
reduce leverage in the next 12-18 months.
The slow down in growth of hard seltzers in 2021 was sudden and
unexpected and the resulting inventory overhang means that some of
the company's key customers are cutting back on orders until
inventory can be cleared from the system. The slowdown resulted in
margin compression due to less capacity utilization. In addition,
inflation and supply chain challenges also pressured earnings due
to shortages of cans and some inputs as well as a lag in being able
to collect for certain higher input costs which will ultimately be
covered by customers. The supply chain challenges also impacted
City's customers, who represent some of the largest branded
beverage companies in the United States. The company believes that
the demand reset will be temporary, and that once inventory clears,
production demand will be restored. However, it is not clear what
level demand will recover to and what realistic growth expectations
will be for the category.
Aside from hard seltzer, other premium beverage categories
including premium malt beverages, spirit based ready to drink
beverages and non-alcoholic beverages including functional
beverages continue to see good growth. However, it can take time
for the company to fully on-board new customers and gear up to
produce different products. Moody's rating review will consider the
potential for such new business to help to restore top line and
profit growth in 2022 and the likelihood that leverage will be
reduced to a range that would be comfortable for the rating in the
next 12-18 months.
Moody's expects that year end 2021 debt to EBITDA leverage will be
in the high 5x range versus closing leverage of around 5x after the
refinancing. This would be significantly higher than the original
projections, which called for strong EBITDA growth that would have
lowered debt-to-EBITDA leverage to close to 3x in 2021. As a result
of slower growth, expansion capex needs will likely also be lower,
which will help to compensate for lower EBITDA but Moody's will
also consider liquidity in the review, and whether the company will
need to more actively use its revolving credit facility than
previously anticipated. Management has a stated goal to lower and
maintain gross debt to EBITDA leverage (by their definition) to
below 4x (currently at 4.9x including adjustments).
The following ratings/assessments are affected by the action:
Ratings placed on review for downgrade:
Issuer: City Brewing Company, LLC
Corporate Family Rating, Placed on Review for Downgrade,
currently B1
Probability of Default Rating, Placed on Review for Downgrade,
currently B1-PD
Senior Secured 1st Lien Term Loan, Placed on Review for
Downgrade, currently B1 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Placed on
Review for Downgrade, currently B1 (LGD3)
Outlook Actions:
Issuer: City Brewing Company, LLC
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
City's existing B1 CFR reflects the company's position as the
largest non-brand owning alcoholic beverage co-packer in the US,
with a longstanding customer base, limited commodity/sourcing
exposure, and an asset base that is becoming more geographically
diverse with the addition of the Irwindale brewery in California.
The company benefits from attractive category positioning, with its
business skewed toward producing beverages in fast growing, premium
beverage categories leading to healthy margins. These strengths are
counterbalanced by smaller scale than most rated beverage
companies, operational risks associated with capacity expansion and
the build out of the Irwindale Brewery, negative free cash flow in
2021 due to capacity expansion, and the risk of potential loss of
business should categories currently in favor begin to decline, or
if customers move production in house or to other co-packers.
City Brewing's adequate liquidity is constrained by a modest $14
million cash balance as of September 2021 and uncertainty regarding
the company's ability to generate positive free cash flow over the
next year. The company's $122 million revolving credit facility
expires in 2026 and provides good liquidity support. As of the end
of September the revolver was undrawn. The revolving credit
facility is subject to a springing Net Debt / EBITDA leverage
covenant of 7.15x which is only tested if borrowings exceed 30% at
the end of a quarter. Moody's expects the company to have good
cushion under the covenant should it be tested. The term loan
contains no financial maintenance covenants.
ENVIRONMENTAL SOCIAL AND GOVERNANCE CONSIDERATIONS
Moody's regards the coronavirus outbreak as a social risk under our
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 our forecasts is high.
Volatility can be still expected in 2022 due to uncertain demand
characteristics, channel disruptions, and supply chain
disruptions.
In terms of other social factors, City faces the risk of shifts in
customer behavior as well as health and wellness considerations
including those around the responsible use of alcohol, factors
which can influence consumption of products it produces.
From an environmental perspective, like other beverage companies,
City Brewing relies on having a sufficient supply of clean water
for its beverage products. It has an environmental/ wastewater
management system in place. Sustainable packaging initiatives will
also be a driver for the industry going forward.
City's governance is influenced by its private equity ownership,
which typically means a greater willingness to take on leverage,
pay large distributions or make leveraged acquisitions. Larger than
normal distributions were taken by its owners in 2020 and further
distributions were funded through the 2021 refinancing. Moody's
views the distributions as aggressive, at a time when the company
is also investing heavily to expand capacity and ramp up new volume
in newer beverage categories. Still, the company's stated plans to
lower debt-to-EBITDA leverage over time to under 4x (based on the
company's calculation) provides partial mitigation.
A rating upgrade could be considered as the company completes
expansion initiatives, gains greater scale, further diversifies its
customer base to reduce customer concentration, sustains healthy
margins, demonstrates a conservative financial policy such that
debt to EBITDA is sustained below 3x and generates solid,
consistent free cash flow.
A downgrade could be warranted in the case of operational
difficulties, including any material delays in getting new capacity
on-line to successfully ramp up production, significant drop off in
margins, loss of significant customer business that would leave
capacity underutilized, large debt financed shareholder returns or
acquisitions or if Debt to EBITDA leverage exceeds 4.50x (including
Moody's adjustments).
Headquartered in La Crosse, WI, City Brewing Company, LLC is
engaged primarily in the contract production and packaging of
beverages including beer and malt based alcoholic beverages, teas,
energy drinks and soft drinks. Customers include large branded,
independent beverage makers and marketers, including companies
engaged in both the alcoholic and non-alcoholic beverage segments.
The company operates breweries in La Crosse, WI, Latrobe, PA and
Memphis, TN. The purchase of the Irwindale equipment and leasehold
added a fourth brewery on the west coast. The company is minority
owned by private equity firms Charlesbank, and Oaktree Capital
Management, with the majority held by Blue Ribbon Partners which is
led by American beverage entrepreneur Eugene Kashper. City's net
sales for the LTM ended September 30, 2021 were over $400 million,
however these revenues are predominately fees and thus may not be
comparable with revenues generated by other contract manufacturers.
COOPER-STANDARD AUTOMOTIVE: Moody's Lowers CFR to Caa1; Outlook Neg
-------------------------------------------------------------------
Moody's Investors Service downgraded Cooper-Standard Automotive
Inc.'s corporate family rating (CFR) to Caa1 from B3, the
Probability of Default Rating to Caa1-PD from B3-PD, the senior
secured rating to B2 from B1 and the senior unsecured rating to
Caa2 from Caa1. The Speculative Grade Liquidity Rating remains
SGL-3. The outlook was changed to negative from stable.
The downgrades and change in outlook to negative reflect Moody's
expectation for continued weak results as several industry
headwinds -- the semiconductor chip shortage causing erratic OEM
production runs, elevated raw material and freight costs, supply
chain disruptions - extend deep into 2022. A negative EBITA margin
and negative free cash flow, applying Moody's standard adjustments,
highlight ongoing cost structure challenges and restructuring
actions. Liquidity is currently adequate but could be constrained
if the company has another year of sizable cash burn in 2022.
Meaningful progress on cost recovery mechanisms with customers,
targeted at $100 million, along with monetization of certain
assets, could help mitigate liquidity strain in 2022 until global
light vehicle volumes trend back towards more normalized levels.
Moody's took the following actions on Cooper-Standard Automotive
Inc.
- Corporate Family Rating, downgraded to Caa1 from B3
- Probability of Default Rating, downgraded to Caa1-PD from B3-PD
- Senior Unsecured Notes, downgraded to Caa2 (LGD5) from Caa1
(LGD5)
- Senior Secured Term Loan, downgraded to B2 (LGD2) from B1
(LGD2)
- Gtd Senior Secured Regular Bond/Debenture, downgraded to B2
(LGD2) from B1 (LGD2)
Outlook, changed to Negative from Stable
RATINGS RATIONALE
Cooper-Standard's ratings reflect solid market positions in sealing
systems, fuel and brake delivery systems and fluid transfer systems
where demand fundamentals are largely drivetrain agnostic. A
product mix skewed towards SUVs/CUVs and light trucks, including
content on top selling vehicle platforms, helps mitigate the
competitive, highly fragmented nature in core end markets.
Nonetheless, margin erosion over the past several years highlights
operating inefficiencies on falling industry volumes as well as
increasingly competitive end markets. Customer concentration is
high with the top three customers accounting for nearly 60% of
revenue, while most OEMs are experiencing production disruptions
due to the lingering semiconductor chip shortage.
Credit metrics are expected to remain weak through 2022 as elevated
raw material costs and persistent supply chain issues weigh on
results despite strong underlying demand for new vehicles. Steadily
recovering vehicle production volumes combined with benefits from
organizational realignments should lift margins in the back half of
2022 yet the EBITA Margin, inclusive of Moody's standard
adjustments, is still expected to be negative for the full year.
Debt-to-EBITDA will remain very high but positive earnings momentum
exiting 2022 should lead to sharply improved leverage in 2023.
The negative outlook reflects Moody's expectation that negative
free cash flow due to modest profitability and elevated interest
expense will result in a solid but declining cash balance.
Additionally, a lack of improvement in the auto industry's supply
chain issues in the near term, namely the chip shortage, will
further delay improvement in credit metrics and place additional
stress on liquidity.
Cooper-Standard's SGL-3 Speculative Grade Liquidity Rating is
supported by cash on hand at September 30, 2021 of approximately
$253 million, boosted by the $250 million, 13% senior secured notes
issued in May of 2020. The $180 million asset-based lending
facility (ABL) was undrawn at September 30, 2021. Of the nearly
$150 million borrowing base at quarter end, unrestricted borrowing
availability was lower at $127 million, limited in part by
financial covenant restrictions that Moody's expects to persist
through 2022. The facility expires March 2025 but includes a
springing maturity of 91 days before the maturity of the term loan
(November 2023). Moody's anticipates continued negative free cash
flow over the near term before approaching breakeven, on a
quarterly basis, in late-2022.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded with the inability to demonstrate
margin improvement through 2022. Expectations for increasingly
negative free cash flow or indications that the current debt
capital structure is unsustainable could result in downward rating
pressure. Further erosion in the liquidity position could also
result in negative rating action. The ratings could be upgraded
with stronger than anticipated margin recovery, boosted by prior
restructuring and cost efficiency actions, combined with recovering
global light vehicle production. Accelerated progress towards
generating positive free cash flow over the next twelve months
would also be viewed favorably, improving overall financial
flexibility. Strengthening the liquidity profile is also important
to supporting an upgrade.
Cooper-Standard Automotive Inc. is a global automotive supplier of
sealing and trim, fuel and brake delivery systems and fluid
transfer systems. Revenue for the latest twelve months ended
September 30, 2021 was approximately $2.4 billion.
CROCS INC: S&P Places 'BB-' Issuer Credit Rating on Watch Negative
------------------------------------------------------------------
S&P Global Ratings placed all of its ratings on Colorado-based
footwear seller Crocs Inc., including its 'BB-' issuer credit
rating, on CreditWatch with negative implications.
Crocs Inc. announced that it has entered into a definitive
agreement to acquire casual footwear brand HEYDUDETM for $2.5
billion . The company plans to fund the transaction with $2.05
billion of debt and $450 million of its equity, which it will
distribute to HEYDUDE's founder.
S&P said, "We plan to resolve the CreditWatch following our receipt
of more information regarding HEYDUDE's financial performance and
Crocs' financial outlook and policies. At that time, we will also
assess the acquisition's effect on our view of the company's
overall operations and credit metrics.
"The acquisition could cause us to downgrade Crocs if we believe
its leverage will be sustained above 3x for over 12 months." This
could occur due to integration difficulties or operational missteps
or additional aggressive financial policy decisions that result in
leverage sustained above 3x.
Crocs exceeded our expectations in 2021 by increasing its S&P
Global Ratings-adjusted EBITDA for the 12 months ended Sept. 30,
2021, by over 200% relative to its 2020 levels, largely due to its
continued strong demand amid the pandemic and ability to sell at
higher price points. However, the company has also undertaken
several large debt-funded share repurchases (since S&P assigned its
initial rating in early 2021) totaling approximately $1 billion,
which eliminated a significant amount of its leverage cushion to
take on a large debt-funded acquisition at this rating level while
maintaining leverage of 2x. If Crocs and HEYDUDE continue to
perform, even at decelerated growth levels, S&P believes the
company's leverage will likely improve below 3x in 2022. However,
given Crocs' elevated leverage levels, there is little room for an
underperformance, either due to unexpected volatility in the
macroeconomy stemming from the spread of new coronavirus variants,
further supply chain disruptions, or operational missteps.
HEYDUDE is a fast-growing, mid-price casual footwear brand with
limited brand recognition. Similar to Crocs, HEYDUDE has benefited
from the casualization of apparel trends accelerated by the
pandemic. Specifically, it increased its revenue and EBITDA
exponentially in 2020 and more than doubled both figures this year.
S&P said, "We view positively Crocs' planned investment in branding
and marketing to increase HEYDUDE's consumer reach and brand
equity. Rapidly expanding companies typically experience growing
pains as they try to scale beyond their initial loyal customer
base. However, Crocs has a proven track record of expanding its own
signature shoe and it will leverage its experience to scale HEYDUDE
by expanding its distribution and deepening its brand reach. The
addition of HEYDUDE will also diversify the company's product
portfolio away from its signature clog product (currently
accounting for approximately 75% of its sales). Nonetheless, Crocs'
execution risk remains high, especially given HEYDUDE's
participation in the highly competitive and fragmented casual shoe
segment, where the levels of competition and fashion risk are
higher than in the clog category. Given these risks, we do not
believe the acquisition will improve our assessment of Croc's
business risk in the near term."
S&P said, "We will seek to resolve the CreditWatch placement
following our receipt of more information regarding HEYDUDE's
financial performance and Crocs' financial outlook and policies. At
that time, we will assess the acquisition's effect on our view of
the company's overall operations, credit metrics, and financial
policies, including its communicated target to prioritize debt
repayment.
"Upon the completion of our review, we could affirm our ratings on
Crocs if we expect it to maintain leverage of less than 3x over the
next 12 months because it will continue to expand its EBITDA and
repay debt to reduce its leverage.
"Alternatively, we could lower our ratings on the company if we
forecast it will sustain leverage of over 3x due to continued
aggressive financial policies."
ENTEGRIS INC: Moody's Puts Ba1 CFR on Review for Downgrade
----------------------------------------------------------
Moody's Investors Service placed Entegris Inc.'s (Entegris)
ratings, including the Ba1 Corporate Family Rating (CFR), Ba1-PD
Probability of Default Rating (PDR), the Baa3 Senior Secured Bank
Credit Facility ratings, and the Ba2 Senior Unsecured Notes
ratings, on review for downgrade. This action follows the
announcement that Entegris plans to acquire CMC Materials, Inc
(CMC) in a cash and stock transaction. The Speculative Grade
Liquidity (SGL) rating of SGL-1 remains unchanged.
Entegris plans to acquire CMC for a per share price of $133.00,
consisting of cash and 0.4506 Entegris shares, or about $5.8
billion in total consideration for the CMC equity, excluding
transaction fees. The expected $3.9 billion cash portion will be
funded with a combination of balance sheet cash and new debt.
Entegris has committed debt financing. Entegris has not announced a
strategy regarding its existing debt nor plans for the debt at CMC
post-acquisition. The acquisition, which is not subject to a
financing condition, is expected to close in the second half of
calendar year 2022.
On Review for Downgrade:
Issuer: Entegris Inc.
Corporate Family Rating, Placed on Review for Downgrade,
currently Ba1
Probability of Default Rating, Placed on Review for Downgrade,
currently Ba1-PD
Senior Secured Revolving Credit Facility, Placed on Review for
Downgrade, currently Baa3 (LGD2)
Senior Secured Term Loan B, Placed on Review for Downgrade,
currently Baa3 (LGD2)
Senior Global Notes, Placed on Review for Downgrade, currently
Ba2 (LGD4)
Outlook Actions:
Issuer: Entegris Inc.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The review will focus on: (1) the strategic rationale and product
priorities for the combined company, including any planned product
rationalization or divestitures, (2) details on the integration
plan and cost synergies, including targeted areas and the timing of
costs and synergy capture, (3) deleveraging plans and financial
policy, (4) any conditions placed on the combined company in order
to obtain regulatory approval, and (5) details on the mix and terms
of the new debt and plans for Entegris's and CMC's existing debt.
The acquisition will expand Entegris' revenue scale and add
complementary chemical mechanical planarization (CMP) products to
Entegris' existing CMP product portfolio. This will enable Entegris
to provide a more complete CMP product line to its semiconductor
manufacturing customers. Entegris' existing CMP portfolio (within
the Specialty Chemicals and Engineered Materials segment),
including polyvinyl alcohol roller brushes and CMP pad
conditioners, which are used in the CMP process, will benefit from
CMC's leading market position in CMP slurries and a number two
market position in CMP pads. (Since the CMP products of both firms
are consumed in the manufacturing of semiconductor chips, demand is
driven by the volume of semiconductor chip production.) Since CMC's
product portfolio of CMP products, specialty chemicals, pipeline
products are primarily semiconductor chip manufacturing
consumables, Moody's anticipates that with CMC's products,
Entegris's combined consumables revenue base will increase to
nearly 80%, from about 70% prior to the acquisition.
The mix of common equity in the consideration, at approximately 33%
of the purchase price, is credit positive, since this limits the
leveraging impact of the acquisition.
Still, despite the large equity component, the high purchase
multiple results in a leveraging acquisition, increasing Entegris'
debt to EBITDA from 1.5x (twelve months ended October 2, 2021,
Moody's adjusted) to over 5.5x (proforma combined twelve months
ended October 2, 2021, Moody's adjusted, excluding anticipated cost
synergies) assuming that the entire cash portion of the acquisition
consideration is funded with new debt. (Including the $75 million
of cost synergies anticipated within 12 to 18 months, the leverage
would be 5.3x). Since both companies generate strong free cash flow
(FCF) and have substantial cash balances, and the acquisition is
not expected to close until the second half of calendar year 2022,
Moody's expects that the required debt financing will likely be
lower than the $3.9 billion cash consideration, modestly reducing
the starting leverage at closing.
Based on the information the company has disclosed so far, at the
conclusion of the review Moody's anticipates that a downgrade of
Entegris' ratings would likely be limited to one notch.
Entegris, Inc., based in Billerica, Massachusetts, develops and
manufactures products, including filters, materials handling
equipment, and specialty chemicals used in the manufacture of
semiconductors and other microelectronic components.
CMC Materials, Inc, based in Aurora, Illinois, through its
Electronic Materials segment (82% of FY 2021 revenues) manufactures
materials used in semiconductor manufacturing, including CMP
slurries, CMP pads, and specialty chemicals. Through its
Performance Materials segment (18% of FY 2021 revenues), CMC
provides supplies and services to the pipeline industry, including
drag reducing agents (DRAs) used for crude oil transmission, and
wood preservation chemicals to industrial companies. CMC generated
$1.2 billion of revenues for the fiscal year ended September 30,
2021.
FREEPORT-MCMORAN INC: Moody's Hikes Unsec. Notes Rating From Ba1
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Moody's Investors Service upgraded Freeport-McMoRan Inc.'s (FCX)
senior unsecured notes rating to Baa3 from Ba1. At the same time,
Moody's affirmed the Baa2 senior unsecured notes rating of Freeport
Minerals Corporation (FMC), which have a downstream guarantee from
FCX. Moody's also withdrew FCX's Ba1 Corporate Family Rating,
Ba1-PD Probability of Default Rating and the SGL-1 Speculative
Grade Liquidity Rating. The ratings outlook for FCX and FMC remain
stable.
"The ratings upgrade to Baa3 reflects the near-completion of the
underground expansion at Grasberg that will support sustainably
higher copper and gold production, the clarity on the company's
financial policy, strategic growth objectives and the financing
plans to construct the new smelter in Indonesia. Moody's views
FCX's substantially strengthened balance sheet, excellent liquidity
and ability to generate significant earnings and free cash flow
through a range of copper and gold prices as supportive of the
investment grade rating", said Botir Sharipov, Moody's Vice
President and lead analyst for FCX.
Upgrades:
Issuer: Freeport-McMoRan Inc.
Gtd. Senior Unsecured Regular Bond/Debenture, Upgraded to Baa3
from Ba1 (LGD4)
Affirmations:
Issuer: Freeport Minerals Corporation
Gtd. Senior Unsecured Regular Bond/Debenture, Affirmed Baa2
from Baa2 (LGD2)
Withdrawals
Issuer: Freeport-McMoRan Inc.
Corporate Family Rating, Withdrawn, previously rated Ba1
Probability of Default Rating, Withdrawn, previously rated
Ba1-PD
Speculative Grade Liquidity Rating, Withdrawn, previously rated
SGL-1
Outlook Actions:
Issuer: Freeport Minerals Corporation
Outlook, Remains Stable
Issuer: Freeport-McMoRan Inc.
Outlook, Remains Stable
RATINGS RATIONALE
FCX's Baa3 senior unsecured rating is supported by its 1) scale as
one of the largest copper producers globally, 2) broad geographic
footprint with mining, smelting and refining facilities in
Indonesia, US, Peru, Chile and Spain, 3) cost competitive mines
capable of generating substantial earnings and FCF at current and
lower copper prices and positive FCF in adverse market conditions,
4) significant gold production and de-risked operating profile at
the Indonesian operations with the successful ramp-up of Grasberg
underground mines, 5) significant debt reduction over the last few
years, balanced capital allocation policy and commitment to
maintaining a strong balance sheet, and 6) investment-grade credit
profile. The rating also reflects Moody's expectations that FCX
will ensure compliance with metrics commensurate with a Baa3
rating. FCX's rating is constrained by its concentration in copper
and gold and the related price volatility, substantial exposure to
regions with elevated geopolitical risks and still relatively high
debt levels.
The sharp rebound in copper prices that have averaged $4.23/lb
year-to-date, higher production and continued strength in gold
prices contributed to a substantial improvement in FCX's revenues,
cash flows, liquidity and credit metrics in the last 12 months.
With the successful ramp-up of Grasberg underground production, Q3
2021 copper and gold sales increased 22% and 72% y-o-y,
respectively. This, along with high commodity prices, gradually
improving mill throughput at Cerro Verde, and Lone Star copper
leach project outperforming production targets, has led to a 58%
y-o-y growth in net revenues in Q3 2021.
Higher gold production and molybdenum prices materially increased
by-product credits and more than offset higher site production
costs and delivery costs and lower y-o-y, on average, gold prices,
driving a decrease in consolidated copper net cash costs (net of
by-product credits) to $1.36/lb YTD from $1.55/lb YTD September 30,
2020. As a result of a better operating performance, high commodity
prices, earnings growth and meaningful gross debt reduction, FCX's
credit profile has evidenced a significant improvement, with
Debt/EBITDA, as adjusted by Moody's, falling to 1.1x the LTM ending
September 30, 2021 from 4.9x in 2019, EBIT/Interest expense
expanding to 8.7x from 1x and CFO-Dividends/Debt rising to 59.1%
from 9.2%.
Moody's believes that a structural deficit will keep copper prices
high with supply, particularly in major copper producing countries
struggling to keep up with rising demand as elevated geopolitical
risks, limited number of shovel-ready growth projects, lengthy
permitting and licensing processes and the risk of higher mining
taxes and royalties continue to delay or discourage large-scale
investments. Copper is expected to play an increasingly important
role in growing areas such as renewable energy systems, vehicle
electrification and energy storage, supporting the future expansion
in global copper demand.
Moody's expects FCX to sustain its strong operating and financial
performance through a range of commodity prices. Assuming a copper
price of $3.50/lb and a gold price of $1,500/oz (top end of Moody's
price sensitivity range of $2.75-3.50/lb for copper and
$1,200-1,500/oz for gold), we estimate that FCX will generate
nearly $9 billion in annual Moody's adjusted EBITDA in 2022 and
2023 and that leverage will not exceed 1.4x. Our leverage forecasts
factor in the assumption that FCX's 48.76% owned PT Freeport
Indonesia (PT-FI) subsidiary will raise approximately $2 billion of
net new debt to fund the development of the $2.8 billion greenfield
smelter in Indonesia. We expect $6.7 billion in estimated annual
operating cash flow to comfortably cover the projected consolidated
capex (including the 100% of greenfield smelter and precious metal
refinery capex at PT-FI) of about $4.3 billion in 2022 and $3.3
billion in 2023. After deducting $880 million in dividends (base
plus variable) and significant distributions to non-controlling
interests (NCI), which assume substantial dividend payments from
PT-FI and Cerro Verde to FCX, we forecast that Moody's-adjusted FCF
will average $1 billion in 2022-2023.
At near-spot copper ($4.30/lb) and gold ($1,750/oz) prices, FCX is
expected to generate about $26 billion in net revenues,
approximately $12.5 billion in EBITDA, $2.5 billion in
Moody's-adjusted FCF (after dividends and NCI distributions) and to
maintain Debt/EBITDA ratio around 1x. Projected strong FCF and
shareholder returns (dividends and share buybacks), capped at 50%
of excess cash flow, should support a potential redemption of debt
maturing in 2023 and 2024.
FCX's has an excellent liquidity comprised of $7.7 billion in
consolidated cash and $3.5 billion available under its undrawn (net
of $8 million in letters of credit) unsecured revolving credit
facility. Moody's does not expect FCX to borrow under this facility
in 2022 or in subsequent years. After amending its credit agreement
in 2020 to enhance financial flexibility, FCX ended the Covenant
Increase Period and reverted to prior covenants in March 2021, with
maximum allowable total leverage ratio of 5.25x through the quarter
ending June 30, 2021, stepping down to 3.75x at the end of Q3 2021
(30 September 2021), and with the interest expense coverage ratio
minimum reverting to 2.25x. A minimum liquidity requirement of $1
billion and provisions related to restricted payments were also
eliminated. Moody's expects the company to remain in full
compliance with these financial covenants. Additionally, in July
2021, PT-FI entered into a $1.0 billion, 5-year unsecured bank
credit facility to support domestic smelter expansion and the
development of the precious metals refinery (PMR) in Indonesia and
for PT-FI's general corporate purposes, with $158 million drawn as
of September 30, 2021. FCX is expected to maintain its excellent
liquidity over the next 12 months supported by strong cash
position, revolver availability and projected cash flow generation.
The 2022-2024 maturities include $325 million balance on Cerro
Verde term loan due June 2022 as well as $996 million and $730
million of senior unsecured notes maturing in 2023 and 2024,
respectively.
The stable outlook reflects Moody's expectations that
Freeport-McMoRan will maintain its strong operating and financial
performance over the next 12-18 months by advancing and maintaining
underground production at Grasberg at 100% of post ramp-up targets,
sustaining current production levels at Cerro Verde and North
American operations and continuing to generate strong earnings and
operating cash flows. The improved fundamentals of the copper
market are seen as sustainable and will contribute to further
strength in FCX's credit profile. The stable outlook also assumes
that the company will remain financially disciplined with respect
to capital expenditures and shareholder returns, preserve its
excellent liquidity to mitigate the inherent commodity price
volatility and will maintain strong balance sheet and debt
protection metrics appropriate for a Baa3 rating.
The global mining industry is viewed as having very high
environmental risk and high social risk stemming from the
industry's inherent risk exposures to wastewater discharges, site
remediation and mine closure, waste rock and tailings management,
air emissions, environmental law and regulations, health and safety
risks and social responsibility given the often-remote location of
the mines. By the nature of its business, Freeport faces very high
environmental risks based on its very highly negative exposure to
natural capital risk. Copper mining operations and copper smelters
require high energy intensity and tend to cause a significant
impact on water, air and land resources. Some of the company's
operations are located in water stressed areas, the risk that is
partially mitigated by its high-water efficiency rate of 89%.
Freeport's social risks are also very high given its very highly
negative exposure to health & safety risks with a high number of
fatalities in 2018-2021.
FCX has detailed protocols in place to manage its environmental and
social risks. Seven of the company's operating sites have been
awarded the Copper Mark, a comprehensive assurance framework that
promotes responsible production practices and demonstrates the
industry's contribution to the United Nations Sustainable
Development Goals. The company also implemented a new "Safe
Production Matters" strategy in 2020 aimed at the elimination of
systematic causes of incidents with the focus on high risk and
potentially fatal events.
From a governance perspective, FCX has been disciplined in the
allocation of its capital between shareholder returns, capital
expenditures and balance sheet/liability management as evidenced by
a significant gross debt reduction since 2015, decision to
temporarily suspend dividends in 2020, the newly adopted financial
policy and the continued commitment to maintaining a strong balance
sheet. The company has recently announced a new capital allocation
policy that will pay dividends and buy back common stock up to 50%
of excess free cash flow (after planned capital spending and
distributions to noncontrolling interests) and allocate the balance
to debt reduction and growth projects. The dividend component of
shareholder returns consists of an annual base dividend of
$0.30/share and a variable dividend of $0.30/share for a total of
about $880 million in annual dividend payments based on shares
outstanding at September 30, 2021. The company has also recently
announced a $3 billion share repurchase program. The new financial
policy is subject to maintaining a net debt level of $3-4 billion
(excluding project debt for additional smelting capacity in
Indonesia).
Despite very highly negative exposure to environmental and social
risks, strong balance sheet, disciplined capital allocation, highly
experienced senior leadership team with proven track record of
operating success, rising importance of copper in electrification
and decarbonization as well as its commitment to responsible copper
production and leadership in setting the ESG standards for the
industry, position the company well to withstand any potential
negative credit impacts from its ESG risk exposures.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's said, "We could upgrade the ratings if underground copper
and gold production at Grasberg is sustained at planned
post-expansion targets, if the company maintains or improves
production levels at its South and North American operations,
continues to generate strong operating earnings, positive free cash
flow and maintains its excellent liquidity position.
Quantitatively, an upgrade would be considered if the company can
sustain EBIT/interest of at least 6x, debt/EBITDA under 2x and
(CFO-dividends)/debt of at least 35%."
Negative pressure on the ratings could develop if the company
experiences a prolonged decline in operating performance,
profitability and cash flow generation resulting in negative FCF,
weakening liquidity and deterioration in debt protection metrics.
Any weakening of the company's balanced financial policy,
shareholder distributions or capital spending significantly
exceeding Moody's expectations, a pursuit of an aggressive business
expansion or a material debt-financed acquisition that is deemed
detrimental to its financial profile would also likely pressure the
ratings. Quantitatively, we could downgrade the ratings if the
Moody's-adjusted debt/EBITDA were to rise above 2.75x on a
sustained basis; (CFO-dividends)/debt maintained below 30% and
EBIT/interest expense falls below 4.5x.
FCX, a Phoenix, Arizona-based mining company involved in mining and
processing of copper, gold and molybdenum. The company's global
footprint includes mining, smelting and refining operations in
Indonesia, the United States, Chile, Peru and Spain. Revenues for
the 12 months ended September 30, 2021 were $21.2 billion.
GRUPO AEROMEXICO: Provides Information on Public Tender Offer
-------------------------------------------------------------
Grupo Aeromexico, S.A.B. de C.V. on Dec. 16 disclosed that,
following the approval on December 10th by the United States
Bankruptcy Court for the Southern District of New York (the
"Court") of the (i) Disclosure Statement regarding the Joint Plan
of Reorganization of Aeromexico and its subsidiaries that are
debtors under the Company's Chapter 11 restructuring proceeding
(the "Plan"), and (ii) solicitation voting process on the Plan, it
has been informed in connection with the agreements reached with
certain creditors under its DIP Financing:
* A company, not related to Aeromexico, will initiate the
proceedings before the National Banking and Securities Commission
(Comisión Nacional Bancaria y de Valores) and the Mexican
Securities Exchange (Bolsa Mexicana de Valores) to make a voluntary
tender offer pursuant to Article 97 and other applicable provisions
set forth in the Mexican Securities Law (Ley del Mercado de
Valores) (the "Offering") to give the existing shareholders the
option to withdraw from the current capital stock prior to the
imminent capitalization of several debt of Aeromexico and its
subsidiaries and new contributions into the capital stock, which
will substantially dilute the current shares upon emerging from its
Chapter 11 restructuring proceeding once the Plan is approved by
the Court and becomes effective.
* The Offering will be launched prior to Aeromexico's general
shareholders meeting, pending to be called, at which it is expected
that several corporate actions required to implement and effectuate
the Plan will be approved, which will include, among other
resolutions to be submitted to the approval of the shareholders, a
capital increase and the equitization of debt and new capital
contributions (the "Shareholders' Meeting").
* The Offering will be made at 1 Mexican cent for each Mexican
peso, for each of Aeromexico's outstanding shares. Delta Airlines,
Inc. ("Delta") who informed that will not participate in the
Offering, and thus, a maximum of 331,480,713 shares are expected to
be acquired, which would represent, if applicable, up to 49% of the
capital stock prior to the dilution effects to be derived from the
implementations of the Plan. Said chares jointly represent, at the
end of the Offer and once the Plan becomes effective, less than
0.01% of the total future new shares representing the capital stock
of the Company, given the dilution to be derived from the
capitalization of debt and new capital stock contributions and
eventual subscription by other shareholders and investors.
The Offering would be consummated after the Shareholders Meeting
takes place (provided that the resolutions to be adopted at the
Shareholders Meeting, as the case may be, will take full legal
effect until the effective date of the Plan, that is, after the
Offer is consummated). Shareholders holding future new shares
representing the capital stock of Aeromexico, once the Plan becomes
effective and the consequent dilution of the Company's existing
capital stock occurs, have assurance of their expected new
shareholding participation under the terms of the Plan. Within the
new shareholders will be the group of strategic Mexican
shareholders with a 4.10%, Apollo with 22.38%, Delta Airlines with
20.00%, and the remaining shares distributed among all new
investors and creditors that capitalize their recognized claims in
shares representing Aeromexico's future capital stock.
The Offer will be sponsored with funds of the bidder, coordinated
with Aeromexico, and subject to a schedule that allows Aeromexico's
existing shareholders to have an opportunity to sell their shares
through the securities market before the effectiveness of the Plan
and of the resolutions to be adopted by the Shareholders Meeting
regarding the capital increase and capitalization of debt and new
capital contributions contemplated under the Plan, which imply, as
indicated, a substantial dilution for existing shareholders.
Brief antecedents
Orderly financial restructuring
The Company says, "As we have been reporting to the market, in
June, 2020, we filed before the Court a voluntary financial
restructuring process under Chapter 11 of the U.S. Bankruptcy Code.
Said process has been carried out in an orderly manner, while
continuing to operate as an ongoing business to strengthen our
financial position and liquidity, protect and preserve our
operations and assets, and implement the necessary operational
adjustments to address the impact of COVID-19."
DIP financing and conversion option
"As part of our financial restructuring process, as disclosed to
the market since August 13, 2020, and subsequently updated through
other disclosures, with prior Court approval we entered into a DIP
Financing in the aggregate principal amount of US$1 billion with
funds managed by affiliates of Apollo Global Management Inc.
('Apollo'). The DIP Financing was comprised of: (i) a US$200
million senior secured Tranche 1; and (ii) a US$800 million senior
secured Tranche 2. We disposed both tranches in full by the end of
February of this year, as duly informed to the market.
"Tranche 2 of the DIP Financing provided an option for each tranche
creditor to convert its debt into new shares of Aeromexico's
capital stock. As is common in this type of financing, as of this
date, Apollo is not the only creditor under the DIP Financing and
there are several creditors, holders of collection rights derived
from the Tranche 2 financing, that opted to convert all or part of
their claims into new shares of Aeromexico, subject to the approval
and effectiveness of the Plan.
Request from our Board of Directors
"Since February of this year, our Board of Directors approved that,
in the event of the capital increase and the capitalization of debt
derived from the DIP Financing, a public tender offer should be
carried out in order to provide all of our existing shareholders
with a put in the market, prior to the imminent and extraordinary
dilution that the shares shall suffer from the capital increase and
capitalization of debt derived from the Plan.
"The foregoing, derived from the fact that, as disclosed to the
market since February 19, 2021, it was anticipated that: ". . . if
the lenders exercise the option to convert the Tranche 2 DIP
Facility, following the corresponding capital increase, the
shareholders will be almost fully diluted so that their remaining
equity stake will likely be minimal (if any)… "
Restructuring Plan
"As a part of our restructuring process, we have been working for
months with the key stakeholders process to finalize the Plan and
related documents. These have been submitted for approval of the
Court, as we have been timely informing the market through multiple
relevant events, regardless of the accessibility and publicity of
all key documents and milestones relating to our Chapter 11
restructuring process. Aeromexico will continue working with all of
its key stakeholders to obtain Court approval of the Plan and
emerge from Chapter 11 as expeditiously as possible. The Plan and
the other documents are public since December 10, 2021 and that are
filed before the Court, as communicated in the corresponding
relevant event on that same date. The referred Plan, and documents
under it, establish the obligation to cause the Offer to be made.
Capital and debt issuance
"Under the Plan, subject to several conditions, Aeromexico will,
directly or indirectly, raise approximately $720 million of new
capital and $762.5 million of new debt, in addition to the
equitization of a large portion of our recognized debt under the
Plan, submitted for Court approval, which would put us in a
position of financial strength and liquidity that we believe will
allow us to emerge from our financial restructuring process in the
best possible condition and focus on our consolidation and future
growth, for the benefit of all Aeromexico's stakeholders,
particularly our workforce, as well as our loyal customers.
Capital commitments
"Under the Plan and related documents, we have capital commitments
from creditors and investors that include creditors of the DIP
Financing; new investors; Delta, our strategic partner; and a
strong group of long-term shareholders who have been and investors,
who have been at the forefront of our group of shareholders for
many years with us proactively throughout the restructuring
process, including Eduardo Tricio Haro, Valentín Diez Morodo,
Antonio Cosio Pando and Jorge Esteve Recolons.
"Both Delta and the Mexican shareholders, in addition to injecting
resources into the Company, have committed to support us with their
valuable strategic participation. Among others, the Mexican
shareholders, who also serve on our board of directors, and will
hold shares representing more than 1% but less than 10% of
Aeromexico's outstanding shares, have committed to remain, not to
compete, align, and focus their interests and efforts in
Aeromexico.
"As we had anticipated, considering the upcoming capital increase
to be resolved at the Shareholders Meeting the current Delta shares
and the other shareholders who are not expected to exercise their
preemptive rights will be fully practically in its entirety. It is
expected that, upon consummation of the capital increase and the
equitization of debt and new capital contributions under the Plan,
our strategic partner, Delta, will
hold approximately 20% of Aeromexico's capital stock.
"That is, once the Plan and the resolutions of the Shareholders
Meeting becomes fully effective, existing shareholders will be
almost completely diluted, so that their remaining shareholding is
likely to be minimal (if any) and the value expectations with
respect to their current shareholding positions may be close to
zero.
Other actions to implement the Plan
"In addition to the capital increase and the commitment to cause
the Offering subject matter of this release to be carried out, the
Plan contains several actions to be implemented, that will be
proposed shortly for the approval of the Shareholders Meeting,
including, among others, amending certain provisions of our
by-laws and appointing and/or ratifying members of the Board of
Directors. In due course, we will provide our shareholders with
more information regarding said actions to provide them with
additional information for decision-making at the Shareholders
Meeting."
* * * *
The Offering will be subject to the conditions and terms described
in the corresponding tender offer prospectus which will be made
available pursuant to the applicable legal provisions.
About Grupo Aeromexico
Grupo Aeromexico, S.A.B. de C.V. (BMV: AEROMEX) --
https://www.aeromexico.com/ -- is a holding company whose
subsidiaries are engaged in commercial aviation in Mexico and the
promotion of passenger loyalty programs. Aeromexico, Mexico's
global airline, has its main hub at Terminal 2 at the Mexico City
International Airport. Its destinations network features the United
States, Canada, Central America, South America, Asia and Europe.
Grupo Aeromexico and three of its subsidiaries sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 20-11563) on June 30,
2020. In the petitions signed by CFO Ricardo Javier Sanchez Baker,
the Debtors reported consolidated assets and liabilities of $1
billion to $10 billion.
The Debtors tapped Davis Polk and Wardell LLP as their bankruptcy
counsel, KPMG Cardenas Dosal S.C. as auditor, and Rothschild & Co
US Inc. and Rothschild & Co Mexico S.A. de C.V. as financial
advisor and investment banker. White & Case LLP, Cervantes Sainz
S.C. and De la Vega & Martinez Rojas, S.C., serve as the Debtors'
special counsel. Epiq Corporate Restructuring, LLC, is the claims
and administrative agent.
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors on July 13, 2020. The committee is represented
by Willkie Farr & Gallagher, LLP and Morrison & Foerster, LLP.
HARTWICK COLLEGE: Moody's Lowers Issuer Rating to B1; Outlook Neg.
------------------------------------------------------------------
Moody's Investors Service has downgraded Hartwick College's (NY)
issuer and debt ratings to B1 from Ba3. The outlook remains
negative. Hartwick has total outstanding debt of about $37
million.
RATINGS RATIONALE
The downgrade of Hartwick College's issuer rating to B1 from Ba3
reflects an escalation of student market difficulties, resulting in
deepening operating deficits and declining liquidity. Weak regional
demographics, a social consideration under Moody's ESG framework,
along with heightened competition from an array of public and
private colleges in the northeast, contribute to the college's
deteriorating strategic position and are a driver of this rating
action. The college's financial strategy, a key governance
consideration under Moody's ESG framework, adds to risk through
elevated endowment draws and is also a key driver of the action.
Based on its current fiscal 2022 budget, the college will have a
fifth consecutive year of negative cash flow from operations and
further unrestricted liquidity declines. A large supplemental
endowment draw will be used in fiscal 2022 to fund an initiative
designed to strengthen student demand. The ability to achieve the
desired results from this strategy is uncertain, and sustainably
funding this higher baseline level of spending will be difficult
without a significant and sustained increase in philanthropy.
The B1 favorably incorporates good nominal wealth of $83 million.
While a large portion of these cash and investments are subject to
donor restriction, the college retains some runway to work through
financial challenges and pursue strategic objectives. Further, the
college maintains good donor support for its size as measured by
three-year average gift revenue of $5 million. Prospects for
increasing philanthropy are enhanced by the recent launch of the
quiet phase of a five-year $55 million fundraising campaign to help
fund newly implemented strategic initiatives. Achieving success on
this campaign and strengthening fundraising will be important to
supporting the funding needs of the college since tuition revenue
growth will remain constrained. The college has received $8.5
million in committed gifts and pleges from the campaign to date.
The Series 2015A bonds are rated at the same level as the issuer
rating. While the bonds have a lien on unrestricted gross revenues,
this provides limited additional security due to the college's
fundamental operating difficulties.
RATING OUTLOOK
The negative outlook acknowledges the potential for further credit
deterioration should further liquidity depletion and negative cash
flow persist beyond fiscal 2022.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Sustained improvement in brand and strategic positioning,
reflected in student demand, revenue growth, and fundraising
- Significant improvement in operating performance leading to debt
service coverage above 1x
- Marked growth in unrestricted liquidity relative to expenses
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Inability to eliminate reliance on a supplemental endowment draw
to fund operations
- Move to below 50 monthly days cash on hand
- Failure to generate positive cash flow by fiscal 2023
- Inability to stabilize net tuition revenue
LEGAL SECURITY
The Series 2015A bonds are a general obligation, payable from any
legally available moneys of the college and further secured by a
lien on unrestricted gross revenues. There is no debt service
reserve fund.
Hartwick covenants in a guaranty agreement that it must meet one of
the following requirements to issue additional debt: maintenance of
a rating no lower than Baa3 or BBB-, pro forma maximum annual debt
service of at least 120% for two of the most recent audited fiscal
years if financing a residence hall, or pro forma maximum annual
debt service of 115% for the most recent audited fiscal year. For
five consecutive years through fiscal 2020, the college's
calculated annual debt service coverage under the covenant was
below 1x, but management indicates that coverage will be above 2.7x
for fiscal 2021.
PROFILE
Hartwick College is a small, tuition dependent private liberal arts
and sciences college with fall 2021 enrollment of 1,151 full-time
equivalent students and fiscal 2021 operating revenue of about $44
million. The college is in Oneonta, New York, located between
Binghamton and Albany in the northern foothills of the Catskill
Mountains.
HEILUX LLC: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Heilux, LLC
f/k/a Growlites LLC
f/d/b/a Growfilm
10921 Valley View Road
Eden Prairie, MN 55344
Chapter 11 Petition Date: December 28,2021
Court: United States Bankruptcy Court
District of Minnesota
Case No.: 21-42334
Judge: Hon. Katherine A. Constantine
Debtor's Counsel: Michael A. Stephani, Esq.
BEST & FLANAGAN LLLP
60 South Sixth Street
Suite 2700
Minneapolis, MN 55402
Tel: 612-310-3452
Email: mstephani@bestlaw.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michelle Bonahoom, acting CEO.
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/2JA3B4Y/Heilux_LLC__mnbke-21-42334__0001.0.pdf?mcid=tGE4TAMA
HIRERIGHT HOLDINGS: Moody's Assigns B2 CFR; Outlook Stable
----------------------------------------------------------
Moody's Investors Service assigned HireRight Holdings Corporation
("HireRight") a B2 corporate family rating ("CFR"), a B2-PD
probability of default rating ("PDR") and a speculative grade
liquidity rating ("SGL") of SGL-1. At the same time, Moody's
affirmed Genuine Financial Holdings, LLC's (a wholly owned
subsidiary of HireRight) senior secured first lien credit facility,
including $100 million revolver due 2023 and $835 million term loan
($710 million outstanding, pro forma for the debt repayment) due
2025 rating at B2. The outlook is stable.
The rating actions follow the company's repayment of $110 million
of loans outstanding under the first lien credit agreement,
including $10 million under the revolver, and all $215 million of
its senior secured second lien term loan with net proceeds from
HireRight's recent IPO. The B3 CFR and B3-PD PDR assigned at
Genuine Financial Holdings, LLC, along with the Caa2 second lien
term loan rating, have been withdrawn.
The effective upgrade of the CFR to B2 from B3 considers the
reduction of financial leverage to about 5.8 times from 7.8 times
(Moody's adjusted and expensing all capitalized software
development costs) as of September 30, 2021 following HireRight's
repayment of its second lien debt, revolving borrowings, and a
portion of its first lien term loan, which meaningfully strengthens
the company's credit profile. Governance considerations in the
rating include HireRight's public company status and expectation of
more balanced financial policies despite significant financial
sponsor ownership following the IPO. The company's largest
shareholders include affiliates of private equity firms General
Atlantic and Stone Point Capital, as well as the Conrad entities
(trusts held by Conrads, following the 2018 leveraged buyout
transaction with GIS). Combined, private owners control 72% of
HireRight's equity.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: HireRight Holdings Corporation
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Speculative Grade Liquidity Rating, Assigned SGL-1
Ratings Affirmed:
Issuer: Genuine Financial Holdings, LLC
Senior Secured 1st Lien Bank Credit Facility, Affirmed B2 (LGD3)
Ratings Withdrawn:
Issuer: Genuine Financial Holdings, LLC
Corporate Family Rating, Withdrawn, previously rated B3
Probability of Default Rating, Withdrawn, previously rated B3-PD
Senior Secured 2nd Lien Bank Credit Facility, Withdrawn,
previously rated Caa2 (LGD6)
Outlook Actions:
Issuer: Genuine Financial Holdings, LLC
Outlook, Remains Stable
Issuer: HireRight Holdings Corporation
Outlook, Assigned Stable
RATINGS RATIONALE
"The debt reduction and increase in cash to about $100 million
expected at the year-end 2021 significantly enhance HireRight's
financial flexibility to support backend optimization initiatives
and strategic M&A" said Moody's AVP-Analyst Oleg Markin.
HireRight's B2 CFR reflects the company's established global market
position as a provider of background screening, verification,
identification, monitoring and drug and health screening services
that are deeply embedded into clients' human resource, security and
risk management functions and entail high switching costs. Moody's
adjusted debt-to-EBITDA is expected to decline towards mid-4 times
range over the next 12-18 months, driven by anticipated organic
revenue growth in the mid-single digit percentages and EBITDA
growth above 10%. Moody's expects free cash flow as a percentage of
debt above 10% over the next 12-15 months, which is strong compared
to many other B2 rated business service companies. Moody's projects
organic revenue growth in the mid-single digit percentages over the
next 12-18 months driven by favorable macro-economic indicators and
the company's ability to add new customers and upsell existing with
its bundled products.
HireRight's credit profile benefits from good end-user industry
diversification, long-standing relationships with its customers,
including both blue-chip and mid-market companies, high gross
revenue retention rates above 95% in 2021 and no significant
customer concentration. The company's asset-lite operating model
and low capital requirements drive good operating margin and cash
flow conversion. HireRight's EBITDA margin is expected in the 20%
range at the end of 2021, which is below the profit rates of its
industry peers, Sterling Check Corp. (B1 Stable) and First
Advantage Holdings, LLC (B1 Stable), both in the mid-to-high 20%
range, are expected to improve meaningfully over the next two years
as efficiencies from its cost optimization and robotic process
automation initiatives are realized. The rating is also supported
by Moody's expectation that HireRight will maintain very good
liquidity over the next 12-15 months.
The rating is constrained by the company's high pro forma
debt-to-EBITDA leverage of around 5.8 times (Moody's adjusted and
expensing all capitalized software costs), moderate operating scale
and narrow product focus, as well as operations within the highly
competitive and fragmented global screening and verifications
market. HireRight faces moderate social and reputational risks and
requires ongoing technology and capital investments to develop new
products, improve process efficiency, as well as to expand into new
geographies. Despite public ownership, the company remains
controlled by private equity sponsors, which, in Moody's view,
elevates the risk of aggressive financial strategies.
The B2 rating assigned to the company's first lien senior secured
credit facility reflects HireRight's B2-PD PDR and a loss given
default (LGD) assessment of LGD3. Following the repayment of
company's senior secured second lien term loan, the rating on the
senior secured first lien credit facility was affirmed at B2 to be
consistent with the CFR as the company's debt capital structure is
almost entirely comprised of this single class of debt.
HireRight's SGL-1 SGL rating reflects the company's very good
liquidity profile. Moody's expects approximately $100 million of
cash as of December 31, 2021, as well as free cash flow as a
percentage of debt above 10% over the next 12-15 months. The
company's cash flows are moderately seasonal, typically stronger in
the second half of the year corresponding with clients hiring
activity and collections. The company's liquidity is also bolstered
by an undrawn $100 million revolving credit facility due July 2023.
There are no financial maintenance covenants applicable to the
senior secured first lien term loan. The revolving credit facility
is subject to a springing first lien leverage ratio of 7.3x when
the amount of revolving loans drawn exceeds 35% facility
commitment. Moody's does not expect the company to utilize the
revolver during the next 12-15 months, and that it would remain
well in compliance with the springing first-lien net leverage
covenant if it were tested.
The stable outlook reflects Moody's expectations that HireRight
revenues will expand at a mid-single digit percentage rate, while
EBITDA improves at higher rate as efficiency benefits are realized,
and debt-to-EBITDA declines to the mid-4 times range over the next
12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if HireRight profitably grows its
scale and diversity, improves profitability rates meaningfully and
establishes a track record of balanced financial policies.
Quantitatively, Moody's could consider an upgrade if the company's
debt-to-EBITDA (Moody's adjusted) approaches 4.0 times, EBITDA
margin (Moody's adjusted) is sustained above 25% and at least good
liquidity is maintained.
The ratings could be downgraded if HireRight's operating
performance meaningfully deteriorates, leading to permanently high
debt leverage and low or negative free cash flow expectations.
Large debt-financed acquisitions or shareholder distributions could
also pressure the ratings. Quantitatively, the ratings could be
downgraded if debt-to-EBITDA (Moody's adjusted) is expected to
remain above 6.0 times or free cash flow-to-debt (Moody's adjusted)
is sustained below 5%.
HireRight, headquartered in Nashville, TN, is a global provider of
background screening and compliance solutions, including criminal
background checks, credential verification, employee drug testing,
and fingerprint-based screening for enterprise and mid-market
clients. Following the November 2021 IPO, HireRight is a publicly
traded company on NYSE: HRT. Moody's expects the company to
generate revenue in excess of $700 million at the end of fiscal
2021.
HORNBLOWER SUB: Moody's Hikes CFR to Caa1; Outlook Stable
---------------------------------------------------------
Moody's Investors Service upgraded the ratings of Hornblower Sub,
LLC ("Hornblower") including its corporate family rating to Caa1
from Caa2 and its probability of default rating to Caa1-PD from
Caa3-PD. At the same time, Moody's affirmed the Caa2 rating on the
company's senior secured bank credit facility rating. The outlook
is stable.
"The upgrade reflects Hornblower's improved liquidity profile
following the company's receipt of about $115 million from the
Coronavirus Economic Relief for Transportation Services ("CERTS")
Program," stated Pete Trombetta, Moody's VP-Senior Analyst. The
CERTS proceeds, along with reduced cash burn in the third quarter,
will enable the company to get through the typically slow winter
months and be in position to benefit from improved operations in
the second quarter of 2022," added Trombetta.
Upgrades:
Issuer: Hornblower Sub, LLC
Corporate Family Rating, Upgraded to Caa1 from Caa2
Probability of Default Rating, Upgraded to Caa1-PD from
Caa3-PD
Affirmations:
Issuer: Hornblower Sub, LLC
Senior Secured 1st Lien Term Loan B , Affirmed Caa2 (to LGD4
from LGD3)
Gtd. Senior Secured 1st Lien Revolving Credit Facility,
Affirmed Caa2 (to LGD4 from LGD3)
Outlook Actions:
Issuer: Hornblower Sub, LLC
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Hornblower's credit profile is constrained by Moody's forecast of
extremely high leverage in 2022 as the company continues to recover
from the significant impact of the pandemic. Even if the company
gets back to 2019 earnings, leverage will be above 7x given the
debt the company had to raise over the past year. We expect
earnings will continue to improve in 2022 but not get back fully to
2019 levels until at least 2023. The recovery continues to be
dependent upon the easing of travel restrictions and occupancy
limitations on its vessels. If these restrictions are not eased, or
if visitation slows to these attractions because of additional
restrictions put in place related to concerns around regional COVID
flare-ups, the company's liquidity could be further pressured. The
company has no availability under its $22.5 million revolver that
expires in November 2022 (unrated). Positive consideration is given
to the exclusive nature of multiyear contracts to operate ferry
transportation services at two National Park Service locations
(Alcatraz and Statue of Liberty/Ellis Island) and the Canadian side
of the Niagara Falls for the Niagara Parks Commission. The company
is also the exclusive operator of the NYC Ferry system which will
continue to see rising ridership numbers as large businesses return
to the office in 2022. The overnight division has been running its
US river vessels since March of this year with few restrictions and
with 100% mandatory vaccination requirements for all onboard. There
have been no COVID issues to date. The company recently began
operating under a new contract for its Alcatraz concession that
runs through 2034 and its Statue of Liberty contract runs through
2024.
Hornblower has adequate liquidity reflected by its $120 million
cash balance at the end of September 2021 offset by its lack of
availability under its $22.5 million committed revolver.
Hornblower's cash balances are sufficient to absorb negative cash
flow over the normally slow winter months until operations resume
in full in April 2022. The company is subject to a minimum
liquidity covenant of $10 million. Alternate sources of liquidity
are considered modest.
The Caa2 rating on the company's senior secured credit facility --
one notch below the CFR -- reflects the material amount of
superpriority debt ahead of it in the capital structure.
The stable outlook reflects Moody's view that Hornblower's
liquidity will remain adequate into 2022 and leverage will begin to
return to sustainable levels.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Hornblower's ratings could be upgraded if operations return to
normalized levels enabling the company to generate free cash flow
in an amount sufficient to pay down debt to achieve leverage
approaching 6.5x with EBITA/interest coverage above 1.0x. Any
upgrade would require at least adequate liquidity. Ratings could be
downgraded if liquidity weakens in any way or if the likelihood of
a default increases for any reason.
Headquartered in San Francisco, California, Hornblower Sub, LLC is
a concessioner of ferry transportation services to the National
Park Service for Alcatraz Island and the Statue of Liberty/Ellis
Island and the Niagara Parks Commission for the Canadian side of
Niagara Falls, and is the exclusive operator of the NYC Ferry
system. The company also provides cruises & events service in the
US, Canada and the UK, operates overnight cruises on the
Mississippi River, the Pacific Northwest, and the Great Lakes, as
well as provides maritime operations and management services to
public and private clients. Gross revenues were about $290 million
for the twelve month period ending September 30, 2021. Hornblower
is majority owned by Crestview Partners along with management and
does not file public financial statements.
IM SERVICES: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: IM Services Group, LLC
5418 N. Eagle Rd., Ste. 160
Boise, ID 83713-0100
Chapter 11 Petition Date: December 28, 2021
Court: United States Bankruptcy Court
District of Idaho
Case No.: 21-00737
Judge: Hon. Noah G. Hillen
Debtor's Counsel: Matthew T. Christensen, Esq.
JOHNSON MAY
199 N. Capitol Blvd, Ste 200
Boise, ID 83702
Tel: 208-384-8588
Fax: 208-629-2157
Email: info@johnsonmaylaw.com
Total Assets: $20,479,785
Total Liabilities: $21,829,475
The petition was signed by Sabatha Kelsey, director of Finance &
Accounting.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/WIMSWNI/IM_Services_Group_LLC__idbke-21-00737__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim
Claim Amount
------ ---------------
------------
1. DKD Electric LLC Vendor
$981,503
69801 Academy
Parkway West NE
Albuquerque, NM
87109
2. EquipmentShare.com, Inc. Vendor
$1,392,560
PO Box 2214
Decatur, AL 35609
3. ESI Pipeline Vendor
$414,827
Services dba Ozzie's Pipeline
7102 West Sherman Street
Phoenix, AZ 85043
4. Excel Mulching Vendor
$298,105
2228 SE Loop
Carthage, TX 75633
5. EZ Pipeline Padding Vendor
$240,767
1550 Laredo Drive
Odessa, TX 79762
6.Flex Fleet Rental LLC Vendor
$294,499
PO Box 95405
Chicago, IL
60694-5405
7. H&E Equipment Services Vendor
$645,087
PO Box 849850
Dallas, TX
75284-9850
8. HL Chapman Pipeline Vendor
$431,290
PO Box 846241
Dallas,TX
75284-6241
9. Libertas Funding LLC Loan
$1,566,120
65 W 36th St., 5th Floor
New York, NY 10018
10. Moffitt Services Vendor
$236,841
PO Box 4820
Houston, TX
77210-4820
11. Nelson Mullins Attorney Fees
$3,518,303
PO Box 11009
Columbia, SC 29211
12. Paylocity Payroll Taxes
$265,999
Attn: Legal Counsel
1400 American Lane
Schaumberg, IL
60196
13. Power Engineering Services Vendor
$202,122
9179 Shadow Creek Lane
Converse, TX 78109
14. Skope Broadband & Comm Vendor
$626,434
PO Box 1930
Kyle, TX 78640
15. Small Business Admin PPP Loan (not yet
$2,000,000
PO Box 740192 forgiven)
Atlanta, GA 30374
16. Splicers Inc. Vendor
$306,002
PO Box 2525
Conroe, TX 77305
17. TBK Bank, SSB Loan Agreement
$866,071
12700 Park Central Dr.
Ste. 1700
Dallas, TX 75251
18. United Rentals Vendor
$563,089
File 51122
Los Angeles, CA
90074-1220
19. West States Energy Vendor
$290,664
Contractor
PO Box 1457
Bloomfield, NM
87413
20. WRS-Worldwide Vendor
$332,576
Rental Service
PO Box 172363
Denver, CO
80217-2363
INTELSAT SA: Bankruptcy Court Approves Reorganization Plan
----------------------------------------------------------
Intelsat S.A. on Dec. 16, 2021, disclosed that the U.S. Bankruptcy
Court for the Eastern District of Virginia, Richmond Division, has
approved its Plan of Reorganization, marking the final Court
milestone in the Company's financial restructuring process.
Intelsat is poised to emerge from the process in early 2022 upon
receipt of regulatory approvals, completion of certain corporate
actions, and satisfaction of other customary conditions.
The confirmed Plan will reduce Intelsat's debt by more than half --
from approximately $16 billion to $7 billion -- and position the
Company for long-term success as it innovates and brings new
services to market. The Plan was supported by all creditor groups
across Intelsat's capital structure following extensive
negotiations and the ultimate consensual resolution of a multitude
of complex issues.
"[The] Plan confirmation is a key milestone in Intelsat's
transformation. We have achieved all of the goals we identified at
the outset of the process, including a substantial reduction of our
legacy debt burden," said Intelsat's Chief Executive Officer,
Stephen Spengler. "Throughout the process, we have driven our
business forward at full speed -- launching new satellites,
advancing the accelerated clearing of C-band spectrum, acquiring
Gogo's commercial aviation business, progressing our next
generation network and service strategy, and serving customers
every day with the excellence for which we are known. We greatly
appreciate the dedication and contributions of our employees, the
support of our valued customers, vendors, and other partners, and
the collaboration with our financial stakeholders as we pave the
way for future innovation and growth."
"With a strengthened balance sheet, strong operating model, and
unparalleled global orbital and spectrum rights, scale, and
partnerships, we will be better positioned to advance our strategic
objectives, accelerate our growth trajectory, and fuel the success
of our customers and other key stakeholders. Our goals include
building the world's first global 5G satellite-based,
software-defined, unified network," Spengler continued. "For nearly
60 years, Intelsat has been respected for innovation, reliability,
sector leadership, and high-performing services and support. We
look forward to maintaining our leading position in the satellite
communications industry for decades to come."
Under the terms of the Plan and with exit financing commitments
already obtained, Intelsat is set to emerge as a private company,
with the support of new equity owners, access to $7.875 billion in
capital, and a significantly deleveraged balance sheet. The Company
is well positioned to continue to reduce its debt upon receipt of
$4.87 billion of accelerated relocation payments in connection with
the C-band spectrum clearing project, with $1.2 billion of the
total already approved by the Federal Communications Commission for
anticipated receipt in January.
Additional Information
Additional information regarding Intelsat's financial restructuring
is available at Intelsatonward.com. Court filings are available at
https://cases.stretto.com/intelsat, by calling the Company's claims
agent, Stretto, at +1 855-489-1434 (toll-free) or +1 949-561-0347
(international), or by emailing intelsatinquiries@stretto.com.
Kirkland & Ellis LLP is serving as legal counsel, PJT Partners is
serving as financial advisor, and Alvarez & Marsal is serving as
restructuring advisor to the Company.
About Intelsat S.A.
Intelsat S.A. (OTC: INTEQ) -- 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.
ION GEOPHYSICAL: Fails to Comply With NYSE Listing Standards
------------------------------------------------------------
ION Geophysical Corporation received a written notice from the New
York Stock Exchange that the Company is not in compliance with the
continued listing standards set forth in Section 802.01B of the
NYSE Listed Company Manual. ION is considered below criteria
established by the NYSE for continued listing because its average
market capitalization has been less than $50 million over a
consecutive 30 trading-day period, and at the same time its last
reported stockholders' equity was below $50 million.
The Company intends to submit a plan that demonstrates its ability
to bring the Company into conformity with the continued listing
standards within six months. During the six-month period, the
Company's shares will continue to be listed and traded on the NYSE,
subject to its continued compliance with the plan and other NYSE
continued listing standards.
"We have already begun preparation on our plan to restore
compliance with the NYSE as our business continues to improve from
industry lows and we review our strategic alternatives as announced
on September 15, 2021," said Chris Usher, ION's President and Chief
Executive Officer. "During this time, we will cooperatively work
with the NYSE to return to compliance."
About ION
Headquartered in Houston, Texas, ION (NYSE: IO) --
http://www.iongeo.com– is an innovative, asset light global
technology company that delivers powerful data-driven
decision-making offerings to offshore energy, ports and defense
industries. The Company is entering a fourth industrial revolution
where technology is fundamentally changing how decisions are made.
The Company provides its services and products through two business
segments -- E&P Technology & Services and Operations Optimization.
ION Geophysical reported a net loss of $37.11 million for the year
ended Dec. 31, 2020, compared to a net loss of $47.21 million on
$174.68 million for the year ended Dec. 31, 2019. As of Sept. 30,
2021, the Company had $190.91 million in total assets, $256.07
million in total liabilities, and a total deficit of $65.17
million.
Houston, Texas-based Grant Thornton LLP, the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated Feb. 11, 2021, citing that as of Dec. 31, 2020, the Company
had outstanding $120.6 million aggregate principal amount of its
9.125% Senior Secured Second Priority Notes, which mature on Dec.
15, 2021. The Notes, classified as current liabilities, caused the
Company's current liabilities to exceed its current assets by
$150.9 million and its total liabilities exceeds its total assets
by $71.1 million. These conditions, along with other matters,
raise substantial doubt about the Company's ability to continue as
a going concern.
* * *
As reported by the TCR on June 7, 2021, S&P Global Ratings raised
its issuer credit rating on U.S.-based marine seismic data company
ION Geophysical Corp. to 'CCC' from 'SD' (selective default). S&P
said, "Our 'CCC' rating reflects the company's unsustainable
leverage and the potential for a liquidity shortfall over the next
12 months. After a 30% year-over-year decline in its revenue in
2020 and a 49% sequential decline in the first quarter of 2021, ION
is highly dependent on an improvement in demand for offshore
seismic data to survive."
JP RAMBLE: Case Summary & 2 Unsecured Creditors
-----------------------------------------------
Debtor: JP Ramble, LLC
6485 Zuma View Pl
Malibu, CA 90265
Business Description: JP Ramble is a Single Asset Real Estate
debtor (as
defined in 11 U.S.C. Section 101(51B))
Chapter 11 Petition Date: December 28, 2021
Court: United States Bankruptcy Court
Central District of California
Case No.: 21-11255
Debtor's Counsel: Michael R. Totaro, Esq.
TOTARO & SHANAHAN
P.O. Box 789
Pacific Palisades, CA 90272
Tel: (888) 425-2889
Fax: (310) 496-1260
E-mail: Ocbkatty@aol.com
Total Assets: $3,100,000
Total Liabilities: $4,719,788
The petition was signed by Dean R. Isaacson, managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/R5ZSBRA/JP_Ramble_LLC__cacbke-21-11255__0001.0.pdf?mcid=tGE4TAMA
KURNCZ FARMS: Taps Warner Norcross + Judd as Legal Counsel
----------------------------------------------------------
Kurncz Farms, Inc. seeks approval from the U.S. Bankruptcy Court
for the Western District of Michigan to hire Warner Norcross +
Judd, LLP to serve as legal counsel in its Chapter 11 case.
The firm's services include:
1. Advising the Debtor of its rights, powers and duties;
2. Attending meetings and negotiating with creditors and other
parties in interest;
3. Advising the Debtor regarding the conduct of its case,
including all of the legal and administrative requirements of
operating in Chapter 11;
4. Assisting the Debtor in evaluating its unexpired leases and
executory contracts;
5. Taking all necessary actions to protect and preserve the
Debtor's estate, including the prosecution of actions on its
behalf, the defense of actions commenced against the estate,
negotiations concerning litigation in which the Debtor may be
involved, and objections to claims filed against the estate;
6. Preparing a plan of reorganization, disclosure statement
and related documents and taking necessary actions to obtain
confirmation of the plan;
7. Appearing before the court and the Office of the U.S.
Trustee; and
8. Performing other necessary legal services for the Debtor.
The hourly rates charged by the firm's attorneys and paralegals are
as follows:
Elisabeth Von Eitzen $475 per hour
Susan Cook $475 per hour
Paralegal $190 per hour
In addition, the firm will seek reimbursement for work-related
expenses.
Warner received the sum of $15,000 as retainer.
Susan Cook, Esq., at Warner disclosed in a court filing that her
firm does not represent any interest adverse to the Debtor.
The firm can be reached at:
Susan M. Cook, Esq.
Warner Norcross + Judd, LLP
715 E. Main Street, Suite 110
Midland, MI 48640-5382
Tel: 989-698-3759
Fax: 989-486-6159
Email: smcook@wnj.com
About Kurncz Farms Inc.
Kurncz Farms, Inc. is part of the cattle ranching and farming
industry. The company is based in Saint Johns, Mich.
Kurncz Farms sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. W.D. Mich. Case No. 21-02612) on Nov. 30, 2021,
listing as much as $10 million in both assets and liabilities.
Peter J. Kurncz, president of Kurncz Farms, signed the petition.
Susan M. Cook, Esq., at Warner Norcross + Judd, LLP and Barron
Business Consulting serve as the Debtor's legal counsel and
business consultant, respectively.
The U.S. Trustee for Region 17 appointed an official committee of
unsecured creditors in the Debtor's case on Nov. 22, 2021. The
committee is represented by Shulman Bastian Friedman & Bui, LLP.
LIQUI-BOX HOLDINGS: Moody's Affirms B3 CFR; Outlook Negative
------------------------------------------------------------
Moody's Investors Service affirmed Liqui-Box Holdings, Inc.'s B3
Corporate Family Rating (CFR), Caa1-PD Probability of Default
Rating, and B3 rating on the company's senior secured credit
facility. The outlook remains negative.
The rating affirmation reflects Moody's expectation that Liqui-Box
will successfully complete the integration of DS Smith in the first
quarter of 2022 and an improvement in free cash will result from
capital expenditures and working capital requirements declining to
normalized levels. Recently, the company successfully issued an
incremental term loan to repay revolver borrowings and shore up
liquidity. To support liquidity going forward, Moody's expects free
cash to be allocated to repaying revolver borrowings before any
sizable inorganic growth opportunities.
"While we expect improving operating performance from Liqui-Box,
our negative outlook reflects elevated liquidity risk from
consistent outstanding revolver borrowings, and continued
integration risk of acquisitions, stemming from an aggressive
financial policy," said Scott Manduca, Vice President at Moody's.
Affirmations:
Issuer: Liqui-Box Holdings, Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed Caa1-PD
Gtd Senior Secured Term Loan, Affirmed B3 (LGD3)
Gtd Senior Secured Revolving Credit Facility, Affirmed B3 (LGD3)
Outlook Actions:
Issuer: Liqui-Box Holdings, Inc.
Outlook, Remains Negative
RATINGS RATIONALE
Liqui-Box's B3 CFR reflects (i) lengthy lags in raw material cost
pass throughs; (ii) the high concentration of sales with customers
in cyclical end markets and quick service restaurants and (iii)
small scale in the competitive and fragmented packaging industry.
The company's substantial revolver borrowing raises liquidity risk
and has reduced the cushion under the financial covenant.
The CFR is supported by Liqui-Box's (i) significant exposure to
stable end markets like food and beverage; (ii) recovery in end
markets that were impacted by the pandemic; and (iii) high
switching costs for customers due to long-term contracts and the
installed base of equipment on customer premises.
Governance risks are heightened given Liqui-Box's private equity
ownership, where shareholder interests may take preference over
those of debt holders and could result in debt funded acquisitions
or dividends.
Liqui-Box's liquidity is adequate and encompasses an expectation of
improving free cash flow generation over the next 12 months.
However, in addition to cash of $31 million as of September 30,
2021, the company had $72 million of borrowings under the company's
$75 million revolver, of which about half has since been repaid
with incremental term loan proceeds of $47.5 million. Going
forward, revolver borrowings are expected to be repaid with free
cash flow and cash is to build, as capital expenditures return to a
more normal level post the integration of acquisitions. The only
financial covenant on the credit facilities is a static total net
leverage covenant of 7.5 times. Moody's expects the company to
maintain adequate cushion under this covenant over the next 12
months, but an acceleration in debt-funded acquisitions, any
further integration challenges, or a cyclical downturn in the
company's end markets (industrial, construction, logistics,
graphics) would put this cushion at risk. Term loan amortization is
1.0% annually and the facility contains an excess cash flow sweep.
US assets are fully encumbered by the secured debt and the European
assets provide a modest degree of alternative liquidity as they are
not part of the collateral package. The nearest significant debt
maturity is the $75 million revolver in 2024.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could downgrade the company's ratings if credit metrics,
liquidity or the competitive environment deteriorate. Debt funded
acquisitions entailing significant integration risk could also
jeopardize the rating. Specifically, the ratings could be
downgraded if debt-to-EBITDA (inclusive of Moody's adjustments) is
sustained above 6.5 times, funds from operations-to-debt is
sustained below 7.0%, and EBITDA-to-interest coverage is sustained
below 2.25 times.
Moody's could upgrade the rating if the company is able to
sustainably improve credit metrics and maintain good liquidity.
Specifically, the ratings could be upgraded if debt-to-EBITDA
(inclusive of Moody's adjustments) is sustained below 5.5 times,
funds from operations-to-debt is sustained above 9.0%, and
EBITDA-to-interest coverage is sustained above 3.0 times.
Headquartered in Richmond, Virginia, Liqui-Box is a manufacturer of
flexible and rigid packaging. Liqui-Box is a portfolio company of
Olympus Partners and does not publicly disclose financial
information.
LTL MANAGEMENT: Talc Claimants Panel Seeks to Hire Canadian Counsel
-------------------------------------------------------------------
The official committee of talc claimants of LTL Management, LLC
seeks approval from the U.S. Bankruptcy Court for the District of
New Jersey to retain Miller Thomson, LLP as special Canadian
counsel.
The committee requires the services of a Canadian counsel
experienced in Canadian insolvency law and cross-border insolvency
proceedings. LTL Management is seeking to have its Chapter 11 case
recognized in Canada under Canada's Companies' Creditors
Arrangement Act.
Miller Thomson's services include:
a. providing recommendations and input for legal strategies,
tactics and positions to be taken by the committee in Canada,
including those in response to motions and other actions taken by
others in the recognition proceeding as well as with respect to
motions filed and strategies to be implemented by the committee,
whether in or out of court, as requested by the committee;
b. handling specific motions, whether the committee is the
movant or respondent, for various relief filed in the bankruptcy
court or the Canadian commercial court, to avoid duplication with
other committee counsel, as requested by the committee;
c. participating as a committee presenter in bankruptcy
hearings, as requested, or in the recognition proceeding on
specific topics for significant motions;
d. participating as part of the committee's negotiating team
against Johnson & Johnson, as requested by the committee; and
e. participating in talc claims valuation and estimation as
requested by the committee.
The hourly rates charged by the firm's attorneys and paralegals are
as follows:
Partners $400 - $800 per hour
Associates $250 - $500 per hour
Paralegals $150 - $300 per hour
As disclosed in court filings, Miller Thomson is a disinterested
person under Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Jeffrey Carhart, Esq.
Miller Thomson LLP
40 King Street West, Suite 5800
Toronto, Ontario, Canada M5H 3S1
About LTL Management
LTL Management, LLC is a subsidiary of Johnson & Johnson (J&J),
which was formed to manage and defend thousands of talc-related
claims and oversee the operations of Royalty A&M. Royalty A&M owns
a portfolio of royalty revenue streams, including royalty revenue
streams based on third-party sales of LACTAID, MYLANTA/MYLICON and
ROGAINE products.
LTL Management filed a petition for Chapter 11 protection (Bankr.
W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was
transferred to New Jersey (Bankr. D. N.J. Case No. 21-30589) on
Nov. 16, 2021. The Hon. Michael B. Kaplan is the case judge.
At the time of the filing, the Debtor was estimated to have $1
billion to $10 billion in both assets and liabilities.
The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A. as
bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon
LLP as special counsel; McCarter & English, LLP as litigation
consultant; Bates White, LLC as financial consultant; and
AlixPartners, LLP as restructuring advisor. Epiq Corporate
Restructuring, LLC is the claims agent.
U.S. Bankruptcy Administrator Shelley Abel formed an official
committee of talc claimants in the Debtor's Chapter 11 case. The
committee tapped Bailey & Glasser, LLP, Otterbourg, P.C. and Brown
Rudnick, LLP as bankruptcy counsel; and Massey & Gail, LLP and
Parkins Lee & Rubio, LLP as special counsel. Miller Thomson, LLP
serves as the committee's Canadian counsel.
About Johnson & Johnson
Johnson & Johnson is an American multinational corporation founded
in 1886 that develops medical devices, pharmaceuticals, and
consumer packaged goods. It is the world's largest and most
broadly based healthcare company.
Johnson & Johnson is headquartered in New Brunswick, New Jersey,
the consumer division being located in Skillman, New Jersey. The
corporation includes some 250 subsidiary companies with operations
in 60 countries and products sold in over 175 countries.
The corporation had worldwide sales of $82.6 billion in 2020.
MARINER WEALTH: Moody's Affirms B1 CFR Amid New $150M 2nd Lien Loan
-------------------------------------------------------------------
Moody's Investors Service affirmed Mariner Wealth Advisors, LLC's
(Mariner) B1 Corporate Family Rating (CFR) following the company's
closing of a new $150 million second lien term loan facility. The
new second lien facility (unrated) includes a $100 million funded
term loan and a $50 million delayed draw term loan, bringing total
debt, including the $50 million delayed draw loan, to $550 million.
Outlook remains stable.
The rating affirmation follows from Moody's expectation that once
proceeds from the new facility are used to complete signed
acquisitions, Mariner's leverage will remain stable, at
approximately 5 times run-rate EBITDA.
In addition to affirming the CFR, Moody's has upgraded the
company's existing first lien loan facility and revolving credit
facility by one notch to Ba3. First lien creditors' position is
improved versus the CFR. They will have a claim on a larger
company, with the second lien facility acting as a loss-absorbing
cushion in the capital structure, behind them.
The following ratings actions were taken:
Issuer: Mariner Wealth Advisors, LLC
Affirmation:
Long-term Corporate Family Rating, affirmed B1
Probability of Default Ratings, affirmed B1-PD
Upgrades:
Senior Secured Term Loan B, upgraded to Ba3 from B1
Senior Secured Delayed Draw Term Loan, upgraded to Ba3 from B1
Senior Secured Revolving Credit Facility, upgraded to Ba3 from B1
Outlook Action:
Outlook remains Stable
RATINGS RATIONALE
Mariner's B1 CFR reflects its leading position as a consolidator of
wealth advisors, its strong AUM resilience and organic growth rate,
and its relatively high financial leverage, a product of its
acquisition-driven strategy. The company has relied on a balanced
use of debt and internally-generated cash to support its
acquisition strategy and grow its business since its founding in
2006.
The company's strong organic growth, which has exceeded 10 percent
given the company's excellent client retention and sales record,
could reduce leverage over time, as revenues grow, and the company
invests in efficiencies that accelerate gains in operating
leverage.
However, ongoing acquisitions of advisors, as Mariner actively
participates in the consolidation of the wealth advisory industry,
should lead to increased demand for external capital resources.
Moody's therefore anticipates that Mariner's leverage will remain
elevated as it presses ahead with new acquisitions. Multiples for
RIA acquisitions have averaged 9x acquired EBITDA, and so internal
resources, including cash flow and synergies, as well as equity,
will be required to manage leverage lower. Moody's does not expect
significant deleveraging for the next 12 to 18 months.
While the growing company is able to carry more debt, risks of
rapid growth are a concern. Mariner has a solid advisor retention
record of 98% and good experience with acquired RIAs that have
increased their practices post acquisition. Nonetheless it may be
exposed to challenges encountered by serial acquirers such as
integrating new businesses, merging personalities, and maintaining
incentives.
Marty Bicknell, a founder of Mariner and its CEO and president, has
been instrumental in fashioning the firm's strategic objectives,
and he maintains oversight of the firm's critical M&A program.
Thus, Mariner is exposed to the "key person" risk that he might be
unable to continue in his duties for any reason.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The factors that could lead to an upgrade of Mariner's rating
include: (1) scale (net revenue) exceeding $400 million; (2)
steady-state leverage multiple below 3.5x; and (3) pre-tax margins
in excess of 15%. Conversely, factors that could lead to a
downgrade included: (1) scale declining below $150 million; (2)
leverage rising on decline in earnings, to exceed 6.0x; (3)
breakdown of advisor and client retention metrics; and (4)
sustained decline in wealth management fee rates or loss of pricing
power.
The last rating action on Mariner Wealth Advisors was July 28, 2021
when Moody's assigned new ratings to Mariner.
Mariner Wealth Advisors is a national wealth advisory firm founded
in 2006 with $47.5 billion of assets under management and
advisement as of September 30, 2021.
ODYSSEY AT PATERSON: Sale of Commercial Property to Fund Plan
-------------------------------------------------------------
The Odyssey at Paterson, LLC, submitted a Plan and a Disclosure
Statement.
The Debtor intends to sell all real property and fully satisfy all
claims in this case. The Effective Date of the proposed Plan is the
first date upon which any property is sold in accordance with this
Plan.
The estimated amount of undisputed general unsecured claims as
scheduled or filed is $28,560. After payment to Allowed Secured
Claims and customary closing costs, including property, transfer,
mansion taxes, payment of Administrative Expenses including
administrative tax claims, any remaining sale proceeds from real
estate sold shall be paid on a pro rata basis to holders of general
unsecured claims in Class 2 within 30 days following sale real
property.
General Unsecured Creditors may seek dismissal or conversion of
this case to Chapter 7 should the Debtor default with its
obligation to make payment.
Class 2 is impaired.
The Plan will be funded from a combination of (i) sale of the
Property; and (ii) funds on hand in the estate at the time of
Confirmation.
Counsel for the Debtor:
David L. Stevens
SCURA, WIGFIELD HEYER,
STEVENS & CAMMAROTA, LLP
1599 Hamburg Turnpike
Wayne, New Jersey 07470
Tel.: 973-696-8391
E-mail: Dstevens@scura.com
A copy of the Disclosure Statement dated Dec. 22, 2021, is
available at https://bit.ly/3mzLdNM from PacerMonitor.com.
About The Odyssey at Paterson
The Odyssey at Paterson is a Single Asset Real Estate debtor (as
defined in 11 U.S.C.
Section 101(51B)). The real property owned by the Debtor are 131
-139 Market Street & 231 -235 Main Street, Paterson, New Jersey.
The Property is a three-unit, contiguous property encompassing all
storefronts within 131-139 Market Street and 231- 235 Market
Street. There are currently three units within the Property, two of
which are currently being rented.
In early 2020 the COVID-19 Pandemic affected nearly every business
nationwide, including the Debtor’s business operations. As a
result, Debtor's anchor tenant did not renew its lease and Debtor
was unable to find a replacement tenant. Due to the hardships
associated with COVID-19, the Debtor became delinquent with
mortgage payments for the Property. The mortgage holder Lakeland
Bank commenced a foreclosure action and received an order
appointing a rent receiver.
To stay a foreclosure sale and allow the Debtor to regain control
of the Property, The Odyssey at Paterson, LLC, filed a Chapter 11
petition (Bankr. D.N.J. Case No. 21-16724) on Aug. 24, 2021. David
L. Stevens, Esq., at SCURA, WIGFIELD, HEYER, STEVENS & CAMMAROTA,
LLP, is the Debtor's counsel. The Debtor estimated assets and debt
of $1 million to $10 million as of the bankruptcy filing.
PARAMOUNT RESOURCES: Moody's Hikes CFR to B1; Outlook Positive
--------------------------------------------------------------
Moody's Investors Service upgraded Paramount Resources Ltd.'s
Corporate Family Rating (CFR) to B1 from B2, and its senior secured
revolving credit facility rating to Ba3 from B1. The B2-PD
Probability of Default Rating was affirmed. The outlook remains
positive. The speculative grade liquidity rating was changed to
SGL-2 (good) from SGL-3 (adequate).
"The upgrade of Paramount Resources reflects the significant amount
of debt repayment from free cash flow that has led to strong
leverage metrics and an improved liquidity profile in 2021", said
Paresh Chari Moody's analyst.
Upgrades:
Issuer: Paramount Resources Ltd.
Corporate Family Rating, Upgraded to B1 from B2
Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3
Senior Secured Bank Credit Facility, Upgraded to Ba3 (LGD2) from
B1 (LGD3)
Affirmations:
Issuer: Paramount Resources Ltd.
Probability of Default Rating, Affirmed B2-PD
Outlook Actions:
Issuer: Paramount Resources Ltd.
Outlook, Remains Positive
RATINGS RATIONALE
Paramount's B1 CFR is supported by (1) its growing production
(around 85,000 boe/d net of royalties expected in 2022) and
reserves base; (2) acreage diversification across multiple
producing areas in western Canada; and (3) strong expected retained
cash flow to debt of around 225% in 2022. Paramount's rating is
constrained by (1) a low leveraged full-cycle ratio of just above
1.5x in 2022 despite a supportive commodity price environment; (2)
a relatively high production and F&D cost structure (around $15/boe
each) that reduces portfolio durability; and (3) history of
liquidity challenges, including persistent negative free cash
flow.
Paramount has good liquidity (SGL-2) over the next year. Sources of
cash, at September 30, 2021, totaled C$525 million with no uses
over the next year. At September 30, 2021, Paramount had minimal
cash and about C$400 million available under its C$900 million
revolving credit facility that matures in June 2024. We anticipate
C$125 million in free cash flow in 2022 which we expect will be
used to repay revolver drawings. We expect Paramount will be in
compliance with its two financial covenants during this period.
Alternate liquidity is good given the investments Paramount holds
in other companies as well as its sizeable acreage position.
Paramount's senior secured revolver is rated Ba3 (one notch above
B1 CFR) reflecting its priority ranking to other unsecured
liabilities.
Paramount's governance reflects its history of persistent negative
free cash flow and challenged liquidity profile, offset with its
conservative balance sheet and now improving free cash flow and
liquidity profiles.
The positive outlook reflects our expectation that Paramount's
leverage will improve in 2022, and that the growth program will
improve its LFCR to above 1.5x with falling operating and F&D
costs.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if retained cash flow to debt is
above 50% (69% Sep-21 LTM), LFCR is above 1.5x (0.4x Sep-21 LTM),
if production growth expectations are achieved (above 90,000 boe/d
net of royalties in 2023), and if Paramount can continue to
generate meaningful free cash flow and maintain good liquidity.
The ratings could be downgraded if retained cash flow to debt is
below 30% (69% Sep-21 LTM), LFCR remains below 1x (0.4x Sep-21
LTM), production declines (around 75,000 boe/d net of royalties
currently) or liquidity deteriorates.
Paramount is a publicly-traded, Calgary, Alberta-based exploration
and production company with operations across Alberta and British
Columbia.
PHILIPPINE AIRLINES: Wins U.S. Approval of Reorganization Plan
--------------------------------------------------------------
Philippine Airlines, Inc. (PAL) on Dec. 17 disclosed that the U.S.
Bankruptcy Court of the Southern District of New York has approved
its Plan of Reorganization (the "Plan"). PAL filed a voluntary
petition on September 3, 2021 for a prearranged restructuring under
the U.S. Chapter 11 process, and has received overwhelming creditor
support throughout the process.
"[The] court approval represents a critical moment in our journey
to emerge as a stronger airline. We are thankful for our loyal
customers, dedicated employees, and the support of our shareholders
and partners and government, which has enabled us to move
efficiently through the process and reach this milestone," said
Gilbert F. Santa Maria, PAL President & Chief Operating Officer.
"We have a few more procedural steps to take before we can complete
the Chapter 11 process, after which we will focus intensely on
serving the public, navigating the continuing challenges of the
pandemic and economic recovery, and sustaining the links that
connect our archipelago."
The consensual Plan was accepted by 100% of the votes cast, which
were from PAL's primary aircraft lessors and lenders, original
equipment manufacturers and maintenance, repair, and overhaul
service providers, and certain funded debt lenders. The Plan
provides for over US$2.0 billion in permanent balance sheet
reductions from existing creditors, allows PAL to consensually
contract fleet capacity by 25%, improves PAL's critical operational
agreements and includes US$505 million investment in long-term
equity and debt financing from PAL's majority shareholder.
The effective date of the Plan is expected to occur before the end
of 2021.
PAL continues to operate flights to 32 international and 29
domestic destinations from its hubs in Manila, Cebu and Davao. The
Philippine flag carrier expects to restore more routes and increase
flight frequencies as travel restrictions ease and borders reopen.
Following implementation of the Plan, PAL will be better positioned
to capture travel demand and serve the needs of global citizens,
actively contributing to the Philippine economy.
Filing Entities
Philippine Airlines Inc. is the only party included in the Chapter
11 filing; while PAL Holdings Inc., which is listed on the
Philippine Stock Exchange (PSE: PHI), and Air Philippines
Corporation, known as PAL Express, are not included in the Chapter
11 filing.
Additional Information
Additional resources for customers and other stakeholders, and
other information on PAL's filings, can be accessed by visiting the
Company's restructuring website at www.PALrecovery.com.
Court filings and other documents related to the Chapter 11 process
in the U.S. are available on a separate website administered by
PAL's claims agent, KCC, at www.kccllc.net/PAL. Information is also
available by calling (866) 967-0671 (U.S./Canada) or (310) 751-2671
(International).
Debevoise & Plimpton LLP, Norton Rose Fulbright US LLP and Angara
Abello Concepcion Regala & Cruz (ACCRA) are acting as legal
advisors and Seabury Securities LLC as financial advisor and
investment banker to the Company.
About Philippine Airlines Inc.
Philippine Airlines, Inc., is the flag carrier of the Philippines
and the country's only full-service network airline. PAL was the
first commercial airline in Asia and marked its 80th anniversary in
March 2021. PAL's young fleet of Boeing 777s, Airbus A350s, Airbus
A330s, Airbus A321s and De Havilland DHC Q400 aircraft operate out
of hubs in Manila, Cebu and Davao to 29 destinations in the
Philippines and 32 destinations in Asia, North America, Australia,
Europe and the Middle East. PAL was rated a 4-Star Global Airline
by Skytrax in 2018 and a 5-Star Major Airline by the Association of
Airline Passengers (APEX) in 2020, and was likewise voted the
World's Most Improved Airline in the 2019 Skytrax worldwide
passenger survey with a ranking of 30th best airline in the world.
On Sept. 3, 2021, Philippine Airlines, Inc. (PAL) filed a voluntary
petition for relief under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D.N.Y. Case No. 21-11569) to seek approval of a
restructuring plan negotiated with lenders and lessors.
As of July 31, 2021, the Debtor's overall assets and liabilities
were approximately $4.1 billion and $6.07 billion, respectively.
The Honorable Shelley C. Chapman is the case judge.
The Debtor tapped Debevoise & Plimpton LLP as general bankruptcy
counsel; Norton Rose Fulbright as special counsel; and Seabury
Securities LLC and Seabury International Corporate Finance LLC as
restructuring advisor and investment banker. Angara Abello
Concepcion Regala & Cruz (ACCRA) is acting as legal advisor in the
Philippines. Kurtzman Carson Consultants, LLC, is the claims and
noticing agent.
Buona Sorte Holdings, Inc. and PAL Holdings Inc., as DIP lenders,
are represented by White & Case LLP.
RYMAN HOSPITALITY: Moody's Affirms Ba3 CFR; Outlook Negative
------------------------------------------------------------
Moody's Investors Service has affirmed Ryman Hospitality
Properties, Inc.'s ratings, including its Ba3 corporate family
rating and RHP Hotel Properties, LP's B1 senior unsecured rating.
The company's rating outlook remains negative.
The ratings affirmation reflects the gradual recovery in the
lodging sector, including leisure transient and longer term group
demand, as well as Ryman's visibility into future bookings having
rebooked the majority of group room nights canceled due to the
pandemic since March 2020. The ratings affirmation also reflects
the modest improvement in Ryman's earnings profile from a trough
during the second half of 2020, with positive cash flow and EBITDA
as of Q3 2021 and further improvement expected in 2022, despite
recent headwinds related to COVID-19 variants.
The negative outlook reflects the risk that new COVID-19 variants
could slow the momentum of the lodging recovery, including business
travel, and continue to pressure Ryman's earnings in 2022. Moody's
base case assumes improvement in the second half of 2022 and into
2023, resulting in leverage of about 6.0x at the end of 2022.
Affirmations:
Issuer: Ryman Hospitality Properties, Inc.
-- Corporate family rating, Affirmed at Ba3
Issuer: RHP Hotel Properties, LP
-- Senior unsecured debt, Affirmed at B1
-- Senior secured bank credit facility, Affirmed at Ba3
Outlook Actions:
Issuer: Ryman Hospitality Properties, Inc.
Outlook, remains negative
Issuer: RHP Hotel Properties, LP
Outlook, remains negative
RATINGS RATIONALE
Ryman's Ba3 corporate family rating reflects its high-quality
portfolio comprised primarily of five large, group-oriented hotels
with resort-style amenities and longer booking windows that provide
greater visibility to earnings and occupancy. Additionally, under
normal circumstances, the credit profile acknowledges Ryman's solid
credit metrics for the rating category. However, given the material
impact of the pandemic, and Moody's expectation for a gradual
lodging recovery, Moody's forecasts that Ryman's leverage and
coverage levels will remain weak during the first half of 2022 but
should start to normalize over the next 12-18 months.
Ryman's SGL-3 speculative grade liquidity rating reflects Moody's
view over the next twelve months that the REIT will maintain an
adequate liquidity profile considering near-term funding needs. As
of September 30, 2021, liquidity is supported by approximately
$53.1 million in unrestricted cash on hand and $519.7 million in
revolver availability. Additionally, the company has no maturities
until 2023 when $800 million in debt related to the Gaylord Rockies
property comes due.
The negative outlook reflects the risk that new coronavirus
variants could slow the momentum of the lodging recovery, including
business travel, and continue to pressure Ryman's earnings in 2022.
Moody's base case assumes improvement in the second half of 2022
and into 2023, resulting in leverage of about 6.0x at the end of
2022.
Moody's regards the coronavirus outbreak as a social risk under our
ESG framework, given the substantial implications for public health
and safety.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded should occupancy, RevPAR and earnings
remain depressed through the second half of 2022 beyond our base
case assumption, or an expectation that Net Debt/EBITDA will remain
above 5.0x over the longer term. Significant operating challenges
or failure to maintain adequate liquidity could also lead to
downward ratings pressure.
A ratings upgrade is unlikely and would require material
improvement in the overall lodging outlook. Additionally, asset
diversification, improving operating performance over several
quarters, and increasing the size of its unencumbered asset pool
would be needed for an upgrade.
Ryman Hospitality Properties, Inc. is a REIT specializing in
group-oriented, destination hotel assets in urban and resort
markets. The Company's owed assets include a network of five
upscale, meetings-focused resorts and suites that are managed by
lodging operator Marriot International, Inc. under the Gaylord
Hotels brand.
S K TRANSPORT: Seeks Approval to Hire Mike McClure as Manager
-------------------------------------------------------------
S K Transport Inc. seeks approval from the U.S. Bankruptcy Court
for the Southern District of West Virginia to hire Mike McClure to
manage the operation of its business.
Mr. McClure's services include assisting the Debtor's legal counsel
in preparing a Chapter 11 plan of reorganization, overseeing the
Debtor's relationships with suppliers, and managing the general
operation of the Debtor's business.
The Debtor will pay the manager $1,000 per week for his services.
Mr. McClure disclosed in a court filing that he does not represent
any interest adverse to the Debtor and its bankruptcy estate.
About S K Transport Inc.
S K Transport Inc., a company based in Nitro, W.Va., filed a
petition for Chapter 11 protection (Bankr. S.D. W. Va. Case No.
21-30262) on Nov. 3, 2021, listing as much as $10 million in both
assets and liabilities. Matthew McClure, president of S K
Transport, signed the petition.
Judge Mckay B. Mignault oversees the case.
The Debtor tapped Joseph W. Caldwell, Esq., at Caldwell & Riffee as
its legal counsel. Michelle Steele Accounting Solutions, Inc. and
Mike McClure serve as the Debtor's accountant and manager,
respectively.
SCP COLDWORKS: Amendment to Plan
--------------------------------
SCP Coldworks, LLC amends the Subchapter V Chapter 11 Plan of
Reorganization as follows:
No substantive provisions of the Plan are changing. The only
amendment is the service of an appropriate ballot to all creditors.
The deadline to return a completed ballot is Wednesday, December
29, 2021, by 5:00 p.m. (CDT).
The confirmation of the Plan is rescheduled to January 5, 2022, at
1:30 p.m. in Courtroom 1, United States Bankruptcy Court for the
Northern District of Alabama, Robert S. Vance Federal Building,
1800 Fifth Avenue, Birmingham, Alabama 35203.
About SCP Coldworks,
LLC
SCP Coldworks, LLC d/b/a Steel City Pops sells family-recipe pops
in more than a dozen stores. The Debtor sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ala. Case No.
21-02564) on October 29, 2021. In the petition signed by Philip L.
Hodges, manager, the Debtor disclosed up to $10 million in both
assets and liabilities.
Judge D. Sims Crawford oversees the case.
Jeffery J. Hartley, Esq., at Helmsing Leach Herlong Newman and
Rouse is the Debtor's counsel.
UNDER ARMOUR: Moody's Hikes CFR to Ba2; Outlook Remains Positive
----------------------------------------------------------------
Moody's Investors Service upgraded Under Armour, Inc.'s ratings,
including its corporate family rating ("CFR") to Ba2 from Ba3,
probability of default rating to Ba2-PD from Ba3-PD, and unsecured
notes to Ba3 from B1. The company's speculative grade liquidity
rating is unchanged at SGL-1, reflecting very good liquidity. The
outlook remains positive.
"The CFR upgrade and positive outlook reflect Under Armour's
revenue and earnings growth that exceeded Moody's previous
expectations, when combined with continued solid free cash flow and
debt reduction, resulted in significant improvement in its credit
metrics over the past year," stated Mike Zuccaro, Moody's Vice
President. Under Armour has taken significant action to improve
overall brand health and profitability, particularly in North
America, its largest market, which had faced significant challenges
before the onset of the pandemic. "With improved profitability, a
much stronger balance sheet and very good liquidity, the company is
well positioned to weather the lingering effects of the pandemic,
including current disruptions throughout the global apparel
industry supply chain," added Mr. Zuccaro
Upgrades:
Issuer: Under Armour, Inc.
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD
Senior Unsecured Regular Bond/Debenture, Upgraded to Ba3 (LGD5)
from B1 (LGD4)
Outlook Actions:
Issuer: Under Armour, Inc.
Outlook, Remains Positive
RATINGS RATIONALE
Under Armour's Ba2 CFR reflects governance considerations including
a conservative financial strategies with a track record of debt
reduction and maintaining moderate financial leverage. The rating
also reflects its well-known brand and solid competitive position
in branded performance apparel, footwear and accessories in the
U.S. and internationally. Also considered are the company's track
record of innovation and Moody's positive view of the global sports
apparel market, which provides credible longer-term organic growth
opportunities, particularly in international markets where the
company is significantly underpenetrated.
Under Armour is constrained by its reliance on a single brand and
limited geographic reach, which exposes the company to economic
cyclicality and inherent changes in consumer preferences in a
concentrated region. This is evidenced by recent challenges in its
largest market, North America. Under Armour has taken significant
action over the past several years to improve its operations, which
has resulted in improved profit margins. While operating margins
have significantly improved over the past year, they remain weak
relative to other similarly rated apparel peers, and it will take
additional time to prove that turnaround efforts will have a
sustained positive effect.
Environmental, social and governance factors are considered in
Under Armour's credit profile. As an apparel company, Under Armour
faces industry challenges in sourcing products from third-party
manufacturers in various countries. The global coronavirus outbreak
is also viewed as a key social risk, given the substantial
implications for public health and safety. With respect to
governance, Moody's expects the company to maintain a conservative
financial policies and moderate leverage, consistent with its
longer-term track record. Also, the company recently paid a $9
million civil monetary penalty as part of an SEC settlement
regarding company disclosures related to certain pull-forward sales
between the third quarter of 2015 and the fourth quarter of 2016,
neither admitting nor denying the SEC's findings. The company
previously stated that there has been no additional requests from
the DOJ since the second quarter of 2020 and that it does not
currently anticipate additional engagement with the DOJ relating to
this matter.
Under Armour's SGL-1 speculative grade liquidity rating reflects
Moody's expectation for very good liquidity, supported by $1.25
billion of unrestricted cash on the balance sheet as of September
2021, full availability under its unrated $1.1 billion revolver,
positive free cash flow, and ample covenant headroom.
The positive outlook reflects Moody's view that despite near-term
challenges related to global supply chain disruptions, continued
execution of the company's operating initiatives sales recovery and
stronger profitability will result in sustained improvement in
credit metrics and continued very good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would require sustained improvement in operating
performance, including continued revenue growth in all markets
while maintaining higher margins and very good liquidity. Key
metrics include operating margins sustained in the high single
digit range or better and debt/EBITDA sustained below 2.0x.
Ratings could be downgraded should operating performance trends or
liquidity deteriorate, or if financial policies turn aggressive,
such as through debt-financed returns to shareholders or
acquisitions. Quantitative metrics include operating margins
sustained at or below mid-single digits or debt/EBITDA sustained
above 3.5x.
Headquartered in Baltimore, Maryland, Under Armour, Inc. is a
designer, developer, marketer and distributor of footwear, apparel,
and accessories for a wide variety of sports and fitness
activities. Revenue for the twelve months ended September 2021
approached $5.6 billion.
WATSONVILLE HOSPITAL: Seeks to Hire Force Ten Partners, Appoint CRO
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Watsonville Hospital Corporation and its affiliates seek approval
from the U.S. Bankruptcy Court for the Northern District of
California to employ Force Ten Partners, LLC as restructuring
advisor and designate Jeremy Rosenthal as chief restructuring
officer.
Mr. Rosenthal's services include:
(a) managing the affairs of the Debtors, supervising the
hospital manager, supervising the Debtors' employees to the extent
not under the supervision of the hospital manager, supervising the
Debtors' professionals, and providing periodic reports to the
Debtors' Board of Directors;
(b) assisting the Debtors and their legal counsel in executing
their bankruptcy cases;
(c) overseeing the engagement of the Debtors' investment
banker;
(d) seeking to maximize the value of the Debtors' assets and
operations by obtaining court approval for debtor-in-possession
financing, exit financing, sale of the Debtors' assets, refinancing
of existing debt, recapitalization, restructuring or reorganizing
of the Debtors' business;
(e) providing assistance in connection with motions, responses
or other court activity as directed by the Debtors' legal counsel;
(f) assisting in the preparation of schedules of assets and
liabilities and statements of financial affairs;
(g) preparing periodic reporting to stakeholders, the
bankruptcy court, and the Office of the United States Trustee;
(h) evaluating and developing restructuring plans and other
strategic alternatives for maximizing the value of the Debtors'
assets;
(i) assisting in the formulation and preparation of the
Debtors' disclosure statement and plan of reorganization;
(j) assisting in negotiations with the Debtors' creditors and
responding to any objections to the bankruptcy plan by parties in
interest;
(k) preparing and offering declarations, reports, depositions
and in-court testimony;
(l) assisting with any other financial services as requested
by the Debtors that are not duplicative of services provided by
other professionals; and
(m) providing such other services as may be mutually agreed
from time to time.
The hourly rates of Force Ten personnel are as follows:
Jeremy Rosenthal $850 per hour
Partners $695 - $900 per hour
Managing Directors $495 - $600 per hour
Directors $425 - $475 per hour
Analysts $225 - $350 per hour
Effective as of Jan. 1, 2022, Mr. Rosenthal's hourly rate as CRO
will be $900.
Additionally, the Debtors will reimburse Force Ten for
out-of-pocket expenses incurred.
Mr. Rosenthal disclosed in court filings that he and his firm are
"disinterested persons" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Jeremy Rosenthal
Force Ten Partners, LLC
10100 Venice Blvd.
Culver City, CA 90232
Telephone: (310) 870-3205
Email: jrosenthal@force10partners.com
About Watsonville Hospital Corporation
Watsonville Hospital Corporation and its affiliates operate
Watsonville Community Hospital, a 106-bed acute care facility
located in Watsonville, Calif. The hospital, which is the only
acute care facility in the area, provides emergency, cardiac,
pediatric, surgical, pharmaceutical, laboratory, radiological and
other critical services.
Watsonville Hospital Corporation and its affiliates filed petitions
for Chapter 11 protection (Bankr. N.D. Calif. Lead Case No.
21-51477) on Dec. 5, 2021. Jeremy Rosenthal, chief restructuring
officer, signed the petitions. In its petition, Watsonville
Hospital Corporation listed as much as $50 million in both assets
and liabilities.
Judge Elaine M. Hammond oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Hooper, Lundy & Bookman, PC and Bartko Zankel Bunzel &
Miller as special counsel; Cowen and Company, LLC as investment
banker; and Force Ten Partners, LLC as restructuring advisor.
Jeremy Rosenthal of Force Ten Partners serves as the Debtors' chief
restructuring officer. Bankruptcy Management Solutions, Inc.,
doing business as Stretto, is the Debtors' claims, noticing and
solicitation agent and administrative advisor.
WATSONVILLE HOSPITAL: Seeks to Hire Ordinary Course Professionals
-----------------------------------------------------------------
Watsonville Hospital Corporation and its affiliates seek approval
from the U.S. Bankruptcy Court for the Northern District of
California to retain professionals employed in the ordinary course
of business.
The "ordinary course" professionals include:
Blanco + Hopkins & Associates, LLC
66 Foothill Blvd., Suite 318
La Canada, CA 91011
-- Public Relations
Dummit Buchholz & Trap
11755 Wilshire Blvd., 15th Floor
Los Angeles, CA 90025
-- Litigation Counsel
Pension Assurance LLP
20335 Ventura Blvd., Suite 305
Woodland Hills, CA 91364
-- 401(k) Auditor
Steve Clark & Associates, Inc.
950 Glenn Drive, Suite 250
Folsom, CA 95630
-- Healthcare Financial and Operational Consultant
Zenere Cowden & Stoddard APC
2005 De La Cruz Blvd., Suite 240
Santa Clara, CA 95050
-- Litigation Counsel
The Debtors also seek approval to compensate an OCP, without formal
application to the court, 100 percent of the fees and reimburse 100
percent of the expenses incurred upon the submission to, and
approval by, the Debtors of an appropriate invoice setting forth in
reasonable detail the nature of the services rendered and expenses
actually incurred. Each OCP's total compensation and
reimbursements, however, will be capped at $12,500 per month
starting from the first full month following the petition date.
About Watsonville Hospital Corporation
Watsonville Hospital Corporation and its affiliates operate
Watsonville Community Hospital, a 106-bed acute care facility
located in Watsonville, Calif. The hospital, which is the only
acute care facility in the area, provides emergency, cardiac,
pediatric, surgical, pharmaceutical, laboratory, radiological and
other critical services.
Watsonville Hospital Corporation and its affiliates filed petitions
for Chapter 11 protection (Bankr. N.D. Calif. Lead Case No.
21-51477) on Dec. 5, 2021. Jeremy Rosenthal, chief restructuring
officer, signed the petitions. In its petition, Watsonville
Hospital Corporation listed as much as $50 million in both assets
and liabilities.
Judge Elaine M. Hammond oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Hooper, Lundy & Bookman, PC and Bartko Zankel Bunzel &
Miller as special counsel; Cowen and Company, LLC as investment
banker; and Force Ten Partners, LLC as restructuring advisor.
Jeremy Rosenthal of Force Ten Partners serves as the Debtors' chief
restructuring officer. Bankruptcy Management Solutions, Inc.,
doing business as Stretto, is the Debtors' claims, noticing and
solicitation agent and administrative advisor.
WATSONVILLE HOSPITAL: Seeks to Tap Pachulski as Bankruptcy Counsel
------------------------------------------------------------------
Watsonville Hospital Corporation and its affiliates seek approval
from the U.S. Bankruptcy Court for the Northern District of
California to employ Pachulski Stang Ziehl & Jones, LLP to serve as
legal counsel in their Chapter 11 cases.
The firm's services include:
a. representing the Debtors in their consultations with estate
constituents regarding the administration of their bankruptcy
cases;
b. representing the Debtors in any manner relevant to their
financing needs, asset dispositions, and leases and other
contractual obligations;
c. providing legal advice concerning issues associated with
the acts, conduct, assets, liabilities, and financial condition of
the Debtors;
d. assisting the Debtors in the negotiation, formulation, and
drafting of any plan of reorganization and disclosure statement;
e. assisting the Debtors in the performance of their duties
and the exercise of their powers under the Bankruptcy Code, the
Bankruptcy Rules, and any applicable local rules and guidelines;
and
f. providing other necessary legal services.
The firm will be paid as follows:
Partners $845 - $1,695 per hour
Of Counsel $679 - $1,275 per hour
Associates $695 - $725 per hour
Paraprofessionals $375 - $475 per hour
The firm received payments from the Debtors during the year prior
to their bankruptcy filing in the aggregate amount of $1,101,275.80
(and approximately $224,000 remains as a retainer) .
Debra Grassgreen, Esq., an attorney at Pachulski, disclosed in a
court filing that her firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Ms.
Grassgreen disclosed that:
-- Pachulski has not agreed to any variations from, or
alternatives to, its standard or customary billing arrangements for
this engagement.
-- None of the professionals included in the engagement vary
their rate based on the geographic location of the bankruptcy
case.
-- The material financial terms for the pre-bankruptcy
engagement remained the same as the engagement was hourly-based.
The billing rates and material financial terms for the
post-petition period remain the same as the pre-bankruptcy period.
The standard hourly rates of Pachulski are subject to periodic
adjustment in accordance with the firm's practice.
-- The Debtors and Pachulski expect to develop a prospective
budget and staffing plan to comply with the U.S. trustee's request
for information and additional disclosures. In accordance with the
U.S. Trustee Fee Guidelines, any budget may be amended as necessary
to reflect changed circumstances or unanticipated developments.
The firm can be reached through:
Debra I. Grassgreen, Esq.
Maxim B. Litvak, Esq.
Steven W. Golden, Esq.
Pachulski Stang Ziehl & Jones LLP
One Market Street
Spear Tower, 40th Floor
San Francisco, CA 94105-1020
Tel: 415-263-7000
Fax: 415-263-7010
Email: dgrassgreen@pszjlaw.com
mlitvak@pszjlaw.com
sgolden@pszjlaw.com
About Watsonville Hospital Corporation
Watsonville Hospital Corporation and its affiliates operate
Watsonville Community Hospital, a 106-bed acute care facility
located in Watsonville, Calif. The hospital, which is the only
acute care facility in the area, provides emergency, cardiac,
pediatric, surgical, pharmaceutical, laboratory, radiological and
other critical services.
Watsonville Hospital Corporation and its affiliates filed petitions
for Chapter 11 protection (Bankr. N.D. Calif. Lead Case No.
21-51477) on Dec. 5, 2021. Jeremy Rosenthal, chief restructuring
officer, signed the petitions. In its petition, Watsonville
Hospital Corporation listed as much as $50 million in both assets
and liabilities.
Judge Elaine M. Hammond oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Hooper, Lundy & Bookman, PC and Bartko Zankel Bunzel &
Miller as special counsel; Cowen and Company, LLC as investment
banker; and Force Ten Partners, LLC as restructuring advisor.
Jeremy Rosenthal of Force Ten Partners serves as the Debtors' chief
restructuring officer. Bankruptcy Management Solutions, Inc.,
doing business as Stretto, is the Debtors' claims, noticing and
solicitation agent and administrative advisor.
WATSONVILLE HOSPITAL: Taps Bartko Zankel as Special Labor Counsel
-----------------------------------------------------------------
Watsonville Hospital Corporation and its affiliates seek approval
from the U.S. Bankruptcy Court for the Northern District of
California to employ Bartko Zankel Bunzel & Miller as their special
labor and employment counsel.
The firm's services include:
a) advising and assisting the Debtors with respect to
employment and unfair labor practices litigation and grievances;
b) providing the Debtors with general labor advice;
c) advising and assisting the Debtors with respect to general
labor bargaining and arbitrations;
d) advising and assisting the Debtors with respect to
representation in employment and labor related administrative
hearings;
e) advising the Debtors on labor related issues concerning the
sale of their assets and any negotiations related to Sections 1113
and 1114 of the Bankruptcy Code; and
f) performing other legal services for the Debtors.
Bartko's billing rates are as follows:
An Nguyen Ruda, Esq. $625 per hour
Partners $595 per hour
Associates $375 - $395 per hour
Paraprofessionals $225 per hour
An Nguyen Ruda, Esq., a partner at Bartko Zankel, disclosed in a
court filing that her firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
Consistent with the U.S. Trustee Guidelines, Ms. Ruda provided the
following information:
-- Bartko has not agreed to a variation of its standard or
customary billing arrangements for representing the Debtors during
the bankruptcy cases.
-- None of Bartko's professionals included in this engagement
have varied their rate based on the geographic location of the
Bankruptcy Cases.
-- The Debtors and Bartko expect to develop a prospective budget
and staffing plan for the firm's engagement to reasonably comply
with the Office of the U.S. Trustee's requests for information and
additional disclosures. Consistent with the U.S. Trustee
Guidelines, the budget may be amended as necessary to reflect
changed or unanticipated developments.
The firm can be reached through:
An Nguyen Ruda, Esq.
Bartko Zankel Bunzel & Miller
1 Embarcadero Ctr #800
San Francisco, CA 94111
Phone: +1 415-956-1900/+1 415-291-4534
Email: aruda@bzbm.com
About Watsonville Hospital Corporation
Watsonville Hospital Corporation and its affiliates operate
Watsonville Community Hospital, a 106-bed acute care facility
located in Watsonville, Calif. The hospital, which is the only
acute care facility in the area, provides emergency, cardiac,
pediatric, surgical, pharmaceutical, laboratory, radiological and
other critical services.
Watsonville Hospital Corporation and its affiliates filed petitions
for Chapter 11 protection (Bankr. N.D. Calif. Lead Case No.
21-51477) on Dec. 5, 2021. Jeremy Rosenthal, chief restructuring
officer, signed the petitions. In its petition, Watsonville
Hospital Corporation listed as much as $50 million in both assets
and liabilities.
Judge Elaine M. Hammond oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Hooper, Lundy & Bookman, PC and Bartko Zankel Bunzel &
Miller as special counsel; Cowen and Company, LLC as investment
banker; and Force Ten Partners, LLC as restructuring advisor.
Jeremy Rosenthal of Force Ten Partners serves as the Debtors' chief
restructuring officer. Bankruptcy Management Solutions, Inc.,
doing business as Stretto, is the Debtors' claims, noticing and
solicitation agent and administrative advisor.
WATSONVILLE HOSPITAL: Taps Cowen and Company as Investment Banker
-----------------------------------------------------------------
Watsonville Hospital Corporation and its affiliates seek approval
from the U.S. Bankruptcy Court for the Northern District of
California to employ Cowen and Company, LLC as their investment
banker.
The firm's services include:
(a) assisting the Debtors in analyzing their business,
operations, properties, financial condition and prospects;
(b) assisting the Debtors in identifying and evaluating
parties that might be interested in a sale;
(c) advising the Debtors on tactics and strategies for
negotiating with potential investors, potential parties to a sale,
and stakeholders, and if requested by the Debtors, participating in
such negotiations;
(d) assisting in preparing materials describing the Debtors
(based entirely on information supplied or approved by the Debtors)
for distribution and presentation to parties that might be
interested in a sale;
(e) advising the Debtors on the timing, nature and terms of
new securities, other consideration or other inducements to be
offered pursuant to any restructuring;
(f) rendering financial advice to the Debtors and
participating in meetings or negotiations with stakeholders, rating
agencies or other appropriate parties in connection with a
restructuring;
(g) attending meetings of the Debtors' Board of Directors (or
similar governing entity) and its committees with respect to
matters on which Cowen has been engaged to advise the Debtors;
(h) providing oral and written testimony, as necessary, with
respect to matters on which Cowen has been engaged to advise the
Debtors in any proceeding before the court;
(i) performing other financial advisory and investment banking
services for the Debtors.
The firm will be paid as follows:
(a) Monthly Fee. A non-refundable fee of US$75,000 shall be
payable upon the monthly anniversary of the engagement agreement.
If the sum of the monthly fees paid is greater than $300,000 in the
aggregate, then 50 percent of any such amount paid over $300,000
shall be credited one time to the first paid fee set forth below in
items (b) to (c); provided that, in no event shall the fees set
forth in items (b) to (c), as applicable, be reduced below $0.
(b) Restructuring Fee. A fee equal to US$1 million payable
upon the consummation of a restructuring; provided, however, that
if a restructuring is to be completed through a "pre-packaged" or
"pre-arranged" plan of reorganization, the restructuring fee shall
be earned and shall be payable upon the consummation of such plan.
Cowen shall be entitled to only one of the restructuring fee or the
sale fee. No restructuring fee shall be payable to Cowen if the
sale fee is paid.
(c) Sale Fee. A non-refundable fee payable upon consummation
of a sale, equal to the greater of $1 million and 3.0 percent of
the aggregate consideration of such sale.
Lorie Beers, managing director at Cowen, disclosed in court filings
that the firm is "disinterested" within the meaning of Section
101(14) of the Bankruptcy Code.
Cowen can be reached through:
Lorie R. Beers
Cowen and Company, LLC
599 Lexington Avenue, 20th Floor
New York, NY 10022
Tel: 646 562 1010 / 646 562 1250
Email: info@cowen.com
About Watsonville Hospital Corporation
Watsonville Hospital Corporation and its affiliates operate
Watsonville Community Hospital, a 106-bed acute care facility
located in Watsonville, Calif. The hospital, which is the only
acute care facility in the area, provides emergency, cardiac,
pediatric, surgical, pharmaceutical, laboratory, radiological and
other critical services.
Watsonville Hospital Corporation and its affiliates filed petitions
for Chapter 11 protection (Bankr. N.D. Calif. Lead Case No.
21-51477) on Dec. 5, 2021. Jeremy Rosenthal, chief restructuring
officer, signed the petitions. In its petition, Watsonville
Hospital Corporation listed as much as $50 million in both assets
and liabilities.
Judge Elaine M. Hammond oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Hooper, Lundy & Bookman, PC and Bartko Zankel Bunzel &
Miller as special counsel; Cowen and Company, LLC as investment
banker; and Force Ten Partners, LLC as restructuring advisor.
Jeremy Rosenthal of Force Ten Partners serves as the Debtors' chief
restructuring officer. Bankruptcy Management Solutions, Inc.,
doing business as Stretto, is the Debtors' claims, noticing and
solicitation agent and administrative advisor.
WATSONVILLE HOSPITAL: Taps Stretto as Administrative Advisor
------------------------------------------------------------
Watsonville Hospital Corporation and its affiliates seek approval
from the U.S. Bankruptcy Court for the Northern District of
California to employ Stretto, Inc. as their administrative
advisor.
The firm's services include:
a. assisting with, among other things, solicitation,
balloting, and tabulation of votes, and preparing any related
reports in support of confirmation of a Chapter 11 plan;
b. preparing an official ballot certification and, if
necessary, testifying in support of the ballot tabulation results;
c. assisting in the preparation of the Debtors' schedules of
assets and liabilities and statements of financial affairs, and
gathering data in conjunction therewith;
d. assisting in the preparation of the Debtors' monthly
operating reports and gathering data in conjunction therewith;
e. providing a confidential data room;
f. managing and coordinating any distributions pursuant to a
Chapter 11 plan if designated as distribution agent under such
plan; and
g. provide claims analysis and reconciliation, case research,
depository management, treasury services, confidential online
workspaces or data rooms (publication to which shall not violate
the confidentiality provisions of the engagement agreement), and
any related services otherwise required by applicable law,
governmental regulations, or court rules or orders in connection
with the Debtors' bankruptcy cases.
The firm received a retainer of $20,000 from the Debtor.
Sheryl Betance, senior managing director at Stretto, disclosed in a
court filing that she is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Sheryl Betance
Stretto, Inc.
410 Exchange, Ste. 100
Irvine, CA 92602
Telephone: 714.716.1872
Email: sheryl.betance@stretto.com
About Watsonville Hospital Corporation
Watsonville Hospital Corporation and its affiliates operate
Watsonville Community Hospital, a 106-bed acute care facility
located in Watsonville, Calif. The hospital, which is the only
acute care facility in the area, provides emergency, cardiac,
pediatric, surgical, pharmaceutical, laboratory, radiological and
other critical services.
Watsonville Hospital Corporation and its affiliates filed petitions
for Chapter 11 protection (Bankr. N.D. Calif. Lead Case No.
21-51477) on Dec. 5, 2021. Jeremy Rosenthal, chief restructuring
officer, signed the petitions. In its petition, Watsonville
Hospital Corporation listed as much as $50 million in both assets
and liabilities.
Judge Elaine M. Hammond oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Hooper, Lundy & Bookman, PC and Bartko Zankel Bunzel &
Miller as special counsel; Cowen and Company, LLC as investment
banker; and Force Ten Partners, LLC as restructuring advisor.
Jeremy Rosenthal of Force Ten Partners serves as the Debtors' chief
restructuring officer. Bankruptcy Management Solutions, Inc.,
doing business as Stretto, is the Debtors' claims, noticing and
solicitation agent and administrative advisor.
WHITEHORSE VII: S&P Lowers Rating on Class B-3L Notes to 'D (sf)'
-----------------------------------------------------------------
S&P Global Ratings withdrew the rating on the class C notes and
lowered its ratings on the class D and E notes from Blue Ridge CLO
Ltd. I. At the same time, S&P lowered its rating on the class B-3L
notes from WhiteHorse VII Ltd.
Blue Ridge CLO Ltd. I
Blue Ridge CLO Ltd. I is a cash flow collateralized loan obligation
(CLO) that originally issued in 2014 and refinanced in 2017, and is
managed by Barings LLC. The transaction liquidated its portfolio,
and as per their August 2021 payment date report, the amount of
principal proceeds received from the liquidations were adequate to
pay off the outstanding interest and full principal balances of
class C notes, but was not enough to pay off the outstanding
tranche balance of the class D and E notes. As a result, S&P
withdrew its rating on the class C notes due to paydown and lowered
its ratings to 'D (sf)' on the class D and E notes.
WhiteHorse VII Ltd.
WhiteHorse VII Ltd. is a U.S. CLO transaction that closed in 2013,
and is managed by H.I.G WhiteHorse Capital LLC. Based on the
November 2021 payment date report, the class B-3L notes experienced
an interest shortfall. Further, S&P also noticed that this class is
severely undercollateralized, and thus believe that there is a
virtual certainty for the class to experience a non-payment of the
ultimate principal. As a result, S&P lowered its rating to 'D (sf)'
on the class B-3L notes.
Rating Withdrawn
Blue Ridge CLO Ltd. I
Class C: to 'NR' from 'BBB (sf)'
Ratings Lowered
Blue Ridge CLO Ltd. I
Class D: to 'D (sf)' from 'CCC (sf)'
Class E: to 'D (sf)' from 'CC (sf)'
WhiteHorse VII Ltd.
Class B-3L: to 'D (sf)' from 'CC (sf)'
NR--Not rated.
WYNN RESORTS: Moody's Lowers CFR to B1; Outlook Negative
--------------------------------------------------------
Moody's Investors Service downgraded Wynn Resorts Finance, LLC's
("WRF" or "Wynn") Corporate Family Rating ("CFR") to B1 from Ba3,
Probability of Default Rating to B1-PD from Ba3-PD, and senior
unsecured notes to B2 from B1. WRF's Ba1 rated senior secured
revolver and term loan were affirmed. Additionally, Wynn Macau,
Limited's ("WML") senior unsecured notes were downgraded to B2 from
B1. The senior unsecured notes at Wynn Las Vegas, LLC were
downgraded to B2 from B1. The company's speculative-grade liquidity
rating of SGL-2 is unchanged. The outlook remains negative.
The rating downgrade reflects Moody's expectation that Wynn's
credit metrics will remain weaker than pre-pandemic levels, because
of the slow recovery in earnings amid lingering travel restrictions
affecting Wynn's Macau operations given the still heightened social
risk due to the negative effect the coronavirus continues to have
on visitation and travel in the region. Moody's expects Wynn's
consolidated earnings to remain meaningfully below pre-pandemic
levels at least through 2022, because the recovery in gross gaming
revenue (GGR) in Macao SAR, China will likely be gradual and bumpy.
This expectation factors in the likely pattern of travel resumption
and temporary suspensions, mainland China's control over visa
issuances, and the uncertain lifting of quarantine requirements for
travelers from Hong Kong SAR, China. Improved operating performance
at Wynn's Las Vegas properties and Encore Boston Harbor is not
enough to fully offset the lingering weakness in Macau. As a
result, Moody's expects leverage will remain elevated until a
recovery is more fully realized in 2023.
Moody's affirmed WRF's Ba1 secured debt ratings because the mix of
secured debt remains modest and the strong asset coverage would
lead to a strong recovery in the event of default.
The following ratings/assessments are affected by the action:
Ratings Downgraded:
Issuer: Wynn Las Vegas, LLC
Senior Unsecured Regular Bond/Debenture, Downgraded to B2
(LGD4) from B1 (LGD4)
Issuer: Wynn Macau, Limited
Senior Unsecured Regular Bond/Debenture, Downgraded to B2
(LGD4) from B1 (LGD4)
Issuer: Wynn Resorts Finance, LLC
Corporate Family Rating, Downgraded to B1 from Ba3
Probability of Default Rating, Downgraded to B1-PD from Ba3-PD
Senior Unsecured Regular Bond/Debenture, Downgraded to B2
(LGD4) from B1 (LGD4)
Ratings Affirmed:
Issuer: Wynn Resorts Finance, LLC
Senior Secured Bank Credit Facility, Affirmed Ba1 (LGD1) from
Ba1 (LGD2)
Outlook Actions:
Issuer: Wynn Las Vegas, LLC
Outlook, Remains Negative
Issuer: Wynn Macau, Limited
Outlook, Remains Negative
Issuer: Wynn Resorts Finance, LLC
Outlook, Remains Negative
RATINGS RATIONALE
Wynn's B1 Corporate Family Rating reflects the lingering earnings
weakness from efforts to contain the coronavirus and the slow
recovery in Macau visitation and revenue. The rating is supported
by the quality, popularity, and favorable reputation of the
company's resort properties -- a factor that continues to
distinguish Wynn from most other gaming operators -- along with the
company's well-established and very successful track record of
building large, high quality destination resorts. Wynn's good
liquidity and relatively low cost of debt capital also support the
ratings. The B1 Corporate Family Rating also incorporates Moody's
expectation that Wynn will successfully renew its Macau concession
agreement on terms that will not materially impair Wynn's credit
quality. Key credit concerns include Wynn's limited diversification
despite being one of the largest U.S. gaming operators in terms of
revenue and exposure to reductions in cyclical discretionary
consumer and business spending. Wynn's revenue and cash flow will
remain heavily concentrated in the Macau gaming market. Moody's
also expects that Wynn will be presented with and pursue other
large, high profile, integrated resort development opportunities
around the world. As a result, there will likely be periods where
the company's leverage increases due to partially debt-financed,
future development projects.
The coronavirus outbreak and the government measures put in place
to contain it continue to disrupt economies and credit markets
across sectors and regions. Although an economic recovery is
underway, the recovery is tenuous, and continuation will be closely
tied to containment of the virus. As a result, a degree of
uncertainty around our forecasts remains. Moody's regards the
coronavirus outbreak as a social risk under our ESG framework,
given the substantial implications for public health and safety.
The gaming sector has been one of the sectors most significantly
affected by the shock given its sensitivity to consumer demand and
sentiment. More specifically, Wynn remains vulnerable to a renewed
spread of the outbreak. Wynn also remains exposed to discretionary
consumer spending that leaves it vulnerable to shifts in market
sentiment in these unprecedented operating conditions.
Additional social risks for gaming companies include high taxes and
operating restrictions imposed by governments to mitigate the
effects of problem gambling, and evolving consumer preferences
related to entertainment choices and population demographics that
may drive a change in demand away from traditional casino-style
gaming. Younger generations may not spend as much time playing
casino-style games (particularly slot machines) as previous
generations. Data security and customer privacy risk is elevated
given the large amount of data collected on customer behavior. In
the event of data breaches, the company could face higher
operational costs to secure processes and limit reputational
damage.
Wynn's financial policies include use of debt for development
projections that contributes to high leverage. The company has a
history of returning significant amounts of capital to shareholders
through cash dividends, but Wynn is willing to change the amount of
cash dividends paid, if necessary, to match the earnings profile.
To that end, Wynn has suspended the dividend since early 2020. The
company also has a long and consistent history of maintaining a
large amount of unrestricted cash on its balance sheet to support
investment and liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects the uncertain duration and recovery
from the coronavirus-related earnings and cash flow pressure, which
is contributing to higher debt and an extended recovery in the
company's very high leverage. Wynn remains vulnerable to travel
disruptions and unfavorable sudden shifts in discretionary consumer
spending and the uncertainty regarding the pace at which consumer
spending at the company's properties will recover.
Ratings could be downgraded if liquidity deteriorates or if Moody's
anticipates Wynn's earnings declines to be deeper or more prolonged
because of actions to contain the spread of the coronavirus or
reductions in discretionary consumer spending. An inability to
reduce debt-to-EBITDA leverage to 7x could also lead to a
downgrade.
A ratings upgrade is unlikely given the weak operating environment
in Macau. However, an upgrade would require casinos to remain open
and ramp up closer to normal utilization, a restoration of
sufficient earnings to generate meaningful positive free cash flow
before discretionary development spending, and the continued
ramp-up of Encore Boston Harbor. Wynn would also need to maintain
debt/EBITDA on a Moody's adjusted basis below 6.0x.
Wynn Resorts Finance, LLC is an indirect wholly-owned subsidiary of
publicly-traded Wynn Resorts, Limited, and holds all of Wynn
Resorts, Limited's ownership interests in Wynn Las Vegas, LLC,
which owns and operates the Wynn Las Vegas integrated resort in Las
Vegas, Nevada (excluding certain leased retail space that is owned
by Wynn Resorts directly), Wynn Asia, and Wynn MA, LLC, which owns
and operates Encore Boston Harbor. The company owns 72% of Wynn
Macau, Limited. Consolidated revenue for the last twelve-month
period ended September 30, 2021 was approximately $3.4 billion.
[*] Lewis J. Cohn Named to Boston Magazine's Top Lawyers List
-------------------------------------------------------------
Cohn & Dussi, a full-service law firm with its principal office in
Boston, on Dec. 24 disclosed that Managing Partner Lewis J. Cohn
has been named a Top Lawyer by Boston magazine. Boston magazine's
inaugural Top Lawyers List recognizes lawyers throughout Greater
Boston for excellence in the field as chosen by their peers. Cohn
was chosen as a Top Lawyer in the field of bankruptcy law.
Mr. Cohn's practice is focused on representing lenders in all
phases of the commercial loan process, with a special expertise in
the collection, workout, and liquidation of troubled debt. With a
deep background in commercial litigation, Mr. Cohn regularly
handles matters in the state, federal and bankruptcy courts. He
serves as chair of Cohn & Dussi's Financial Services Group.
Mr. Cohn is a member of the Equipment Leasing and Finance
Association (ELFA), where he serves on the Credit and Collections
Committee. He is also a member of the National Equipment Finance
Association and its Legal Committee (NEFA), the Lease Enforcement
Attorney Network (LEAN), The New York Institute of Credit (NYIC),
The Massachusetts Bankers Association and the Northeast Chapter of
the Turnaround Management Association (TMA).
Cohn & Dussi's clients include banks of all sizes, equipment
leasing and finance companies, and alternative lenders, among
others. The firm offers a unique national network of attorneys from
all over the U.S., providing a national solution for business
clients, no matter where they do business.
About Cohn & Dussi
Boston law firm Cohn & Dussi -- http://www.cohnanddussi.com-- is a
full-service law firm that offers clients comprehensive, customized
solutions to their complex business challenges. Attorneys in the
firm offer extensive experience in collections and workouts,
creditors' rights, commercial litigation, leasing, bankruptcy,
corporate and finance law, construction law, and real estate
transactions. Over the course of more than 25 years, Cohn & Dussi
has built long-term relationships with its clients, solving
problems using a team approach and leveraging a national network of
attorneys in all 50 states.
[] Seven New Partners to Join Young Conaway Effective January 1
---------------------------------------------------------------
Young Conaway Stargatt & Taylor, LLP on Dec. 15 disclosed that
seven new partners have been elected to join the firm partnership,
effective January 1, 2022.
"Young Conaway is proud to welcome our newest partners," said
Robert Brady, Chairman of the firm. "Our clients and co-counsel
rely on the business insight and broad knowledge of Delaware case
law that these attorneys possess to quickly and efficiently solve
their problems and support long term strategic goals."
Travis G. Buchanan is a member of Young Conaway's Bankruptcy and
Restructuring Group, with experience in a wide array of chapter 11
matters, ranging from debtor practice and bankruptcy litigation to
mass-tort insolvencies and settlement trusts. He often serves as
counsel to the legal representatives appointed by courts to
safeguard the rights and interests of future claimants in
bankruptcy matters involving mass torts.
Mr. Buchanan graduated from Duke University School of Law. He has a
master's degree (M.A.) from Boston University and an undergraduate
degree (B.A.) from Bowdoin College. He is admitted to practice in
the State of Delaware.
Justin P. Duda focuses his practice in the area of business
transactions, including mergers and acquisitions, corporate
restructurings, and financing matters. Mr. Duda acts as outside
counsel to a number of regional clients, whom he regularly advises
in contractual and corporate governance matters. He also represents
a number of institutional trustees and high net worth individuals
looking to take advantage of Delaware's comprehensive trust laws
and highly regarded court system, including with regards to
transfers of trust situs, decantings, and trust modifications.
Mr. Duda is a graduate of University of Pennsylvania Law School and
earned his undergraduate degree (B.A.) from Dartmouth College. He
is admitted to practice in the State of Delaware and the State of
New York.
Ashley E. Jacobs concentrates her practice on representing debtors,
lenders, and other parties in chapter 11 cases, as well as foreign
representatives in chapter 15 cases. Ms. Jacobs has advised clients
across a broad range of industries and has developed an efficient
and pragmatic approach to solving complex issues arising in her
cases. Clients and peers alike recognize Ms. Jacobs for her legal
excellence. She has been selected to participate in the Next
Generation Program hosted by the National Conference of Bankruptcy
Judges and recognized as a 2022 Best Lawyers: Ones to Watch.
Ms. Jacobs graduated cum laude from Boston University School of
Law. She received her undergraduate degree (B.A.), magna cum laude,
from the University of Delaware. She is admitted to practice in the
State of Delaware.
Allurie R. Kephart concentrates her practice on the wide variety of
issues that can arise during the lifecycle of various types of
businesses, including corporations and non-incorporated entities.
Clients turn to Ms. Kephart as counsel for negotiation in various
transactions, including joint ventures, financings, mergers, and
acquisitions. Her business acumen and attention to detail adds
value to complex transactions and produces favorable outcomes. She
has represented numerous special conflicts committees on asset
drop-downs, restructurings, and other interested transactions.
Ms. Kephart graduated magna cum laude from Penn State Dickinson
School of Law. She earned her undergraduate degree (B.A.) from The
Pennsylvania State University. She is admitted to practice in the
State of Delaware.
Lakshmi A. Muthu focuses her practice on corporate litigation,
primarily in the Delaware Court of Chancery, representing clients
in connection with corporate governance and contractual disputes,
books and records demands, and expedited requests for injunctive
relief. She has particular expertise representing special
litigation committees. She served as a law clerk for the Honorable
Kathaleen St. Jude McCormick of the Court of Chancery. Peers
recognized her as one of Best Lawyers: Ones to Watch 2022.
Ms. Muthu graduated from New York University School of Law. She
received her undergraduate degree (B.A.) from Johns Hopkins
University. She is admitted to practice in Delaware.
Nicholas J. Rohrer focuses his practice on complex commercial
litigation in the Delaware Court of Chancery—including
contractual disputes, corporate governance disputes, books and
records actions, advancement proceedings, and litigation involving
claims of breach of fiduciary duty and fraud.
Mr. Rohrer has advised corporate boards regarding governance issues
and has also represented special committees. He routinely litigates
expedited matters in the Court of Chancery, including actions
seeking expedited injunctive relief.
Mr. Rohrer graduated from Boston University School of Law. He
received his undergraduate degree (B.A.) from Cornell University.
Nicholas is admitted to practice in Delaware.
Robert M. Vrana assists clients with commercial litigation and
intellectual property matters ranging from litigating patent
infringement disputes to copyright, trademark, and trade secret
counseling and litigation. He has experience in a wide variety of
industries, including pharmaceuticals, medical devices, software,
networking, and blockchain technology. Clients appreciate Mr.
Vrana's ability to effectively advocate for their goals by
collaborating on particular approaches and sharing the inclinations
of Delaware's judges.
Mr. Vrana graduated cum laude from Washington and Lee University
School of Law. He received his undergraduate degree from the
University of Pennsylvania. He is admitted to practice in the State
of Delaware. Rob is an alumnus of the District of Delaware Federal
Trial Practice Seminar and a member of the Delaware Chapter of the
Federal Bar Association, Delaware State Bar Association, and the
American Bar Association. Rob is also an Associate Member of the
Board of Bar Examiners of the Delaware Supreme Court. He has been
recognized by his peers as an IP Star-Rising Star in Managing
Intellectual Property magazine and in Best Lawyers: Ones to Watch.
About Young Conaway Stargatt & Taylor, LLP
Young Conaway Stargatt & Taylor, LLP counsels national and
international clients, handling sophisticated advisory and
litigation matters involving bankruptcy, intellectual property,
corporate and alternative entity law. Young Conaway also guides
regional businesses through a myriad of employment, education, real
estate, tax, estate planning, environmental, and banking issues.
[^] Recent Small-Dollar & Individual Chapter 11 Filings
-------------------------------------------------------
In re Rubin W. Harris
Bankr. W.D. Tex. Case No. 21-10969
Chapter 11 Petition filed December 16, 2021
represented by H. Hervol, Esq.
In re William Andrew Meyer
Bankr. D.N.M. Case No. 21-11361
Chapter 11 Petition filed December 16, 2021
represented by: Christopher Gatton, Esq.
GIDDENS & GATTON, P.C.
In re Donna Smith
Bankr. M.D. Tenn. Case No. 21-03826
Chapter 11 Petition filed December 16, 2021
In re William R. Perry
Bankr. N.D. Fla. Case No. 21-50127
Chapter 11 Petition filed December 17, 2021
represented by Robert Bruner, Esq.
BRUNER WRIGHT, P.A.
In re Clark Alan Brevig and Gail Virginia Brevig
Bankr. D. Mont. Case No. 21-40082
Chapter 11 Petition filed December 17, 2021
represented by: Gary S. Deschenes, Esq.
DESCHENES & ASSOCIATES LAW OFFICES
In re Eduard Neyman
Bankr. E.D.N.Y. Case No. 21-43110
Chapter 11 Petition filed December 17, 2021
represented by Alla Kachan, Esq.
In re Jonathan L. Orgen and Joan T. Orgen
Bankr. S.D.N.Y. Case No. 21-35899
Chapter 11 Petition filed December 17, 2021
represented by: Michelle Trier, Esq.
GENOVA, MALIN & TRIER LLP
In re Douglas Richard Fisher and Sherrie Lynn Fisher
Bankr. N.D. Ohio Case No. 21-32099
Chapter 11 Petition filed December 17, 2021
represented by: Randy L. Reeves, Esq.
REEVES AND SHERRICK CO. LPA
In re Mario Armando Loyola Doval and Magdalena Salgado Soto
Bankr. D.P.R. Case No. 21-03713
Chapter 11 Petition filed December 17, 2021
represented by: Jesus Batista Sanchez, Esq.
In re Gary Michael Pittman
Bankr. E.D. Va. Case No. 21-12044
Chapter 11 Petition filed December 18, 2021
represented by: Nathan Fisher, Esq.
In re Wendy Choi
Bankr. C.D. Cal. Case No. 21-19325
Chapter 11 Petition filed December 20, 2021
represented by Andy Warshaw, Esq.
In re Craig J. Bolton, Esq.
Bankr. D. Ariz. Case No. 21-09191
Chapter 11 Petition filed December 21, 2021
In re Carl G. Roscoe
Bankr. D. Mass. Case No. 21-11883
Chapter 11 Petition filed December 21, 2021
represented by: Carl G. Roscoe, Esq.
MADOFF & KHOURY LLP
In re Regional All Access Consultants
Bankr. M.D. Fla. Case No. 21-05707
Chapter 11 Petition filed December 22, 2021
See
https://www.pacermonitor.com/view/X4BWTUY/Regional_All_Access_Consultants__flmbke-21-05707__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Steve Campbell Walker, III
Bankr. N.D. Fla. Case No. 21-40405
Chapter 11 Petition filed December 22, 2021
represented by Robert Bruner, Esq.
In re Craig Frost
Bankr. D. Idaho Case No. 21-20406
Chapter 11 Petition filed December 22, 2021
represented by Aaron Tolson, Esq.
In re Deliverance Holy Tabernacle, Inc.
Bankr. D.N.J. Case No. 21-19784
Chapter 11 Petition filed December 22, 2021
See
https://www.pacermonitor.com/view/FHVANDI/Deliverance_Holy_Tabernacle_Inc__njbke-21-19784__0001.0.pdf?mcid=tGE4TAMA
represented by: Melinda D. Middlebrooks, Esq.
MIDDLEBROOKS SHAPIRO, P.C.
Email:
middlebrooks@middlebrooksshapiro.com
In re Timothy Wayne Bates
Bankr. S.D. Ala. Case No. 21-12334
Chapter 11 Petition filed December 23, 2021
represented by Barry Friedman, Esq.
In re Michael Louis Endicott and Christa Rae Endicott
Bankr. S.D. Cal. Case No. 21-04731
Chapter 11 Petition filed December 23, 2021
represented by Craig Dwyer, Esq.
In re Ilan Doron
Bankr. S.D. Fla. Case No. 21-21964
Chapter 11 Petition filed December 23, 2021
represented by Steven Solomon, Esq.
In re Prestige Pavers LLC
Bankr. N.D. Tex. Case No. 21-32271
Chapter 11 Petition filed December 23, 2021
See
https://www.pacermonitor.com/view/EHTBJAQ/Prestige_Pavers_LLC__txnbke-21-32271__0001.0.pdf?mcid=tGE4TAMA
represented by: Joyce W. Lindauer, Esq.
JOYCE W. LINDAUER ATTORNEY, PLLC
Email: joyce@joycelindauer.com
In re New York Hand & Physical Therapy PLLC
Bankr. S.D.N.Y. Case No. 21-35911
Chapter 11 Petition filed December 23, 2021
See
https://www.pacermonitor.com/view/6OGPP5I/New_York_Hand__Physical_Therapy__nysbke-21-35911__0001.0.pdf?mcid=tGE4TAMA
represented by: Devon Salts, Esq.
SALTS LAW OFFICE
Email: saltslaw@gmail.com
In re Advantage Hotels, Inc.
Bankr. W.D. Tex. Case No. 21-10990
Chapter 11 Petition filed December 23, 2021
See
https://www.pacermonitor.com/view/Y2DTAWY/Advantage_Hotels_Inc__txwbke-21-10990__0001.0.pdf?mcid=tGE4TAMA
represented by: Brandon Tittle, Esq.
TITTLE LAW GROUP, PLLC
Email: btittle@tittlelawgroup.com
In re Dalton Evonne Grant
Bankr. C.D. Cal. Case No. 21-19435
Chapter 11 Petition filed December 24, 2021
represented by David Brownstein, Esq.
In re Gopher Courier Services, Inc.
Bankr. D. Mass. Case No. 21-40929
Chapter 11 Petition filed December 24, 2021
See
https://www.pacermonitor.com/view/BBE7AQY/Gopher_Courier_Services_Inc__mabke-21-40929__0001.0.pdf?mcid=tGE4TAMA
represented by: Mr. Robert W. Kovacs Jr., Esq.
KOVACS LAW, P.C.
Email: robert@kovacslawfirm.com
In re Michella Ann Venezia
Bankr. S.D. Fla. Case No. 21- 21979
Chapter 11 Petition filed December 27, 2021
represented by: Edward Shahady, Esq.
In re LM Endeavor, LLC
Bankr. W.D. Tex. Case No. 21-30987
Chapter 11 Petition filed December 27, 2021
See
https://www.pacermonitor.com/view/RVSSACQ/LM_Endeavor_LLC__txwbke-21-30987__0001.0.pdf?mcid=tGE4TAMA
represented by: Carlos Miranda, Esq.
MIRANDA & MALDONADO, PC
Email: cmiranda@eptxlawyers.com
In re Linna Xiu Ling Zhao
Bankr. N.D. Cal. Case No. 21-30839
Chapter 11 Petition filed December 28, 2021
represented by Arasto Farsad, Esq.
In re Huis Holdings LLC
Bankr. M.D. Fla. Case No. :21-06430
Chapter 11 Petition filed December 28, 2021
See
https://www.pacermonitor.com/view/4E2N2IY/Huis_Holdings_LLC__flmbke-21-06430__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Julio Zephirin
Bankr. M.D. Fla. Case No. 21-02979
Chapter 11 Petition filed December 28, 2021
represented by: Thomas Adam, Esq.
In re Lisa Marie Zimmermann
Bankr. S.D. Fla. Case No. 21-22010
Chapter 11 Petition filed December 28, 2021
represented by: Brian Behar, Esq.
In re Arthur Dale Lothringer
Bankr. W.D. Tex. Case No. 21-51570
Chapter 11 Petition filed December 28, 2021
represented by Morris White, Esq.
VILLA & WHITE LLP
*********
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
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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.
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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.
*********
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Troubled Company Reporter is a daily newsletter co-published
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