/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/240223.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 23, 2024, Vol. 28, No. 53 Headlines 620 FIRST URBAN: Court OKs Sale of Properties to Secured Creditors 68 NORTH HENRY: Voluntary Chapter 11 Case Summary AC FABRICATION: Case Summary & 16 Unsecured Creditors AEMETIS INC: Updates 5-Year Plan Projecting Growth to $1.9B Revenue ALLISON TRANSMISSION: Fitch Affirms 'BB+' LT IDR, Outlook Stable ALTICE USA: S&P Downgrades ICR to 'B-', Outlook Stable AMERICAN HEARTLAND: A.M. Best Hikes FS Rating to C(Weak) APPLOVIN CORP: Moody's Affirms 'Ba3' CFR, Outlook Stable BIOLASE INC: Has 23.3 Million Common Shares Outstanding BIOLASE INC: Lind Global, Two Others Report 9.9% Equity Stake BOY SCOUTS: Quick Abuse Victims Payment Choice Cannot be Changed CABLEVISION LIGHTPATH: S&P Downgrades ICR to 'B-', Outlook Stable CAMBER ENERGY: Amends Preferred Stock Certificate of Designation CARTER BURKS: Case Summary & 20 Largest Unsecured Creditors CELESTICA INC: S&P Ups ICR to 'BB' on Strong Operating Performance CHERNY REALTY: Case Summary & Five Unsecured Creditors COHERENT CORP: Moody's Hikes CFR to Ba2 & Alters Outlook to Stable COMMSCOPE HOLDING: Mackenzie Quits as Director; Replacement Named CONSTELLATION RENEWABLES: Moody's Ups Sec. Term Loan Rating to Ba2 CYTTA CORP: Recurring Losses Raise Going Concern Doubt DOC CORPORATE: Voluntary Chapter 11 Case Summary DOCTX3 PLLC: Voluntary Chapter 11 Case Summary DOUGHP INC: Case Summary & 20 Largest Unsecured Creditors DOUGHP NEVADA: Case Summary & Three Unsecured Creditors EAGLE HEMP: Plan Exclusivity Period Extended to March 18 ECLIPZ.IO INC: Seeks to Extend Plan Exclusivity to March 28 EIGHT COPELAND: Hearing on Sale of NJ Properties Set for Feb. 27 ELETSON HOLDINGS: Creditors Want Trustee Appointed EMERGENT BIOSOLUTIONS: Appoints Joseph Papa as President, CEO EQM MIDSTREAM: Moody's Rates New $600MM Sr. Unsecured Notes 'Ba3' EQUITRANS MIDSTREAM: S&P Affirms 'BB-' ICR, Outlook Negative FRONTIER COMMUNICATIONS: Fitch Lowers IDR to 'B+', Outlook Neg. GAUCHO GROUP: Reports Unregistered Sales of $980K Common Shares GOEASY LTD: Moody's Gives Ba3 Rating on New Unsec. Notes Due 2029 GOLDEN KEY: Says Committee's Plan Fatally Flawed, Has 100% Plan GOTO GROUP: Debt Surges After Debt Proposal Opens to Creditors GULF SOUTH ENERGY: Seeks Cash Collateral, DIP Loan from TXP HAMMER FIBER: Fruci & Associates II Raises Going Concern Doubt INNOVATIVE MEDTECH: Raises Going Concern Doubt JAG SPECIALTY: Voluntary Chapter 11 Case Summary LILIUM N.V.: Launches First Customer Service Organization LIVINGSTON TOWNSHIP: Sells Properties to Insight Group for $2.7MM MEN'S WEARHOUSE: Moody's Rates New $550MM Secured Term Loan 'B1' MODERN POTOMAC: Gets OK to Sell Stafford Properties to Green Bluff NATIONAL RIFLE: Took Steps to Resolve Compliance Deficiencies PAS SERVICES: Voluntary Chapter 11 Case Summary PONTOON BREWING: Gets OK to Sell Tucker Assets by Public Auction REMARK HOLDINGS: Amends Purchase Agreement With Ionic Ventures ROBERT MORRIS: Moody's Lowers Issuer & Revenue Bond Ratings to Ba1 SACKS WESTON: Seeks to Extend Plan Exclusivity to March 22 SEMILEDS CORP: Inks 5th Amendment to Trung Doan Loan Agreement SORRENTO THERAPEUTICS: Bankruptcy Venue in Texas Fraudulent TAILORED BRANDS: S&P Affirms 'B' ICR, Outlook Stable THERATECHNOLOGIES INC: Incurs $24 Million Net Loss in 2023 TOPAZ SOLAR: Moody's Raises Rating on 2039 Secured Bonds to Ba1 TRANSOCEAN LTD: Incurs $954 Million Net Loss in 2023 TRIBE BUYER: S&P Downgrades ICR to 'D' on Missed Principal Payment UXIN LIMITED: Amends Form 6-K to Correct Number of Shares VENICE HOSPITALITY: Voluntary Chapter 11 Case Summary VIRTUS INVESTMENT: Moody's Alters Outlook on 'Ba1' CFR to Positive [^] BOOK REVIEW: The Phoenix Effect ********* 620 FIRST URBAN: Court OKs Sale of Properties to Secured Creditors ------------------------------------------------------------------ A U.S. bankruptcy judge has given the go-signal for 620 First Urban Renewal, LP and Millennium Urban Renewal, LP to sell their properties in New Jersey to their secured creditors. Judge John Sherwood of the U.S. Bankruptcy Court for the District of New Jersey approved the sale to Middlegate Elizabeth I, LLC and MSF Fulton, LLC whose $5,432,820.38 offer was selected as the winning bid for the real properties. The properties located at 620 First Avenue and 600-604 First Street, Elizabeth, N.J., are being sold "free and clear" of liens, claims and encumbrances. In the event both secured creditors fail to close on the sale, the properties will be sold to the back-up bidder, Clevmen Property Group, for $5,300,000. If the secured creditors consummate closing on only one of the properties, the purchase price is allocated as $2,603,000 for the 620 property and $2,829,820.38 for the other property. The mortgages in favor of the New Jersey, Department of Community Affairs for each of the properties and the mortgage in favor of the City of Elizabeth for the 600-604 property will be paid in full at closing from the sale proceeds. About 620 First Urban Renewal 620 First Urban Renewal, LP operates in the building and construction industry. 620 First Urban Renewal filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D.N.J. Case No. 23-12631) on March 30, 2023. Its affiliate, Millennium Urban Renewal, LP, filed a Subchapter V petition on May 5, 2023. Both Debtors reported $1 million to $10 million in assets and liabilities. The cases are jointly administered under Case No. 23-12631. Mark Hall, Esq., a partner at Fox Rothschild, LLP, serves as Subchapter V trustee in both cases. The Hon. John K. Sherwood is the case judge. McManimon, Scotland & Baumann, LLC is the Debtors' legal counsel. 68 NORTH HENRY: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: 68 North Henry Street LLC f/k/a 573 Meeker Avenue LLC 270 Madison Avenue New York, NY 10016 Business Description: The Debtor is engaged in activities related to real estate. Chapter 11 Petition Date: February 22, 2024 Court: United States Bankruptcy Court Eastern District of New York Case No.: 24-40786 Judge: Hon. Nancy Hershey Lord Debtor's Counsel: Avinoam Y. Rosenfeld, Esq. THE ROSENFELD LAW OFFICE 156 Harborview South Lawrence NY 11559 Tel: (516) 547-1717 Email: aviyrosenfeld@aol.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Dov Roth as authorized signatory. 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/XVJ2SOA/68_North_Henry_Street_LLC_fka__nyebke-24-40786__0001.0.pdf?mcid=tGE4TAMA AC FABRICATION: Case Summary & 16 Unsecured Creditors ----------------------------------------------------- Debtor: AC Fabrication, Inc. 220 W. Los Angeles Ave., Bldg 2C Simi Valley, CA 93065 Business Description: AC Fabrication is a machine shop in Simi Valley, California. Chapter 11 Petition Date: February 22, 2024 Court: United States Bankruptcy Court Central District of California Case No.: 24-10191 Judge: Hon. Ronald A Clifford III Debtor's Counsel: Matthew D. Resnik, Esq. RHM LAW, LLP 17609 Ventura Blvd. Ste 314 Encino, CA 91316 Tel: (818) 285-0100 Fax: (818) 855-7013 Email: matt@rhmfirm.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Anthony Chaghlassian as chief executive officer. A full-text copy of the petition containing, among other items, a list of the Debtor's 16 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/LKUOAII/AC_Fabrication_Inc__cacbke-24-10191__0001.0.pdf?mcid=tGE4TAMA AEMETIS INC: Updates 5-Year Plan Projecting Growth to $1.9B Revenue ------------------------------------------------------------------- Aemetis, Inc. announced an updated Aemetis Five Year Plan that projects the company will generate $1.95 billion in revenues and $645 million of adjusted EBITDA in year 2028. The 2024 Plan states revenues are expected to grow at a compound annual growth rate of 38%, and adjusted EBITDA is expected to grow at a projected compound annual growth rate of 83% for the years 2024 to 2028. A presentation summarizing the updated Five Year Plan is available for review on the Aemetis website at www.aemetis.com/Five-Year-Plan. In the Aemetis 2024 Five Year Plan, the Company's revenue and adjusted EBITDA growth is expected from 75 dairies producing RNG by 2028; from a 90 million gallon per year sustainable aviation fuel and renewable diesel (SAF/RD) plant in Riverbank, California; from a CO2 Carbon Sequestration and Underground Storage (CCUS) well located near the Riverbank and Keyes biofuels plant sites in California; from the completion of solar, mechanical vapor recompression and other energy efficiency, carbon emission reduction, and electrification projects at the Company's Keyes biofuels plant; and from the continued expansion of biodiesel and tallow refining production at the Aemetis plant in India. The presentation also describes the tax credits expected to be received by Aemetis from the Inflation Reduction Act (IRA) for its renewable fuel and sequestration projects. "Through the expansion of our RNG, biodiesel, SAF/RD, CCUS, and ethanol businesses, Aemetis is poised to rapidly grow revenue to almost $2 billion by the end of 2028," said Eric McAfee, Chairman and CEO of Aemetis. "Additionally, Aemetis closed $50 million of new USDA funding and received $55 million from the sale of IRA tax credits in the past year. With strong financing support from the USDA for renewable fuels projects, the passage of the $380 billion Inflation Reduction Act to provide funding to renewable energy projects, and EPA approval allowing 15% ethanol blends in 49 states which expands the ethanol market by almost 50%, the regulatory and financial climate for renewable energy projects continues to support our overall growth plan," added McAfee. Significant milestones were achieved in the past year under the previous 2023 Five Year Plan, including the transition to receiving revenue and positive operational cash flow from the biogas-to-RNG upgrading facility and dairy digesters; receiving the Use Permit and CEQA approval for the SAF/RD plant at the Riverbank site; receiving the first private carbon sequestration characterization well drilling permit issued by the State of California; completing construction and commissioning of the 1.9 megawatt solar microgrid with battery backup; installed an Allen Bradley distributed control system with AI capabilities to optimize energy use and other operational performance of the Keyes ethanol plant; completing design engineering and are now procuring equipment for the Mechanical Vapor Recompression (MVR) unit at the Keyes plant to utilize low carbon intensity electricity instead of fossil natural gas; completing deliveries of biodiesel to the Oil Marketing Companies in India under the first $40 million of contracts; and receiving awards for an additional $150 million of allocations from the three India government Oil Marketing Companies to be fulfilled using a Cost-Plus pricing formula. Due to uncertainties regarding timing, the 2024 Plan does not include several other growth initiatives that are actively under development at Aemetis, including revenues and EBITDA from the planned operation of the 50 million gallon per year capacity, debt-free, India refined tallow plant. The export of tallow from India to North America customers at approximately $4 to $5 per gallon for 50 million gallons per year, increasing revenues by up to $250 million per year, is excluded. The 2024 Plan projections include using the refined tallow from India as a feedstock supply source for the operations of the SAF/RD plant under development in California to improve profit margins. In addition to the $55 million received in Q4 2024 from the sale of transferable tax credits, the Inflation Reduction Act is expected to provide transferable investment and production tax credits to Aemetis related to the Company's U.S. renewable fuels and CO2 sequestration projects, which are included in the 2024 Plan. The Five Year Plan for Aemetis Dairy RNG operations projects revenues will grow from $18 million in 2024 to $190 million in 2028, while Dairy RNG project EBITDA is expected to expand from $7 million in 2024 to $123 million in 2028. The RNG plan accounts for the delays in receiving LCFS revenue that are caused by the current regulatory process to obtain LCFS pathway approvals for each dairy digester that may be shortened if pending regulatory changes are adopted by the California Air Resources Board. The Five Year Plan projects that the Aemetis Sustainable Aviation Fuel and Renewable Diesel plant will provide revenue of $672 million with adjusted EBITDA of $195 million in year 2027 from the 90 million gallon plant that received the Use Permit and CEQA approval in September 2023 to be built at the 125-acre Riverbank Industrial Complex which has 100% renewable hydroelectricity; a rail line and storage for 120 railcars; 710,000 square feet of buildings; and 50 acres of developable industrial land. In connection with the carbon reduction upgrades at the Keyes plant, expansions of the India biodiesel plant, and expanded market opportunities resulting from changes to governmental policies, the Five Year Plan projects that the Company will generate annual revenue from ethanol and biodiesel of approximately $826 million in 2028, up from $368 million of expected revenue in 2024. About Aemetis Headquartered in Cupertino, California, Aemetis, Inc. -- http://www.aemetis.com-- is an international renewable natural gas, renewable fuels and byproducts company focused on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products. The Company operates in two reportable geographic segments: "North America" and "India." Aemetis reported a net loss of $107.76 million for the year ended Dec. 31, 2022, compared to a net loss of $47.15 million for the year ended Dec. 31, 2021. As of Sept. 30, 2023, the Company had $277.44 million in total assets, $114.37 million in total current liabilities, $363.06 million in total long-term liabilities, and a total stockholders' deficit of $199.99 million. "As a result of negative capital, negative market conditions resulting in prolonged idling of the Keyes Plant, negative operating results, and collateralization of substantially all of the company assets, the Company has been reliant on its senior secured lender to provide additional funding and has been required to remit substantially all excess cash from operations to the senior secured lender. In order to meet its obligations during the next twelve months, the Company will need to either refinance the Company's debt or receive the continued cooperation of its senior lender. This dependence on the senior lender raises substantial doubt about the Company's ability to continue as a going concern," said Aemetis in its Quarterly Report for the period ended Sept. 30, 2023. ALLISON TRANSMISSION: Fitch Affirms 'BB+' LT IDR, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has affirmed Allison Transmission Holdings, Inc.'s (Allison) and subsidiary Allison Transmission, Inc.'s (ATI) Long-Term Issuer Default Ratings (IDRs) at 'BB+'. Fitch has also affirmed the ratings on ATI's secured revolver and term loan at 'BBB-'/'RR1' and ATI's senior unsecured notes at 'BB+'/'RR4'. Allison's and ATI's ratings apply to a $650 million secured revolving credit facility, $620 million of secured term loan B borrowings and $1.9 billion of senior unsecured notes. The Rating Outlook is Stable. Allison's ratings reflect Fitch's expectation that the company's earnings and FCF will remain strong over the intermediate term, even if margins do not fully recover to pre-pandemic levels over the next several years. Allison dominates its core commercial vehicle automatic transmission category, and continues to invest in electric vehicle (EV) technology to prepare for the shift to commercial vehicle electrification. KEY RATING DRIVERS Strong Market Position: Allison continues to lead the global market for fully automatic transmissions for commercial vehicles, off-road equipment and military vehicles. In 2022, 85% of the school buses and 79% of the class 6 and 7 commercial trucks manufactured in North America were delivered with the company's transmissions, in addition to 78% of class 8 straight trucks and 44% of the class A motorhomes. Allison's transmissions command a price premium, which is unusual for a Tier 1 supplier, and Fitch expects the overall market for commercial vehicle automatic transmissions in North America to increase over time. Outside North America, the penetration of commercial vehicle automatic transmissions remains relatively low. However, acceptance is growing, particularly in certain emerging markets, where Allison is well positioned for future growth opportunities. Electrification Investments: The shift toward greater use of electric powertrains in commercial vehicles could pose a longer-term risk to Allison's core transmission business. EVs, including hydrogen fuel cell vehicles, do not typically incorporate automatic transmissions in their drivetrains. Although the technological limitations of commercial EVs will likely result in a slower transition to electrification than in the light vehicle sector, it nonetheless poses a risk to Allison's traditional business. To mitigate this risk, Allison is one of several commercial vehicle driveline suppliers investing significantly in EV propulsion systems for commercial vehicles. Allison has been awarded a number of EV-related supply agreements with manufacturers of commercial vehicles, off-highway equipment and military vehicles over the past several years. The company has a strong market position as one of the largest producers of hybrid-electric propulsion systems for city buses. However, it remains too soon to tell how the electrification transition will affect Allison's business over the long term. High Profitability: Pre-pandemic, Allison produced very strong EBITDA margins in the 40% range. However, since the pandemic began, the company's EBITDA margins have generally been in the low- to mid-30% range due to supply chain challenges, volatile customer production schedules, inflationary pressures and development costs associated with its EV programs. While these issues are likely to remain for the next few years, Fitch expects Allison will continue to produce EBITDA margins in the mid-30% range. Although EBITDA margin performance is down from pre-pandemic levels, it is nonetheless very strong relative to most capital goods and auto suppliers, and about double the level for many investment grade-rated auto suppliers. Declining Leverage: Allison's leverage continued to decline in 2023, following the pandemic-driven rise a few years ago. Lower leverage has been primarily the result of increased EBITDA, as debt has been roughly flat at around $2.5 billion for several years. Fitch expects EBITDA leverage (gross debt/EBITDA, as calculated by Fitch) declined toward 2.4x at YE 2023, and Fitch expects leverage to decline further, toward the low-2x range over the next several years as EBITDA continues to grow. Strong FCF: Allison has produced solidly positive FCF in every quarter since becoming a public company in 2012, including every quarter since the pandemic began in 2020. Fitch expects Allison's post-dividend FCF margin grew a bit in 2023, to over 16%, primarily due price increases on certain products and lower capex. Beyond 2023, Fitch expects Allison's FCF to continue growing, with FCF margins rising back toward the upper-teens over the next several years. This compares with pre-pandemic FCF margins in the low- to mid-20% range. Although FCF margins will likely be lower than pre-pandemic levels for several years, Fitch expects they will remain 8x higher than most investment grade-rated capital goods or auto suppliers. Fitch expects capex as a percentage of revenue of a little over 4.0% in 2023, down from 6.0% in 2022, as the company cycled past several large capital projects. Potential Rating Constraints: Aside from lingering post-pandemic effects, rating constraints include heavy cyclicality of the global commercial vehicle and off-highway equipment markets, volatile raw material costs and the company's primary focus on one major product category. The shift toward commercial vehicle electrification is also a potential rating constraint. DERIVATION SUMMARY Allison is among the smaller public capital goods suppliers, with a more focused and less diversified product offering. Compared with suppliers like Cummins, Inc. or Dana Incorporated (BB+/Negative), Allison is smaller, with less geographically diversified sales, as nearly three-quarters of Allison's revenue is derived from North America. However, its share in many of the end-markets in which it competes is very high, with well over 50% penetration in certain end-markets. Compared with other suppliers in the 'BB' rating category, such as Dana or The Goodyear Tire and Rubber Company (BB-/Stable), Allison's EBITDA leverage is lower, and its EBIT and FCF margins much stronger. The company's strong EBITDA margins are more than double those of many investment-grade capital goods or auto supply issuers, such as BorgWarner Inc. (BBB+/Stable), Aptiv PLC (BBB/Stable) and Lear Corporation (BBB/Stable), while its post-dividend FCF margins are more than 8x higher than many of those higher-rated issuers. Fitch used its "Parent and Subsidiary Linkage Rating Criteria" to assign ratings to ATI using the stronger subsidiary approach. Based on the criteria, Fitch has concluded that ring fencing and access and control are both open. As such, Fitch rates Allison and ATI at the consolidated level with no notching between the entities. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Agency's Rating Case for the Issuer: - Revenue increases a little over 8.0% in 2023 on strengthened demand conditions, new business wins and higher pricing. Revenue growth moderates to the low-single-digit range in 2024, due to lower North American truck production, offset by pricing and share gains outside North America, then rises toward the mid-single-digit range in the outer years on growth in global truck production; - The EBITDA margin runs in the mid-30% range over the next several years as the benefits of higher production levels are partially offset by electrification investments, inflation and costs associated with the new United Auto Workers (UAW) agreement; - Debt declines slightly through the forecast period as the company makes amortization payments on its term loan; - Capex as a percentage of revenue runs at about 4.0%-4.5% over the next several years as the company has cycled past several large capital investment programs; - Dividend spending is roughly flat through the forecast; - The company maintains a solid cash position, with excess cash used for share repurchases or occasional acquisitions. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Successfully growing the e-powertrain business; - Demonstrated commitment to financial policy resulting in Fitch-calculated mid-cycle EBITDA leverage sustained below 2.5x; - Maintenance of balanced capital allocation plan and financial flexibility, including a less encumbered capital structure. Factors that could, individually or collectively, lead to negative rating action/downgrade: - A sustained significant decline in EBITDA margins or an extended period of negative FCF; - A competitive entry into the market that results in a significant market share loss; - Sustained Fitch-calculated mid-cycle EBITDA leverage above 3.5x; - A merger or acquisition that results in higher leverage or lower margins over an extended period. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Fitch expects Allison's liquidity to remain adequate over the intermediate term. At Sept. 30, 2023, the company had $501 million of cash and cash equivalents. In addition, the company had $645 million available on ATI's $650 million secured revolver, after accounting for $5 million of letters of credit backed by the facility. Due to the consistency of Allison's FCF generation, Fitch treated all of the company's cash as readily available. Debt Structure: Allison's debt structure as of Sept. 30, 2023 consisted of ATI's secured term loan B, which had $620 million outstanding, and three series of senior unsecured notes issued by ATI: $400 million of 4.75% notes due 2027, $500 million of 5.875% notes due 2029 and $1.0 billion of 3.75% notes due 2031. The term loan is secured by substantially all of Allison's assets, the assets of Allison's U.S. subsidiaries and certain assets of ATI's direct and indirect domestic and foreign subsidiaries. ISSUER PROFILE Allison supplies fully automatic transmissions to the global on-highway, off-highway and military end-markets. The company also manufactures hybrid-electric propulsion systems for city buses and propulsion systems for the emerging electric commercial vehicle market. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Allison Transmission, Inc. LT IDR BB+ Affirmed BB+ senior secured LT BBB- Affirmed RR1 BBB- senior unsecured LT BB+ Affirmed RR4 BB+ Allison Transmission Holdings, Inc. LT IDR BB+ Affirmed BB+ ALTICE USA: S&P Downgrades ICR to 'B-', Outlook Stable ------------------------------------------------------ S&P Global Ratings lowered all ratings on U.S.-based cable provider Altice USA Inc. one notch, including its issuer credit rating to 'B-' from 'B'. The stable outlook reflects Altice's solid liquidity position and S&P's view that it can still generate sustainability positive FOCF long-term, particularly when fiber-related capital expenditure (capex) eases. S&P said, "The downgrade reflects that leverage likely will remain elevated longer than previously expected. We lowered our EBITDA forecast following management's guidance for slightly lower earnings in 2024 on the heels of a 6.7% decline in 2023. This is due to the heightened competitive environment, especially as the Western footprint now faces a 40% fiber-to-the-home (FTTH) overlap while fixed wireless access (FWA) continues to gain market share. In its Eastern U.S. footprint, the company continues to face stiff competition from FTTH provider Verizon FioS, which has been adding broadband subscribers and successfully bundling mobile. Despite successful management-initiated operational improvements, we believe it will be difficult to meaningfully improve financial leverage given top-line pressure and limited cash generation. "Increasing high-speed data (HSD) revenue will continue to be challenging. We believe stabilizing HSD revenue is key to earnings growth. We expect this will remain difficult in a mature and competitive environment, especially considering Altice USA's already high average revenue per user (ARPU). Management has taken corrective actions by simplifying its pricing and packaging in an attempt to bridge the gap between promotional pricing and everyday prices. However, the balancing act is delicate between keeping its promotional prices competitive enough to win new customers while trying to avoid a large step-up in price after the promotion ends and trying to avoiding price decreases with its existing base. We believe the company will either have lower ARPU to better harmonize its pricing and packaging across the base, bringing HSD ARPU more in line with peers, or it will continue to lose subscribers. "Longer term, we believe demand for higher data speeds will help drive ARPU growth industrywide. However, the timeframe for growth is more uncertain for Altice USA if it reduces everyday prices after promotions end. Separately, management is prudently moving certain customers to higher speeds commensurate with prices they already pay. While this will help reduce churn and improve customer satisfaction, it also reduces opportunities for ARPU growth. This retention tactic, already deployed to 100,000 customers, will likely continue to create headwinds for upselling over the next several years. Given this challenging backdrop, it is unclear when Altice will resume HSD revenue growth. "We expect management to carefully manage capital spending to maintain positive FOCF. Management has guided to capex of $1.6 billion-$1.7 billion in 2024 (from $1.7 billion in 2023), which we expect will result in modest FOCF of about $200 million. The company's FTTH investments have yet to yield significant returns. Penetration of fiber passings is only 12% because it is costly to install a home to fiber. Management will be shifting its priority this year to connect more homes to its fiber network, which should yield churn benefits and potentially drive higher ARPU. We expect it will convert about 175,000 new homes to fiber this year, bringing total penetration to about 18%. However, this will come at the expense of expanding FTTH passings, which we estimate will moderate to about 275,000 from 576,000 in 2023, bringing the total FTTH passings to about 3 million by the end of 2024 (about 30% of total homes passed). "Mobile wireless is starting to ramp up. We believe wireless is an important bundling tool, especially in an increasingly competitive marketplace. However, subscriber acquisition costs will likely weigh on earnings as it has taken larger, scaled cable companies--with presumably better wholesale terms--a few years to break even. Therefore, we expect wireless to modestly drag on Altice's earnings in 2024 and 2025 before it can contribute to growth longer term. We also believe Altice's elevated financial leverage makes it more difficult to aggressively use mobile as a price-saving mechanism for customers the way Charter Communications Inc. and Comcast Corp., which both have more financial flexibility, have done. "We believe Altice's capital structure remains sustainable. Our ratings are predicated on the company's ability to stabilize broadband revenue and earnings. We believe there is a narrow, but achievable, path toward longer-term earnings growth. We believe its enhanced operational focus should yield modest financial benefits over time, particularly considering that incumbent cable operators still enjoy solid (albeit increasingly competitive) operating fundamentals. Altice has adequate runway to execute on its turnaround plan for the next three years, as the next maturity wall is not until 2027, and we will continue to monitor progress on this front. "More specifically, we believe Altice can service its debt longer term because we project FOCF will remain positive and EBIT interest coverage will remain above 1x through 2028, factoring in higher interest rates. Furthermore, capital spending is elevated. Once fiber investments are complete, we believe the company can operate with capex to revenue closer to the low-teens percents compared with the 18.5% rate management guided to in 2024. While it is unclear when, we project that FOCF could be over $500 million in 2028 if Altice cuts capex to revenue to 13% (about where it was in the fourth quarter of 2023). "The stable outlook reflects Altice's elevated leverage offset by its good liquidity position and our belief that FOCF will remain positive for the next several years." S&P could lower the rating if it views the capital structure as unsustainable such that we view a default or debt restructuring as likely. This could be caused by a lack of progress on operational improvements and earnings trends that result in: -- An inability to generate sustainably positive FOCF; or -- EBIT interest approaches 1x. Although unlikely over the next year, S&P could raise the rating if: -- Debt to EBITDA falls comfortably below 6.5x; and -- FOCF to debt is on a credible path toward 5%. This would be a result of improved broadband revenue trends such that we expect Altice to sustain meaningful earnings growth. Altice is owned by controlling shareholder Patrick Drahi, who holds about 92% of voting shares and about a 50% economic stake. Drahi has a record of engaging in activity that prioritizes shareholder interests over those of creditors at other companies that he controls. For example, the 2021 take-private of European telecommunications assets highlighted governance concerns when take-private debt raised at a personal funding vehicle of Drahi was repaid using proceeds from Altice International S.a.r.l.'s 50.1% stake in French towers that were designated unrestricted shortly after the company was taken private. Given that Altice's stock price has declined substantially, S&P believes a take-private transaction could be considered in the U.S. at some point. AMERICAN HEARTLAND: A.M. Best Hikes FS Rating to C(Weak) -------------------------------------------------------- AM Best has upgraded the Financial Strength Rating (FSR) to C (Weak) from C- (Weak) and the Long-Term Issuer Credit Rating (Long-Term ICR) to "ccc+" (weak) from "ccc-" (Weak) of American Heartland Insurance Company (American Heartland). The outlook of the FSR is stable, while the outlook of Long-Term ICR is negative. Concurrently, AM Best has downgraded the FSR to C (weak) from C++ (Marginal) and the Long-Term ICR to "ccc+" (Weak) from "b" (Marginal) of United Equitable Insurance Company (United Equitable). The outlook of the FSR has been revised to stable from negative, while the outlook of the Long-Term ICR is negative. Both companies are domiciled in Morton Grove, IL. Historically, AM Best has maintained separate Credit Ratings (ratings) for American Heartland and United Equitable; however, based on the level of integration and commonalities between the two entities, which benefit from explicit support by a common parent, United Equitable Group, Ltd., AM Best now analyzes the companies on a consolidated basis. Collectively they are referred to as United Equitable Insurance Group or UEIG. The ratings of UEIG reflect its balance sheet strength, which AM Best assesses as very weak, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM). The group's very weak balance sheet strength assessment is reflective of its weak overall risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio (BCAR), and its significantly elevated underwriting leverage measures in relation to the private passenger non-standard auto composite. The negative outlooks on the Long-Term ICRs for UEIG are based on continued pressure on the group's balance sheet strength assessment driven by significant recent growth and continued elevated underwriting and reserve leverages. UEIG's adequate operating performance assessment reflects combined ratios that compare favorably to the composite. These results are mainly due to the group's pure loss ratio. However, this is somewhat offset by UEIG's elevated underwriting expense ratio driven by commission costs that compare unfavorably to the composite. UEIG's limited business profile and marginal ERM assessments reflect the narrow product offering and geographic concentration of risk with nearly all of its business written in Illinois, which exposes the group to potential judicial, regulatory and economic concerns. Although still evolving, the ERM framework continues to be enhanced with a more formalized structure integrated into its process by management. However, uncertainty and execution risks remain due to UEIG's aggressive growth and elevated leverage position. The stable outlooks on the FSRs reflect the expectation that risk-adjusted capitalization will be maintained at an acceptable level as measured by BCAR to support the balance sheet strength assessment and near-term business plan. APPLOVIN CORP: Moody's Affirms 'Ba3' CFR, Outlook Stable -------------------------------------------------------- Moody's Investors Service affirmed AppLovin Corporation's Ba3 Corporate Family Rating, Ba3-PD Probability of Default Rating and Ba3 ratings on the guaranteed senior secured first-lien bank credit facilities (comprising the $610 million revolving credit facility (RCF) due 2028, $1.47 billion outstanding term loan due 2028 and $1.49 billion outstanding term loan due 2030). The company's SGL-1 Speculative Grade Liquidity (SGL) rating is unchanged. The outlook is stable. RATINGS RATIONALE AppLovin's Ba3 CFR reflects the company's scale as one of the largest mobile marketing platforms with an improving business mix and diversification across gaming and other industry sectors. AppLovin's higher margin Software Platform now contributes a larger share of total revenue (56%) and EBITDA (85%) with roughly 70% EBITDA margins (segment adjusted). Moody's continues to forecast favorable growth trends for the in-game advertising market, which is likely to grow at least 10% annually over the next four years. Moody's expects the company to grow faster than the market as advertisers diversify their digital presence away from the Big Tech walled garden publishers to performance-based marketers with robust mobile marketing, measurement and user-analysis technologies. AppLovin's Apps EBITDA margins (segment adjusted) improved approximately 200-300 basis points over the past two years to roughly 16% as a result of portfolio optimization, which led to higher overall margins. This enabled the company to invest in talent and technology while the mobile in-app ad market was muted, positioning AppLovin to capture share when the market recovered. Moody's expects AppLovin's margins to continue to expand over the medium-term. The Ba3 CFR is constrained by the company's increased exposure to highly cyclical advertising spend now that the Software Platform contributes the lion's share of revenue and profitability, and relies on mobile app advertisers who use the platform to grow and monetize their apps. Following the slowdown in mobile in-game advertising in H2 2022 and H1 2023, which impacted AppLovin's performance following the 2022 MoPub (debt-funded) and Wurl (cash and stock funded) acquisitions, revenue accelerated 28% in H2 2023 as marketing spend recovered led by digital media formats. Owing to strong EBITDA growth, the company de-levered to just under 3x at FYE 2023 from 3.8x at FYE 2022 (metrics are Moody's adjusted). Liquidity is expected to remain very good with solid cash balances and strong free cash flow (FCF) generation due to AppLovin's high margins and relatively modest capital expenditures. Given Moody's expectation for continued EBITDA growth and robust FCF, AppLovin has the propensity to de-lever further. However, Moody's expects that excess cash flow and incremental debt will be allocated to share repurchases and/or M&A over the near-to-medium term. Despite the potential for additional debt in the capital structure, Moody's forecasts that leverage will remain in the 3x-4x range. The stable outlook reflects Moody's expectation for top-line revenue growth with Moody's adjusted EBITDA margins in the 30%-35% range (after adjusting for publisher bonuses). The recent improvement in profit margins reflects robust mobile app advertiser spending growth and greater EBITDA contribution from AppLovin's Software Platform. In addition, the company, has successfully optimized the Apps portfolio by intentionally reducing its studio footprint for a more focused investment strategy. Moody's expects FCF to total debt in the 25%-30% range as profitability continues to expand (metrics are Moody's adjusted). Over the next 12-18 months, Moody's expects AppLovin will maintain very good liquidity as indicated by the SGL-1 Speculative Grade Liquidity rating supported by solid cash balances, access to the $610 million RCF and strong FCF. At 31 December 2023, cash-on-hand totaled approximately $502 million and $419 million was available under the RCF. The company has a multi-year track record for maintaining cash balances of at least $200 million with good revolver availability, modest capital expenditures and working capital, and FCF to total debt at least in the mid-teens percentage range. Moody's expects that AppLovin will generate roughly $1 billion of FCF in FY 2024. The bulk of last year's $1 billion of FCF was allocated to help repurchase around $1.154 billion of common stock, a more than threefold increase compared to $339 million in FY 2022. Given that $1.25 billion is currently available under AppLovin's recently upsized authorized share repurchase program, Moody's expects that share buybacks will continue at a high level and funded with a portion of FCF. ESG CONSIDERATIONS AppLovin's ESG credit impact score is CIS-3, chiefly driven by governance risks associated with controlled ownership of the company and increasing share repurchases. This is somewhat mitigated by the composition of the board, which is has a majority of independent directors, and Moody's expectation that AppLovin will continue to maintain a disciplined financial policy. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if revenue and profit growth lead to adjusted total debt to EBITDA sustained comfortably below 3x and AppLovin demonstrates a commitment to conservative financial policies aided by continued reduction in KKR ownership. The company would also need to maintain very good liquidity with growing cash balances, good conversion of EBITDA to FCF and FCF to total debt consistently above 15% (all metrics are Moody's adjusted). Ratings could be downgraded if Moody's expects AppLovin's adjusted total debt to EBITDA will be sustained above 4x (Moody's adjusted) due to underperformance or cash distributions, share buybacks, acquisitions or partnerships funded with debt. Ratings could also be downgraded if organic revenue growth slows consistently below the mid-single digit percentage range reflecting underperformance related to execution or competitive pressures. Downward pressure on ratings could also occur if liquidity deteriorates as evidenced by reduced cash balances or revolver availability; adjusted FCF to total debt declines to the mid-single digit percentage range; or Moody's expects more aggressive financial policies that would result in higher financial leverage, cash distributions, share buybacks and/or weakened adjusted FCF. With headquarters in Palo Alto, CA, AppLovin Corporation provides a software platform for mobile app developers to improve app marketing and monetization. Founded in 2011, the company also owns and operates a portfolio of free-to-play mobile games that it develops through its own or partner studios. AppLovin is publicly traded controlled company with two company executives and KKR Denali Holdings, L.P. holding 84% voting control. Revenue in FY 2023 totaled approximately $3.3 billion. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. BIOLASE INC: Has 23.3 Million Common Shares Outstanding ------------------------------------------------------- Biolase Inc. disclosed in a Form 8-K filed with the Securities and exchange Commission that as of Feb. 19, 2024, the Company had a total of 23,334,852 shares of common stock issued and outstanding. About Biolase Biolase, Inc. -- http://www.biolase.com-- is a medical device company that develops, manufactures, markets, and sells laser systems in dentistry and medicine. BIOLASE's products advance the practice of dentistry and medicine for patients and healthcare professionals. BIOLASE's proprietary laser products incorporate approximately 259 actively patented and 24 patent-pending technologies designed to provide biologically and clinically superior performance with less pain and faster recovery times. Biolase reported a net loss of $28.63 million in 2022, a net loss of $16.16 million in 2021, a net loss of $16.83 million in 2020, a net loss of $17.85 million in 2019, and a net loss of $21.52 million in 2018. As of Sept. 30, 2023, the Company had $38.74 million in total assets, $32.86 million in total liabilities, $5.55 million in total mezzanine equity, and $332,000 in total stockholders' equity. The Company had cash and cash equivalents of approximately $7.8 million on Sept. 30, 2023. Costa Mesa, California-based BDO USA, LLP, the Company's auditor since 2005, issued a "going concern" qualification in its report dated March 28, 2023, citing that the Company has suffered recurring losses from operations and has had negative cash flows from operations for each of the three years ended December 31, 2022. These factors, among others, raise substantial doubt about its ability to continue as a going concern. The Company incurred losses from operations and used cash in operating activities for the three and nine months ended September 30, 2023, and for the years ended December 31, 2022, 2021, and 2020. The Company's recurring losses, level of cash used in operations, and potential need for additional capital, along with uncertainties surrounding the Company's ability to raise additional capital, raise substantial doubt about its ability to continue as a going concern, the Company said in its Quarterly Report for the period ended Sept. 30, 2023. BIOLASE INC: Lind Global, Two Others Report 9.9% Equity Stake ------------------------------------------------------------- Lind Global Fund II LP, Lind Global Partners II LLC, and Jeff Easton disclosed in a Schedule 13G filed with the Securities and Exchange Commission that as of Feb. 15, 2024, they beneficially owned 1,190,000 shares of common stock of Biolase, Inc., representing 9.9 percent of the shares outstanding. The reporting persons' ownership consists of (i) 1,190,000 shares of common stock, (ii) 835,000 Pre-funded Warrants, (iii) 9,210 Common Warrants, (iv) 2,025,000 Series A Warrants, and (v) 2,025,000 Series B Warrants; however, due to the exercise limitations of the Warrants, the reporting persons' beneficial ownership has been limited to 1,190,000 shares in the aggregate. Each of the Warrants includes a provision limiting the holder's ability to exercise the Warrants if such exercise would cause the holder to beneficially own greater than 9.99% of the Company. A full-text copy of the regulatory filing is available for free at: https://www.sec.gov/Archives/edgar/data/811240/000092963824000749/sch13g.htm About Biolase Biolase, Inc. -- http://www.biolase.com-- is a medical device company that develops, manufactures, markets, and sells laser systems in dentistry and medicine. BIOLASE's products advance the practice of dentistry and medicine for patients and healthcare professionals. BIOLASE's proprietary laser products incorporate approximately 259 actively patented and 24 patent-pending technologies designed to provide biologically and clinically superior performance with less pain and faster recovery times. Biolase reported a net loss of $28.63 million in 2022, a net loss of $16.16 million in 2021, a net loss of $16.83 million in 2020, a net loss of $17.85 million in 2019, and a net loss of $21.52 million in 2018. As of Sept. 30, 2023, the Company had $38.74 million in total assets, $32.86 million in total liabilities, $5.55 million in total mezzanine equity, and $332,000 in total stockholders' equity. The Company had cash and cash equivalents of approximately $7.8 million on Sept. 30, 2023. Costa Mesa, California-based BDO USA, LLP, the Company's auditor since 2005, issued a "going concern" qualification in its report dated March 28, 2023, citing that the Company has suffered recurring losses from operations and has had negative cash flows from operations for each of the three years ended December 31, 2022. These factors, among others, raise substantial doubt about its ability to continue as a going concern. The Company incurred losses from operations and used cash in operating activities for the three and nine months ended September 30, 2023, and for the years ended December 31, 2022, 2021, and 2020. The Company's recurring losses, level of cash used in operations, and potential need for additional capital, along with uncertainties surrounding the Company's ability to raise additional capital, raise substantial doubt about its ability to continue as a going concern, the Company said in its Quarterly Report for the period ended Sept. 30, 2023. BOY SCOUTS: Quick Abuse Victims Payment Choice Cannot be Changed ---------------------------------------------------------------- Alex Wolf of Bloomberg Law reports that hundreds of former Boy Scouts who mistakenly selected to receive a one-time payment of $3,500 as compensation for sexual abuse they suffered as children are bound to their errant choice, a Delaware bankruptcy judge ruled. The Boy Scouts of America bankruptcy plan, which allowed the organization to emerge from Chapter 11 last 2023 through what amounted to the largest sexual abuse settlement in US history, doesn't allow abuse survivors to amend their method for being compensated, Judge Laurie Selber Silverstein of the US Bankruptcy Court for the District of Delaware ruled, acknowledging it's a "harsh result." 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. CABLEVISION LIGHTPATH: S&P Downgrades ICR to 'B-', Outlook Stable ----------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating (ICR) on Cablevision Lightpath to 'B-' from 'B'. At the same time, S&P lowered its issue-level ratings on its senior secured debt to 'B-' from 'B' and its issue-level ratings on its senior unsecured debt to 'CCC+' from 'B-'.S&P's '3' recovery rating on the secured debt and '5' recovery rating on the unsecured debt are unchanged. The stable outlook reflects S&P's expectation that the company's S&P Global Ratings-adjusted net leverage will remain in the mid-5x area over the next 12 months, given its expectation for a 6%-8% increase in its S&P Global Ratings-adjusted EBITDA. S&P said, "The credit profile of Cablevision's parent, Altice USA Inc., has deteriorated such that we lowered our issuer credit rating (ICR) to 'B-' from 'B'. We also lowered our group credit profile (GCP) for the company and its subsidiaries to 'b-' from 'b' because we primarily base the GCP on Altice's credit quality to reflect its considerable earnings contribution to the group. We cap our issuer credit ratings (ICR) on Altice's subsidiaries at the same level as our GCP because we believe--in a stress scenario--the group would draw on the resources of its group members, thereby weakening their creditworthiness. "The downgrade follows our downgrade of its parent to 'B-' from 'B'. We lowered our ICR on Altice USA Inc. due to its earnings pressure and elevated leverage. Subsequently, we lowered our GCP on Altice's credit group (comprising Altice and its subsidiaries) because the company is the key determinant of the group's creditworthiness, given its sizeable earnings contribution. We do not rate Altice's subsidiaries above our GCP on the company because the group could draw on the resources of its members and weaken their creditworthiness. As such, we cap our rating on Cablevision Lightpath at 'B-'. Despite the lower rating, our 'b' stand-alone credit profile (SACP) on Lightpath is unchanged. "However, when the GCP is in the 'ccc' category, we can rate a subsidiary ICR at 'B-' if we do not view a subsidiary default as likely based on the parent, or other group members, defaulting. The risk of negative intervention by the parent to the point at which it would render Cablevision's capital structure unsustainable appears low because there are no cross-default provisions, Lightpath is much smaller than Altice USA, and a minority investor holds some influence over the company's board and voting rights. Therefore, we view further downside risk to Cablevision's ICR based on a lower GCP as low. "We do not consider Lightpath to be an insulated subsidiary. We believe financial stress at Altice could affect Lightpath's creditworthiness because the companies have some degree of operational overlap. Furthermore, we do not believe that there is a strong economic basis for Altice to preserve Lightpath's credit strength, nor are there ring-fencing provisions in place on these assets. In a credit-stress scenario, we believe Altice may transfer assets from Lightpath or sell the subsidiary. Still, under the existing credit agreement, we recognize there are restrictions on upstreaming cash that could limit the size of these transfers. However, if the credit trajectories of Lightpath and its parent diverge over time, we believe the likelihood and potential scope for such asset transfers could increase. "The stable outlook reflects our expectation that Lightpath's S&P Global Ratings-adjusted gross leverage will remain in the mid-5x area over the next 12 months based on our forecast for a 6%-8% increase in its S&P Global Ratings-adjusted EBITDA." S&P could lower its rating on Lightpath over the next 12 months if view its capital structure as unsustainable. This could occur if: -- Greater competition results in higher churn or pricing pressure, leading to lower-than-expected EBITDA and sustained negative free operating cash flow generation; or -- The company adopts a more-aggressive financial policy and incurs debt to fund acquisitions or dividends to its owners such it is unable to meet its long-term financial obligations. Although unlikely, S&P could raise its rating on Lightpath over the next 12 months if: -- S&P raises its ICR on Altice to 'B' or higher; and -- S&P expects the company will maintain leverage of below 7x on a sustained basis. CAMBER ENERGY: Amends Preferred Stock Certificate of Designation ---------------------------------------------------------------- Camber Energy, Inc. disclosed in a Form 8-K filed with the Securities and Exchange Commission that on Feb. 21, 2024, the Company filed with the Secretary of State of Nevada an amendment to certificate of designations regarding its Series C Preferred Stock, as amended (the "COD") dated as of Feb. 21, 2024, pursuant to the Agreement, which amended the COD to (i) establish a floor price in connection with determining the Conversion Premium (as defined in the COD) associated with conversions of Series C Preferred Stock, (ii) confirm that the Company may make an early redemption of any outstanding Series C Preferred Stock provided that outstanding promissory notes in favor of the Investor or its affiliates are paid in full, and (iii) confirm that no additional conversion shares will be owed to the Investor if the Notes are paid in full and all then outstanding shares of Series C Preferred Stock have been redeemed. Specifically, the Amendment provides that (i) beginning on the Amendment Date and thereafter, the Measuring Metric will be the higher of (x) the volume weighted average price of the Common Stock on any Trading Day following the Issuance Date of the Series C Preferred Stock and (y) $0.15, (ii) notwithstanding any other provision of the COD or any other document or agreement between the parties, the Company may make an early redemption pursuant to Section I.F.2 of the COD even though multiple Trigger Events (as defined in the COD) have occurred, subject to full repayment of any outstanding Notes, and (iii) if all outstanding Notes are paid in full and all then outstanding shares of Series C Preferred Stock are redeemed, the Investor will not thereafter deliver any Additional Notices (as defined in the COD) with respect to then already-converted shares of Series C Preferred Stock, and no additional Conversion Shares (as defined in the COD) will be owed to the Investor. On Feb. 15, 2024, the Company entered into an agreement with an investor that holds shares of the Series C redeemable convertible preferred stock of the Company with certain conversion entitlements. The Agreement is in relation to an amendment to the fifth amended and restated certificate of designations regarding its Series C Preferred Stock, as amended (the "COD"). Particularly, in exchange for the release and indemnity as provided for in the Agreement, the Investor agreed to certain amendments to the COD. In addition, pursuant to the Agreement, (i) beginning on Feb. 15, 2024 and thereafter, the Company agreed to pay at least fifty percent of the net proceeds received by the Company in connection with any registered or unregistered offering of equity or debt securities of the Company toward repayment of any outstanding promissory notes of the Company in favor of the Investor or any of its affiliates and (ii) the Investor rescinded its prior notice to increase the beneficial ownership limitation to 9.99%, such that the limitation is restored to 4.99% effective five Business Days from the date of the Agreement. About Camber Energy Based in Houston, Texas, Camber Energy, Inc. -- http://www.camber.energy/-- is a growth-oriented diversified energy company. Through its majority-owned subsidiary, Camber provides custom energy & power solutions to commercial and industrial clients in North America and owns interests in oil and natural gas assets in the United States. The company's majority-owned subsidiary also holds an exclusive license in Canada to a patented carbon-capture system, and has a majority interest in: (i) an entity with intellectual property rights to a fully developed, patent pending, ready-for-market proprietary Medical & Bio-Hazard Waste Treatment system using Ozone Technology; and (ii) entities with the intellectual property rights to fully developed, patent pending, ready-for-market proprietary Electric Transmission and Distribution Open Conductor Detection Systems. Camber Energy reported a net loss attributable to the company of $107.74 million for the year ended Dec. 31, 2022, a net loss attributable to the company of $169.68 million for the year ended Dec. 31, 2021, compared to a net loss attributable to the company of $52.01 million for the nine months ended Dec. 31, 2020. In its Quarterly Report for the three months ended Sept. 30, 2023, Camber Energy disclosed that the Company had a stockholders' equity of $29,189,192, long-term debt of $38,849,855 and a working capital deficiency of $9,451,778 as of Sept. 30, 2023. These conditions raise substantial doubt regarding the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to utilize the resources in place to generate future profitable operations, to develop additional acquisition opportunities, and to obtain the necessary financing to meet its obligations and repay its liabilities arising from business operations when they come due. Management believes the Company may be able to continue to develop new opportunities and may be able to obtain additional funds through debt or equity financings to facilitate its business strategy; however, there is no assurance of additional funding being available. CARTER BURKS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Carter Burks, Inc. f/d/b/a CB Installations, Inc d/b/a Carter Water 947 S.Oange Blossom Trail Apopka, FL 32703 Business Description: Carter Water offers water solutions for Central Florida homes and businesses. It also offers home energy savings solutions and clean air solutions. Chapter 11 Petition Date: February 21, 2024 Court: United States Bankruptcy Court Middle District of Florida Case No.: 24-00823 Judge: Hon. Lori V Vaughan Debtor's Counsel: Frank M. Wolff, Esq. NARDELLA & NARDELLA, PLLC 135 W. Central Blvd Suite 300 Orlando, FL 32801 Tel: 407-966-2680 E-mail: fwolff@nardellalaw.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Virgil Burks as president. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/HIAT46Q/Carter_Burks_Inc__flmbke-24-00823__0001.0.pdf?mcid=tGE4TAMA CELESTICA INC: S&P Ups ICR to 'BB' on Strong Operating Performance ------------------------------------------------------------------ S&P Global Ratings raised its issuer credit rating on Celestica Inc. to 'BB' from 'BB-'. S&P also raised its issue-level rating on the company's senior secured term loan to 'BB' based on a recovery rating of '3'. The stable outlook reflects S&P's expectation that Celestica's improved EBITDA generation will lead to an S&P Global Ratings'-adjusted net debt to EBITDA in the 1.3x-1.4x for the next 12 months. The upgrade reflects Celestica's improving leverage and strengthening free operating cash flow (FOCF) generation. The company's S&P Global Ratings'-adjusted net leverage improved to 1.6x in 2023. S&P expects it will decline further by the end of 2024, representing a significant improvement from higher leverage levels (1.8x) in fiscal 2019. Driving leverage improvement was a 2023 EBITDA increase to $525 million, with support from EBITDA margin expansion to 6.6% and debt repayments of approximately $18 million. The company also lowered cash usage in its working capital program. Moreover, free cash flow generation remains robust, with support from better operational performance as a result of an expanded S&P Global Ratings'-adjusted EBITDA margin. S&P said, "Subsequently, we expect Celestica to generate at least $150 million-$200 million in annual FOCF for 2024 and 2025. Given the notable strength in the company's cash flow generation ability, we believe it could repay more of its outstanding debt within the next 24 months." S&P said, "Our assessment of Celestica's business risk profile as fair reflects greater scale, enhanced competitiveness, and a modest improvement in profitability. Celestica has significantly outperformed our revenue and EBITDA expectations while enhancing its profitability, which along with a greater share of high-margin hardware platform solutions (HPS) and hyperscaler revenue, increased its EBITDA margin (S&P Global Ratings' adjusted) to 6.6% in 2023. Over the past couple of years Celestica's scale of operations has also improved with EBITDA growing to $525 million, a 66% increase from 2021, reflecting an increase in demand for its AI/ML compute deployment to the hyperscalers. With our expectation of a strong 2024 forecast, we believe Celestica can continue achieving revenue growth well in excess of 8% for fiscal 2024, well ahead than growth rates of other EMS providers like Sanmina Corp. "Looking further ahead, we expect Celestica to continue to report robust growth over the next two years and anticipate revenues will surpass the $9 billion mark by fiscal 2025, primarily driven by strengthening demand in networking from hyperscalers, including in its HPS programs. However, the company operates in highly competitive EMS market with limited pricing power, and it has cyclical non-HPS business because wins and losses for large contracts could result from volatile industry conditions. We also view the lack of customer diversity (top 10 customers represent 64% of the revenues) as an inherent disadvantage, because losing a customer or a large program could lead to significant loss in revenues and EBITDA margin, given the company's high operating leverage. "We believe Celestica's improved EBITDA margins is sustainable given the company's growth in its high-margin HPS business. During 2023, Celestica's connectivity business within its CCS segment benefitted from growing demand in AI/ML compute capacity by its hyperscaler customers. This resulted in year-over-year growth of about 32% in fiscal 2023 within Celestica's hyperscaler business and an overall topline growth of about 10%. The incremental topline growth from both hyperscaler and enterprise business within Celestica's high-margin HPS business resulted in S&P Global Ratings'-adjusted EBITDA margin of 6.6% in 2023 compared with 5.7% in 2022. For 2024, we expect the demand growth for Celestica's AI/ML compute programs to remain elevated, leading to incremental growth in its enterprise end market. However, we expect Celestica's ATS segment would remain pressured in 2024, driven by demand softness in the industrial business and ongoing market softness in capital equipment, partly offset by continued growth in aerospace & defense. As a result, going forward, we expect S&P Global Ratings'-adjusted EBITDA margins will remain constrained but grow gradually within 6.5%-7.0% at least for the next 12-24 months. "Management's reduction in leverage remains consistent with our ratings. During 2023, Onex Corp., Celestica's then-controlling shareholder converted its multiple voting shares (MVS) into subordinate voting shares (SVS) and Onex is no longer the controlling shareholder. As a result, we revised our assessment of Celestica's financial policy to neutral from FS-4. The revision is consistent with our expectation that management has prioritized reducing leverage over any transformational debt-financed acquisitions." The stable outlook reflects S&P Global Ratings' expectation that Celestica's improved EBITDA generation will lead to an S&P Global Ratings'-adjusted net debt to EBITDA in the 1.3x-1.4x range for the next 12 months. In its view, the company's balanced financial policy and strong liquidity creates some flexibility to accommodate any demand volatility across its various end markets. S&P could consider a downgrade in the next 12 months if: -- Adjusted net debt to EBITDA approaches 2.5x due to a soft demand environment for some of the company's product lines or a loss of a significant customer leading to declining EBITDA; and -- Celestica adopts a significantly more aggressive financial policy in terms of debt-funded shareholder returns and acquisitions, pressuring leverage measures. S&P could upgrade the company over the next 12 months: -- If Celestica gains significant scale and geographic or end-market diversification, leading us to believe its credit metrics would be less exposed to industry cyclicality and, -- If Celestica adopts a prudent financial strategy to sustain leverage measures well below 1.5x and FOCF to debt well above 30% after considering potential share buybacks or acquisitions. CHERNY REALTY: Case Summary & Five Unsecured Creditors ------------------------------------------------------ Two affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- Cherny Realty, Inc. 24-10283 421 East 12th Street New York, NY 10009 Cherny Properties, Inc. 24-10281 421 East 12th Street New York, NY 10009 Business Description: Cherny Realty owns a mixed used building located at 421 East 12th Street, New York, NY 10009, consisting of 10 residential units and 1 commercial unit valued at $12 million. Cherny Properties owns a mixed used building located at 511 East 6th Street, New York, NY 10009, consisting of 8 residential units and 1 commercial unit valued at $5.7 million in the aggregate. Chapter 11 Petition Date: February 21, 2024 Court: United States Bankruptcy Court Southern District of New York Judge: Hon. David S. Jones Debtors' Counsel: Gary C. Fischoff, Esq. BERGER, FISCHOFF, SHUMER, WEXLER & GOODMAN, LLP 6901 Jericho Turnpike Suite 230 Syosset, NY 11791 Tel: 516-747-1136 Email: hberger@bfslawfirm.com/ gfischoff@bfslawfirm.com Cherny Realty's Total Assets: $12,025,000 Cherny Realty's Total Liabilities: $12,302,896 Cherny Properties' Total Assets: $5,808,142 Cherny Properties' Total Liabilities: $12,192,368 The petitions were signed by Alexa Czerny as vice president. Full-text copies of the petitions are available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/S4FMF6A/Cherny_Realty_Inc__nysbke-24-10283__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/BYVKTKY/Cherny_Properties_Inc__nysbke-24-10281__0001.0.pdf?mcid=tGE4TAMA List of Cherny Realty's Five Unsecured Creditors: Entity Nature of Claim Claim Amount 1. IRS Centralized $0 Insolvency Operation PO Box 7346 Philadelphia, PA 19101-7346 2. Monica Clifford Security $3,500 Mason Dudas Deposit 421 East 12th Street Apartment 5 New York, NY 10009 3. NYS Department of $0 Taxation & Finance Bankruptcy Unit-TCD Bldg 8 Room 455 Albany, NY 12227 4. Samantha Simoneaux Security $4,500 Zachary Getz Deposit 421 East 12th Street Apartment 9 New York, NY 10009 5. Tirath Patel Security $3,500 Vinit Shah Deposit 421 East 12th Street Apartment 1 New York, NY 10009 List of Cherny Properties' Five Unsecured Creditors: Entity Nature of Claim Claim Amount 1. AGN Restaurant LLC Lawsuit $63,127 McElroy Deutsch Mulvaney & Carpenter LLP 225 Liberty Street 36th Floor New York, NY 10281 2. Carly Zdankowski Security Deposit $4,150 Margot Lichtenthal 511 East 6th Street Apartment 2R New York, NY 10009 3. IRS Centralized $0 Insolvency Operation PO Box 7346 Philadelphia, PA 19101-7346 4. NYS Department of $0 Taxation & Finance Bankruptcy Unit-TCD Bldg 8 Room 455 Albany, NY 12227 5. Richard A. Solomon Esq. Legal Services $17,000 290 Central Avenue Suite 102 Lawrence, NY 11559-8507 COHERENT CORP: Moody's Hikes CFR to Ba2 & Alters Outlook to Stable ------------------------------------------------------------------ Moody's Investors Service has upgraded the ratings of Coherent Corp., including the Corporate Family Rating to Ba2 from Ba3, the senior secured rating to Ba1 from Ba2, the senior unsecured notes to B1 from B2, and the Probability of Default Rating to Ba2-PD from Ba3-PD. The outlook was revised to stable from positive. The Speculative Grade Liquidity (SGL) rating remains unchanged at SGL-1. The ratings upgrade reflects Moody's expectation that Coherent's financial metrics and cash generation will continue to improve. This reflects a recovery in end markets along with continued strong sales growth in optical transceivers serving generative artificial intelligence (GenAI) uses. Revenues for fiscal year end June 2024 (FY2024) will be 10% to 15% lower than the prior fiscal year, reflecting revenue declines in the first half of FY2024. Over the next 12 to 18 months, however, Moody's expects upper single digits percent annual growth in revenues, which will contribute to higher profits. In December, Coherent sold a 25% interest in the Silicon Carbide LLC (SiC) business for a $1 billion combined investment from DENSO Corporation and Mitsubishi Electric Corporation. The investment by DENSO and Mitsubishi Electric will fund the SiC business' required capital expenditures. Since the SiC business accounts for about half of Coherent's annual capital expenditures, this investment significantly reduces Coherent's capital expenditure funding requirements, improving free cash flow (FCF). The increased profit level for Coherent, along with a reduced capital spending needs, will contribute to stronger FCF over the next 12 to 18 months. The higher profit level, combined with debt repayment, will result in leverage declining toward the mid to upper 3x level of debt to EBITDA (Moody's adjusted) over the period, with FCF to debt increasing toward the upper single digits percent (Moody's adjusted). RATINGS RATIONALE Coherent's Ba2 CFR reflects the company's large revenue scale, with a product portfolio spanning materials, components, and systems, which serve a varied set of end markets. This diversity of end markets, which generally follow unrelated demand cycles, tends to reduce overall revenue volatility. Coherent benefits from an established leadership position in the broad Optical Networking Components market, including in several niches in the Datacom and Telecom market segments. These leadership positions are complemented by Coherent's materials expertise, including laser optics, silicon carbide (SiC) wafers, and vertical cavity surface emitting laser (VCSEL) diodes. Coherent's optical transceiver portfolio is well-positioned over the near to intermediate term for the continued strong spending on GenAI-related equipment, which requires the high-speed interconnect enabled by Coherent's optical transceivers. Leverage of 4.6x debt to EBITDA (twelve months ended December 31, 2023, Moody's adjusted) is high for the rating. Given Coherent's vertically-integrated manufacturing model that requires large capital spending, this high leverage pressures FCF, which was negative in the most recent quarter (quarter ended December 31, 2023, Moody's adjusted). Given the negative FCF in the December quarter, Moody's expects FCF to debt (Moody's adjusted) will only reach the low single digits percent for the full 12 months of FY2024. Nevertheless, Moody's expect FCF to debt (Moody's adjusted) to improve toward the upper single digits percent level over the next 12 to 18 months. Although Coherent's broad product and end market exposures tend to reduce total revenue volatility, the company experiences significant revenue volatility within individual subsegments, such as the Telecom and Datacom end markets of the Networking segment. These two end markets experience swings in demand due to the spending patterns of their respective end customer bases. The stable outlook reflects Moody's expectation that Coherent's revenues will rebound strongly, with annual revenue growth in the upper single digit percent over the next 12 to 18 months. The EBITDA margin (Moody's adjusted) will remain at the low 20s percent level. With the increasing absolute level of EBITDA, combined with debt repayment, Moody's expects that leverage will be reduced toward the mid to upper 3x level of debt to EBITDA (Moody's adjusted) over the period. The improved EBITDA will also contribute to increasing FCF over the next 12 to 18 months, with FCF to debt rising toward the upper single digits percent level (Moody's adjusted). The Ba1 rating on the Senior Secured Bank Credit Facilities (Senior Secured Revolver due 2027, Senior Secured Term Loan A due 2027, and Senior Secured Term Loan B due 2029) reflects the collateral and the cushion of unsecured notes and liabilities. The B1 rating on the Senior Notes due 2029 reflects the absence of collateral and the large quantity of secured debt. The Speculative Grade Liquidity (SGL) rating of SGL-1 reflects Coherent's very good liquidity, which is supported by FCF and a large cash balance ($856 million, exclusive of the $965 million of restricted cash, at December 31, 2023). Moody's expects that Coherent will generate annual FCF (Moody's adjusted) of at least $200 million over the next 12 to 18 months and that cash will exceed $500 million. Given the consistent cash flows and large cash balance, Moody's expects that Coherent will maintain at least 50% availability under the $350 million Senior Secured Revolver due 2027 (Revolver). The Revolver and Senior Secured Term Loan A due 2027 are subject to financial maintenance covenants, net leverage and interest coverage (as defined in the credit agreement), and Moody's expects the company to be well within the established limits. The Senior Secured Term Loan B due 2029 is not subject to financial maintenance covenants. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Coherent: -- Sustains organic revenue growth in the upper single digits -- Sustains EBITDA margin (Moody's adjusted) at or above 25% -- Maintains leverage below 3x debt to EBITDA (Moody's adjusted) -- FCF to debt remains is sustained above 10% (Moody's adjusted) The ratings could be downgraded if Coherent: -- Revenues decline on more than a temporary basis -- Adopts a more shareholder-friendly financial policy prior to reducing leverage to below 3x debt to EBITDA (Moody's adjusted) -- EBITDA margin (Moody's adjusted) declines toward 20% Coherent Corp. makes engineered materials and optoelectronic devices. Products include optical communications modules, components, and systems for data center applications, optical equipment such as wavelength selective switches used in telecommunications long haul and metro networks, vertical cavity surface emitting lasers (VCSELs) used in 3D sensing applications such as facial recognition in consumer devices and other applications, industrial laser components, advanced materials, such as silicon carbide substrates, and precision optics for military applications. The principal methodology used in these ratings was Semiconductors published in October 2023. COMMSCOPE HOLDING: Mackenzie Quits as Director; Replacement Named ----------------------------------------------------------------- Commscope Holding Company, Inc. disclosed in a Form 8-K filed with the Securities and Exchange Commission that on Feb. 14, 2024, Mindy Mackenzie, a member of the board of directors of the Company, notified the Company of her decision to resign from the Board, effective immediately. Ms. Mackenzie also resigned from her position as a member of the Compensation Committee of the Board. Ms. Mackenzie's decision to resign was not the result of a disagreement with the Company, management or the Board on any matter relating to the Company's operations, policies or practices. Ms. Mackenzie was a director designated by Carlyle Partners VII S1 Holdings, L.P. pursuant to an Investment Agreement, dated as of Nov. 8, 2018, between the Company and Carlyle. Carlyle designated Scott H. Hughes as a replacement for Ms. Mackenzie. On Feb. 19, 2024, the Board appointed Scott H. Hughes to the Board to fill the vacancy resulting from the resignation of Ms. Mackenzie, for a term expiring at the Company's 2024 annual meeting of stockholders. The Company plans to nominate Mr. Hughes for election as a director at the Company's 2024 annual meeting of stockholders, with a term expiring at the Company's 2025 annual meeting of stockholders. The Board considered the independence of Mr. Hughes under the listing standards of NASDAQ and the Company's corporate governance guidelines and concluded that Mr. Hughes is an independent director under the applicable listing standards of NASDAQ and the Company's corporate governance guidelines. The Board also appointed Mr. Hughes to the Compensation Committee. Mr. Hughes will not receive any compensation from the Company in connection with his service as a director. Mr. Hughes will also enter into the Company's standard indemnification agreement. About CommScope Holding Headquartered in Hickory, North Carolina, CommScope Holding Company, Inc. -- https://www.commscope.com -- is a global provider of infrastructure solutions for communication, data center and entertainment networks. The Company's solutions for wired and wireless networks enable service providers, including cable, telephone and digital broadcast satellite operators and media programmers to deliver media, voice, Internet Protocol (IP) data services and Wi-Fi to their subscribers and allow enterprises to experience constant wireless and wired connectivity across complex and varied networking environments. CommScope reported a net loss of $1.28 billion in 2022, a net loss of $462.6 million in 2021, and net loss of $573.4 million in 2020. For the nine months ended Sept. 30, 2023, the Company incurred a net loss of $925.7 million. * * * As reported by the TCR on Nov. 22, 2023, S&P Global Ratings lowered its issuer credit rating on Network infrastructure provider CommScope Holding Co. Inc. to 'CCC' from 'B-' and removed the ratings from CreditWatch with negative implications, where they were placed on Oct. 31, 2023. S&P revised the outlook to negative. The negative outlook reflects S&P's view that CommScope's expected weak financial performance of leverage above the 10x area and low FOCF generation in 2023 and 2024 will increase the risk of a distressed exchange or buyback within the next 12 months to address upcoming maturities. CONSTELLATION RENEWABLES: Moody's Ups Sec. Term Loan Rating to Ba2 ------------------------------------------------------------------ Moody's Investors Service upgraded Constellation Renewables LLC's (CR) rating on its senior secured term loan to Ba2 from Ba3 and revised the outlook to stable from positive. RATINGS RATIONALE CR's upgrade to Ba2 reflects the additional equity investment of over $50 million by Constellation Energy Generation, LLC (CEG: Baa2, positive) to fund CR's share of the repowering of the 70 MW Criterion wind power plant that CR majority owns. Moody's understand the repowering has been completed, which strengthens CR's overall asset quality and provides for 10 years of additional contracted cash flows and production tax credit (PTC) benefits at Criterion. These additional long term cash flows take greater prominence since rising interest rates and lower power generation have led to financial performance below the Moody's Case in 2023. Further supporting the upgrade is the improved credit profile of Pacific Gas & Electric Company (PG&E), a subsidiary of PG&E Corporation (Ba1 corporate family rating: positive), whose ratings were upgraded with a positive outlook on February 20, 2024. PG&E's rating action reflects the company's significant investments to mitigate wildfire risk, improvement on its relationship with key stakeholders, and improving financial profile. Please see Moody's press release on PG&E dated February 20, 2024 for additional information on PG&E. PG&E is the sole offtaker for the AV Solar Ranch 1, LLC (AVSR) project that provides around half of CR's total dividends and represents nearly all of CR's distributions from contracted cash flows after 2032. CR's credit quality is also supported by its broad portfolio of renewable solar and wind projects that have long term contracts with mostly load serving utilities and cooperatives that underpins the issuer's credit quality. These long term contracts provide for fixed power prices and represent more than 95% of the total revenues through debt maturity. Additionally, geographic and resource diversity of the borrower's assets serve to substantially reduce overall power generation uncertainty, which can be risks for renewable power projects. Additionally credit supportive factors include ownership by a strategic sponsor, use of mostly proven technology, a long operating history, and project finance holding company features. Key lender protections at CR include a sponsor backed six-month debt service reserve, a 75% excess cash sweep, and collateral in the borrower's assets comprising mainly of stock of subsidiaries. The borrower's liquidity is further supported by a sponsor backed $25 million liquidity reserve that can be replenished, if used, at CR's option. CR's credit profile also reflects the holding company loan's structural subordination to operating company debt or tax equity across most assets and its high consolidated leverage that leads to relatively low consolidated cash flow ratios and refinancing risk. Additionally, a minority of projects utilize or had utilized turbines made by Suzlon, Senvion, and Clipper that have led to operating issues including a write down of the original Criterion plant. Recently, lower than expected generation and rising interest costs have led to modestly weaker financial performance over the last twelve months. As of the last twelve months ending September 2023, CR had consolidated Project CFO to Debt of 6.1%, debt service coverage ratio of 1.24x and holding company level debt of around $652 million, which is moderately weaker than the original Moody's Case expectation. RATING OUTLOOK CR's stable outlook reflects Moody's expectation of holding company debt service coverage ratio (DSCR) averaging around 2.0x, expectations for continued debt reduction, and consolidated DSCR 1.30x to 1.50x and Project CFO to Debt between 6-8%. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade CR's rating could be upgraded if debt reduction is substantially greater than the original Moody's Case leading to Project CFO to Debt exceeding 10%, DSCR above 1.8x, and Debt to EBITDA below 7.0x. Additionally, the rating could improve if there are additional equity funded investments in CR's assets that significantly increase asset life and cash flow. Factors that could lead to a downgrade -- Consolidated DSCR drops materially below 1.30x, consolidated Project CFO to Debt drops below 5% or Debt to EBITDA exceeds well over 9x on a sustained basis -- AVSR or a substantial portion of the portfolio incurs major operational problems -- The borrower is unable to receive a material portion of its dividends from its underlying projects or holdco DSCR drops well below 2.0x on a sustained basis -- Substantial credit deterioration of major project level offtakers including PG&E -- Debt reduction is less than expected Profile Constellation Renewables, LLC (CR, formerly known as ExGen Renewables IV, LLC), a holding company, indirectly owns around a 962 MW (net ownership adjusted) portfolio of 29 operating solar and wind power projects spread over 14 states. The projects reached commercial operations from 2007 through 2016 and most of the assets have operating company level debt while a few others have tax equity financings. Approximately half of CR's dividends flow through Constellation Renewables Partners, LLC (CRP, formerly known as ExGen Renewable Partners, LLC), a joint venture with an affiliate of Axium Infrastructure. Constellation Energy Generation LLC's (CEG: Baa2 positive) (formerly known as Exelon Generation Company), a subsidiary of Constellation Energy Corporation (CEC), indirectly owns 100% of CR. The principal methodology used in this rating was Power Generation Projects published in June 2023. CYTTA CORP: Recurring Losses Raise Going Concern Doubt ------------------------------------------------------ Cytta Corp. disclosed in a Form 10-Q Report filed with the U.S. Securities and Exchange Commission for the quarter ended December 31, 2023, that there is substantial doubt about its ability to continue as a going concern doubt. According to the Company, it had limited operating capital as of December 31, 2023. "Our current capital and our other existing resources will not be sufficient to provide the working capital needed for our current business. Additional capital will be required to meet our obligations and to further expand our business. We may be unable to obtain the additional capital required. Our inability to generate capital or raise additional funds when required will have a negative impact on our business development and financial results. These conditions raise substantial doubt about our ability to continue as a going concern as well as our recurring losses from operations and the need to raise additional capital to fund operations. This going concern could impair our ability to finance our operations through the sale of debt or equity securities," the Company said. As of December 31, 2023, the Company had an accumulated deficit of $33,662,608 and has also generated losses since inception. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. As of December 31, 2023, the Company had cash of $390,262 compared to $674,824 at September 30, 2023. As of December 31, 2023, the Company had current assets of $1,030,026 and current liabilities of $2,652,957, which resulted in working capital deficiency of $1,622,931. The current liabilities are comprised of accounts payable and accrued expenses, related party payables, convertible note payable, notes payable, and dividends payable. For the three months ended December 31, 2023, the Company reported a net loss of $1,059,128 on $2,411 of revenue, compared to a net loss of $1,100,708 on $5,706 of revenue for the same period in 2022. As of December 31, 2023, the Company had $1,553,451 in total assets, $2,652,957 in total current liabilities, and $1,099,506 in total stockholders' deficit. A full-text copy of the Form 10-Q is available at: https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/1383088/000147793224000796/cyca_10q.htm#bs About Cytta Corp. Las Vegas, Nevada-based Cytta Corp. is in the business of imagineering, developing, and securing disruptive technologies. DOC CORPORATE: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: DOC Corporate Group LLC 3300 Dallas Parkway Suite 200 Plano, TX 75093 Chapter 11 Petition Date: February 21, 2024 Court: United States Bankruptcy Court District of Delaware Case No.: 24-10280 Judge: Hon. J. Kate Stickles Debtor's Counsel: Alessandra Glorioso, Esq. DORSEY & WHITNEY (DELAWARE) LLP 300 Delaware Avenue Suite 1010 Wilmington, DE 19801 Tel: (302) 425-7171 Email: glorioso.alessandra@dorsey.com Total Assets as of Jan. 31, 2024: $4,235,905 Total Current Liabilities as of Jan. 31, 2024: $3,925,224 The petition was signed by Colin Chenault as chief financial officer. 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/KCVXQ2I/DOC_Corporate_Group_LLC__debke-24-10280__0001.0.pdf?mcid=tGE4TAMA DOCTX3 PLLC: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: DOCTX3 PLLC 3300 Dallas Parkway Suite 200 Plano, TX 75093 Chapter 11 Petition Date: February 21, 2024 Court: United States Bankruptcy Court District of Delaware Case No.: 24-10282 Judge: Hon. J. Kate Stickles Debtor's Counsel: Alessandra Glorioso, Esq. DORSEY & WHITNEY (DELAWARE) LLP 300 Delaware Avenue Suite 1010 Wilmington, DE 19801 Tel: (302) 425-7171 E-mail: glorioso.alessandra@dorsey.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Colin Chenault as chief financial officer. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/KQHOGWY/DOCTX3_PLLC__debke-24-10282__0001.0.pdf?mcid=tGE4TAMA DOUGHP INC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Doughp, Inc. DBA Doughp 1810 E. Sahara Ave., Ste. 346 Las Vegas, NV 89104 Business Description: Doughp is an edible cookie dough company. Chapter 11 Petition Date: February 21, 2024 Court: United States Bankruptcy Court District of Nevada Case No.: 24-10770 Judge: Hon. Hilary L. Barnes Debtor's Counsel: Matthew C. Zirzow, Esq. LARSON & ZIRZOW, LLC 850 E. Bonneville Ave. Las Vegas, NV 89101 Tel: 702-382-1170 E-mail: mzirzow@lzlawnv.com Estimated Assets: $50,000 to $100,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Kelsey E. Moreira as president. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/YEAFNFA/DOUGHP_INC__nvbke-24-10770__0001.0.pdf?mcid=tGE4TAMA DOUGHP NEVADA: Case Summary & Three Unsecured Creditors ------------------------------------------------------- Debtor: Doughp Nevada, LLC d/b/a Doughp 1810 E. Sahara Ave. Ste. 346 Las Vegas, NV 89104 Business Description: The Debtor is engaged in bakeries and tortilla manufacturing business. Chapter 11 Petition Date: February 21, 2024 Court: United States Bankruptcy Court District of Nevada Case No.: 24-10771 Judge: Hon. Hilary L. Barnes Debtor's Counsel: Matthew C. Zirzow, Esq. LARSON & ZIRZOW, LLC 850 E. Bonneville Ave. Las Vegas, NV 89101 Tel: 702-382-1170 Email: mzirzow@lzlawnv.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Kelsey E. Moreira, president of Doughp, Inc., Managing Member of Debtor. A full-text copy of the petition containing, among other items, a list of the Debtor's three unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/54HJOQI/DOUGHP_NEVADA_LLC__nvbke-24-10771__0001.0.pdf?mcid=tGE4TAMA EAGLE HEMP: Plan Exclusivity Period Extended to March 18 -------------------------------------------------------- Judge Roberta A. Colton of the U.S. Bankruptcy Court for the Middle District of Florida extended Eagle Hemp, LLC, and Trim Life Labs, LLC's exclusive periods to file a plan of reorganization, and solicit acceptances thereof to March 18 and May 17, 2024, respectively. About Eagle Hemp Eagle Hemp, LLC, a company in Lakeland, Fla., filed Chapter 11 petition (Bankr. M.D. Fla. Case No. 23-04137) on Sept. 20, 2023, with $1 million to $10 million in assets and $10 million to $50 million in liabilities. Judge Roberta A. Colton oversees the case. Harley E. Riedel, Esq., at Stichter, Riedel, Blain & Postler, P.A., is the Debtor's legal counsel. ECLIPZ.IO INC: Seeks to Extend Plan Exclusivity to March 28 ----------------------------------------------------------- Eclipz.io, Inc., asked the U.S. Bankruptcy Court for the Northern District of California to extend its exclusivity period to file a chapter 11 plan of reorganization to March 28, 2024. The Debtor claims that the primary reason for the requested extension of the Plan Deadline is that the company recently had to alter its exit strategy. The Debtor originally intended to propose a plan where payments would be made from disposable income from the sale of Eclipz 2.0 to customers. Unfortunately, despite clearing title to Eclipz 2.0 after protracted litigation with SDSE, thus far, the Debtor has not yet been able to produce revenue from sales of Eclipz 2.0 to customer. Further, despite its efforts to market and sell Eclipz 2.0 to customers, the Debtor does not know whether and when it will start to generate disposable income from the sale of Eclipz 2.0, which would have been required to fund the type of plan originally completed by the Debtor. The foregoing circumstances are ones for which the Debtor should not be held accountable. The Debtor notes that it has already started to work with Sherwood, the Debtor's Court-approved sales agent, to prepare offering materials, bid procedures, and related proposed scheduling for marketing and selling the Debtor's Eclipz 2.0 intellectual property in a transaction that would have to close by no later than March 22, 2024. The Debtor asserts that it is seeking to extend the Plan Deadline Plan Deadline for 60 days from the current deadline of January 28, 2024 to and including March 28, 2024. This will allow the Debtor enough time to close the sale of its Eclipz 2.0 intellectual property before filing its plan. In turn, this will allow the Debtor to file a plan that more accurately states likely distributions on allowed claims. Information regarding plan distributions will also be made more accurate by providing the Debtor with some additional time to analyze, reconcile, and, if appropriate, to seek the withdrawal and/or to object to certain claims. Counsel to the Debtor: Ron Bender, Esq. Levene, Neale, Bender, Yoo & Golubchik, LLP 2818 La Cienega Avenue Los Angeles, CA 90034 Tel: (310) 229-1234 Fax: (310) 229-1244 Email: rb@lnbyg.com About Eclipz.io Inc. Eclipz.io, Inc., a company in Los Gatos, Calif., has been in the business of developing encryption software. The Debtor filed a Chapter 11 bankruptcy petition (Bankr. N.D. Cal. Case No. 23-51253) on Oct. 30, 2023, with $50,000 to $100,000 in assets and $1 million to $10 million in liabilities. James Bailey, president, signed the petition. Judge Stephen L. Johnson oversees the case. Ron Bender, Esq., at Levene, Neale, Bender, Yoo & Golubchik, LLP, is the Debtor's legal counsel. EIGHT COPELAND: Hearing on Sale of NJ Properties Set for Feb. 27 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey is set to hold a hearing on Feb. 27 on the proposed private sale of real properties owned by Eight Copeland Road Group, LLC. The company is selling the properties to Alison Fordyce for $4.98 million "free and clear" of liens, claims, encumbrances and interests. The properties include single family residences and a mixed-used building located in New Jersey. The company will use the proceeds from the sale to pay mortgage liens on the properties subject to a resolution with the claim of the New Jersey Department of Environmental Protection. The remaining amount will be used to fund the company's Chapter 11 plan. About Eight Copeland Eight Copeland Road Group, LLC, is engaged in activities related to real estate. The company is based in Livingston, N.J. Eight Copeland Road Group filed a Chapter 11 petition (Bankr. D.N.J. Case No. 23-17756) on Sept. 5, 2023, with $1 million to $10 million in both assets and liabilities. Marc Theophile, managing member, signed the petition. Judge John K. Sherwood oversees the case. Avram D. White, Esq., at White and Co. Attorneys and Counsellors, is the Debtor's bankruptcy counsel. ELETSON HOLDINGS: Creditors Want Trustee Appointed -------------------------------------------------- Yun Park of Law360 reports that unsecured creditors of bankrupt gas tanker company Eletson Holdings asked a New York court on Wednesday to appoint a Chapter 11 trustee, saying the debtor did not cooperate with the committee and accused the families that control it of transferring assets without creditors' consent while "barely" participating in the case. About Eletson Holdings Eletson Holdings Inc. is a family-owned international shipping company, which touts itself as having a global presence with headquarters in Piraeus, Greece as well as offices in Stamford, Connecticut, and London. At one time, Eletson claimed to own and operate one of the world's largest fleets of medium and long-range product tankers and boasted a fleet consisting of 17 double hull tankers with a combined capacity of 1,366,497 dwt, 5 LPG/NH3 carriers with a combined capacity of 174,730 cbm and 9 LEG carriers with capacity of 108,000 cbm. Eletson Holdings, a Liberian company, is Eletson's ultimate parent company and is the direct parent and owner of 100% of the equity interests in the two other debtors, Eletson Finance (US) LLC, and Agathonissos Finance LLC. Eletson and its two affiliates were subject to involuntary Chapter 7 bankruptcy petitions (Bankr. S.D.N.Y. Case No. 23-10322) filed on March 7, 2023 by creditors Pach Shemen LLC, VR Global Partners, L.P. and Alpine Partners (BVI), L.P. The petitioning creditors are represented by Kyle J. Ortiz, Esq., at Togut, Segal & Segal, LLP. On Sept. 25, 2023, the Chapter 7 cases were converted to Chapter 11 cases. The Honorable John P. Mastando, III is the case judge. Derek J. Baker, Esq., represents the Debtors as bankruptcy counsel. On Oct. 20, 2023, the U.S. Trustee for Region 2 appointed an official committee of unsecured creditors in these Chapter 11 cases. The committee tapped Dechert LLP as its counsel. EMERGENT BIOSOLUTIONS: Appoints Joseph Papa as President, CEO ------------------------------------------------------------- Emergent BioSolutions Inc. announced that its Board of Directors has appointed Joseph C. Papa as president and CEO, effective February 21, 2024. Mr. Papa succeeds Haywood Miller, who will step down from his role as interim CEO, effective Feb. 21, 2024. Mr. Papa will receive an annual base salary of $1,000,000 and will be eligible for an annual bonus of 130% of the Annual Base Salary with a maximum bonus opportunity of 200% of the Annual Base Salary, subject to determination by the Board's Compensation Committee in accordance with the Company's bonus policy and upon achievement of certain performance targets established by the Board in consultation with Mr. Papa. Mr. Papa also is eligible to receive a sign-on bonus of $1,000,000 subject to Mr. Papa's continued employment at the Company for a two-year period. "Following a thorough search process, we are pleased to appoint Joe Papa as president and CEO of Emergent," said Zsolt Harsanyi, Ph.D., chairman of the Board of Directors. "He is a recognized industry leader with unparalleled experience in all facets of the pharmaceutical and healthcare industry. Joe has a solid track record of driving growth and successfully navigating companies through periods of transformation. His leadership will be instrumental in strengthening Emergent's balance sheet and returning to growth, as we continue to deliver on our mission to protect and enhance life. On behalf of the Board, I would also like to thank Haywood Miller for his leadership and contributions during this interim period." "Whether it's increasing access to NARCAN Nasal Spray, which is helping combat the opioid epidemic, or continuing to deliver important medical countermeasures to customers around the world, Emergent is providing critical products to address global health crises," said Mr. Papa. "I am confident that these important products provide for a bright future ahead as Emergent continues to lead in public health preparedness. I look forward to working with the team to accelerate the company's progress, continue improving its financial position and drive value for shareholders. It is a privilege to join Emergent and chart a new chapter in this vital space." "Over the past several months, I am encouraged by our achievements in strengthening Emergent's financial foundation and core products business," stated Mr. Miller. "It has been an honor to lead Emergent during this period of transition, and I am confident the company is well positioned for the future as a leader in global preparedness and public health." 2023 Key Milestones & Accomplishments Emergent's sharpened strategic focus delivered several key accomplishments in 2023, including: Strengthened Portfolio * Launched NARCAN Nasal Spray over-the-counter opioid overdose reversal treatment in the U.S., in addition to distributing over 20 million doses (10 million two-dose boxes) in the U.S. and Canada * Secured a new $235.8 million contract with U.S. Dept. of Defense for BioThrax (Anthrax Vaccine Adsorbed) * Signed a new $379.6 million U.S. Dept. of Defense contract for RSDL (Reactive Skin Decontamination Lotion Kit) * Received U.S. FDA approval of CYFENDUS (Anthrax Vaccine Adsorbed, Adjuvanted), formerly AV7909, a two-dose anthrax vaccine for post-exposure prophylaxis use * Awarded a $75 million option to Emergent's existing contract for the acquisition of anthrax vaccine CYFENDUS * Awarded a 10-year contract by BARDA for advanced development, manufacturing scale-up, and procurement of Ebanga (ansuvimab-zykl), a treatment for Ebola * Submitted supplemental Biologics License Application to FDA for ACAM2000 (Smallpox (Vaccinia) Vaccine, Live) vaccine for immunization against Mpox virus Improved Financial Position * Implemented organizational changes resulting in $60 million in annual savings * Shifted resource deployment resulting in $100 million in annual savings * Amended and extended maturity of our secured credit facility to May 2025 * Travel Health business divestiture – valued at up to $380 million About Emergent Biosolutions Headquartered in Gaithersburg, MD, Emergent Biosolutions Inc. is a global life sciences company focused on providing innovative preparedness and response solutions addressing accidental, deliberate and naturally occurring public health threat. The Company's solutions include a product portfolio, a product development portfolio, and a contract development and manufacturing ("CDMO") services portfolio. Tysons, Virginia-based Ernst & Young LLP, the Company's auditor since 2004, issued a "going concern" qualification in its report dated March 1, 2023, citing that the Company does not expect to be in compliance with debt covenants in future periods without additional sources of liquidity or future amendments to its Credit Agreement, has a working capital deficiency, and has stated that substantial doubt exists about the Company's ability to continue as a going concern. As of September 30, 2023, Emergent had unrestricted cash and cash equivalents of $87.8 million and remaining capacity under its Revolving Credit Facility of $88.3 million. Also as of September 30, 2023, there was $211.2 million outstanding on the Company's Revolving Credit Facility and $202.1 million on its Term Loan Facility that mature in May 2025. Certain provisions within the Credit Agreement Amendment require further action from the Company, most notably the requirement to raise not less than $75.0 million through the issuance of equity or unsecured indebtedness by April 30, 2024, and that the Company make quarterly principal payments of approximately $3.9 million on the Term Loan Facility, according to the Company's Quarterly Report for the period ended Sept. 30, 2023. As a result, the Company determined that there is substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements were issued. The Company will need to obtain substantial additional funding in connection with its continuing operations, which cannot be assured. EQM MIDSTREAM: Moody's Rates New $600MM Sr. Unsecured Notes 'Ba3' ----------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to EQM Midstream Partners, LP's proposed $600 million senior unsecured notes due 2029. All other ratings of EQM are unchanged, including its Ba3 Corporate Family Rating. The stable outlook is also unchanged. Proceeds from the notes will be used to reduce revolving credit borrowings. RATINGS RATIONALE The proposed notes are rated Ba3, the same as the CFR, reflecting the unsecured nature of EQM's capital structure. EQM's Ba3 CFR reflects its competitive natural gas gathering and transmission footprint in the Appalachian Basin, elevated debt leverage, and the benefits the company will realize from the expected Q2 2024 completion of the Mountain Valley Pipeline (MVP) after six years of delays. MVP cost overruns have caused EQM's leverage to steadily rise in recent years, with debt/EBITDA likely to crest at about 5.7x during 2024, before beginning to ease as MVP comes online. EQM is supported by its close proximity to high production volumes in the Marcellus and Utica Shales and the critical nature of its pipelines for moving natural gas within the region to long haul pipelines. EQM has highly concentrated exposure to its anchor shipper, EQT Corporation (EQT, Baa3 stable) which contributed 61% of EQM's 2023 revenue and is poised to increase significantly with the completion of MVP. However, EQT's credit profile has improved in recent years, easing concern about concentration risk. Moody's expects EQM's liquidity to remain adequate through mid-2025, reflected by its SGL-3 rating. Liquidity is primarily sourced from availability under the company's $1.55 billion revolver, which expires in April 2026. Revolver usage has risen substantially to fund recent cost overruns on the Mountain Valley Pipeline (MVP), in which EQM owns a 49% interest. Since the passage of the Fiscal Responsibility Act of 2023 in June, which enabled the final permits needed to complete MVP, weather delays and a tight labor market have caused the overall cost of the project to swell by about $1 billion. With the application of proceeds from the proposed notes to paying down borrowings under the revolver, Moody's expects EQM will have more than $1 billion of availability under the facility. EQM's next maturities are a $300 million note issue due in August 2024 and a $400 million note issue due in July 2025, which Moody's expect EQM to address in the ordinary course. EQM's stable outlook reflects Moody's expectation that MVP will come online in the second quarter of 2024, with no further cost increases, allowing the company to begin reducing its debt leverage. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING EQM's ratings could be downgraded if there are additional cost overruns on MVP, above the $7.6 billion estimate, debt/EBITDA approaches 6x when including forecasted deferred revenue, operating performance deteriorates significantly, or counterparty credit risk rises substantially. An upgrade would be considered post-MVP completion if MVP debt/EBITDA approaches 5x when including forecasted deferred revenue. Pittsburgh, PA-based EQM Midstream Partners, LP owns and operates interstate pipelines and gathering lines in southwestern Pennsylvania, West Virginia and southeastern Ohio. The principal methodology used in this rating was Midstream Energy published in February 2022. EQUITRANS MIDSTREAM: S&P Affirms 'BB-' ICR, Outlook Negative ------------------------------------------------------------ S&P Global Ratings affirmed its 'BB-' issuer credit rating and negative outlook on Equitrans Midstream (ETRN). The ratings on the senior unsecured notes remain unchanged at 'BB-'. The company also announced a proposed $600 million senior unsecured notes issuance maturing 2029. S&P assigned its 'BB-' issue-level rating and '3' recovery rating to EQM Midstream Partners LP's notes, which reflect its expectation for meaningful recovery in a hypothetical default scenario. S&P said, "The negative outlook reflects our view that if contracts on Mountain Valley Pipeline (MVP) do not initiate on June 1, 2024, or if the company cannot implement asset-level financing at MPV by year-end 2024, leverage will remain above our downside trigger of 5.5x through the end of fiscal 2024, resulting in a ratings downgrade." ETRN announced the Mountain Valley Pipeline would be further delayed to the second quarter of fiscal 2024 (ending June 2024) and costs have increased approximately $350 million, with the total project cost of roughly $7.6 billion now roughly double that initially anticipated. S&P said, "While we anticipate ETRN's leverage will still decline below 5.5x by fiscal year-end with the latest delay on MVP, any further delay would result in a ratings downgrade. On a rolling-12-months basis, the company's leverage will remain above 5.5x in fiscal 2024. However, we also assess leverage using annualized EBITDA from MVP (assuming it is completed on its revised timeline and budget estimate) given the fully subscribed and firm nature of its 2.0 billion cubic feet per day (bcf/d) 20-year contracts. Under this analysis, we anticipate ETRN's leverage to be below 5.5x at year-end and comfortably below this by fiscal 2025. The affirmation of the ratings and outlook reflect this view. "For leverage to decline under 5.5x at fiscal year-end, ETRN will also need to successfully execute on asset-level financing at MVP, which it currently estimates could generate approximately $1 billion of net proceeds it will use to pay down debt. We anticipate treating MVP for the purposes of our S&P Global Ratings-adjusted credit metrics under the equity method. Using this approach, we would not include asset-level debt in our analysis of ETRN and would add the distributions from MVP to ETRN's S&P Global Ratings-adjusted EBITDA. "This treatment considers ETRN's ownership stake at less than 50%, as well as the total contribution to the company's EBITDA that MVP represents (less than 15%). If ETRN's ownership increases above 50% such that it has a majority stake in MVP, we would reassess our treatment and could proportionally consolidate MVP in our analysis. We are also basing our anticipated treatment on our current understanding of the structure and nature of the financing and will assess the details of the asset-level financing as they become available. "Any delay on MVP would increase ETRN's costs, increase its year-end leverage, and lead us to downgrade the company. If MVP faces any further delays, the cash contributions to ETRN would be less this year than anticipated and costs would increase, requiring additional contributions to the joint venture. The company's leverage metrics would weaken beyond our current expectations, and its covenant headroom, which is already tight, would become pressured." In addition, the company would have less time to execute on asset-level financing by the end of the year, a critical step to deleveraging. Furthermore, ETRN is currently contributing capital on behalf of other MVP partners, certain of which contributions increase ETRN's ownership stake in MVP. If ETRN is required to contribute on behalf of additional partners, further increasing its ownership stake, that could lead us to reassess our consolidation approach and proportionally consolidate, increasing leverage by approximately half a turn. The negative outlook reflects S&P's expectation that ETRN's leverage will remain elevated while it continues to pursue completion of MVP. Its outlook reflects that S&P would lower the rating if MVP is delayed any further. S&P could lower the rating on ETRN if it does not see a clear path for the company to deleverage below 5.5x in fiscal 2024 when considering an annualized contribution from MVP cash flows, given their contracted nature. This could occur if: -- Contracts on MVP do not initiate on June 1, 2024; -- ETRN does not execute plans for asset-level financing at MVP by year-end 2024; -- The company cannot tap markets in the near term to shore up its liquidity to cover additional costs at MVP; or -- Producer activity declines due to weakness in commodity pricing regardless of MVP completion, resulting in a meaningful EBITDA contraction and leverage maintained above 5.5x. S&P could revise the outlook to stable if it is confident that ETRN is on a path to deleverage below 5.5x in the near-term. This could occur if: -- MVP is completed and contracts initiate on June 1, 2024; -- ETRN successfully implements asset-level financing at MVP, allowing it to reduce ETRN's leverage by over $1 billion; and -- Producer activity and volumes on the company's systems remain robust despite pressures on natural gas pricing anticipated this year. FRONTIER COMMUNICATIONS: Fitch Lowers IDR to 'B+', Outlook Neg. --------------------------------------------------------------- Fitch Ratings has downgraded Frontier Communications Parent, Inc. (Frontier) and its rated subsidiaries' Long-Term Issuer Default Ratings (IDRs) to 'B+' from 'BB-'. The Rating Outlooks on these entities is Negative. The downgrade and Outlook reflect Fitch's view that continued fiber expansion in the next few years will require additional capital raises that will keep financial leverage high and free cash flow meaningfully negative over the ratings horizon. Fitch believes the company will consider multiple avenues for future financing, and management is focused on its credit ratings over time, but its elevated leverage positions the IDR more appropriately at the 'B+' rating. Fitch could stabilize the rating at 'B+' if the company displays continued EBITDA expansion in the next couple of years combined with EBITDA leverage sustained in the low- to mid-5.0x range. Fitch is encouraged by the progress Frontier has made to date building out its fiber network and improving EBITDA modestly for the YTD 2023 period through September and expects EBITDA could improve further in 2024-2025 as fiber grows in the revenue mix. However, there remains multiple years of heavy capital investment to achieve its 10 million fiber passings goal and increased leverage limits flexibility for execution risks or other challenges that could arise, particularly in what has become a tighter capital markets environment. Fitch has also downgraded to 'B+' and subsequently withdrawn the IDR for Frontier Southwest, Inc. given its debt was defeased with proceeds from the August 2023 fiber securitization transaction and Fitch does not expect the issuer will issue debt in the future. Fitch has also withdrawn the issue-level ratings at Frontier Southwest, Inc. on its outstanding senior notes. KEY RATING DRIVERS Elevated Leverage: Fitch estimates EBITDA leverage was in the mid-5.0x range at YE 2023 and could remain in the low- to mid-5.0x range through Fitch's forecast period. While EBITDA net leverage is lower in the mid-4.0x range inclusive of short-term investments, the company is aggressively spending on its fiber expansion strategy and so its sizable cash does not provide meaningful protection to repay existing debt. Frontier's financial leverage increased materially in 2022-2023 due to heavy capital spending to fund its fiber network deployment, which Fitch views as carrying execution risk related to both subscriber adoption and build cost. The company has flexibility to adapt the pace of its capital spending, but this is somewhat constrained by the need to offset revenue erosion from its copper network and certain legacy services. Fitch estimates the company had material cash and short-term investments of more than $2.0 billion at YE 2023, which should enable much of its near-term fiber build plans. Capital Allocation: Frontier's capital allocation policy following its April 2021 bankruptcy emergence largely centers on accelerated plans to invest in fiber to the home (FTTH) as well as to target fiber deployment to small and medium businesses, enterprises and the wholesale market. The company's financial policy targets net leverage in the mid-3x range, although it is above this range following the acceleration of its fiber build in 2022 (4.3x reported at September 2023). Frontier's aggressive investment plan will expand the deployment of fiber to more than 10 million locations, or two-thirds of its current footprint. As of September 2023, the company has 6.2 million fiber passings and targets 10 million by YE 2025. Penetration rates on the base fiber network are 44%; penetration rates in new build areas are lower on average with a target penetration rate of 25%-30% after 24 months, but are expected to reach similar penetration to the base network over time. Fiber Opportunity Mitigates Risks: Fitch views both opportunity and execution risk for Frontier to grow its fiber-based revenue. Risks are somewhat mitigated by secular growth evidenced by success in adding fiber customers, with several years of consecutive quarters of net adds and lower churn (broadband fiber churn in 1.34%-1.36% range for consumer/business customers for YTD through September 2023 compared to ~1.9% for its copper customers). The opportunity to capture additional broadband share is highlighted by a footprint that has only one or no competitors in approximately 85% of its markets. The new locations to be served by fiber have material upside, as penetration rates for the company's legacy, less-competitive copper broadband network are in the low-teens percentage range. Negative Cash Flows: Fitch views heavy capital intensity and cash burn related to its fiber build-out strategy as constraining the IDR in the next few years. Fitch calculates FCF deficits accelerated meaningfully in the past few years and could be near $1.9 billion in 2023 versus $1.3 billion (2022) and $900+ million (2021). Nearly all cash flow deterioration is from significantly increased capex spend of more than $3.0 billion in 2023 versus the low-$1.0 billion range in 2019-2020. Fitch expects FCF deficits will continue in the next few years and make the company reliant on the capital markets to fund its fiber expansion strategy. The company has the ability to pull back on fiber spending/capex in order to manage its cash burn, but this would delay its targeted goal to reach 10 million fiber passings by YE 2025. Margins Improving: Accelerated fiber deployments are improving profitability, and the ongoing fiber mix shift could help drive further margin expansion over time. Reported EBITDA margins increased 80 basis points YoY for the YTD period through September 2023. Management guided margins could expand to the mid- to high-40% range over time (~39% YTD 2023), although Fitch estimates margin expanding only to low-40% by 2026. Fitch believes fiber now comprises more than 60% of total EBITDA and the ongoing mix shift to fiber should help profitability, as fiber requires fewer on-site service calls versus copper and lower call volumes generally. Additionally, Frontier has been aggressively cutting costs and is believed to have cut more than $500 million from mid-2021 through YE 2023. Growing EBITDA combined with increased fiber penetration should enable the company to delever its balance sheet in the future. Competition Intense: Fitch views competition in telecom services as intense and increasingly diverse as more providers and technology solutions have entered Frontier's end markets. Frontier has a strong presence within its footprint, often only competing with one other wireline provider, but other providers have also been building out their own networks around the U.S. Cable companies, fiber "overbuilders", satellite providers, among others continually seek increased market share in broadband services. Additionally, U.S. wireless companies have now become a viable alternative internet solution with fixed wireless access given increased 5G speeds. Parent-Subsidiary Relationship: Fitch links the IDRs of Frontier and its subsidiaries based on a strong parent/weak subsidiary approach. The IDRs are equalized under Fitch's criteria based on an analysis incorporating high strategic and operational incentives and low legal incentives. DERIVATION SUMMARY Frontier has higher exposure to the consumer market compared with wireline peer Lumen Technologies, Inc. (CCC-/RWN), and Windstream Services, LLC (B/Stable). The consumer market faces secular challenges (particularly in voice/video), with legacy revenue declines in older copper-based communication technologies being only somewhat offset by growth in faster, fiber-based technology. Incumbent wireline operators face competition for broadband customers from cable operators, including Comcast Corp. (A-/Stable) and Charter Communications Inc. (Fitch rates Charter's indirect subsidiary CCO Holdings, LLC BB+/Stable). Frontier also faces emerging broadband competition from 5G wireless operators offering fixed wireless access, including T-Mobile U.S. Inc. (BBB+/Stable) and Verizon Communications Inc. (A-/Stable). Fitch views Frontier's aggressive fiber investments as having long-term benefits but will require significant near-term costs that will weigh on cash flow generation. Frontier is less competitive in the enterprise market, although its enterprise business has some differences compared to larger peers as it is less exposed to large enterprise accounts. In enterprise, Frontier is smaller than AT&T Inc. (BBB+/Stable), Verizon and Lumen. All three companies have an advantage as national or multinational companies given their extensive footprints in the U.S. and abroad. Windstream Services, LLC is somewhat smaller than Frontier and is a hybrid in that it operates as an incumbent in rural markets and as a business services provider with its enterprise and wholesale units, which compete nationally. Compared with Frontier, AT&T and Verizon have significantly larger scale, greater business diversification and also meaningfully lower financial leverage as investment grade operators. Frontier's EBITDA leverage is higher than Lumen, but Lumen's rating is heavily influenced currently by a transaction support agreement (TSA) the company entered into in late 2023/early 2024 that Fitch views as potentially drawing the issuer toward a distressed debt exchange (DDE). Frontier also recently exhibited EBITDA growth whereas Lumen's revenue/EBITDA continue to decline. KEY ASSUMPTIONS - Revenues are flat to modestly down in the next few years, with fiber growth offset by copper-based declines. Assumes modest revenue increases starting in 2026 as fiber becomes a bigger piece of mix. Assumes mid-single digit growth in data & internet services, offset by double-digit declines in Voice & Video; - EBITDA margins expand to low-40% over ratings horizon, benefiting from a mix shift to fiber (higher margin); - Cash Taxes and restructuring costs - modest use of cash flow in the next few years, with taxes kept low due to operating losses and tax loss carryforwards; - Capex declines materially starting in 2025 as fiber spend slows; - EBITDA leverage remains in the low/mid-5.0x range, or near current levels, over the ratings horizon. RECOVERY ANALYSIS For entities rated 'B+' and below - where default is closer and recovery prospects are more meaningful to investors - Fitch undertakes a tailored, or bespoke, analysis of recovery upon default for each issuance. The resulting debt instrument rating includes a Recovery Rating (RR, graded from 'RR1' to 'RR6'), and is notched from the IDR accordingly. In this analysis, there are three steps: (i) estimating the distressed enterprise value (EV); (ii) estimating creditor claims; and (iii) distribution of value. Fitch assumes Frontier will emerge from a default scenario under the going concern approach versus liquidation. Key assumptions used in the recovery analysis are as follows: - Going Concern (GC) EBITDA - Fitch assumes a GC EBITDA of approximately $1.6 billion, which is roughly 20% below the company's current run-rate EBITDA (less EBITDA from the Dallas metro area). Reduced EBITDA of this magnitude in a bankruptcy scenario could imply increased competition has pressured revenue to decline by 10-20% and EBITDA margins have declined closer to 30%. - Fitch excludes from its recovery waterfall debt amounts outstanding at Frontier's issuer subsidiary for its Dallas securitization, Frontier Issuer LLC. This entity is a bankruptcy remote subsidiary, and Fitch assumes this entity would not be part of a corporate-level bankruptcy. Fitch has, however, included residual cash flows (discounted for a stressed scenario) as part of Fitch's recovery EBITDA assumptions. - EV Multiple - Fitch assumes a 5.5x multiple, using a blended approach of roughly 50% of business being copper-based (legacy) at 4.0x and 50% being fiber (growth) at 7.0x. This multiple is validated based upon historic industry trading multiples, M&A transactions in the industry, and Fitch bankruptcy case studies. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - EBITDA leverage, defined as debt/EBITDA, sustained below 4.5x; - Revenue and/or EBITDA growth expected to be sustained at mid-single digit percentage or higher; - Sustained positive FCF generation could also lead Fitch to reassess the rating. Factors that could, individually or collectively, lead to stabilization of the IDR: - EBITDA leverage sustained in the low- to mid-5.0x range; - Sustained EBITDA improvement in 2024-2025. Factors that could, individually or collectively, lead to negative rating action/downgrade: - EBITDA leverage sustained above 5.5x; - A weakening of operating results, including deteriorating margins and an inability to stabilize revenue erosion in key product areas or offset EBITDA pressure through cost reductions; - More aggressive capital or financial policies that Fitch views as negative for the credit profile. LIQUIDITY AND DEBT STRUCTURE Liquidity Profile: Frontier had approximately $2.2 billion of unrestricted cash and short-term investments at September 2023, as well as $651 million available on its $900 million revolving credit facility. The revolver expires in April 2025, but $850 million of capacity could mature as late as 2028. Fitch expects Frontier to have material FCF deficits of more than $2.6 billion cumulatively in 2024-2025, a meaningful portion of which could be funded through future debt issuance. Projected negative FCFs over Fitch's ratings horizon are due to the capital-intensive nature of the business in conjunction with an aggressive build-out of fiber across its footprint. Fitch expects Frontier will be heavily reliant on the capital markets in the next few years for its liquidity needs. Debt Profile: Frontier had roughly $11.2 billion of debt outstanding as of September 2023 and its debt structure consists of various sources of capital including: $1.6 billion of securitization debt that was raised in 2023 (asset-backed debt collateralized by the company's Dallas metro area fiber footprint), roughly $6.1 billion of senior secured debt, $2.8 billion of second-lien debt and $750 million of unsecured subsidiary debt. Its first lien debt includes a $900 million senior secured revolving credit facility and $1.4 billion of term loans outstanding. The company also has capacity under a $500 million securitized financing facility entered into at the time of the Dallas market fiber securitization. Nearly all of the company's debt matures between 2027-2031 and, thus, there is some maturity concentration risk. ISSUER PROFILE Frontier is the fourth largest U.S. incumbent local exchange carrier providing data and Internet services (58% of 2022 revenue), wireline voice (26%), and wireline video service (9%) to residential and business customers. The company is expected to generate 2023 revenue of roughly $5.8 billion. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Frontier North Inc. LT IDR B+ Downgrade BB- senior unsecured LT BB+ Upgrade RR1 BB- Frontier Florida LLC LT IDR B+ Downgrade BB- senior unsecured LT B- Downgrade RR5 B+ Frontier California Inc. LT IDR B+ Downgrade BB- senior unsecured LT BB+ Upgrade RR1 BB- Frontier Communications Holdings, LLC LT IDR B+ Downgrade BB- senior secured LT BB+ Affirmed RR1 BB+ Senior Secured 2nd Lien LT B Downgrade RR5 BB- Frontier Communications Parent, Inc. LT IDR B+ Downgrade BB- Frontier Southwest Inc. LT IDR B+ Downgrade BB- LT IDR WD Withdrawn B+ senior secured LT WD Withdrawn BB+ Frontier West Virginia Inc. LT IDR B+ Downgrade BB- senior unsecured LT BB+ Upgrade RR1 BB- GAUCHO GROUP: Reports Unregistered Sales of $980K Common Shares --------------------------------------------------------------- As previously reported on its Current Report on Form 8-K filed on Nov. 27, 2023, Gaucho Group Holdings, Inc. commenced a private placement of shares of common stock for gross proceeds of up to $4,000,000 at a price per share which equals the Nasdaq Rule 5653(d) Minimum Price definition, but in no event at a price per share lower than $0.60. In a Form 8-K filed with the Securities and Exchange Commission on Feb. 20, 2024, the Company disclosed that on Feb. 13, 2024, pursuant to the Private Placement, the Company issued a total of 633,333 shares of common stock for gross proceeds of $380,000 at $0.60 per share. On Feb. 16, 2024, pursuant to the Private Placement, the Company issued a total of 1,000,000 shares of common stock for gross proceeds of $600,000 at $0.60 per share. The Private Placement is conducted pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated under the Securities Act. The shares are only offered to a small select group of accredited investors, as defined in Rule 501 of Regulation D, all of whom have a substantial pre-existing relationship with the Company. The Company filed a Form D on December 15, 2023, amended on Jan. 11, 2024, and amended on Feb. 12, 2024. On Feb. 7, 2024, in connection with the vesting of Restricted Stock Units ("RSUs"), on Dec. 31, 2023, certain of the Company's employees, consultants and advisors received a total of 18,410 shares pursuant to RSUs issued under the 2018 Equity Incentive Plan at a price per share of $11.16. For this sale of securities, no general solicitation was used, no commissions were paid, all persons were accredited investors, and the Company relied on the exemption from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering. A Form D was filed with the SEC on March 30, 2023. About Gaucho Group Headquartered in New York, NY, Gaucho Group Holdings, Inc. was incorporated on April 5, 1999. Effective Oct. 1, 2018, the Company changed its name from Algodon Wines & Luxury Development, Inc. to Algodon Group, Inc., and effective March 11, 2019, the Company changed its name from Algodon Group, Inc. to Gaucho Group Holdings, Inc. Through its wholly-owned subsidiaries, GGH invests in, develops and operates real estate projects in Argentina. GGH operates a hotel, golf and tennis resort, vineyard and producing winery in addition to developing residential lots located near the resort. In 2016, GGH formed a new subsidiary, Gaucho Group, Inc. and in 2018, established an e-commerce platform for the manufacture and sale of high-end fashion and accessories. In February 2022, the Company acquired 100% of Hollywood Burger Argentina, S.R.L., now Gaucho Development S.R.L ("GD"), through InvestProperty Group, LLC and Algodon Wine Estates S.R.L., which is an Argentine real estate holding company. In addition to GD, the activities in Argentina are conducted through its operating entities: InvestProperty Group, LLC, Algodon Global Properties, LLC, The Algodon Recoleta S.R.L, Algodon Properties II S.R.L., and Algodon Wine Estates S.R.L. Algodon distributes its wines in Europe under the name Algodon Wines (Europe). On March 20, 2020, the Company formed a wholly-owned Delaware subsidiary corporation, Bacchus Collection, Inc., which was dissolved on March 23, 2021. On June 14, 2021, the Company formed a wholly-owned Delaware limited liability company subsidiary, Gaucho Ventures I Las Vegas, LLC, for purposes of holding the Company's interest in LVH Holdings LLC. Gaucho reported a net loss of $21.83 million for the year ended Dec. 31, 2022, compared to a net loss of $2.39 million for the year ended Dec. 31, 2021. As of Sept. 30, 2023, the Company had $18.91 million in total assets, $11.02 million in total liabilities, and $7.89 million in total stockholders' equity. New York, NY-based Marcum LLP, the Company's auditor since 2013, issued a "going concern" qualification in its report dated April 17, 2023, citing that the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. "The Company's operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. Based upon projected revenues and expenses, the Company believes that it may not have sufficient funds to operate for the next twelve months from the date these financial statements are made available. Since inception, the Company's operations have primarily been funded through proceeds received from equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. The aforementioned factors raise substantial doubt about the Company's ability to continue as a going concern for a period of one year from the issuance of these financial statements," according to the Company's Quarterly Report for the period ended Sept. 30, 2023. GOEASY LTD: Moody's Gives Ba3 Rating on New Unsec. Notes Due 2029 ----------------------------------------------------------------- Moody's Investors Service has assigned a Ba3 rating to goeasy Ltd.'s proposed senior unsecured notes due in 2029. The Ba3 long-term corporate family rating of goeasy Ltd. is unaffected. goeasy's outlook is stable. RATINGS RATIONALE Moody's said the Ba3 rating assigned to the notes is aligned with goeasy's Ba3 CFR and the Ba3 rating on its existing senior unsecured notes. The net proceeds of the debt issuance will be used primarily to pay down outstanding secured debt with a modest amount also being retained in cash for general corporate purposes. Moody's said the transaction will temporarily reduce secured debt reliance but adds a small and manageable amount of leverage, such that goeasy's existing ratings are unaffected. Moody's said goeasy's Ba3 CFR continues to be supported by its solid franchise as a leading provider of alternative financial services in Canada's subprime consumer lending market and its strong profitability. The CFR also takes into consideration goeasy's solid capitalization, the credit risks associated with a possible deterioration in asset quality driven by a weakening economic environment, and the inherent regulatory risks pertaining to goeasy's pricing and business practices. The CFR also reflects the benefits to creditors from goeasy's improved revenue diversity in recent years with expansion in consumer auto financing, secured lending and lease-to-own financing. goeasy's profitability remained solid in 2022 and through the first nine months ended September 30, 2023, as evidenced by Moody's-adjusted ratio of net income to average managed assets of 4.9% and 6.5% in these periods, respectively. goeasy has strong capitalization which protects creditors against unexpected losses, with Moody's-adjusted tangible common equity to tangible managed assets of 19.7% at September 30, 2023 and 19.3% at December 31, 2022. The firm's risk culture underpins its track record of consistent profitability and well-managed asset risk. However, the firm's key credit challenge, which is inherent in its business profile, is its high exposure to subprime consumer credit, making it vulnerable to a turn in the economic cycle and regulatory risk. Its asset quality performance has remained relatively stable and in line with the company's forecast, with annualized net charge-offs of 8.9% of average gross consumer loans for 2023, although delinquencies and charge-offs have increased in periods since this ratio reached a low of only 7.8% in the third quarter of 2020. Moody's expects modest credit deterioration in the current economic environment. Moody's said that goeasy's outlook is stable based on its management's strong performance record and experience in the Canadian consumer finance market; and because the company's risk management practices and improved revenue diversity will help mitigate asset quality headwinds and contribute to broadly stable financial performance during a weaker economic environment. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING goeasy's CFR could be upgraded if its risk management practices continue to effectively support strong asset quality through the cycle while also maintaining or improving its existing profitability and capitalization levels. The pending implementation of regulatory rules that would tighten the maximum allowable customer interest rate will require further changes in goeasy's business activities, and the demonstration of successfully navigating these rules would likely be necessary before a possible upgrade could be considered. An improvement in liquidity and further diversification of funding sources could also be positive for the rating. An upgrade of the CFR could lead to an upgrade of the senior unsecured rating, but this would also be dependent upon the further evolution of goeasy's capital structure. goeasy's CFR could be downgraded should there be a material deterioration in its capital, profitability or liquidity, or should there be missteps in risk management leading to a material deterioration in asset quality. A downgrade of the CFR would likely lead to a downgrade of the senior unsecured rating. The senior unsecured rating could be downgraded should goeasy's capital structure evolve in a manner that is unfavorable to senior unsecured creditors, such as a reduction in unencumbered assets available to support unsecured creditors. The principal methodology used in this rating was Finance Companies Methodology published in November 2019. GOLDEN KEY: Says Committee's Plan Fatally Flawed, Has 100% Plan --------------------------------------------------------------- Golden Key Group, LLC, submitted an Amended Disclosure Statement for the Plan of Reorganization dated February 15, 2024. Since the beginning of this case, The Debtor has not only timely paid its postpetition obligations, but it has also repaid its secured lender $1,653,823.08 since the petition date, paid prepetition obligations for the stub month of January 2023 and has maintained a sufficient cash reserve to prudently manage its cash needs. The Debtor seeks to continue its success under a confirmed plan in this case. To that end, it has proposed a plan that will pay creditors 100% of their allowed claims. It has already modified its plan to add interest at the Federal Judgment Rate and incorporate other requested changes from the Committee. Plans proposing to pay 100% to creditors are rare, and the Debtor takes pride in its success thus far in the case. The Debtor is committed to swiftly exiting bankruptcy and paying all of its Allowed Claims in full. The budgets and projections being relied upon by the Debtor in drafting its Plan have required the Debtor's careful planning and analysis of the Debtor's government contracts, such as its contract with the Department of Commerce. The Debtor's Plan has thoughtfully considered and accounted for the true-up related contract delays and its experience with its complex financial obligations and variables that are specific to its business. The Debtor's Plan, which was the result of extensive discussions and collaboration among the Debtor, the Committee and individual creditors towards reaching a consensual plan, anticipates a 100% payment to the Holders of Allowed Claims plus interest. The Debtor's Plan and the Committee's Plan differ in both economic and noneconomic terms. While significant variables in the economic terms exist, the economic end result for creditors is the same – 100% payment on account of Allowed Claims. The payment differences between the Debtor's Plan and the Committee's Plan result from limited timing of payments during the term of the plan and related method and amounts of interest calculated. The differences between the plans have been referred to as "Excess Cash" and "Guaranteed" payments. Economically, both plans claim to achieve the same end result. The Committee's Plan fails to account for fluctuations in cash flow and it precipitates defaults. The Committee should defer to the Debtor's management team. The Committee's Plan is also flawed because it purports to assign the exclusive right to enforce any and all Claims and Causes of Action to an Independent Board of Managers. However, the Debtor will also be required to seek the prior approval of the Independent Board of Managers for various actions. The Committee's Disclosure Statement and the Committee's Plan are deeply flawed, insufficient and should not be approved for the following reasons: * The Committee fails to provide adequate information or an explanation to creditors and other stakeholders the rationale for why the chairman of the Committee, Joseph Fergus of COMTek, has rejected the Committee's Plan and does not endorse the Committee's Disclosure Statement. * The Committee fails to provide adequate information to creditors and other stakeholders about the unduly punitive nature the Plan towards the Debtor and its essential management team. Without cause, the Committee proposes to take over management and control of the post-bankruptcy entity, with sole authority to impose onerous and expensive operational controls and management. It also fabricates provisions concerning non-existent litigation claims which are designed to confuse and unfairly prejudice Creditors. These provisions are akin to the appointment of a Chapter 11 trustee and jeopardize the Debtor's ability to reorganized at all. * The Committee fails to disclose to the Creditors and other stakeholders that there will be no mechanism in place to fund any monthly gaps resultant from delayed payments from the government because Associated Receivables Funding, Inc. cannot be compelled to support the Committee's Plan's funding requirements and the removal of the Debtor's management. * The Committee fails to provide adequate information (specifically debt percentage details and payments) to creditors and other stakeholders demonstrating that the primary beneficiary of the Committee's Plan is COMTek, who will receive approximately $87.00 dollars for every $100.00 paid by the Debtor, leaving the other 30 creditors $13.00 to split among themselves. More importantly, the Committee fails to disclose that any payments to COMTek will be remanded to an escrow account and will remain there until the allowance of COMTek's claim is resolved. The Amended Disclosure Statement does not alter the proposed treatment for unsecured creditors: * Class 2 Unsecured Convenience Claims (Claims under $25,000) total $ 228,078.20 and impaired. The Debtor will pay each Holder of a Class 2 Claim 100% of its Allowed Claim, in consecutive monthly installments, with the potential for a Quarterly Excess Cash Payment, commencing the month immediately following Allowed Administrative Expense Claims are paid in full. The Class 2 Claims will not receive interest on their Allowed Claims. * Class 5 General Unsecured Creditors and Contract Rejection Claims total $1,582,320.25 and unimpaired. The Debtor will pay each Holder of a Class 5 Allowed Claim 100% of its Allowed Claim, in consecutive equal monthly installments, with the potential for a Quarterly Excess Cash Payments, commencing in the month immediately following Class 4 being Paid in Full. The Class 5 Claims will accrue simple interest from the Effective Date at the Federal Judgment Rate of 4.7% per annum, or at such other interest rate that the Bankruptcy Court determines at a hearing on Confirmation. * Class 6 Disputed General Unsecured Judgment Claim total $9,008,252.70 and unimpaired. The Debtor will pay the Holder of the Class 6 Claim 100% of its Allowed General Unsecured Claim, in consecutive equal monthly installments, with the potential for a Quarterly Excess Cash Payments, commencing in the month immediately following Class 4 being Paid in Full. Payments will be made on a pro rata basis pari passu with Class 5. The Class 6 Claim will accrue simple interest from the Effective Date at a rate of 4.7% per annum, or at such other interest rate that the Bankruptcy Court determines at a hearing on Confirmation. The Plan will be funded from five sources: (1) Cash on hand on the Effective Date, (2) recoveries from the pursuit of any claims, rights, or other legal remedies the Debtor has or may have in the future income derived from its operations, (3) additional principal advanced by A/R Funding on the DIP Financing Agreement, (4) tax refunds and/or tax credits which the Debtor is owed for any pre- or post-petition period, and (5) available Cash from ongoing operations. In addition, the New Value contribution by Gretchen McCracken will further supplement the Plan funding. The Debtor reserves the right to use funds from other sources not contemplated herein to fund the Plan, and/or vary the proportions of funds from these or such other sources, provided the intent and purposes of the Plan are adequately addressed. The Plan anticipates funding certain Claims using Cash of the Debtor existing as of the Effective Date. As of the Effective Date, the Reorganized Debtor estimates that it will have approximately $2,482,000.00 of Cash on hand. The Plan contemplates funding, from the on-going continued operations of the Reorganized Debtor that will produce net positive Cash receipts after taking into account regular Cash disbursements made in the normal course of business of the Reorganized Debtor, but before taking into account payments contemplated by the Plan. A full-text copy of the Amended Disclosure Statement dated February 15, 2024 is available at https://urlcurt.com/u?l=gQQLea from PacerMonitor.com at no charge. Counsel for the Debtor: Paul Sweeney, Esq. Corinne Donohue Adams, 18768 YVS Law, LLC 11825 West Market Place, Suite 200 Fulton, MD 20759 Tel: (443) 569-5972 E-mail: psweeney@yvslaw.com About Golden Key Group Golden Key Group, LLC, is a professional services firm dedicated to helping federal and commercial clients solve today's strategic, organizational and operational challenges while addressing their future needs. Founded in 2002, Golden Key Group's solution offerings include Human Capital Management Support, Human Resources Operations, Employee Training and Leadership Development, Professional Consulting Services, Program Management Office, Acquisition and Category Management, Analytics and Information Technology, Executive Search Services, and Select Solutions. The Debtor sought protection under U.S. Bankruptcy Code (Bankr. D. Md. Case No. 23-10414) on Jan. 20, 2023. In the petition signed by Gretchen McCracken as CEO and managing member, the Debtor disclosed up to $10 million in assets and up to $50 million in liabilities. Judge Maria Elena Chavez-Ruark oversees the case. Paul Sweeney, Esq., at Yumkas, Vidmar, Sweeney and Mulrenin, LLC, is the Debtor's legal counsel. GOTO GROUP: Debt Surges After Debt Proposal Opens to Creditors -------------------------------------------------------------- Reshmi Basu of Bloomberg News reports that a restructuring plan software company GoTo Group Inc. reached with creditors including Blackrock Inc., Eaton Vance Management, and GoldenTree Asset Management sent the company's debt surging after the deal was opened to all creditors, according to people with knowledge of the matter. About GoTo Group GoTo, formerly LogMeIn Inc., is a flexible-work provider of software as a service and cloud-based remote work tools for collaboration and IT management. * * * Bloomberg News reports GoTo Group Inc. has reached a framework for a debt exchange deal with a group of lenders. That plan would reduce the software maker's debt while tightening protections for creditors that participate in the deal, according to people familiar with the situation. The deal would also include roughly $100 million of new money and the debt exchange would be open to a broader group of lenders. Bloomberg previously reported in April 2023 that a lender group has engaged Paul Weiss Rifkind Wharton & Garrison for advice. In January 2024, S&P Global Ratings lowered all its ratings on GoTo, including its issuer credit rating to 'CCC+' from 'B-'. S&P also lowered its rating on its senior secured debt to 'CCC+' from 'B-'. The ratings firm said GoTo faces high business execution risk to stabilize the business amid an increasing challenging and competitive collaboration market. "While we expect GoTo will have sufficient liquidity over the next 12 months, it will incur cash flow deficits after debt service and maintain elevated leverage in 2023 and 2024. The company's adjusted debt to EBITDA spiked to 9.3x as of Sept. 30, 2023, compared to 6.2x at the end of 2021. This coincides with peak demand for collaboration technologies amid the COVID-19 pandemic. We forecast leverage to remain elevated at about 9.6x in 2023 and 9.2x in 2024. Given business challenges, we believe material deleveraging will be difficult and any improvements to its credit profile will likely be modest over the next year or two," S&P said. In December 2023, Fitch Ratings downgraded the Long-Term Issuer Default Ratings of LMI Parent, L.P. and its subsidiary, GoTo Group, Inc., fka LogMeIn, Inc., to 'CCC+' from 'B-'. The first lien debt was downgraded one notch to 'B-' from 'B'. The downgrade to 'CCC+' reflects concerns regarding the Company's limited liquidity, which has been diminishing. Fitch believes the Company's access to a $250 million revolver is restricted due to the Company pushing up against its financial covenant for leverage. In addition, the Company's revenues continue to show modest overall declines. Fitch explained GoTo's ability to draw on its $250 million revolver due August 2025 is dependent on having its first lien net leverage ratio below 7.9x. Due to declining EBITDA, there is very limited covenant headroom. As of the end of 3Q23, the bank defined first lien net leverage ratio was 7.73x, down slightly from 7.86x at the end of 2Q23. There were no revolver borrowings. GULF SOUTH ENERGY: Seeks Cash Collateral, DIP Loan from TXP ----------------------------------------------------------- Gulf South Energy Services, LLC asks the U.S. Bankruptcy Court for the Western District of Louisiana, Shreveport Division, for authority to use cash collateral and obtain postpetition financing. The Debtor requires the use of cash collateral to meet its payroll and employee benefit obligations, fund continuing operations, or otherwise sustain its operations. On November 24, 2020, Gulf South and TXP Capital entered into the Accounts Receivable Purchase and Sale Agreement dated November 24, 2020. As part of the Accounts Receivable Purchase and Sale Agreement, TXP Capital took out Gulf South's current accounts receivable lender b1Bank, formerly known as Business First Bank. On February 22, 2021, Gulf South and TXP Capital modified the Purchase Agreement by entering into the First Amendment to Accounts Receivable Purchase and Sale Agreement. Gulf South and TXP Capital have been operating under the Purchase Agreement up to and including the Petition Date. As of February 12, 2024, the Debtor's monetary obligations owed to TXP Capital under the Purchase Agreement were in the aggregate amount of $1.2 million, which amount excludes fees and costs of whatever kind or nature, including attorney's fees TXP Capital is entitled to recover, in accordance with the Purchase Agreement and/or as authorized by 11 U.S.C. section 506(b). Under the post-petition financing operation of the Purchase Agreement, the Debtor will have the right to incur credit from TXP Capital, net of amounts permitted under the Purchase Agreement, including the Required Reserve Amount. Other than TXP Capital, the holder of a duly perfected and unavoidable first priority ownership interest in the Purchased Accounts as well as a duly perfected and unavoidable first priority security interest in the Collateral, including all Accounts, the Debtor believes that the U.S. Small Business Administration, B1 Bank, The Bank of Brenham, N.A, Clyde W. Ricks, or PECE Shack LLC may claim an interest in Cash Collateral. Axiom Funding Solutions LLC and Global Merchant Cash Inc., entities commonly referred to as Merchant Cash Advance Lenders claim to have obtained an ownership interest and/or a security interest in the Debtor's accounts pursuant to MCA Agreements. The Debtor does not believe it is necessary to provide adequate protection for any other entity in the cash collateral, since TXP Capital has a senior and first priority duly perfected and unavoidable prepetition security interest in all of the Collateral, and the value of the Debtor's prepetition collateral has a value slightly in excess of the amount of TXP Capital's secured claim, including fees charges and expenses, including attorneys' fees. A copy of the motion is available at https://urlcurt.com/u?l=U0TxjQ from PacerMonitor.com. About Gulf South Energy Services, LLC Gulf South Energy Services, LLC is an oil & natural gas company in Shreveport, Louisiana. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. La. Case No. 24-10178) on February 16, 2024. In the petition signed by Todd Davis, managing member, the Debtor disclosed up to $50 million in both assets and liabilities. Judge John S. Hodge oversees the case. Robert W. Raley, Esq., represents the Debtor as legal counsel. HAMMER FIBER: Fruci & Associates II Raises Going Concern Doubt -------------------------------------------------------------- Hammer Fiber Optics Holding Corp disclosed in a Form 10-K Report filed with the U.S. Securities and Exchange Commission for the fiscal year ended July 31, 2023, that Fruci & Associates II, PLLC, the Company's independent auditor, expressed substantial doubt about the Company's ability to continue as a going concern. Fruci & Associates II, PLLC said, "We have audited the accompanying consolidated balance sheets of Hammer Fiber Optics Holding Corp as of July 31, 2023 and 2022, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the years in the two-year period ended July 31, 2023, and the related notes. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2023 and 2022 and the results of its operations and its cash flows for each of the years in the two-year period ended July 31, 2023, in conformity with accounting principles generally accepted in the United States of America. The Company has consistently sustained losses since inception. This factor, among others, raise substantial doubt about the Company's ability to continue as a going concern." As at July 31, 2023, substantial doubt existed as to the Company's ability to continue as a going concern as the Company has earned only minimal revenue, has no certainty of earning additional revenues in the future, has a working capital deficit and an overall accumulated deficit since inception. The Company will require additional financing to continue operations either from management, existing shareholders, or new shareholders through equity financing and/or sources of debt financing. The Company intends to continue to address this condition by seeking to raise additional capital through the issuance of debt and/or the sale of equity until such time that ongoing revenues can sustain the business, at which time capitalization may be considered through other means. For the year ended July 31, 2023, the Company reported a net loss of $1,920,242, compared to a net loss of $1,353,528 for the same period in 2022. As of July 31, 2023, the Company has $7,828,038 in total assets, $3,669,858 in total liabilities, and $4,158,180 in total stockholder's equity. A full-text copy of the Company's Form 10-K is available at http://tinyurl.com/yddw265b About Hammer Fiber Optics Sarasota, FL-based Hammer Fiber Optics Holding Corp is focused on sustainable shareholder value investing in both financial services technology and wireless telecommunications infrastructure. The company Hammer Fiber Optics Holdings Corp. is now an alternative telecommunications carrier that is poised to position itself as a premier provider of diversified dark fiber networking solutions as well as high capacity broadband wireless access networks in the United States and abroad. INNOVATIVE MEDTECH: Raises Going Concern Doubt ---------------------------------------------- Innovative MedTech, Inc. disclosed in a Form 10-Q Report filed with the U.S. Securities and Exchange Commission for the quarterly period ended December 31, 2023, that substantial doubt exists about its ability to continue as a going concern. According to the Company, for the six months ended December 31, 2023 and 2022, the Company reported a net loss of $353,208 and $1,977,564, respectively. As of December 31, 2023, the Company maintained total assets of $4,329,646, total liabilities including long-term debt of $5,968,391 along with an accumulated deficit of $36,975,521. The Company continues to have limited capital resources and has experienced net losses and negative cash flows from operations and expects these conditions to continue for the foreseeable future. As of December 31, 2023, the Company had $92,509 cash available for operations and had an accumulated deficit of $36,975,521. Management believes that cash on hand as of December 31, 2023 is not sufficient to fund operations through December 31, 2024. The Company will be required to raise additional funds to meet its short and long-term planned goals. There can be no assurance that such funds, if available at all, can be obtained on terms reasonable to the Company. The Company believes that additional capital will be required to fund operations through December 31, 2024 and beyond, as it attempts to generate increasing revenue, and develop new products. The Company intends to attempt to raise capital through additional equity offerings and debt obligations. There can be no assurance that the Company will be successful in obtaining financing at the level needed or on terms acceptable to the Company. These conditions raise substantial doubt about the Company's ability to continue as a going concern. A full-text copy of the Company's Form 10-Q is available at: https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/1331612/000147793224000788/imth_10q.htm About Innovative MedTech Blue Island, IL-based Innovative MedTech, Inc. is a provider of health and wellness services, primarily through its wholly owned subsidiaries Sarah Adult Day Services, Inc., and Sarah Day Care Centers, Inc. SarahCare, an adult day care franchisor with 25 centers (2 corporate and 23 franchise locations) located in 13 states. SarahCare offers seniors daytime care and activities focusing on meeting their physical and medical needs on a daily basis, and ranging from nursing care to salon services and providing meals, to offering engaging and enriching activities to allow them to continue to lead active and engaged lives. JAG SPECIALTY: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: JAG Specialty Foods LLC 115-05 15th Avenue College Point, NY 11356 Business Description: JAG Specialty Foods is baker of food products for food service providers across numerous industries. Chapter 11 Petition Date: February 22, 2024 Court: United States Bankruptcy Court Eastern District of New York Case No.: 24-40782 Judge: Hon. Elizabeth S. Stong Debtor's Counsel: Richard J. McCord, Esq. CERTILMAN BALIN ADLER & HYMAN, LLP 90 Merrick Avenue East Meadow, NY 11554 Tel: (516) 296-7000 Email: rmccord@certilmanbalin.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Gregg Desantis as vice president, operations. A copy of the Debtor's list of 20 largest unsecured creditors is now available for download at PacerMonitor.com. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/RXRP2QQ/JAG_Specialty_Foods_LLC__nyebke-24-40782__0001.0.pdf?mcid=tGE4TAMA LILIUM N.V.: Launches First Customer Service Organization --------------------------------------------------------- Lilium N.V. has appointed Senior Lilium Executive Dominique Decard to head the eVTOL industry's first Customer Service organization, named Lilium POWER-ON. At the Singapore Air Show, the Company announced its newly established business unit that will offer the full aircraft manufacturer services portfolio, including training services, maintenance operations, material and battery management and global distribution, flight operations support, ground service equipment, and digital solutions. "As regional air mobility accelerates, our partners can rely on Lilium to provide a comprehensive aircraft manufacturer service organization," said Lilium CEO, Klaus Roewe. "The team is focused on enabling seamless, efficient services and support through premium aftermarket products and world-class partners. With an experienced leader like Dominique at the helm, we are confident Lilium POWER-ON will offer outstanding customer service while strengthening Lilium's business." Work began on Lilium POWER-ON, two years ahead of the Lilium Jet's expected entry into service. Lilium already announced a number of partnerships for its services business, including flight training with Lufthansa Aviation Training and FlightSafety International, and global material services with AJW Group, as well as digital aircraft health management solutions with Palantir. "As we officially launch Lilium POWER-ON, our priority will be to test the full range of products and services to support our future operators during Lilium flight testing campaign and continue to contract and onboard the best partners for our working ecosystem," said Dominique Decard. "The services revenue and contribution margins will play a crucial role in Lilium's profitability. I am excited to lead this organization from the very beginning with a clear vision for our customers." Lilium began production of the Lilium Jet in late 2023, following Lilium's Design Organization Approval by EASA, evidencing that the company has the organization, procedures, competencies, resources, and demonstrated rigor required to certify aircraft according to the highest safety standards. Dominique Decard is a Franco-German engineer, with degrees from TU Munich and Oxford University. He has 20 years of experience in senior leadership positions in France, Germany, Spain, and UK in airline operations, the creation of production platforms and new business models, customer support organizations, and market entry strategy development. He joined Lilium in 2018 and is currently VP Flight Operations & Customer Service, having previously served as Director Flight Test Spain. In his new role, he will report to Lilium's Chief Commercial Officer, Sebastien Borel. About Lilium Lilium (NASDAQ: LILM) -- www.lilium.com -- is creating a sustainable and accessible mode of high-speed, regional transportation for people and goods. Using the Lilium Jet, an all-electric vertical take-off and landing jet, designed to offer leading capacity, low noise, and high performance with zero operating emissions, Lilium is accelerating the decarbonization of air travel. Working with aerospace, technology, and infrastructure leaders, and with announced sales and indications of interest in Europe, the United States, China, Brazil, UK, and the Kingdom of Saudi Arabia, Lilium's 800+ strong team includes approximately 450 aerospace engineers and a leadership team responsible for delivering some of the most successful aircraft in aviation history. Founded in 2015, Lilium's headquarters and manufacturing facilities are in Munich, Germany, with teams based across Europe and the U.S. Munich, Germany-based PricewaterhouseCoopers GmbH Wirtschaftsprufungsgesellschaft, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 28, 2023, citing that the Company has incurred recurring losses from operations since its inception and expects to continue to generate operating losses that raise substantial doubt about its ability to continue as a going concern. LIVINGSTON TOWNSHIP: Sells Properties to Insight Group for $2.7MM ----------------------------------------------------------------- Livingston Township Fund One, LLC asked the U.S. Bankruptcy Court for the Southern District of Mississippi for approval to sell real properties to Insight Group, LLC. Insight Group offered $2.7 million for the properties, including a cooking school building located at 1030 Market St., Flora, Miss.; a two-storey building located at 1150 Old Cedars Lane, Flora, Miss.; and 4.5 acres of land. The properties are being sold "free and clear" of liens, Livingston said in a motion filed in court. Bank of Montgomery, which has a deed of trust on the property, will be paid from the proceeds of the sale after payment of sale costs, taxes and other charges. The sale motion is on the court's calendar for March 5. About Livingston Township Fund One Livingston Township Fund One, LLC filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Miss. Case No. 23-02573) on Nov. 6, 2023, with $1 million to $10 million in both assets and liabilities. Craig Geno, Esq., at the Law Offices of Craig M. Geno, PLLC serves as Subchapter V trustee. Judge Jamie A. Wilson oversees the case. The Debtor tapped The Rollins Law Firm, PLLC, Steven H. Smith, PLLC and Eileen N. Shaffer, Esq., a practicing attorney in Jackson, Miss., as bankruptcy counsels; and Jernigan Copeland Attorneys, PLLC as special counsel. Phillips & Company is the Debtor's accountant. MEN'S WEARHOUSE: Moody's Rates New $550MM Secured Term Loan 'B1' ---------------------------------------------------------------- Moody's Investors Service assigned a B1 senior secured rating to The Men's Wearhouse, LLC's proposed 5-year $550 million senior secured term loan B. At the same time, Moody's affirmed the company's existing B1 corporate family rating and B1-PD probability of default rating. Concurrently, Moody's withdrew the B1 rating on Men's Wearhouse existing senior secured term loan as it has been repaid in full. The outlook is maintained at stable. Proceeds from the new $550 million term loan along with a preferred equity raise and borrowings under the asset based revolving credit facility will be used to fund Men's Wearhouse's proposed share repurchases. The affirmation of the B1 CFR reflects Moody's expectation that leverage and coverage metrics will remain solid and at appropriate levels for the rating despite the increase in debt. Considering Moody's expectation for a modest softening in revenue and EBITDA for fiscal year ended February 1, 2025 as well as some repayment of revolver borrowings, debt/EBITDA will be about 2.5x and interest coverage will be about 2.7x, respectively. The affirmation also considers the transformation of the business post its 2020 bankruptcy, after which the company rationalized its store footprint and overhauled its sourcing and selling strategies which has led to material and sustained increases in sales, earnings per store and EBITDA margins compared to 2019. RATINGS RATIONALE Men's Wearhouse's credit profile reflects its solid credit metrics which have resulted from profitable revenue growth and strong free cash flow generation. Following the close of the new term loan, lease adjusted debt/EBITDA is likely to be about 2.4x while EBITA/Interest coverage is likely to be about 2.8x at fiscal year-end Feb 3, 2024. Although Men's Wearhouse is majority owned by a hedge fund, it has maintained a balanced approach to capital allocation and a commitment to a conservative leverage profile. Also considered are Men's Wearhouse's significant scale in the men's clothing market and brand diversity with each brand focusing on different customer demographics. While the company operates in a relatively narrow segment of the apparel industry, primarily selling and renting men's tailored and polished casual clothing for business and special occasions, Moody's views this category as generally having less fashion risk than most segments of apparel retailing. The rating is constrained by the company's high business risk as an apparel retailer, and the ongoing risk associated with the sustainability of its business recovery as the company continues work to improve its business model and product offerings and as pent-up demand has also likely contributed to recent solid performance. Some uncertainty remains around potential normalization of demand, as well as increasing global economic challenges. The stable outlook reflects Moody's expectation that the company will maintain solid credit metrics and very good liquidity over the next 12-18 months. The new senior secured term loan B is rated B1 reflecting that it has a first lien on all assets of the company, except accounts receivable and inventory on which it has a second lien behind the $400 million asset based revolving credit facility. It also reflects the term loans priority position ahead of more junior claims in the capital structure such as leases and accounts payable. Marketing terms for the new credit facilities (final terms may differ materially) include the following: Incremental pari passu debt capacity up to the greater of $100 million and 25% of Consolidated EBITDA plus unlimited amounts subject to First Lien Leverage remaining below 2.0x with no inside maturity sublimit. A "blocker" provision restricts the transfer of material intellectual property to unrestricted subsidiaries. The credit agreement provides some limitations on up-tiering transactions, requiring affected lender consent for amendments that subordinate the debt and liens unless such lenders can ratably participate in such priming debt. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade is unlikely over the near-to-intermediate term given Men's Wearhouse's private ownership by hedge funds. Factors that could lead to an upgrade include sustained revenue growth, margin expansion, robust cash flow generation and maintenance of very good liquidity. Quantitative metrics include Moody's debt/EBITDA sustained below 3.0 times and EBITA/Interest sustained above 3.0 times. The ratings could be downgraded if operating performance deteriorates, liquidity weakens or financial policies turn more aggressive. Quantitative metrics include if Debt/EBITDA is sustained above 4.0 times and EBITA/Interest sustained below 2.25 times. The Men's Wearhouse, LLC is an omnichannel specialty retailer of menswear, including suits, formalwear and a broad selection of business casual offerings. The company operates over 1,000 stores in the US and Canada under the Men's Wearhouse, Jos. A. Bank, Moores and K&G brands. Annual revenue is about $2.6 billion. Parent company, Tailored Brands, Inc., and certain subsidiaries emerged from Chapter 11 bankruptcy on December 1, 2020. The company is majority owned by Silver Point Capital, L.P. The principal methodology used in these ratings was Retail and Apparel published in November 2023. MODERN POTOMAC: Gets OK to Sell Stafford Properties to Green Bluff ------------------------------------------------------------------ Modern Potomac, LLC got the green light from the U.S. Bankruptcy Court for the Eastern District of Virginia to sell its real properties in Stafford, Va. The bankruptcy court, at a hearing on Feb. 13, approved the sale of the properties to Green Bluff, LLC, which offered to pay $900,000 or $450,000 each. The properties are being sold "free and clear of liens," according to court filings. Modern Potomac estimates the net proceeds from the sale to be $819,770.88, after deducting expenses including real estate commissions. Ready Capital Corporation, which holds a lien in the amount of $1,228,176.63, will be paid from the net proceeds. About Modern Potomac Modern Potomac, LLC, a company in Burke, Va., filed Chapter 11 petition (Bankr. E.D. Va. Case No. 23-10944) on June 7, 2023, with $1,200,000 in assets and $1,030,500 in liabilities. David Guglielmi, managing member, signed the petition. Judge Corali Lopez-Castro oversees the case. Richard G. Hall, Esq., and Arthur Lander, C.P.A., P.C. serve as the Debtor's legal counsel and accountant, respectively. NATIONAL RIFLE: Took Steps to Resolve Compliance Deficiencies ------------------------------------------------------------- Rachel Scharf of Law360 reports that an outside auditor for the National Rifle Association told jurors Wednesday, February 7, 2024, in the New York fraud case against the gun rights group and its executives that the NRA is "very transparent" and has taken steps to address compliance deficiencies since the state's investigation began. About National Rifle Association Founded in 1871 in New York, the National Rifle Association of America is a gun rights advocacy group. The NRA claims to be the longest-standing civil rights organization and has more than five million members. Seeking to move its domicile and principal place of business to Texas amid lawsuits in New York, the National Rifle Association of America sought Chapter 11 protection (Bankr. N.D. Tex. Case No. 21-30085) on Jan. 15, 2021. Affiliate Sea Girt LLC simultaneously sought Chapter 11 protection (Case No. 21-30080). The NRA was estimated to have assets and liabilities of $100 million to $500 million as of the bankruptcy filing. Judge Harlin Dewayne Hale oversees the cases. The Debtors tapped Neligan LLP and Garman Turner Gordon LLP as their bankruptcy counsel, and Brewer, Attorneys & Counselors as their special counsel. The U.S. Trustee for Region 6 appointed an official committee of unsecured creditors on Feb. 4, 2021. Norton Rose Fulbright US, LLP and AlixPartners, LLP serve as the committee's legal counsel and financial advisor, respectively. * * * Following a 12-day trial, U.S. Bankruptcy Judge Harlin D. Hale dismissed the National Rifle Association's Chapter 11 case Tuesday, May 11, 2021, after finding the group filed its petition in bad faith in order to gain advantage in litigation brought by New York's attorney general. New York Attorney General Letitia James sought the dismissal of the case. The judge condemned the NRA's attempts to avoid accountability, making clear that the organization's actions were "not an appropriate use of bankruptcy." PAS SERVICES: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: PAS Services PLLC 3300 Dallas Parkway Suite 200 Plano, TX 75093 Chapter 11 Petition Date: February 21, 2024 Court: United States Bankruptcy Court District of Delaware Case No.: 24-10283 Judge: Hon. J. Kate Stickles Debtor's Counsel: Alessandra Glorioso, Esq. DORSEY & WHITNEY (DELAWARE) LLP 300 Delaware Avenue Suite 1010 Wilmington, DE 19801 Tel: (302) 425-7171 Email: glorioso.alessandra@dorsey.com Total Assets as of Jan. 31, 2024: $1,887,172 Total Curent Liabilities as of Jan. 31, 2024: $0 The petition was signed by Colin Chenault as chief financial officer. 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/KZBFPWA/PAS_Services_PLLC__debke-24-10283__0001.0.pdf?mcid=tGE4TAMA PONTOON BREWING: Gets OK to Sell Tucker Assets by Public Auction ---------------------------------------------------------------- Pontoon Brewing Company, LLC received approval from the U.S. Bankruptcy Court for the Northern District of Georgia to sell its assets by public auction. The assets consist of equipment and other tangible personal property stored at the company's facility in Tucker, Ga. The assets will be sold by public auction currently scheduled for March 13. The company has tapped New Mill Capital Holdings, LLC, an asset disposition firm, to conduct the auction. Pontoon will use the proceeds from the sale to pay the secured claim of United Community Bank and the company's post-petition rent under its lease agreement with Bridges-Stone Properties, LLC. The company owes $1.735 million to UCB, which holds security interest in the assets. About Pontoon Brewing Company Pontoon Brewing Company, LLC is an alcoholic beverage company in Atlanta, Ga. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 23-61376) on Nov. 16, 2023, with up to $10 million in both assets and liabilities. Tamara Miles Ogier, Esq., at Ogier, Rothschild & Rosenfeld, PC serves as Subchapter V trustee. Judge Lisa Ritchey Craig oversees the case. G. Frank Nason, IV, Esq., at Lamberth, Cifelli, Ellis & Nason, PA represents the Debtor as legal counsel. REMARK HOLDINGS: Amends Purchase Agreement With Ionic Ventures -------------------------------------------------------------- Remark Holdings, Inc. disclosed in a Form 8-K filed with the Securities and Exchange Commission that on Feb. 14, 2024, the Company and Ionic Ventures, LLC entered into a letter agreement which amends the Purchase Agreement, dated as of Oct. 6, 2022, by and between Remark and Ionic, as previously amended on Jan. 5, 2023, July 12, 2023, Aug. 10, 2023, Sept. 15, 2023 and Jan. 9, 2024. Under the Letter Agreement, the parties agreed, among other things, (i) to redefine the definition of Principal Market to include markets in addition to the Nasdaq Capital Market and the OTC Bulletin Board, (ii) that Ionic will forbear from enforcing any noncompliance with the covenants in the Amended ELOC Purchase Agreement as a result of Remark's delisting from Nasdaq and any related suspension of trading on Nasdaq, and (iii) to clarify that Remark Holdings can still issue Regular Purchase Notices despite the delisting from Nasdaq and any related suspension of trading on Nasdaq so long as the Principal Market is either the OTCQB, OTCQX, or OTCBB and each Regular Purchase does not exceed $500,000. About Remark Holdings Remark Holdings, Inc. (NASDAQ: MARK) -- http://www.remarkholdings.com-- is a diversified global technology business with leading artificial intelligence and data-analytics, as well as a portfolio of digital media properties. The Company's innovative artificial intelligence ("AI") and data analytics solutions continue to gain worldwide awareness and recognition through comparative testing, product demonstrations, media exposure, and word of mouth. The Company continues to see positive responses and increased acceptance of its software and applications in a growing number of industries. The Company reported a net loss of $55.48 million for the year ended Dec. 31, 2022, compared to net income of $27.47 million for the year ended Dec. 31, 2021. As of Sept. 30, 2023, the Company had $12.40 million in total assets, $45.32 million in total liabilities, and a total stockholders' deficit of $32.92 million. Remark Holdings said in its Quarterly Report for the period ended Sept. 30, 2023, that the Company's history of recurring operating losses, working capital deficiencies and negative cash flows from operating activities give rise to, and management has concluded that there is, substantial doubt regarding the Company's ability to continue as a going concern. Remark Holdings' independent registered public accounting firm, in its report on the Company's consolidated financial statements for the year ended Dec. 31, 2022, has also expressed substantial doubt about the Company's ability to continue as a going concern. ROBERT MORRIS: Moody's Lowers Issuer & Revenue Bond Ratings to Ba1 ------------------------------------------------------------------ Moody's Investors Service has downgraded Robert Morris University's (PA) issuer and revenue bond ratings to Ba1 from Baa3. The university had approximately $92 million in outstanding debt as of May 31, 2023. The outlook remains negative. The downgrade of the ratings to Ba1 is driven by RMU's challenged operating performance, with annual budget deficits and elevated draws on financial reserves projected to continue into fiscal 2026 as the university executes its strategic plan to improve its market position. Likely reduction of unrestricted liquidity informs the negative outlook. Social considerations under Moody's ESG framework are a key driver of this rating action, primarily weak regional demographics and shifting student preferences that are contributing to RMU's student demand challenges and revenue prospects. RATINGS RATIONALE Robert Morris University's Ba1 issuer rating reflects its brand and strategic position as a professionally oriented university with some market distinction in the greater Pittsburgh area that is managing through heightened student demand challenges in a highly competitive market. Enrollment gains in fall 2023 and strategic investments in high demand programs provide prospects for brand distinction. Regional competition will continue to challenge RMU's ability to grow net tuition revenue over the coming fiscal years. RMU's wealth remains modest relative to peer medians, but the university's fiscal 2023 unrestricted monthly liquidity of 128 days cash on hand gives leadership some financial flexibility to implement budget adjustments and revenue growth strategies under its five-year strategic plan. Wealth and liquidity will be strained over the next two fiscal years as RMU takes draws on reserves to address large budget deficits. Favorably, the university continues to benefit from relatively strong gift support, with three-year average gift revenue of over $13 million for fiscal 2023 providing resources for new initiatives to strengthen student demand during a period of challenged financial operations. The Ba1 revenue bond rating reflects the issuer rating as well as the broad nature of the general obligation pledge to pay debt service. RATING OUTLOOK The negative outlook reflects Moody's expectations that the university will continue to take elevated draws on financial reserves as the result of material operating deficits over the next two to three fiscal years as it pursues a strategy to grow net tuition revenue and return to fiscal balance. The negative outlook also incorporates uncertainty over fall 2024 enrollment and fiscal 2025 net tuition revenue results. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS -- Sustained improvement in brand and strategic position reflected by growing enrollment and net tuition revenue and philanthropy -- Strengthening of operating performance with a return to double digit EBIDA margins and annual debt service coverage well above 1.5x -- Substantial increase in wealth and liquidity that provides for stronger coverage of debt and operating expenses FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS -- Failure to meet strategic enrollment and net tuition revenue growth goals in fiscal 2025 -- Further deterioration of operating performance beyond currently projected deficits over the next two fiscal years -- Material decline in wealth and unrestricted liquidity relative to expenses and debt -- Failure to maintain compliance with financial covenants LEGAL SECURITY All bonds are general obligations secured by a gross revenue pledge and debt service reserve funds. The notes, not rated by Moody's, have a similar revenue pledge to the bonds. PROFILE Founded in 1921, Robert Morris University is a private university with its main campus in Moon Township, Pennsylvania, a nearby suburb of Pittsburgh. The university enrolled 3,555 full-time equivalent students across its undergraduate and graduate degree programs in fall 2023 and generated $110 million of operating revenue in fiscal 2023. METHODOLOGY The principal methodology used in these ratings was Higher Education Methodology published in August 2021. SACKS WESTON: Seeks to Extend Plan Exclusivity to March 22 ---------------------------------------------------------- Sacks Weston LLC asks the U.S. Bankruptcy Court for the Eastern District of Pennsylvania to extend its exclusivity periods to file a plan of reorganization and obtain acceptance thereof to March 22 and May 22, 2024, respectively. The Debtor claims that cause for a second extension of exclusivity exists because the company needs additional time to make a clear determination as to the optimal path of reorganization particularly in light of the Court's pending resolution of the Debtor's Section 552 Motion of the Bankruptcy Code, which is scheduled for hearing on February 14, 2024. Against this backdrop, it would be premature (at best), as well as a waste of time, effort and resources, including judicial resources, to require the Debtor to file a plan by February 21, 2024 to maintain its right to exclusivity. The Debtor asserts that it should be afforded a full and fair opportunity to negotiate, propose, and seek acceptances to a confirmable plan of reorganization. The Debtor believes that a second (and short) extension of the exclusive periods is warranted and appropriate under the circumstances and should be granted. It is submitted that the second extension requested will not prejudice the legitimate interests of any creditor and will likely afford parties in interest an opportunity to pursue to fruition the beneficial objectives of a consensual reorganization. Counsel to the Debtor: David B. Smith, Esq. SMITH KANE HOLMAN, LLC 112 Moores Road, Suite 300 Malvern, PA 19355 Tel: (610) 407-7215 Email: dsmith@skhlaw.com About Sacks Weston Sacks Weston is a Philadelphia-based law firm. Sacks Weston sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Penn. Case No. 23-12540) on August 25, 2023. In the petition filed by Andrew B. Sacks, as manager, the Debtor reports estimated assets between $10 million and $50 million and estimated liabilities between $10 million and $50 million. Judge Patricia M. Mayer oversees the case. The Debtor is represented by David B. Smith, Esq. at SMITH KANE HOLMAN, LLC. SEMILEDS CORP: Inks 5th Amendment to Trung Doan Loan Agreement -------------------------------------------------------------- SemiLEDs Corporation disclosed in a Form 8-K filed with the Securities and Exchange Commission that the Company and Trung Doan entered into the fifth amendment to their secured loan agreement. The Amended Loan Agreement, upon the mutual agreement of the Company and Trung Doan, permits the Company to repay any principal amount or accrued interest, in an amount not to exceed $800,000, by issuing shares of the Company's common stock to Trung Doan as partial repayment of the Loan Agreement at a price per share equal to the closing price of the Company's common stock immediately preceding the business day of the payment notice date. On Feb. 9, 2024, the Company delivered a payment notice indicating its intent to prepay $800,000 of loan principal by delivering 629,921 shares of the Company's common stock to Mr. Doan, based on the closing price of $1.27 per share on February 8, 2024. The shares of common stock were issued in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended. On Jan. 8, 2019, SemiLEDs Corporation entered into a secured loan agreement with Trung Doan, the Company's Chairman and chief executive officer, with an aggregate amount of $1.7 million and an annual interest rate of 8%. The Loan Agreement is secured by a second priority security interest on the Company's headquarters building . The maturity date of the Loan Agreement was Jan. 14, 2021. On Jan. 16, 2021, the maturity date of the Loan Agreement was extended with same terms and interest rate for one year to Jan. 15, 2022, and on Jan. 14, 2022, the maturity date of the Loan Agreement was extended again with same terms and interest rate for one more year to Jan. 15, 2023. On Jan. 13, 2023, the maturity date of the Loan Agreement was further extended with same terms and interest rate for one year to Jan. 15, 2024. On Jan. 7, 2024, the Company amended the Loan Agreement to extend the maturity date to Jan. 15, 2025. All other terms and conditions of the Loan Agreement remain the same. About SemiLEDs Headquartered in Miao-Li County, Taiwan, R.O.C., SemiLEDs -- http://www.semileds.com-- develops and manufactures LED chips and LED components for general lighting applications, including street lights and commercial, industrial, system and residential lighting, along with specialty industrial applications such as ultraviolet (UV) curing, medical/cosmetic, counterfeit detection, horticulture, architectural lighting and entertainment lighting. Diamond Bar, California-based KCCW Accountancy Corp., the Company's auditor since 2019, issued a "going concern" qualification in its report dated Nov. 27, 2023, citing that the Company incurred recurring losses from operations and has an accumulated deficit, which raises substantial doubt about its ability to continue as a going concern. SORRENTO THERAPEUTICS: Bankruptcy Venue in Texas Fraudulent ----------------------------------------------------------- Randi Love of Bloomberg Law reports that a Sorrento Therapeutics Inc. shareholder claimed the drug developer fraudulently obtained a PO Box in Texas just hours before filing for bankruptcy in the state. A UPS PO Box application for a Sorrento subsidiary was submitted about 10 hours before the Chapter 11 filing, shareholder Timothy Culberson said court papers in the US Bankruptcy Court for the Southern District of Texas Wednesday, February 7, 2024. The company, working to develop cancer and Covid-19 treatments, filed for bankruptcy in February 2023 after being targeted by short sellers and secured court approval to liquidate in November, leaving stockholders with nothing. About Sorrento Therapeutics Sorrento Therapeutics, Inc. -- http://www.sorrentotherapeutics.com/ -- is a clinical and commercial stage biopharmaceutical company developing new therapies to treat cancer, pain (non-opioid treatments), autoimmune disease and COVID-19. Sorrento's multimodal, multipronged approach to fighting cancer is made possible by its extensive immuno-oncology platforms, including key assets such as next-generation tyrosine kinase inhibitors ("TKIs"), fully human antibodies ("G-MAB(TM) library"), immuno-cellular therapies ("DAR-T(TM)"), antibody-drug conjugates ("ADCs"), and oncolytic virus ("Seprehvec(TM)"). Sorrento is also developing potential antiviral therapies and vaccines against coronaviruses, including STI-1558, COVISHIELD(TM) and COVIDROPS(TM), COVI-MSCTM; and diagnostic test solutions, including COVIMARK(TM). Sorrento Therapeutics, Inc., and Scintilla Pharmaceuticals, Inc., sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 23-90085) on Feb. 13, 2023. Sorrento disclosed assets in excess of $1 billion and liabilities of about $235 million as of Feb. 10, 2023. Judge David R. Jones originally oversaw the cases. The Debtors tapped Latham & Watkins, LLP as bankruptcy counsel; Jackson Walker, LLP as local counsel; Tran Singh, LLP as conflicts counsel; and M3 Advisory Partners, LP as financial advisor. Mohsin Y. Meghji, managing partner at M3, serves as the Debtors' chief restructuring officer. Stretto Inc. is the claims, noticing and solicitation agent. Norton Rose Fulbright US, LLP and Milbank, LLP represent the official committee of unsecured creditors appointed in the Debtors' Chapter 11 cases. On April 10, 2023, the U.S. Trustee for Region 7 appointed an official committee to represent the Debtors' equity security holders. On April 10, 2023, the U.S. Trustee for Region 7 appointed an official committee to represent the Debtors' equity security holders. Glenn Agre Bergman & Fuentes, LLP and Greenberg Traurig, LLP serve as the equity committee's bankruptcy counsel. TAILORED BRANDS: S&P Affirms 'B' ICR, Outlook Stable ---------------------------------------------------- S&P Global Ratings affirmed its 'B' issuer credit rating on specialty retailer Tailored Brands Inc. The term loan is issued from borrower The Men's Wearhouse LLC. S&P said, "At the same time, we have assigned a 'B' issue-level rating, reflecting the recovery rating of '3' (50%-70% recovery; rounded estimate: 65%). "The stable outlook reflects our expectation that the company will sustain improved operating performance and leverage over coming years. "We forecast S&P Global Ratings-adjusted leverage will increase to the low- to mid-2x area in 2024 from 1.3x following the proposed debt-funded share repurchases. The company has repaid its post-bankruptcy capital structure with free cash flow enabled by turnaround initiatives. It plans to repurchase $750 million of shares funded by a $550 million term loan, draw on its asset-based lending (ABL) facility and cash. In conjunction, Tailored Brands will offer shareholders the option to exchange common shares for preferred shares, a total amount of $380 million. In our view, the proposed preferred shares have good credit protective terms and provide sufficient interest alignment with equity holders. Accordingly, we exclude the preferred equity from our credit metrics and do not treat it as debt. "Our rating on Tailored Brands reflects the company's continued improvement in operating performance despite ongoing challenging macroeconomic conditions. Although revenues are down almost 12% in the third quarter (ended Oct. 28, 2023), we expect the business will continue to normalize following the special events boom coming out of COVID-19 stresses. Inventory management has been a key driver of the turnaround since the company emerged from bankruptcy in 2020. A greater focus on maintaining appropriate inventory has led to free cash flow generation and less promotion. We expect sales to stabilize this year and resume growth in 2025, supported by organic store growth and higher e-commerce penetration. "We believe Tailored Brands' focus on developing omnichannel capabilities, enhancing direct sourcing, and improving its rental business will benefit profitability. The company has optimized its store count since it emerged from bankruptcy, closing more than 400, while its e-commerce business remains below 10% of overall sales. It has invested in integrating and expanding its penetration as well as increasing its profitability. In addition, increased adoption of direct sourcing has supported improvement in gross margins. We expect S&P Global Ratings-adjusted operating margin to be within the 14% area in 2024 compared to the pre-pandemic, three-year historical average of about 8%. "Our view also considers Tailored Brands' credit profile as holistically weaker than those of higher-rated peers given its singular focus on the niche menswear segment, vulnerability to discretionary consumer spending, participation in the intensely competitive and highly volatile apparel retail segment, and exposure to fashion risk. We reflect this in a negative comparable rating analysis modifier. "We expect reported free operating cash flow (FOCF) higher than $200 million in 2024. Year-to-date FOCF decreased to $210 million in the third quarter (ended Oct. 28, 2023) due to higher maintenance capital expenditure. We expect inventory optimization will continue to contribute to free cash flow this year, partially offset by lease expense normalization as rent concessions from the bankruptcy period decrease. We expect working capital to normalize and interest expenses to increase to over $60 million, reducing FOCF in 2025. "The stable outlook reflects our view that Tailored Brands will sustain S&P Global Ratings-adjusted leverage in the low- to mid-2x area, supported by improved operating margins. In addition, we expect reported FOCF will be above $200 million this year." S&P could lower the rating on Tailored Brands if: -- It underperforms our base case, potentially because of a significant decline in men's apparel demand, intensifying competition, increased promotional activity, or inventory challenges; -- FOCF falls significantly; or -- It adopts a more aggressive financial policy. S&P could raise the rating on Tailored Brands if: -- Its recent operating performance track record as consumer demand normalizes amid challenging macroeconomic conditions. This includes revenue and operating margins stability and meaningful free cash flow; and -- The company does not adopt a more aggressive financial policy. ESG credit factors are neutral to our credit rating analysis of Tailored Brands. THERATECHNOLOGIES INC: Incurs $24 Million Net Loss in 2023 ---------------------------------------------------------- Theratechnologies Inc. filed with the Securities and Exchange Commission its Annual Report on Form 20-F reporting a net loss of $23.96 million on $81.76 million of revenue for the year ended Nov. 30, 2023, compared to a net loss of $47.24 million on $80.06 million of revenue for the year ended Nov. 30, 2022. As of Nov. 30, 2023, the Company had $77.77 million in total assets, $98.64 million in total liabilities, and a total deficit of $20.87 million. Montreal, Canada-based KPMG LLP, the Company's auditor since 1993, issued a "going concern" qualification in its report dated Feb. 20, 2024, citing that the Company has incurred net losses and negative cash flows from operating activities. The Company's Loan Facility contains various covenants, including minimum liquidity covenants. There is material uncertainty related to events or conditions that cast substantial doubt about its ability to continue as a going concern. A full-text copy of the Form 20-F is available for free at: https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/1512717/000119312524040745/d680117d20f.htm About Theratechnologies Theratechnologies (TSX: TH) (NASDAQ: THTX) -- www.theratech.com -- is a biopharmaceutical company focused on the development and commercialization of innovative therapies addressing unmet medical needs. TOPAZ SOLAR: Moody's Raises Rating on 2039 Secured Bonds to Ba1 --------------------------------------------------------------- Moody's Investors Service upgraded Topaz Solar Farms LLC to Ba1 from Ba2 on its senior secured bonds due 2039. The outlook remains positive. RATINGS RATIONALE The upgrade of Topaz Solar's bonds to Ba1 from Ba2 reflects the improved credit profile of Pacific Gas and Electric Company (PG&E), a subsidiary of PG&E Corporation (Ba1 corporate family rating: positive), whose ratings were upgraded with a positive outlook on February 20, 2024. PG&E's rating action reflects the company's significant investments to mitigate wildfire risk, improvement on its relationship with key stakeholders, and improving financial profile. Please see Moody's press release on PG&E dated February 20, 2024 for additional information on PG&E. While the project's underlying financial and operating performance has been consistently much stronger than the original Moody's case, Topaz Solar's rating is capped by PG&E's credit quality since the project derives all of its revenue and cash flow under a long-term power purchase and sales agreement (PPA) with PG&E that expires in October 2039. The rating at Topaz Solar also recognizes the project's strong financial performance since 2015, the benefits from ownership by Berkshire Hathaway Energy Company (BHE: A3 stable), the project's low carbon transition risk, and traditional project finance protections. For the last twelve months ending September 2023, Moody's estimate Topaz Solar had a debt service coverage ratio (DSCR) of over 1.94x according to Moody's standard calculations, which is below the 3-year historical average of almost 2.2x. While Topaz Solar has demonstrated power generation much stronger than expected through 2022, power generation for the last twelve months ending September 2023 was significantly below the original P50 due to curtailment and inverter issues. Since the project is compensated for economic curtailment, Moody's also consider Topaz's production adjusted for curtailment, which was slightly below the P50 level for the same period. Regarding the project's inverter issues, Moody's understand the project has taken action to address invertor related underperformance. Looking forward, Moody's expect the project will continue to maintain a DSCR within Moody's long term expected range of 1.9x to 2.3x range depending on the solar resource, curtailment levels and improved operating performance. RATING OUTLOOK Topaz Solar's positive outlook reflects the positive outlook on PG&E and Moody's expectation that the project will achieve DSCR in the 1.9x to 2.3x range. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade Topaz Solar's rating is likely to be upgraded if PG&E is upgraded while the project also maintains strong operating and financial performance. Factors that could lead to a downgrade Topaz Solar's rating would likely be downgraded should PG&E be downgraded from its current rating level given the project's reliance on the off-taker for all of its revenues and cash flow or if the project experiences major operational or financial problems resulting in consistently substantially lower DSCRs. Profile Topaz Solar Farms LLC (Topaz Solar), an indirect subsidiary of BHE, is a 550 MWac thin-film photovoltaic solar generating project in San Luis Obispo County, California. The project was acquired in 2012 from First Solar, who completed construction in March 2015 and remains responsible for project operations and maintenance. Output from the project is sold to PG&E under a PPA maturing in October 2039. As of year-end 2023, Topaz Solar had approximately $693 million of senior secured bonds due September 30, 2039. The principal methodology used in these ratings was Power Generation Projects published in June 2023. TRANSOCEAN LTD: Incurs $954 Million Net Loss in 2023 ---------------------------------------------------- Transocean Ltd. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $954 million on $2.83 billion of contract drilling revenues for the year ended Dec. 31, 2023, compared to a net loss of $621 million on $2.57 billion of contract drilling revenues for the year ended Dec. 31, 2022. As of Dec. 31, 2023, the Company had $20.25 billion in total assets, $1.39 billion in total current liabilities, $8.44 billion in total long-term liabilities, and $10.42 billion in total equity. The Company expects to use existing unrestricted cash balances, cash flows from operating activities, borrowings under its Secured Credit Facility or proceeds from the disposal of assets or the issuance of debt or shares to fulfill anticipated near-term obligations, which may include capital expenditures, working capital and other operational requirements, scheduled debt maturities or other payments. At Dec. 31, 2023, the Company had $762 million in unrestricted cash and cash equivalents and $233 million in restricted cash and cash equivalents. The Company has generated positive cash flows from operating activities over recent years and, although the Company cannot provide assurances, the Company expects that such cash flows will continue to be positive over the next year. For example, among other factors, if the Company incurs costs for reactivation or contract preparation of multiple rigs or to otherwise assure the marketability of its fleet or general economic, financial, industry or business conditions deteriorate, its cash flows from operations may be reduced or negative. Contract drilling revenues for the three months ended Dec. 31, 2023 increased sequentially by $28 million to $741 million due to increased average daily revenue and higher fleet revenue efficiency, as well as increased utilization on four rigs that were undergoing contract preparation and one rig that underwent a special periodic survey in the third quarter. This was partially offset by lower revenue generated by two rigs that were idle and two rigs that were undergoing contract preparation during the fourth quarter. Contract intangible amortization represented a non-cash revenue reduction of $7 million, compared to $8 million in the prior quarter. Operating and maintenance expense was $569 million, compared with $524 million in the prior quarter. The sequential increase was primarily due to rigs returning to work after undergoing contract preparation in the prior quarter and higher in-service maintenance costs across our fleet, partially offset by lower activity for two rigs that were idle in the fourth quarter. After consideration of the fair value adjustment of the bifurcated exchange feature embedded in our 4.625% exchangeable bonds, which was favorable $145 million in the fourth quarter and unfavorable $93 million in the third quarter, interest expense net of amounts capitalized was $142 million, compared with $139 million in the prior period. Interest income was $10 million, compared with $12 million in the previous quarter. The Effective Tax Rate was (25.0)%, down from 16.3% in the prior quarter. The decrease was primarily due to reduced losses in the current quarter. The Effective Tax Rate excluding discrete items was (30.0)% compared to (8.7)% in the previous quarter. Cash provided by operating activities was $98 million during the fourth quarter of 2023, representing an increase of $142 million compared to the prior quarter. The sequential increase was primarily due to timing of interest payments and increased collections from customers partially offset by decreased cash collected from, and increased payments to, the Company's unconsolidated affiliates. Fourth quarter 2023 capital expenditures of $220 million were primarily associated with the newbuild ultra-deepwater drillship Deepwater Aquila. This compares with $50 million in the prior quarter. "We are very proud of our performance in 2023," said Chief Executive Officer Jeremy Thigpen. "We added $3.2 billion of backlog in the calendar year, providing additional visibility to future cash flows. In addition to delivering standout personal and process safety results, we finished the year with a company-best 97.6% uptime performance. Notably, we generated these results in a year that included eight large-scale projects, including installation of the 20K BOP on the Deepwater Atlas, the industry's first eighth-generation drillship, and the timely delivery and commissioning of the Deepwater Titan, our second eighth-generation drillship. Finally, we took delivery of our eighth 1,400 short ton drillship, the Deepwater Aquila." Thigpen concluded: "We remain encouraged by the continued tightness in the market and remain focused on delivering value to our shareholders as we progress through what we expect to be a multi-year upcycle." A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001451505/000145150523000029/rig-20221231x10k.htm About Transocean Transocean Ltd. is an international provider of offshore contract drilling services for oil and gas wells. The Company specializes in technically demanding sectors of the offshore drilling business with a particular focus on ultra-deepwater and harsh environment drilling services. Transocean Ltd. reported a net loss of $591 million for the year ended Dec. 31, 2021, a net loss of $568 million for the year ended Dec. 31, 2020 and a net loss of $1.25 billion for the year ended Dec. 31, 2019. * * * As reported by the TCR on Sept. 28, 2023, S&P Global Ratings raised its issuer credit rating on offshore drilling contractor Transocean Ltd. to 'CCC+' from 'CCC'. S&P said, "The upgrade reflects improved rig demand, higher day rates, and our view that there is reduced near-term risk of a distressed debt exchange or balance sheet restructuring." TRIBE BUYER: S&P Downgrades ICR to 'D' on Missed Principal Payment ------------------------------------------------------------------ S&P Global Ratings lowered its issuer credit rating on the company to 'D' from 'CCC-'. At the same time, S&P lowered its issue-level rating on the company's senior secured term loan to 'D' from 'CCC-' The downgrade on Tribe Buyer reflects the missed interest and principal payments on the first-lien term loan and revolving credit facility, which matured on Feb. 16, 2024. Tribe Buyer failed to make payments on its first-lien term loan with an outstanding balance of approximately $374 million and its revolving credit facility with an outstanding balance of approximately $21 million. S&P said, "The company has a 45-day grace period to make the payments, but we do not expect it will satisfy its payment obligations over this time frame. Because the first-lien credit agreement comprises of the entirety of the capital structure, we consider this to be a general default, and as a result we have lowered our issuer credit rating and our issue-level rating on the senior secured term loan to 'D'. We expect lenders will receive less than original promise given the current distressed conditions and macroeconomic headwinds." Tribe Buyer (dba Tradesmen International) is a staffing agency that provides skilled craftsmen in the construction, industrial and manufacturing, renewable, institutional, shipyard and marine, and skilled trades vertical throughout the U.S. and Canada. It offers clients on-demand access to trained and highly skilled tradesmen, allowing them to manage their workforce needs in the largely project-based industry. The company is owned by Blackstone Group and its financial statements are private. UXIN LIMITED: Amends Form 6-K to Correct Number of Shares --------------------------------------------------------- Uxin Limited furnished with the Securities and Exchange Commission an Amendment No.1 on Form 6-K originally furnished on Jan. 30, 2024 to update the Exhibit 99.3 thereto to correct, among other miscellaneous changes, the number of shares following the Share Capital Increase (as defined in the Exhibit 99.3). Following the Share Capital Increase, the authorized share capital of the Company will be US$20,000,000 divided into 200,000,000,000 shares, as opposed to 100,000,000,000 shares as included in the originally furnished Form 6-K. About Uxin Uxin is a China-based used car retailer, pioneering industry transformation with advanced production, new retail experiences, and digital empowerment. The Company offers vehicles through a reliable, one-stop, and hassle-free transaction experience. Under its omni-channel strategy, the Company is able to leverage its pioneering online platform to serve customers nationwide and establish market leadership in selected regions through offline inspection and reconditioning centers. Shanghai, the People's Republic of China-based PricewaterhouseCoopers Zhong Tian LLP, the Company's auditor since 2017, issued a "going concern" qualification in its report dated Aug. 14, 2023, citing that the Company has incurred net losses since inception and incurred cash outflows from operating activities during the fiscal year ended March 31, 2023. In addition, the Company has an accumulated deficit and net current liabilities as of March 31, 2023. These events and conditions raise substantial doubt about the Company's ability to continue as a going concern. VENICE HOSPITALITY: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Venice Hospitality, LLC 2688 Beach Blvd. Biloxi, MS 39531 Chapter 11 Petition Date: February 20, 2024 Court: United States Bankruptcy Court Southern District of Mississippi Case No.: 24-50214 Judge: Hon. Katharine M. Samson Debtor's Counsel: Patrick Sheehan, Esq. SHEEHAN AND RAMSEY, PLLC 429 Porter Ave Ocean Springs, MS 39564 Tel: 228-875-0572 Email: Pat@sheehanramsey.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Jason Reneau as chief financial officer. A copy of the Debtor's list of 20 largest unsecured creditors is now available for download at PacerMonitor.com. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/ZE7BBUY/Venice_Hospitality_LLC__mssbke-24-50214__0001.0.pdf?mcid=tGE4TAMA VIRTUS INVESTMENT: Moody's Alters Outlook on 'Ba1' CFR to Positive ------------------------------------------------------------------ Moody's Investors Service has changed the rating outlook on Virtus Investment Partners, Inc. to positive from stable. Concurrently, the Ba1 corporate family rating, Ba1 senior secured bank credit facility rating, and Ba1-PD probability of default rating have been affirmed. RATINGS RATIONALE The positive outlook on Virtus' ratings recognizes the company's balanced capital management strategy, stable operating performance and potential for the company's credit metrics to strengthen to levels consistent with Baa-rated asset managers. For years, the multi-boutique asset manager has maintained financial leverage below 2x debt-to-EBITDA while increasing distributions to common shareholders and engaging in acquisitions and partnerships that have broadened its franchise. Virtus has expanded its scale and despite higher borrowing costs has also maintained healthy profit margins. Although the company's geographic footprint remains limited, it is much improved from just a few years ago. As of year-end 2023, assets sourced from non-US clients have increased to 18% of assets under management compared to approximately 7% in 2020. A key credit challenge for Virtus, however, is its organic growth prospects given Moody's expectation of slowing economic growth and generally risk-averse retail investors. In 2021, the company reported record gross sales of $36.5 billion. But, subsequent years have seen a steady decrease as investors shifted towards safer assets. A substantial portion of the company's assets under management, approximately 63%, comes from retail channels. These channels are known to display risk-averse behavior in times of market volatility or uncertainty. Although net outflows have abated, they still are high for the company. Over the past year, net outflows totaled $7.2 billion compared to $13.4 billion in 2022. Virtus' Ba1 CFR reflects its modest use of leverage, solid profitability and diverse suite of investment product offerings. Constraining the company's rating is its concentrated asset exposure to US equities, limited geographic footprint, and exposure to balance sheet risk. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Virtus' ratings could be upgraded if scale as measured by the company's revenue net of distribution and sub-advisory expenses, is sustained over $750 million; or there is meaningful improvement in the company's geographic footprint such that its overall client base is diverse and global in nature; or the equity coverage of risk-adjusted balance sheet investments improves to align with similarly rated peers; or average pre-tax income margins are sustained above 25%. Conversely, Virtus' ratings could be affirmed and the outlook returned to a stable if the company upsizes its seeding program or leverage is elevated above 2x debt-to-EBITDA, as computed by Moody's; or net client redemptions are in excess of 2% of managed assets per year; or profitability as measured by the five-year pre-tax income margin falls below the high single digits. Virtus is a multi-boutique asset manager headquartered in Hartford, CT. At year-end 2023, the company had assets under management of $172 billion and total revenues of approximately $740 million. The principal methodology used in these ratings was Asset Managers Methodology published in November 2019. [^] BOOK REVIEW: The Phoenix Effect ----------------------------------- Nine Revitalizing Strategies No Business Can Do Without Authors: Carter Pate and Harlann Platt Publisher: John Wiley & Sons, Inc. Softcover: 244 Pages List Price: $27.95 Review by Gail Owens Hoelscher Buy a copy for yourself and one for a colleague on-line at http://amazon.com/exec/obidos/ASIN/0471062626/internetbankrupt Think of all the managers of faltering companies who dream of watching those companies rise from the ashes all around them! With a record number of companies failing in 2001, and another record-setting year expected for 2002, there are a lot of ashes from which to rise these days. Carter Pate and Harlan Platt highly value strong leadership able to sharpen a company's focus and show the way to the future. They believe that all too often, appropriate actions required to improve organizations are overlooked because upper management either isn't aware of the seriousness of the issues they face or they don't know where to turn for accurate information to best address their concerns. In the Phoenix Effect, the authors present their ideas to "confront, comprehend, and conquer a company's ills, big and small." These ideas are grouped into nine steps: (i) Find out whether the company needs a tune-up, a turnaround, or crisis management. Locate the source of "the pain." (ii) Analyze the true scope of the company's operations. Decide whether to stay in the same businesses, withdraw from existing businesses, or enter new ones. (iii) Hold the company to its mission statement. If it strives to be "the most environmentally friendly." Figure out how. (iv) Manage scale. Should the company grow, stay the same size, or shrink? (v) Determine debt obligations and work toward debt relief. (vi) Get the most from the company's assets. Eliminate superfluous assets and evaluate underused assets. (vii) Get the most from the company's employees. Increase output and lower workforce costs. (viii) Get the most from the company's products. Turn out products that are developed and marketed to fill actual, current customer needs. (ix) Produce the product. Search for alternate ways to create the product: owning or leasing facilities, outsourcing, etc. The authors believe that "how you're doing is where you're going." They assert that the "one fundamental source of life in companies, as in people, is the capacity for self-renewal, the ability to excite your team for game after game. to go for broke season after season." This ability can come from "(g)enetics, charisma, sheer luck, stock options -- all crucial, yes, but the best renewal insurance is a leader who always knows exactly how his or her company is doing." There are a lot of books written on this topic. Pate and Platt successfully bridge the gap between overgeneralization and too detail. They are equally adept at advising on how to go about determining a business's scope and arguing for Monday rather than Friday for implementing layoffs. They don't dwell on sappy motivational techniques. They don't condescend to the reader or depend too much on folksy vernacular and cliche. Their message is clear: your company's phoenix, too, can rise from its ashes. Carter Pate has served on the Board of multiple public companies. During his two decades as a Partner at PricewaterhouseCoopers, he held several global leadership positions, including being the Global Managing Partner of the Advisory Services Practice, Healthcare Practice and the Government practice. He subsequently served as the CEO of Providence Service Corporation (revenue $1.5B) and as the CEO of MV Transportation, one of the largest privately held transportation companies. Dr. Harlan D. Platt is a professor of Finance and Insurance at Northeastern University. He is president of 911RISK, Inc., which specializes in developing analytical models to predict corporate distress. He received a Ph.D. from the University of Michigan, and holds a B.A. degree from Northwestern University. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. TCR subscribers have free access to our on-line news archive. Point your Web browser to http://TCRresources.bankrupt.com/and use the e-mail address to which your TCR is delivered to login. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA. Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2024. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. *** End of Transmission ***