/raid1/www/Hosts/bankrupt/TCR_Public/120921.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, September 21, 2012, Vol. 16, No. 263
Headlines
ACCESS PHARMACEUTICALS: In Talks with Holder on Payment Extension
ADVANCEPIERRE FOODS: Moody's Affirms 'B2' Corp. Family Rating
ADVANCEPIERRE FOODS: S&P Affirms 'B' Corporate Credit Rating
ADVANTA CORP: KPMG Loses 2nd Bid to Nix Shareholder Class Action
AEROGROW INTERNATIONAL: Closes Sale of $1.3-Mil. Promissory Notes
AFA FOODS: Reaches Settlement With Lenders Owed $71.6M
ALLEN INVESTMENTS: Case Summary & 2 Unsecured Creditors
ALLIANCE 2009: Files for Chapter 11 in Nashville
ALLIANCE 2009: Case Summary & 8 Unsecured Creditors
ALLIED SYSTEMS: Stikeman Okayed as Committee's Canadian Counsel
ALLIED SYSTEMS: Conway Mackenzie Okayed as Panel's Fin'l Advisor
ALMACENES RIVIERA: Trustee Fails to Advance Suit Against Insiders
ALPHA NATURAL: S&P Puts 'BB-' Corporate Credit Rating on Watch Neg
AMERICAN AIRLINES: AMR, Committee Lawyers Cost $5.5-Mil. Per Month
AMERICAN AIRLINES: Pilots' Union to Appeal Contract Rejection
AMERICAN AIRLINES: Court OKs New CBA With Flight Attendants Union
AMERICAN AIRLINES: Labor Contract With TWU Approved by Judge
AMERICAN AIRLINES: Opposes M&T Bid for Guaranty Claims Protocol
AMERICAN AIRLINES: U.S. Bank Renews Bid to Limit Cash Use
AMERICAN AIRLINES: Pilots Picket at O'Hare Int'l Airport
AMERICAN AXLE: Enters Into First Supplemental Indenture with BNY
ARCAPITA BANK: Moves to Secure Unique Bankruptcy Financing
ASSET MANAGEMENT: Case Summary & 3 Unsecured Creditors
ASP HHI: S&P Assigns Prelim. 'B+' Corporate Credit Rating
BAKER & TAYLOR: Moody's Reviews 'Caa1' CFR for Upgrade
BEHRINGER HARVARD: Hires Powell Coleman, Alvin Badger
BENDER SHIPBUILDING: Court Rules on Clawback Suit Against ACT
BERNARD L. MADOFF: First of Two Big Appeals Set for Mid-November
BON-TON STORES: COO Schrantz Terminated; Position Phased Out
CAPITOL BANCORP: Can Employ Honigman Miller as Bankruptcy Counsel
CAPITOL BANCORP: Committee Can Retain Foley & Lardner as Counsel
CASTLE KEY: A.M. Best Affirms 'B-' Financial Strength Rating
CATASYS INC: Inks $1.7-Mil. Shares Purchase Pacts With Investors
CENTER FOR SYSTEMS: Ruling in Lawsuit Over Pension Plan Deferred
CENTRAL EUROPEAN: Russian Standard Founder Is Interim President
CENTRAL EUROPEAN: Roustam Tariko Discloses 19.4% Equity Stake
CLINICA REAL: Hiring Mark J. Giunta Firm as Bankruptcy Counsel
COCOPAH NURSERIES: Has Sept. 27 Hearing on Continued Cash Use
COCOPAH NURSERIES: Court Okays Stanley Speer as CRO
COCOPAH NURSERIES: Oct. 1 Set as Claims Bar Date
COMPUCOM SYSTEMS: Moody's Affirms 'B2' Corporate Family Rating
CONTEC HOLDINGS: Taps Ropes & Gray as Bankruptcy Counsel
CONTEC HOLDINGS: Taps AP Services as Crisis Managers
CONTINENTAL AIRLINES: Moody's Assigns 'Ba2' Rating to B Certs.
CONTINENTAL AIRLINES: S&P Affirms 'B' Corporate Credit Rating
COPYTELE INC: Completes Private Placement of $750,000 Debentures
DDR CORP: S&P Lifts CCR to BB+ on Reduced Leverage, EBITDA Growth
DELPHI AUTOMOTIVE: S&P Keeps 'BB+' CCR After Term Loan Add-On
DEWEY & LEBOEUF: Court to Review $71MM Contribution Deal
DEWEY & LEBOEUF: JPMorgan Supports Firm's $71MM Clawback Plan
DEWEY & LEBOEUF: 444 Settling Ex-Partners Identified
DEX ONE: Meets with Supermedia to Discuss Debt Facilities
DIGITAL DOMAIN: Creditor Concerned About Fast Auction
DOLE FOOD: Fitch Alteres Rating Watch to Positive
DRIVETIME AUTOMOTIVE: S&P Puts 'B' Issuer Credit Rating on Watch
DZ.EYE.N STUDIOS: Judge Dismisses Involuntary Chapter 11 Case
FIRSTFED FINANCIAL: Seeks OK on Agreement for Confirmation Hearing
FTMI REAL ESTATE: Has Final Authority to Employ G&A as Counsel
FTMI REAL ESTATE: FTMI Operator Taps Mark Nunheimer as Consultant
FULLER BRUSH: Oct. 16 Auction to Test Victory Park Offer
GENERAL CABLE: S&P Rates Proposed $550MM Sr. Unsecured Notes 'B+'
GENERAL MOTORS: U.S. Balks at Plan to Sell Entire Stake
GLATFELTER CO: S&P Rates $200MM Senior Unsecured Notes 'BB+'
GLOBAL AVIATION: Files Joint Chapter 11 Plan
GMX RESOURCES: 47.9% of 2013 Noteholders Accept Tender Offer
GORDIAN MEDICAL: Additional Work for Fulbright & Jaworski Okayed
GRANITE DELLS: Objects to Tri-City's New Plan Disclosures
GRANITE DELLS: AED Objects to Debtor's Disclosure Statement
GREAT PLAINS: Wants Plan Filing Period Extended Until Dec. 6
HAWKER BEECHCRAFT: Judge OKs Request to Consolidate Pension Claims
HARVARD DRUG: S&P Rates Proposed $335MM Senior Secured Debt 'B'
HERCULES OFFSHORE: Files Fleet Status Report as of Sept. 18
HOVNANIAN ENTERPRISES: Moody's Rates Senior Secured Notes 'B3'
HOVNANIAN ENTERPRISES: S&P Puts 'CCC-' CCR on Watch Positive
ICEWEB INC: Evergreen Founder Appointed to Board of Directors
IDEAL PROPERTIES: Case Summary & 3 Unsecured Creditors
IDEARC INC: Verizon Facing Jury Trial in $9.8 Million Lawsuit
IMAGEWARE SYSTEMS: Neal Goldman Discloses 18.2% Equity Stake
INDIANAPOLIS DOWNS: Centaur Offers $500 Million for Assets
INTELSAT JACKSON: S&P Rates Proposed $640MM Senior Notes 'CCC+'
J.R. INSULATION: Court Affirms Dismissal of Suit Against PREPA
JACOBS ENTERTAINMENT: Moody's Affirms 'B3' Corp. Family Rating
JACOBS ENTERTAINMENT: S&P Puts 'B-' Corp. Credit Rating on Watch
JHK INVESTMENTS: VC Fund Sues 3 JHK Principals Over $32MM in Loans
KANSAS CITY SOUTHERN: Fitch Raises Issuer Default Rating From 'BB'
KNIGHT CAPITAL: Stephen Schwarzman Owns 36.8% of Class A Shares
KRYSTAL INFINITY: Thor Industries to Buy Bus Unit for $3M
LEE'S FORD: U.S. Trustee Unable to Form Committee
LEE'S FORD: Court Approves Radwan Brown as Accountants
LEE'S FORD: Files Schedules of Assets and Liabilities
LENNAR CORP: Medford Objects to 'Bad Faith' Chapter 11 Claims
LIFECARE HOLDINGS: Moody's Maintains 'Caa3' CFR/PDR
LOCAL TV: Moody's Affirms 'B3' Corporate Family Rating
MACROSOLVE INC: Updated Shareholders on Company Developments
MAGABLEH LLC: Case Summary & Unsecured Creditor
MARK SHALE: To Close Three Chicago Store Locations
MCWADE PROPERTIES: Case Summary & 3 Unsecured Creditors
MICHAELS STORES: Enters Into Second Amended Credit Agreement
NEWLEAD HOLDINGS: Stock Price Falls Below NASDAQ $1.00 Rule
NIELSEN FINANCE: Fitch Rates Proposed Senior Unsecured Notes 'BB'
NORTHERN TIER: Moody's Affirms 'B1' CFR; Outlook Stable
PDC ENERGY: Moody's Confirms 'B2' CFR/PDR; Outlook Positive
PEP BOYS: S&P Affirms 'B' Corp. Credit Rating; Outlook Negative
PET ECOLOGY: Files for Chapter 11 Bankruptcy
PH GLATFELTER: Moody's Rates New $200MM Sr. Unsecured Notes 'Ba1'
PHILADELPHIA ORCHESTRA: Firms File Final Application for Payment
PRIMUS TELECOMS: Moody's Confirms 'B3' CFR; Outlook Stable
PRODUCTION RESOURCE: Moody's Cuts Corp. Family Rating to 'B3'
PROTECTIVE PRODUCTS: Dist. Court Defers Ruling on D&O Lawsuit
QUAD/GRAPHICS INC: S&P Rates Amended Credit Facility 'BB+'
RADIENT PHARMACEUTICALS: Further Amends License Pact with GCDx
RESIDENTIAL CAPITAL: Committee Proposes JF Morrow as Consultant
RESIDENTIAL CAPITAL: Ally Bank Servicing Pact Continued
RG BRANDS: Moody's Raises Corporate Family Rating to 'B2'
RICHFIELD EQUITIES: Files for Chapter 11 to Sell All Assets
RICHFIELD EQUITIES: Case Summary & Largest Unsecured Creditor
ROCKET SOFTWARE: Moody's Affirms 'B2' CFR; Rates Term Loan 'B1'
ROCKET SOFTWARE: S&P Affirms 'B+' CCR on Proposed Acquisitions
ROSEMAN UNIVERSITY: S&P Rates Series 2012 Bonds 'BB+'
ROTHSTEIN ROSENFELDT: Florida Jeweler to Disgorge $325,000
RR DONNELLEY: Moody's Cuts Unsecured Notes Ratings to 'Ba3'
RR DONNELLEY: S&P Affirms 'BB' Corp. Credit Rating; Outlook Stable
RYLAND GROUP: July and August Orders Up 62% vs. 2011
RYLAND GROUP: Offering $250 Million of Senior Notes Due 2022
SHERITT INT'L: DBRS Rates $400MM Senior Unsecured Notes 'BB(high)'
SMART ONLINE: Entre-Strat Consultant R. Brinson Appointed CEO
SOTHEBY'S: Moody's Rates New $300MM Senior Unsecured Notes 'Ba3'
SPRINGFIELD PROPERTIES: Has Until October 21 to File Plan
TONY MIJARES: Florida Developer Files for Chapter 11 Bankruptcy
TRAINOR GLASS: Hires Hilco Fixed Asset Recovery to Sell FF&E
TRANSTAR HOLDING: S&P Lowers CCR to 'B' on Higher Leverage
TRIDENT MICROSYSTEMS: Files First Amended Ch. 11 Liquidation Plan
TRIMAS CO: Moody's Rates $650-Mil. Sr. Secured Facility 'Ba3'
TRIMAS CO: S&P Rates Proposed $650MM Credit Facilities 'BB'
UNITED RETAIL: Judge Confirms Chapter 11 Plan After Sale
US FIDELIS: Former Owner Gets 3 Years for $70MM Refunds Fraud
US XPRESS: S&P Rates Proposed $230MM Senior Secured Facility 'B'
VANN'S INC: Issues 60-Day Layoff Notice; To Close All Stores
VERINT SYSTEMS: S&P Alters Rating Outlook Over Comverse Merger
WILLIAMS LOVE: Judge to Confirm Third Amended Plan
WYNN RESORTS: Fitch Assigns 'BB' Issuer Default Rating
* Moody's Says Sector Outlook for U.S. States Still Negative
* Moody's Says Liquidity-Stress Index Up 3.5% in August 2012
* Junk-Rated Companies Maintain Adequate Cash Positions
* BOOK REVIEW: Performance Evaluation of Hedge Funds
*********
ACCESS PHARMACEUTICALS: In Talks with Holder on Payment Extension
-----------------------------------------------------------------
Access Pharmaceuticals, Inc., has received notice from the holder
of its currently outstanding $2,750,000 secured note that as of
Sept. 13, 2012, the note had become due and that payment was
demanded. The Company did make its required interest payment of
$330,000 on the note. The Company currently does not have the
resources to repay the note and is in discussions with the holder
for an extension.
About Access Pharmaceuticals
Access Pharmaceuticals, Inc., develops pharmaceutical products
primarily based upon its nano-polymer chemistry technologies and
other drug delivery technologies. The Company currently has one
approved product, one product candidate at Phase 3 of clinical
development, three product candidates in Phase 2 of clinical
development and other product candidates in pre-clinical
development.
After auditing the 2011 results, Whitley Penn LLP, in Dallas
Texas, expressed substantial doubt about the Company's ability to
continue as a going concern. The independent auditors noted that
the Company has had recurring losses from operations, negative
cash flows from operating activities and has an accumulated
deficit.
The Company's balance sheet at June 30, 2012, showed $2.43 million
in total assets, $33.51 million in total liabilities, and a
$31.07 million total stockholders' deficit.
ADVANCEPIERRE FOODS: Moody's Affirms 'B2' Corp. Family Rating
-------------------------------------------------------------
Moody's Investors Service has affirmed the B2 corporate family
rating of AdvancePierre Foods, Inc. (APF) following its
announcement of plans to make a roughly $160 million dividend
distribution to its sponsor, Oaktree Capital Management LP, and
refinance its existing capital structure. Concurrent with the
affirmation, Moody's assigned a B1 rating to APF's proposed $825
million term loan B and a Caa1 rating to its proposed $450 million
senior unsecured notes. The rating outlook is stable.
The following ratings have been assigned subject to review of
final documentation:
B1 (LGD3, 40%) to the proposed $825 million first lien term loan
B due 2017; and
Caa1 (LGD5, 87%) to the proposed $450 million senior unsecured
notes due 2017.
The following ratings have been affirmed:
Corporate family rating (CFR) at B2;
Probability of default rating at B2; and
B1 (LGD3, 45%) on the existing $835 million term loan due 2016.
The ratings on the $835 million term loan due 2016 will be
withdrawn upon completion of the refinancing.
Rating Rationale
The B2 CFR reflects the aggressive nature of the proposed dividend
and the resulting increase in leverage to over 6.5x on proforma
basis, as adjusted by Moody's. While leverage is initially viewed
as high, the rating incorporates Moody's expectation for
meaningful near-term deleveraging from both debt reduction and
earnings growth. Seasonal and discretionary inventory builds,
funded with a $50 million draw on APF's proposed $150 million
asset-based revolver (not rated) at close, are expected to be
repaid as working capital unwinds in the fourth quarter of 2012.
In addition, synergies from the recent closure of its Orange City,
Iowa manufacturing facility and ongoing restructuring of its
operations following its acquisitions of Advance Foods, Advance
Brands and Barber Foods, over the past few years, are expected to
support earnings growth in the second half of 2012 and in 2013.
The B2 rating positively reflects APF's operating scale, diversity
of value-added protein, prepared sandwich and fully-cooked breaded
chicken offerings and modest customer and sales channel
diversification. APF's ability to pass along raw material price
inflation, through its use of price lists or contractual
agreements with customers, is a key rating factor offsetting the
risk of long-term gross margin deterioration in a rising commodity
price environment. Since price increases occur on a one-to-three
month lag, quarterly margin and cash flow volatility is
inevitable. The company's revolver is expected to provide ample
liquidity during interim periods when working capital requirements
rise due to seasonal needs or in periods of sharp raw material
price increases.
The B1 rating on the $825 million term loan B maturing in 2017
reflects its seniority in the capital structure relative to the
notes as well as its junior position versus the ABL's first-
priority interest in the current assets of APF. The Caa1 rating on
the $450 million notes due 2017 reflects their junior position
relative to both the ABL and term loan B. All instruments are
expected to benefit from upstream guarantees from each domestic
subsidiary. Neither the term loan or the notes are expected to be
subject to financial maintenance covenants.
The stable rating outlook reflects Moody's expectation for margin
expansion and debt reduction over the next twelve months. Recent
softness in volumes, due in large part to the ongoing weakness in
economic conditions in North America, will likely continue;
however, Moody's expects operating efficiencies and pricing to
offset volume declines supporting Moody's expectation for margin
improvement.
Leverage maintained above 6.0x for an extended period would not be
viewed as consistent with the current rating level. A ratings
downgrade could occur if leverage is not reduced below 6.0x or if
revolver availability were to be meaningfully reduced over the
next twelve months. The ratings could be upgraded if APF is
successful in reducing debt while remaining free cash flow
positive and maintaining full revolver availability. Moody's would
expect debt-to-EBITDA to be sustainable around 4.5x prior to any
ratings upgrade.
The principal methodology used in rating AdvancePierre Foods, Inc
was the Global Packaged Goods Industry Methodology published in
July 2009. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
AdvancePierre Foods, Inc. (APF), headquartered in Cincinnati, OH,
is a producer and marketer of value-added protein and hand-held
convenience items serving the foodservice, retail and convenience
and vending store channels. Key products include packaged
sandwiches, fully-cooked burgers, philly steaks, stuffed chicken
breasts and country fried chicken. Oaktree Capital Management LP
(Oaktree) has owned the company since Pierre Foods, Inc. emerged
from bankruptcy in 2008. Net sales for the twelve months ending
June 2012 were approximately $1.5 billion.
ADVANCEPIERRE FOODS: S&P Affirms 'B' Corporate Credit Rating
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on Cincinnati, Ohio-based AdvancePierre Foods Inc.,
and revised its rating outlook to stable from negative.
"In addition, we assigned an issue level rating of 'B' to
AdvancePierre's proposed new $825 million 4.75-year term loan B.
The recovery rating is '3', which indicates our expectation for
meaningful (50%-70%) recovery for lenders in the event of a
payment default. We also assigned our 'CCC+' issue rating to
AdvancePierre's proposed new $450 million five-year senior
unsecured notes. The recovery rating is '6', which indicates our
expectation of negligible (0%-10%) recovery for lenders in the
event of a payment default. The company's new $150 million asset-
based revolving credit facility (ABL) is unrated," S&P said.
"AdvancePierre intends to refinance its existing credit facilities
and issue new senior unsecured notes as part of a recapitalization
that also includes the payment of a special dividend to
shareholders. Despite the modest increase in debt levels resulting
from this recapitalization, the outlook revision reflects the
anticipated elimination of financial maintenance covenants in
this proposed recapitalization, resulting in a change in our
opinion of AdvancePierre's liquidity to 'adequate' (the company's
new ABL will have a springing fixed charge covenant). Our ratings
on AdvancePierre's existing first-lien term loan will be withdrawn
following the completion of this transaction. Our new issue
ratings are subject to review upon receipt of final
documentation," S&P said.
AdvancePierre had about $1.1 billion of total debt outstanding as
of June 30, 2012, and is expected to have about $1.3 billion
following the recapitalization transaction.
"The ratings on U.S.-based AdvancePierre Foods Inc. reflect
Standard & Poor's view that the company's business risk profile is
'weak' and its financial risk profile is 'highly leveraged.' Key
credit factors in our assessment of AdvancePierre's business risk
profile include the company's narrow product focus, participation
in the highly competitive packaged foods industry, exposure to
volatile commodity costs, and significant exposure to the cyclical
foodservice channel," S&P said.
AdvancePierre Foods has a narrow product focus as a manufacturer
of differentiated value-added protein and handheld convenience
food items that it sells primarily to foodservice distributors,
schools, national accounts, retailers, and convenience stores.
"Although AdvancePierre's operating performance improved somewhat
in the first half of 2012, we believe operating performance will
experience some pressure through the remainder of 2012 because of
continuing high commodity costs," said Standard & Poor's credit
analyst Jeffrey Burian.
"The majority of the company's pricing is now based on pricing
lists or pass-through commodity pricing, and some fixed contract
business, which may mitigate but does not eliminate the effect of
rapid input cost movements," said Mr. Burian. "We expect the
company will continue to address these anticipated higher input
costs with pricing actions and cost savings. In addition,
favorable forward purchases of protein should mitigate some of the
rising input costs."
"The stable outlook reflects our anticipation that the company
will maintain adequate liquidity and that leverage will be reduced
below 6x," S&P said.
ADVANTA CORP: KPMG Loses 2nd Bid to Nix Shareholder Class Action
----------------------------------------------------------------
Linda Chiem at Bankruptcy Law360 reports that U.S. District Judge
Cynthia Rufe on Tuesday affirmed her decision to revive an amended
securities class action alleging directors of Advanta Corp. and
its auditor KPMG LLP concealed Advanta's bleak finances from
investors, saying the plaintiffs' allegations were sufficiently
pled.
About Advanta Corp.
Advanta Corp. -- http://www.advanta.com/-- issues business
purpose credit cards to small businesses and business
professionals in the United States. Advanta primarily funds and
operates its business credit card business through Advanta Bank
Corp., which offers a range of deposit products that are insured
by the Federal Deposit Insurance Corporation.
In June 2009, the FDIC placed significant restrictions on the
activities and operations of Advanta Bank, as the Bank's capital
ratios were below required regulatory levels.
On Nov. 8, 2009, Advanta Corp. sought Chapter 11 bankruptcy
protection (Bankr. D. Del. Case No. 09-13931). Attorneys at Weil,
Gotshal & Manges LLP, and Richards, Layton & Finger, P.A., serve
as the Debtor's bankruptcy counsel. Alvarez & Marsal is the
financial advisor. The Garden City Group, Inc., is the claims
agent. The filing did not include Advanta Bank. The petition said
that Advanta Corp.'s assets totaled $363,000,000 while debts
totaled $331,000,000 as of Sept. 30, 2009.
As reported in the TCR on Feb. 15, 2011, Advanta Corp. obtained an
order from Bankruptcy Judge Kevin Carey confirming its Chapter 11
plan. The Plan was unanimously approved by seven of the 11
creditor classes.
AEROGROW INTERNATIONAL: Closes Sale of $1.3-Mil. Promissory Notes
-----------------------------------------------------------------
On Sept. 14, 2012, AeroGrow International, Inc., closed on the
private sale of $1,285,722 in Series 2012CC 15% secured promissory
notes backed by a portion of the Company's prospective credit card
receipts, and 12,857,220 shares of common stock.
Consideration for the Credit Card Offering comprised $1,285,722 in
cash. After deducting $46,128 of placement agent sales
commissions and expenses, net cash proceeds to the Company totaled
$1,239,594. In addition, the Company will issue 1,285,722 shares
of common stock to the placement agent as additional sales
compensation, representing one share of common stock for every 10
shares issued to investors in the Credit Card Offering.
The Company intends to use the proceeds from the Credit Card
Offering to invest in advertising and marketing programs to
support its direct-to-consumer business, purchase inventory,
provide other general working capital, repay $198,406 of Series
2011CC 17% Notes and pay commissions and expenses related to the
private offering.
Directors and officers of the Company invested $245,000 in the
Credit Card Offering and were issued Credit Card Notes with a face
amount of $245,000 and 2,450,000 shares of common stock.
Investors having a beneficial ownership in the Company of more
than 5% who are not also directors or officers of the Company
invested $350,000 in the Credit Card Offering and were issued
Credit Card Notes with a face amount of $350,000 and 3,500,000
shares of common stock. The investments by the directors,
officers, and investors having a beneficial ownership in the
Company of more than 5% who are not also directors or officers of
the Company, were on the same terms and conditions as all other
investors in the Credit Card Offering.
The Credit Card Notes bear interest at 15% per annum and have a
final maturity of Nov. 1, 2013. Twenty percent of the Company's
daily credit card receipts will be held in escrow with First
Western Trust Bank under an Escrow and Account Control Agreement
to fund bi-weekly payments of principal and interest to the
investors in the Credit Card Offering.
About AeroGrow
Boulder, Colo.-based AeroGrow International, Inc., is a developer,
marketer, direct-seller, and wholesaler of advanced indoor garden
systems designed for consumer use and priced to appeal to the
gardening, cooking, and healthy eating, and home and office decor
markets.
The Company's balance sheet at June 30, 2012, showed $3.86 million
in total assets, $3.63 million in total liabilities and $229,483
in total stockholders' equity.
The Company reported a net loss of $3.55 million for the year
ended March 31, 2012, a net loss of $7.92 million for the year
ended March 31, 2011, and a net loss of $6.33 million for the year
ended March 31, 2010.
AFA FOODS: Reaches Settlement With Lenders Owed $71.6M
------------------------------------------------------
Stephanie Gleason at Dow Jones' DBR Small Cap reports that AFA
Foods Inc. is asking a bankruptcy court to approve a settlement
that pays 80% of cash available to second-lien lenders to an
affiliate of Beef Products Inc., the "pink slime" manufacturer
that is suing ABC News for allegedly defaming the meat additive.
About AFA Foods
King of Prussia, Pennsylvania-based AFA Foods Inc. was one of the
largest processors of ground beef products in the United States.
The Company had five processing facilities and two ancillary
facilities across the country with annual processing capacity of
800 million pounds. AFA had seven facilities capable of producing
800 million pound of ground beef annually. Revenue in 2011 was
$958 million.
Yucaipa Cos. acquired the business in 2008 and currently owns 92%
of the common stock and all of the preferred stock.
AFA Foods, AFA Investment Inc. and other affiliates filed for
Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-11127) on
April 2, 2012, after recent changes in the market for its ground
beef products and the impact of negative media coverage related to
boneless lean beef trimmings -- BLBT -- affected sales.
Judge Mary Walrath presides over the case. Lawyers at Jones Day
and Pachulski Stang Ziehl & Jones LLP serve as the Debtors'
counsel. FTI Consulting Inc. serves as financial advisors and
Imperial Capital LLC serves as marketing consultants. Kurtzman
Carson Consultants LLC serves as noticing and claims agent.
As of Feb. 29, 2012, on a consolidated basis, the Debtors' books
and records reflected approximately $219 million in assets and
$197 million in liabilities. AFA Foods, Inc., disclosed
$615,859,574 in assets and $544,499,689 in liabilities as of the
Petition Date.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven
members to the official committee of unsecured creditors in the
Chapter 11 cases of AFA Investment Inc., AFA Foods and their
debtor-affiliates. The Committee has obtained approval to hire
McDonald Hopkins LLC as lead counsel and Potter Anderson &
Corroon LLP serves as co-counsel. The Committee also obtained
approval to retain J.H. Cohn LLP as its financial advisor, nunc
pro tunc to April 13, 2012.
ALLEN INVESTMENTS: Case Summary & 2 Unsecured Creditors
-------------------------------------------------------
Debtor: Allen Investments & Acquisitions Corporation
920 Main Street
Windermere, FL 34786
Bankruptcy Case No.: 12-12725
Chapter 11 Petition Date: September 18, 2012
Court: United States Bankruptcy Court
Middle District of Florida (Orlando)
Debtor's Counsel: Jeffrey Ainsworth, Esq.
MANGUM & ASSOCIATES PA
5100 Hwy 17-92, Suite 300
Casselberry, FL 32707
Tel: (407) 478-1555
Fax: (407) 478-1552
E-mail: jeff@mangum-law.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its two largest unsecured
creditors filed together with the petition is available for free
at http://bankrupt.com/misc/flmb12-12725.pdf
The petition was signed by Mark Allen, president.
ALLIANCE 2009: Files for Chapter 11 in Nashville
------------------------------------------------
Alliance 2009, LLC, filed a bare-bones Chapter 11 petition (Bankr.
M.D. Tenn. Case No. 12-08515) on Sept. 17, 2012.
In May, Regions Bank filed a lawsuit against Alliance 2009 and
Milton A. Turner (N.D. Ala. 2:2012cv01789) for breach of contract.
According to the Birmingham Business Journal, the lawsuit was on
account of the Debtor's failure to pay a $7.5 million loan. The
lawsuit claims the borrower failed to make payments due Oct. 15,
2011, on the $7.5 million loan made in December 2010. Mr. Turner
guaranteed the debt.
The Debtor estimated assets of $10 million to $50 million and up
to liabilities of up to $10 million as of the Chapter 11 filing.
Mr. Turner, as vice president of the company, signed the Chapter
11 petition.
The Debtor is represented by:
Craig Vernon Gabbert, Jr.
HARWELL HOWARD HYNE GABBERT & MANNER PC
333 COMMERCE STREET, SUITE 1500
Nashville, TN 37201
Tel: 615-256-0500
Fax: 615-251-1059
E-mail: cvg@h3gm.com
ALLIANCE 2009: Case Summary & 8 Unsecured Creditors
---------------------------------------------------
Debtor: Alliance 2009, LLC
500 Henley Street, Suite 200
Knoxville, TN 37902
Bankruptcy Case No.: 12-bk-08515
Chapter 11 Petition Date: September 17, 2012
Court: U.S. Bankruptcy Court
Middle District of Tennessee (Nashville)
Judge: Marian F. Harrison
Debtor's Counsel: Craig Vernon Gabbert, Jr., Esq.
HARWELL HOWARD HYNE GABBERT & MANNER, P.C.
333 Commerce Street, Suite 1500
Nashville, TN 37201
Tel: (615) 256-0500
Fax: (615) 251-1059
E-mail: cvg@h3gm.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $1,000,001 to $10,000,000
The petition was signed by Milton A. Turner, vice president.
Debtor's List of Its Eight Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Natixis Private Banking -- $1,199,836
51 Avenue J.F. Kennedy
L-1855 Luxembourg
Johnston Financial Services -- $145,000
1795 Alysheba Way, Suite 5201
Lexington, KY 40509
Kennerly Montgomery & Finley -- $59,746
P.O. Box 442
Knoxville, TN 37901
Forsyth County Tax Collector -- $22,043
Virginia Department of Taxation -- $7,510
A & W Pressure -- $3,600
Commercial Property Maintenance -- $600
VSC Fire and Security Inc. -- $500
ALLIED SYSTEMS: Stikeman Okayed as Committee's Canadian Counsel
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Allied Systems
Holdings, Inc., and their subsidiaries sought and obtained
approval from the Bankruptcy Court to retain Stikeman Elliott LLP
as Canadian counsel, nunc pro tunc to July 5, 2012.
Stikeman will provide legal services to the Committee in
connection with certain issues of Canadian law, including advising
the Committee as to its rights and duties with respect to the
Companies' Creditors Arrangement Act.
Stikeman may render these professional services:
A. Advise the Committee with respect to Canadian issues
impacting its rights, powers and duties in the
Chapter 11 Cases and in any associated Canadian
proceedings;
B. Assist in preparing, on behalf of the Committee, all
necessary and appropriate applications, motions, proposed
orders, other pleadings, notices, and other documents, and
review all financial and other reports filed or to be
filed in the Canadian Proceedings;
C. Advise the Committee concerning, and preparing responses
to, applications, motions, other pleadings, notices and
other papers that may be filed by other parties in the
Canadian Proceedings;
D. Review the nature and validity of any liens asserted
against property of the Debtors' estates and advise the
Committee concerning the enforceability of such liens
under Canadian law;
E. Advise the Committee in connection with the formulation,
negotiation and promulgation of chapter 11 plans, sale
transactions, and related transactional documents;
F. Assist and advise the Committee and take all necessary or
appropriate actions at the Committee's direction with
respect to Canadian issues that relate to reviewing,
estimating, resolving, and litigating claims asserted
against the Debtors' estates in Canada, and the
negotiation of Canadian legal disputes involving the
Committee;
G. Commence and conduct litigation necessary and appropriate
to assert rights held by the Committee in Canada; and
H. Provide such other legal services as the Committee may
require in connection with the Chapter 11 Cases and in the
Canadian proceedings.
Stikeman will charge for its legal services on an hourly basis in
accordance with its standard hourly rates in effect as of July 5,
2012, subject to periodic adjustments. Stikeman's standard hourly
rates for its professional services for persons ordinarily
involved in these matters range from:
Partners C$600 to C$1,000
Associates C$400 to C$600
Paraprofessionals C$200 to C$300
The Committee will reimburse Stikeman for all reasonable out-of-
pocket expenses incurred by the firm during the engagement.
To the best of the Committee's knowledge, Stikeman does not hold
or represent any interest adverse to the Debtor's estate.
About Allied Systems
BDCM Opportunity Fund II, LP, Spectrum Investment Partners LP, and
Black Diamond CLO 2005-1 Adviser L.L.C., filed involuntary
petitions for Allied Systems Holdings Inc. and Allied Systems Ltd.
(Bankr. D. Del. Case Nos. 12-11564 and 12-11565) on May 17, 2012.
The signatories of the involuntary petitions assert claims of at
least $52.8 million for loan defaults by the two companies.
Allied Systems, through its subsidiaries, provides logistics,
distribution, and transportation services for the automotive
industry in North America.
Allied Holdings Inc. previously filed for chapter 11 protection
(Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537) on July 31,
2005. Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP,
represented the Debtors in the 2005 case. Allied won confirmation
of a reorganization plan and emerged from bankruptcy in May 2007
with $265 million in first-lien debt and $50 million in second-
lien debt.
The petitioning creditors said Allied has defaulted on payments of
$57.4 million on the first lien debt and $9.6 million on the
second. They hold $47.9 million, or about 20% of the first-lien
debt, and about $5 million, or 17%, of the second-lien obligation.
They are represented by Adam G. Landis, Esq., and Kerri K.
Mumford, Esq., at Landis Rath & Cobb LLP; and Adam C. Harris,
Esq., and Robert J. Ward, Esq., at Schulte Roth & Zabel LLP.
Allied Systems Holdings Inc. formally put itself and 18
subsidiaries into bankruptcy reorganization June 10, 2012,
following the filing of the involuntary Chapter 11 petition.
The Company is being advised by the law firms of Troutman Sanders,
Gowling Lafleur Henderson, and Richards Layton & Finger.
The bankruptcy court process does not include captive insurance
company Haul Insurance Limited or any of the Company's Mexican or
Bermudan subsidiaries. The Company also announced that it intends
to seek foreign recognition of its Chapter 11 cases in Canada.
An official committee of unsecured creditors has been appointed in
the Chapter 11 cases of Allied Systems Holdings Inc. and Allied
Systems Ltd. The Committee
An official committee of unsecured creditors has been appointed in
the case. The Committee consists of Pension Benefit Guaranty
Corporation, Central States Pension Fund, Teamsters National
Automobile Transporters Industry Negotiating Committee, and
General Motors LLC. The Committee is represented by Sidley Austin
LLP.
ALLIED SYSTEMS: Conway Mackenzie Okayed as Panel's Fin'l Advisor
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Allied Systems
Holdings, Inc., et al., sought and obtained approval from the U.S.
Bankruptcy Court to retain Conway Mackenzie, Inc. as financial
advisor, effective as of June 25, 2012.
The firm will, among other things:
a. review and analyze Allied's financial condition and the
circumstances leading up to the current financial stress,
current business plan, and operating metrics as basis, in
part, for evaluating the prospects for a financial recovery
and viable plan of treatment for unsecured creditors;
b. supplement the Committee's review of the financial and cash
flow projections and DIP financing terms to evaluate the
risks and opportunities represented or inherent therein and
the sufficiency of the DIP financing necessary to get to
resolution of the circumstances; and
c. review and assist in the company's analysis of potential
Chapter 5 recoveries; and evaluate other assets and claims
available to the unsecured creditors and estimate value.
About Allied Systems
BDCM Opportunity Fund II, LP, Spectrum Investment Partners LP, and
Black Diamond CLO 2005-1 Adviser L.L.C., filed involuntary
petitions for Allied Systems Holdings Inc. and Allied Systems Ltd.
(Bankr. D. Del. Case Nos. 12-11564 and 12-11565) on May 17, 2012.
The signatories of the involuntary petitions assert claims of at
least $52.8 million for loan defaults by the two companies.
Allied Systems, through its subsidiaries, provides logistics,
distribution, and transportation services for the automotive
industry in North America.
Allied Holdings Inc. previously filed for chapter 11 protection
(Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537) on July 31,
2005. Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP,
represented the Debtors in the 2005 case. Allied won confirmation
of a reorganization plan and emerged from bankruptcy in May 2007
with $265 million in first-lien debt and $50 million in second-
lien debt.
The petitioning creditors said Allied has defaulted on payments of
$57.4 million on the first lien debt and $9.6 million on the
second. They hold $47.9 million, or about 20% of the first-lien
debt, and about $5 million, or 17%, of the second-lien obligation.
They are represented by Adam G. Landis, Esq., and Kerri K.
Mumford, Esq., at Landis Rath & Cobb LLP; and Adam C. Harris,
Esq., and Robert J. Ward, Esq., at Schulte Roth & Zabel LLP.
Allied Systems Holdings Inc. formally put itself and 18
subsidiaries into bankruptcy reorganization June 10, 2012,
following the filing of the involuntary Chapter 11 petition.
The Company is being advised by the law firms of Troutman Sanders,
Gowling Lafleur Henderson, and Richards Layton & Finger.
The bankruptcy court process does not include captive insurance
company Haul Insurance Limited or any of the Company's Mexican or
Bermudan subsidiaries. The Company also announced that it intends
to seek foreign recognition of its Chapter 11 cases in Canada.
An official committee of unsecured creditors has been appointed in
the Chapter 11 cases of Allied Systems Holdings Inc. and Allied
Systems Ltd. The Committee
An official committee of unsecured creditors has been appointed in
the case. The Committee consists of Pension Benefit Guaranty
Corporation, Central States Pension Fund, Teamsters National
Automobile Transporters Industry Negotiating Committee, and
General Motors LLC. The Committee is represented by Sidley Austin
LLP.
ALMACENES RIVIERA: Trustee Fails to Advance Suit Against Insiders
-----------------------------------------------------------------
Senior District Judge Salvador E. Casellas in Puerto Rico tossed
an appeal taken by the Chapter 7 trustee of the now defunct
Almacenes Riviera, Inc., a family-owned corporation, from the
bankruptcy court's dismissal of the trustee's three remaining
causes of action in his lawsuit against two former directors and
shareholders of ARI: the first, for breach of fiduciary duties;
the fifth, for prepetition transfers of $180,000 for less than
equivalent value; and the sixth, for collection of loans made to
insiders.
According to the District Court, although the Trustee, Wilfredo
Segarra-Miranda, has launched a myriad of appellate challenges,
most of them presume error in the bankruptcy court's conclusions
that (1) certain claims within the first cause of action were time
barred; and (2) the Trustee failed to carry his burden of proof as
to his claim of fiduciary duty violations for payment of illegal
dividends as well as to the fifth and sixth causes of action.
Because the Trustee failed to identify a reversible error in those
conclusions, the District Court said need not reach any of the
other issues raised, and the bankruptcy court's decision is
affirmed.
Almacenes Riviera, Inc., which operated several retail department
stores in Puerto Rico, and its affiliates filed for Chapter 11
bankruptcy protection (Bankr. D. P.R. Case No. 02-10788) in
October 2002, amidst a downturn in both sales and working capital,
and apparently unable to obtain additional external financing.
The reorganization attempts came to a halt in 2004, when the
Chapter 11 bankruptcy case was converted to a Chapter 7
liquidation, and Wilfredo Segarra Miranda became the Chapter 7
Trustee.
The case before the District Court is, WILFREDO SEGARRA-MIRANDA
Appellant, v. MEISY A. PEREZ-PADRO, et al. Appellees, Civil No.
12-1026 (D. P.R.). A copy of the District Court's Sept. 13, 2012
Opinion and Order is available at http://is.gd/4VdT56from
Leagle.com.
ALPHA NATURAL: S&P Puts 'BB-' Corporate Credit Rating on Watch Neg
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
the 'BB-' corporate credit rating, on Bristol, Va.-based Alpha
Natural Resources Inc. on CreditWatch with negative implications.
"The CreditWatch negative listing means we could affirm or lower
the ratings after we complete our review," S&P said.
"We placed the ratings on CreditWatch following Alpha's
announcement that it plans further production curtailments in
2013, given weaker pricing and demand for both thermal and
metallurgical coal," said credit analyst Megan Johnston. "Alpha
now plans 2013 tonnage production around the low-80 million range,
down from our previous expectation of 90 million tons. We
previously expected 2013 EBITDA of between $750 million and $850
million."
"In resolving the CreditWatch listing, we will review our
performance expectations and Alpha's liquidity position, and
assess its operating prospects to determine whether a lower rating
is warranted. This will include meeting with management to discuss
near-term operating and financial prospects, including end market
trends. We expect to resolve the CreditWatch listing within the
next several weeks," S&P said.
AMERICAN AIRLINES: AMR, Committee Lawyers Cost $5.5-Mil. Per Month
------------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that AMR Corp., the parent company of American Airlines
Inc., is being charged an average of about $4 million a month by
its primary bankruptcy lawyers since filing to reorganize in late
November.
According to the report, Weil Gotshal & Manges LLP, the airline's
chief lawyers, this week filed a request for court approval of
$17.5 million in fees covering April 1 through July 31. From the
start of the case through March 31, the cost excluding expenses
was $14.8 million. Primary lawyers for the official creditors'
committee from Skadden Arps Slate Meagher & Flom LLP are costing
an average of $1.4 million a month. In the new fee request filed
this week, Skadden seeks $5.6 million. In the prior request, the
total was $5.7 million.
The report relates that the airline is being forced to reduce the
flight schedule 2% this month and next because of a shortage of
pilots. The pilots' union said its members aren't engaging in a
job action. Last week, the bankruptcy court authorized AMR to
impose contract concessions on the pilots.
The report notes that AMR's other eight unions negotiated and
ratified contracts with fewer concessions. AMR will be putting
about 4,000 mechanics and ground workers on furlough as the result
of their unions' contract concessions.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion
in total assets, $29.55 billion in total liabilities, and a
$4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Pilots' Union to Appeal Contract Rejection
-------------------------------------------------------------
A union representing American Airlines Inc. pilots said it will
appeal a bankruptcy judge's ruling that allowed the company to
cancel its labor agreement with pilots.
Earlier this month, Judge Sean Lane of the U.S. Bankruptcy Court
for the Southern District of New York authorized American Airlines
to throw out its agreement with the union after it changed its
earlier proposal to remove all restrictions on its power to
furlough pilots and to outsource flying via code-share agreements
with other airlines.
In a notice filed last week, Allied Pilots Association said it
will ask a federal court to consider whether the bankruptcy judge
erroneously concluded that the changes to the agreement proposed
by the company are necessary for its restructuring.
APA pointed out that American Airlines made no effort to show that
it could not restructure with a lesser earnings target and that
the concessions it sought exceeded those needed to reach
competitive pilot labor costs.
The pilots' union also said that American Airlines demanded
concessions on "numerous specific terms that are wholly
unnecessary to reorganization" in light of the company's own
business plan and the union's counterproposals.
APA is seeking to have the case heard by the U.S. District Court
for the Southern District of New York.
A group of American Airlines pilots led by David Williams Jr. also
challenged Judge Lane's September 5 ruling. The pilots previously
worked for Trans World Airlines before it merged with American
Airlines.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in
total assets, $29.55 billion in total liabilities, and a $4.83
billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Court OKs New CBA With Flight Attendants Union
-----------------------------------------------------------------
American Airlines Inc. won approval of a new labor agreement with
the Association of Professional Flight Attendants.
Judge Sean Lane on September 12 approved the six-year contract,
which gives the union 3% of the equity issued to unsecured
creditors when the airline's parent AMR Corp. emerges from
bankruptcy protection. The contract also offers larger pay
increases for the flight attendants and an early-retirement option
for senior attendants.
The bankruptcy judge said "labor peace" was valuable to AMR,
Bloomberg News reported.
"This is a very wise thing to do to resolve the dispute in this
way," Bloomberg News quoted Judge Lane as saying.
If the flight attendants had rejected the contract, American
Airlines was expected to ask the bankruptcy judge to cancel their
current contract and allow the airline to impose more drastic
terms on the group.
The flight attendants wound up their ratification voting on
August 19, with 59.5% accepting the offer to 40.5% turning it
down. Almost 93% of the voters cast ballots.
If the flight attendants had rejected the offer, American
Airlines was expected to ask the bankruptcy judge overseeing AMR
Corp.'s restructuring to cancel their current contract and allow
the company to impose more drastic terms on the group, the report
said.
Under the new labor contract, the flight attendants are offered
larger pay increases, an early-retirement option for senior
attendants and 3% of the equity of the restructured company.
American Airlines said in a statement that the ratification is an
important step in its restructuring, and that the "yes" vote
means the flight attendants will see many benefits that would not
have been available without a consensual agreement.
Separately, AMR filed a motion on August 24 asking Judge Sean
Lane of the U.S. Bankruptcy Court for the Southern District of
New York to authorize American Airlines to enter into the new
labor contract with the Association of Professional Flight
Attendants, the union representing the 18,000 flight attendants.
The terms of the new labor contract are outlined in a proposal
and two letter agreements, which can be accessed without charge
at http://bankrupt.com/misc/AMR_CBAsAPFA.pdf
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in
total assets, $29.55 billion in total liabilities, and a $4.83
billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Labor Contract With TWU Approved by Judge
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved American Airlines Inc.'s new labor agreement with the
Transport Workers Union of America. The union, which represents
groups including mechanics and baggage handlers, will get 4.8% of
the equity distributed to creditors. The new contract also
provides for annual pay increases, an early out incentive and
enhanced 401(k), and preserves medical benefits in line with
those offered to other AMR employees.
The new agreement "recognizes the concerns of American's mechanic
& related and stores employee groups while providing the debtors
with the necessary savings and work rule flexibility that are key
to their long-term viability," according to the company's lawyer,
Stephen Karotkin, Esq., at Weil Gotshal & Manges LLP, in New
York.
The CBA provides for annual pay increases, an early out incentive,
and enhanced 401(k) contributions, according to court papers.
Specifically, the CBA provides for structured base pay rate
increases in each year of the agreement as well as for pay rates
to be increased to industry average at the mid-point of the term
of the agreement.
The CBA also provides new retirement defined contribution
benefits in line with those provided to peers at other network
carriers but provides for a freeze of the existing defined
benefit retirement plans.
The agreement also preserves medical benefits in line with those
offered to other employees of AMR and its affiliates. Future
retirees will have access to retiree medical coverage or Medicare
supplement coverage at their cost.
The terms of the CBA are outlined in two settlement proposals,
which can be accessed without charge at http://is.gd/gr4bAJ
In view of the revisions to the current CBA with the union, the
new agreement also contains additional provisions related to the
administration of AMR's bankruptcy case and a proposed
restructuring plan. These understandings are reflected in a
settlement letter and the letters of memorandum, which can be
accessed at http://is.gd/GTLnu9
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in
total assets, $29.55 billion in total liabilities, and a $4.83
billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Opposes M&T Bid for Guaranty Claims Protocol
---------------------------------------------------------------
American Airlines Inc. and the Official Committee of Unsecured
Creditors object to, and ask the Court to deny, the joint motion
of Manufacturer and Traders Trust Company and Marathon Asset
Management, LP, asking the Court to establish preliminary
adjudication procedures for special facilities revenue bond
guaranty claims.
The Debtors and the Creditors' Committee complain that requiring
them to object to the Guaranty Claims by no later than Oct. 19,
2012, is unjustified.
The Movants, according to Debtors' counsel, Alfredo R. Perez,
Esq., at Weil, Gotshal & Manges LLP, in New York, cited no basis
to force the Debtors to begin adjudicating the Guaranty Claims
ahead of thousands of other claims asserted in the Chapter 11
cases other than to note that the bar date passed in July this
year, and "the time is ripe" for starting to adjudicate the
Guaranty Claims. Mr. Perez points out that the Debtors are
currently in the process of evaluating the thousands of claims
that were filed in their Chapter 11 cases and will seek to
resolve or adjudicate those claims in the time-frame and process
that they determine are in the best interest of their estates.
Denying the Motion at this juncture does not foreclose the
possibility of streamlining the litigation process of Guaranty
Claims, Mr. Perez tells the Court.
The Creditors' Committee also argues that requiring the Debtors
and the panel to attend to the parochial concerns of a small
subset of creditors at this time is inappropriate. The Committee
has been focused on matters of central relevance to the Debtors'
long-term viability and creditor recoveries, including resolution
of the Debtors' defined benefit pension plans, negotiations with
the Debtors' labor organizations, the refinement of the Debtors'
business plan, and the evaluation of potential strategic
alternatives, John Wm. Butler, Jr., Esq., at Skadden, Arps,
Slate, Meagher & Flom LLP, in New York, tells the Court.
The Bank of New York Mellon Trust Company, N.A., as indenture
trustee for approximately $2.3 billion in airport revenue bonds,
supports the motion filed by M&T and Marathon and asserts that
the Debtors and the Committee should be required to object to
guaranty claims in advance of solicitation of any Chapter 11
plan. BNY Mellon relates that it has filed guarantee claims
against American Airlines Inc. totaling not less than
$1,631,208,610 and against AMR totaling not less than
$1,801,965,961.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in
total assets, $29.55 billion in total liabilities, and a $4.83
billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: U.S. Bank Renews Bid to Limit Cash Use
---------------------------------------------------------
U.S. Bank Trust National Association, as trustee and security
agent with respect to the 10.5% Senior Secured Notes due 2012 of
American Airlines, Inc., filed a renewed motion asking the Court
to condition the Debtors' use of the Trustee's collateral and to
continue to impose the automatic stay upon the grant of adequate
protection. In the alternative, U.S. Bank seeks relief from the
automatic stay.
According to Craig M. Price, Esq., at Chapman and Cutler LLP, in
Chicago, Illinois, the Notes are secured primarily by
depreciating assets -- certain aircraft that are depreciating
both with age and usage, and U.S. Bank has received nothing since
the Petition Date in return for those diminishing assets.
Mr. Price tells the Court that the Trustee filed the renewed
Motion as a result of changes in circumstances, each of which
change poses a risk of diminution to the value of the Trustee's
collateral. These include:
(a) the failure of American to pay postpetition interest on
the Notes resulting in the accrual of over $35.8 million
of postpetition interest;
(b) the decline of the disposition value of the Aircraft,
with a gross current value of $546 million;
(c) American's failure to comply with certain provisions of
the Indenture, including its failure to provide
information sufficient to enable the Trustee to report to
investors and the failure to maintain the contractually
bargained-for Collateral Ratio -- based on AVITAS Inc.'s
current valuation of the Aircraft -- with additional cash
or aircraft value of $490 million;
(d) the further deterioration of the maintenance condition of
the Aircraft and the deferral of over 490 damage items on
over 80 of the 143 Aircraft, or over 56% of the Aircraft,
and the corresponding postpetition erosion of value of the
Aircraft;
(e) the failure to make permanent repairs to certain damaged
Aircraft;
(f) American's generation of monthly revenue of approximately
$339 million from these Aircraft or over approximately
$2.7 billion in revenue since the filing of the petition,
all without paying anything to the Trustee for the use
and deterioration of the Aircraft;
(g) the Notes mature on October 15, 2012; and
(h) the nearly non-existent equity cushion on a net basis that
is now believed to be a mere 2.0%.
As a result, the Trustee asks the Court to:
(i) grant it an administrative priority claim for the
diminution in the value and the use of the Aircraft since
the Petition Date and a superpriority claim under
Section 507(b) of the Bankruptcy Code for the failure to
have adequate collateral to cover all obligations under
the Indenture;
(ii) lift the automatic stay and provide for the release of the
$41,000,000 held as collateral by the Trustee to pay the
fees and expenses of the Trustee and to make a payment of
principal and interest to the holders of the Notes and to
pay any other obligations under the Indenture, including
expenses of preservation of the Aircraft or costs of
remarketing;
(iii) require the Debtors to make a payment in the amount of the
monthly maintenance burn of approximately $13.9 million
for use to make payments due on the Notes as well as to
provide a source of funds in the event the Debtors do not
maintain the Aircraft;
(iv) require return conditions so that the Trustee knows where
and in what condition the Aircraft will be if and when the
Aircraft are returned; and
(v) require the Debtors upon any return of the Aircraft to
deliver records that comply with the expectation of the
marketplace, including but not limited to, providing
executed copies of records such as maintenance reports.
Debtors & Creditors' Committee Object
The Debtors and the Official Committee of Unsecured Creditors ask
the Court to deny the Trustee's renewed motion arguing that the
Renewed Motion makes essentially the same allegations that
accompanied the First Adequate Protection Motion, which was
previously denied by the Court.
The Committee also argues that the "changes in circumstances"
referred to in the renewed motion are not new or do not justify
adequate protection, or both.
The Debtors relate that since the entry of the Initial Order,
they furnished the Trustee with an updated appraisal of the
Collateral, dated April 16, 2012, and that appraisal demonstrated
that the Trustee's equity cushion remained over 80% above its
interest in the Collateral -- again unequivocally establishing
that the Trustee's interest is adequately protected.
U.S. Bank Talks Back
U.S. Bank maintains that the situation has changed due to (a) a
lack of heavy maintenance checks and engine restoration visits
which cause the value of the aircraft to decrease, (b) the
identification of approximately 500 items of deferred maintenance
the Debtors have elected not to complete, (c) the default in the
payment of interest on the Notes when due on April 15, 2012
eroding the collateral coverage, (d) the Debtors' decision to
park three of the Aircraft, and (e) merger discussions which may
cause the Debtors to reject older aircraft.
In their Objections, the Debtors and the Committee assume that
the Trustee is adequately protected rather than guarantee that
the Trustee is adequately protected, Mr. Price points out. The
desktop appraisals that the Debtors rely upon make assumptions
with respect to the Aircraft that erroneously inflate their value
by hundreds of millions of dollars, according to Mr. Price.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in
total assets, $29.55 billion in total liabilities, and a $4.83
billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Pilots Picket at O'Hare Int'l Airport
--------------------------------------------------------
The Allied Pilots Association (APA) representing the 10,000 pilots
who fly for American Airlines picketed to signify American
Airlines pilots' determination to secure a contract commensurate
with their status as professional aviators for a major U.S.
carrier. The picket was set for Thursday, Sept. 20, 2012 from 3
p.m. to 5 p.m. Central time between Terminals 2 and 3 on outside
connecting sidewalk, O'Hare International Airport in Chicago.
American Airlines management recently received bankruptcy court
approval to reject the APA-American Airlines Collective Bargaining
Agreement. Management is now unilaterally implementing new terms
of employment that adversely affect pilots' working conditions,
compensation and retirement security. APA believes management is
using Chapter 11 bankruptcy to extract far more value from the
pilots than what's needed to successfully restructure American
Airlines.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion
in total assets, $29.55 billion in total liabilities, and a
$4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AXLE: Enters Into First Supplemental Indenture with BNY
----------------------------------------------------------------
In connection with the cash tender offer and consent solicitation
by American Axle & Manufacturing, Inc., for any and all of its
outstanding $250 million aggregate principal amount of 5.25%
Senior Notes due Feb. 11, 2014, the Company and The Bank of New
York Mellon Trust Company, N.A. (as successor to BNY Midwest Trust
Company), as trustee, entered into a first supplemental indenture
dated as of Sept. 17, 2012.
On Sept. 18, 2012, the Company accepted for payment and paid for
$137,833,000 aggregate principal amount of the Notes. The First
Supplemental Indenture amends and supplements the indenture, dated
as of Feb. 11, 2004, among the Company, American Axle &
Manufacturing Holdings, Inc., as guarantor, and the Trustee,
pursuant to which the Notes were issued. The First Supplemental
Indenture became operative on Sept. 18, 2012, upon the acceptance
and payment by the Company of all Notes tendered in the Tender
Offer before 5:00 p.m., Sept. 17, 2012. The First Supplemental
Indenture amends the Indenture to, among other things, eliminate
most of the restrictive covenants and certain default provisions
applicable to the Notes.
A copy of the First Supplemental Indenture is available at:
http://is.gd/1bcGgG
About American Axle
Headquartered in Detroit, Michigan, American Axle & Manufacturing
Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- manufactures,
engineers, designs and validates driveline and drivetrain systems
and related components and chassis modules for light trucks, sport
utility vehicles, passenger cars, crossover vehicles and
commercial vehicles.
The Company's balance sheet at June 30, 2012, showed $2.44 billion
in total assets, $2.83 billion in total liabilities and a $394.7
million total stockholders' deficit.
* * *
In January 2012, Fitch Ratings has affirmed the 'B+' Issuer
Default Ratings (IDRs) of American Axle & Manufacturing.
Fitch expects leverage to trend downward over the intermediate
term, however, as the company gains traction on its new business
wins. Looking ahead, Fitch expects free cash flow to be
relatively weak, but positive, in 2012 with the steep ramp-up
in new business and as the company continues to make investments
in both capital assets and research and development work to
support growth opportunities in its customer base and product
offerings. Beyond 2012, free cash flow is likely to strengthen
meaningfully as the new programs coming on line in the near term
begin to produce higher levels of cash.
ARCAPITA BANK: Moves to Secure Unique Bankruptcy Financing
----------------------------------------------------------
Jacqueline Palank at Dow Jones' Daily Bankruptcy Review reports
that Arcapita Bank won bankruptcy-court permission to move forward
with talks to line up what could be one the first bankruptcy-
financing deal compliant with Islamic Sharia law.
Arcapita Bank
Arcapita Bank B.S.C., also known as First Islamic Investment Bank
B.S.C., along with affiliates, filed for Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 12-11076) in Manhattan on
March 19, 2012. The Debtors said they do not have the liquidity
necessary to repay a US$1.1 billion syndicated unsecured facility
when it comes due on March 28, 2012.
Falcon Gas Storage Company, Inc., later filed a Chapter 11
petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012.
Falcon Gas is an indirect wholly owned subsidiary of Arcapita
that previously owned the natural gas storage business NorTex Gas
Storage Company LLC. In early 2010, Alinda Natural Gas Storage
I, L.P. (n/k/a Tide Natural Gas Storage I, L.P.), Alinda Natural
Gas Storage II, L.P. (n/k/a Tide Natural Gas Storage II, L.P.)
acquired the stock of NorTex from Falcon Gas for $515 million.
Arcapita guaranteed certain of Falcon Gas' obligations under the
NorTex Purchase Agreement.
The Debtors tapped Gibson, Dunn & Crutcher LLP as bankruptcy
counsel, Linklaters LLP as corporate counsel, Towers & Hamlins
LLP as international counsel on Bahrain matters, Hatim S Zu'bi &
Partners as Bahrain counsel, KPMG LLP as accountants, Rothschild
Inc. and financial advisor, and GCG Inc. as notice and claims
agent.
Milbank, Tweed, Hadley & McCloy LLP represents the Official
Committee of Unsecured Creditors. Houlihan Lokey Capital, Inc.,
serves as its financial advisor and investment banker.
Founded in 1996, Arcapita is a global manager of Shari'ah-
compliant alternative investments and operates as an investment
bank. Arcapita is not a domestic bank licensed in the United
States. Arcapita is headquartered in Bahrain and is regulated
under an Islamic wholesale banking license issued by the Central
Bank of Bahrain. The Arcapita Group employs 268 people and has
offices in Atlanta, London, Hong Kong and Singapore in addition
to its Bahrain headquarters. The Arcapita Group's principal
activities include investing on its own account and providing
investment opportunities to third-party investors in conformity
with Islamic Shari'ah rules and principles.
The Arcapita Group has roughly US$7 billion in assets under
management. On a consolidated basis, the Arcapita Group owns
assets valued at roughly US$3.06 billion and has liabilities of
roughly US$2.55 billion. The Debtors owe US$96.7 million under
two secured facilities made available by Standard Chartered Bank.
Arcapita explored out-of-court restructuring scenarios but was
unable to achieve 100% lender consent required to effectuate the
terms of an out-of-court restructuring.
Subsequent to the Chapter 11 filing, Arcapita Investment Holdings
Limited, a wholly owned Debtor subsidiary of Arcapita in the
Cayman Islands, issued a summons seeking ancillary relief from
the Grand Court of the Cayman Islands with a view to facilitating
the Chapter 11 cases. AIHL sought the appointment of Zolfo
Cooper as provisional liquidator.
ASSET MANAGEMENT: Case Summary & 3 Unsecured Creditors
------------------------------------------------------
Debtor: Asset Management Holdings, LLC
551 North Cattlemen Road
Suite 100
Sarasota, FL 34232
Bankruptcy Case No.: 12-14098
Chapter 11 Petition Date: September 15, 2012
Court: United States Bankruptcy Court
Middle District of Florida (Tampa)
Debtor's Counsel: David Marshall Brown, Esq.
BROWN, VAN HORN, P.A.
330 North Andrews Avenue, Suite 450
Fort Lauderdale, FL 33301
Tel: (954) 765-3166
Fax: (954) 765-3382
E-mail: David@brownvanhorn.com
Scheduled Assets: $1,215,001
Scheduled Liabilities: $925,173
A copy of the Company's list of its three unsecured creditors
filed together with the petition is available for free at
http://bankrupt.com/misc/flmb12-14098.pdf
The petition was signed by Thierry Cassagnol, MGMR.
ASP HHI: S&P Assigns Prelim. 'B+' Corporate Credit Rating
---------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'B+'
corporate credit rating to ASP HHI Intermediate Holdings Inc.
(HHI). The rating outlook is stable. "We also assigned our
preliminary 'B+' issue-level rating to HHI's $580 million senior
secured credit facility, consisting of a $75 million senior
secured revolver (unfunded at close) and a $505 million term loan
B. We also assigned this debt our preliminary recovery rating of
'3', indicating our expectation of meaningful (50% to 70%)
recovery for lenders in the event of a payment default," S&P said.
"Our preliminary ratings are subject to review of final
documentation upon close of transaction," S&P said.
"We intend to withdraw the existing ratings on HHI Holdings LLC
(which American Securities is acquiring through ASP HHI
Intermediate Holdings Inc.) upon completion of the proposed
financing since all existing debt will have been refinanced," S&P
said.
"The ratings on the Royal Oak, Mich.-based auto supplier HHI
reflect what Standard & Poor's considers a 'weak' business risk
profile and 'aggressive' financial risk profile, according to our
criteria. Our business risk assessment incorporates the multiple
industry risks facing automotive suppliers, including volatile
demand, high fixed costs, intense competition, and severe pricing
pressures," S&P said.
"HHI has a reported strong market position (which we view as
sustainable because of the limited number of competing assets) as
a manufacturer of highly engineered metal forgings and machined
components, wheel bearings, and powdered metal engine and
transmission components for automotive and industrial customers,"
S&P said.
"Our financial risk profile assessment includes HHI's pending
acquisition by American Securities through a recapitalization
comprising a $505 million senior secured term loan B and a $75
million revolver, repaying existing debt. We estimate the ratio of
debt to EBITDA at about 4x pro forma at June 30, 2012, including
our adjustment to add the net present value of operating leases to
debt," said Standard & Poor's credit analyst Nishit Madlani.
"Despite the potential for moderating leverage over time," Mr.
Madlani added, "we assume HHI's financial policies will remain
aggressive, given the private-equity ownership and the possibility
that the company may pursue additional targeted acquisitions or,
eventually, distributions to shareholders."
"The stable rating outlook reflects our belief that HHI can
maintain positive free operating cash flow generation in the year
ahead, with leverage of about 4.0x or less, given our expectation
of gradually improving production in North America. However, the
general economic recovery is fragile, in our view, and HHI's cash
generation is very susceptible to future auto production, which we
believe could be volatile. We also consider GM's ability to
maintain its market share a key factor for HHI's performance," S&P
said.
BAKER & TAYLOR: Moody's Reviews 'Caa1' CFR for Upgrade
------------------------------------------------------
Moody's Investors Service placed Baker & Taylor Acquisitions
Corp.'s Caa1 corporate family rating and probability of default
rating on review for possible upgrade. At the same time, Moody's
assigned a Ba3 rating to the proposed $245 million senior secured
asset-based revolving credit facility due 2016 and a B1 rating to
the $45 million last out senior secured tranche due 2016. Moody's
also assigned a B3 rating to the proposed $150 million senior
secured second lien notes due 2017. Moody's affirmed the Caa1
rating on the existing second-priority senior secured notes.
Ratings Rationale
The company intends to use proceeds from the issuance to refinance
existing indebtedness of Baker & Taylor Acquisitions Corp.
Concurrently, $13.2 million of the $75.4 million of senior
unsecured discount notes due July 1, 2014 (unrated) that are an
obligation of BTAC Holding Corp. will be converted into a new
third lien secured PIK note due 2017 at Baker & Taylor
Acquisitions Corp. The remaining amount will be restructured into
a new $62.2 million discount note due 2018 that will remain an
obligation of BTAC Holding Corp.
The review for possible upgrade considers that the proposed
refinancing will improve Baker & Taylor's debt maturity profile.
The $165 million senior secured notes mature on July 1, 2013 and
the $275 million revolving credit facility will mature on March
31, 2013 unless the senior secured notes are refinanced by this
date. In addition, the company will be in technical default of the
existing revolving credit facility if it's unable to deliver an
unqualified audit by October 27, 2012 (current audit includes a
qualification over the ability to continue as a going concern).
The timely completion of the proposed refinancing will likely
result in an upgrade of Baker & Taylor's corporate family rating
to B3. The ratings on the proposed debt instruments were assigned
based on the B3 corporate family rating should the transaction
transpire, subject to Moody's review of final terms and
conditions.
Ratings assigned:
Proposed $245 million senior secured asset-based revolving
credit facility due 2016 at Ba3 (LGD2, 14%)
Proposed $45 million last out senior secured tranche due 2016 at
B1 (LGD2, 29%)
Proposed $150 million senior secured second lien notes due 2017
at B3 (LGD3, 43%)
Ratings placed under review for upgrade:
Corporate family rating at Caa1
Probability of default rating at Caa1
Rating affirmed and to be withdrawn at closing:
$165 million second-priority senior secured notes due 2013 at
Caa1
The possible rating upgrade also reflects Moody's expectation that
profitability levels will remain stable or modestly improve
despite topline pressure and that free cash flow will be positive.
In addition, pro forma credit metrics are generally supportive of
the B3 ratings category. Moody's estimates that pro forma debt to
EBITDA was 5.8 times (Moody's adjusted and incorporating the
proposed transaction) as of June 29, 2012. Moody's expects debt to
EBITDA will decline in the range of 5.5 times near-term based on
stable to modestly higher EBITDA levels and debt paydowns that are
sufficient to offset the accretion of the third lien PIK note and
holding company debt. The proposed debt structure is expected to
carry high interest rates, contributing to modest coverage
metrics. Moody's expects EBITDA less capex to interest in the
range of 1.0 to 1.1 times over the next 12 to 18 months.
The rating action also incorporates material business risks,
including continued pressure on the library & education business
due to reduced funding for public libraries, soft demand trends in
the retail business, and structural changes to the industry with
the shift in consumer preference towards digital books. The rating
is supported by the company's business position as a large-scale
book distributor, significant market presence in public and
academic libraries, and the counter-cyclical nature of its cash
flows.
To the extent the proposed refinancing is not completed on a
timely basis, the ratings could be downgraded given the
approaching debt maturities.
Headquartered in Charlotte, North Carolina, Baker & Taylor
Acquisitions Corp. is a leading distributor of books and
entertainment products to the retail and institutional markets.
The company reported sales of approximately $1.6 billion for the
fiscal-year ended June 29, 2012.
The principal methodology used in rating Baker & Taylor
Acquisitions Corp. was the Global Distribution & Supply Chain
Services Ratings Methodology published in November 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
BEHRINGER HARVARD: Hires Powell Coleman, Alvin Badger
-----------------------------------------------------
BHFS I LLC and its affiliates ask for permission from the U.S.
Bankruptcy Court to employ certain law firms regularly employed in
the ordinary course of their business without submission of
separate employment applications and the issuance of separate
retention orders for each professional.
The ordinary course professionals and the services they provide
are:
Law Firm Service
-------- -------
Powell Coleman & Arnold LLP Real estate transactional
Principal attorney: Patrick M. Arnold
8080 N. Central Expressway, Suite 1380
Dallas, TX 75206
Telephone: (214) 373-8767
E-mail: parnold@pcallp.com
Alvin H. Badger, Esq. Lease disputes and settlements
6440 N. Central Expressway
Suite 514 LB 30
Dallas, TX 75206
Telephone: (214) 521-2888
E-mail: ahbadger@gmail.com
The Debtors propose to compensate each OCP, without formal
application to the Court, 100% of fees and reimbursements to each
OCP, however, that, while the Chapter 11 cases are pending, the
fees of each OCP do not exceed $7,500 per month.
The Debtors attest that the firm is a "disinterested person" as
the term is defined in Section 101(14) of the Bankruptcy Code.
Meanwhile, the Hon. Brenda T. Rhoades on Sept. 4 entered a fourth
interim cash collateral order. The order extended the prior cash
collateral order from the period Sept. 1, 2012 through Sept. 14.
As reported by the Troubled Company Reporter on July 24, 2012, the
Debtors said in court papers that, without an immediate ability to
use cash collateral, they do not have other sufficient cash and
funds to carry on the operation of their businesses, to pay
employees, pay vendors and service providers, and to protect their
property. Absent an immediate use of cash collateral, the Debtors
said they would suffer immediate and irreparable injury.
Four debtors -- BHFS I LLC, BHFS II LLC, BHFS III LLC, and BHFS IV
LLC -- owed Bank of America, N.A., as agent for itself and for
Regions Bank, $43.8 million under a syndicated loan. BofA and
Regions Bank assert a first lien on the Four Debtors' assets.
BHFS Theater owed Bank of America $4.6 million under a separate
loan. BofA asserts a first lien on BHFS Theater's assets. BofA
and Regions Bank, as lenders under the syndicated loan, assert a
second lien on BHFS Theater's assets.
About BHFS
Addison, Texas-based BHFS I LLC and its affiliates, owners of the
Frisco Square master-planned development in the Dallas suburb of
Frisco, filed for Chapter 11 protection (Bankr. E.D. Tex. Case No.
12-41581 to 12-41585) on June 13 in Sherman. The affiliates are
Behringer Harvard Frisco Square LP, BHFS II LLC, BHFS III LLC,
BHFS IV LLC, and BHFS Theater LLC. BHFS I and BHFS II each
estimated assets and debts of $10 million to $50 million. In its
schedules, BHFS I LLC disclosed $28,947,198 in total assets and
$13,742,348 in total liabilities.
The Debtors own and operate substantial office, retail, and
residential rental space at the highly regarded project known as
"Frisco Square," in Frisco, Texas. The project has 103,120 square
feet of rentable office space in three buildings, 110,395 square
feet of retail space in six buildings, including a 12-screen,
41,464 square-foot Cinemark theater, and 114 high-end multifamily
rental units in two buildings, all built between 2000 and 2010.
Occupancy rates are more than 85% for the office and retail space
and almost 95% for multifamily space.
Judge Brenda T. Rhoades presides over the case. Davor Rukavina,
Esq., and Jonathan Lindley Howell, Esq., at Munsch Hardt Kopf &
Harr, P.C., serve as the Debtors' counsel. The petition was
signed by Michael J. O'Hanlon, president.
George H. Barber, Esq., and David D. Ritter, Esq., at Kane Russell
Coleman & Logan PC, represent Regions Bank.
Bank of America, N.A., is represented by Keith M. Aurzada, Esq.,
and John Leininger at Bryan Cave.
BENDER SHIPBUILDING: Court Rules on Clawback Suit Against ACT
-------------------------------------------------------------
Chief Bankruptcy Judge Margaret A. Mahoney granted, in part, and
denied, in part, Analytical Chemical and Testing, Inc.'s Motion
for Summary Judgment in the lawsuit filed by the Plan
Administrator for Bender Shipbuilding and Repair Co., Inc.
The Plan Administrator sued ACT in June 2011 seeking recovery of
certain prepetition transfers from Bender. The transfers in
question total $28,627.50. The Plan Administrator alleges that
the transfers were preferential pursuant to 11 U.S.C. Sec. 547 as
they were made during the 90 days preceding the June 9, 2009
petition date. The parties exchanged discovery and, on Aug. 1,
2012, ACT filed the motion for summary judgment.
ACT is in the business of chemical testing and analysis. ACT
provided Bender with reports used to maintain compliance with
federal and state regulations (like the Clean Water Act, 33 U.S.C.
Sec. 1251 et seq.) and to obtain necessary permits. ACT provided
to Bender were necessary to avoid enforcement actions from the
Alabama Department of Environmental Management. However, no
critical vendor motion was filed by Bender on behalf of ACT in
Bender's bankruptcy case.
Bender and ACT's business relationship has spanned the last 23
years and, during that time, Bender and ACT have conducted
business on a credit basis. Bender's principal, Tom Bender, and
Robert Naman, founder, principal stockholder, and Chief Operating
Officer of ACT, have enjoyed a "long standing personal
relationship" extending back to childhood, according to Mr. Naman.
Mr. Naman stated that he was "never worried about the length of
time it took [Bender] to pay" because Tom Bender gave him personal
assurances that ACT would be paid. Moreover, Mr. Naman said that
ACT was "willing to continue performing work for [Tom Bender] even
when some invoices were long outstanding." In line with that
testimony, ACT would often accept payments on invoices 80 to 150
days in arrears from Bender.
In its ruling, the Court held that ACT's motion for summary
judgment is granted as to its subsequent new value defense. ACT
is liable for at most $15,548 in potential preference recovery.
ACT's motion for summary judgment is otherwise denied. The
adversary proceeding is set for status on Oct. 2, 2012 at 8:30
a.m.
The case is BENDER SHIPBUILDING AND REPAIR CO., INC., Plaintiff,
v. ANALYTICAL CHEMICAL AND TESTING INC., Defendant, Adv. Proc. No.
11-00102 (Bankr. S.D. Ala.). A copy of the Sept. 13, 2012 Order
is available at http://is.gd/xVCbcLfrom Leagle.com.
About Bender Shipbuilding
On June 9, 2009, three creditors filed an involuntary Chapter 7
petition (Bankr. S.D. Ala. Case No. 09-12616) against Mobile,
Ala.-based Bender Shipbuilding & Repair Co. --
http://www.bendership.com/-- and on July 1, 2009, Bender
consented to voluntary conversion of the involuntary chapter 7
proceeding to a chapter 11 proceeding. The Debtor sold
substantially all of its assets in late-2009 to Dallas-based SunTX
Capital Partners. The Court confirmed the Debtor's Plan of
Liquidation on Dec. 9, 2010. The Plan became effective Dec. 27,
2010.
BERNARD L. MADOFF: First of Two Big Appeals Set for Mid-November
----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that HSBC Holdings Plc, JPMorgan Chase & Co., UBS AG and
UniCredit SpA may learn early in the new year whether the trustee
for Bernard L. Madoff Investment Securities Inc. succeeded in
reviving $30.6 billion in lawsuits against the financial
institutions.
According to the report, two federal district judges independently
concluded that Madoff trustee Irving Picard didn't have the right
to file suits based on claims belonging to creditors. Mr. Picard
appealed to the U.S. Court of Appeals in Manhattan. Before they
were dismissed, Mr. Picard was seeking $19 billion from JPMorgan,
$9 billion from HSBC, and $2.6 billion from UBS. The last of the
briefs by the trustee and the banks was filed in April. The
appeals court scheduled the case for oral argument during the week
of Nov. 19. The appeals court usually takes several weeks to
several months after argument before a decision is handed down.
The report relates that the outcome may not be known until next
year. Separately, Mr. Picard is taking a mass appeal to the Court
of Appeals from several decisions by U.S. District Judge Jed
Rakoff knocking out some $10 billion in lawsuits against 635
customers.
The report notes that Judge Rakoff ruled, among other things, that
Mr. Picard can only recover fraudulent transfers going back two
years before bankruptcy, not six years as the trustee sought. The
two appeals together may decide whether customers are paid in full
on their claims totaling about $17 billion. If Mr. Picard loses
both appeals, customers may recover not much more than the $11.1
billion the trustee has already brought in. Mr. Picard will file
his first brief on the appeal from the 635 suits in October.
The appeals in the court of appeals with regard to HSBC, JPMorgan,
and UBS are, respectively, 11-05175, 11-05044, and 11-05051, U.S.
Court of Appeals (Manhattan). The HSBC suit in U.S. District
Court is Picard v. HSBC Bank Plc, 11-763, U.S. District Court,
Southern District of New York (Manhattan).
The UBS suit in district court is Picard v. UBS AG, 11-04213, in
the same court. The JPMorgan lawsuit in district court is Picard
v. JPMorgan Chase & Co., 11-00913, in the same court. The
JPMorgan lawsuit in bankruptcy court was Picard v. JPMorgan Chase
& Co., 10-04932, U.S. Bankruptcy Court, Southern District of New
York (Manhattan). The mass appeal is In re Bernard L. Madoff
Investment Securities Inc., 12-2557, U.S. 2nd Circuit Court of
Appeals (Manhattan).
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The
petitioning creditors -- Blumenthal & Associates Florida General
Partnership, Martin Rappaport Charitable Remainder Unitrust,
Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert
US$64 million in claims against Mr. Madoff based on the balances
contained in the last statements they got from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751).
The Chapter 15 case was later transferred to Manhattan. In June
2009, Judge Lifland approved the consolidation of the Madoff SIPA
proceedings and the bankruptcy case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to
150 years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.)
The SIPA Trustee has said that as of March 31, 2012, through
prepetition litigation and other settlements, he has successfully
recovered, or reached agreements to recover, more than $9 billion
-- over 50% of the principal lost in the Ponzi scheme by those who
filed claims -- for the benefit of all customers of BLMIS.
The liquidation has so far has cost the Securities Investor
Protection Corp. $1.3 billion, including $791 million to pay a
portion of customers' claims.
Mr. Picard has so far made only one distribution in October of
$325 million for 1,232 customer accounts. Uncertainty created by
the appeals has limited Mr. Picard's ability to distribute
recovered funds. Outstanding appeals include the $5 billion
Picower settlement and the $1.025 billion settlement.
BON-TON STORES: COO Schrantz Terminated; Position Phased Out
------------------------------------------------------------
The Bon-Ton Stores, Inc., eliminated the position of Chief
Operating Officer and that, as a result of that change, the
employment of the Company's current Chief Operating Officer,
Barbara J. Schrantz, was terminated effective Sept. 14, 2012.
The Company entered into a Separation Agreement and General
Release with Ms. Schrantz. The Separation Agreement was entered
into in accordance with the terms set forth in the Employment
Agreement between the Company and Ms. Schrantz dated Jan. 30,
2011. The Separation Agreement provides for severance payments
and other benefits to be paid to Ms. Schrantz upon a termination
without cause. In addition, among other things, the Company has
agreed under the Separation Agreement that:
(i) Ms. Schrantz will be compensated for her accrued but unused
vacation days during the 2012 fiscal year; and
(ii) 15,000 shares of restricted stock granted to Ms. Schrantz
pursuant to the Restricted Stock Agreement dated April 12,
2010, with a vesting date of April 12, 2013, will vest upon
termination of employment.
About Bon-Ton Stores
The Bon-Ton Stores, Inc., with corporate headquarters in York,
Pennsylvania and Milwaukee, Wisconsin, operates 276 department
stores, which includes 11 furniture galleries, in 23 states in the
Northeast, Midwest and upper Great Plains under the Bon-Ton,
Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman,
Herberger's and Younkers nameplates and, in the Detroit, Michigan
area, under the Parisian nameplate.
The Company incurred a net loss of $40.8 million on $640 million
of net sales for the 13 weeks ended April 28, 2012.
The Company's balance sheet at July 28, 2012, showed $1.56 billion
in total assets, $1.51 billion in total liabilities and $48.33
million in total shareholders' equity.
* * *
In the Jan. 12, 2012, edition of the TCR, Standard & Poor's
Ratings Services lowered its corporate credit rating on Bon-Ton
Stores Inc. to 'B-' from 'B'.
"The downgrade reflects the continued deterioration of the
company's performance, which has been below our expectations due
to merchandising that has not resonated with its customers," said
Standard & Poor's credit analyst David Kuntz. He added, "It
incorporates our view that operations will remain weak in the near
term and that credit protection measures will erode further
over the next year."
As reported by the TCR on July 13, 2012, Moody's Investors Service
revised The Bon-Ton Stores, Inc.'s Probability of Default Rating
to Caa1/LD from Caa3. The Caa1/LD rating reflects the company's
exchange of $330 million of new senior secured notes due 2017 for
$330 million of its unsecured notes due 2014. The LD designation
indicates that a limited default on the company's 2014 notes has
occurred, as Moody's deem that this transaction is a distressed
exchange. The LD designation will be removed in approximately 3
business days.
Moody's also affirmed the company's Corporate Family Rating at
Caa1 and affirmed the Caa3 rating assigned to the company's senior
unsecured notes due 2014.
CAPITOL BANCORP: Can Employ Honigman Miller as Bankruptcy Counsel
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
authorized Capitol Bancorp Ltd. and Financial Commerce Corporation
to employ Honigman Miller Schwartz and Cohn LLP as general
bankruptcy counsel for the Debtors.
As reported in the TCR on Aug. 15, 2012, Honigman has represented
the Debtors as their primary outside counsel since 2008 and has
served as the Debtors' counsel, for among other things, drafting
and preparing the Debtors' proposed Exchange Offers, Offering
Memoranda, the Standby Plan and the Amended Standby Plan, as well
as the preparation for the Chapter 11 cases.
To the best of Debtors' knowledge, Honigman does not have any
connection with the Debtors, their creditors, or any other party
in interest, or their attorneys.
About Capitol Bancorp
Capitol Bancorp Ltd. and Financial Commerce Corporation filed
voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case
Nos. 12-58409 and 12-58406) on Aug. 9, 2012.
Capitol Bancorp -- http://www.capitolbancorp.com/-- is a
community banking company with a network of individual banks and
bank operations in 10 states and total consolidated assets of
roughly $2.0 billion as of June 30, 2012. CBC owns roughly 97% of
FCC, with a number of CBC affiliates owning the remainder. FCC,
in turn, is the holding company for five of the banks in CBC's
network. CBC is registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841,
et seq., and trades on the OTCQB under the symbol "CBCR."
Lawyers at Honigman Miller Schwartz and Cohn LLP represent the
Debtors as counsel.
In its petition, Capitol Bancorp scheduled $112,634,112 in total
assets and $195,644,527 in total liabilities. The petitions were
signed by Cristin K. Reid, corporate president.
A hearing will be held on Sept. 18, 2012, at 10:30 a.m. to
consider confirmation of Capitol Bancorp's prepackaged Chapter 11
plan of reorganization.
CAPITOL BANCORP: Committee Can Retain Foley & Lardner as Counsel
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
authorized the official committee of unsecured creditors of
Capitol Bancorp Ltd. to retain John A. Simon, Esq., of Foley &
Lardner LLP as counsel to the Committee, nunc pro tunc to Aug. 30,
2012. The law firm's professionals bill at hourly rates ranging
from $200 to $525.
About Capitol Bancorp
Capitol Bancorp Ltd. and Financial Commerce Corporation filed
voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case
Nos. 12-58409 and 12-58406) on Aug. 9, 2012.
Capitol Bancorp -- http://www.capitolbancorp.com/-- is a
community banking company with a network of individual banks and
bank operations in 10 states and total consolidated assets of
roughly $2.0 billion as of June 30, 2012. CBC owns roughly 97% of
FCC, with a number of CBC affiliates owning the remainder. FCC,
in turn, is the holding company for five of the banks in CBC's
network. CBC is registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841,
et seq., and trades on the OTCQB under the symbol "CBCR."
Lawyers at Honigman Miller Schwartz and Cohn LLP represent the
Debtors as counsel.
In its petition, Capitol Bancorp scheduled $112,634,112 in total
assets and $195,644,527 in total liabilities. The petitions were
signed by Cristin K. Reid, corporate president.
A hearing will be held on Sept. 18, 2012, at 10:30 a.m. to
consider confirmation of Capitol Bancorp's prepackaged Chapter 11
plan of reorganization.
CASTLE KEY: A.M. Best Affirms 'B-' Financial Strength Rating
------------------------------------------------------------
A.M. Best Co. has affirmed the financial strength rating (FSR) of
B- (Fair) and issuer credit ratings (ICR) of "bb-" of the members
of Castle Key Group (Castle Key) (headquartered in St. Petersburg,
FL). The outlook for all ratings is negative. (See below for a
detailed listing of companies.)
The ratings and outlook reflect Castle Key's unprofitable
operating performance and poor risk-adjusted capitalization, as
measured by Best's Capital Adequacy Ratio (BCAR). Castle Key is
the dedicated Florida property writer for its parent company,
Allstate Insurance Company (Allstate), and it maintains
significant exposure to hurricanes, with a corresponding
substantial reliance on catastrophe reinsurance. In addition,
Castle Key's reinsurance program relies heavily upon the Florida
Hurricane Catastrophe Fund (FHCF). A.M. Best remains concerned
regarding the ability of the FHCF to fund all obligations in the
event of a severe hurricane, largely based on its contingent
capital structure. This contributes to A.M. Best's negative view
regarding the adequacy of Castle Key's catastrophe reinsurance
program in the case of a significant catastrophe event.
A.M. Best deviated from its "Rating Members of Insurance Groups"
criteria by providing more than two FSR levels of rating
enhancement to Castle Key's stand-alone assessment. However, the
additional rating enhancement acknowledges the historical
financial and operational support provided to Castle Key as part
of the Allstate organization. Although Castle Key is separately
capitalized and not reinsured by Allstate, in A.M. Best's opinion
parental support regarding the claims paying ability of Castle Key
will be maintained commensurate with its rating level in the event
of frequent and/or severe hurricane activity. If parental support
is not provided, it would be necessary for A.M. Best to re-
evaluate the current FSR of A+ (Superior) and ICRs of "aa-" of
Allstate and all the remaining members of the Allstate Insurance
Group.
Future positive rating actions may result from Castle Key
producing more favorable underwriting results along with capital
preservation. However, negative rating actions could result if
parental support was not provided in case of a significant event.
The FSR of B- (Fair) and ICRs of "bb-" have been affirmed for the
following members of the Castle Key Group:
-- Castle Key Insurance Company
-- Castle Key Indemnity Company
-- Encompass Floridian Insurance Company
-- Encompass Floridian Indemnity Company
CATASYS INC: Inks $1.7-Mil. Shares Purchase Pacts With Investors
----------------------------------------------------------------
Catasys, Inc., on Sept. 13, 2012, entered into Securities Purchase
Agreements with several investors, including Crede CG II, Ltd., an
affiliate of Terren S. Peizer, chairman and chief executive
officer, and David Smith, an affiliate of the Company, relating to
the sale and issuance of an aggregate of 17,190,000 shares of the
Company's common stock, par value $0.0001 per share and warrants
to purchase an aggregate of 17,190,000 shares of Common Stock, at
an exercise price of $0.10 per share, for aggregate gross proceeds
of approximately $1.7 million. The foregoing issuances triggered
anti-dilution provisions in certain of the Company's outstanding
warrants. As a result, the exercise price of these warrants
decreased to $0.10, however, the number of shares issuable under
these warrants remain unchanged.
Among other things, the Agreements provide that in the event that
the Company effectuates a reverse stock split of its Common Stock
within 24 months of the closing date of the Offering and the
volume weighted average price of the Common Stock during the 20
trading days following the effective date of the Reverse Split.
In the aggregate, Crede invested approximately $981,000 in the
Offering. After giving effect to the Offering, Mr. Peizer
beneficially owns approximately 61.8% of the Common Stock,
including shares underlying options and warrants. Mr. Smith
invested $665,000 in the Offering and after giving effect to the
Offering, Mr. Smith beneficially owns approximately 48.9% of the
Common Stock, including shares underlying warrants.
About Hythiam, Inc.
Based in Los Angeles, California, Hythiam, Inc., n/k/a Catasys,
Inc., is a healthcare services management company, providing
through its Catasys(R) subsidiary specialized behavioral health
management services for substance abuse to health plans.
In its auditors' report accompanying the consolidated financial
statements for the year ended Dec. 31, 2011, Rose, Snyder & Jacobs
LLP, in Encino, California, expressed substantial doubt about the
Company's ability to continue as a going concern. The independent
auditors noted that the Company has incurred significant operating
losses and negative cash flows from operations during the year
ended Dec. 31, 2011.
The Company reported a net loss of $8.12 million in 2011, compared
with a net loss of $19.99 million in 2010.
The Company's balance sheet at June 30, 2012, showed $3.47 million
in total assets, $11.95 million in total liabilities and a $8.47
million total stockholders' deficit.
Bankruptcy Warning
As of Aug. 13, 2012, the Company had a balance of approximately
$500,000 cash on hand. The Company had working capital deficit of
approximately $2.2 million at June 30, 2012. The Company has
incurred significant net losses and negative operating cash flows
since its inception. The Company could continue to incur negative
cash flows and net losses for the next twelve months. The
Company's current cash burn rate is approximately $450,000 per
month, excluding non-current accrued liability payments. The
Company expects its current cash resources to cover expenses into
September 2012, however delays in cash collections, revenue, or
unforeseen expenditures, could impact this estimate. The Company
will need to immediately obtain additional capital and there is no
assurance that additional capital can be raised in an amount which
is sufficient for the Company or on terms favorable to its
stockholders, if at all.
"If we do not immediately obtain additional capital, there is a
significant doubt as to whether we can continue to operate as a
going concern and we will need to curtail or cease operations or
seek bankruptcy relief. If we discontinue operations, we may not
have sufficient funds to pay any amounts to stockholders," the
Company said in its quarterly report for the period ended June 30,
2012.
CENTER FOR SYSTEMS: Ruling in Lawsuit Over Pension Plan Deferred
----------------------------------------------------------------
In the lawsuit, Roy Queen Plaintiff, v. Center for Systems
Management, Inc., et al. Defendants, Case No. ELH-10-3518
(D. Md.), Magistrate Judge Beth P. Gesner recommended that the
plaintiff's Motion for Default Judgment Against Defendant Kenneth
Mosteller be denied without prejudice, pending both (1) the
conclusion of the action as to the remaining defendants; and (2)
the filing of an affidavit of service of the plaintiff's Amended
Complaint on Mr. Mosteller.
Roy Queen brought the lawsuit individually and on behalf of all
plan participants in the Center for Systems Management 401K
Retirement Plan against these defendants: (1) Center for Systems
Management, Inc., a Virginia corporation doing business in
Maryland and other states, which sponsors the Pension Plan for its
employees; (2) Thomas DeCrescente, who plaintiff alleges is a
trustee and fiduciary of the Pension Plan within the meaning of
the Employee Retirement Income Security Act; (3) Kenneth
Mosteller, who plaintiff alleges is the president of CSM, the Plan
Administrator of the Pension Plan, as well as a trustee and
fiduciary of the Pension Plan within the meaning of ERISA; (4)
Kevin Forsberg, who plaintiff alleges is a co-founder and owner of
CSM; and (5) Albert Truesdale, who plaintiff alleges was the
Executive Vice President of Operations and Client Relations for
CSM in 2009 and 2010.
The Plaintiff's original Complaint alleged claims for failing to
place required contributions into an employer-sponsored profit
sharing plan in violation of ERISA, 29 U.S.C. Section 1001, et
seq. The Plaintiff's Amended Complaint added a claim for alleged
violations of the Racketeer Influenced and Corrupt Organizations
Act, 18 U.S.C. Sec. 1961 et seq., against all defendants, with the
exception of CSM.
A copy of the Magistrate Judge's Sept. 13, 2012 Report And
Recommendation is available at http://is.gd/l6TgGwfrom
Leagle.com.
Fairfax, Virginia-based Center for Systems Management, Inc., filed
a voluntary petition for Chapter 11 bankruptcy (Bankr. E.D. Va.
Case No. 11-16101) on Aug. 18, 2011. Judge Robert G. Mayer
oversees the case. Thomas F. DeCaro, Jr., Esq., at DeCaro &
Howell, P.C., serves as the Debtor's bankruptcy counsel. In
its petition, CSM estimated under $50,000 in assets and under
$10 million in debts. A list of the Company's 20 largest
unsecured creditors filed together with the petition is available
for free at http://bankrupt.com/misc/vaeb11-16101.pdf The
petition was signed by Kenneth Mosteller, president.
CENTRAL EUROPEAN: Russian Standard Founder Is Interim President
---------------------------------------------------------------
Central European Distribution Corporation has agreed to appoint
Mr. Roustam Tariko, the Chairman of the CEDC Board of Directors,
to serve as its Interim President to deepen the Company's
strategic alliance Russian Standard Corporation. Mr. Tariko will
be appointed to serve as Interim President as soon as practicable
but in any event upon the filing by CEDC of its restated financial
statements with the United States Securities and Exchange
Commission.
In his role as Interim President of CEDC, Mr. Tariko will
supervise CEDC's operations outside of Poland. David Bailey will
continue to serve as Interim CEO of CEDC with responsibility for
company-wide finance and CEDC's operations in Poland, as well as
the administrative, reporting, legal, compliance and audit
functions of CEDC.
Mr. Tariko will continue to serve as Chairman of the CEDC Board of
Directors. However, in light of Mr. Tariko's increased
responsibilities at CEDC, the CEDC Board of Directors is amending
the by-laws to provide for an increased role for the lead director
also as Vice Chairman of the CEDC Board of Directors.
Accordingly, Scott Fine will continue to serve as lead director
and, upon the appointment of Mr. Tariko as Interim President of
CEDC, Vice Chairman, of the CEDC Board of Directors.
CEDC also announced that Christopher Biedermann has resigned as
CEDC's Chief Financial Officer, and Bartosz Kolacinski, the
current Deputy Financial Officer of the CEDC group, has been
appointed Interim Chief Financial Officer. Mr. Biedermann will
remain available to CEDC to assist CEDC's finance team for a
transition period.
In connection with Mr. Biedermann's resignation, CEDC and Mr.
Biedermann have entered into a separation agreement providing for
certain severance benefits in an aggregate amount of approximately
$1.1 million plus fringe benefits and accrued salary and paid time
off. In addition, under the Separation Agreement, Mr. Biedermann
has agreed to serve as a consultant to CEDC until Dec. 14, 2012,
for which he will receive a fee of $27,000 per month.
Interim CFO Appointment
On Sept. 14, 2012, the Board of Directors of CEDC appointed Mr.
Bartosz Kolacinski as interim Chief Financial Officer of CEDC.
Bartosz Kolacinski (age: 38) has served as Deputy Chief Financial
Officer of the CEDC group since October 2008. Prior to joining
CEDC, Mr. Kolacinski spent 10 years working at Ernst & Young in
Poland. During his time at Ernst & Young, Mr. Kolacinski spent
eight years with Ernst & Young's Audit Department working on
various significant audit engagements. Mr. Kolacinski also spent
two years with Ernst & Young's Corporate Finance Department as a
Manager in the Transaction and Advisory Services group, where he
was responsible for the coordination and management of due
diligence projects in different industries.
Mr. Kolacinski graduated from the Technical University of Lodz in
1999 with a Master and Engineer degree in Organization and
Management.
On Sept. 13, 2012, the Board of Directors of CEDC approved a
framework for the corporate governance of CEDC0, a copy of which
is available for free at http://is.gd/RUbNF6
Update on Financial Restatement
As previously disclosed, upon the recommendation of CEDC's
management, CEDC's Board of Directors has concluded that CEDC's
financial statements for all reporting periods from and after
Jan. 1, 2010, should no longer be relied upon primarily due to the
fact that certain retroactive rebates and trade marketing expenses
were not properly recorded by CEDC's principle operating
subsidiary in Russia, the Russian Alcohol Group. The Audit
Committee of CEDC's Board of Directors initiated an internal
investigation regarding CEDC's retroactive rebates, trade
marketing expenses and related accounting issues. CEDC currently
expects this internal investigation to conclude by the end of
September or shortly thereafter.
In connection with the expected restatement, CEDC intends to file
amended quarterly reports on Forms 10-Q for affected periods in
2011 and 2012 and an amended annualreport on Form 10-K for the
fiscal year ended Dec. 31, 2011. CEDC expects to be able to file
those amended annual and quarterly reports as soon as practicable
following completion of its internal investigation.
About CEDC
Mt. Laurel, New Jersey-based Central European Distribution
Corporation is one of the world's largest vodka producers and
Central and Eastern Europe's largest integrated spirit beverages
business with its primary operations in Poland, Russia and
Hungary.
The Company's balance sheet at March 31, 2012, showed
US$2.033 billion in total assets, US$1.674 billion in total
liabilities, and stockholders' equity of US$358.45 million.
According to the regulatory filing, "[C]ertain credit and
factoring facilities are coming due in 2012, which the Company
expects to renew. Furthermore, our Convertible Senior Notes are
due on March 15, 2013. Our current cash on hand, estimated cash
from operations and available credit facilities will not be
sufficient to make the repayment on Convertible Notes and, unless
the transaction with Russian Standard Corporation is completed as
scheduled, the Company may default on them. The Company's cash
flow forecasts include the assumption that certain credit and
factoring facilities that are coming due in 2012 will be renewed
to manage working capital needs. Moreover, the Company had a net
loss and significant impairment charges in 2011 and current
liabilities exceed current assets at March 31, 2012. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern unless the transaction with Russian
Standard is completed as scheduled."
Ernst & Young Audit sp. z o.o., in Warsaw, Poland, expressed
substantial doubt about Central European's ability to continue as
a going concern, following the Company's results for the fiscal
year ended Dec. 31, 2011. The independent auditors noted that
certain of the Company's credit and factoring facilities are
coming due in 2012 and will need to be renewed to manage its
working capital needs.
* * *
As reported by the TCR on Aug. 10, 2012, Standard & Poor's Ratings
Services kept on CreditWatch with negative implications its 'CCC+'
long-term corporate credit rating on U.S.-based Central European
Distribution Corp. (CEDC), the parent company of Poland-based
vodka manufacturer CEDC International sp. z o.o.
"The CreditWatch status reflects our view that uncertainties
remain related to CEDC's ongoing accounting review and that
CEDC's liquidity could further and substantially weaken if there
was a breach of covenants which could lead to the acceleration of
the payment of the 2016 notes, upon receipt of a written notice
of 25% or more of the noteholders," S&P said.
CENTRAL EUROPEAN: Roustam Tariko Discloses 19.4% Equity Stake
------------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Roust Trading Ltd. and Roustam Tariko
disclosed that, as of Sept. 13, 2012, they beneficially own
15,920,411 shares of common stock of Central European Distribution
Corporation representing 19.4% of the shares outstanding.
On Sept. 13, 2012, the Board of Directors of the Company voted to
approve the appointment of Mr. Tariko as Interim President. Mr.
Tariko will continue to serve as Chairman of the Board of
Directors of the Company.
A copy of the filing is available for free at http://is.gd/J3TQsI
About CEDC
Mt. Laurel, New Jersey-based Central European Distribution
Corporation is one of the world's largest vodka producers and
Central and Eastern Europe's largest integrated spirit beverages
business with its primary operations in Poland, Russia and
Hungary.
The Company's balance sheet at March 31, 2012, showed
US$2.033 billion in total assets, US$1.674 billion in total
liabilities, and stockholders' equity of US$358.45 million.
According to the regulatory filing, "[C]ertain credit and
factoring facilities are coming due in 2012, which the Company
expects to renew. Furthermore, our Convertible Senior Notes are
due on March 15, 2013. Our current cash on hand, estimated cash
from operations and available credit facilities will not be
sufficient to make the repayment on Convertible Notes and, unless
the transaction with Russian Standard Corporation is completed as
scheduled, the Company may default on them. The Company's cash
flow forecasts include the assumption that certain credit and
factoring facilities that are coming due in 2012 will be renewed
to manage working capital needs. Moreover, the Company had a net
loss and significant impairment charges in 2011 and current
liabilities exceed current assets at March 31, 2012. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern unless the transaction with Russian
Standard is completed as scheduled."
Ernst & Young Audit sp. z o.o., in Warsaw, Poland, expressed
substantial doubt about Central European's ability to continue as
a going concern, following the Company's results for the fiscal
year ended Dec. 31, 2011. The independent auditors noted that
certain of the Company's credit and factoring facilities are
coming due in 2012 and will need to be renewed to manage its
working capital needs.
* * *
As reported by the TCR on Aug. 10, 2012, Standard & Poor's Ratings
Services kept on CreditWatch with negative implications its 'CCC+'
long-term corporate credit rating on U.S.-based Central European
Distribution Corp. (CEDC), the parent company of Poland-based
vodka manufacturer CEDC International sp. z o.o.
"The CreditWatch status reflects our view that uncertainties
remain related to CEDC's ongoing accounting review and that
CEDC's liquidity could further and substantially weaken if there
was a breach of covenants which could lead to the acceleration of
the payment of the 2016 notes, upon receipt of a written notice
of 25% or more of the noteholders," S&P said.
CLINICA REAL: Hiring Mark J. Giunta Firm as Bankruptcy Counsel
--------------------------------------------------------------
Clinica Real, LLC, seeks Bankruptcy Court permission to employ Law
Office of Mark J. Giunta in Phoenix, Arizona, as its counsel to
(a) furnishing legal advice with respect to the powers and duties
of debtor-inpossession in the continued operation of its affairs
and management of its property; (b) preparation of necessary
applications, answers, orders, reports, motions and other legal
papers; and (c) performance of all other legal services for which
may be necessary.
Mark J. Giunta received $3,200 from Clinica as a retainer for pre-
bankruptcy analysis and preparation on Aug. 22, 2012. On Sept. 7,
2012, $35,000 was paid by Clinica to Mark J. Giunta as an
additional retainer for Clinica. During the ensuing time period
prior to the commencement of the bankruptcy proceeding Mark J.
Giunta provided legal services to Clinica consisting of the
preparation of the petition and initial Chapter 11 filing.
Prior to the Chapter 11 filing, $1,812.50 was drawn down on Sept.
12, 2012 and $9,560.50 was drawn on Sept. 13, 2012 for pre-
petition services and costs ($1,812.50 for August and $8,514.50
for September attorney?s fees and $1,046.00 for filing fee). Mark
J. Giunta currently maintains a retainer in the amount of
$26,827.00 for this matter.
Other personnel in his firm who will work on the Debtor's case and
their rates are:
Mark J. Giunta $375
Associate $150
Law Clerk $125
Legal Assistant $90
To the best of the Debtor?s knowledge, Mark J. Giunta has no
connection with Debtor?s creditors or any other party-in-interest,
or its attorneys or accountants, nor does it represent an interest
adverse to the debtor-in-possession or the estate in the matters
upon which it is to be engaged for debtor as debtor-in-possession.
About Clinica Real
Clinica Real LLC, dba Clinica Real Rehabilitation & Chiropractic,
filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 12-20451) in
Phoenix, Arizona, on Sept. 13, 2012. Clinica Real, doing business
as Clinica Real Rehabilitation & Chiropractic, disclosed $10.5
million in assets and $29.8 million in liabilities.
The Debtor has no real property. Its largest asset is an
unliquidated claim against State Farm Mutual Automobile Insurance
Co. and State Farm Fire & Casualty Co., which the Debtor valued at
$9.75 million. Most of the claims against the Debtor are
unsecured. State Farm has an unsecured claim of $29 million,
which the Debtor says is disputed.
Judge Sarah Sharer Curley presides over the case. The Law Office
of Mark J. Giunta, Esq., serves as the Debtor's counsel. The
petition was signed by Keith M. Stone, member.
COCOPAH NURSERIES: Has Sept. 27 Hearing on Continued Cash Use
-------------------------------------------------------------
Judge Eileen W. Hollowell entered a third interim order
authorizing Cocopah Nurseries of Arizona, Inc., et al., to use
cash collateral. The Debtors and the prepetition lenders agree
that the Debtors may use cash collateral through 5:00 p.m. on
Sept. 29, 2012.
The Debtors have agreed to provide Wells Fargo Bank, N.A. and
Rabobank, N.A, adequate protection liens and superior-priority
administrative expense claims.
The hearing on the Debtors' emergency motion for access to cash
collateral has been continued to Sept. 27, 2012 at 11:00 a.m. at
230 N. First Ave., 6th Floor, Courtroom 602, Phoenix.
The Debtors said in Court papers filed in August that the use of
cash collateral will ensure payment of necessary postpetition
expenses to protect the lenders' collateral.
The Debtors said that by Sept. 14, 2012, they would prepare and
circulate to the prepetition lenders (a) proposed term sheets for
debtor-in-possession financing (most likely contemplating separate
financing from each Prepetition Lender); (b) a proposed initial
term sheet regarding the structure for a plan of reorganization;
and (c) a 90-day budget, from Oct. 1, 2012 through Dec. 31, 2012.
About Cocopah Nurseries
Cocopah Nurseries of Arizona, Inc., and three affiliates sought
Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 12-15292) on
July 9, 2012. The affiliates are Wm. D. Young & Sons, Inc.;
Cocopah Nurseries, Inc.; and William Dale Young & Sons Trucking
and Nursery.
Cocopah Nurseries is a Young-family owned agricultural enterprise
with operations in Arizona and California. The core business
involves the cultivation of palm trees and other trees used for
landscaping purposes, as well as the associated farming of citrus,
dates, and other crops. The Debtors presently own more than
250,000 palm trees in various stages of the tree-growth cycle.
Cocopah has 250 full-time salaried employees, and taps an
additional 50 to 250 contract laborers depending on the season.
Revenue in 2010 was $23 million, down from $57 million in 2006.
Judge Eileen W. Hollowell presides over the case. The Debtors'
counsel are Craig D. Hansen, Esq., and Bradley A. Cosman, Esq., at
Squire Sanders (US) LLP.
The petitions were signed by Darl E. Young, authorized
representative.
Attorneys for Rabobank, N.A., are Robbin L. Itkin, Esq., and Emily
C. Ma, Esq., at Steptoe & Johnson LLP, and S. Cary Forrester,
Esq., at Forrester & Worth, PLLC.
Non-debtor affiliate Jewel Date Company, Inc., is represented by
Michael W. Carmel, Ltd., as counsel.
COCOPAH NURSERIES: Court Okays Stanley Speer as CRO
---------------------------------------------------
Cocopah Nurseries of Arizona, Inc., has sought and obtained
permission from the U.S. Bankruptcy Court to employ Stanley E.
Speer at Speer & Associates LLC as chief restructuring officer.
Pursuant to an engagement letter signed by the Debtors and the
firm, Mr. Speer will:
(a) report directly to the board of directors or board of
members of the Debtors;
(b) review and approve all transactions with affiliates and
insiders of any of the Debtors;
(c) review and approve transactions involving the sale of any of
the Debtors' assets outside of the ordinary course of
business (subject to the Court's approval); and
(d) review and approve compromises with vendors and suppliers
with respect to their pre-petition claims in the Debtors'
chapter 11 cases and their claims treatment under a plan of
reorganization (subject to the Court's approval).
The employment was effective Aug. 1, 2012.
Mr. Speer's compensation package includes:
(a) A monthly, non-refundable advisory fee of $65,000 due and
payable in advance on the first business day of each month.
Following the first three months of the assignment,
Mr. Speer and the Debtors will review the fee and mutually
determine if an adjustment of the monthly fee is appropriate
on a go forward basis.
(b) Reimbursement for Mr. Speer's reasonable out-of-pocket
expenses incurred in connection with this assignment, such
as travel, lodging, duplicating, messenger and telephone
charges. All fees and expenses will be billed and payable on
a monthly basis.
The payments will be subject to the Court's subsequent approval as
part of the normal interim fee application process approximately
every 120 days and in any event subject to 11 U.S.C. Sec. 331.
Mr. Speer will provide general narratives of services provided and
itemize expenses incurred as CRO as part of his fee applications.
Although they do not propose to retain Mr. Speer under 11 U.S.C.
Sec. 327, the Debtors attest that neither Mr. Speer nor his law
firm holds or represents and interest adverse to the Debtors'
estates and is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
About Cocopah Nurseries
Cocopah Nurseries of Arizona, Inc., and three affiliates sought
Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 12-15292) on
July 9, 2012. The affiliates are Wm. D. Young & Sons, Inc.;
Cocopah Nurseries, Inc.; and William Dale Young & Sons Trucking
and Nursery.
Cocopah Nurseries is a Young-family owned agricultural enterprise
with operations in Arizona and California. The core business
involves the cultivation of palm trees and other trees used for
landscaping purposes, as well as the associated farming of citrus,
dates, and other crops. The Debtors presently own more than
250,000 palm trees in various stages of the tree-growth cycle.
Cocopah has 250 full-time salaried employees, and taps an
additional 50 to 250 contract laborers depending on the season.
Revenue in 2010 was $23 million, down from $57 million in 2006.
Judge Eileen W. Hollowell presides over the case. The Debtors'
counsel are Craig D. Hansen, Esq., and Bradley A. Cosman, Esq., at
Squire Sanders (US) LLP.
The petitions were signed by Darl E. Young, authorized
representative.
Attorneys for Rabobank, N.A., are Robbin L. Itkin, Esq., and Emily
C. Ma, Esq., at Steptoe & Johnson LLP, and S. Cary Forrester,
Esq., at Forrester & Worth, PLLC.
Non-debtor affiliate Jewel Date Company, Inc., is represented by
Michael W. Carmel, Ltd., as counsel.
COCOPAH NURSERIES: Oct. 1 Set as Claims Bar Date
------------------------------------------------
Creditors of Cocopah Nurseries of Arizona, Inc., et al. must file
their proofs of claim not later than Oct. 1, 2012, according to an
order entered Aug. 16 by the bankruptcy judge.
Cocopah Nurseries of Arizona, Inc., and three affiliates sought
Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 12-15292) on
July 9, 2012. The affiliates are Wm. D. Young & Sons, Inc.;
Cocopah Nurseries, Inc.; and William Dale Young & Sons Trucking
and Nursery.
Cocopah Nurseries is a Young-family owned agricultural enterprise
with operations in Arizona and California. The core business
involves the cultivation of palm trees and other trees used for
landscaping purposes, as well as the associated farming of citrus,
dates, and other crops. The Debtors presently own more than
250,000 palm trees in various stages of the tree-growth cycle.
Cocopah has 250 full-time salaried employees, and taps an
additional 50 to 250 contract laborers depending on the season.
Revenue in 2010 was $23 million, down from $57 million in 2006.
Judge Eileen W. Hollowell presides over the case. The Debtors'
counsel are Craig D. Hansen, Esq., and Bradley A. Cosman, Esq., at
Squire Sanders (US) LLP.
The petitions were signed by Darl E. Young, authorized
representative.
Attorneys for Rabobank, N.A., are Robbin L. Itkin, Esq., and Emily
C. Ma, Esq., at Steptoe & Johnson LLP, and S. Cary Forrester,
Esq., at Forrester & Worth, PLLC.
Non-debtor affiliate Jewel Date Company, Inc., is represented by
Michael W. Carmel, Ltd., as counsel.
COMPUCOM SYSTEMS: Moody's Affirms 'B2' Corporate Family Rating
--------------------------------------------------------------
Moody's Investors Service affirmed CompuCom Systems, Inc.'s B2
Corporate Family Rating (CFR) and assigned a B1 rating to the
Company's proposed $470 million first lien credit facility and a
B3 rating to its proposed $165 million second lien credit
facility. The Company will use the net proceeds from the credit
facilities to refinance existing debt and pay a special dividend
of up to approximately $211 million to its shareholders. As part
of the ratings action, Moody's revised CompuCom's ratings outlook
to stable from positive to reflect the deterioration in the
Company's credit profile as a result of the proposed debt-financed
dividend to shareholders. Moody's will withdraw the ratings for
CompuCom's existing first lien credit facility and senior notes
upon full repayment of debt. The ratings are subject to final
review of the documents.
Ratings Rationale
Pro forma for the proposed dividend recapitalization transaction,
CompuCom's total debt to EBITDA leverage will increase by
approximately 1.5x to 4.7x (Moody's adjusted, and excluding 50%
debt attribution to the Company's preferred stock under Moody's
methodology, which raises leverage by approximately 1.1x). The
expected increase in leverage fully offsets CompuCom's
deleveraging attained over the past two and a half years and the
Company will absorb the cushion available under its B2 CFR. The
affirmation of the CFR reflects Moody's expectation that CompuCom
will be able to sustain its improved EBITDA margins and generate
free cash flow of about 6% to 8% of total adjusted debt (excluding
preferred stock) driven by growth in higher margin information
technology outsourcing services and operating efficiencies.
The B2 CFR reflects CompuCom's high leverage and its small scale
relative to its much larger and financially stronger competitors
that offer a broad range of IT services and solutions. The rating
additionally reflects CompuCom's intensely competitive market
segments such as outsourced end-user computing and help desk
support services, and value-added resale of hardware and software
products, from which the Company derives a large proportion of its
revenues. However, the rating considers CompuCom's good market
position as a Tier 2 IT outsourcing services provider and the
Company's well-regarded execution capabilities in the end-user
computing and help desk outsourcing services market in North
America. Although CompuCom has high levels of revenue
concentration among its large customers, the risks are somewhat
mitigated by the Company's track record of long-standing
relationships with its key blue-chip customers, its good revenue
retention rates, especially after the recession, and the near-term
visibility provided by recurring revenues under multi-year service
contracts. The rating also incorporates Moody's expectations that
the Company's financial policies will remain aggressive under its
financial sponsors.
Given the increase in leverage and Moody's expectations that
CompuCom's financial policies will remain aggressive under its
financial sponsors, a ratings upgrade is not expected in the next
12 to 18 months. Moody's could raise CompuCom's ratings if the
Company maintains organic growth rates, improves profitability and
if Moody's believes that the Company could sustain total debt-to-
EBITDA of less than 3.5x (Moody's adjusted, and excluding the 50%
debt attribution to the Company's preferred stock) and free cash
flow in excess of 10% of its total adjusted debt.
Conversely, Moody's could lower CompuCom's ratings if the Company
experiences loss of a large customer or erosion in IT services
revenue or EBITDA margin. The rating could be downgraded if
CompuCom's liquidity deteriorates, free cash flow declines to the
low single digit percentages of total debt, and the Company is
unable to manage Total Debt/EBITDA leverage of less than 5.0x
(Moody's adjusted, and excluding the 50% debt attribution to the
Company's preferred stock).
Moody's has taken the following rating actions:
Issuer: CompuCom Systems, Inc.
Corporate Family Rating -- Affirmed, B2
Probability of Default Rating -- Affirmed, B2
$470 million First Lien Senior Secured Term Loan due 2018 -
Assigned, B1, LGD3 (33%)
$165 million Second Lien Senior Secured Term Loan due 2019 -
Assigned, B3, LGD5 (77%)
$110 million (outstanding) Senior Secured Bank Credit
Facility due 2014 -- Affirmed, Ba2, LGD1 (7%), to be
withdrawn
$285 million Senior Subordinated Notes due 2015 -- Affirmed,
B3, LGD4 (63%), to be withdrawn
Outlook Actions:
Issuer: CompuCom Systems, Inc.
Outlook, Changed To Stable From Positive
Headquartered in Dallas, Texas, CompuCom Systems, Inc. provides IT
solutions and services. For the twelve months ended June 30, 2012
the Company generated $1.4 billion in revenue.
The principal methodology used in rating CompuCom was the Global
Business & Consumer Service Industry Methodology published in
October 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
CONTEC HOLDINGS: Taps Ropes & Gray as Bankruptcy Counsel
--------------------------------------------------------
CHL, Ltd., et al., ask the U.S. Bankruptcy Court for the District
of Delaware for authorization to employ Ropes & Gray LLP as
bankruptcy counsel for the Debtors, nunc pro tunc to the Petition
Date.
Ropes & Gray will, among others, these professional services:
a. advising the Debtors with respect to their powers and duties
as debtors in possession in the continued management and
operation of their businesses and properties;
b. advising and consulting on the conduct of the Chapter 11
cases, including all of the legal and administrative
requirements of operating in Chapter 11;
c. taking all necessary actions to protect and preserve the
Debtors' estates, including prosecuting actions on the
Debtors' behalf, defending any action commenced against the
Debtors, and representing the Debtors' interests in
negotiations concerning litigations in which the Debtors are
involved, including objections to the claims filed against
the Debtors' estates; and
d. preparing all pleadings, including motions, applications,
answers, orders, reports, and any other documents necessary
or otherwise beneficial to the administration of the Debtors'
estates.
The current hourly rates charged by Ropes & Gray professionals and
paraprofessionals employed in its offices are $710 to $1,100 for
partners, $475 to $1,030 for counsel, $365 to $725 for associates,
and $130 to $320 for paraprofessionals.
The principal attorneys presently designated to represent the
Debtors and their hourly rates are:
D. Ross Martin, Esq., Partner $855
Stephen Moeller-Sally, Partner $715
James A. Wright III, Associate $695
Adam J. Goldstein, Associate $650
Darren T. Azman, Associate $440
Meredith Tinkham, Associate $375
Meir C. Weinberg, Paralegal $200
The Debtors believe that Ropes & Gray is a "disinterested person"
and does not represent or hold any interest adverse to the Debtor'
estates.
About Contec Holdings
Headquartered in Schenectady, New York, Contec Holdings Ltd. --
http://www.gocontec.com/-- is the market leader in the repair and
refurbishment of customer premise equipment for the cable
industry. The Company repairs more than 2 million cable set top
boxes annually, while also providing logistical support services
for over 12 million units of cable equipment annually.
With substantial operations in the United States and Mexico, the
Debtors earned revenues of approximately $153.6 million in 2011,
and as of July 28, 2012, the Debtors directly employed over 2,300
people in North America, 72% of which are unionized.
Contec Holdings, Ltd., and its affiliates on Aug. 29, 2012 sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12437) with
a plan of reorganization that has the support of senior lenders
and noteholders.
Ropes & Gray LLP, serves as bankruptcy counsel to the Debtors;
Pepper Hamilton LLP is the local counsel; AP Services LLC, is the
restructuring advisor; Moelis & Company is the investment banker;
and Garden City Group is the claims agent.
CONTEC HOLDINGS: Taps AP Services as Crisis Managers
----------------------------------------------------
CHL, Ltd., et al., ask the U.S. Bankruptcy Court for the District
of Delaware for authorization to employ AP Services, LLC, to
perform crisis management services to the Debtors, nunc pro tunc
to the Petition Date, and to designate (A) Lawrence E. Young as
interim chief executive officer and and chief restructuring
officer and (B) Kurt Schnaubelt as interim chief financial
officer.
Mr. Young and Mr. Schanubelt will assist the Debtors in evaluating
and implementing strategic and tactical initiatives throughout the
restructuring process. Additionally, APS has agreed to provide
temporary staff to assist Mr. Young, Mr. Schnaubelt, and the
Debtors in their restructuring efforts.
Mr. Young will bill the Debtors $880 per hour for his services,
while Schnaubelt will bill the Debtors $620 for his services.
Additional Temporary Staff of APS bill at hourly rates ranging
from $305 to $715.
The Debtors tell the Court that they do not believe that APS is a
"professional" whose retention is subject to approval under
Section 327 of the Bankruptcy Code.
About Contec Holdings
Headquartered in Schenectady, New York, Contec Holdings Ltd. --
http://www.gocontec.com/-- is the market leader in the repair and
refurbishment of customer premise equipment for the cable
industry. The Company repairs more than 2 million cable set top
boxes annually, while also providing logistical support services
for over 12 million units of cable equipment annually.
With substantial operations in the United States and Mexico, the
Debtors earned revenues of approximately $153.6 million in 2011,
and as of July 28, 2012, the Debtors directly employed over 2,300
people in North America, 72% of which are unionized.
Contec Holdings, Ltd., and its affiliates on Aug. 29, 2012 sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12437) with
a plan of reorganization that has the support of senior lenders
and noteholders.
Ropes & Gray LLP, serves as bankruptcy counsel to the Debtors;
Pepper Hamilton LLP is the local counsel; AP Services LLC, is the
restructuring advisor; Moelis & Company is the investment banker;
and Garden City Group is the claims agent.
CONTINENTAL AIRLINES: Moody's Assigns 'Ba2' Rating to B Certs.
--------------------------------------------------------------
Moody's Investors Service assigned Baa2 and Ba2 ratings,
respectively, to the Class A and Class B Pass Through
Certificates, Series 2012-2 of the 2012-2 Pass Through Trusts that
Continental Airlines, Inc. will establish. Moody's also affirmed
the B2 Corporate Family and Probability of Default ratings
assigned to Continental and all but two of its other instrument
ratings. Moody's downgraded its ratings assigned to two of
Continental's existing Enhanced Equipment Trust Certificates;
2000-2: A-tranche to Baa3 from Baa2, B-tranche to Ba3 from Ba2;
and 2007-1: A-tranche to Baa2 from Baa1. Moody's also affirmed the
B2 Corporate Family and Probability of Default ratings of United
Continental Holdings, Inc., and lowered its ratings of United Air
Lines, Inc.'s 2009-2 EETC: A-tranche to Baa3 from Baa2, B-tranche
to Ba3 from Ba2. The rating outlooks for both Continental Airlines
and United Continental Holdings are stable.
Assignments:
Issuer: Continental Airlines, Inc.
Senior Secured Enhanced Equipment Trust (Class A),
Assigned Baa2
Senior Secured Enhanced Equipment Trust (Class B),
Assigned Ba2
Downgrades:
Issuer: Continental Airlines, Inc.
Senior Secured Enhanced Equipment Trust, 2000-2, Downgraded
to a range of Ba3 to Baa3 from a range of Ba2 to Baa2
Senior Secured Equipment Trust, 2007-1, Downgraded to Baa2
from Baa1
Issuer: United Air Lines, Inc.
Senior Secured Enhanced Equipment Trust, 2009-2, Downgraded to
a range of Ba3 to Baa3 from a range of Ba2 to Baa2
Ratings Rationale
The Certificates proceeds, initially to be held in escrow, will
fund the purchase of equipment notes to be issued by Continental
for 21 aircraft in total: 18 new Boeing B737-900ER aircraft, four
to be delivered in the fourth quarter of 2012 and 14 in 2013 and
three new Boeing B787-8 aircraft, two scheduled for delivery in
December 2012 and the remaining aircraft in July 2013. The payment
obligations of Continental will not be guaranteed by its parent,
United Continental Holdings, Inc. The transaction documentation
provides for the possible issuance of a single new series of
subordinated equipment notes at any time. The subordination
provisions of the inter-creditor agreement provide for the payment
of interest on the Preferred B Pool Balance, if any, of the Class
B certificates before scheduled distributions on the Pool Balance
of the Class A Certificates. Amounts due under the Certificates
will be subordinated to any amounts due on the separate Class A
and Class B Liquidity Facilities ("Liquidity Facility"). Natixis,
S.A., acting through its New York Branch will be the Depositary
and the provider of the respective liquidity facilities.
The ratings of the Certificates consider the credit quality of
Continental as obligor of the underlying equipment notes, Moody's
opinion of the collateral protection of the Notes, the credit
support provided by the liquidity facilities and certain
structural characteristics of the Notes such as the applicability
of Section 1110 of Title 11 of the United States Code (the "Code")
and the cross-default and cross-collateralization features. The
assigned ratings reflect Moody's opinion of the ability of the
Pass-Through Trustees to make timely payments of interest and the
ultimate distributions with respect to the Pool Balances on the
respective Final Maturity Dates of April 29, 2026 for the A-
tranche and April 29, 2022 for the B-tranche.
The rating assignment considers that the B737-900ER and B787-8
aircraft will form the foundation of United Continental Holdings'
mainline fleet for years to come. The attractiveness of the
aircraft including their relative fuel efficiency versus older
aircraft supports the A-tranche rating that is six notches above
the B2 Corporate Family rating. Moody's estimates the initial peak
loan-to-value ("LTV") on the A-tranche in the mid- to high 50%
range based on its estimates of market values and benefit for
cross-collateralization. This compares to the mid-50% range for
Continental's EETCs issued between 2009 and 2011 and about 55%
based on the appraised base values reflected in the Series 2012-2
offering memorandum. The superior fuel-burn and expected
maintenance savings relative to that of aircraft of traditional
design and materials should allow the B787-8 to better retain its
value versus traditional aircraft over time. The recent increase
in the order book and operator base of the B737-900ER should help
temper downwards pressure on the value of this current technology
narrow-body aircraft that Moody's believes will develop later this
decade after the Airbus' NEO and Boeing MAX models begin to
deliver.
Any combination of future changes in the underlying credit quality
or ratings of Continental, unexpected material changes in the
value of the aircraft pledged as collateral, and/or changes in the
status or terms of the liquidity facilities could cause Moody's'
to change its ratings of the Certificates.
The affirmation of the B2 Corporate Family ratings considers the
airlines' good liquidity, competitive market position and
supportive credit metrics. The corporate ratings reflect Moody's
belief that the combined group can sustain its current credit
profile beyond 2012 notwithstanding potential pressure on
operating earnings should demand weaken and anticipated negative
free cash flow generation because of higher capital expenditures
for new aircraft and other capital investments in upcoming years.
The downgrades of the ratings on the two Continental EETCs and the
one United Air Lines' EETC reflect the above average declines in
market values of certain of the aircraft included in the
collateral of these respective financings. In each case, Moody's
does not anticipate a positive inflection in the trend of market
values of the subject aircraft, which should prevent any
improvements in the LTVs. In the case of CAL 2000-2, Moody's
estimates an A-Tranche LTV approaching 75%, about 25 percentage
points weaker than the offering memorandum projected at the time
this transaction came to market and a B-Tranche LTV approaching
85%. The collateral in this transaction includes aircraft types,
three B737-900s and three B767ER aircraft, whose market values
have declined to a greater extent than those of other aircraft,
such as the B737-800. Additionally, very small scheduled
distributions in 2011 and 2012 prevented the decline in the debt
balance from keeping up with the decline in market values. The
downgrade of the A-Tranche of the CAL 2007-1 EETC aligns the
rating of this transaction with Moody's ratings assigned to the
other A-Tranches of the majority of Continental's EETCs with
similar LTVs. Moody's estimates the LTV of this transaction at
about 60%, meaningfully weaker than anticipated when this rating
was assigned in 2007. The downgrade of the ratings on the United
Air Lines 2009-2 EETC also follows declines in the values of
aircraft collateral. B747-400s and A319-100s, whose market values
remain under pressure, account for 15 of the 37 aircraft financed
by this transaction. The declines in values of these as well as
the other aircraft in this transaction have taken Moody's
estimates of LTVs to the 75% and 85% ranges for the A-Tranche and
B-Tranche, respectively.
The principal methodology used in rating United Continental
Holdings, Inc. was the Global PassengerAirlines Industry
Methodology published in May 2012 and Enhanced Equipment Trust And
Equipment Trust Certificates Industry Methodology published in
December 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
United Continental Holdings, Inc. (NYSE: UAL) is the holding
company for both United Airlines and Continental Airlines.
Together with United Express, Continental Express and Continental
Connection, these airlines operate an average of 5,574 flights a
day to 377 airports on six continents from their hubs in Chicago,
Cleveland, Denver, Guam, Houston, Los Angeles, New York/Newark
Liberty, San Francisco, Tokyo and Washington, D.C.
CONTINENTAL AIRLINES: S&P Affirms 'B' Corporate Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'A-
'(sf) rating to Continental Airlines Inc.'s series 2012-2 Class A
pass-through certificates with an expected maturity of Oct. 29,
2024, and its preliminary 'BBB-'(sf) rating to Continental's
series 2012-2 Class B pass-through certificates with an expected
maturity of Oct. 29, 2020. The final legal maturities will be 18
months after the expected maturity. Continental is issuing the
certificates under a Rule 415 shelf registration. S&P said it will
assign final ratings after concluding a legal review of the
documentation.
"The preliminary 'A-'(sf) and 'BBB-'(sf) ratings are based on the
consolidated redit quality of Continental's parent, United
Continental Holdings Inc. (B/Stable/--); substantial collateral
coverage by good-quality aircraft; and the legal and structural
protections available to the pass-through certificates. The
company will use proceeds of the offerings to finance 2012 and
2013 deliveries of 18 Boeing B737-900ER (extended range) aircraft
and three new Boeing B787-8s. Each aircraft's secured notes are
cross-collateralized and cross-defaulted--a provision we believe
increases the likelihood that Continental would affirm the notes
(and thus continue to pay on the certificates) in bankruptcy," S&P
said.
"The pass-through certificates are a form of enhanced equipment
trust certificates (EETC) and benefit from legal protections
afforded under Section 1110 of the federal bankruptcy code and by
liquidity facilities provided by Natixis S.A. (A/Stable/A-1). The
liquidity facilities would cover up to three semiannual interest
payments while certificateholders negotiated with Continental in
an event of bankruptcy and, if necessary, repossessed and sold
aircraft collateral following any default by the airline," S&P
said.
"The preliminary ratings on the certificates reflect trust
property and escrow receipts for deposits Continental has made to
Natixis S.A. The New York branch of the bank will hold the escrow
deposits pending delivery of the new aircraft. Amounts deposited
under the escrow agreements are not the property of Continental
and are not entitled to the benefits of Section 1110 of the U.S.
Bankruptcy Code (which governs creditor rights for aircraft-backed
debt and leases). Accordingly, any default arising under an
indenture solely by reason of its cross-default provisions may not
be a type of default that Section 1110 requires an airline to
cure. Any cash collateral held as a result of the cross-
collateralization of the equipment notes also would not be
entitled to the benefits of Section 1110. Neither the certificates
nor the escrow receipts may be separately assigned or
transferred," S&P said.
"We believe that United Continental would view these planes as
important and would, given the cross-collateralization and cross-
default provisions, likely affirm the aircraft notes in a
bankruptcy scenario. In contrast to most EETCs that airlines
issued before 2009, the cross-default would take effect
immediately in a bankruptcy if Continental rejected any of the
aircraft notes. This should prevent Continental from selectively
affirming some aircraft notes and rejecting others ('cherry-
picking'), which often harms the interests of certificateholders
in a bankruptcy," S&P said.
"This transaction is very similar to Continental's 2012-1 pass-
through certificates (to which we assigned 'A-' and 'BBB-'
ratings) issued in March 2012. As in the earlier certificates, the
collateral pool consists of B737-900ER (71% by value) and B787-8
(29%) aircraft, both of which we view as good quality models (the
2012-1 certificates' collateral had a somewhat higher proportion
of B787-8s, though). The B737-900ER is the largest model in
Boeing's range of current technology narrowbody planes. Entering
service in 2007 as a longer-range version of the relatively
unsuccessful B737-900, the model has gradually gained orders,
although it has fewer orders and deliveries (about 500) and
operators (16) than Airbus' competing model, the A321-200. The
B737-900ER has not yet been as successful as its operating
economics and capabilities would suggest. This may be partly
because it entered into service only in 2007, fairly recently and
shortly before the financial crisis and recession in 2008-2009.
However, it is the best plane available to replace B757-200s in
domestic U.S. service, a factor borne out by Delta Air Lines
Inc.'s 2012 order. We believe that the global fleet and operator
base will continue to expand, particularly if it appears that fuel
prices will increase further in coming years," S&P said.
"Boeing will offer a B737-900ER with its new engine option (the
'MAX' series), but we do not believe that this will cause current
B737-900ER values to fall materially in the near term. Companies
are still ordering the current version to replace many of their
B757-200s. Following the merger of United and Continental, the
combined company operates two families of narrowbody planes,
Boeing 737s and Airbus 320s. The combined company appears to favor
the B737-900ER to the competing A321-200, based on recent orders
and management's stated preference," S&P said.
"The remaining collateral value is represented by B787-8s, making
their second appearance in a EETC. The B787-8 is Boeing's new
long-range, midsize, widebody plane, which it began delivering
(after long delays) in September 2011. The B787 family (there is
also the larger B787-9, not yet delivered) has been a huge success
in terms of orders. There are 824 sales (both -8 and -9 versions)
to 58 airline operators, one of the fastest starts for any
aircraft model. The airline user base is globally diversified, and
includes a mix of types of airlines and aircraft leasing
companies. The B787-8 is intended mainly as a replacement for the
B767-300ER, a small widebody," S&P said.
"We are applying a depreciation rate of 6.5% annually of the
preceding year's value for the 787-8, which is equal to the lowest
depreciation rate we currently use for a widebody plane (for the
B777-300ER). We chose the 6.5% depreciation rate for the B787-8
considering several factors. Its resale liquidity should be good
for a widebody plane, though not as good as for the most popular
narrowbody planes (which usually have a greater number of airline
operators globally). With its advanced technology, the 787 should
face little technological risk for many years to come. At the same
time, the first version of a widebody family of planes that a
manufacturer introduces (the B787-8, in this case) is often partly
superseded by later, improved versions that can carry more
passengers (the B787-9 and, potentially, even larger variants).
The B787-9 will, according to Boeing, have both a higher seat
capacity and slightly longer range than the B787-8, and we believe
that this version will ultimately be more successful. For the
B737-900ER, we also used a depreciation rate of 6.5%, the same as
we have used before," S&P said.
"The loan-to-value (LTV) of the Class A certificates at the first
distribution date (Oct. 29, 2013) is 55.0% and the Class B is
65.2%, using the appraised base values and depreciation
assumptions in the offering memorandum. When we evaluate an
enhanced equipment trust certificate, we compare the values
provided by appraisers that the airline hired with our own
sources. In this case, we are focusing on the lowest of three base
values provided by appraisers that the prospectus uses. We apply
more conservative (faster) depreciation rates than those used in
the prospectus (3% of initial value each year), and our LTVs start
out a bit higher (58.1% for the Class A and 68.9% for Class B) and
gradually diverge further from those shown in the prospectus,
reaching 61% maximum for the Class A certificates and 70% for the
Class B certificates. Our analysis also considered that a full
draw of the liquidity facility, plus interest on those draws,
represents a claim senior to the certificates. This amount is
somewhat less than levels typical of an EETC, equal to 5%-6% of
collateral value. We factored that added priority claim in our
analysis," S&P said.
RATINGS LIST
Continental Airlines Inc.
Corporate credit rating B/Stable/--
New Ratings
Continental Airlines Inc.
Equipment trust certificates
Series 2012-1 Class A pass-thru certs A-(sf) (prelim)
Series 2012-1 Class B pass-thru certs BBB-(sf) (prelim)
COPYTELE INC: Completes Private Placement of $750,000 Debentures
----------------------------------------------------------------
CopyTele, Inc., has completed the private placement of $750,000 of
8% convertible debentures due Sept. 12, 2016, to five accredited
investors, including the Company's current Chairman and Chief
Executive Officer and one other director of the Company. The
debentures pay interest quarterly and are convertible into shares
of the Company's common stock at a conversion price of $0.092 per
share on or before Sept. 12, 2016. The Company may prepay the
debentures at any time without penalty upon 30 days prior notice.
About CopyTele
Melville, N.Y.-based CopyTele, Inc.'s principal operations include
the development, production and marketing of thin flat display
technologies, including low-voltage phosphor color displays and
low-power passive E-Paper(R) displays, and the development,
production and marketing of multi-functional encryption products
that provide information security for domestic and international
users over several communications media.
The Company's balance sheet at July 31, 2012, showed $5.9 million
in total assets, $6.8 million in total liabilities, and a
shareholders' deficit of $893,071.
According to the Company's quarterly report for the period ended
July 31, 2012, based on information presently available, the
Company does not believe that its existing cash, cash equivalents,
and investments in certificates of deposit, together with cash
flows from expected sales of its encryption products and revenue
relating to its display technologies, and other potential sources
of cash flows or necessary expense reductions including employee
compensation, will be sufficient to enable it to continue its
marketing, production, and research and development activities for
12 months from the end of this reporting period. "Accordingly,
there is substantial doubt about our ability to continue as a
going concern.
DDR CORP: S&P Lifts CCR to BB+ on Reduced Leverage, EBITDA Growth
-----------------------------------------------------------------
Standard Poor's Ratings Services raised its corporate credit
rating on DDR Corp. to 'BB+' from 'BB'. "In addition, we raised
our ratings on the company's senior unsecured notes to 'BBB-' from
'BB+' and the company's preferred shares to 'B+' from 'B'. At the
same time, we revised the outlook to stable from positive. We also
maintain a '2' recovery rating on the company's senior unsecured
notes. These rating actions affect roughly $2 billion of rated
debt," S&P said.
"The raised ratings reflect the incremental steps the company has
taken to reduce leverage and fixed charges. They also acknowledge
that the company's recent leasing activity and EBITDA growth have
exceeded our previous expectations," said credit analyst Matthew
Lynam. "The company has made steady progress to strengthen its
financial profile by issuing cheaper debt to refinance maturities
and financing new investments primarily with equity capital, while
extending its average debt tenor. We expect leasing momentum to
continue through 2012 and believe the resulting EBITDA growth will
drive continued improvement in credit metrics over the next year."
"The stable outlook signifies our expectation for continued
improvement in the company's operating performance and modest
balance sheet deleveraging over the next 12 months. We expect S&P-
calculated FCC to exceed 1.8x by year-end 2012 and approach 2.0x
by year-end 2013. S&P-calculated debt-to-EBITDA will continue to
tick down over the next year to the low 8x range, in our opinion.
We would consider raising our corporate credit rating if DDR's
credit metrics approach those of investment-grade peers, such that
S&P-calculated FCC strengthens to greater than 2.1x, the company
continues to adequately cover the common dividend, and S&P-
calculated debt-to-EBITDA falls to the mid-7x range. Although we
presently believe it is unlikely in the near term, we would
consider lowering the corporate credit rating if leverage or
liquidity materially weakened," S&P said.
DELPHI AUTOMOTIVE: S&P Keeps 'BB+' CCR After Term Loan Add-On
-------------------------------------------------------------
Standard & Poor's Ratings Services is affirming its 'BBB' issue
rating on Delphi Corp.'s term loan A after the company's
announcement that an amended and restated credit agreement will
incorporate a $363 million add-on to the loan that brings the
funded amount to $573 million from $210 million. "The 'BB+'
corporate credit rating on Delphi Automotive PLC remains
unchanged. We view the incremental leverage and interest expense
as minimal. The proceeds of the additional term loan borrowings
will be used to partly pay for the company's recent acquisition of
FCI's Motorized Vehicles Division," S&P said.
"At the same time, Delphi Automotive PLC's announcement of a $750
million share repurchase authorization has no effect on the
ratings because we expect the company to take a measured approach
to repurchases, to generate at least that much free cash flow this
year and again in 2013, and for the company's leverage to remain
in line with the rating," S&P said.
"The borrower under the amended and restated credit agreement is
Delphi Corp. The 'BBB' rating on Delphi Corp.'s senior secured
credit facility has a recovery rating of '1', indicating our
expectation that lenders would receive very high (90% to 100%)
recovery in the event of default. The 'BB+' rating on Delphi's
senior unsecured notes remains unchanged with a recovery rating of
'3', indicating our expectation that lenders would receive
meaningful (50% to 70%) recovery in the event of a default. The
rating is unchanged because the increased amount of funded senior
secured debt in the capital structure as a result of the add-on to
term loan A will be quickly amortized," S&P said.
"The 'BB+' corporate credit rating on Delphi Automotive reflects
the company's 'fair' business risk profile and 'intermediate'
financial risk profile, which incorporate substantial exposure to
the highly cyclical light vehicle market," S&P said.
RATINGS LIST
Delphi Automotive PLC
Corporate Credit Rating BB+/Stable/--
Ratings Affirmed
Delphi Corp.
Senior Secured
$573 mil term loan A BBB
Recovery Rating 1
DEWEY & LEBOEUF: Court to Review $71MM Contribution Deal
--------------------------------------------------------
Casey Sullivan at Thomson Reuters News & Insight reports the
proposed $71 million settlement between creditors and former
partners of Dewey & LeBoeuf was slated for review on Sept. 20,
2012, by U.S. Bankruptcy Judge Martin Glenn.
According to Reuters, the settlement -- which has drawn support
from more than 450 of 672 former Dewey partners as well as
creditors who claim they are owed more than $500 million -- would
require the lawyers to return $71 million in back compensation,
based on what they earned at the firm, in exchange for being
released from clawback claims.
The report relates many creditors, including landlord Paramount
Group and lender JPMorgan, as well as various other large groups
of former partners, expressed their support for the settlement in
court papers filed earlier this month.
The report says, if Judge Glenn approves the deal, individual
partners would each have to pay anywhere between $5,000 and
$3.5 million. A settlement could also avert years of costly
litigation between Dewey's estate and its former partners and
provide a modest recovery for Dewey's creditors.
The report notes if Judge Glenn nixes the deal, the bankruptcy
would likely escalate from a Chapter 11 to a Chapter 7, in which
case a trustee would be appointed by the court to aggressively
seek clawbacks from former Dewey partners as part of a
liquidation.
According to the report, the hearing comes after numerous
objections to the settlement plan have been filed in New York
bankruptcy court by various groups of former partners. Lawyers
retired from Dewey have complained that they didn't have anything
to do with the firm's demise and shouldn't be forced to return
compensation. They have requested that Glenn appoint an
independent trustee to investigate the settlement before it gets
court approval, the report adds.
The report relates a handful of former Dewey executives, including
former chairman Steven Davis, say the terms of the deal could
affect how they defend themselves in future litigation. The same
parties also object to the fact the Dewey estate has kept secret
the names of settling partners and say they need the names in
order to prepare for their defenses.
In a motion filed on Sept. 19, 2012, Dewey restructuring lawyer Al
Togut said Davis and other top executives "misread" how terms of
the settlement would impact future litigation; he also said the
names of settling partners would be made public after the
settlement received court approval, according to the report.
About Dewey & LeBoeuf
New York-based law firm Dewey & LeBoeuf LLP sought Chapter 11
bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the
wind-down of its operations. The firm had struggled with high
debt and partner defections. Dewey disclosed debt of $245 million
and assets of $193 million in its chapter 11 filing late evening
on May 29, 2012.
Dewey & LeBoeuf was formed by the 2007 merger of Dewey Ballantine
LLP and LeBoeuf, Lamb, Greene & MacRae LLP. At its peak, Dewey
employed about 2,000 people with 1,300 lawyers in 25 offices
across the globe. When it filed for bankruptcy, only 150
employees were left to complete the wind-down of the business.
Dewey's offices in Hong Kong and Beijing are being wound down.
The partners of the separate partnership in England are in process
of winding down the business in London and Paris, and
administration proceedings in England were commenced May 28. All
lawyers in the Madrid and Brussels offices have departed. Nearly
all of the lawyers and staff of the Frankfurt office have
departed, and the remaining personnel are preparing for the
closure. The firm's office in Sao Paulo, Brazil, is being
prepared for closure and the liquidation of the firm's local
affiliate. The partners of the firm in the Johannesburg office,
South Africa, are planning to wind down the practice.
The firm's ownership interest in its practice in Warsaw, Poland,
was sold to the firm of Greenberg Traurig PA on May 11 for $6
million. The Pension benefit Guaranty Corp. took $2 million of
the proceeds as part of a settlement.
Judge Martin Glenn oversees the case. Albert Togut, Esq., at
Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy
Solutions LLC serves as claims and notice agent. The petition was
signed by Jonathan A. Mitchell, chief restructuring officer.
JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the
lenders under the Revolver Agreement, hired Kramer Levin Naftalis
& Frankel LLP. JPMorgan, as Collateral Agent for the Revolver
Lenders and the Noteholders, hired FTI Consulting and Gulf
Atlantic Capital, as financial advisors. The Noteholders hired
Bingham McCutchen LLP as counsel.
The U.S. Trustee formed two committees -- one to represent
unsecured creditors and the second to represent former Dewey
partners. The creditors committee hired Brown Rudnick LLP led by
Edward S. Weisfelner, Esq., as counsel. The Former Partners hired
Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt &
Winters, LLP, as counsel.
DEWEY & LEBOEUF: JPMorgan Supports Firm's $71MM Clawback Plan
-------------------------------------------------------------
Lisa Uhlman at Bankruptcy Law360 reports that JPMorgan Chase Bank
NA on Tuesday threw its support behind Dewey & LeBoeuf LLP's
proposed $71 million clawback deal with ex-partners, saying
certain former partners' objections were merely attempts to
frustrate the Chapter 11 plan process and should be overruled.
As administrative and collateral agent under an April 2010 secured
credit agreement, the bank supports the relief the debtor
requested in its motion for approval of the so-called partner
contribution plan, a centerpiece of Dewey's bankruptcy, Bankruptcy
Law360 relates.
About Dewey & LeBoeuf
New York-based law firm Dewey & LeBoeuf LLP sought Chapter 11
bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the
wind-down of its operations. The firm had struggled with high
debt and partner defections. Dewey disclosed debt of $245 million
and assets of $193 million in its chapter 11 filing late evening
on May 29, 2012.
Dewey & LeBoeuf was formed by the 2007 merger of Dewey Ballantine
LLP and LeBoeuf, Lamb, Greene & MacRae LLP. At its peak, Dewey
employed about 2,000 people with 1,300 lawyers in 25 offices
across the globe. When it filed for bankruptcy, only 150
employees were left to complete the wind-down of the business.
Dewey's offices in Hong Kong and Beijing are being wound down.
The partners of the separate partnership in England are in process
of winding down the business in London and Paris, and
administration proceedings in England were commenced May 28. All
lawyers in the Madrid and Brussels offices have departed. Nearly
all of the lawyers and staff of the Frankfurt office have
departed, and the remaining personnel are preparing for the
closure. The firm's office in Sao Paulo, Brazil, is being
prepared for closure and the liquidation of the firm's local
affiliate. The partners of the firm in the Johannesburg office,
South Africa, are planning to wind down the practice.
The firm's ownership interest in its practice in Warsaw, Poland,
was sold to the firm of Greenberg Traurig PA on May 11 for $6
million. The Pension benefit Guaranty Corp. took $2 million of
the proceeds as part of a settlement.
Judge Martin Glenn oversees the case. Albert Togut, Esq., at
Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy
Solutions LLC serves as claims and notice agent. The petition was
signed by Jonathan A. Mitchell, chief restructuring officer.
JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the
lenders under the Revolver Agreement, hired Kramer Levin Naftalis
& Frankel LLP. JPMorgan, as Collateral Agent for the Revolver
Lenders and the Noteholders, hired FTI Consulting and Gulf
Atlantic Capital, as financial advisors. The Noteholders hired
Bingham McCutchen LLP as counsel.
The U.S. Trustee formed two committees -- one to represent
unsecured creditors and the second to represent former Dewey
partners. The creditors committee hired Brown Rudnick LLP led by
Edward S. Weisfelner, Esq., as counsel. The Former Partners hired
Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt &
Winters, LLP, as counsel.
DEWEY & LEBOEUF: 444 Settling Ex-Partners Identified
----------------------------------------------------
On Sept. 20, 2012, Dewey & Leboeuf LLP filed with the Court a
schedule of the 444 ex-partners of the defunct firm who agreed to
return money to avoid litigation.
To recall, Dewey & Leboeuf at the end of August filed with the
U.S. Bankruptcy Court for the Southern District of New York a
motion seeking approval of a $71.5 million settlement with former
attorneys of the Debtor that would shield former attorneys from
potential clawback litigation.
The settlements represent about 80% of the $89 million the firm
was seeking to recover from all former partners.
A copy of the schedule of the 444 participating partners and their
respective partner contribution amounts is available for free at:
http://bankrupt.com/misc/dewey.doc497-1.pdf
About Dewey & LeBoeuf
New York-based law firm Dewey & LeBoeuf LLP sought Chapter 11
bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the
wind-down of its operations. The firm had struggled with high
debt and partner defections. Dewey disclosed debt of $245 million
and assets of $193 million in its chapter 11 filing late evening
on May 29, 2012.
Dewey & LeBoeuf was formed by the 2007 merger of Dewey Ballantine
LLP and LeBoeuf, Lamb, Greene & MacRae LLP. At its peak, Dewey
employed about 2,000 people with 1,300 lawyers in 25 offices
across the globe. When it filed for bankruptcy, only 150
employees were left to complete the wind-down of the business.
Dewey's offices in Hong Kong and Beijing are being wound down.
The partners of the separate partnership in England are in process
of winding down the business in London and Paris, and
administration proceedings in England were commenced May 28. All
lawyers in the Madrid and Brussels offices have departed. Nearly
all of the lawyers and staff of the Frankfurt office have
departed, and the remaining personnel are preparing for the
closure. The firm's office in Sao Paulo, Brazil, is being
prepared for closure and the liquidation of the firm's local
affiliate. The partners of the firm in the Johannesburg office,
South Africa, are planning to wind down the practice.
The firm's ownership interest in its practice in Warsaw, Poland,
was sold to the firm of Greenberg Traurig PA on May 11 for $6
million. The Pension benefit Guaranty Corp. took $2 million of
the proceeds as part of a settlement.
Judge Martin Glenn oversees the case. Albert Togut, Esq., at
Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy
Solutions LLC serves as claims and notice agent. The petition was
signed by Jonathan A. Mitchell, chief restructuring officer.
JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the
lenders under the Revolver Agreement, hired Kramer Levin Naftalis
& Frankel LLP. JPMorgan, as Collateral Agent for the Revolver
Lenders and the Noteholders, hired FTI Consulting and Gulf
Atlantic Capital, as financial advisors. The Noteholders hired
Bingham McCutchen LLP as counsel.
The U.S. Trustee formed two committees -- one to represent
unsecured creditors and the second to represent former Dewey
partners. The creditors committee hired Brown Rudnick LLP led by
Edward S. Weisfelner, Esq., as counsel. The Former Partners hired
Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt &
Winters, LLP, as counsel.
DEX ONE: Meets with Supermedia to Discuss Debt Facilities
---------------------------------------------------------
Certain members of management of Dex One Corporation and
SuperMedia Inc. and representatives of their respective financial
advisors conducted a meeting on Sept. 18, 2012, to discuss the
proposed merger transactions previously announced on Aug. 21,
2012.
The parties discussed proposed amendments to existing credit
facilities to, among other things, extend maturity, reduce Dex
One's mandatory amortization and to use portion of cash flow in
market-based tender for debt.
The proposed amendments to the Borrowers' credit facilities are,
among others, conditions to the consummation of the proposed
merger transactions.
A copy of the discussion materials used during that meeting is
available for free at http://is.gd/UEzkQ5
About Dex One
Dex One, headquartered in Cary, North Carolina, is a local
business marketing services company that includes print
directories and online voice and mobile search. Revenue was
approximately $1.1 billion for the LTM period ended Sept. 30,
2010.
R.H. Donnelley Corp. and 19 of its affiliates, including Dex
Media East LLC, Dex Media West LLC and Dex Media Inc., filed for
Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09-
11833 through 09-11852). They emerged from bankruptcy on Jan. 29,
2010. On the Effective Date and in connection with its emergence
from Chapter 11, RHD was renamed Dex One Corporation.
Dex One reported a net loss of $518.96 million in 2011 compared
with a net loss of $923.59 million for the eleven months ended
Dec. 31, 2010.
The Company's balance sheet at June 30, 2012, showed $3.03 billion
in total assets, $2.93 billion in total liabilities and $103.57
million in total shareholders' equity.
* * *
As reported in the April 2, 2012 edition of the TCR, Moody's
Investors Service has downgraded the corporate family rating (CFR)
for Dex One Corporation's to Caa3 from B3 based on Moody's view
that a debt restructuring is inevitable. Moody's has also changed
Dex's Probability of Default Rating (PDR) to Ca/LD from B3
following the company's purchase of about $142 million of par
value bank debt for about $70 million in cash. The Caa3 rating
also reflects Moody's view that additional exchanges at a discount
are likely in the future since the company amended its bank
covenants to make it possible to repurchase additional bank debt
on the open market through the end of 2013.
As reported by the TCR on April 4, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Cary, N.C.-based
Dex One Corp. and related entities to 'CCC' from 'SD' (selective
default). "The upgrade reflects our assessment of the company's
credit profile after the completion of the subpar repurchase
transaction in light of upcoming maturities, future subpar
repurchases, and our expectation of a continued week operating
outlook," explained Standard & Poor's credit analyst Chris
Valentine.
DIGITAL DOMAIN: Creditor Concerned About Fast Auction
-----------------------------------------------------
Rachel Feintzeig at Dow Jones' DBR Small Cap reports that
Technicolor Creative Services USA Inc., a creditor that is
planning on making a bid for Digital Domain Media Group Inc.'s
assets, is concerned about the pace of the special-effects
company's sale process and says the accelerated timeline could
result in lower offers for the business.
About Digital Domain
Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/
-- engages in the creation of original content animation feature
films, and development of computer-generated imagery for feature
films and transmedia advertising primarily in the United States.
Digital Domain Media Group, Inc. and 13 affiliates sought Chapter
11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11
to sell its business for $15 million to Searchlight Capital
Partners LP.
The Debtors have also sought ancillary relief in Canada, pursuant
to the Companies' Creditors Arrangement Act in the Supreme Court
of British Columbia, Vancouver Registry.
Port St. Lucie, Florida-based Digital Domain disclosed assets of
$205 million and liabilities totaling $214 million.
DDMG also announced that it has entered into a purchase agreement
with Searchlight Capital Partners L.P. to acquire Digital Domain
Productions Inc. and its operating subsidiaries in the United
States and Canada, including Mothership Media, subject to the
receipt of higher and better offers and Court approval.
DDPI and Mothership, with studios in California and Vancouver, are
focused on creating digital visual effects, CG animation and
digital production for the entertainment and advertising
industries and are led by recently promoted Chief Executive
Officer Ed Ulbrich.
Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the
Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief
restructuring officer. Kurtzman Carson Consultants LLC is the
claims and notice agent.
DOLE FOOD: Fitch Alteres Rating Watch to Positive
-------------------------------------------------
Fitch Ratings has changed the Rating Watch on Dole Food Co., Inc.
(Dole; NYSE DOLE) and Solvest, Ltd., which is Dole's wholly owned
subsidiary, to Positive from Negative.
The affected ratings are as follows:
Dole (Operating Company)
-- Long-term Issuer Default Rating (IDR) 'B+';
-- Asset-based (ABL) revolver due 2016 'BB+/RR1';
-- Secured term loan B due 2018 'BB+/RR1';
-- 13.875% third-lien notes due 2014 'BB/RR2';
-- 8% third-lien notes due 2016 'BB/RR2';
-- 8.75% senior unsecured notes due 2013 'B-/RR6'.
Solvest Ltd. (Bermuda-Based Subsidiary)
-- Long-term IDR 'B+';
-- Secured term loan C due 2018 'BB+/RR1'.
At June 16, 2012, Dole had $1.6 billion of total debt.
Rating Rationale and Triggers:
On Sept. 17, 2012, Dole announced that it had signed a definitive
agreement to sell its worldwide packaged foods and Asia fresh
produce business to ITOCHU Corp. for $1.685 billion in cash. The
transaction is expected to close by year end following customary
regulatory approvals in multiple countries. Combined revenue and
EBITDA, excluding corporate overhead, for these businesses was
roughly $2.5 billion and $190 million during 2011, respectively,
translating to a transaction multiple of 8.9x.
Dole further announced that it will use the majority of the
proceeds, net of about $300 million of cash cost associated with
the deal and subsequent restructuring, to pay off debt. In
connection with the transaction, Dole will recapitalize its debt
structure, with any new debt issued on more favorable terms and
being biased towards term loans.
The Positive Rating Watch indicates that there is heightened
probability of an upgrade with the ultimate outcome dependent on
Dole's post recapitalization capital structure and leverage.
Timing of the recapitalization is uncertain and Dole has not
committed to final debt levels or what cash proceeds will be used
for but Fitch believes shareholder payouts are possible.
Upon resolution of the Positive Watch, Dole's ratings will
continue to reflect the company's relatively low margins and the
periodic volatility of its fresh produce operations. However,
leverage is likely to be substantially lower and free cash flow
(FCF) should improve versus history due to lower interest expense
and capital expenditures . As a result of the divestiture, Dole
also plans to implement cost-savings initiatives and corporate
restructuring by the end of 2013 which are expected to result in
$50 million of annual savings.
Pro forma for the divestiture, Dole will have approximately $4.2
billion revenue and $246 million of EBITDA including the $50
million of cost savings mentioned above but the company will be
less diversified. Capital expenditures could approximate $41
million and net interest expense, should the company pay off all
but about $260 million of its debt and prior to any additional
debt incurrence associated with the recapitalization, could be
about $16 million.
Prior to the Dole strategic review, the company's financial
strategy was to utilize FCF and asset sale proceeds to reduce debt
while engaging in select tuck-in acquisitions. The company's
leverage goal was net debt-to-EBITDA of 2.0x. Although Dole has
not committed to a new leverage goal, Fitch expects total debt-to-
operating EBITDA to be maintained substantially below current
levels outlined below.
Credit Statistics, Liquidity and Maturities:
For the latest 12-month (LTM) period ended June 16, 2012, total
debt-to-operating EBITDA was 5.5x, up from 4.6x at Dec. 31, 2011.
Operating EBITDA-to-gross interest expense was 2.2x, down from
2.6x and funds from operations (FFO) fixed charge coverage was
1.3x, versus 1.5x at year end. FCF was negative $95.6 million
versus negative $77 million at year end.
At June 16, 2012, Dole's liquidity consisted of $94.1 million of
cash and $239.5 of availability under its revolver. Dole's $350
million ABL facility expires on July 8, 2016. Dole's only
financial covenant is a springing fixed charge coverage ratio of
at least 1.0x if ABL availability is below a certain amount.
Dole's debt agreements contain mandatory prepayment requirements
related to asset sales. At June 16, 2012, Dole had $155 million
of 8.75% senior unsecured notes due July 2013, $174.9 million of
13.875% junior-lien notes due March 2014, 8% of junior-lien notes
due September 2016, and a $312.6 million term B loan due July
2018. Solvest's $559.5 million term C loan is due July 2018.
The ABL has a first-priority lien on U.S. account receivables and
inventory and a second-priority lien on real and intangible
property. Term loans are secured on a first priority basis by real
and intangible property and on a second priority basis by ABL
collateral. Lastly, third-lien notes have the benefit of a lien
on certain U.S. assets of Dole that is junior to the liens of the
company's senior secured credit facilities.
Dole will continue to have a substantial asset base, inclusive of
113,000 acres of land, five salad processing facilities, 11 owned
ships, and other tangible assets, following the divestiture of its
worldwide packaged food and Asia fresh produce business. Fitch
believes any new term loans or revolving credit facilities could
be unsecured given the significant improvement in Dole's credit
profile.
What Could Trigger A Rating Action
Future developments that may, individually or collectively, lead
to a positive rating action include:
-- The closure of Dole's asset sale transaction, the subsequent
payoff of existing debt, and more certainty as to Dole's
capital structure following the recapitalization of its debt
structure is expected to result in rating upgrade(s).
Future developments that may, individually or collectively, lead
to a negative rating action include:
-- A downgrade is not anticipated as Fitch expects Dole's
leverage to be maintained below historical levels following
its recapitalization and believes its FCF profile will
improve.
DRIVETIME AUTOMOTIVE: S&P Puts 'B' Issuer Credit Rating on Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B' issuer credit
ratings on DriveTime Automotive Group Inc. and DT Acceptance Corp.
(DriveTime) on CreditWatch with developing implications. "We also
placed our 'B' rating on DriveTime's $200 million senior secured
notes on CreditWatch developing," S&P said.
"The CreditWatch action follows DriveTime's announcement that it
has entered into a definitive agreement to sell itself in separate
transactions," said Standard & Poor's credit analyst Kevin Cole.
DriveTime has agreed to sell its finance receivable portfolio to
Santander Consumer USA Inc. And a new entity owned by third-party
investors will acquire all of the outstanding stock of DriveTime,
thereby acquiring all of DriveTime's used vehicle dealerships and
other facilities. In addition to standard closing conditions, the
transaction is contingent on the purchasers successfully
completing an offer to repurchase DriveTime's $200 million senior
notes.
"In our view, there is a good likelihood the transaction will be
completed," said Mr. Cole. "However, we expect the purchasers will
need to repurchase the senior notes at a substantial premium to
par, which may complicate the acquisition's completion."
"We do not believe there is enough information available at this
time about the eventual capital structure and ownership of the
newly formed entity acquiring DriveTime to determine the potential
rating. If the parties do not consummate the transaction, we would
likely maintain our 'B' ratings on DriveTime and its senior
notes," S&P said.
DZ.EYE.N STUDIOS: Judge Dismisses Involuntary Chapter 11 Case
-------------------------------------------------------------
Angel Staffing Incorporated sent DZ.EYE.N Studios, LLC, to
Chapter 11 bankruptcy by filing an involuntary petition. Angel
Staffing also sought a Chapter 11 trustee to take over management.
The Debtor filed a motion to dismiss the bankruptcy case.
At hearings held in July, the Court ruled on the record that the
Petition should be dismissed.
After stating the Court's ruling on the record, the bankruptcy
judge said "I've made my findings of fact and my conclusions of
law on the record. I don't intend to reduce them to writing; I
don't think it's necessary."
However, the proposed order submitted by the Debtor that was later
signed by the bankruptcy judge included findings that:
-- The petitioner's claim is the subject of a bona fide
dispute;
-- This case is essentially a two-party dispute;
-- There is an adequate forum in which the Parties can resolve
their dispute;
-- There is insufficient evidence for a finding of fraud,
trick, artifice or scam; and
-- The appointment of a trustee is not in the interests of
creditors, any equity security holders, or other interests
of the estate.
Angel Staffing filed a motion to amend the dismissal order to
remove certain finding, including the provision that said the
appointment of a trustee is not in the interest of creditors.
The judge in an order agreed to strike certain findings pointed
out by Angel Staffing but said the motion to amend the dismissal
order "is in all other respects denied."
The judge in an August order said the motion to appoint a trustee
is "moot."
Davis Group Hiring
In July, the Debtor sought and obtained permission from the U.S.
Bankruptcy Court to employ Davis Group, Attorneys & Counselors,
P.C., as special litigation counsel. Santos Vargas attests that
the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
Pursuant to the Debtor's employment application, the firm would:
(a) represent the Debtor in the case styled Angel Staffing,
Inc. et al. v. DZ.EYE.N. Studios LLC d/b/a Boss Creative,
Cause No. 2012-CI-07380, pending in the District Court for
the 45th Judicial District for Bexar County, Texas; and
(b) represent the Debtor in Bankruptcy Court in connection with
any matters that may be related to the State Court Lawsuit.
The firm's hourly rates are:
Professional Rates
------------ -----
Managing Partner $375
Santos Vargas, Partner $275
Caroline Newman, Associate $250
Dela Rico, Paralegal $100
About Boss Creative
An involuntary Chapter 11 case was filed against DZ.EYE.N Studios,
LLC (Bank. W.D. Tex. Case No. 12-51861) on June 8, 2012, by Angel
Staffing. The petitioning creditor, which asserts a $425,000
claim for an unpaid loan, also filed a motion for a trustee to
take over the Debtor's estate.
Dz.eye.n Studios, doing business as Boss Creative, continues to
manage and operate its business. Boss Creative is a San Antonio-
Texas based provider of innovative web, print, search engine
optimization and logo design. Boss Creative's in-house developers
and programmers promise visually stunning, effective and engaging
websites that drive industry standards.
FIRSTFED FINANCIAL: Seeks OK on Agreement for Confirmation Hearing
------------------------------------------------------------------
BankruptcyData.com reports that FirstFed Financial filed with the
U.S. Bankruptcy Court a motion for approval of a stipulation
between the Debtors, Holdco Advisors, the Federal Deposit
Insurance Corporation and the Office of the United States Trustee
to continue the confirmation hearing for the Second Amended
Chapter 11 Plan of Reorganization from Oct. 2, 2012 to
Oct. 11, 2012.
About FirstFed Financial
Irvine, Calif.-based FirstFed Financial Corp. is the bank
holding company for First Federal Bank of California and its
subsidiaries. The Bank was closed by federal regulators on
Dec. 18, 2009.
FirstFed Financial Corp. filed for Chapter 11 protection (Bankr.
C.D. Calif. Case No. 10-10150) on Jan. 6, 2010. Jon L. Dalberg,
Esq., at Landau Gottfried & Berger LLP, represents the Debtor in
its restructuring effort. Garden City Group is the claims and
notice agent. The Debtor disclosed assets at $1 million and
$10 million, and debts at $100 million and $500 million.
The Debtor's exclusive period to propose a plan expired in
January 2011.
The Debtor has proposed a Plan of Liquidation, which proposes an
orderly liquidation of the Debtor's estate. Holdco Advisors L.P.,
submitted a competing plan of reorganization.
FTMI REAL ESTATE: Has Final Authority to Employ G&A as Counsel
--------------------------------------------------------------
On Sept. 10, 2012, the U.S. Bankruptcy Court for the Southern
District of Florida granted FTMI Real Estate, LLC, final authority
to employ Thomas L. Abrams, Esq., and Gamberg & Abrams as counsel
for the Debtor and Debtor-in-Possession.
About FTMI Real Estate
FTMI Real Estate, LLC, and FTMI Operator, LLC, sought Chapter 11
protection (Bankr. S.D. Fla. Lead Case No. 12-29214) in Fort
Lauderdale, Florida, on Aug. 10, 2012.
FTMI Operator, which operates a health care business The Lenox on
The Lake, disclosed just $112,000 in assets and $31.98 million in
liabilities. The LENOX -- http://www.thelenox.com-- is South
Florida's, newest state-of-the-art Assisted Living and Memory Care
community, which has a serene lakeside setting and wonderful
waterfront vistas.
FTMI Real Estate, a single asset real estate under 11 U.S.C. Sec.
101(51B), scheduled $19.64 million in assets and $28.93 million
in liabilities. The Debtor owns The Lenox on The Lake facilities
at 6700 Commercial Boulevard, in Lauderhill, Florida valued at
$13 million. Secretary of Housing Urban Development has a
$25.87 million claim secured by the property.
FTMI REAL ESTATE: FTMI Operator Taps Mark Nunheimer as Consultant
-----------------------------------------------------------------
FTMI Operator, LLC, asks the U.S. Bankruptcy Court for the
Southern District of Florida for authorization to employ Mark
Nunheimer as financial services consultant to the Debtor, nunc pro
tunc to the Petition Date.
Mr. Nunheimer will provide these services:
a. supervision of onsite bookkeeping/business office manager and
advice on similar functions;
b. maintenance of all operating budgets;
c. tracking and review of accounts receivable;
d. monitoring of payroll systems;
e. tracking and review of all accounts payable;
f. preparation of annual operating budgets;
g. response to any requests for financial information by lender
except services required to be performed by an independent
auditing firm;
h. coordination and preparation of annual income tax returns;
i. coordination of annual audit for HUD;
j. preparation of a monthly reporting package for owners that
will include the following by the 24th of the month: Balance
Sheet, Income Statement, Budget verse Actual Income
Statement, Accounts Receivable, Rent Roll and Cash
Accounts;
k. tracking of all prepaid expenses; and
l. advice to owners on internal control procedures.
To the best of the Debtor's knowledge, the consultant does not
have any connection with the creditors or other parties in
interest or their respective attorneys aside from creditor MMR
Associates Lauderhill, the Management Company with whom
Mr. Nunheimer is affiliated. Mr. Nunheimer does not represent any
interest adverse to the Debtor.
For his services as consultant to the Debtor, Mr. Nunheimer will
be paid $4,000 per month.
About FTMI Real Estate
FTMI Real Estate, LLC, and FTMI Operator, LLC, sought Chapter 11
protection (Bankr. S.D. Fla. Lead Case No. 12-29214) in Fort
Lauderdale, Florida, on Aug. 10, 2012.
FTMI Operator, which operates a health care business The Lenox on
The Lake, disclosed just $112,000 in assets and $31.98 million in
liabilities. The LENOX -- http://www.thelenox.com-- is South
Florida's, newest state-of-the-art Assisted Living and Memory Care
community, which has a serene lakeside setting and wonderful
waterfront vistas.
FTMI Real Estate, a single asset real estate under 11 U.S.C. Sec.
101(51B), scheduled $19.64 million in assets and $28.93 million
in liabilities. The Debtor owns The Lenox on The Lake facilities
at 6700 Commercial Boulevard, in Lauderhill, Florida valued at
$13 million. Secretary of Housing Urban Development has a
$25.87 million claim secured by the property.
FULLER BRUSH: Oct. 16 Auction to Test Victory Park Offer
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Fuller Brush Co. will be sold to secured lender
Victory Park Capital Advisors LLC in exchange for $18 million in
debt unless a competing bidder submits a higher off at auction on
Oct. 16.
According to the report, this week the bankruptcy court in New
York approved auction and sale procedures where competing bids are
due initially on Oct. 12. A hearing to approve the sale will take
place Oct. 18. The Fuller reorganization is being financed with a
$5 million loan from an affiliate of Victory Park, owed $22.85
million.
The report relates that Fuller's consumer and non-consumer
businesses will be sold separately. Victory Park's initial bid
will be $13 million for the non consumer operations and $5 million
for the consumer portion. Unlike most bankruptcy sales, Victory
Park will have no breakup fee or expense reimbursement if outbid.
Fuller can designate a cash bidder to be the so-called stalking
horse at the auction. A cash bidder will have a breakup fee if
outbid at auction.
About Fuller Brush
The Fuller Brush Company -- http://www.fuller.com/-- sells
branded and private label products for personal care, commercial
and household cleaning and has a current catalog of 2,000 cleaning
products. Some of Fuller's retail partners include Home Trends,
Bi-Mart, Byerly's, Lunds, Home Depot, Do-It-Best, Primetime
Solutions, Vermont Country Store and Starcrest.
Founded in 1906 and based in Great Bend, Kansas, The Fuller Brush
Company, Inc., and its parent, CPAC, Inc., filed for Chapter 11
protection (Bankr. S.D.N.Y. Case Nos. 12-10714 and 12-10715) in
Manhattan on Feb. 21, 2012. Fuller Brush filed for bankruptcy
five years after the company was taken over by private equity firm
Buckingham Capital Partners. Fuller, which has 180 employees as
of the Chapter 11 filing, disclosed $22.9 million in assets and
$50.9 million in debt. Fuller said it will be business as usual
while undergoing Chapter 11 restructuring. But it said that while
in reorganization, it intends to trim about half of the current
catalog of cleaning products.
Herrick Feinstein LP serves as the Debtors' bankruptcy counsel.
The official committee of unsecured creditors has tapped the law
firm of Kelley Drye & Warren LLP as counsel.
The reorganization is being financed with a $5 million loan from
an affiliate of Victory Park Capital Advisors LLC, the secured
lender owed $22.7 million that plans to buy the business
in exchange for debt.
GENERAL CABLE: S&P Rates Proposed $550MM Sr. Unsecured Notes 'B+'
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' (one notch
below the corporate credit rating) issue-level rating to General
Cable Corp.'s proposed $550 million senior unsecured notes due
2022. "The recovery rating on the notes is '5', indicating our
expectation of modest (10%-30%) recovery in the event of a payment
default. The notes are being issued pursuant to Rule 144A with
registration rights," S&P said.
"The notes will be senior unsecured obligations, will rank equally
with all of General Cable's existing and future unsecured and
unsubordinated indebtedness, and will be effectively subordinated
in the right of payment related to collateral to secured
indebtedness. The company intends to use the proceeds from this
offering to redeem its $200 million 7.125% senior notes due 2017
and either tender for, purchase, or pay at maturity its $355
million 0.875% senior convertible notes due 2013," S&P said.
"The 'BB-' corporate credit rating and stable rating outlook on
General Cable reflects the combination of what we consider to be
the company's 'fair' business risk and 'aggressive' financial risk
profiles. The company's business is supported by its diversified
sales and operations and its broad product portfolio. These
attributes are somewhat offset by the competitive characteristics
of the wire and cable industry, which is highly fragmented,
exposed to raw material price volatility, and has low margins. We
assess the financial risk as aggressive because of the company's
strategy to grow through acquisitions and use debt to finance
them," S&P said.
"We believe that full-year 2012 EBITDA could reach $400 million,
an improvement over 2011 due to higher volumes, and results in
2013 should benefit from the recent acquisition of Alcan Cable. We
expect debt-to-EBITDA to be under 4x by year-end 2012 and funds
from operations (FFO)-to-total debt to be around 20%, consistent
with the rating," S&P said.
RATINGS LIST
General Cable Corp.
Corporate credit rating BB-/Stable
New Rating
General Cable Corp.
Proposed $550M sr unsecured notes due 2022 B+
Recovery rating 5
GENERAL MOTORS: U.S. Balks at Plan to Sell Entire Stake
-------------------------------------------------------
American Bankruptcy Institute, citing the Wall Street Journal,
reports that the Treasury Department is resisting a push by
General Motors Co. to sell the government's entire stake in the
automaker.
About General Motors
With its global headquarters in Detroit, Michigan, General Motors
Company (NYSE:GM, TSX: GMM) -- http://www.gm.com/-- is one of
the world's largest automakers, traces its roots back to 1908.
GM employs 208,000 people in every major region of the world and
does business in more than 120 countries. GM and its strategic
partners produce cars and trucks in 30 countries, and sell and
service these vehicles through the following brands: Baojun,
Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Isuzu, Jiefang,
Opel, Vauxhall, and Wuling. GM's largest national market is
China, followed by the United States, Brazil, the United Kingdom,
Germany, Canada, and Italy. GM's OnStar subsidiary is the
industry leader in vehicle safety, security and information
services.
General Motors Co. was formed to acquire the operations of
General Motors Corp. through a sale under 11 U.S.C. Sec. 363
following Old GM's bankruptcy filing. The U.S. government once
owned as much as 60.8% stake in New GM on account of the
financing it provided to the bankrupt entity. The deal was
closed July 10, 2009, and Old GM changed its name to Motors
Liquidation Co.
General Motors Corp. and three of its affiliates filed for
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on
June 1, 2009. The Honorable Robert E. Gerber presides over the
Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin,
Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges
LLP, assist the Debtors in their restructuring efforts. Al Koch
at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as
the Chief Executive Officer for Motors Liquidation Company. GM
is also represented by Jenner & Block LLP and Honigman Miller
Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP
is providing legal advice to the GM Board of Directors. GM's
financial advisors are Morgan Stanley, Evercore Partners and the
Blackstone Group LLP. Garden City Group is the claims and notice
agent of the Debtors.
The U.S. Trustee appointed an Official Committee of Unsecured
Creditors and a separate Official Committee of Unsecured
Creditors Holding Asbestos-Related Claims. Lawyers at Kramer
Levin Naftalis & Frankel LLP served as bankruptcy counsel to the
Creditors Committee. Attorneys at Butzel Long served as counsel
on supplier contract matters. FTI Consulting Inc. served as
financial advisors to the Creditors Committee. Elihu Inselbuch,
Esq., at Caplin & Drysdale, Chartered, represented the Asbestos
Committee. Legal Analysis Systems, Inc., served as asbestos
valuation analyst.
The Bankruptcy Court entered an order confirming the Debtors'
Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan
was declared effect on March 31, 2011.
GLATFELTER CO: S&P Rates $200MM Senior Unsecured Notes 'BB+'
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' issue-level
rating to U.S.-based P.H. Glatfelter Co.'s proposed $200 million
senior unsecured notes due 2020. "We also assigned our '3'
recovery rating to the proposed notes, indicating our expectation
for meaningful (50% to 70%) recovery in the event of default. We
expect the company to use proceeds to repay its $200 million
senior notes due 2016," S&P said.
"Our 'BB+' rating on York, Pa.-based Glatfelter reflects our view
of the company's business risk as 'fair' and its financial risk as
'intermediate'. Our fair business risk assessment acknowledges the
company's significant reliance on certain commodity-like specialty
paper products, as well as its exposure to sometimes volatile
input costs and selling prices. That said, the company is growing
its exposure to more value-added niche products for which demand
is growing," S&P said.
"Our intermediate financial risk assessment acknowledges
Glatfelter's improved leverage profile with debt-to-EBITDA now
below 2.0x and funds from operations to debt near 50%. This
financial profile provides flexibility at the current rating level
for leveraged investments that further expand the company's value-
added segments where demand is growing," S&P said.
"Glatfelter produces paper and other products at its mills in
North America, Germany, France, and the U.K. Its specialty papers
segment accounts for roughly 55% of revenues and includes paper
for trade book publishing and carbonless products that, in our
opinion, face substitution risks. Glatfelter derives the rest of
its revenue from its composite fibers segment (tea bags, coffee
filters, and other products) and its advanced airlaid materials
segment (feminine hygiene and other products). We view these
businesses as having better long-term growth prospects," S&P said.
GLOBAL AVIATION: Files Joint Chapter 11 Plan
--------------------------------------------
BankruptcyData.com reports that Global Aviation Holdings filed
with the U.S. Bankruptcy Court a Joint Chapter 11 Plan and related
Disclosure Statement.
"As described in the first day declaration of William Garrett, the
Debtors' Executive Vice President and Chief Financial Officer, to
appropriately restructure, the Debtors needed to (a) rationalize
their fleet, (b) reduce their labor costs through voluntary
modifications to collective bargaining agreements or court order
and (c) develop an appropriate post-emergence balance sheet and
secure exit financing to emerge from chapter 11 as a competitive
enterprise. All three of these goals will be achieved either prior
to or upon confirmation of the Plan." Treatment under the Plan is
as follows: "Each Holder of such Claims arising under that certain
Indenture dated as of August 13, 2009 whose claims total
approximately $111.4 million, will receive a Pro Rata distribution
of: (i) the remaining New First Lien Loan after satisfaction of
the DIP Claims; (ii) new second lien debt of $40 million, with a
5-year term and an interest rate of 3% per annum, with an option
for cash pay or pay-in-kind and (iii) 100% of the new common stock
of Reorganized Global Aviation subject to dilution for
distributions of New Common Stock under Reorganized Global
Aviation's Management Equity Incentive Plan and Employee Incentive
Equity Plan; Holders of Second Lien Claims will not receive any
distribution; Holders of General Unsecured Claims will not receive
any distribution; On the Effective Date, all General Unsecured
Claims shall be cancelled and discharged; No distribution shall be
made on account of Intercompany Claims; All equity interests in
Global Aviation will be cancelled or extinguished on the Effective
Date," according to the Disclosure Statement obtained by
BankruptcyData.com.
The Court scheduled an Oct. 17, 2012 hearing to consider the
Disclosure Statement.
About Global Aviation
Global Aviation Holdings Inc., based in Peachtree City, Ga., is
the parent company of North American Airlines and World Airways.
Global is the largest commercial provider of charter air
transportation for the U.S. military, and a major provider of
worldwide commercial global passenger and cargo air transportation
services. North American Airlines, founded in 1989 and based in
Jamaica, N.Y., operates passenger charter flights using B757-200ER
and B767-300ER aircraft. World Airways, founded in 1948 and based
in Peachtree City, Ga., operates cargo and passenger charter
flights using B747-400 and MD-11 aircraft.
Global Aviation, along with affiliates, filed Chapter 11 petitions
(Bankr. E.D.N.Y. Case No. 12-40783) on Feb. 5, 2012.
Global's lead counsel in connection with the restructuring is
Kirkland & Ellis LLP and its financial advisor is Rothschild.
Kurtzman Carson Consultants LLC is the claims agent.
The Debtors disclosed $589.8 million in assets and $493.2 million
in liabilities as of Dec. 31, 2011. Liabilities include $146.5
million on 14% first-lien secured notes and $98.1 million on a
second-lien term loan. Wells Fargo Bank NA is agent for both.
Global said it will use Chapter 11 to shed 16 of 30 aircraft.
In addition, Global said it will use Chapter 11 to negotiate new
collective bargaining agreements with its unions and deal with
liabilities on multi-employer pension plans.
On Feb. 13, 2012, the U.S. Trustee for Region 2 appointed a seven
member official committee of unsecured creditors in the case. The
Committee tapped Lowenstein Sandler PC as its counsel, and
Imperial Capital, LLC as its financial advisor.
The Hon. Carla E. Craig has extended the Debtors' exclusive period
to file a Chapter 11 plan for each Debtor until Oct. 2, 2012, and
the exclusive period to solicit acceptances of a Chapter 11 plan
of each Debtor until Dec. 3, 2012.
GMX RESOURCES: 47.9% of 2013 Noteholders Accept Tender Offer
------------------------------------------------------------
GMX Resources Inc. had received, as of immediately after 5:00
p.m., New York City Time, on Sept. 17, 2012, tenders from the
holders of approximately $24.9 million in aggregate principal
amount, or approximately 47.9%, of its outstanding 5.00% Senior
Convertible Notes due 2013 and approximately $38.0 million in
aggregate principal amount, or approximately 44.0%, of its
outstanding 4.50% Senior Convertible Notes due 2015 in connection
with its previously announced exchange offers for the Convertible
Notes, which commenced on Aug. 9, 2012. Holders tendering 2013
Notes will receive new Senior Secured Second-Priority Notes due
2018 and shares of the Company's common stock. Holders tendering
2015 Notes will receive New Notes.
Pursuant to the terms of the exchange offer for the 2013 Notes,
the Company will accept tenders for all of those notes and issue
in exchange an aggregate of approximately $24.9 million principal
amount of New Notes and 7,176,384 shares of the Company's common
stock. In addition, pursuant to the terms of the exchange offer
for the 2015 Notes, the Company will accept tenders for all 2015
notes tendered and issue in exchange an aggregate of approximately
$26.6 million principal amount of New Notes. The settlement date
of the exchange offers is expected to be Sept. 19, 2012.
After giving effect to the exchange offers, approximately $27.1
million aggregate principal amount of 2013 Notes and $48.3 million
aggregate principal amount of 2015 Notes will remain outstanding,
and approximately $51.5 million aggregate principal amount of New
Notes will be outstanding.
Any Convertible Notes not tendered and purchased pursuant to the
tender offers will remain outstanding.
About GMX Resources
GMX Resources Inc. -- http://www.gmxresources.com/-- is an
independent natural gas production company headquartered in
Oklahoma City, Oklahoma. GMXR has 53 producing wells in Texas &
Louisiana, 24 proved developed non-producing reservoirs, 48 proved
undeveloped locations and several hundred other development
locations. GMXR has 9,000 net acres on the Sabine Uplift of East
Texas. GMXR has 7 producing wells in New Mexico. The Company's
strategy is to significantly increase production, revenues and
reinvest in increasing production. GMXR's goal is to grow and
build shareholder value every day.
GMX Resources' balance sheet at June 30, 2012, showed $394.79
million in total assets, $462.46 million in total liabilities and
a $67.67 million total deficit.
The Company reported net losses of $206.44 million in 2011,
$138.29 million in 2010, and $181.08 million in 2009.
* * *
As reported by the Troubled Company Reporter on Aug. 16, 2012,
Standard & Poor's Ratings Services lowered its corporate credit
rating on GMX Resources to 'CC' from 'CCC+'.
"The downgrade to 'CC' reflects the potential for a selective
default on GMX's 4.5% senior convertible notes due 2015 -- $86.3
million outstanding as of June 30, 2012 -- due to certain aspects
of GMX's exchange offer that would constitute a distressed
exchange under our criteria," said Standard & poor's credit
analyst Paul B. Harvey. "As part of the exchange offer for its
2013 and 2015 convertible notes, holders of the 2015 notes have
the right to exchange $1,000 principle of existing notes for $700
principle of new senior secured second-priority notes due 2018. We
view this as a distressed exchange."
Holders of the existing 2015 notes, regardless of when purchased,
would receive significantly less than the original face value that
was promised, S&P said.
GORDIAN MEDICAL: Additional Work for Fulbright & Jaworski Okayed
----------------------------------------------------------------
Gordian Medical, Inc., dba American Medical Technologies, sought
and obtained permission from the U.S. Bankruptcy Court to expand
the scope of Fulbright & Jaworski L.L.P.'s services.
Early in the case, the Debtor obtained approval to hire the firm
as counsel with respect to the Debtor's health care regulatory
matters. The Debtor sought to expand the scope of the firm's
legal duties to include representing the Debtor in litigation it
intends to initiate in Pennsylvania state court against various
parties based upon, among other things, fraud, conspiracy breach
of contract, tortuous interference with business relations and
theft of trade secrets.
The attorneys and paralegal currently expected to be principally
responsible for this specific matter, and their hourly rates are:
Amy L. Barrette, Partner, $480; Matthew H. Sepp, Counsel, $295;
Michael Peter Gaetani, Associate, $300; and Josh Loncar,
Paralegal, $265.
Fulbright has requested an additional postpetition retainer in the
amount of $25,000 to be held in Fulbright's client trust account
to be applied against fees and costs incurred costs related to the
Litigation.
About Gordian Medical
Gordian Medical, Inc., dba American Medical Technologies, filed a
Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-12339) in
Santa Ana, California, on Feb. 24, 2012, after Medicare refunds
were halted. Irvine, California-based Gordian Medical provides
supplies and services to treat serious wounds. The company has
active relationships with and serves patients in more than 4,000
nursing facilities in 49 states with the heaviest concentration of
the nursing homes being in the south and southeast sections of the
United States.
The Debtor estimated assets and debts of up to $50 million. It
has $4.3 million in cash and $31.1 million in receivables due from
Medicare.
Judge Mark S. Wallace oversees the case. Pachulski Stang Ziehl &
Jones LLP serves as the Debtor's counsel. GlassRatner Advisory &
Capital Group LLC serves as the Debtor's financial advisor.
The U.S. Trustee appointed five members to the Official Committee
of Unsecured Creditors. The Committee is represented by Landau
Gottfried & Berger LLP.
GRANITE DELLS: Objects to Tri-City's New Plan Disclosures
---------------------------------------------------------
Tri-City Investment & Development, LLC, a 39.25% equity holder in
Debtor Granite Dells Ranch Holdings, LLC, filed with the U.S.
Bankruptcy Court for the District of Arizona on Aug. 24, 2012, a
Second Supplemental Disclosure Statement in support of its
proposed Plan of Reorganization as amended and its Supplemental
Disclosure Statement dated Aug. 3, 2012.
The purpose of the second supplemental disclosure statement is to
alert all interested parties to the agreements that were reached
at mediation on Aug. 20, 2012.
Tri-City's Plan seeks the support of Arizona Eco, the Debtor's
largest secured creditor, eliminating the need for litigation
between the Debtor and Arizona Eco. Tri-City's Plan proposes the
partition of the property between Arizona Eco and the Reorganized
Debtor. Arizona Eco will be responsible for those debts
associated with the land it receives. The Reorganized Debtor will
be responsible for those debts associated with the land it retains
and remains liable for the debts for which Arizona Eco will be
primarily responsible.
Under Tri-City's Plan, Arizona Eco will receive dirt for debt and
mutual release of any potential claims from the Debtor or equity
members. General unsecured creditors will be paid in full with
interest at the WSJ prime rate on or before the fifth anniversary
of the Effective Date by either the Reorganized Debtor or Arizona
Eco. Equity holders will retain equity with changed management.
A copy of Tri-City's Supplemental Disclosure filed Aug. 3, 2012,
is available at http://bankrupt.com/misc/gdrh.doc221.pdf
A copy of Tri-City's Second Supplemental Disclosure filed Aug. 24,
2012, is available at http://bankrupt.com/misc/gdrh.doc249.pdf
Under Tri-City's Amended Plan, the Reorganized Debtor will retain
the following assets of the Estate:
-- Parcels identified as CV 22, CV 25-27, and CV 33-34.
These properties will be transferred free and clear of
Arizona Eco's lien.
-- The Promissory Note from Granite Dells Estates I, LLC, and
Granite Dells Estates II, LLC.
Arizona Eco will cause a company related to Arizona Eco to
transfer a 51% interest to the real property known as Bright Star.
The Bright Star development, a multi-phase Master Plan Community
in Chino Valley, is currently managed by Mr. Charles Arnold, the
chair of Tri-City's executive committee. Mr. Arnold will continue
to manage the development after it is transferred to the
Reorganized Debtor.
The settlement includes an option to purchase an additional 20% of
Bright Star for $2,500,000 exercisable in three years or a
$2,500,000 line of credit to allow development of the Bright Star
project.
Arizona Eco agrees that allowed Administrative claims of the
Estate Professionals, not to exceed $500,000, and allowed by the
Court as reasonable and necessary, may be paid from the mining
revenue received quarterly by the Estate and which is Arizona
Eco's collateral, not to exceed $500,000. Only allowed fees
incurred by the Debtor's approved professionals through the date
of the mediation will be paid from Arizona Eco's cash collateral.
The Reorganized Debtor will be owned:
-- 40% by Tri-City, which will serve as the Manager of the
Reorganized Debtor.
-- 35% by the Convertible Promissory Note Holders.
-- 15.5% by Granite Dells Investors, which owns 15.5% of
the Debtor.
-- 6% by Granite Dells Equity Group, which owns 6% of the
Debtor.
-- 3.5% by the entities to which Cavan Management Services, the
manager of the Debtor, hypothecated its profits in the Debtor
to prior to bankruptcy filing.
Granite Dells Ranch Holdings, LLC, objects to Tri-City's Second
Supplemental Disclosure Statement filed Aug. 24, 2012.
The Debtor submitted these specific comments:
1. The disclosure statement refers to a plan to be filed in
the future. The Plan, when submitted, may also raise
additional disclosure issues.
2. The comments about the positions of the parties during the
mediation should be omitted under applicable rules regarding
mediation. Additionally, Debtor understands that the
specific representations about the position that Mr. Gregory
Stanford took regarding the acceptability of proposals made
by Arizona Eco and Tri-City have been explicitly contradicted
by Mr. Stanford. Mr. Stanford is the principal of the
Standford Family Trust (a member of GDI).
Tri-City's proposed disclosure statement indicates that "Tri-
City has reached an agreement with Arizona Eco." This
statement could easily be misleading. If this is Tri-City's
position, it seems necessary to add that (i) the agreement
has not been reduced to writing, (ii) Arizona Eco has not
agreed to specific terms, and (iii) Tri-City filed its
previous plan and disclosure statement on the assumption that
Arizona Eco had agreed to the substantive terms stated in
that plan, but (at about the time the mediation commenced),
Arizona Eco advised Tri-City that it would not accept the
terms of the previous plan and would instead agree to
Debtor's retention of substantially less property.
3. Tri-City has included the bare statement of what Tri-City
thinks the retained property is worth and what Debtor thinks
that property is worth. These statements are inadequate even
on this limited topic without some supplemental explanation
of the bases of the opinions.
It also seems necessary that the disclosure statement
provide Tri-City's opinion of the value of the property that
would be transferred to Arizona Eco.
Finally, the disclosure statement needs to include Tri-City's
opinion of the value of the 51% interest in "Bright Star"
proposed to be transferred to the Reorganized Debtor,
including any opinion of the value of the real property and
an opinion of the after-tax value of the interest.
4. The disclosure statement should include the 2011 balance
sheet, as suggested by Tri-City, plus at least the
corresponding income statement for "Bright Star." Debtor
does not believe that one year is sufficient and that some
sort of financial summary for 2012 to date should be
included.
In making this comment, Debtors make several assumptions
(beyond the information included in the Disclosure Statement
or previously provided Debtor) about what the Tri-City Plan
proposes. While the disclosure statement states that [an
unidentified entity] will transfer a 51% interest in the real
property known as "Bright Star" this Objection assumes that
the disclosure statement means the following:
-- Debtor would receive a 51% interest in the entity that
owns the real property;
-- The current owner of the property is Prescott Holdings,
LLC.
-- Prescott Holdings acquired the property through a
foreclosure in late 2011;
-- The current owners of Prescott Holdings, LLC consist of
Michael Fann and Swanson Real Estate Holdings LLC;
-- These current owners will be retaining the 49% balance of
the interest.
-- The current status of this entity would be changed so that
it becomes a manager-managed limited liability company
instead of a member-managed limited liability company.
-- The balance sheet that you propose to attach will not
reflect any substantial amount owed for borrowed money or
any amounts owed to the existing members or any members of
Tri-City.
If Debtors are incorrect in making these assumptions, the
disclosure statement requires specific clarification. If
correct, each of these assumptions should be represented
explicitly in the disclosure statement. Obviously, any
material amount of liabilities shown on the balance sheet
would need to be explained. Given the peculiar ownership
history of "Bright Star," it is likely that additional
information will be needed in the disclosure statement to
identify the tax basis of the owner in the real property, the
current status of each member's capital account, and the
proposed beginning capital account that would be recognized
for Debtor for its interest in the entity.
5. Alternative Line of Credit. The disclosure statement
contains none of the terms of the "alternative" line of
credit, such as, who will be the borrower (Debtor assumes it
is the owner of Bright Star but perhaps it is the Debtor),
when it will be available, on what terms, who gets to decide
to access it, what security will be provided, and how would
the borrower pay the loan back.
6. Payment of Professional Fees. This paragraph in the
Disclosure Statement could easily be misleading to creditors
and other parties in interest since it indicates that Arizona
Eco will agree to certain terms but does not indicate whether
these terms can be forced upon professional fee claimants, or
the Court, and does not address the obvious problem that the
dollar amount limitation and the source limitation would
necessarily mean that the Plan does not provide for payment
of administrative claims on the Effective Date of the Plan,
as would be required under Section 1129(a) of the Code. This
issue needs to be addressed in the disclosure statement and
the Disclosure Statement should identify any legal or factual
basis upon which Tri-City relies to impose this limitation on
the allowance and payment of administrative expenses.
7. Releases for Certain Parties. Debtor believes that Tri-City
intended to provide for releases from "Parties voting for the
Plan" in favor of parties voting in favor of the Plan and
their affiliates and insiders (and probably officers,
directors, members, attorneys and agents). If so, it would
seem appropriate to state who would be included in the
releases.
8. Capital Calls. The language included in the Disclosure
Statement is much less informative than the previous draft,
which stated unequivocally that the Debtor's operating
agreement would be changed to provide for capital calls.
Thus, the disclosure about this topic is even more
inadequate.
At a minimum, the disclosure statement must contain projected
cash flows for the development of the Bright Star property
and the development of Debtor's retained property so that
creditors and interest holders can judge whether or not the
Reorganized Debtor will be able to pay debts as they mature
and whether capital calls are likely.
The disclosure statement also needs to describe the
management structure of "Bright Star" and the management
structure of the Reorganized Debtor. Will, for example,
Debtor's 51% interest in the Bright Star entity mean that
Debtor can reject any capital calls in that entity? Will the
provision for Tri-City to take over management of the
Reorganized Debtor mean that Tri-City, or perhaps Mr. Arnold,
alone has the authority to make capital calls on Debtor's
members? What would be the consequence to a member not
making its share of a capital call? Will the operating
structure address the obvious conflict between Mr. Arnold, as
the manager of the Bright Star project, and Mr. Arnold, as
apparent manager of the Reorganized Debtor?
Additional Comments
Effective Date Funding. Particularly given the provisions
included in the disclosure statement about funding administrative
expenses, the disclosure statement needs to include a summary of
the sources and revenues on the Effective Date of the plan.
Cram Down. Previous plans and disclosure statements have
indicated that Tri-City will seek confirmation if a class of
impaired creditors does not accept the Plan. The disclosure
statement needs to include a statement of any legal bases that
Tri-City would rely upon for confirmation over the rejection of
the Plan by an impaired class. That discussion should include
Tri-City's bases for sustaining the plan over the objection of a
creditor class based upon unfair discrimination among classes of
unsecured claimants.
Foregoing considered, Debtor requests the Court to deny approval
of the Second Supplemental Disclosure Statement unless same is
modified and amended to address the inadequacies of the disclosure
stated herein.
A copy of the Debtor's objection is available at:
http://bankrupt.com/misc/gdrh.doc291.pdf
About Granite Dells
Scottsdale, Arizona-based Granite Dells Ranch Holdings LLC filed a
bare-bones Chapter 11 petition (Bankr. D. Ariz. Case No. 12-04962)
in Phoenix on March 13, 2012. Judge Redfield T. Baum PCT Sr.
oversees the case. The Debtor is represented by Alan A. Meda,
Esq., at Stinson Morrison Hecker LLP. The Debtor disclosed
$2.22 million in assets and $157 million in liabilities as of the
Chapter 11 filing.
Cavan Management Services, LLC is the Debtor's manager. David
Cavan, member of the firm, signed the Chapter 11 petition.
Arizona ECO Development LLC, which acquired a $83.2 million 2006
loan by the Debtor, is represented by Snell & Wilmer L.L.P. The
resolution authorizing the Debtor's bankruptcy filing says the
Company is commencing legal actions against Stuart Swanson, AED,
and related entities relating to the purchase by Mr. Swanson of a
promissory note payable by the Company to the parties that sold a
certain property to the Company. According to Law 360, AED sued
Granite Dells on March 6 asking the Arizona court to appoint a
receiver. Arizona ECO is foreclosing on a secured loan backed by
15,000 acres of Arizona land.
The United States Trustee said that an official committee has not
been appointed in the bankruptcy case of Granite Dells because an
insufficient number of unsecured creditors have expressed interest
in serving on a committee.
GRANITE DELLS: AED Objects to Debtor's Disclosure Statement
-----------------------------------------------------------
Arizona Eco Development objects to Granite Dells Ranch Holdings,
LLC's Disclosure statement filed in support of its Amended Plan of
Reorganization dated Aug. 3, 2012, and the Supplement to
Disclosure Statement dated Aug. 28, 2012.
AED, the Debtor's largest secured creditor, said that the Amended
disclosure statement cannot be approved for the reasons set forth
in its objection to Debtor's disclosure statement dated June 11,
2012, and because (1) the recent Chapter 11 bankruptcy filing of
the Debtor's manager and majority equity holder (Cavan Management
Services) constitutes a material change in circumstances which
essentially renders unworkable "Debtor's Amended Plan of
Reorganization Dated August 3, 2012", and necessitates significant
revision of the Amended Disclosure Statement; and (2) the Amended
Disclosure Statement contains an insufficient liquidation analysis
and continues to lack critical documents such as a form of
operating agreement.
As reported in the TCR on July 26, 2012, AED said the Disclosure
Statement dated June 11, 2012, must be denied because:
i) the Debtor filed the Disclosure Statement a week after it
was ordered to do so by the Court;
ii) the Debtor did not provide proper notice of the Disclosure
Statement Hearing; and
iii) it failed to provide adequate information about the
"Debtor's Plan of Reorganization and contained misleading
and inaccurate characterizations of the facts.
The Chapter 11 Plan
The TCR reported on June 28, 2012, that the Plan provides for the
continuation of the management and development of the property --
approximately 15,000 acres in Yavapai County, Arizona, near the
city of Prescott.
The Plan also provides that the operations of the Reorganized
Debtor will be funded from revenues from mining and grazing
leases, sale of parcels of the property, loans from third parties,
and equity contributions made by participating investors and
holders of Interests that elect to contribute additional capital
and to participate.
Under the Plan, priority Claims will be paid in full on the
Effective Date or in installments over specified periods. Secured
Claims will be paid in full, in installments over time and as
parcels of the property are sold. Holders of Unsecured Claims
will receive installments payments over eight years from the
Unsecured Creditor Fund, to be funded by Debtor in the aggregate
amount of $5 million. Holders of Investor Claims and holders of
equity interest will be provided an election to participate in the
funding of approximately $20 million over three years, to cover
payments to creditors and other anticipated costs of development
of the property.
The Interests of Equity Holders who do not choose to participate
in the funding of the Reorganized Debtor will be canceled and the
Equity Holders will receive nothing on account of their Interests.
A copy of the Disclosure Statement dated June 11, 2012, is
available at http://bankrupt.com/misc/GRANITE_DELLS_ds.pdf
A copy of the Amended Disclosure statement dated Aug. 3, 2012, is
available at http://bankrupt.com/misc/gdrh.doc224.pdf
A copy of the Supplement to Disclosure Statement dated Aug. 28,
2012, is available at http://bankrupt.com/misc/gdrh.doc261.pdf
About Granite Dells
Scottsdale, Arizona-based Granite Dells Ranch Holdings LLC filed a
bare-bones Chapter 11 petition (Bankr. D. Ariz. Case No. 12-04962)
in Phoenix on March 13, 2012. Judge Redfield T. Baum PCT Sr.
oversees the case. The Debtor is represented by Alan A. Meda,
Esq., at Stinson Morrison Hecker LLP. The Debtor disclosed
$2.22 million in assets and $157 million in liabilities as of the
Chapter 11 filing.
Cavan Management Services, LLC is the Debtor's manager. David
Cavan, member of the firm, signed the Chapter 11 petition.
Arizona ECO Development LLC, which acquired a $83.2 million 2006
loan by the Debtor, is represented by Snell & Wilmer L.L.P. The
resolution authorizing the Debtor's bankruptcy filing says the
Company is commencing legal actions against Stuart Swanson, AED,
and related entities relating to the purchase by Mr. Swanson of a
promissory note payable by the Company to the parties that sold a
certain property to the Company. According to Law 360, AED sued
Granite Dells on March 6 asking the Arizona court to appoint a
receiver. Arizona ECO is foreclosing on a secured loan backed by
15,000 acres of Arizona land.
The United States Trustee said that an official committee has not
been appointed in the bankruptcy case of Granite Dells because an
insufficient number of unsecured creditors have expressed interest
in serving on a committee.
GREAT PLAINS: Wants Plan Filing Period Extended Until Dec. 6
------------------------------------------------------------
Great Plains Exploration, LLC, asks the U.S. Bankruptcy Court for
the Western District of Pennsylvania to extend its exclusive
period to file a Plan and explanatory Disclosure Statement until
Dec. 6, 2012, and the exclusive period for it to obtain
acceptances of a filed plan until Feb. 4, 2012. This is the
Debtor's second request for an extension of the deadlines.
The Debtor's exclusive right to file a plan expired on Sept. 7,
2012. The Debtor's current exclusive period to solicit acceptance
of a plan will expire on Nov. 6, 2012.
The Debtor tells the Court that it has spent considerable time to
seek an offer to sell certain deep drilling rights of its
leasehold interests and entered into a Purchase and Sale Agreement
("PSA") with Halcon Energy Properties, Inc., on May 10, 2012. The
sale was approved by the Court on August 16. However, the parties
encountered difficulties in moving forward to a closing which has
necessitated Debtor's filing of an adversary complaint.
According to the Debtor, the extension of the deadlines will
afford it sufficient time to consummate the pending sale and,
thus, permit it to propose a confirmable plan of reorganization.
About John D. Oil,
Great Plains Exploration and Oz Gas
Mentor, Ohio-based John D. Oil & Gas Co., is in the business of
acquiring, exploring, developing, and producing oil and natural
gas in Northeast Ohio. The Company has 58 producing wells. The
Company also has one self storage facility located in Painesville,
Ohio. The self-storage facility is operated through a partnership
agreement between Liberty Self-Stor Ltd. and the Company.
John D. Oil's affiliated entities -- Oz Gas, LTD. and Great Plains
Exploration LLC -- filed voluntary Chapter 11 petitions (Bankr.
W.D. Pa. Case Nos. 12-10057 and 12-10058) on Jan. 11, 2012. Two
days later, John D. Oil filed its own Chapter 11 petition (Bankr.
W.D. Pa. Case No. 12-10063).
On Nov. 21, 2011, at the request of the lender RBS Citizens, N.A.,
dba Charter One, a receiver was appointed for all three corporate
Debtors, in the United States District Court for the Northern
District of Ohio at case No. 11-cv-2089-CAB. District Judge
Christopher A. Boyko issued an order appointing Mark E. Dottore as
receiver. The Receivership Order was appealed to the Sixth
Circuit Court of Appeals on Dec. 19, 2011 and the appeal is
currently pending.
Judge Thomas P. Agresti oversees the Chapter 11 cases. Robert S.
Bernstein, Esq., at Bernstein Law Firm P.C., serves as counsel to
the Debtors. Each of Great Plains and Oz Gas estimated $10
million to $50 million in assets and debts. John D. Oil's balance
sheet at Sept. 30, 2011, showed $8.12 million in total assets,
$12.92 million in total liabilities and a $4.79 million total
deficit. The petitions were signed by Richard M. Osborne, CEO.
The United States Trustee said a committee under 11 U.S.C. Sec.
1102 has not been appointed because no unsecured creditor
responded to the U.S. Trustee's communication for service on the
committee.
HAWKER BEECHCRAFT: Judge OKs Request to Consolidate Pension Claims
------------------------------------------------------------------
American Bankruptcy Institute reports that a bankruptcy judge has
approved a request by the Pension Benefit Guaranty Corp. (PBGC) to
file consolidated proofs of claims for three pension plans
covering Hawker Beechcraft.
About Hawker Beechcraft
Hawker Beechcraft Acquisition Company, LLC, headquartered in
Wichita, Kansas, manufactures business jets, turboprops and piston
aircraft for corporations, governments and individuals worldwide.
Hawker Beechcraft reported a net loss of $631.90 million on
$2.43 billion of sales in 2011, compared with a net loss of
$304.30 million on $2.80 billion of sales in 2010.
Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11
reorganization (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3,
2012, having already negotiated a plan that eliminates $2.5
billion in debt and $125 million of annual cash interest expense.
The plan will give 81.9% of the new stock to holders of $1.83
billion of secured debt, while 18.9% of the new shares are for
unsecured creditors. The proposal has support from 68% of secured
creditors and holders of 72.5% of the senior unsecured notes.
Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and
49%-owned by Onex Corp. The Company's balance sheet at Dec. 31,
2011, showed $2.77 billion in total assets, $3.73 billion in total
liabilities and a $956.90 million total deficit. Other claims
include pensions underfunded by $493 million.
Hawker's legal representative is Kirkland & Ellis LLP, its
financial advisor is Perella Weinberg Partners LP and its
restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy
Solutions LLC is the claims and notice agent.
Sidley Austin LLP serves as legal counsel and Houlihan Lokey
Howard & Zukin Capital Inc. serves as financial advisor to the DIP
Agent and the Prepetition Agent.
Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of
senior secured prepetition lenders holding 70% of the loans.
Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee
of holders of the 8.500% Senior Fixed Rate Notes due 2015 and
8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker
Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes
Company. The members of the Ad Hoc Committee -- GSO Capital
Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims
or manage accounts that hold claims against the Debtors' estates
arising from the purchase of the Senior Notes. Deutsche Bank
National Trust Company, the indenture trustee for senior fixed
rate notes and the senior PIK-election notes, is represented by
Foley & Lardner LLP.
An Official Committee of Unsecured Creditors appointed in the case
has selected Daniel H. Golden, Esq., and the law firm of Akin Gump
Strauss Hauer & Feld LLP as legal counsel.
HARVARD DRUG: S&P Rates Proposed $335MM Senior Secured Debt 'B'
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' issue-level
rating (one notch higher than the corporate credit rating) to
Generic Drug Holdings Inc.'s (the holding company of Livonia,
Mich.-based Harvard Drug Group LLC) proposed $35 million revolving
credit facility maturing in 2017 and $300 million senior secured
term loan B maturing in 2019. "The recovery rating on these credit
facilities is '2', indicating our expectation for substantial
(70%-90%) recovery in the event of payment default," S&P said.
"We also affirmed our 'B' corporate credit rating on Harvard Drug.
The rating outlook is stable," S&P said.
"We believe that the acquisition is a complementary fit to Harvard
Drug's existing proprietary-label generic drug business and will
not substantially alter our view of the company's 'highly
leveraged' financial risk profile," said Standard & Poor's credit
analyst Jesse Juliano.
"The ratings on Harvard Drug reflect what Standard & Poor's
considers its 'weak' business risk and highly leveraged financial
risk profiles, according to our criteria. The business risk
profile incorporates Harvard Drug's relative small scale and niche
position, while the financial risk profile predominantly reflects
its substantial adjusted debt," S&P said.
"We believe the company's financial risk profile will remain the
primary limiting factor on the rating, despite our expectations
for increased revenue through generic drug introductions and the
expanded use of the company's proprietary-label drugs," added Mr.
Juliano. "Harvard Drug's revenues declined significantly in 2011
as it exited a portion of its low-profit branded drug distribution
business. Despite these sales losses, it substantially increased
EBITDA, EBITDA margins, and cash flow."
"Our rating outlook on Harvard Drug is stable. We believe that the
anticipated additional moderate-sized acquisition would not alter
our issue-level or corporate credit ratings on the company. We
believe an upgrade is unlikely in the near term, as the company's
growing PIK obligations would offset any EBITDA growth or
reductions in funded debt. We believe a downgrade is also
unlikely, but would probably depend on weakened liquidity at this
rating level. While unexpected at this time, covenants would need
to tighten significantly or free cash flows would need to severely
decline relative to the company's debt obligations. We would
likely lower our rating on Harvard Drug if we believed that
covenant cushion would fall to 10% or less over the next year.
Such a case could result from a roughly 25% decline in EBITDA, for
which we do not foresee a likely scenario," S&P said.
HERCULES OFFSHORE: Files Fleet Status Report as of Sept. 18
-----------------------------------------------------------
Hercules Offshore, Inc., posted on its Web site
http://www.herculesoffshore.com/a report entitled "Hercules
Offshore Fleet Status Report". The Fleet Status Report includes
the Hercules Offshore Rig Fleet Status (as of Sept. 18, 2012),
which contains information for each of the Company's drilling
rigs, including contract dayrate and duration. The Fleet Status
Report also includes the Hercules Offshore Liftboat Fleet Status
Report, which contains information by liftboat class for August
2012, including revenue per day and operating days. The Fleet
Status Report is available for free at http://is.gd/equwH8
About Hercules Offshore
Hercules Offshore Inc. (NASDAQ: HERO) --
http://www.herculesoffshore.com/-- provides shallow-water
drilling and marine services to the oil and natural gas
exploration and production industry in the United States, Gulf of
Mexico and internationally. The Company provides these services
to integrated energy companies, independent oil and natural gas
operators and national oil companies. The Company operates in six
business segments: Domestic Offshore, International Offshore,
Inland, Domestic Liftboats, International Liftboats and Delta
Towing.
The Company reported a net loss of $76.12 million in 2011, a
net loss of $134.59 million in 2010, and a net loss of
$91.73 million in 2009.
The Company's balance sheet at June 30, 2012, showed $2.04 billion
in total assets, $1.13 billion in total liabilities, and
$913.21 million in stockholders' equity.
* * *
The Troubled Company Reporter said on March 23, 2012, that
Moody's Investors Service upgraded Hercules Offshore, Inc.,
Corporate Family Rating (CFR) and Probability of Default Rating
(PDR) to B3 from Caa1 contingent upon the completion of its
recently announced recapitalization plan.
Hercules' B3 CFR reflects its jackup fleet, which consists
primarily of standard specification rigs with an average age of
about 30 years. Its rigs are geographically concentrated in the
Gulf of Mexico (GoM), a market that experienced a slow-down after
the Macondo well incident. However, over the last year a pick-up
in permitting and activity levels in the GoM, has led to higher
dayrates. For Hercules, the improving market conditions have
stabilized its cash flow from operations, which are expected
continue to improve for at least the next 18 to 24 months as old
contracts roll into new contracts with higher dayrates. These
improving market conditions support the decision to upgrade
Hercules' CFR at this time.
As reported by the TCR on Jan. 23, 2012, Standard & Poor's Ratings
Services revised its outlook on Houston-based Hercules Offshore
Inc. to stable from negative and affirmed its 'B-' corporate
credit rating on the company. "The rating on the company's senior
secured credit facility remains 'B-' (the same as the corporate
credit rating on the company) with a recovery rating of '3',
indicating our expectation of a meaningful (50% to 70%) recovery
in the event of payment default," S&P said.
"Our ratings on Hercules reflect its participation in the highly
volatile and competitive shallow-water drilling and marine
services segments of the oil and gas industry. The ratings also
incorporate our expectation that day rates and utilization for the
company's jack-up rigs in the U.S. Gulf of Mexico will remain
robust throughout 2012. Moreover, we expect the company's domestic
offshore operations will provide the majority of EBITDA generation
in 2012, since its international offshore segment will perform
more weakly compared with 2011 due to lower contract renewal day
rates reflecting current market conditions. The ratings also
incorporate the company's geographic and product diversification
(provided by the its liftboat segments) and adequate liquidity, as
well as the risks associated with the Securities and Exchange
Commission's investigation into possible violations of securities
law, including possible violations of the Foreign Corrupt
Practices Act. The company is also the subject of a review by the
U.S. Department of Justice (DOJ)," S&P said.
HOVNANIAN ENTERPRISES: Moody's Rates Senior Secured Notes 'B3'
--------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to Hovnanian
Enterprises, Inc.'s proposed first-lien senior secured note s due
2020, a Caa2 rating to its proposed second-lien senior secured
notes due 2020, and a Caa3 rating to its proposed exchangeable
senior unsecured notes due 2017. At the same time, Moody's changed
the outlook to stable from negative, and Moody's affirmed the
company's Caa2 corporate family and probability of default
ratings, B3 rating on the existing senior secured notes, Caa3
rating on the existing senior unsecured notes, Ca rating on
preferred stock, and SGL-3 speculative grade liquidity assessment.
Ratings Rationale
The proceeds from the first and second-lien notes and from the
exchangeable senior unsecured notes will be used to retire the
outstanding $797 million of 10.625% first-lien notes due 2016.
Moody's anticipates little change to the company's very high
adjusted homebuilding debt to capitalization ratio of
approximately 140% at July 31, 2012, as only a small increase in
the absolute debt level will result. The proposed transaction
extends the company's debt maturities and also results in interest
expense savings.
The stabilization of the rating outlook reflects the improvement
in Hovnanian's operating performance, including growing revenues,
increasing gross margins, and the slow return to profitability,
which Moody's expects to continue.
The following rating actions were taken:
Proposed $550 million first-lien senior secured notes due 2020,
assigned B3 (LGD2, 23%);
Proposed $247 million second-lien senior secured notes due 2020,
assigned Caa2 (LGD4, 61%);
Proposed exchangeable senior unsecured notes due 2017, (in an
estimated amount of $72 million as part of a $90 million
exchangeable note unit offering), assigned Caa3 (LGD5, 85%);
Corporate family rating, affirmed at Caa2;
Probability of default rating, affirmed at Caa2;
Existing first-lien senior secured notes, affirmed at B3 (LGD2,
23%);
Senior unsecured notes, affirmed at Caa3 (LGD5, 85%);
Preferred stock rating affirmed at Ca (LGD6, 98%);
Speculative grade liquidity assessment affirmed at SGL-3;
Rating outlook changed to stable from negative.
All of K. Hovnanian Enterprises' debt is guaranteed by its parent
company, Hovnanian Enterprises, Inc. and its restricted operating
subsidiaries.
The Caa2 corporate family rating reflects Hovnanian's elevated
debt leverage of approximately 140%, weak gross margins, negative
cash flow generation, reduced cash position, and Moody's
expectation that the conditions in the homebuilding industry over
the next year will provide limited opportunities for substantial
improvement in the company's operating and financial metrics. In
addition, the ratings consider Hovnanian's large negative net
worth position, which Moody's anticipates will remain weak until
the company is able to reverse its deferred tax asset reserve.
At the same time, the ratings are supported by the homebuilding
industry's strengthening conditions and the company's beginning to
build the base for reasonably strong order, delivery, and revenue
growth.
The company's SGL-3 speculative grade liquidity assessment
reflects its adequate liquidity profile, supported by the
company's lack of financial maintenance covenants with which to
comply and the absence of significant debt maturities until 2016.
The liquidity is constrained by the company's weakening
unrestricted cash position of about $219 million at July 31, 2012,
the negative cash flow generation and lack of a revolving credit
facility.
The ratings could be lowered if the company were to continue to
materially deplete its cash reserves either through sharper-than-
expected operating losses or through a substantial investment or
other transaction.
The outlook could improve if the company were to generate sizable
amounts of operating cash flow, turn sustainably profitable on an
operating basis, or receive a significant infusion of equity
capital.
The principal methodology used in rating Hovnanian Enterprises,
Inc was the Global Homebuilding Industry Methodology published in
March 2009. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Established in 1959 and headquartered in Red Bank, New Jersey,
Hovnanian Enterprises, Inc. designs, constructs and markets
single-family detached homes and attached condominium apartments
and townhouses. Revenue and consolidated net loss for the last
twelve months ending July 31, 2012 were approximately $1.3 billion
and $80 million, respectively.
HOVNANIAN ENTERPRISES: S&P Puts 'CCC-' CCR on Watch Positive
------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
its 'CCC-' corporate credit rating, on Hovnanian Enterprises Inc.
on CreditWatch with positive implications.
"We also assigned a 'CCC+' issue rating and '3' recovery rating to
the company's proposed $550 million first-lien senior secured
notes due 2020. The recovery rating indicates our expectations for
a meaningful (50%-70%) recovery in the event of a payment default.
We also assigned 'CCC-' issue-level ratings and '6 recovery
ratings to the company's proposed $247 million second-lien senior
secured notes due 2020 and proposed $90 million exchangeable notes
due 2017 The '6' recovery ratings indicate our expectations for a
negligible (0%-10%) recovery in the event of a payment default.
The notes will be issued by K. Hovnanian Enterprises Inc. and
guaranteed by Hovnanian Enterprises Inc. and certain
subsidiaries," S&P said.
"We placed our ratings on Hovnanian on CreditWatch positive
following the company's announcement that it plans to raise $797
million of new first-lien and second-lien secured notes due 2020
and $90 million of convertible notes due 2017 to refinance its
existing $797 million 10.625% first-lien senior secured notes due
2016," said credit analyst George Skoufis. "The refinancing will
lengthen the company's debt tenor by addressing the bulk of its
2016 debt maturities and reducing significant refinancing risk
from $1 billion to $218 million. It will also reduce Hovnanian's
interest burden by an estimated $15 million-$20 million."
"We will resolve the CreditWatch listing after Hovnanian
successfully closing the proposed transaction, at which time we
expect to raise our corporate credit rating on the company two
notches to 'CCC+'. We would also expect to upgrade the builder's
existing and remaining senior secured notes (due 2021) to 'CCC'
from 'CC' and senior unsecured notes due 2014-2017 to 'CCC-' from
'CC'. If the transaction does not proceed as planned, we would
likely consider raising the corporate credit rating one notch, to
'CCC', solely based on improving operating performance," S&P said.
ICEWEB INC: Evergreen Founder Appointed to Board of Directors
-------------------------------------------------------------
Dr. Mark Stavish has been appointed to IceWEB, Inc.'s Board of
Directors.
Dr. Stavish is the founder, President and General Manager of
Evergreen Partners, a consulting and venture capital entity
focusing on the achievement and preservation of organization's
objectives and goals. Concurrently, Dr. Stavish is an Adjunct
Professor of Clinical Management and Leadership at The George
Washington University. Prior to his ten year tenure with
Evergreen, he served as Executive Vice President of Human
Resources at AOL. There, he headed AOL's Human Resource,
Facilities and Security Operations and was a significant
contributor to the Company's $100 million to $9 billion revenue
growth, employee growth from 700 in two locations to 18,000 in 40
different countries, and member growth from 1.5 million to 35
million. As Director of Human Resources at Pepsi Beverages
Company, Dr. Stavish spearheaded Human Resources activities in
several of the Company's regional and headquarters business units.
Dr. Stavish holds an Ed. D. in Human Resources Development and
Organizational Learning from The George Washington University and
a B.S. in Psychology from Iowa State University.
"Mark brings that special breed of entrepreneurialism coupled with
a keen awareness of what it takes to nurture a large corporate
infrastructure that IceWEB needs at this critical and exciting
juncture. The addition of his vision will be a contributing
factor in setting the stones in place for tremendous growth,"
stated Rob Howe, CEO.
About IceWEB Inc.
Sterling, Va.-based IceWEB, Inc., manufactures high performance
unified data storage appliances with enterprise storage management
capabilities.
The Company's balance sheet at June 30, 2012, showed $3.1 million
in total assets, $7.9 million in total liabilities, and a
stockholders' deficit of $4.8 million.
Sherb & Co., LLP, in Boca Raton, Florida, stated in their report
on the consolidated financial statements of the Company for the
years ended Sept. 30, 2011, and 2010, that the Company had net
losses of $4.7 million and $7.0 million respectively, for the
years ended Sept. 30, 2011, and 2010, which raise substantial
doubt about the Company's ability to continue as a going concern.
IDEAL PROPERTIES: Case Summary & 3 Unsecured Creditors
------------------------------------------------------
Debtor: Ideal Properties, LLC
1500 Farragut Street, NW
Washington, DC 20011
Bankruptcy Case No.: 12-00631
Chapter 11 Petition Date: September 18, 2012
Court: United States Bankruptcy Court
District of Columbia (Washington, D.C.)
Judge: S. Martin Teel, Jr.
Debtor's Counsel: Charles C. Iweanoge, Esq.
THE IWEANOGES' FIRM, PC
Iweanoge Law Center
1026 Monroe Street, NE
Washington, DC 20017
Tel: (202) 347-7026
Fax: (202) 347-7108
E-mail: cci@iweanogesfirm.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its three unsecured creditors
filed together with the petition is available for free at
http://bankrupt.com/misc/dcb12-00631.pdf
The petition was signed by Njonjo Abdullah Kalonji, member.
IDEARC INC: Verizon Facing Jury Trial in $9.8 Million Lawsuit
-------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Verizon Communications Inc. might be facing a jury
trial in a $9.8 million lawsuit next month if creditors of former
subsidiary Idearc Inc. succeed in convincing the U.S. Court of
Appeals in New Orleans that the district judge made a mistake when
he decided to hold a trial without a jury.
According to the report, Idearc, now named SuperMedia Inc., was a
yellow-page publisher that completed a liquidating Chapter 11 case
and created a trust to bring lawsuits on behalf of creditors. The
trust sued New York-based Verizon, contending there were
fraudulent transfers when Verizon spun Idearc off in 2006. Idearc
went bankrupt 28 months later. U.S. District Judge A. Joe Fish in
Dallas wrote an opinion in March saying the Idearc creditors
weren't entitled to a jury trial. Judge Fish acknowledged in his
March opinion that jury trials are usually held in fraudulent
transfer suits. The plaintiffs weren't entitled to a jury, Fish
said, because Verizon had filed a claim in the Idearc bankruptcy.
The report relates that consequently, the lawsuit is akin to a
dispute over a claim where there isn't a jury trial right, Fish
said. The judge later refused to change his mind. The plaintiffs
filed a petition for mandamus in the Court of Appeals on Sept. 17,
asking the appeals court to overturn Judge Fish and grant them a
jury trial. The creditors' papers in the circuit court are under
seal, including the legal rationale on the jury trial issue.
The report notes that the creditors sealed their papers under a
confidentiality agreement that Verizon required. Judge Fish
turned back several efforts by Verizon to knock out the suit
completely, although he did rule against the creditors by
dismissing some of their claims. The Idearc creditors' lawsuit
contends that the 2006 spinoff entailed fraudulent transfers
designed to generate $9.5 billion for the second-largest phone
company in the U.S. Verizon has said that lawsuit is baseless and
without merit. When Verizon spun off its directory business in
2006 it was appropriately valued, and Verizon bears no
responsibility for Idearc's bankruptcy in 2009, spokesman Bob
Varettoni said this week.
The mandamus petition in the circuit court is U.S. Bank NA v.
Verizon Communications Inc., 12-10955, U.S. 5th Circuit Court of
Appeals (New Orleans). The creditors' lawsuit is U.S. Bank
National Association v. Verizon Communications Inc., 10-01842,
U.S. District Court, Northern District Texas (Dallas).
About Idearc Inc.
Headquartered in D/FW Airport, Texas, Idearc, Inc., now known as
SuperMedia Inc., is the second largest U.S. yellow pages
publisher. Idearc was spun off from Verizon Communications, Inc.
Idearc and its affiliates filed for Chapter 11 protection (Bankr.
N.D. Tex. Lead Case No. 09-31828) on March 31, 2009. The Debtors'
financial condition as of Dec. 31, 2008, showed total assets of
$1,815,000,000 and total debts of $9,515,000,000. Toby L. Gerber,
Esq., at Fulbright & Jaworski, LLP, represented the Debtors in
their restructuring efforts. The Debtors tapped Moelis & Company
as their investment banker; Kurtzman Carson Consultants LLC as
their claims agent.
William T. Neary, the United States Trustee for Region 6,
appointed six creditors to serve on the official committee of
unsecured creditors. The Committee selected Mark Milbank, Tweed,
Hadley & McCloy LLP, as counsel, and Haynes and Boone, LLP, co-
counsel.
Idearc completed its debt restructuring and its plan of
reorganization became effective as of Dec. 31, 2009. In
connection with its emergence from bankruptcy, Idearc changed its
name to SuperMedia Inc. Under its reorganization, Idearc reduced
its total debt from more than $9 billion to $2.75 billion of
secured bank debt.
Less than two years since leaving bankruptcy protection,
SuperMedia remains in quandary. Early in October 2011, Moody's
Investors Service slashed its corporate family rating for
SuperMedia to Caa1 from B3 prior. The downgrade reflects Moody's
belief that revenues will continue to decline at a double digit
rate for the foreseeable future, leading to a steady decline in
free cash flow. SuperMedia's sales were down 17% for the second
quarter of 2011 in a generally improving advertising sector.
Moody's ratings outlook for SuperMedia remains negative.
While SuperMedia is attempting to transition the business away
from its reliance on print advertising through development of
online and mobile directory service applications, Moody's is
increasingly concerned that the company will not be able to make
this change quickly enough to stabilize the revenue base over the
intermediate term. Further, the high fixed cost nature of
SuperMedia's business could lead to steep margin compression,
notwithstanding continued aggressive cost management.
IMAGEWARE SYSTEMS: Neal Goldman Discloses 18.2% Equity Stake
------------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Neal I. Goldman and his affiliates disclosed
that, as of Sept. 10, 2012, they beneficially own 32,460,145
shares of common stock of Imageware Systems, Inc., representing
18.2% of the shares outstanding. Mr. Goldman previously reported
beneficial ownership 18.1% equity stake as of Oct. 5, 2010. A
copy of the amended filing is available for free at:
http://is.gd/CmXuCx
About ImageWare Systems
Headquartered in San Diego, California, ImageWare Systems, Inc.,
is a leader in the emerging market for software-based identity
management solutions, providing biometric, secure credential, law
enforcement and enterprise authorization. Its "flagship" product
is the IWS Biometric Engine. Scalable for small city business or
worldwide deployment, the Company's biometric engine is a multi-
biometric platform that is hardware and algorithm independent,
enabling the enrollment and management of unlimited population
sizes. The Company's identification products are used to manage
and issue secure credentials, including national IDs, passports,
driver licenses, smart cards and access control credentials. Its
law enforcement products provide law enforcement with integrated
mug shot, fingerprint LiveScan and investigative capabilities.
The Company also provides comprehensive authentication security
software.
The Company reported a net loss of $3.18 million in 2011,
compared with a net loss of $5.05 million in 2010.
The Company's balance sheet at June 30, 2012, showed $7.80 million
in total assets, $6.60 million in total liabilities, and
$1.19 million in total shareholders' equity.
INDIANAPOLIS DOWNS: Centaur Offers $500 Million for Assets
----------------------------------------------------------
Peg Brickley at Dow Jones' Daily Bankruptcy Review reports that
Indianapolis Downs LLC will try to forge ahead with a $500 million
sale of its racetrack and casino to Centaur Holdings LLC, even if
it has to drag leading creditor Fortress Investment Group LLC into
the deal.
About Indianapolis Downs
Indianapolis Downs LLC operates Indiana Live --
http://www.indianalivecasino.com/-- a combined race track and
casino at a state-of-the-art 283 acre Shelbyville, Indiana site.
It also operates two satellite wagering facilities in Evansville
and Clarksville, Indiana. Total revenue for 2010 was $270
million, representing an 8.7% increase in 2009. The casino
captured 53% of the Indianapolis market share.
In July 2001, Indianapolis Downs was granted a permit to conduct a
horse track operation in Shelvyville, Indiana, and started
operating the track in 2002. It was granted permission to operate
the casino at the racetrack operation in May 2007. The casino
began operations in July 2010.
Indianapolis Downs and subsidiary, Indianapolis Downs Capital
Corp., sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
11-11046) in Wilmington, Delaware, on April 7, 2011. Indianapolis
Downs estimated $500 million to $1 billion in assets and up to
$500 million in debt as of the Chapter 11 filing. According to a
court filing, the Debtor owes $98,125,000 on a first lien debt. It
also owes $375 million on secured notes and $72.6 million on
subordinated notes.
Matthew L. Hinker, Esq., Scott D. Cousins, Esq., and Victoria
Watson Counihan, Esq., at Greenberg Traurig, LLP in Wilmington,
Delaware, have been tapped as counsel to the Debtors. Christopher
A. Ward, Esq., at Polsinelli Shughart PC, in Wilmington, Delaware,
is the conflicts counsel. Lazard Freres & Co. LLC is the
investment banker. Bose Mckinney & Evans LLP and Bose Public
Affairs Group LLC serve as special counsel. Kobi Partners, LLC,
is the restructuring services provider. Epiq Bankruptcy
Solutions is the claims and notice agent.
INTELSAT JACKSON: S&P Rates Proposed $640MM Senior Notes 'CCC+'
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' issue-level
rating and '6' recovery rating to Intelsat Jackson Holdings S.A.'s
proposed $640 million senior notes due 2022. "The '6' recovery
rating indicates our expectation for negligible (0% to 10%)
recovery for noteholders in the event of a payment default. The
proposed notes will not be guaranteed by operating subsidiaries,"
S&P said.
"Concurrent with this proposed issuance, Intelsat plans a tender
offer for its Intelsat Jackson 11.25% senior notes due 2016, of
which $603 million was outstanding as of June 30, 2012. These
notes are also not guaranteed by operating subsidiaries. The
company expects to use the proceeds from the new debt offering to
finance the tender. As a result, we expect minimal change to fully
adjusted leverage, which was high, at 8.4x as of June 30, 2012,"
S&P said.
"The proposed transactions, if completed, would not affect our
financial risk assessment on Luxembourg-based parent Intelsat
Global Holdings S.A., which remains 'highly leveraged.' The 'B'
corporate credit rating and stable outlook also remain unchanged,"
S&P said.
RATINGS LIST
Intelsat Global S.A.
Corporate Credit Rating B/Stable/--
New Ratings
Intelsat Jackson Holdings S.A.
Senior Unsecured
$637 mil. nts due 2022 CCC+
Recovery Rating 6
J.R. INSULATION: Court Affirms Dismissal of Suit Against PREPA
--------------------------------------------------------------
Senior District Judge Salvador E. Casellas in Puerto Rico affirmed
the bankruptcy court's ruling dismissing J.R. Insulation Sales &
Services, Inc.'s lawsuit against Puerto Rico Electric Power
Authority over unpaid contract obligations.
PREPA and JR entered into a series of contracts in 1999 regarding
maintenance, cleanup, and removal of environmental contaminants.
JR then leased from one of its suppliers, Brand Scaffold Builders,
Inc., equipment for use in the performance of the Contracts. Some
time later, however, JR defaulted on its obligations, resulting in
its filing of Chapter 11 bankruptcy protection (Bankr. D. P.R.
Case No. 03-2050) on Feb. 28, 2003. JR sued PREPA in September
2007, to collect $925,325.01 under the Contracts for alleged
unpaid invoices. In May 2008, PREPA raised as an affirmative
defense that JR's complaint had failed to state a claim upon which
relief could be granted. PREPA also filed a third party complaint
against Brand, contending that Brand's recovery should have been
limited to the amounts owed under the contract under which Brand
provided services to JR.
On appeal, JR assails the Bankruptcy Court's grant of dismissal to
enforce a mandatory forum selection clause. Because the
bankruptcy court's decision to that effect is supported by the
record and the applicable law, and because JR failed to properly
present to that court the arguments now raised here, the District
Court said it need not reach the appellate challenges on the
merits. JR's challenges are thus summarily rejected, and the
bankruptcy court's decision is affirmed.
The case before the District Court is, J.R. INSULATION SALES &
SERVICES, INC., Appellant, v. PUERTO RICO ELECTRIC POWER
AUTHORITY, ET AL., Appellees, Civil No. 11-1779 (D. P.R.). A copy
of the District Court's Sept. 13, 2012 Opinion and Order is
available at http://is.gd/UxhS0bfrom Leagle.com.
JACOBS ENTERTAINMENT: Moody's Affirms 'B3' Corp. Family Rating
--------------------------------------------------------------
Moody's Investors Service affirmed Jacobs Entertainment Inc's
("JEI") Corporate Family (CFR) and Probability of Default (PDR)
ratings at B3 and Speculative Grade Liquidity rating at SGL-3,
while revising the rating outlook to stable from negative. Moody's
also assigned a B2 rating to the company's proposed $50 million 5-
year senior secured first lien revolver and $210 million 6-year
senior secured first lien term loan, and a Caa2 rating to the
company's proposed $110 million 7-year senior secured second lien
term loan.
The revision of the rating outlook to stable is prompted by JEI's
announcement that it plans to refinance all of its $210 million 9
3/4% senior unsecured notes due June 15, 2014 and its $97 million
senior bank credit facility with proceeds from the company's
proposed $370 million bank facilities. Proceeds from the proposed
debt facilities will also be used to prefund two bolt-on
acquisitions, to pay an approximately $10 million distribution to
JEI's parent company and related fees and expenses. All ratings
assigned are subject to Moody's review of final documents and
terms of the refinancing facilities.
The stable outlook contemplates that if the refinancing occurs as
proposed, JEI's financial flexibility will improve. Pro forma for
the proposed transaction, the company's nearest material debt
maturity will be pushed out to 2017 from 2013. Also, the funded
debt will increase modestly and consequently, the financial
leverage as measured by adjusted debt/EBITDA (as per Moody's
standard adjustments) will increase to approximately 6.1x as of
June 30, 2012. However, Moody's believes this improved debt
maturity profile along with the expectation that the operating
performance of JEI's main casino/gaming operations will remain
stable and that adjusted debt/EBITDA will stay around 6.0x support
a stable B3 rating profile.
Ratings assigned:
$50 million 1st lien senior secured revolving credit facility
due 2017 at B2 (LGD3, 35%)
$210 million 1st lien senior secured term loan due 2018 at B2
(LGD3, 35%)
$110 million 2nd lien senior secured term loan due 2019 at Caa2
(LGD5, 87%)
Ratings affirmed:
Corporate family rating at B3
Probability of default rating at B3
$210 million senior unsecured notes due 2014 at Caa1 (LGD4, 67%)
Speculative Grade Liquidity rating at SGL-3
Ratings Rationale
The affirmation of its B3 CFR reflects JEI's high financial
leverage as measured by adjusted debt/EBITDA of 6.1x at June 30,
2012 proforma the higher debt from the refinancing. Despite JEI's
recent relatively stable revenues and earnings in Black Hawk, Co
and Louisiana truck stops, which combined generated approximately
86% of the company's property EBITDA, the possibility of
significant deleveraging is limited in the near term considering
the company's acquisitive business strategy and lack of meaningful
free cash generation in the near term per Moody's expectation. "We
also expect the competitive pressure will likely intensify in the
coming year in Black Hawk gaming market as competitor casinos are
upgrading their properties, which will limit Jacobs' earnings
growth in our view," commented Moody's lead analyst John Zhao. The
ratings are tempered by JEI's small size and earnings
concentration, as well as low overall operating margins compared
to other gaming operators.
JEI's ratings will likely be downgraded if liquidity deteriorates
for any reason. Additionally, ratings could be lowered if the
company is not able to complete the proposed refinancing in a
timely fashion. A downgrade could also materialize if total
adjusted debt/EBITDA rises above 6.5x or EBIT/Interest falls below
1.0x.
A rating upgrade is unlikely in the near term. Besides the high
leverage, JEI's acquisitive business strategy and the possibility
to incur more borrowing under the incremental bank facility of $75
million for future acquisition as contemplated in the proposed
refinancing documents would also constrain the rating upside in
the near term. Over time, positive rating pressure could build if
JEI can improve and sustain adjusted debt/EBITDA around 5.0 times
and maintain positive free cash flow.
The principal methodology used in rating Jacobs Entertainment Inc.
was the Global Gaming Methodology published in December 2009.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Jacobs Entertainment Inc. is the owner and operator of gaming
facilities located in Colorado, Nevada, Louisiana and Virginia.
Net revenues for the twelve-month period ended June 30, 2012 were
approximately $385 million.
JACOBS ENTERTAINMENT: S&P Puts 'B-' Corp. Credit Rating on Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B-' corporate
credit rating on Golden, CO-based Jacobs Entertainment Inc. on
CreditWatch with positive implications.
"At the same time, we assigned our preliminary 'BB-' issue-level
rating to Jacobs' proposed $260 million first-lien credit
facility, which consists of a $50 million revolving credit
facility maturing in 2017, and a $210 million first-lien term
loan, maturing in 2018. We also assigned the first-lien credit
facility our preliminary recovery rating of '1', indicating our
expectation of very high (90% to 100%) recovery for lenders in the
event of a payment default," S&P said.
"We also assigned our preliminary 'CCC+' issue-level rating to
Jacobs' proposed $110 million second-lien term loan maturing 2019,
and assigned the credit facility our preliminary recovery rating
of '6', indicating our expectation of negligible (0% to 10%)
recovery for lenders in the event of a payment default," S&P said.
"Jacobs plans to use the proceeds from the first- and second-lien
term loans predominantly to refinance existing debt (on June 30,
2012, Jacobs had around $80 million in senior secured debt due
December 2013 and $210 million in principal amount of notes due
June 2014). The company also plans to use the proceeds to buy out
a management contract, acquire a revenue sharing contract, fund a
reimbursement to the company's owner for prior truck stop plaza
acquisitions, and fund fees and expenses," S&P said.
"The CreditWatch listing reflects our expectation that we will
raise our corporate credit rating on Jacobs to 'B' from 'B-' after
the financing transaction closes," S&P said.
"The upgrade would reflect the elimination of near-term
refinancing risk, and our belief that operating performance will
remain fairly stable over the intermediate term, resulting in
EBITDA interest coverage remaining around 2x, which we view as in
line with a 'B' rating level," said Standard & Poor's credit
analyst Ariel Silverberg.
"While the transaction would add around $40 million in incremental
debt to Jacobs' capital structure, we expect adjusted leverage
(pro forma for the transaction, leverage was 6.5x at June 30,
2012) to improve toward 6x over the intermediate term. Our
expectation for gradual improvement of leverage incorporates our
expectation for modest EBITDA growth over the intermediate term,
in conjunction with required term loan amortization under the
proposed first-lien term loan. Further, while we believe the
company will continue to pursue modest acquisitions, particularly
of truck plazas in Louisiana, through both internally generated
funds and revolver availability, we do not expect Jacobs would
pursue acquisitions to the extent that adjusted leverage would
increase meaningfully above the low-to-mid 6x range."
"Our rating incorporates our expectation for revenue and EBITDA to
grow in the low-single-digit percent area through 2013. Our
revenue expectation follows 2.8% revenue growth in the first half
of 2012 and our belief that continued growth in gaming revenue
(particularly at The Lodge and Louisiana truck plazas) will offset
our expectation for fuel revenue growth to be flat to a modest
decline in 2013 (fuel revenue represented 31% of net revenue in
the first half of 2012). Our revenue expectation also stems from
our belief that demand for gaming will benefit somewhat from
continued modest increases in consumer spending (our economists
are currently forecasting 1.9% and 2.2% growth in 2012 and 2013),"
S&P said.
"While the elimination of near-term refinancing risk improves
Jacobs' credit profile, we continue to assess the company's
financial risk profile as 'highly leveraged,' according to our
criteria, given our expectation that adjusted leverage will remain
above 6x over the intermediate term and that the company will
prioritize acquisitions as a use of excess cash in lieu of
optional debt reduction," S&P said.
"In resolving the CreditWatch listing, we will monitor Jacobs'
progress to complete the proposed financing transaction. After the
transaction closes and we have reviewed the executed documents, we
expect to raise our corporate credit rating to 'B' and assign a
stable rating outlook, as well as assign final issue-level and
recovery ratings to Jacobs' proposed first-lien and second-lien
senior secured credit facilities. If Jacobs does not successfully
close its transaction, we would likely affirm our 'B-' corporate
credit rating and remove it from CreditWatch. However, failure to
close the proposed transaction would likely increase our concern
regarding the company's ability to meet its upcoming maturities,
and result in a negative outlook," S&P said.
JHK INVESTMENTS: VC Fund Sues 3 JHK Principals Over $32MM in Loans
------------------------------------------------------------------
Maria Chutchian at Bankruptcy Law360 reports that Bay City Capital
Fund V LP on Monday hit three principals of JHK Investments LLC
with a lawsuit seeking nearly $32 million following several months
of JHK's alleged failure to repay loans guaranteed by Bay City.
Bay City and Bay City Capital Fund V Co-Investment Fund LP claim
that the loans defaulted in March and that it has yet to receive
any payment, according to Bankruptcy Law360.
About JHK Investments
Westport, Connecticut-based JHK is an investment company founded
by the former senior management team of United States Surgical
Corporation. Founded by Leon C. Hirsch in 1963, USSC became a
global medical device manufacturer with sales exceeding
$1.2 billion and employing $4,000 Connecticut residents.
Following the success of USSC, Mr. Hirsch and two other senior
USSC executives created JHK in order to produce and develop new
markets and penetrate established markets throughout the worl for
high-tech medical devices. JHK owns equity in several start-up
medical subsidiaries. The start-ups include Interventional
Therapies, LLC, Auditory Licensing Company, LLC, Biowave
Corporation, Gorham Enterprises, LLC, and American Bicycle Group,
LLC.
Bay City claims to be owed $31 million for funding provided to the
Debtor since January 2011. The principals at JHK -- Mr. Hirsch,
Turi Josefsen, and Robert A. Knarr -- guaranteed JHK's
obligations, pledged the property in Wilton, Connecticut to secure
obligations under the guaranty, and pledged all equity interests
of JHK.
In March 2012, Eleuthera, in its capacity as administrative agent
for Bay City, declared an event of default as a result of the
passage of the maturity date and the failure to pay the entire
amount outstanding. On Aug. 28, 2012, Bay City and Eleuthera
purported to exercise the pledge agreements insofar as they
purported to register the Principals' interest in JHK in the name
of Eleuthera, as nominee for Bay City, and purported to reserve
their right to exercise voting rights in JHK.
KANSAS CITY SOUTHERN: Fitch Raises Issuer Default Rating From 'BB'
------------------------------------------------------------------
Fitch Ratings has assigned an Issuer Default Rating (IDR) of 'BBB-
' to Kansas City Southern (KSU) and its primary operating
subsidiary Kansas City Southern Railway Co. (KCSR).
Simultaneously, Fitch has upgraded the IDR of Kansas City Southern
de Mexico (KCSM) to 'BBB-' from 'BB'. The 'BBB-' ratings for all
issuers in the corporate family reflect the strong operational and
strategic ties throughout the consolidated entity. Much of the
consolidated debt is issued at KCSM, although this debt is not a
legal obligation of KSU and KCSR. That said, approximately 60% of
earnings and the majority of cash flow for the consolidated entity
is derived from the KCSM subsidiary which remains strategically
and operationally integrated with the U.S. entities.
Ratings apply to $1.55 billion of debt outstanding. The Rating
Outlook is Stable.
Fitch's assignment of ratings to KSU follows a period of
significant improvement in the railroad's operating and credit
profile. Fitch believes that KSU is in a stronger position to
weather a potential downturn, relative to the last recession,
reflecting the company's improved free cash flow (FCF), liquidity
and balance sheet profile. The 'BBB-' ratings are supported by
the consolidated entity's solid operating margins and FCF, strong
growth from cross-border business to Mexico, healthy liquidity and
improved credit profile. With approximately 6,000 miles of track,
KSU is significantly smaller than its peers, but it operates an
important rail network in the south-central U.S. and Mexico
corridor. Despite underperformance historically, KSU's current
and expected operating and credit metrics are in-line with, and in
some cases stronger than, other Class I rail operators.
KSU has taken great strides in recent years to delever and improve
its balance sheet -- reducing total balance sheet debt by
approximately $442 million (excluding a lease converted to debt)
since the end of 2009. Over the same time period, leverage
improved from 4.4x to 2.0x, while adjusted leverage declined from
5.2x to 2.7x. The company has also reduced its total cost of
debt, retiring many of its legacy high-yield bonds in favor of
lower-cost term debt, or better priced bond issuances. As a
result, total interest expense in 2012 is expected to be
approximately $100 million, down from $174 million in 2009.
Recent financing actions have also improved the company's maturity
schedule, taking out bonds scheduled to come due in 2013 and 2014.
KSU currently has a well-laddered maturity schedule with no major
principal payments coming due until 2016 when $200 million of its
12.5% KCSM notes mature.
Accordingly, Fitch expects further improvement in KSU's leverage
over the near term to be driven by earnings growth, although KSU
may continue to proactively refinance remaining high-yield notes
outstanding at KCSM to further reduce its total cost of funding.
Fitch expects KSU's revenue performance to continue to outperform
its peers, albeit at a more moderate pace than recent trends.
Revenue growth coming out of the recession has been robust driven
primarily by strong cross-border growth and rising intermodal
traffic. The resurgence of the American auto industry has also
driven higher volumes, not only in automotive shipments, but also
from related industries and raw materials. In the last 12 months
ended June 30, 2012, revenues totaled $2.2 billion, 17% higher
than the pre-recession peak. KSU is uniquely positioned to
benefit from the growth story in Mexico. The trend of
manufacturers 'near-sourcing' to Mexico (especially for auto
production) continues to create new shipping opportunities. The
proximity of Lazaro Cardenas, where KSU is the sole rail provider,
to Houston, compared to other primary ports such as Los Angeles
and Oakland is also expected to drive additional volume through
Mexico. This is aided by improvements in the Mexican rail
infrastructure and safety that have taken place since the
railroads were privatized in the late 1990s. The company also
plans to take advantage of opportunities to continue to grow its
cross-border intermodal traffic by converting volumes currently
shipped by truck.
Fitch's expectations for revenue growth are tempered by the
current uncertainty in the broader economy. The company's
exposure to cyclical end-markets (KSU has more exposure to
industrials than most peers) means that revenues could face
material pressure in the event of a downturn. Weakness in coal
volume is a concern for all rails, but less of a headwind for KSU
given its limited exposure relative to other Class I rails.
Solid operating margins are also a credit positive. KSU
maintained an EBITDA margin above 30% through the worst of the
recession despite a 20% year-over-year drop in revenue in 2009.
Margins have expanded notably since 2009 due to rebounding volumes
across all commodity groups, improved pricing from a better
revenue mix, and rising length of haul. KSU is also reaping the
benefits of several cost-reduction measures implemented in recent
years targeted at reducing operating expenses and improving
efficiency.
KSU's cash flow generation has been solid since the recession,
averaging $170 million annually, despite higher levels of capital
expenditure. The company's higher capital spending reflects
necessary investments to grow its cross-border intermodal business
(which are paying off now) and improve its track infrastructure.
Fitch expects FCF to be lower in the near term due to the
institution of a dividend in 2012 and the expectation that cash
taxes will become significant in 2013. Nonetheless, Fitch
estimates FCF to remain positive, exceeding $100 million this year
and increasing again in 2014 as higher operating cash flows offset
the expected dividend and tax payments. Importantly, Fitch
estimates that KSU's FCF can withstand severe stresses in a
potential downside scenario, and remains positive and large enough
to cover the dividend even when EBITDA is haircut by more than
30%.
KSU has solid liquidity with total cash on hand of $105.5 million
and full availability under both its $200 million U.S. and $200
million Mexican revolvers. Covenants under the revolvers are not
restrictive, and are not expected to hinder the company's access
to capital. Debt maturities are also manageable.
Kansas City Southern de Mexico:
The rating upgrade reflects the continued business deleveraging of
Kansas City Southern de Mexico (KCSM) and its parent Kansas City
Southern (KSU) during the last 24-month period ended June 30,
2012, coupled with adequate liquidity and low refinancing risk at
the consolidated level (KSU/KCSM). The upgrade also reflects the
view that KCSM and KSU will continue to benefit from increasing
cross-border traffic driven by the consolidation of Mexico's
position as a manufacturing global player, which is expected to
continue over the medium term based on the country's investor-
friendly legal framework, strategic location, and labor cost
advantages.
KCSM's ratings reflect the company's solid business position as a
leading provider of railway transportation services in Mexico with
a diversified revenue base, as well as the strong credit linkage
between KCSM and its parent company. Operationally and
strategically, KCSM is a major component of KCS's consolidated
business, constituting a significant proportion of total earnings
and debt, and the majority of free cash flow.
Also considered in the ratings is the positive trend in the
company's operational results during the latest 12 months (LTM)
ended (LTM) June 30, 2012. During this time period, KCSM's
revenues were USD967 million, a 12% increase over the same time
period during 2011. The ratings consider the expectation that
KCSM's revenue growth remains solid while EBITDA margins are in
line with or slightly higher than LTM levels.
Improvement in the company's cash flow generation, as measured by
EBITDAR, has resulted in a significant reduction in the company's
financial leverage over the last two years. The company's EBITDAR
for the LTM ended June 30, 2012 was USD524 million, a 28% increase
over the LTM ended June 30, 2011. The company's adjusted gross
leverage, measured by its total adjusted debt/EBITDAR ratio, was
2.7x as of June 30, 2012. This ratio compares favorably with the
company's adjusted leverage ratios of 3.3 and 5.7x by the end of
2010 and 2009, respectively. KCSM has outperformed the
expectations previously incorporated in the ratings that were
considering the company's gross adjusted leverage to be in the
3.0x to 3.5x range during 2012.
Risk Factors:
Fitch's ratings for both KCSR and KCSM incorporate risk factors
such as the cyclicality of the company's end-markets, waning
demand for coal, and weak summer grain volumes. Volumes from
cyclical markets such as industrial/consumer goods and automotive
(25% and 7% of revenue, respectively) could drop off significantly
in the event of another downturn. Demand for coal (roughly 9% of
second quarter 2012 revenue) has also been weak in the face of low
natural gas prices. These risks are partially offset by the
company's pricing power and stable operating margins. KSU is also
vulnerable to a slowdown in U.S./Mexico trade.
What Could Trigger a Rating Action
A positive rating action could be triggered by continued
operational improvements and the maintenance of leverage at or
below current levels. An upgrade would also be contingent on
KSU's ability to generate positive FCF through the cycle, while
maintaining flexibility in capital spending and incorporating the
newly initiated dividend and higher cash taxes.
A weaker U.S. economy and/or a slowdown in U.S./Mexico trade are
the primary sources of risk for KSU. Fitch believes that KSU is
in a much stronger position to weather a potential downturn,
relative to the last recession reflecting the company's much
improved FCF, liquidity and credit profile. A negative rating
action is not expected in the near term.
Fitch has assigned the following ratings:
Kansas City Southern:
-- IDR at 'BBB-'.
Kansas City Southern Railway Co.:
-- IDR at 'BBB-';
-- Senior Secured Bank Facility at 'BBB'.
Fitch has upgraded the following ratings:
Kansas City Southern de Mexico, S.A. de C.V.
-- Foreign Currency IDR to 'BBB-' from 'BB';
-- Local Currency IDR to 'BBB-' from 'BB';
-- Senior Unsecured Notes to 'BBB-' from 'BB'.
KNIGHT CAPITAL: Stephen Schwarzman Owns 36.8% of Class A Shares
---------------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Stephen A. Schwarzman and his affiliates
disclosed that, as of Aug. 10, 2012, they beneficially own
56,875,361 shares of Class A Common Stock of Knight Capital Group,
Inc., representing 36.8% of the shares outstanding.
Mr. Schwarzman previously reported beneficial ownership of
11,607,339 Class A shares representing 10.6% of the shares
outstanding as of Aug. 6, 2012. A copy of the amended filing is
available at http://is.gd/9PthqH
About Knight Capital
Knight Capital Group (NYSE Euronext: KCG) --
http://www.knight.com/-- is a global financial services firm that
provides access to the capital markets across multiple asset
classes to a broad network of clients, including broker-dealers,
institutions and corporations. Knight is headquartered in Jersey
City, N.J. with a global presence across the Americas, Europe, and
the Asia Pacific regions.
At the start of trading on Aug. 1, Knight Capital installed a
trading software to push itself onto a new trading platform that
the New York Stock Exchange opened that day. But when Knight's
new system went live, the firm "experienced a human error and/or a
technology malfunction related to its installation of trading
software." The error caused Knight to place unauthorized offers
to buy and sell shares of big American companies, driving up the
volume of trading and causing a stir among traders and exchanges.
The orders affected the shares of 148 companies, including Ford
Motor, RadioShack and American Airlines, sending the markets into
upheaval. Knight had to sell the stocks that it accidentally
bought, prompting a $440 million pre-tax loss, the firm announced
Aug. 2.
Knight Capital averted collapse after announcing Aug. 6 that it
has arranged $400 million in equity financing with Wall Street
firms including Jefferies Group, Inc., which conceived and
structured the investment, as well as Blackstone, GETCO LLC,
Stephens, Stifel Financial Corp. and TD Ameritrade Holding
Corporation.
Knight has said that the software that led to the Aug. 1 trading
issue has been removed from the company's systems. The New York
Stock Exchange nonetheless said Aug. 7 said it "temporarily"
reassigned the firm's market-making responsibilities for more than
600 securities to Getco, the high-speed trading firm that also
invested in Knight.
"This event severely impacted the Company's capital base and
business operations, and the Company experienced reduced order
flow, liquidity pressures and harm to customer and counterparty
confidence," the Company said in its quarterly report for the
period ended June 30, 2012. "As a result, there was substantial
doubt about the Company's ability to continue as a going concern."
Following the event of Aug. 1, 2012, the Company has begun an
internal review into such event and associated controls.
The Company's balance sheet at June 30, 2012, showed $9.19 billion
in total assets, $7.69 billion in total liabilities and
$1.49 billion in total equity.
KRYSTAL INFINITY: Thor Industries to Buy Bus Unit for $3M
---------------------------------------------------------
Marie Beaudette at Dow Jones' DBR Small Cap reports that
California limo maker Krystal Infinity held a last-minute auction
for its bus division during which Thor Industries Inc., which
claims to be the world's largest maker of recreational vehicles,
beat rival RV maker Forest River Inc. with an offer worth more
than $3 million.
About Krystal Infinity
Krystal Infinity LLC filed a Chapter 11 petition (Bankr. C.D.
Calif. Case No. 12-19701) on Aug. 14, 2012, in Santa Ana,
California. Krystal Infinity manufactures and sells stretch
limousines, limousine vans, shuttle buses, limousine busses and
hearses. Roughly 85% of Krystal Infinity's vehicle manufacturing
work is completed in Mexico through an affiliate Krystal
International. The business was acquired by the Debtor through a
11 U.S.C. Sec. 363 sale conducted by Krystal Koach, Inc. (Case No.
10-26547) in January 2011.
Krystal Infinity estimated assets and debts of $10 million to
$50 million as of the Chapter 11 filing.
Bankruptcy Judge Catherine E. Bauer presides over the case. The
Debtor is represented by Ron Bender, Esq., at Levene, Neale,
Bender, Yoo & Brill LLP, in Los Angeles.
LEE'S FORD: U.S. Trustee Unable to Form Committee
-------------------------------------------------
The United States Trustee has said an official committee under
11 U.S.C. Sec. 1102 has not been appointed in the bankruptcy case
of Lee's Ford Dock Inc. because an insufficient number of persons
holding unsecured claims against the Debtor have expressed
interest in serving on a committee. The U.S. Trustee reserves the
right to appoint a committee should interest developed among the
creditors.
About Lee's Ford Dock
Lee's Ford Dock Inc., Hamilton Brokerage LLC, Hamilton Capital
LLC, Lee's Ford Hotels LLC, Lee's Ford Woods LLC, and Top Shelf
Marine Sales Inc., filed for Chapter 11 bankruptcy (Bankr. E.D.
Ky. Case Nos. 12-60818 to 12-60823) on July 4, 2012. The Debtors
collectively operate as "Lee's Ford Resort & Marina" --
http://www.leesfordmarina.com/-- which consists of a boat dock,
lodging facilities, the Harbor Restaurant & Tavern, a retail
store, and a boat brokerage business and Web site located at
http://www.buyaboat.neton Lake Cumberland in Nancy, Kentucky.
Hamilton Brokerage LLC and Hamilton Capital LLC are not actively
involved in the Debtors' operations, but are holding companies set
up as part of the structure of the original purchase transactions
which began in 2003.
The Debtors' revenues were adversely impacted by the lowering of
the water level of Lake Cumberland in January 2007 to allow for
repairs to Wolf Creek Dam. The Debtors were forced to incur
extraordinary costs to relocate the Dock and related facilities in
accordance with the new water level.
DelCotto Law Group PLLC serves as the Debtors' counsel. In its
petition, Lee's Ford Dock estimated $10 million to $50 million in
assets and debt. The petition was signed by James D. Hamilton,
president. Mr. Hamilton has been designated as the individual
responsible for performing the duties of the Debtors.
LEE'S FORD: Court Approves Radwan Brown as Accountants
------------------------------------------------------
Lee's Ford Dock Inc. and its affiliates sought and obtained
approval from the U.S. Bankruptcy Court to employ Radwan, Brown &
Company, P.S.C., as their accountants.
Lee's Ford Dock Inc., Hamilton Brokerage LLC, Hamilton Capital
LLC, Lee's Ford Hotels LLC, Lee's Ford Woods LLC, and Top Shelf
Marine Sales Inc., filed for Chapter 11 bankruptcy (Bankr. E.D.
Ky. Case Nos. 12-60818 to 12-60823) on July 4, 2012. The Debtors
collectively operate as "Lee's Ford Resort & Marina" --
http://www.leesfordmarina.com/-- which consists of a boat dock,
lodging facilities, the Harbor Restaurant & Tavern, a retail
store, and a boat brokerage business and Web site located at
http://www.buyaboat.neton Lake Cumberland in Nancy, Kentucky.
Hamilton Brokerage LLC and Hamilton Capital LLC are not actively
involved in the Debtors' operations, but are holding companies set
up as part of the structure of the original purchase transactions
which began in 2003.
The Debtors' revenues were adversely impacted by the lowering of
the water level of Lake Cumberland in January 2007 to allow for
repairs to Wolf Creek Dam. The Debtors were forced to incur
extraordinary costs to relocate the Dock and related facilities in
accordance with the new water level.
DelCotto Law Group PLLC serves as the Debtors' counsel. In its
petition, Lee's Ford Dock estimated $10 million to $50 million in
assets and debt. The petition was signed by James D. Hamilton,
president. Mr. Hamilton has been designated as the individual
responsible for performing the duties of the Debtors.
LEE'S FORD: Files Schedules of Assets and Liabilities
-----------------------------------------------------
Lee's Ford Dock Inc. filed with the U.S. Bankruptcy Court for the
Eastern District of Kentucky its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $320,000
B. Personal Property $20,905,899
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $9,388,245
E. Creditors Holding
Unsecured Priority
Claims $87,331
F. Creditors Holding
Unsecured Non-priority
Claims $3,864,169
----------- -----------
TOTAL $21,225,899 $13,339,745
About Lee's Ford Dock
Lee's Ford Dock Inc., Hamilton Brokerage LLC, Hamilton Capital
LLC, Lee's Ford Hotels LLC, Lee's Ford Woods LLC, and Top Shelf
Marine Sales Inc., filed for Chapter 11 bankruptcy (Bankr. E.D.
Ky. Case Nos. 12-60818 to 12-60823) on July 4, 2012. The Debtors
collectively operate as "Lee's Ford Resort & Marina" --
http://www.leesfordmarina.com/-- which consists of a boat dock,
lodging facilities, the Harbor Restaurant & Tavern, a retail
store, and a boat brokerage business and Web site located at
http://www.buyaboat.neton Lake Cumberland in Nancy, Kentucky.
Hamilton Brokerage LLC and Hamilton Capital LLC are not actively
involved in the Debtors' operations, but are holding companies set
up as part of the structure of the original purchase transactions
which began in 2003.
The Debtors' revenues were adversely impacted by the lowering of
the water level of Lake Cumberland in January 2007 to allow for
repairs to Wolf Creek Dam. The Debtors were forced to incur
extraordinary costs to relocate the Dock and related facilities in
accordance with the new water level.
DelCotto Law Group PLLC serves as the Debtors' counsel. In its
petition, Lee's Ford Dock estimated $10 million to $50 million in
assets and debt. The petition was signed by James D. Hamilton,
president. Mr. Hamilton has been designated as the individual
responsible for performing the duties of the Debtors.
LENNAR CORP: Medford Objects to 'Bad Faith' Chapter 11 Claims
-------------------------------------------------------------
Kaitlin Ugolik at Bankruptcy Law360 reports that the owners of
Medford Village, a stalled 280-acre residential and commercial
development valued at more than $100 million before the recession,
objected Monday in New Jersey bankruptcy court to Lennar Corp.'s
claim that it had entered Chapter 11 in bad faith.
Bankruptcy Law360 says Lennar had asked the court in August to
dismiss the bankruptcy case, claiming that Medford was using it as
a litigation tactic to circumvent foreclosure orders issued by New
Jersey courts and avoid returning a $6 million deposit secured by
a mortgage.
About Lennar Corp.
Founded in 1954 and headquartered in Miami, Lennar Corp. is the
third-largest U.S. homebuilder by revenue. Total revenues and net
loss for the 2009 fiscal year that ended November 30, 2009, were
$3.1 billion and ($417) million, respectively.
As reported by the Troubled Company Reporter on October 15, 2010,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Lennar Corp. to 'B+' from 'BB-'. At the same time, S&P
lowered its issue ratings on the company's $2.4 billion senior
unsecured notes to 'B+' from 'BB-'. Lastly, S&P revised the
outlook to stable from negative.
"S&P lowered its ratings on Lennar after the homebuilder drew down
its unrestricted cash balance to fund a sizeable investment in
three portfolios of distressed real estate assets," said credit
analyst James Fielding. "S&P's ratings reflect its opinion that
Lennar maintains an aggressively leveraged profile, including a
liquidity position that S&P views to be more constrained than
similarly rated homebuilders."
S&P revised its outlook to stable to reflect its expectation for
breakeven or modestly profitable homebuilding operations at
current low sales levels. S&P would raise its rating by one notch
over the next 12 months if profitability improves more quickly
than S&P currently expect (such that debt-to-adjusted EBITDA moves
much closer to 4.0x), and the company builds sufficient liquidity
to meet maturities and working capital needs through 2013. S&P
would lower S&P's rating by one or more notches if working capital
needs, including investments in the Rialto segment, are larger
than S&P currently anticipates, such that unrestricted cash and
forward two-year FFO estimates were to fall significantly below
current levels.
As reported by the TCR on June 25, 2010, Fitch Ratings affirmed
Lennar's Issuer Default Rating at 'BB+'; Short-Term IDR at 'B';
and Senior unsecured debt at 'BB+'. The Rating Outlook has been
revised to Stable from Negative. The ratings affirmation and the
Outlook revision to Stable from Negative reflect the company's
strong liquidity position, improving operating results and
moderately stronger prospects for the housing sector this year.
The TCR on April 28, 2010, said Moody's Investors Service affirmed
Lennar's existing corporate family of B2, existing senior
unsecured note rating of B3, and speculative grade liquidity
rating of SGL-2. The rating outlook was changed to positive from
stable. The B2 corporate family rating considers that Lennar's
cash flow generation will be challenging to maintain as it
increases its investment in land and distressed assets in 2010 and
beyond. The rating also incorporates Lennar's long land position
and the industry's largest (albeit greatly reduced) off-balance
sheet joint venture exposure.
LIFECARE HOLDINGS: Moody's Maintains 'Caa3' CFR/PDR
---------------------------------------------------
Moody's maintains LifeCare Holdings, Inc.'s Caa3 corporate family
rating, Ca probability of default rating and a negative outlook
after the company avoided imminent default by entering into a 45
day waiver (expires on November 1) with its creditors for a missed
interest payment on its senior subordinated notes. Even though
this event is slightly credit positive, the current ratings
incorporate the overall credit risk of the company.
The probability of default rating could be changed to "D" or "LD",
denoting a default or a limited default, based on the outcome of
the negotiations between the company and its creditors within the
next month and a half. At the end of the second quarter 2012,
LifeCare had $456 million of total debt including approximately
$334 million of senior secured debt and $119 million of
subordinated notes.
Headquartered in Plano, TX, LifeCare operates 27 long-term acute
care hospitals in ten states. The company's facilities include
eight "hospital within a hospital" facilities ("HWH") and 19 free-
standing facilities. In addition, the company holds a 50%
investment in a joint venture for a long-term care hospital.
LifeCare reported revenues of $472 million for the twelve months
ended June 30, 2012. LifeCare is owned by Carlyle.
LOCAL TV: Moody's Affirms 'B3' Corporate Family Rating
------------------------------------------------------
Moody's Investors Service affirmed B1 ratings on Local TV Finance,
LLC's 1st lien senior secured revolver due May 2015, 1st lien
senior secured term loan due May 2013, and 1st lien senior secured
term loan due 2015 including the proposed $70 million incremental
portion to fund a special dividend. The Loss Given Default (LGD)
point estimates on all instruments were updated to reflect the new
debt mix. Moody's also affirmed the company's B3 Corporate Family
Rating (CFR), B3 Probability of Default Rating (PDR) and the Caa2
rating on the senior toggle notes due June 2015. The rating
outlook remains stable.
Affirmed:
Issuer: Local TV Finance, LLC
Corporate Family Rating: Affirmed B3
Probability of Default Rating: Affirmed B3
$15 million 1st lien sr secured revolver due May 2015: Affirmed
B1, LGD2 - 26% (from LGD2 -- 25%)
1st lien sr secured term loan B due May 2013 ($12.3 million
outstanding as of September 17, 2012): Affirmed B1, LGD2 -- 26%
(from LGD2 -- 25%)
$251 million (existing $181 million + proposed $70 million) 1st
lien sr secured term loan B due May 2015: Affirmed B1, LGD2 --
26% (from LGD2 -- 25%)
9.25%/10% sr toggle notes due June 2015 ($200 million
outstanding): Affirmed Caa2, LGD5 -- 81% (from LGD5 -- 80%)
Outlook Actions:
Issuer: Local TV Finance, LLC
Outlook is Stable.
Ratings Rationale
Local TV's B3 corporate family rating reflects high leverage with
a 2-year average debt-to-EBITDA ratio of 6.4x estimated for
September 30, 2012 (including Moody's standard adjustments) and
pro forma for the proposed dividend. Despite the likelihood of
additional dividends to be funded in the first half of 2013,
Moody's expects the 2-year average debt-to-EBITDA ratio to improve
to less than 6.0x by June 2013 due largely to the impact of higher
retransmission fees, net of retrans sharing or reverse
compensation, as these agreements are renegotiated towards year
end 2012. Reduced leverage compared to the 2-year average debt-to-
EBITDA ratio of 8.7x for FY2010 (including Moody's standard
adjustments) reflects consistently improved operating performance
given the absence of debt reduction. Local TV grew EBITDA for
FY2011 to $59 million (including Moody's standard adjustments)
well above EBITDA of $44 million in FY2009, reflecting an
improving economy and a gradual recovery in advertising demand,
notably in the auto and retails sectors, combined with
management's focus on direct local sales. Although Moody's expects
the company to prepay an aggregate $44 million of term loan B
outstandings in the nine months through September 30, 2012, the
proposed $70 million incremental term loan B facility elevates
debt balances above prior levels and increases refinancing
pressure given all debt instruments mature in 2015. Moody's
believes the ability to prepay credit facilities and the 9.25%
notes (2.3% penalty, declining to 0% in June 2013) provides Oak
Hill flexibility in exercising strategic options.
Looking forward, Moody's expects the company to achieve more than
15% revenue growth in 2012 over 2011 given stronger than expected
demand for political advertising. Beyond 2012, Local TV will
benefit from meaningful increases in retransmission revenues and
related cash flow partially offsetting the absence of significant
political revenues in 2013. Moody's believes the company needs to
reduce debt balances given expected revenue declines in non-
election years, vulnerability to economic cycles, and need to
refinance all debt instruments in 2015. Local TV faces increased
competition for advertising dollars due to ongoing media
fragmentation. Furthermore, ratings are constrained by its lack of
national or regional scale and the likelihood of additional
dividends in the near term. Ratings are supported by the company's
diverse network affiliations, leading audience positions as well
as good EBITDA margins reflecting cost sharing and negotiating
leverage from its operating agreement with FoxCo and its
management contract with Tribune Company. Liquidity is good with
cash balances of a minimum $10 million over the rating horizon
plus mid to high single digit percentage free cash flow-to-debt
ratios.
The stable outlook reflects Moody's view that Local TV will grow
core advertising revenues as well as retransmission fees, net of
retrans sharing or reverse compensation, resulting in 2-year debt-
to-EBITDA ratios improving from the initial 6.4x level (including
Moody's standard adjustments) estimated for the proposed dividend.
The outlook incorporates Moody's expectation that the company will
fund additional dividends as permitted under its debt agreements
in the near term, while maintaining good liquidity including
positive free cash flow-to-debt ratios. Ratings could be
downgraded if the company is not able to grow core revenues due to
weak ad demand in key markets reflecting economic weakness or loss
of leading audience shares, resulting in 2-year debt-to-EBITDA
ratios (including Moody's standard adjustments) increasing above
6.75x. Weakened liquidity, including negative free cash flow or
inability to access its revolver due to the 4.50x senior secured
leverage ratio test, could also lead to a downgrade. Ownership by
a financial sponsor and likelihood for additional dividends
constrain ratings; however, ratings could be upgraded if revenue
growth and debt repayments result in trailing 2-year debt-to-
EBITDA ratios being sustained comfortably below 5.50x. Local TV
would also need to maintain good liquidity including expectations
for high single-digit free cash flow-to-debt ratios.
The principal methodology used in rating Local TV Finance was the
Global Broadcast and Advertising Industry Methodology published in
May 2012. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Formed in early 2007 through the acquisition of nine television
stations from the New York Times Company, Local TV Finance, LLC,
owns ten television stations located in 8 mid-size markets (DMAs
41 to 101) across the United States. Network affiliations are
diversified including 4 CBS stations, 2 ABC, 2 NBC, and 1 CW.
Local TV's parent company is 95% owned by affiliates of Oak Hill
Capital Partners. The company maintains headquarters in Newport,
Kentucky and revenue for the twelve months ended June 30, 2012
totaled $180 million.
MACROSOLVE INC: Updated Shareholders on Company Developments
------------------------------------------------------------
MacroSolve, Inc., has issued a letter to shareholders updating
them on significant developments at the Company including:
* an advantageous sale of the Illume Mobile business unit to
Decision Point Systems Inc.;
* significant reduction of MacroSolve overhead;
* cash flow positive expectations in the third quarter of 2012;
* profitability in the fourth quarter of 2012;
* the launch of a new strategy that will result in favorable
returns for shareholders; and
* the offering of intellectual property and corporate
experience in new ventures.
"MacroSolve's new strategy is an extension of the success we
achieved in the past," wrote Jim McGill, chairman of the Board of
Directors. "On a going forward basis, we plan to work as joint
venture partners so that we may maintain the low overhead,
positive cash flow, and profitable operations, which we anticipate
achieving at MacroSolve by the end of fiscal 2012."
A copy of the Letter is available for free at:
http://is.gd/W56jzP
About MacroSolve, Inc.
Tulsa, Okla.-based MacroSolve, Inc. (OTC BB: MCVE)
-- http://www.macrosolve.com/-- is a technology and services
company that develops mobile solutions for businesses and
government. A mobile solution is typically the combination of
mobile handheld devices, wireless connectivity, and software that
streamlines business operations resulting in improved efficiencies
and cost savings.
The Company reported a net loss of $2.53 million in 2011, compared
with a net loss of $1.92 million during the prior year.
The Company's balance sheet at June 30, 2012, showed $2.20 million
in total assets, $1.37 million in total liabilities and $833,924
in total stockholders' equity.
In its report on the Company's 2011 financial results, Hood Sutton
Robinson & Freeman CPAs, P.C., in Tulsa, Oklahoma, expressed
substantial doubt about the Company's ability to continue as a
going concern. The independent auditors noted that the Company
has suffered recurring losses from operations and has a net
capital deficiency.
MAGABLEH LLC: Case Summary & Unsecured Creditor
-----------------------------------------------
Debtor: Magableh, LLC
dba Pacifica Park Apartments, LLC
dba Citrus Plaza Shopping Center
465 Darrell Road
Hillsbourough, CA 94010
Bankruptcy Case No.: 12-17968
Chapter 11 Petition Date: September 18, 2012
Court: United States Bankruptcy Court
Eastern District of California (Fresno)
Judge: W. Richard Lee
Debtor's Counsel: Marcus A. Torigian, Esq.
LAW OFFICE OF MARCUS A. TORIGIAN
2033 S. Court Street
Visalia, CA 93277
Tel: (559) 627-5399
Scheduled Assets: $2,666,806
Scheduled Liabilities: $5,050,335
The list of 20 largest unsecured creditors contains only one
entry:
Entity Nature of Claim Claim Amount
------ --------------- ------------
CWCAPITAL, LLC $5,050,335
P.O. Box 90498
Chicago, IL 60696-0498
The petition was signed by Mohammad Omar Mohammad, manager.
MARK SHALE: To Close Three Chicago Store Locations
--------------------------------------------------
CBS reports that Mark Shale will be closing three of its stores in
Chicago. According to the report, Mark Shale will now have to
close all three of its locations, in the 900 N. Michigan Ave.
building on the Magnificent Mile, and in the Northbrook Court and
Oakbrook Center malls.
"Unfortunately, our efforts to find a strategic partner to help
save the business were not successful. We are saddened to say
that we now have to close our doors after 83 years," the report
quotes Mark Shale President Rich Myers as saying. "Our business
was able to thrive for so many years as a result of our loyal
associates and amazing customers. We encourage our customers to
take advantage of the extraordinary savings on all of our
merchandise as we will be receiving shipments throughout the
fall."
The report adds Gordon Brothers Group will oversee the going out
of business sales, the retailer said. There are no firm closing
dates; rather, the retailer says it will keep all locations open
until everything has been sold.
Based in Woodridge, Illinois, MS Mark Shale, LLC, filed for
Chapter for Chapter 11 protection on Aug. 21, 2012 (Bankr. N.D.
Ill. Case No. 12-33041). Judge Jacqueline P. Cox presides over
the case. Steven B. Towbin, Esq., at Shaw Gussis et al.,
represents the Debtor. The Debtor disclosed assets of
$3.2 million and liabilities of $5.5 million.
MCWADE PROPERTIES: Case Summary & 3 Unsecured Creditors
-------------------------------------------------------
Debtor: McWade Properties, LLC
1301 Pennsylvania Avenue, SE
Washington, DC 20003
Bankruptcy Case No.: 12-00634
Chapter 11 Petition Date: September 18, 2012
Court: United States Bankruptcy Court
District of Columbia (Washington, D.C.)
Judge: S. Martin Teel, Jr.
Debtor's Counsel: Craig R. McLaurin, Esq.
LAW OFFICES OF CRAIG MCLAURIN
422 5th St. SE
Washington, DC 20003
Tel: (202) 544-4352
E-mail: craigmclaurin@comcast.net
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its three unsecured creditors
filed together with the petition is available for free at
http://bankrupt.com/misc/dcb12-00634.pdf
The petition was signed by Craig R. McLaurin, managing member.
MICHAELS STORES: Enters Into Second Amended Credit Agreement
------------------------------------------------------------
Michaels Stores, Inc., as lead borrower, and certain of its
subsidiaries as borrowers or facility guarantors, Wells Fargo
Bank, National Association, as administrative agent, collateral
agent and swingline lender, the lenders party thereto, JPMorgan
Chase Bank, N.A., and Goldman Sachs Bank USA, as co-syndication
agents, Barclays Bank PLC, Deutsche Bank Securities Inc., Bank of
America, N.A., Credit Suisse AG, Cayman Islands Branch and Morgan
Stanley Senior Funding, Inc., as co-documentation agents, and
Wells Fargo Capital Finance, LLC and J.P. Morgan Securities LLC,
as joint lead arrangers and joint book runners, entered into a
Second Amended and Restated Credit Agreement to amend various
terms of the Company's amended and restated credit agreement,
dated as of Feb. 18, 2010.
The Restated Revolving Credit Facility provides for senior secured
financing of up to $650 million, subject to a borrowing base,
maturing on Sept. 17, 2017. The borrowing base under the Restated
Revolving Credit Facility equals the sum of (i) 90% of eligible
credit card receivables and debit card receivables, plus (ii) 90%
of the appraised net orderly liquidation value of eligible
inventory, plus (iii) the lesser of (x) 90% of the appraised net
orderly liquidation value of inventory supported by eligible
letters of credit and (y) 90% of the face amount of eligible
letters of credit, minus (iv) certain reserves.
The Restated Revolving Credit Facility provides the Company with
the right to request up to $200 million of additional commitments
under the Restated Revolving Credit Facility. The lenders under
the Restated Revolving Credit Facility will not be under any
obligation to provide any such additional commitments, and any
increase in commitments is subject to customary conditions
precedent. If the Company were to request any such additional
commitments, and the existing lenders or new lenders were to agree
to provide such commitments, the facility size could be increased
to up to $850 million, but the Company's and its co-borrowers'
ability to borrow under the Restated Revolving Credit Facility
would still be limited by the borrowing base.
Borrowings under the Restated Revolving Credit Facility bear
interest at a rate per annum equal to, at the Company's option,
either (a) a base rate determined by reference to the highest of
(1) the prime rate of Wells Fargo, (2) the federal funds effective
rate plus 0.50% and (3) a LIBOR rate subject to certain
adjustments plus 1.00% or (b) a LIBO rate subject to certain
adjustments, in each case plus an applicable margin. The initial
applicable margin is (a) 0.75% for prime rate borrowings and 1.75%
for LIBO rate borrowings. The applicable margin is subject to
adjustment each fiscal quarter based on the excess availability
under the Restated Revolving Credit Facility. Same-day borrowings
bear interest at the base rate plus the applicable margin.
A copy of the Second Amended Credit Agreement is available at:
http://is.gd/QbGdoL
About Michaels Stores
Headquartered in Irving, Texas, Michaels Stores, Inc., is the
largest arts and crafts specialty retailer in North America. As
of March 9, 2009, the Company operated 1,105 "Michaels" retail
stores in the United States and Canada and 161 Aaron Brothers
Stores.
The Company's balance sheet at July 28, 2012, showed $1.68 billion
in total assets, $4.09 billion in total liabilities and a $2.40
billion total stockholders' deficit.
* * *
As reported by the TCR on April 5, 2012, Moody's Investors Service
upgraded Michaels Stores, Inc.'s Corporate Family Rating to B2
from B3. "The upgrade of Michaels' Corporate Family Rating
primarily reflects the positive benefits of its continuing
business initiatives which have led to consistent improvements in
same store sales," said Moody's Vice President Scott Tuhy.
In the April 16, 2012, edition of the TCR, Standard & Poor's
Ratings Services raised its corporate credit rating on Irving,
Texas-based Michaels Stores Inc. to 'B' from 'B-'. "Standard &
Poor's Ratings Services' upgrade on Michaels Stores reflects the
improvement in financial ratios following the company's
performance in the important fourth quarter, given the seasonality
of the company's business," said Standard & Poor's credit analyst
Brian Milligan. "The CreditWatch placement remains effective,
given the pending IPO."
NEWLEAD HOLDINGS: Stock Price Falls Below NASDAQ $1.00 Rule
-----------------------------------------------------------
NewLead Holdings Ltd. received a written notification from the
NASDAQ Stock Market LLC on Sept. 13, 2012, indicating that the
Company is not in compliance with the NASDAQ Listing Rule
5450(a)(1) because the minimum bid price of its common shares was
below $1.00 per share for the previous 30 consecutive business
days.
Pursuant to the NASDAQ Listing Rule 5810(c)(3)(A), the Company has
been granted a 180-day compliance period, ending on March 12,
2013, to regain compliance with the minimum bid price requirement.
During this compliance period, NewLead's common stock will
continue to be listed and traded on the NASDAQ Global Select
Market. The Company may regain compliance with the minimum bid
price requirement if the minimum bid price of NewLead's common
shares equals at least $1.00 per share for a minimum of ten
consecutive business days at any time during the compliance
period.
NewLead continues to monitor the minimum bid price of its common
shares and is considering all its options in order to regain
compliance within the minimum bid price requirement.
About NewLead Holdings
NewLead Holdings Ltd. -- http://www.newleadholdings.com-- is an
international, vertically integrated shipping company that owns
and manages product tankers and dry bulk vessels. NewLead
currently controls 22 vessels, including six double-hull product
tankers and 16 dry bulk vessels of which two are newbuildings. N
ewLead's common shares are traded under the symbol "NEWL" on the
NASDAQ Global Select Market.
PricewaterhouseCoopers S.A. in Athens, Greece, said in a May 15,
2012, audit report NewLead Holdings Ltd. has incurred a net loss,
has negative cash flows from operations, negative working
capital, an accumulated deficit and has defaulted under its
credit facility agreements resulting in all of its debt being
reclassified to current liabilities. These raise substantial
doubt about its ability to continue as a going concern, PwC said.
The Company reported a net loss of US$290.39 million in 2011,
compared with a net loss of US$86.34 million in 2010.
The Company's balance sheet at Dec. 31, 2011, showed US$396.75
million in total assets, US$599.18 million in total liabilities
and a US$202.43 million total shareholders' deficit.
NIELSEN FINANCE: Fitch Rates Proposed Senior Unsecured Notes 'BB'
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to Nielsen Finance LLC
and Nielsen Finance Co. (collectively, Nielsen Finance) proposed
eight year senior unsecured notes. Nielsen Finance is an indirect
wholly owned subsidiary of Nielsen Holdings, N.V. (Nielsen).
Proceeds of the notes are expected to be used to redeem the 11.5%
senior unsecured notes due 2016 ($325 million outstanding), prepay
the 8.5% senior secured term loan due 2017 ($500 million
outstanding) and for general corporate purposes (including capital
expenditures and working capital). The Rating Outlook is
Positive.
Fitch views the offering, as proposed, to be favorable for the
credit profile, extending maturities three to four years and
reducing the $3 billion 2016 maturity balance to $2.7 billion.
For additional information on Nielsen, please see Fitch's special
report, The Credit Encyclo-Media Volume V, published on Sept. 13,
2012.
Key Rating Drivers:
-- Nielsen was much more resilient during the downturn than
other media companies, given the contractual and diversified
nature of its revenue stream and the benign competitive
environment. The company exhibited revenue and EBITDA
growth, as well as positive free cash flow (FCF), through the
trough of the downturn. Fitch expects Nielsen will continue
to generate organic revenue growth, which should outpace the
U.S. economy under all foreseeable economic conditions.
-- Nielsen's Watch and Buy businesses are well positioned in
their respective markets. The ratings reflect the risk that
competitive threats may emerge over time. Increased
competition could result in revenue pressure (lost share),
incremental costs (talent/sales/services), and some FCF
pressure (investments in offerings). However, the complexity
and significant investments associated with attempting to
replicate Nielsen's offerings create meaningful barriers to
entry.
-- The company has indicated its intention to continue
deleveraging. Fitch believes Nielsen will be able to
accomplish this, even absent further voluntary debt
reduction, as Fitch expects EBITDA to grow in the mid-single
digits, providing additional balance sheet flexibility.
-- Nielsen has publicly stated its goal to reach investment
grade, but has not provided a leverage target or a rationale
for maintaining investment-grade ratings. Fitch's concerns
remain around the uncertainty of Nielsen's long-term
financial policy (including a change in its investment-grade
goal) and the risk to the balance sheet from a private equity
exit.
-- At the current ratings, the above concerns are mitigated by
Fitch's belief that, conservatively, Nielsen will generate
FCF in the $300 million-$400 million range per annum over the
next several years. This will provide Nielsen with the
financial flexibility to satisfy mandatory debt amortization
and make small acquisitions, while building cash for future
shareholder-friendly actions.
Fitch believes Nielsen's liquidity is sufficient. At June 30,
2012, liquidity was composed of $283 million of cash on hand and
$408 million available under the $635 million senior secured
revolver due in 2016. In the 12 months ended June 30, 2012, Fitch
calculates the company generated $307 million of FCF.
Fitch calculates unadjusted leverage as of June 30, 2012 at 4.2x.
Before adjusting for the note offering, total debt at June 30,
2012 was approximately $6.5 billion, consisting primarily of $4.8
billion in secured term loans and revolver borrowings; $215
million of senior notes due 2014; $325 million of senior notes due
2016; and $1.1 billion of senior notes due 2018. The company has
been active in managing its near-term maturities, and they are
manageable over the next several years.
In addition to the debt noted above, the company has $288 million
of 6.25% mandatory convertible subordinated notes due 2013, which
are afforded 100% equity credit under Fitch's hybrid criteria.
These notes will automatically convert on Feb. 1, 2013 (less than
three years) into common equity and have a set conversion rate (a
max of 2.1739 and a min of 1.8116). The notching of the mandatory
convertible instruments reflects Fitch's hybrid criteria, which
typically notches such hybrid securities two notches down from the
IDR.
The notching on Nielsen Finance's senior secured debt reflects the
security provided to the lenders.
What Could Trigger a Rating Action?
Positive: Absent a clear leverage target statement, continued
improvement in operating trends with gross leverage less than 4x
over the next 12-24 months could result in a one-notch upgrade.
Negative: Near term, the most likely drivers of rating pressure
include a material debt-funded acquisition that increased gross
unadjusted leverage to over 4.5x or a dividend policy that
materially reduced FCF.
Fitch has taken the following rating actions:
Nielsen
-- Issuer Default Rating (IDR) assigned at 'BB';
-- Mandatory convertible subordinated notes affirmed at 'B+'.
Nielsen Finance
-- IDR affirmed at 'BB';
-- Senior secured bank facility affirmed at 'BB+';
-- Senior unsecured notes affirmed at 'BB'.
Fitch has withdrawn the following ratings:
Nielsen Company B.V.
-- IDR 'BB';
The ratings have been withdrawn, as Fitch does not expect Nielsen
Company BV to be a future issuer of debt.
The Rating Outlook is Positive.
NORTHERN TIER: Moody's Affirms 'B1' CFR; Outlook Stable
-------------------------------------------------------
Moody's Investors Service affirmed Northern Tier Energy LLC's
(NTE) B1 Corporate Family Rating (CFR) and its B1 senior secured
notes rating following the initial public offering of its parent
company Northern Tier Energy LP (NTI) as a variable distribution
Master Limited Partnership (MLP) in July 2012. Moody's also
assigned NTE a SGL-3 Speculative Grade Liquidity Rating. The
outlook is stable.
Issuer: Northern Tier Energy, LLC
Affirmations:
Corporate Family Rating of B1
Probability of Default Rating of B1
10.5% Senior Secured Regular Bond/Debenture, B1
Assignments:
Speculative Grade Liquidity Rating, Assigned SGL-3
"While we view Northern Tier's adoption of the MLP corporate
structure an inherently riskier business model, requiring the
quarterly payout of almost all excess cash, the B1 ratings
affirmation considers the company's commitment to a variable
distribution, moderate financial leverage profile, and maintenance
of healthy cash balances, as well as the strong cash flow
generating capacity of its refinery through the cycle," commented
Gretchen French, Moody's Vice President.
Rating Rationale
NTE's B1 CFR reflects the company's single refinery asset risk and
relatively small scale, particularly compared to its largest
regional competitor, the inherent volatility and capital intensity
of the refining sector, and the high payouts associated with its
MLP corporate structure. The rating is supported by the refinery's
proven operational track record and favorable geographic location.
NTE's refinery has access to heavily discounted Bakken and
Canadian crude oils and is well positioned within a product short
region, resulting in record strong margins in the last twelve
months. Moody's believes that NTE's crude sourcing differentials
will continue to remain supportive, but will begin to narrow over
the next several years as increased take away capacity comes on
stream. The CFR also benefits modestly from NTE's integrated
owned/operated retail network through which NTE sells more than
50% of its gasoline products.
The high payout MLP corporate structure chosen by Northern Tier as
a public company limits credit accretion by taking out all excess
cash on a regular basis, preventing the buildup of large cash
balances that have traditionally been used as reserve cushions in
the inherently volatile refining business for both growth and
regulatory spending during sector downturns. Moody's notes that
Northern Tier's variable pay model does offer certain advantages
over traditional MLPs, including no incentive distribution rights,
a build in cash reserves for turnarounds, and the consideration
for working capital needs, and primarily by limiting the
distributions to the excess cash flow generation ability of the
company. The variability does not, however, change the basic
distribution payout impetus of the MLP model.
The MLP business model also relies heavily on capital market
access for major capital expenditure programs and acquisitions,
which can increase the company's risk profile during financial
downturns. NTE plans to finance future material growth projects
through the traditional MLP business model of raising 50/50 debt
and equity financing, which could lead to higher financial
leverage over the longer term. However, unlike traditional MLPs,
Moody's believes Northern Tier, as an independent
refiner/marketer, is likely to pursue a more modest growth profile
and maintain moderate financial leverage.
Under Moody's Loss Given Default Methodology, the B1 rating on the
senior secured notes reflects both the overall probability of
default of NTE, to which Moody's has assigned at B1 PDR and a loss
given default of LGD 4, 50%. In addition to the senior secured
notes, NTE has an undrawn $300 million committed credit facility,
with a borrowing base of $195 million, as of July 14, 2012. The
senior secured notes have a first lien against the PP&E of NTE,
while the credit facility has a first lien on working capital
assets. As a result of the senior notes having discreet assets as
collateral and the view that the refinery should provide
sufficient value for the note holders, even in the event of
distress, the notes are rated in line with the CFR.
NTE's SGL-3 Speculative Grade Liquidity Rating reflects an
adequate liquidity profile. NTE's liquidity profile is constrained
by its MLP structure and the volatility and cyclicality of the
refining business. In 2013, Moody's expects that NTE's internally
generated cash flow will cover maintenance spending (approximately
$33 million per annum excluding turnaround expenditures) and MLP
common unit distributions (Moody's estimates at close to $150
million in 2013). As of June 30, 2012 the company had $171 million
cash on its balance sheet and $113 million of availability under
its borrowing base revolving credit facility, which matures in
July 2017. There are no active financial maintenance covenants
associated with NTE's revolving credit facility. NTE's liquidity
is enhanced by a supply and logistics agreement whereby JP Morgan
funds the purchase of crude for the refinery and provides
logistical services for delivery of the crude to the company's
refinery. This arrangement accounts for almost all of the
refinery's crude supply. Alternate liquidity is limited given that
substantially all of the company's assets are pledged under the
revolving credit facility and the senior secured notes.
The stable outlook assumes that the NTE will continue to
demonstrate consistent operating performance and remain moderately
leveraged. The stable outlook also assumes that all future
acquisitions and major growth capital expenditures are adequately
funded with equity.
This single asset risk and MLP business model limits ratings
upside given that any unforeseen prolonged downtime and the
company's high payout model could have a significant impact on
sufficient cash flow to service debt and capital needs. A
modestly-levered acquisition of another refinery might add the
operational diversity and scale that would allow an upgrade to be
considered.
The ratings could be downgraded if leverage materially rises or
liquidity weakens (including cash balances materially declining)
due to a prolonged period of unplanned downtime, debt funding of
an acquisition, capital spending requirement or distribution, or a
prolonged period of margin softness.
The principal methodology used in rating Northern Tier was the
Global Refining and Marketing Industry Methodology published in
December 2009. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Northern Tier Energy, LLC is a wholly-owned subsidiary of Northern
Tier Energy LP, and is headquartered in Ridgefield, CT.
PDC ENERGY: Moody's Confirms 'B2' CFR/PDR; Outlook Positive
-----------------------------------------------------------
Moody's Investors Service confirmed PDC Energy, Inc.'s (PDC) B2
Corporate Family Rating (CFR) and its B3 senior unsecured note
rating. This concludes the review for upgrade initiated on
April 2, 2012. The outlook is changed to positive.
Issuer: PDC Energy, Inc.
Confirmations:
Corporate Family Rating, B2
Probability of Default Rating, B2
Senior Unsecured Notes rating, B3
"The confirmation of existing ratings with a positive outlook
reflects the company's scale and growing liquids production, a
large and diversified drilling inventory and modest finding and
development (F&D) costs," commented Andrew Brooks, Moody's Vice
President.
Ratings Rationale
The B2 CFR reflects PDC's smaller scale and its concentration in
the Rocky Mountain region, offset by moderate F&D costs, a large
and well diversified drilling inventory, considerable flexibility
with the size of its capital expenditure program and growth in its
liquids production, which is targeted to reach 36% of total
production in 2012. The company's expansion into several newer
plays, notably the Marcellus and Utica Shale, will likely increase
scale, diversification, and contribute to increased liquids
production. However, its short track record in these newer plays
increases its business risk profile, and debt funding of negative
free cash flow could lead to rising leverage on production and
reserves.
Average daily production for 2012's second quarter was 21 MBOE per
day, 81% of which is in the Rocky Mountain region, however,
portfolio highgrading is adding to diversification, with growth
initiatives focused on the company's horizontal Niobrara,
horizontal Marcellus, and Utica Shale properties. Development is
at a relatively early stage; however, presuming larger scale
drives positive economic returns, this growth is positive for the
company's credit profile. PDC's near term focus is on developing
the liquids-rich Wattenberg Field in the Rockies to capitalize on
the higher margins associated with liquids production. PDC's 2012
capital budget is $288 million, 65% of which is allocated to
drilling and development, virtually all to the Wattenberg. In the
second quarter of 2012, PDC liquids production was 33% of its
total, up significantly from 18% at year end 2009.
The SGL-3 Speculative Grade Liquidity rating reflects Moody's view
that the company has adequate liquidity through 2013, based
largely on the $241 million availability it has under its $525
million secured borrowing base revolving credit at June 30, 2012.
The borrowing base was increased on June 29 from $425 million
based on PDC's 2011 reserves audit and reserves associated with
additional acquired Wattenberg acreage. Revolver covenants include
a current ratio of 1.0x or better, and debt to EBITDAX of no more
than 4.0x. At June 30, PDC was fully in compliance, and Moody's
would expect it to remain so through 2013. There are no debt
maturities until 2015 when the revolving credit facility is
scheduled to mature. Substantially all of PDC's assets are pledged
as security under the credit facility which limits the extent to
which asset sales could provide a source of additional liquidity
if needed. PDC conducts its operations in the Marcellus through
its 50% stake the PDC Mountaineer, LLC (PDCM) joint venture, which
maintains an $80 million secured borrowing base revolving credit;
outstandings at June 30 totaled $52 million. This credit facility
is scheduled to mature in 2014 and is non-recourse to PDC.
The rating outlook is positive. An upgrade could result should
average daily production increase to 35 MBOE per day while
maintaining debt to average daily production below $25,000 per
BOE, assuming returns and the company's business risk profile do
not deteriorate as a result of further expansion and development.
Moody's could downgrade the ratings should debt to average daily
production increase above $35,000 per BOE for a sustained period,
or should capital productivity decline to the extent that PDC's
leveraged full-cycle ratio falls below 1.0x.
The B3 senior unsecured note rating reflects PDC's overall
probability of default, to which Moody's assigns a PDR of B2, and
a loss given default of LGD5-82%. The secured revolving credit's
$525 million borrowing base is large enough to result in a double
notching of the senior unsecured notes below the B2 CFR under
Moody's Loss Given Default Methodology. However, Moody's has
overridden the two-notch differential and confirmed the B3 rating
on the notes based on the projected limited utilization of the
revolver over the coming year.
PDC Energy is an independent E&P company headquartered in Denver,
Colorado.
The principal methodology used in rating PDC Energy was the Global
Independent Exploration and Production Industry Methodology
published in December 2011. Other methodologies used include Loss
Given Default for Speculative-Grade Non-Financial Companies in the
U.S., Canada and EMEA published in June 2009.
PEP BOYS: S&P Affirms 'B' Corp. Credit Rating; Outlook Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on Philadelphia-based Pep Boys - Manny, Moe & Jack.
The outlook is negative.
"In addition, we assigned our 'BB-' issue-level rating to the
company's proposed six-year $200 million term loan. The recovery
rating is '1', which indicates our expectation of very high (90%
to 100%) recovery for creditors in the event of a payment default
or bankruptcy," S&P said.
"We will withdraw our existing issue-level ratings upon
confirmation of repayment of existing debt with proposed term
loan," S&P said.
"The issue-level rating on Pep Boys' existing senior secured term
loan due 2013 is 'BB-' with a '1' recovery rating, indicating our
expectation for very high recovery (90%-100%) for lenders in the
event of a payment default. The issue-level rating on Pep Boys'
$200 million senior subordinated notes due 2014 is 'B' with a '3'
recovery rating, indicating our expectation for meaningful
recovery (50% to 70%) for noteholders in the event of a payment
default. We will withdraw these ratings on completion of
refinancing transaction," S&P said.
The ratings on Pep Boys reflect Standard & Poor's analysis that
the company's business risk profile remains "vulnerable" and its
financial risk profile remains "aggressive."
"Our business risk assessment reflects the company's weak
competitive position, principally because of its competitively
disadvantaged store base," said Standard & Poor's credit analyst
Brian Milligan. "The company may be able to improve its
competitive position through its service and tire center (STC)
expansion plan, which would reduce average store size and would
increase service- and maintenance-related revenue. However, weaker
industry conditions over a prolonged period could meaningfully
disrupt the STC expansion plan."
"The outlook is negative, which reflects our analysis that
financial ratios may weaken to levels indicative of a 'highly
leveraged' financial risk profile, either through continued weak
financial results over the next two quarters or through more
aggressive financial policies," S&P said.
"We would likely lower the ratings if performance does not improve
over the next two quarters, which would likely result in financial
ratios worsening to levels clearly indicative of a highly
leveraged financial risk profile, including adjusted leverage
above 5.5x. Based on second-quarter fiscal 2012 results and pro
forma for the proposed refinancing, an EBITDA decline of nearly
15% would be necessary for adjusted leverage to exceed 5.5x," S&P
said.
"We could revise the outlook to stable if it becomes apparent that
financial ratios can remain clearly within levels indicative of an
aggressive financial risk profile, including adjusted leverage
below 4.5x. Based on second-quarter fiscal 2012 results and pro
forma for the proposed refinancing, EBITDA growth of nearly 10% is
necessary for adjusted leverage to decline below 4.5x," S&P said.
PET ECOLOGY: Files for Chapter 11 Bankruptcy
--------------------------------------------
BankruptcyData.com reports that Pet Ecology Brands filed for
Chapter 11 protection (Bankr. E.D. Tex. Case No. 12-42550). The
Company is represented by Joyce W. Lindauer. Pet Ecology engages
in the development, manufacture and marketing of products for pets
in the United States - with a focus on lightweight, flushable and
odor free cat litters and fat free dog treats.
PH GLATFELTER: Moody's Rates New $200MM Sr. Unsecured Notes 'Ba1'
-----------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to P. H.
Glatfelter Company's proposed $200 million senior unsecured notes
due 2020, which will rank equally with the company's existing
senior unsecured indebtedness. The Company's Ba1 Corporate Family
Rating, SGL-1 liquidity rating and the stable outlook all remain
unchanged. The proposed refinancing is leverage neutral (the net
proceeds will be used to prepay the company's senior unsecured
notes due 2016) and will provide a slight improvement in the
company's debt maturity profile. The ratings are subject to
Moody's review of final documentation.
Moody's took the following rating actions:
-- Assigned a Ba1 (LGD4 - 57%) to proposed senior unsecured
notes due 2020
Ratings Rationale
Glatfelter's Ba1 corporate family rating reflects the company's
leading market position in several niche segments of the specialty
paper markets, its geographic diversity and sound credit
protection measures. The rating also reflects Glatfelter's very
good liquidity position and expectations that growth in the
company's composite fibers and air-laid materials segments will
more than offset the secular decline in the company's paper
businesses. The rating also considers the company's relatively
small size, and it's exposure to environmental clean-up costs.
Glatfelter's SGL-1 rating reflects the company's very good
liquidity position, which is supported by approximately US$23
million of cash (June 2012) and net availability of approximately
US$327 million on the company's committed US$350 million multi-
currency revolving credit facility (net of US$18 million drawn and
US$5 million of letter of credit use). The credit facility matures
in November 2016. Moody's estimates free cash flow of
approximately US$30 million over the next 12 months with seasonal
working capital swings. Covenant issues are not expected over the
near term. Most of the company's assets are unencumbered and the
company's alternative liquidity potential includes over 28,000
acres of timberlands that can be sold to augment liquidity.
The stable outlook reflects Glatfelter's ability to offset
declining demand in its paper business through growth in its other
segments or through modest acquisitions. Moody's anticipates that
the company will maintain conservative financial policies and will
not pressure its balance sheet or liquidity position with
excessive dividend payouts, share buy backs or creditor-unfriendly
acquisitions. An upgrade may be warranted if the company maintains
its strong liquidity position, remains in a position to manage its
environmental issues, and generates sustained normalized (RCF-
CapEx)/TD exceeding 15% and EBITDA margins exceeding 16%. The
ratings may be downgraded should anticipated environmental costs
escalate significantly, or if there is an inability by the company
to offset the secular decline in paper demand such that normalized
(RCF-CapEx)/TD declines below 10% for a sustained period of time.
The principal methodology used in rating Glatfelter was the Global
Paper and Forest Products Industry Methodology published in
September 2009. Other methodologies used include Loss Given
Default for Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009.
Headquartered in York, Pennsylvania, P. H. Glatfelter Company is a
manufacturer of specialty papers and fiber-based engineered
products. LTM June 30, 2012 revenue was $1.6 billion, with about
two-thirds of the company's sales generated from assets located in
North America and the balance from operating assets located in
Europe.
PHILADELPHIA ORCHESTRA: Firms File Final Application for Payment
----------------------------------------------------------------
Peter Dobrin at Philly.com reports that final applications for
payment have been submitted by the firms handling the Philadelphia
Orchestra Association's bankruptcy. Fees claimed by the seven
major professionals seem to support the estimate previously given
by the orchestra: just below $10 million.
According to the report, the fees listed in court papers over the
past few days only go back as far as the bankruptcy filing itself
in the spring of 2011, and the orchestra racked up bills well
before then as it researched the option of chapter 11.
The report notes the top three billers (from April 16, 2011 to
July 30, 2012) are:
-- Dilworth Paxson: $3.04 million, plus $75,000 in expenses.
Dilworth's chairman is a member of the orchestra board.
-- Alvarez & Marsal: $1.55 million, $102,000 in expenses.
-- Curley, Hessinger & Johnsrud: $777,000, plus $6,885 in
expenses. Curley is the firm that handled the orchestra's
labor relations, so you might view some of their fee as
being incurred in a normal negotiating year, and some
specific to the bankruptcy.
The report relates it's not yet clear whether the strategy taken
in Philadelphia will be emulated at orchestras elsewhere, though a
recent piece in Bloomberg BusinessWeek certainly reads like an
endorsement of the idea. The report says struggling symphony
orchestras that should consider using federal bankruptcy courts to
stabilize their finances include those with runaway expenses
similar to Philadelphia's, said Lawrence G. McMichael, a lawyer
for the orchestra in its bankruptcy case.
The report adds, if a symphony faces contract and pension
obligations it can't afford, owes debt it can't pay, or needs
financing it can't get, bankruptcy might be a good option, said
Mr. McMichael, of the Philadelphia law firm Dilworth Paxson LLP.
About Philadelphia Orchestra
The Philadelphia Orchestra -- http://www.philorch.org/-- claims
to be among the world's leading orchestras. Bloomberg News says
the orchestra became the first major U.S. symphony to file for
bankruptcy protection, surprising the music world.
Previous conductors include Fritz Scheel (1900-07), Carl Pohlig
(1907-12), Leopold Stokowski (1912-41), Eugene Ormandy (1936-80),
Riccardo Muti (1980-92), Wolfgang Sawallisch (1993-2003), and
Christoph Eschenbach (2003-08). Charles Dutoit is currently chief
conductor, and Yannick Nezet-Seguin has assumed the title of music
director designate until he takes up the baton as The Philadelphia
Orchestra's next music director in 2012.
The Philadelphia Orchestra Association, Academy of Music of
Philadelphia, Inc., and Encore Series, Inc., filed separate
Chapter 11 petitions (Bankr. E.D. Pa. Case Nos. 11-13098 to
11-13100) on April 16, 2011. Judge Eric L. Frank presides over
the case. The Philadelphia Orchestra Association is being advised
by Dilworth Paxson LLP, its legal counsel, and Alvarez & Marsal,
its financial advisor. Curley, Hessinger & Johnsrud serves as its
special counsel. Philadelphia Orchestra disclosed $15,950,020 in
assets and $704,033 in liabilities as of the Chapter 11 filing.
Encore Series, Inc., tapped EisnerAmper LLP as accountants and
financial advisors.
Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed
seven members to the official committee of unsecured creditors in
the Debtors' case. Reed Smith LLP serves as the Committee's
counsel.
The orchestra postpetition signed a new contract with musicians
and authority to terminate the existing musicians' pension plan.
PRIMUS TELECOMS: Moody's Confirms 'B3' CFR; Outlook Stable
----------------------------------------------------------
Moody's Investors Service has confirmed the B3 Corporate Family
Rating (CFR) of Primus Telecommunications Group, Inc. following
the company's repurchase of $119 million principal amount of
existing 10% Senior Secured Notes due 2017. Moody's has increased
the loss-given-default (LGD) assessment on the B3-rated 10% notes
to LGD3-44% from LGD4-65% and changed Primus's probability of
default rating (PDR) to B3 from B2 to reflect Moody's view of a
higher expected recovery. Moody's has also raised Primus's
speculative grade liquidity (SGL) rating to SGL-2 from SGL-3 to
reflect the company's ongoing good liquidity. This concludes the
review initiated in April 2012. As a result of the debt reduction,
Primus will achieve a more sustainable capital structure and leave
enough cash on the balance sheet to invest in the remaining
business. The rating outlook is now stable.
Issuer: Primus Telecommunications Group, Incorporated
Corporate Family Rating, Confirmed at B3
Probability of Default Rating, Downgraded to B3 from B2
Speculative Grade Liquidity Rating, Upgraded to SGL-2 from
SGL-3
Outlook, Changed To Stable From Rating Under Review
Issuer: Primus Telecommunications Holding, Inc.
Senior Secured Regular Bond/Debenture due Apr 15, 2017,
Changed to B3 (LGD3, 44 %) from B3 (LGD4, 65%)
Outlook, Changed To Stable From Rating Under Review
Ratings Rationale
Primus's B3 rating reflects its very small scale, weak competitive
position in the Canadian telecommunications market and the risks
associated with the high capital intensity of the data center
business. These weaknesses are offset by the company's low
leverage relative to the rating and Moody's expectation of
positive free cash flow.
Following the sale of the Australian business, Primus reorganized
into two segments; one being a "pure-play" data center operator
and the other a North American telecom service provider. Moody's
believes that Primus's telecom unit will face serious competitive
challenges going forward given its small scale and the continued
pressure on voice revenues that may not be offset by data-centric
service offerings.
Given the small scale of the data center segment, Moody's does not
expect its growth to offset the steady decline in the telecom
service segment. As such, Moody's expects Primus's leverage to
remain in the mid 3x range (Moody's adjusted) through year end
2013 as the company continues to cut costs to maintain stable
EBITDA.
Moody's expects Primus will maintain good liquidity over the next
twelve months supported by over $50 million of cash on hand pro
forma for the debt redemption. The company has no revolver.
Moody's expects neutral cash flow in 2012 and positive free cash
flow in 2013. Cash on hand is enough to meet projected capital
expenditures and other cash needs over the next 12-18 months.
Moody's could raise Primus's ratings if the company achieves
sustainable positive free cash flow while maintaining adjusted
leverage near 3x, which could be the result of revenue growth and
margin expansion as the company transitions into higher margin
business.
The ratings could be lowered if free cash flow becomes negative as
the result of increased capital intensity or a decline in EBITDA
due to competitive pressure. Moody's could also lower the ratings
if leverage exceeds 5x (Moody's adjusted) on a sustainable basis.
The principal methodology used in rating Primus was the Global
Telecommunications Industry Methodology published in December
2010. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Primus is a competitive telecom provider headquartered in McLean,
VA. The company offers telecommunications, IP and data center
services to small and medium-sized enterprises, residential
customers and other telecommunications carriers in the United
States and Canada.
PRODUCTION RESOURCE: Moody's Cuts Corp. Family Rating to 'B3'
-------------------------------------------------------------
Moody's Investors Service downgraded Production Resource Group,
Inc.'s Corporate Family Rating ("CFR") and Probability of Default
Rating ("PDR") to B3 from B2, and the rating on its 8.875% Senior
Unsecured Notes due 2019 to Caa1 from B3. These actions reflect
Moody's view that a soft macroeconomic environment in Europe and
an acquisitive financial philosophy likely will prevent the
company from improving its operating performance enough to return
credit measures to levels appropriate for a B2 CFR. The rating
outlook is stable.
PRG has implemented an operational restructuring program to
improve the performance of its European business, but Moody's
believes the cost savings will not be sufficient to offset the
effects of reduced demand and lower pricing. Consequently, there
is unlikely to be meaningful improvement from lease-adjusted
interest coverage in the 1 times (EBITDA-CapEx)/Interest range,
and free cash flow will likely be negative in 2012. The business
is quite capital intensive relative to most other rated peers in
the business and consumer service industry due to an ongoing need
to replace rental equipment, though spending could be lowered from
current levels for a short time to help manage free cash flow.
Nevertheless, Moody's does not anticipate PRG will generate
meaningful and sustainable free cash flow absent an improvement in
underlying business conditions.
The Actions:
Issuer: Production Resource Group Inc.
Corporate Family Rating, Downgraded to B3 from B2
Probability of Default Rating, Downgraded to B3 from B2
8.875% $400 million Senior Unsecured Notes due 2109,
Downgraded to Caa1 (LGD4 69%) from B3
Ratings Rationale
The B3 CFR is principally constrained by weak credit metrics for
the rating category, including weak interest coverage and
historically negative free cash flow, and an aggressive financial
philosophy that has included a number of debt-funded acquisitions.
The rating also reflects concerns related to a highly-competitive
environment, ongoing capital needs, and vulnerability to changes
in macroeconomic conditions. Good market positions, low customer
concentration, and high geographic diversity help mitigate these
fundamental business risks. The rating also benefits from a
significant level of financial support provided by PRG's private
equity sponsor during the most recent downturn. However, given the
company's weak coverage and negative free cash flow, an adequate
liquidity position supported by over $90 million of availability
under an asset-based revolving credit line is the principal
supporting factor for the company's B3 CFR.
The stable outlook reflects Moody's view that an adequate
liquidity position provides PRG with sufficient flexibility to
withstand the soft macroeconomic environment in the near-term. The
B3 rating assumes PRG will generate negative free cash flow at
least through 2012 and credit measures will remain relatively weak
for the rating category over the next 12-18 months, but the
company will maintain at least $50 million of covenant-adjusted
revolver availability.
Moody's could downgrade the ratings in anticipation of substantive
erosion in the company's liquidity position, worsening business
conditions in Europe, or financial leverage exceeding 7 times.
Conversely, an upgrade is unlikely absent a sustained improvement
in credit measures. Moody's could take a positive action if the
company reduces its leverage to below 5 times, improves interest
coverage to above 1.5 times, starts to generate free cash flow-to-
debt in the low single digit range. A positive action would
require a solid liquidity cushion and an expectation for a
sustained reduction in revolver borrowings.
The principal methodology used in rating Production Resource Group
was the Global Business & Consumer Service Industry Rating
Methodology published in October 2010. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
Production Resource Group, Inc. is a provider of entertainment
technology solutions to the live event industry. The company is
majority-owned by The Jordan Company (The Resolute Fund II). PRG
reported $619 million of revenue for the twelve months ended June
30, 2012.
PROTECTIVE PRODUCTS: Dist. Court Defers Ruling on D&O Lawsuit
-------------------------------------------------------------
District Judge James I. Cohn deferred ruling on the request by
defendants to withdraw the bankruptcy court reference to an
adversary proceeding commenced against them by the Chapter 11
trustee of PPOA Holding Inc. and four related debtors. The
District Judge opted to wait for the bankruptcy court's resolution
of the defendants' motion to dismiss the lawsuit.
On Jan. 11, 2012, Kenneth A. Welt, the PPOA Trustee, filed the
adversary proceeding against several former officers and directors
of PPOA. In general, the Trustee's Complaint alleges that the
Defendants breached various fiduciary duties to the Debtors and
engaged in other misconduct in the handling of the Debtors'
corporate affairs, resulting in substantial losses of company
assets. The Complaint pleads eight counts against the Defendants
and seeks a variety of legal and equitable remedies. Some of the
claims arise under the Bankruptcy Code, while others are based on
state law. On April 20, 2012, the Defendants filed in the
Bankruptcy Court their Motion to Withdraw the Reference. On June
21, 2012, the Defendants' Motion was transmitted to and filed in
the District Court.
The Chapter 11 Trustee agrees with the Defendants that the
reference should be withdrawn to permit a jury trial on Counts I
and II. The Trustee argues, however, that the reference should
not be withdrawn for trial of Counts III through VII of the
Complaint (relating to avoidable transfers) because (1) no party
has demanded a jury trial on those claims and (2) five of the
eleven Defendants have waived their jury-trial rights by filing a
proof of claim in Debtors' bankruptcy case. Further, the Trustee
objects to withdrawing the reference for trial of Count VIII of
the Complaint (objection to and/or subordination of the
Defendants' bankruptcy claims) since that count "may be resolved
in the process of allowing or disallowing claims, a task normally
reserved for bankruptcy judges."
The District Court noted that in the Bankruptcy Court, the
Defendants have filed a Motion to Dismiss the Complaint in its
entirety, and it appears that briefing was recently completed on
that motion. According to Judge Cohn, to allow the District Court
to make a more informed decision on the Motion to Withdraw
Reference, and recognizing that the ruling on the Defendants'
dismissal motion may clarify the claims in the case, the District
Court will defer ruling on the motion to withdraw the reference,
with one exception. In view of the uncertainty regarding the
application of the U.S. Supreme Court's decision in Stern v.
Marshall to the PPOA Trustee's claims, and given the Bankruptcy
Court's familiarity with these proceedings, the District Court
requests the Bankruptcy Court to issue a report and recommendation
on the Defendants' pending Motion to Dismiss.
The case before the District Court is, KENNETH A. WELT, not
individually but as Creditor Trustee of the PPOA Holding Creditor
Trust, Plaintiff, v. R. PATRICK CALDWELL, KEITH J. ENGEL, FRANK E.
JAUMOT, LARRY G. MOELLER, CHARLES E. PETERS, JR., NEIL E.
SCHWARTZMAN, HENRY H. SHELTON, BRIAN L. STAFFORD, RICHARD P.
TORYKIAN, SR., DEON VAUGHAN, and JASON A. WILLIAMS, Defendants,
12-61250-CIV-COHN (S.D. Fla.). A copy of Judge Cohn's Sept. 13,
2012 Order is available at http://is.gd/M7x2gXfrom Leagle.com.
About Protective Products of America
Sunrise, Florida-based Protective Products of America, Inc.,
formerly known as Ceramic Protection Corporation --
http://www.protectiveproductsofamerica.com/-- engaged in the
design, manufacture and marketing of advanced products used to
provide ballistic protection for personnel and vehicles in the
military and law enforcement markets.
The Company filed for Chapter 11 bankruptcy protection on
Jan. 13, 2010 (Bankr. S.D. Fla. Case No. 10-10711). The Company's
affiliates -- PC Holding Corporation of America; Ceramic
Protection Corporation of America; Protective Products
International Corp.; and Protective Products of North Carolina,
LLC -- also filed separate Chapter 11 petitions. Protective
Products disclosed $86,678,781 in assets and $27,460,502 in
liabilities as of the Petition Date.
Berger Singerman, in Miami, Fla., represented the Debtors as
counsel. Genovese Joblove & Battista, P.A., in Miami, Fla.,
represented the Official Committee of Unsecured Creditors as
counsel.
The Bankruptcy Court on Oct. 5, 2011, entered an order confirming
the third amended plan of liquidation for PPOA Holding, Inc. f/k/a
Protective Products of America, Inc., et al., proposed by the
Creditors Committee. As reported in the Troubled Company Reporter
on Jan. 3, 2011, the Committee's Plan provides for, among other
things, the collection of the Debtors' portion of certain income
tax refunds, the pursuit of certain litigation, including but not
limited to avoidance actions and causes of action, and the
distribution of the Creditor Trust Assets. Under the Plan,
holders of general unsecured claims received a pro rata share of
cash proceeds of the Creditor Trust Assets. The Committee
estimated that actual recovery for holders of allowed general
unsecured claims would be $2,669,559. A full text copy of the
Committee's Plan Outline is available for free at:
http://bankrupt.com/misc/PROTECTIVEPRODUCTS_CreditorsDS.pdf
QUAD/GRAPHICS INC: S&P Rates Amended Credit Facility 'BB+'
----------------------------------------------------------
Standard & Poor's Ratings Services assigned Sussex, Wisc.-based
printing company Quad/Graphics Inc.'s amended and extended
revolving bank loan due July 2017 and term loan A due July 2017
its 'BB+' issue-level rating (at the same level as the 'BB+'
corporate credit rating on the company). "In addition, the
facilities were assigned a recovery rating of '3', indicating our
expectation of meaningful (50% to 70%) recovery for lenders in the
event of a payment default. The company is seeking to extend the
maturities of its current revolver and term loan A by one year
each from the existing July 2016 maturities. The size of the new
amended revolver and new term loan A will depend on investor
interest. The current credit facility totals $1.5 billion and
consists of an $850 million revolver, a $450 million term loan A,
and a $200 million term loan B. We do not expect the total size of
the credit facility to change as a result of this amendment," S&P
said.
"The corporate credit rating on Quad/Graphics is 'BB+' and the
rating outlook is negative. We view Quad's business risk profile
as 'fair' (as per our criteria) based on its size, operating
efficiency, and profitability--notwithstanding the difficult
fundamentals in the printing industry, which include keen
competition, fragmentation, intense pricing pressure, gradually
declining end-market demand, and significant revenue volatility
over the economic cycle. We view the company's financial risk as
'intermediate,' based on its moderate leverage. The negative
rating outlook reflects our expectation that the company will
continue to face negative structural trends and economic pressures
that will only partially be offset by business integration savings
from its July 2010 acquisition of World Color Press Inc. and an
ongoing restructuring," S&P said.
RATINGS LIST
Quad/Graphics Inc.
Corporate Credit Rating BB+/Negative/--
New Ratings
Quad/Graphics Inc.
Revolving bank loan due 2017 BB+
Recovery Rating 3
Term loan A due 2017 BB+
Recovery Rating 3
RADIENT PHARMACEUTICALS: Further Amends License Pact with GCDx
--------------------------------------------------------------
Radient Pharmaceuticals Corporation previously disclosed that it
entered into a license agreement with Global Cancer Diagnostics,
Inc., in order to commercialize certain of the Company's
intellectual property in the form of a Lung Cancer test.
Section 3.1 of the Agreement was amended on Aug. 23, 2012, with
the remainder of the Agreement unchanged. Pursuant to the
Amendment, GCDx will pay the Company an upfront license fee of
$250,000 immediately upon receipt of funds from the first closing
of its current financing for approximately $2,000,000, which was
anticipated to close no later than Sept. 15, 2012.
On Sept. 14, 2012, the Company agreed to further amend Section 3.1
of the Agreement and replace it with the following:
"GCDx will pay a License Fee of Two Hundred and Eighty Thousand
Dollars ($280,000) to RXPC immediately upon receipt of it
funding in the amount of Two Million dollars, or on or before
October 1, 2012. As of the date of this amendment, GCDx has
paid a total of US$6,000 towards this licensing fee."
A copy of the Amendment is available for free at:
http://is.gd/ROtTg6
On Sept. 4, 2012, the lawsuit Ironridge Global IV, Ltd., filed
against the Company on Dec. 8, 2010, in the Superior Court of
California, Los Angeles County claiming breach of contract and
seeking damages in excess of $30.0 million was dismissed by the
Court, without prejudice, upon motion by the Plaintiff.
About Radient Pharmaceuticals
Tustin, Calif.-based Radient Pharmaceuticals Corporation is
engaged in the research, development, manufacturing, sale and
marketing of its Onko-Sure(R) test kit, which is a proprietary in-
vitro diagnostic (or IVD) cancer test. The Company markets its
Onko-Sure(R) test kits in the United States, Canada, Chile,
Europe, India, Korea, Japan, Taiwan, Vietnam and other markets
throughout the world.
In the auditors' report accompanying the consolidated financial
statements for the year ended Dec. 31, 2011, KMJ Corbin & Company
LLP, in Costa Mesa, California, expressed substantial doubt about
Radient's ability to continue as a going concern. The independent
auditors noted that the Company has incurred significant operating
losses, had negative cash flows from operations in 2011 and 2010,
and has a working capital deficit of approximately $49.8 million
at Dec. 31, 2011.
The Company reported a net loss of $86.19 million in 2011,
compared with a net loss of $85.71 million in 2010.
The Company's balance sheet at Dec. 31, 2011, showed $1.18 million
in total assets, $50.87 million in total current liabilities, and
a stockholders' deficit of $49.69 million.
Bankruptcy Warning
"The committee of our three independent directors continues to
assess whether the Company has any other options to remain in
business. Due to the shortage of working capital, we were unable
to pay premiums associated with our Directors and Officers
insurance. As a consequence, on June 25, 2012, we were informed
by two members of our Board of Directors of their resignation. As
a result, we have only one independent Director serving on our
Board at this time. Although our remaining sales team continues
to work towards completing pending and future sales of our Onko-
Sure test kit, if these sales are not completed and we do not
otherwise raise additional funds in the immediate future, it is
likely that we will be forced to cease all operations and might
seek protection from our creditors under the United States
bankruptcy laws," the Company said in its annual report for the
year ended Dec. 31, 2011.
RESIDENTIAL CAPITAL: Committee Proposes JF Morrow as Consultant
---------------------------------------------------------------
The Official Committee of Unsecured Creditors in Residential
Capital's bankruptcy cases seeks the Court's authority to retain
JF Morrow as consultant and possible expert witness, nunc pro tunc
to September 5, 2012.
Mr. Morrow will analyze applicable underwriting guidelines,
representations and warranties; plan and review, and supervise
review, of up to 1,500 randomly selected loan files to determine
conformance with applicable underwriting guidelines,
representations and warranties; develop expert report and
opinion, and if necessary provide expert testimony, with respect
to the RMBS Settlement; and provide other expert-related
testimony, consulting or advisory services as may be needed.
Mr. Morrow will be paid $400 per hour for his expert services and
will be reimbursed for any out-of-pocket expenses he incurs.
Mr. Morrow, who stated in his declaration that he has served as
an expert witness in a wide array of financial institutions/
mortgage areas, including on underwriting guidelines, assures the
Court that he does not represent any interest adverse to the
Committee, the Debtors or their estates.
Mr. Morrow also discloses that he has represented individuals as
a mortgage expert against Debtor GMAC Mortgage, LLC, in a
mortgage servicing action. The action settled without deposition
or trial. Mr. Morrow adds that he has also represented Debtor
Residential Funding Company, LLC, as mortgage expert in a
mortgage servicing action that has also already concluded.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
ResCap is selling its mortgage origination and servicing
businesses and its legacy portfolio, consisting mainly of mortgage
loans and other residual financial assets. At the onset of the
bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC
for the mortgage origination and servicing businesses, and with
Ally Financial for the legacy portfolio. Together, the asset
sales are expected to generate roughly $4 billion in proceeds.
Following a hearing in June, the bankruptcy judge scheduled
auctions for Oct. 23. A hearing to approve the sales was set for
Nov. 5. Fortress Investment Group LLC will make the first bid for
the mortgage-servicing business, while Berkshire Hathaway Inc.
will serve as stalking-horse bidder for the remaining portfolio of
mortgages.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Ally Bank Servicing Pact Continued
-------------------------------------------------------
The Bankruptcy Court approved a stipulation among the Residential
Capital, the Official Committee of Unsecured Creditors, Ally Bank,
and Ally Financial Inc. for the Debtors' continuance of
performance under the terms of the servicing agreement between
Debtor GMAC Mortgage, LLC, and Ally Bank, until the agreement is
terminated under its own terms. The Debtors will continue to make
all payments to Ally Bank in accordance with the agreement.
As reported in the Sept. 14, 2012 edition of the Troubled Company
Reporter, the Debtors have previously asked permission from the
Court to continue to perform under the servicing agreement in the
ordinary course of business. The Debtors and Ally Bank have
agreed for GMAC Mortgage to pay Ally Bank in connection with
modifications to the loan. The Creditors' Committee, however,
opposed the inclusion of the indemnification obligation in the
servicing agreement.
AFI, in connection with the indemnification obligation, will
establish and fund an escrow account to be held by Ally Bank as
escrow agent. The Initial Funding will consist of $19.9 million
paid by the Debtors paid in June, plus $7.7 million to be paid in
respect of the unpaid amounts for May through July, plus any
additional amounts paid by the Debtors in accordance with the
indemnification obligation under the agreement.
The parties agree that Ally Bank is granted limited relief from
the automatic stay solely to the extent required to provide the
120-day notice required under the servicing agreement to
terminate the servicing agreement with respect to all HELOC
loans, the "CMG loans" and no more than an additional 3,500
mortgage loans.
The Debtors, in a statement in support of the stipulation, assert
that the servicing agreement is critical to the success of the
Chapter 11 cases, which are premised on the sale of the Debtors'
mortgage loan origination and servicing business as a live
operational platform. The Debtors add that their continued
servicing of the Ally Bank loan portfolio will benefit the
estates by, among other things, generating servicing fees and
preserving the value of the loan business pending its sale. The
Debtors argue that if they are not permitted to continue
servicing the Ally Bank portfolio, the repercussions could have a
devastating effect on their Chapter 11 cases.
In a separate statement, AFI and Ally Bank tell the Court that
the stipulation effectuates a comprehensive reservation of rights
on the key issue in dispute -- payment of the indemnification
obligation under the servicing agreement. To facilitate at least
temporary peace with respect to the Committee's objections, AFI
has agreed to fund the escrow. Ally tells the Court that entry
into the stipulation is yet a further accommodation that it is
providing to the Debtors to aid the Debtors' efforts to maximize
the value of their estates, which Ally hopes will assist its own
recoveries for the benefit of the United States taxpayers.
The Creditors' Committee tells the Court that it is pleased that
the parties have been able to reach a stipulation to avoid a
contested evidentiary hearing on the motion at this time and
permit the Debtors to move forward with the servicing agreement
without further delay and uncertainty. The Committee adds that
it supports the resolution now before the Court because it
permits the servicing relationship between Ally Bank and GMAC
Mortgage to continue through the sale process -- thereby
preserving the going-concern value of the Debtors' business
platform, minimizing any real or imagined risk to the Debtors'
asset sale process.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
ResCap is selling its mortgage origination and servicing
businesses and its legacy portfolio, consisting mainly of mortgage
loans and other residual financial assets. At the onset of the
bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC
for the mortgage origination and servicing businesses, and with
Ally Financial for the legacy portfolio. Together, the asset
sales are expected to generate roughly $4 billion in proceeds.
Following a hearing in June, the bankruptcy judge scheduled
auctions for Oct. 23. A hearing to approve the sales was set for
Nov. 5. Fortress Investment Group LLC will make the first bid for
the mortgage-servicing business, while Berkshire Hathaway Inc.
will serve as stalking-horse bidder for the remaining portfolio of
mortgages.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RG BRANDS: Moody's Raises Corporate Family Rating to 'B2'
---------------------------------------------------------
Moody's Investors Service has upgraded to B2 from B3 the corporate
family rating (CFR) and probability of default rating (PDR) of JSC
RG Brands (RG Brands), Kazakhstan's leading private food and
beverage company. The outlook on the ratings is stable.
Ratings Rationale
"The rating action was prompted by the fact that RG Brands has
recently delivered on financial targets, including a reduction in
leverage, measured as adjusted debt/EBITDA, to below 3.5x in the
last 12 months ended June 30, 2012 and the maintenance of an
adjusted EBITA margin and funds from operations /debt above 10% in
the past 18 months," says Sergei Grishunin, a Moody's Assistant
Vice President - Analyst and lead analyst for RG Brands.
The recent improvements in RG Brands' credit metrics were driven
by a decrease in its adjusted debt to KZT15.8 billion (around $105
million) as of June 30, 2012 from KZT21.2 billion (around $142
million) as of December 31, 2011. The improved metrics were also
driven by a strengthening of the company's profitability and cash
flow generation, on the back of (1) extensive product innovations,
reflected by the launch of new high-margin single-serve and high
value-added products, packaging and flavours, as well as improved
sales and marketing initiatives; (2) the gradual increase in the
level of disposable income among the population of Central Asia,
as a result of which more is being spent on food and beverages;
and (3) the company's penetration of markets of neighbouring
Commonwealth of Independent States (CIS) countries.
Moody's expects that RG Brands' operating performance will
continue to improve in line with its business plan. Specifically,
the rating agency expects that the company will be able to sustain
its credit metrics, including adjusted debt/EBITDA below 3.5x and
an adjusted EBITA margin and adjusted funds from operations
(FFO)/net debt above 10% in the next 12-18 months, while
maintaining a good liquidity position.
In Moody's view, RG Brands' liquidity position has improved since
2011. This improvement was underpinned by the company's stronger
cash flow generation and multi-year available committed
facilities. RG Brands has cash reserves, committed lines and
inflows of around KZT12,9 billion (approximately $86 million) over
the next 18 months (starting from Q3 2012). Moody's expects that
these reserves will be sufficient to cover the company's debt
maturities, working capital requirements and capital expenditure
(capex) in the same period. RG Brands' liquidity position may be
further enhanced by (1) the discretionary nature of the company's
capex; and (2) its historical ability to lease fixed assets
instead of purchasing them.
RG Brands' ratings continue to be constrained by (1) the company's
relatively small scale of operations in the global context; (2)
material related party transactions; and (3) its exposure to CIS-
related risk factors.
However, more positively, the ratings also assume that RG Brands
will continue to benefit from (1) its leading position in Central
Asian markets; (2) the diversified nature of its product
portfolio, which includes strong brand names; (3) the long-term
nature of its exclusive bottling agreement with PepsiCo; and (4)
its developed distribution network.
The stable outlook on RG Brands' ratings reflects the stable
macroeconomic environment in Kazakhstan and Moody's assumption
that the company and its industry should benefit from robust
growth for a number of years. The rating agency expects that this
growth will translate into improved company operating and
financial metrics, as per its business plan.
WHAT COULD CHANGE THE RATINGS UP/DOWN
Moody's does not envisage positive pressure being exerted on RG
Brands' rating in the next 12-18 months. Moody's would consider
upgrading the rating if RG Brands were to materially increase its
revenue generation while maintaining a meaningful market share in
key markets, as well as demonstrating further improvements in
financial metrics such as adjusted debt/EBITDA at below 2.5x and
FFO/debt above 30%. In addition, to consider a rating upgrade,
Moody's would expect RG Brands to maintain a satisfactory
liquidity position, and comply with all its debt covenants.
Conversely, the ratings could come under pressure if weaker-than-
anticipated conditions in RG Brands' key markets, or any other
credit factors such as financial policies including capital
outlays and/or dividend distributions, were to result in (1) its
adjusted debt/EBITDA increasing to, and remaining, above 3.5x; (2)
its adjusted EBITA margin declining to, and remaining, below 10%;
(3) its cash flow generation deteriorating and resulting in
FFO/debt falling below 10%; and (4) its liquidity position
eroding.
The principal methodology used in rating RG Brands was the "Global
Packaged Goods Industry" rating methodology, published in July
2009.
JSC RG Brands is a leading private food and beverage company with
its own manufacturing and distribution capacities. The company's
operations are predominantly in the Republic of Kazakhstan and
Central Asia. As of end-2011, RG Brands reported revenue of
approximately KZT31 billion (around US$220 million) and adjusted
EBITDA of KZT4.6 billion (approximately US$31 million).
RICHFIELD EQUITIES: Files for Chapter 11 to Sell All Assets
-----------------------------------------------------------
Richfield Equities, L.L.C., and its affiliates sought Chapter 11
protection (Bankr. E.D. Mich. Case Nos. 12-33788 to 12-33791) on
Sept. 18.
Richfield Equities is a vertically integrated solid waste
collection, transfer, disposal and recycling company that service
the southeast, central/mid, and "thumb" regions of Michigan. The
Debtors have two landfills, two transfer stations, and collection
and hauling operations. They have 233 full-time employees.
For the 12 months ending April 30, 2012, the Debtors recorded
gross revenue of $26.1 million and incurred net losses of
$2.5 million. The Debtors are projecting consolidated gross
revenue of $27.2 million for 2012.
The consolidated balance sheet shows assets of $37.1 million and
liabilities of $41.8 million as of April 30, 2012.
For loans provided prepetition, Comerica Bank is owed $18 million
plus contingent reimbursement obligations of $8.3 million under
letters of credit.
The Debtors blamed liquidity pressures on (a) increased disposal
expenses caused by record rainfall during the spring 2011 season,
(b) costs associated with disposal of recyclable materials, (c)
increased fuel prices, and (d) capacity constraints at their
landfills caused by insufficient or delayed funding for cell
construction resulting in significant overtime and fuel expenses.
For the last 15 months, the Debtors have been engaged in a process
to sell some or all of their assets and operations.
The Debtors intend to continue to pursue transactions for the sale
of substantially all of their assets in the Chapter 11 cases.
Sale Agreement by Sept. 28
The Debtors have arranged DIP financing from Comerica Bank. The
Debtors will use the loans to pay payroll and other operating
expenses, obtain needed supplies and pay for essential services,
and hire Chapter 11 professionals.
The bank will provide postpetition advances for operating expenses
provided that the amount outstanding under the prepetition
revolving credit will not exceed $10.6 million. The Debtors owe a
total of $9.1 million under the revolving credit as of the
Petition Date.
According to the budget, there will be $2.1 million in loan
advances during the four weeks ended Oct. 5, 2012.
In exchange for the use of DIP financing and use of cash
collateral, the Debtors agreed to make monthly interest payments
due on the prepetition notes to Comerica. On or before Sept. 28,
2012, the Debtor will execute a proposed purchase agreement for
the sale of substantially all assets, and file a sale motion.
Aside from the DIP financing, other first day motions include
requests to pay prepetition wages, continue insurance policies and
programs, and provide adequate assurance of payment to utilities.
The Debtors are seeking an extension of the deadline for the
schedules of assets and liabilities and statement of affairs,
saying that they intend to file those documents in 45 days.
The Debtors have tapped Carson Fischer, P.L.C. as bankruptcy
counsel; Huron Consulting Services, LLC's Jeffrey M. Beard as
chief restructuring officer; C. Thomas Toppin & Associates, P.c.
as general corporate and transactional counsel; and Kurtzman
Carson Consultants LLC as claims and notice agent.
An emergency hearing on the first day motions was scheduled for
Sept. 20 before Judge Daniel S. Opperman.
RICHFIELD EQUITIES: Case Summary & Largest Unsecured Creditor
-------------------------------------------------------------
Debtor: Richfield Equities, L.L.C.
1606 E. Webster Road
Flint, MI 48505
Bankruptcy Case No.: 12-33788
Chapter 11 Petition Date: September 18, 2012
Court: U.S. Bankruptcy Court
Eastern District of Michigan (Flint)
Judge: Daniel S. Opperman
Debtor's Counsel: Christopher A. Grosman, Esq.
CARSON FISCHER, P.L.C.
4111 Andover West, Second Floor
Bloomfield Hills, MI 48302-1924
Tel: (248) 644-4840
E-mail: BRCY@CarsonFischer.com
Estimated Assets: $500,001 to $1,000,000
Estimated Debts: $10,000,001 to $50,000,000
Affiliates that simultaneously filed for Chapter 11:
Debtor Case No.
------ --------
Richfield Landfill, Inc. 12-33789
Assets: $10,000,001 to $50,000,000
Debts: $10,000,001 to $50,000,000
Richfield Management, L.L.C. 12-33790
Waste Away Disposal, L.L.C. 12-33791
The petition was signed by Jeffrey M. Beard, chief restructuring
officer.
A. Richfield Equities' List of Its Largest Unsecured Creditors
contains only one entry:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Michigan Department of Treasury -- Unknown
P.O. Box 30199
Lansing, MI 4899-7699
B. Richfield Landfill's List of 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Michigan CAT -- $177,606
Dept. 77576
P.O. Box 7700
Detroit, MI 48277-0576
Mersino Dewatering Inc. -- $123,000
600 West Dryden
Metamora, MI 48455
Disposal Management -- $52,538
P.O. Box 1960
Birmingham, MI 48009
Test America Laboratories Inc. -- $33,687
State of Michigan -- $29,500
Polar Companies -- $20,031
Sprint -- $18,963
State of Michigan -- $16,000
NTH Consultants Ltd. -- $11,027
Kieft Engineering Inc. -- $10,359
TCF Equipment Finance Inc. -- $9,959
McDowell & Associates -- $7,945
Blue Skies Energy LLC -- $6,785
Richfield Township -- $6,763
Labor Ready Midwest Inc. -- $6,451
EQ ? The Environmental Company -- $6,014
Niswander Environmental LLC -- $5,677
Wilcox Professional Services -- $4,900
Goyette Mechanical -- $4,850
Bartniks Sales & Service -- $2,775
ROCKET SOFTWARE: Moody's Affirms 'B2' CFR; Rates Term Loan 'B1'
---------------------------------------------------------------
Moody's Investors Service has affirmed all the ratings of Rocket
Software, including the B2 corporate family rating, in
consideration of the company's plan to issue a $59 million
incremental first lien term loan under its existing bank facility.
The outlook is stable. Proceeds of the add-on term loan will fund
two moderately sized acquisitions. The acquisitions will be
complimentary in nature and bolster Rocket's back up products as
well as its mainframe integration and modernization solutions.
Although limited financial information pertaining to the two
target companies is available to Moody's, the debt financed
acquisition is in line with Moody's expectation of acquisition
activity and accommodated within Rocket's current rating level.
Ratings Rationale
Rocket Software Inc.'s B2 corporate family rating reflects the
company's relatively small size (approximately $270 million in LTM
June 2012 revenues, pro forma for the proposed acquisitions)
relative to its infrastructure software peers, acquisition
appetite and aggressive financial policies.
The company has modest organic growth prospects and the company
looks to strategic acquisitions for growth and improved market
position. Debt to EBITDA is moderate at approximately 4.2x on a
Moody's adjusted basis pro forma for the proposed incremental loan
and acquisitions. The ratings also consider the company's niche
position providing infrastructure software and tools for mainframe
and distributed markets, longstanding supply relationship with a
major OEM supplier, and relatively high proportion of recurring
revenues. The recurring nature of the company's revenue and cash
generating capabilities of the business should provide a good
ability to service debt even at higher than current levels. While
Moody's expects most acquisitions will be accomplished while
keeping leverage well below 5x, significant debt financed
acquisitions or equity distributions could result in downward
rating pressure.
Liquidity is very good post closing based on the company's free
cash flow generating capability, an undrawn $25 million revolver
and cash on hand. Moody's expects Rocket to demonstrate a free
cash flow to debt ratio in the mid to high single digit range by
mid 2013.
Moody's has assigned the following rating (and loss given default
(LGD) assessment):
$59 million first lien incremental term loan due February 2018,
assigned at B1, LGD3, 36%
Giving effect to the proposed incremental borrowing, Rocket's
ratings (and revised LGD assessments) include the following:
Corporate Family, affirmed at B2
Probability of Default, affirmed at B2
$25 million first lien revolver due February 2017, affirmed at
B1 LGD3, revised to 36% from 35%
$300 million first lien term loan due February 2018, affirmed at
B1, LGD3, revised to 36% from 35%
$105 million second lien revolver due February 2019, affirmed at
Caa1, LGD5, unchanged at 87%
Rating Outlook, Stable
The stable ratings outlook reflects Moody's expectation of modest
organic growth, but also accommodates a moderate acquisition
program. The ratings could face downward pressure if the company
pursues a large debt financed acquisition or equity distribution,
particularly if leverage exceeds 5.75x. Given the financial
policies of the company and its relatively small scale, an upgrade
is not likely in the near to medium term.
Ratings on the proposed debt instruments were determined in
conjunction with Moody's Loss Given Default Methodology and
reflect the instruments' respective position in the capital
structure.
The principal methodology used in rating Rocket Software Inc. was
the Global Software Industry Methodology published in May 2009.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Rocket Software Inc. is a provider of IT management software
tools. The company, based in Waltham, MA, generated approximately
$243 million in pro forma revenue as of LTM June 30 2012.
ROCKET SOFTWARE: S&P Affirms 'B+' CCR on Proposed Acquisitions
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Waltham, Mass.-based enterprise infrastructure
software provider Rocket Software Inc. The outlook is stable.
"At the same time, we affirmed our 'BB' issue-level rating on the
company's first-lien credit facilities comprising a $359 million
term loan (including the proposed $59 million incremental debt)
due 2018 and a $25 million revolving credit facility due 2017. The
'1' recovery rating remains unchanged and indicates our
expectation of very high (90%-100%) recovery in the event of
payment default," S&P said.
"We also lowered our issue-level rating on the company's $105
million second-lien term loan, due 2019 to 'B' from 'B+',
revising our recovery rating to '5' from '4'. The '5' recovery
rating indicates our expectation of modest (10%-30%) recovery in
the event of payment default," S&P said.
"The ratings on Rocket reflect the company's 'weak' business risk
profile marked by its niche position in the market for
infrastructure software and the presence of larger and better
funded competitors, and its 'aggressive' financial profile, with
pro forma leverage in the high-4x area; an acquisitive growth
strategy; and an ownership structure that, in our view, is likely
to preclude sustained de-leveraging. However, we expect that
meaningful recurring revenues, high renewal rates, and an
entrenched customer base will continue to support modest organic
revenue growth and consistent profitability," S&P said.
Rocket is proposing the acquisition of a data storage provider and
a mainframe integration and modernization business which will add
back-up and recovery, and mainframe access capabilities to its
product portfolio.
"We anticipate that the complementary nature of these capabilities
with the company's existing product offerings, combined with its
existing sales and distribution channels, will allow it to deliver
modest sales growth and cost efficiencies following the
acquisitions," said Standard & Poor's credit analyst Christian
Frank.
"The stable outlook reflects our expectation that Rocket's revenue
base will remain highly recurring and profitability will stay
stable. The company's niche market position, acquisitive growth
strategy, and an ownership structure that we believe will preclude
substantial de-leveraging limit a possible upgrade," S&P said.
"If competition from larger business rivals intensifies, leading
to pricing pressure, or if the company increases costs for R&D,
profitability could weaken. Also, the company could pursue debt-
financed acquisitions. We could lower the rating if these
scenarios cause Rocket's leverage to approach 6x," S&P said.
ROSEMAN UNIVERSITY: S&P Rates Series 2012 Bonds 'BB+'
-----------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' long-term
rating to the series 2012 bonds issued by the Public Finance
Authority, Wis. for Roseman University, located in Henderson,
Nev. and south Jordan, Utah.
"The stable outlook reflects our expectation that over the next
year, the university will have balanced operations on a full
accrual basis and maintain or strengthen financial resource ratios
consistent with the rating category," said Standard & Poor's
credit analyst Blake Cullimore. "The university does not expect to
issue additional debt for the next two years."
The 'BB+' rating reflects Standard & Poor's view of the
university's:
-- Very narrow enrollment profile for fall 2011, dominated by
pharmacy students mostly enrolled at the graduate level and an
expected fall 2012 enrollment of 1,250 students;
-- Relatively young age (founded in 1999) and while successful to
date, remains in a very high growth mode;
-- High tuition dependency with 87.6% of fiscal 2011 operating
revenues coming from tuition;
-- Low levels of expendable resources for the rating category;
-- Growing and unrestricted, but still small, endowment of $11
million as of fiscal 2011, and improving but still limited
fundraising success due to the university's young age and
limited alumni base; and
-- Maximum annual debt service (MADS) burden post issuance of
11.5% of fiscal 2011 expenses, but it should be partially
offset by the reduced expense of the lease.
Credit factors that support the rating include:
-- Very profitable niche programs (doctorate in pharmacy,
Bachelor of Science in Nursing, Doctor of Dental Medicine, and
Master of Business Administration in Health Services) with
little regional competition, partially offset by a stand-alone
structure and small full-time equivalent enrollment;
-- Positive operating performance with annual surpluses,
partially offset by a small deficit on a full accrual basis in
2012, but slightly positive on a cash basis (before
depreciation);
-- Reasonable levels of cash and investments relative to the
rating category; and
-- A unique business model, which should lead to growing margins
and growth in unrestricted net assets as the institution grows
and stabilizes.
Standard & Poor's could consider increased enrollment and net
operating margins on a full accrual basis as positive rating
factors. Credit factors that could result in a negative rating
action during the two-year outlook period include weaker
enrollment trends than current levels, deficit operations on a
cash basis, and declining financial resource ratios that limit
financial flexibility and lead to an inability to meet operating
and debt commitments.
ROTHSTEIN ROSENFELDT: Florida Jeweler to Disgorge $325,000
----------------------------------------------------------
Jacqueline Palank, writing for Dow Jones' Daily Bankruptcy Review,
reports that SPD Group Inc., which does business as J.R. Dunn
Jewelers, has agreed to pay $325,000 over the next two years to
settle a lawsuit aiming to recover $2.4 million that Scott
Rothstein paid it over the years.
DBR recounts that the July 2011 lawsuit alleged that Mr. Rothstein
used his law firm?s funds to rack up $2.4 million in personal
jewelry purchases -- including platinum earrings and Swiss watches
-- at J.R. Dunn between November 2005 and October 2009. DBR
relates that while the settlement is for less than half of what
the lawsuit sought, trustee Herbert Stettin said the terms are
favorable in light of the jeweler?s ability to finance a
"protracted" and expensive legal battle.
DBR says an Oct. 5 hearing has been scheduled in U.S. Bankruptcy
Court in Fort Lauderdale Florida to consider approval of the
settlement.
DBR also reports J.R. Dunn is helping to search for an 8.91-carat
diamond, one of the most valuable jewels that Mr. Rothstein?s
wife, Kim Rothstein, allegedly hid from the authorities. She
pleaded not guilty to the charges last week, according to the
South Florida Business Journal.
About Rothstein Rosenfeldt
Scott Rothstein, co-founder of law firm Rothstein Rosenfeldt Adler
PA -- http://www.rra-law.com/-- has been suspected of running a
$1.2 billion Ponzi scheme. U.S. authorities claimed in a civil
forfeiture lawsuit filed November 9, 2009, that Mr. Rothstein, the
firm's former chief executive officer, sold investments in non-
existent legal settlements. Mr. Rothstein pleaded guilty to five
counts of conspiracy and wire fraud on January 27, 2010.
Creditors of Rothstein Rosenfeldt Adler signed a petition sending
the Florida law firm to bankruptcy (Bankr. S.D. Fla. Case No.
09-34791). The petitioners include Bonnie Barnett, who says she
lost $500,000 in legal settlement investments; Aran Development,
Inc., which said it lost $345,000 in investments; and trade
creditor Universal Legal, identified as a recruitment firm, which
said it is owed $7,800. The creditors alleged being owed money
invested in lawsuit settlements.
Herbert M. Stettin, the state-court appointed receiver for
Rothstein Rosenfeldt, was officially carried over as the
Chapter 11 trustee in the involuntary bankruptcy case.
On June 10, 2010, Mr. Rothstein was sentenced to 50 years in
prison.
RR DONNELLEY: Moody's Cuts Unsecured Notes Ratings to 'Ba3'
-----------------------------------------------------------
Moody's Investors Service assigned a Baa2 rating to RR Donnelley &
Sons Company's new 5-year senior secured credit facility of up to
$1.25 billion. At the same time the company's unsecured notes were
downgraded to Ba3 from Ba2. The company's speculative grade rating
(SGL) was also downgraded to SGL-2 (good liquidity) from SGL-1
(very good liquidity). RR Donnelley's corporate family rating
(CFR) and probably of default ratings (PDR) remain unchanged and
were affirmed at Ba2. The outlook remains negative.
With the expected outstanding amount under the new facility being
no different than that under RR Donnelley's existing revolving
credit facility, the transaction is credit-neutral and RR
Donnelley's Ba2 CFR and PDR were affirmed. Since the new credit
facility benefits from a security package and is relatively small
compared to the company's pool of unsecured notes, its rating is
three notches higher, Baa2, than the company's Ba2 CFR.
Reciprocally, the same factors cause the unsecured pool to be
rated one notch below the CFR at Ba3. Lastly, since the new
revolving credit facility will impose standard limitations on the
application of asset sale proceeds, RR Donnelley's SGL rating was
downgraded to SGL-2 from SGL-1.
The following summarizes the rating actions and RR Donnelley's
ratings:
Issuer: R.R. Donnelley & Sons Company
Assignments:
Senior Secured Credit Facility, Baa2 (LGD1, 7%)
Ratings/Outlook Actions:
Corporate Family Rating, affirmed at Ba2
Probability of Default Rating, affirmed at Ba2
Speculative Grade Liquidity Rating, Downgraded to SGL-2 from
SGL-1
Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 (LGD4
- 67%) from Ba2 (LGD4 - 60%)
Senior Unsecured Shelf, Downgraded to (P)Ba3 from (P)Ba2
Outlook, Unchanged at Negative
Ratings Rationale
RR Donnelley's Ba2 ratings result from the interrelationship of
financial policies/leverage with difficult industry fundamentals.
The broadly defined commercial printing sector is in secular
decline and many segments are plagued by over-capacity and
fragmented competition that dramatically suppresses margins. In
addition, the visibility of forward activity levels is quite poor
and the timing and magnitude of future growth or secular decline
is highly uncertain. Activity levels are also susceptible to
rebound-less decline with each recession. The company's debt load
and dividend pay-out were sized prior to recent industry
contraction, and conversion of EBITDA into free cash flow has
become increasingly limited. The company's industry-leading
leading aggregate scale and product line and geographic
diversification are positive considerations, as is a highly
flexible cost structure that allowed RR Donnelley to remain cash
flow positive through-out the recent recession. The company's
solid liquidity profile is also credit-positive.
Rating Outlook
The outlook is negative given Moody's concerns about the secular
decline of the commercial printing industry combined with
management's historic bias towards shareholder returns vs.
reducing financial risks.
What Could Change the Rating - UP
Given adverse systemic influences and the negative outlook, a
near-term ratings upgrade is not anticipated. However, presuming
stronger industry fundamentals and continuing solid liquidity, a
ratings upgrade would be considered were FCF/TD to increase into
the 10%-to- 15% range; Moody's adjusted debt-to-EBITDA would
likely be in the 3.0x-to-3.5x range (all measures include Moody's
standard adjustments).
What Could Change the Rating - DOWN
The CFR may be downgraded if it is concluded that Debt/EBITDA
would not likely improve towards at least 3.75x (including Moody's
standard adjustments), likely caused by a lack of debt reduction.
A significant debt-financed acquisition and/or adverse liquidity
developments could also result in downward rating pressure.
The principal methodology used in rating RR Donnelley was the
Global Publishing Industry Methodology published in December 2011.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
RR DONNELLEY: S&P Affirms 'BB' Corp. Credit Rating; Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned Chicago, Ill.-based
R.R. Donnelley & Sons Co. (RRD) proposed senior secured revolving
credit facility of up to $1.25 billion its issue-level rating of
'BBB-' (two notches higher than the 'BB' corporate credit rating
on the company) with a recovery rating of '1', indicating S&P's
expectation of very high (90% to 100%) recovery for lenders in the
event of a payment default. The new revolver will replace the
existing $1.75 billion senior unsecured revolving credit facility,
which expires in December 2013. With $325 million drawn at June
30, 2012, additional availability under the current facility was
restricted to about $1 billion by outstanding balances on the
facility and the financial covenants as of June 30, 2012.
"At the same time, we revised our recovery rating on the company's
senior unsecured bonds to '4' (30% to 50% recovery expectation)
from '3' (50% to 70%) due to new secured debt reducing the total
value available to the unsecured debt. The 'BB' issue-level rating
on those bonds remains unchanged, as we do not notch our issue
ratings from the corporate credit rating for a recovery rating of
either '3' or '4'," S&P said.
"In addition, we have affirmed our 'BB' corporate credit rating on
RRD. The outlook is stable," S&P said.
"Our rating on R.R. Donnelley & Sons (RRD) reflects the company's
positive cash flow generation despite revenue declines, and our
expectation that leverage will decline to the high 3x area over
the near-term, provided that economic and pricing pressures do not
worsen," said Standard & Poor's credit analyst Tulip Lim.
"We regard the company's financial risk profile as 'significant'
(based on our criteria). Our 'fair' business risk profile reflects
RRD's market position and efficiencies associated with its
critical mass. The company faces secular declines in several of
its products and pricing pressure because of industry
overcapacity. We believe that these trends could cause RRD's
organic revenue to decline over the near term," S&P said.
"The printing industry has steadily lost ground to electronic
distribution of content and online advertising. As a result, it
has been afflicted by overcapacity, chronic pricing pressure, and
the need to continuously take out costs. RRD is the largest
participant in the industry, with broad-based services that
address a variety of end markets. RRD's size confers important
efficiencies, the capacity to provide one-stop service to clients,
the ability to invest in leading technology, and the ability to
cope with pricing pressure more successfully than many of its
competitors. Nevertheless, several of its important end markets,
notably the magazine, retail inserts, directory, and book
businesses, are subject to long-term adverse fundamentals.
Industry volume shrinkage is likely to continue to necessitate
capacity downsizing and restructuring charges," S&P said.
"Our base-case scenario incorporates our expectation that revenue
could decline at a low-single-digit percent rate for the full
year, despite recent customer wins. We believe that EBITDA will be
relatively flat this year. We assume modest EBITDA margin
expansion based on the potential for lower restructuring charges
in 2012 following high restructuring expenses in 2011 related to
the acquisition of Bowne & Co. Inc. We expect revenue could be
flat or decline at a low-single-digit percentage rate in 2013 and
for EBITDA to decline at a low- to mid-single-digit percentage
rate, which would cause EBITDA margin gains in 2012 to reverse,"
S&P said.
RYLAND GROUP: July and August Orders Up 62% vs. 2011
----------------------------------------------------
The Ryland Group, Inc., announced that orders for the first two
months of the third quarter of 2012 were up 62% compared to the
same two months of 2011. The Company garnered 564 orders in July
and 416 in August, compared to 324 orders in July of 2011 and 280
in August of 2011. The Company's recent acquisition of
Timberstone Homes added 141 orders to its July 2012 results. All
order numbers are net of cancellations.
"This information should not be considered indicative of results
for the full quarter," the Company said in a press release.
"While new orders are one of the many drivers of homebuilding
revenues, there are many other factors that impact the Company's
results and this information should not be construed as an
indication of homebuilding revenues, or of any other component of
the Company's revenues or expenses, for any period."
About Ryland Group
Headquartered in Calabasas, California, The Ryland Group, Inc.
(NYSE: RYL) -- http://www.ryland.com/-- is one of the nation's
largest homebuilders and a leading mortgage-finance company.
Since its founding in 1967, Ryland has built more than 285,000
homes and financed more than 240,000 mortgages. The Company
currently operates in 15 states and 19 homebuilding divisions
across the country and is listed on the New York Stock Exchange
under the symbol "RYL."
The Company reported a net loss of $50.75 million in 2011, a net
loss of $85.14 million in 2010, and a net loss of $162.47 million
in 2009.
The Company's balance sheet at June 30, 2012, showed $1.80 billion
in total assets, $1.32 billion in total liabilities and $485.67
million in total equity.
* * *
Ryland Group carries 'B1' corporate family and probability of
default ratings, with stable outlook, from Moody's. It has 'BB-'
issuer credit ratings, with stable outlook, from Standard &
Poor's.
RYLAND GROUP: Offering $250 Million of Senior Notes Due 2022
------------------------------------------------------------
The Ryland Group, Inc., filed with the U.S. Securities and
Exchange Commission a free writing prospectus relating to the
Company's offering of $250,000,000 of 5.375% Senior Notes due
2022.
Joint bookrunning managers of the offering are J.P. Morgan
Securities LLC and Citigroup Global Markets Inc. The co-managers
of the offering are Deutsche Bank Securities Inc. and Wells Fargo
Securities, LLC.
About Ryland Group
Headquartered in Calabasas, California, The Ryland Group, Inc.
(NYSE: RYL) -- http://www.ryland.com/-- is one of the nation's
largest homebuilders and a leading mortgage-finance company.
Since its founding in 1967, Ryland has built more than 285,000
homes and financed more than 240,000 mortgages. The Company
currently operates in 15 states and 19 homebuilding divisions
across the country and is listed on the New York Stock Exchange
under the symbol "RYL."
The Company reported a net loss of $50.75 million in 2011, a net
loss of $85.14 million in 2010, and a net loss of $162.47 million
in 2009.
The Company's balance sheet at June 30, 2012, showed $1.80 billion
in total assets, $1.32 billion in total liabilities, and
$485.67 million in total equity.
* * *
Ryland Group carries 'B1' corporate family and probability of
default ratings, with stable outlook, from Moody's. It has 'BB-'
issuer credit ratings, with stable outlook, from Standard &
Poor's.
SHERITT INT'L: DBRS Rates $400MM Senior Unsecured Notes 'BB(high)'
------------------------------------------------------------------
DBRS has assigned a provisional rating of BB (high) with a Stable
trend to the $400 million senior unsecured notes (the New Senior
Unsecured Notes) to be issued by Sherritt International
Corporation. Sherritt indicates that it will use the proceeds
from the notes issue to fund the redemption of all of the $225
million outstanding principal amount of the Company's 8.25% Senior
Unsecured Debentures Series B due October 24, 2014, and for
general corporate purposes. DBRS views Sherritt's new debt
issuance as a prudent funding initiative to resolve in a timely
manner the Company's need to fund the maturity of the 8.25% notes,
in light of ongoing uncertainty in commodity and financial markets
and, potentially, to help supplement its existing financial
resources as it seeks to ramp up its 40%-owned Ambatovy project in
Madagascar and to complete its other growth projects.
The New Senior Unsecured Notes are being offered by way of a
supplementary prospectus to the Company's short form base shelf
prospectus dated August 24, 2012. They will rank equally with
Sherritt's other senior, unsecured indebtedness.
The provisional rating is based on DBRS's review of a draft
preliminary prospectus supplement to its short form base shelf
prospectus received September 17, 2012, as well as Sherritt's
public security document filings, including its Q2 2012 report,
2011 Annual Information Form and 2011 annual report, and other
information provided by Sherritt to DBRS as of September 18, 2012.
The assignment of final ratings is subject to receipt by DBRS of
final documentation that is consistent with that which DBRS has
already reviewed.
SMART ONLINE: Entre-Strat Consultant R. Brinson Appointed CEO
-------------------------------------------------------------
Smart Online, Inc., announced that Mr. Dror Zoreff resigned as
Interim Chief Executive Officer and that Mr. Robert M. Brinson,
Jr., has been appointed as Chief Executive Officer.
Mr. Brinson will be employed by the Company pursuant to a services
agreement with Entre-Strat Consulting LLC for a one year period.
Entre-Strat will be paid $168,000 per year. Mr. Brinson's
individual compensation is dependent upon other factors, including
overhead, other resources utilized and other costs of operations.
Three and a half years after his appointment as Chairman and
Interim CEO, Mr. Dror Zoreff announced his resignation from the
position of Interim CEO effective immediately and as Chairman
effective Nov. 1, 2012. Mr. Zoreff advised the Board that he was
asked and agreed to join a national entrepreneurial consortium
effective as of the same date. Mr. Zoreff will continue to serve
on the Company's Board as a director and chair the Board's
Governance committee. The Board of Directors accepted Mr.
Zoreff's resignation and decided not to elect a new Chairman to
replace him. The Board resolved to hire Mr. Rob Brinson to serve
as the Company's CEO.
Mr. Zoreff stated: "Just short of three years ago, with the
departure of the company's former CEO, I agreed to assume, for a
short period of time, an additional responsibility, as the Interim
CEO, until such a time that a new CEO could be appointed. It took
longer than we all expected but such a time has finally arrived.
Now, with the possibility of appointment of my dear friend and
colleague, the distinguished and extremely talented Mr. Rob
Brinson, as the Company's CEO, I hereby submit my resignation from
this most challenging position with immediate effect. One year
ago I asked Rob to join the Board and help me transform Smart
Online to become a leading mobile solutions provider. Rob is the
right man to take the Company forward and successfully meet all
challenges ahead. I am leaving him with the best team possible;
under his leadership anything becomes possible."
For over 25 years, Mr. Brinson, as a Principal and consultant of
Entre-Strat Consulting, LLC, has excelled as a leader, parallel
entrepreneur and executive in businesses centered on the
development and commercialization of innovative and advanced
technologies. His experience ranges from start-up companies to
well-established enterprises in the areas of healthcare, science,
national defense & intelligence and consumer solutions. Mr.
Brinson has been integrally involved in national and industry
standards organizations, working groups, committees and taskforces
focusing on initiatives within his areas of expertise.
Additionally, with his involvement with other innovative
organizations, Mr. Brinson has accumulated considerable experience
in the intellectual property processes of concept expansion, due
diligence, protection and commercialization.
"Like I have said many times in the past, I believe that Smart
Online has a novel and dynamic solution that meets the ever
changing needs of the mobile industry and I am honored to lead and
be a part of this innovative environment," said Mr. Brinson. "I
believe that successful companies are grown by empowering a
talented team founded in integrity and dedication, who strive for
effective, efficient, leading edge performance and am looking
forward to working with just such a team," added Mr. Brinson.
About Smart Online
Durham, North Carolina-based Smart Online, Inc., develops and
markets a full range of mobile application software products and
services that are delivered via a SaaS model. The Company also
provides Web site and mobile consulting services to not-for-profit
organizations and businesses.
Cherry, Bekaert & Holland, L.L.P., in Raleigh, North Carolina,
expressed substantial doubt about Smart Online's ability to
continue as a going concern, following the Company's results for
the fiscal year ended Dec. 31 2011. The independent auditors
noted that the Company has suffered recurring losses from
operations and has a working capital deficiency as of Dec. 31,
2011.
The Company's balance sheet at June 30, 2012, showed $1.49 million
in total assets, $26.38 million in total liabilities, and a
$24.88 million total stockholders' deficit.
SOTHEBY'S: Moody's Rates New $300MM Senior Unsecured Notes 'Ba3'
----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Sotheby's
proposed $300 million senior unsecured notes and affirmed all
existing ratings with a stable outlook. The proceeds from the
proposed senior unsecured notes will be used to redeem the
existing $79 million 7.75% senior unsecured notes due 2015 in the
near term. The proceeds will also be used for general corporate
purposes including the repayment of the $200 million 3.125% senior
convertible notes due June 2013 when they come due. The rating on
the proposed senior notes is contingent upon the successful
completion of the transaction and review of final terms and
conditions.
The following rating is assigned:
$300 million senior unsecured notes due 2022 at Ba3 (LGD 5, 75%)
The following ratings are affirmed with point estimates changed:
Corporate family rating at Ba2
Probability of default rating at Ba2
Senior convertible notes due June 2013 at Ba3 (LGD 5, to 75%
from 79%)
The following rating is affirmed to be withdrawn upon successful
conclusion of the transactin and completion of the redemption:
Senior unsecured notes due 2015 at Ba3 (LGD 5, to 75% from 79%)
Ratings Rationale
Moody's views the proposed offering as a credit positive event as
it extends Sotheby's near term maturities to 2022. The affirmation
of Sotheby's Ba2 Corporate Family Rating reflects that the
increase in leverage will only be temporary as Sotheby's intends
to repay the 2013 maturity of its senior convertible notes when
they come due. Moody's estimates that debt to EBITDA pro forma for
the transaction for the year ending December 31, 2012 will likely
be 3.1 times compared to 2.4 times currently.
The Ba2 Corporate Family Rating reflects Moody's view that
Sotheby's will maintain enough liquidity and financial flexibility
at its current rating to weather future cyclical downturns and the
temporary declines in operating performance and credit metrics
that typically accompany these downturns. Sotheby's Ba2 Corporate
Family Rating is also supported by the company's strong
qualitative factors which include its well known expertise in a
highly specialized industry characterized by high barriers to
entry. Also considered is the company's balanced financial policy
of a moderate level of funded debt, very good liquidity, and a
modest dividend. Ratings improvement, however, is limited due to
Moody's opinion that Sotheby's performance remains exposed to
dramatic swings due to the high cyclicality of the art auction
market.
The stable outlook reflects Moody's belief that Sotheby's will
maintain very good liquidity and balanced financial policies
providing the company with the ability to weather the high
cyclicality of the international auction market.
The rating on the senior unsecured notes reflects both the overall
probability of default, at Ba2, and a loss given default of LGD5.
The new senior unsecured notes are rated one level below the
Corporate Family Rating reflecting their junior position to the
$200 million senior secured revolving credit facility and the $232
million in secured mortgage financing, as well as their size and
scale in the capital structure.
Given the high cyclicality of the international auction market,
upwards rating pressure is limited. Since there is a direct
correlation between Sotheby's operating performance and the size
of the total auction market, an upgrade would require the auction
market to demonstrate greater stability that results in more
resilience in Sotheby's operating performance. In addition, an
upgrade would require Sotheby's to maintain good liquidity and
balanced financial policies.
A downgrade could result should Moody's becomes concerned that
Sotheby's presently good liquidity weaken and become insufficient
to support the company through a cyclical downturn in the auction
market. Ratings could also be downgraded should financial policy
become more aggressive, should Sotheby's market position erode, or
should Moody's has reason to believe that the auction market is
likely to face a protracted structural downturn.
The principal methodology used in rating Sotheby's was the Global
Retail Industry Methodology published in June 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Sotheby's, headquartered in New York NY, is one of the two largest
auction houses in the world. Total revenues are over $750 million.
SPRINGFIELD PROPERTIES: Has Until October 21 to File Plan
---------------------------------------------------------
Chapetr11cases.com reports the Hon. Susan D. Barretti of the U.S.
Bankruptcy Court for the Southern District of Georgia extended the
exclusive periods of Springfield Properties LLLP, and John and
Rebecca Whigham, to file a Chapter 11 plan until Oct. 31, 2012,
and solicit acceptances of that plan until Jan. 4, 2013.
According to the report, on Aug. 28, 2012, a hearing was held on
Debtors' motion to extend the exclusivity period and the objection
filed by the Bank of Eastman. Mr. Whigham testified that in the
several months prior to the initial 120-day exclusivity deadline,
he has been working with his bankruptcy counsel, negotiating with
the Bank of Eastman and trying to determine which assets to
liquidate to adequately fund the chapter 11 plan. Assets of non-
debtor entities owned by the Whighams may be used to fund the
bankruptcy plan.
The report relates Mr. Whigham also stated the Debtors would file
their initial chapter 11 plan on Aug. 31, 2012 and would propose
to pay all creditors in full overtime. He also testified the plan
proposes to pay the Bank of Eastman $500,000 shortly after
confirmation with the Bank of Eastman's remaining debt to be paid
over time. He and his counsel acknowledged continued negotiations
with the Bank of Eastman would most likely be necessary.
Based in East Dublin, Georgia, Springfield Properties, LLP, filed
for Chapter 11 bankruptcy protection (Bankr. Case No. 12-30124) on
April 4, 2012. Ward Stone, Jr., Esq., at Stone & Baxter, LLP,
represents the Debtors. The Debtors disclosed assets of less than
$50,000, and debts of between $1 million and $10 million.
TONY MIJARES: Florida Developer Files for Chapter 11 Bankruptcy
---------------------------------------------------------------
Paul Brinkmann, reporter at South Florida Business Journal,
reports that South Florida developer Tony Mijares has filed a
personal Chapter 11 bankruptcy that lists guaranties on loans
totaling $84.5 million as liabilities.
According to the report, the largest loan is from City National
Bank -- $34.1 million for the Bella Vista condominium project in
Lauderdale Lakes. Mr. Mijares had been a principal of Miami
Lakes-based United Homes International, among other companies.
His bankruptcy petition listed loans from six different lenders on
projects from Stuart to Homestead.
The report relates the case is evidence that, while bankruptcy
filings have slowed this year, fallout from the real estate crash
of 2007 is still appearing.
The report notes Jerry Markowitz, Mr. Mijares' bankruptcy
attorney, said the pace of new bankruptcies has slowed
considerably this year but there are still some real estate
workouts in progress. The bankruptcy is mostly about seeking
modifications on existing loans, Mr. Markowitz said.
"He has worked out deals with a number of lenders, but there are a
few that he hasn't been able to reach agreement with," the report
quotes Mr. Markowitz as saying.
The report says, besides the City National loan, the following
loans are listed on Mr. Mijares' petition:
-- $15.7 million, Banco Popular, Santa Barbara Townhomes in
Homestead;
-- $4.7 million, BankUnited, Mediterania in North Lauderdale and
St. Moritz Townhomes in Tamarac;
-- $9.5 million, Fiorilli Finance Ltd. of British Virgin
Islands, Bella Vista and Village Park;
-- $13.9 million, Great Florida Bank, Village Park and
Celebration Pointe in Margate; and
-- $6.6 million, Marchi Mariners Garden Circle Note LLC of Coral
Gables, Mariner Village Townhomes in Stuart
The report adds that in March 2010, Miami-based City National Bank
of Florida filed foreclosure against United Homes' Bella Vista
subsidiary. The bank gave United Homes a $44 million loan in late
2007 to build the mixed-use project.
The report says, in October 2009, Banco Popular North America
filed a $16 million foreclosure lawsuit against Santa Barbara
Townhomes, targeting 163 unsold residential units. The
foreclosure also targeted managing members Mijares and Silvio
Cardoso, another executive of United Homes International.
TRAINOR GLASS: Hires Hilco Fixed Asset Recovery to Sell FF&E
------------------------------------------------------------
Trainor Glass Company, doing business as Trainor Modular Walls,
Trainor Solar, and Trainor Florida, has sought and obtained
approval from the U.S. Bankruptcy Court to employ Hilco Fixed
Asset Recovery, LLC, to sell certain furniture, fixtures, and
equipment. At the request of the Debtors, the Court also has
authorized the sale of the FF&E free and clear of all liens,
claims, interests and encumbrances.
As agreed by the parties, the sale was to begin Sept. 1 and would
conclude Sept. 30. The sale of FF&E would take place at Michigan
City, Indiana. At no cost to Hilco, the Debtor would provide all
occupancy services including, but not limited to, rent, alarm
system and utilities during the course of the sale.
As compensation for its services, Hilco would receive a fee on
gross sales as:
Gross Sales Fee to Hilco
----------- ------------
Up to $100,000 20% of gross sales
Over $100,000 15% of gross sales over $100,000
The Debtor would be responsible for all reasonable out-of-pocket
expenses.
Hilco's Ian S. Fredericks attests the firm is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code.
About Trainor Glass
Trainor Glass Company, doing business as Trainor Modular Walls,
Trainor Solar, and Trainor Florida, filed for Chapter 11
bankruptcy (Bankr. N.D. Ill. Case No. 12-09458) on March 9, 2012.
Trainor was founded in 1953 by Robert J. Trainor Sr. to pursue a
residential glass business in Chicago, Illinois. Trainor's
business model was focused on quality fabrication, design,
engineering, and installation of glass products and framing
systems in virtually every architectural application, including
(a) new construction, (b) green-building solutions, (c) building
rehabilitation, (d) storefronts and entrances, (e) tenant
interiors, and (f) custom-specialty work.
The Hon. Carol A. Doyle oversees the Chapter 11 case. David A.
Golin, Esq., Michael L. Gesas, Esq., and Kevin H. Morse, Esq., at
Arnstein & Lehr LLP, serve as the Debtor's counsel. High Ridge
Partners, Inc., serves as its financial consultant.
The Debtor scheduled $14,276,745 in assets and $64,840,672 in
liabilities.
A three-member official committee of unsecured creditors has been
appointed in the case. The committee retained Sugar Felsenthal
Grais & Hammer LLP as counsel.
TRANSTAR HOLDING: S&P Lowers CCR to 'B' on Higher Leverage
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Cleveland-based auto parts distributor Transtar Holding Co.,
including the corporate credit rating to 'B' from 'B+'. The
outlook is stable.
"At the same time, we assigned our issue-level and recovery
ratings to the company's proposed $510 million senior secured
credit facility, comprising a $50 million revolving credit
facility due 2017, a $295 million first-lien term loan due 2018,
and a $165 million second-lien term loan due 2019. We rated the
revolver and first-lien term loan 'B+' (one notch above the
corporate credit rating), with a recovery rating of '2',
indicating our expectation of substantial (70% to 90%) recovery
for lenders in the event of a payment default. We rated the
second-lien term loan 'CCC+' (two notches below the corporate
credit rating), with a recovery rating of '6', indicating our
expectation of negligible (0% to 10%) recovery for lenders in the
event of a payment default," S&P said.
"The company will use proceeds of the term loans and $10 million
of existing cash to repay outstanding borrowings under the
company's existing credit facility and fund a special dividend to
the equity sponsor of $91 million," S&P said.
"The downgrade reflects the increase in leverage as a result of
the proposed debt-financed dividend transaction," said Standard &
Poor's credit analyst Robyn Shapiro. "We now view Transtar's
financial risk profile as 'highly leveraged,' based on the
expectation that pro forma debt to EBITDA (adjusted to include
operating leases) will be about 7x. Additionally, the automotive
aftermarket has experienced general softness through the second
quarter of 2012, despite a slight increase in miles driven. In our
view, the most significant variable in Transtar's credit profile
in the near term will be the extent of the owner's focus on debt
reduction, as we expect the company to continue its track record
of generating free cash flow."
"The rating on Transtar reflects Standard & Poor's expectation
that the company will maintain its operating performance in line
with recent history, including good margins that exceed those of
other rated aftermarket distribution companies in the mid-teens
percentage area. Given the company's good margins and low capital
expenditure requirements, we expect continued positive free cash
flow generation over the next few years. Still, these
characteristics have not led to lower leverage yet. Private-equity
firm Friedman Fleischer & Lowe acquired Transtar in 2010 and
controls the company," S&P said.
"We view the business risk profile as 'weak' based on its exposure
to the fragmented and competitive transmission parts aftermarket.
However, the business risk profile assessment benefits from
Transtar being the largest light-vehicle aftermarket transmission
parts distributor in the U.S. and its good margins. Transtar also
competes in the auto body repair supply segment, and, though gross
margins are attractive, Transtar is not the market leader," S&P
said.
"Still, the company is midsized compared with some other rated
distribution companies. We believe competition in Transtar's main
product lines is based on service and price. The company's margins
are stronger than those of many rated aftermarket distributors,
pointing to its ability to aggregate a massive number of parts for
customers and provide good service," S&P said.
"Competitive strengths include a geographic footprint broader than
those of its competitors and a wide array of products. These
factors help Transtar obtain accounts with a wide range of
customers, from national accounts to local repair shops. Within
its narrow scope of businesses, Transtar has good customer,
supplier, and geographic diversity. The company said that no
single customer accounted for more than 5% of total sales, and no
supplier provided more than about 13% of the cost of goods sold.
In addition, we view Transtar's information systems as an
important competitive strength because these systems manage a
substantial portion of the distribution network and process more
than 10,000 transactions per day," S&P said.
"Sales in the U.S. auto aftermarket (excluding tire sales) have
historically been fairly recession-resilient compared with new-
vehicle-related sales and have grown by single-digit percentages
yearly. However, more recently, unemployment remains high,
consumer sentiment volatile, and data from the U.S. Department of
Transportation's Federal Highway Administration indicates that
the number of miles driven remains less than the 2005 peak. The
weak economy and volatile gas prices caused consumers to drive
less and defer discretionary maintenance in recent years, whereas
in previous years, consumer maintenance purchases provided slight
revenue growth," S&P said.
Transtar's financial risk profile is "highly leveraged." "Low
capital expenditures, coupled with manageable working capital
requirements, should enable the company to continue generating
free cash flow. We assume Transtar will generate positive free
cash flow (before any required cash flow sweep for debt reduction)
at about the low-double-digit million area annually. The ratings
account for the potential for smaller acquisitions from available
cash flow," S&P said.
"Our stable rating outlook on Transtar reflects our belief that
the company can maintain its good EBITDA margins and positive free
cash flow and that leverage will decline in the 12 months ahead.
We estimate this would require modest revenue growth in 2012 and
maintenance of historical profitability and capital spending
levels," S&P said.
"We could lower the rating if free cash flow generation turns
negative or if we believed debt to EBITDA will increase further.
For example, we estimate that adjusted debt to EBITDA could remain
above 7x during the next year if Transtar does not reduce debt,
gross margins fall by about 100 basis points, and revenue growth
is limited," S&P said.
"Although less likely during the next year, we could consider a
one-notch upgrade if business fundamentals are healthy and
adjusted debt to EBITDA trends toward 5x," S&P said.
TRIDENT MICROSYSTEMS: Files First Amended Ch. 11 Liquidation Plan
-----------------------------------------------------------------
BankruptcyData.com reports that Trident Microsystems filed with
the U.S. Bankruptcy Court a First Amended Chapter 11 Plan of
Liquidation and related Disclosure Statement.
"Since the commencement of these Chapter 11 Cases, the Debtors and
the Cayman Liquidators (and previously, the JPLs) have engaged in
efforts to solicit a plan of liquidation that would be agreeable
to all of the Debtors' Creditors and holders of Equity Interests
and bring about consensus on certain contentious issues relating
to the formulation and consummation of the Plan. Owing to these
extensive efforts, the Debtors, the Cayman Liquidators, the
Creditors Committee and the Equity Committee have entered into the
Plan Support Agreement, the terms of which resolve for, or carve-
out, all material litigation issues, eliminate the uncertainty,
time delay and substantial costs that may be posed by litigating
these complex, cross-border issues and, most critically, provide
the Class 2.A. Creditors (the General Unsecured Creditors of TMFE
not including the Debtors' Affiliates) with a substantially
enhanced recovery than they would be entitled to under the
Bankruptcy Code's priority of payment regime. Thus, the Plan and
this accompanying Disclosure Statement encompasses the terms of
the Plan Support Agreement, which the Debtors believe will provide
the most efficient, cost-effective and equitable liquidation of
the Debtors and their Estates," according to the Disclosure
Statement obtained by BankruptcyData.com.
The Court scheduled an Oct. 22, 2012, hearing to consider the
Disclosure Statement.
About Trident Microsystems
Sunnyvale, California-based Trident Microsystems, Inc., currently
designs, develops, and markets integrated circuits and related
software for processing, displaying, and transmitting high quality
audio, graphics, and images in home consumer electronics
applications such as digital TVs, PC-TV, and analog TVs, and set-
top boxes. The Company has research and development facilities in
Beijing and Shanghai, China; Freiburg, Germany; Eindhoven and
Nijmegen, The Netherlands; Belfast, United Kingdom; Bangalore and
Hyderabad, India; Austin, Texas; and Sunnyvale, California. The
Company has sales offices in Seoul, South Korea; Tokyo, Japan;
Hong Kong and Shenzhen, China; Taipei, Taiwan; San Diego,
California; Mumbai, India; and Suresnes, France. The Company also
has operations facilities in Taipei and Kaoshiung, Taiwan; and
Hong Kong, China.
Trident Microsystems and its Cayman subsidiary, Trident
Microsystems (Far East) Ltd. filed for Chapter 11 bankruptcy
protection (Bankr. D. Del. Lead Case No. 12-10069) on Jan. 4,
2011. Trident said it expects to shortly file for protection in
the Cayman Islands.
Judge Christopher S. Sontchi presides over the case. Lawyers at
DLA Piper LLP (US) serve as the Debtors' counsel. FTI Consulting,
Inc., is the financial advisor. Union Square Advisors LLC serves
as the Debtors' investment banker. PricewaterhouseCoopers LLP
serves as the Debtors' tax advisor and independent auditor.
Kurtzman Carson Consultants is the claims and notice agent.
Trident had $310 million in assets and $39.6 million in
liabilities as of Oct. 31, 2011. The petition was signed by David
L. Teichmann, executive VP, general counsel & corporate secretary.
Pachulski Stang Ziehl & Jones LLP represents the Official
Committee of Unsecured Creditors. The Committee tapped to retain
Fenwick & West LLP as its special tax and claims counsel, Imperial
Capital, LLC, as its investment banker and financial advisor.
Dewey & Leboeuf as represents the statutory committee of equity
security holders. The statutory committee tapped to retain
Campbells as Cayman Islands counsel, and Quinn Emanuel Urquhart &
Sullivan, LLP as its conflicts counsel.
TRIMAS CO: Moody's Rates $650-Mil. Sr. Secured Facility 'Ba3'
-------------------------------------------------------------
Moody's Investors Service rated TriMas Company LLC's new $650
million senior secured credit facility Ba3 and affirmed the
company's Ba3 CFR and PDR as well as its SGL-2 Speculative Grade
Liquidity rating. The rating outlook was changed to positive from
stable.
Ratings Rationale
The new $650 million senior secured credit facilities are being
issued by TriMas Company LLC, a wholly owned subsidiary of TriMas
Corporation who is guaranteeing the notes. The issuance will be
comprised of a $150 million Term Loan A, $250 million Term Loan B,
and a $250 million revolving credit facility. The proceeds will
primarily be used to refinance the company's current indebtedness.
Upon the close of the transaction the ratings on the previously
rated facilities will be withdrawn. The affirmation of the
company's CFR and PDR at Ba3 reflect the company's good credit
metrics for the ratings category and the expectation for continued
improvement. The ratings consider the company's conglomerate
nature and its niche position in various businesses.
The change in TriMas ratings outlook to positive reflects the
company's improving leverage with debt to EBITDA of 2.9 times for
the 12 month period ending June 30, 2012 on a Moody's adjusted
basis, and EBITA to interest coverage of 3.9 times (as adjusted)
for the same period. Although a large percent of the company's
products are discretionary in nature and would be affected
meaningfully if the economy weakens further, the ratings benefit
from a broad mix of industry verticals that provide end-market and
product diversity and the company's solid performance since the
2009 downturn and the expectation for continued deleveraging. The
ratings are constrained by the cyclicality of the company's
operating performance demonstrated by the sharp decline in
revenues and profitability during the recent economic downturn,
pressures from a weakening European economy and the likelihood of
slow growth in the U.S.
Assignments:
Issuer: TriMas Company LLC
Senior Secured Bank Credit Facilities, Assigned Ba3
(LGD3, 44%)
Outlook Actions:
Issuer: TriMas Company LLC
Outlook, Changed To Positive From Stable
Issuer: TriMas Corporation
Outlook, Changed To Positive From Stable
CFR affirmed at Ba3
PDR affirmed at Ba3
Speculative Grade Liquidity Rating affirmed at SGL-2.
The company's Speculative Grade Liquidity Rating was affirmed at
SGL-2, reflecting Moody's view that the company has good
liquidity. The company's liquidity benefits from positive cash
flow, meaningful revolver availability and adequate cushion under
financial maintenance covenants.
To be considered for a higher rating, the company should
demonstrate sustained organic revenue growth, improving margins,
sustainable debt to EBITDA below 2.5 times and EBITA to interest
coverage over 5 times. Also important to positive rating traction
is good liquidity including effective working capital management,
and consistent good performance across the company's diverse
businesses.
The rating could be downgraded if the company's leverage (debt to
EBITDA) was to increase to over 3.75 times, or if its free cash
flow to debt was anticipated to be below 7.0%, both on a sustained
basis.
The principal methodology used in rating TriMas was the Global
Manufacturing Industry Methodology, published December 2010. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
TriMas Corporation is a diversified industrial manufacturer. The
Company is engaged in five business segments with diverse products
and market channels in packaging, energy, aerospace & defense,
engineered components and Cequent. Last twelve months revenues
through June 30, 2012 totaled approximately $1.17 billion.
TRIMAS CO: S&P Rates Proposed $650MM Credit Facilities 'BB'
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' senior
secured debt issue ratings and '2' recovery rating to Bloomfield
Hills, Mich.-based TriMas Co. LLC's $650 million credit
facilities. TriMas Co. LLC is the wholly owned subsidiary of
TriMas Corp., which plans to use the proceeds from the facilities
to repay existing bank lines and to fund the repayment of its
existing outstanding senior secured notes due 2017.
"The recovery rating on the proposed first-lien credit facilities
is '2', indicating our expectation of substantial (70%-90%)
recovery in the event of a default," S&P said.
"The existing ratings on the industrial manufacturer remain
unchanged, including the corporate credit rating of 'BB-'. Our
outlook is stable," S&P said.
"The ratings on TriMas reflect our view of its 'fair' business
risk profile and 'aggressive' financial risk profile. The company
has maintained good credit ratios due to steady free cash flow
generation and continued focus on debt reduction. TriMas'
operating performance should continue to benefit from moderating
demand in the company's global industrial markets in 2012 and
further improvement in productivity and efficiency. The company's
focus on cost containment and working capital investment led to
EBITDA margin improvement to about 18% as of June 30, 2012,
compared with an average 15% over the past three years. We expect
revenue growth in the mid- to high-single-digits and modest
improvement in EBITDA margin for 2012. This could likely result in
adjusted leverage of less than 3x. We further expect that TriMas
will maintain its credit measures while it expands through
acquisitions," S&P said.
"The outlook is stable. We expect TriMas to perform well this year
considering the current global industrial conditions, and our
ratings assume revenue growth in the mid- to high-single-digit
area in fiscal 2012, along with steady margin performance. We also
expect TriMas to use some of its consistent free cash flow on
acquisitions to complement organic growth, while maintaining
adjusted total debt to EBITDA leverage of 3.5x to 4.0x," S&P said.
RATINGS LIST
TriMas Corp.
Corporate Credit Rating BB-
/Stable/--
New Ratings
TriMas Co. LLC
$250 mil. revolving credit
facility due 2017 BB
Recovery rating 2
$150 mil. term loan due 2017 BB
Recovery rating 2
$250 mil. term loan due 2019 BB
Recovery rating 2
UNITED RETAIL: Judge Confirms Chapter 11 Plan After Sale
--------------------------------------------------------
Lisa Uhlman at Bankruptcy Law360 reports that U.S. Bankruptcy
Judge Stuart M. Bernstein on Tuesday confirmed a Chapter 11 plan
for Redcats USA Inc.'s high-end women's clothing retailer United
Retail Group Inc. following a Versa Capital Management LLC unit's
April purchase of its assets in a Section 363 sale.
According to Bankruptcy Law360, Judge Bernstein confirmed the
plan, which calls for the liquidation of what's left of the debtor
after the sale to Versa affiliate Ornatus URG Acquisition LLC, a
sale that created a new company called Avenue Stores LLC.
About United Retail Group
United Retail Group Inc., owner of the Avenue brand of women's
fashion apparel and a subsidiary of Redcats USA, sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 12-10405) on Feb. 1,
2012, as it seeks to sell the business to Versa Capital Management
for $83.5 million, subject to higher and better offers.
The Company's legal advisor is Kirkland & Ellis LLP; AlixPartners
LLP serves as restructuring advisor and Peter J. Solomon Company
serves as financial advisor and investment banker; and Donlin
Recano & Company Inc. is the notice, claims and administrative
agent. Versa Capital's legal advisor is Sullivan & Cromwell LLP.
Avenue has 433 stores and an e-commerce site --
http://www.avenue.com/. Avenue employs roughly 4,422 employees,
roughly 294 of which are located at Avenue's corporate
headquarters in Rochelle Park, New Jersey or at the Troy
Distribution Facility. The Company disclosed $117.2 million in
assets and $67.3 million in liabilities as of the Chapter 11
filing.
Cooley LLP serves as counsel for the Official Committee of
Unsecured Creditors.
US FIDELIS: Former Owner Gets 3 Years for $70MM Refunds Fraud
-------------------------------------------------------------
Max Stendahl at Bankruptcy Law360 reports that U.S. District Judge
Catherine D. Perry on Tuesday sentenced Cory Atkinson, the former
owner U.S. Fidelis Inc., to 40 months in prison on charges
stemming from his theft of as much as $71 million in customer
refunds.
Judge Perry also ordered Ms. Atkinson to pay $4.5 million in back
taxes to the IRS, prosecutor John M. Bodenhausen confirmed to
Law360.
About US Fidelis
Wentzville, Missouri-based US Fidelis, Inc., was a marketer of
vehicle service contracts developed by independent and unrelated
companies. It stopped writing new business in December 2009.
The Company filed for Chapter 11 bankruptcy protection (Bankr.
E.D. Mo. Case No. 10-41902) on March 1, 2010. Brian T. Fenimore,
Esq., Crystanna V. Cox, Esq., James Moloney, Esq, at Lathrop &
Gage L.C., in Kansas City, Mo.; and Laura Toledo, Esq., at Lathrop
& Gage, in Clayton, Mo., advise the Debtor. GCG, Inc., is the
consumer claims and noticing agent.
Allison E. Graves, Esq., Brian Wade Hockett, Esq., and David A.
Warfield, Esq., at Thompson Coburn LLP, in St. Louis, Mo.,
represent the Official Unsecured Creditors Committee.
The Company scheduled assets of $74.4 million and liabilities of
$25.8 million as of the petition date.
US XPRESS: S&P Rates Proposed $230MM Senior Secured Facility 'B'
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' rating to
Chattanooga, Tenn.-based US Xpress Enterprises Inc.'s proposed
$230 million senior secured credit facility. "We assigned a '4'
recovery rating to the facility to reflect our expectation that
lenders would receive average (30%-50%) recovery in a payment
default," S&P said.
"The proposed senior secured facility is composed of a $40 million
revolving credit facility due 2015 and a $190 million term loan B
due 2016. The company will use proceeds from the proposed debt
issue to repay existing indebtedness. In addition, the transaction
will grant US Xpress additional covenant headroom under the
proposed covenants," S&P said.
"The ratings on US Xpress reflect the company's highly leveraged
capital structure and the intensely competitive, highly fragmented
cyclical truck-load (TL) market in which it operates. US Xpress'
significant business position as a major TL carrier with good
customer, end-market, and geographic diversity partially offsets
these factors. We categorize its business profile as 'weak,' its
financial profile as 'aggressive,' and its liquidity as 'adequate'
under our criteria," S&P said.
"The company's earnings have stabilized as a result of more
balanced supply and demand as well as better pricing in the
trucking sector. Still, the U.S. economy remains weak, and we
continue to expect slow GDP growth, particularly during the second
half of 2012. For the 12 months ended June 30, 2012, credit
metrics are within expectations for the ratings with funds from
operations (FFO) to total debt at 20%, EBITDA interest coverage at
2x, and debt to EBITDA at 6x," S&P said.
"Over the next few quarters, we expect slow GDP growth, higher
fuel costs, and wages to constrain earnings in the TL sector. We
could lower our ratings if earnings deterioration leads to FFO to
debt falling into the midteen percent area on a sustained basis or
if the proposed financing does not materialize. Alternatively, we
could revise the outlook to stable if consistent earnings
improvement results in debt to EBITDA declining below 4.5x on a
sustained basis or if covenant cushion improves based on
completion of the proposed transaction and revised covenant
levels," S&P said.
RATINGS LIST
US Xpress Enterprises Inc.
Corporate Credit Rating B/Negative/--
New Ratings
US Xpress Enterprises Inc.
$230 mil sr secd credit facility B
Recovery Rating 4
VANN'S INC: Issues 60-Day Layoff Notice; To Close All Stores
------------------------------------------------------------
Rob Chaney at the Missoulian reports that Vann's Inc. has given
its Missoula employees 60-day layoff notices, signaling the end
for the 51-year-old electronics and appliance store.
"We've been trying to restructure under Chapter 11 (bankruptcy
rules) and we have an obligation to let the judge know that unless
somebody is willing to put in $3 million to $5 million for
inventory, we can't do it," the report quotes Vann's chief
executive officer Jerry McConnell as saying. "So we are
requesting conversion to orderly liquidation under Chapter 11."
The report says all Vann's stores will be closed. Federal law
requires businesses to give a 60-day closure notice if they employ
more than 50 people; thus, the formal layoff notices given to
Vann's employees in Missoula. Mr. McConnell said workers at the
other stores will be laid off on the same schedule.
The report notes Vann's stores will remain open as usual while the
company submits its liquidation plan to a bankruptcy judge. Mr.
McConnell said he expects a decision by Oct. 2, after which it
will begin winding down in earnest.
According to the report, the preferred method would be for Vann's
employees to sell the remaining stock through the stores and the
company's online sales site, Mr. McConnell said. The judge also
could turn the process over to an outside liquidation firm,
similar to the way Missoula's Kmart and Macy's stores were
emptied.
The report relates, if the court allows the company to manage its
wind-down, Mr. McConnell said it would take until around the end
of November to unload all the current inventory. He said he'd
like to have enough to last through the Christmas season, but the
bankruptcy rules wouldn't allow him to bring in additional stock.
About Vann's Inc.
Vann's Inc. -- http://www.vanns.com/-- a retailer of appliances
and consumer electronics with five stores in Montana, filed for
Chapter 11 protection (Bankr. D. Mont. Case No. 12-61281) in
Butte, Montana, on Aug. 5, 2012. The Debtor also owns outdoor
clothing and sports products at http://www.bigskycountry.com/
Vann's is owned by an employee stock ownership plan trust.
Vann's Inc. disclosed assets of $17.6 million and liabilities of
$14.4 million. Assets include $12.2 million cost-value of
inventory plus $1 million in current accounts receivable. The
Company owes $4 million to First Interstate Bank. It also owes
$4.8 million on an inventory loan from GE Commercial Distribution
Finance Corp.
Bankruptcy Judge John L. Peterson presides over the case. Vann's
hired Perkins Coie LLP's Alan D. Smith, Esq., and Brian A.
Jennings, Esq., as counsel; and Hamstreet & Associates, LLC, as
turnaround and restructuring advisors.
GE Commercial Distribution Finance Corporation is represented by
Gary Vincent, Esq., at Husch Blackwell LLP, and the Law Offices of
John P. Paul, PLLC. First Interstate Bank, the DIP Lender, is
represented by Benjamin P. Hursh, Esq., at Crowley Fleck PLLP.
The U.S. Trustee has formed a seven-member creditors committee.
The Committee is represented by Halperin Battagia Raicht, LLP, and
Ross Richardson.
VERINT SYSTEMS: S&P Alters Rating Outlook Over Comverse Merger
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Melville, N.Y.-based Verint Systems Inc. to positive from stable.
"In addition, we affirmed all our ratings on the company,
including our 'B+' corporate credit rating," S&P said.
"The outlook revision reflects our expectation of an improved
financial risk profile following the proposed merger with Comverse
Technologies," said Standard & Poor's credit analyst Jacob
Schlanger.
The ratings on Verint reflect the company's "weak" business risk
profile, reflecting reliance on specialized product offerings
within the highly competitive software industry, and an
"aggressive" financial risk profile, characterized by a fairly
acquisitive growth strategy and high leverage. Favorable market
growth--particularly through the recession, a somewhat predictable
and growing revenue base stemming from high renewal rates and
orders from existing customers, and a diversified portfolio of
products and services partially offsets those factors.
"The outlook is positive, reflecting our expectation for
conversion of the preferred stock to common equity, and a
subsequent reduction in leverage. We could raise the rating if the
merger is successfully completed, and the company maintains
leverage at or below 4x. We could revise the outlook to stable if
investments in R&D and sales don't translate into revenue and
EBITDA growth in the near term or if leverage were to exceed 5x on
a sustained basis," S&P said.
WILLIAMS LOVE: Judge to Confirm Third Amended Plan
--------------------------------------------------
Chapter11cases.com reports that the Hon. Elizabeth L. Perris of
the U.S. Bankruptcy Court for the District of Oregon will confirm
the third amended Chapter 11 plan of Williams Love O'Leary &
Powers P.C.
The report notes Sterling Savings Bank voted in favor of the
Debtor's proposed plan.
According to the report, the Court overruled creditor Heather
Brann's objection to the Debtor's plan on grounds of:
-- the Debtor's failure to provide for alternative treatment
for Ms. Brann's claims for Tier 2 and Tier 3 fees in the
event she prevails on appeal or in the pending adversary
proceeding, and
-- the Debtor's use of the federal judgment interest rate
rather than the contract rate for Ms. Brann's contract
claims.
The report adds that Ms. Brann's other objections to the Debtor's
proposed plan were resolved.
About Williams Love O'Leary & Powers
Based in Portland, Oregon, Williams, Love, O'Leary & Powers, P.C.,
fdba Williams, Dailey & O'Leary, P.C., dba WLOP and WDO.com, is a
law firm that has a national practice representing individuals in
medical product liability cases. It filed for Chapter 11
bankruptcy (Bankr. D. Ore. Case No. 11-37021) on Aug. 14, 2011.
Judge Elizabeth L. Perris presides over the case. The Debtor
disclosed $8,602,955 in assets and $6,734,830 in liabilities as of
the Chapter 11 filing. The petition was signed by Michael L.
Williams, its president. Albert N. Kennedy, Esq., and Michael W.
Fletcher, Esq., at Tonkon Torp LLP, in Portland, Oregon, represent
the Debtor as counsel.
WYNN RESORTS: Fitch Assigns 'BB' Issuer Default Rating
------------------------------------------------------
Wynn Resorts Ltd (Wynn Resorts, or the parent) announced that it
has terminated its credit facility at its Las Vegas subsidiary,
Wynn Las Vegas LLC (Wynn LV). As a result, the collateral
supporting the first mortgage notes (FMNs) issued by Wynn LV has
been released, since the notes' lien was conditional on Wynn LV
maintaining other secured debt in the capital structure. In
addition, Wynn LV transferred $700 million in cash and the Las
Vegas golf course to Wynn Resorts.
These transactions are negative for the Wynn LV standalone credit
profile but were largely expected. The announcement does not
impact Wynn LV's ratings because the FMNs at Wynn LV continue to
benefit from existing covenants, and Fitch links the Issuer
Default Ratings (IDRs) across the company.
Fitch is maintaining the 'BB+' rating on the notes, which is one
notch higher than Wynn LV's 'BB' IDR. The one notch reflects the
notes' springing lien feature. In the event Wynn LV issues
secured debt at a future date, the company will have to pledge the
collateral to the notes on a pari passu basis. In the interim,
further unsecured debt issuances will be constrained by Wynn LV
notes' debt incurrence coverage ratio of 2.0x.
In an event Fitch upgrades Wynn's IDR to 'BB+' from 'BB', the
agency will likely maintain the notes' ratings at 'BB+' reflecting
the high leverage at Wynn LV of around 9x (for the latest 12-month
period ending June 30, 2012).
Liquidity and Ratings Linkage:
The termination of the revolver at Wynn LV and the $700 million
upstream to the parent weakens Wynn LV's stand-alone liquidity.
The cash at Wynn LV increased when the subsidiary issued $900
million of FMNs in March 2012, of which about $370 million was
used to repay amounts outstanding on the entity's credit facility.
Fitch estimates the cash balance at Wynn LV pro forma for the
transfer is approximately $72 million, of which roughly $30
million is used for cage cash purposes. With no revolver in place
and around $40 million in excess cash, the cash transfer leaves
minimal available liquidity at Wynn LV.
Sources of liquidity outside of Wynn LV include $327 million of
cash at Wynn Resorts and $834 million at Wynn Resorts (Macau) SA
[Wynn Macau]. In addition, Wynn Macau received $1.55 billion in
revolver commitments when it entered into a new credit facility in
July 2012. Some of the cash and revolver availability in Macau
will be used to support Wynn Resort's $4 billion development plans
in Macau. The $700 million upstream to the parent increases
Wynn's flexibility with respect to its ability to fund growth
initiatives and/or shareholder-friendly capital allocations such
as paying special dividends.
Fitch currently links the IDRs of Wynn Resorts, Wynn LV, and Wynn
Macau. The parent company and subsidiaries are distinct issuers,
the subsidiary debt is nonrecourse to the parent, and there are no
cross-default provisions or cross guarantees, other than the
departure of Chairman and CEO Steve Wynn from the company.
The strategic linkage between the parent and subsidiaries is very
high, primarily due to the use of the Wynn brand in the overall
corporate strategy, the cross-marketing for high-end Asian
customers, and the common management team. The company has also
demonstrated intercompany support through a number of
transactions, and Fitch is comfortable with the company's ability
to move cash tax-efficiently.
As credit quality improves, Fitch is likely to continue to link
the IDRs if there is positive rating momentum. If Wynn's credit
quality were to deteriorate, Fitch may opt to view the credits on
a stand-alone rather than linked basis. This could occur if the
credit becomes distressed, and intercompany or parent-level
support appears unlikely, insufficient, or not possible. The
credit would probably have to deteriorate to 'B' category IDR for
this to occur.
Fitch currently rates Wynn Resorts and its subsidiaries as
follows:
Wynn Resorts, Ltd. (Wynn Resorts)
-- IDR 'BB'.
Wynn Las Vegas, LLC
-- IDR 'BB';
-- Senior secured first mortgage notes (FMNs) 'BB+'.
Wynn Resorts (Macau), SA
-- IDR 'BB';
-- Senior secured bank credit facility 'BBB-'.
* Moody's Says Sector Outlook for U.S. States Still Negative
------------------------------------------------------------
The credit outlook for US states remains negative, reflecting
ongoing macroeconomic risks and persistent budgetary challenges,
says Moody's Investors Service in a new report that updates its
2012 sector outlook.
"While the US states remain strong with tax revenues having
recovered modestly, states face persistent fiscal challenges due
to the slow recovery of the US economy, a weak global economic
outlook and risks to states from federal downsizing," said Ted
Hampton, author of the report, "US States Sector Outlook Remains
Negative."
Moody's negative sector outlook has been in place since the start
of the recession in 2007, and the new report underscores that
current conditions are likely to extend challenges for states.
"During this protracted period of economic and fiscal stress,
states have shown the ability to rein in spending, shift fiscal
burdens onto local units and, to a lesser extent, increase tax
revenues," said Mr. Hampton. "These powers are key to states'
credit standing, which remains high, despite a preponderance of
downgrades in the past three years."
Compared with issuers in other sectors, states benefit from
manageable debt burdens and diverse economies. Thirty of the 50
states have general obligation bonds rated Aaa or Aa1, the highest
two rating levels. Default risk implied by state ratings even at
the weakest level -- currently A2 -- remains low.
"Revenues are growing, and some states are rebuilding reserves or
restoring funding to programs previously cut," said Mr. Hampton.
"Weaker states nevertheless are struggling to address persistent
pressures from pensions and employee healthcare, as well as
Medicaid."
In its report, Moody's offers that conditions that would lead it
to revise the sector's outlook to stable -- such as continued
economic and revenue growth or a more muted impact due to federal
downsizing -- remain to be seen, and the prolonged period of the
sector's negative outlook continues to be characterized by a
disproportionate share of downgrades and other negative rating
actions.
Since the beginning of 2009, state general obligation bond ratings
have been lowered 16 times and raised only twice.
State general obligation bond rating changes so far this year have
been limited to downgrades: Pennsylvania, to Aa2 from Aa1 in July,
and in January, Connecticut was downgraded to Aa3 from Aa2 and
Illinois to A2 from A1. Nine states have negative outlooks.
* Moody's Says Liquidity-Stress Index Up 3.5% in August 2012
------------------------------------------------------------
Moody's Liquidity-Stress Index (LSI) rose to 3.5% in August, but
remains near July's record low of 3.1%, Moody's Investors Service
says in its latest edition of SGL Monitor. The index has held in a
tight and low range since the beginning of the year, indicating
that speculative-grade companies have good liquidity to manage
their cash needs over the coming 12 months.
Moody's Liquidity-Stress Index falls when corporate liquidity
appears to improve and rises when it appears to weaken.
"Companies continue to capitalize on favorable high-yield market
conditions to refinance maturities, while liquidity remains
healthy despite a number of potential risks, including a sluggish
global economy and overhang from the European sovereign debt
crisis," says Vice President -- Senior Credit Officer John
Puchalla. "The low LSI suggests that the US speculative-grade
default rate likewise will remain low over the coming year."
Moody's projects that the default rate will decline to 3.2% by
August 2013, from 3.5% at present, after climbing to 4.0% in
October.
The SGL Monitor also says there were two defaults among US-rated
SGL issuers in August. Both were rated SGL-4, the lowest
speculative-grade liquidity rating, for more than a year. ATP Oil
& Gas Corp.'s liquidity rating was lowered to SGL-4 in mid-2010
and the company filed for bankruptcy on August 17. Aventine
Renewable Energy Holdings, rated SGL-4 since December 2010, missed
a term loan interest payment, and Moody's believes the five-day
grace period expired on August 5.
Moody's Covenant-Stress Index jumped to 2.7% in August, the
highest reading since April this year, but the index nonetheless
remains at an historically low level. The index measures the
extent to which speculative-grade companies are at risk of
violating debt covenants and rises when headroom under covenants
seems to decrease.
* Junk-Rated Companies Maintain Adequate Cash Positions
-------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the lack of cash won't be causing an increase in
corporate bankruptcies, according to a new report from Moody's
Investors Service.
According to the report, the percentage of junk-rated companies
with the weakest liquidity rose in August to 3.5% from 3.1% in
July, the report said. This year, Moody's liquidity-stress index
has ranged between 3.1% and 4.2%.
The report relates that July's 3.1% was a record low, Moody's
said. Moody's is predicting that defaults by junk-rated
companies, at 3.5% in August, will rise to 4% in October before
falling back to 3.2% by August 2013.
The Bloomberg report discloses that Moody's has been predicting
that U.S. companies mostly likely to default will be in the media,
advertising, printing, and publishing industries.
* BOOK REVIEW: Performance Evaluation of Hedge Funds
----------------------------------------------------
Edited by Greg N. Gregoriou, Fabrice Rouah, and Komlan Sedzro
Publisher: Beard Books
Hardcover: 203 pages
Listprice: $59.95
Review by Henry Berry
Hedge funds can be traced back to 1949 when Alfred Winslow Jones
formed the first one to "hedge" his investments in the stock
market by betting that some stocks would go up and others down.
However, it has only been within the past decade that hedge funds
have exploded in growth. The rise of global markets and the
uncertainties that have arisen from the valuation of different
currencies have given a boost to hedge funds. In 1998, there were
approximately 3,500 hedge funds, managing capital of about $150
billion. By mid-2006, 9,000 hedge funds were managing $1.2
trillion in assets.
Despite their growing prominence in the investment community,
hedge funds are only vaguely understood by most people.
Performance Evaluation of Hedge Funds addresses this shortcoming.
The book describes the structure, workings, purpose, and goals of
hedge funds. While hedge funds are loosely defined as "funds with
no rules," the editors define these funds more usefully as
"privately pooled investments, usually structured as a partnership
between the fund managers and the investors." The authors then
expand upon this definition by explaining what sorts of
investments hedge funds are, the work of the managers, and the
reasons investors join a hedge fund and what they are looking for
in doing so.
For example, hedge funds are characterized as an "important avenue
for investors opting to diversify their traditional portfolios and
better control risk" -- an apt characterization considering their
tremendous growth over the last decade. The qualifications to
join a hedge fund generally include a net worth in excess of $1
million; thus, funds are for high net-worth individuals and
institutional investors such as foundations, life insurance
companies, endowments, and investment banks. However, there are
many individuals with net worths below $1 million that take part
in hedge funds by pooling funds in financial entities that are
then eligible for a hedge fund.
This book discusses why hedge funds have become "notorious as
speculating vehicles," in part because of highly publicized
incidents, both pro and con. For example, George Soros made $1
billion in 1992 by betting against the British pound. Conversely,
the hedge fund Long-Term Capital Management (LTCP) imploded in
1998, with losses totalling $4.6 billion. Nonetheless, these are
the exceptions rather than the rule, and the editors offer
statistics, studies, and other research showing that the
"volatility of hedge funds is closer to that of bonds than mutual
funds or equities."
After clarifying what hedge funds are and are not, the book
explains how to analyze hedge fund performance and select a
successful hedge fund. It is here that the book has its greatest
utility, and the text is supplemented with graphs, tables, and
formulas.
The analysis makes one thing clear: for some investors, hedge
funds are an investment worth considering. Most have a
demonstrable record of investment performance and the risk is low,
contrary to common perception. Investors who have the necessary
capital to invest in a hedge fund or readers who aspire to join
that select club will want to absorb the research, information,
analyses, commentary, and guidance of this unique book.
Greg N. Gregoriou teaches at U. S. and Canadian universities and
does research for large corporations. Fabrice Rouah also teaches
at the university level and does financial research. Komlan
Sedzro is a professor of finance at the University of Quebec and
an advisor to the Montreal Derivatives Exchange.
*********
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.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
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.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
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., Frederick, Maryland,
USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Carmel
Paderog, Meriam Fernandez, Ronald C. Sy, Joel Anthony G. Lopez,
Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman,
Editors.
Copyright 2012. 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 $775 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 Christopher
Beard at 240/629-3300.
*** End of Transmission ***