/raid1/www/Hosts/bankrupt/TCR_Public/121029.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, October 29, 2012, Vol. 16, No. 301
Headlines
50 BELOW: Sues SecureNet Over Cancellation of Contract
A123 SYSTEMS: Fisker Automotive Wants Court to Delay Auction
A123 SYSTEMS: Files Applications to Hire Advisors
AFA INVESTMENT: Lenders Consent to Cash Use Until Oct. 29
AIRTOUCH COMMUNICATIONS: Sells $2 Million Unsecured Note
ALLY FINANCIAL: To Sell Canadian Business for $4.1 Billion
AMERICAN AIRLINES: Opens Antitrust Trial vs. Sabre in Fort Worth
AMERICAN AIRLINES: US Air CEO Draws Criticism From Unions
AMERICAN LASER: Wants Bankruptcy Case Converted to Chapter 7
AMF BOWLING: S&P Lowers Corporate Credit Rating to 'D'
ARCAPITA BANK: Court Adjourns Hearing on SP Financing to Oct. 29
ASTORIA GENERATING: Moody's Affirms 'B2' Ratings on Sr. Sec. Debt
B+H OCEAN: Court Approves New Centurion as Financial Advisor
BAKERS FOOTWEAR: Aldo Terminates Asset Purchase Agreement
BLUE SPRINGS: Court Approves Spencer Fane as Conflicts Counsel
BLUE SPRINGS: Claims Due Nov. 16; BMC to Serve Bar Date Notice
BLUEJAY PROPERTIES: Hires TICC Property as Asset Manager
CAPITOL BANCORP: Wins Court Approval to Sell Capital Stock
CENTRAL EUROPEAN: Roustam Tariko Appointed Interim President
CHAMPION INDUSTRIES: Amends 2007 Credit Pact with Fifth Third
CHARLIE MCGALMRY: Files Schedules of Assets and Liabilities
CHARLIE MCGLAMRY: Has Until Dec. 5 to Propose Chapter 11 Plan
CHARLIE MCGLAMRY: Plan Confirmation Hearing Set for Dec. 10
CHG HEALTHCARE: Moody's Assigns 'B2' CFR; Outlook Stable
CHG HEALTHCARE: S&P Assigns B Corp. Credit Rating; Outlook Stable
CIRCUS AND ELDORADO: Court Confirms Joint Chapter 11 Plan
CLEAR CHANNEL: Issues $2 Billion Guarantee Notes Due 2019
CLEARWIRE CORP: Files Form 10-Q, Incurs $213.8MM Net Loss in Q3
CLEARWIRE CORP: Bright House Holds 1.2% of Class A Shares
CLEARWIRE CORP: Incurs $213.8 Million Net Loss in Third Quarter
CLINICA REAL: U.S. Trustee Unable to Form Committee
CLINICA REAL: Wins OK to Hire Giunta Firm as Bankruptcy Counsel
COMMUNICATION INTELLIGENCE: To Issue 50-Mil. Shares Under Plan
COMMUNITY MEMORIAL: Plan Confirmation Hearing Adjourned to Nov. 15
CONCHO RESOURCES: Moody's Corrects July 31 Rating Release
CORDILLERA GOLF: Debtor & Committee File Reorganization Plan
CORDILLERA GOLF: Selects GA Keen to Sell County Golf Club
CORNERSTONE BANCSHARES: Reports $364,000 Net Income in 3rd Qtr.
CROSS ISLAND: U.S. Trustee Wants Case Converted to Chapter 7
CRYOPORT INC: Jerrell Shelton Joins Board of Directors
CSD LLC: Hiring Greene Infuso LLP as Local Counsel
CSD LLC: Hiring Munsch Hardt as General Bankruptcy Counsel
CSD LLC: Hiring Odyssey Capital to Provide CRO and Add'l Personnel
CSD LLC: Seeks Court OK for Interim DIP Financing of $500,000
CSD LLC: Wants to Reject Residential Lease on Current Newton Home
DAIS ANALYTIC: Inks $7 Million SPA with Green Valley
DENBURY RESOURCES: S&P Affirms 'BB' Corporate Credit Rating
DESERT GARDENS: Plan Confirmed; Mortgage Extended
DEWEY & LEBOEUF: FPC Says Disbandment Motion Not Supported by Law
DEX MEDIA: Prepack Bankruptcy Among Options to Complete Merger
DEX ONE: Incurs $12.7 Million Net Loss in Third Quarter
DIGITAL DOMAIN: Legendary Sues John Textor Over $3 Million Loan
DUFRY FINANCE: Fitch Rates 5.5% Senior Unsecured Notes 'BB'
EAGLE POINT: U.S. Trustee Unable to Form Committee
EASTMAN KODAK: Settles $58.6 Million Claim With ATLC
ELPIDA MEMORY: Judge Clears Patent Pledge Discord Over Micron Sale
ENERGY CONVERSION: Harrington Dragich to Review Payment Request
ENERGY FUTURE: Completes $252.7 Million Senior Notes Offering
ENERGY TRANSFER: Moody's Corrects April 30 Rating Release
FEDERAL-MOGUL: Moody's Cuts CFR/PDR to 'B2'; Outlook Stable
FEDERAL-MOGUL: S&P Cuts Corp. Credit Rating to ' B'; Outlook Neg
FLORIDA GAMING: Terminates David Jonas as Centers' CRO
FREESEAS INC: Ion Varouxakis Discloses 34.8% Equity Stake
GALLANT ACQUISITIONS: U.S. Trustee Wants Case Converted to Ch. 7
GOODMAN NETWORKS: S&P Lowers Corporate Credit Rating to 'B'
GUIDED THERAPEUTICS: Selects I.T.E.M. to Distribute LuViva
GYLECO INC: Earns $3.4 Million from Units Offering
HERCULES OFFSHORE: Incurs $37.8 Million Net Loss in 3rd Quarter
HIGH PLAINS: Mark Hettinger Quits as Officer and Director
HMX ACQUISITION: Has Interim Nod to Enter Into $65MM DIP Facility
HMX ACQUISITION: Proposes Authentic-Led Auction on Dec. 3
HOSTESS BRANDS: Says Union Strike May Prompt Liquidation
INTELLICELL BIOSCIENCES: Sells $25,000 Conv. Preferred Stock
JER/JAMESON: Wants Until Feb. 17 to Propose Reorganization Plan
JOHN MICHAEL McMAHAN: Chapter 24 Filing Circumvents BAPCPA
JOURNAL REGISTER: Committee Taps FTI as Financial Advisor
JOURNAL REGISTER: Committee Taps Lowenstein Sandler as Counsel
K-V PHARMACEUTICAL: Lost in Court, Tries for Success at ITC
KINETIC CONCEPTS: Moody's Says Credit Amendment Credit Positive
KOREA TECHNOLOGY: Court Confirms Sale-Based Plan
LAMAR MEDIA: Moody's Affirms 'Ba3' CFR/PDR; Outlook Stable
LAMAR MEDIA: S&P Rates $535-Mil. Senior Subordinated Notes 'BB-'
LEHMAN BROTHERS: LBI Nears 100% Payment on $105 Billion in Claims
LEHMAN BROTHERS: Swap Dispute Nearing Resolution
LIGHTSQUARED INC: Gets Approval for Modified Executive Bonuses
LOCATION BASED TECH: $205,000 PocketFinder Orders from Apple
LODGENET INTERACTIVE: Phillip Spencer Resigns from Board
LON MORRIS: Ex-President Faces Texas AG Probe Over Missing $1.3MM
LONG ISLAND RUBBISH: Files Schedules of Assets and Liabilities
LPATH INC: Inks Indemnification Agreements with Top Executives
MACROSOLVE INC: Inks Employment Agreement with Kendall Carpenter
MAINLINE CONTRACTING: Can't Recoup $506K Paid to Vendor
MAMMOTH LAKES: OK'd to Amend Writ of Mandate in State Court
MAUI LAND: Incurs $1.6 Million Net Loss in Third Quarter
MENDOCINO COAST: Fort Bragg Hospital in Chapter 9
METRO FUEL: To Auction Business on Dec. 12
MF GLOBAL: Brokerage Avoids Lawsuits for Mass Firings
MG FORGE: Construction Firm Enters Chapter 11 in New Jersey
MGM RESORTS: Amends and Extends Credit Facility with Lenders
MILK SPECIALTIES: Moody's Raises CFR to B2; Outlook Stable
MMRGLOBAL INC: Has Record-Breaking Million Dollar Quarter
MOMENTIVE PERFORMANCE: Enters Into $1.1 Billion Notes Indenture
MORRIER RANCH: Chapter 11 Reorganization Case Dismissed
MUSCLEPHARM CORP: Board OKs $625,000 Bonuses for Executives
NAVIOS MARITIME: Moody's Cuts CFR/PDR to 'B2'; Outlook Stable
NAVISTAR INT'L: Offering Doesn't Alleviate Significant Concerns
NAVISTAR INTERNATIONAL: M. Rachesky Discloses 14.9% Equity Stake
NAVISTAR INTERNATIONAL: GAMCO Asset Discloses 6.2% Equity Stake
NAVISTAR INTERNATIONAL: Carl Icahn Discloses 14.9% Equity Stake
NEXSTAR BROADCASTING: Further Amends Mission Credit Facilities
NEXSTAR BROADCASTING: Prices $250 Million Senior Notes at Par
NEXSTAR BROADCASTING: Launches Cash Tender Offer of Senior Notes
NEXSTAR BROADCASTING: Offering $200 Million of Senior Notes
NEXSTAR BROADCASTING: S&P Rates $250MM Senior Unsecured Notes 'B-'
OILSANDS QUEST: Investors $136-Mil. Overvaluation Suit Allowed
OVERSEAS SHIPHOLDING: Debt Drops to All-Time Low
PATRIOT COAL: UMW Encouraged Workers' Letters to Bankruptcy Judge
PATRIOT COAL: Forms Committee to Study Third-Party Claims
PRESTIGE TRAVEL: Files for Chapter 11; Sues Bank, Hotels
RENFRO CORP: S&P Affirms 'B' Corp. Credit Rating; Outlook Positive
RG STEEL: Raising $5.6 Million From Iron Ore Sale
RESIDENTIAL CAPITAL: Michigan Dist. Court Dismisses Hutton Action
RYAN ST. ANNE: Trustee to Keep Claim v. Milwaukee Archdiocese
SAN BERNARDINO: Public Employees Seek Dismissal of Bankruptcy
SF CC INTERMEDIATE: Moody's Corrects October 23 Rating Release
SIFCO SA: Fitch Affirms 'B-' Issuer Default Rating
SINCLAIR TELEVISION: Moody's Corrects Sept. 27 Rating Release
SNO MOUNTAIN: Judge FitzSimon Ousts President Denis Carlson
SOLYNDRA LLC: IRS to Appeal Plan Confirmation
SOUTH FRANKLIN CIRCLE: Files Bankruptcy With Chapter 11 Plan
SOVEREIGN CAPITAL: Moody's Confirms 'Ba1' Preferred Stock Rating
SPIRIT AEROSYSTEMS: Moody's Affirms 'Ba2' CFR; Outlook Negative
STANFORD INT'L: Political Parties Liable to Pay Back Contributions
UNITED RENTALS: Moody's Rates $400-Mil. Sr. Unsecured Notes 'B3'
UNITED RENTALS: S&P Rates New $400MM Senior Unsecured Notes 'B+'
US VIRGIN ISLAND: Fitch Affirms 'BB' Rating on GO Bonds
VELOCITY EXPRESS: Can Be Named as Defendant in N.J. Tort Suit
VIRGIN MEDIA: Moody's Corrects October 24 Rating Release
VITRO SAB: Profit Jumps 151% as Auto Glass Sales Rise
W.R. GRACE: Libby Claimants Drop Plan Confirmation Appeal
WEST PENN: Fitch Lowers Rating on $737-Mil. Bonds to 'CCC'
WEST SEATTLE FITNESS: Says Chapter 11 Won't Affect Operations
* Nonrefundable Child Tax Credits Aren't Exempted
* Fitch Says Near-Term Default Pressures Easing in 2012
* Fitch Completes Peer Review of 10-Rated Community Banks
* Moody's Says US Oil & Gas Bond Investor Protection Varies
* US Public Finance Rating Downgrades Down in Third Qtr. 2012
* BOND PRICING -- For The Week From Oct. 22 to 26, 2012
*********
50 BELOW: Sues SecureNet Over Cancellation of Contract
------------------------------------------------------
Candace Renalls at Duluth News Tribune reported that 50 Below and
its court-appointed trustee have filed a lawsuit to keep SecureNet
Payment Systems, a Maryland-based company, from cancelling
services.
The report relates that two weeks before 50 Below filed for
bankruptcy in August 2012, it signed an agreement with SecureNet
to process its credit and debit card transactions. Now the
company wants out.
According to the report, the complaint said without SecureNet,
50 Below wouldn't be able to process credit and debit card
transactions necessary to do business. Only authorized credit
card processors can do that, according to the complaint filed
recently in federal court. The complaint also stated that losing
SecureNet's services also severely jeopardizes 50 Below's ability
to restructure under Chapter 11.
According to the report, trustee Nauni Jo Manty contends that
allowing SecureNet to terminate the agreement would be a violation
of U.S. Bankruptcy Code. She asked the court to deem the
agreement a contract that can't be terminated because of a
client's financial condition, its filing for bankruptcy or the
appointment of a trustee when a case is in bankruptcy.
On Sept. 28, SecureNet sent 50 Below its 30-day notice of
termination. Although a termination requires stated reasons, no
specific reasons were cited.
The report also notes the bankruptcy trustee is seeking to sell
50 Below's assets to pay off debts. The deadline for sealed bids
is Oct. 29, with a Nov. 7 court hearing on the sale.
50 Below, which provides Internet marketing and web design
services, filed for Chapter 11 bankruptcy on Aug. 29, 2012,
claiming liabilities of about $12 million, including nearly
$8.8 million owed to the Internal Revenue Service, and another
$1 million to the Minnesota Department of Revenue.
A123 SYSTEMS: Fisker Automotive Wants Court to Delay Auction
------------------------------------------------------------
Dawn McCarty at Bloomberg News reports that Fisker Automotive
Inc., a closely held startup carmaker led by auto designer Henrik
Fisker, asked a bankruptcy judge to delay the auction of U.S.
electric-car battery maker A123 Systems Inc. "A hurried sale
process will be damaging to the estates and deprive creditors of
value that may be realized through higher and better offers,"
Atty. Gregg Galardi, a Fisker attorney, said in court papers filed
Oct. 26 in Wilmington, Delaware.
Fisker, based in Anaheim, California, also said Oct. 26 it would
file an "emergency motion" challenging a so-called debtor-in-
possession loan, and didn't provide details. Fisker is seeking an
extension of the bid deadline, auction date and related dates and
deadlines in the bidding procedures request by at least 30 days,
court papers show.
According to the report, D.J. "Jan" Baker, Esq., a lawyer
representing A123, didn't immediately return a phone call seeking
comment.
A123, the recipient of a $249 million federal grant, said it would
sell its automotive-business assets to Milwaukee-based Johnson
Controls Inc. in a deal valued at $125 million. The deal is
subject to other potential offers in a bankruptcy auction.
Loan Approval
The report relates that A123, which is scheduled to return to
court to seek approval of the remainder of a $72.5 million loan,
intends to file court papers seeking interim approval of a
replacement debtor-in-possession facility from Wanxiang America
Corp., according to court documents filed Oct. 26. The company on
Oct. 18 won interim court approval to borrow as much as
$15.5 million in DIP financing from Johnson Controls.
Johnson Controls said in a statement Oct. 26 that it has chosen
not to be debtor-in-possession lender during A123's bankruptcy to
"avoid potential delays by threatened legal action from Wanxiang."
"We are concerned that back-and-forth posturing by other
interested parties may lead to confusion and anxiety for A123's
employees and customers and thus destroy underlying value in the
estate," Alex Molinaroli, president of Johnson Controls Power
Solutions, said in the statement. Johnson Controls maintains its
$125 million offer for the automotive assets and plans to expand
its offer to include A123's government business during the
bankruptcy process, according to the company's statement.
'Various Protections'
The report notes that the auto company said it doesn't oppose the
need for an asset sale, just "various protections" for Johnson
"that are unnecessary, excessive, and counterproductive to a
successful sales process," including a possible $7.75 million
breakup fee and expense reimbursement. The proposed procedures
and protections were "crafted" for the benefit of Johnson
Controls, Mr. Galardi said. "The best interests of the estates,
however, are not well served through a hasty and unfair sale
process designed to ensure that JCI is the ultimate purchaser," he
said. In January 2010, A123 and Fisker signed a multiyear supply
agreement for Fisker's Karma plug-in hybrid electric luxury car.
A123's obligations under the supply accord, including warranty
obligations, "give rise to substantial unsecured claims" in favor
of Fisker that may exceed a total of $100 million, according to
court papers.
U.S. Trustee Objection
Also on Oct. 26, Mark Kenney, trial attorney at the Office of the
U.S. Trustee in Region 3, filed an objection to the breakup fee.
According to Bloomberg, Mr. Kenney said it can't be characterized
as "actually necessary to preserve the value of the estate."
In another objection Friday, Bloomberg relates patent owners
including the University of Montreal asked a judge to consider the
value of their exclusively licensed patents for lithium battery
technology and the rights of A123 to keep or transfer them in the
sale.
Johnson Controls plans to acquire A123's automotive business
assets, including its facilities in Livonia and Romulus, Michigan.
The Milwaukee-based company also will obtain A123's cathode powder
plant in China and its equity interest in Shanghai Advanced
Traction Battery Systems Co., A123's joint venture with Shanghai
Automotive Industry Corp.
'Purchased Assets'
According to Bloomberg, Massachusetts Clean Energy Technology
Center filed an objection Oct. 26 to the sale motion saying the
proposed court documents don't "reasonably identify the purchased
assets, nor clearly state the treatment of the claims secured by
the purchased assets." "The term 'Auto Business' is not only
vague but misleading," Massachusetts Clean Energy Center's
attorney Michael Barrie said in court papers. The proposed
bidding procedures "do not limit the bidding to the purchased
assets but permit bidding on any other assets" of A123, Barrie
said.
Massachusetts Clean Energy Center, created by the Green
Jobs Act of 2008, wants the court to make A123 amend certain
documents "so that they reasonably identify which assets are being
sold and which leases are being assumed with sufficient
particularity to allow MA-CEC to ascertain whether its collateral
will be among the assets eligible for sale," Barrie said. The
Massachusetts Clean Energy Center provided A123 a $5 million
secured loan in October 2010, court papers show. The agency would
forgive and A123 wouldn't need to repay the loan if certain
employment and capital expenditures were met.
Half Forgiven
The Bloomberg report discloses that half of the loan would be
forgiven if A123 creates 263 jobs in Massachusetts by the end of
2014 and maintains at least 513 jobs from January 2013 through
Oct. 8, 2017, according to court documents. If the company
doesn't achieve those milestones they can get partial forgiveness
analogous to the levels they do reach. The loan was amended in
2011 with the Center forgiving half after the battery-maker spent
at least $12.5 million in infrastructure and leasehold
improvements. The company still owes about $2.8 million in
principal and interest.
About A123 Systems
Based in Waltham, Massachusetts, A123 Systems Inc. designs,
develops, manufactures and sells advanced rechargeable lithium-ion
batteries and battery systems and provides research and
development services to government agencies and commercial
customers.
A123 is the recipient of a $249 million federal grant from the
Obama administration. Pre-bankruptcy, A123 had an agreement to
sell an 80% stake to Chinese auto-parts maker Wanxiang Group Corp.
U.S. lawmakers opposed the deal over concerns on the transfer of
American taxpayer dollars and technology to China.
A123 didn't make a $2.7 million payment due Oct. 15 on $143.75
million in 3.75% convertible subordinated notes due 2016.
A123 and U.S. affiliates, A123 Securities Corporation and Grid
Storage Holdings LLC, sought Chapter 11 bankruptcy protection
(Bankr. D. Del. Case Nos. 12-12859 to 12-12861) on Oct. 16, 2012,
with a deal to sell its auto-business assets to Johnson Controls
Inc. The deal with JCI is valued at $125 million, and subject to
higher offers at a bankruptcy auction.
A123 disclosed assets of $459.8 million and liabilities totaling
$376 million. Debt includes $143.8 million on 3.75% convertible
subordinated notes. Other liabilities include $22.5 million on a
bridge loan owing to Wanziang. About $33 million is owed to trade
suppliers.
The Hon. Kevin J. Carey presides over the case. Lawyers at
Richards, Layton & Finger, P.A., and Latham & Watkins LLP serve as
the Debtors' counsel. Lazard Freres & Co. LLC acts as the
Debtors' financial advisors, while Alvarez & Marsal serves as
restructuring advisors. Logan & Company Inc. serves as the
Debtors' claims and noticing agent. The petitions were signed by
David Prystash, chief financial officer.
Wanxiang America Corporation and Wanxiang Clean Energy USA Corp.
are represented in the case by lawyers at Young Conaway Stargatt &
Taylor, LLP, and Sidley Austin LLP.
The company's notes traded as low as 21.25 cents on the day of the
bankruptcy filing.
A123 SYSTEMS: Files Applications to Hire Advisors
-------------------------------------------------
BankruptcyData.com reports that A123 Systems filed with the U.S.
Bankruptcy Court motions to retain:
-- Logan & Company (Contact: Kathleen M. Logan) for the
additional role of administrative advisor;
-- Richards, Layton & Finger (Contact: Mark D. Collins)
as co-counsel at hourly rates ranging from $200 to $750;
-- Lazard Freres (Contact: Timothy Pohl) as investment banker
for a monthly fee of $200,000 and a $5 million completion
fee;
-- Latham & Watkins (Contact: D. J. Baker) as bankruptcy co-
counsel at these hourly rates: associate at $385 to $840
for associate, counsel at $785 to $1,010, partner at $800
to $1,180 and paraprofessional at $165 to $590; and
-- Alvarez & Marsal North America (Contact: David Prystash)
as financial advisor for these hourly rates: managing
director at $650 to $850, director at $450 to $650,
associate $300 to $450 and analyst $250 to $300.
About A123 Systems
Based in Waltham, Massachusetts, A123 Systems Inc. designs,
develops, manufactures and sells advanced rechargeable lithium-ion
batteries and battery systems and provides research and
development services to government agencies and commercial
customers.
A123 is the recipient of a $249 million federal grant from the
Obama administration. Pre-bankruptcy, A123 had an agreement to
sell an 80% stake to Chinese auto-parts maker Wanxiang Group Corp.
U.S. lawmakers opposed the deal over concerns on the transfer of
American taxpayer dollars and technology to China.
A123 didn't make a $2.7 million payment due Oct. 15 on $143.75
million in 3.75% convertible subordinated notes due 2016.
A123 and U.S. affiliates, A123 Securities Corporation and Grid
Storage Holdings LLC, sought Chapter 11 bankruptcy protection
(Bankr. D. Del. Case Nos. 12-12859 to 12-12861) on Oct. 16, 2012,
with a deal to sell its auto-business assets to Johnson Controls
Inc. The deal with JCI is valued at $125 million, and subject to
higher offers at a bankruptcy auction.
A123 disclosed assets of $459.8 million and liabilities totaling
$376 million. Debt includes $143.8 million on 3.75% convertible
subordinated notes. Other liabilities include $22.5 million on a
bridge loan owing to Wanziang. About $33 million is owed to trade
suppliers.
The Hon. Kevin J. Carey presides over the case. Lawyers at
Richards, Layton & Finger, P.A., and Latham & Watkins LLP serve as
the Debtors' counsel. Lazard Freres & Co. LLC acts as the
Debtors' financial advisors, while Alvarez & Marsal serves as
restructuring advisors. Logan & Company Inc. serves as the
Debtors' claims and noticing agent. Wanxiang America Corporation
and Wanxiang Clean Energy USA Corp. are represented in the case by
lawyers at Young Conaway Stargatt & Taylor, LLP, and Sidley Austin
LLP.
AFA INVESTMENT: Lenders Consent to Cash Use Until Oct. 29
---------------------------------------------------------
AFA Investment Inc., et al., notified the U.S. Bankruptcy Court
for the District of Delaware that the second lien secured parties
consented to the continued use of second lien secured parties'
cash collateral.
The second lien agent on behalf of the second lien lenders, and
the Debtors have agreed to a further extension of the termination
date under the interim cash collateral order until Oct. 29, 2012.
On Sept. 19, the Court authorized, on an interim basis, the
Debtors to use the cash collateral to operate their business
postpetition.
As adequate protection from any diminution value of the lenders'
collateral, the Debtor will grant the second lien lenders adequate
protection liens and superpriority administrative expense claim,
subject to carve out on certain expenses.
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.
AFA, in its Chapter 11 case, sold plants and paid off the first-
lien lenders and the loan financing the Chapter 11 effort.
Remaining assets are $14 million cash and the right to file
lawsuits.
General Electric Capital Corp. and Bank of America Corp. provided
about $60 million in DIP financing. The loan was paid off in
July.
Yucaipa, the owner and junior lender, has agreed to a settlement
that would generate cash for unsecured creditors under a
liquidating Chapter 11 plan. Under the deal, Yucaipa will receive
$11.2 million from the $14 million, with the remainder earmarked
for unsecured creditors. Asset recoveries above $14 million will
be split with Yucaipa receiving 90% and creditors 10%. Proceeds
from lawsuits will be divided roughly 50-50.
In return, Yucaipa will receive release from claims and lawsuits
the creditors might otherwise bring. An affiliate of Yucaipa has
a $71.6 million second lien and would claim the remaining assets
absent settlement.
AIRTOUCH COMMUNICATIONS: Sells $2 Million Unsecured Note
--------------------------------------------------------
AirTouch Communications, Inc., issued to one investor an unsecured
promissory note in the original principal amount of $2,000,000 and
a warrant to purchase 100,000 shares of the Company's common
stock. The Company paid a finder's fee on the transaction in the
amount of $30,000. The note and warrant were issued pursuant to
Section 4(2) of the Securities Act of 1933. The note bears
interest on the unpaid principal amount at the rate of 15% per
annum.
About AirTouch Communications
AirTouch Communications, Inc., formerly Waxess Holdings, Inc., is
a technology firm, located in Newport Beach, Calif., that was
incorporated in 2008 and designs innovative and state-of-the-art
wireless routers, stationary signal-enhanced cell phones, and
?Triple Play' (Voice/Data/Video over IP) portals. The Company
offers its HomeConneX (R) products through the dealer network of a
major wireless carrier and its SmartLinX TM products through
various distributors in the US and Mexico.
As reported in the TCR on March 26, 2012, Anton & Chia, LLP, in
Irvine, California, expressed substantial doubt about Waxess
Holdings' 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 sustained
accumulated losses from operations totaling $16 million at
Dec. 31, 2011.
The Company's balance sheet at June 30, 2012, showed $4.7 million
in total assets, $1.9 million in total liabilities and
stockholders' equity of $2.8 million.
ALLY FINANCIAL: To Sell Canadian Business for $4.1 Billion
----------------------------------------------------------
Ally Financial Inc. has reached an agreement to sell its Canadian
auto finance operation, Ally Credit Canada Limited, and ResMor
Trust to Royal Bank of Canada (RBC), Canada's largest bank by
assets and market capitalization. The transaction is subject to
regulatory approval and is expected to close in the first quarter
of 2013. Ally will receive an approximately US$620 million
premium to book value, which for the third quarter of 2012 was
approximately $3.5 billion. Based on the third quarter total
equity for the Canadian operations, Ally would receive
approximately US$4.1 billion in proceeds from this transaction.
"This transaction represents another significant step toward our
plans to pursue strategic alternatives for our international
operations and accelerate plans to repay the remaining U.S.
Treasury investment," said Ally Chief Executive Officer Michael A.
Carpenter. "The Canadian transaction is the second transaction in
a week to support these goals. We continue to evaluate options
for our remaining international operations in Europe and Latin
America, and we are encouraged by the progress and interest in the
businesses."
Mr. Carpenter continued, "Our international operations are strong
franchises, and both the ABA Seguros and the Canadian transactions
demonstrate our goals of finding the best solutions for those
businesses, while also maximizing shareholder value.
"Successful execution of the international transactions will
enable Ally to further strengthen and grow our leading U.S.-based
automotive services and direct banking franchises, and we remain
focused on achieving those goals."
Ally's remaining international businesses include automotive
finance operations in Europe and Latin America. The company
expects to identify plans for these operations in November.
Ally's Canadian operations are based in Toronto and represent the
largest single country of operations outside the U.S. with $13.6
billion in assets at the end of the third quarter 2012. The
operations consist of Ally Credit Canada Limited and ResMor Trust,
both subsidiaries of Ally.
Ally Credit Canada Limited is one of the largest auto finance
companies in Canada with approximately $9.4 billion in assets at
the end of the third quarter 2012. The business offers automotive
financing and related services to dealers and their customers.
ResMor Trust offers deposit products through independent brokers
as well as innovative savings products directly to consumers.
ResMor had $3.8 billion in deposits and $4.2 billion in assets at
the end of the third quarter 2012.
Royal Bank of Canada (RY on TSX and NYSE) is among the largest
banks in the world, based on market capitalization. It is North
America's leading diversified financial services company, and
provides personal and commercial banking, wealth management
services, insurance, corporate and investment banking and investor
services on a global basis.
About Ally Financial
Ally Financial Inc., formerly GMAC Inc. -- http://www.ally.com/--
is one of the world's largest automotive financial services
companies. The company offers a full suite of automotive
financing products and services in key markets around the world.
Ally's other business units include mortgage operations and
commercial finance, and the company's subsidiary, Ally Bank,
offers online retail banking products. Ally operates as a bank
holding company.
GMAC obtained a $17 billion bailout from the U.S. government in
exchange for a 56.3% stake. Private equity firm Cerberus Capital
Management LP keeps 14.9%, while General Motors Co. owns 6.7%.
Ally reported a net loss of $157 million in 2011, compared with
net income of $1.07 billion in 2010. Net income was $310 million
for the three months ended March 31, 2012.
The Company's balance sheet at June 30, 2012, showed
$178.56 billion in total assets, $160.19 billion in total
liabilities and $18.36 billion in total equity.
* * *
In February 2012, Fitch Ratings downgraded the long-term Issuer
Default Rating (IDR) and the senior unsecured debt rating of Ally
Financial and its subsidiaries to 'BB-' from 'BB'. The Rating
Outlook is Negative. The downgrade primarily reflects
deteriorating operating trends in ResCap, which has continued to
be a drag on Ally's consolidated credit profile, as well as
exposure to contingent mortgage-related rep and warranty and
litigation issues tied to ResCap, which could potentially impact
Ally's capital and liquidity levels.
As reported by the TCR on May 22, 2012, Standard & Poor's Ratings
Services revised its outlook on Ally Financial Inc. to positive
from stable. At the same time, Standard & Poor's affirmed its
ratings, including its 'B+' long-term counterparty credit and 'C'
short-term ratings, on Ally. "The outlook revision reflects our
view of potentially favorable implications for Ally's credit
profile arising from measures the company announced May 14, 2012,
designed to resolve issues relating to Residential Capital LLC,
Ally's troubled mortgage subsidiary," said Standard & Poor's
credit analyst Tom Connell.
In the May 28, 2012, edition of the TCR, DBRS, Inc., has placed
the ratings of Ally Financial Inc. and certain related
subsidiaries, including its Issuer and Long-Term Debt rating of BB
(low), Under Review Developing. This rating action follows the
decision by Ally's wholly owned mortgage subsidiary, Residential
Capital, LLC (ResCap) to file a pre- packaged bankruptcy plan
under Chapter 11 of the U.S. Bankruptcy Code.
AMERICAN AIRLINES: Opens Antitrust Trial vs. Sabre in Fort Worth
----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that American Airlines Inc. began an antitrust trial
before a jury of 12 on Oct. 24 in Fort Worth, Texas, against Sabre
Holdings Corp., the airline reservation system it spun off 12
years ago. The complaint alleges that Sabre set out to stifle new
competition.
According to the report, the effort by US Airways Group Inc. to
acquire American may have been given a boost when US Airways
surprised analysts by announcing third-quarter net income more
than doubled from last year. US Airways also predicts a
profitable fourth quarter.
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: US Air CEO Draws Criticism From Unions
---------------------------------------------------------
Mary Schlangenstein at Bloomberg news reports that US Airways
Group Inc. pilots and flight attendants joined other unions in
urging Chief Executive Officer Doug Parker to end the carrier's
labor disputes before trying to merge with AMR Corp.'s bankrupt
American Airlines. Employees are frustrated that CEO Parker
reached conditional agreements with American workers in a matter
of weeks yet hasn't combined the two biggest labor groups from the
2005 merger between America West Holdings Corp. and US Airways, US
Airline Pilots Association President Gary Hummel said.
"Our patience is coming to an end," Mr. Hummel said he told
Mr. Parker and other executives in a regular quarterly meeting at
the airline's Tempe, Arizona, headquarters. "We are not opposed
to a merger. However, we do not have confidence in management's
ability to integrate the employees because of your track record."
Discord at US Airways runs counter to the image of union
management unity that Mr. Parker has sought to project. He moved
in April to win support of American labor groups, which failed to
agree on cost-saving contract concessions in talks starting as
long as five years before AMR's Nov. 29 Chapter 11 filing.
"Employees are a foundational issue," said Deborah Volpe,
president of the Association of Flight Attendants-CWA at the
former America West," Bloomberg relates.
"If you don't take care of the foundation, then everything else
tends to crumble eventually."
Airline's View
The Bloomberg report relates that John McDonald, a US Airways
spokesman, said a nondisclosure agreement signed with AMR to
review financial data prevents the company from discussing a
potential merger with its own unions. US Airways has reached
labor accords with eight work groups since the combination with
America West, he said.
"The idea that management is unable to come to agreements with
unions is a fallacy," McDonald said in an interview. US Airways,
the fifth-biggest U.S. airline, hasn't made a formal bid for No. 3
American because that carrier holds the exclusive right to file a
reorganization plan. A combined airline would be the world's
largest by traffic. US Airways has said its strategy would
require fewer job reductions than American's plan, which at one
point called for eliminating as many as 13,000 positions. AMR CEO
Tom Horton has told employees his stand-alone strategy would
create a stronger airline and is paring the cuts in negotiations.
Mr. Hummel said AMR creditors and bondholders already concerned
with labor strife at that airline would have to weigh the
prospects for a merger that would combine three workforces,
counting Fort Worth, Texas-based American's and US Airways' still-
separate union groups.
'Can't Believe'
"I can't believe anyone would be interested in investing in a
company knowing that 30,000-plus employees of US Airways and
80,000 employees of American combined would be in disarray," said
Mr. Hummel, who like Volpe spoke in an interview after the meeting
with management. Volpe wasn't at that session.
The Bloomberg report discloses that AMR had about 77,900 employees
as of Sept. 30, according to an airline statement, while US
Airways' workforce totaled 30,845. Pilots and flight attendants
at the smaller carrier continue working under separate contracts
from counterparts at America West seven years after the merger
that brought US Airways out of bankruptcy. Bargaining with pilots
has been mired in a union legal battle over how seniority lists at
US Airways and America West would be combined. US Airways has
maintained that the pilots must resolve that issue before a
contract can be negotiated. The Association of Flight Attendants
rejected a tentative contract agreement with US Airways last month
for a second time, by a vote of 51% to 49 percent. The 6,700-
member union plans to hold a strike authorization vote starting
Oct. 31.
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 LASER: Wants Bankruptcy Case Converted to Chapter 7
------------------------------------------------------------
Ama Sarfo at Bankruptcy Law360 reports that American Laser Centers
LLC on Tuesday asked a Delaware bankruptcy judge to convert its
Chapter 11 bankruptcy to a Chapter 7, saying it did not have the
money to fund a Chapter 11 reorganization plan.
Bankruptcy Law360 relates that American Laser said in a motion
that after it was bought out in January by private equity lender
Versa Capital Management LLC, the company liquidated most of its
assets and started to wind down its operations, leaving little
money to fund a Chapter 11 bankruptcy.
About ALC Holdings
Farmington Hills, Michigan-based ALC Holdings LLC dba American
Laser Centers, and American Laser Skincare, provides laser hair
removal treatments.
The Company and its affiliates filed for Chapter 11 protection
(Bankr. D. Del. Lead Case No. 11-13853) on Dec. 8, 2011.
Bankruptcy Judge Mary F. Walrath presides over the case. Landis
Rath & Cobb LLP represents the Debtors in their restructuring
efforts. BMC Group Inc. serves as claims agent; SSG Capital
Advisors, LLC serves as financial advisors; and Traverse, LLC
serves as restructuring crisis manager. MBC Consulting and
Melanie B. Cox serve as interim chief executive officer. Qorval
and Eric Glassman serve as restructuring consultant.
The Debtors disclosed total assets of $80.4 million and total
liabilities including $40.3 million owing on a first-lien debt,
$51 million in subordinated notes, and $17.9 million is owing to
trade suppliers, as of Oct. 31, 2011. American Laser Centers of
California LLC disclosed $21.0 million in assets and
$99.96 million in liabilities as of the Chapter 11 filing. ALC
Holdings LLC disclosed $15,000 in assets and $93.7 million in
liabilities.
The Official Committee of Unsecured Creditors has tapped Herrick,
Feinstein LLP as bankruptcy counsel; Ashby & Geddes, P.A. as
Delaware counsel; and J.H. Cohn LLP as its financial advisor.
American Laser Centers in February 2012 completed a sale of
substantially all of its assets to private equity investment firm
Versa Capital Management, LLC. The company received Court
approval of the sale on Jan. 31. Private equity lender Versa
Capital is paying $39.5 million. A planned auction failed to turn
up additional bids.
AMF BOWLING: S&P Lowers Corporate Credit Rating to 'D'
------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate rating on
U.S. bowling center operator AMF Bowling Worldwide Inc. (AMF) to
'D' from 'CCC'. "At the same time, we lowered our issue-level
rating on the company's first-lien senior secured credit
facilities to 'D' from 'CCC+' and its second-lien senior secured
credit facilities to 'D' from 'CC'. The rating actions follow
AMF's recently missed interest payment on its credit facilities,"
S&P said.
"These rating actions stem from AMF's confirmation that it did not
make its most recent interest payment on its senior secured credit
facilities," said Standard & Poor's credit analyst Michael
Halchak.
"AMF has received a waiver from its lender group granting a grace
period until Nov. 6, 2012, to make the payments. However, Standard
& Poor's considers a default to have occurred when a payment
related to an obligation is not made, even if a grace period
exists, when the nonpayment is a function of the borrower being
under financial stress--unless we are confident that the payment
will be made in full during the grace period. Given AMF's upcoming
November revolver maturity and our previous 'CCC' corporate credit
rating, we are not confident in AMF's ability to make the interest
payment," S&P said.
ARCAPITA BANK: Court Adjourns Hearing on SP Financing to Oct. 29
----------------------------------------------------------------
Arcapita Bank B.S.C.(c), et al.'s motion for entry of an order
authorizing the Debtors to enter into the Silver Point DIP
facility scheduled for consideration on Oct. 25, 2012, at 2:00
p.m. has been adjourned. The hearing on the motion will resume on
Oct. 29, 2012, at 2:00 p.m.
As reported in the Oct. 2, 2012 edition of the TCR, Arcapita Bank
has arranged up to $150 million of Shari'ah compliant financing
from Silver Point Finance LLC. The Debtors intend to pay Silver
Point a $2.25 million commitment fee. The fee won't be paid until
Silver Point waives the right to perform further investigation and
secures approval from its own credit committee. Arcapita has the
right to accept an unsolicited financing proposal from another
lender. Silver Point would be paid a $1.25 million breakup fee if
a deal with another lender is reached. The proposed Silver Point
loan is to bear interest at 10.5 percentage points higher than the
London Interbank Offered Rate.
About 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.
ASTORIA GENERATING: Moody's Affirms 'B2' Ratings on Sr. Sec. Debt
-----------------------------------------------------------------
Moody's Investors Service affirmed the B2 rating and stable
outlook for Astoria Generating Company Acquisitions, L.L.C.'s
(AGC) proposed $455 million of first priority senior secured
credit facilities, which include a $425 million term loan and a
$30 million working capital facility. This affirmation considers
recent changes to the pricing and structure of the transaction.
The rating outlook remains stable.
Ratings Rationale
Proceeds will be used to refinance existing debt at AGC, which is
made up of a 1st lien term loan with about $99 million currently
outstanding ($430 million original balance), a 1st lien working
capital facility that has about $57 million currently outstanding
and a $300 million 2nd lien term loan (with the $300 million
original balance still outstanding) all of which mature in 2013.
These ratings on these facilities, currently at B3 for the 1st
lien facilities and Caa2 for the 2nd lien term loan, will be
withdrawn once the refinancing closes.
Astoria Generating Company Acquisitions, LLC (AGC) is a 1,732 MW
power generation portfolio in New York City, excluding 567 MW of
the mothballed Astoria Units 2 and 4. The largest plant is the 773
MW Astoria facility, which has both intermediate and peaking
units. Peaking units located in Brooklyn, at Gowanus (593 MW) and
at the Narrows (308 MW) make up the balance of the portfolio.
Astoria is a subsidiary of US Power Generating Company (US
PowerGen), which was formed in 2007.
The latest rating action on AGC occurred on October 1, 2012, when
Moody's assigned a B2 rating to the planned senior secured
facilities.
The principal methodology used in this rating was Power Generation
Projects published in December 2008.
B+H OCEAN: Court Approves New Centurion as Financial Advisor
------------------------------------------------------------
BankruptcyData.com reports that the U.S. Bankruptcy Court signed a
supplemental order approving B+H Ocean Carriers' motion to retain
New Centurion Capital Partners as financial advisor. The
retention order is supplemented as:
(a) New Centurion Capital Partners will be paid a monthly
advisory fee of $75,000 for services rendered through
November 30, 2012 and
(b) New Centurion shall be compensated on an hourly basis
for all services rendered from December 1, 2012 through
the conclusion of these cases, at New Centurion's standard
hourly rates: $675 for H. Sean Mathis and $550 for Howard
F. Curd.
About B+H Ocean Carriers
B+H Ocean Carriers Ltd. is an international ship-owning and
operating company that owns, through subsidiaries, a fleet of
four product-suitable Panamax combination carriers capable of
transporting both wet and dry bulk cargoes, along with a 50%
interest in an additional combination carrier.
B+H Ocean Carriers and its subsidiaries filed voluntary Chapter
11 petitions (Bankr. S.D.N.Y. Case Nos. 12-12356) on May 30, 2012.
The Debtors disclosed assets of US$4.52 million and liabilities of
$46.09 million as of the Chapter 11 filing.
John H. Hall, Jr., Esq., at Pryor & Mandelup, L.L.P., in New York,
serves as bankruptcy counsel for the Debtors.
BAKERS FOOTWEAR: Aldo Terminates Asset Purchase Agreement
---------------------------------------------------------
As part of its restructuring plan, Bakers Footwear Group, Inc.,
entered into an Asset Purchase Agreement with Aldo U.S., Inc., in
August 2012. Under the Agreement, Aldo agreed to assume leases
and certain other assets for up to 52 of the Company's stores for
up to $6.375 million in cash. The sales are subject to obtaining
landlord consents by specified deadlines, with closing in three
phases from January 2013 to June 2013. The landlord consent
requirement for 19 of the Stores also includes modification of
certain terms, including extension of the lease term.
On Oct. 5, 2012, Aldo notified the Company that it elected not to
assume leases for 7 Stores pursuant to a provision in the
Agreement. The Company did not receive formal landlord consents
prior to the Oct. 6, 2012, deadline for phases one and two;
however, provisions of the Bankruptcy Code may render landlords'
consents unnecessary as to certain of the Stores. The phase three
deadline is not until March 1, 2013.
On Oct. 18, 2012, the Company received written notice from Aldo
purporting to immediately terminate the Agreement pursuant to
Section 9.3(e)(relating to bankruptcy). If the Agreement were
terminated, Aldo's escrow deposit would be refunded.
Nevertheless, Aldo has expressed a continuing desire to purchase
certain of the Stores.
The Company believes that the Bankruptcy Code renders Section
9.3(e) of the Agreement unenforceable and thus that Aldo's
termination notice is in violation of the automatic stay under
applicable bankruptcy law. The Company intends to vigorously
defend its position in Court, including potentially seeking
recovery from Aldo for breach of contract and violation of the
automatic stay and enforcing the sale, at least as to certain
Stores where the Agreement does not contemplate modification of
lease terms.
The Company can give no assurance as to its ability to
successfully sell leases or other assets to Aldo or other parties,
to otherwise effect actions contemplated by its restructuring
plans, or its ability to successfully reorganize under Chapter 11.
About Bakers Footwear
Bakers Footwear Group Inc., a mall-based retailer of shoes for
young women, filed for bankruptcy protection (Bankr. E.D. Mo. Case
No. 12-49658) in St. Louis on Oct. 3, 2012, after announcing a
plan to close stores and reduce costs.
Bakers was founded in St. Louis in 1926 as Weiss-Kraemer, Inc.,
later renamed Weiss and Neuman Shoe Co., a regional chain of
footwear stores. In 1997, Bakers was acquired principally by its
current chief executive officer, Peter Edison, who had previously
served in various senior management positions at Edison Brothers
Stores Inc. In June 1999, Bakers purchased selected assets of the
"Bakers" and "Wild Pair" footwear retailing chains from the
bankruptcy estate of Edison Brothers. The "Bakers" footwear
retailing chain was founded in 1924 and is the third-oldest soft
goods retail concept still in operation in the United States.
In February 2001, the Debtor changed its name to Bakers Footwear
Group, Inc. In February 2004, Bakers conducted an initial public
offering of its common stock. Bakers' common stock is quoted
under the ticker symbol "BKRS" on the, the OTC Markets Group's
quotation platform.
As of the Petition Date, Bakers operates roughly 215 stores
nationwide.
Bankruptcy Judge Charles E. Rendlen III presides over the case.
Brian C. Walsh, Esq., David M. Unseth, Esq., and Laura Uberti
Hughes, Esq., at Bryan Cave LLP, serve as the Debtor's counsel.
Alliance Management serves as financial and restructuring
advisors. Donlin, Recano & Company, Inc., serves as claims agent.
The petition was signed by Peter A. Edison, chief executive
officer and president.
The Company's balance sheet at April 28, 2012, showed $41.90
million in total assets, $59.49 million in total liabilities and a
$17.59 million total shareholders' deficit.
Counsel for Crystal Financial, the DIP Lender, are Donald E.
Rothman, Esq., at Riemer & Braunstein LLP; and Lisa Epps Dade,
Esq., at Spencer, Fane, Britt & Brown, LLP.
The U.S. Trustee has appointed 11 members to the official
committee of unsecured creditors.
BLUE SPRINGS: Court Approves Spencer Fane as Conflicts Counsel
--------------------------------------------------------------
Blue Springs Ford Sales, Inc., sought and obtained approval from
the Bankruptcy Court to employ the law firm of Spencer Fane Britt
& Browne LLP as special conflicts counsel for the Debtor.
The Debtor has selected Spencer Fane because of its attorneys'
expertise and knowledge in chapter 11 cases, extensive bankruptcy
litigation and transactional experience, and experience in
handling matters in the Western District of Missouri.
Spencer Fane will represent the Debtor only in connection with
conflict matters. Initially, Spencer Fane will be engaged to
conduct an analysis of lease issues between the Debtor and BFRE,
LLC, including whether the Debtor's lease with BFRE LLC is a fair
market lease.
The Debtor proposes to pay Spencer Fane its customary hourly rates
for services rendered. The firm's hourly rates range from $305 to
$425 per hour for partners, $220 per hour for associates and $170
per hour for paraprofessionals. The primary attorneys and
paralegals expected to represent the Debtor, and their hourly
rates are:
Scott J. Goldstein (Partner) $425 per hour
Lisa E. Dade (Partner) $335 per hour
Eric L. Johnson (Partner) $305 per hour
Heather Morris (Associate) $220 per hour
Lisa Wright (Paralegal) $170 per hour
Spencer Fane attests it is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
Blue Springs Ford
Blue Springs Ford Sales, Inc. -- http://www.bluespringsford.com/
-- is a Ford dealer, serving Blue Springs in Missouri. A jury
verdict assessing actual damages of $171,500 and punitive damages
in the amount of $1.75 million (54 times the actual damages)
prompted Blue Springs Ford to seek Chapter 11 protection. The
judgment was on account of a suit filed by a customer in Circuit
Court of Jackson County, Missouri, under a variety of legal
claims, including, but not limited to, the company's alleged
failure to adequately disclose a full detailed vehicle history
report in connection with a sale of a used Ford.
Blue Springs Ford filed a Chapter 11 petition (Bankr. D. Del. Case
No. 12-10982) on March 21, 2012, listing $10 million to $50
million in assets and debts. Christopher A. Ward, Esq., at
Polsinelli Shughart PC, serves as the Debtor's counsel. Donlin
Recano & Company Inc. serves as the Debtor's claims agent. The
petition was signed by Robert C. Balderston, president.
Delaware Bankruptcy Judge Mary F. Walrath in a March 28 order
transferred the case's venue following an oral motion by the
judgment, creditors Kimberly and Michael von David, at a March 23
hearing. The case was transferred to the U.S. Bankruptcy Court
Western District of Missouri Court (Case No. 12-41176) and
assigned to the Hon. Jerry W. Venters.
BLUE SPRINGS: Claims Due Nov. 16; BMC to Serve Bar Date Notice
--------------------------------------------------------------
The U.S. Bankruptcy has entered an order setting Nov. 16, 2012, as
the deadline for all creditors and parties-in-interest to file
proofs of claim against Blue Springs Ford Sales, Inc.
In a separate order, Blue Springs Ford Sales sought and obtained
Court approval to employ BMC Group, Inc. to serve the Court-
approved notice of the deadline for filing proofs of claim.
The Debtor has more than 700 creditors, potential creditors and
parties in interest to whom the Bar Date Notice will be sent.
Thousands of current and former customers will also receive the
Bar Date Notice.
Tinamarie Feil, President of Client Services at BMC Group, Inc.
attests that her firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
BMC will, among other things:
a. prepare and serve the Bar Date Notice, together with a proof
of claim form substantially conforming to Official
Bankruptcy Form 10, and a copy of the Bar Date Order;
b. receive and secured any mail returned as undeliverable; and
c. record and process any changes of address as requested by
the Debtor, and corresponding re-mailing.
Blue Springs Ford
Blue Springs Ford Sales, Inc. -- http://www.bluespringsford.com/
-- is a Ford dealer, serving Blue Springs in Missouri. A jury
verdict assessing actual damages of $171,500 and punitive damages
in the amount of $1.75 million (54 times the actual damages)
prompted Blue Springs Ford to seek Chapter 11 protection. The
judgment was on account of a suit filed by a customer in Circuit
Court of Jackson County, Missouri, under a variety of legal
claims, including, but not limited to, the company's alleged
failure to adequately disclose a full detailed vehicle history
report in connection with a sale of a used Ford.
Blue Springs Ford filed a Chapter 11 petition (Bankr. D. Del. Case
No. 12-10982) on March 21, 2012, listing $10 million to $50
million in assets and debts. Christopher A. Ward, Esq., at
Polsinelli Shughart PC, serves as the Debtor's counsel. Donlin
Recano & Company Inc. serves as the Debtor's claims agent. The
petition was signed by Robert C. Balderston, president.
Delaware Bankruptcy Judge Mary F. Walrath in a March 28 order
transferred the case's venue following an oral motion by the
judgment, creditors Kimberly and Michael von David, at a March 23
hearing. The case was transferred to the U.S. Bankruptcy Court
Western District of Missouri Court (Case No. 12-41176) and
assigned to the Hon. Jerry W. Venters.
BLUEJAY PROPERTIES: Hires TICC Property as Asset Manager
--------------------------------------------------------
Bluejay Properties, Inc., asks the U.S. Bankruptcy Court for
approval to employ TICC Property Management, LLC, to provide asset
management services.
The firm will, among other things:
a. supervise property manager Rental Management Solutions and
execution of the property business plan;
b. manage the negotiation and resolution of any disputes with
the Property Manager; and
c. locate, identify and negotiate with prospective third party
purchasers for the sale of all or any portion of the
Property and assistance to owner in closing the transaction.
Compensation would include an asset management fee equal to 1.5%
annualized of "Gross Rentals" as is industry standard practice and
part of the seamless compensation package in the Property
Management Agreement. In addition, the Debtor proposes TICC
should be entitled to earn a selling or financing commission equal
to 2% of the gross sales price of the Property or amount of the
gross loan proceed at the close of escrow if the Property is sold
or refinanced. From the selling or financing commission TICC will
be obligated to pay any commission due and payable to any real
estate or mortgage brokerage firm due on the sale or refinance of
the Bankruptcy Estate.
About Bluejay Properties
Based in Junction City, Kansas, Bluejay Properties, LLC, doing
business as Quinton Point, filed a bare-bones Chapter 11 petition
(Bankr. D. Kan. Case No. 12-22680) in Kansas City on Sept. 28,
2012. Bankruptcy Judge Robert D. Berger presides over the case.
Todd A. Luckman, Esq., at Stumbo Hanson, LLP in Topeka.
The Debtor owns the Quinton Point Apartment Complex in Kansas City
valued at $17 million. The Debtor scheduled liabilities of
$13,112,325. Bankers' Bank of Kansas is owed $13.08 million,
secured by a first mortgage on the property. The petition was
signed by Michael L. Thomas of TICC Prop., managing member.
CAPITOL BANCORP: Wins Court Approval to Sell Capital Stock
----------------------------------------------------------
BankruptcyData.com reports that the U.S. Bankruptcy Court approved
Capitol Bancorp Motion to authorize the sale of capital stock
owned by the Company's non-Debtor subsidiary, Capitol Development
Bancorp Limited VI, in High Desert Bank, a federal savings banking
corporation, pursuant to a second amended and restated stock
purchase agreement by and among the Company, High Desert Bank and
Alexander Hamilton as representative of a group of individual
investor for $760,000.
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.
CENTRAL EUROPEAN: Roustam Tariko Appointed Interim President
------------------------------------------------------------
In connection with the Corporate Governance Framework approved by
the Board of Directors of Central European Distribution
Corporation, on Sept. 13, 2012, the Board of Directors appointed
Mr. Roustam Tariko Interim President of the Company on Oct. 23,
2012. Mr. Tariko continues to serve as Chairman of the Board of
Directors of the Company.
Mr. Tariko, age 50, has been a director and Chairman of the Board
of Directors of the Company since July 2012. Mr. Tariko is the
founder of Russian Standard, one the largest Russian privately
owned companies working in the consumer market. Russian Standard
has leading positions in banking, premium vodka, sparkling wines
and spirits distribution. Dating back to 1992, the Russian
Standard family of companies today includes Russian Standard Vodka
(a number one premium vodka in Russia, present in over 75
countries), Roust Inc. (a leading Russian distributor of alcoholic
beverages), Gancia (a legendary Italian producer of sparkling
wines and vermouths founded in 1850), Russian Standard Bank (a
leading consumer lending and credit card bank in Russia) and
Russian Standard Insurance. Mr. Tariko is a graduate of the
Moscow Institute for Railway Engineering with a degree in
economics and INSEAD Executive School.
Mr. Tariko indirectly owns all of the shares of and controls Roust
Trading Ltd. and, accordingly, may be deemed to beneficially own
the shares of common stock of the Company currently owned by Roust
Trading Ltd. and which may be owned by Roust Trading Ltd.
In light of Mr. Tariko's increased responsibilities at the
Company, the Board of Directors has appointed Mr. Scott Fine to
serve as Vice Chairman of the Board of Directors of the Company.
Mr. Fine will continue to serve as lead director of the Board of
Directors of the Company.
Bylaws Amendment
The Board of Directors of the Company approved Amendment No. 2 to
the Company's Amended and Restated Bylaws, effective Oct. 23,
2012. The Bylaws were amended as follows:
Section 2.1 (Place of Meetings) was amended to provide that
the Chief Executive Officer may fix where stockholder
meetings of the Company are to be held in addition to the
Board of Directors or the Chairman of the Board.
Section 3.1 (Powers) was amended to make provision for the
annual election by the Board of Directors of a Lead Director
from among its members, and to stipulate that the Lead
Director will be nominated by a Committee of the Board of
Directors consisting of directors that have not been
appointed or designated by, or are affiliated with, Roust
Trading Ltd. or its affiliates. Section 3.1 further permits
the Board of Directors to designate the Lead Director to
preside at its meetings in the event that the Chairman of the
Board is also serving as President, Chief Executive Officer
or in a similar executive capacity.
Section 3.2 (Number and Election) was amended to provide that
unless and until Roust Trading Ltd. acquires a majority of
the outstanding class or classes of stock of the Corporation
entitled to elect directors, a majority of the then-serving
directors shall consist of directors that have not been
appointed or designated by, or are affiliated with, Roust
Trading Ltd. or its affiliates, provided, that so long as the
number of directors appointed or designated by Roust Trading
Ltd does not exceed the number of directors that Roust
Trading Ltd is entitled to appoint pursuant to Section 2.1 of
the Governance Agreement, no director appointed or designated
by, or are affiliated with, Roust Trading Ltd. or its
affiliate shall be required to resign or vacate his or her
position as a director to preserve such a majority.
Section 3.3 (Vacancies) was amended to provide that when the
majority of then-serving directors includes directors that
have been appointed or designated by, or are affiliated with,
Roust Trading Ltd, vacancy or vacancies caused by the
resignation of a director shall be filled by a vote of the
majority of then-serving directors that have not been
appointed or designated by, or are affiliated with, Roust
Trading Ltd.
Section 3.4.2 (Special Meetings) was amended to provide that
the Lead Director may call special meetings of the Board in
addition to the Chairman of the Board or the President.
A new Section 3.9 (Lead Director) was inserted to provide an
overview of the duties and powers of the Lead Director. The
Amendment provides, among other things, that the Lead
Director shall serve to coordinate the activities of other
non-employee directors and to perform such other duties and
have such other powers as the Board of Directors shall
designate from time to time.
Section 4.2 (Chairman of the Board), Section 4.3 (Chief
Executive Officer) and Section 4.4 (President) were amended
to reflect the role of Chairman of the Board as distinct from
the Chief Executive Officer and President and to revise and
clarify that the Chief Executive Officer and President shall
perform their respective duties in managing the business and
affairs of the Company within the scope of what has been
assigned to each of them by the Board of Directors acting
within its authority.
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.
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.
The Company's balance sheet at June 30, 2012, showed $1.86 billion
in total assets, $1.68 billion in total liabilities, $29.55
million in temporary equity, and $158.10 million in total
stockholders' equity.
Liquidity
Certain credit and factoring facilities are coming due in 2012,
which the Company expects to renew. Furthermore, the Company's
Convertible Senior Notes are due on March 15, 2013. The Company's
current cash on hand, estimated cash from operations and available
credit facilities will not be sufficient to make the repayment of
principal on the Convertible Notes and, unless the transaction
with Russian Standard Corporation is completed 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 June 30, 2012. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
The transaction with Russian Standard Corporation is subject to
certain risks, including shareholder approval which may not be
obtained. The Company's 2012 Annual Meeting of Stockholders,
which was postponed due to the need to restate the Company's
financial statements, is expected to be held as soon as
practicable. The Company believes that if the transaction is
completed as scheduled, the Convertible Notes will be repaid by
their maturity date, which would substantially reduce doubts about
the Company's ability to continue as a going concern.
* * *
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.
In the Oct. 9, 2012, edition of the TCR, Moody's Investors Service
has downgraded the corporate family rating (CFR) and probability
of default rating (PDR) of Central European Distribution
Corporation (CEDC) to Caa2 from Caa1.
"The downgrade reflects delays in CEDC securing adequate
financing to repay its US$310 million of convertible notes due
March 2013 which are increasing Moody's concerns that the
definitive agreement for a strategic alliance between CEDC and
Russian Standard Corporation (Russian Standard) might not
conclude at the current terms," says Paolo Leschiutta, a Moody's
Vice President - Senior Credit Officer and lead analyst for CEDC.
CHAMPION INDUSTRIES: Amends 2007 Credit Pact with Fifth Third
-------------------------------------------------------------
Champion Industries, Inc., and Fifth Third Bank, as a Lender, L/C
Issuer and Administrative Agent for Lenders and the other Lenders
party to Champion's Credit Agreement dated Sept. 14, 2007, have
entered into a First Amended and Restated Credit Agreement dated
Oct. 19, 2012, and Side Letter Agreement dated Oct. 19, 2012, by
and between each Lender, the Borrower, each Guarantor and the
Shareholder regarding Credit Facilities extended to the Borrower.
The Restated Credit Agreement and Side Letter Agreement amended
various provisions of the Original Credit Agreement and added
various provisions, including but not limited to:
* Restated Credit Agreement maturity at June 30, 2013, subject
to Champion's compliance with terms of the Restated Credit
Agreement and Side Letter Agreement.
* $0.001 per share warrants issued for up to 30% (on a post-
exercise basis) of the outstanding common stock of the
Company in the form of non-voting Class B common stock and
associated Investor Rights Agreement for the benefits of the
Lenders, subject to shareholder approval. The Company has
various milestone dates, which may reduce the number of
warrants outstanding upon satisfaction of certain conditions.
The Company is working with its outside advisors regarding
these items but is unable to predict the outcomes or
likelihood of success regarding the achievement of such
milestones. The warrants expire after Oct. 19, 2017.
* Various Targeted Transactions which may require the sale of
various assets, divisions or segments upon the achievement of
agreed upon value benchmarks among other considerations and
if not successfully completed by the applicable milestone
dates will be considered an event of default.
* Existing debt restructured into a $20,000,000 Term Loan A,
$6,277,743 Term Loan B, $4,000,000 Bullet Loan and
$9,025,496 Revolver Loan.
* A $10,000,000 revolving credit facility with a sublimit of up
to $3,000,000 for swing loans. Outstanding borrowings
thereunder may not exceed the sum of (1) up to 85% of
eligible receivables (reduced to 80% of eligible receivables
effective Dec. 30, 2012) plus (2) up to the lesser of
$5,000,000 or 50% of eligible inventory.
* Targeted interest rates as follows based on a 30-day LIBOR
borrowing option; Term Note A at LIBOR plus 8%, Term Note B
at 0% (subject to a deferred fee of 16% per annum with
various milestone dates reducing or forgiving such fees upon
successful completion of such milestones.), revolving loans
at LIBOR plus 6% and Bullet Loans A at a rate of LIBOR plus
8%.
* At Champion's option, interest at a LIBOR Rate plus the
applicable margin.
* Post default increase in interest rates of 2%.
* Amendment of various covenants as further described in the
Restated Credit Agreement.
* Fixed Charge Coverage Ratio is required to be 1.0 to 1.0 as
of Jan. 31, 2013, and 1.10 to 1.0 as of April 30, 2013, based
on a build up model commencing Oct. 1, 2012.
* Leverage Ratio is required to be 3.30 to 1.00 as of Jan. 31,
2013, and 3.10 to 1.00 as of April 30, 2013, based on a
trailing twelve month EBITDA calculation.
* Minimum EBITDA pursuant to a monthly build up commencing with
the month ended Oct. 31, 2012, of $600,000 increasing to
$1,100,000 for Nov. 30, 2012, $1,600,000 at Dec. 31, 2012,
$2,600,000 at Jan. 31, 2013, $3,350,000 at Feb. 28, 2013,
$4,100,000 at March 31, 2013, $5,200,000 at April 30, 2013,
$5,550,000 at May 31, 2013, and $5,900,000 at June 30, 2013.
* Maximum Capital expenditures are limited to $1,000,000 for
fiscal years commencing after Oct. 31, 2012.
* Enhanced reporting by Champion to Administrative Agent.
Continued retention of a Chief Restructuring Advisor and
Raymond James & Associates, Inc., as well as continued
retention by Secured Lenders of their advisor.
* $100,000 fee due at closing plus monthly Administrative Agent
fees of $15,000
A copy of the Amended Credit Agreement is available at:
http://is.gd/5HX5kW
A copy of the Side Letter Agreement is available at:
http://is.gd/0U8xnT
About Champion Industries
Champion Industries, Inc., is a commercial printer, business forms
manufacturer and office products and office furniture supplier in
regional markets in the United States. The Company also publishes
The Herald-Dispatch daily newspaper in Huntington, WV. The
Company's sales force sells printing services, business forms
management services, office products, office furniture and
newspaper advertising. Its subsidiaries include Interform
Corporation, Blue Ridge, Champion Publishing, Inc., The Dallas
Printing, The Bourque Printing, The Capitol, and The Herald-
Dispatch.
The Company reported a net loss of $3.97 million for the year
ended Oct. 31, 2011, compared with net income of $488,134 during
the prior year.
The Company's balance sheet at July 31, 2012, showed
$51.21 million in total assets, $51.98 million in total
liabilities, and a $767,157 total shareholders' deficit.
CHARLIE MCGALMRY: Files Schedules of Assets and Liabilities
-----------------------------------------------------------
Charlie N. McGlamry filed with the U.S. Bankruptcy Court for the
Middle District Of Georgia its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $5,510,601
B. Personal Property $14,234,478
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $6,005,954
E. Creditors Holding
Unsecured Priority
Claims $44,125
F. Creditors Holding
Unsecured Non-priority
Claims $86,587,919
----------- -----------
TOTAL $19,745,079 $92,637,998
A copy of the schedules, as amended, is available of free at
http://bankrupt.com/misc/CHARLIE_N_MCGLAMRY_sal_amended.pdf
About Charlie N. McGlamry
Centerville, Georgia-based real estate developer Charlie N.
McGlamry filed a petition for Chapter 11 protection, along with
his 14 companies, in Macon, Georgia on May 9, 2012.
Over the past 44 years, Mr. McGlamry has managed to successfully
develop numerous real estate developments in and around Houston
County, Georgia. Mr. McGlamry continues to operate his real
estate development business through sole proprietorship McGlamry
Properties -- http://www.mcglamryproperties.com-- and USA Land
Development Inc. Mr. McGlamry individually owns, through his sole
proprietorship, approximately, 74 acres of undeveloped commercial
property at the intersection of Russell Parkway and Corder Road in
Houston County, Georgia. Mr. McGlamry established a number of
single member limited liability companies and sole shareholder
corporations to own and develop specific tracts of land.
Mr. McGlamry and his affiliated companies sought joint
administration of their Chapter 11 cases and have Mr. McGlamry's
as the lead case (Bankr. M.D. Ga. Case No. 12-51197). Judge James
P. Smith oversees the case.
Cohen Pollock Merlin & Small, PC, serves as the Debtors' Chapter
11 counsel. Nichols, Cauley & Associates, LLC, serves as their
accountant.
Mr. McGlamry, as sole shareholder or member, signed Chapter 11
petitions for USA Land Development (Case No. 12-51198); Barrington
Hall Development Corp. (12-51199); Bear Branch LLC; By-
Pass/Courthouse LLC (12-51201); Chinaberry Place, LLC (12-51202);
Eagle Springs LLC (12-51203); Elmdale Development, LLC (12-51204);
Gurr/Kings Chapel Road, LLC (12-51205); Jaros Development LLC
(12-51206); Lake Joy Development, LLC (12-51207); Old Hawkinsville
Road, LLC (12-51208); South Houston Development, LLC (12-51209);
The Villages at Nunn Farms, LLC (12-51210); and Houston-Peach
Investments LLC (12-51212).
Mr. McGlamry estimated up to $50 million in assets and up to
$100 million in liabilities in his Chapter 11 filing. The Debtors
tapped Cohen Pollock Merlin & Small, PC, as bankruptcy counsel.
CHARLIE MCGLAMRY: Has Until Dec. 5 to Propose Chapter 11 Plan
-------------------------------------------------------------
The Hon. James P. Smith of the U.S. Bankruptcy Court for the
Middle District of Georgia extended Charlie N. McGlamry, et al.'s
exclusive periods to file plans and solicit acceptances for the
proposed plans of reorganization until Dec. 5, 2012, and Feb. 4,
2013, respectively.
About Charlie N. McGlamry
Centerville, Georgia-based real estate developer Charlie N.
McGlamry filed a petition for Chapter 11 protection, along with
his 14 companies, in Macon, Georgia on May 9, 2012.
Over the past 44 years, Mr. McGlamry has managed to successfully
develop numerous real estate developments in and around Houston
County, Georgia. Mr. McGlamry continues to operate his real
estate development business through sole proprietorship McGlamry
Properties -- http://www.mcglamryproperties.com-- and USA Land
Development Inc. Mr. McGlamry individually owns, through his sole
proprietorship, approximately, 74 acres of undeveloped commercial
property at the intersection of Russell Parkway and Corder Road in
Houston County, Georgia. Mr. McGlamry established a number of
single member limited liability companies and sole shareholder
corporations to own and develop specific tracts of land.
Mr. McGlamry and his affiliated companies sought joint
administration of their Chapter 11 cases and have Mr. McGlamry's
as the lead case (Bankr. M.D. Ga. Case No. 12-51197). Judge James
P. Smith oversees the case.
Cohen Pollock Merlin & Small, PC, serves as the Debtors' Chapter
11 counsel. Nichols, Cauley & Associates, LLC, serves as their
accountant.
Mr. McGlamry, as sole shareholder or member, signed Chapter 11
petitions for USA Land Development (Case No. 12-51198); Barrington
Hall Development Corp. (12-51199); Bear Branch LLC; By-
Pass/Courthouse LLC (12-51201); Chinaberry Place, LLC (12-51202);
Eagle Springs LLC (12-51203); Elmdale Development, LLC (12-51204);
Gurr/Kings Chapel Road, LLC (12-51205); Jaros Development LLC
(12-51206); Lake Joy Development, LLC (12-51207); Old Hawkinsville
Road, LLC (12-51208); South Houston Development, LLC (12-51209);
The Villages at Nunn Farms, LLC (12-51210); and Houston-Peach
Investments LLC (12-51212).
Mr. McGlamry disclosed $19,745,079 in assets and $92,637,998 in
liabilities as of the Chapter 11 filing. The Debtors tapped Cohen
Pollock Merlin & Small, PC, as bankruptcy counsel.
CHARLIE MCGLAMRY: Plan Confirmation Hearing Set for Dec. 10
-----------------------------------------------------------
The Hon. James P. Smith of the U.S. Bankruptcy Court for the
Middle District of Georgia will convene a hearing on Dec. 10, and
Dec. 11, 2012, at 10 a.m., to consider the confirmation of Charlie
N. McGlamry's Chapter 11 Plan, as amended. Objections, if any,
are due Nov. 30.
The Court said that the Disclosure Statement filed on Aug. 24,
2012, and modified on Oct. 16, contained adequate information.
Written ballots accepting or rejecting the Plan are due Nov. 30.
According to Mr. McGlamry's First Amended Disclosure Statement,
the Plan provides for the creation of a Liquidating Trust and the
appointment of a Plan Trustee to administer the Trust. The Debtor
has selected Ward Stone, Esquire as the Plan Trustee. All of
Debtor's assets other than those in which he holds an exemption
under Georgia law, will be transferred to the McGlamry Liquidating
Trust and will be liquidated by the Plan Trustee and the proceeds
distributed to creditors.
The Debtor's Plan provides for the satisfaction of all allowed
domestic support obligations and administrative claims on the
Effective Date or as soon as practicable thereafter.
The major claimants are State Bank, Colony, Certus, BB&T, Key, and
Wells Fargo. All of these claims are based on unsecured personal
guarantees of secured loans made by one or more of the McGlamry
Affiliates or other entities which are partially owned by
McGlamry.
A copy of the Disclosure Statement is available for free at
http://bankrupt.com/misc/CHARLIE_N_MCGLAMRY_ds_1amended.pdf
As reported in the Troubled Company Reporter on Aug. 30, 2012, the
trustee also will have the power to pursue any causes of action
provided for under the bankruptcy code or state law against third
parties. Finally, the Debtor will make certain payments to the
trust of his disposable income over a period of three years from
the Effective Date of the Plan.
The Debtor owes Synovus Bank on a $5.559 million loan secured by
74 acres of undeveloped commercial property at the intersection of
Russell Parkway and Corder Road in Houston County, Georgia. The
Debtor will convey his right to the property in full satisfaction
of the secured claim.
The Debtor has an unsecured debt of $4.5 million on an obligation
relating to his interest in a non-Debtor entity known as Oaky
Timberlands, LLC. In addition, the Debtor owes $20 million to
unsecured creditors on account of a personal guarantee of the
indebtedness of his affiliated companies. The unsecured creditors
will share pro rata with Synovus in the proceeds from the
liquidating trust.
A copy of the Disclosure Statement dated Aug. 24, 2012, is
available at http://bankrupt.com/misc/Charlie_McGlamry_DS.pdf
About Charlie N. McGlamry
Centerville, Georgia-based real estate developer Charlie N.
McGlamry filed a petition for Chapter 11 protection, along with
his 14 companies, in Macon, Georgia on May 9, 2012.
Over the past 44 years, Mr. McGlamry has managed to successfully
develop numerous real estate developments in and around Houston
County, Georgia. Mr. McGlamry continues to operate his real
estate development business through sole proprietorship McGlamry
Properties -- http://www.mcglamryproperties.com-- and USA Land
Development Inc. Mr. McGlamry individually owns, through his sole
proprietorship, approximately, 74 acres of undeveloped commercial
property at the intersection of Russell Parkway and Corder Road in
Houston County, Georgia. Mr. McGlamry established a number of
single member limited liability companies and sole shareholder
corporations to own and develop specific tracts of land.
Mr. McGlamry and his affiliated companies sought joint
administration of their Chapter 11 cases and have Mr. McGlamry's
as the lead case (Bankr. M.D. Ga. Case No. 12-51197). Judge James
P. Smith oversees the case.
Cohen Pollock Merlin & Small, PC, serves as the Debtors' Chapter
11 counsel. Nichols, Cauley & Associates, LLC, serves as their
accountant.
Mr. McGlamry, as sole shareholder or member, signed Chapter 11
petitions for USA Land Development (Case No. 12-51198); Barrington
Hall Development Corp. (12-51199); Bear Branch LLC; By-
Pass/Courthouse LLC (12-51201); Chinaberry Place, LLC (12-51202);
Eagle Springs LLC (12-51203); Elmdale Development, LLC (12-51204);
Gurr/Kings Chapel Road, LLC (12-51205); Jaros Development LLC
(12-51206); Lake Joy Development, LLC (12-51207); Old Hawkinsville
Road, LLC (12-51208); South Houston Development, LLC (12-51209);
The Villages at Nunn Farms, LLC (12-51210); and Houston-Peach
Investments LLC (12-51212).
Mr. McGlamry Mr. McGlamry disclosed $19,745,079 in assets and
$92,637,998 in liabilities as of the Chapter 11 filing. The
Debtors tapped Cohen Pollock Merlin & Small, PC, as bankruptcy
counsel.
CHG HEALTHCARE: Moody's Assigns 'B2' CFR; Outlook Stable
--------------------------------------------------------
Moody's Investors Service assigned Corporate Family and
Probability of Default Ratings of B2 to CHG Healthcare Services,
Inc. ("CHG", initially "CHG Buyer Corporation") in connection with
its proposed $1.25 billion leveraged buyout. Moody's also assigned
B1 ratings to the proposed $550 million first lien credit
facilities, and Caa1 to the proposed $215 million second lien term
loan. The rating outlook is stable.
Proceeds from the credit facilities and a common equity infusion
will fund CHG's leveraged buyout by Leonard Green & Partners L.P.
and Ares Management LLC from current owner J. W. Childs Associates
and refinance existing debt.
Assignments:
Issuer: CHG Buyer Corporation
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2
$100 million First Lien Senior Secured Revolving Credit
Facility due 2017, Assigned B1 (LGD3 33%)
$450 million First Lien Senior Secured Term Loan B due 2019,
Assigned B1 (LGD3 33%)
$215 million Second Lien Senior Secured Term Loan due 2020,
Assigned Caa1 (LGD5 85%)
Outlook, Stable
The assigned ratings are subject to Moody's review of final terms
and conditions of the proposed transaction, which is expected to
close in the fourth quarter.
Ratings Rationale
The B2 Corporate Family Rating ("CFR") is principally constrained
by CHG's high leverage at 6.7 times for the LTM period ended
September 30, 2012 pro-forma for the buyout transaction, small
size relative to other rated staffing companies, limited business
line diversity, and event risk associated with private equity
ownership. The rating benefits from the relative stability of the
core locum tenens staffing business, CHG's leading market position
and track record of above-average growth in the locum tenens
segment, the breadth of its physician specialty offerings and
customer base, and a good liquidity profile.
Debt capital will be comprised of a $100 million proposed first
lien senior secured revolving credit facility due 2017, a $450
million proposed first lien senior secured term loan due 2019, and
a $215 million proposed second lien senior secured term loan due
2020.
The B1 ratings on the first lien term loan and revolver, one notch
above the B2 CFR, reflect their first priority lien on
substantially all tangible and intangible assets of CHG and its
domestic subsidiaries, a pledge of 65% of the voting stock of all
non-US subsidiaries, and upstream guarantees by all existing and
future domestic wholly-owned subsidiaries. The Caa1 rating on the
second lien senior secured term loan, two notches below the B2
CFR, reflects contractual subordination to the first lien credit
facilities. The second lien term loan has a second priority lien
on the same collateral that secures the first lien facility and
the same guarantor arrangements.
The stable outlook anticipates steady moderate near-term earnings
growth and limited debt repayment. The ratings could be downgraded
if the company adopts aggressive financial policies, if liquidity
deteriorates, or if Moody's expects leverage to exceed 6.0 times
on a sustained basis. Negative rating pressure could also arise if
CHG margins or market share decline. Moody's could upgrade the
ratings if the company demonstrates a commitment to debt
repayment, such that leverage is expected to be maintained below
5.0 times, and maintains organic earnings growth and good
liquidity.
The principal methodology used in rating CHG 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.
CHG Healthcare Services, Inc ("CHG", initially "CHG Buyer
Corporation") is a provider of temporary healthcare staffing
services to hospitals, physician practices and other healthcare
settings in the United States. CHG derives the majority of its
revenues from locum tenens (temporary physician) staffing, and
additionally provides travel nurse, allied health, and permanent
placement services. Revenues for the LTM period ended 9/30/2012
were approximately $716 million. CHG will be controlled by Leonard
Green & Partners L.P. and Ares Management LLC following the
closing of the expected purchase from J.W. Childs in the fourth
quarter of 2012. Upon consummation of the transaction, CHG Buyer
Corporation will be merged with and into CHG Healthcare Services,
Inc.
CHG HEALTHCARE: S&P Assigns B Corp. Credit Rating; Outlook Stable
-----------------------------------------------------------------
Standard and Poor's Ratings Services assigned CHG Healthcare
Services Inc. its 'B' corporate credit rating. The outlook is
stable.
"At the same time, we assigned CHG Buyer Corp.'s proposed $550
million first-lien credit facility (comprised of a $100 million
revolver maturing 2017 and a $450 million first-lien term loan
maturing 2019) our 'B' issue-level rating with a recovery rating
of '3', indicating our expectation for meaningful (50% to 70%)
recovery in the event of principal default," S&P said.
"We also assigned CHG Buyer Corp.'s proposed $215 million second-
lien term loan maturing 2020 our 'CCC+' issue-level rating with a
recovery rating of '6', indicating our expectation for negligible
(0% to 10%) recovery in the event of principal default," S&P said.
"Our ratings on CHG Healthcare Services Inc. reflect the company's
'weak' business risk profile, highlighted by CHG's operating
concentration in the highly competitive health care staffing
industry," said Standard & Poor's credit analyst Tahira Wright.
"This is partly offset by the company's revenue growth of its
locum tenens business, providing some stability against the
variability of demand and supply from its allied health and travel
nurse segment. The rating also reflects the company's 'highly
leveraged' financial risk profile. This incorporates our
expectation that pro-forma adjusted leverage will be over 7x
following the leverage buyout (LBO) by it sponsors LGP and Ares.
We expect the company will use available cash flow to reduce debt,
but we expect adjusted leverage will still be above 5x through
2013 and 2014. CHG is the largest locum tenens health care
staffing firm with a leading presence in allied health and travel
nurse staffing."
CIRCUS AND ELDORADO: Court Confirms Joint Chapter 11 Plan
---------------------------------------------------------
BankruptcyData.com reports that the U.S. Bankruptcy Court
confirmed Circus and Eldorado Joint Venture's First Amended Joint
Chapter 11 Plan of Reorganization, which assumes substantive
consolidation treatment of all assets and claims. The Plan
provides that the Company's estimated $4.7 million in general
unsecured claims will be paid in full in cash in four equal
quarterly installments, the last of which will occur no later than
one year after the Plan's effective date.
Bill O'Driscoll at RGJ.com reported that the Silver Legacy Resort
Casino's bankruptcy settlement was made official in court on
Oct. 23, 2012, and Gary Carano, CEO of Circus and Eldorado Joint
Venture, said the downtown Reno high-rise has aggressive plans to
make the resort the "sweetheart of the community" it was when it
opened in 1995.
According to the report, Mr. Carano said the settlement is based
on a revised total debt of $97.5 million, including a new $70
million bank loan and cash from the owners as well as the Silver
Legacy's balance sheet. "The bondholders took a small haircut,"
Mr. Carano said, but he added that they will also receive a $27.5
million second lien on the 35-story, 1,700-room property at the
corner of Fourth and Virginia Streets.
According to the report, Mr. Carano said the onset of recession
four years ago, coupled with the ongoing proliferation of Indian
gaming in California, put the Silver Legacy in a difficult
position when the loan, taken out in 2002 at a 10.125% interest
rate, came due.
The report noted Mr. Carano said the Silver Legacy is preparing
"exciting marketing plans" to be announced by 2013.
The Troubled Compan Reporter, citing Bill Rochelle, the bankruptcy
columnist for Bloomberg News, reported that Circus & Eldorado can
exit bankruptcy protection after a judge signed a confirmation
order Oct. 23 approving its Chapter 11 reorganization plan.
Confirmation without a fight was made possible when the casino's
owners reached a settlement this month with noteholder Black
Diamond Capital Management LLC. Under the confirmed plan,
unsecured creditors are being paid in full on about $5 million in
claims. The owners are making new capital contributions.
About Circus and Eldorado
Circus and Eldorado Joint Venture and Silver Legacy Capital Corp.
filed for Chapter 11 bankruptcy (Bankr. D. Nev. Case Nos. 12-51156
and 12-51157) on May 17, 2012.
Circus and Eldorado Joint Venture owns and operates the Silver
Legacy Resort Casino, a 19th century silver mining themed hotel,
casino and entertainment complex located in downtown Reno, Nevada.
The casino and entertainment areas at Silver Legacy are connected
by skyway corridors to the neighboring Eldorado Hotel & Casino and
the Circus Circus Hotel and Casino, each of which are owned by
affiliates of the Debtors. Together, the three properties
comprise the heart of the Reno market's prime gaming area and room
base.
Silver Legacy Capital is a wholly owned subsidiary of the Joint
Venture and was created and exists for the sole purpose of serving
as a co-issuer of the mortgage notes due 2012. SLCC has no
operations, assets or revenues.
Eldorado Hotel & Casino and Circus Circus Hotel and Casino are not
debtors in the Chapter 11 cases.
The Company did not make the required principal payment of its
10.125% mortgage notes on the maturity date of March 1, 2012. The
company also elected not to make the scheduled interest payment.
As a result, an aggregate of $142.8 million principal amount of
Notes were outstanding and accrued interest of $7.23 million on
the Notes, as of March 1, 2012, was due and payable.
Judge Bruce T. Beesley presides over the Chapter 11 case. Paul S.
Aronzon, Esq., and Thomas P. Kreller, Esq., at Milbank, Tweed,
Hadley & McCloy LLP; and Sallie B. Armstrong, Esq., at Downey
Brand LLP, serve as the Debtors' counsel. The Debtors' financial
advisor is FTI Consulting Inc. The claims agent is Kurtzman
Carson Consultants LLC.
The Bank of New York Mellon Trust Company, N.A., the trustee for
the Debtors' 10-1/8% Mortgage Notes due 2012, is represented by
Craig A. Barbarosh, Esq., and Karen B. Dine, Esq., at Pillsbury
Winthrop Shaw Pittman LLP.
Circus and Eldorado Joint Venture disclosed $264,649,800 in assets
and $158,753,490 in liabilities as of the Chapter 11 filing.
The petitions were signed by Stephanie D. Lepori, chief financial
officer.
August B. Landis, the Acting U.S. Trustee for Region 17, appointed
three creditors to serve in the Official Committee of Unsecured
Creditors in the Debtors' Chapter 11 cases. Stutman, Treister &
Glatt Professional Corporation represents the Committee.
CLEAR CHANNEL: Issues $2 Billion Guarantee Notes Due 2019
---------------------------------------------------------
Clear Channel Communications, Inc., closed its previously
announced private offer to exchange up to $2 billion aggregate
principal amount of term loans under its cash flow credit
facilities for a like principal amount of newly issued CCU 9.0%
priority guarantee notes due 2019. Because in excess of $8.6
billion in aggregate principal amount of term loans was submitted
for exchange in the exchange offer, the amount of each lender's
term loans that was accepted for exchange was reduced by a
proration factor of 23.0590%. As a result of the application of
the proration factor and rounding as described in the Offering
Circular, CCU issued an aggregate principal amount of
$1,999,815,000 of the Notes. The exchange offer, which was only
available to eligible lenders under CCU's cash flow credit
facilities, was made pursuant to an Offering Circular dated
Oct. 12, 2012, as supplemented on Oct. 18, 2012, and was exempt
from registration under the Securities Act of 1933, as amended.
Concurrently with the closing of the exchange offer, CCU entered
into an amendment to the agreement governing its cash flow credit
facilities. The Amendment, among other things:
-- permits exchange offers of term loans for new debt
securities in an aggregate principal amount of up to
$5 billion;
-- provides CCU with greater flexibility to prepay tranche A
term loans;
-- following the repayment or extension of all tranche A term
loans, permits below par non-pro rata purchases of term
loans pursuant to customary Dutch auction procedures whereby
all lenders of the class of term loans offered to be
purchased will be offered an opportunity to participate;
-- following the repayment or extension of all tranche A term
loans, permits the repurchase of junior debt maturing before
January 2016 with cash on hand in an amount not to exceed
$200 million;
-- combines the term loan B, the delayed draw term loan 1 and
the delayed draw term loan 2 under the cash flow credit
facilities;
-- preserves revolving credit facility capacity in the event
CCU repays all amounts outstanding under the revolving
credit facility; and
-- eliminates certain restrictions on the ability of Clear
Channel Outdoor Holdings, Inc., and its subsidiaries to
incur debt.
Upon the consummation of the exchange offer, approximately $9.3
billion in aggregate principal amount of term loans was
outstanding under the cash flow credit facilities.
The Notes are fully and unconditionally guaranteed, jointly and
severally, on a senior basis by CCU's parent, Clear Channel
Capital I, LLC, and all of CCU's existing and future domestic
wholly-owned restricted subsidiaries.
"We are pleased with the success of this debt transaction and
gratified that it was so significantly oversubscribed," said Tom
Casey, Executive Vice President and Chief Financial Officer. "We
appreciate the support from our sponsors and our lenders for the
amendments to our credit facilities that made this
transformational transaction possible. As the latest step in our
continuing refinancing strategy, it will also provide us greater
flexibility to manage our debt maturities in the future. We
believe that this transaction reflects investor confidence in the
Company's business strategy and performance."
About Clear Channel
San Antonio, Texas-based CC Media Holdings, Inc. (OTC BB: CCMO) --
http://www.ccmediaholdings.com/-- is the parent company of Clear
Channel Communications, Inc. CC Media Holdings is a global media
and entertainment company specializing in mobile and on-demand
entertainment and information services for local communities and
premier opportunities for advertisers. The Company's businesses
include radio and outdoor displays.
Clear Channel reported a net loss of $302.09 million on $6.16
billion of revenue in 2011, compared with a net loss of $479.08
million on $5.86 billion of revenue in 2010. The Company had a
net loss of $4.03 billion on $5.55 billion of revenue in 2009.
The Company's balance sheet at June 30, 2012, showed
$16.45 billion in total assets, $24.31 billion in total
liabilities, and a $7.86 billion total shareholders deficit.
Bankruptcy Warning
At March 31, 2012, the Company had $20.7 billion of total
indebtedness outstanding.
The Company said in its quarterly report for the period ended
March 31, 2012, that its ability to restructure or refinance the
debt will depend on the condition of the capital markets and the
Company's financial condition at that time. Any refinancing of
the Company's debt could be at higher interest rates and increase
debt service obligations and may require the Company and its
subsidiaries to comply with more onerous covenants, which could
further restrict the Company's business operations. The terms of
existing or future debt instruments may restrict the Company from
adopting some of these alternatives. These alternative measures
may not be successful and may not permit the Company or its
subsidiaries to meet scheduled debt service obligations. If the
Company and its subsidiaries cannot make scheduled payments on
indebtedness, the Company or its subsidiaries, as applicable, will
be in default under one or more of the debt agreements and, as a
result the Company could be forced into bankruptcy or liquidation.
* * *
The Troubled Company Reporter said on Feb. 10, 2012, Fitch Ratings
has affirmed the 'CCC' Issuer Default Rating of Clear Channel
Communications, Inc., and the 'B' IDR of Clear Channel Worldwide
Holdings, Inc., an indirect wholly owned subsidiary of Clear
Channel Outdoor Holdings, Inc., Clear Channel's 89% owned outdoor
advertising subsidiary. The Rating Outlook is Stable.
Fitch's ratings concerns center on the company's highly leveraged
capital structure, with significant maturities in 2014 and 2016;
the considerable and growing interest burden that pressures free
cash flow; technological threats and secular pressures in radio
broadcasting; and the company's exposure to cyclical advertising
revenue. The ratings are supported by the company's leading
position in both the outdoor and radio industries, as well as the
positive fundamentals and digital opportunities in the outdoor
advertising space.
CLEARWIRE CORP: Files Form 10-Q, Incurs $213.8MM Net Loss in Q3
---------------------------------------------------------------
Clearwire Corporation filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
attributable to the Company of $213.78 million on $313.88 million
of revenue for the three months ended Sept. 30, 2012, compared
with a net loss attributable to the Company of $84.79 million on
$332.17 million of revenue for the same period during the prior
year.
For the nine months ended Sept. 30, 2012, the Company reported a
net loss attributable to the Company of $541.41 million on $953.45
million of revenue, in comparison with a net loss attributable to
the Company of $480.48 million on $891.59 million of revenue for
the same period a year ago.
The Company's balance sheet at Sept. 30, 2012, showed $8.14
billion in total assets, $5.86 billion in total liabilities and
$2.28 billion in total stockholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/iU9Hrk
About Clearwire Corporation
Kirkland, Wash.-based Clearwire Corporation (NASDAQ: CLWR)
-- http://www.clearwire.com/-- through its operating
subsidiaries, is a provider of 4G mobile broadband network
services in 68 markets, including New York City, Los Angeles,
Chicago, Dallas, Philadelphia, Houston, Miami, Washington, D.C.,
Atlanta and Boston.
The Company reported a net loss attributable to the Company of
$717.33 million in 2011, a net loss attributable to the Company of
$487.43 million in 2010, and a net loss attributable to the
Company of $325.58 million in 2009.
* * *
As reported by the TCR on Nov. 25, 2011, Standard & Poor's Ratings
Services lowered its corporate credit and senior secured first-
lien issue-level ratings on Bellevue, Wash.-based wireless
provider Clearwire Corp. to 'CCC' from 'CCC+'.
The ratings on Clearwire continue to reflect its "highly
leveraged" financial risk profile based on its high debt burden
and "weak" liquidity (both terms as defined in S&P's criteria).
"The ratings also reflect our view that Clearwire has a vulnerable
business position as a developmental-stage company with
significant competition from better capitalized wireless carriers,
including AT&T Mobility and Verizon Wireless, which are deploying
their own 4G wireless services," S&P said in January 2012.
"We believe that the company would likely run out of cash in the
late 2012 to early 2013 time frame absent significant asset sales,
since we view the terms in the December 2011 wholesale agreement
with Sprint Nextel as unfavorable in the near term and will likely
constrain cash inflows in 2012 to 2013. We have not assumed
spectrum sales in our liquidity assessment because of the
uncertainty involved in finding a buyer, as well as timing.
However, if the company could secure sufficient funding for
operations through 2013, we could raise the ratings," S&P also
stated.
CLEARWIRE CORP: Bright House Holds 1.2% of Class A Shares
---------------------------------------------------------
In a Schedule 13D filing with the U.S. Securities and Exchange
Commission, Bright House Networks, LLC, BHN Spectrum Investments,
LLC, and Newhouse Broadcasting Corporation disclosed that, as of
Oct. 17, 2012, they beneficially own 8,474,440 shares of Class A
Common Stock of Clearwire Corporation representing 1.2% of the
shares outstanding. A copy of the filing is available at:
http://is.gd/68xuq4
About Clearwire Corporation
Kirkland, Wash.-based Clearwire Corporation (NASDAQ: CLWR)
-- http://www.clearwire.com/-- through its operating
subsidiaries, is a provider of 4G mobile broadband network
services in 68 markets, including New York City, Los Angeles,
Chicago, Dallas, Philadelphia, Houston, Miami, Washington, D.C.,
Atlanta and Boston.
The Company reported a net loss attributable to the Company of
$717.33 million in 2011, a net loss attributable to the Company of
$487.43 million in 2010, and a net loss attributable to the
Company of $325.58 million in 2009.
The Company's balance sheet at Sept. 30, 2012, showed $8.14
billion in total assets, $5.86 billion in total liabilities and
$2.28 billion in total stockholders' equity.
* * *
As reported by the TCR on Nov. 25, 2011, Standard & Poor's Ratings
Services lowered its corporate credit and senior secured first-
lien issue-level ratings on Bellevue, Wash.-based wireless
provider Clearwire Corp. to 'CCC' from 'CCC+'.
The ratings on Clearwire continue to reflect its "highly
leveraged" financial risk profile based on its high debt burden
and "weak" liquidity (both terms as defined in S&P's criteria).
"The ratings also reflect our view that Clearwire has a vulnerable
business position as a developmental-stage company with
significant competition from better capitalized wireless carriers,
including AT&T Mobility and Verizon Wireless, which are deploying
their own 4G wireless services," S&P said in January 2012.
"We believe that the company would likely run out of cash in the
late 2012 to early 2013 time frame absent significant asset sales,
since we view the terms in the December 2011 wholesale agreement
with Sprint Nextel as unfavorable in the near term and will likely
constrain cash inflows in 2012 to 2013. We have not assumed
spectrum sales in our liquidity assessment because of the
uncertainty involved in finding a buyer, as well as timing.
However, if the company could secure sufficient funding for
operations through 2013, we could raise the ratings," S&P also
stated.
CLEARWIRE CORP: Incurs $213.8 Million Net Loss in Third Quarter
---------------------------------------------------------------
Clearwire Corporation reported a net loss attributable to the
Company of $213.78 million on $313.88 million of revenue for the
three months ended Sept. 30, 2012, compared with a net loss
attributable to the Company of $84.79 million on $332.17 million
of revenue for the same period during the prior year.
The Company reported a net loss attributable to the Company of
$541.41 million on $953.45 million of revenue for the nine months
ended Sept. 30, 2012, compared with a net loss attributable to the
Company of $480.48 million on $891.59 million of revenue for the
same period a year ago.
The Company's balance sheet at Sept. 30, 2012, showed
$8.14 billion in total assets, $5.86 billion in total liabilities
and $2.28 billion in total stockholders' equity.
"Recent developments in the U.S. wireless industry serve as a
direct reminder of the key strategic role deep spectrum resources
and a global LTE ecosystem will play in the long-term success of
any 4G mobile broadband operator," said Erik Prusch, President and
CEO of Clearwire. "Clearwire's unmatched spectrum assets and
focus on serving major population centers will be the foundation
on which we will build a critical 4G LTE network positioned to
serve the needs of the industry and the rapidly growing base of 4G
customers across the country."
A copy of the press release is available for free at:
http://is.gd/kXSNhT
Research Report from IDC and ABI
Clearwire made available two commissioned research studies that
outline the growing prominence of the global TDD-LTE ecosystem and
an analysis of Clearwire's vast spectrum holdings.
"Given the market's resurgent interest in understanding both our
TDD LTE technology choice and our spectrum holdings, we're sharing
the independent findings from these recently commissioned research
reports today," said John Saw, CTO of Clearwire. "The IDC and ABI
reports highlight the benefits and economies of scale of TDD-LTE,
our 2.5GHz to 2.6GHz frequency band (Band 41), and Clearwire's
unmatched spectrum resources."
The first report is titled "Validating the Market for TDD LTE in
the U.S. Marketplace" by John Byrne, Research Director for
Wireless Infrastructure at IDC. The second report is titled "LTE
TDD - Making the Most of 4G" by Phil Solis, Research Director,
Devices, Content & Applications; and Jake Saunders, Vice President
and Practice Director, Core Forecasting at ABI Research.
Complementary copies of both reports are available at Clearwire's
newsroom at http://www.clearwire.com/newsroom
As the IDC report notes, "Clearwire is able to operate on a single
bandwidth in excess of 130 MHz on average, including approximately
160 MHz on average in top 100 markets where capacity constraints
are the most likely to emerge. As a result, Clearwire has the
capability to generate much greater capacity and better network
performance by virtue of a significantly fatter pipe vis-…-vis
competitors."
The TDD-LTE ecosystem continues to grow with commercial or planned
deployments in major population centers, including Japan, China,
India, the European Union and Clearwire's deployment in the United
States. The ABI Research report "estimates that global TDD LTE
coverage will have addressable population coverage of 4.4 billion
by 2014 if network rollouts in key countries are aggressive." The
report also outlines the economies of scale for the device
ecosystem and projects that "every LTE device will support both
TDD and FDD technologies," given their commonality.
The reports explore different topic areas, such as:
* The capacity and bandwidth constraints facing other U.S.
wireless operators;
* The challenges and timetables associated with acquiring new
spectrum via auctions;
* The pervasiveness of the 2.5GHz band among global operators;
* The adoption of TDD-LTE by operators around the world,
commonality with other LTE technologies, and the device
ecosystem, and more.
About Clearwire Corporation
Kirkland, Wash.-based Clearwire Corporation (NASDAQ: CLWR)
-- http://www.clearwire.com/-- through its operating
subsidiaries, is a provider of 4G mobile broadband network
services in 68 markets, including New York City, Los Angeles,
Chicago, Dallas, Philadelphia, Houston, Miami, Washington, D.C.,
Atlanta and Boston.
Clearwire reported a net loss attributable to the Company of
$717.33 million in 2011, a net loss attributable to the Company of
$487.43 million in 2010, and a net loss attributable to the
Company of $325.58 million in 2009.
* * *
As reported by the TCR on Nov. 25, 2011, Standard & Poor's Ratings
Services lowered its corporate credit and senior secured first-
lien issue-level ratings on Bellevue, Wash.-based wireless
provider Clearwire Corp. to 'CCC' from 'CCC+'.
The ratings on Clearwire continue to reflect its "highly
leveraged" financial risk profile based on its high debt burden
and "weak" liquidity (both terms as defined in S&P's criteria).
"The ratings also reflect our view that Clearwire has a vulnerable
business position as a developmental-stage company with
significant competition from better capitalized wireless carriers,
including AT&T Mobility and Verizon Wireless, which are deploying
their own 4G wireless services," S&P said in January 2012.
"We believe that the company would likely run out of cash in the
late 2012 to early 2013 time frame absent significant asset sales,
since we view the terms in the December 2011 wholesale agreement
with Sprint Nextel as unfavorable in the near term and will likely
constrain cash inflows in 2012 to 2013. We have not assumed
spectrum sales in our liquidity assessment because of the
uncertainty involved in finding a buyer, as well as timing.
However, if the company could secure sufficient funding for
operations through 2013, we could raise the ratings," S&P also
stated.
CLINICA REAL: U.S. Trustee Unable to Form Committee
---------------------------------------------------
The United States Trustee said that an official committee under
11 U.S.C. Sec. 1102 has not been appointed in the bankruptcy case
of Clinica Real, LLC, dba Clinica Real Rehabilitation &
Chiropractic.
The United States Trustee has attempted to solicit creditors
interested in serving on an official unsecured creditors'
committee from the 20 largest unsecured creditors. After
excluding governmental units, secured creditors and insiders, the
U.S. Trustee has been unable to solicit sufficient interest in
serving on the Committee, in order to appoint a proper Committee.
The U.S. Trustee reserves the right to appoint such a committee
should interest develop among the creditors.
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. Mark J. Giunta,
Esq., serves as the Debtor's counsel. The petition was signed by
Keith M. Stone, member.
CLINICA REAL: Wins OK to Hire Giunta Firm as Bankruptcy Counsel
---------------------------------------------------------------
Clinica Real, LLC, sought and obtained permission from the
Bankruptcy Court to employ Law Office of Mark J. Giunta in
Phoenix, Arizona, as its counsel effective as of Sept. 14, 2012,
to (a) furnish legal advice with respect to the powers and duties
of debtor-in-possession in the continued operation of its affairs
and management of its property; (b) prepare necessary
applications, answers, orders, reports, motions and other legal
papers; and (c) perform 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.
Papers filed by the Debtor indicate that $1,812 was drawn down on
Sept. 12, 2012 and $9,560 was drawn on Sept. 13 for prepetition
services and costs ($1,812.50 for August and $8,514 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 for this
matter.
The firm's hourly rates are:
Hourly Rate
-----------
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. Mark J. Giunta,
Esq., serves as the Debtor's counsel. The petition was signed by
Keith M. Stone, member.
COMMUNICATION INTELLIGENCE: To Issue 50-Mil. Shares Under Plan
--------------------------------------------------------------
Communication Intelligence Corporation filed with the U.S.
Securities and Exchange Commission a Form S-8 registering 50
million shares of common stock issuable under the Company's 2011
Stock Compensation Plan. The proposed maximum aggregate offering
price is $2.27 million. A copy of the filing is available for
free at http://is.gd/UTPQLh
About Communication Intelligence
Redwood Shores, California-based Communication Intelligence
Corporation is a supplier of electronic signature products and the
recognized leader in biometric signature verification.
In its audit report accompanying the financial statements for
2011, PMB Helin Donovan, LLP, in San Francisco, Calif.,
expressed substantial doubt about Communication Intelligence's
ability to continue as a going concern. The independent auditors
noted that of the Company's significant recurring losses and
accumulated deficit.
The Company reported a net loss of $4.50 million for 2011,
compared with a net loss of $4.16 million for 2010.
The Company's balance sheet at June 30, 2012, showed $2.76 million
in total assets, $4.09 million in total liabilities, and a
$1.33 million total stockholders' deficit.
COMMUNITY MEMORIAL: Plan Confirmation Hearing Adjourned to Nov. 15
------------------------------------------------------------------
The Hon. Daniel S. Opperman of the U.S. Bankruptcy Court for the
Eastern District of Michigan adjourned to Nov. 15, 2012, at
1:30 p.m., the hearing to consider the confirmation of Community
Memorial Hospital's Plan of Liquidation. Objections, if any, are
due Nov. 8.
Previously, the Court entered the order, adjourning the
confirmation hearing to Oct. 19, 2012.
According to the Debtor, interested parties are seeking to further
adjourn the confirmation hearing in order to allow additional time
to resolve the issues presented in the plan objections, and that
remain unresolved, prior to the confirmation hearing.
The Court also ordered that Citizens Bank's ballot must be
submitted to the Debtor no later than Nov. 8.
In accordance with the Rule 3018-1 of the Local Bankruptcy Rules,
the Debtor will file a verified summary of the ballot count at
least two business days prior to the confirmation hearing.
As reported in the Troubled Company Reporter on Oct. 19, 2012, the
Plan of Liquidation provides, inter alia, for the establishment of
a liquidating trust. The proposed Liquidating Trust Agreement was
filed with the Court on Aug. 17, 2012.
Daniel M. McDermott, U.S. Trustee for Region 9, asked the
Bankruptcy Court to deny the confirmation of the Plan.
About Community Memorial Hospital
Community Memorial Hospital, operator of the Cheboygan Memorial
Hospital, filed for Chapter 11 bankruptcy (Bankr. E.D. Mich. Case
No. 12-20666) on March 1, 2012. Judge Daniel S. Opperman oversees
the case. Paul W. Linehan, Esq., and Shawn M. Riley, Esq., at
McDonald Hopkins LLC, in Cleveland, Ohio; and Jayson Ruff, Esq.,
at McDonald Hopkins LLC, in Bloomfield Hills, Michigan, represent
the Debtor as counsel. The Debtor's financial advisor is Conway
Mackenzie Inc. The Debtor disclosed $23,085,273 in assets and
$26,329,103 in liabilities.
Opened in 1942, the Debtor is an independent, not-for-profit
entity, organized exclusively for charitable, scientific and
educational purposes, and holds tax exempt status in accordance
with Section 501(c)(3) of the Internal Revenue Code. The
Cheboygan Memorial Hospital is a 25-bed critical access hospital
located in Cheboygan, Cheboygan County, a community on the Lake
Huron coast. The Debtor has 395 employees.
McLaren Health Care Corporation proposed to acquire substantially
all of the Debtor's operating assets at its primary hospital
campus, for $5,000,000, plus (2) all amounts required for the
Debtor to cure and assume the assigned Assumed Contracts and
Leases.
Daniel M. McDermott, the U.S. Trustee for Region 9, appointed a
five-member official committee of unsecured creditors in the
Chapter 11 case of Community Memorial Hospital.
Michael S. McElwee, Esq., at Varnum LP, in Grand Rapids, Michigan,
represents the Unsecured Creditor's Committee as counsel.
CONCHO RESOURCES: Moody's Corrects July 31 Rating Release
---------------------------------------------------------
Moody's Investors Service issued a correction to the July 31, 2012
rating release of Concho Resources Inc.
Revised release follows.
Moody's Investors Service confirmed Concho Resources Inc.'s
(Concho) corporate family rating(CFR) at Ba3 and changed the
outlook to stable. The SGL-2 Speculative Grade Liquidity (SGL)
rating and the B1 rating on the existing senior notes are
unchanged. This action concludes Moody's review for upgrade, which
commenced April 2, 2012.
Ratings Rationale
"Concho closed on the Three Rivers Operating Company acquisition
in mid-July. While an all debt transaction, the purchase price of
about $17.25 BOE for proved reserves in a heavily oil/liquids play
with substantial incremental drilling acreage is reasonable on its
face and complements its portfolio and strategy," said Harry
Schroeder, Moody's Vice President.
The Ba3 CFR reflects Concho's strong position in the Permian
Basin, large drilling inventory, and strong cash margins driven by
a high proportion of oil and NGL production. Post-acquisition the
leverage is nominally high compared to its rated peers but
Concho's production derives from areas with unlevered cash margins
exceeding $50 BOE affording them the ability to self-fund an
approximate $1.5 billion capex budget going forward. Protecting
this budget is a prudent hedging strategy for the two-years post
March 31, 2012 of about 41 million BOE of oil and a very modest
level of gas at an average price of $94.85 BOE. The company should
easily and economically replace produced reserves with the drill
bit. There are no debt maturities until 2016 when the credit
facility matures and the company has a quite lengthy reserve life,
in excess of fifteen years.
The SGL-2 reflects adequate liquidity through June 30, 2013. The
Three Rivers acquisition was funded by drawing $1 billion on the
revolver. Pro-forma for the acquisition, as of March 31, 2012
Concho has $1.3 billion of availability under its recently upsized
to $2.5 billion credit facility. The company plans to fund its
2012 drilling program with internal cash flow, and small bolt-on
acquisitions with its credit facility. Financial covenants under
the facility are debt / EBITDAX of not more than 4.0x and a
current ratio of at least 1.0x. Moody's expects Concho to remain
well within compliance with these covenants during the next 12
months. There are no debt maturities until 2016 when the credit
facility matures. Substantially all of Concho's oil and gas assets
are pledged as security.
The B1 senior unsecured note rating reflects both the overall
probability of default of Concho, to which Moody's assigns a PDR
of Ba3, and a loss given default of LGD5-78%. The size of the
senior secured revolver's priority claim relative to the senior
unsecured notes results in the notes being rated one notch below
the Ba3 CFR under Moody's Loss Given Default Methodology.
The stable outlook reflects Moody's expectation of an absorption
phase where Concho focuses on integrating the assets acquired from
Three Rivers and subsequent asset sales to partially fund the
acquisition. Moody's expects leverage to compress over time
through organic production growth as well as debt reduction from
announced asset sales of $200 - $400 million. Moody's could
upgrade the ratings if Concho continues to grow production and
reserves essentially within cash flow with debt / proved developed
reserves of less than $10 BOE and debt / average daily production
of less than $30,000 BOE. Strong full cycle metrics are clearly
the underlying driver of the economics. Moody's could downgrade
the ratings if RCF / debt degrades to below 30% due to a
leveraging acquisition, or if profitability deteriorates
materially due to sustained operational issues.
The principal methodology used in rating Concho Resources Inc 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.
Concho Resources Inc. is an independent exploration and production
company headquartered in Midland, Texas.
CORDILLERA GOLF: Debtor & Committee File Reorganization Plan
------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the owner of the four-course golf club at the
Cordillera resort community in Edwards, Colorado, filed a proposed
Chapter 11 reorganization plan jointly sponsored by the official
creditors' committee. The plan incorporates a settlement
announced in September designed to wrap up both the bankruptcy and
accompanying class lawsuits by club members against owner David
Wilhelm. The settlement was negotiated with help from a mediator.
According to the report, the settlement calls for selling the
club. Proceeds from the sale will be distributed in the order of
priority laid out in bankruptcy law, with club members having
unsecured claims. The sale is to be approved as part of the plan
confirmation process. The settlement forestalled litigation in
bankruptcy court where club members were seeking a trustee to
supplant Mr. Wilhelm.
The settlement provides that Alpine Bank has an approved secured
claim of $13 million while Mr. Wilhelm's secured claim is pegged
at $7.5 million.
About Cordillera Golf
Cordillera Golf Club, LLC, owns an exclusive 730-acre four-course
golf club at the Cordillera resort community in Edwards, Colorado.
The club is located at the 7,000-acre Cordillera development,
which has 1,087 residential lots. Non-equity club membership is
open to community residents. The club has three golf courses, a
Dave Pelz designed short course, five swimming pools, and tennis
courts. The membership plan provides that there will be no more
than 1,085 golf memberships and up to 100 social memberships.
Half of all property owners within Cordillera are club members.
Cordillera Golf Club filed for Chapter 11 bankruptcy protection
(Bankr. D. Del. Case No. 12-11893) on June 26, 2012, the same day
a $12.7 million loan was due to Alpine Bank of Colorado. The club
blamed lower membership rates and tensions with current members
for the bankruptcy.
David A. Wilhelm, manager of CGH Manager LLC, manager, signed the
Chapter 11 petition. Mr. Wilhelm acquired 100% interest in the
Debtor in 2009 following an arbitration that stemmed from
revelations that the then owners of the 70% interests had diverted
funds away from the Debtor's operations.
In the petition, the Debtor estimated $10 million to $50 million
in assets and debts, including secured debt of $12.7 million owed
to Alpine Bank and a $7.5 million secured claim by Mr. Wilhelm.
Delaware Bankruptcy Judge Christopher S. Sontchi presided over the
case. Lawyers at Young, Conaway, Stargatt & Taylor and Foley &
Lardner LLP serve as the Debtor's counsel. Omni Management Group
LLC serves as the Debtor's claims agent.
On July 16, 2012, the Delaware Court granted the request of
certain club members to transfer the venue of the case to the
Bankruptcy Court in Colorado. The case was endorsed to Hon.
A. Bruce Campbell in Denver (Bankr. D. Colo. Case No. 12-24882).
An official committee of unsecured creditors has been appointed in
the case. The Committee members consist of various homeowner and
trade creditors of the Debtor. All members have Colorado
addresses. The Committee is represented by Munsch Hardt Kopf &
Harr, PC as counsel.
Certain homeowners also have retained separate counsel, Michael S.
Kogan, Esq., at Kogan Law Firm, APC.
Secured lender, Alpine Bank in Vail, Colo., is represented by
lawyers at Ballard Spahr LLP.
CORDILLERA GOLF: Selects GA Keen to Sell County Golf Club
---------------------------------------------------------
Denver Business Journal reports that GA Keen Realty Advisors of
New York has been picked to sell The Club at Cordillera, an Eagle
County golf club that filed for Chapter 11 bankruptcy protection
in June.
The report notes The Club at Cordillera agreed in September to be
sold by the end of the year.
According to the report, GA Keen Realty Advisors said offers will
be accepted through Dec. 3. The company said it's taking offers on
all or part of the club's assets, which includes three 18-hole
golf courses.
The report adds GA Keen Realty Advisors is also marketing the
club's non-core assets, including a 10-hole short golf course, a
general store, a health club and a family center.
About Cordillera Golf
Cordillera Golf Club, LLC, owns an exclusive 730-acre four-course
golf club at the Cordillera resort community in Edwards, Colorado.
The club is located at the 7,000-acre Cordillera development,
which has 1,087 residential lots. Non-equity club membership is
open to community residents. The club has three golf courses, a
Dave Pelz designed short course, five swimming pools, and tennis
courts. The membership plan provides that there will be no more
than 1,085 golf memberships and up to 100 social memberships.
Half of all property owners within Cordillera are club members.
Cordillera Golf Club filed for Chapter 11 bankruptcy protection
(Bankr. D. Del. Case No. 12-11893) on June 26, 2012, the same day
a $12.7 million loan was due to Alpine Bank of Colorado. The club
blamed lower membership rates and tensions with current members
for the bankruptcy.
David A. Wilhelm, manager of CGH Manager LLC, manager, signed the
Chapter 11 petition. Mr. Wilhelm acquired 100% interest in the
Debtor in 2009 following an arbitration that stemmed from
revelations that the then owners of the 70% interests had diverted
funds away from the Debtor's operations.
In the petition, the Debtor estimated $10 million to $50 million
in assets and debts, including secured debt of $12.7 million owed
to Alpine Bank and a $7.5 million secured claim by Mr. Wilhelm.
Delaware Bankruptcy Judge Christopher S. Sontchi presided over the
case. Lawyers at Young, Conaway, Stargatt & Taylor and Foley &
Lardner LLP serve as the Debtor's counsel. Omni Management Group
LLC serves as the Debtor's claims agent.
On July 16, 2012, the Delaware Court granted the request of
certain club members to transfer the venue of the case to the
Bankruptcy Court in Colorado. The case was endorsed to Hon.
A. Bruce Campbell in Denver (Bankr. D. Colo. Case No. 12-24882).
An official committee of unsecured creditors has been appointed in
the case. The Committee members consist of various homeowner and
trade creditors of the Debtor. All members have Colorado
addresses. The Committee is represented by Munsch Hardt Kopf &
Harr, PC as counsel.
Certain homeowners also have retained separate counsel, Michael S.
Kogan, Esq., at Kogan Law Firm, APC.
Secured lender, Alpine Bank in Vail, Colo., is represented by
lawyers at Ballard Spahr LLP.
CORNERSTONE BANCSHARES: Reports $364,000 Net Income in 3rd Qtr.
---------------------------------------------------------------
Cornerstone Bancshares reported net income of $364,246 on $4.73
million of total interest income for the three months ended
Sept. 30, 2012, compared with net income of $523,668 on $5.11
million of total interest income for the same period during the
prior year.
The Company reported net income of $1.03 million on $14.17 million
of total interest income for the nine months ended Sept. 30, 2012,
compared with net income of $917,230 on $15.49 million of total
interest income for the same period during the prior year.
Cornerstone reported net income of $1.03 million in 2011, compared
with a net loss of $4.70 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $425.17
million in total assets, $387.05 million in total liabilities and
$38.12 million in total stockholders' equity.
"We continue to make steady progress in the right direction," said
Cornerstone's President and Chief Executive Officer Frank Hughes.
"While we still have a ways to go, it's nice that the regulators
have also recognized our efforts and improvements made across the
board."
On Aug. 27, 2012, Cornerstone announced that the FDIC and
Tennessee Department of Financial Institutions had officially
terminated the Consent Order and Written Agreement entered into
with the Bank on April 2, 2010, after loan losses sustained during
the "Great Recession". The regulatory agreement provided
guidelines for the Bank to improve its capital ratios, loan
portfolio and earnings. The release of the Consent Order and
Written Agreement were major benchmarks for Cornerstone's success
in aggressively tackling its asset quality issues, cleaning up the
balance sheet and raising in excess of $12 million in capital
through a Preferred Stock Offering in the local market.
A copy of the press release is available for free at:
http://is.gd/dOCOu2
About Cornerstone Bancshares
Chattanooga, Tenn.-based Cornerstone Bancshares, Inc., is a bank
holding company. Its wholly-owned subsidiary, Cornerstone
Community Bank, is a Tennessee-chartered commercial bank with five
full-service banking offices located in Hamilton County,
Tennessee.
Cornerstone said in its 2011 annual report that as of Dec. 31,
2011, the Company had one loan, currently being serviced by
Midland Loan Services for the FDIC, which totaled approximately $3
million. The loan contains certain compliance covenants which
include stated minimum or maximum target amounts for Cornerstone's
capital levels, the Bank's capital levels, nonperforming asset
levels at the Bank and the ability of Cornerstone to meet the
required debt service coverage ratio, which is computed on the
four most recent consecutive fiscal quarters. Due to the level of
nonperforming assets of the Bank and not currently meeting the
required debt service coverage ratio, Cornerstone was not in
compliance with these two covenants at Dec. 31, 2011. However,
Cornerstone had previously obtained waivers through Dec. 31, 2011.
During March 2012, Cornerstone obtained from the FDIC a waiver of
the covenant compliance requirements through Dec. 31, 2012,
granted that all payments are made in accordance with the
aforementioned repayment schedule. However, if the Company is
unable to comply with those covenants or obtain an additional
waiver from the lender for violations that occur after Dec. 31,
2012, if any, the lender may declare the loan in default and take
possession of the Bank's common stock. If this event were to
occur, Cornerstone's assets and operations would be substantially
reduced and therefore its ability to continue as a going concern
would be in substantial doubt.
CROSS ISLAND: U.S. Trustee Wants Case Converted to Chapter 7
------------------------------------------------------------
Tracy Hope Davis, U.S. Trustee for Region 2 will move before the
Hon. Nancy Hersey Lord of the U.S. Bankruptcy Court for the
Eastern District of New York on Oct. 29, 2012, at 2 p.m., for the
conversion of the Chapter 11 cases of Cross Island Plaza, Inc. and
Block 12892 Realty Corp. to Chapter 7 of the Bankruptcy Code.
About Cross Island
Rosedale, New York-based Cross Island Plaza, Inc., and affiliate
Block 1892 Realty Corp. filed Chapter 11 petitions (Bankr.
E.D.N.Y. Case Nos. 12-42491 and 12-42493) on April 4, 2012.
Cross Island claims to be a Single Asset Real Estate as defined in
11 U.S.C. Sec. 101 (51B). The Debtor disclosed $30,637,984 in
assets and $74,014,238 in liabilities as of the Chapter 11 filing.
CIP owns and operates an office building and parking lot known as
"One Cross Island Plaza" in Rosedale. The property consists of
three floors and a lower level which is occupied by roughly 100
tenants. Block owns an additional parking lot in close proximity
to the One Cross Island Plaza, and has entered into a ground lease
with CIP to provide additional parking space for two tenants of
Cross Island.
Judge Nancy Hershey Lord presides over the cases. Adam L. Rosen,
Esq., at Silverman Acampora LLP, serves as the Debtors' counsel.
The petition was signed by Chloe Henning, authorized
representative.
To date, no committee, trustee, or examiner has been appointed the
cases.
CRYOPORT INC: Jerrell Shelton Joins Board of Directors
------------------------------------------------------
Jerrell Shelton was elected to Cryoport, Inc.'s Board of Directors
on Oct. 22, 2012. Mr. Shelton has served on many public and
private boards and currently sits on the Smithsonian Institution
Library Board.
"Jerry is an outstanding addition to Cryoport's Board of
Directors. He has built and managed successful companies in very
competitive industries, and will bring strong strategic and
operating experience to help drive our growth," said Stephen
Wasserman, Cryoport's Chairman.
"Cryoport has a unique solution to the deep frozen cold-chain
logistics arena. Its partnerships with leading companies in
various biologics, in-vitro fertilization, cell lines, stem cells,
and other commodities requiring a deep frozen solution is
unsurpassed," said Mr. Shelton. "Cryoport's revolutionary and
proprietary portal, providing a robust dashboard of information
from the time materials are loaded through successful delivery,
sets Cryoport apart as the undisputed leader in deep frozen
logistics. One of the additional things that has impressed me is
the recognition of Cryoport's technology by FedEx and the
partnership that has developed between the two companies. With
great anticipation, I am looking forward to working with the Board
and management team to advance Cryoport in its mission to improve
the quality and reliability of deep frozen cold chain logistics."
Mr. Shelton has over 30 years of executive and corporate
governance experience across several industries, including
information services, telecommunications, manufacturing and
distribution. Mr. Shelton's appointment brings Cryoport to four
board members, all of which are considered independent.
Previously, Mr. Shelton was a Visiting Executive at IBM Research
where his team created and developed WebFountain, a project
contributing significantly to IBM's software strategy. He was
also President and Chief Executive Officer of NDC Holdings,
Continental Graphics Holdings, Thomson Business Information Group,
and Advantage Companies. Under his leadership each of those
companies achieved rapid revenue growth, improved profitability
and increases in shareholder value.
Mr. Shelton has served on the boards of several public companies,
including Solera Holdings, Nielsen NetRatings, Advantage Companies
and Tennessee Natural Resources, and was a member of audit,
compensation, governance, finance, and executive committees.
During his career he has also served on the boards of 25 private
companies and 7 civic organizations.
Mr. Shelton holds a BSBA degree from the University of Tennessee,
and a MBA from the Harvard Business School.
On Oct. 22, 2012, the Board of Directors of the Company approved
and adopted amendments to its Bylaws and restated them in full.
The Amended and Restated Bylaws (i) increase the total number of
authorized directors to four, (ii) provide for the use of
electronic transmissions for notices of meetings and written
consents, and (iii) make certain other changes to make the
Company's Bylaws consistent with current Nevada law. A copy of
the Amended Bylaws is available for free at http://is.gd/x6tUFE
About CryoPort Inc.
Headquartered in Lake Forest, Calif., CryoPort, Inc. (OTC BB:
CYRXD) -- http://www.cryoport.com/-- provides innovative cold
chain frozen shipping system dedicated to providing superior,
affordable cryogenic shipping solutions that ensure the safety,
status and temperature of high value, temperature sensitive
materials. The Company has developed a line of cost-effective
reusable cryogenic transport containers capable of transporting
biological, environmental and other temperature sensitive
materials at temperatures below 0-degree Celsius.
The Company reported a net loss of $7.83 million for the year
ended March 31, 2012, compared with a net loss of $6.15 million
during the prior fiscal year.
The Company's balance sheet at June 30, 2012, showed $4.23 million
in total assets, $1.96 million in total liabilities and $2.26
million in total stockholders' equity.
KMJ Corbin & Company LLP, in Costa Mesa, California, issued a
"going concern" qualification on the consolidated financial
statements for the fiscal year ended March 31, 2012. The
independent auditors noted that the Company has incurred recurring
operating losses and has had negative cash flows from operations
since inception. Although the Company has working capital of
$4,024,120 and cash & cash equivalents of $4,617,535 at March 31,
2012, management has estimated that cash on hand, which include
proceeds from the offering received in the fourth quarter of
fiscal 2012, will only be sufficient to allow the Company to
continue its operations only into the fourth quarter of fiscal
2013. These matters raise substantial doubt about the Company's
ability to continue as a going concern.
CSD LLC: Hiring Greene Infuso LLP as Local Counsel
--------------------------------------------------
CSD, LLC, asks the U.S. Bankruptcy Court for the District of
Nevada for authorization to employ James D. Greene, Esq., and
Greene Infuso, LLP, as counsel to the Debtor, effective as of
Oct. 12, 2012.
Green Infuson will provide, among others, these legal services:
(1) Advising and representing the Debtor concerning the rights
and remedies of the Debtor's business company in regard of
the business and with respect to the secured, priority and
general claims of creditors;
(2) Advising and representing the Debtor in connection with the
restructuring of its financial and business matters,
including sales of any assets;
(3) Advising and representing the Debtor in connection with the
investigation of potential causes of action against persons
or entities, including, but no limited to, avoidance
actions, and the litigation thereof, if warranted; and
(4) Representing the Debtor in any proceeding or hearing in the
Bankruptcy Court, and in any action in other courts where
the rights of the company may be litigated or affected.
To the best of the Debtor's knowledge, GI is "disinterested"
within the meaning of Section 101(14) of the Bankruptcy Code.
The Debtor proposes to pay GI its customary hourly rates in effect
from time to time and to reimburse GI for its expenses according
to its reimbursement policies.
About CSD LLC
Las Vegas, Nev.-based CSD, LLC, filed a Chapter 11 petition
(Bankr. D. Nev. Case No. 12-21668) on Oct. 12, estimating
$50 million to $100 million in assets and $10 million to
$50 million in debts. The petition was signed by Steven K.
Kennedy, manager of CSD Management, LLC, manager.
The Debtor owns 37.82 acres of land, seven houses, and an
equestrian facility, all located at 6629 S. Pecos Road, Las Vegas,
Nevada. The Debtor purchased the property from Mr. Wayne Newton
and his wife, Kathleen, for $19.5 million to develop and operate a
museum/tourist attraction honoring the life and career of Wayne
Newton. Situated on the purchased property is the current home of
the Newtons, known as "Casa de Shenandoah", which was to be used
to showcase Wayne Newton's memorabilia. The museum remains
unopened. DLH, LLC, which holds a 70% interest in the Debtor,
contributed nearly $60 million towards development of the museum.
Plans called for contributing $2 million toward the construction
of a new home for Newton on the acreage. The new home hasn't been
built, so Newton still lives in the existing home, paying minimal
rent.
While the Debtor has made substantial expenditures towards the
development of the Newton Museum, the Debtor and the Newtons have
been involved in certain disputes regarding the development of the
museum. The Debtor in May 2012 filed a lawsuit in Nevada state
court for fraud, civil conspiracy, and breach. The Newtons filed
counterclaims. Because of the deteriorating relationship of the
parties, it appears that it is no longer feasible for the parties
to move forward with the development of the museum.
On Aug. 9, 2012, the Debtor's committee members held an emergency
meeting and voted to dissolve the Debtor. Though the Debtor has
sought approval in the state court proceedings to dissolve, that
matter is not scheduled to be heard until May 2013.
Because the Debtor is out of money and options, and because the
Debtor's lender, Neva Lane Acceptance, LLC, is unwilling to lend
any additional funds to the Debtor on a prepetition basis, the
majority of the committee members voted in favor of the bankruptcy
filing.
Although the Debtor is out of cash, it claims that it has
substantial equity in its property.
The Debtor has decided that, at the present time, a sale of the
Debtor's property pursuant to Section 363 of the Bankruptcy Code,
followed by the filing of a plan of liquidation, is the Debtor's
best option for maximizing the value of the property and
maximizing the return to the Debtor's creditors and interest
holders.
James D. Greene, Esq., at Greene Infuso, LLP, in Las Vegas,
represents the Debtor. The Debtor's CRO is Odyssey Capital Group,
LLC.
CSD LLC: Hiring Munsch Hardt as General Bankruptcy Counsel
----------------------------------------------------------
CSD, LLC, asks the U.S. Bankruptcy Court for the District of
Nevada for authorization to employ Munsch Hardt Kopf & Harr, P.C.,
as general bankruptcy counsel to the Debtor.
Munsch Hardt will render, among others, these services:
1) to serve as attorneys of record for the Debtor in all
aspects, including any adversary proceedings commenced in
connection the bankruptcy case, and to provide
representation and legal advice to the Debtor throughout the
bankruptcy case;
2) to assist the Debtor in carrying out its duties under the
Bankruptcy Code, including advising the Debtor or such
duties, its obligations, and its legal rights;
3) to consult with the United States Trustee, any statutory
committee that may be formed, and all other creditors and
parties-in-interest concerning administration of the
bankruptcy case; and
4) to assist in potential sales of the Debtor's assets.
Munsch Hardt's hourly rates for attorneys and paraprofessionals
who will most likely be working on the bankruptcy case are:
Joseph J. Wielebinski, Esq., Shareholder $635
Zachery Z. Annable, Esq., Associate $350
Audrey Monlezun, Paralegal $200
To the best of the Debtor's knowledge, the shareholders and
associates of Munsch Hard are "disinterested persons" as that term
is defined in Section 101(14) of the Bankruptcy Code.
About CSD LLC
Las Vegas, Nev.-based CSD, LLC, filed a Chapter 11 petition
(Bankr. D. Nev. Case No. 12-21668) on Oct. 12, 2012, estimating
$50 million to $100 million in assets and $10 million to
$50 million in debts. The petition was signed by Steven K.
Kennedy, manager of CSD Management, LLC, manager.
The Debtor owns 37.82 acres of land, seven houses, and an
equestrian facility, all located at 6629 S. Pecos Road, Las Vegas,
Nevada. The Debtor purchased the property from Mr. Wayne Newton
and his wife, Kathleen, for $19.5 million to develop and operate a
museum/tourist attraction honoring the life and career of Wayne
Newton. Situated on the purchased property is the current home of
the Newtons, known as "Casa de Shenandoah", which was to be used
to showcase Wayne Newton's memorabilia. The museum remains
unopened. DLH, LLC, which holds a 70% interest in the Debtor,
contributed nearly $60 million towards development of the museum.
Plans called for contributing $2 million toward the construction
of a new home for Newton on the acreage. The new home hasn't been
built, so Newton still lives in the existing home, paying minimal
rent.
While the Debtor has made substantial expenditures towards the
development of the Newton Museum, the Debtor and the Newtons have
been involved in certain disputes regarding the development of the
museum. The Debtor in May 2012 filed a lawsuit in Nevada state
court for fraud, civil conspiracy, and breach. The Newtons filed
counterclaims. Because of the deteriorating relationship of the
parties, it appears that it is no longer feasible for the parties
to move forward with the development of the museum.
On Aug. 9, 2012, the Debtor's committee members held an emergency
meeting and voted to dissolve the Debtor. Though the Debtor has
sought approval in the state court proceedings to dissolve, that
matter is not scheduled to be heard until May 2013.
Because the Debtor is out of money and options, and because the
Debtor's lender, Neva Lane Acceptance, LLC, is unwilling to lend
any additional funds to the Debtor on a prepetition basis, the
majority of the committee members voted in favor of the bankruptcy
filing.
Although the Debtor is out of cash, it claims that it has
substantial equity in its property.
The Debtor has decided that, at the present time, a sale of the
Debtor's property pursuant to Section 363 of the Bankruptcy Code,
followed by the filing of a plan of liquidation, is the Debtor's
best option for maximizing the value of the property and
maximizing the return to the Debtor's creditors and interest
holders.
James D. Greene, Esq., at Greene Infuso, LLP, in Las Vegas,
represents the Debtor. The Debtor's CRO is Odyssey Capital Group,
LLC.
CSD LLC: Hiring Odyssey Capital to Provide CRO and Add'l Personnel
------------------------------------------------------------------
CSD, LLC, asks the U.S. Bankruptcy Court for the District of
Nevada for authorization to employ Odyssey Capital Group, LLC, as
financial advisors and for the purposes of providing a chief
restructuring officer and additional personnel for the Debtor,
effective as of the Petition Date.
Odyssey will provide assistance to the Debtor with respect to
(i) preparation of Monthly Operating Reports; (ii) claims analysis
and objections; (iii) analysis of financing data necessary to
obtain confirmation of a plan of reorganization or liquidation;
(iv) securing and maintaining financial records; (v) accounting
for all receipts and disbursements from the estate and the
preparation of all necessary reports; (vi) analysis of tax and
taxation issues and filing of necessary income tax returns;
(vii) coordination with counsel and pursuit of litigation, if
necessary; (viii) testimony at any hearing or trials as to one or
more of the matters set forth in the engagement letter;
(ix) identification and analysis of avoidable transactions; and
(x) performing other accounting and financial consulting services
that may be necessary during the court of the Chapter 11
proceedings.
The CRO will (i) serve as the Debtor's consultant and control
person with respect to reorganization related matters;
(ii) evaluate strategic alternatives available to the Debtor and
work with Debtor counsel during the bankruptcy process; and
(iii) be responsible for managing professionals and consultants
retained by the Debtor.
To the best of the Debtor's knowledge and information, neither
Odyssey nor any professional employee of Odyssey has any
connection with or interest adverse to the Debtors, or any other
party in interest, or their respective attorneys and accountants.
Odyssey's compensation will consist of:
a. A monthly advisory fee of $30,000; and
b. A minimum transaction completion fee of $200,000 payable
upon consummation of any (a) recapitalization or
restructuring and/or (b) disposition (equity, assets or
businesses) transaction. To the extent Odyssey successfully
markets the property of the estate and a non-affiliate of
DLH, LLC, purchases the property for an amount in excess of
million at auction or otherwise, Odyssey will be entitled to
a Completion incentive fee of 1.25% of the amount of the
sale price that exceeds $20 million.
The first Monthly Fee will be due and payable on the date of the
Engagement Agreement. In addition, a working retainer of $30,000
is also due as of the date of the Agreement. This Retainer will
be deducted from the Completion Fee, or the Completion Incentive
Fee upon the successful completion of a Transaction.
About CSD LLC
Las Vegas, Nev.-based CSD, LLC, filed a Chapter 11 petition
(Bankr. D. Nev. Case No. 12-21668) on Oct. 12, estimating
$50 million to $100 million in assets and $10 million to
$50 million in debts. The petition was signed by Steven K.
Kennedy, manager of CSD Management, LLC, manager.
The Debtor owns 37.82 acres of land, seven houses, and an
equestrian facility, all located at 6629 S. Pecos Road, Las Vegas,
Nevada. The Debtor purchased the property from Mr. Wayne Newton
and his wife, Kathleen, for $19.5 million to develop and operate a
museum/tourist attraction honoring the life and career of Wayne
Newton. Situated on the purchased property is the current home of
the Newtons, known as "Casa de Shenandoah", which was to be used
to showcase Wayne Newton's memorabilia. The museum remains
unopened. DLH, LLC, which holds a 70% interest in the Debtor,
contributed nearly $60 million towards development of the museum.
Plans called for contributing $2 million toward the construction
of a new home for Newton on the acreage. The new home hasn't been
built, so Newton still lives in the existing home, paying minimal
rent.
While the Debtor has made substantial expenditures towards the
development of the Newton Museum, the Debtor and the Newtons have
been involved in certain disputes regarding the development of the
museum. The Debtor in May 2012 filed a lawsuit in Nevada state
court for fraud, civil conspiracy, and breach. The Newtons filed
counterclaims. Because of the deteriorating relationship of the
parties, it appears that it is no longer feasible for the parties
to move forward with the development of the museum.
On Aug. 9, 2012, the Debtor's committee members held an emergency
meeting and voted to dissolve the Debtor. Though the Debtor has
sought approval in the state court proceedings to dissolve, that
matter is not scheduled to be heard until May 2013.
Because the Debtor is out of money and options, and because the
Debtor's lender, Neva Lane Acceptance, LLC, is unwilling to lend
any additional funds to the Debtor on a prepetition basis, the
majority of the committee members voted in favor of the bankruptcy
filing.
Although the Debtor is out of cash, it claims that it has
substantial equity in its property.
The Debtor has decided that, at the present time, a sale of the
Debtor's property pursuant to Section 363 of the Bankruptcy Code,
followed by the filing of a plan of liquidation, is the Debtor's
best option for maximizing the value of the property and
maximizing the return to the Debtor's creditors and interest
holders.
James D. Greene, Esq., at Greene Infuso, LLP, in Las Vegas,
represents the Debtor. The Debtor's CRO is Odyssey Capital Group,
LLC.
CSD LLC: Seeks Court OK for Interim DIP Financing of $500,000
-------------------------------------------------------------
CSD, LLC, asks the U.S. Bankruptcy Court for the District of
Nevada for emergency authorization to obtain postpetition
financing of up to $500,000, on an interim basis, and up to
$2.5 million, on a final basis, to fund working capital and other
corporate purposes of the Debtor in the ordinary course of its
business. According to papers filed with the Court, the DIP
Financing is necessary to preserve the value of the Property
pending its sale.
The Debtor's prepetition secured lender, a Harber-related entity
known as Neva Lane Acceptance, LLC, owed in excess of $2.2 million
as of the Petition Date, has agreed to provide the required
postpetition financing.
The DIP financing will be unsecured. Interest rate will be Prime
plus 1% per annum. No transaction/bank fees will be collected.
The maturity date of the DIP financing will be the earliest of:
(a) Nov. 12, 2013, at 5:00 p.m., (b) the effective date of a
confirmed plan of liquidation for the Borrower, and (c) the date
on which the Bankruptcy Court approves the extension of any other
credit facility to the Debtor.
As provided under the DIP Loan Documents, the postpetition lender
will be granted administrative claims allowable under Section
503(b)(1) of the Bankruptcy Code for the total amount of the DIP
Financing.
The Debtor asks the Court to schedule a final hearing on the
motion to be held within 21 days of the entry of the interim
order.
Objection of Newtons and Sacred Land
Creditors Carson Wayne Newton, Kathleen McCrone Newton and Sacred
Land, LLC, object to the Debtor's Emergency DIP Financing Motion,
citing:
1. The Debtor fails to disclose in its motion that Newton holds
"by far the largest single unsecured claims against the
estate, estimated in excess of $19 million, based on the
Debtor's and its insiders' fraud and breaches of duties to
Newton."
2. The Debtor fails to disclose that the bankruptcy case was
filed only after the state court on Oct. 11, 2012, issued
its Order against the Debtor and its insiders to Show Cause,
at a hearing scheduled for Oct. 22, why they should not be
held in contempt of the state court's Temporary Restraining
Order issued June 7, 2012. According to Newton, the TRO
ordered the Debtor to continue to pay for the feed and care
of Newton's 51 Arabian horses until a preliminary injunction
hearing is concluded.
3. The motion seeks approval of financing to pay legal fees
which exceed the normal and customary rate for similar
services in Las Vegas, Nevada, legal fees which are subject
to court approval only after the emergency period will end
and which are anticipated to be performed by professionals
whose applications for employment have not been approved by
the Bankruptcy Court, and further seeks to pay, on an
emergency and interim basis, expenses for which no emergency
exists.
Newton, et al., are represented by:
J. Stephen Peek, Esq.
Mona L. Burton, Esq.
Bryce K. Kunimoto, Esq.
Robert J. Cassity, Esq.
HOLLAND & HART LLP
9555 Hillwood Drive, 2nd Floor
Las Vegas, NV 89134
About CSD LLC
Las Vegas, Nev.-based CSD, LLC, filed a Chapter 11 petition
(Bankr. D. Nev. Case No. 12-21668) on Oct. 12, estimating
$50 million to $100 million in assets and $10 million to
$50 million in debts. The petition was signed by Steven K.
Kennedy, manager of CSD Management, LLC, manager.
The Debtor owns 37.82 acres of land, seven houses, and an
equestrian facility, all located at 6629 S. Pecos Road, Las Vegas,
Nevada. The Debtor purchased the property from Mr. Wayne Newton
and his wife, Kathleen, for $19.5 million to develop and operate a
museum/tourist attraction honoring the life and career of Wayne
Newton. Situated on the purchased property is the current home of
the Newtons, known as "Casa de Shenandoah", which was to be used
to showcase Wayne Newton's memorabilia. The museum remains
unopened. DLH, LLC, which holds a 70% interest in the Debtor,
contributed nearly $60 million towards development of the museum.
DLH is a Nevada limited liability company, and its members are
Lacy Harber and Dorothy Harber.
Plans called for contributing $2 million toward the construction
of a new home for Newton on the acreage. The new home hasn't been
built, so Newton still lives in the existing home, paying minimal
rent.
While the Debtor has made substantial expenditures towards the
development of the Newton Museum, the Debtor and the Newtons have
been involved in certain disputes regarding the development of the
museum. The Debtor in May 2012 filed a lawsuit in Nevada state
court for fraud, civil conspiracy, and breach. The Newtons filed
counterclaims. Because of the deteriorating relationship of the
parties, it appears that it is no longer feasible for the parties
to move forward with the development of the museum.
On Aug. 9, 2012, the Debtor's committee members held an emergency
meeting and voted to dissolve the Debtor. Though the Debtor has
sought approval in the state court proceedings to dissolve, that
matter is not scheduled to be heard until May 2013.
Because the Debtor is out of money and options, and because the
Debtor's prepetition secured lender, Neva Lane Acceptance, LLC, is
unwilling to lend any additional funds to the Debtor on a
prepetition basis, the majority of the committee members voted in
favor of the bankruptcy filing.
Although the Debtor is out of cash, it claims that it has
substantial equity in its property.
The Debtor has decided that, at the present time, a sale of the
Debtor's property pursuant to Section 363 of the Bankruptcy Code,
followed by the filing of a plan of liquidation, is the Debtor's
best option for maximizing the value of the property and
maximizing the return to the Debtor's creditors and interest
holders.
James D. Greene, Esq., at Greene Infuso, LLP, in Las Vegas,
represents the Debtor. The Debtor's CRO is Odyssey Capital Group,
LLC.
CSD LLC: Wants to Reject Residential Lease on Current Newton Home
-----------------------------------------------------------------
CSD, LLC, asks the U.S. Bankruptcy Court for the District of
Nevada for authorization to reject certain residential real
property leases, personal property lease and executory contracts.
Included in the list to be rejected are:
1. The residential lease on the current Newton Home.
2. The New Build Lease between the Debtor and Sacred Land, LLC,
through which the Debtor was to construct a new home for the
Newtons on the Real Property.
3. The Related Party Lease regarding the McCrone House and the
Matoba house.
4. The Personal Property Lease and License Agreement between
the Debtor and Wayne Newton regarding the use of Wayne
Newton's personal property in connection with the Newton
Museum (the Personal Property Lease also requires the Debtor
to care for and feed the Newtons' collection of exotic
animals located on the Property); and
5. The License Agreement regarding the licensing of Wayne
Newton's intellectual property for use in conjunction with
the Newton Museum.
The Debtor relates that because it will no longer continue with
the development of the Newton Museum, it, in the exercise of its
sound business judgment, has determined that rejecting the leases
and executory contracts is in the best interests of the Debtor's
estates, its creditors, and other parties-in-interest.
About CSD LLC
Las Vegas, Nev.-based CSD, LLC, filed a Chapter 11 petition
(Bankr. D. Nev. Case No. 12-21668) on Oct. 12, estimating
$50 million to $100 million in assets and $10 million to
$50 million in debts. The petition was signed by Steven K.
Kennedy, manager of CSD Management, LLC, manager.
The Debtor owns 37.82 acres of land, seven houses, and an
equestrian facility, all located at 6629 S. Pecos Road, Las Vegas,
Nevada. The Debtor purchased the property from Mr. Wayne Newton
and his wife, Kathleen, for $19.5 million to develop and operate a
museum/tourist attraction honoring the life and career of Wayne
Newton. Situated on the purchased property is the current home of
the Newtons, known as "Casa de Shenandoah", which was to be used
to showcase Wayne Newton's memorabilia. The museum remains
unopened. DLH, LLC, which holds a 70% interest in the Debtor,
contributed nearly $60 million towards development of the museum.
DLH is a Nevada limited liability company, and its members are
Lacy Harber and Dorothy Harber.
Plans called for contributing $2 million toward the construction
of a new home for Newton on the acreage. The new home hasn't been
built, so Newton still lives in the existing home, paying minimal
rent.
While the Debtor has made substantial expenditures towards the
development of the Newton Museum, the Debtor and the Newtons have
been involved in certain disputes regarding the development of the
museum. The Debtor in May 2012 filed a lawsuit in Nevada state
court for fraud, civil conspiracy, and breach. The Newtons filed
counterclaims. Because of the deteriorating relationship of the
parties, it appears that it is no longer feasible for the parties
to move forward with the development of the museum.
On Aug. 9, 2012, the Debtor's committee members held an emergency
meeting and voted to dissolve the Debtor. Though the Debtor has
sought approval in the state court proceedings to dissolve, that
matter is not scheduled to be heard until May 2013.
Because the Debtor is out of money and options, and because the
Debtor's prepetition secured lender, Neva Lane Acceptance, LLC, is
unwilling to lend any additional funds to the Debtor on a
prepetition basis, the majority of the committee members voted in
favor of the bankruptcy filing.
Although the Debtor is out of cash, it claims that it has
substantial equity in its property.
The Debtor has decided that, at the present time, a sale of the
Debtor's property pursuant to Section 363 of the Bankruptcy Code,
followed by the filing of a plan of liquidation, is the Debtor's
best option for maximizing the value of the property and
maximizing the return to the Debtor's creditors and interest
holders.
James D. Greene, Esq., at Greene Infuso, LLP, in Las Vegas,
represents the Debtor. The Debtor's CRO is Odyssey Capital Group,
LLC.
DAIS ANALYTIC: Inks $7 Million SPA with Green Valley
----------------------------------------------------
Dais Analytic Corporation entered into a Securities Purchase
Agreement with an investor, Green Valley International Investment
Management Company Limited, pursuant to which the Company will
offer up to $7 million of its common stock, $0.01 par value per
share, and warrants to purchase up to 17,500,000 shares of common
stock.
The Company will issue the Common Stock and Warrants in three
tranches. Upon the receipt of the funds for the first tranche on
or about Oct. 26, 2012, the Company will issue $2 million of newly
issued Common Stock for $0.10 per share and receive warrants for
5,000,000 Warrants. Upon the receipt of the funds for the second
tranche on or about Nov. 20, 2012, the Company will issue $2
million of newly issued Common Stock for $0.10 per share and
receive warrants for 5,000,000 Warrants. Upon the receipt of the
funds for the third tranche on or about Dec. 28, 2012, the Company
will issue $3 million of newly issued Common Stock for $0.10 per
share and receive warrants for 7,500,000 Warrants.
The Warrants are exercisable for 60 months beginning on the date
of their issuance. The warrants have an exercise price of $0.30,
and are subject to standard anti-dilution adjustments for stock
splits and other subdivisions.
Pursuant to terms of the Offering, officers of the Company and the
Investor have signed lock-up agreements restricting the sale of
Common Stock. The Investor does not have any registration rights
with respect to the Common Stock or Warrants. No underwriter or
placement agent was used in the sale of the Common Stock or
Warrants.
On Oct. 22, 2012, (with an effective date of Oct. 15, 2012), the
Company extended the term of its Secured Convertible Promissory
Note and Patent Security Agreement issued to an investor on
July 13, 2012. Pursuant to the terms and subject to the
conditions set forth in the Financing Agreements, the Investor
provided a loan in the amount of $2,000,000 to the Company, which
is secured by all current and future patents, patent applications
and similar protections of the Company and all rents, royalties,
license fees and "accounts" with respect to such intellectual
property assets. The Loan was originally due on Oct. 15, 2012,
but has been extended to Oct. 26, 2012.
A copy of the Securities Purchase Agreement is available at:
http://is.gd/0D5mwU
About Dais Analytic
Odessa, Fla.-based Dais Analytic Corporation has developed and
patented a nano-structure polymer technology, which is being
commercialized in products based on the functionality of these
materials. The initial product focus of the Company is ConsERV,
an energy recovery ventilator. The Company also has new product
applications in various developmental stages.
In the auditors' report accompanying the financial statements for
year ended Dec. 31, 2011, Cross, Fernandez & Riley LLP, in
Orlando, Florida, expressed substantial doubt about the Company's
ability to continue as a going concern. The independent auditors
noted that the Company has incurred significant losses since
inception and has a working capital deficit and stockholders'
deficit of $3.22 million and $4.90 million at Dec. 31, 2011.
The Company reported a net loss of $2.33 million in 2011,
compared with a net loss of $1.43 million in 2010.
The Company's balance sheet at June 30, 2012, showed $1.16 million
in total assets, $5.81 million in total liabilities and a $4.64
million total stockholders' deficit.
DENBURY RESOURCES: S&P Affirms 'BB' Corporate Credit Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Plano,
Texas-based Denbury Resources Inc. (Denbury) to positive from
stable and affirmed its 'BB' corporate credit rating on the
company.
"Denbury's senior subordinated debt rating remains unchanged at
'BB' (the same as the corporate credit rating). We are revising
the recovery rating on this debt to '3', indicating our
expectation of meaningful (50% to 70%) recovery in the event of a
payment default, from '4'. The revised recovery rating reflects
our new methodology for assigning recovery ratings to E&P
issuers," S&P said.
"We are revising the outlook to positive to reflect Denbury's
solid operating performance developing its tertiary asset base,"
said Standard & Poor's credit analyst Marc D. Bromberg. "Under our
current pricing assumptions, we believe that Denbury's
profitability will remain strong relative to similarly rated peers
given that more than 90% of its production is weighted to robust
oil prices. As a result, we forecast that Denbury's run rate
leverage could be in the low 2x area, which we consider
appropriate for a 'BB+' rating, assuming that the company does not
embark on a more aggressive share buyback program than we
currently envision or a material debt financed acquisition."
"The ratings on Denbury, an independent E&P company, reflect the
capital-intensive, high-cost nature of its tertiary oil
operations, its aggressive capital spending program, and negative
free cash flow expectations for the next several years. The
ratings incorporate our 'aggressive' financial risk, 'fair;
business risk, and 'strong' liquidity assessments. The ratings
also reflect the company's good balance on high-priced oil and its
lower-risk exploitation strategy, and improving financial
performance over the next 12 months," S&P said.
"The outlook is positive to reflect our expectation that we could
raise the corporate credit rating to 'BB+' over the next 12 months
if Denbury's solid operating performance continues, with
production and costs near our current expectations. We could
upgrade the company if it can maintain leverage in the low 2x
range, which we consider appropriate for a higher rating. This is
likely to happen if Denbury can increase production without adding
significant debt levels under our current price assumptions.
Alternatively, if crude oil prices outperform our current
assumptions, we could raise ratings, assuming Denbury will
maintain a more conservative financial policy given the improved
cash flow outlook," S&P said.
"We could revise the outlook to stable if Denbury adds to leverage
by expanding its share buyback program or if it embarks on a
transaction that we think could weaken its debt to EBITDA ratio to
2.5x or higher," S&P said.
DESERT GARDENS: Plan Confirmed; Mortgage Extended
-------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the owner of 532-unit Desert Gardens apartments in
Glendale, Arizona, last week won the signature of the bankruptcy
judge on a confirmation order approving its reorganization plan.
According to the report, there were no objections to confirmation
and all voting classes were in favor of the plan. The secured
creditor is U.S. Bank NA, as trustee for the trust owning the
securitized mortgage. The $24.7 million mortgage debt will be
paid over 30 years at a 4.25% interest rate. Interest only will
be paid for two years.
The Bloomberg report discloses that unsecured creditors with
$85,600 in claims will be paid in full over five years.
There is an outstanding dispute with the lender over the validity
of the mortgage and the bank's right to a $7.9 million prepayment
penalty if the mortgage is paid off early.
About Desert Gardens IV
Desert Gardens IV LLC, owner of a 532-unit Desert Gardens
apartments in Glendale, Arizona, filed for Chapter 11 protection
to halt foreclosure that was set for Nov. 14. The project has two
31-story towers, one built in 1983 and the other in 2003. U.S.
Bank, the secured lender, is owed $26.3 million. The property is
estimated to be worth $16 million.
Desert Gardens IV filed a Chapter 11 petition (Bankr. D. Ariz.
Case No. 11-31061) on Nov. 4, 2011, in Phoenix. Jennings, Strouss
& Salmon, P.L.C., serves as the Debtor's counsel. Sierra
Consulting Group, LLC, is the financial advisor.
The Debtor disclosed $16.14 million in assets and $27.14 million
in liabilities in its schedules.
The U.S. Trustee has not yet appointed a creditors committee in
the Debtor's case because an insufficient number of persons
holding unsecured claims against the Debtor have expressed
interest in serving on a committee.
DEWEY & LEBOEUF: FPC Says Disbandment Motion Not Supported by Law
-----------------------------------------------------------------
The Official Committee of Former Partners appointed in the Chapter
11 case of Dewey & LeBoeuf LLP objects to the Debtor's application
for an order directing the U.S. to disband the FPC.
The FPC said:
1. "The Debtor's Stalinistic wish to silence objections to its
wind-down agenda by doing away with the objector is not a
valid reason for the Court to take the extraordinary and
virtually unprecedented step of disbanding an official
committee appointed by the UST."
2. Congress granted courts only the limited power to direct the
appointment of additional committees, and to review whether
the members of an extant committee provide adequate
representation of the committee's constituency. "The Court
does not have the authority to eliminate a committee that
the UST has appointed".
3. None of the law cited in the Disbandment Motion applies to
the relief that the Debtor seeks. "But even under the
standards of the inapposite law cited by the Debtor, the
Disbandment Motion still must be denied. There should be no
doubt -- and certainly no doubt sufficient to support a
finding that the UST has acted arbitrarily and capriciously
-- that the Former Partners are not, and cannot be,
adequately represented by the Creditors' Committee, the Ad
Hoc Committee, or any other constituency in this case. The
approximately 200 Former Partners and surviving spouses who
rely on retirement income that the Debtor has jeopardized
have extremely different interests in this estate than the
three trade creditors that are the exclusive members of the
Creditors' Committee. The Ad Hoc Committee is also
incapable of representing the interests of all former
partners because it does not have any former legacy Dewey
Ballantine partners as members, and as an informal committee
it owes no fiduciary duties to anyone beyond its particular
members."
4. "The Former Partners' retirement interests arise from
complex pension plans, severance agreements, employment
contracts and other similar employment arrangements. No
one, including the Debtor, has even attempted to evaluate,
let alone litigate, the nature and extent of these claims.
Accordingly, the Debtor cannot say with any semblance of
confidence that all or any of the Former Partners are "out
of the money" (which, even if true, still would not instill
the Court with authority to disband the FPC)."
For the foregoing reasons, the FPC asks the Court to deny the
Disbandment Motion.
About Dewey & LeBoeuf
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 LLP operated as a prestigious, New York City-
based, law firm that traced its roots to the 2007 merger of Dewey
Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird
-- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in
1929. In recent years, more than 1,400 lawyers worked at the firm
in numerous domestic and foreign offices.
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 MEDIA: Prepack Bankruptcy Among Options to Complete Merger
--------------------------------------------------------------
Dex One Corporation said in a regulatory filing on Thursday it may
have to file for bankruptcy to file to implement a merger
agreement with SuperMedia Inc.
According to Dex One, following the announcement of the proposed
Merger, the current senior secured lenders for both companies
formed a joint steering committee to evaluate the proposed
amendments to the parties' respective credit agreements. Thus
far, the senior secured lenders, acting through the steering
committee, have rejected the proposed amendments to the parties'
respective credit agreements. Dex One and SuperMedia continue to
negotiate with the steering committee in an attempt to reach
agreement on amendments to the parties' respective credit
agreements that will secure the consents necessary to effect the
Merger.
In light of the current negotiations, however, Dex One recognizes
that the parties may not be able to obtain sufficient approval
from the senior secured lenders to any proposed amendments to the
parties' respective credit agreements. According to Dex One,
possible alternatives to the current transaction structure to
effect the Merger are under consideration, including a
"prepackaged" restructuring of the parties' senior secured
indebtedness through proceedings instituted under Chapter 11 of
the Bankruptcy Code to implement possible amendments that may
garner sufficient, though not unanimous, support from the parties'
respective lenders, while otherwise maintaining the basic economic
terms of the Merger Agreement. However, there can be no assurance
that Dex One and SuperMedia can effect a transaction through an
alternative structure, that the necessary consents will be
obtained, or that the Merger will be consummated.
On Aug. 20, 2012, Dex One entered into an Agreement and Plan of
Merger providing for the companies' merger. Consummation of the
Merger is subject to, among other things, receiving 100% approval
from the current lenders to Dex One and SuperMedia, respectively,
to amend each party's existing credit agreements with their senior
secured lenders all as set forth in the Merger Agreement. The
Merger is also subject to other customary closing conditions.
Dex One said the Merger Agreement may be terminated by either
party if it determines in good faith that the lender consents will
not be obtained by Dec. 31, 2012. Accordingly, it is possible
that the Merger Agreement will be terminated, unilaterally, by
either party. The parties may amend the Merger Agreement to
extend this deadline, or may waive the deadline, but it is
possible that no agreement to amend, and no decision to waive,
will be reached or that any agreement to so amend would contain
terms or conditions that are different from those in the Merger
Agreement.
Under the current merger terms, the companies' shared headquarters
will be in Texas, meaning layoffs for an undisclosed number of
Triangle workers, reports Lauren K. Ohnesorge, staff writer at
Triangle Business Journal. Dex One's lease in Cary, N.C., runs
through the end of next year.
Also on Thursday, Dex One unveiled its quarterly earnings,
complete with a 14% ad sales drop from last year. Quarterly
revenue ($320 million) and bookings declined 11% and 13%,
respectively, according to Business Journal.
About Dex Media Inc.
Dex Media, Inc., a wholly owned subsidiary of R.H. Donnelley
Corporation, is the exclusive publisher of the "official" yellow
pages and white pages directories for Qwest Corporation, the local
exchange carrier of Qwest Communications International Inc., in
Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and
South Dakota -- the "Dex East States" -- and Arizona, Idaho,
Montana, Oregon, Utah, Washington and Wyoming -- the "Dex West
States". The Company is the indirect parent of Dex Media East LLC
and Dex Media West LLC. Dex Media East operates the directory
business in the Dex East States and Dex Media West operates the
directory business in the Dex West States.
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), after missing a $55 million interest payment on
its senior unsecured notes due April 15. James F. Conlan, Esq.,
Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork,
Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago,
Illinois represent the Debtors in their restructuring efforts.
Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young,
Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as
the Debtors' local counsel. The Debtors' financial advisor is
Deloitte Financial Advisory Services LLP while its investment
banker is Lazard Freres & Co. LLC. The Garden City Group, Inc.,
is claims and noticing agent.
DEX ONE: Incurs $12.7 Million Net Loss in Third Quarter
-------------------------------------------------------
Dex One Corporation reported a net loss of $12.7 million on
$319.7 million of net revenue for the three months ended Sept. 30,
2012, compared with net income of $22.2 million on $360.1 million
of net revenue for the same period during the prior year.
The Company reported net income of $97.9 million on $998.7 million
of net revenue for the nine months ended Sept. 30, 2012, compared
with a net loss of $524.5 million on $1.12 billion of net revenue
for the same period a year ago.
The Company's balance sheet at Sept. 30, 2012, showed $2.86
billion in total assets, $2.77 billion in total liabilities and
$92 million in stockholders' equity.
"In the quarter, local businesses turned to Dex One to manage and
expand their presence across mobile, social and local platforms,"
said Alfred Mockett, Dex One CEO. "Our digital bookings growth
was fueled by customers seeking to integrate their local marketing
efforts and connect with consumers."
"While merger-related activities required some of our attention,
we continued to focus on efforts to grow our digital business and
further reduce costs," said Dex One CFO Greg Freiberg. "We
continue to maintain solid EBITDA margins despite the topline
pressure, and remain on track to achieve our annual guidance."
A copy of the press release is available for free at:
http://is.gd/0yORPi
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.
* * *
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: Legendary Sues John Textor Over $3 Million Loan
---------------------------------------------------------------
Jeff Ostrowski at Palm Beach Post reports that Legendary Pictures
Funding LLC sued John Textor, former head of Digital Domain Media
Group Inc. on Oct. 24, 2012, in federal court over the $3 million
loan it loaned to Digital Domain in March 2012. The loan was
personally guaranteed by Mr. Textor.
According to the report, when Digital Domain filed for Chapter 11
bankruptcy in September, it listed Legendary Pictures as an
unsecured creditor owed $3.09 million. Legendary Pictures said
the bankruptcy put Digital Domain in default and meant that Mr.
Textor was on the hook for the loan.
The report relates Mr. Textor said Digital Domain satisfied the
loan by signing over to Legendary Pictures its rights to the film
"Jack the Giant Killer."
"The obligation that Legendary now asserts is due, by federal
court order, is the obligation of the new owner of Digital
Domain," the report quotes Mr. Textor as stating. "If in fact the
guaranty is valid, I did not guaranty any obligations for the new
owner."
The report adds Chinese firm Galloping Horse has offered to pay
$30 million for the Digital Domain studios in Venice, Calif., and
Vancouver. Legendary Pictures' suit said an August agreement
directs two other companies to pay $3.2 million on behalf of
Digital Domain. But, the suit says, that "agreement does not
address, has no impact on, and has no application to" the money
Legendary Pictures asserts Mr. Textor owes.
The report relates Legendary Pictures seeks $3 million, plus 8%
annual interest and attorney fees.
According to the report, the suit is the latest legal entanglement
for Mr. Textor, the Hobe Sound businessman who in 2009 brought a
Digital Domain animation studio to Port St. Lucie in exchange for
$20 million in cash from the state.
The report notes Mr. Textor negotiated $135 million in cash,
loans, free land and tax credits from the state and the cities of
Port St. Lucie and West Palm Beach. When the company closed its
Port St. Lucie studio and West Palm Beach school in September, it
marked the largest-ever failure in Florida's two-decade effort to
use cash and tax incentives to lure employers.
The report relates Mr. Textor has been named in several
shareholder suits, and longtime friend Sean Heyniger of Palm Beach
sued Mr. Textor in September for $1 million. Meanwhile, the
Florida Department of Economic Opportunity asked lawmakers to
approve $500,000 for attorney fees so it can sue Mr. Textor and
other former officers and directors of Digital Domain.
The report adds Mr. Textor signed the $3 million loan on March 19,
about six weeks before he completed a so-called death spiral loan
with Tenor Capital in early May. Legendary Pictures has co-
produced such hits as The Dark Knight and The Hangover.
About Digital Domain
Port St. Lucie, Florida-based Digital Domain Media Group, Inc. --
http://www.digitaldomain.com/-- engaged 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,
2012, to sell its business for $15 million to Searchlight Capital
Partners LP, subject to higher and better offers.
At the auction on Sept. 21, the principal part of the business was
purchased by a joint venture between Galloping Horse America LLC,
an affiliate of Beijing Galloping Horse Co., and an affiliate of
Reliance Capital Ltd., based in Mumbai. The $36.7 million total
value of the contact includes $3.6 million to cure defaults on
contracts and $2.9 million in reimbursement of payroll costs.
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.
An official committee of unsecured creditors appointed in the case
is represented by lawyers at Sullivan Hazeltine Allinson LLC and
Brown Rudnick LLP.
The company listed assets of $205 million and liabilities totaling
$214 million. Debt includes $40 million on senior secured
convertible notes plus $24.7 million in interest. There is
another issue of $8 million in subordinated secured convertible
notes.
The Debtors also have sought ancillary relief in Canada, pursuant
to the Companies' Creditors Arrangement Act in the Supreme Court
of British Columbia, Vancouver Registry.
DUFRY FINANCE: Fitch Rates 5.5% Senior Unsecured Notes 'BB'
-----------------------------------------------------------
Fitch Ratings has assigned Dufry Finance S.C.A.'s eight-year 5.5%
senior unsecured notes a final rating of 'BB'. The notes will
refinance near-term loan maturities.
The assignment of the final ratings follows a review of final
documentation which materially conforms to information received at
the time the agency assigned the expected ratings together with
Dufry AG's Long-term Issuer Default Rating (IDR) (see " Fitch
Assigns Dufry AG 'BB'; Rates Unsecured Notes 'BB(EXP)'" dated 12
October 2012 at www.fitchratings.com).
Dufry's 'BB' IDR is supported by the issuer's moderate business
risk profile as it benefits from a leading position in the high-
growth air travel retail market, with solid geographic
diversification that is balanced between emerging and developed
markets. The rating also reflects Dufry's low operating leverage,
with property costs that are largely turnover-based with modest
levels of minimum payment guarantees. This provides Dufry with
some overhead flexibility when faced with moderately cyclical
passenger numbers. Solid underlying socio-economic drivers such as
worldwide GDP growth, increased disposable incomes in emerging
markets, trends towards greater air transport accessibility and
airport privatisations further underpin the rating.
Negative rating factors include the concentration of revenues in
the air travel retail market with limited channel diversification
outside the predominantly airport-based duty free and paid format.
Some geographic concentration also exists with the US and Brazil
representing nearly half of revenues, exposing Dufry to
potentially slowing growth or travel disruptions from these
regions. In addition, the company faces risks related to
potential margin erosion from increasing concession payment fees
to airport operators as the number of contracts subject to renewal
is expected to increase over the next two to three years. The
risk of margin erosion is mitigated by cost saving initiatives
such as gross margin expansion through better sourcing or enhanced
product mix, and continued organic expansion generating economies
of scale. Some comfort is taken from Dufry's historically high
contract renewal rates.
Dufry's financial risk profile is low due to an EBITDAR margin
that is relatively high within the wider retail peer group and
free cash flow that has been consistently positive. Dufry
currently demonstrates a solid de-leveraging profile. Funds from
operations (FFO) net adjusted leverage are expected to decline
below 4x in 2013 from 4.8x in 2011 following the peak in leverage
resulting from debt-funded acquisitions in South and Central
America. Given strong free cash flow generation, averaging 5% of
sales per annum by 2015, Fitch expects leverage to remain
sustainably below 4x with FFO fixed charge cover approaching 3x
over the rating horizon.
Dufry's IDR incorporates some headroom for future debt-funded
acquisitions as Fitch understands M&A is an integral part of the
growth strategy. Fitch evaluates Dufry's liquidity profile as
solid with an undrawn CHF650m revolving credit facility (RCF) and
solid cash on balance sheet. The RCF is a new facility maturing
in 2017 and refinanced a CHF415m RCF that was due to expire in
2013. Prior to announcing the planned bond issue, Dufry had
manageable debt maturities given its available liquidity and
access to bank financing.
Dufry's senior unsecured notes, which are being issued by Dufry
Finance S.C.A., will rank pari-passu with the CHF650m RCF borrowed
by Dufry International AG and all future senior unsecured
obligations. The bond will benefit from first ranking guarantees
provided on an unsecured basis by Dufry International AG, Dufry
AG, Dufry Holdings & Investments AG, Hudson Group (HG), Inc.
representing 100% of the group's EBITDA excluding the ring-fenced
Greek acquisition. Fitch notes that restricted subsidiary
permitted indebtedness is limited by a weak debt incurrence-based
interest cover covenant test above 2.0x.
What Could Trigger A Rating Action?
Positive: Future developments that may, individually or
collectively, lead to positive rating action include
-- Further improvement in operating profitability through
organic business growth, accelerated debt prepayment that
reduces FFO net adjusted leverage beyond Fitch's current
expectations to below 3.5x on a sustainable basis;
-- FFO fixed charge coverage ratio of 3x or above on a sustained
basis.
Negative: Future developments that may, individually or
collectively, lead to negative rating action include
-- FFO net adjusted leverage at or above 4.5x over a sustained
period due to a significant decline in profitability versus
Fitch's expectations or a more aggressive acquisitive growth
strategy;
-- Permanent reduction in operating profitability leading to
EBITDA margins below 13%;
-- FFO fixed charge coverage below 2.5x;
-- Negative organic revenue growth dynamics for more than one
year
-- Fitch may have provided another permissible service to the
rated entity or its related third parties. Details of this
service can be found on Fitch's website in the EU regulatory
affairs page.
EAGLE POINT: U.S. Trustee Unable to Form Committee
--------------------------------------------------
The United States Trustee said that an official committee under
11 U.S.C. Sec. 1102 has not been appointed in the bankruptcy case
of Eagle Point Developments. Despite efforts to contact eligible
unsecured creditors, the United States Trustee has not received a
sufficient number of creditors willing to serve on a committee of
unsecured creditors.
About Eagle Point Developments
Eagle Point Developments, in Medford, Oregon, developed the Eagle
Point Golf Course, which was built in 1996. Eagle Point filed for
Chapter 11 bankruptcy (Bankr. D. Ore. Case No. 12-60353) on
Feb. 1, 2012. Judge Thomas M. Renn oversees the case, taking over
from Judge Frank R. Alley III. Sussman Shank LLP serves as
bankruptcy attorneys. The petition was signed by Arthur Critchell
Galpin, managing member.
Eagle Point's case is jointly administered with Mr. Galpin's
personal bankruptcy case (Bankr. D. Ore. Case No. 12-60362), which
is the lead case. In schedules, Mr. Galpin disclosed total assets
of $35.7 million and total liabilities of $51.7 million.
EASTMAN KODAK: Settles $58.6 Million Claim With ATLC
----------------------------------------------------
Carla Main at Bloomberg News reports that Eastman Kodak Co.
settled what could have been a $58.6 million secured claim by
agreeing on a $40.5 million unsecured claim.
According to the report, ATLC Ltd. was hired by Kodak in 1998 to
license digital imaging technology. After disputes arose, Kodak
terminated the agreement with ATLC in 2006 and reached a
settlement in 2007. Disputes erupted once again, this time in a
Florida lawsuit where ATLC claimed a breach of the 2007
settlement.
The report relates that after bankruptcy, ATLC filed a claim for
$58.6 million and started litigation to establish that it had the
equivalent of a secured claim in proceeds from the digital-imaging
technology Kodak was attempting to sell. The two parties agreed
to another settlement, to be considered for approval at a Nov. 14
hearing in U.S. Bankruptcy Court in New York.
The report notes that in return for dropping all other claims,
ATLC will have an approved unsecured claim for $40.5 million. In
addition, ATLC will receive additional unsecured claims equal to
10% of whatever Kodak recovers in lawsuits against technology
licensees. Finally, ATLC will receive 5% of proceeds of payments
by licensees if Kodak asks for the firm's assistance in the suits.
Kodak said in September that it won't sell the portfolio of
digital-imaging technology for now. Kodak, which plans to focus
on its commercial printing business, said it might exit Chapter 11
while continuing to license the imaging technology.
WROC-TV reported that Kodak was slated to meet with creditors at a
bankruptcy court hearing Oct. 17. WROC-TV said Kodak has asked a
bankruptcy judge to extend its window for submitting a plan to
emerge from Chapter 11. But instead of pushing it back from
January to February, as Kodak wanted, the judge wants to see
everyone back in one month to check on the progress.
The Bloomberg report discloses that Kodak's $400 million in 7%
convertible notes due in 2017 traded on Oct. 19 for 10 cents on
the dollar, according to Trace, the bond-price reporting system of
the Financial Industry Regulatory Authority.
About Eastman Kodak
Rochester, New York-based Eastman Kodak Company and its U.S.
subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11
petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan.
Subsidiaries outside of the U.S. were not included in the filing
and are expected to continue to operate as usual.
Kodak, founded in 1880 by George Eastman, was once the world's
leading producer of film and cameras. Kodak sought bankruptcy
protection amid near-term liquidity issues brought about by
steeper-than-expected declines in Kodak's historically profitable
traditional businesses, and cash flow from the licensing and sale
of intellectual property being delayed due to litigation tactics
employed by a small number of infringing technology companies with
strong balance sheets and an awareness of Kodak's liquidity
challenges.
In recent years, Kodak has been working to transform itself from a
business primarily based on film and consumer photography to a
smaller business with a digital growth strategy focused on the
commercialization of proprietary digital imaging and printing
technologies. Kodak has 8,900 patent and trademark registrations
and applications in the United States, as well as 13,100 foreign
patents and trademark registrations or pending registration in
roughly 160 countries.
As of July 31, 2012, the Company had total assets of
$3.93 billion, total liabilities of $5.32 billion and total
stockholders' deficit of $1.39 billion.
Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt &
Taylor, LLP, serve as counsel to the Debtors. FTI Consulting,
Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is
the investment banker. Kurtzman Carson Consultants LLC is the
claims agent.
The Official Committee of Unsecured Creditors has tapped
Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel.
Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi,
Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the
Unofficial Second Lien Noteholders Committee.
Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato,
Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners
II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth
S. Grossman; and Paul Martin.
ELPIDA MEMORY: Judge Clears Patent Pledge Discord Over Micron Sale
------------------------------------------------------------------
Lance Duroni at Bankruptcy Law360 reports that U.S. Bankruptcy
Judge Christopher S. Sontchi on Wednesday cleared Elpida Memory
Inc. to pledge more than 250 U.S. patents to back a supply pact
with Apple Inc., but also vowed that he would not simply rubber
stamp the planned $2.5 billion sale of the Japanese chipmaker to
Micron Technology Inc.
About Elpida Memory
Elpida Memory Inc. (TYO:6665) -- http://www.elpida.com/ja/-- is
a Japan-based company principally engaged in the development,
design, manufacture and sale of semiconductor products, with a
focus on dynamic random access memory (DRAM) silicon chips. The
main products are DDR3 SDRAM, DDR2 SDRAM, DDR SDRAM, SDRAM,
Mobile RAM and XDR DRAM, among others. The Company distributes
its products to both domestic and overseas markets, including the
United States, Europe, Singapore, Taiwan, Hong Kong and others.
The company has eight subsidiaries and two associated companies.
After semiconductor prices plunged, Japan's largest maker of DRAM
chips filed for bankruptcy in February with liabilities of 448
billion yen ($5.6 billion) after losing money for five quarters.
Elpida Memory and its subsidiary, Akita Elpida Memory, Inc.,
filed for corporate reorganization proceedings in Tokyo District
Court on Feb. 27, 2012. The Tokyo District Court immediately
rendered a temporary restraining order to restrain creditors from
demanding repayment of debt or exercising their rights with
respect to the company's assets absent prior court order.
Atsushi Toki, Attorney-at-Law, has been appointed by the Tokyo
Court as Supervisor and Examiner in the case.
Elpida Memory Inc. sought the U.S. bankruptcy court's recognition
of its reorganization proceedings currently pending in Tokyo
District Court, Eight Civil Division. Yuko Sakamoto, as foreign
representative, filed a Chapter 15 petition (Bankr. D. Del. Case
No. 12-10947) for Elpida on March 19, 2012.
ENERGY CONVERSION: Harrington Dragich to Review Payment Request
---------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Energy Conversion Devices, Inc., et al., asks the U.S.
Bankruptcy Court Eastern District of Michigan for permission to
retain Harrington Dragich PLLC, as special counsel to the
Committee.
According to the Committee, on the July 31, 2012, the Committee
was dissolved except for certain limited purposes. Pursuant to
the Plan, the Committee has a right to be heard with respect to
claims for professional fees of professionals arising prior to the
Effective Date. Foley & Lardner LLP remained as counsel to the
Committee for the limited purpose.
The Committee notes that on Sept. 29, 2012, Duff & Phelps
Securities, LLC as a managing director, filed an Amended Notice of
Administrative Expense Claim and Request for Payment.
Accordingly, the Committee sought to retain separate counsel for
the limited purpose of reviewing the Duff and Phelps Request for
Payment and advising the Committee on that matter.
Harrington Dragich, as special counsel, will perform legal
services on its behalf effective Oct. 12, for the limited purpose
of advising it with regard to issues related to the Duff & Phelps
Request for Payment.
The hourly rates of Harrington Dragich's personnel are:
Members $350
Associates $250
To the best of the Committee's knowledge, Harrington Dragich does
not hold or represent an interest adverse to the estate in the
matters upon which Harrington Dragich is to be employed.
The U.S. Trustee has consented to the employment of Harrington
Dragich.
About Energy Conversion
Energy Conversion Devices -- http://energyconversiondevices.com/
-- has a renowned 51 year history since its formation in Detroit,
Michigan and has been a pioneer in materials science and renewable
energy technology development. The company has been awarded over
500 U.S. patents and international counterparts for its
achievements. ECD's United Solar wholly owned subsidiary has been
a global leader in building-integrated and rooftop photovoltaics
for over 25 years. The company manufactures, sells and installs
thin-film solar laminates that convert sunlight to clean,
renewable energy using proprietary technology.
ECD filed for Chapter 11 protection (Bankr. E.D. Mich. Case No.
12-43166) on Feb. 14, 2012. Judge Thomas J. Tucker presides over
the case. Aaron M. Silver, Esq., Judy B. Calton, Esq., and Robert
B. Weiss, Esq., at Honigman Miller Schwartz & Cohn LLP, in
Detroit, Michigan, represent the Debtor as counsel. The Debtor
estimated assets and debts of between $100 million and $500
million as of the petition date.
The petition was signed by William Christopher Andrews, chief
financial officer and executive vice president.
Affiliate United Solar Ovonic LLC filed a separate Chapter 11
petition on the same day (Bankr. E.D. Mich. Case No. 12-43167).
Affiliate Solar Integrated Technologies, Inc., filed a petition
for relief under Chapter 7 of the Bankruptcy Code (Bankr. E.D.
Mich. Case No. 12-43169).
An official committee of unsecured creditors has been appointed in
the case. Foley and Lardner, LLP represents the Committee.
Scouler & Company, LLC, serves as financial advisor.
A group of shareholders had asked a bankruptcy judge to allow it
to form an official committee with lawyers and expenses paid for
by the company.
The company had estimated in court papers that it was worth
$986 million, based on nearly $800 million of investment in the
manufacturing unit.
The Debtors canceled an auction to sell USO as a going concern and
discontinued the court-approved sale process after failing to
receive an acceptable qualified bid by the bid deadline. Quarton
Partners served as the companies' investment banker. The Debtors
also hired auction services provider Hilco Industrial to prepare
for an orderly sale of the companies' assets.
The Second Amended Chapter 11 Plan of Liquidation for Energy
Conversion Devices and United Solar Ovonic became effective, and
the Company emerged from Chapter 11 protection.
ENERGY FUTURE: Completes $252.7 Million Senior Notes Offering
-------------------------------------------------------------
Energy Future Intermediate Holding Company LLC, a wholly-owned
subsidiary of Energy Future Holdings Corp., and EFIH Finance Inc.,
a direct, wholly-owned subsidiary of EFIH, completed an offering
of $252,714,000 aggregate principal amount of the Issuer's 6.875%
Senior Secured Notes due 2017 in a private placement conducted
pursuant to the exemptions from registration contained in Rule
144A and Regulation S under the Securities Act of 1933, as
amended.
The Notes were issued as additional notes under the Indenture,
dated as of Aug. 14, 2012, as supplemented by the First
Supplemental Indenture, dated as of Oct. 23, 2012, each among the
Issuer and The Bank of New York Mellon Trust Company, N.A., as
trustee, pursuant to which the Issuer previously issued $250
million aggregate principal amount of its 6.875% Senior Secured
Notes due 2017. The Additional Notes have identical terms as,
other than the issue date and issue price, will be fungible with,
and constitute part of the same series as, the Initial Notes. The
Notes will mature on Aug. 15, 2017. Interest on the Notes is
payable in cash in arrears on February 15 and August 15 of each
year at a fixed rate of 6.875% per annum, commencing on Feb. 15,
2013.
The Notes are secured equally and ratably with certain outstanding
indebtedness of the Issuer and EFH Corp. on a first-priority basis
by the pledge of all of the membership interests and other
investments EFIH owns or holds in Oncor Electric Delivery Holdings
Company LLC.
The Issuer may redeem the Notes, in whole or in part, at any time
on or after Feb. 15, 2015, at specified redemption prices, plus
accrued and unpaid interest, if any.
A copy of the First Supplemental Indenture is available at:
http://is.gd/UAhJjv
On Oct. 23, 2012, the Issuer also entered into a registration
rights agreement among the Issuer and the initial purchasers named
therein. Pursuant to the Registration Rights Agreement, the
Issuer has agreed to register with the SEC notes having
substantially identical terms as the Additional Notes as part of
an offer to exchange those registered notes for the Additional
Notes and to complete such exchange offer no later than 365 days
after Aug. 14, 2012. A copy of the Registration Rights Agreement
is available for free at http://is.gd/nge2o2
About Energy Future
Energy Future Holdings Corp., formerly known as TXU Corp., is a
privately held diversified energy holding company with a portfolio
of competitive and regulated energy businesses in Texas. Oncor,
an 80%-owned entity within the EFH group, is the largest regulated
transmission and distribution utility in Texas.
The Company delivers electricity to roughly three million delivery
points in and around Dallas-Fort Worth. EFH Corp. was created in
October 2007 in a $45 billion leverage buyout of Texas power
company TXU in a deal led by private-equity companies Kohlberg
Kravis Roberts & Co. and TPG Inc.
The Company's balance sheet at June 30, 2012, showed $43.44
billion in total assets, $52.17 billion in total liabilities and a
$8.73 billion total deficit.
Energy Future had a net loss of $1.91 billion on $7.04 billion of
operating revenues for the year ended Dec. 31, 2011, compared with
a net loss of $2.81 billion on $8.23 billion of operating revenues
during the prior year.
* * *
As reported by the TCR on Aug. 15, 2012, Moody's downgraded the
Corporate Family Rating (CFR) of EFH to Caa3 from Caa2 and
affirmed its Caa3 Probability of Default Rating (PDR) and SGL-4
Speculative Grade Liquidity Rating. The downgrade of EFH's CFR to
Caa3 from Caa2 reflects the company's financial distress and
limited financial flexibility.
ENERGY TRANSFER: Moody's Corrects April 30 Rating Release
---------------------------------------------------------
Moody's Investors Service issued a correction to the April 30,
2012 rating release of Energy Transfer Partners, L.P.
Revised release follows:
Moody's Investors Service affirmed Energy Transfer Partners,
L.P.'s (ETP) ratings and placed Sunoco Logistics Partners
Operations L.P. (SXL) ratings under review for downgrade. These
actions were in response to ETP's announcement that it will
acquire SXL's parent, Sunoco, Inc. (SUN), in a transaction valued
at $5.3 billion. Moody's maintained ETP's negative outlook on its
Baa3 senior unsecured note rating. Moody's affirmed SUN's Ba1
Corporate Family Rating (CFR) and Ba2 senior unsecured note rating
but changed SUN's outlook to developing from stable. The Ba1 CFR
on ETP's general partner (GP), Energy Transfer Equity, L.P. (ETE),
currently under review for possible downgrade, was unaffected by
the rating action.
Ratings Rationale
Continuation of ETP's negative outlook reflects its ongoing
elevated debt leverage in excess of 4.5x EBITDA, and uncertainty
over the leverage and operating risk implications of further
potential asset reconfigurations emanating from the March 26, 2012
closing of ETE's acquisition of Southern Union Company (SUG, Baa3
negative). Concerns related to leverage and structural complexity
have been exacerbated by ETP's announcement that it will acquire
SUN.
Following the anticipated closing of the SUN acquisition later
this year, ETP's largely natural gas-oriented infrastructure asset
base will be supplemented by the inclusion of SXL's liquids-
dominated logistics assets, increasing 2012's estimated cash flow
derived by ETP from liquids-oriented infrastructure to
approximately 30% on a pro forma basis. However, notwithstanding
the positive attributes afforded by the diversification and
incremental cash flow attained through this acquisition, the
already highly complex ETE structural organization will become
that much more complex as a result of this acquisition, and
pressure on cash distributions and ongoing financing requirements
within the ETE family will continue.
SXL's review for downgrade reflects Moody's expectation that under
the management of ETP, SXL's current 2.8x debt leverage will
increase as its organic growth prospects are likely to be financed
with a higher debt component, and its conservative cash
distribution policy could become more aggressive. Moreover, the
review reflects the impact of the pending change from SUN as its
GP with roughly $2 billion in cash to potentially support SXL's
growth initiatives, to ETP as GP, a more highly levered,
aggressively managed owner with its own very substantial cash
needs. However, it is likely that any downgrade in SXL's senior
unsecured rating would be limited to one notch to Baa3, since its
credit is well supported by a high quality portfolio of largely
fee-based energy infrastructure assets.
ETP intends to acquire 100% of the outstanding shares of SUN whose
retail refined product marketing assets will remain owned and
operating by SUN as a wholly owned subsidiary of ETP. SUN also
owns the 2% GP interest in SXL, 100% of its incentive distribution
rights (IDRs) and a 32.4% limited partnership (LP) interest in
SXL, which will remain a separate, publically traded master
limited partnership (MLP).
The $5.3 billion transaction consideration will consist of 50% ETP
common units and 50% cash, with approximately $2 billion of that
cash sourced from SUN's projected cash balances, the remainder to
be funded through ETP's $2.5 billion revolving credit facility.
SUN's existing $965 million of senior notes will remain
outstandinhg. With the expiration in November 2012, or possible
earlier termination, of SUN's $800 million secured revolving
credit facility, SUN's Ba2 senior unsecured notes rating could be
upgraded. However, SUN's developing outlook reflects a current
absence of specificity and timing regarding the ultimate
disposition of its unsecured notes as well as the use of its
substantial cash balance to fund much of the cash portion of the
acquisition. This size of this cash balance, resulting in negative
net debt at SUN, further supported its rating.
The evolving nature of asset reconfigurations and financing
requirements among the inter-related entities comprising the
overall ETE family will determine when ETP's outlook can be
stabilized. ETP's Baa3 rating continues to be supported by its
sizable asset footprint and record of equity issuance to support
growth projects and acquisitions. However, its rating could be
lowered if it fails to achieve debt leverage at or below 4.5x
EBITDA on a sustained basis, the prospects for which in 2012 are
now less clear because of this latest acquisition. Additionally,
should ETP embark on another sizable acquisition in the near
future, its Baa3 rating would be placed in greater jeopardy.
The principal methodology used in rating Energy Transfer Partners
was the Global Midstream Energy 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.
Energy Transfer Partners, L.P. is a publicly traded midstream
energy master limited partnership headquartered in Dallas, Texas.
Sunoco, Inc. is petroleum products marketing and distribution
company headquartered in Philadelphia, Pennsylvania. Sunoco
Logistics Partners, L.P. is a publicly traded midstream energy
master limited partnership also headquartered in Philadelphia,
Pennsylvania whose general partner is Sunoco, Inc.
FEDERAL-MOGUL: Moody's Cuts CFR/PDR to 'B2'; Outlook Stable
-----------------------------------------------------------
Moody's Investors Service has lowered the ratings of the Federal-
Mogul Corporation -- Corporate Family and Probability of Default
Ratings, to B2 from B1. In a related action, the ratings of the
company's senior secured term loans were lowered to B1 from Ba3,
and the rating for the senior secured asset based revolver was
lowered to Ba3 from Ba2. The Speculative Grade Liquidity Rating
also was lowered to SGL-3 from SGL-2. The rating outlook is
stable.
The following ratings were lowered:
Corporate Family Rating, to B2 from B1;
Probability of Default Rating, to B2 from B1;
$540 million senior secured asset based revolver, to Ba3 (LGD3,
32%) from Ba2, (LGD 2, 29%);
$1.96 billion senior secured term loan due December 2014, to B1
(LGD3, 34%) from Ba3 (LGD3, 37%);
$1.0 billion senior secured term loan facility due December 2015,
which includes a $50 million senior secured synthetic letter of
credit facility and a $0.95 billion senior secured term loan, to
B1 (LGD3, 34%) from Ba3 (LGD3, 37%);
Speculative Grade Liquidity Rating to SGL- 3 from SGL-2
Rating Rationale
The lowering of Federal-Mogul's Corporate Family Rating to B2
reflects the company's weakening credit metrics as lower European
automotive demand and weaker commercial vehicle demand in North
America have pressured the company's operating performance. For
the LTM period ending September 30, 2012, EBITA/Interest expense
was 1.7x (including Moody's Standard adjustments) and incorporates
the last quarter's ratio of below 1.0x. The company's announced
restructuring actions and any additional headcount reductions will
help mitigate these pressures. Yet, Moody's expects the company's
credit metrics to be more consistent with a B2 rating over the
intermediate-term, including Debt/EBITDA, which for the LTM period
ending September 30, 2012 was about 6.8x. Moody's believes
macroeconomic weakness in Europe will persist and has led to
Moody's expectation that automotive demand in Europe will contract
by about 3%. Moreover, uncertainty over the near-term impact of
U.S. fiscal policies is expected to moderate growth in demand
going into 2013.
Federal-Mogul is expected to maintain its strong competitive
position in the automotive parts supplier sector over the
intermediate-term. The company has a diverse revenue exposure with
about 34% of revenues from the automotive aftermarkets which have
positive long-term demand trends. No individual customer accounted
for more than 5% of the company's direct sales during 2011. In
addition, the company's global capacity is expected to sustain its
market position over the intermediate-term.
Federal-Mogul is anticipated to maintain an adequate liquidity
profile over the next twelve months supported by cash balances
which, as of September 30, 2012, was about $541 million. Full
committed availability, as of September 30, 2012, under the $540
million asset based revolving facility is a positive liquidity
consideration. However, the December 2013 maturity of this
facility is an offsetting detractor. Free cash flow is expected to
be break even over the next twelve months as the company manages
restructuring actions to offset weakness in European demand and
extended payment terms required by its aftermarket parts
customers. The term loans have nominal amortization requirements
over the next twelve months. The senior secured credit facilities
do not have financial maintenance covenants. These facilities are
secured by essentially all of the company's domestic subsidiaries'
personal property (including 66% of the stock of certain first-
tier foreign subsidiaries) and certain real property. Alternative
forms of liquidity are available to Federal-Mogul through
additional indebtedness baskets allowed by the senior secured
credit facilities.
The stable outlook considers Moody's expectation that the
company's restructuring actions in Europe should help mitigate
regional demand pressures. While the company's liquidity profile
is constrained by the December 2013 maturity of the revolving
credit agreement, Moody's expects Federal-Mogul global market
position and scale, and customer diversity to support the
company's access to the capital markets.
Future events that have potential to drive Federal-Mogul's outlook
or ratings higher would result from stronger operating performance
leading to improvements in EBITA/Interest coverage approaching
3.0x, or in leverage below 4.0x.
Future events that have potential to drive Federal-Mogul's outlook
or ratings lower include further deterioration in revenues,
without offsetting restructuring actions, or material increases in
raw materials costs that cannot be passed on to customers, leading
to lower profitability. Consideration for a lower outlook or
rating could arise if any combination of these factors were to
result in EBITA/Interest coverage approaching 1.0x or debt/EBITDA
being sustained above 6.5x. A deterioration in liquidity could
also lead to a lower outlook or rating.
The principal methodology used in rating Federal-Mogul was the
Global Automotive Supplier Industry Methodology published in
January 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.
Federal-Mogul Corporation, headquartered in Southfield, Michigan,
is a leading global supplier of vehicular parts, components,
modules and systems to customers in the automotive, small engine,
heavy-duty, marine, railroad, aerospace and industrial markets.
The company's primary operating segments are: Powertrain: -
pistons, rings, liners, valve seats & guides, bearings, bushings,
ignition, sealing and systems protection products; and Vehicle
Components Solutions: - Engine and sealing components, braking,
wipers, steering & suspension, fluids and chemicals for
aftermarket customers. Revenues for fiscal 2011 were $6.9 billion.
FEDERAL-MOGUL: S&P Cuts Corp. Credit Rating to ' B'; Outlook Neg
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Southfield, Mich.-based Federal-Mogul to 'B' from 'B+'.
The outlook is negative.
"At the same time, we lowered the issue-level ratings on the
company's senior secured revolving credit facility to 'BB-' (two
notches above the 'B' corporate credit rating) from 'BB'. The
recovery rating remains '1', indicating our expectation that
lenders would receive very high (90% to 100%) recovery in the
event of a payment default. We also lowered our issue ratings
on Federal-Mogul's term loan B and term loan C to 'B' (the same as
the corporate credit rating) from 'B+'. The recovery ratings
remain '4', indicating our expectation that lenders would receive
average (30% to 50%) recovery in the event of a payment default,"
S&P said.
"The downgrade reflects the company's weaker-than-expected sales
and operating performance, partly because of European market
weakness, but also industrywide challenges in the aftermarket
segment," said Standard & Poor's credit analyst Robyn Shapiro. "We
now view the financial risk profile as 'highly leveraged,' with
debt to EBITDA (adjusted to include underfunded pensions and
operating leases) approaching 7x. Additionally, free cash flow
remains negative as a result of longer accounts receivable terms
with its aftermarket customers. Even when these receivables are
collected, as we expect, long-dated receivables are now a
prominent feature of aftermarket sales to the large retailers."
"The negative outlook reflects our view that the company will need
to undertake refinancing in a fragile economic environment with
likely uncertain financial market conditions in 2013. The
currently unfunded revolving credit facility expires in December
2013 and the term loans mature in December 2014 and 2015. We think
it is not likely that lenders would extend the maturity of the
revolver past the existing loan maturity," S&P said.
The ratings on Federal-Mogul reflect its highly leveraged
financial risk profile and "weak" business risk profile as a major
participant in the cyclical and highly competitive global auto
industry. Standard & Poor's business risk assessment incorporates
the multiple industry risks facing automotive suppliers, including
volatile demand, high fixed costs, and severe pricing pressures.
"We believe intermediate-term financial prospects can support the
'B' rating despite elevated leverage. We believe light-vehicle
production in North America should rise this year and next,
although we expect that economic activity will remain weak in
Europe and Latin America in 2013. Additionally, we expect the
company will generate some positive free operating cash flow in
2013, as the longer-dated accounts receivable terms from Federal-
Mogul's aftermarket customers is currently reaching a plateau,"
S&P said.
"We believe Federal-Mogul's controlling investor, Carl Icahn, who
indirectly controls 77% of the common shares, heavily influences
the company's business strategy and financial policies. Earlier
this year, Federal-Mogul's board of directors decided to modify
the company's corporate structure to create a separate and
independent aftermarket division with its own CEO who reports
directly to the company's board of directors. The aftermarket
sector has been challenging because of fewer miles driven and low-
cost competitors. Should this organizational development at
Federal-Mogul either presage a strategic shift in the business
mix, a transaction involving an increase in leverage, or fail to
offset challenging markets, we could lower the ratings," S&P said.
"Federal-Mogul manufactures powertrain components, sealing
products, bearings, brake friction materials, and vehicle safety
products for the global auto market. Its customers are original
equipment (OE) manufacturers (66% of 2011 sales) and aftermarket
participants (34%). We expect this mix to remain about the same.
It serves light automotive vehicle (73%), heavy-duty truck (17%),
and industrial (10%) markets. Aftermarket sales provide diversity
to Federal-Mogul's revenue stream and have historically been more
stable than OE sales. However, we believe recent experience has
shown that the aftermarket is under pressure from lower consumer
spending during weak economic periods, fewer miles driven, and a
sharper focus on private label products," S&P said.
"We consider Federal-Mogul's customer base and end markets as
diverse. No single customer accounts for more than about 5% of
sales. The company maintains a No. 1 or No. 2 market share in most
of its markets, which we believe indicates acceptable
technological expertise and quality. The North American market
provided 38% of 2011 consolidated revenues, European markets
provided 43%, and the remaining 19% of sales came from the rest of
the world," S&P said.
"Although we view commodity price fluctuations as a risk because
of uncertainty of recovery from customers, the company has passed
most of its incremental costs on to customers, albeit with a lag,
through some contractual price escalations," S&P said.
"In 2012, we expect higher demand in North America for light
vehicles. In the U.S. light-vehicle market, we expect an increase
in 2012 to 14.3 million light vehicles, and for the first time
since 2008 sales are significantly greater than our estimate of
scrappage rate (the upper end of estimates is 13 million units).
Meanwhile, auto sales in Europe continue to decline and were down
7.1% through the first eight months of 2012 and could be down in
2013 as well. Standard & Poor's base-case outlook continues to
forecast considerable regional differences in auto sales for 2012,
and we believe the underlying reasons for these differences--
including economic growth in China and Brazil, and fiscal
uncertainty in the U.S.--could persist in 2013," S&P said.
"We expect commercial-vehicle production in North America to rise
10% to 20% in 2012, while production is likely to decline about
10% in Europe and more than 20% in South America. Aftermarket
demand has suffered from fewer miles driven, the low cost of
imports, and some shift in consumer preference away from premium
brands in the current economic environment. Therefore, we view
this segment as more challenging than we did previously," S&P
said.
"The highly leveraged financial risk profile reflects weak credit
protection measures. The company's total debt to EBITDA (adjusted
to include underfunded pensions and operating leases) was 6.9x as
of Sept. 30, 2012. Also, funds from operations (FFO) to total debt
remained weak, at 8% as of Sept. 30, 2012," S&P said.
"In our opinion, any improvement in EBITDA through 2013 could
allow the company to decrease its leverage to about 6x before debt
maturities come due starting in late 2013. In addition to
refinancing risk, we assume the company could face higher interest
costs following refinancing. For these reasons, we assume the
company will preserve cash rather than pursue acquisitions of a
material size, increase its joint-venture positions, or make large
dividend payouts within the next two years," S&P said.
"The negative outlook reflects our view that the company will
probably need to refinance most of its capital structure in the
next 18 months in a fragile economic environment and possibly
uncertain capital markets," S&P said.
"We could lower the rating if the company is unable to
successfully address upcoming maturities during the next year and
progress toward improving credit metrics is delayed. These events
are likely to be related. For example, we could downgrade the
company if leverage remains above 6x and we don't expect near-term
improvement. This could occur if revenue is flat or negative and
EBITDA margins fall below 8% in fiscal 2013. We could also lower
the rating if the company's free operating cash flow fails to
return to positive territory in the next couple of quarters," S&P
said.
"However, we could revise the outlook to stable if the company
successfully addresses its debt maturities by refinancing in a
timely manner and we believe that prospects for free cash flow are
sustainable, supporting reduced leverage," S&P said.
FLORIDA GAMING: Terminates David Jonas as Centers' CRO
------------------------------------------------------
The board of directors of Florida Gaming Centers, Inc., the wholly
owned subsidiary of Florida Gaming Corporation, terminated the
engagement of David S. Jonas as Centers' Chief Restructuring
Officer effective Oct. 19, 2012.
On Oct. 18, 2012, ABC Funding, LLC, on behalf of certain of
Centers' lenders, filed motions requesting the immediate
appointment of David S. Jonas as receiver to take operational
control of Centers. ABC Funding filed the motions as
Administrative Agent for the lenders under Centers' primary credit
facility, alleging that the appointment of a receiver is necessary
to protect certain property that was pledged to the lenders under
the credit facility. The motions further allege that:
-- Centers is unable to manage its contractual obligations
appropriately and to protect the collateral of its secured
creditors;
-- Centers is incapable of adhering to the corporate structure
by which it and the Company are required to operate;
-- Centers' funds have been misappropriated and misallocated;
and
-- the assets that are available to repay the loan are in
danger of being dissipated in violation of the credit
facility loan documents.
The motions were filed in connection with lawsuits previously
filed by ABC Funding in the Eleventh Judicial Circuit in and for
Miami-Dade County, Florida and in the Nineteenth Judicial District
in and for St. Lucie County, Florida.
As previously reported, the Company and Centers entered into a
credit agreement with ABC Funding, as Administrative Agent for the
lenders. As security for the credit agreement, Centers and City
National Bank of Florida, as Trustee under the Land Trust
Agreement dated Jan. 3, 1979, known as Trust Number 5003471,
granted mortgages to ABC Funding in certain real property owned by
Centers and the Land Trust in St. Lucie, Florida and Miami-Dade
County, Florida, respectively. As additional security under the
Credit Agreement: (1) Centers collaterally assigned all of its
rights in the Land Trust to ABC Funding; (2) the Land Trust, the
Company and the Company's wholly-owned subsidiary, Tara Club
Estates, Inc., each executed a Credit Party Guaranty in favor of
ABC Funding, guaranteeing Centers' obligations under the Credit
Agreement; and (3) the Company, Centers and Freedom Holding, Inc.,
the Company's largest shareholder, executed a Pledge Agreement
granting ABC Funding a security interest in substantially all of
their personal property.
ABC Funding delivered to the Company and Centers notice of
immediate acceleration of all of the Obligations, and it filed the
two lawsuits on Sept. 5, 2012.
In its complaints, ABC Funding alleged numerous defaults and other
violations of the credit agreement and other loan documents
against the Company and Centers. ABC Funding is seeking:
(i) an award of damages in excess of $84,000,000 against
Centers for breach of the credit agreement;
(ii) enforcement of the Guaranty against the Company, including
an award of damages in excess of $84,000,000;
(iii) to foreclose on the collateral secured by the Miami
mortgage, the St. Lucie mortgage, the Pledge Agreement and
the Trust Assignment, including, certain real property
owned by Centers and the Land Trust in Miami-Dade County,
Florida and in St. Lucie, Florida; and
(iv) the appointment of a receiver.
About Florida Gaming
Florida Gaming Corporation operates live Jai Alai games at
frontons in Ft. Pierce, and Miami, Florida through its Florida
Gaming Centers, Inc. subsidiary. The Company also conducts
intertrack wagering (ITW) on jai alai, horse racing and dog racing
from its facilities. Poker is played at the Miami and Ft. Pierce
Jai-Alai, and dominoes are played at the Miami Jai-Alai. In
addition, the Company operates Tara Club Estates, Inc., a
residential real estate development located near Atlanta in Walton
County, Georgia. Approximately 46.2% of the Company's common
stock is controlled by the Company's Chairman and CEO either
directly or beneficially through his ownership of Freedom Holding,
Inc. The Company is based in Miami, Florida.
The Company reported a net loss of $21.76 million in 2011,
compared with a net loss of $4.84 million in 2010.
The Company's balance sheet at June 30, 2012, showed
$84.01 million in total assets, $118.36 million in total
liabilities, and a $34.34 million total stockholders' deficit.
As of June 30, 2012, the Company was in default on an $87,000,000
credit agreement regarding certain covenants. The Company's
continued existence as a going concern is dependent on its ability
to obtain a waiver of its credit default and to generate
sufficient cash flow from operations to meet its obligations.
After auditing the 2011 results, King & Company, PSC, in
Louisville, Kentucky, noted that the Company has experienced
recurring losses from operations, cash flow deficiencies, and is
in default of certain credit facilities, all of which raise
substantial doubt about its ability to continue as a going
concern.
FREESEAS INC: Ion Varouxakis Discloses 34.8% Equity Stake
---------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Ion G. Varouxakis and his affiliates
disclosed that, as of Oct. 23, 2012, they beneficially own
4,400,134 shares of common stock of FreeSeas Inc. representing
34.8% of the shares outstanding. A copy of the filing is
available for free at http://is.gd/wOP1Ki
About FreeSeas Inc.
Headquartered in Athens, Greece, FreeSeas Inc., formerly known as
Adventure Holdings S.A., was incorporated in the Marshall Islands
on April 23, 2004, for the purpose of being the ultimate holding
company of ship-owning companies. The management of FreeSeas'
vessels is performed by Free Bulkers S.A., a Marshall Islands
company that is controlled by Ion G. Varouxakis, the Company's
Chairman, President and CEO, and one of the Company's principal
shareholders.
The Company's fleet currently consists of six Handysize vessels
and one Handymax vessel that carry a variety of drybulk
commodities, including iron ore, grain and coal, which are
referred to as "major bulks," as well as bauxite, phosphate,
fertilizers, steel products, cement, sugar and rice, or "minor
bulks." As of Oct. 12, 2012, the aggregate dwt of the Company's r
operational fleet is approximately 197,200 dwt and the average age
of its fleet is 15 years.
As reported in the TCR on July 18, 2012, Ernst & Young (Hellas)
Certified Auditors Accountants S.A., in Athens, Greece, expressed
substantial doubt about FreeSeas' ability to continue as a going
concern, following its audit of the Company's financial statements
for the fiscal year ended Dec. 31, 2011. The independent
auditors noted that the Company has incurred recurring operating
losses and has a working capital deficiency. "In addition, the
Company has failed to meet scheduled payment obligations under its
loan facilities and has not complied with certain covenants
included in its loan agreements with banks."
The Company's balance sheet at June 30, 2012, showed
US$120.8 million in total assets, US$104.1 million in total
current liabilities, and shareholders' equity of US$16.7 million.
GALLANT ACQUISITIONS: U.S. Trustee Wants Case Converted to Ch. 7
----------------------------------------------------------------
Judy A. Robbins, U.S. Trustee for Region 7, asks the U.S.
Bankruptcy Court for the Southern District of Texas to dismiss or
convert the Chapter 11 case of Gallant Acquisitions, Ltd.'s to one
under Chapter 7 of the Bankruptcy Code.
The Trustee notes that the secured creditor holding a first lien
and deed of trust on the Debtor's real estate, First National Bank
foreclosed on the real property. The Debtor no longer owns the
real estate with which it hoped to reorganize. Without the
property, the Debtor no longer is in a position to reorganize.
A hearing on Nov. 13, 2012, at 2:45 p.m., has been set.
About Gallant Acquisitions
Willis, Texas-based Gallant Acquisitions Ltd. filed a Chapter 11
petition (Bankr. S.D. Tex. Case No. 12-33353) in Houston, Texas on
May 1, 2012. In the petition, the Debtor disclosed total assets
of $10 million and total debts of $9.15 million, all on account of
liquidated secured debt.
The Debtor owns various properties in Texas, including a 130-acre
Land & Golf Course and 32-acre multiuse land on Highway 105, in
Conroe, Texas.
Judge Jeff Bohm oversees the case. Barbara Mincey Rogers, Esq.,
at Rogers & Anderson, PLLC, serves as the Debtor's counsel. The
petition was signed by Warrant Gallant, president of Gallan GP,
LLC, general partner.
GOODMAN NETWORKS: S&P Lowers Corporate Credit Rating to 'B'
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured issue-level ratings on Goodman Networks Inc. to
'B' from 'B+', and removed all ratings from CreditWatch. The
ratings had been placed on CreditWatch with negative implications
on April 19, 2012, following the company's failure to complete
its audit and release its year-end financial statements in a
timely manner. The outlook is stable.
"Goodman recently completed its audited statements for 2011 and
previous years, and we expect it to become current with its
quarterly financial reporting by the end of 2012. However, in
resolving our CreditWatch, we revised our base-case forecast to
exclude the expansion of Goodman's existing outsourcing agreement
with a major customer that we had previously incorporated. The
revised forecast is based on management's determination that it
does not expect to materially increase the amount of revenues from
a contract with a major customer. As a result, we expect Goodman
will not be able to achieve leverage improvement to 3x or lower on
a sustained basis, which we viewed as necessary to support the
prior 'B+' corporate credit rating," said Standard & Poor's credit
analyst Michael Weinstein.
"In addition, the downgrade reflects our revision of the business
risk profile to 'vulnerable' from 'weak' under our criteria. Our
assessment of the business risk takes into account the company's
very high customer concentration with about 85% of expected 2012
revenues derived from AT&T. Under our previous assumptions, strong
growth in revenues from a major customer would have reduced
Goodman's concentration with AT&T to about 60%," S&P said.
"The ratings on Plano, Texas-based Goodman reflect the high
customer concentration, participation in a competitive and
fragmented industry, dependence on spending patterns by
telecommunications carriers, and an aggressive financial risk
profile. Tempering factors include a planned ramp up in
infrastructure spending by AT&T to support increased demand for
data services, a considerable backlog of business with AT&T, and
some recent new business wins with other customers," S&P said.
"The stable outlook incorporates our expectation that leverage
will remain above 3x and FFO to total debt will remain below 20%
over the next couple of years. Our expectation of no contract
expansion with one of Goodman's major customers more than offsets
the expected surge in LTE infrastructure spending by AT&T in 2013
and new business wins over the past year," S&P said.
In S&P's view, an upgrade would require Goodman to meet all of
these conditions:
-- Total leverage below 3x.
-- FFO to total debt above 25%.
-- A material improvement in customer diversity, such that the
share of total revenue from customers other than AT&T
approaches 50%.
"While unlikely over the next year, we could lower the ratings if
AT&T were to curtail capital spending for wireless projects, or if
Goodman were to lose a portion of this contract, and this resulted
in leverage rising above 5x and FFO to debt decreasing to below
12%, as these measures would be consistent with a highly leveraged
financial risk profile," S&P said.
GUIDED THERAPEUTICS: Selects I.T.E.M. to Distribute LuViva
----------------------------------------------------------
Guided Therapeutics, Inc., has signed a definitive agreement
granting I.T.E.M. Medical Technologies Group exclusive
distribution rights for LuViva Advanced Cervical Scan in Turkey,
Iraq and Azerbaijan. The agreement brings to 12 the number of
territories under definitive distribution relationships in Europe,
North America, Asia and Africa.
The agreement is for three years. An initial shipment of one
LuViva demonstration unit was made in September 2012 and product
launch is expected upon compliance with the CE Mark, Third
Edition, which is anticipated prior to year end.
"The selection of I.T.E.M. as a qualified distributor for LuViva
establishes a bridge from Europe to Asia and aligns us with a
highly-experienced team that has demonstrated success in
introducing and selling new technologies into a rapidly developing
market eager for medical innovation," said Mark L. Faupel, Ph.D.,
CEO and President of Guided Therapeutics, Inc. "Due diligence is
also ongoing in a number of other territories with additional
agreements pending."
Zafer Yazici, CEO and President of I.T.E.M. Medical Technologies
Group, added, "Since our beginning, we have been committed to
bringing advanced medical technologies to this region of the
world. LuViva's innovative technology will not only complement
our current gynecology product offerings, but allows us to raise
the bar in women's healthcare in our region."
Each year in Turkey, about 2 million women undergo Pap test
screening for cervical cancer, with as many as 200,000 receiving
an abnormal Pap result. These women are then scheduled for a
follow-up exam, called a colposcopy, which typically includes a
painful biopsy of cervical tissue. LuViva is designed to be used
before colposcopy to identify women without disease and preventing
them from receiving these unnecessary biopsies. Besides the
obvious reduction in patient discomfort, there will also be a
significant reduction in healthcare costs. All of this is
accomplished utilizing a painless test that takes less than one
minute and produces a result immediately at the point of care.
About Guided Therapeutics
Guided Therapeutics, Inc. (OTC BB and OTC QB: GTHP)
-- http://www.guidedinc.com/-- is developing a rapid and painless
test for the early detection of disease that leads to cervical
cancer. The technology is designed to provide an objective result
at the point of care, thereby improving the management of cervical
disease. Unlike Pap and HPV tests, the device does not require a
painful tissue sample and results are known immediately. GT has
also entered into a partnership with Konica Minolta Opto to
develop a non-invasive test for Barrett's Esophagus using the
LightTouch technology platform.
In its report on the Company's 2011 Form 10-K, UHY LLP, in
Sterling Heights, Michigan, noted that the Company's recurring
losses from operations and accumulated deficit raise substantial
doubt about its ability to continue as a going concern.
The Company reported a net loss of $6.64 million in 2011, compared
with a net loss of $2.84 million in 2010.
The Company's balance sheet at June 30, 2012, showed $3.51 million
in total assets, $3.08 million in total liabilities and $438,000
in total stockholders' equity.
Bankruptcy Warning
At June 30, 2012, the Company had negative working capital of
approximately $1.0 million and stockholders' equity of
approximately $334,000, primarily due to the recurring losses. As
of June 30, 2012, the Company was past due on payments due under
its notes payable in the amount of approximately $393,000.
"The Company's capital-raising efforts are ongoing. If sufficient
capital cannot be raised during the first quarter of 2013, the
Company has plans to curtail operations by reducing discretionary
spending and staffing levels, and attempting to operate by only
pursuing activities for which it has external financial support,
such as under its development agreement with Konica Minolta and
additional NCI or other grant funding. However, there can be no
assurance that such external financial support will be sufficient
to maintain even limited operations or that the Company will be
able to raise additional funds on acceptable terms, or at all. In
such a case, the Company might be required to enter into
unfavorable agreements or, if that is not possible, be unable to
continue operations, and to the extent practicable, liquidate
and/or file for bankruptcy protection," the Company said in its
quarterly report for the period ended June 30, 2012.
GYLECO INC: Earns $3.4 Million from Units Offering
--------------------------------------------------
GlyEco, Inc., closed its offering of 6,780,000 units at a purchase
price of $0.50 per unit. Total proceeds from the Offering was
$3,390,000.
About GlyEco, Inc.
Phoenix, Ariz.-based GlyEco, Inc., is a green chemistry company
formed to roll-out its proprietary and patent pending glycol
recycling technology that transforms waste glycols, a hazardous
material, into profitable green products.
Jorgensen & Co., in Lehi, Utah, expressed substantial doubt about
GlyEco'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 not yet achieved
profitable operations and is dependent on the Company's ability to
raise capital from stockholders or other sources and other factors
to sustain operations.
The Company's balance sheet at June 30, 2012, showed $1.1 million
in total assets, $2.1 million in total liabilities, and a
stockholders' deficit of $950,887.
HERCULES OFFSHORE: Incurs $37.8 Million Net Loss in 3rd Quarter
---------------------------------------------------------------
Hercules Offshore, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $37.85 million on $184.88 million of revenue for the
three months ended Sept. 30, 2012, compared with a net loss of
$16.99 million on $162.99 million of revenue for the same period
during the prior year.
The Company reported a net loss of $131.27 million on $507.15
million of revenue for the nine months ended Sept. 30, 2012,
compared with a net loss of $54.64 million on $492.57 million of
revenue for the same period a year ago.
The Company's balance sheet at Sept. 30, 2012, showed $2.02
billion in total assets, $1.15 billion in total liabilities and
$877.24 million stockholders' equity.
John T. Rynd, chief executive officer and president of Hercules
Offshore stated, "Visibility in our Domestic Offshore segment is
the best it has been since the company's formation, driven by
solid demand and tight supply of jackup rigs in the U.S. Gulf of
Mexico. We believe this positive momentum will continue through
at least 2013 based on our discussions with customers, many of
whom are seeking longer term commitments than what we have
traditionally seen in the U.S. Gulf of Mexico.
"We continue to rationalize and optimize our global asset base.
This includes the favorable insurance settlement on the Hercules
185, along with the sale of our non-core platform rig in Mexico
and two cold stacked units in the U.S. during the third quarter.
We also sold a third cold stacked rig, the Hercules 252, in early
October, which prompted an impairment charge in the third quarter.
Consistent with our fleet optimization efforts, we have elected to
cold stack and impair the book value of the Hercules 258 in
Malaysia."
A copy of the Form 10-Q is available for free at:
http://is.gd/n0WTOd
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 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.
HIGH PLAINS: Mark Hettinger Quits as Officer and Director
---------------------------------------------------------
Mark Hettinger resigned as an officer and director of High Plains
Gas, Inc., effective Oct. 17, 2012. The Board of Directors of the
Company accepted Mr. Hettinger's resignation.
About High Plains
Houston, Texas-based High Plains Gas, Inc., is a provider of goods
and services to regional end markets serving the energy industry.
It produces natural gas in the Powder River Basin located in
Northeast Wyoming. It provides construction and repair and
maintenance services primarily to the energy and energy related
industries mainly located in Wyoming and North Dakota.
The Company reported a net loss of $57.48 million on
$17.15 million of revenues for 2011, compared with a net loss of
$5.48 million on $2.61 million of revenues for 2010.
The Company's balance sheet at June 30, 2012, showed
$10.26 million in total assets, $40.42 million in total
liabilities, and a $30.16 million total stockholders' deficit.
Eide Bailly LLP, in Greenwood Village, Colorado, issued a "going
concern" qualification on the financial statements for the year
ending Dec. 31 2011, citing significant operating losses which
raised substantial doubt about High Plains Gas' ability to
continue as a going concern.
HMX ACQUISITION: Has Interim Nod to Enter Into $65MM DIP Facility
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized HMX Acquisition Corp., et al., on an interim basis, to
enter into a secured post-petition credit facility of up to
$65,000,000, consisting of revolving loans and a term loan in the
amount of $5,000,000 from Salus Capital Partners, LLC, of which
$2,000,000 will be available from the time of the entry of the
interim order and the entry of the Final Order.
The Debtors are also authorized to use cash collateral of the Pre-
Petition Lender until the earlier of (a) the "Maturity Date"
(defined as the Forbearance Termination Date in the DIP Loan
Agreement) or (b) the occurrence of a Termination Event.
Any objection to the relief requested in the motion on a permanent
basis must file written objections no later than Nov. 1, 2012, at
5:00 p.m. The final hearing on the motion is scheduled for Nov.
5, 2012, at 2:30 p.m.
A copy of the interim order is available at:
http://bankrupt.com/misc/hmx.doc36.pdf
About HMX Acquisition
HMX Acquisition Corp. and HMX Poland Sp. z o. o. filed for Chapter
11 bankruptcy protection (Bankr. S.D.N.Y. Case Nos. 12-14300 and
12-14301) on Oct 19, 2012. On Oct. 21, 2012, affiliates HMX, LLC,
Quartet Real Estate, LLC, and HMX, DTC Co. also filed for Chapter
11 bankruptcy protection (Bankr. S.D.N.Y. Cases Nos. 12-14327 to
12-14329). Judge Allan L. Gropper presides over the cases. The
Debtors are seeking to have their cases jointly administered for
procedural purposes under Case No. 12-14300, which is the case
number assigned to HMX Acquisition Corp. The Debtors' principal
place of business is located at 125 Park Avenue, in New York.
The Debtors are leading American designers, manufacturers,
licensors, and licensees of men's and women's business and leisure
apparel focused primarily on the luxury, bridge, and better price
points. The Debtors are the largest manufacturer and marketer of
U.S.-made men's tailored clothing, with an attractive portfolio of
owned and licensed brands sold primarily through upscale
department stores, specialty stores, and boutiques.
As of Oct. 12, 2012, the Debtors had consolidated assets of
$153.6 million and total liabilities of $119.5 million.
Jared D. Zajac, Esq., at Proskauer Rose LLP, in New York; and Mark
K. Thomas, Esq., and Peter J. Young, Esq., in Proskauer Rose LLP,
in Chicago, represent the Debtors as counsel. The Debtors'
investment banker is William Blair & Company, L.L.C. CDG Group,
LLC, is the Debtors' financial advisor. Epiq Bankruptcy
Solutions, LLC is the Debtors' claims agent.
An official committee of unsecured creditors has not yet been
appointed in these cases by the Office of the United States
Trustee.
HMX ACQUISITION: Proposes Authentic-Led Auction on Dec. 3
---------------------------------------------------------
HMX Acquisition Corp., et al., ask the U.S. Bankruptcy Court for
the Southern District of New York to enter orders (1) authorizing
the Debtors to enter into the Stalking Horse Purchase Agreement
with Authentic Brands Group, LLC, for the sale of substantially
all assets of the Debtors; (2) approving the bidding procedures
for the conduct of the auction; and (3) approving the payment of a
break-up fee in the amount of $2,200,000 and expense reimbursement
of up to a maximum of $700,000 in the event the Stalking Horse
Purchase Agreement is terminated through the Seller's consummation
of an alternative transaction.
The Stalking Horse Purchaser has agreed to pay the sum of: (A) the
aggregate amount of the Salus prepetition and postpetition claims
against the Sellers and against Coppley plus (B) $5,100,000 to the
Sellers' bankruptcy estates, exclusive of the assumption of any
Assumed Liabilities. Upon execution of the License Agreement, the
Licensee will execute a joinder to this Agreement so that it will
be bound by the terms of this Agreement that are applicable to the
Licensee. The License Agreement will require that the Licensee
provide evidence of financial ability to perform, satisfactory to
Purchaser in its sole discretion, no later than three (3) Business
Days prior to the Auction. In the event that the Purchaser and
the Licensee fail to execute the License Agreement no later than
three (3) Business Days prior to the Auction, then the Purchase
Price will equal the sum of: (X) the Salus Claim plus (Y)
$9,100,000 to the Sellers' bankruptcy estates, exclusive of the
assumption of any Assumed Liabilities.
Upon the Court's approval of proposed bid procedures, the Stalking
Horse Purchase Agreement will be tested in the market and at an
auction.
The auction will take place on Dec. 3, 2012, at 10:00 a.m. at the
offices of Proskauer Rose LLP, 11 Times Square in New York. The
Debtors request that the Court schedule the Sale Hearing on or
prior to Dec. 5, 2012. The Debtors further request that the
objection deadline be at least 3 days prior to the Sale Hearing.
A copy of the APA is available at:
http://bankrupt.com/misc/hmx.doc21.pdf
About HMX Acquisition
HMX Acquisition Corp. and HMX Poland Sp. z o. o. filed for Chapter
11 bankruptcy protection (Bankr. S.D.N.Y. Case Nos. 12-14300 and
12-14301) on Oct 19, 2012. On Oct. 21, 2012, affiliates HMX, LLC,
Quartet Real Estate, LLC, and HMX, DTC Co. also filed for Chapter
11 bankruptcy protection (Bankr. S.D.N.Y. Cases Nos. 12-14327 to
12-14329). Judge Allan L. Gropper presides over the cases. The
Debtors are seeking to have their cases jointly administered for
procedural purposes under Case No. 12-14300, which is the case
number assigned to HMX Acquisition Corp. The Debtors' principal
place of business is located at 125 Park Avenue, in New York.
The Debtors are leading American designers, manufacturers,
licensors, and licensees of men's and women's business and leisure
apparel focused primarily on the luxury, bridge, and better price
points. The Debtors are the largest manufacturer and marketer of
U.S.-made men's tailored clothing, with an attractive portfolio of
owned and licensed brands sold primarily through upscale
department stores, specialty stores, and boutiques.
As of Oct. 12, 2012, the Debtors had consolidated assets of
$153.6 million and total liabilities of $119.5 million.
Jared D. Zajac, Esq., at Proskauer Rose LLP, in New York; and Mark
K. Thomas, Esq., and Peter J. Young, Esq., in Proskauer Rose LLP,
in Chicago, represent the Debtors as counsel. The Debtors'
investment banker is William Blair & Company, L.L.C. CDG Group,
LLC, is the Debtors' financial advisor. Epiq Bankruptcy
Solutions, LLC is the Debtors' claims agent.
An official committee of unsecured creditors has not yet been
appointed in these cases by the Office of the United States
Trustee.
HOSTESS BRANDS: Says Union Strike May Prompt Liquidation
--------------------------------------------------------
Elaine Watson at Foodnavigator-usa.com reports that Hostess Brands
said it hopes it will be able to exit Chapter 11 in a few months,
but has warned employees in the Bakery, Confectionery, Tobacco
Workers and Grain Millers International Union that strike action
will force it to liquidate the company.
According to the report, Hostess -- which recently got approval
from the bankruptcy court to force members of the BCTGM to accept
a collective bargaining agreement they had overwhelmingly rejected
-- says union members have the right to strike, but that by doing
so they will jeopardize the company's future.
The report relates chief executive Gregory Rayburn said in a
letter to employees, the likelihood of making it out of Chapter 11
would "evaporate" if the BCTGM-represented employees strike.
"Terminated employees will no longer receive paychecks or health
and welfare benefits after their date of termination, and they may
not be eligible immediately for unemployment benefits; some of our
facilities may close forever; purchasers of our brands may well
decide to make them in their own facilities; local markets will
suddenly be flooded with former Hostess employees competing for
jobs," Mr. Rayburn said, according to the report.
According to the Troubled Company Reporter on Oct. 18, 2012, the
U.S. Bankruptcy Court for the Southern District of New York will
convene a hearing on Nov. 29, 2012, at 10 a.m., to consider the
adequacy of the information in the Disclosure Statement explaining
Hostess Brands, Inc., et al.' Chapter 11 Plan. Objections, if
any, are due Nov. 19, at 5 p.m.
The TCR notes the Debtors filed a Plan of Reorganization dated
Oct. 10, 2012. The Plan requires Hostess to raise $88 million in
cash plus enough to pay off the amount outstanding under the $75
million loan financing the reorganization.
About Hostess Brands
Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known
for iconic brands such as Butternut, Ding Dongs, Dolly Madison,
Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride,
Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution
centers and 570 outlets in 49 states.
Hostess filed for Chapter 11 bankruptcy protection early morning
on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through
12-22056) in White Plains, New York. Debtor-affiliates that filed
separate Chapter 11 petition are IBC Sales Corporation, IBC
Trucking LLC, IBC Services LLC, Interstate Brands Corporation, and
MCF Legacy Inc. Hostess Brands disclosed assets of $982 million
and liabilities of $1.43 billion as of Dec. 10, 2011. Debt
includes $860 million on four loan agreements. Trade suppliers
are owed as much as $60 million.
The bankruptcy filing was made two years after predecessors
Interstate Bakeries Corp. and its affiliates emerged from
bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). Ripplewood
Holding LLC, after providing $130 million to finance the plan,
obtained control of IBC's business following the prior
reorganization. Hostess Brands is privately held. The new owners
pursued new Chapter 11 cases to escape from what they called
"uncompetitive and unsustainable" union contracts, pension plans,
and health benefit programs.
In 2011, Hostess retained Houlihan Lokey to explore sales of its
smaller assets and individual brands. Houlihan Lokey oversaw the
sale of Mrs. Cubbison's to Sugar Foods Corporation for
$12 million, but was unable to sell any of Hostess' core assets.
Judge Robert D. Drain oversees the case. Hostess has hired Jones
Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general
corporate counsel and conflicts counsel; Perella Weinberg Partners
LP as investment bankers, FTI Consulting, Inc. to provide an
interim treasurer and additional personnel for the Debtors, and
Kurtzman Carson Consultants LLC as administrative agent.
Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry
Wilson, the head of turnaround and restructuring firm MAEVA
Advisors, are representing the Teamsters union.
Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain
Millers International Union and Bakery & Confectionery Union &
Industry International Pension Fund are Jeffrey R. Freund, Esq.,
at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David
A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright &
Jaworski L.L.P.
An official committee of unsecured creditors has been appointed in
the case. The committee selected New York law firm Kramer Levin
Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein
head the legal team for the committee.
INTELLICELL BIOSCIENCES: Sells $25,000 Conv. Preferred Stock
------------------------------------------------------------
Intellicell Biosciences, Inc., entered into a securities purchase
agreement pursuant to which the Company sold the investor 25
shares of the Company's series E convertible preferred stock for
aggregate gross proceeds of $25,000. Each share of Preferred
stock has a stated value equal to $1,000 per share.
Each share of Preferred Stock is convertible, at the option of the
holder, at any time into such number of shares of the Company's
Common Stock which is equal to the Stated Value divided by the
Conversion Price in effect on the date of conversion, subject to
adjustment under certain circumstances. Each share of Preferred
Stock will be entitled to one vote per share. Except as required
by law, the holders of the Preferred Stock and common stock will
vote together as one class. The Preferred Stock pays dividends of
8% per annum, payable quarterly in arrears, in cash or stock, on
January 1, April 1 and July 1 and October 1 of each year. Each
share of Preferred Stock is entitled to receive upon liquidation,
in preference to the holders of the Company's common stock and the
holders of any shares of any other class of preferred stock, an
amount equal to 150% of that Stated Value, plus any accrued but
unpaid dividends. The Preferred Stock will be pari passu in
dividends, liquidation, redemption and other rights and
preferences to the Company's Series D preferred stock and senior
all other classes and series of the Company's stock.
Each holder of Preferred Stock will have the right at any time to
convert its Preferred Stock into shares of the Company's common
stock at a price that is $0.01 above the highest price that would
trigger any anti-dilution provisions or rights available to any
shareholders of the Company who were shareholders on or before the
initial closing. Upon the expiration of any outstanding
convertible securities issued and outstanding on or prior to the
Initial Closing with anti-dilution protections, the Initial
Conversion Price of the Preferred Stock will be reduced to a price
equal to $0.30 per share, subject to further adjustment by way of
weighted average anti-dilution protections, provisions or rights,
that will commence on the Anti-Dilution Expiration Date. Prior to
the Anti-Dilution Expiration Date, holders of the Preferred Stock
will not have anti-dilution protections, provisions or rights.
The investor has contractually agreed to restrict its ability to
convert Preferred Stock such that the number of shares of the
Company common stock held by the investors and their respective
affiliates after that conversion does not exceed 9.99% of the
Company's then issued and outstanding shares of common stock.
A FINRA registered broker-dealer was engaged as placement agent in
connection with the private placement. The Company paid the
placement agent a cash fee in the amount of $5,000 and will issue
the placement agent a warrant to purchase 2.5 shares of Preferred
Stock with an exercise price of $1,000 per share.
February 2012 Financing Amendments
Between Sept. 5, 2012, and Oct. 11, 2012, the Company entered into
an exchange agreement and an amendment agreement, with investors
who participated in the Company's February 2012 private placement
pursuant to which the Feb 2012 Investors holding (i) an aggregate
of 2,050,000 shares of the Company's common stock, par value
$0.001 per share, (ii) class A warrants to purchase an aggregate
of 4,100,000 shares of Common Stock, and (iii) class B warrants to
purchase an aggregate of 4,100,000 shares of Common Stock, agreed
to certain amendments to their securities purchase agreement and
their Warrants to, among other things, remove all anti-dilution
price protection provisions included in the Warrants, amend the
definition of "Exempt Issuance", amend the price protection
provision in the securities purchase agreement such that a
dilutive issuance will be deemed to have occurred when the Company
issues shares of Common Stock at a price below $0.33 per share and
exchange the Feb 2012 Investors respective Warrants for (i) an
aggregate of 4,100,000 shares of the Company's Common Stock (ii) a
new series A warrant to purchase an aggregate of 4,100,000 shares
of Common Stock at an exercise price of seventy-five cents ($0.75)
per share and (iii) a new series B warrant to purchase an
aggregate of 4,100,000 shares of Common Stock.
Series D Preferred Stock Financing Amendment
Between Oct. 2, 2012, and Oct. 11, 2012, the Company entered into
an amendment agreement, with investors who participated in the
Company's series D preferred stock private placement pursuant to
which the Series D Investors holding (i) an aggregate of 40,500
shares of series D preferred stock and (ii) warrants to purchase
an aggregate of 405,000 shares of Common Stock, agreed to certain
amendments to their securities purchase agreement and their Series
D Warrants to, among other things, remove all anti-dilution price
protection that the Feb 2012 Investors received in connection with
the transaction, allow the Company to create a new series of
preferred stock that ranks pari passu as to dividends, redemption
or distribution of assets upon liquidation with the Series D
Preferred Stock in exchange for reducing (i) the conversion price
of the Series D Preferred Stock to $0.33 and (ii) the exercise
price of the Series D Warrants to $0.75.
Termination of StemCells Agreement
On Oct. 23, 2012, the Company sent a letter to StemCells 21 Co.
Ltd. pursuant to which the Company notified the Thailand Licensee
that it intends to terminate the Laboratory Services License
Agreement, dated April 7, 2012, by and between the Company and
Thailand Licensee, effective immediately. The Company is
terminating the Thailand Agreement, for, among other things,
Thailand Licensee's (i) attempt to determine the Technology for
Tissue Processing, (ii) failure to provide monthly reports
summarizing Thailand Licensee's efforts to utilize and
commercially exploit the Patents and Technology, (iii) operation
of the Technology without using the name "Intellicell Thailand",
(iv) operation of the Technology in ways that fall outside the
scope of the Thailand Agreement and (v) failure to notify the
Company of infringing uses of the Technology. Pursuant to the
terms of the Thailand Agreement, the Thailand Licensee has 10
business days to cure an event of default under the Thailand
Agreement.
Lasersculpt IP License Agreement
On July 20, 2012, the Company entered into an intellectual
property license agreement with Lasersculpt, Inc., a corporation
controlled by Dr. Steven Victor, the Company's chief executive
officer, pursuant to which Lasersculpt licensed to the Company,
among other things, the right to (i) use, market, broadcast and
otherwise exploit a 30 minute infomercial, 30 and 60 second
commercials and other produced content regarding the Lasersculpt
method and procedure (ii) product and commercially exploit new
versions of the Shows, as well as any sequels, prequels and other
productions based on the Shows or the IP Rights, and (iii) use and
exploit the IP Rights in any manner the Company, in its sole
discretion, deems necessary or advisable. The License Agreement
will have an initial term of ten years from the date of the
License Agreement, unless terminated sooner in accordance with the
License Agreement. In consideration for the rights granted under
the License Agreement, the Company agreed to (i) issue 430,000
shares of Common Stock to Lasersculpt and (ii) pay Lasersculpt
royalties in an amount equal to 5% of Net Revenue received by the
Company during the Term.
Frank Loan
On Aug. 26, 2012, the Company entered into a secured promissory
note with Fredrick Frank pursuant to which the August 2012 Lender
loaned the Company $200,000 that is due and payable on Oct. 31,
2012, in accordance with the terms of the Note. The Note is
secured by 500,000 shares of the Company's Common Stock. The
Note, and all accrued and unpaid interest thereon, was paid in
full on Oct. 1, 2012. Fredrick Frank is an advisor of the
Company.
LMazur Associates JV Loan
On Sept. 1, 2012, the Company entered into a secured promissory
note with LMazur Associates JV, as agent for LMazur Associates JV
and JJK LLC pursuant to which the Lender loaned the Company
$100,000 that was due and payable on Oct. 1, 2012, in accordance
with the terms of the Note. The Note beared interest at a rate of
10% per annum which was payable on the Maturity Date. The
Company's obligations under the Note were guaranteed by Dr. Steven
Victor, the Company's chief executive officer. In addition, the
Company, Dr. Victor and the Lender entered into a pledge and
security Agreement pursuant to which the Note was secured by all
of Dr. Victor's shares of series B preferred stock of the Company.
The Note, and all accrued and unpaid interest thereon, was paid in
full on Oct. 1, 2012. LMazur Associates JV is an entity
controlled by Leonard Mazur, a director of the Company.
Australia License
On Dec. 16, 2011, the Company entered into an exclusive lab
services agreement with Cell-Innovations Pty Ltd. pursuant to
which the Company granted Australian Licensee the exclusive right
and license to the Company's technology and trademarks so that the
Australian Licensee can utilize the Company's technology and
trademarks to provide tissue processing services for humans in
Australia and New Zealand. As of Oct. 24, 2012, the Company and
Australian Licensee are in a dispute over the some of the terms of
the Australian Agreement, including, but not limited to,
compliance by Australian Licensee with ICB Protocols. While the
Company has commenced discussions with the Australian Licensee
concerning the disputes that have arisen under the terms of the
Australian Agreement, there can be no assurance that the Company
and the Australian Licensee will come to any mutual understanding
with respect to any of the issues in question. As of Oct. 24,
2012, the Company is continuing to evaluate what further actions,
if any, it make take in response to the dispute with the
Australian Licensee, which actions may include, but not be limited
to, terminating the Australian Agreement.
A copy of the Form 8-K is available for free at:
http://is.gd/f1nMtm
About Intellicell Biosciences
Intellicell BioSciences, Inc., headquartered in New York, N.Y.,
was formed on Aug. 13, 2010, under the name "Regen Biosciences,
Inc." as a pioneering regenerative medicine company to develop and
commercialize regenerative medical technologies in large markets
with unmet clinical needs. On Feb. 17, 2011, the company changed
its name from "Regen Biosciences, Inc." to "IntelliCell
BioSciences Inc". To date, IntelliCell has developed proprietary
technologies that allow for the efficient and reproducible
separation of stromal vascular fraction (branded
"IntelliCell(TM)") containing adipose stem cells that can be
performed in tissue processing centers and in doctors' offices.
The Company has incurred losses since inception resulting in an
accumulated deficit of $43,079,590 and a working capital deficit
of $3,811,024 as of March 31, 2012, respectively. However, if the
non-cash expense related to the Company's change in fair value of
derivative liability and stock based compensation is excluded then
the accumulated deficit amounted to $4,121,538. Further losses
are anticipated in the continued development of its business,
raising substantial doubt about the Company's ability to continue
as a going concern.
The Company's balance sheet at June 30, 2012, showed $3.76 million
in total assets, $6.97 million in total liabilities and a $3.20
million in total stockholders' deficit.
JER/JAMESON: Wants Until Feb. 17 to Propose Reorganization Plan
---------------------------------------------------------------
JER/Jameson MEZZ Borrower I LLC, et al., ask the U.S. Bankruptcy
Court for the District of Delaware to extend their exclusive
periods to file and solicit acceptances for the proposed Chapter
11 plan until Feb. 17, 2013, and April 18, respectively.
The Debtors, together with Channel Point, their equity holders and
their secured lenders, have undertaken efforts to negotiate and
develop a plan of reorganization that contemplates, among other
things, modifications to their franchise agreements with Choice
Hotels International, Inc. and affiliates of Wyndham Worldwide
Corporation, which will enable the re-branding of the Debtors'
hotel properties.
A hearing on Nov. 14, 2012, at 11:30 a.m., has been set.
Objections, if any, are due Nov. 2, 2012, at 4 p.m.
About JER/Jameson Mezz Borrower II
Founded in 1987, Jameson is a chain of 103 small, budget hotels
operating under the Jameson brand in the Southeast and Midwest.
The Jameson properties are operated under the names Jameson Inn
and Signature Inn. The hotels are based in Smyrna, Georgia.
The chain was taken private in a 2006 buyout by JER Partners, a
unit of real-estate investor J.E. Robert Cos. JER then put
$330 million of debt on the chain to finance the buyout. At the
top of the list is a $175 million mortgage loan with Wells Fargo
Bank NA serving as special servicer. There are four tranches of
mezzanine loans, each for $40 million. The collateral for each of
the Mezz Loans is the equity interest in the entity or entities
immediately below the borrower of each Mezz Loan. All of the
mezzanine loans matured in August.
JER/Jameson NC Properties LP and JER/Jameson Properties LLC are
borrowers under the loan with Wells Fargo. The mortgage loan is
secured by mortgages on hotel properties. The first set of
foreclosure sales were set for Nov. 1, 2011. The Mortgage
Borrowers have not sought bankruptcy protection.
Colony Capital affiliates, CDCF JIH Funding LLC and ColFin JIH
Funding LLC, hold the first and second mezzanine loans. The First
Mezz Loan is secured by a pledge of JER/Jameson Mezz Borrower I
LLC's 100% interest in the Mortgage Borrowers.
Prior to the maturity default, the Colony JIH Lenders purchased
the Second Mezz Loan from a previous holder. The Second Mezz Loan
is secured by a pledge of JER/Jameson Mezz Borrower II's 100%
membership interest in the First Mezz Borrower.
Gramercy Warehouse Funding I LLC and Gramercy Loan Services LLC
hold a controlling participation interest in the Third Mezz and
Fourth Mezz Loans. JER Investors Trust Inc. holds the remaining
participation interests in the Third Mezz and Fourth Mezz Loans.
JER/Jameson Holdco LLC, an affiliate of the Mortgage Borrowers,
owns the 100% equity interest in the Fourth Mezz Borrower.
Gramercy took over its mezzanine borrower in August.
JER/Jameson Mezz Borrower II LLC filed for Chapter 11 bankruptcy
(Bankr. D. Del. Case No. 11-13338) on Oct. 18, 2011, to prevent
foreclosure by Colony. The Chapter 11 filing had the effect of
preventing Colony from wiping out Gramercy's interest.
Seven days later, JER/Jameson Mezz Borrower I LLC filed for
bankruptcy (Bankr. D. Del. Case No. 11-13392) on Oct. 25, 2011.
Judge Mary F. Walrath presides over the case. The Debtors tapped
Ashby & Geddes, P.A. to represent their restructuring efforts.
Epiq Bankruptcy Solutions, LLC, serves as its noticing, claims and
balloting agent.
Each of the Debtors estimated $100 million to $500 million in
assets and $10 million to $50 million in debts. JER/Jameson
Properties LLC disclosed $294,662,815 in assets and $163,424,762
in liabilities as of the Chapter 11 filing. The petitions were
signed by James L. Gregory, vice president.
Colony specializes in real estate and has roughly $34 billion of
assets under management. Colony is represented in the case by
Pauline K. Morgan, Esq., John T. Dorsey, Esq., Margaret Whiteman
Greecher, Esq., and Patrick A. Jackson, Esq., at Young Conaway
Stargatt & Taylor LLP; and Lindsee P. Granfield, Esq., Sean A.
O'Neil, Esq., and Jane VanLare, Esq., at Cleary Gottlieb Steen &
Hamilton LLP.
The U.S. Trustee has not appointed an official Committee of
unsecured creditors in any of the Debtors' cases.
JOHN MICHAEL McMAHAN: Chapter 24 Filing Circumvents BAPCPA
----------------------------------------------------------
Chief Bankruptcy Judge Jeff Bohm dismissed the Chapter 13 case
commenced by John Michael McMahan, saying he is not eligible to
file for bankruptcy.
In 2010, Pearland State Bank negotiated with Mr. McMahan and
agreed to a Chapter 11 reorganization plan. Upon the Chapter 11
Plan's confirmation, and after 10 months of plan payments, Mr.
McMahan defaulted. Rather than modifying the Chapter 11 Plan
under 11 U.S.C. Sec. 1127(e), he filed a Chapter 13 petition and a
proposed plan in the Chapter 13 case. The Proposed Chapter 13
Plan, if confirmed, would change the payment schedule that the
Debtor had negotiated with the Bank in the Chapter 11 case.
The Bank sought dismissal of the Chapter 13 case for serial
filing, arguing that the Chapter 13 petition was not filed in good
faith under 11 U.S.C. Sections 1307 and 1325(a)(3). The Debtor
admits that he was in default to the Bank under the Chapter 11
Plan, and that he filed the Pending Chapter 13 Case to stop the
Bank from going forward with its scheduled foreclosure sale -- a
right which the Bank had bargained for in the Chapter 11 Case, and
which was expressly set forth in the Chapter 11 Plan. The Debtor
argues that he filed this second bankruptcy petition in good
faith, and that therefore his Chapter 13 Case should not be
dismissed.
According to Judge Bohm, since the passage of the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005, a different plan
modification procedure is allowable for individual debtors in
Chapter 11, as opposed to that for corporate or partnership
debtors. Specifically, post-confirmation an individual debtor may
continue to modify his plan even if the plan has been
substantially consummated. Even though the Chapter 11 Plan was
confirmed and substantially consummated, Judge Bohm said Mr.
McMahan could nevertheless have invoked 11 U.S.C. Sec. 1127 to
seek to modify his Chapter 11 Plan. Instead, the Debtor chose to
file a Chapter 13 petition and propose a new plan. In doing so,
the Debtor has attempted to circumvent the procedures put in place
by BAPCPA for modifying confirmed Chapter 11 plans of individuals.
Judge Bohm also pointed out that an individual debtor receives a
discharge in Chapter 11 only upon completion of plan payments or
upon a showing of cause. Until the debtor receives a discharge in
his Chapter 11 case, he is barred from filing a second bankruptcy
petition and proposing a new plan even if his Chapter 11 Case has
been closed following confirmation of the plan. Two simultaneous
reorganization cases in which no discharge has been granted
constitutes an abuse and manipulation of the Bankruptcy Code.
In his Oct. 25, 2012 Memorandum Opinion available at
http://is.gd/SLsLIxfrom Leagle.com, Judge Bohm said he is
extending the rationale articulated in the Fifth Circuit's
decision of Elmwood Dev. Co. v. General Elec. Pension Trust (In re
Elmwood), 964 F.2d 508 (5th Cir. 1992), which analyzed serial
filings of Chapter 11 petitions. The principles articulated in
Elmwood for Chapter 22 petitions (i.e., the filing of a second
Chapter 11 petition after having already obtained a confirmed plan
in a prior Chapter 11 case that is still being effectuated) should
apply equally to Chapter 24 petitions (i.e., the filing of a
Chapter 13 petition after having already obtained a confirmed
Chapter 11 plan in a prior Chapter 11 case that is still being
effectuated). The Elmwood case and its holding may therefore be
analyzed in both contexts.
John Michael McMahan filed a Chapter 11 petition (Bankr. S.D. Tex.
Case No. 10-32978) on April 6, 2010. Mr. McMahan is in the
business of buying, fixing up and selling cars, including classic
automobiles. Bankruptcy Judge Karen K. Brown oversees the case.
Mr. McMahan also owns two pieces of real property located in
Houston, Texas: an unimproved real estate referred to as the
Beltway 8 Property; and an improved real estate on which the
Debtor's business is operated, referred to as the Greens Road
Property. The Bank has a valid first lien on both properties.
The Debtor initiated the Chapter 11 Case to stop the Bank from
foreclosing on both properties.
On Jan. 19, 2011, in the Chapter 11 Case, Judge Brown confirmed
the Debtor's First Amended Chapter 11 plan. The Plan provided
that the Bank had an allowed secured claim of $630,079.74, secured
by both properties as well as by all equipment owned by the
Debtor.
Under the Chapter 11 Plan, the Debtor attempted to sell the
properties to make his payments to the Bank. The Debtor was
unsuccessful, and as a result, the Bank exercised its bargained-
for rights under the Chapter 11 Plan, scheduling a foreclosure
sale of both properties.
To stop this action, the Debtor first approached the Bank,
negotiating an extension of the Jan. 1, 2012 balloon payment
deadline in exchange for the payment of $20,000. The Bank agreed.
However, when the Debtor was again unable to make the $280,000
balloon payment -- now due on June 1, 2012 -- the Bank once more
exercised its right to foreclose. It posted the properties for a
July 3, 2012 foreclosure sale. In response, the Debtor filed the
Chapter 13 case (Bankr. S.D. Tex. Case No. 12-34980) on the eve of
the Bank's foreclosure.
JOURNAL REGISTER: Committee Taps FTI as Financial Advisor
---------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Journal Register Company, et al., asks the U.S.
bankruptcy Court for the Southern District of New York for
permission to retain FTI Consulting, Inc. as its financial
advisor.
FTI will, among other things:
-- assist the Committee in the review of financial related
disclosures required by the Court;
-- assist in the preparation of analyses required to assess any
proposed Debtor-In-Possession financing or use of cash
collateral; and
-- assist in the assessment and monitoring of the Debtor's
short term cash flow, liquidity and operating results.
FTI will seek compensation on a fixed monthly basis of $70,000,
subject to re-evaluation by the committee after the first three
month, plus reimbursement of actual and necessary expenses.
Samual E. Star, senior managing director with FTI, assures the
Court that FTI does not hold or represent any interest adverse to
the estate.
A hearing on Nov. 20, 2012, at 10 a.m., has been set. Objections,
if any, are due Nov. 13.
About Journal Register
Journal Register Company -- http://www.JournalRegister.com/-- is
the publisher of the New Haven Register and other papers in 10
states, including Philadelphia, Detroit and Cleveland, and in
upstate New York. The Company's more than 350 multi-platform
products reach an audience of 21 million people each month. JRC
is managed by Digital First Media and is affiliated with MediaNews
Group, Inc., the nation's second largest newspaper company as
measured by circulation.
Journal Register, along with its affiliates, first filed for
Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No.
09-10769) on Feb. 21, 2009. Attorneys at Willkie Farr & Gallagher
LLP, served as counsel to the Debtors. Attorneys at Otterbourg,
Steindler, Houston & Rosen, P.C., represented the official
committee of unsecured creditors. Journal Register emerged from
Chapter 11 protection under the terms of a pre-negotiated plan.
Journal Register returned to bankruptcy (Bankr. S.D.N.Y. Lead Case
No. 12-13774) on Sept. 5, 2012, to sell the business to 21st CMH
Acquisition Co., an affiliate of funds managed by Alden Global
Capital LLC. The deal is subject to higher and better offers.
Journal Register expects to complete the auction and sale process
within 90 days.
Journal Register exited the 2009 restructuring with $225 million
in debt and with a legacy cost structure, which includes leases,
defined benefit pensions and other liabilities that have become
unsustainable and threatened the Company's efforts for a
successful digital transformation. Journal Register managed to
reduce the debt by 28% with the Company servicing in excess of
$160 million of debt.
Alden Global is the holder of two terms loans totaling $152.3
million. Alden Global acquired the stock and the term loans from
lenders in Journal Register's prior bankruptcy.
Journal Register disclosed total assets of $235 million and
liabilities totaling $268.6 million as of July 29, 2012. This
includes $13.2 million owing on a revolving credit to Wells Fargo
Bank NA.
Bankruptcy Judge Stuart M. Bernstein presides over the 2012 case.
Neil E. Herman, Esq., Rachel Jaffe Mauceri, Esq., and Patrick D.
Fleming, Esq., at Morgan, Lewis & Bockius, LLP; and Michael R.
Nestor, Esq., Kenneth J. Enos, Esq., and Andrew L. Magaziner,
Esq., at Young Conaway Stargatt & Taylor LLP, serve as the 2012
Debtors' counsel. SSG Capital Advisors, LLC, serves as financial
advisors. American Legal Claims Services LLC acts as claims
agent. The petition was signed by William Higginson, executive
vice president of operations.
Otterbourg, Steindler, Houston & Rosen, P.C., represents Wells
Fargo. Akin, Gump, Strauss, Hauer & Feld LLP, represents the
Debtors' Tranche A Lenders and Tranche B Lenders. Emmet, Marvin &
Martin LLP, serves as counsel to Wells Fargo, in its capacity as
Tranche A Agent and the Tranche B Agent.
Tracy Hope Davis, U.S. Trustee for Region 2, appointed these
persons to serve on the Official Committee of Unsecured Creditors
JOURNAL REGISTER: Committee Taps Lowenstein Sandler as Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Journal Register Company, et al., asks the U.S.
bankruptcy Court for the Southern District of New York for
permission to retain Lowenstein Fandler PC as its counsel.
The hourly rates of Lowenstein Sandler's personnel are:
Members $485 to $895
Senior Counsel $390 to $660
Counsel $350 to $630
Associates $250 to $470
Paralegals $145 to $245
To the best of the Committee's knowledge, Lowenstein Sandler is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
A hearing on Nov. 20, 2012, at 10 a.m., has been set. Objections,
if any, are due Nov. 13, at 4 p.m.
About Journal Register
Journal Register Company -- http://www.JournalRegister.com/-- is
the publisher of the New Haven Register and other papers in 10
states, including Philadelphia, Detroit and Cleveland, and in
upstate New York. The Company's more than 350 multi-platform
products reach an audience of 21 million people each month. JRC
is managed by Digital First Media and is affiliated with MediaNews
Group, Inc., the nation's second largest newspaper company as
measured by circulation.
Journal Register, along with its affiliates, first filed for
Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No.
09-10769) on Feb. 21, 2009. Attorneys at Willkie Farr & Gallagher
LLP, served as counsel to the Debtors. Attorneys at Otterbourg,
Steindler, Houston & Rosen, P.C., represented the official
committee of unsecured creditors. Journal Register emerged from
Chapter 11 protection under the terms of a pre-negotiated plan.
Journal Register returned to bankruptcy (Bankr. S.D.N.Y. Lead Case
No. 12-13774) on Sept. 5, 2012, to sell the business to 21st CMH
Acquisition Co., an affiliate of funds managed by Alden Global
Capital LLC. The deal is subject to higher and better offers.
Journal Register expects to complete the auction and sale process
within 90 days.
Journal Register exited the 2009 restructuring with $225 million
in debt and with a legacy cost structure, which includes leases,
defined benefit pensions and other liabilities that have become
unsustainable and threatened the Company's efforts for a
successful digital transformation. Journal Register managed to
reduce the debt by 28% with the Company servicing in excess of
$160 million of debt.
Alden Global is the holder of two terms loans totaling $152.3
million. Alden Global acquired the stock and the term loans from
lenders in Journal Register's prior bankruptcy.
Journal Register disclosed total assets of $235 million and
liabilities totaling $268.6 million as of July 29, 2012. This
includes $13.2 million owing on a revolving credit to Wells Fargo
Bank NA.
Bankruptcy Judge Stuart M. Bernstein presides over the 2012 case.
Neil E. Herman, Esq., Rachel Jaffe Mauceri, Esq., and Patrick D.
Fleming, Esq., at Morgan, Lewis & Bockius, LLP; and Michael R.
Nestor, Esq., Kenneth J. Enos, Esq., and Andrew L. Magaziner,
Esq., at Young Conaway Stargatt & Taylor LLP, serve as the 2012
Debtors' counsel. SSG Capital Advisors, LLC, serves as financial
advisors. American Legal Claims Services LLC acts as claims
agent. The petition was signed by William Higginson, executive
vice president of operations.
Otterbourg, Steindler, Houston & Rosen, P.C., represents Wells
Fargo. Akin, Gump, Strauss, Hauer & Feld LLP, represents the
Debtors' Tranche A Lenders and Tranche B Lenders. Emmet, Marvin &
Martin LLP, serves as counsel to Wells Fargo, in its capacity as
Tranche A Agent and the Tranche B Agent.
Tracy Hope Davis, U.S. Trustee for Region 2, appointed these
persons to serve on the Official Committee of Unsecured Creditors
K-V PHARMACEUTICAL: Lost in Court, Tries for Success at ITC
-----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that K-V Pharmaceutical Co. filed a complaint last week
with the U.S. International Trade Commission against more than 40
compounding pharmacies and manufacturers, alleging infringement of
exclusive rights to the active ingredient in Makena.
According to the report, the new initiative in the trade
commission follows a defeat K-V suffered in September in U.S.
District Court. Filed in July, the suit contended that the U.S.
Food and Drug Administration effectively nullified K-V's seven-
year exclusive right under the Orphan Drug Act to sell Makena.
K-V contended that the FDA bent under political pressure based on
allegations it was selling the drug at too high a price.
The report relates that the district judge dismissed the suit,
saying the court had no power to oversee the FDA's enforcement
activities. Should K-V prevail in the trade commission, the
agency could block importation of compounders' versions of Makena.
The report notes that K-V may not have the right to Makena much
longer. On Nov. 13 there will be a hearing in U.S. Bankruptcy
Court in Manhattan where Hologic Inc. will try to take back rights
to distribute the drug.
The Bloomberg report discloses that K-V's liabilities include
$455.6 million in long-term debt, including $225 million on the
senior secured notes due 2015, and $200 million owing on 2.5%
contingent convertible subordinated notes due 2033.
The first-lien notes traded on Oct. 23 for 45.5 cents on the
dollar, according to Trace, the bond-price reporting system of the
Financial Industry Regulatory Authority. The subordinated notes
last traded Oct. 24 for 7 cents on the dollar, according to Trace.
About K-V Pharmaceutical
K-V Pharmaceutical Company (NYSE: KVa/KVb) --
http://www.kvpharmaceutical.com/-- is a fully integrated
specialty pharmaceutical company that develops, manufactures,
markets, and acquires technology-distinguished branded and
generic/non-branded prescription pharmaceutical products. The
Company markets its technology distinguished products through
ETHEX Corporation, a subsidiary that competes with branded
products, and Ther-Rx Corporation, the company's branded drug
subsidiary.
K-V Pharmaceutical Company and certain domestic subsidiaries on
Aug. 4 filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead
Case No. 12-13346, under K-V Discovery Solutions Inc.) to
restructure their financial obligations.
K-V has retained the services of Willkie Farr & Gallagher LLP as
bankruptcy counsel, Williams & Connolly LLP as special litigation
counsel, and SNR Denton as special litigation counsel. In
addition, K-V has retained Jefferies & Co., Inc., as financial
advisor and investment banker. Epiq Bankruptcy Solutions LLC is
the claims and notice agent.
The U.S. Trustee appointed five members to serve in the Official
Committee of Unsecured Creditors.
KINETIC CONCEPTS: Moody's Says Credit Amendment Credit Positive
---------------------------------------------------------------
Moody's Investors Service commented that, if Kinetic Concepts
("KCI"; B2 Stable) is able to amend and re-price its credit
facility, as proposed, it would be a credit positive. The interest
cost savings would meaningfully contribute to improved operating
cash flow. That said, repayment of junior capital, as proposed in
the amendment, could potentially result in a change to the senior
secured bank debt rating. There are no changes to any ratings at
this time, or the stable outlook.
KOREA TECHNOLOGY: Court Confirms Sale-Based Plan
------------------------------------------------
Bankruptcy Judge R. Kimball Mosier confirmed the First Amended
Joint Plan of Reorganization of Korea Technology America, Inc.,
Uintah Basin Resources, LLC, and Crown Asphalt Ridge, L.L.C. dated
July 25, 2012. The Plan which provide for the sale of
substantially all of the Debtors' assets, including their mining
properties, either pursuant to a sale to Rutter and Wilbanks
Corporation, or, if the sale to R&W does not timely close,
pursuant to an alternative sale or auction, as provided under the
Plan. The Plan also provides for the sale to R&W of the sale of
the ownership interests in Crown Asphalt Ridge and permits the
sale of the ownership interests in Crown Asphalt Ridge pursuant to
an Alternative Sale or Auction.
No objections to the Plan were filed.
The Court has approved a roughly 120-day extension of the Sale
Deadline, from June 30, 2012 through Oct. 31. Because of this,
the 180-day period within which to seek an Alternative Sale or at
the end of which an Auction would be held begins from Aug. 29.
The Debtors may be reached through:
Soung Joon Kim
Korea Technology Industry America, Inc.
1245 East Brickyard Road, Suite 110
Salt Lake City, UT 84106
Facsimile: (801) 466-4132
Email: soungjoonkim@gmail.com
The Debtors are represented by:
Steven J. McCardell, Esq.
Kenneth L. Cannon II, Esq.
DURHAM JONES & PINEGAR, P.C.
111 East Broadway, Suite 900
P.O. Box 4050
Salt Lake City, UT 84110-4050
Facsimile: (801) 415-3500
Email: smccardell@djplaw.com
kcannon@djplaw.com
The Purchaser may be reached at:
Rutter & Wilbanks Corporation
301 South Main Street, Suite A (Overnight delivery only)
P.O. Box 3186
Midland, TX 79702
Attn: A.W. Rutter, III
Email: b3rutter@gmail.com
The Purchaser is represented by:
Blake D. Miller
William R. Gray
James W. Anderson
MILLER GUYMON, PC
165 South Regent Street
Salt Lake City, UT 84111
Facsimile: (801) 363-5601
Email: miller@millerguymon.com
gray@millerguymon.com
anderson@millerguymon.com
A copy of the Court's Oct. 23 Findings of Fact and Conclusions of
Law is available at http://is.gd/5CkwHcfrom Leagle.com.
About Korea Technology
Korea Technology Industry America, Inc., is a subsidiary of
Seoul-based Korea Technology Industry Co. that tried to squeeze
crude oil from Utah's sandy ridges. Korea Technology Industry
America, Uintah Basin Resources LLC, and Crown Asphalt Ridge
L.L.C., filed separate Chapter 11 bankruptcy petitions (Bankr. D.
Utah Case Nos. 11-32259, 11-32261, and 11-32264) on Aug. 22,
2011. The cases are jointly administered under KTIA's case.
Kenneth L. Cannon, II, Esq., Lena Daggs, Esq., and Steven J.
McCardell, Esq., at Durham Jones & Pinegar, P.C., in Salt Lake
City, serve as the Debtors' counsel. The Debtors tapped DBH
Consulting, LLC, as their accountant. The Debtors disclosed
US$35,246,360 in assets and US$38,751,528 in debts.
Mark D. Hashimoto, in his capacity as examiner in the Debtors
cases, retained George Hofmann and the firm of Parsons Kinghorn
Harris, P.C., as his counsel, and Piercy Bowler Taylor & Kern as
his accountants and financial advisors.
Richard A. Wieland, the United States Trustee for Region 19, has
appointed three members to the Official Committee of Unsecured
Creditors.
LAMAR MEDIA: Moody's Affirms 'Ba3' CFR/PDR; Outlook Stable
----------------------------------------------------------
Moody's Investors Service (Moody's) assigned a B1 rating to Lamar
Media Corporation's new senior subordinated note. The Corporate
Family Rating (CFR) and Probability of Default Rating (PDR) for
its parent company, Lamar Advertising Company were affirmed at
Ba3. The 9.75% senior unsecured notes that mature April 2014 were
upgraded to Ba2 from Ba3 driven by the increase in debt that is
subordinate to the senior unsecured notes in the capital
structure. The outlook was changed to stable from positive as the
proposed debt funded acquisition, with the potential for a future
acquisition, would prevent leverage levels from decreasing to a
level commensurate with a higher rating level in the near term. In
addition, the potential for the company to convert to a REIT
indicate a more shareholder oriented financial policy that would
reduce the free cash flow available for future debt repayment.
The transaction is expected to fund the recently signed
acquisition of NextMedia Outdoor, Inc., a redemption of the
remainder of the senior subordinated notes that mature in 2015,
and the prefunding of a second potential acquisition. If the
second acquisition is not successful, the remaining proceeds are
expected to be used to pay down the bank loan debt.
Summary of Rating Actions:
Issuer: Lamar Media Corporation
New senior subordinated note due 2023 assigned a B1 (LGD 5,
77%)
Senior unsecured notes maturing 2014 upgraded to Ba2 (LGD 3,
37%) from Ba3 (LGD-3, 43%)
Outlook, Changed to Stable from Positive
Issuer: Lamar Advertising Company
Corporate Family Rating and Probability of Default affirmed
at Ba3
Outlook, Changed to Stable from Positive
Ratings Rationale
Lamar's Ba3 corporate family rating reflects its market presence
as one of the largest outdoor advertising companies in the U.S.,
the high-margin business model, and stable free cash flow
generation. The rating also reflects the higher debt level
proforma for the recently announced acquisition and the potential
for another debt funded acquisition. Prior to the announced
acquisition, the company had been focused on debt reduction (over
$250 million of debt was repaid in 2011) which reduced leverage to
5.0x as of the 2Q 2012 (including Moody's standard adjustments for
lease expenses) from 5.6x at 12/31/10 and 6.2x at the end of 2009.
The ability to transfer traditional static billboards to digital
provides growth opportunities to the company as well as higher
EBITDA margins. However, as the company transitions more static
boards to digital the company will be more sensitive to short term
changes in advertising demand given the shorter term contract
period compared to static boards. This may lead to more volatility
in earnings than what was experienced historically when its assets
were more likely to be subject to longer term contracts. Compared
to other traditional media outlets, the outdoor advertising
industry is not likely to suffer from disintermediation and
benefits from restrictions on the supply of billboards that help
support advertising rates and high asset valuations.
As a pure play outdoor advertising company, Lamar provides mainly
local advertising and derives revenues from a diversified customer
base, with no single advertiser accounting for more than 1% of the
company's billboard advertising revenue. The high advertising
exposure means that the business is subject to above average
movements in revenue during consumer-led downturns in the economy
which constrains the ratings as long as the company maintains high
leverage levels. However, Lamar's EBITDA margin of over 40%
(excluding Moody's standard adjustments) and relatively low
proportion of maintenance capex as compared to total capex provide
sufficient headroom to weather cyclical setbacks. The rating also
considers the company's demonstrated discipline in managing
operating expenses and capital expenditures, which resulted in
strong free cash flow generation during the economic downturn in
2008 and 2009.
Lamar's liquidity remains strong as reflected by the SGL-2
liquidity rating. Liquidity is supported by the company's balance
sheet cash, $250 million revolver facility, and expectation for
solid free cash flow generation going forward.
The rating outlook is Stable as expectations of revenue and EBITDA
growth in the low to mid single digits are offset by higher debt
levels and the potential that Lamar could convert to a REIT that
would necessitate the payout of at least 90% of the taxable income
from a REIT qualified subsidiary.
The ratings could be upgraded if the company reduces leverage
below 4.5x (including Moody's standard adjustments) by reducing
debt and demonstrates both the desire and ability to sustain
leverage below this level while maintaining comparable EBITDA
margins. If the company converts to a REIT, which would not likely
occur until 2014, the required leverage level for an upgrade would
decrease modestly given the reduced free cash flow after
dividends.
Ratings could face downward pressure if debt to EBITDA were to
increase to over 6x driven by debt funded acquisitions, material
debt funded stock buybacks, or a decline in earnings triggered by
a significant drop in advertising spending. If the company
converts to a REIT, the leverage threshold for a downgrade would
likely decrease modestly.
The principal methodology used in rating Lamar Advertising was the
Global Broadcast and Advertising Related Industries 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.
Lamar Advertising Company, with its headquarters in Baton Rouge,
Louisiana, is a leading owner and operator of advertising
structures in the U.S. and Canada. The company generated revenues
of approximately $1.1 billion during LTM 6/30/12.
LAMAR MEDIA: S&P Rates $535-Mil. Senior Subordinated Notes 'BB-'
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its corporate credit
rating on Baton Rouge, La.-based outdoor advertising operator
Lamar Advertising Co. and its operating subsidiary Lamar Media
Corp. The rating outlook is stable.
"At the same time, we assigned Lamar's proposed $535 million
senior subordinated notes due 2023 our 'BB-' issue-level rating
with a recovery rating of '3', indicating our expectation for
meaningful(50% to 70%) recovery for noteholders in the event of a
payment default," S&P said.
"Standard & Poor's Ratings Services' rating on Baton Rouge, La.-
based outdoor advertising operator Lamar Advertising Co. and its
operating subsidiary Lamar Media Corp. (Lamar) reflect our
expectation that the company will continue to reduce and maintain
fully adjusted leverage below 5.5x, and that its financial policy
will not become more aggressive," said Standard & Poor's credit
analyst Chris Valentine.
"The company's announcement that it's considering converting into
a real estate investment trust (REIT) also does not currently
affect the rating. Under a REIT structure, the company would be
required to distribute 90% of taxable income to shareholders on an
ongoing basis, which in our opinion could reduce financial
flexibility," S&P said.
"Lamar's business risk profile is 'satisfactory' (based on our
criteria) because of its strong position in small to midsize
outdoor advertising markets, consistently high EBITDA margin in
the low-40% area, and only moderate structural pressure compared
with various other media because of less competition from online
advertising. We view Lamar's financial risk profile as
'aggressive,' because we expect fully adjusted leverage to decline
below 5x in 2013. Leverage of less than 5x is consistent with our
characterization of an aggressive financial risk profile, based on
our criteria. Our assessment as aggressive incorporates Lamar's
historically aggressive financial policy of share repurchases and
debt-financed acquisitions. We view liquidity as 'adequate'
because of Lamar's good discretionary cash flow, and expect its
debt repayment-oriented financial policy to continue in 2012," S&P
said.
"Lamar is the third largest U.S. outdoor advertising company,
based on number of displays, which confers operating efficiency
and business diversification. A significant portion of revenue is
from its higher-margin billboard business. Unlike much larger
competitors Clear Channel Communications Inc. and CBS Corp., Lamar
generates a high percentage of revenues from small to midsize
markets and has less exposure to national advertising. We believe
this helps mitigate revenue declines during times of greater
economic pressure. Lamar also has a significantly higher EBITDA
margin than larger-market peers'. We partly attribute this to its
lack of participation in international markets, where CBS and
Clear Channel operate with a higher mix of lower-margin transit
displays than in the U.S. We believe Lamar has less domestic
exposure to lower-margin specialty displays than its larger
peers," S&P said.
LEHMAN BROTHERS: LBI Nears 100% Payment on $105 Billion in Claims
-----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the trustee for Lehman Brother Inc., the brokerage
subsidiary of Lehman Brothers Holdings Inc., said the remaining
customers are on the cusp of a 100% recovery, given three major
settlements in the works.
According to the report, retail customers were fully paid within
days of the bankruptcy in 2008, said James Giddens, the trustee
for the Lehman brokerage appointed under the Securities Investor
Protection Act. When the settlements are implemented, $105
billion in customer claims will have been fully paid.
The report relates that the remaining customer claims are those of
affiliates, hedge funds and institutional investors. They, too,
will be fully paid once the settlements are documented and
approved by the court. The settlements are those with the Lehman
parent, the U.K. liquidators for European affiliates and
liquidators for the Swiss affiliate. Mr. Giddens said in his
report to the bankruptcy court that he's holding $13.5 billion in
cash and $12.5 billion in securities.
The report notes that because the Lehman brokerage liquidation is
under SIPA, the costs aren't borne by customers. Rather, expenses
are paid from Lehman's general estate.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: Swap Dispute Nearing Resolution
------------------------------------------------
Carla Main at Bloomberg News reports that a test case by Lehman
Brothers Holdings Inc. on a so-called flip clause in swap
agreements is inching its way toward conclusion in bankruptcy
court in New York. The Michigan State Housing Development
Authority started a lawsuit to resolve the issue after litigation
among other swap parties settled without a final decision from an
appellate court. The ultimate outcome in this case will decide
whether flip clauses in swap agreements are enforceable across the
board.
According to the report, the authority originally sued Lehman in
November 2009 to recover $2.4 million erroneously paid to Lehman
on termination of an interest-rate swap. Lehman filed a
counterclaim later, contending it was owed an additional $23
million because the swap contract contained a flip clause changing
the calculation in the event Lehman was to go bankrupt. The
Housing Authority filed a motion in March asking U.S. Bankruptcy
Judge James M. Peck to depart from a ruling he made two years ago
in a different case. The authority contends that there are no
disputed facts and that the so-called safe harbor in bankruptcy
law entitles it to retain the $23 million.
The report relates that the issue deals with Judge Peck's opinion
from January 2010 in which he concluded that provisions in a swap
agreement reducing the amount owing to Lehman on account of its
bankruptcy was a forfeiture, violating the ipso facto clause in
the Bankruptcy Code. A district judge allowed an immediate appeal
given the importance of the issue to the financial markets.
Before the district court could rule, Lehman settled, so there was
no ruling on whether Judge Peck was correct. The prior case
involved a so-called flip clause where Lehman receives less or
nothing solely on account of filing bankruptcy.
The report notes that in May 2011, Judge Peck wrote an opinion in
another swap case, adhering to his former conclusion that Lehman
shouldn't lose money on a profitable swap simply because it filed
bankruptcy. The Housing Authority said another provision in
bankruptcy law, the safe harbor, takes precedence over the ipso
facto clause. It's the authority's theory that the safe harbor
provides protection from being forced to disgorge the payment
because it was in connection with a swap agreement. Lehman filed
its brief last week in response. The reorganized former
investment bank argues that the safe harbor only protects the
right to terminate a swap and doesn't deal with the enforceability
of damage calculations contained in the swap agreement.
According to Bloomberg, it is Lehman's contention that enforcing a
flip clause has nothing to do with "enhancing market certainty or
liquidity," the objectives of the safe harbor for swaps. Last
year, the authority failed in an effort to have the lawsuit
removed from bankruptcy court and decided in U.S. District Court.
The Housing Authority lawsuit is Michigan State Housing
Development Authority v. Lehman Brothers Derivative Products,
09-01728, U.S. Bankruptcy Court, Southern District of New York
(Manhattan).
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LIGHTSQUARED INC: Gets Approval for Modified Executive Bonuses
--------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that LightSquared Inc. received bankruptcy court approval
Oct. 23 for a revised bonus program benefiting top managers. The
proposal was modified to satisfy objections from the U.S. Trustee
and lenders owed $1.1 billion.
About LightSquared Inc.
LightSquared Inc. and 19 of its affiliates filed Chapter 11
bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on
May 14, 2012, as the Company seeks to resolve regulatory issues
that have prevented it from building its coast-to-coast integrated
satellite 4G wireless network.
LightSquared had invested more than $4 billion to deploy an
integrated satellite-terrestrial network. In February 2012,
however, the U.S. Federal Communications Commission told
LightSquared the agency would revoke a license to build out the
network as it would interfere with global positioning systems used
by the military and various industries. In March 2012, the
Company's partner, Sprint, canceled a master services agreement.
LightSquared's lenders deemed the termination of the Sprint
agreement would trigger cross-defaults under LightSquared's
prepetition credit agreements.
LightSquared and its prepetition lenders attempted to negotiate a
global restructuring that would provide LightSquared with
liquidity and runway necessary to resolve its issues with the FCC.
Despite working diligently and in good faith, however,
LightSquared and the lenders were not able to consummate a global
restructuring on terms acceptable to all interested parties,
prompting the bankruptcy filing.
As of the Petition Date, the Debtors employed roughly 168 people
in the United States and Canada. As of Feb. 29, 2012, the Debtors
had $4.48 billion in assets (book value) and $2.29 billion in
liabilities.
LightSquared also sought ancillary relief in Canada on behalf of
all of the Debtors, pursuant to the Companies' Creditors
Arrangement Act (Canada) R.S.C. 1985, c. C-36 as amended, in the
Ontario Superior Court of Justice (Commercial List) in Toronto,
Ontario, Canada. The purpose of the ancillary proceedings is to
request the Canadian Court to recognize the Chapter 11 cases as a
"foreign main proceeding" under the applicable provisions of the
CCAA to, among other things, protect the Debtors' assets and
operations in Canada. The Debtors named affiliate LightSquared LP
to act as the "foreign representative" on behalf of the Debtors'
estates.
Judge Shelley C. Chapman presides over the Chapter 11 case.
Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to
the Debtors. Kurtzman Carson Consultants LLC serves as claims and
notice agent.
Counsel to UBS AG as agent under the October 2010 facility is
Melissa S. Alwang, Esq., at Latham & Watkins LLP.
The ad hoc secured group of lenders under the Debtors' October
2010 facility was formed in April 2012 to negotiate an out-of-
court restructuring. The members are Appaloosa Management L.P.;
Capital Research and Management Company; Fortress Investment
Group; Knighthead Capital Management LLC; and Redwood Capital
Management. Counsel to the ad hoc secured group is Thomas E.
Lauria, Esq., at White & Case LLP.
Philip Falcone's Harbinger Capital Partners indirectly owns 96% of
LightSquared's outstanding common stock. Harbinger and certain of
its managed and affiliated funds and wholly owned subsidiaries,
including HGW US Holding Company, L.P., Blue Line DZM Corp., and
Harbinger Capital Partners SP, Inc., are represented in the case
by Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP.
The Office of the U.S. Trustee has not appointed a statutory
committee of unsecured creditors.
LOCATION BASED TECH: $205,000 PocketFinder Orders from Apple
------------------------------------------------------------
Location Based Technologies Inc. received a purchase order from
Apple (through its distributor, Navarre) for $205,000 worth of
PocketFinder devices. PocketFinder GPS trackers are the easiest
way to locate people, pets and vehicles.
About Location Based Technologies
Irvine, Calif.-based Location Based Technologies, Inc., designs,
develops, and sells leading-edge personal locator devices and
services.
The Company's balance sheet at May 31, 2012, showed $7.64 million
in total assets, $5.44 million in total liabilities, $499,387 of
commitments and contingencies, and stockholders' equity of $1.70
million.
"The Company has incurred net losses since inception, and as of
May 31, 2012, had an accumulated deficit of $42,125,209. These
conditions raise substantial doubt as to the Company's ability to
continue as a going concern," the Company said in its quarterly
report for the period ended May 31, 2012.
As reported in the TCR on Dec. 2, 2011, Comiskey & Company, in
Denver Colorado, expressed substantial doubt about the Company's
ability to continue as a going concern, following the Company's
results for the fiscal year ended Aug. 31, 2011. The independent
auditors noted that the Company has incurred recurring losses
since inception and has an accumulated deficit in excess of
$37,000,000. "There is no established sales history for the
Company's products, which are new to the marketplace."
LODGENET INTERACTIVE: Phillip Spencer Resigns from Board
--------------------------------------------------------
Phillip Spencer informed LodgeNet Interactive Corporation of his
decision to resign from the Board of Directors of the Company,
effective on Oct. 25, 2012. Mr. Spencer's decision to resign was
not due to any disagreement with the Company on any matter
relating to the Company's operations, policies or practices.
About LodgeNet Interactive
Sioux Falls, South Dakota-based LodgeNet Interactive Corporation
(Nasdaq:LNET), formerly LodgeNet Entertainment Corp. --
http://www.lodgenet.com/-- provides media and connectivity
solutions designed to meet the unique needs of hospitality,
healthcare and other guest-based businesses. LodgeNet Interactive
serves more than 1.9 million hotel rooms worldwide in addition to
healthcare facilities throughout the United States. The Company's
services include: Interactive Television Solutions, Broadband
Internet Solutions, Content Solutions, Professional Solutions and
Advertising Media Solutions. LodgeNet Interactive Corporation
owns and operates businesses under the industry leading brands:
LodgeNet, LodgeNetRX, and The Hotel Networks.
The Company reported a net loss of $631,000 in 2011, a net loss of
$11.68 million in 2010, and a net loss of $10.15 million in 2009.
The Company's balance sheet at June 30, 2012, showed $283.34
million in total assets, $439.32 million in total liabilities and
a $155.98 million total stockholders' deficiency.
* * *
As reported by the TCR on Aug. 7, 2012, Moody's Investors Services
downgraded LodgeNet Interactive Corp.'s Corporate Family Rating
(CFR) to Caa1 from B3 and changed the Probability of Default
Rating (PDR) to Caa2 from Caa1. The reason for the downgrade is
due to poor first and second quarter financial results and Moody's
expectations that they will not improve in the near term.
In the Aug. 7, 2012, edition of the TCR, Standard & Poor's Ratings
Services lowered its corporate credit rating on U.S. in-room
entertainment and data services provider LodgeNet Interactive
Corp. to 'CCC' from 'B-'. "The downgrade reflects LodgeNet's weak
second-quarter operating performance resulting from a sharp
reduction in its room base, which we expect will continue over the
near term," said Standard & Poor's credit analyst Hal Diamond.
LON MORRIS: Ex-President Faces Texas AG Probe Over Missing $1.3MM
-----------------------------------------------------------------
Ben Tinsley at Jacksonville Daily Progress reports that Dr. Miles
McCall, the former president of Lon Morris College, is at the
center of a Texas Attorney General investigation into a missing
$1.3 million. The money comes from an endowment that should have
reverted to Sam Houston State University after LMC declared
Chapter 11 bankruptcy in July.
Dr. McCall was college president from July 2005 until he resigned
May 24. The report relates Dr. McCall was questioned in Arlington
last week regarding management of the endowment, according to
officials and court documents. He had been ordered by a U.S.
Bankruptcy Judge to comply with the questioning.
According to the report, state officials do not currently suspect
the money was stolen, but it is missing, confirmed Hal Morris,
assistant attorney general and managing attorney for the Texas
AG's bankruptcy regulatory section.
The report notes Mr. Morris and his office are conducting a dual
investigation into the missing money with Hugh Ray III, attorney
for Lon Morris College.
According to the report, Dr. McCall was also compelled by the
federal judge to produce documents, emails, board resolutions and
minutes related to the Long endowment during his questioning. He
was required to produce all copies of insurance policies that
might insure him, Lynn Acker, the owner of Tyler accounting firm
Acker & Co., or an agent of Acker & Co. He was additionally
ordered to produce, among other documents, copies of any
communications since 2008 that described the actual or
contemplated treatment of any assets held in trust by LMC.
The report relates Ms. Acker will be questioned in Arlington in
connection with the case starting at 9 a.m. Nov. 1. Ms. Acker
will be quizzed about the college's assets and liabilities,
operations, potential claims, property and pre-petition acts and
conduct.
About Lon Morris College
Lon Morris College was founded in 1854 as a not-for-profit
religiously affiliated two-year degree granting institution. Over
the past 158 years, the College has impacted the lives of
countless members of the local Jacksonville community in Texas.
Lon Morris College filed a Chapter 11 petition (Bankr. E.D. Tex.
Case No. 12-60557) in Tyler, on July 2, 2012, after lacking enough
endowments to pay teachers, vendors and creditors. In May 2012,
the Debtor missed two payrolls and vendor payables, utilities, and
long term debt were also past due. From a headcount of 1,070 in
2010, enrolments have been down to 547 in 2012. The president of
the College has resigned, as have members of the board of
trustees.
Judge Bill Parker oversees the case. Bridgepoint Consulting LLC's
Dawn Ragan took over management of the College as chief
restructuring officer. Attorneys at Webb and Associates, and
McKool Smith P.C., serve as counsel to the Debtor. Capstone
Partners serves as financial advisor.
According to its books, on April 30, 2012, the College had roughly
$35 million in assets, including $11 million in endowments and
restricted funds, and $18 million in funded debt and $2 million in
trade and other liabilities. The Debtor disclosed $29,957,488 in
assets and $15,999,058 in liabilities as of the Chapter 11 filing.
Amegy Bank is represented in the case by James Matthew Vaughn,
Esq., at Porter Hedges LLP.
LONG ISLAND RUBBISH: Files Schedules of Assets and Liabilities
--------------------------------------------------------------
Long Island Rubbish Removal Eastern Corp. filed with the U.S.
Bankruptcy Court for the Eastern District of New York its
schedules of assets and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $0
B. Personal Property $2,385,624
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $145,000
E. Creditors Holding
Unsecured Priority
Claims $885,000
F. Creditors Holding
Unsecured Non-priority
Claims $1,704,349
----------- -----------
TOTAL $2,385,624 $2,724,349
A copy of the schedules is available for free at
http://bankrupt.com/misc/LONG_ISLAND_sal.pdf
Winters Bros. Holdings, LLC, of West Bay Shore, New York, filed an
involuntary Chapter 11 petition against Long Island Rubbish
Removal Eastern Corp. (Bankr. E.D.N.Y. Case No. 12-73870) in
Central Islip on June 21, 2012. Winters Bros. is represented by
he Law Offices of Raymond A. Giusto, P.C.
LPATH INC: Inks Indemnification Agreements with Top Executives
--------------------------------------------------------------
In connection with the listing of the common stock of Lpath, Inc.,
on the NASDAQ Capital Market, the Company's Board of Directors
approved a form of indemnification agreement for the Company's
directors and executive officers, and the Company entered into
Indemnification Agreements with:
(i) Scott R. Pancoast, the Company's President, Chief Executive
Officer, and Director;
(ii) Gary J. G. Atkinson, the Company's Vice President and Chief
Financial Officer; and
(iii) each of the members of the Board.
The Indemnification Agreement reflects changes in Nevada law and
best practices for NASDAQ listed companies, and complies with the
Company's Bylaws, as amended, and Nevada law. The Board
determined that it was in the best interests of the Company and
its stockholders to approve the Indemnification Agreement to help
the Company attract and retain the services of talented and
experienced individuals to serve as directors and officers of the
Company and its subsidiaries.
The Indemnification Agreement confirms the Company's obligation to
indemnify its directors and executive officers against liability
arising out of the performance of their duties. The
Indemnification Agreement provides mandatory indemnification, on
the terms and conditions set forth in the agreement, for expenses,
liabilities and losses actually and reasonably incurred by
directors and executive officers in defending legal proceedings in
which they are parties by reason of their service to the Company
or other entities to which they provide services at the Company?s
request.
Effective Oct. 22, 2012, in connection with the listing of the
Company's common stock on the NASDAQ Capital Market, the Board
approved amendments to the Company's Amended and Restated Bylaws,
which became effective immediately. The amendments (i) eliminate
cumulative voting in director elections; (ii) establish advance
notice procedures with respect to stockholder proposals and
nominations of candidates for election as directors other than
nominations made by or at the direction of the Board; (iii) fix
the size of the Board at six directors, subject to resolution
adopted by the Board approving such other number as may be
determined from time to time; and (iv) revise the indemnification
provisions to reflect the current indemnification provisions in
the Nevada Revised Statues.
About Lpath, Inc.
San Diego, Calif.-based Lpath, Inc. is a biotechnology company
focused on the discovery and development of lipidomic-based
therapeutics, an emerging field of medical science whereby
bioactive lipids are targeted to treat human diseases.
The Company's balance sheet at June 30, 2012, showed $21.03
million in total assets, $14.31 million in total liabilities and
$6.71 million in total stockholders' equity.
The Company reported a net loss of $3.11 million in 2011, compared
with a net loss of $4.60 million in 2010.
MACROSOLVE INC: Inks Employment Agreement with Kendall Carpenter
----------------------------------------------------------------
MacroSolve, Inc., entered into an employment agreement with
Kendall Carpenter to serve as Executive Vice President, Chief
Financial Officer and Secretary, which Agreement is effective as
of Oct. 1, 2012. The Agreement can be terminated by Ms. Carpenter
at any time or by the Company upon 90 days prior written notice.
The base salary under the Agreement is initially $150,000, which
will be paid in cash through Dec. 31, 2012, and thereafter, in
cash and notes payable. Starting Jan. 1, 2013, Ms. Carpenter will
receive an initial salary of at least $96,000 per annum in cash
and notes payable in an amount equal to the difference between the
Base Salary and the Cash Salary. The Notes will accrue interest
at a rate of 6% per annum and payment of outstanding Notes will be
done quarterly as funds become available, as determined by the
Board of Directors.
In addition, Ms. Carpenter is entitled to participate in any and
all benefit plans, from time to time, in effect for the Company's
employees, along with vacation, sick and holiday pay in accordance
with its policies established and in effect from time to time.
A copy of the Employment Agreement is available at:
http://is.gd/BbOKAG
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.
MAINLINE CONTRACTING: Can't Recoup $506K Paid to Vendor
-------------------------------------------------------
Richard D. Sparkman, the Chapter 7 trustee for Mainline
Contracting, Inc., failed in its bid to recoup funds the Debtor
transferred to Martin Marietta Materials, Inc., one of its
vendors, prior to the bankruptcy. The Chapter 7 Trustee seeks to
avoid several alleged preferential transfers made within the 90
days prior to the petition date. The Trustee asserts the Debtor
made five payments in June and July 2009, totaling $506,056.
Bankruptcy Judge Randy D. Doub, however, ruled the Transfers were
made in the ordinary course of business pursuant to 11 U.S.C. Sec.
547(c)(2). Judge Doub denied the Trustee's Motion for Summary
Judgment, and granted Martin Marietta Materials's Motion for
Summary Judgment.
"Upon review of all the evidence in the light most favorable to
the Trustee, and after finding the the ordinary course defense
applies, the Court finds no genuine issue of material fact exists
and the Defendant is entitled to judgment as a matter of law,"
Judge Doub said in an Oct. 23, 2012 Order available at
http://is.gd/tLo2TRfrom Leagle.com.
The case is RICHARD D. SPARKMAN, Trustee, Plaintiff, v. MARTIN
MARIETTA MATERIALS, INC., Defendant, Adv. Proc. No. 11-00040
(Bankr. E.D.N.C.).
About Mainline Contracting
Durham, North Carolina-based Mainline Contracting, Inc., operated
a construction company. The Company filed for Chapter 11 (Bankr.
E.D.N.C. Case No. 09-07927) on Sept. 15, 2009. Everett Gaskins
Hancock & Stevens, LLP, represented the Debtor in its
restructuring effort. In its schedules, the Debtor listed total
assets of $23,027,505 and total liabilities of $33,280,644. The
Debtor's Chapter 11 case was converted to a case under Chapter 7
and Richard D. Sparkman was appointed as Chapter 7 Trustee by an
order entered on Oct. 15, 2009.
MAMMOTH LAKES: OK'd to Amend Writ of Mandate in State Court
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of California
modified the automatic stay in the Chapter 9 case of Town of
Mammoth Lakes, California for the purpose of (i) permitting the
Town and Mammoth Lakes Land Acquisition, LLC to seek an amendment
to the Writ of Mandate in State Court in strict accordance with
the terms of the settlement with respect to MLLA; and (ii)
permitting the Superior Court of Mono County to consider and act
upon the Town's and MLLA's request.
As reported in the Troubled Company Reporter on Oct. 1, 2012, the
Town asked the Court to enter an order:
i) granting relief from the automatic stay to permit the Town
and Mammoth Lakes Land Acquisition, LLC to jointly seek, and
the Superior Court of Mono County to enter, amendments to
that certain writ of mandate, entered by the Superior Court
of Mono County on March 23, 2012, commanding the Town to
satisfy that certain judgment in favor of MLLA in full, in
strict accordance with the terms of that certain Settlement
Agreement, dated as of Sept. 20, 2012; and
ii) dismissing the Chapter 9 case without further motion by the
Town or hearing in the Court, immediately on the filing of a
certificate by the Town with the Court indicating that the
Amended MLLA Writ has been entered by the Superior Court of
Mono County and has become final, by and through the
entrance by the Court of an order dismissing the case.
According to the Debtor, relief will allow the Town to amicably
resolve numerous significant creditor issues, and will provide for
the Town's prompt exit from bankruptcy while avoiding the
significant cost, delay, risk, and distraction of extensive
eligibility and plan confirmation litigation.
The Court also ordered that within seven calendar days after the
Amended MLLA Writ becomes final, but not later than Jan. 2, 2013,
the Town will file with the Court a certificate stating that the
Amended MLLA Writ has been entered by the Superior Court of Mono
County and has become final.
About Mammoth Lakes
The town of Mammoth Lakes, a small California resort community
near Yosemite National Park, filed a Chapter 9 bankruptcy petition
(Bankr. E.D. Calif. Case No. 12-32463) on July 3, 2012, estimating
$100 million to $500 million in assets and $50 million to $100
million in debts. Bankruptcy Judge Thomas C. Holman oversees the
case. Lawyers at Fulbright & Jaworski LLP and Klee, Tuchin,
Bogdanoff & Stern, LLP, serve as the Debtor's counsel. The
petition was signed by Dave Wilbrecht, town manager.
According to the report, the bankruptcy judge in Sacramento,
California, will hold a status conference on Aug. 29 regarding
eligibility for Chapter 9.
MAUI LAND: Incurs $1.6 Million Net Loss in Third Quarter
--------------------------------------------------------
Maui Land & Pineapple Company, Inc., filed with the U.S.
Securities and Exchange Commission its quarterly report on Form
10-Q disclosing a net loss of $1.61 million on $3.62 million of
total operating revenues for the three months ended Sept. 30,
2012, compared with a net loss of $1.33 million on $3.37 million
of total operating revenues for the same period during the prior
year.
The Company reported a net loss of $2.89 million on $12.38 million
of total operating revenues for the nine months ended Sept. 30,
2012, compared with net income of $8.62 million on $11.03 million
of total operating revenues for the same period a year ago.
The Company's balance sheet at Sept. 30, 2012, showed $61.44
million in total assets, $89.62 million in total liabilities and a
$28.17 million stockholders' deficiency.
A copy of the Form 10-Q is available for free at:
http://is.gd/4q8pi3
About Maui Land & Pineapple Co.
Maui Land & Pineapple Company, Inc. (NYSE: MLP) --
http://mauiland.com/-- develops, sells, and manages residential,
resort, commercial, and industrial real estate. The Company owns
approximately 23,000 acres of land on Maui and operates retail,
utility operations, and a nature preserve at the Kapalua Resort.
The Company's principal subsidiary is Kapalua Land Company, Ltd.,
the operator and developer of Kapalua Resort, a master-planned
community in West Maui.
Following the financial results for the year ended Dec. 31, 2011,
the Company's independent auditors expressed substantial doubt
about the Company's ability to continue as a going concern.
Deloitte & Touche LLP, in Honolulu, Hawaii, noted that the
Company's recurring negative cash flows from operations and
deficiency in stockholders' equity raise substantial doubt
about the Company's ability to continue as a going concern.
MENDOCINO COAST: Fort Bragg Hospital in Chapter 9
-------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Mendocino Coast Health Care District, the operator of
a 25-bed acute-care hospital in Fort Bragg, California, filed a
Chapter 9 municipal bankruptcy petition.
According to the report, bankruptcy ensued when mediation failed
to reach agreement with the union. The hospital district complied
with California law requiring negotiations before filing a Chapter
9 petition.
Mendocino Coast Health Care District of Mendocino, California,
filed a Chapter 9 petition (Bankr. N.D. Calif. Case No. 12-12753)
in Santa Rosa on Oct. 17, 2012.
The petition showed that assets and debt both exceed $10 million.
METRO FUEL: To Auction Business on Dec. 12
------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Metro Fuel Oil Corp. will sell the assets at auction
on Dec. 12 under procedures approved by the bankruptcy judge in
Brooklyn.
According to the report, lenders are requiring a quick sale,
although there is no buyer under contract. Metro has permission
to bestow a breakup fee if a buyer signs a contract before the
auction.
The report relates that preliminary bids are due Oct. 31. The bid
deadline is Dec. 10, with the Dec. 12 auction followed by a sale
approval hearing on Dec. 18.
About Metro Fuel
Metro Fuel Oil Corp., is a family-owned energy company, founded in
1942, that supplies and delivers bioheat, biodiesel, heating oil,
central air conditioning units, ultra low sulfur diesel fuel,
natural gas and gasoline throughout the New York City metropolitan
area and Long Island. Owned by the Pullo family, Metro has 55
delivery trucks and a 10 million-gallon fuel terminal in Brooklyn.
Financial problems resulted in part from cost overruns in building
an almost-complete biodiesel plant with capacity of producing 110
million gallons a year.
Based in Brooklyn, New York, Metro Fuel Oil Corp., fka Newtown
Realty Associates, Inc., and several of its affiliates filed for
Chapter 11 bankruptcy protection (Bankr. E.D.N.Y. Lead Case No.
12-46913). Judge Elizabeth S. Stong presides over the case.
Nicole Greenblatt, Esq., at Kirkland & Ellis LLP, represents the
Debtor. The Debtor selected Epiq Bankruptcy Solutions LLC as
notice and claims agent.
The petition showed assets of $65.1 million and debt totaling
$79.3 million. Liabilities include $58.8 million in secured debt,
with $48.3 million owing to banks and $10.5 million on secured
industrial development bonds.
MF GLOBAL: Brokerage Avoids Lawsuits for Mass Firings
-----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that MF Global Inc. won't be liable to workers who were
fired without 60 days' notice required by state and federal law.
Employees of the parent company, MF Global Holdings Ltd., may be
able to recover, as the result of a ruling Oct. 23 by the
bankruptcy judge in New York.
According to the report, after the bankruptcy liquidations of the
MF Global parent and the brokerage unit began last year, several
class-action lawsuits were filed for violation of so-called WARN
Acts requiring 60 days' notice of mass firings. The trustee for
the brokerage under the Securities Investor Protection Act and the
Chapter 11 trustee for the parent company both filed papers
arguing that the suits should be dismissed entirely. Both
trustees contended they were covered by the so-called liquidating
fiduciary exception to the WARN Acts. The exception arose from a
preamble to regulations written by the U.S. Labor Department. The
preamble says that a fiduciary whose "sole function" is to
liquidate a failed business is exempted from liability for mass
firings without notice.
The report relates that in a 23-page opinion Oct. 23, U.S.
Bankruptcy Judge Martin Glenn concluded that the trustee for the
brokerage is entitled to dismissal of the suit entirely because
SIPA only allows liquidation. Not so for the holding company,
Judge Glenn said, because it's in Chapter 11 where reorganization
is possible.
The report notes that unless the fired employees win on appeal,
the suit against the brokerage is dead. Judge Glenn is allowing
plaintiffs to revise the complaint against the holding company's
Chapter 11 trustee to add allegations about whether the case is a
liquidation or reorganization. He also directed the plaintiffs to
identify which MF Global company was the employer.
The Bloomberg report discloses that in winning dismissal, James
Giddens, the SIPA trustee for the brokerage, relied partly on a
ruling from a bankruptcy appellate panel for the U.S. Ninth
Circuit, which held that a hospital being liquidated in Chapter 7
bankruptcy didn't violate a WARN Act by firing worker en masse
because operations had ceased.
About MF Global
New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/
-- was one of the world's leading brokers of commodities and
listed derivatives. MF Global provided access to more than
70 exchanges around the world. The firm was also one of 22
primary dealers authorized to trade U.S. government securities
with the Federal Reserve Bank of New York. MF Global's roots go
back nearly 230 years to a sugar brokerage on the banks of the
Thames River in London.
MF Global Holdings Ltd. and MF Global Finance USA Inc. filed
voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos.
11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to
Interactive Brokers Group collapsed.
As of Sept. 30, 2011, MF Global had $41,046,594,000 in total
assets and $39,683,915,000 in total liabilities.
Judge Honorable Martin Glenn presides over the Chapter 11 case.
J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric
Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve
as bankruptcy counsel. The Garden City Group, Inc., serves as
claims and noticing agent. The petition was signed by Bradley I.
Abelow, Executive Vice President and Chief Executive Officer of
MF Global Finance USA Inc.
Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy
cases of MF Global Holdings Ltd. and its affiliates. The Chapter
11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as
investigative counsel; (ii) FTI Consulting Inc., as restructuring
advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel;
and (iv) Pepper Hamilton as special counsel.
An Official Committee of Unsecured Creditors has been appointed
in the case. The Committee has retained Capstone Advisory Group
LLC as financial advisor.
The Securities Investor Protection Corporation commenced
liquidation proceedings against MF Global Inc. to protect
customers. James W. Giddens was appointed as trustee pursuant to
the Securities Investor Protection Act. He is a partner at
Hughes Hubbard & Reed LLP in New York.
Jon Corzine, the former New Jersey governor and co-CEO of
Goldman Sachs Group Inc., stepped down as chairman and chief
executive officer of MF Global just days after the bankruptcy
filing.
MG FORGE: Construction Firm Enters Chapter 11 in New Jersey
-----------------------------------------------------------
Carla Main at Bloomberg news reports that MG Forge Construction
LLC, a general-services contracting company founded in 2007, filed
for Chapter 11 protection (Bankr. D.N.J. Case No. 12-bk-35817) on
Oct. 25 in Newark, New Jersey.
The Company declared assets of less than $50,000 and debts of more
than $10 million.
According to the report, the largest creditors are PNC Business
Credit, owed $11.9 million, with $8 million secured; RCC Pile &
Foundation Inc., owed $1.8 million; and a trade debt owed to Roll
Form for $2.36 million, according to court papers.
MGM RESORTS: Amends and Extends Credit Facility with Lenders
------------------------------------------------------------
MGM China Holdings Limited, an indirect majority-owned subsidiary
of MGM Resorts International, and MGM Grand Paradise, S.A., a
wholly owned subsidiary of MGM China, entered into agreements with
certain lenders pursuant to which MGM Grand Paradise's existing
US$950 million senior secured credit facilities, dated July 27,
2010, will be amended and restated in their entirety. The New
Facility Agreement extends the term of the original facilities for
a five year period ending Oct. 29, 2017.
The New Facility Agreement includes a US$550 million term loan and
a US$1.45 billion revolving credit facility, of which US$500
million is conditioned on the land concession contract for the
proposed Cotai resort and casino being published in the Official
Gazette of Macau.
The New Facilities will bear interest at a fluctuating rate per
annum based on HIBOR plus a margin, initially set for a six month
period at 2.50% per annum, but thereafter the margin (in the range
of 1.75% to 2.50% per annum) will be determined on MGM China's
leverage ratio.
The material subsidiaries of MGM China will guarantee the New
Facilities, and MGM China, MGM Grand Paradise and those
subsidiaries will grant a first priority security interest in
substantially all of their assets to secure the New Facility
Agreement.
The proceeds of the New Facilities will be used to refinance the
existing credit facilities of MGM Grand Paradise, S.A., future
development opportunities including Cotai, and for general
corporate purposes of MGM China and its subsidiaries.
The New Facility Agreement is expected to close on Oct. 29, 2012,
subject to customary closing and documentary conditions.
About MGM Resorts
MGM Resorts International (NYSE: MGM) --
http://www.mgmresorts.com/-- has significant holdings in gaming,
hospitality and entertainment, owns and operates 15 properties
located in Nevada, Mississippi and Michigan, and has 50%
investments in four other properties in Nevada, Illinois and
Macau.
The Company reported net income of $3.23 billion in 2011 and a net
loss of $1.43 billion in 2010.
The Company's balance sheet at June 30, 2012, showed $27.26
billion in total assets, $17.85 billion in total liabilities and
$9.41 billion in total stockholders' equity.
Bankruptcy Warning
In the Form 10-K for the year ended Dec. 31, 2011, the Company
said that any default under the senior credit facility or the
indentures governing the Company's other debt could adversely
affect its growth, its financial condition, its results of
operations and its ability to make payments on its debt, and could
force the Company to seek protection under the bankruptcy laws.
* * *
As reported by the TCR on Nov. 14, 2011, Standard & Poor's Ratings
Services raised its corporate credit rating on MGM Resorts
International to 'B-' from 'CCC+'. In March 2012, S&P revised
the outlook to positive from stable.
"The revision of our rating outlook to positive reflects strong
performance in 2011 and our expectation that MGM will continue to
benefit from the improving performance trends on the Las Vegas
Strip," S&P said.
In March 2012, Moody's Investors Service affirmed its B2 corporate
family rating and probability of default rating. The affirmation
of MGM's B2 Corporate Family Rating reflects Moody's view that
positive lodging trends in Las Vegas will continue through 2012
which will help improve MGM's leverage and coverage metrics,
albeit modestly. Additionally, the company's declaration of a $400
million dividend ($204 million to MGM) from its 51% owned Macau
joint venture due to be paid shortly will also improve the
company's liquidity profile. The ratings also consider MGM's
recent bank amendment that resulted in about 50% of its
$3.5 billion senior credit facility being extended one year from
2014 to 2015.
As reported by the TCR on Oct. 15, 2012, Fitch Ratings has
affirmed MGM Resorts International's (MGM) Issuer Default Rating
(IDR) at 'B-' and MGM Grand Paradise, S.A.'s (MGM Grand Paradise)
IDR at 'B+'.
MILK SPECIALTIES: Moody's Raises CFR to B2; Outlook Stable
----------------------------------------------------------
Moody's Investors Service has upgraded Milk Specialties Company's
Corporate Family Rating ("CFR") to B2 from B3 to reflect the
company's ongoing earnings growth, margin expansion and an
expected improvement in its liquidity profile following the
recently proposed refinancing. Concurrently, Moody's assigned a B2
rating to the company's proposed $315 million first lien credit
facility. Proceeds from this refinancing are expected to repay
existing indebtedness and pre-fund capital expansion plans. The
rating outlook is stable.
The upgrade of Milk Specialties' CFR to B2 from B3 reflects the
company's significant improvement in its operating performance and
the completion of the construction and subsequent expansion of its
Fond du Lac facility which provides additional capacity to meet
demand for its whey protein products and should foster further
margin expansion over the next twelve months as utilization rates
improve. While adjusted pro forma leverage of roughly 4.4x
(excluding the undrawn delayed draw term loan) is viewed as
somewhat high at close, Moody's anticipates that leverage will be
reduced to less than 4.0x over the next twelve months as earnings
continue to be supported by the ramp up of the Fond du Lac
facility and should begin to benefit from other expansion projects
in Utah and California.
In addition, Moody's expects liquidity to improve following the
refinancing as a result of the pre-funding of its capital
expansion plans, which are primarily focused on the company's
entrance into Utah and California whey markets. Roughly $30
million of incremental term loan borrowings and $30 million
available through the delayed draw term loan should be sufficient
to cover free cash flow shortfalls resulting from the growth
capital spending anticipated in fiscal 2013 and 2014.
The following rating have been upgraded:
CFR to B2 from B3.
The following ratings have been assigned subject to the review of
final documentation:
B2 (LGD3, 35%) to the proposed $35 million revolving credit
facility due 2017;
B2 (LGD3, 35%) to the proposed $250 million first lien term loan
due 2018; and
B2 (LGD3, 35%) to the proposed $30 million first lien delayed
draw term loan due 2018.
The following rating has been affirmed:
Probability of Default Rating ("PDR") at B3.
Ratings Rationale
The B2 CFR reflects Milk Specialties' small scale, relatively high
leverage, low but improving margins, the geographic concentration
of its manufacturing facilities, product focus within niche human
and animal nutrition segments and an adequate liquidity profile.
Further, the rating incorporates Moody's view that meaningful
capital investments will be needed to fund the company's expansion
plans and that free cash flow will remain negative over the next
twelve months. The rating benefits from the company's leadership
position as an independent processor of whey protein in the US,
good customer diversification and a growing network of independent
whey stream suppliers. In recent periods, the company has
benefited from growing demand for whey in the sports nutrition and
health and wellness markets and its commitment to expanding its
manufacturing footprint and capacity, two trends Moody's expects
to continue over the next 12-18 months.
The B2 ratings on the first lien bank facility benefit from their
first priority lien on substantially all assets of the company and
its guarantors. The ratings on the debt instruments reflect both
the B3 PDR and a expected family recovery rate of 65%. The ratings
anticipate that the delayed draw term loan, included in the credit
facility, will be committed at close and proceeds will be used to
fund a portion of the company's capital spending requirements over
the next 12-18 months.
The stable outlook reflects Moody's expectation of improved
operating performance and that financial leverage will moderately
decrease offsetting meaningful cash outflows over the next twelve
to eighteen months. Liquidity is expected to improve further once
the company's capacity expansion efforts in Utah and California
have been completed and capital spending returns to a more
sustainable level. Moody's anticipates that as capacity
utilization increases following these investments, Milk
Specialties will be able to deliver strong organic revenue growth
and improvement in operating margins.
Although not likely over the near term, a rating upgrade could
occur if Milk Specialties were to generate positive free cash flow
on a annual basis, improve EBITDA margins and reduce leverage
while meaningfully improving its operational diversification . The
ratings could be downgraded if the company experiences meaningful
cost overruns on capital projects or if liquidity deteriorates
requiring extended reliance on its revolver. Further, prolonged
negative free cash flow or leverage around 5.0x could result in a
negative rating action.
The principal methodology used in rating Milk Specialties was the
Protein and Agriculture Industry Methodology published in [date].
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Milk Specialties Company is a leading independent manufacturer of
whey and specialty dairy protein ingredients for the sports
nutrition, health and wellness, food manufacturing and animal
nutrition end markets. Revenues for the twelve months ending
September 30, 2012 were approximately $523 million. Milk
Specialties was acquired by HM Capital Partners LLC in December
2011.
MMRGLOBAL INC: Has Record-Breaking Million Dollar Quarter
---------------------------------------------------------
MMRGlobal, Inc., said that in the third quarter ending Sept. 30,
2012, the Company had sales, deferred revenue and signed customer
purchase agreements for more than one million dollars driven by
MMRPro. This includes 75 MMRPro systems which are currently being
installed and are at various stages of delivery.
According to Robert H. Lorsch, Chairman and CEO of MMRGlobal "We
expect the sales momentum we have achieved to continue,
particularly in view of the favorable regulatory climate whereby
requirements under HIPAA and the HITECH Act could make it
difficult for providers to comply with certain guidelines for
Meaningful Use without purchasing or licensing MMR's intellectual
property including MMRPro. These requirements cover how
confidential personal health information is maintained and shared
with patients, who are becoming increasingly aware of the
importance of having a Personal Health Record like
MyMedicalRecords.com, which covers up to 10 family members
including pets."
MMR is the owner of a patent portfolio related to personal and
electronic healthcare records, including U.S Patent Nos.
8,121,855, 8,117,646, and 8,117,045. MMR also has numerous
additional patent applications related to a large number of health
IT services, particularly as they pertain to patient information
and Personal Health Records. As pending applications are issued,
the Company believes they have the potential to expand the scope
of its intellectual property pertaining to the provisioning of
Personal Health Records and other forms of Electronic Medical
Records.
MMRGlobal's patent portfolio covers a broad range of ways to
maintain and manage patients' health information, such that if a
healthcare professional is communicating health information to
patients, including all or a part of those patients' medical
records by means such as telephone, facsimile, electronically or
via a web-based portal, they have the option to purchase MMR
products or services or to license the Company's IP to avoid
infringement on MMR's patent portfolio.
About MMRGlobal
Los Angeles, Calif.-based MMR Global, Inc. (OTC BB: MMRF)
-- http://www.mmrglobal.com/-- through its wholly-owned operating
subsidiary, MyMedicalRecords, Inc., provides secure and easy-to-
use online Personal Health Records (PHRs) and electronic safe
deposit box storage solutions, serving consumers, healthcare
professionals, employers, insurance companies, financial
institutions, and professional organizations and affinity groups.
In the auditors' report accompanying the financial statements for
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 years ended
Dec. 31, 2011, and 2010.
The Company reported a net loss of $8.88 million in 2011, compared
with a net loss of $17.90 million in 2010. The Company reported a
net loss of $10.3 million in 2009.
The Company's balance sheet at June 30, 2012, showed $2.03 million
in total assets, $8.46 million in total liabilities, and a
$6.43 million total stockholders' deficit.
MOMENTIVE PERFORMANCE: Enters Into $1.1 Billion Notes Indenture
---------------------------------------------------------------
Momentive Performance Materials Inc. said that MPM Escrow LLC and
MPM Finance Escrow Corp., wholly owned special purpose
subsidiaries of the Company, entered into an indenture among the
Escrow Issuers, MPM TopCo LLC and The Bank of New York Mellon
Trust Company, N.A., as trustee, governing the Escrow Issuers'
$1,100,000,000 aggregate principal amount of 8.875% First-Priority
Senior Secured Notes due 2020, which mature on Oct. 15, 2020.
The gross proceeds of the Notes have been placed in escrow pending
satisfaction of certain conditions, including either (i) obtaining
an amendment to the Company's senior secured credit facilities to
permit the Company to assume the obligations of the Escrow Issuers
under the Notes or (ii) entering into the asset-based lending
facility. Upon satisfaction of those conditions, the Company will
assume the Escrow Issuers' obligations under the Notes. If those
conditions are not satisfied by Jan. 15, 2013, the Escrow Issuers
will redeem the Notes at a price equal to 100% of the gross
proceeds of the Notes, plus accrued interest.
On and after the Assumption, the Notes will be guaranteed on a
senior secured basis by each of the Company's existing domestic
subsidiaries that is a guarantor under the Senior Secured Credit
Facilities and by each of the Company's future domestic restricted
subsidiaries that guarantees the Senior Secured Credit Facilities.
On and after the Assumption, the Notes will be secured by first-
priority pari passu liens on the collateral of the Company and the
Note Guarantors under the Senior Secured Credit Facilities,
subject to certain exceptions and permitted liens. After the
Company enters into the ABL Facility, the Notes will be secured by
first-priority liens on certain notes priority collateral and by
second-priority liens on the certain domestic ABL priority
collateral, in each case subject to certain exceptions and
permitted liens. On and after the Assumption, the Notes will rank
equally in right of payment with all senior indebtedness of the
Company and Note Guarantors and senior to all subordinated
indebtedness of the Company and Note Guarantors.
The Notes will bear interest at 8.875% per annum. Interest on the
Notes will be paid on each April 15 and October 15, commencing on
April 15, 2013.
On Oct. 25, 2012, The Bank of New York Mellon Trust Company, N.A.,
as escrow agent and trustee, under the Indenture, the Escrow
Issuers and the Guarantor entered into an escrow agreement, a copy
of which is available for free at http://is.gd/CSvNz6
About Momentive Performance
Momentive Performance Materials, Inc., is a producer of silicones
and silicone derivatives, and is engaged in the development and
manufacture of products derived from quartz and specialty
ceramics. As of Dec. 31, 2008, the Company had 25 production
sites located worldwide, which allows it to produce the majority
of its products locally in the Americas, Europe and Asia.
Momentive's customers include companies in industries, such as
Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola,
L'Oreal, BASF, The Home Depot and Lowe's.
The Company had a net loss of $140 million in 2011, following a
net loss of $63 million in 2010. Net loss in 2009 was
$42 million.
The Company's balance sheet at June 30, 2012, showed $3.02 billion
in total assets, $3.92 billion in total liabilities, and a
$901 million total deficit.
* * *
As reported by the TCR on May 14, 2012, Moody's Investors Service
lowered Momentive Performance Materials Inc.'s Corporate Family
Rating (CFR) and Probability of Default Rating (PDR) to Caa1 from
B3. The action follows the company's weak first quarter results
and expectations for a slower than expected recovery in volumes in
2012.
In the Aug. 15, 2012, edition of the TCR, Standard & Poor's
Ratings Services lowered all of its ratings on MPM by two notches,
including the corporate credit rating to 'CCC' from 'B-'. The
outlook is negative.
"The likelihood that earnings and cash flow will remain very weak
for the next several quarters prompted the downgrade," explained
credit analyst Cynthia Werneth. "In our view, leverage is
unsustainably high, with total adjusted debt to EBITDA above 15x
as of June 30, 2012."
MORRIER RANCH: Chapter 11 Reorganization Case Dismissed
-------------------------------------------------------
The Hon. Patricia C. Williams of the U.S. Bankruptcy Court for the
Eastern District Of Washington dismissed the Chapter 11 case of
Morrier Ranch, Inc.
As reported in the Troubled Company Reporter on Sept. 25, 2012,
the Debtor related that it has reached an agreement with the
holder of the Key Bank claim regarding restructure of the claim
and has reached a tentative agreement with Banner Bank
restructuring the balance of their claim.
The Debtor believed that all other claims listed in the schedules
or filed with the Court are held by insiders or can and will be
paid in the ordinary course of business after the dismissal of the
case.
About Morrier Ranch
Yakima, Washington-based Morrier Ranch, Inc., aka Morrier Hop
Storage, filed for Chapter 11 bankruptcy (Bankr. E.D. Wash. Case
No. 12-00179) on Jan. 17, 2012. Judge Patricia C. Williams
presides over the case, taking the assignment from Judge Frank L.
Kurtz. James P. Hurley, Esq., at Hurley & Lara, served as the
Debtor's counsel. In its schedules, the Debtor disclosed $19.7
million in total assets and $6.02 million in total liabilities.
Robert D. Miller Jr., U.S. Trustee for Region 18, has informed the
U.S. Bankruptcy Court for the Eastern District of Washington that
he is not appointing an unsecured creditors' committee in this
case at the present time, due to lack of response to the request
for notice of willingness to serve on the unsecured creditors'
committee.
MUSCLEPHARM CORP: Board OKs $625,000 Bonuses for Executives
-----------------------------------------------------------
The Compensation Committee of the Board of Directors of
MusclePharm Corporation approved 2012 target bonuses for its
executive officers as follows:
2012
Executive Officer Position Target Bonus
----------------- -------- ------------
Brad J. Pyatt CEO and Pres. $160,000
John H. Bluher EVP - COO $130,000
Cory J. Gregory Executive Vice President $130,000
Jeremy R. DeLuca EVP - CMO $130,000
Gary Davis Chief Financial Officer $75,000
The Employment Agreements are for an initial term ending Dec. 31,
2014. However, the Employment Agreements entered into with Mr.
Pyatt and Mr. DeLuca provide for an initial term ending Dec. 31,
2015.
Under the terms of the Employment Agreements, each Officer will
receive an annual base salary subject to any increase the
Compensation Committee may deem appropriate from time to time.
Name Annual Base Salary
---- ------------------
Brad J. Pyatt $350,000
Gary Davis $130,000 ($200,000 beginning Jan. 1, 2013)
John H. Bluher $300,000
Jeremy R. DeLuca $175,000 ($320,000 beginning Jan. 1, 2013)
Cory J. Gregory $212,000
In addition, the Officers will be eligible to receive one or more
annual cash bonuses and grants of stock options, restricted stock
or other equity-related awards from the Company's various equity
compensation plans, as determined by the Compensation Committee.
A copy of the Form 8-K is available for free at:
http://is.gd/ix5kJI
About MusclePharm
Headquartered in Denver, Colorado, MusclePharm Corporation
(OTC BB: MSLP) -- http://www.muslepharm.com/-- is a healthy life-
style company that develops and manufactures a full line of
National Science Foundation approved nutritional supplements that
are 100% free of banned substances. MusclePharm is sold in over
120 countries and available in over 5,000 U.S. retail outlets,
including GNC and Vitamin Shoppe. MusclePharm products are also
sold in over 100 online stores, including bodybuilding.com,
Amazon.com and Vitacost.com.
In the auditors' report accompanying the consolidated financial
statements for the year ended Dec. 31, 2011, Berman & Company,
P.A., in Boca Raton, Florida, expressed substantial doubt about
the Company's ability to continue as a going concern. The
independent auditors noted that the Company has a net loss of
$23,280,950 and net cash used in operations of $5,801,761 for the
year ended Dec. 31, 2011; and has a working capital deficit of
$13,693,267, and a stockholders' deficit of $12,971,212 at
Dec. 31, 2011.
The Company reported a net loss of $23.28 million in 2011,
compared with a net loss of $19.56 million in 2010.
The Company's balance sheet at June 30, 2012, showed $4.72 million
in total assets, $15.73 million in total liabilities, and a
$11.01 million in total stockholders' deficit.
NAVIOS MARITIME: Moody's Cuts CFR/PDR to 'B2'; Outlook Stable
-------------------------------------------------------------
Moody's Investors Service has downgraded the corporate family
rating (CFR) and probability of default rating (PDR) of Navios
Maritime Holdings, Inc. (Navios Holdings) to B2 from B1.
Concurrently, Moody's has also downgraded the rating on Navios
Holdings' $488 million of senior secured notes (due in 2017) to B1
(LGD3, 33%) from Ba3, and the rating on the company's $350 million
of senior unsecured notes (due in 2019) to Caa1 (LGD5, 87%) from
B3. The outlook on the ratings is stable.
Ratings Rationale
"The rating action reflects our view that, over the next 12-18
months, Navios Holding is unlikely to achieve a consolidated
financial profile that would be commensurate with the guidance
previously outlined for maintaining a B1 rating," says Marco
Vetulli, a Moody's Vice President - Senior Credit Officer and lead
analyst for the company.
Moody's had previously indicated that for Navios Holdings to
retain its B1 rating, it would need to maintain its operating
profile and improve its credit metrics on a sustainable basis by
demonstrating a combination of any of the following metrics: (1)
debt/EBITDA of less than 6.0x; and/or (2) EBIT/interest coverage
above 1.5x; and/or (3) improved free cash flow (FCF) generation
approaching 3% of the company's total debt. However, the dry-bulk
shipping market is currently under pressure, with freight rates
fluctuating at levels approaching historical lows since the start
of Q2 2012, and Moody's expects that market conditions will remain
challenging well into 2013.
To date, Navios Holdings has not been significantly affected by
the aforementioned conditions thanks to its portfolio of long-term
contracts that were concluded when freight rates were higher, and
which currently confer some protection from the low freight-rate
environment. However, Moody's says that the degree of protection
conferred to Navios Holdings is likely to diminish over time as
the existing freight contracts expire, and the company will come
under pressure to offer lower freight rates. Moreover, giving the
challenging condition of the dry bulk market, it has also
increased the risk that some of current charterers may ask for a
renegotiation of the current contracts. Moody's therefore expects
that Navios Holdings' credit metrics will deteriorate at the end
of the current year to a level commensurate with a B2 rating.
Moody's notes positively that Navios Holdings' CFR is supported by
the company's relatively moderate business risk, stemming from a
combination of the following: (1) the company's charter policy
(based predominantly on long-term contracts), which provides good
revenue visibility; (2) a strong customer base, and the protection
afforded to all the company's long-term revenues by credit
insurance granted by an Aa3-rated insurance company of a European
Union member state; (3) operating costs that are among the lowest
in the industry, as a result of both the low average age of Navios
Holdings' fleet (5.4 years) and its efficient in-house fleet
management strategy; (4) the company's strong asset base (albeit
largely encumbered); and (5) the company's adequate liquidity.
While Moody's expects Navios' operating profile to deteriorate
over the coming months/ quarters in conjunction with the harsh
trading environment, the stable rating outlook is based on Moody's
expectation that the company's leverage and liquidity profiles
will stabilise to adequate levels for the B2 rating category, and
enable Navios to maintain sufficient headroom under its financial
covenants.
What Could Change the Ratings Up/Down
Moody's notes that Navios Holdings' CFR and PDR could be
positively affected -- albeit only in the longer term -- if the
company demonstrated its ability to achieve, on a sustainable
basis, the following credit metrics: (1) adjusted EBIT/interest
above 1.5x; and (2) debt/EBITDA below 6.0x.
Conversely, Navios Holdings' ratings could come under downward
pressure if the company were to record any of the following: (1)
debt/EBITDA trending towards 7.0x; and/or (2) EBIT/interest
coverage trending towards 1.0x. Furthermore, the ratings would
face immediate downward pressure if Moody's identified any
weaknesses in Navios Holdings' liquidity profile.
Principal Methodology
The principal methodology used in rating Navios Maritime Holdings,
Inc. (Navios Holdings) was the Global Shipping 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.
Navios Maritime Holdings, Inc. (Navios Holdings) is a vertically
integrated global seaborne shipping company, specialising in the
worldwide carriage, trade, storage and other related logistics of
international dry-bulk cargo transportation. As of end of June
2012, the company controlled a fleet of 52 vessels with an
aggregate carrying capacity of 5.5 million deadweight tonnes (dwt)
and an average age of 5.4 years. The group's revenues totalled
$666 million as of the end of June 2012 on a last-12-months basis.
NAVISTAR INT'L: Offering Doesn't Alleviate Significant Concerns
---------------------------------------------------------------
Navistar's common stock offering does not alleviate significant
concerns that Fitch Ratings has about the company's liquidity and
negative free cash flow over the next three quarters.
Navistar (NAV) priced an offering of common stock for
approximately $200 million. Proceeds will support the company's
liquidity while it addresses numerous operating challenges
including the transition of its engine strategy, an ongoing review
of its non-core businesses, weakening industry demand for heavy
and medium duty trucks, NAV's loss of market share, and
restructuring. The equity issuance, together with several other
recent positive developments, could potentially support a return
to a Stable rating outlook in the future.
However, Fitch still believes that Navistar's near term liquidity
and free cash flow will continue to be pressured by some of the
operating challenges mentioned above. Also adding to Fitch's
concern is margin pressure associated with the new engine
strategy, future pension contributions, the cost of non-
conformance penalties, and elevated warranty costs. The negative
impact of these items should be partly offset by cost reductions
associated with NAV's restructuring actions.
In addition to NAV's equity issuance, recent developments include
a final agreement with Cummins about the addition of SCR
technology to NAV's engines and the use of Cummins' 15 liter
engines in some NAV trucks. The agreement reduces execution risks
surrounding NAV's engine strategy, which will be implemented
gradually beginning in early fiscal 2013. The agreement also
mitigates concerns about NAV's ability to sell trucks with
emissions compliant engines. Also, NAV reached agreements with
two large shareholders to replace certain board members. The
shareholders agreed to support the board's director nominees in
fiscal 2013 which should provide some stability in the near term.
Manufacturing debt/EBITDA increased materially to 5.7x as of July
31, 2012, and above 7x adjusted for a new $1 billion term loan in
August 2012. Leverage could remain high through the next 12 - 18
months before NAV's revised engine strategy and other strategic
and operating changes become fully effective. NAV's manufacturing
cash and marketable securities at July 31, 2012 (adjusted to
include the new $1 billion term loan and a simultaneous reduction
of NAV's ABL facility) exceeded $1.3 billion. The amount excludes
proceeds from NAV's equity issuance. NAV has projected it will
burn $325 - $475 million of cash in the current quarter ending
Oct. 31. Fitch believes this is a realistic forecast and could be
followed by additional cash burn in the first half of fiscal 2013.
Fitch could take a positive rating action if:
-- Manufacturing FCF returns toward a breakeven level during
fiscal 2013,
-- NAV's new engine strategy is implemented on time and at
moderate cost
-- The company's market share begins to recover, and leverage
declines materially.
Conversely, Fitch could take a negative rating action if:
-- NAV's engine transition is delayed or FCF does not begin to
recover in early fiscal 2013.
As of July 31, 2012, Fitch's ratings cover approximately $3
billion of debt at NAV, adjusted for the $1 billion term loan and
reduction of NAV's ABL facility, and $2.3 billion of outstanding
debt at the Financial Services segment, the majority of which is
at NFC. Fitch continues to view NFC's performance, asset quality
and leverage levels as neutral to NAV's ratings.
Fitch's currently rates Navistar as follows:
Navistar International Corporation
-- Long-term IDR 'CCC';
-- Senior unsecured notes 'CCC-'/'RR5';
-- Senior subordinated notes 'CC'/'RR6'.
Navistar, Inc.
-- Long-term IDR 'CCC';
-- Senior secured bank term loan 'B'/'RR1'.
Cook County, Illinois
-- Recovery zone revenue facility bonds (Navistar International
Corporation Project) series 2010 'CCC-'.
Illinois Finance Authority (IFA)
-- Recovery zone revenue facility bonds (Navistar International
Corporation Project) series 2010 'CCC-'.
Navistar Financial Corporation
-- Long-term IDR 'CCC';
-- Senior secured bank credit facilities 'CCC-'/'RR5'.
NAVISTAR INTERNATIONAL: M. Rachesky Discloses 14.9% Equity Stake
----------------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Mark H. Rachesky, M.D., and his affiliates
disclosed that, as of Oct. 24, 2012, they beneficially own
11,873,000 shares of common stock of Navistar International
Corporation representing 14.98% of the shares outstanding.
Mr. Rachesky previously reported beneficial ownership of
10,275,000 common shares as of Oct. 5, 2012. A copy of the
amended filing is available for free at http://is.gd/MNBv3F
About Navistar International
Navistar International Corporation (NYSE: NAV) --
http://www.Navistar.com/-- is a holding company whose
subsidiaries and affiliates subsidiaries produce International(R)
brand commercial and military trucks, MaxxForce(R) brand diesel
engines, IC Bus(TM) brand school and commercial buses, Monaco RV
brands of recreational vehicles, and Workhorse(R) brand chassis
for motor homes and step vans. It also is a private-label
designer and manufacturer of diesel engines for the pickup truck,
van and SUV markets. The company also provides truck and diesel
engine parts and service. Another affiliate offers financing
services.
The Company's balance sheet at July 31, 2012, showed
$11.14 billion in total assets, $11.50 billion in total
liabilities, and a $363 million total stockholders' deficit.
* * *
In the Aug. 3, 2012, edition of the TCR, Moody's Investors Service
lowered Navistar International Corporation's Corporate Family
Rating (CFR), Probability of Default Rating (PDR), and senior note
rating to B2 from B1. The downgrade of Navistar's ratings
reflects the significant challenges the company will face during
the next eighteen months in re-establishing the profitability and
competitiveness of its US and Canadian truck operations in light
of the failure to achieve EPA certification of its EGR emissions
technology, the significant reductions in military revenues and
substantially higher engine warranty reserves.
As reported by the TCR on June 13, 2012, Standard & Poor's Ratings
Services lowered its ratings on Navistar International Corp.,
including the corporate credit rating to 'B+', from 'BB-'. "The
downgrade and CreditWatch placement reflect the company's
operational and financial setbacks in recent months," said
Standard & Poor's credit analyst Sol Samson.
In the Sept. 19, 2012, edition of the TCR, Fitch Ratings has
downgraded the Issuer Default Ratings (IDR) for Navistar
International Corporation (NAV) and Navistar Financial
Corporation (NFC) to 'CCC' from 'B-'. The rating Outlook is
Negative. The rating downgrades and Negative Rating Outlook
reflect the company's heightened liquidity risk and negative
manufacturing free cash flow (FCF) which could continue into 2013.
NAVISTAR INTERNATIONAL: GAMCO Asset Discloses 6.2% Equity Stake
---------------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, GAMCO Asset Management, Inc., and its
affiliates disclosed that, as of Oct. 25, 2012, they beneficially
own 4,256,461 shares of common stock of Navistar International
Corporation representing 6.20% of the shares outstanding. GAMCO
Asset previously reported beneficial ownership of 4,246,911 common
shares or a 6.19% equity stake as of Oct. 19, 2012. A copy of the
amended filing is available for free at http://is.gd/BTeVs5
About Navistar International
Navistar International Corporation (NYSE: NAV) --
http://www.Navistar.com/-- is a holding company whose
subsidiaries and affiliates subsidiaries produce International(R)
brand commercial and military trucks, MaxxForce(R) brand diesel
engines, IC Bus(TM) brand school and commercial buses, Monaco RV
brands of recreational vehicles, and Workhorse(R) brand chassis
for motor homes and step vans. It also is a private-label
designer and manufacturer of diesel engines for the pickup truck,
van and SUV markets. The company also provides truck and diesel
engine parts and service. Another affiliate offers financing
services.
The Company's balance sheet at July 31, 2012, showed
$11.14 billion in total assets, $11.50 billion in total
liabilities, and a $363 million total stockholders' deficit.
* * *
In the Aug. 3, 2012, edition of the TCR, Moody's Investors Service
lowered Navistar International Corporation's Corporate Family
Rating (CFR), Probability of Default Rating (PDR), and senior note
rating to B2 from B1. The downgrade of Navistar's ratings
reflects the significant challenges the company will face during
the next eighteen months in re-establishing the profitability and
competitiveness of its US and Canadian truck operations in light
of the failure to achieve EPA certification of its EGR emissions
technology, the significant reductions in military revenues and
substantially higher engine warranty reserves.
As reported by the TCR on June 13, 2012, Standard & Poor's Ratings
Services lowered its ratings on Navistar International Corp.,
including the corporate credit rating to 'B+', from 'BB-'. "The
downgrade and CreditWatch placement reflect the company's
operational and financial setbacks in recent months," said
Standard & Poor's credit analyst Sol Samson.
In the Sept. 19, 2012, edition of the TCR, Fitch Ratings has
downgraded the Issuer Default Ratings (IDR) for Navistar
International Corporation (NAV) and Navistar Financial
Corporation (NFC) to 'CCC' from 'B-'. The rating Outlook is
Negative. The rating downgrades and Negative Rating Outlook
reflect the company's heightened liquidity risk and negative
manufacturing free cash flow (FCF) which could continue into 2013.
NAVISTAR INTERNATIONAL: Carl Icahn Discloses 14.9% Equity Stake
---------------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Carl C. Icahn and his affiliates disclosed
that, as of Oct. 25, 2012, they beneficially own 11,845,167 shares
of common stock Navistar International Corporation representing
14.95% of the shares outstanding. Mr. Icahn previously reported
beneficial ownership of 9,038,814 common shares or a $13.19%
equity stake as of July 11, 2012. A copy of the amended filing is
available for free at http://is.gd/VD7vMV
About Navistar International
Navistar International Corporation (NYSE: NAV) --
http://www.Navistar.com/-- is a holding company whose
subsidiaries and affiliates subsidiaries produce International(R)
brand commercial and military trucks, MaxxForce(R) brand diesel
engines, IC Bus(TM) brand school and commercial buses, Monaco RV
brands of recreational vehicles, and Workhorse(R) brand chassis
for motor homes and step vans. It also is a private-label
designer and manufacturer of diesel engines for the pickup truck,
van and SUV markets. The company also provides truck and diesel
engine parts and service. Another affiliate offers financing
services.
The Company's balance sheet at July 31, 2012, showed
$11.14 billion in total assets, $11.50 billion in total
liabilities, and a $363 million total stockholders' deficit.
* * *
In the Aug. 3, 2012, edition of the TCR, Moody's Investors Service
lowered Navistar International Corporation's Corporate Family
Rating (CFR), Probability of Default Rating (PDR), and senior note
rating to B2 from B1. The downgrade of Navistar's ratings
reflects the significant challenges the company will face during
the next eighteen months in re-establishing the profitability and
competitiveness of its US and Canadian truck operations in light
of the failure to achieve EPA certification of its EGR emissions
technology, the significant reductions in military revenues and
substantially higher engine warranty reserves.
As reported by the TCR on June 13, 2012, Standard & Poor's Ratings
Services lowered its ratings on Navistar International Corp.,
including the corporate credit rating to 'B+', from 'BB-'. "The
downgrade and CreditWatch placement reflect the company's
operational and financial setbacks in recent months," said
Standard & Poor's credit analyst Sol Samson.
In the Sept. 19, 2012, edition of the TCR, Fitch Ratings has
downgraded the Issuer Default Ratings (IDR) for Navistar
International Corporation (NAV) and Navistar Financial
Corporation (NFC) to 'CCC' from 'B-'. The rating Outlook is
Negative. The rating downgrades and Negative Rating Outlook
reflect the company's heightened liquidity risk and negative
manufacturing free cash flow (FCF) which could continue into 2013.
NEXSTAR BROADCASTING: Further Amends Mission Credit Facilities
--------------------------------------------------------------
Nexstar Broadcasting, Inc., an indirect wholly-owned subsidiary of
Nexstar Broadcasting Group, Inc., and Mission Broadcasting, Inc.,
entered into amendments to each of their senior secured credit
facilities.
The amendments, among other things, (i) exclude, through and
including Dec. 31, 2012, from the calculation of indebtedness, the
proceeds of the senior notes due 2020 that Nexstar Broadcasting
intends to offer, (ii) exclude the net proceeds of not more than
$250,000,000 received in connection with the issuance of the notes
from the anti-cash hoarding mandatory prepayment requirement,
(iii) permit Nexstar Broadcasting to hold the net proceeds of the
notes, pending repurchase of its outstanding 7% Senior
Subordinated Notes due 2014 and 7% Senior Subordinated PIK Notes
due 2014 and refinancing of a portion of the borrowings
outstanding under its senior secured credit facilities with such
proceeds, until Dec. 31, 2012, and (iv) require Nexstar
Broadcasting to, not later than Dec. 31, 2012, consummate a tender
offer for any and all of its 2014 Notes and 2014 PIK Notes.
Copies of the Amendments are available for free at:
http://is.gd/O5dcRq
http://is.gd/BZYdag
About Nexstar Broadcasting Group
Irving, Texas-based Nexstar Broadcasting Group Inc. currently
owns, operates, programs or provides sales and other services to
62 television stations in 34 markets in the states of Illinois,
Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania,
Louisiana, Arkansas, Alabama, New York, Rhode Island, Utah and
Florida. Nexstar's television station group includes affiliates
of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches
approximately 13 million viewers or approximately 11.5% of all
U.S. television households.
The Company reported a net loss of $11.89 million in 2011, a net
loss of $1.81 million in 2010, and a net loss of $12.61 million
in 2009.
The Company's balance sheet at June 30, 2012, showed $566.34
million in total assets, $736.93 million in total liabilities and
a $170.58 million total stockholders' deficit.
* * *
As reported by the TCR on Oct. 26, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Irving, Texas-based
Nexstar Broadcasting Group Inc. and on certain subsidiaries to
'B+' from 'B'. "The rating action reflects our view that the
stations that Nexstar will acquire from Newport will improve the
company's business risk profile and that trailing-eight-quarter
leverage will improve to 6x or less over the intermediate term,"
said Standard & Poor's credit analyst Daniel Haines.
In the Oct. 26, 2012, edition of the TCR, Moody's Investors
Service upgraded the corporate family and probability of default
ratings of Nexstar Broadcasting, Inc. (Nexstar) to B2 from B3.
The upgrade and positive outlook incorporate expectations for
continued improvement in the credit profile resulting from both
the transaction and Nexstar's operating performance.
NEXSTAR BROADCASTING: Prices $250 Million Senior Notes at Par
-------------------------------------------------------------
Nexstar Broadcasting Group, Inc's wholly-owned subsidiary, Nexstar
Broadcasting, Inc., has priced an offering of $250 million
aggregate principal amount of 6.875% senior notes due 2020. The
sale of the notes is expected to be completed on or about Nov. 9,
2012, subject to customary closing conditions.
The notes were priced at par. The notes will be senior unsecured
obligations of Nexstar Broadcasting and will be guaranteed by the
Company, Mission Broadcasting, Inc., and all of Nexstar
Broadcasting and Mission's future domestic restricted subsidiaries
on a senior unsecured basis.
Nexstar Broadcasting intends to use the net proceeds from the
offering to repurchase any and all of its outstanding 7% Senior
Subordinated Notes due 2014 and 7% Senior Subordinated PIK Notes
due 2014, refinance a portion of its existing senior secured
credit facilities and pay related fees and expenses.
About Nexstar Broadcasting Group
Irving, Texas-based Nexstar Broadcasting Group Inc. currently
owns, operates, programs or provides sales and other services to
62 television stations in 34 markets in the states of Illinois,
Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania,
Louisiana, Arkansas, Alabama, New York, Rhode Island, Utah and
Florida. Nexstar's television station group includes affiliates
of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches
approximately 13 million viewers or approximately 11.5% of all
U.S. television households.
The Company reported a net loss of $11.89 million in 2011, a net
loss of $1.81 million in 2010, and a net loss of $12.61 million
in 2009.
The Company's balance sheet at June 30, 2012, showed $566.34
million in total assets, $736.93 million in total liabilities and
a $170.58 million total stockholders' deficit.
* * *
As reported by the TCR on Oct. 26, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Irving, Texas-based
Nexstar Broadcasting Group Inc. and on certain subsidiaries to
'B+' from 'B'. "The rating action reflects our view that the
stations that Nexstar will acquire from Newport will improve the
company's business risk profile and that trailing-eight-quarter
leverage will improve to 6x or less over the intermediate term,"
said Standard & Poor's credit analyst Daniel Haines.
In the Oct. 26, 2012, edition of the TCR, Moody's Investors
Service upgraded the corporate family and probability of default
ratings of Nexstar Broadcasting, Inc. (Nexstar) to B2 from B3.
The upgrade and positive outlook incorporate expectations for
continued improvement in the credit profile resulting from both
the transaction and Nexstar's operating performance.
NEXSTAR BROADCASTING: Launches Cash Tender Offer of Senior Notes
----------------------------------------------------------------
Nexstar Broadcasting Group, Inc.'s its wholly-owned subsidiary,
Nexstar Broadcasting, Inc., has commenced a cash tender offer and
consent solicitation with respect to Nexstar Broadcasting's
outstanding $3,912,000 aggregate principal amount of 7% Senior
Subordinated Notes due 2014 and $112,593,449 aggregate principal
amount of 7% Senior Subordinated PIK Notes due 2014. The tender
offer and consent solicitation will expire at Midnight, New York
City time, on Nov. 21, 2012, unless extended or earlier terminated
by Nexstar Broadcasting.
Holders who validly tender (and do not validly withdraw) their
Existing Notes on or prior to the consent payment deadline of 5:00
p.m., New York City time, on Nov. 6, 2012, and whose Existing
Notes are accepted for payment, will receive total consideration
equal to $1,003.00 per $1,000 principal amount of the Existing
Notes, plus any accrued and unpaid interest on the Existing Notes
up to, but not including, the first settlement date. The Total
Consideration includes a consent payment of $10.00 per $1,000
principal amount of the Existing Notes.
Holders who validly tender (and do not validly withdraw) their
Existing Notes after the Consent Payment Deadline, but on or prior
to the Expiration Time, and whose Existing Notes are accepted for
payment, will receive the tender consideration equal to $993.00
per $1,000 principal amount of the Existing Notes, plus any
accrued and unpaid interest on the Existing Notes up to, but not
including, the final settlement date. Holders of Existing Notes
who tender after the Consent Payment Deadline will not receive a
consent payment.
Holders who tender Existing Notes on or prior to the Consent
Payment Deadline may withdraw such Existing Notes at any time on
or prior to the Consent Payment Deadline.
In connection with the tender offer, Nexstar Broadcasting is also
soliciting consents from the holders of each series of Existing
Notes for certain proposed amendments that would eliminate
substantially all restrictive covenants contained in the
applicable indenture governing such notes. Adoption of the
proposed amendments with respect to the Existing Notes requires
the consent of the holders of at least a majority of the
outstanding principal amount of the Existing Notes of that series.
Holders who tender their Existing Notes will be deemed to consent
to the proposed amendments and holders may not deliver consents to
the proposed amendments without tendering their Existing Notes in
the tender offer.
Nexstar Broadcasting has engaged BofA Merrill Lynch to act as
dealer manager and solicitation agent for the tender offer and
consent solicitation and Global Bondholder Services Corporation to
act as information agent and depositary for the tender offer.
Requests for documents may be directed to Global Bondholder
Services Corporation at (866) 389-1500 (toll free) or (212) 430-
3774 (collect). Questions regarding the tender offer or consent
solicitation may be directed to BofA Merrill Lynch at (888) 292-
0070 (toll free) or (646) 855-3401 (collect).
About Nexstar Broadcasting Group
Irving, Texas-based Nexstar Broadcasting Group Inc. currently
owns, operates, programs or provides sales and other services to
62 television stations in 34 markets in the states of Illinois,
Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania,
Louisiana, Arkansas, Alabama, New York, Rhode Island, Utah and
Florida. Nexstar's television station group includes affiliates
of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches
approximately 13 million viewers or approximately 11.5% of all
U.S. television households.
The Company reported a net loss of $11.89 million in 2011, a net
loss of $1.81 million in 2010, and a net loss of $12.61 million
in 2009.
The Company's balance sheet at June 30, 2012, showed $566.34
million in total assets, $736.93 million in total liabilities and
a $170.58 million total stockholders' deficit.
* * *
As reported by the TCR on Oct. 26, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Irving, Texas-based
Nexstar Broadcasting Group Inc. and on certain subsidiaries to
'B+' from 'B'. "The rating action reflects our view that the
stations that Nexstar will acquire from Newport will improve the
company's business risk profile and that trailing-eight-quarter
leverage will improve to 6x or less over the intermediate term,"
said Standard & Poor's credit analyst Daniel Haines.
In the Oct. 26, 2012, edition of the TCR, Moody's Investors
Service upgraded the corporate family and probability of default
ratings of Nexstar Broadcasting, Inc. (Nexstar) to B2 from B3.
The upgrade and positive outlook incorporate expectations for
continued improvement in the credit profile resulting from both
the transaction and Nexstar's operating performance.
NEXSTAR BROADCASTING: Offering $200 Million of Senior Notes
-----------------------------------------------------------
Nexstar Broadcasting Group, Inc.'s wholly-owned subsidiary,
Nexstar Broadcasting, Inc., intends to offer, subject to market
and other customary conditions, up to $200 million in aggregate
principal amount of new senior notes due 2020 in a private
offering. The Notes will be senior unsecured obligations of
Nexstar Broadcasting and will be guaranteed by the Company and
Mission Broadcasting Inc.
Nexstar Broadcasting intends to use the net proceeds from the
proposed offering to repurchase all of its outstanding 7% Senior
Subordinated Notes due 2014 and its 7% Senior Subordinated PIK
Notes due 2014, and refinance a portion of its existing senior
secured credit facilities and pay related fees and expenses.
The notes and related guarantees will be offered in the United
States only to qualified institutional buyers pursuant to Rule
144A under the Securities Act of 1933, as amended, and outside the
United States, only to non-U.S. investors pursuant to Regulation S
under the Securities Act. The notes and the related guarantees
have not been registered under the Securities Act or the
securities laws of any other jurisdiction and may not be offered
or sold in the United States absent registration or an applicable
exemption from registration requirements.
About Nexstar Broadcasting Group
Irving, Texas-based Nexstar Broadcasting Group Inc. currently
owns, operates, programs or provides sales and other services to
62 television stations in 34 markets in the states of Illinois,
Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania,
Louisiana, Arkansas, Alabama, New York, Rhode Island, Utah and
Florida. Nexstar's television station group includes affiliates
of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches
approximately 13 million viewers or approximately 11.5% of all
U.S. television households.
The Company reported a net loss of $11.89 million in 2011, a net
loss of $1.81 million in 2010, and a net loss of $12.61 million
in 2009.
The Company's balance sheet at June 30, 2012, showed $566.34
million in total assets, $736.93 million in total liabilities and
a $170.58 million total stockholders' deficit.
* * *
As reported by the Troubled Company Reporter on Aug. 30, 2010,
Standard & Poor's Ratings Services raised its corporate credit
rating on Nexstar Broadcasting Group to 'B' from 'B-'. The rating
outlook is stable.
"The 'B' corporate credit rating reflects S&P's expectation that
Nexstar's core ad revenue will continue growing modestly in 2010
and 2011," said Standard & Poor's credit analyst Deborah Kinzer.
The EBITDA growth resulting from the rebound in core advertising,
combined with political ad revenue from the 2010 midterm
elections, should, in S&P's view, enable Nexstar to reduce its
leverage significantly by the end of the year.
NEXSTAR BROADCASTING: S&P Rates $250MM Senior Unsecured Notes 'B-'
------------------------------------------------------------------
Standard & Poor's Ratings Services said its ratings on Irving,
Texas-based Nexstar Broadcasting Group Inc. and on certain
subsidiaries are unaffected by the upsizing of the recently rated
senior unsecured notes. Nexstar increased the size of the notes
to $250 million from the proposed amount of $200 million. Pro
forma leverage remains in the low-6x area as the company will now
draw less on the revolver to fund the acquisition of stations from
Newport Television. "The rating on the notes is 'B-' with a
recovery rating of '6', indicating our expectation for negligible
(0% to 10%) recovery for lenders in the event of a payment
default," S&P said.
RATINGS LIST
Ratings Unchanged
Nexstar Broadcasting Group Inc.
Nexstar Finance Holdings LLC
Nexstar Finance Holdings Inc.
Nexstar Broadcasting Inc.
Corporate Credit Rating B+/Stable/--
Nexstar Broadcasting Inc.
Mission Broadcasting Inc.
Senior Unsecured
$250M 7% nts due 2020* B-
Recovery Rating 6
*Upsized from $200 million
OILSANDS QUEST: Investors $136-Mil. Overvaluation Suit Allowed
--------------------------------------------------------------
Stewart Bishop at Bankruptcy Law360 reports that U.S. District
Judge Jed S. Rakoff on Tuesday greenlighted a putative investor
class action against the former top brass of Oilsands Quest Inc.,
which accuses the company of overstating asset valuations by more
than $136 million, after a Canadian bankruptcy court lifted a stay
in a related case.
About Oilsands Quest
Oilsands Quest Inc. -- http://www.oilsandsquest.com/-- is
exploring and developing oil sands permits and licenses, located
in Saskatchewan and Alberta, and developing Saskatchewan's first
commercial oil sands discovery.
The Company reported a net loss of US$10.3 million for the six
months ended Oct. 31, 2011, compared with a net loss of
US$25.1 million for the six months ended Oct. 31, 2010.
The Company's balance sheet at Oct. 31, 2011, showed
US$156.6 million in total assets, US$33.3 million in total
liabilities, and stockholders' equity of US$123.3 million. As at
Oct. 31, 2011, the Company had a deficit accumulated during the
development phase of US$721.7 million.
On Nov. 29, 2011, the Company and certain of its subsidiaries
voluntarily commenced proceedings under the CCAA obtaining an
Initial Order from the Court of Queen's Bench of Alberta (the
"Court"), in In re Oilsands Quest, Inc., et al., Case No. 1101-
16110.
The CCAA Proceedings were initiated by: Oilsands Quest, Oilsands
Quest Sask Inc., Township Petroleum Corporation, Stripper Energy
Services, Inc., 1291329 Alberta, Ltd., and Oilsands Quest
Technology, Inc.
Under the Initial Order, Ernst & Young, Inc., was appointed by the
Court to monitor the business and affairs of the Oilsands
Entities. Neither of Oilsands' other subsidiaries, 1259882
Alberta, Ltd., and Western Petrochemical Corp., have filed for
creditor protection.
The Company's common shares remain halted from trading until
either a delisting occurs or until the NYSE Amex permits the
resumption of trading.
OVERSEAS SHIPHOLDING: Debt Drops to All-Time Low
------------------------------------------------
Krista Giovacco at Bloomberg News reports that Overseas
Shipholding Group Inc.'s $300 million of 8.125% bonds due in March
2018 fell to the lowest level since they were sold in 2010 as a
group of bondholders hired a legal advisor. The senior unsecured
notes of the largest U.S. tanker company fell 2 cents to 28.5
cents on the dollar to yield 43.2% at 2:32 p.m. in New York,
according to Trace, the bond price reporting system of the
Financial Industry Regulatory Authority.
According to the report, Bracewell & Giuliani LLP is advising a
group of holders of Overseas Shipholding's 8.125%, 8.75% and 7.5%
obligations, according to a statement Oct. 26 distributed by
Business Wire. The New York-based company is "evaluating its
strategic options, including the potential voluntary filing of a
petition for relief to reorganize under Chapter 11 of the
Bankruptcy Code," it said in an Oct. 22 regulatory filing.
About Overseas Shipholding
Overseas Shipholding Group, Inc., headquartered in New York City,
NY, is one of the largest publicly traded tanker companies in the
world, engaged primarily in the ocean transportation of crude oil
and petroleum products.
On Oct. 22, 2012, the Company filed a Form 8-K with the Securities
and Exchange Commission disclosing that on Oct. 19, 2012 "the
Audit Committee of the Board of Directors of the Company, on the
recommendation of management, concluded that the Company's
previously issued financial statements for at least the three
years ended Dec. 31, 2011 and associated interim periods, and for
the fiscal quarters ended March 31 and June 30, 2012, should no
longer be relied upon." The Form 8-K further stated that the
Company is reviewing whether a restatement of those financial
statements may be required and "evaluating its strategic options,
including the potential voluntary filing of a petition for relief
to reorganize under Chapter 11 of the Bankruptcy Code."
As a result of this news, OSG's stock price declined more than 60%
from the previous trading day's closing price of $3.25 per share
on Oct. 19, 2012, to close at $1.23 per share on Oct. 22, 2012 on
extremely heavy volume of more than 16 million shares traded.
PATRIOT COAL: UMW Encouraged Workers' Letters to Bankruptcy Judge
-----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that hundreds of Patriot Coal Corp. retired workers wrote
to the bankruptcy judge in New York with encouragement from the
United Mine Workers of American union. U.S. Bankruptcy Judge
Shelley C. Chapman asked the union to explain why so many letters
were arriving. The union responded with an affidavit filed in
bankruptcy court Oct. 23 by Cecil Roberts, executive assistant to
the union president.
According to the report, in late September, the union wrote to
members and retirees "encouraging" them to write the judge,
"letting her know about your illness and what would happen if you
lost your health coverage," Ms. Roberts said in the court filing.
"I ask that any letters be courteous and non-threatening."
The report relates that the letter to the membership says the
union plans to have volunteers attend court hearings. The union
said it would pay transportation, lodging and a daily allowance.
The report notes that Ms. Roberts explained the history of the
promise to the country's mine workers that they would receive
retirement and health benefits for life. Following publicity that
Patriot intended to shed retiree benefits through bankruptcy
court, Ms. Roberts said, "the level of concern by our members and
their families over these issues far exceeds anything I have
encountered over any other issue." Judge Chapman is deciding
whether the coal producer's bankruptcy should remain in New York
or be transferred to West Virginia, where most of the mines are
located, or to St. Louis, home to the headquarters. The union
wants the case moved to West Virginia.
According to Bloomberg, Patriot's $200 million in 3.25% senior
convertible notes due in 2013 traded on Oct. 22 for 13 cents on
the dollar, according to Trace, the bond-price reporting system of
the Financial Industry Regulatory Authority.
About Patriot Coal
St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer
and marketer of coal in the eastern United States, with 13 active
mining complexes in Appalachia and the Illinois Basin. The
Company ships to domestic and international electricity
generators, industrial users and metallurgical coal customers, and
controls roughly 1.9 billion tons of proven and probable coal
reserves.
Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11
petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y.
Lead Case No. 12-12900) on July 9, 2012. Patriot said it had
$3.57 billion of assets and $3.07 billion of debts, and has
arranged $802 million of financing to continue operations during
the reorganization.
Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone
Advisory Partners LP is serving as financial advisor, and AP
Services, LLC is providing interim management services to Patriot
in connection with the reorganization. Ted Stenger, a Managing
Director at AlixPartners LLP, the parent company of AP Services,
has been named Chief Restructuring Officer of Patriot, reporting
to the Chairman and CEO. GCG, Inc. serves as claims and noticing
agent.
The case has been assigned to Judge Shelley C. Chapman.
The U.S. Trustee appointed a seven-member creditors committee.
PATRIOT COAL: Forms Committee to Study Third-Party Claims
---------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Patriot Coal Corp. is under new leadership, and the
coal producer formed a special committee of the board to oversee
claims the company might bring against third parties.
According to the report, on Wednesday morning Patriot announced
that Irl F. Engelhardt is leaving the company. He was chairman,
chief executive officer and a member of the board. He is replaced
by Bennett K. Hatfield, 55, the new president and CEO. Before
joining Patriot one year ago, he had been with coal producers such
as Arch Coal Inc. and Massey Energy Co.
The report relates that the board formed a "special oversight
committee" to evaluate claims against unnamed third parties,
according to the company's statement. The special committee is
populated with independent directors. Peabody Holding Co. and
Arch Coal were sued in a class action on behalf of more than
10,000 active workers and retirees whose benefits were transferred
to Patriot. The suit was filed in U.S. District Court in
Charleston, West Virginia.
The report notes that the workers contend that Patriot's former
owners promised benefits for life. Mr. Engelhardt had been
chairman of Peabody from 1995 to 2007. The judge in Manhattan is
deciding whether the bankruptcy reorganization should remain in
New York or be transferred to West Virginia, where most of the
mines are located, or to St. Louis, the headquarters. The union
wants the case in West Virginia.
The Bloomberg report discloses that Patriot's $200 million in
3.25% senior convertible notes due 2013 traded on Oct. 22 for 13
cents on the dollar, according to Trace, the bond-price reporting
system of the Financial Industry Regulatory Authority. The
$250 million in 8.25% senior unsecured notes due 2018 traded on
Oct. 23 for 51.25 cents on the dollar, Trace reported.
About Patriot Coal
St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer
and marketer of coal in the eastern United States, with 13 active
mining complexes in Appalachia and the Illinois Basin. The
Company ships to domestic and international electricity
generators, industrial users and metallurgical coal customers, and
controls roughly 1.9 billion tons of proven and probable coal
reserves.
Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11
petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y.
Lead Case No. 12-12900) on July 9, 2012. Patriot said it had
$3.57 billion of assets and $3.07 billion of debts, and has
arranged $802 million of financing to continue operations during
the reorganization.
Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone
Advisory Partners LP is serving as financial advisor, and AP
Services, LLC is providing interim management services to Patriot
in connection with the reorganization. Ted Stenger, a Managing
Director at AlixPartners LLP, the parent company of AP Services,
has been named Chief Restructuring Officer of Patriot, reporting
to the Chairman and CEO. GCG, Inc. serves as claims and noticing
agent.
The case has been assigned to Judge Shelley C. Chapman.
The U.S. Trustee appointed a seven-member creditors committee.
PRESTIGE TRAVEL: Files for Chapter 11; Sues Bank, Hotels
--------------------------------------------------------
Las Vegas-based Prestige Travel, Inc., filed for Chapter 11
bankruptcy (Bankr. D. Nev. Case No. 12-21951) on Oct. 23, 2012,
estimating $0 to $50,000 in assets and $10 million to $50 million
in liabilities. Judge Bruce A. Markell o versees the case.
Prestige Travel is represented by:
Bryan A. Lindsey, Esq.
Samuel A. Schwartz
THE SCHWARTZ LAW FIRM
6623 Las Vegas Blvd. So.,, Ste 300
LAS VEGAS, NV 89119
Tel: (702) 385-5544
Fax: (702) 385-2741
E-mail: bryan@schwartzlawyers.com
sam@schwartzlawyers.com
Kurtzman Carson Consultants LLC serves as the Debtor's claims,
notice and solicitation agent.
Tim O'Reiley at Las Vegas Review-Journal reports that Prestige
Travel filed for Chapter 11 bankruptcy after a disruption in the
credit lines essential to the business. According to the report,
Prestige Travel owes nearly $3 million to MGM Resorts
International properties, $1.3 million to other resorts, $795,000
to Cirque du Soliel shows, plus $1.3 million to American Express
and other amounts to hotels outside Las Vegas.
Las Vegas Review-Journal relates Prestige maintained a $4.75
million letter of credit with City National Bank to satisfy the
hotels that they would be paid if the agency, which collected
money from customers, became insolvent. Prestige attorneys
contend that recent changes in the collateral for the letter of
credit rendered the company insolvent.
Sec. 341 Creditors' Meeting
According to the case docket, the U.S. Trustee will convene a
Meeting of Creditors under 11 U.S.C. Sec. 341 in the Chapter 11
case on Nov. 29, 2012, at 2:00 p.m. at 341s - Foley Bldg, Rm 1500.
The last day to file Proof of Claims is Feb. 27, 2013.
Lawsuits v. Bank, Hotels & Casinos
At the onset of the case, Prestige Travel commenced separate
adversary proceedings against City National Bank, N.A., and
various hotel and casino operators, including MGM Resorts
International, Aria Resort & Casino, LLC, Aria Resort & Casino
Holdings, LLC, Vdara Condo Hotel, LLC, CityCenter Vdara Condo
Hotel Holdings, LLC.
Steve Green, writing for Vegas Inc., reports that Prestige sued
City National Bank to recover a $3.3 million certificate it issued
to the bank to back up letters of credit it has with various
hotels. The lawsuit does not allege wrongdoing on the part of
City National Bank. It says Prestige Travel was insolvent when
the certificate was issued Oct. 4.
Vegas Inc. also reports Prestige filed 33 lawsuits against hotels
and casino companies in bankruptcy court to demand limits on draws
against letters of credit and to require them to honor customer
reservations booked by TripRes, Prestige's online business.
Vegas Inc. reports Prestige has shuttered TripRes.com. Some 90
employees were laid off, leaving about 80 workers mostly involved
with Prestige's traditional bricks and mortar travel agency.
According to Vegas Inc., Prestige said in the lawsuits court
intervention is needed in the coming weeks because after the
bankruptcy filing, several of Prestige's "various hotel and show
partners indicated that they would not honor future hotel and show
bookings previously reserved" by Prestige.
Vegas Inc. also reports that during a hearing Friday, Judge
Markell approved plans for the company to continue operating in
the short term with existing financial resources while attorneys
for Prestige gear up to litigate what appear to be serious
financial disputes with creditors including City National Bank and
MGM Resorts.
According to Vegas Inc., other hotels and casino operators subject
to the lawsuits are Caesars Entertainment Corp., Treasure Island,
the Stratosphere and its sister properties the two Arizona
Charlie's and the Aquarius in Laughlin; the Silver Legacy in Reno,
the Venetian, Wynn Las Vegas, Trump Tower, the South Point, the M
Resort, the Tropicana, the Golden Nugget, the Four Queens, the
Gold Coast and its sister properties the Orleans, the California
and the Fremont; the Hard Rock, the LVH, the Palms, Palms Place,
Hooters, Circus Circus Reno, the Grand Sierra in Reno, the
Riviera, the D, Don Laughlin's Riverside Resort, the Tropicana
Express in Laughlin, the Tuscany and the Sands Regent in Reno.
RENFRO CORP: S&P Affirms 'B' Corp. Credit Rating; Outlook Positive
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on North Carolina-based Renfro Corp. and revised the
rating outlook to positive from stable.
"In addition, we affirmed our 'B' issue-level rating on Renfro's
$164 million term B-1 debt due 2016. We revised the recovery
rating to '3', indicating our expectation of meaningful (50% to
70%) recovery for debtholders in the event of payment default,
from '4'. We estimate there is about $143 million outstanding on
the term B-1 debt as of July 28, 2012," S&P said.
"The rating actions reflect the company's positive operating
performance," said Standard & Poor's credit analyst Jacqueline
Hui. "The company benefited from incremental revenue from its
recently acquired brands and stronger mass channel sales, as well
as improved profitability. An improved mix of higher-margin
branded products, lower cotton costs, better efficiencies, and
increased pricing contributed to the company's higher EBITDA
margin. We expect positive operating results to continue over the
next year and for the company to further reduce debt with its
excess cash flow."
The ratings on apparel manufacturer Renfro reflect Standard &
Poor's view that the company's financial profile has strengthened
to "significant" from "aggressive" due to its stronger credit
metrics. Renfro's business risk profile remains "vulnerable",
given its participation in the highly competitive apparel
manufacturing industry and its narrow product focus, in S&P's
view.
RG STEEL: Raising $5.6 Million From Iron Ore Sale
-------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that RG Steel LLC is raising about $5.6 million from the
sale of iron ore pellets at a plant in Warren, Ohio. CJ Betters
Enterprises Inc. paid $16 million for the Ohio plant, although the
iron ore wasn't included in the sale. RG says it could sell the
pellets in the ordinary course of business without court approval.
According to the report, after marketing, an affiliate of steel
producer ArcelorMittal made the best offer of $5.6 million for the
approximately 100,000 tons of pellets. The buyer insisted on
having a comfort order from the bankruptcy court blessing the
sale. RG is asking the bankruptcy judge in Delaware for expedited
sale approval on Oct. 29.
About RG Steel
RG Steel LLC -- http://www.rg-steel.com/-- is the United States'
fourth-largest flat-rolled steel producer with annual steelmaking
capacity of 7.5 million tons. It was formed in March 2011
following the purchase of three steel facilities located in
Sparrows Point, Maryland; Wheeling, West Virginia and Warren,
Ohio, from entities related to Severstal US Holdings LLC. RG
Steel also owns finishing facilities in Yorkville and Martins
Ferry, Ohio. It also owns Wheeling Corrugating Company and has a
50% ownership in Mountain State Carbon and Ohio Coatings Company.
RG Steel along with affiliates, including WP Steel Venture LLC,
sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12-
11661) on May 31, 2012, to pursue a sale of the business. The
bankruptcy was precipitated by liquidity shortfall and a dispute
with Mountain State Carbon, LLC, and a Severstal affiliate, that
restricted the shipment of coke used in the steel production
process.
The Debtors estimated assets and debts in excess of $1 billion as
of the Chapter 11 filing. The Debtors owe (i) $440 million,
including $16.9 million in outstanding letters of credit, to
senior lenders led by Wells Fargo Capital Finance, LLC, as
administrative agent, (ii) $218.7 million to junior lenders, led
by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million
on account of a subordinated promissory note issued by majority
owner The Renco Group, Inc., and (iv) $100 million on a secured
promissory note issued by Severstal.
Judge Kevin J. Carey presides over the case.
The Debtors are represented in the case by Robert J. Dehney, Esq.,
and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP,
and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T.
Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the
Debtors.
Conway MacKenzie, Inc., serves as the Debtors' financial advisor
and The Seaport Group serves as lead investment banker. Donald
MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson
Consultants LLC is the claims and notice agent.
Wells Fargo Capital Finance LLC, as Administrative Agent, is
represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo,
Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura
Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang
Ziehi & Jones LLP.
Renco Group is represented by lawyers at Cadwalader, Wickersham &
Taft LLP.
An official committee of unsecured creditors has been appointed in
the case. Kramer Levin Naftalis & Frankel LLP represents the
Committee. Huron Consulting Services LLC serves as its financial
advisor.
The Debtor has sold off the principal plants. The sale of the
Wheeling Corrugating division to Nucor Corp. brought in $7
million. That plant in Sparrows Point, Maryland, fetched the
highest price, $72.5 million.
RESIDENTIAL CAPITAL: Michigan Dist. Court Dismisses Hutton Action
-----------------------------------------------------------------
William Hutton, Plaintiff, v. GMAC Mortgage LLC and Federal
National Mortgage Association, Defendants, Case No. 10-14715 (E.D.
Mich.), which seeks to forestall foreclosure on an eviction from
the plaintiff's home, is a 15-count complaint alleging violations
of the Real Estate Settlement Procedures Act (RESPA), the Michigan
Mortgage Brokers, Lenders, and Servicers Licensing Act, the
Michigan Consumer Protection Act, and the Fair Credit Reporting
Act. The Court heard oral argument on the motion on Feb. 7, 2012.
Since then, GMAC filed for bankruptcy protection and the case was
stayed as to that party. The plaintiff also agreed to the
dismissal of several counts of the complaint. In an Oct. 24, 2012
Opinion and Order is available at http://is.gd/AHsyqJfrom
Leagle.com, District Judge David M. Lawson ruled that as to Fannie
Mae, the plaintiff has not stated a viable claim. Therefore, the
Court granted the defendants' motion and dismissed the case
against Fannie Mae, only.
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.
Nationstar was to make the first bid for the mortgage-servicing
business, while Berkshire Hathaway Inc. would serve as stalking-
horse bidder for the remaining portfolio of mortgages.
ResCap sold its assets at auctions that started Oct. 23. The
partnership of Ocwen Financial Corp. and Walter Investment
Management Corp. won the auction for the mortgage-servicing and
origination assets. Their $3 billion offer defeated the last bid
of $2.91 billion from Fortress Investment Group's Nationstar
Mortgage Holdings Inc. Nationstar was the stalking horse bidder.
The $1.5 billion offer from Warren Buffett's Berkshire Hathaway
Inc. was declared the winning bid for a portfolio of loans at the
auction on Oct. 25. The hearing to approve the sales is set for
Nov. 19.
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).
RYAN ST. ANNE: Trustee to Keep Claim v. Milwaukee Archdiocese
-------------------------------------------------------------
Dennis Magee at WCFCourier.com reports the trustee handling Ryan
St. Anne Scott's personal bankruptcy case in Iowa filed a motion
to retain future assets, specifically possible settlement money
from the Roman Catholic Church.
According to the report, Mr. Scott, also known as Ryan Patrich
Scott Gevelinger and Randell Stocks, previously led a group of
followers in the former Buchanan County home. Mr. Scott, however,
abandoned the property in January just ahead of eviction forced by
the county attorney's office.
The report recounts Mr. Scott's history includes claims he
suffered abuse by Catholic priests, including an account he was
"brutally gang-raped in the rectory of St. John's Cathedral" in
Milwaukee. Mr. Scott alleges church officials in October 1976
sent him to Tucson, Ariz., for treatment.
The report relates Mr. Scott filed a corporate bankruptcy petition
in Illinois on behalf of his failed religious community in
Galesburg and followed that with a personal bankruptcy petition in
Iowa. Trustee Renee Hanrahan is handling the Iowa case and is
charged with recovering Mr. Scott's assets for later distribution
to his creditors.
According to the report, Ms. Hanrahan is preparing to close
Scott's case in Iowa. In her motion to retain future assets, Ms.
Hanrahan notes Mr. Scott failed to include information about a
potential financial settlement with the Archdiocese of Milwaukee.
Objections to Hanrahan's motion can be filed until Nov. 2. If a
federal judge allows Ms. Hanrahan's request, officials could
reopen Ms. Scott's personal bankruptcy.
The report says Catholic church officials in Wisconsin previously
investigated Mr. Scott's claims of abuse. They found the
allegation was without substance.
The report notes Ms. Hanrahan previously auctioned Mr. Scott's
herd of 19 llamas and the group's belongings left behind in the
former Buchanan County home. She also successfully argued the
federal bankruptcy court should seize funds from Mr. Scott's bank
accounts.
The report also relates that, in separate legal action,
authorities in Knox County in Illinois charged Mr. Scott with
three counts of financial abuse of an elderly person, three counts
of theft and one count of deceptive practices. Each charge is a
felony. Mr. Scott is free on bond but scheduled to face trial in
November.
SAN BERNARDINO: Public Employees Seek Dismissal of Bankruptcy
-------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that San Bernardino, California, public employees filed
papers urging the bankruptcy judge to dismiss the city's municipal
bankruptcy for failure to comply with state law requiring two
months of negotiations before filing in Chapter 9.
According to the report, whether San Bernardino remains in
Chapter 9 is a question that won't be decided until later this
year, if not in 2013, under a schedule laid down by U.S.
Bankruptcy Judge Meredith A. Jury. Opponents' papers were due
Oct. 24. There will be a status conference on Nov. 5, implying
that a final hearing on Chapter 9 eligibility may not begin until
December.
The report relates that unlike a Chapter 11 reorganization for
companies, Chapter 9 requires the judge to make a threshold
determination of eligibility. San Bernardino will be required to
show the judge there was a fiscal emergency allowing the city to
forego 60 days of mediation required by state law.
San Bernardino is facing investigation by the Securities and
Exchange Commission over its fiscal practices. Earlier this
month, Moneynews reported that the nature of the inquiry wasn't
disclosed in an Oct. 11 letter from Robert H. Conrrad, a Los
Angeles-based senior enforcement counsel at the SEC, according to
a copy from City Attorney James Penman. The letter called on
local officials to preserve records of securities offerings and
communications with underwriters, fiscal advisers and credit
ratings companies.
According to Moneynews, Andrea Travis-Miller, the interim city
manager, said in a July interview that San Bernardino relied on a
variety of budgetary maneuvers to stay solvent, such as
redirecting money from restricted accounts. None appeared
illegal, she said then.
Moneynews also reported that Mayor Patrick Morris said by
telephone he's unaware of criminal conduct involving city
finances.
About San Bernardino
San Bernardino, California, filed an emergency petition for
municipal bankruptcy under Chapter 9 of the U.S. Bankruptcy Code
(Bankr. C.D. Calif. Case No. 12-28006) on Aug. 1, 2012. San
Bernardino, a city of about 210,000 residents roughly 65 miles
(104 km) east of Los Angeles, estimated assets and debts of more
than $1 billion in the bare-bones bankruptcy petition.
The city council voted on July 10, 2012, to file for bankruptcy.
The move lets San Bernardino bypass state-required mediation with
creditors and proceed directly to U.S. Bankruptcy Court.
The city is represented that Paul R. Glassman, Esq., at Stradling
Yocca Carlson & Rauth.
San Bernardino joins two other California cities in bankruptcy:
Stockton, an agricultural center of 292,000 east of San Francisco,
and Mammoth Lakes, a mountain resort town of 8,200 south of
Yosemite National Park.
SF CC INTERMEDIATE: Moody's Corrects October 23 Rating Release
--------------------------------------------------------------
Moody's Investors Service issued a correction to the October 23,
2012 rating release of SF CC Intermediate Holdings, Inc.
Revised release follows:
Moody's Investors Service assigned a B3 corporate family rating
and probability of default rating to SF CC Intermediate Holdings,
Inc. (SFCC), a special purpose holding company formed to acquire
Smart & Final Holdings Corp. In addition, Moody's also assigned a
Ba2 rating to the company's proposed $150 million ABL revolving
credit facility, a B3 rating to the company's proposed $510
million first lien term loan and a Caa2 rating to the company's
proposed $210 million second lien term loan. The rating outlook is
stable. Concurrently all existing ratings at Smart & Final
Holdings Corporation and Smart & Final Stores LLC have been put on
review for downgrade and will be withdrawn at the closing of the
proposed transaction.
Proceeds from the proposed financing along with approximately $287
million in equity from Ares Management (Ares) will be used to
acquire Smart & Final Stores LLC and repay existing debt. Upon the
closing of the acquisition, the ABL revolver, first lien term loan
and the second lien term loan will be contributed and assigned to
Smart & Final Stores LLC or its direct parent and thereafter Smart
& Final Stores LLC or its direct parent will be the borrower under
each of the credit facilities. Ratings are subject to Moody's
review of final documentation and the execution of the transaction
as proposed.
"Although Smart & Final's operating performance continues to
demonstrate its ability to compete effectively and maintain
margins in a tough economic and competitive business environment
this transaction will significantly weaken the company's credit
metrics while more than doubling the company's existing funded
debt burden," Moody's Senior Analyst Mickey Chadha stated.
Ratings Rationale
The B3 Corporate Family Rating of SFCC reflects the company's weak
pro forma credit metrics, regional concentration, and challenging
geographic and demographic markets. The ratings also recognize the
company's adequate liquidity, consistent positive same store sales
growth, the potential benefits of the company's diversification
efforts and new management initiatives.
The following ratings are assigned:
SF CC Intermediate Holdings, Inc.:
Corporate Family Rating at B3;
Probability of Default rating at B3;
$150 million guaranteed ABL revolving credit facility expiring
2017 at Ba2 (LGD2, 17%);
$510 million guaranteed first lien term loan maturing 2019 at
B3 (LGD3, 45%);
$210 million guaranteed second lien term loan maturing 2020 at
Caa2 (LGD5, 82%).
The following ratings are put on review for downgrade and will be
withdrawn at the closing of the proposed transaction:
Smart & Final Holdings Corporation
Corporate Family Rating at B2;
Probability of Default Rating at B2.
Smart & Final Stores LLC
$47 million First Lien Term Loan maturing May 2014 at B2 (LGD
3, 47%);
$119 million First Lien Term Loan maturing May 2016 at B2 (LGD
3, 47%);
$125 million Asset-Based Revolving Credit Facility maturing
June 2016 at Ba1 (LGD 2, 15%);
$138 million Second Lien Term Loan maturing November 2016 at B3
(LGD 5, 74%);
$2 million Second Lien Term Loan maturing November 2014 at B3
(LGD 5, 74%).
SFCC's stable outlook incorporates Moody's expectation that over
the next 12-18 months credit metrics will moderately improve
driven by the improving economy along with management initiatives
focused on price optimization, cost savings and product offerings.
The B3 CFR of SFCC could be subject to upward momentum if the
company demonstrates sustained and material improvements in
liquidity, profitability and operating margins. Quantitatively, an
upgrade could be achieved if debt to EBITDA approaches 5.5 times
and EBITA to interest is sustained in excess of 1.5 times.
The B3 CFR of SFCC could be pressured if there is a material
deterioration in liquidity or if operating performance
deteriorates as evidenced by sustained decline in same store sales
growth and profitability. Ratings could also be downgraded if the
company's EBITA to interest approaches 1.1 times or if debt to
EBITDA is sustained above 6.5 times for an extended period of
time.
The principal methodology used in rating SF CC Intermediate
Holdings, Inc. 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.
Smart & Final Stores LLC, is headquartered in Commerce,
California, and operates 235 non-membership warehouse club stores
serving retail and commercial customers in six western states and
northern Mexico under the Smart & Final and Cash & Carry banners.
SIFCO SA: Fitch Affirms 'B-' Issuer Default Rating
--------------------------------------------------
Fitch Ratings has affirmed the following ratings of Sifco S.A.:
-- Foreign and local currency Issuer Default Ratings (IDRs) at
'B-';
-- USD75 million senior unsecured notes due 2016 at 'B-/RR4'.
In conjunction with these ratings, Fitch has upgraded Sifco's
national scale rating to 'BB+(bra)' from BB(bra).
The Corporate Ratings Outlook is Stable.
These rating actions follow Sifco's announced spin off from Grupo
Brasil (GB) to the former owners of GB. As part of this
transaction, GB and two of its subsidiaries -- MTP and Karmann
Ghia -- were sold to private investors.
Fitch views this transaction as positive. In the past, Sifco had
provided financial support to affiliated companies at GB that had
weak capital structures. As part of the transaction, Sifco's
BRL287 million of account receivables from related parties will be
partially reduced through the receipt of BRL33 million through the
transfer of two real estate properties from GB and the repayment
of BRL38 million of receivable with proceeds from an asset sale.
The upgrade in the company's national scale rating is a result of
this incremental improvement in Sifco's credit profile. The 'B-'
international ratings continue to reflect high leverage, elevated
refinancing risks, and limited free cash flow.
High Leverage:
Sifco has a highly leveraged capital structure. The company's net
adjusted debt-to-EBITDA ratio was 5.3 times (x) during the last 12
months (LTM) ended June 30, 2012. Total adjusted debt of BRL777
million includes BRL33 million of debt of related companies of GB
that Sifco has guaranteed. This related part of debt is expected
to be refinanced and the guarantee released within two years.
The company's balance sheet debt of BRL744 million compares with
BRL110 million of EBITDA during the LTM and a cash balance of
BRL200 million. Tax refinancing is a significant part of Sifco's
total debt. As of June 30, 2012, the total amount of refinanced
taxes was BRL211 million. This compares unfavorably with BRL169
million at the end of 2011. The majority of tax refinancing is
composed of REFIS, which has a 180 month amortization period.
Fitch expects Sifco's leverage to be in the 4.5x to 5.0x range by
the end of 2013. The moderate decline in leverage will be driven
by an increase in operating cash flow, lower capital expenditures,
and the receipt of about BRL71 million of cash from the
aforementioned transaction. High interest expenses will continue
to constrain free cash flow and will limit a material reduction in
debt.
Liquidity is Low, Operating Results Should Improve:
Over the past few years, the company's short-term debt, as a
percentage of total debt has climbed to 49% from 39%. This growth
has continued to elevate refinancing risk. As of June 30, 2012,
Sifco had BRL356 million of short-term debt and BRL200 million of
cash and marketable securities. Most of the company's cash is
needed to manage sharp cycles in the auto industry and is not
available to repay short-term debt.
During the LTM, Sifco generated BRL138 million of cash flow from
operations - this is a decline from BRL204 million during 2011.
Results have been hurt by the changes in emission standards for
trucks and buses during 2012 that resulted in a sharp decline in
sales during this year, as many sales were accelerated to 2011 in
anticipation of this change. Economic growth in Brazil in excess
of 4% during 2013, as well as a more normal market for truck and
bus sales, should translate into higher demand for vehicles and
should positively impact the company's cash flow.
Potential Rating or Outlook Drivers:
The ratings could be affected positively by an improvement in the
company's liquidity position and/or a successful refinancing of
its short-term debt. Strong cash generation on a sustainable
basis that resulted in free cash flow for debt reduction would
also be viewed positively. A downturn in the company's operating
results and increasing leverage could lead to a negative rating
action. The inability to refinance short-term debt could also lead
to rating downgrades.
SINCLAIR TELEVISION: Moody's Corrects Sept. 27 Rating Release
-------------------------------------------------------------
Moody's Investors Service issued a correction to the September 27,
2012 rating release of Sinclair Television Group, Inc.
Revised release follows:
Moody's Investors Service assigned a B2 rating and LGD5 -- 83%
assessment to Sinclair Television Group, Inc.'s ("STG") proposed
$500 million senior unsecured notes. The proposed notes are being
issued primarily to purchase six television stations from Newport
Television ($412.5 million), the assets of Bay Television, Inc.
($40 million), KBTV in Port Arthur, TX ($14 million), and WUTD in
Baltimore, MD ($2.7 million). Moody's upgraded the rating on STG's
9.25% 2nd lien notes due 2017 to Ba3, LGD4 -- 51% from B1, LGD5 --
71% due to the increased cushion provided by the new senior
unsecured notes. In addition, Moody's affirmed Sinclair Broadcast
Group, Inc's ("Sinclair") Ba3 Corporate Family Rating (CFR), Ba3
Probability of Default (PDR) Rating and related debt instrument
ratings. LGD point estimates were updated to reflect the new debt
mix. The SGL -- 2 Speculative Grade Liquidity (SGL) Rating was
affirmed and the outlook remains stable.
Assigned:
Issuer: Sinclair Television Group, Inc.
New $500 million Sr Unsecured Notes (10 year maturity):
Assigned B2, LGD5 -- 83%
Upgraded:
Issuer: Sinclair Television Group, Inc.
$500 million 9.25% 2nd lien sr secured notes due 2017:
Upgraded to Ba3, LGD4 -- 51% from B1, LGD5 -- 71%
Affirmed:
Issuer: Sinclair Television Group, Inc.
1st lien sr secured revolver due 2016 ($97.5 million
commitment): Affirmed Ba1, LGD2 -- 16% (from LGD2 -- 24%)
1st lien sr secured term loan A due 2016 ($268 million
outstanding): Affirmed Ba1, LGD2 -- 16% (from LGD2 -- 24%)
1st lien sr secured term loan B due 2016 ($591 million
outstanding): Affirmed Ba1, LGD2 -- 16% (from LGD2 -- 24%)
8.375% convertible sr notes due 2018 ($238 million
outstanding): Affirmed B2, LGD5 -- 83% (from LGD6 -- 93%)
Issuer: Sinclair Broadcast Group, Inc.
Corporate Family Rating: Affirmed Ba3
Probability of Default Rating: Affirmed Ba3
4.875% convertible sr notes due 2018 (less than $6 million
outstanding): Affirmed B2, LGD6 -- 97% (from LGD6 -- 96%)
Speculative Grade Liquidity Rating: Affirmed SGL -- 2
Outlook Actions:
Issuer: Sinclair Broadcast Group, Inc.
Outlook is Stable.
Ratings Rationale
Sinclair's Ba3 Corporate Family Rating reflects moderately high
leverage with a 2-year average debt-to-EBITDA ratio of less than
5.50x estimated for September 30, 2012 (including Moody's standard
adjustments) and pro forma for the pending acquisitions of Newport
stations and other announced properties. The pending transactions
represent Sinclair's continued investment to expand the company's
footprint currently reaching 26% of U.S. households while further
diversifying revenues by geographic market and network
affiliations. Ratings incorporate strong demand for political
advertising during election years, most recently resulting in
markedly higher EBITDA growth for Sinclair through the end of
2012. Moody's expects 2-year average leverage ratios to approach
5.0x over the next 12 months with run-rate EBITDA margins greater
than 35% (including Moody's standard adjustments) generated by the
company's sizable and diverse television station group. Moody's
believes total revenues will decline in 2013, on a same store
basis, due to the absence of significant political ad spending
only partially offset by low single-digit growth in core ad
revenues and expected increases in retransmission fees. Ratings
incorporate Moody's expectation that the company will achieve most
of its planned acquisition synergies for Newport stations soon
after the transaction closes having successfully assimilated Four
Points Media (acquired January 2012) and Freedom stations
(acquired April 2012). Moody's believes Sinclair will continue to
generate mid-single digit free cash flow-to-debt ratios and apply
free cash flow to reduce debt balances, in the absence of
additional acquisitions. Ratings reflect moderately high financial
risk, the inherent cyclicality of the broadcast television
business, and increasing media fragmentation. The SGL-2 liquidity
rating incorporates Moody's expectations that the company will
maintain good liquidity and continue to fund quarterly dividends
from excess cash.
The stable outlook reflects Moody's expectations that core
revenues will grow in the low single digit percentage range over
the rating horizon with additional increases in retransmission
fees, but the absence of significant political ad demand in 2013
will result in total revenue declines. The outlook incorporates
the proposed $500 million increase in debt balances to fund
pending station purchases. We expect Sinclair will continue to
reduce debt balances as cash is generated from operations, absent
additional acquisitions. Ratings could be downgraded if 2-year
average debt-to-EBITDA ratios are sustained above 5.50x
(incorporating Moody's standard adjustments) or if distributions,
share repurchases or deterioration in operating performance
results in free cash flow-to-debt ratios falling below 4%. Ratings
could also be downgraded if liquidity deteriorates due to
dividends, share buybacks, debt financed acquisitions, or
decreased EBITDA cushion to financial covenants. Ratings could be
upgraded if Sinclair's 2-year average debt-to-EBITDA ratios are
sustained comfortably below 4.25x with good liquidity including
free cash flow-to-debt ratios in the high single-digit range.
Management will also need to show a commitment to financial
policies consistent with the higher rating.
Recent Events
In July 2012, Sinclair announced its agreement to purchase the
broadcast assets of six television stations and the rights for two
LMA's collectively owned or operated by Newport Television for
$412.5 million. The transaction is expected to close near the end
of 2012, subject to FCC approval. Also in July, Sinclair entered
into an agreement to purchase the assets of Bay Television, Inc.,
which owns WTTA-TV (MyTV) in the Tampa/St. Petersburg, FL market,
for $40 million, or less than a 7x buyer multiple. Bay Television,
Inc. is majority owned by the Smith family and required a fairness
opinion. The transaction received FCC approval and closing is
expected in the fourth quarter of 2012. In August 2012, Sinclair
agreed to purchase KBTV (FOX) located in Port Arthur, TX for $14
million and exercised its option to purchase WUTB (MNT) in
Baltimore, MD for $2.7 million, each subject to FCC approval.
Sinclair intends to assign the rights to purchase these two
licenses to Deerfield Media, Inc., and Sinclair expects to provide
sales and other non-programming services pursuant to shared
services and joint sales agreements.
The principal methodology used in rating Sinclair was the
Broadcast and Advertising Related Industries 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.
Sinclair Broadcast Group, Inc., headquartered in Hunt Valley, MD,
and founded in 1986, is a television broadcaster, operating 74
stations in 45 markets primarily through Sinclair Television
Group, Inc. The station group reaches approximately 26% of U.S.
television households and includes FOX, ABC, MyTV, CW, CBS, NBC,
and Azteca affiliates. Through the 12 months ending June 30, 2012,
reported revenue totaled $871 million.
SNO MOUNTAIN: Judge FitzSimon Ousts President Denis Carlson
-----------------------------------------------------------
James Haggerty at thetimes-tribune.com reports that, amid
allegations of fraud and misappropriation of funds, Bankruptcy
Judge Jean FitzSimon has ousted the president and general partner
at Sno Mountain.
The report relates Judge FitzSimon issued an order removing Denis
Carlson as top executive. The judge also ordered Mr. Carlson to
surrender keys and any means of access to the facility, preserve
all written and electronic business records and submit to a
deposition within 10 days.
According to the report, the order follows an explosive litany of
allegations against Mr. Carlson in papers filed by a group of
investors and creditors seeking to force Sno Mountain into
bankruptcy reorganization. The report relates the creditors'
group, which includes partners in the skiing and water-park
complex, filed an involuntary Chapter 11 petition. The
petitioners allege they cumulatively are owed more than
$9.6 million.
About Sno Mountain
Various parties -- predominated by various limited partners of Sno
Mountan LP, including Richard Ford, Charles Hertzog, Edward
Reitmeyer, who are each guarantors of certain obligations owing by
Sno Mountain -- filed an involuntary Chapter 11 petition against
Sno Mountain (Bankr. E.D. Pa. Case No. 12-19726) On Oct. 15, 2012.
The other petitioning parties include Wynnewood Capital Partners,
L.L.C., t/a WCP Snow Mountain Partners, L.P., and Kathleen
Hertzog.
The Alleged Debtor is the owner and operator of a popular ski
mountain resort and water park known as "Sno Mountain," located at
1000 Montage Mountain Road in Scranton, Pennsylvania. The
Debtor's bankruptcy case is a "single asset real estate" case
within the meaning of 11 U.S.C. Sec. 101(51)(B).
Judge Jean K. FitzSimon oversees the case. Brian Joseph Smith,
Esq., at Brian J. Smith & Associates PC, represents the
petitioning creditors.
SOLYNDRA LLC: IRS to Appeal Plan Confirmation
---------------------------------------------
Reuters reported that Anne Oliver, an Internal Revenue Service
lawyer, told the bankruptcy judge in Delaware that the government
may appeal the confirmation of Solyndra LLC's bankruptcy-exit
plan. Reuters said Judge Mary F. Walrath granted her request to
delay the repayment plan by 10 days.
The Delaware Bankruptcy Court at the Oct. 22 hearing approved
Solyndra's plan to repay creditors. Bankruptcy Judge Mary Walrath
rejected the government argument that the plan was improper
because its main purpose was to provide tax breaks.
According to Reuters, Venture capital firms Argonaut Private
Equity and Madrone Capital Partners will control Solyndra's tax
breaks, known as net operating losses or NOLs, that are
potentially worth $341 million after the bankruptcy. "It is clear
in this case the bankruptcy and the reorganization dealt with many
other things than the value of the NOLs or the preservation of the
NOLs," the Reuters quoted Judge Walrath as saying.
Reuters said the plan calls for Argonaut and Madrone to take
control of Solyndra's parent company, which will have no employees
or operations but hold about $1 billion of net operating losses.
Argonaut and Madrone plan to use the company as a vehicle to make
investments or buy businesses, and apply those losses against
potential future profits to reduce tax liabilities.
The report relates that, despite selling nearly all its assets,
Solyndra expects most creditors to recover 3% or less of what they
are owed, far less than in a typical corporate bankruptcy.
About Solyndra LLC
Founded in 2005, Solyndra LLC was a U.S. manufacturer of solar
photovoltaic solar power systems specifically designed for large
commercial and industrial rooftops and for certain shaded
agriculture applications. The Company had 968 full time employees
and 211 temporary employees. Solyndra has sold more than 500,000
of its panels since 2008 and generated cumulative sales of over
$250 million.
Fremont, California-based Solyndra and affiliate 360 Degree Solar
Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D.
Del. Lead Case No. 11-12799) on Sept. 6, 2011. Solyndra is at
least the third solar company to seek court protection from
creditors since August 2011.
Judge Mary F. Walrath presides over the Debtors' cases. The
Debtors are represented by Pachulski Stang Ziehl & Jones LLP as
legal adviser. AlixPartners LLP serves as noticing claims and
balloting agent. Imperial Capital LLC serves as the company's
investment banker and financial adviser. The Debtors also tapped
former Massachusetts Governor William F. Weld, now with the law
firm McDermott Will & Emery, to represent the company in
government investigations and related litigation. BDO Consulting,
a division of BDO USA, LLP, as financial advisor and BDO Capital
Advisors, LLC, serves as investment banker for the creditors'
panel.
The Official Committee of Unsecured Creditors of Solyndra LLC has
tapped Blank Rome LLP as counsel and BDO Consulting as financial
advisors.
In October 2011, the Debtors hired Berkeley Research Group, LLC,
and designated R. Todd Neilson as Chief Restructuring Officer.
Solyndra owed secured lenders $783.8 million, including
$527.8 million to the U.S. government pursuant to a federal loan
guarantee, and held assets valued at $859 million as of the
Petition date. The U.S. Federal Financing Bank, owned by the U.S.
Treasury Department, is the Company's biggest lender.
When they filed for Chapter 11, the Debtors pursued a two-pronged
strategy to effectuate either a sale of their business to a
"turnkey" buyer who may acquire substantially all of Solyndra's
assets or, if the Debtors were unable to identify any potential
buyers, an orderly liquidation of the assets for the benefit of
their creditors.
Solyndra did not receive acceptable offers to buy the business as
a going concern. Two auctions late last year brought in a total
of $8 million. A three-day auction in February generated another
$3.8 million. An auction in June generated $1.79 million from the
sale of 7,200 lots of equipment.
Solyndra filed a liquidating plan at the end of July and scheduled
a hearing on Sept. 7 for approval of the explanatory disclosure
statement. The Plan is designed to pay 2.5% to 6% to unsecured
creditors with claims totaling as much as $120 million. Unsecured
creditors with $27 million in claims against the holding company
are projected to have a 3% dividend.
SOUTH FRANKLIN CIRCLE: Files Bankruptcy With Chapter 11 Plan
------------------------------------------------------------
Dawn McCarty at Bloomberg News reports South Franklin Circle, a
nonprofit continuing care retirement community, filed a so-called
pre-packaged bankruptcy in the U.S. Bankruptcy Court for the
Northern District of Ohio (Case No. 12-17804) with a plan to
reduce its total secured debt by about 40%.
According to Bloomberg, the company listed assets of $167.2
million and debt of $166.3 million, measured by book value, as of
Dec. 31 in Chapter 11 documents. In fiscal years 2010 and 2011,
the company had net losses of $9.3 million and $7.8 million,
respectively.
"The economic downturn has caused lower than expected occupancy
rates at South Franklin Circle, which has led to South Franklin
Circle not being able to independently service its debt,"
Bloomberg quotes Cynthia Dunn, South Franklin's chief executive
officer, as saying. About 53% of the 199 independent living units
and more than half of the 40 assisted-living units are occupied,
according to court papers.
The report relates the company said the proposed plan is supported
by the requisite majority of its pre-bankruptcy secured lenders.
South Franklin Circle will swap current secured debt totaling
about $100.6 million for a new bond and term-note secured debt of
$66.75 million.
The report notes residents of the South Franklin Circle facility
will be unaffected by the restructuring as membership agreements
will be honored. Under the accords with South Franklin Circle,
each resident pays a one-time entrance fee and monthly service
fees. Entrance fees range from $251,000 to about $566,000.
Monthly service fees range from $2,416 to $3,623.
SOVEREIGN CAPITAL: Moody's Confirms 'Ba1' Preferred Stock Rating
----------------------------------------------------------------
Moody's Investors Service confirmed the long- and short-term
ratings of the US mainland subsidiaries of Banco Santander S.A.
(Santander) and Banco Bilbao Vizcaya Argentaria, S.A. (BBVA).
Following the confirmations, Moody's returned the subsidiaries'
rating outlooks to stable, with the exception of Santander
Holdings USA, Inc. (SHUSA), which was assigned a negative outlook.
These actions conclude the reviews for downgrade that were
initiated on June 27, 2012. Moody's also continued the reviews for
downgrade on the long- and short-term ratings of Santander's and
BBVA's Puerto Rico bank subsidiaries. (For purposes of this press
release, "US subsidiaries" exclude the Puerto Rico subsidiaries.)
The actions follow the rating confirmations of Santander
(standalone bank financial strength rating (BFSR)/baseline credit
assessment (BCA) of C-/baa2, negative outlook) and BBVA
(standalone BFSR/BCA of D+/baa3, negative outlook). These actions
are discussed in the press release "Moody's concludes rating
reviews on majority of Spanish banks after sovereign rating
confirmation," dated October 24, 2012 and available on moodys.com.
List of Affected Ratings:
Subsidiaries of Santander:
- Santander Holdings USA, Inc. (SHUSA): all long- and short-term
ratings (senior at Baa2) confirmed; negative outlook assigned
- Sovereign Capital Trust IV: Ba1 (hyb) preferred stock rating
confirmed; negative outlook assigned
- Sovereign Capital Trust V: (P)Ba1 preferred stock rating
confirmed
- Sovereign Capital Trust VI: Ba1 (hyb) preferred stock rating
confirmed; negative outlook assigned
- Sovereign Bank, N.A.: all long- and short-term ratings
(deposits at Baa1), including the standalone BFSR/BCA of C-
/baa1, confirmed; stable outlook assigned
- Sovereign Real Estate Investment Trust: Ba1 (hyb) non-
cumulative preferred stock rating confirmed; stable outlook
assigned
- Banco Santander Puerto Rico: all long- and short-term ratings
remain on review for downgrade; the standalone BFSR/BCA of C-
/baa1, which was placed on review for downgrade on April 10,
2012 because of Puerto Rico's difficult operating environment,
also remains on review for downgrade
Subsidiaries of BBVA:
- BBVA USA Bancshares, Inc.: Baa3 long-term issuer rating
confirmed; stable outlook assigned
- Compass Bank: all long- and short-term ratings (deposits at
Baa2), including the standalone BFSR/BCA of C-/baa2, confirmed;
stable outlook assigned
- Phoenix Loan Holdings: Ba2 (hyb) non-cumulative preferred stock
rating confirmed; stable outlook assigned
- Banco Bilbao Vizcaya Argentaria Puerto Rico: all long- and
short-term ratings remain on review for downgrade; the standalone
BFSR/BCA of C-/baa2, which was placed on review for downgrade on
April 10, 2012 because of Puerto Rico's difficult operating
environment, also remains on review for downgrade
Ratings Rationale
The confirmations of the US subsidiaries' ratings follow the
confirmations of their parents' standalone ratings and reflect
Moody's view that the bank subsidiaries are sufficiently insulated
from problems at their parent companies to support higher
standalone ratings. This view is underpinned by the strong
regulatory ring-fencing in the US, which should prevent
extraordinary capital and liquidity flows from the subsidiaries to
their Spanish parents.
Other key considerations supporting Moody's view that the
subsidiaries are relatively independent from their parents
include: 1) the bank subsidiaries are primarily core deposit-
funded and have limited reliance on short-term, confidence
sensitive wholesale funding, 2) the bank subsidiaries have their
own customers that are almost entirely US-based, and they do not
derive significant revenues from providing services to their
parents' customers or from distribution of their parents'
products, 3) the bank subsidiaries and their US holding
companies have separate boards of directors with independent
members, 4) the subsidiaries have their own infrastructures and
are not heavily reliant on their parents for key business/control
functions, and 5) the subsidiaries are relatively insulated from
the macroeconomic pressures affecting their parents in Spain.
Following the confirmations, the standalone ratings of Santander's
and BBVA's lead US banks (Sovereign Bank and Compass Bank,
respectively) remain one notch above their parents' respective
standalone ratings. Given the characteristics described above,
Moody's said that a one-notch downgrade of the parents' standalone
ratings likely would not affect the standalone ratings of the bank
subsidiaries. This is reflected in the stable outlooks on
Sovereign Bank and all of BBVA's US subsidiaries, including
Compass Bank. Moody's added that these entities had stable
outlooks prior to this latest review for downgrade, reflecting
their good capital positions, improvement in their profitability
and asset quality metrics, and reductions in their asset
concentrations.
The ratings of Santander's US holding company, SHUSA, and its
capital trust subsidiaries continue to benefit from one notch of
parental support uplift given Santander's continued capacity to
support these subsidiaries. This is reflected in Santander's
standalone rating of baa2, one notch above SHUSA's intrinsic
financial strength of baa3. A one-notch downgrade of Santander's
standalone rating would likely result in the removal of parental
support uplift at SHUSA. As a result, following the confirmations,
Moody's assigned a negative rating outlook to SHUSA and its
capital trust subsidiaries, consistent with the negative outlook
on its Spanish parent.
In the event of a multi-notch downgrade of the parents' standalone
ratings, the standalone ratings of the bank subsidiaries would be
reassessed. Although Moody's believes that the subsidiaries are
reasonably insulated from their parents' credit issues, the
linkages that do remain could have negative consequences for the
subsidiaries if the parents' credit profiles weaken significantly.
Those linkages include: 1) the subsidiaries' significant reliance
on parental support in recent years, 2) shared name/branding to
varying degrees, which could lead to contagion or confidence
sensitivity issues, and 3) key members of management have come
from their Spanish parents, which heightens the risk that those
managers could be pulled out of the US if needed in Spain or other
parts of the companies. Moody's added that significant
deterioration in Santander's creditworthiness could also
have a negative effect on SHUSA's funding profile, given its
majority ownership of Santander Consumer USA, Inc., a
subprime/near-prime auto finance company that is reliant on
confidence sensitive wholesale funding to finance its operations.
As part of the actions, Moody's continued the reviews for
downgrade on the long- and short-term ratings of Banco Santander
Puerto Rico and Banco Bilbao Vizcaya Argentaria Puerto Rico. The
Puerto Rico bank subsidiaries' standalone ratings were initially
placed on review for downgrade in April 2012, reflecting the
adverse effects of Puerto Rico's ongoing recession on its banking
sector, as well as the weak prospects for a sustainable recovery
in the coming years. Moody's added that the reviews will consider
the probability that parental support would be provided, if
needed, and the parents' capacity to provide support. Moody's
expects to conclude those reviews shortly.
The principal methodology used in these ratings was Moody's
Consolidated Global Bank Rating Methodology published in June
2012.
SPIRIT AEROSYSTEMS: Moody's Affirms 'Ba2' CFR; Outlook Negative
---------------------------------------------------------------
Moody's Investors Service has affirmed the debt ratings of Spirit
Aerosystems, Inc., including the Corporate Family Rating of Ba2,
and changed the rating outlook to negative from positive. The
company's Speculative Grade Liquidity rating was lowered to SGL-3
from SGL-2.
Ratings/Outlook changed:
Speculative Grade Liquidity, to SGL-3 from SGL-2
Rating Outlook, to Negative from Positive
Ratings unchanged:
Corporate Family, Ba2
Probability of Default, Ba2
$650 million first lien revolver due 2017, Ba1, to LGD3, 33%
from LGD2, 27%
$550 million first lien term loan due 2019, Ba1, to LGD3, 33%
from LGD2, 27%
$300 million 7.5% senior unsecured notes due 2017, Ba3, LGD5, to
81% from 83%
$300 million 6.75% senior unsecured notes due 2020, Ba3, LGD5,
to 81% from 83%
Ratings Rationale
The weaker rating outlook follows Spirit's announced $590 million
forward loss charge that reduces inventoried costs on several
commercial aircraft development programs. This charge from core
operations was partially offset by a $235 million insurance
settlement on a severe weather event that Spirit had at its
Witchita, KS facility. Although the insurance settlement will
bring cash of $130 million in Q4-2012, the forward loss charge
reflects lower earnings and cash flow now anticipated across the
intermediate term as Spirit's ramp-up cost estimates on several
key aircraft programs have proven to be optimistic. The magnitude
of the forward loss charge, over 80% of reported operating profit
across 2010-2011 and about 60% of Spirit's deferred production
cost asset at June 30th, reflects operational complexity of
managing multiple aircraft development projects simultaneously and
cost pressures to come from an already-strained supply chain.
Similar charges in the future would further lessen intermediate-
term earnings and cash flow prospects, undermining Spirit's
ability to retain the Ba2 CFR.
The Speculative Grade Liquidity rating revision to SGL-3 from SGL-
2, denoting adequate liquidity, incorporates the financial ratio
covenant amendment that Spirit has negotiated with its lenders
which should provide a sufficient but probably not robust degree
of covenant cushion across 2013. At June 30th Spirit held cash of
$180 million. Scheduled debt maturities are only about $10 million
near-term, though the forward loss charge, when considered in
relation to committed capital projects, suggests that cash outlays
will probably exceed inflows across 2013, making the company
reliant on its cash balances and possibly on its $650 million
revolving credit. (The $130 million cash insurance settlement that
Spirit anticipates receiving in Q4-2012 lessens the degree to
which revolver reliance may develop across 2013.)
The Ba2 CFR continues in recognition of favorable earnings and
cash flow stemming from the company's high ship set values on more
mature aircraft programs -- namely the B737 and B777. Scheduled
production rate increases of these aircraft models represent a
critical support to the company's intermediate term earnings/cash
flow outlook. As well, the long cycle nature of programs ramping
up bodes positively for longer-term earnings prospects. Although
the announced charge defers the cash break-even point on
development programs underway, many future years of profitable
manufacturing should ultimately follow from those positions, where
sizable OEM backlogs currently exist.
Downward rating pressure would result from weakening liquidity,
such as from diminishing covenant compliance headroom or growing
revolver reliance, or from expectation that free cash flow to debt
will be less than 10% by 2014. (The ratio will likely be negative
across 2013.) Upward rating momentum, currently unanticipated,
would follow expectation of free cash flow to debt consistently
remaining above 15% with debt to EBITDA at 2x or less.
Spirit AeroSystems, Inc., headquartered in Wichita, KS and
formerly a division of Boeing Company, is an independent non-OEM
designers and Tier-1 manufacturer of commercial aircraft
aerostructures. Components include fuselages, pylons, struts,
nacelles, thrust reversers, and wing assemblies, primarily for
Boeing but also for Airbus, Gulfstream and others. Revenues were
$5 billion for the twelve months to June 30, 2012.
The principal methodology used in rating Spirit was the Global
Aerospace and Defense Industry Methodology published in June 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.
STANFORD INT'L: Political Parties Liable to Pay Back Contributions
------------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that political parties are liable to pay back
contributions made by perpetrators of Ponzi schemes, the U.S.
Court of Appeals in New Orleans ruled in favor of the receiver in
the R. Allen Stanford fraud.
According to the report, one year after the Stanford receivership
began in a federal district court in Texas, the receiver sued both
Democratic and Republican campaign committees seeking to recover
$1.6 million in political contributions. The receiver filed a
motion for judgment without a trial, while the political
committees sought dismissal. The receiver won in U.S. District
Court. The committees appealed and lost again in 14-page opinion
on Oct. 23 from the 5th U.S. Circuit Court of Appeals in New
Orleans.
The report relates that Circuit Judge James L. Dennis first ruled
that the receiver stood in the shoes of creditors in the suit
brought under the Texas version of the Uniform Fraudulent Transfer
Act. The receiver wasn't in the shoes of the Stanford firm, which
would bar him from suing. Judge Dennis relied on decisions from
Texas courts holding that a "receiver acts to protect innocent
creditors" and thus can sue "even though the corporation would not
be permitted to do so."
The report notes that the Stanford case in this respect differs
from the liquidation of Bernard L. Madoff Investment Securities
Inc. where a district judge has barred the trustee from suing on
state common law claims, on the theory that the trustee steps into
the shoes of the Ponzi schemer. The contributions were the
product of "actual fraud," Judge Dennis said, because Stanford was
running a Ponzi scheme.
The Bloomberg report discloses that whether the politicians knew
about the fraud was irrelevant since the money was stolen from
Stanford investors. The circuit court ruled that the suit wasn't
time barred because the receiver sued within one year from the
time he reasonably could have discovered the fraudulent transfers.
Finally, Judge Dennis held that federal election law didn't
preempt the suit. Stanford was sentenced in June to a 110-year
prison sentence.
The case is Janvey v. Democratic Senatorial Campaign Committee
Inc., 11-10704, 5th U.S. Circuit Court of Appeals (New Orleans).
About Stanford International
Domiciled in Antigua, Stanford International Bank Limited --
http://www.stanfordinternationalbank.com/-- is a member of
Stanford Private Wealth Management, a global financial services
network with US$51 billion in deposits and assets under
management or advisement. Stanford Private Wealth Management
serves more than 70,000 clients in 140 countries.
On Feb. 16, 2009, the United States District Court for the
Northern District of Texas, Dallas Division, signed an order
appointing Ralph Janvey as receiver for all the assets and
records of Stanford International Bank, Ltd., Stanford Group
Company, Stanford Capital Management, LLC, Robert Allen Stanford,
James M. Davis and Laura Pendergest-Holt and of all entities they
own or control. The February 16 order, as amended March 12,
2009, directs the Receiver to, among other things, take control
and possession of and to operate the Receivership Estate, and to
perform all acts necessary to conserve, hold, manage and preserve
the value of the Receivership Estate.
UNITED RENTALS: Moody's Rates $400-Mil. Sr. Unsecured Notes 'B3'
----------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to the $400 million
of senior unsecured notes, due 2023, to be issued by United
Rentals (North America), which it the principal operating
subsidiary of United Rentals, Inc. (URI). Moody's also affirmed
URI's B2 Corporate Family Rating (CFR) and Probability of Default
Rating (PDR). The outlook remains stable and the Speculative Grade
Liquidity rating is unchanged at SGL-3.
Ratings Rationale
Proceeds from the $400 million in unsecured notes along with
additional borrowings from its asset based revolver (not rated)
will be applied towards paying off its 10.875 notes due 2016 that
have an approximate outstanding balance of $500 million and to
finance the call premium and related expenses. The notes will be
guaranteed by holdings and its domestic subsidiaries, with certain
limitations.
The B2 CFR reflects URI's large scale relative to its competitors,
and the expectation for strengthening operating margins. These
attributes are balanced against the ongoing cyclicality of the
non-residential construction sector, meaningful uncertainty in the
commercial market, and negative cash flows due in part to an
aggressive fleet expansion program. The company announced recent
plans to scale back its capital expenditure program so that its
free cash flow is anticipated to be less negative. Moody's
anticipates that continued focus on synergies from its RSC
equipment acquisition combined with slow, yet steady, economic
growth will allow for improved coverage metrics in 2013. Leverage
by the end of 2013 could prove low for the rating category.
The following new debt was rated:
Issuer: United Rentals (North America), Inc.
$400 million Senior Unsecured Regular Bond/Debenture,
Assigned B3 (LGD4, 63%)
The rating outlook or ratings could strengthen if positive revenue
growth coincided with improving operating margins and improved
return on assets. Positive ratings traction could develop were the
company's pretax income to average assets to improve to above 4%,
EBITA/Interest above 1.5 times, debt/EBITDA below 4.25 times and
deemed to be improving (all ratios per Moody's standard accounting
adjustments), with at least an adequate liquidity profile.
The stable outlook could be under pressure if EBITA/Interest falls
below 1.3 times, or the company generates negative free cash not
driven by an increase in capital expenditures due to greater
demand. The ratings may be downgraded if the company's operating
margin was anticipated to contract, or if EBITA/Interest was
anticipated to fall below 1.0 times on a projected basis.
Debt/EBITDA trending towards 5.0 times could also result in a
ratings downgrade.
The principal methodology used in rating United Rentals, Inc. and
subsidiaries was the Global Equipment and Automobile Rental
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 July 2010.
United Rentals, Inc. is a holding company that conducts its
operations through its wholly owned subsidiary, United Rentals
(North America), Inc. and its subsidiaries (collectively "URI").
URI is the world's largest equipment rental company operating in
48 states within the United States (serving 99 of the 100 largest
metropolitan areas) and Canada. Revenues are derived primarily
from equipment rentals, sales of used rental equipment, sales of
new equipment, and contractor supplies sales and service. LTM
Revenues through September 2012 totaled $3.6 billion.
UNITED RENTALS: S&P Rates New $400MM Senior Unsecured Notes 'B+'
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' issue-level
rating to the proposed $400 million senior unsecured notes due
2023 to be issued by United Rentals (North America) Inc., a
subsidiary of United Rentals Inc. (URI). URI is the guarantor of
the notes. "The rating is the same as the corporate credit ratings
on United Rentals (North America) and URI. The recovery rating on
this debt is '4', indicating our expectation of average (30%-50%)
recovery in the event of a default scenario. We expect the company
to use the proceeds from the new notes and additional borrowings
under its asset-based loan revolver to redeem $500 million in
10.875% senior notes due 2016 and pay a call redemption premium.
The issue-level ratings and recovery ratings for the company's
existing debt remain unchanged," S&P said.
The company's "fair" business risk profile primarily reflects its
leading position in the cyclical, highly competitive, and
fragmented equipment rental industry. The ratings also reflect
URI's "aggressive" financial risk profile. "The largely debt-
funded acquisition of RSC Equipment Rental Inc. (not rated) in
April reflects URI's very aggressive financial policy, in our
view. Pro forma for the transaction, as of Sept. 30, 2012, URI's
total debt to EBITDA was approximately 4.4x, a level appropriate
for the rating," S&P said.
RATINGS LIST
United Rentals (North America) Inc.
Corporate Credit Rating B+/Stable/--
New Rating
United Rentals (North America) Inc.
$400 mil sr unsecd notes due 2023 B+
Recovery Rating 4
US VIRGIN ISLAND: Fitch Affirms 'BB' Rating on GO Bonds
-------------------------------------------------------
Fitch Ratings assigns a 'BBB' rating to $279.66 million U.S.
Virgin Islands (USVI) Public Finance Authority (VIPFA) bonds
(Virgin Islands gross receipts tax (GRT) loan note) consisting of:
-- $195.995 million revenue refunding bonds, series 2012A
(Working Capital Refinancing/Tax Exempt);
-- $31.19 million revenue bonds, series 2012B (Capital Projects/
Federally Taxable);
-- $52.475 million revenue bonds, series 2012C (Capital
Projects/Tax Exempt).
The bonds are expected to sell via negotiation on Oct. 31, 2012.
Additionally, Fitch affirms the following ratings:
-- USVI implied general obligation (GO) bond rating of 'BB'.
There are no outstanding stand-alone GO bonds of the USVI.
-- $517.2 million in outstanding VIPFA gross receipts revenue
bonds at 'BBB'.
The Rating Outlook for both ratings is Negative.
SECURITY
The GRT revenue bonds issued by VIPFA are secured by a pledge of
GRT collections from the USVI deposited to the trustee for
bondholders prior to their use for general purposes. The bonds
also carry a GO pledge of the USVI.
KEY RATING DRIVERS
GRT SECURITY INSULATED FROM GOVERNMENT OPERATIONS: Bonds issued by
VIPFA and secured by the GRT are fairly insulated from general
fund operations and debt service coverage remains significant,
even through stress scenarios. However, the severity of expected
declines in the GRT due to the loss of Hovensa, previously a large
oil refiner located on St. Croix and the largest employer and
taxpayer on the USVI, is unknown despite some offset provided by
recent increases in the GRT rate. Also, leveraging of the GRT to
support general fund operations, if necessary, could weaken
projected coverage.
ECONOMIC AND FINANCIAL STRAIN: The below investment-grade implied
GO rating and Negative Outlook on both the GRT and implied GO
ratings reflect significantly strained fiscal operations, despite
recent initiatives to structurally balance the operating budget,
and the intractability of longer-term fiscal challenges that are
now compounded by severe economic difficulties from the closure of
Hovensa.
WEAKENED FINANCIAL POSITION: Longstanding fiscal challenges
worsened in the recent downturn with sharp revenue declines,
prolonged, unresolved property tax litigation, high fixed-cost
burdens, and difficulty in reducing expenditures. The territory
has relied on borrowing to close both its operating gaps and
maintain liquidity.
HOVENZA CLOSURE EXACERBATES CHALLENGES: The inability to close the
budget gap in fiscal 2012 is expected to be compounded in fiscal
2013 by additional revenue losses associated with the closure of
Hovensa, completed in February 2012. Given recent tax rate
increases and employee layoffs as well as a history of difficulty
in reducing expenditures, Fitch believes future budgeting
balancing options will be limited.
HIGH LONG-TERM LIABILITIES: Net tax-supported debt is extremely
high, and dedication of revenues to debt service reduces fiscal
flexibility. Other liabilities for pensions and unpaid
retroactive salaries further weigh on the territory's limited
resources.
NARROW ECONOMY: The economy is limited, dependent on tourism and
vulnerable to disruption from natural disasters.
STABILITY FROM U.S. TERRITORY STATUS: Although the USVI enjoys
less flexibility in fiscal matters than U.S. states, the U.S.
legal and regulatory environment provides stability through some
oversight of financial operations as well as the allocation of
grant and operating revenue
What Could Trigger a Downgrade
-- A substantial reduction in GRT revenues or a significant
leveraging of this revenue source by the USVI that notably
reduces debt service coverage ratios could lead to negative
rating action on the GRT bonds.
-- Further erosion in the USVI's financial position and/or
deterioration in the USVI's economy due to the Hovensa
closure, beyond current expectations, would lead to negative
rating action on the implied GO rating.
Credit Profile
The assignment of a 'BBB' rating on the GRT bonds reflects the
structure's legal protections and significant coverage of debt
service by pledged revenues. GRT bonds are secured by the USVI's
pledge of GRT revenues received or to be received. All such
collections are deposited daily to a special escrow account. With
the exception of a small required payment for housing, all
revenues are allocated daily to the trustee for the benefit of
bondholders, only after which are remaining receipts available for
general purposes. The priority claim of bondholders to GRT
collections and other structural protections insulate bondholders
from the USVI's broader fiscal stress and support a rating level
that is higher than the GO rating.
Security features include an additional bonds test requiring 1.5x
maximum annual debt service (MADS) coverage by historical and
prospective revenues, a debt service reserve funded at MADS, and
covenants precluding tax rate reductions or the granting of
excessive tax incentives. Additionally, should a 1.5x MADS
coverage level be reached in any 12-month period, the USVI has
covenanted to seek out additional revenue to pledge to the bonds.
As with states, the USVI and VIPFA are ineligible to file for
protection under the U.S. Bankruptcy Code. Debt service coverage
on the bonds increased in fiscal 2011 (Oct. 1 fiscal year) from
fiscal 2010 due to an increase in the GRT rate from 4% to 4.5%,
effective May 1, 2011. Coverage of senior lien bonds in fiscal
2011 is estimated at about 3.62x, up from 3.36x.
A further increase in the GRT rate to 5%, effective March 1, 2012,
is expected to produce similar levels of debt service coverage in
fiscal 2012 as in fiscal 2011 as the higher rate is expected to be
offset by the economic retrenchment produced by the Hovensa
closure combined with increasing levels of debt service. When
including unrated, junior lien obligations, combined debt service
coverage is estimated at 3x in both fiscal years 2011 and 2012.
Coverage of senior lien MADS by estimated fiscal 2012 revenues is
forecast at 2.64x; down slightly from about 2.8x forecast earlier
this year, reflecting the $131 million refinancing of a line of
credit secured by a subordinate lien of GRT with this senior lien
issue and the additional borrowing for capital projects. MADS
coverage of all GRT-secured debt is 2.63x based on estimated
fiscal 2012 revenues.
The enacted budget for fiscal 2013 reflects the expected impact of
the closing of the Hovensa refinery on both the economy and
revenues, including a 6% assumed decline in GRT revenue. Fitch's
stress scenario, assuming 5% annual declines throughout the
forecast period, results in still sufficient coverage of senior
lien obligations until fiscal 2030. T he stress test scenario does
not include the issuance of additional debt secured by the GRT,
notable in that Fitch believes there is the potential for the USVI
to leverage this revenue source for additional deficit and capital
borrowing in the coming fiscal years. This concern is encompassed
in the Negative Outlook on these bonds.
The USVI's implied GO 'BB' bond rating incorporates Fitch's view
that the USVI will continue to have difficulty achieving ongoing
structural budget balance in the context of revenue losses due to
the loss of its largest taxpayer and employer, longstanding fiscal
constraints, including from unresolved property tax litigation,
high fixed costs, and very high liabilities. The USVI has had
limited flexibility in responding first to the economic downturn
and now to an operating budget that is out of balance. After
relying primarily on substantial external borrowing to address
budget gaps, the government has made deep spending cuts, including
staffing reductions, and has increased the GRT rate to address its
structural budget gap.
Progress had been made in fiscal management under federal
oversight, leading to spending and debt control, upgraded internal
systems, and improved financial reporting. Some of this progress
has recently stalled as audit reports are again considerably late,
with the fiscal 2010 audit now expected at the end of November
2012.
USVI revenue collections are subject to significant volatility.
After several years of robust economic and revenue growth, general
fund revenues plummeted in the recession, with GAAP-basis fiscal
2009 falling 29% from fiscal 2008, to $483 million. Personal and
corporate income taxes were sharply lower, and further litigation
delays limited property tax collections. The USVI issued a $100
million loan note that year to fund operating expenditures.
Operations in fiscal 2010 were additionally aided by an allocation
of federal stimulus funds as well as further borrowing to cover
its structural deficit; in fiscal 2010, the USVI issued its $399
million series 2010 A & B working capital revenue bonds to redeem
the $100 million loan note outstanding from fiscal 2009, redeem a
$100 million working capital loan note that had been issued during
fiscal 2010, and provide an additional $150 million in working
capital for that fiscal year.
For fiscal 2011, appropriations continued to exceed projected
revenues and the governor sought substantial mid-year spending
cuts and an increase in the GRT rate to balance the budget. The
GRT rate increase to 4.5% provided some budget relief, an 8%
salary rollback for certain USVI employees was implemented,
effective Aug. 1, 2011, and a retirement incentive for long-term
employees was offered, as means to balance the budget. The USVI
has preliminarily estimated total revenues of $861 million,
inclusive of $123 million received through an external bank line
of credit, supporting $863 million in expenditures that year,
resulting in a $2.9 million operating deficit.
Following the enactment of the fiscal 2012 budget, the governor's
office forecast a $67.5 million operating deficit and called for
immediate expenditure reductions and revenue increases to balance
the budget. Approximately 500 employees were terminated in
December 2011, providing about $20 million in savings, although
negotiations on increasing the GRT rate stalled. Amidst budget
negotiations, in January 2012 Hovensa announced its imminent
closure. The USVI estimated a direct annual revenue loss of about
$50 million ($30 million in income tax losses and $17 million in
lost GRT revenue) related to the closure in addition to the loss
of about 2,000 jobs.
Following Hovensa's announcement, the legislature approved the
increase in the GRT rate to offset the expected loss of GRT
revenue from Hovensa and also implemented other expenditure
reductions. A remaining budget gap was closed through proceeds
from the issuance of a working capital matching fund-secured bond
issue in August 2012. Proceeds of $60 million were applied to the
fiscal 2012 budget and it is planned that $35 million and $25
million will be applied to the fiscal 2013 and fiscal 2014
budgets, respectively.
Increasing matching fund (excise tax) revenue is expected to be
available to the general fund related to production at a new rum
facility owned by Diageo. Matching fund revenue is only available
to the general fund after debt service payments on the USVI's
matching fund revenue bonds have been made in full and Fitch
believes the USVI may choose to further leverage this revenue
source for working capital and capital projects. The USVI
estimates that a $9 million budget gap exists in the recently
enacted fiscal 2013 budget; however, Fitch believes the budget gap
could prove significantly larger given optimistic projections for
income tax receipts.
The USVI's liabilities are extremely high. Tax-supported debt
totals about $2 billion as of Nov. 1, 2012, equivalent to 75% of
personal income. About $735 million is GRT bonds, subordinate
notes and tax increment revenue bond anticipation notes (BANs)
issued by VIPFA, which also carry a USVI GO pledge. Another $1.3
billion is backed by matching funds from federal excise taxes
levied on USVI-distilled rum. In 2012, debt service for GRT bonds
and matching fund bonds totaled about $139 million, equal to 18.8%
of general fund taxes and gross matching fund receipts combined.
Amortization is slow, with 30% maturing in 10 years.
Persistent underfunding has led to a large pension liability, with
an estimated funding ratio of 49.9% as of Sept. 30. 2010, down
from 52.4% the year prior; the $1.5 billion unfunded liability
equates to about 56% of 2010 personal income. Other liabilities
include negotiated but unpaid salary increases over the last two
decades, the burden of which was estimated at $232 million as of
Sept. 30, 2009. In October 2010, the USVI shifted $45 million
from its insurance guarantee fund to repay a portion of the unpaid
salaries. The USVI's liability for other post-employment benefits
totals $1.12 billion as of Sept. 30, 2010.
The USVI is an organized, unincorporated U.S. territory 40 miles
east of the Commonwealth of Puerto Rico. The economy is small,
narrow and subject to considerable volatility, although some
diversification is underway. Tourism and related industries
represent approximately 80% of economic activity, although other
activities, notably rum distillation are prominent, and government
employment equals more than a quarter of jobs. Prior to its
closure and conversion to a storage facility in February 2012,
Hovensa employed 2,000 on the island of St. Croix, about 4.5% of
total USVI employment, and was significant to the USVI's economic
activity and fiscal stability. Hovensa is expected to continue to
provide about 100 jobs on St. Croix; the USVI relates that a large
share of Hovensa's former employees are ex-patriots and are likely
to leave the USVI. The closure of the facility has contributed to
the unemployment rate in the USVI escalating to 13.2% in August
2012 as compared to 9.3% one year prior.
Tourism indicators have begun to stabilize after sharp, recession-
related declines in 2008 and 2009, although the economic recovery
appears to be unsteady and further improvement will be linked to
broader economic trends in the U.S., from which the majority of
USVI visitors originate. Following the recession, 2010 employment
rose 1.1% in the USVI, compared with a 0.7% decline nationally.
In 2011, employment results were less positive, with a 0.7%
decline compared to 1.1% growth in the U.S. More recent employment
performance is weak with August 2012 down 6.6% from August 2011,
compared to growth of 1.4% nationally over the same period.
VELOCITY EXPRESS: Can Be Named as Defendant in N.J. Tort Suit
-------------------------------------------------------------
District Judge Jose L. Linares ruled that Velocity Express
Leasing, Inc., may be added as defendant in a personal injury
lawsuit involving St. Mary's Hospital in Passaic, New Jersey, and
other defendants.
According to the complaint, on April 25, 2008, Miguel Sarmiento
was unloading his commercial vehicle at St. Mary's Hospital while
making a delivery on behalf of his employer, Ace Endco. At the
same time, Orsoman Baquero was also on the loading dock making a
delivery on behalf of Velocity, a company that delivers medical
supplies to hospitals. Unknown to Mr. Sarmiento, as he was
unloading his vehicle, Mr. Baquero lowered a mechanical platform
on the loading dock that created a hole on the dock. Mr.
Sarmiento subsequently fell into the hole, suffered serious head
injuries, and lost consciousness.
Mr. Sarmiento on Dec. 17, 2009, filed a Complaint against St.
Mary's and fictitious defendants alleging three counts of
negligence. He voluntarily dismissed the Complaint without
prejudice on Dec. 23, 2009, upon learning that there was an
automatic stay in place as to St. Mary's as a result of a Chapter
11 bankruptcy filing in March 2009. On Jan. 28, 2010, Mr.
Sarmiento filed a motion for relief from the automatic stay, and
in March 2010 entered into a consent order to lift the automatic
stay with bankruptcy counsel for St. Mary's.
On April 22, 2010, by Miguel and Martha P. Sarmiento filed a
second Complaint against St. Mary's and fictitious defendants
alleging three counts of negligence, and one count of loss of
services, consortium and companionship. The Sarmientos later
added as defendants AmeriSource, a provider of medical supplies,
which was also making a delivery on the loading dock at the time
of Mr. Sarmiento's accident, and Velocity, whom AmeriSource's
counsel identified as the employer of the driver who made
AmeriSource's delivery.
Also unknown to the Sarmientos, Velocity had filed for bankruptcy
in September 2009 in the District of Delaware. As a result, the
Court stayed this litigation on June 20, 2011.
Thereafter, the Sarmientos obtained the services of legal counsel
in Delaware and moved for relief from the automatic stay in place
as to Velocity on Aug. 11, 2011. Delaware Bankruptcy Judge Mary
F. Walrath granted the Sarmientos' motion on Nov. 1, 2011.
Velocity moved for summary judgment alleging that the Sarmientos'
claims are time-barred by New Jersey's two-year statute of
limitations for personal injury actions.
In his Oct. 23, 2012 Opinion available at http://is.gd/DpL7OSfrom
Leagle.com, Judge Linares said the Court is satisfied that the
Sarmientos attempted in good faith to identify fictitious
defendants. Accordingly, the Court held that the Sarmientos
satisfy the due diligence requirement for invoking the fictitious
defendant rule.
The lawsuit is MIGUEL SARMINETO and MARTHA P. SARMIENTO,
Plaintiffs, v. ST. MARY'S HOSPITAL PASSAIC, NJ, et al.,
Defendants, Civil Action No. 10-2042 (D. N.J.).
About Velocity Express
Velocity Express -- http://www.velocityexpress.com/-- operated a
nationwide network of regional ground delivery services. Together
with 12 affiliates, Velocity filed for Chapter 11 protection
(Bankr. D. Del. Case No. 09-13294) on Sept. 24, 2009. The Company
disclosed assets of $94.1 million and debt of $120.6 million as of
Sept. 1, 2009.
Velocity subsequently changed its name to VEC Liquidating
Corporation following the sale of its assets to ComVest Velocity
Acquisition I, LLC. The buyer is represented in the case by
Kenneth G. Alberstadt, Esq., at Akerman Senterfitt LLP in New
York. DIP Lender Burdale is represented in the case by Jonathan
M. Cooper, Esq., Randall L. Klein, Esq., and Sarah J. Risken,
Esq., at Goldberg Kohn Bell Black Rosenbloom & Moritz, LTD., in
Chicago.
VIRGIN MEDIA: Moody's Corrects October 24 Rating Release
--------------------------------------------------------
Moody's Investors Service issued a correction to the October 24,
2012 rating release of Virgin Media Finance PLC.
Moody's Investors Service assigned a (P)Ba2 rating to the
approximately USD1.25 billion of Senior Notes (due 2022) being
issued by Virgin Media Finance PLC ('Issuer'), a subsidiary of
Virgin Media Inc. ("Virgin Media" or "the company").
Virgin Media intends to use the net proceeds to repurchase (i) the
outstanding $850 million and EUR180 million of 9.50% Senior Notes
(due 2016) and (ii) a portion of the outstanding $600 million of
8.375% Senior Notes (due 2019) and the outstanding GBP350 million
of 8.875% Senior Notes (due 2019). The company also has access to
a GBP450m revolving credit facility.
Should the company be unable to use the full proceeds of this
offering to purchase such notes, it expects to repurchase/repay
some other indebtedness and/ or maintain funds for general
corporate purposes.
Ratings Rationale
The proposed Notes are rated (P)Ba2 based on Moody's expectation
that the transaction will have marginal negative impact on the
company's gross debt. The proposed transaction also replaces
existing debt with debt of equivalent seniority and thus does not
affect the proportion of subordinated debt within the company's
capital structure. The Notes will rank pari passu with the
remaining senior notes (rated Ba2) at Virgin Media's subsidiary,
Virgin Media Finance Plc.
On October 10, 2012, Virgin Media had announced the commencement
of tender offers by Virgin Media Finance PLC to repurchase the
aforementioned 2016 and 2019 senior notes. The tender offers are
conditional upon the Virgin Media group issuing sufficient debt
for the Issuer to pay the total consideration. The total premium
cost and fees of the tender offer are expected to be approximately
GBP130 million, which forms part of Virgin Media's GBP225 million
second-phase Capital Return Programme, announced in July 2011, of
which GBP175 million remains available for outstanding debt
structure optimization. The execution of the tender offers via the
proposed Notes issue should help Virgin Media in lowering its
interest cost and in improving its debt maturity profile.
Virgin Media's Ba1 CFR reflects: (i) the good operating
performance of the company in the relatively mature UK broadband
and television market; (ii) its continued commitment towards de-
leveraging by mid-2013 to a target of approximately 3.0x net
debt/OCF (operating income before depreciation, amortisation,
goodwill and intangible asset impairments and restructuring and
other charges) -- as calculated by Virgin Media; and (iii) its
consistent positive free cash flow generation.
For the first nine months of 2012, Virgin Media grew its revenues
by 3.1% year-on-year. Consumer Cable revenues grew by 2.7% during
the period largely driven by the RGU growth in high speed
broadband services, good take of the TiVo service (which is now
availed by 30% of the Virgin Media's total TV customer base) as
well as Cable ARPU growth. Consumer Mobile revenues on the other
hand remained largely flat year-on-year due to the impact of
regulatory changes to mobile termination rates. Revenues for the
Business division (16.5% of Virgin Media's total revenues) for the
first nine months of 2012 grew solidly by 8.8%, which represented
44% of the total group revenue growth for the period.
Reported OCF growth of 3.8% year-on-year in the first nine months
of 2012, has helped Virgin Media in maintaining its leverage (on a
net hedged debt to last twelve months of reported OCF) broadly
flat (compared to the leverage as of September 30, 2011 based on
last twelve months of reported OCF) at 3.4x as of 30 September
2012. Nevertheless, Moody's would expect the company to remain
focused on achieving its leverage target of approximately 3.0x Net
Total Debt to EBITDA by mid 2013. However, the reported free cash
flow of Virgin Media has declined by 6.3% to GBP336m for the first
nine months of 2012 due to the one-off incremental capital
investment in the company's broadband speed upgrade programme.
What Will Change The Rating Up/Down
Any upward pressure to the CFR towards investment grade is
unlikely to occur in the short to medium term and would require
amongst other things (i) Gross Debt/EBITDA ratio (as calculated by
Moody's) trending towards 3.0x; (ii) FCF/ Debt (as calculated by
Moody's) above 10% on a sustained basis; (iii) further
simplification of the company's borrowing structure; and (iv)
evidence that Virgin Media can continue to sustain and improve its
market position despite intense competition and amidst the
gradually increasing convergence of broadband with television in
the UK.
The rating could come under downward pressure if the company's
operating performance deteriorates substantially and/or its
Debt/EBITDA (as calculated by Moody's) remains above 4x at the end
of 2011 together with constrained free cash flow generation (as
defined by Moody's).
Moody's issues provisional ratings in advance of the final sale of
securities and these ratings reflect Moody's preliminary credit
opinion regarding the transaction only. Upon a conclusive review
of the final documentation, Moody's will endeavour to assign a
definitive rating to the Notes. A definitive rating may differ
from a provisional rating.
Principal Methodology
The principal methodology used in rating Virgin Media Finance plc
was the Global Cable Television 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.
Virgin Media, headquartered in Hook, Hampshire, is the largest
cable operator in the UK. In the fiscal year ending 31 December
2011, the company generated about GBP4 billion in revenue and
GBP1.6 billion in reported OCF (operating income before
depreciation, amortisation, goodwill and intangible asset
impairments and restructuring and other charges - as reported by
Virgin Media).
VITRO SAB: Profit Jumps 151% as Auto Glass Sales Rise
-----------------------------------------------------
Brendan Case at Bloomberg News report that Vitro SAB, the Mexican
glassmaker embroiled in a legal battle with Elliott Management
Corp. and Aurelius Capital Management LP, said net income rose
151% in the third quarter as sales to automakers climbed and the
company's foreign exchange gain nearly doubled.
According to the report, net income was $30 million compared with
$12 million a year earlier, the San Pedro Garza Garcia, Mexico-
based company said in a statement. Sales climbed 4.7% to $455
million, including a 15% gain in automotive glass sales. Vitro
defaulted on $1.2 billion of bonds in February 2009 amid a
recession that reduced demand for construction and auto glass.
The report relates that in the third quarter, earnings before
interest, taxes, depreciation and amortization, a profit measure
known as Ebitda, increased 25% to $105 million. Vitro said it
benefited from "lower-than-expected electricity costs" and "lower
fees in connection with the company's debt restructuring process."
The Bloomberg report discloses that total net debt dropped 28% to
$957 million, which Vitro said reflected the conclusion of its
Mexican restructuring as well as higher cash balances. The
company posted a foreign exchange gain of $47 million compared
with $25 million a year earlier.
About Vitro SAB
Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV:
VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases
Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global
glass producer, serving the construction and automotive glass
markets and glass containers needs of the food, beverage, wine,
liquor, cosmetics and pharmaceutical industries.
Vitro is the largest manufacturer of glass containers and flat
glass in Mexico, with consolidated net sales in 2009 of MXN23,991
million (US$1.837 billion).
Vitro defaulted on its debt in 2009, and sought to restructure
around US$1.5 billion in debt, including US$1.2 billion in notes.
Vitro launched an offer to buy back or swap US$1.2 billion in
debt from bondholders. The tender offer would be consummated
with a bankruptcy filing in Mexico and Chapter 15 filing in the
United States. Vitro said noteholders would recover as much as
73% by exchanging existing debt for cash, new debt or convertible
bonds.
Concurso Mercantil & Chapter 15 Proceedings
Vitro SAB on Dec. 13, 2010, filed its voluntary petition for a
pre-packaged Concurso Plan in the Federal District Court for
Civil and Labor Matters for the State of Nuevo Leon, commencing
its voluntary concurso mercantil proceedings -- the Mexican
equivalent of a prepackaged Chapter 11 reorganization. Vitro SAB
also commenced parallel proceedings under Chapter 15 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan
on Dec. 13, 2010, to seek U.S. recognition and deference to its
bankruptcy proceedings in Mexico.
Early in January 2011, the Mexican Court dismissed the Concurso
Mercantil proceedings. But an appellate court in Mexico
reinstated the reorganization in April 2011. Following the
reinstatement, Vitro SAB on April 14, 2011, re-filed a petition
for recognition of its Mexican reorganization in U.S. Bankruptcy
Court in Manhattan (Bankr. S.D.N.Y. Case No. 11-11754).
The Vitro parent received sufficient acceptances of its
reorganization by using the US$1.9 billion in debt owing to
subsidiaries to vote down opposition by bondholders. The holders
of US$1.2 billion in defaulted bonds opposed the Mexican
reorganization plan because shareholders could retain ownership
while bondholders aren't being paid in full.
Vitro announced in March 2012 that it has implemented the
reorganization plan approved by a judge in Monterrey, Mexico.
In the present Chapter 15 case, the Debtor seeks to block any
creditor suits in the U.S. pending the reorganization in Mexico.
Chapter 11 Proceedings
A group of noteholders opposed the exchange -- namely Knighthead
Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc.,
Davidson Kempner Distressed Opportunities Fund LP, and Brookville
Horizons Fund, L.P. Together, they held US$75 million, or
approximately 6% of the outstanding bond debt. The Noteholder
group commenced involuntary bankruptcy cases under Chapter 11 of
the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D.
Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010.
Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation
counsel to analyze the potential rights that Vitro may exercise
in the United States against the ad hoc group of dissident
bondholders and its advisors.
A larger group of noteholders, known as the Ad Hoc Group of Vitro
Noteholders -- comprised of holders, or investment advisors to
holders, which represent approximately US$650 million of the
Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not
among the Chapter 11 petitioners, although the group has
expressed concerns over the exchange offer. The group says the
exchange offer exposes Noteholders who consent to potential
adverse consequences that have not been disclosed by Vitro. The
group is represented by John Cunningham, Esq., and Richard
Kebrdle, Esq. at White & Case LLP.
A bankruptcy judge in Fort Worth, Texas, denied involuntary
Chapter 11 petitions filed against four U.S. subsidiaries. On
April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro
America LLC and three other U.S. subsidiaries -- that were
subject to the involuntary petitions into voluntary Chapter 11.
The Texas Court on April 21 denied involuntary petitions against
the eight U.S. subsidiaries that didn't consent to being in
Chapter 11.
Kurtzman Carson Consultants is the claims and notice agent to
Vitro America, et al. Alvarez & Marsal North America LLC, is the
Debtors' operations and financial advisor.
The official committee of unsecured creditors appointed in the
Chapter 11 cases of Vitro America, et al., has selected Sarah
Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in
Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq.,
and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP,
in New York, as counsel. Blackstone Advisory Partners L.P.
serves as financial advisor to the Committee.
The U.S. Vitro companies sold their assets to American Glass
Enterprises LLC, an affiliate of Sun Capital Partners Inc., for
US$55 million.
U.S. subsidiaries of Vitro SAB are having their cases converted
to liquidations in Chapter 7, court records in January 2012 show.
In December, the U.S. Trustee in Dallas filed a motion to convert
the subsidiaries' cases to liquidations in Chapter 7. The
Justice Department's bankruptcy watchdog said US$5.1 million in
bills were run up in bankruptcy and hadn't been paid.
On June 13, 2012, U.S. Bankruptcy Judge Harlin "Cooter" Hale in
Dallas entered a ruling that precluded Vitro from enforcing
its Mexican reorganization plan in the U.S. Vitro's appeal is
pending.
W.R. GRACE: Libby Claimants Drop Plan Confirmation Appeal
---------------------------------------------------------
Claimants injured by exposure to asbestos from W.R. Grace's
operations in Lincoln County, Montana, sought and obtained
approval from Judge Ronald Buckwalter of the U.S. District Court
for the District of Delaware of their unopposed motion for
voluntary dismissal of their appeal with prejudice. The Libby
Claimants appealed from Judge Buckwalter's order affirming the
order confirming the Debtors' Chapter 11 Plan of Reorganization.
The Libby Claimants' withdrawal of appeal came following a
Bankruptcy Court's order of a settlement among the Debtors, the
Official Committee of Asbestos-related Personal Injury Claimants,
and the Libby Claimants regarding the transition of the Libby
Medical Program to a trust created pursuant to the global
settlement arrangement -- the LMP Trust.
In January 2012, Grace entered into a proposed agreement requiring
it to turn the Libby Medical Program over to a locally
administered trust, and to fund the trust with $19.5 million.
The Libby Medical Program first became effective on April 3, 2000.
The Debtors voluntarily created the Libby Medical Program prior
to, and independent of, their Chapter 11 cases. Since then, the
Debtors voluntarily maintained the Libby Medical Program, through
which the Debtors provided certain health care benefits related to
the treatment of asbestos-related conditions to eligible
individuals, who enrolled in the program. The program provided
that certain individuals would be eligible for coverage, including
former employees of the Debtors who worked in the Debtors' mine
operations in Libby, Montana, and certain other individuals, who
reside or formerly resided in the area surrounding the mine. The
Debtors disclosed that their estates incur more than $2 million
annually in health care expenses for the Libby Medical Program.
On the effective date of the Libby Settlement, all rights and
duties whatsoever of Grace and Health Network of America, Inc.,
under the Libby Medical Program will be transferred to the LMP
Trustee. Grace, however, will remain responsible for any expenses
of the program incurred prior to the effective date.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
W.R. Grace obtained confirmation of a plan co-proposed with the
Official Committee of Asbestos Personal Injury Claimants, the
Official Committee of Equity Security Holders, and the Asbestos
Future Claimants Representative. The Chapter 11 plan is built
around an April 2008 settlement for all present and future
asbestos personal injury claims, and a subsequent settlement for
asbestos property damage claims. Implementation of the Plan has
been held up by appeals in District Court from various parties,
including a group of prepetition bank lenders and the Official
Committee of Unsecured Creditors.
District Judge Ronald Buckwalter on Jan. 31, 2012, entered an
order affirming the bankruptcy court's confirmation of W.R. Grace
& Co. and its debtor affiliates' Plan of Reorganization.
Bankruptcy Judge Judith Fitzgerald had approved the Plan on
Jan. 31, 2011.
On April 20, 2012, the company filed a motion with the Bankruptcy
Court to approve definitive agreements among itself, co-proponents
of the Plan, BNSF railroad, several insurance companies and the
representatives of Libby asbestos personal injury claimants, to
settle objections to the Plan. Pursuant to the agreements, the
Libby claimants and BNSF would forego any further appeals to the
Plan.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
WEST PENN: Fitch Lowers Rating on $737-Mil. Bonds to 'CCC'
----------------------------------------------------------
Fitch Ratings has downgraded West Penn Allegheny Health System's
(WPAHS) approximately $737 million series 2007A health system
revenue bonds issued by the Allegheny County Hospital Development
Authority outstanding debt to 'CCC' from 'B+'. The rating is
removed from Rating Watch Negative.
Security
Security comprises a pledge of gross revenues, a mortgage on the
system hospital facilities and a debt service reserve fund.
Key Rating Drivers
AFFILIATION UNCERTAINTY RAISES RESTRUCTURING POSSIBILITY:
The downgrade to 'CCC' reflects the increased possibility of a
debt restructuring, coupled with and arising from heightened
uncertainty about the progress of WPAHS's affiliation with insurer
Highmark, Inc. The previous rating was predicated on the expected
benefits of the affiliation agreement, which offset WPAHS's
extremely poor liquidity, coverage and profitability metrics. The
hospital's recent notice to Highmark terminating the affiliation
agreement and its stated intention to pursue other affiliation
opportunities at best signal an elevated and material possibility
that the Highmark affiliation will not close by the April 30, 2013
implementation deadline, leaving WPAHS with limited options for
addressing its precarious financial situation.
Credit Summary
Fitch says "On June 21, 2012, Fitch affirmed the 'B+' rating on
WPAHS's series 2007A revenues bonds and revised the Outlook to
Stable in large part based on the continuing progress of the
affiliation with Highmark. In our commentary, however, we noted
that 'WPAHS's viability hinges on the successful execution of the
affiliation with Highmark. If the affiliation agreement is not
finalized, a multi-notch negative rating action is likely to
occur.' On Sept. 28, 2012 Fitch placed the 'B+' rating on Rating
Watch Negative in response to WPAHS's announcement that it had
notified Highmark that 'the System is released from its obligation
under the Affiliation Agreement signed by the two companies in Nov
2011.' Both parties have initiated litigation, and it is unknown
whether the agreement will be upheld, whether WPAHS will be
allowed to pursue other partners, and how certain funds advanced
to WPAHS by Highmark will be treated."
Notwithstanding the uncertainty, Fitch believes that debt
restructuring is now a greater possibility than it was several
months ago based both on public statements from WPAHS and
Highmark, and on the weakness of WPAHS's financial profile. In
its public statement, WPAHS cited as a primary factor for
terminating the agreement that "Highmark has specifically
demanded, among other things, that WPAHS restructure through
bankruptcy." Although denying the allegation, Highmark has
identified debt restructuring as an option to be considered in the
process of completing the affiliation.
Although the rating is removed from Rating Watch, the credit
situation remains volatile and dependent on the outcome of
litigation, the involvement of government entities, the release of
financial information by WPAHS, and the possible resumption of
discussions between WPAHS and Highmark. Fitch will monitor
developments, including the release of audited and unaudited
financial and operating results, and will take rating action as
appropriate.
WEST SEATTLE FITNESS: Says Chapter 11 Won't Affect Operations
-------------------------------------------------------------
West Seattle Blog reports the management at Allstar Fitness said
it plans to send a letter to its members explaining that its
recent Chapter 11 filing is not affecting and will not change
membership services and operations.
West Seattle Fitness LLC does business as Allstar Fitness. West
Seattle Fitness LLC filed for Chapter 11 bankruptcy (Bankr. W.D.
Wash. Case No. 12-18818) on Aug. 27, 2012, estimating both assets
and debts under $1 million. A copy of the petition is available
at http://bankrupt.com/misc/wawb12-18818.pdf West Seattle Fitness
is represented by James E. Dickmeyer, Esq.
West Seattle Blog sought out Allstar management/ownership after
receiving inquiries from members who said the filing was the
subject of rumors. The blog also reviewed court documents.
West Seattle Blog relates Allstar general manager Ramon Velasquez
pointed out in a conversation with WSB researcher/editorial
assistant Katie Meyer said the club's daily operations, including
hours, classes, and staff, have not and will not be affected by
the proceedings, and that the forthcoming letter to members will
include that information.
The report says Mr. Velasquez told WSB that memberships will not
be affected and that there has been no interruption in employee
wages, health coverage, vacations, etc. He said the club's
operations are strong and that last month was their best September
ever for memberships.
* Nonrefundable Child Tax Credits Aren't Exempted
-------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the U.S. Court of Appeals in Denver ruled on Oct. 23
ruled that nonrefundable portion of a federal child tax credit
isn't exempt property.
According to the report, the 10th Circuit in Denver was construing
exemptions allowed under Colorado state law. The appeals court
reversed the ruling by the Bankruptcy Appellate Panel and
reinstated the result reached in bankruptcy court.
The case is Cohen v. Borgman (In re Borgman), 11-1369, 10th U.S.
Circuit Court of Appeals (Denver).
* Fitch Says Near-Term Default Pressures Easing in 2012
-------------------------------------------------------
Near-term default pressures appear to be easing as 2012 draws to a
close, allowing the possibility that the U.S. high yield default
rate may end the year below Fitch's 2012 forecast of 2.5%-3.0%.
Fitch says "We believe the Fed's efforts to revive the economy and
a positive resolution to the U.S. fiscal cliff remain critical
even as the insatiable demand for yield products is allowing more
highly levered companies to access the debt markets."
The trailing 12-month default rate slipped back to 2% in September
from 2.2% in August. Two defaults in September brought the year's
issuer count to 25 and volume tally to $13.4 billion (versus 12
issuers and $7.9 billion in the first nine months of 2011).
Following a strong August, issuance soared in September and was
notable both in terms of volume and composition. The share of
newly minted bonds rated 'CCC' or lower climbed to 26% of total
volume ($38.6 billion) -- a record for the year -- as the Federal
Reserve's launch of QE3 further stimulated investor appetite for
high yield in the primary and secondary markets. At the end of
September, 46% of 'CCC' rated volume in Fitch's U.S. High Yield
Default Index was trading above par, compared with just 9% a year
earlier.
If default volume in the last quarter of 2012 matches 2011's
considerable $8 billion, the default rate will end the year at
roughly 2%. A filing by Edison Mission Energy (IDR rated 'CC' by
Fitch and one of the large potential defaults for year-end) would
contribute half that amount, but with funding conditions so
robust, it may be difficult to arrive at the full tally needed to
move the default rate beyond 2%.
Booming issuance notwithstanding, fundamentals show that credit
gains have slowed this year -- not surprising given the economy's
sluggish performance -- and the bottom tier of speculative-grade
issues has expanded. The 'CCC' or lower pool has grown to $227.3
billion from $196.8 billion at the beginning of the year
(including 'B-' issues, this high risk slice of the market now
totals $358.9 billion).
The weighted average recovery rate on defaults through September
was 49.5% of par, boosted by the 53% of defaulted volume that
consisted of secured bonds. The average recovery rate on senior
secured bonds of 65% of par was more than twice the recovery rate
on unsecured issues of 30.8%.
Industry-specific recovery rates showed even more of a gap,
ranging from 80% of par to the mid-teens.
* Fitch Completes Peer Review of 10-Rated Community Banks
---------------------------------------------------------
Fitch Ratings has completed a peer review of 10 rated community
banks. The Community Bank Peer Review resulted in the affirmation
and Stable Outlook of eight banks and the affirmation and Negative
Outlook for two banks.
The following banks were reviewed as part of the Community Banks
Group: Ameriserv Financial, Inc. (ASRV), Central Pacific Financial
Corp. (CPFC), Community Bank System, Inc. (CBU), CVB Financial
Corp. (CVB), First Commonwealth Financial Corp. (FCF), First
Interstate Bancsystems, Inc. (FIBK), First Midwest Bancorp, Inc.
(FMBI), Independent Bank Corp. (INDB), Old National Bancorp (ONB),
Trustmark Corporation (TRMK). The majority of this peer group is
rated 'BBB' with a Stable Rating Outlook.
Fitch's Community Bank Peer Group is mostly defined by banks with
less than $10 billion in assets that typically operate in a
limited number of markets and, in general, are conservative,
traditional on balance-sheet lenders for local communities.
RATING DRIVERS AND SENSITIVITIES - VRs and IDRs (applicable to all
banks in the Community Bank Group)
Fitch-rated community banks Viability Ratings (VRs) and Issuer
Default Ratings (IDRs) incorporate limiting rating factors. The
company's VRs and IDRs are significantly more sensitive to the
economic conditions within their respective footprints given their
geographic concentration. Additionally, community banks' earnings
profile is much more reliant on spread revenue with limited
opportunities to improve fee-based income. Fitch also notes that
community banks' loan mix is heavily weighted towards real estate
lending, particularly commercial real estate, when compared to
larger peer groups.
Fitch's Outlook for Community Banks is trending Negative. In
general, the banking industry is facing significant challenges
given the weak economic picture, the prolonged low rate
environment, increased burden from regulatory-related costs and
impacts from Dodd-Frank. However, in Fitch's view, these issues
may impact community banks much more than global trading banks,
national banks and large regionals, which are more diversified,
benefit from economies of scale and are typically price leaders in
their operating markets.
In Fitch's opinion, the community bank group business model will
likely come under pressure. Moreover, rising fixed costs related
to increased regulation and reporting, and aspects of Dodd-Frank
which may affect consumer lending practices, corporate governance
coupled with increased capital and liquidity requirements stemming
from Basel III, are factors that will likely lead to lower returns
over time. Fitch notes that community banks may need to enhance
compliance and risk management functions to measure with the
increased standards for risk modeling and regulatory reporting.
In general, community banks are operating with excess liquidity
given weak loan demand. Cashflows are being reinvested in lower
yield assets from both securities portfolio and new loans being
originated at lower rates. At this point, most banks have
remained conservative in terms of increasing duration and/or
credit risk in their investment securities portfolio. However,
this rate environment may push banks to reach for yield or extend
duration in order to improve spread income. Fitch continues to
assess any changes in risk appetite in the investment securities
book.
Fitch is also concerned with the recent growth rates in commercial
and industrial lending (C&I) across the banking industry,
particularly at a time when competition is fierce given weak loan
demand. As banks reassess their risk profile and capital
allocation, many are lowering CRE exposure and shifted focus to
grow C&I loans. Some community banks have not historically
focused on C&I and their lending platforms may need to improve to
support such growth plans. This also could potentially lead to
adverse borrower selection. To date, Fitch has not seen credit
trends in C&I to suggest credit deterioration is looming, however,
anecdotally banks have alluded to aggressive competition in terms
of price and structure.
Fitch believes merger & acquisition (M&A) activity will increase
for community banks over the next several years. According to
FDIC data, the number of community banks accounts for 98% of the
banking system, but only 20% of total industry assets. In Fitch's
opinion, management teams at smaller companies may have more of an
incentive to consider M&A as a way to increase economies of scale
and enhance geographic and product diversity, which may help
offset the present challenges.
Strengths:
Community bank's funding profile is considered a rating strength
providing a stable source of liquidity as core deposits are stable
and sticky. Although community banks are not typically price
leaders for either loans or deposits, most hold good market
positions in their respective footprints. Such examples would be
TRMK, FIBK, ONB, which typically hold the 1, 2 or 3 rank position
in their operating footprint when reviewed by MSA. Nonetheless,
community banks market share positions may be squeezed should loan
demand pick and competition for deposits intensifies, particularly
under a rising rate scenario. .
Fitch views community banks' simplistic balance sheet as another
positive attribute. They experience minimal earnings volatility
and financials are transparent and less complex. These banks are
less susceptible to negative impacts from market volatility given
their focus on traditional types of lending. Further, the more
manageable organizational structure bodes well for controlling
risk profile and appetite for most community banks.
Fitch-rated community banks have experienced good credit
performance despite their CRE concentrations. During the real
estate downturn, credit losses are reportedly better than larger
banks, excluding those concentrated in markets where the housing
sector experienced significant stress (i.e. CA, FL, AZ, NV, MI,
OH, GA). Net charge-offs (NCOs) peaked at 2.00% for this group in
2010, which is lower than larger competitors (large regionals
peaked at 2.62% in 2009 and mid-tier regionals peaked at 2.20% in
2009). In Fitch's view, current NCOs levels are approaching
normalized levels for community banks, with the second quarter of
2012 (2Q'12), NCOs on average 0.77% compared to a 10-year average
of 0.69%.
Weaknesses:
Fitch believes the prolonged low rate environment and flat yield
curve will continue to pressure earnings. Although true for all
banks, Fitch believes community banks will be disproportionately
affected owing to the lack of revenue diversity and their reliance
on spread income. For Fitch-rated community banks, average
noninterest income ratio stood at 26% at 2Q'12 versus 46% for
national banks, 36.4% large regionals and 33.8% for mid-tier
regionals.
Fitch also notes that community bank's loan mix is heavily
weighted towards real estate lending, particularly commercial real
estate, when compared to larger peer groups. Prior to 2008,
smaller banks bulked up on CRE as they lost business to bigger
banks in other traditional products such as auto loans, home
mortgages, and credit cards. As such, community bank's loan mix
reflects a higher risk profile given CRE concentration that still
exists. Real estate accounts for an average of 70% of total loans
with CRE (including construction and development) averaging
roughly 40% of total loans down slightly from peak of 42% in 2007.
Fitch also considers the improved capital positions of community
banks relative to CRE exposure as appropriate given the higher
risk profile. CRE (which includes construction loans) to total
equity totaled 218% in 2Q'12 versus 304% in 2007.
Future capital positions may be pressured given regulators changes
to the definition of capital. U.S. banking regulators recent
Notice of Proposed Rulemaking (NPR) implementing Basel III
anticipates that these requirements would apply equally to all
banks, regardless of size. Most notable in the proposals would be
the treatment of unrealized gains and losses in other
comprehensive income, which could greatly increase the volatility
of a bank's regulatory capital measure, which if sustained, would
require community banks to hold additional capital over minimum
requirements to account for this volatility. Further, Fitch also
believes that community bank's access to the capital markets may
be a challenge in the future given limited products suited for
banks of this size.
RATING DRIVERS AND SENSITIVITIES FOR THE IDRS AND VRS OF EACH BANK
ARE SUMMARIZED BELOW:
ASRV (L-T IDR 'BB', Outlook Stable)
ASRV's affirmation and Stable Outlook reflects its stable asset
quality and earnings metrics. However, with an efficiency ratio
of over 85% driving pre-provision net revenues (PPNR) of less than
1%, the company has the weakest earnings profile of the peer
group. The modest level of profitability is attributable to an
organized labor force and a lack of scale as the bank has only $1
billion in assets, which also makes it the smallest bank in
Fitch's community bank peer group. S hould the company maintain
its existing expense base while generating scale in a reasonable
manner, positive rating actions could ensue. Conversely, should
capital maintenance or loan growth become significantly more
aggressive, current ratings could be pressured.
CPFC (L-T IDR 'BB-', Outlook Stable)
CPFC's affirmation of its current rating and Stable Outlook is
driven by asset quality and operating performance in line with
Fitch's expectations. The institution has shown significant asset
quality improvement in the past year, which is embodied in the
current rating, which was upgraded in May of 2012. Most notably,
Central Pacific continues to reduce exposure to its legacy
mainland exposure and C&D portfolios. While CPFC is expected to
remain profitable, headwinds still exist as the institution faces
NIM pressure and high overhead costs. Future financial
performance should continue to benefit from negative provisions in
the near term. However, PPNR still lags community bank peers.
Positively, capital ratios are solid with a Fitch calculated
tangible common equity ratio of 10.8% and ranked the highest for
the community banks group. Fitch considers this appropriate given
the CPFC also has the highest level of NPAs (which includes
restructured loans and 90+ past dues) at 8% when compared to
peers.
CBU (L-T IDR 'BBB', Outlook Stable)
CBU's affirmation and Stable Outlook reflects the company's strong
profitability relative to its peer group, sound asset quality and
stable NIM. CBU's ROA averaged 1.19% over the past five quarters
and compares better than its peer group mean of 1.10% over the
same period. Despite the challenging interest rate environment,
CBU also maintained a healthy average NIM which has hovered around
4% over past five quarters and last three years, and is generally
stronger than its peer group average of 3.82%. CBU maintains good
asset quality with NPAs and NCOs amongst the lowest in its peer
group. NPAs were 1% at June 30, 2012 and far exceeded the peer
group average of 3.54%. CBU's ratings have limited upward
mobility, primarily due to its TCE ratio relative to peers, as
well by its small franchise given its community bank business
profile. Although the TCE ratio of 7.74% at June 30, 2012 has
seen improvements of 165 basis points (bps) year-over-year, it is
still below average compared to its peer group which had an
average TCE ratio of 8.99% at June 30, 2012. Fitch believes a
higher TCE ratio would need to be achieved before a rating action
could occur.
CVB (L-T IDR 'BBB', Outlook Stable)
CVB's affirmation and Stable Outlook is supported by the company's
strong earnings and capital profiles relative to peers. The
company has reported strong financial measures through the most
recent cycle while maintaining a solid level of tangible capital
levels. These buffers are deemed adequate to offset any
unexpected credit losses owing to the bank's geographic
concentrations (Southern CA) and loan type (CRE secured).
Above all else, the affirmation reflects Fitch's opinion of
credit culture at CVB as the bank was able to show consistent
profitability over the cycle in the face of an incredibly weak
credit environment in its operating footprint. Should capital
maintenance become more aggressive or asset quality weaken
negative rating actions would ensue. Positive rating actions could
occur as the bank diversifies away from CRE lending and reduces
its reliance on spread income.
FCF (L-T IDR 'BBB-', Outlook Stable)
FCF's rating affirmation and Stable Outlook is supported by the
company's strong capital position relative to peers along with its
improving credit fundamentals. Also incorporated in FCF's IDR is
its weaker earnings and credit profiles over the cycle compared to
community bank peers. The management team and board of directors
have experienced significant change in recent years, culminating
with the termination of the company's CEO in December 2011.
Should the new management team be able to achieve better
performance from both an earnings and credit standpoint, positive
rating action could follow. Conversely, a more aggressive
approach to capital management and/or credit trends that reverse
their current positive trajectory may lead to negative rating
action.
FIBK (L-T IDR 'BBB-', Outlook Stable)
FIBK's ratings are affirmed and Stable Outlook is maintained.
While FIBK enjoys dominant deposit market share in Wyoming,
Montana and South Dakota financial performance trails others in
the community bank peer group due to weaker loan pricing power and
lingering asset quality issues that have forced FIBK to maintain
an elevated level of provisions quarter to quarter. FIBK's ROA of
69 bps at 2Q'12 is consistent with historical performance but lags
the community bank peer group mean by 25-30 bps. In Fitch's view,
FIBK's ROA is aided by a strong core, low cost deposit base. Loss
of this cheap funding could put adverse pressure on FIBK's
ratings. Further, while asset quality trends have been improving
over the past five quarters, NPAs remain elevated, especially in
relation to peer, at 5.35% of gross loans + OREO. If positive
asset quality trends do not continue or if NPAs fall strictly due
to large levels of charge-offs, negative rating action could be
taken. Fitch also notes that FIBK's capital position is relatively
thin compared to others within the community bank peer group
especially in light of elevated problem loans.
Given Fitch's expectations that asset quality trends should
improve and capital ratios should continue to be augmented through
earnings retention and nominal balance sheet growth, a Stable
Outlook is maintained.
FMBI (L-T IDR 'BBB-', Outlook Stable)
FMBI's ratings affirmation and Stable Outlook reflects
stabilization of asset quality, financial performance in line with
expectations and solid capital measures. Earnings performance as
well as credit measures are in-line with 'BBB-' peers. Presently,
core revenue stream is stable with an average PPNR/average assets
of about 1.46% over the last five quarters. The company's
earnings base also provides absorption for its higher provisioning
needs. Also incorporated in current rating and Outlook is the view
that credit challenges may persist. In Fitch's view, some
volatility should be expected given the CRE concentration (about
52% of loans and roughly 300% of total equity). Fitch also notes
that FMBI is operating with higher level of NPLs when compared to
community bank peers.
Ratings could be positively affected if FMBI's earnings were to
improve and pull in line with peer average coupled with a
reduction in NPAs and diversified loan mix. The Outlook may be
revised to Negative should capital base materially decline from
its present levels absent improvements in credit trends and risk
profile and/or a significant decline in core revenue.
INDB (L-T IDR 'BBB', Outlook Negative)
INDB's rating affirmation reflects the company's strong asset
quality, as evidenced by the low levels of NPAs and NCOs relative
to other Fitch-rated community banks. The ratings also continue
to be supported by INDB's stable operating performance, as
measured through ROA and NIM, both of which are in line or above
peer averages. The ratings continue to be constrained by
concentration of CRE in INDB's loan portfolio (which accounts for
over half of INDB's loan book), and a home equity portfolio which
has experienced 34% growth since 2010 and currently accounts for
20% of the loan book. The revision of the Rating Outlook to
Negative from Stable not only reflects the aforementioned industry
issues, but also INDB's pro forma tangible capital position in
relation to its peers.
INDB's TCE and Tier 1 RBC measures are among the weakest relative
to other community banks rated by Fitch. While the company has
historically managed its TCE in the 6%-7% range, Fitch believes
such low levels of tangible capital leave less room than peers for
any potential deterioration in asset quality. However, Fitch
notes that INDB's credit measures have consistently outperformed
most of its peers. As a result of INDB's announcement to acquire
Central Bank Corp, Inc. (CEBK), the TCE ratio is expected to
decline to 6.28% from 6.99% actual 1Q'12 levels.
In Fitch's view, INDB's liquidity profile may limit the company's
financial flexibility under more stressful market conditions, in
relation to peers. INDB reported a 98% loan-to-deposit ratio at
June 30, 2012, which is higher than the peer group average of 80%.
Furthermore, the company has relatively smaller investment
securities portfolio, which accounts for 10% of total assets.
ONB (L-T IDR 'BBB', Outlook Stable)
ONB's IDR affirmation reflects the company's solid level of
earnings relative to the community bank peer group and its
maintenance of solid capital levels through period of growth and
acquisitions. The Stable Outlook reflects Fitch's view that
modest improvements in earnings should be realized as asset
quality issues relating to the Monroe Bancorp acquisition subside
and efficiencies are found during the integration of newly
acquired institutions.
Fitch notes that ONB's earnings performance is in line with
similarly rated banks. Through 2Q'12, ONB generated an ROA of
1.14%, a marked increase compared to 2Q'11 at 0.83% and fiscal
year-end (FYE) 2011 at 0.86%. Driving improved performance is the
benefit from purchase accounting discounts related to the
acquisitions of Monroe Bancorp and Integra Bank (FDIC-assisted)
along with lower provisioning for loan losses, partially offset by
modestly higher operating expenses. Fitch expects earnings to be
flat with the possibility of slight improvement in efficiencies.
Further, ONB's margin should continue its improvement as higher
cost time deposits roll off ONB's balance sheet and are replaced
with lower cost funds. Fitch also notes that asset quality, which
deteriorated following the acquisition of Monroe Bancorp, has
stabilized and positions ONB comfortably amongst the other 'BBB'
rated institutions within its peer group. Total NCOs for the
company were 0.24% at 2Q'12, down from 0.41% at 2Q'11 and 0.49% at
FYE 2011. While NPAs appear to be elevated compared to peer, it
should be noted that ONB has approximately $406 million in FDIC-
covered assets, $160 million of which are nonperforming.
TRMK (L-T IDR 'A-', Outlook Negative)
The affirmation of TRMK at 'A-' reflects the company's strong
earnings profile, consistency of performance, and leading market
share in its home state of Mississippi. Despite a challenging
interest rate environment, TRMK has maintained a strong NIM in
excess of 4% over the past several years. TRMK's higher relative
rating, compared to the community bank group, also reflects its
solid liquidity profile, strong capital position, and diversified
loan book. Fitch notes that TRMK's asset quality deteriorated
during the crisis, mainly reflecting its Florida exposure, but
NCOs have remained very manageable.
Nothwithstanding these strengths, Fitch revised the Rating Outlook
to Negative from Stable in May 2012 after TRMK announced the
planned acquisition of Banctrust Financial Group (BTFG). The
transaction is estimated by Fitch to result in an approximate 250
bps decline in capital ratios. The pricing on the deal was also
considered aggressive given BTFG's weak financial condition. In
the event the transaction is completed, the likelihood of a
downgrade is considered high. The combination of a pro forma
capital base that will now be approximately 100 bps lower than the
community bank peer average according to Fitch, and an earnings
profile that is forecasted by Fitch to no longer be well above
peer averages contribute to an increased likelihood of downgrade.
In the event the transaction is not finalized, Fitch would expect
to see progress in returning its earnings profile to pre-financial
crisis levels in order to maintain the rating at 'A-', a rating
that is above the community bank peer average rating.
RATING DRIVERS AND SENSITIVITIES - SUPPORT RATING AND SUPPORT
FLOOR RATING
All of the community banks in the peer group have Support Ratings
of '5' and Support Floor Rating of 'NF'. In Fitch's view, the
community banks are not systemically important and therefore,
Fitch believes the probability of support is unlikely. IDRs and
VRs do not incorporate any support for the Community Bank Peer
Group.
SUBORDINATED DEBT AND OTHER HYBRID SECURITIES
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
Following Fitch's criteria, trust preferred securities are notched
down from the VRs by two for loss severity and down two for non-
performance for most trust preferred securities.
HOLDING COMPANY RATING DRIVERS AND SENSITIVITIES
All of the entities reviewed in the Community Bank Group have a
bank holding company (BHCs) structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent
holding company supporting equalized ratings between bank
subsidiaries and bank holding companies. IDRs and VRs are
equalized with those of its operating companies and banks
reflecting its role as the bank holding company, which is mandated
in the U.S. to act as a source of strength for its bank
subsidiaries. Double leverage is below 120% for all the parent
companies reviewed in this peer group.
SUBSIDIARY AND AFFILIATED COMPANY RATING DRIVERS AND SENSITIVITIES
All of the entities reviewed in the Community Bank Group factor in
a high probability of support from parent institutions to its
subsidiaries. This reflects the fact that performing parent banks
have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has affirmed the following ratings with a Stable outlook:
Ameriserv Financial, Inc.
-- Long-term Issuer Default Rating (IDR) at 'BB';
-- Short-term IDR at 'B';
-- Viability Rating at 'bb';
-- Support Rating at '5';
-- Support Floor at 'NF'.
Ameriserv Financial Bank
-- Long-term IDR at 'BB';
-- Long-term deposits at 'BB+';
-- Short-term IDR at 'B';
-- Short-term deposits at 'B';
-- Viability Rating at 'bb';
-- Support Rating at '5';
-- Support Floor at 'NF'.
Ameriserv Capital Trust I
-- Preferred at 'B-'.
Central Pacific Financial Corp.
-- Long-term IDR at 'BB-';
-- Short-term IDR 'B';
-- Viability rating at 'bb-;
-- Support Rating Floor at 'NF';
-- Support affirmed at '5'.
Central Pacific Bank
-- Long-term IDR at 'BB-';
-- Long-term deposits at 'BB';
-- Short-term IDR at 'B';
-- Short-term deposits at 'B';
-- Viability Rating at 'bb-';
-- Support Rating Floor at 'NF';
-- Support Rating at '5'.
CPB Capital Trust I, II & IV
CPB Statutory Trust III & V
-- Trust preferred securities at 'C'.
Community Bank System, Inc.
-- Long-term IDR at 'BBB';
-- Short-term IDR at 'F2';
-- Viability Rating at 'bbb';
-- Support at '5';
-- Support Floor at 'NF'.
Community Bank, N.A.
-- Long-term IDR at 'BBB';
-- Long-term deposits at 'BBB+';
-- Short-term IDR at 'F2';
-- Short-term deposits at 'F2';
-- Viability Rating at 'bbb';
-- Support at '5';
-- Support Floor at 'NF'
CVB Financial Corp.
-- Long-term IDR at 'BBB';
-- Short-term IDR at 'F2';
-- Viability Rating at 'bbb';
-- Support Floor at 'NF';
-- Support at '5';
Citizens Business Bank
-- Long-term IDR at 'BBB';
-- Long-term deposit at 'BBB+';
-- Short-term IDR at 'F2';
-- Short-term deposit at 'F2';
-- Viability Rating at 'bbb';
-- Support Floor at 'NF';
-- Support at '5'.
CVB Statutory II and III
-- Preferred stock at 'BB-'.
First Commonwealth Financial Corp.
-- Long-term IDR at 'BBB-';
-- Short-Term IDR at 'F3';
-- Viability Rating at 'bbb-';
-- Support Floor at 'NF'
-- Support at '5'.
First Commonwealth Bank
-- Long-term IDR at 'BBB-';
-- Long-term deposit at 'BBB'';
-- Short-Term IDR at 'F3';
-- Viability Rating at 'bbb-';
-- Short-term deposit at 'F2';
-- Support Floor at 'NF';
-- Support at '5'.
First Commonwealth Capital Trust
-- Preferred stock at 'B+'.
First Interstate Bancsystems, Inc.
-- Long-term IDR at 'BBB-';
-- Short-term IDR at 'F3';
-- Viability Rating at 'bbb-';
-- Support Floor at 'NF';
-- Support '5'.
First Interstate Bank
-- Long-term IDR at 'BBB-';
-- Long-term deposit at 'BBB';
-- Short-term IDR at 'F3';
-- Short-term deposit 'F2';
-- Viability Rating at 'bbb-';
-- Support Floor at 'NF';
-- Support '5'.
First Midwest Bancorp, Inc.
-- Long-term IDR at 'BBB-';
-- Short-term IDR at 'F3';
-- Viability Rating at 'bbb-';
-- Senior unsecured at 'BBB-';
-- Subordinated debt at 'BB+';
-- Support '5';
-- Support Floor 'NF'.
First Midwest Bank
-- Long-term IDR at 'BBB-';
-- Short-term IDR at 'F3';
-- Long-term deposits at 'BBB';
-- Short-term deposits at 'F3'.
-- Viability Rating at 'bbb-';
-- Support '5';
-- Support Floor 'NF'.
First Midwest Capital Trust I
-- Preferred stock at 'B+'.
Old National Bancorp
-- Long-term IDR at 'BBB';
-- Short-term IDR at 'F2';
-- Viability Rating at 'bbb';
-- Support Floor at 'NF';
-- Support '5'
Old National Bank
-- Long-term IDR at 'BBB';
-- Short-Term IDR at 'F2';
-- Long-term deposit at 'BBB+';
-- Short-term deposit 'F2';
-- Viability Rating at 'bbb';
-- Support Floor at 'NF';
-- Support '5'.
St. Joseph Capital Trust I and II
-- Preferred stock at 'BB-'.
Fitch has affirmed the following ratings with a Negative Outlook:
Trustmark Corporation
-- Long-term IDR at 'A-';
-- Short-term IDR at 'F1';
-- Viability Rating at 'a-';
-- Support at '5';
-- Support Floor at 'NF'.
Trustmark National Bank
-- Long-term IDR at 'A-';
-- Short-term IDR at 'F1';
-- Long-term deposits at 'A';
-- Short-term deposits at 'F1';
-- Subordinated debt at 'BBB+';
-- Viability Rating at 'a-';
-- Support at '5';
-- Support Floor at 'NF'
Fitch has affirmed the following ratings and revised the Outlook
to Negative from Stable:
Independent Bank Corp.
-- Long-term IDR at 'BBB';
-- Short-term IDR at 'F2';
-- Viability Rating at 'bbb';
-- Support Rating at '5';
-- Support Rating Floor at 'NF'.
Rockland Trust Company
-- Long-term IDR at 'BBB';
-- Short-term IDR at 'F2';
-- Viability Rating at 'bbb';
-- Support Rating at '5';
-- Support Rating Floor at 'NF';
-- Long-term deposits at 'BBB+';
-- Short-term deposits at 'F2'.
* Moody's Says US Oil & Gas Bond Investor Protection Varies
-----------------------------------------------------------
The US oil and gas sector differs markedly in terms of investor
protection, Moody's Investors Service says in a new report. While
the covenant packages of high-yield independent oil and gas
exploration and production companies (E&Ps) offer protection close
to the average for all US high-yield non-financial corporates,
those of midstream master limited partnerships (MLPs) provide the
least protection among 31 corporate sectors and subsectors.
"Our review of bonds issued between January 2011 and October 2012
showed that those of US midstream limited partnerships have the
worst covenant quality," says Andrew Brooks, Moody's Vice
President and co-author of the report, "Midstream MLP Covenants
Offer Least Investor Protection; E&Ps Near US Average." "Investor
protection is weakest in the areas of restricted payments and
liens subordination, reflecting these firms' focus on high
shareholder distributions and externally financed growth."
An average score of 4.19 on Moody's five-point covenant quality
scale places US midstream MLP covenant packages at the bottom
among the 31 sectors included in Moody's High-Yield Covenant
Quality Database. The average score of 3.45 for US E&Ps, on the
other hand, is close to the 3.37 average for all US non-financial
corporates. (Higher covenant scores indicate weaker investor
protection.)
Nevertheless, US E&P covenant packages have strong and weak
points, and deviated materially from the peer group in two main
ways. "While US E&P bonds had the best average score for
structural subordination, they had the worst average for
protection against risky investments," Brooks says, "with the
latter stemming from shareholders' desire to boost returns by
giving management more flexibility in making their oil and gas
investment decisions."
Moody's new report lists the scores on various factors for the
bonds of 19 high-yield US midstream MLPs and 55 US high-yield
independent E&Ps analyzed. The rating agency's High-Yield Covenant
Database includes more than 1,000 global bond issues dating from
2010 and will be launched online soon, allowing investors to
compare covenants across issuers, industries, rating categories
and other factors.
* US Public Finance Rating Downgrades Down in Third Qtr. 2012
-------------------------------------------------------------
The number of US public finance rating downgrades decreased in the
third quarter of 2012 as compared to the second quarter, but the
dollar amount of downgraded debt increased and pushed the 2012 YTD
total above $200 billion, says Moody's Investors Service. In the
quarterly report "US Public Finance Rating Revisions for Q3 2012:
Year-to-Date Downgrades 80% of All Rating Changes and Exceed $200
Billion," Moody's says $216.6 billion of total downgraded debt
through three quarters exceeds the $193.5 billion for all of 2011.
"Increased risk associated with difficult economic and industry
environments, stressed budgetary and reserve positions, and
challenging debt structures are the principal factors driving the
downgrades," says Eileen Hawes, a Moody's Assistant Vice President
and Analyst. "We expect overall downgrade activity to continue to
surpass upgrades through the end of 2012."
Rating actions on four issuers accounted for over 70% of the debt
downgraded in the third quarter. Specifically, Moody's downgraded
the ratings on the Port Authority of New York and New Jersey
($18.2 billion by par amount), the Puerto Rico Sales Tax Financing
Corporation ($16 billion), the Commonwealth of Pennsylvania
($13.16) and the Chicago O'Hare Airport Enterprise ($6.5 billion).
Despite the larger amount of downgraded debt, the total number of
rating downgrades and upgrades during the third quarter was the
lowest for any quarter so far in 2012.
At $5.5 billion, the par amount of upgraded debt during the third
quarter was approximately half that of the second quarter.
Improved financial operations and strengthened reserve positions
led to most of the upgrades, says Moody's.
"The not-for-profit hospital sector saw more than $3 billion of
upgrades including six changes due to consolidation activity." "In
other sectors, the number of downgrades has started to moderate or
nearly match upgrades," says Moody's Hawes.
In the local government sector downgrades still outpaced upgrades
by a large margin, with 90 downgrades during the quarter compared
to 25 upgrades, but the ratio of upgrades to downgrades was lower
than in the second quarter.
State and state-related issuers saw the downgrade-to-upgrade ratio
increase modestly in the third quarter, to 2.5 times, and the par
amount of downgraded debt significantly exceeded the upgraded par
amount, performance consistent with Moody's negative outlook on
the sector.
In addition to not-for-profit hospitals, local governments and
state and state-related entities, the Moody's report also covers
higher education, not-for-profit entities, infrastructure and
housing.
* BOND PRICING -- For The Week From Oct. 22 to 26, 2012
-------------------------------------------------------
Company Coupon Maturity Bid Price
------- ------ -------- ---------
AES EASTERN ENER 9.000 1/2/2017 2.000
AES EASTERN ENER 9.670 1/2/2029 4.875
AGY HOLDING COR 11.000 11/15/2014 48.060
AHERN RENTALS 9.250 8/15/2013 66.000
ALION SCIENCE 10.250 2/1/2015 52.417
AM AIRLN PT TRST 10.180 1/2/2013 95.375
AMBAC INC 6.150 2/7/2087 3.500
ATP OIL & GAS 11.875 5/1/2015 14.875
ATP OIL & GAS 11.875 5/1/2015 14.875
ATP OIL & GAS 11.875 5/1/2015 15.643
BASIC ENERGY SVC 7.125 4/15/2016 102.750
BUFFALO THUNDER 9.375 12/15/2014 35.000
CALIF BAPTIST 7.100 4/1/2014 4.500
CAPMARK FINL GRP 6.300 5/10/2017 2.000
CENTRAL EUROPEAN 3.000 3/15/2013 87.875
CHAMPION ENTERPR 2.750 11/1/2037 1.000
DIRECTBUY HLDG 12.000 2/1/2017 20.500
DIRECTBUY HLDG 12.000 2/1/2017 20.500
DOWNEY FINANCIAL 6.500 7/1/2014 58.125
EASTMAN KODAK CO 7.000 4/1/2017 10.000
EASTMAN KODAK CO 7.250 11/15/2013 13.000
EASTMAN KODAK CO 9.200 6/1/2021 10.000
EASTMAN KODAK CO 9.950 7/1/2018 11.750
EDISON MISSION 7.500 6/15/2013 50.625
ENERGY CONVERS 3.000 6/15/2013 40.375
FIBERTOWER CORP 9.000 1/1/2016 30.000
GEOKINETICS HLDG 9.750 12/15/2014 43.020
GLB AVTN HLDG IN 14.000 8/15/2013 35.363
GLOBALSTAR INC 5.750 4/1/2028 48.750
GMX RESOURCES 4.500 5/1/2015 40.500
GMX RESOURCES 5.000 2/1/2013 89.750
HAWKER BEECHCRAF 8.500 4/1/2015 19.500
HAWKER BEECHCRAF 8.875 4/1/2015 19.500
HAWKER BEECHCRAF 9.750 4/1/2017 0.500
HUTCHINSON TECH 8.500 1/15/2026 55.425
KV PHARM 12.000 3/15/2015 45.500
LEHMAN BROS HLDG 0.250 12/12/2013 19.250
LEHMAN BROS HLDG 0.250 1/26/2014 19.250
LEHMAN BROS HLDG 1.000 10/17/2013 19.250
LEHMAN BROS HLDG 1.000 3/29/2014 19.250
LEHMAN BROS HLDG 1.000 8/17/2014 19.250
LEHMAN BROS HLDG 1.000 8/17/2014 19.250
LEHMAN BROS HLDG 1.250 2/6/2014 19.250
LEHMAN BROS INC 7.500 8/1/2026 14.500
LIFECARE HOLDING 9.250 8/15/2013 36.854
MANNKIND CORP 3.750 12/15/2013 67.750
MASHANTUCKET PEQ 8.500 11/15/2015 9.250
MASHANTUCKET PEQ 8.500 11/15/2015 15.725
MASHANTUCKET TRB 5.912 9/1/2021 9.250
MF GLOBAL LTD 9.000 6/20/2038 59.100
NB CAP-CALL11/12 7.830 12/15/2026 101.958
NEWPAGE CORP 10.000 5/1/2012 5.500
NEWPAGE CORP 11.375 12/31/2014 52.750
NGC CORP CAP TR 8.316 6/1/2027 13.000
OVERSEAS SHIPHLD 8.125 3/30/2018 26.750
OVERSEAS SHIPHLD 8.750 12/1/2013 32.500
PATRIOT COAL 3.250 5/31/2013 13.000
PENSON WORLDWIDE 8.000 6/1/2014 40.297
PLATINUM ENERGY 14.250 3/1/2015 40.000
PMI CAPITAL I 8.309 2/1/2027 1.125
PMI GROUP INC 6.000 9/15/2016 26.625
POWERWAVE TECH 3.875 10/1/2027 12.419
POWERWAVE TECH 3.875 10/1/2027 13.500
RESIDENTIAL CAP 6.500 4/17/2013 26.938
RESIDENTIAL CAP 6.875 6/30/2015 25.372
SAVIENT PHARMA 4.750 2/1/2018 27.000
SCHOOL SPECIALTY 3.750 11/30/2026 58.500
STATION CASINOS 6.625 3/15/2018 0.010
TERRESTAR NETWOR 6.500 6/15/2014 10.000
TEXAS COMP/TCEH 10.250 11/1/2015 23.375
TEXAS COMP/TCEH 10.250 11/1/2015 24.100
TEXAS COMP/TCEH 10.250 11/1/2015 20.500
TEXAS COMP/TCEH 15.000 4/1/2021 34.250
TEXAS COMP/TCEH 15.000 4/1/2021 32.000
THQ INC 5.000 8/15/2014 58.500
TIMES MIRROR CO 7.250 3/1/2013 34.000
TRAVELPORT LLC 11.875 9/1/2016 38.350
TRAVELPORT LLC 11.875 9/1/2016 37.375
TRIBUNE CO 5.250 8/15/2015 34.750
USEC INC 3.000 10/1/2014 41.125
WCI COMMUNITIES 6.625 3/15/2015 0.375
*********
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 ***