/raid1/www/Hosts/bankrupt/TCR_Public/130215.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, February 15, 2013, Vol. 17, No. 45
Headlines
155 EAST TROPICANA: Court Enters Final Decree Closing Cases
4KIDS ENTERTAINMENT: Dimensional Ceases to Own Shares at Dec. 31
77 GOLDEN: S&P Withdraws 'B' Issuer Credit Rating
ALLIED DEFENSE: Dimensional Stake at 6.1% as of Dec. 31
AEROGROW INTERNATIONAL: Incurs $296,700 Net Loss in Dec. 31 Qtr.
AM GENERAL: Moody's Rates New USD370-Mil. Credit Facility 'B2'
AM GENERAL: S&P Assigns 'B' CCR; Rates $370MM Facility 'BB-'
AMERICAN AIRLINES: AMR and US Airways Announce Merger
AMERICAN AIRLINES: Five Major Unions Support Merger
AMERICAN AIRLINES: AMR Bondholders Say Merger the Best Outcome
AMERICAN AIRLINES: IAM to Back Merger if USAir Pacts Renewed
AMERICAN AIRLINES: Too Early to Tell, Amer. Eagle Pilots Say
AMERICAN AXLE: JB Stake Down to 0.5% as of Dec. 31
AMERICAN AXLE: Vanguard Stake at 5.4% as of Dec. 31
AMERICAN AXLE: Richard Dauch Ownership at 9.2% as of Dec. 31
AMERICAN DEFENSE: Elliott Davis Replaces Marcum as Accountants
AMES DEPARTMENT: Wants Plan Exclusivity Extended Until April 30
AMPAL-AMERICAN: March 1 Established as General Claims Bar Date
ARTE SENIOR: Can Continue Use of Cash Collateral Through March 31
ASSURED PHARMACY: BDO USA Replaces UHY LLP as Accountants
ATP OIL & GAS: Receives Interim Approval of New Emergency Loan
BAKERFIELD GROVE: Receiver OK'd to Sell The Grove to 617 North
BAKERS FOOTWEAR: To Auction Remaining Assets on Feb. 21
BAMBERG HOSPITAL: Selling Assets to HCA
BEALL CORP: Wants Exclusive Plan Filing Period Extended to Feb. 28
BEAZER HOMES: Kenneth Griffin Ownership at 5.6% as of Feb. 7
BEAZER HOMES: Vanguard Stake at 5.4% as of Dec. 31
BEECHCRAFT HOLDINGS: S&P Retains 'BB-' Rating on $425MM Term Loan
BERNARD L. MADOFF: Third Distribution to Total $505-Mil.
BERNARD L. MADOFF: Rakoff Slams Door on Escape Liability
BETHESDA BAPTIST: Case Summary & Unsecured Creditor
BLACK ELK: S&P Affirms 'CCC+' CCR; Off Creditwatch Negative
CAGLE'S INC: Dimensional Ceases to Own Class A Shares at Dec. 31
CALIFORNIA COASTAL: Dimensional Owns Less Than 1% at Dec. 31
CALYPTE BIOMEDICAL: M. Roth Stake Down to "Less Than 5%"
CAPITOL BANCORP: Paul Ballard Quits From Board of Directors
CENTRAL FALLS, R.I.: Ex-Mayor Handed 2-Year Prison Term
CENTURYLINK INC: Fitch Lowers Issuer Default Ratings to 'BB+'
CENTURYLINK INC: S&P Affirms 'BB' CCR Following Repurchase Plan
COCOPAH NURSERIES: Wells Fargo Wants Lift Stay on Property
COLLECTIVE BRANDS: S&P Affirms 'B' Ratings on CCR & $480MM Loan
CRAWFORDSVILLE LLC: Hires Variant Capital as Investment Banker
CRAWFORDSVILLE LLC: Hires Frost PLLC as Tax Accountants
CRAWFORDSVILLE LLC: Can Hire Davis Brown as Special Counsel
CSD LLC: Wayne Newton Museum Property to Be Sold at Auction
CUMULUS MEDIA: Dimensional Fund Holds 1.7% of Class A Shares
DELUXE ENTERTAINMENT: Vanguard Has 6.1% Equity Stake at Dec. 31
DETROIT, MI: Mayor to Make Final Pitch to Avoid Takeover of City
DEWEY & LEBOEUF: Objections Pile Up Against Ch. 11 Plan
DIALOGIC INC: Nick Jensen Resigns from Board of Directors
DIALOGIC INC: Gets Add'l $4MM Under Amended Term Loan Agreement
DOUBLE VISION: Strip Club Files Ch.11 Bankruptcy in Albany, NY
DYNASIL CORP: Reports $0.4 Million Net Loss in Fiscal 1st Quarter
DJO GLOBAL: Unit Posts $47-Mil. Net Loss for 4th Quarter 2012
EASTMAN KODAK: Makes $30.6 Million From Eyeglass Trademarks
EASTMAN KODAK: Taps Harter Secrest as Special Counsel
EASTMAN KODAK: Wants Until May 31 to Propose Chapter 11 Plan
EDIETS.COM INC: CEO Resigns; Kevin Richardson Named PEO
EDMENTUM INC: Loan Upsizing No Impact on Moody's 'B2' CFR
EFD LTD: Chapter 11 Reorganization Case Dismissed
ENERGY SOLUTIONS: Moody's Reviews Ratings for Possible Upgrade
EUROFRESH INC: Test Case for Loan-To-Own Scheme
EXCEL DIRECTIONAL: Texas Drilling Firm Files Bankruptcy
FAMOUS DAVE'S: In Discussions with Bank Over Covenant Waiver
FIELD FAMILY: Wells Fargo Objects to Use of Cash Collateral
FIRST PLACE: Dimensional Owns 3.9% of Shares at Dec. 31
FLEXIBLE FLYER: Suddenly Ended Loan Excuses WARN Act Compliance
GATEHOUSE MEDIA: Expects $125.6 Million Revenues in 4th Quarter
GENE CHARLES: Plan to Pay Unsecured Creditors Over Time
GRAPHIC PACKAGING: Moody's Lifts CFR to 'Ba2', Outlook Stable
GRAY TELEVISION: Caspian Ownership at 5.4% as of Dec. 31
HEMCON MEDICAL: Seeks Valuation of BofA's Interests
HOMER CITY: Moody's Assigns 'Caa1' Rating to $673MM Senior Notes
HOSTESS BRANDS: Pedersen & Houpt OK'd as Retiree Panel's Counsel
ICON HEALTH: Moody's Lowers CFR to 'B2', Outlook Negative
INVENTIV HEALTH: Appoints Michel Dubery as EU Managing Director
J & J DEVELOPMENT: Hires Curt Sittenauer as Accountant
JEFFERSON COUNTY: Moody's Cuts Ratings on Revenue Warrants to Ca
JRT LEASING: Case Summary & 2 Unsecured Creditors
K-V PHARMACEUTICAL: Has Until July 16 to Solicit Plan Approval
LACY STREET: Court Dismisses Chapter 11 Case
LATISYS CORP: Moody's Rates New $200-Mil. Debt Facility 'B3'
LATISYS CORP: S&P Assigns 'B' Corp. Credit Rating
LIGHTSQUARED INC: Strikes Ch. 11 Deal, Keeps 4G Hopes Alive
LCI HOLDING: Suzanne Koenig Appointed as Health Care Ombudsman
LEHMAN BROTHERS: Barclays Owes Ex-Director $20M, 2nd Circ. Hears
LEHMAN BROTHERS: To Sell Midtown Manhattan Building
LIGHTSQUARED INC: Asks Court to Approve Deal With SprintCom
LIGHTSQUARED INC: Lenders Agree to Extend Exclusivity Thru May 31
LIN TV: Moody's Reviews 'B2' CFR for Possible Upgrade
LIN TV: S&P Raises Corp. Credit Rating to 'B+'; Outlook Positive
LINDSAY GENERAL: Section 341(a) Meeting Scheduled for March 20
LONESTAR INTERMEDIATE: S&P Affirms 'B+' Counterparty Rating
MARINA BIOTECH: Extends Maturity of Secured Notes to April 30
MARKETING WORLDWIDE: Delays Form 10-Q for Dec. 31 Quarter
MAXXAM INC: Dimensional No Longer Shareholder as of Dec. 31
MENDOCINO COAST HEALTH: Cuts 20 Employees to Save $1.5MM Per Year
MERENDON INC: Trustee Prevails Over Leaders of $300M Ponzi Scam
MF GLOBAL: Customers Oppose New Injunction Provision
MF GLOBAL: JPM Seeks Approval to Prosecute Claims vs. Finance
MIRION TECHNOLOGIES: Rising Debt Cues Moody's to Lower CFR to B2
MIRION TECHNOLOGIES: S&P Affirms 'B' Corp. Credit Rating
MODERN PRECAST: Can Access M&t Bank Cash Collateral Until April 26
MPG OFFICE: Responds to Unusual Market Activity
MURRAY HOTEL: Case Summary & 20 Largest Unsecured Creditors
NEW ENGLAND COMPOUNDING: Panel Centers Meningitis Cases in Mass.
NORTEL NETWORKS: Seeks Approval of Settlement with Travelers
NORTHWESTERN STONE: Third Amended Reorganization Plan Confirmed
OCALA FUNDING: Cadwalader Pays $125,000, Waives $1.6+MM Claim
OILSANDS QUEST: Vanguard Stake Down to 1% as of Dec. 31
OLD SECOND BANCORP: Dimensional Stake at 6.66% as of Dec. 31
ORLEANS HOMEBUILDERS: Dimensional Owns "Less Than 1%" at Dec. 31
OVERLAND STORAGE: Southwell a 6.7% Owner as of Dec. 31
OVERSEAS SHIPHOLDING: Hit for $463M in Taxes as CEO Resigns
OVERSEAS SHIPHOLDING: Vanguard No Longer Owns Shares at Dec. 31
OVERSEAS SHIPHOLDING: Dimensional Has 5.6% Stake at Dec. 31
P.AGUILERA & ASSOCIATES: Case Summary & Largest Unsec. Creditors
PARK SIDE: Section 341(a) Meeting Scheduled for March 6
PATRIOT COAL: Court Gives Claim-Settlement Authority
PATRIOT COAL: Vanguard Ceases to Own Shares as of Dec. 31
PATRIOT COAL: Miners Protest Benefit Cuts
PHOENIX FOOTWEAR: Dimensional No Longer Shareholder as of Dec. 31
PIPELINE DATA: U.S. Trustee Wants Case Converted to Chapter 7
PMI GROUP: Dimensional Ceases to Own Shares as of Dec. 31
POLYCONCEPT INVESTMENTS: S&P Assigns 'B' CCR; Outlook Stable
POLYONE CORP: Moody's Rates New $600-Mil. Senior Notes 'Ba3'
POLYONE CORP: S&P Affirms 'BB-' CCR; Rates $600MM Notes 'BB-'
POWELL STEEL: Files for Chapter 11 in Philadelphia
PREMIERWEST BANCORP: Seeks Shareholder Approval for Merger
PT BERLIAN: Moves to Dismiss Involuntary Chapter 11
QUALTEQ INC: Trustee Files Plan With Shareholder Recovery
RADIAN GROUP: Board Approves Regular Quarterly Dividend
RADIOSHACK CORP: Vanguard Group Ownership at 5.3% as of Dec. 31
RADIOSHACK CORP: Donald Smith a 10% Owner as of Dec. 31
REOSTAR ENERGY: Court Confirms Plan of Reorganization
RESIDENTIAL CAPITAL: Proposes Lewis Kruger as CRO
RESIDENTIAL CAPITAL: Ally No Longer Authorizes Use of Loan
RESIDENTIAL CAPITAL: Resolves Wells Fargo Objection to Sale
RESIDENTIAL CAPITAL: Homeowner Sues for RICO Claims
RHYTHM AND HUES: Hollywood Visual Effects Provider in Chapter 11
RSI HOME: Moody's Rates New $525-Mil. Senior Secured Notes 'B1'
SAN BERNARDINO, CA: Police, Firefighters Seek to Sue City
SCHMIDT'S BAKERY: Files for Chapter 7 Bankruptcy
SCHOOL SPECIALTY: Committee Blasts Speedy Ch. 11 Sale
SEAHORSE INVESTMENTS: Case Summary & 9 Unsecured Creditors
SELECT MEDICAL: S&P Cuts Rating on First Lien Debt to 'B+'
SIMMONS FOOD: S&P Affirms 'CCC+' Corp. Credit Rating
SUN COUNTRY: CEO Gadek Exits, Fredericksen Steps In
THOMPSON CREEK: Mackenzie Stake at 7.97% as of Dec. 31
TASTY BAKING: Dimensional No Longer Shareholder as of Dec. 31
THQ INC: Seeks Great American Auction of Remaining Assets Feb. 21
THQ INC: Vanguard Ceases to Own Shares as of Dec. 31
TIDEWATER OIL: Case Summary & 20 Largest Unsecured Creditors
TOUSA INC: Feb. 26 Status Conference in Connection with Mediation
TRAINOR GLASS: Creditors' Investigation Period Extended to Feb. 25
TRAINOR GLASS: Can Continue Using Cash Collateral Thru April 12
TRIUS THERAPEUTICS: Brian Atwood Stake at 8.3% as of Dec. 31
TWN INVESTMENT: Files for Chapter 11 in San Jose, California
TWN INVESTMENT: Sec. 341(a) Meeting on March 13
TWN INVESTMENT: Proposes Charles B. Greene as Counsel
UNIVERSAL HEALTH: Makes Argument to Stay in Chapter 11
USEC INC: Vanguard Ownership Down to 3.11% as of Dec. 31
USEC INC: Dimensional Stake at 6.1% as of Dec. 31
VALENCE TECHNOLOGY: Plan Filing Exclusivity Extended to April 8
WARNER MUSIC: To Buy Parlophone Label for $765MM From Universal
WILCOX EMBARCADERO: To Present Plan for Confirmation on Feb. 26
WJO INC: Ciardi Firm Wants Case Converted to Chapter 7 Liquidation
WKI HOLDING: Bank Facility Re-Launch No Impact on Moody's B2 CFR
* Fraud Suit Upheld for Foreclosure Without Mortgage Documents
* Investors Buying Junk Bonds With Weaker Covenants
* American and US Mergers Could Affect Hub Operations, Fitch Says
* Late-Payment Rate on U.S. Mortgages Hits 4-Year Low
* Moody's Sees More Hedge Fund Activism in 2013
* Moody's Notes Rising U.S. Real Estate Prices in 2012
* Texas, 7 Other States Join Challenge to Dodd-Frank
* Big Banks Told to Review Own Foreclosures
* Bill Aimed at Reducing Size of "Too-Big-to-Fail" Banks Offered
* BOOK REVIEW: Legal Aspects of Health Care Reimbursement
*********
155 EAST TROPICANA: Court Enters Final Decree Closing Cases
-----------------------------------------------------------
The Hon. Bruce A. Markell of the U.S. Bankruptcy Court for the
District of Nevada entered a final decree closing the Chapter 11
cases of 155 East Tropicana, LLC, et al.
The Debtor related that the Court entered an order confirming
Debtors' First Amended Plan of Reorganization on March 9, 2012,
and the effective date of the Plan was March 30, 2012.
The Chapter 11 plan provided for the sale of the Las Vegas
property. The bankruptcy judge approved the sale of 155 East's
Hooters Casino Hotel in Las Vegas to secured creditor Canpartners.
Completion of the sale required approval of the reorganization
plan at the confirmation hearing. Canpartners owns 98.4% of the
$130 million in 8.75% second-lien senior secured notes. It would
acquire the property in exchange for $45 million of the notes and
the assumption of $15 million in financing for the bankruptcy.
To fund the plan, Canpartners allowed the casino to retain $10.6
million cash to cover professional costs and full payment on $3.35
million in secured notes owned by third parties. Unsecured
creditors with about $265,000 in claims were to be paid in
full. The first-lien credit facility, with about $14.5 million
outstanding, would be assumed by the new owners. Wells Fargo
Capital Finance Inc. is agent for holders of first-lien debt.
About 155 East Tropicana
155 East Tropicana LLC owns the world's first Hooters Casino
Hotel, a 696-room and 4-suite hotel located one block from the Las
Vegas Strip and across Tropicana Blvd. from MGM Grand.
155 East Tropicana, along with an affiliate, sought Chapter 11
protection (Bankr. D. Nev. Case No. 11-22216) on Aug. 1, 2011.
155 East sought bankruptcy protection to stop a scheduled Aug. 8
foreclosure of the second-lien debt. The two secured credit
facilities were accelerated early this year.
Gerald M. Gordon, Esq., and Brigid M. Higgins, Esq., at Gordon
Silver, in Las Vegas, Nevada, serve as counsel to the Debtors.
Garden City Group, Inc., is the claims agent. William G. Kimmel &
Associates has been hired to provide an appraisal of the Debtors'
casino hotel/property. Alvarez & Marsal serves as financial and
restructuring advisor. Innovation Capital LLC serves as financial
advisor for capital raising transactions and M&A transactions.
4KIDS ENTERTAINMENT: Dimensional Ceases to Own Shares at Dec. 31
----------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it does not beneficially own any shares of
common stock of 4Kids Entertainment Inc. A copy of the filing is
available for free at http://is.gd/iT23wv
About 4Kids Entertainment
New York-based 4Kids Entertainment, Inc., dba 4Kids, is an
entertainment and media company specializing in the youth oriented
market, with operations in these business segments: (i) licensing,
(ii) advertising and media broadcast, and (iii) television and
film production/distribution. The parent entity, 4Kids
Entertainment, was organized as a New York corporation in 1970.
4Kids filed for bankruptcy protection under Chapter 11 of the
Bankruptcy Code to protect its most valuable asset -- its rights
under an exclusive license relating to the popular Yu-Gi-Oh!
series of animated television programs -- from efforts by the
licensor, a consortium of Japanese companies, to terminate
the license and force 4Kids out of business.
4Kids and affiliates filed Chapter 11 petitions (Bankr. S.D.N.Y.
Lead Case No. 11-11607) on April 6, 2011. Kaye Scholer LLP is the
Debtors' restructuring counsel. Epiq Bankruptcy Solutions, LLC,
is the Debtors' claims and notice agent. BDO Capital Advisors,
LLC, is the financial advisor and investment banker. EisnerAmper
LLP fka Eisner LLP serves as auditor and tax advisor. 4Kids
Entertainment disclosed $78,397,971 in assets and $86,515,395 in
liabilities as of the Chapter 11 filing.
Hahn & Hessen LLP serves as counsel to the Official Committee of
Unsecured Creditors. Epiq Bankruptcy Solutions LLC serves as its
information agent for the Committee.
The Consortium consists of TV Tokyo Corporation, which owns and
operates a television station in Japan; ASATSU-DK Inc., a Japanese
advertising company; and Nihon Ad Systems, ADK's wholly owned
subsidiary. The Consortium is represented by Kyle C. Bisceglie,
Esq., Michael S. Fox, Esq., Ellen V. Holloman, Esq., and Mason
Barney, Esq., at Olshan Grundman Frome Rosenzweig & Wolosky LLP,
in New York.
In January 2012, the bankruptcy judge ruled in favor of 4Kids,
deciding that the Yu-Gi-Oh! property license agreement between the
Debtor and the licensor was not effectively terminated prior to
the bankruptcy filing. Following the ruling, 4Kids entered into a
settlement where it would receive $8 million to end the dispute
over its valuable Yu-Gi-Oh! Property.
As reported by the TCR on Dec. 17, 2012, U.S. Bankruptcy
Judge Shelley C. Chapman confirmed the Debtor's Chapter 11 plan.
77 GOLDEN: S&P Withdraws 'B' Issuer Credit Rating
-------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings, including
the 'B' issuer credit rating, on 77 Golden Gaming LLC following
the company's decision to withdraw its proposed credit facility
offering.
77 Golden Gaming LLC is an owner and operator of slot routes,
casinos, and gaming taverns.
RATINGS LIST
Ratings Withdrawn
To From
77 Golden Gaming LLC
Corporate Credit Rating NR B/Stable/--
Golden Gaming LLC
Senior Secured NR B
Recovery Rating NR 3
ALLIED DEFENSE: Dimensional Stake at 6.1% as of Dec. 31
-------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it beneficially owns 504,883 shares of common
stock of Allied Defense Group Inc. representing 6.13% of the
shares outstanding. A copy of the amended filing is available at:
http://is.gd/mo5rE8
About The Allied Defense Group
Vienna, Va.-based The Allied Defense Group, Inc. (OTCQB: ADGI)
-- http://www.allieddefensegroup.com/-- is a multinational
defense business focused on the manufacture and sale of ammunition
and ammunition related products for use by the U.S. and foreign
governments. Allied's business is conducted by its two wholly
owned subsidiaries: Mecar S.A. and Mecar USA, Inc. Mecar is
located in Nivelles, Belgium and Mecar USA is located in Marshall,
Texas.
The Company received a subpoena from the U.S. Department of
Justice on Jan. 19, 2010, requesting that the Company produce
documents relating to its dealings with foreign governments. The
Company said it is unlikely that any distributions to stockholders
will be made until the matters relating to the DOJ subpoena have
been resolved.
Plan of Dissolution and Liquidation
On June 24, 2010, the Company signed a definitive purchase and
sale agreement with Chemring Group PLC pursuant to which Chemring
agreed to acquire substantially all of the assets of the Company
for $59,560 in cash and the assumption of certain liabilities. On
Sept. 1, 2010, the Company completed the asset sale to Chemring
contemplated by the Agreement. Pursuant to the Agreement,
Chemring acquired all of the capital stock of Mecar for
approximately $45,810 in cash, and separately Chemring acquired
substantially all of the assets of Mecar USA for $13,750 in cash
and the assumption by Chemring of certain specified liabilities of
Mecar USA. A portion of the purchase price was paid through the
repayment of certain intercompany indebtedness owed to the Company
that would otherwise have been cancelled at closing. $15,000 of
the proceeds of the sale was deposited into escrow to secure the
Company's indemnification obligations under the Agreement.
In conjunction with the Agreement, the Board of Directors of the
Company unanimously approved the dissolution of the Company
pursuant to a Plan of Complete Liquidation and Dissolution. The
Company's stockholders approved the Plan of Dissolution on
Sept. 30, 2010. In response to concerns of certain of the
Company's stockholders, the Company agreed to delay the filing of
a certificate of dissolution with the Delaware Secretary of State.
The Company filed a certificate of dissolution with the Delaware
Secretary of State on Aug. 31, 2011. In connection with this
filing, the Company's stock transfer agent has ceased recording
transfers of the Company's stock and its stock is no longer
publicly traded.
AEROGROW INTERNATIONAL: Incurs $296,700 Net Loss in Dec. 31 Qtr.
----------------------------------------------------------------
AeroGrow International, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $296,788 on $2.97 million of net revenue for the
three months ended Dec. 31, 2012, as compared with a net loss of
$139,221 on $3.02 million of net revenue for the same period a
year ago.
For the nine months ended Dec. 31, 2012, the Company incurred a
net loss of $7.86 million on $5.53 million of net revenue, as
compared with a net loss of $2.71 million on $6 million of net
revenue for the same period during the prior year.
The Company's balance sheet at Dec. 31, 2012, showed $4.13 million
in total assets, $4.31 million in total liabilities and a $185,890
total stockholders' deficit.
"We successfully executed a number of our initiatives for the
holiday season," said Mike Wolfe, President and CEO of AeroGrow.
"We re-entered the retail market with highly successful product
launches at Amazon.com and other retailers, launched our
innovative new AeroGarden ULTRA product, broadened our marketing
efforts to reach new AeroGarden purchasers, and, most importantly,
drove an 85% increase in the number of AeroGarden units shipped
during the quarter. This growth in AeroGarden shipments - the
razors in our razor/razor blade business model - is expected to
result in a resurgence of our recurring revenue from seed kits,
grow bulbs, and other accessories in the coming quarters and
years."
Despite the strong AeroGarden shipments, AeroGrow's total sales
declined 1.8% during the quarter in large part because of the
effects of a labor strike in early December at West Coast ports
that adversely impacted the Company's inventory availability and
therefore its ability to meet pre-Christmas demand. The Company's
net loss of $296,788 was greater than the $139,221 net loss
reported in the previous year because of a significant year-over-
year increase in business building activities like product
development spending related to the AeroGarden ULTRA, and
increased investment in brand and market-building spending.
A copy of the Form 10-Q is available for free at:
http://is.gd/7iyyMK
About AeroGrow
Boulder, Colo.-based AeroGrow International, Inc., is a developer,
marketer, direct-seller, and wholesaler of advanced indoor garden
systems designed for consumer use and priced to appeal to the
gardening, cooking, and healthy eating, and home and office decor
markets.
The Company reported a net loss of $3.55 million for the year
ended March 31, 2012, a net loss of $7.92 million for the year
ended March 31, 2011, and a net loss of $6.33 million for the year
ended March 31, 2010.
AM GENERAL: Moody's Rates New USD370-Mil. Credit Facility 'B2'
--------------------------------------------------------------
Moody's Investors Service has assigned initial ratings to AM
General LLC, including a B3 Corporate Family Rating. The rating
outlook is stable.
Concurrently, B2 ratings have been assigned to debts under the
planned $370 million first lien bank credit facility that will
refinance the company's existing $334 million first-lien term
loan. The rating outlook is stable.
Ratings assigned:
Corporate Family, B3
Probability of Default, B3-PD
$20 million first lien revolver due 2017, B2, LGD3, 33%
$350 million first lien term loan due 2018, B2, LGD3, 33%
Outlook, Stable
Ratings Rationale
The B3 CFR balances AM General's sizable debt load and low order
backlog against adequate liquidity stemming from $100 million of
unrestricted cash and a long history as a manufacturer of military
vehicles. The company's main product, the US military's standard
light tactical vehicle, the HUMVEE, will ultimately be replaced
through the Joint Light Tactical Vehicle (JLTV) program.
AM General is one of three contractors selected to continue
competing under an engineering/manufacturing/development contract
for the 2015 JLTV production award. The US military has no HUMVEEs
on order. A deep pipeline of foreign military HUMVEE sales
prospects exists however and once a foreign order is executed
production visibility will improve. The company states that it is
in the final administrative stage on a meaningful foreign order.
A large installed base of HUMVEEs requires replacement parts and
supports refurbishment demand that will continue for many years.
But orders can vary from year to year and the budgetary continuing
resolution that the US military is presently operating under
clouds visibility of HUMVEE maintenance orders. In Moody's view,
depending on success of the foreign military sales effort, debt to
EBITDA could be as low as 3.5x or as high as +6x in 2013.
Scheduled annual debt amortizations of $45 million over the next
three years represents a large cash requirement.
The rating outlook is stable. With about $100 million of
unrestricted cash expected at close of the planned bank debt
refinancing, the company should adequately cover near-term
operating and financing needs, even in a downside scenario. As
well, about $12 million will be available under the planned $20
million revolver after letters of credit. The cash balance gives
AM General maneuvering room to focus on building its order book.
The stable outlook also favorably recognizes the substantial cost
restructuring undertaken in the past year which boosts AM
General's competitiveness for future procurements.
The B2 ratings on the first lien bank debts, one notch above the
CFR, reflects presence of effectively junior, unsecured claims
that would likely compete for recovery in a stress scenario and
thereby help first lien recovery prospects.
The rating could be upgraded with backlog growth, expectation of
debt to EBITDA at 4.5x or below, and free cash flow to debt above
10%. (Foregoing metrics are on a Moody's adjusted basis, which
includes pension and lease related adjustments.)
The rating could be downgraded with a lack of backlog growth,
expectation of debt to EBITDA above 6x on a sustained basis or
weakening liquidity.
The principal methodology used in this rating 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.
AM General LLC, headquartered in South Bend, IN, designs,
engineers, manufactures, supplies and supports specialized
vehicles for commercial and military customers. Estimated revenues
in 2012 were approximately $1.3 billion. The company is majority-
owned by entities of MacAndrews & Forbes Holdings, Inc.
AM GENERAL: S&P Assigns 'B' CCR; Rates $370MM Facility 'BB-'
------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'B'
corporate credit rating to U.S. defense contractor AM General LLC.
The outlook is stable. S&P also assigned a 'BB-' issue rating to
the proposed $370 million secured credit facility, which includes
a $350 million term loan and an undrawn $20 million revolver, with
a recovery rating of '1'. This indicates expectations of very
high (90%-100%) recovery in a payment default scenario.
"The ratings on AM General reflect our view that although earnings
and cash flow should support the ratings over the next two years,
the long-term prospects for the company are highly uncertain,"
said Standard & Poor's credit analyst Chris Mooney.
S&P views the company's business risk profile as "vulnerable"
given that the company's market position has deteriorated and the
company has limited product diversity. The U.S. government, the
company's main customer, is no longer procuring Humvees, the
company's main product, due to the end of the Iraq war and the
wind-down of the war in Afghanistan. AM General has decided to
increase its focus on international sales in an attempt to
partially offset lost U.S. demand. However, S&P believes the
international market is significantly less attractive than the
U.S. market because sales are more unpredictable, defense budgets
are much smaller throughout the world, and several competitors
exist internationally, although margins are usually higher. The
company is also attempting to penetrate the commercial vehicle
assembly market. This business has yet to deliver meaningful
sales, and production was temporarily suspended in 2012, which
hurt profitability.
"We assess AM General's financial risk profile as "aggressive."
Although we expect credit protection measures to be appropriate
for the rating for the next two years, with debt to EBITDA of 4x-
4.5x and funds from operations (FFO) to debt of 10%-15%, there is
likely to be volatility around our base forecast due to the weak
overall demand, uncertainty surrounding the U.S. defense budget,
and the increasing reliance on international orders. Our base
forecast also assumes that the company will use most of its excess
cash flow (after tax-related payments to members) to pay down
debt. AM General is owned by private-equity firms MacAndrews &
Forbes (70%) and the Renco Group (30%), which have taken
substantial dividends from the company over the past several
years, although none of these were debt-financed," S&P said.
Although the Army plans to reduce its Humvee fleet as the size of
the military shrinks, there is still a large installed base of
Humvees that will require spare parts and services over the next
several years. AM General is well positioned to benefit from
vehicles that need to be upgraded or repaired after returning from
war because it owns the design rights on parts and tooling and
roughly 90% of its aftermarket revenue is sole-source in nature.
While aftermarket sales are generally more stable and higher
margin than new Humvee sales, the current uncertainty around U.S.
defense budgets has resulted in delayed orders, a trend S&P
expects to continue.
Over time, the military plans to replace the Humvee because it is
now being used in ways it was never intended. AM General is one
of three companies in the final bidding stage for the replacement
vehicle--known as the Joint Light Tactical Vehicle (JLTV). S&P
expects the JLTV production contract to be awarded in late 2014.
This contract provides the potential for significant long-term
revenue growth, but S&P don't expect initial production to occur
until late 2015 and it is still unclear whether AM General will
win this award.
Overall, S&P expects sales to continue to decline significantly in
2013 due to the absence of U.S. demand for new Humvees. S&P also
expects a return to more normalized level of aftermarket sales,
which spiked in 2012 as some delayed orders from 2011 were filled.
Despite lower volumes, S&P believed EBITDA margins will improve to
about 20% from 15% in 2012 (adjusted for pension and other
postretirement employee benefits expenses in excess of service
costs) as the company continues to aggressively reduce costs. In
recent years, the company spent a significant amount of money to
develop prototypes for the JLTV and the cancelled "Humvee Recap"
programs. With the design phase of these programs over, S&P
expects research and development to continue to decline. S&P also
expects the commercial operations to turn a modest profit after
operating at a loss in 2012.
The outlook is stable. Although S&P expects earnings to decline
over the next year, it believes the company will continue to
generate positive free cash flow and maintain appropriate credit
metrics for the rating. S&P could lower the rating if earnings
and cash flow are less than projected, such that FFO to debt falls
below 10% for a sustained period and debt to EBITDA rises above
5x. S&P believes this could be because of lower orders, resulting
in greater than a 50% decline in sales from current levels,
compared with S&P's expectations of about a 30%-40% decline in
2013; or EBITDA margins 300-400 basis points below S&P's forecast,
which could be because of cost reduction plans that don't fully
materialize, further disruptions in commercial vehicle operations,
or significant delays in higher-margin aftermarket sales. S&P
could also lower the rating if liquidity deteriorates, such that
S&P characterizes it as "weak." S&P is unlikely to raise the
rating over the next year given challenging market conditions, but
S&P could do so if FFO to debt rises above 25% for a sustained
period.
AMERICAN AIRLINES: AMR and US Airways Announce Merger
-----------------------------------------------------
AMR Corporation, the parent company of American Airlines, Inc.,
and US Airways Group, Inc., on Thursday announced that the boards
of directors of both companies have unanimously approved a
definitive merger agreement under which the companies will combine
to create a premier global carrier, which will have an implied
combined equity value of approximately $11 billion based on the
price of US Airways' stock as of Feb. 13, 2013.
According to The Wall Street Journal, if the deal is cleared by
U.S. and foreign regulators and by the bankruptcy judge overseeing
AMR's 14-month bankruptcy stay, the new American Airlines Group
Inc. would become the world's largest airline by traffic and take
a commanding position in eight of the busiest U.S. airports.
According to the carriers' joint statement, Thomas Horton,
Chairman, President and Chief Executive Officer of American
Airlines, will serve as Chairman of the combined airline's Board
of Directors through its first annual meeting of shareholders, and
will also serve as the combined airline's representative to the
oneworld Alliance, of which he is currently chairman, and
International Air Transport Association for the same duration.
Doug Parker, Chairman and CEO of US Airways, will serve as Chief
Executive Officer and a member of the Board of Directors. Mr.
Parker will assume the additional position of Chairman of the
Board following the conclusion of Mr. Horton's service.
The Board of Directors will initially be made up of 12 members.
The Board will be comprised of three American Airlines
representatives, including Tom Horton, four US Airways
representatives, including Doug Parker, and five AMR creditor
representatives.
Under the terms of the merger agreement, US Airways stockholders
will receive one share of common stock of the combined airline for
each share of US Airways common stock then held. The aggregate
number of shares of common stock of the combined airline issuable
to holders of US Airways equity instruments (including
stockholders, holders of convertible notes, optionees and holders
of restricted stock units) will represent 28% of the diluted
equity of the combined airline. The remaining 72% diluted equity
ownership of the combined airline will be issuable to stakeholders
of AMR and its debtor subsidiaries that filed for relief under
Chapter 11, American's labor unions, and current AMR employees.
Support Agreement With Unsecured Creditors
In connection with the merger agreement, AMR has entered into a
support agreement with certain unsecured creditors holding
approximately $1.2 billion of prepetition unsecured claims against
the Debtors. Pursuant to the support agreement, the creditors
party thereto have agreed, subject to certain conditions, to
support a plan of reorganization implementing the merger and
incorporating a compromise and settlement of certain intercreditor
and intercompany claims issues.
More Choices, Increased Service, and
an Enhanced Travel Experience for Customers
The combined airline will offer more than 6,700 daily flights to
336 destinations in 56 countries. The combined airline is
expected to maintain all hubs currently served by American
Airlines and US Airways, resulting in more travel options for
customers. Both airlines expect that the regional carriers they
own -- AMR Corporation's American Eagle and US Airways' Piedmont
and PSA ? will continue to operate as distinct entities, providing
seamless service to the combined airline. The company will be
headquartered in Dallas-Fort Worth and will maintain a significant
corporate and operational presence in Phoenix.
The combined airline is expected to:
Provide the most service across the East Coast and Central
regions of the U.S., including the East Coast shuttle, enhancing
the combined carrier's competitive position
Expand its presence and further strengthen the network in the
Western U.S.
Bolster American's industry-leading position in Latin America
and the Caribbean
Enhance connectivity within the oneworld Alliance -- including
joint businesses with British Airways and Iberia across the
Atlantic and with Japan Airlines and Qantas across the Pacific --
creating more options for travel and benefits both domestically
and internationally
Serve 21 destinations in Europe and the Middle East
Maintain current hubs of both American Airlines and US
Airways, resulting in more choices for customers
Improve traffic flows through the existing hubs of both
carriers
Expand service from those hubs to offer increased service to
existing markets and service to new cities
Provide an industry-leading travel experience through
innovative initiatives intended to increase comfort and
connectivity for all customers
Improve valuable loyalty program benefits through expanded
opportunities to earn and redeem miles across the combined network
In addition, American Airlines' landmark agreements with Airbus
and Boeing, designed to transform the American Airlines fleet over
the next four years, will solidify the combined airline's fleet
plan into the next decade. The combined airline is planning to
take delivery of more than 600 new aircraft, including 517
narrowbody aircraft and 90 widebody international aircraft, most
of which will be equipped with advanced in-seat inflight
entertainment systems offering thousands of hours of programming,
inflight Wi-Fi offering connectivity throughout the world, and
"Main Cabin Extra" seating with 4-6 inches of additional legroom
in the Main Cabin. The combined carrier's fleet will also feature
fully lie-flat, all-aisle access premium seating on American's new
Boeing 777-300ER aircraft and Airbus 321 Transcontinental
deliveries slated for later this year. Similar to US Airways'
Airbus A330 international Envoy service, American will also
retrofit existing 777-200 and 767-300 aircraft to include fully
lie-flat premium seating in an effort to provide a consistent
experience for customers flying on the combined carrier.
Customers can continue to book travel and track and manage flights
and frequent flyer activity through AA.com or USAirways.com, and
will continue to enjoy all benefits and rewards of the AAdvantage
and Dividend Miles frequent flyer programs. At this time, there
are no changes to the frequent flyer programs of either airline as
a result of the merger agreement. All miles in both programs will
continue to be honored. Upon merger approval, additional
information will be provided to customers of both frequent flyer
programs on any future program updates, including account
consolidation or benefit alignment.
Employees to Benefit from
Greater Long-Term Opportunities
Employees of the combined airline will benefit from being part of
a company with a more competitive and stable financial foundation,
which will create greater opportunities over the long term. Each
carrier's employees will receive reciprocal travel privileges as
quickly as possible. The merger will also provide the path to
improved compensation and benefits for employees.
"Together we will combine the proud histories of both airlines and
create one team that recognizes the contributions of all employees
to our airlines' great customer service and financial success.
Our future has never looked brighter thanks to the outstanding
people of both American Airlines and US Airways," concluded
Parker.
As previously announced, the unions representing American Airlines
pilots, flight attendants and ground employees, as well as the
union representing US Airways pilots, have agreed to terms for
improved collective bargaining agreements effective upon the
closing of the merger. In addition, the union representing US
Airways flight attendants has reached a tentative agreement that
includes support for the merger. The American Airlines unions
representing pilots and flight attendants are working with their
US Airways counterparts to determine representation and single
agreement protocols.
Superior Value for Stakeholders
American Airlines stakeholders and US Airways shareholders are
expected to benefit from the significant upside potential of the
new combined airline, which is expected to have approximately $40
billion in revenues based upon the combination of each company's
projected 2013 performance. The combination is expected to
deliver enhanced value to American Airlines stakeholders and is
projected to be significantly accretive to EPS for US Airways
shareholders in 2014.
The transaction is expected to generate more than $1 billion in
annual net synergies in 2015, including $900 million in network
revenue synergies, resulting predominantly from increased
passenger traffic, taking advantage of the combined carrier's
improved schedule and connectivity, an improved mix of high-yield
business, and the redeployment of the combined fleet to better
match capacity to customer demand. Estimated cost synergies of
approximately $150 million are net of the impact of the new labor
combined contracts at American Airlines and US Airways. The
companies expect one-time transition costs for the merger of
approximately $1.2 billion, spread over the next three years.
The provisions of the support agreement relating to the treatment
of prepetition unsecured claims against the Debtors and existing
equity interests in AMR under a plan are summarized as follows:
* Holders of existing AMR equity interests will receive an
aggregate initial distribution of 3.5% of the common stock of the
combined airline on the effective date of the plan, with the
potential to receive additional shares if the value of common
stock received by holders of prepetition unsecured claims would
satisfy their claims in full;
* So-called "double dip" creditors (i.e., holders of
prepetition unsecured claims as to which both AMR and American
Airlines are obligors, either directly or indirectly) will receive
shares of mandatorily convertible preferred stock equal to the
full amount of their claims. These shares will convert into
common stock of the combined airline at 30 day intervals during
the 120 day period following the effective date of the plan, based
on a formula tied to the market price of the common stock of the
combined airline;
* So-called "single dip" creditors (i.e., holders of
prepetition unsecured claims that are not guaranteed) will receive
a combination of shares of the same class of mandatorily
convertible preferred stock as the "double dip" creditors will
receive and shares of common stock of the combined airline; and
* American Airlines' labor unions and other employees will
receive an aggregate of 23.6% of the common stock of the combined
airline ultimately distributed to holders of prepetition unsecured
claims against the Debtors.
The support agreement can be terminated in certain instances,
including the failure of the Debtors to achieve certain milestones
toward confirmation and consummation of the plan.
Clear Roadmap to Completion
The merger is to be effected pursuant to a plan of reorganization
for American and its debtor-affiliates in their currently pending
cases under Chapter 11 of the United States Bankruptcy Code in the
U.S. Bankruptcy Court for the Southern District of New York. The
Plan is subject to confirmation and consummation in accordance
with the requirements of the Bankruptcy Code.
The merger is also conditioned on regulatory approvals, approval
by US Airways shareholders, and other customary closing
conditions. The combination is expected to be completed in the
third quarter of 2013.
During the period between the signing and closing of the
transaction, a transition-planning team comprised of leaders from
both companies will develop a carefully constructed integration
plan to help assure a smooth and sustainable transition.
Advisors
Rothschild is serving as financial advisor to American Airlines,
and Weil, Gotshal & Manges LLP, Jones Day, Paul Hastings,
Debevoise & Plimpton LLP and K&L Gates LLP are serving as legal
counsel. Barclays and Millstein & Co. are serving as financial
advisors to US Airways, and Latham & Watkins LLP, O'Melveny &
Myers, Cadwalader, Wickersham & Taft LLP, and Dechert LLP are
serving as legal counsel to US Airways. Moelis & Company and
Mesirow Financial are serving as financial advisors to the
Unsecured Creditors Committee. Skadden, Arps, Slate, Meagher &
Flom LLP and Togut, Segal & Segal LLP are serving as the Unsecured
Creditors Committee's legal counsel.
Tax Benefit Preservation Plan
In conjunction with execution of the Merger Agreement, US Airways
also announced that its Board of Directors has adopted a tax
benefit preservation plan designed to help preserve the value of
the net operating losses and other deferred tax benefits of US
Airways and the combined enterprise resulting from the merger with
AMR. The tax benefit preservation plan, which is effective
immediately and will remain in place no longer than the closing of
the merger, is designed to reduce the likelihood that changes in
the US Airways investor base would limit the future use of the tax
benefits by US Airways or the combined enterprise, which would
significantly impair the value of the benefits to all
shareholders.
As part of the plan, the US Airways Board of Directors has
declared a dividend of one common stock purchase right, which are
referred to as "rights," for each outstanding share of US Airways
common stock. The rights will be exercisable if a person or
group, without the approval of the US Airways board or other
permitted exception, acquires beneficial ownership of 4.9% or more
of US Airways' outstanding common stock. The rights also will be
exercisable if a person or group that already beneficially owns
4.9% or more of the common stock of US Airways, without board
approval or other permitted exception, acquires additional shares
(other than as a result of a dividend or a stock split). If the
rights become exercisable, all holders of rights, other than the
person or group triggering the rights, will be entitled to
purchase US Airways common stock at a 50% discount. Rights held
by the person or group triggering the rights will become void and
will not be exercisable. The rights will expire immediately upon
the occurrence of certain events, including the closing of the
merger or the termination of the merger agreement. In addition,
the certificate of incorporation of the combined company will
contain limitations on certain acquisitions and dispositions of
shares effective from and after the closing of the merger, also
with the objective of preserving the value of net operating losses
and other deferred tax benefits.
US Airways shareholders with ownership positions near or above the
4.9% threshold specified in the tax preservation plan are urged to
review its terms carefully.
CEOs' Statements
"Today, we are proud to launch the new American Airlines -- a
premier global carrier well equipped to compete and win against
the best in the world," Tom Horton, Chairman, President, and Chief
Executive Officer of American Airlines, said in a joint statement.
"Together, we will be even better positioned to deliver for all of
our stakeholders, including our customers, people, investors,
partners, and the many communities we serve.
"The combination of American and US Airways brings together two
highly complementary networks with access to the best destinations
around the globe and gives us a strong platform to provide our
customers the most connected, comfortable travel experience
available. The operational and financial strength of the combined
airline is expected to enable continued investment in new products
and technologies and will create exciting new opportunities for
our people, even as we deliver strong cash flow and sustainable
profitability.
"Over the past year, the American team stood tall as we
established a rock solid foundation for long-term success through
an efficient and effective restructuring. As part of this
process, after months of exhaustive analysis and a thorough review
of all alternatives, we concluded that this merger is the best
outcome for our company, delivering not only the greatest value
for our financial stakeholders, but also positioning us well for
sustainable success over the long term.
"This merger provides enhanced potential for full recovery for our
creditors. In addition, I am pleased that we were able to obtain
the support of a sizable portion of our unsecured creditors for a
plan that provides a recovery of at least a 3.5% aggregate
ownership stake in the combined airline for our shareholders. It
is unusual in Chapter 11 cases -- and unprecedented in recent
airline restructurings -- for shareholders to receive meaningful
recoveries. I look forward to working closely with Doug Parker,
whom I have known as a friend for more than 25 years, and with the
leadership teams of both companies to assure a smooth integration
and the creation of a new industry leader."
Doug Parker, Chairman and Chief Executive Officer of US Airways,
said, "Today marks an exciting new chapter for American Airlines
and US Airways. American Airlines is one of the world's most
iconic brands. The combined airline will have the scale, breadth
and capabilities to compete more effectively and profitably in the
global marketplace. Our combined network will provide a
significantly more attractive offering to customers, ensuring that
we are always able to take them where they want to travel, when
they want to go."
Parker continued, "Today's announcement is possible only because
of the important work carried out over the past year by Tom Horton
and the American team. No one cares more about the long-term
success of American Airlines and its people than Tom. Through a
successful restructuring and this merger, Tom and the American
team have established an excellent foundation for the new American
Airlines to become a premier global airline. I am grateful for
all that Tom has done to ensure that American is in the best
position possible for future success and am delighted he has
agreed to remain on board to assist with the transition.
"I am particularly pleased for the employees of both US Airways
and American. This merger will create a stronger company, with
the path to improved compensation and benefits and greater long-
term opportunities for all our employees. We are grateful to have
the support of both companies' unions and thank them and their
leaders for their hard work and vision. We look forward to a
bright future for our employees and enhanced service and choice
for our customers. With today's announcement, we start becoming
one team and one new airline."
American Airlines and US Airways executives held a conference call
Feb. 14, 2013, at 8:30 a.m. ET / 5:30 a.m. PT. To access the
conference call, please dial (877) 681-1320 (U.S. dial-in) or
(973) 935-2840 (international dial-in) at least 20 minutes prior
to the start of the call, referencing conference ID# 99288242. A
replay of the call is available until March 14, 2013 by dialing
(800) 585-8367 (U.S. dial-in) or (404) 537-3406 (international
dial-in) (conference ID# 99288242). The call will also be webcast
with accompanying slides on the investor relations sections of
http://www.aa.com/and http://www.usairways.com/as well as the
new joint website http://www.newAmericanarriving.com/
* * *
Susan Carey and Mike Spector, writing for The Wall Street Journal,
report that in a joint interview, Messrs. Horton and Parker said
they anticipate smooth sailing in their new roles as they seek to
steer the combined carrier past rivals United Continental Holdings
Inc. and Delta Air Lines Inc. The merger represents "the renewal
of our iconic brand," Mr. Horton said.
WSJ notes Mr. Horton is entitled to a severance package of $9.9
million in cash and a like amount in stock of the new company,
according to a securities filing Thursday. He also would receive
lifetime travel benefits, as is customary in the industry, and an
office and support staff for two years after the deal closes, the
filing said.
WSJ says news of the merger was met with widely positive
reactions. Many unions at AMR and US Airways expressed confidence
that the deal would reverse years of decline at once-great
American, and lift US Airways workers from their below-market
compensation.
The report notes credit-ratings service Standard & Poor's put US
Airways' debt on review with positive implications. AMR's shares
jumped 63% Thursday on the so-called Pink Sheets on news that
common shareholders are in line for a modest recovery. US Airways
shares fell 4.6%.
WSJ also reports that Jack Butler, Esq., the lead lawyer for AMR's
creditors committee, said at at bankruptcy-court hearing that his
clients supported the merger. One creditor, Pension Benefit
Guaranty Corp., a federal insurer of private pension plans,
expressed satisfaction that employees will "have both jobs and
pensions," which had been in jeopardy under AMR's restructuring.
The report also relates United Air Lines CEO Jeff Smisek told
employees the merger was "good news," though "the merged American
will be a formidable competitor."
WSJ reports Stephen Karotkin, Esq., a bankruptcy lawyer for
American, said at a court hearing Thursday that the airline
expected to file a motion seeking approval of the merger by the
end of next week and appear for a hearing on the deal in the
second half of March.
According to the report, the deal is likely to repay AMR's
creditors fully, with interest, and carves out a 3.5% ownership
stake for existing shareholders. Those shareholders could reap
addition financial recoveries once the new airline's market value
repays creditors. Such a recovery is unusual in bankruptcies,
where shareholders usually get wiped out.
Meanwhile, The Wall Street Journal's Jack Nicas reports that the
two carriers face months, perhaps years, of work integrating their
massive operations into the world's biggest airline and realizing
more than $1 billion in annual revenue enhancements and other cost
savings. They must take AMR out of bankruptcy, pass a Justice
Department antitrust review, align thousands of pages of manuals,
merge their complex computer systems and sign up thousands of
employees to joint labor contracts.
"The financial deal is easy," said airline consultant Darryl
Jenkins, according to Mr. Nicas' report. "The challenges are
always in the integration."
Mr. Nicas notes analysts have long regarded US Airways, the No. 5
U.S. carrier by traffic, as a scrappy, second-tier airline.
American, meanwhile, sat atop the industry for years and prides
itself on its history. US Airways effectively is taking over an
airline almost twice its size. The report also says the
arrangement will set up a culture clash when some of the US
Airways management team, known for its loose, free-wheeling style,
moves from Tempe, Ariz., to AMR's gleaming headquarters in Fort
Worth, Texas, to run the new carrier.
"You have this open-collar culture taking over a button-down
culture," said Bill Swelbar, an airline researcher at the
Massachusetts Institute of Technology, the report notes. "The
management styles are very different."
The report relates the CEOs' Valentine's Day news conference
Thursday was a love fest, as they ribbed each other and lauded one
another's leadership. Mr. Parker thanked Mr. Horton for letting
him run the combined company, to which Mr. Horton replied, "Don't
mess up."
WSJ's Mike Spector in a separate report says AMR and US Airways'
agreement to merge reached a turning point March 2012 in a posh
New York restaurant, when a lieutenant for Mr. Parker enlisted
AMR's American Airline pilots to his cause. That agreement raised
the heat on Mr. Horton who had been resisting a deal, preferring
for the American Airlines parent to exit bankruptcy on its own.
On Thursday, according to the report, Mr. Horton hinted that his
reluctance was meant to ensure that AMR's creditors got the best
deal. "There was a little poker playing going on in the process,"
he said.
WSJ recounts US Airways had hired bankers at Barclays PLC and
Millstein & Co. and lawyers at Latham & Watkins LLP to study a
merger. In February the airline started making presentations on
Wall Street about the benefits of a combination. The airline also
visited Lazard Ltd. bankers representing American's pilots, who
found a deal intriguing. Mr. Horton, though, told Mr. Parker that
US Airways public campaign for a merger wasn't constructive.
Additional information about the benefits of the transaction is
available at a new joint website launched by the airlines at
http://www.newAmericanarriving.com/ Customers are also invited to
learn more at http://www.aa.com/arrivingand
http://www.usairways.com/arriving
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: Five Major Unions Support Merger
---------------------------------------------------
Leaders from five major unions representing more than 60,000
American Airlines and US Airways employees on Feb. 14 voiced their
strong support for the merger of AMR Corporation, the parent
company of American Airlines, Inc., and US Airways Group, Inc.
The merger of American Airlines and US Airways was announced on
Feb. 14.
Laura Glading, APFA President said: "It's been a long, tough road
but the result is well worth it. [Thurs]day's announcement proves
that everyone benefits when labor has a seat at the table. The
new American will provide job security and fair compensation for
all employees and another great option for the flying public.
Flight attendants are eager to help build a strong and competitive
airline and restore American's prominence."
Deborah Volpe and Roger Holmin, Presidents of the Association of
Flight Attendants - CWA at US Airways said: "Flight Attendants are
ready to participate in the benefits that will be generated by the
strong network combination of American Airlines and US Airways.
We are proud to be a part of the frontline that makes our airline
a success and we look forward to the new opportunities we will
generate by working alongside our counterparts at American."
Keith Wilson, President of the Allied Pilots Association at
American Airlines said: "We are excited with today's announcement,
which we believe is the right path forward for American Airlines
and its employees. This combination paves the way for a new, more
competitive American Airlines and a brighter future for the
dedicated employees of the combined company. We recognized the
value of merging at the very beginning, and worked for the past
year to help bring this deal to fruition. Employees of the new
American Airlines will enjoy competitive compensation and
benefits, and will be part of a stronger airline which will create
greater opportunities over the long term."
Captain Gary Hummel, President, USAPA, said, "This merger came
about due to the cooperative efforts of both management and labor.
As pilots, we are proud to be a part of the New American Airlines
and look forward to working with our colleagues at the Allied
Pilots Association, building our new company into a financially
strong, premier global carrier."
James C. Little, International President, TWU, said, "Our members
have made major sacrifices over the past year. We are pleased
that today American Airlines and US Airways have reached a
positive step toward building a stronger, more secure and more
competitive airline. This should benefit both travelers and
workers. Much more work needs to take place before all of the
parts that will make up a New American Airlines are assembled, but
the airline we're building should be better than the old American
and US Airways."
Founded in 1977, the Association of Professional Flight Attendants
(APFA) -- http://www.apfa.org-- is the largest independent Flight
Attendant union in the nation. It represents the 16,000 Flight
Attendants at American Airlines. APFA Members live in almost
every state of the nation and serve millions of Americans as they
travel the nation and the world. Laura Glading is serving in her
second four-year term as president of the union.
The Association of Flight Attendants is the world's largest Flight
Attendant union. Focused 100 percent on Flight Attendant issues,
AFA has been the leader in advancing the Flight Attendant
profession for 67 years. Serving as the voice for Flight
Attendants in the workplace, in the aviation industry, in the
media and on Capitol Hill, AFA has transformed the Flight
Attendant profession by raising wages, benefits and working
conditions. Nearly 60,000 Flight Attendants come together to form
AFA, part of the 700,000-member strong Communications Workers of
America (CWA), AFL-CIO.
Founded in 1963, the Allied Pilots Association --
http://www.alliedpilots.org-- the largest independent pilot union
in the United States -- is headquartered in Fort Worth, Texas.
APA represents the 10,000 pilots of American Airlines, including
649 pilots not yet offered recall from furlough. The furloughs
began shortly after the Sept. 11, 2001 attacks. Also, several
hundred American Airlines pilots are on full-time military leave
of absence serving in the armed forces.
Headquartered in Charlotte, N.C., the US Airline Pilots
Association (USAPA) represents the more than 5,000 mainline pilots
who fly for US Airways. USAPA's mission is to ensure safe flights
for airline passengers by guaranteeing that their lives are in the
hands of only the most qualified, competent and well-equipped
pilots.
The Transport Workers Union of America (TWU) represents 200,000
workers and retirees, primarily in commercial aviation, public
transportation and passenger railroads. Included in the union's
membership are 26,000 workers at American Airlines. TWU
represents seven work groups at American Airlines including Fleet
Service, Aviation Maintenance Technicians (aircraft mechanics),
Stock Clerks, Dispatchers, Ground School Instructors, Flight
Simulator Technicians and Facility Maintenance Mechanics, TWU also
represents Dispatchers at US Airways. The union is an affiliate
of the AFL-CIO.
ALPA's Statement
"As the largest pilot union in the world, ALPA is deeply invested
in the future of the aviation industry and the piloting
profession. The landscape has changed considerably in recent
years as airlines look to consolidation and other types of
transactions to maximize their assets for the benefit of
shareholders, passengers, and employees.
"ALPA will be watching this merger carefully because we represent
pilots who fly more than 75 percent of express flying within the
US Airways and American networks. We will work to ensure that our
members are not negatively impacted during the merger process or
by any subsequent agreements. And, in fact, they should benefit,
as other stakeholders, in such a consolidation.
"Involving all employees, including those in the wholly-owned
express subsidiaries, is essential to a smooth and effective
integration process. We encourage all parties affected by this
merger to collaborate in building a strong carrier that will
continue to move this industry and our profession forward."
APFA's Statement
The Association of Professional Flight Attendants enthusiastically
welcomed [Thurs]day's announcement that American Airlines and US
Airways have agreed to a merger.
APFA President Laura Glading said, "It's been a long, tough road
but the result is well worth it. [Thur]day's announcement proves
that everyone benefits when labor has a seat at the table. The
new American will provide job security and fair compensation and
benefits for all employees. It will also be a great option for
the traveling public. I'm looking forward to working with our new
colleagues as our companies' operations and cultures combine.
Flight attendants are eager to help build a strong and competitive
airline and restore American's prominence."
In April of 2012, four months after American Airlines filed for
bankruptcy protection, its unions announced that they had reached
agreements with the management of US Airways in the event of a
merger. APFA quickly recognized the value of merging the two
carriers and worked for the ensuing year to bring the deal to
fruition.
American Airlines' Chapter 11 proceedings provided an
unanticipated avenue to build one of the largest and most
competitive airlines in the world in terms of network, passengers,
and fleet. This merger will provide flight attendants at the new
American Airlines with a fair and competitive contract and much
improved job security.
AFA's Statement
US Airways Flight Attendants, represented by the Association of
Flight Attendants-CWA (AFA), issued the following statement on
Feb. 14 after the official announcement of a merger between US
Airways and American Airlines:
"The merger between US Airways and American Airlines holds great
opportunities for Flight Attendants. We will raise the bar for
our profession and we look forward to working as key partners.
"US Airways Flight Attendants have been instrumental in the
overall success of our airline. Our hard work and sacrifices have
helped turn US Airways into the thriving airline it is today.
"As full partners in the world's largest airline, we expect
meaningful participation in its benefits. We look forward to
working with our colleagues at American in improving wages,
benefits, work rules and retirement security for ALL Flight
Attendants at the new American."
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: AMR Bondholders Say Merger the Best Outcome
--------------------------------------------------------------
The Ad-Hoc Committee representing bondholders of AMR Corporation,
the parent company of American Airlines, Inc., on Feb. 14 issued
the following statement regarding the announced merger of American
Airlines and US Airways Group, Inc.:
The Ad-Hoc Committee said, "We are pleased that American Airlines
and US Airways have agreed to combine in a transaction that will
result in significant value for stakeholders of both companies,
including bondholders of AMR. This merger is the best outcome for
AMR's restructuring, providing AMR stakeholders with enhanced
recoveries. We are pleased that the Ad Hoc Committee, along with
certain other large bondholders, have been able to reach an
agreement with AMR regarding a fair and appropriate allocation of
value among AMR stakeholders and believe that such agreement will
avoid significant litigation that might otherwise jeopardize
consummation of the merger. We acknowledge the efforts of Tom
Horton and the American Airlines Board of Directors and management
team, as well as the work of Doug Parker and the US Airways Board
and management team, who have worked extremely hard for more than
a year to make this transaction possible and AMR's restructuring a
success. Gerard Uzzi and Tom Janson of Milbank, Tweed, Hadley &
McCloy LLP and Eric Siegert of Houlihan Lokey represent the Ad Hoc
Committee. Seabury Group and Amy Caton of Kramer Levin Naftalis &
Frankel LLP represent Bank of New York Mellon and Law Debenture as
indenture trustees in connection with the negotiations.
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: IAM to Back Merger if USAir Pacts Renewed
------------------------------------------------------------
The International Association of Machinists and Aerospace Workers
(IAM) on Feb. 14 declared renewed contracts for its US Airways
members must be concluded before the IAM is willing to support the
merger of US Airways and American Airlines.
"IAM members at US Airways need and deserve contracts now," said
IAM District 141 President Rich Delaney. "The Machinists Union
will not allow US Airways to stall our members' contract
negotiations while it devotes its attention to merging with
American Airlines. The IAM is prepared to support this merger
only if it provides real value to employees."
"The IAM has been in negotiations with US Airways to amend
existing contracts for approximately two years," said IAM District
142 President Tom Higginbotham. "US Airways, however, is more
concerned with courting American Airlines than negotiating with
its own employees."
While US Airways and American Airlines today declared their
intention to merge, the pairing still faces many obstacles,
including shareholder and regulatory approval.
The IAM -- http://www.usaaamerger.com-- is the world's largest
airline union and its Air Transport Districts 141 and 142
represent more than 14,000 Mechanics and Related, Fleet Service,
Maintenance Instructors and Stockroom employees at US Airways,
making it the largest union at the airline.
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: Too Early to Tell, Amer. Eagle Pilots Say
------------------------------------------------------------
In response to the American Airlines/US Airways merger announced
on Feb. 14, the American Eagle Pilots Master Executive Council,
represented by the Air Line Pilots Association, Int'l (ALPA),
issued the following statement:
"Although it is far too early to tell how this merger will
ultimately affect the regional carriers that support American
Airlines and US Airways, the pilots of American Eagle -- a wholly-
owned subsidiary of American Airlines -- are looking forward to
the opportunity to better serve the flying public in cooperation
with the merged carrier.
We have a strong history of working through challenging situations
and coming to mutually beneficial agreements with our senior
management -- as we did in our recent bankruptcy negotiations that
provided extensive cost-savings and greater efficiencies to AMR.
We are committed to protecting our pilots' futures and the long-
term success of both American Eagle and our parent company. We
look forward to working with the new management team as well as
finalizing arrangements to fulfill our fleet plan to provide
regional flying as part of the new American Airlines network."
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on $18.02 billion
of total operating revenues for the nine months ended Sept. 30,
2011. AMR recorded a net loss of $471 million in the year 2010, a
net loss of $1.5 billion in 2009, and a net loss of $2.1 billion
in 2008.
AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion
in total assets, $29.55 billion in total liabilities, and a
$4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AXLE: JB Stake Down to 0.5% as of Dec. 31
--------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, JB Investments Management, LLC, and Brian
Riley disclosed that, as of Dec. 31, 2012, they beneficially own
367,254 shares of common stock of American Axle & Manufacturing
Holdings, Inc., representing 0.5% of the shares outstanding.
The investors previously reported beneficial ownership of
5,185,007 common shares or a 6.9% equity stake as of Dec. 31,
2011. A copy of the amended filing is available for free at:
http://is.gd/9YszQX
About American Axle
Headquartered in Detroit, Michigan, American Axle & Manufacturing
Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- manufactures,
engineers, designs and validates driveline and drivetrain systems
and related components and chassis modules for light trucks, sport
utility vehicles, passenger cars, crossover vehicles and
commercial vehicles.
The Company's balance sheet at Dec. 31, 2012, showed $2.86 billion
in total assets, $2.98 billion in total liabilities, and a
$120.8 million total stockholders' deficit.
* * *
In January 2012, Fitch Ratings has affirmed the 'B+' Issuer
Default Ratings (IDRs) of American Axle & Manufacturing.
Fitch expects leverage to trend downward over the intermediate
term, however, as the company gains traction on its new business
wins. Looking ahead, Fitch expects free cash flow to be
relatively weak, but positive, in 2012 with the steep ramp-up
in new business and as the company continues to make investments
in both capital assets and research and development work to
support growth opportunities in its customer base and product
offerings. Beyond 2012, free cash flow is likely to strengthen
meaningfully as the new programs coming on line in the near term
begin to produce higher levels of cash.
In September 2012, Moody's Investors Service affirmed the B1
Corporate Family Rating (CFR) and Probability of Default Rating
(PDR) of American Axle.
American Axle carries a 'BB-' corporate credit rating from
Standard & Poor's Ratings Services. "The 'BB-' corporate credit
rating on American Axle reflects the company's 'weak' business
risk profile and 'aggressive' financial risk profile, which
incorporate substantial exposure to the highly cyclical light-
vehicle market," S&P said, as reported by the TCR on Sept. 6,
2012.
AMERICAN AXLE: Vanguard Stake at 5.4% as of Dec. 31
---------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, The Vanguard Group disclosed that, as of
Dec. 31, 2012, it beneficially owns 3,786,844 shares of common
stock of American Axle & Manufacturing Holdings, Inc.,
representing 5.37% of the shares outstanding. A copy of the
filing is available for free at http://is.gd/EUsyFU
About American Axle
Headquartered in Detroit, Michigan, American Axle & Manufacturing
Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- manufactures,
engineers, designs and validates driveline and drivetrain systems
and related components and chassis modules for light trucks, sport
utility vehicles, passenger cars, crossover vehicles and
commercial vehicles.
The Company's balance sheet at Dec. 31, 2012, showed $2.86 billion
in total assets, $2.98 billion in total liabilities, and a
$120.8 million total stockholders' deficit.
* * *
In January 2012, Fitch Ratings has affirmed the 'B+' Issuer
Default Ratings (IDRs) of American Axle & Manufacturing.
Fitch expects leverage to trend downward over the intermediate
term, however, as the company gains traction on its new business
wins. Looking ahead, Fitch expects free cash flow to be
relatively weak, but positive, in 2012 with the steep ramp-up
in new business and as the company continues to make investments
in both capital assets and research and development work to
support growth opportunities in its customer base and product
offerings. Beyond 2012, free cash flow is likely to strengthen
meaningfully as the new programs coming on line in the near term
begin to produce higher levels of cash.
In September 2012, Moody's Investors Service affirmed the B1
Corporate Family Rating (CFR) and Probability of Default Rating
(PDR) of American Axle.
American Axle carries a 'BB-' corporate credit rating from
Standard & Poor's Ratings Services. "The 'BB-' corporate credit
rating on American Axle reflects the company's 'weak' business
risk profile and 'aggressive' financial risk profile, which
incorporate substantial exposure to the highly cyclical light-
vehicle market," S&P said, as reported by the TCR on Sept. 6,
2012.
AMERICAN AXLE: Richard Dauch Ownership at 9.2% as of Dec. 31
------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Richard E. Dauch disclosed that, as of
Dec. 31, 2012, he beneficially owns 6,991,957 shares of common
stock of American Axle & Manufacturing Holdings, Inc.,
representing 9.21% of the shares outstanding. Mr. Dauch
previously reported beneficial ownership of 7,298,687 common
shares or a 9.52% equity stake as of Dec. 31, 2011. A copy of the
amended filing is available for free at http://is.gd/h6O9xu
About American Axle
Headquartered in Detroit, Michigan, American Axle & Manufacturing
Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- manufactures,
engineers, designs and validates driveline and drivetrain systems
and related components and chassis modules for light trucks, sport
utility vehicles, passenger cars, crossover vehicles and
commercial vehicles.
The Company's balance sheet at Dec. 31, 2012, showed $2.86 billion
in total assets, $2.98 billion in total liabilities, and a
$120.8 million total stockholders' deficit.
* * *
In January 2012, Fitch Ratings has affirmed the 'B+' Issuer
Default Ratings (IDRs) of American Axle & Manufacturing.
Fitch expects leverage to trend downward over the intermediate
term, however, as the company gains traction on its new business
wins. Looking ahead, Fitch expects free cash flow to be
relatively weak, but positive, in 2012 with the steep ramp-up
in new business and as the company continues to make investments
in both capital assets and research and development work to
support growth opportunities in its customer base and product
offerings. Beyond 2012, free cash flow is likely to strengthen
meaningfully as the new programs coming on line in the near term
begin to produce higher levels of cash.
In September 2012, Moody's Investors Service affirmed the B1
Corporate Family Rating (CFR) and Probability of Default Rating
(PDR) of American Axle.
American Axle carries a 'BB-' corporate credit rating from
Standard & Poor's Ratings Services. "The 'BB-' corporate credit
rating on American Axle reflects the company's 'weak' business
risk profile and 'aggressive' financial risk profile, which
incorporate substantial exposure to the highly cyclical light-
vehicle market," S&P said, as reported by the TCR on Sept. 6,
2012.
AMERICAN DEFENSE: Elliott Davis Replaces Marcum as Accountants
--------------------------------------------------------------
American Defense Systems, Inc., informed Marcum LLP that,
effective Feb. 5, 2013, Marcum would no longer serve as the
Company's independent registered public accounting firm. The
dismissal was approved by the Company's Board of Directors on
Feb. 5, 2013.
During the fiscal years ended Dec. 31, 2010, and 2011, Marcum's
reports on the Company's financial statements did not contain an
adverse opinion or disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope or accounting
principles, except that Marcum's audit reports for the years ended
Dec. 31, 2010, and 2011 stated that certain conditions raised
substantial doubt about the Company's ability to continue as a
going concern and that the financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
During the fiscal years ended Dec. 31, 2010, and 2011 and through
Feb. 8, 2013, (i) there were no disagreements between the Company
and Marcum on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure
which, if not resolved to the satisfaction of Marcum, would have
caused Marcum to make reference to the subject matter of the
disagreement in connection with its reports on the Company's
financial statements; and (ii) there were no reportable events as
described in paragraph (a)(1)(v) of Item 304 of Regulation S-K.
On Feb. 5, 2013, the Company's Board of Directors approved the
engagement of Elliott Davis PLLC as its independent registered
public accounting firm for the Company's fiscal year ending
Dec. 31, 2012.
During the years ended Dec. 31, 2010, and 2011 and through the
date of engagement of Elliott Davis, the Company did not consult
with Elliott Davis regarding either (i) the application of
accounting principles to a specified transaction, either completed
or proposed, or the type of audit opinion that might be rendered
on the Company's financial statements; or, (ii) any matter that
was either the subject of a disagreement (as defined in paragraph
(a)(1)(iv) of Item 304 of Regulation S-K and the related
instructions thereto) or a reportable event.
About American Defense
Hicksville, N.Y.-based American Defense Systems, Inc., is a
defense and security products company engaged in three business
areas: customized transparent and opaque armor solutions for
construction equipment and tactical and non-tactical transport
vehicles used by the military; architectural hardening and
perimeter defense, such as bullet and blast resistant transparent
armor, walls and doors. The Company also operates the American
Institute for Defense and Tactical Studies. The Company is in the
process of negotiating a sale or disposal of the portion of its
business related to the operation of a live-fire interactive
tactical training range location in Hicksville, N.Y. The portion
of the Company's business related to vehicle anti-ram barriers
such as bollards, steel gates and steel wedges that deploy out of
the ground was sold as of March 22, 2011.
After auditing the 2011 financial statements, Marcum LLP, in
Melville, New York, expressed substantial doubt about the
Company's ability to continue as a going concern. The independent
auditors noted that the Company had a working capital deficiency
of $867,000, an accumulated deficit of $17.0 million,
shareholders' deficiency of $235,000 and cash on hand of $132,000.
The Company had operating losses of $3.30 million and
$3.69 million for the years ended Dec. 31, 2011 and 2010,
respectively. The Company had income from continuing operations
for the year ended Dec. 31, 2011, of $6.83 million, including a
gain of $12.8 million on the redemption of mandatorily redeemable
preferred stock, and a loss from continuing operations for the
year ended Dec. 31, 2010, of $8.17 million. The Company had net
income (losses) of $9.37 million and $(9.38 million) for the years
ended Dec. 31, 2011 and 2010, respectively.
The Company's balance sheet at Sept. 30, 2012, showed $1.76
million in total assets, $2.55 million in total liabilities, all
current, and a $796,413 total shareholders' deficiency.
AMES DEPARTMENT: Wants Plan Exclusivity Extended Until April 30
---------------------------------------------------------------
Ames Department Stores, Inc., et al., ask the U.S. Bankruptcy
Court for the Southern District of New York to extend their
exclusive period to solicit acceptances for the proposed First
Amended Chapter 11 Plan until April 30, 2013.
The Debtors relate that, in consultation with the statutory
committee of unsecured claimholders, they are in the process of
updating the Disclosure Statement, which the Debtors anticipate
will be filed promptly.
The Debtors explain that they have refrained from soliciting votes
pending resolution of certain issues impacting recoveries under
the Plan, many of which have been resolved.
The Debtors filed their request for an extension before the
exclusive periods was set to expire on Jan. 31, 2013.
About Ames Department Stores
Rocky Hill, Connecticut-based Ames Department Stores was founded
in 1958. At its peak, Ames operated 700 stores in 20 states,
including the Northeast, Upper South, Midwest and the District of
Columbia. In April 1990, Ames filed for bankruptcy protection
under Chapter 11 of the U.S. Bankruptcy Code. In Ames I, the
retailer closed 370 stores and emerged from chapter 11 on Dec. 30,
1992.
Ames filed a second bankruptcy petition under Chapter 11 (Bankr.
S.D.N.Y. Case No. 01-42217) on Aug. 20, 2001. Togut, Segal
& Segal LLP; Weil, Gotshal & Manges; and Storch Amini Munves PC;
Cadwalader, Wickersham & Taft LLP. When the Company filed for
protection from their creditors, they reported $1,901,573,000 in
assets and $1,558,410,000 in liabilities. The Company closed all
of its 327 department stores in 2002.
Ames and its affiliates filed a consolidated Chapter 11 Plan, and
a related Disclosure Statement explaining the Plan with the Court
on Dec. 6, 2004. A full-text copy of Ames' Chapter 11 Plan
is available at no charge at:
http://bankrupt.com/misc/ames_chapter_11_plan.pdf
and a full-text copy of Ames' Disclosure Statement is available
at no charge at:
http://bankrupt.com/misc/ames'_disclosure_statement.pdf
A hearing to determine the adequacy of the Disclosure Statement
explaining Ames' Plan has not yet been scheduled.
AMPAL-AMERICAN: March 1 Established as General Claims Bar Date
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
established March 1, 2013, at 5:00 p.m. as the deadline for any
individual or entity to file proofs of claim against Ampal-
American Israel Corporation.
The Court also set:
-- Feb. 26, 2013, at 5 p.m., as the government bar date; and
-- March 1, at 5:00 p.m. as the amended schedule bar date.
Proofs of claim must be submitted to Epiq Bankruptcy Solutions,
LLC, the Debtor's official noticing and claims agent:
if by first-class mail:
Ampal American Israel Corporation
Claims Processing Center
c/o Epiq Bankruptcy Solutions, LLC
FDR Station, P.O. Box 5082
New York, NY 10150-5082
if by hand delivery or overnight mail:
Ampal American Israel Corporation
Claims Processing Center
c/o Epiq Bankruptcy Solutions, LLC
757 Third Avenue, 3rd Floor
New York, NY 10017
About Ampal-American
Ampal-American Israel Corporation -- http://www.ampal.com/--
acquired interests primarily in businesses located in Israel or
that are Israel-related. Ampal-American filed a Chapter 11
petition (Bankr. S.D.N.Y. Case No. 12-13689) on Aug. 29, 2012, to
restructure the Company's Series A, Series B and Series C
debentures. Bankruptcy Judge Stuart M. Bernstein presides over
the case. Ampal-American sought bankruptcy protection in the U.S.
because bankruptcy laws in Israel would lead to the Company's
liquidation.
Michelle McMahon, Esq., at Bryan Cave LLP, serves as the Debtor's
counsel. Houlihan Lokey serves as investment banker.
The petition was signed by Irit Eluz, chief financial officer,
senior vice president. The Company scheduled $290,664,095 in
total assets and $349,413,858 in total liabilities.
A three-member official committee of unsecured creditors is
represented by Brown Rudnick as counsel.
ARTE SENIOR: Can Continue Use of Cash Collateral Through March 31
-----------------------------------------------------------------
The Hon. George B. Nielsen of the U.S. Bankruptcy Court for the
District of Arizona signed a stipulated order extending the
authority of Arte Senior Living L.L.C., to use the cash collateral
of secured creditor SMA Portfolio Owner, LLC; and incur
postpetition Debtor-In-Possession financing from the Debtor's
members, ASL Investments, LLC and SD Holdings, LLC, through
March 31, 2013, in accordance with a budget.
The lender and the U.S. Trustee have consented to the Debtor's use
of cash collateral; and incurring postpetition financing from its
members.
The Debtor is authorized to use cash collateral to pay for the
ordinary and necessary expenses associated with operating and
maintaining the Debtor's property until March 31, 2012, with a 10%
variance per category.
The Court also ordered that any cash collateral received by the
Debtor in excess of that required for operations will be held in
the Debtor's DIP operating account until the time as the lender
consents to, or the Court orders, its use.
As adequate protection from any diminution in value of the
lender's collateral, the Debtor will grant the lender a
replacement lien in the same types of collateral, with the same
validity and priority, as its prepetition lien.
A copy of the cash collateral budget is available for free at:
http://bankrupt.com/misc/ARTESENIOR_cashcollbudget.pdf
About Arte Senior Living
Arte Senior Living L.L.C. owns and operates an independent and
assisted living facility, known generally as the Arte Resort
retirement community, located at 11415 North 114th Street, in
Scottsdale, Arizona. The Property consists of 128,514 square feet
of rentable living space. The Property is managed by Encore
Senior Living.
Arte Senior Living filed a Chapter 11 petition (Bankr. D. Ariz.
Case No. 12-14993) in Phoenix on July 5, 2012. The Debtor
disclosed $52,317,766 in assets and $34,411,296 in liabilities as
of the Chapter 11 filing.
Judge George B. Nielsen Jr. oversees the case. John J. Hebert,
Esq., at Polsinelli Shughart, P.C., serves as counsel to the
Debtor. Syble Oliver appointed as patient care ombudsman.
SMA Portfolio Owner L.L.C. is represented by lawyers at Greenberg
Traurig, LLP.
The U.S. Trustee has not appointed an unsecured creditors'
committee because an insufficient number of persons holding
unsecured claims against the Debtor have expressed interest in
serving on a committee. The U.S. Trustee reserves the right to
appoint such a committee if interest develop among the creditors.
ASSURED PHARMACY: BDO USA Replaces UHY LLP as Accountants
---------------------------------------------------------
Assured Pharmacy, Inc., at the direction and approval of the Board
of Directors of the Company, dismissed UHY LLP as the Company's
independent registered public accounting firm, effective Feb. 11,
2013.
During the years ended Dec. 31, 2011, and 2010 and through
Feb. 11, 2013, there were no (1) disagreements with UHY on any
matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements
if not resolved to its satisfaction would have caused UHY to make
reference in its reports on the Company's consolidated financial
statements for those years to the subject matter of the
disagreement, or (2) "reportable events," as that term is defined
in Item 304(a)(1)(v) of Regulation S-K.
The audit reports of UHY on the consolidated financial statements
of the Company, as of and for the years ended Dec. 31, 2011, and
2010, did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to audit scope, or
accounting principles. The audit reports did include an
explanatory paragraph concerning the Company's ability to continue
as a going concern.
Effective Feb. 11, 2013, the Company's Board of Directors approved
the engagement of BDO USA, L.P., as the Company's new independent
registered public accounting firm to audit the Company's
consolidated financial statements for the year ending Dec. 31,
2012.
During the Company's two most recent fiscal years and the
subsequent interim period preceding BDO's engagement, neither the
Company nor anyone on behalf of the Company consulted with BDO
regarding the application of accounting principles to any specific
completed or contemplated transaction, or the type of audit
opinion that might be rendered on the Company's financial
statements, and BDO did not provide any written or oral advice
that was an important factor considered by the Company in reaching
a decision as to any accounting, auditing or financial reporting
issue or any matter that was the subject of a "disagreement' or a
"reportable event," as those terms are defined in Item 304(a)(1)
of Regulation S-K.
About Assured Pharmacy
Headquartered in Frisco, Texas, Assured Pharmacy, Inc., is engaged
in the business of establishing and operating pharmacies that
specialize in dispensing highly regulated pain medication for
chronic pain management.
The Company was organized as a Nevada corporation on Oct. 22,
1999, under the name Surforama.com, Inc., and previously operated
under the name eRXSYS, Inc. The Company changed its name to
Assured Pharmacy, Inc., in October 2005.
The Company's balance sheet at Sept. 30, 2012, showed
$2.64 million in total assets, $8.68 million in total liabilities,
and a stockholders' deficit of $6.04 million.
"As of Sept. 30, 2012, the Company had an accumulated deficit of
approximately $42.6 million and recurring losses from operations.
The Company also had negative working capital of approximately
$5.0 million and debt with maturities within one year in the
amount of approximately $2.1 million as of Sept. 30, 2012.
"The Company intends to fund operations through raising additional
capital through debt financing and equity issuances, increased
sales, increased collection activity on past due other receivable
balances and reduced expenses, which may be insufficient to fund
its capital expenditures, working capital or other cash
requirements for the year ending Dec. 31, 2012. The Company is in
negotiations with current debt holders to restructure and extend
payment terms of the existing short term debt. The Company is
seeking additional funds to finance its immediate and long-term
operations. The successful outcome of future financing activities
cannot be determined at this time and there is no assurance that
if achieved, the Company will have sufficient funds to execute its
intended business plan or generate positive operating results.
These factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern."
ATP OIL & GAS: Receives Interim Approval of New Emergency Loan
--------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that ATP Oil & Gas Corp. responded to criticism from
creditors and revised the request for approval of additional
financing. Rather than $142 million as originally sought, the
revised request was for $117 million in new financing, along with
a smaller original issue discount.
The report relates that at a hearing Feb. 12, the U.S. bankruptcy
judge in Houston orally approved interim advances on an emergency
basis. The parties were to draft a formal approval order for
submission to the judge Feb. 14.
The Debtor warned it would have to shut down absent the new loan.
According to the report, opposing the new loan, the official
creditors' committee filed papers seeking appointment of a Chapter
11 trustee or conversion of the case to liquidation in Chapter 7
where a trustee is appointed automatically.
ATP received approval in September for $250 million in new
borrowing power as part of a financing converting about
$365 million in pre-bankruptcy secured debt into a post-bankruptcy
obligation. New financing is from some of the same lenders owed
$365 million on a first-lien loan where Credit Suisse AG serves as
agent. Bank of New York Mellon Trust Co. is agent for the second-
lien notes. The new loan comes in ahead of the existing second-
lien debt.
ATP's $1.5 billion in 11.875% second-lien notes last traded on
Feb. 12 for 4 cents on the dollar, a 45% decline in price since
Jan. 17, according to Trace, the bond-price reporting system of
the Financial Industry Regulatory Authority.
About ATP Oil
Houston, Tex.-based ATP Oil & Gas Corporation is an international
offshore oil and gas development and production company focused
in the Gulf of Mexico, Mediterranean Sea and North Sea.
ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case
No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP,
serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is
the conflicts counsel. Opportune LLP is the financial advisor
and Jefferies & Company is the investment banker. Kurtzman
Carson Consultants LLC is the claims and notice agent.
ATP disclosed assets of $3.6 billion and $3.5 billion of
liabilities as of March 31, 2012. Debt includes $365 million on a
first-lien loan where Credit Suisse AG serves as agent. There is
$1.5 billion on second-lien notes with Bank of New York Mellon
Trust Co. as agent. ATP's other debt includes $35 million on
convertible notes and $23.4 million owing to third parties for
their shares of production revenue. Trade suppliers have claims
for $147 million, ATP said in a court filing.
An official committee of unsecured creditors has been appointed in
the case. Evan R. Fleck, Esq., at Milbank, Tweed, Hadley &
McCloy, in New York, represents the Creditors Committee as
counsel.
BAKERFIELD GROVE: Receiver OK'd to Sell The Grove to 617 North
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
authorized Steven M. Speier, the duly appointed receiver for
debtor Bakersfield Grove Limited's assets, to sell the primary
asset of the estate to 617 North Alpine, LLC,.
The receiver is authorized to sell the property located at 1501,
1507, 1515, 1523, 1529, 1601, 1607, and 1619 Panama Lane,
Bakersfield, California commonly known as the "The Grove",
improved with the shopping center located in the City of
Bakersfield, County of Kern, State of California, together with
all easements, appurtenances, rights, licenses, entitlements,
permits, government approvals and privileges actually belonging
thereto.
The sale will be on an "as is, where is" basis, without
representations and warranties, if any, to 617 North Alpine, LLC,
a California limited liability company, the party submitting the
highest bid.
The purchaser agreed to buy the sale property for a total purchase
price of $14,000,000 cash or $12,500,000 cash without the
McDonald's premises.
Sale Stipulation
On July 18, 2012, the Court approved the stipulation dated April
2012, entered among the Debtor, U.S. Bank National Association, a
National Banking Association, as successor-in-interest to the
Federal Deposit Insurance Corporation as receiver for Savings &
Loan, FA, and the receiver entered into a stipulation re
settlement with U.S. Bank and sale of primary asset of the estate
and assignment of designated leases. The sale stipulation, among
other things, established the Bank's prepetition claim against the
Debtor consisting of principal and interest at $19,787,307, and
established an agreed-upon per diem rate for postpetition interest
of $2,684.
Pursuant to the stipulation, the sale proceeds equal to 125% of
the amount recorded mechanics' lien claimants would be deposited
into a segregated account.
About Bakersfield Grove Limited
Brea, California-based Bakersfield Grove Limited, LLC, filed a
bare-bones Chapter 11 petition (Bankr. C.D. Calif. Case No.
12-13157) on March 12, 2012. The Debtor, a Single Asset Real
Estate as defined in 11 U.S.C. Sec. 101(51B), has property located
at Panama Lane, in Bakersfield, California.
Judge Erithe A. Smith presides over the case. Kathy Bazoian
Phelps, Esq., at Danning, Gill, Diamond & Kollitz, LLP. The
petition was signed by Robert M. Clark, president of managing
member.
receiver -- Steven M. Speier is represented byJeffrey B. Gardner,
Esq., Laurie Chavez, Esq. at Barry, Gardner & Kincannon
BAKERS FOOTWEAR: To Auction Remaining Assets on Feb. 21
-------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the remnants of retailer Bakers Footwear Group Inc.
will be sold by the Chapter 7 bankruptcy trustee at a Feb. 21
auction.
The trustee wants any competing bids by Feb. 20, followed by a
Feb. 21 auction and a hearing on Feb. 25 for approval of sale.
The auction this month will dispose of remaining assets including
54 leases, trademarks, intellectual property and miscellaneous
personal property.
The trustee signed Zigi USA LLC to a $2.45 million contract for
the assets. A hearing was scheduled Feb. 13 in U.S. Bankruptcy
Court in St. Louis for approval of auction and sale procedures.
Going-out-of-business sales began in January and should be
concluded by the end of February, the trustee said in a court
filing.
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, disclosing $41.9
million in assets and $59.5 million in liabilities. Bakers
operated 215 stores as of the Chapter 11 filing.
In November 2012, the U.S. Bankruptcy Court in St. Louis
authorized the company to hire a joint venture between SB Capital
Group LLC and Tiger Capital Group LLC as agents to conduct closing
sales for 150 stores.
Bakers' attempt at Chapter 11 reorganization was converted on Jan.
18 to a liquidation in Chapter 7, where the trustee was appointed.
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.
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.
Bradford Sandler, Esq., at Pachulski Stang Ziehl & Jones LLP,
represents the Official Committee of Unsecured Creditors.
BAMBERG HOSPITAL: Selling Assets to HCA
---------------------------------------
According to Jim McLaughlin of Beckers Hospital Review, citing a
Times and Democrat report, Bamberg County officials in South
Carolina are helping to appraise the assets of the shuttered and
bankrupt Bamberg County Hospital in preparation for a proposed
buyout by Nashville, Tenn.-based Hospital Corporation of America.
The report relates the Bamberg, S.C.-based hospital's board filed
for bankruptcy in 2011 and began operating as an urgent care-only
facility last May, only to be shut down entirely two months later
due to low volume. A private equity firm, Dobbs Equity Partners,
failed to close on an acquisition deal by a July 2012 deadline.
In January, the hospital's board signed a letter of interest to
affiliate with HCA, which owns Colleton Medical Center in nearby
Walterboro, S.C.
As reported by the Troubled Company Reporter on May 25, 2012,
Bamberg County Memorial Hospital and Barnwell County Hospital won
approval of the First Amended Plan for Adjustment of Debts in
their separate Chapter 9 bankruptcy cases. The Plans were based
on the sale of the hospital operators' assets to SC Regional
Health System LLC and the combination of the hospitals'
facilities.
A copy of Judge Duncan's May 23 Order confirming Barnwell County
Hospital's plan is available at http://is.gd/LBaLmffrom
Leagle.com.
A copy of Judge Duncan's May 23 Order confirming Bamberg County
Hospital's plan is available at http://is.gd/ODougSfrom
Leagle.com.
As reported by the Troubled Company Reporter, unsecured creditors
of Barnwell are expected to recover 2% to 5%. In Bamberg's Plan,
creditors will recover 15% to 20%.
About Barnwell County Hospital
Barnwell County Hospital in South Carolina filed for municipal
reorganization under Chapter 9 of the Bankruptcy Code (Bankr. D.
S.C. Case No. 11-06207) on Oct. 5, 2011, in Columbia, South
Carolina. The hospital is licensed for 53 beds, although only 31
are currently operating. It also operates three rural health
clinics in southwestern South Carolina. Assets and debts are both
less than $10 million.
Judge Duncan also presides over the case. Lindsey Carlbert
Livingston, Esq., and Stanley H. McGuffin, Esq., at Haynsworth
Sinkler Boyd, PA, represent the Debtor as counsel. The petition
was signed by Charles Lowell Jowers, Sr., chairman of the
hospital's board of trustees.
W. Clarkson McDow, Jr., the U.S. Trustee for Region 4, appointed
three unsecured creditors to serve on the Official Committee of
Unsecured Creditors of Barnwell County Hospital.
About Bamberg County Memorial Hospital
Bamberg County Memorial Hospital, in Bamberg, South Carolina,
filed for Chapter 9 bankruptcy (Bankr. D. S.C. Case No. 11-03877)
on June 20, 2011. Judge David R. Duncan oversees the case.
Stanley H. McGuffin, Esq. at Haynsworth Sinkler Boyd, P.A., serves
as the Debtor's counsel. In its petition, it estimated $1 million
to $10 million in assets and $1 million to $10 million in debts.
The petition was signed by Danette D. McAlhaney, MD, chairman. An
Official Committee of Unsecured Creditors was appointed in the
case.
BEALL CORP: Wants Exclusive Plan Filing Period Extended to Feb. 28
------------------------------------------------------------------
Beall Corporation has asked the Bankruptcy Court for an order
extending to Feb. 28, 2013, the exclusive period of time for the
Debtor to file a Plan of Reorganization and Disclosure Statement.
The Debtor would like to file a plan that will be uniformly
supported by its creditors. The Debtor believes it will be in a
better position to accomplish that objective if it is provided the
additional time requested to file a plan and disclosure statement.
Filing a consensual plan will lead to a more efficient and less
costly administration of Debtor's estate.
Creditors had until Jan. 28, 2013, to file proofs of claim in the
case. According to the Debtor, it will be beneficial when filing
its plan and disclosure statement to have seen all timely-filed
proofs of claim. The Debtor was expected to close the sale of two
of its major divisions by Jan. 31, 2013.
About Beall Corporation
Portland, Oregon-based Beall Corporation, a manufacturer of
lightweight, efficient, and durable tanker trucks, trailers and
related products, filed a Chapter 11 bankruptcy petition (Bankr.
D. Ore. Case No. 12-37291) on Sept. 24, 2012, estimating at least
$10 million in assets and liabilities. Founded in 1905, Beall has
four factories and nine sale branches across the U.S. The Debtor
has 285 employees, with an average weekly payroll of $300,000.
Judge Elizabeth L. Perris presides over the case. The Debtor has
tapped Tonkon Torp LLP as counsel. The Debtor disclosed
$14,015,232 in assets and $28,791,683 in liabilities as of the
Chapter 11 filing.
Robert D. Miller Jr., the U.S. Trustee for Region 18, appointed
six members to the official committee of unsecured creditors.
Ball Janik LLP represents the Committee.
BEAZER HOMES: Kenneth Griffin Ownership at 5.6% as of Feb. 7
------------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Kenneth Griffin and his affiliates disclosed that, as
of Feb. 7, 2013, they beneficially own 1,394,638 shares of common
stock of Beazer Homes USA, Inc., representing 5.6% of the shares
outstanding. A copy of the filing is available for free at
http://is.gd/zwZdUu
About Beazer Homes
Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com/--
headquartered in Atlanta, is one of the country's 10 largest
single-family homebuilders with continuing operations in Arizona,
California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada,
New Jersey, New Mexico, North Carolina, Pennsylvania, South
Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed
on the New York Stock Exchange under the ticker symbol "BZH."
The Company's balance sheet at Dec. 31, 2012, showed $1.92 billion
in total assets, $1.67 billion in total liabilities and $242.61
million in total stockholders' equity.
Beazer Homes incurred a net loss of $145.32 million for the fiscal
year ended Sept. 30, 2012, a net loss of $204.85 million for the
fiscal year ended Sept. 30, 2011, and a net loss of $34.04 million
for the fiscal year ended Sept. 30, 2010.
* * *
Beazer carries a 'B-' issuer credit rating, with "negative"
outlook, from Standard & Poor's.
In the Jan. 30, 2013, edition of the TCR, Moody's Investors
Service raised Beazer Homes USA, Inc.'s corporate family rating to
Caa1 from Caa2 and probability of default rating to Caa1-PD from
Caa2-PD. The ratings upgrade reflects Moody's increasing
confidence that Beazer's credit metrics, buoyed by a stregthening
housing market, will gradually improve for at least the next two
years and that the company may be able to return to a modestly
profitable position as early as fiscal 2014.
As reported by the TCR on Sept. 10, 2012, Fitch Ratings has
upgraded the Issuer Default Rating (IDR) of Beazer Homes USA, Inc.
(NYSE: BZH) to 'B-' from 'CCC'. The upgrade and the Stable
Outlook reflect Beazer's operating performance so far this year,
its robust cash position, and moderately better prospects for the
housing sector during the remainder of this year and in 2013. The
rating is also supported by the company's execution of its
business model, land policies, and geographic diversity.
BEAZER HOMES: Vanguard Stake at 5.4% as of Dec. 31
--------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, The Vanguard Group disclosed that, as of Dec. 31,
2012, it beneficially owns 1,340,891 shares of common stock of
Beazer Homes USA Inc. representing 5.43% of the shares
outstanding. A copy of the filing is available for free at:
http://is.gd/RYPGLG
About Beazer Homes
Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com/--
headquartered in Atlanta, is one of the country's 10 largest
single-family homebuilders with continuing operations in Arizona,
California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada,
New Jersey, New Mexico, North Carolina, Pennsylvania, South
Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed
on the New York Stock Exchange under the ticker symbol "BZH."
The Company's balance sheet at Dec. 31, 2012, showed $1.92 billion
in total assets, $1.67 billion in total liabilities and $242.61
million in total stockholders' equity.
Beazer Homes incurred a net loss of $145.32 million for the fiscal
year ended Sept. 30, 2012, a net loss of $204.85 million for the
fiscal year ended Sept. 30, 2011, and a net loss of $34.04 million
for the fiscal year ended Sept. 30, 2010.
* * *
Beazer carries a 'B-' issuer credit rating, with "negative"
outlook, from Standard & Poor's.
In the Jan. 30, 2013, edition of the TCR, Moody's Investors
Service raised Beazer Homes USA, Inc.'s corporate family rating to
Caa1 from Caa2 and probability of default rating to Caa1-PD from
Caa2-PD. The ratings upgrade reflects Moody's increasing
confidence that Beazer's credit metrics, buoyed by a stregthening
housing market, will gradually improve for at least the next two
years and that the company may be able to return to a modestly
profitable position as early as fiscal 2014.
As reported by the TCR on Sept. 10, 2012, Fitch Ratings has
upgraded the Issuer Default Rating (IDR) of Beazer Homes USA, Inc.
(NYSE: BZH) to 'B-' from 'CCC'. The upgrade and the Stable
Outlook reflect Beazer's operating performance so far this year,
its robust cash position, and moderately better prospects for the
housing sector during the remainder of this year and in 2013. The
rating is also supported by the company's execution of its
business model, land policies, and geographic diversity.
BEECHCRAFT HOLDINGS: S&P Retains 'BB-' Rating on $425MM Term Loan
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that its preliminary
ratings on Beechcraft Holdings LLC, including the 'BB-'
preliminary issue and '2' preliminary recovery ratings on the
proposed term loan, are not affected by the company's plan to
increase the size of the term loan to $425 million from
$375 million and reduce the size of the revolver to $175 million
from $225 million. The larger term loan results in S&P's expected
2013 debt to EBITDA increasing to 4.5x from 3.8x, but it still
expects leverage to decreases fairly quickly over time because of
anticipated debt reduction from excess cash flows and increasing
earnings. Therefore, overall credit quality is not affected. S&P
also expects liquidity to remain adequate, as the smaller revolver
is offset by higher cash balances resulting from the additional
proceeds from the larger term loan and other sources. S&P
now expects cash at close to be more than $200 million, up from
its previous expectations of about $100 million.
RATINGS LIST
Beechcraft Holdings LLC
Corporate Credit Rating B+(prelim)/Stable/--
Ratings Remain Unchanged
Beechcraft Holdings LLC
Senior Secured
$425 million term loan BB-(prelim)
Recovery Rating 2(prelim)
BERNARD L. MADOFF: Third Distribution to Total $505-Mil.
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the trustee for Bernard L. Madoff Investment
Securities Inc. announced Feb. 13 that he will make an additional
distribution of $505 million to customers with approved claims.
The new distribution will bring the total so far to more than
$5.4 billion, or almost 43% of customers' claims.
According to the report, the distribution will be the third by
Irving Picard, the Madoff trustee. Including $806 million
provided by the Securities Securities Investor Protection Corp.,
Mr. Picard previously distributed just under $5 billion to
customers.
The bankruptcy court in New York will hold a hearing on March 13
to approve the new distribution.
The distribution will be made from the $9.317 billion Mr. Picard
has recovered so far. He is precluded from paying out almost $2.5
billion held in reserve for disputed claims. In addition, Picard
is holding back $1.3 billion until courts rule on whether
customers are entitled to interest on their claims to take into
consideration the time-value of money.
The report notes that March 22 will be the record date for the new
distribution. Most of the new distribution results from more than
$1 billion in a settlement escrow that expired on Feb. 8.
The funds Picard holds don't include an additional $2.2 billion
that was forfeited to the government. Late last year, the
government began the process leading eventually to distribution of
the forfeited funds to customers.
There are about 2,200 customers with approved claims. Half
already have been paid in full, as a result of advances from
SIPC whose fund pays up to $500,000 per claim. When customers
have all recovered 100%, SIPC stands next in line to recoup its
advances, including costs of the liquidation. Unsecured creditors
will have a recovery only after SIPC is fully repaid.
The Madoff liquidation case is Securities Investor Protection
Corp. v. Bernard L. Madoff Investment Securities Inc., 08-01789,
U.S. Bankruptcy Court, Southern District of New York (Manhattan).
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The
petitioning creditors -- Blumenthal & Associates Florida General
Partnership, Martin Rappaport Charitable Remainder Unitrust,
Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert
US$64 million in claims against Mr. Madoff based on the balances
contained in the last statements they got from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751).
The Chapter 15 case was later transferred to Manhattan. In June
2009, Judge Lifland approved the consolidation of the Madoff SIPA
proceedings and the bankruptcy case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to
150 years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.)
The SIPA Trustee has said that as of March 31, 2012, through
prepetition litigation and other settlements, he has successfully
recovered, or reached agreements to recover, more than $9 billion
-- over 50% of the principal lost in the Ponzi scheme by those who
filed claims -- for the benefit of all customers of BLMIS.
The liquidation has so far has cost the Securities Investor
Protection Corp. $1.3 billion, including $791 million to pay a
portion of customers' claims.
Mr. Picard has so far made only one distribution in October of
$325 million for 1,232 customer accounts. Uncertainty created by
various appeals has limited Mr. Picard's ability to distribute
recovered funds.
BERNARD L. MADOFF: Rakoff Slams Door on Escape Liability
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the trustee for Bernard L. Madoff Investment
Securities Inc. won a major victory Feb. 12 when U.S. District
Judge Jed Rakoff slammed the door on customers espousing a theory
to escape liability for having taken more out the Ponzi scheme
than they invested.
According to the report, the opinion affects all of the claims the
Madoff trustee is making against feeder funds. Consequently,
billions of dollars turned on the outcome of the Feb. 12 decision,
David Sheehan the trustee's lawyer from Baker & Hostetler LLP,
said in an interview.
Mr. Rochelle says the victory by trustee Irving Picard is
remarkable because Judge Rakoff reversed himself on part of an
opinion he handed down in September 2011 in a lawsuit against Fred
Wilpon and other owners of the New York Mets baseball team.
Mr. Rochelle adds that the Feb. 12 opinion also means that the
bankruptcy judge will be able to preside over fraudulent-transfer
suits and make recommended rulings to Judge Rakoff.
The decision, the report discloses, involved several customers who
sought to be paid immediately on their claims, even though they
later might be held liable for receiving fraudulent transfers of
stolen money. The issue involves Section 502(d) of the Bankruptcy
Code, which says a creditor won't be paid on its claim if the
creditor allegedly received a preferential payment or a fraudulent
transfer.
The creditors, the report adds, contended that the Securities
Investor Protection Act, which governs the Madoff liquidation,
makes 502(d) inapplicable because SIPA's principal objective is
the rapid payment of customer claims. They urged Judge Rakoff to
require immediate payment of their claims, even though they were
being sued for receipt of fraudulent transfers.
In a two-page ruling Feb. 12, Judge Rakoff nixed the argument,
saying, "SIPA does not preclude the application of Section 502(d)
to customer claims." The judge said he will write a longer
opinion later.
In his summary ruling Feb. 12, Judge Rakoff said he "departs from
the reasoning" contained near the end of his Sept. 27, 2011,
opinion in the Wilpon case, where he said that Section 502(d) is
"overridden" by SIPA. The Madoff liquidation is being conducted
under SIPA, which incorporates most of the Bankruptcy Code, unless
it is "inconsistent" with laws governing brokerage liquidations.
In January, Judge Rakoff handed down an opinion saying the
bankruptcy judge would be precluded from presiding over any
fraudulent transfer suits if he were to decide that Section 502(d)
doesn't apply in SIPA cases.
According to Mr. Rochelle, the Jan. 12 opinion was a victory for
Picard because it means that the bankruptcy judge can hold trials
on fraud suits against customers and write recommended rulings for
Rakoff's review.
The Rakoff opinion was part of Securities Investor Protection
Corp. v. Bernard L. Madoff Investment Securities LLC, 12-mc-00115,
U.S. District Court, Southern District New York (Manhattan).
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The
petitioning creditors -- Blumenthal & Associates Florida General
Partnership, Martin Rappaport Charitable Remainder Unitrust,
Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert
US$64 million in claims against Mr. Madoff based on the balances
contained in the last statements they got from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751).
The Chapter 15 case was later transferred to Manhattan. In June
2009, Judge Lifland approved the consolidation of the Madoff SIPA
proceedings and the bankruptcy case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to
150 years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.)
The SIPA Trustee has said that as of March 31, 2012, through
prepetition litigation and other settlements, he has successfully
recovered, or reached agreements to recover, more than $9 billion
-- over 50% of the principal lost in the Ponzi scheme by those who
filed claims -- for the benefit of all customers of BLMIS.
The liquidation has so far has cost the Securities Investor
Protection Corp. $1.3 billion, including $791 million to pay a
portion of customers' claims.
Mr. Picard has so far made only one distribution in October of
$325 million for 1,232 customer accounts. Uncertainty created by
various appeals has limited Mr. Picard's ability to distribute
recovered funds.
BETHESDA BAPTIST: Case Summary & Unsecured Creditor
---------------------------------------------------
Debtor: Bethesda Baptist Church of Jersey City
158 Mercer Street
Jersey City, NJ 07302
Bankruptcy Case No.: 13-12856
Chapter 11 Petition Date: February 13, 2013
Court: United States Bankruptcy Court
District of New Jersey (Newark)
Judge: Novalyn L. Winfield
Debtor's Counsel: Nancy Isaacson, Esq.
GREENBAUM, ROWE, SMITH & DAVIS, LLP
75 Livingston Ave.
Roseland, NJ 07068
Tel: (973) 535-1600
E-mail: nisaacson@greenbaumlaw.com
Scheduled Assets: $3,469,708
Scheduled Liabilities: $508,089
In its list of 20 largest unsecured creditors, the Company placed
only one entry:
Entity Nature of Claim Claim Amount
------ --------------- ------------
GE Capital Copier Unknown
P.O. Box 3083
Cedar Rapids, IA 52406
The petition was signed by Vincent Thomas, pastor.
BLACK ELK: S&P Affirms 'CCC+' CCR; Off Creditwatch Negative
-----------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its ratings on
Houston-based Black Elk Offshore Operations LLC (Black Elk),
including the 'CCC+' long-term corporate credit ratings. At the
same time, S&P removed the ratings from CreditWatch with negative
implications where they were placed on Nov. 21, 2012, following a
fire on one of the company's Gulf of Mexico production platforms.
"The removal of the CreditWatch follows Black Elk's improved
liquidity after its majority owner committed to invest up to
$50 million of additional equity," said Standard & Poor's credit
analyst Ben Tsocanos. The new investment increases liquidity
significantly; however, the company still has meaningful funding
requirements in 2013, including escrow contributions related to
plugging and abandonment liabilities, and has limited cash and
availability under its credit facility. Black Elk also faces a
regulatory investigation related to the November 2012 Gulf of
Mexico oil production platform fire. The accident killed three
workers and injured several others.
The ratings on Black Elk reflect S&P's view of its "vulnerable"
business risk and "highly-leveraged" financial risk, incorporating
the company's small reserve and production base, high operating
costs and limited liquidity. The company is geographically
concentrated in the Gulf of Mexico region, and operates in a
highly cyclical, capital-intensive, and competitive industry. S&P
views Black Elk's reserve and production base as small relative to
many of its E&P peers. As of year-end 2011, proved reserves were
about 45.2 million barrels of oil equivalent (mmboe), 60% natural
gas, and nearly 57% proved developed. These reserves are
concentrated in the shallow-water Gulf of Mexico, which Standard &
Poor's views as a challenging region due its typically steep
decline curves, and resulting high reinvestment requirements to
maintain reserve and production levels. As of year-end 2011,
Black Elk had a proved developed reserve life of less than five
years, which S&P views as short. The company also has a
relatively high cost structure, with cash operating costs (lease
operating expenses, workover expense, production taxes, and
general and administrative expenses) of about $37 per boe. With
depreciation, depletion, and amortization at about $9 per boe,
Black Elk's all-in unlevered cost is about $46 per boe or $7.67
per mcfe for the first nine months of 2012. To buffer itself from
higher costs and provide cash flow stability, S&P expects Black
Elk will continue to hedge a material amount of its projected
production.
The negative outlook reflects the potential for Black Elk's
liquidity to deteriorate. S&P would consider a downgrade if the
company faces a reduction in its credit facility borrowing base,
or costs related to remediation or penalties related to the
platform accident. S&P would consider a stable outlook or upgrade
if the company is able to improve liquidity to 1.2x expected
sources to uses over the next year. Given its current low level,
the company's leverage is not an impediment to positive rating
actions.
CAGLE'S INC: Dimensional Ceases to Own Class A Shares at Dec. 31
----------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it does not beneficially own any shares of
CLas A common stock of Cagle's Inc. A copy of the filing is
available for free at http://is.gd/FOvYWd
About Cagle's
Cagle's Farms (NYSE: CGL.A) -- http://www.cagles.net/-- engages
in the production, marketing, and distribution of fresh and frozen
poultry products in the United States.
Cagle's Inc. and its wholly owned subsidiary Cagle's Farms filed
on Oct. 19, 2011, voluntary petitions for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 11-80202 and
11-80203). Paul K. Ferdinands, Esq., at King & Spalding, in
Atlanta, Georgia, serves as counsel. FTI Consulting, Inc., serves
as the Debtors' financial advisors. Kurtzman Carson LLC serves as
their claims, noticing, and balloting agent.
In its schedules, Cagle's Inc. disclosed $82.0 million in assets
and $55.3 million in liabilities as of the Petition Date.
The Official Committee of Unsecured Creditors is represented by
McKenna Long & Aldridge LLP and Lowenstein Sandler as counsel.
J.H. Cohn LLP serves as its financial advisors.
The bankruptcy court approved the sale of the business for not
less than $69.5 million to an affiliate of Koch Foods Inc., a
chicken processor based in Park Ridge, Illinois.
As reported by the TCR on Nov. 8, 2012, the Bankruptcy Court
entered an order confirming the Amended and Restated Plan of
Liquidation of CGLA Liquidation, Inc. (formerly known as Cagle's,
Inc.) and its wholly-owned subsidiary CF Liquidation, Inc.
(formerly known as Cagle's Farms, Inc.) on Oct. 19, 2012.
CALIFORNIA COASTAL: Dimensional Owns Less Than 1% at Dec. 31
------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it beneficially owns 31,472 shares of common
stock of California Coastal Communities Inc. representing 0.29% of
the shares outstanding. Dimensional Fund previously reported
beneficial ownership of 583,726 common shares or a 5.31% equity
stake as of Dec. 31, 2010. A copy of the amended filing is
available for free at http://is.gd/q1KFho
About California Coastal
Irvine, California-based California Coastal Communities, Inc.
-- http://www.californiacoastalcommunities.com/-- is a
residential land development and homebuilding company with
properties owned or controlled primarily in Orange County,
California, and also in Lancaster in Los Angeles county. The
Company's primary asset is a 356-home luxury coastal community
known as Brightwater in Huntington Beach, California.
California Coastal and certain of its wholly-owned subsidiaries
filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif.
Lead Case No. 09-21712) on Oct. 27, 2009. Joshua M. Mester, Esq.,
in Los Angeles, California, serves as counsel to the Debtors. The
Company's financial advisor is Imperial Capital, LLC. California
Coastal disclosed $4.23 million in assets and $250.5 million in
liabilities as of the Chapter 11 filing.
The United States Bankruptcy Court for the Central District of
California has confirmed the Company's plan of reorganization with
respect to its Chapter 11 bankruptcy cases. The Company has
emerged from bankruptcy on March 1, 2011.
CALYPTE BIOMEDICAL: M. Roth Stake Down to "Less Than 5%"
--------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Michael A. Roth and Brian J. Stark disclosed
that, as of Dec. 31, 2012, they beneficially own 36,019,265 shares
of common stock of Calypte Biomedical Corporation representing
5.1% of the shares outstanding. The reporting persons previously
disclosed beneficial ownership of 46,733,698 common shares of a
8.5% equity stake as of Jan. 1, 2012. A copy of the amended
filing is available at http://is.gd/5Kea8t
In a subsequent filing, Messrs. Roth and Stark disclosed that, as
of Jan. 28, 2013, they beneficially own common stock equal to less
than 5% of the shares outstanding. A copy of the further amended
filing is available at http://is.gd/CwYS61
About Calypte Biomedical
Portland, Oregon-based Calypte Biomedical Corporation develops,
manufactures, and distributes in vitro diagnostic tests, primarily
for the diagnosis of Human Immunodeficiency Virus ("HIV")
infection.
Following the Company's 2011 results, OUM & Co. LLP, in San
Francisco, California, expressed substantial doubt about the
Company's ability to continue as a going concern. The independent
auditors noted that the Company has suffered recurring operating
losses and negative cash flows from operations, and management
believes that the Company's cash resources will not be sufficient
to sustain its operations through 2012 without additional
financing.
The Company reported a net loss of $693,000 in 2011, compared with
net income of $8.84 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $1.81
million in total assets, $6.79 million in total liabilities and a
$4.98 million total stockholders' deficit.
Bankruptcy Warning
The Company said in the 2011 annual report that, in July 2010 the
Company entered into a series of agreements providing for (i) the
restructuring of the Company's outstanding indebtedness to Marr
and SF Capital and (ii) the transfer of the Company's interests in
the two Chinese joint ventures, Beijing Marr and Beijing Calypte,
to Kangplus. Under the Debt Agreement, $6,393,353 in outstanding
indebtedness was agreed to be converted to 152,341,741 shares of
the Company's common stock, and the Company's remaining
indebtedness to Marr, totaling $3,000,000 was cancelled. In
consideration for that debt restructuring, the Company transferred
its equity interests in Beijing Marr to Kangplus pursuant to the
Equity Transfer Agreement and transferred certain related
technology to Beijing Marr. The Company has also agreed to
transfer its equity interests in Beijing Calypte to Marr
or a designate of its choosing. The transactions contemplated by
the Debt Agreement and the Equity Transfer Agreement are subject
to Chinese government registration of the transfer of the equity
interests. This registration has now been approved, and the
Shares were issued in March 2012. Under the debt agreement with
SF Capital, $2,008,259 in outstanding indebtedness was converted
to 47,815,698 shares of the Company's common stock.
Notwithstanding this debt restructuring, the Company's significant
working capital deficit and limited cash resources place a high
degree of doubt on its ability to continue its operations. In
light of the Company's existing operations and financial
challenges, the Company is exploring strategic and financing
options. Failure to obtain additional financing will likely cause
the Company to seek bankruptcy protection.
CAPITOL BANCORP: Paul Ballard Quits From Board of Directors
-----------------------------------------------------------
Pursuant to its proposed plan of reorganization, on Feb. 7, 2013,
Capitol Bancorp Ltd. accepted the resignation of Paul R. Ballard,
who has resigned from service as a member of the board of
directors.
Mr. Ballard has served as a member of the board of directors since
1990, and formerly served as executive vice president of Capitol
and as president and chief executive officer of Portage Commerce
Bank, Capitol's second bank affiliate, which was merged with and
into Michigan Commerce Bank. Michigan Commerce Bank is also an
affiliate of Capitol.
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. John A. Simon, Esq., of Foley & Lardner LLP
represents the Official Committee of Unsecured Creditors 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.
The Company's balance sheet at Sept. 30, 2012, showed
$1.749 billion in total assets, $1.891 billion in total
liabilities, and a stockholders' deficit of $141.8 million.
The Debtor's plan would exchange debt and trust-preferred
securities for equity. Holders of $6.8 million in senior notes
would see a full recovery by receipt of new stock. Holders of
$151.3 million in trust-preferred securities would take equity
worth $50 million, for a one-third recovery. Holders of $5
million in preferred stock would have a 20% recovery from new
equity, while common stockholders would take stock worth
$15 million.
CENTRAL FALLS, R.I.: Ex-Mayor Handed 2-Year Prison Term
-------------------------------------------------------
Reuters reported that the former mayor of once-bankrupt Central
Falls, Rhode Island, was sentenced on Tuesday to two years in
prison for funneling work on foreclosed homes to a political
contributor, a court official said.
The report related that Former Mayor Charles Moreau pleaded guilty
to federal charges of corruption in November, weeks after he
resigned from office and admitted accepting kickbacks from his
friend Michael Bouthillette in exchange for contracts to board up
vacant homes in the financially troubled city.
Reuters further related that the former mayor said he circumvented
a state requirement that the work be awarded through a competitive
bidding process by declaring each home an emergency that needed to
be boarded up immediately, prosecutors said in a statement.
Prosecutors claimed that between September 2007 and July 2009,
Mr. Bouthillette boarded up at least 167 homes, earning
"unreasonable profits" of hundreds of thousands of dollars.
Mr. Bouthillette said he rewarded Mr. Moreau three times with
partial payment for a furnace for his house and renovations and
flood remediation for another residence he owned.
Reuters reported that Mr. Moreau was sentenced to 24 months in
prison followed by three years of supervised release, said Vickie
McGuire, courtroom deputy at U.S. District Court in Providence.
Mr. Bouthillette, who also pleaded guilty to corruption charges in
November, was sentenced on Tuesday to 2,000 hours of community
service and three years of probation. Both men had pleaded guilty
to one count of federal program fraud, which carries a maximum
penalty of 10 years in prison.
About Central Falls
Central Falls is a city in Providence County, Rhode Island. The
population was 18,928 at the 2000 census. Central Falls is the
smallest and most densely populated city in Rhode Island.
Central Falls sought bankruptcy protection under Chapter 9 of the
U.S. Bankruptcy Code (Bankr. D. R.I. Case No. 11-13105) on Aug. 1,
2011. The Chapter 9 filing was made after former Rhode Island
Supreme Court Judge Robert Flanders, who serves as state-appointed
receiver for the city, was unable to negotiate significant
concessions from unions representing police officers, firefighters
and other city workers. The city grappled with an $80 million
unfunded pension and retiree health benefit liability that is
nearly quadruple its annual budget of $17 million. Judge Robert
Flanders succeeded the role from retired Superior Court Associate
Justice Mark A. Pfeiffer, who was appointed in July 2010. The
Central Falls receivership, the state's first, has left the mayor
and council without any power to govern.
Judge Frank Bailey presides over the Chapter 9 case. Theodore
Orson, Esq., at Orson and Brusini Ltd., serves as bankruptcy
counsel to the receiver.
The City of Central Falls, Rhode Island, on July 10, 2012, filed
with the Bankruptcy Court a Second Amended Plan For The Adjustment
Of Debts and an explanatory disclosure statement.
The Chapter 9 Plan that restructure the City's debt was confirmed
in September 2012. The plan restructured the city's pension
obligations after tax increases and austerity measures failed to
resolve millions of dollars in debt.
CENTURYLINK INC: Fitch Lowers Issuer Default Ratings to 'BB+'
-------------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Ratings (IDRs) of
CenturyLink, Inc. and its subsidiaries to 'BB+' from 'BBB-'. The
downgrade to 'BB+' also applies to CenturyLink's approximately
$6.25 billion of senior unsecured notes and its senior unsecured
revolving credit facility. The outstanding $10.1 billion aggregate
amount of senior unsecured notes of Qwest Corporation and Embarq
Corporation have been affirmed at 'BBB-'. Fitch has withdrawn the
'F3' short-term IDR and commercial paper (CP) rating associated
with CenturyLink's currently unused CP program. The Rating
Outlook is Stable.
The rating actions stem from changes in CenturyLink's financial
policy announced on Feb. 13. The company will initiate a common
stock repurchase program, which while accompanied by a dividend
reduction, will result in a lower level of debt reduction over the
next two years than previously incorporated in Fitch's
expectations. The company plans to repurchase $2 billion in common
stock by February 2015, primarily funded from free cash flow
(FCF). Annual FCF improves by approximately $450 million as a
result of a reduction in the common stock dividend of
approximately 25%, but on a net basis, cash returned to
shareholders will increase.
In Fitch's opinion, CenturyLink's change in financial policy will
lead to a credit profile no longer reflective of a 'BBB-' rating,
as CenturyLink is not expected to reduce leverage to the 2.5x
threshold Fitch believes necessary for CenturyLink to maintain an
investment grade rating. Prior to the policy change, Fitch had
expected CenturyLink to reduce leverage to 2.5x by the end of 2014
(net leverage was approximately 2.7x at year-end 2012). Under the
revised financial policy, CenturyLink has articulated a goal to
maintain net leverage under 3.0x, and expects to use a portion of
FCF to reduce debt.
KEY RATING DRIVERS
The following factors support the rating:
-- Fitch's ratings are based on the expectation that CenturyLink
will demonstrate steady improvement in its revenue profile
over the next couple of years;
-- FCFs are expected to strengthen with the reduction in the
dividend, and liquidity is expected to remain relatively
strong;
-- Execution risks related to the integration of Qwest
Communications International, Inc. (Qwest) and Savvis, Inc.
are nearly behind the company; and
-- The affirmation of QC's and Embarq's issue ratings is based on
the relatively lower leverage of the two entities, and their
respective debt issues' senior position in the capital
structure relative to CenturyLink.
The following concerns are embedded in the rating:
-- The company's change in financial policy, which incorporates
the maintenance of net leverage of up to 3.0x, less
restrictive than its previous mid-2x target;
-- The decline of traditional voice revenues, primarily in the
consumer sector, from wireless substitution and moderate
levels of continuing cable telephony substitution. Although
such revenues are declining in the revenue mix and are being
replaced by broadband and business services revenues, these
latter sources have lower margins.
Fitch expects CenturyLink's revenues to decline slightly in 2013,
and reach stability in 2014. Revenues from high-speed data and
certain advanced business services, including the managed hosting
and cloud computing services offered by Savvis and a modest but
growing level of revenues from facilities-based video, are
expected to contribute to stability.
On a net debt basis, leverage in 2012 was approximately 2.7x
(excluding integration and merger-related costs), consistent with
the 2.7x to 2.8x range Fitch expects over the next several years.
Debt reduction in 2013 and 2014 is expected to be modest.
Additionally, there will be some pressure on EBITDA as there are
lower incremental merger-related cost savings in 2013 than in
2012.
CenturyLink's total net debt was $20.4 billion at Dec. 31, 2012.
Financial flexibility is provided through a $2 billion revolving
credit facility, which matures in April 2017. As of Dec. 31, 2012,
approximately $1.18 billion was available on the facility.
CenturyLink also has a $160 million uncommitted revolving letter
of credit facility.
The principal financial covenants in the $2 billion revolving
credit facility limit CenturyLink's debt to EBITDA for the past
four quarters to no more than 4.0x and EBITDA to interest plus
preferred dividends (with the terms as defined in the agreement)
to no less than 1.5x. QC has a maintenance covenant of 2.85x and
an incurrence covenant of 2.35x. The facility is guaranteed by
Embarq, Qwest Communications International Inc. and Qwest Services
Corporation (QSC).
In 2013, Fitch expects CenturyLink's FCF (defined as cash flow
from operations less capital spending and dividends) to range from
$1 billion to $1.3 billion. Expected FCF levels reflect capital
spending within the company's guidance range of $2.8 billion to $3
billion. Within the capital budget, areas of focus for investment
primarily include continued spending on fiber-to-the-tower, data
center/hosting, broadband expansion and enhancement, as well as
spending on IPTV, the company's facilities based video program.
Fitch believes CenturyLink has the financial flexibility to manage
upcoming maturities due to its FCF and credit facilities. Debt
maturities in 2013 and 2014 are approximately $1.1 billion and
$0.7 billion, respectively.
Going forward, Fitch expects CenturyLink and QC will be
CenturyLink's only issuing entities. CenturyLink has a universal
shelf registration available for the issuance of debt and equity
securities.
RATING SENSITIVITIES:
Fitch does not expect a positive rating action over the next
several years based on its assessment of the competitive risks
faced by CenturyLink and expectations for leverage.
A negative rating action could occur if:
-- Consolidated leverage through, but not limited to, operational
performance, acquisitions, or debt-funded stock repurchases,
is expected to be 3.5x or higher; and
-- For QC or Embarq, leverage trends toward 2.5x or higher (based
on external debt).
Fitch has taken these rating actions. The Rating Outlook is
Stable.
CenturyLink
-- Long-term IDR downgraded to 'BB+' from 'BBB-';
-- Senior unsecured $2 billion revolving credit facility
downgraded to 'BB+' from 'BBB-';
-- Senior unsecured debt downgraded to 'BB+' from 'BBB-';
-- Short-term 'F3' IDR withdrawn;
-- Commercial paper 'F3' rating withdrawn.
Embarq Corp.
-- Long-term IDR downgraded to 'BB+' from 'BBB-';
-- Senior unsecured notes affirmed at 'BBB-'.
Carolina Telephone & Telegraph (CT&T)
-- IDR downgraded to 'BB+' from 'BBB-';
-- Debentures affirmed at 'BBB-'.
Embarq Florida, Inc. (EFL)
-- IDR downgraded to 'BB+' from 'BBB-';
-- First mortgage bonds downgraded to 'BBB-'from 'BBB'.
Qwest Communications International, Inc.
-- IDR downgraded to 'BB+' from 'BBB-';
-- Senior unsecured notes downgraded to 'BB+' from 'BBB-'.
Qwest Corporation
-- IDR downgraded to 'BB+' from 'BBB-';
-- Senior unsecured notes affirmed at 'BBB-'.
Qwest Services Corporation
-- IDR downgraded to 'BB+' from 'BBB-'.
Qwest Capital Funding
-- IDR at downgraded to 'BB+' from 'BBB-';
-- Senior unsecured notes downgraded to 'BB+' from 'BBB-'.
CENTURYLINK INC: S&P Affirms 'BB' CCR Following Repurchase Plan
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit rating and all other ratings on Monroe, La.-based incumbent
local exchange carrier (ILEC) CenturyLink Inc. following its
announcement that will repurchase about $2 billion of common stock
through February 2015. S&P expects the company to fund the
repurchases with discretionary cash flow because it is
simultaneously reducing the annual dividend by about $450 million.
S&P would expect that CenturyLink will allocate excess cash flow
after share repurchases to debt repayment though the company also
announced that it will increase its net leverage target to less
than 3.0x from the 2.0x to 2.5x area.
"Despite CenturyLink's higher net leverage target, our ratings
already factored in the potential for more aggressive shareholder-
friendly initiatives and higher leverage because of secular
industry declines and consolidation," said Standard & Poor's
credit analyst Allyn Arden. S&P estimates that CenturyLink's
target net leverage of less than 3.0x, with Standard & Poor's
adjustments, translates to a gross leverage ratio closer to the
high-3x area, a metric that is still supportive of a "significant"
financial risk profile. Moreover, S&P do not expect the company
to reach this leverage parameter in the near term.
The outlook is stable and reflects S&P's expectation for ongoing
residential access line losses, offset in part by growth in high-
speed data and business services, which includes the data center
segment. However, given CenturyLink's recent change in financial
policy, the company has less financial flexibility at the current
rating.
S&P could lower the rating if consumer revenue declines more than
it expectations, which could occur if an acceleration in
residential access line losses is not sufficiently offset by
growth in IP TV or HSD services, or if weaker economic conditions
and increased competition pressure revenue in the enterprise
segment such that leverage rises above 4x on a sustained basis.
A higher rating would not be considered given the level of debt-
financed share repurchase activity and the company's stated
financial policy, including its new leverage target of less than
3x (high-3x including Standard & Poor's adjustments). CenturyLink
would need to maintain adjusted leverage in the high-2x area on a
sustained basis for Standard & Poor's to consider an upgrade.
COCOPAH NURSERIES: Wells Fargo Wants Lift Stay on Property
----------------------------------------------------------
Secured creditor and party-in-interest Wells Fargo Bank, N.A.,
asks the U.S. Bankruptcy Court for the District of Arizona to
enter an order granting relief from applicable stays and
injunctions, so that Wells Fargo may enforce its rights and
remedies against certain real property and personal property owned
by Cocopah Nurseries of Arizona, Inc., et al.
Wells Fargo Wells Fargo holds valid and enforceable liens on and
security interests in all of the property.
Wells Fargo asserts that it is entitled to stay relief with
respect to the property because:
1. the Debtors have no equity in the property and the property
is not necessary to an effective reorganization which is in
prospect -- in fact the Debtors do not propose to pursue a
reorganization of any kind in the cases; and
2. the Debtors cannot provide Wells Fargo with adequate
protection for its interests in the property.
About Cocopah Nurseries
Cocopah Nurseries of Arizona, Inc., and three affiliates sought
Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 12-15292) on
July 9, 2012. The affiliates are Wm. D. Young & Sons, Inc.;
Cocopah Nurseries, Inc.; and William Dale Young & Sons Trucking
and Nursery.
Cocopah Nurseries is a Young-family owned agricultural enterprise
with operations in Arizona and California. The core business
involves the cultivation of palm trees and other trees used for
landscaping purposes, as well as the associated farming of citrus,
dates, and other crops. The Debtors presently own more than
250,000 palm trees in various stages of the tree-growth cycle.
Cocopah has 250 full-time salaried employees, and taps an
additional 50 to 250 contract laborers depending on the season.
Revenue in 2010 was $23 million, down from $57 million in 2006.
Judge Eileen W. Hollowell presides over the case. The Debtors'
counsel are Craig D. Hansen, Esq., and Bradley A. Cosman, Esq., at
Squire Sanders (US) LLP.
The petitions were signed by Darl E. Young, authorized
representative.
Attorneys for Rabobank, N.A., are Robbin L. Itkin, Esq., and Emily
C. Ma, Esq., at Steptoe & Johnson LLP, and S. Cary Forrester,
Esq., at Forrester & Worth, PLLC.
Non-debtor affiliate Jewel Date Company, Inc., is represented by
Michael W. Carmel, Ltd., as counsel.
The Joint Chapter 11 Plan of Reorganization dated Dec. 18, 2012,
provides for the sale of certain assets that are subject, in part,
to liens of the secured lenders under terms of a transition
agreement.
COLLECTIVE BRANDS: S&P Affirms 'B' Ratings on CCR & $480MM Loan
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed the 'B' corporate
credit rating on Topeka, Kan.-based Collective Brands Inc. The
outlook is stable.
At the same time, S&P affirmed the 'B' issue-level rating on the
expanded $480 million term loan. The recovery rating is unchanged
at '4', and indicates S&P's expectation for average (30% to 50%)
recovery of principal in the event of a payment default.
Collective is increasing its term loan $175 million to fund a
dividend to its private equity owners and pay transaction fees.
There are no other significant changes to the term loan, with
financial maintenance covenants remaining limited and maturity
remaining 2019. The company has also reduced the amount
outstanding on its unrated $250 million asset-based revolving
credit facility by about $20 million since the leveraged buyout
was completed last year.
"Our ratings on Collective reflect our expectation that the
company's financial risk profile will remain 'highly leveraged'
and its business risk profile will remain 'vulnerable' in the
coming year despite efforts to improve merchandising and pricing
and expand its international presence through franchised store
growth," said Standard & Poor's credit analyst Diya Iyer.
Collective is maintaining total debt to EBITDA at 5.6x pro forma
for this deal, as a 15% increase in EBITDA through the latest
quarter ended Oct. 27, 2012, offsets the increased debt load. Pro
forma debt includes the $480 million term loan, about $65 million
of drawn revolver, and other debt mainly related to pensions and
leases. S&P expects interest coverage to also remain flat at
2.2x. S&P expects credit metrics to improve slightly in the
coming year as the company sustains positive same-store sales
following negative performance in 2010 and 2011.
The stable outlook reflects S&P's expectation that modest
operational improvement coupled with limited debt reduction will
result in slightly improved credit measures in the coming year.
S&P could lower the rating if comparable-store sales turn negative
again due to merchandise or pricing missteps, leading to a weaker-
than-expected 2013. This would result in gross margin falling 250
bps and EBITDA declining about 20% from S&P's expectations for
fiscal 2013. In this scenario, interest coverage would fall below
2x, leverage would approach 7x, and FFO to total debt would
decline below 10%. Given Collective's large and sooner-than-
expected dividend, weak credit measures, and continued strategic
realignment, S&P do not expect to raise its ratings over the near
term.
CRAWFORDSVILLE LLC: Hires Variant Capital as Investment Banker
--------------------------------------------------------------
Crawfordsville, LLC asks the U.S. Bankruptcy Court for permission
to employ Variant Capital Advisors LLC as its investment banker.
Variant Capital will perform services as it relates to a proposed
sale of the assets of South Harlan, Brayton and Crawfordsville and
the pork finishing facility in Colfax, Indiana, owned by parent
Natural Pork Production II, LLP in the Chapter 11 cases.
The firm has agreed to, among other things:
a. assist NPPII, Brayton, Crawfordsville and South Harlan (the
"Companies") in the preparation of an executive summary
relating to the proposed transaction for distribution and
presentation to potential purchasers;
b. assist the Companies in the preparation and implementation
of a marketing plan with respect to the proposed
transaction; and
c. assist the Companies in the screening of interested
potential purchasers.
In consideration for Variant Capital's services, the Companies
have agreed to:
a. Initial Payment: A non-refundable fee of $25,000, payable
upon the entry of a Bankruptcy Court Order authorizing the
employment of Variant Capital in the Chapter 11 Cases;
b. Monthly Fee: A non-refundable monthly fee of $25,000,
payable on the same business day of each month (or the first
business day immediately following such day if such day is
not a business day) commencing one month after receipt of
the Initial Payment. In any event, Variant Capital will not
be entitled to any more than three Monthly Fees and the
third Monthly Fee paid shall be applied to any Sale Fee
earned; plus
c. Strategic Advisory Transaction Fee: Upon the closing of the
transaction, the Companies will pay a fee (the "Sale Fee")
equal to 30% of the aggregate Enterprise Value of the
Transaction in excess of $20 million (the "Target Value").
The Sale Fee, if earned, will be payable at the closing of
the Transaction.
In the event the aggregate value of the "stalking horse"
purchase agreements for the assets subject to the
Transaction approved by the Bankruptcy Court is less than
the Target Value, the Companies and Variant Capital shall,
in good faith, re-evaluate the Target Value in light of such
reduced "stalking horse" values.
d. Reimbursement of Expenses: Additionally, Variant Capital
will be entitled to reimbursement of its reasonable and
reasonably documented out-of-pocket expenses.
e. Tail Period: Variant Capital will be entitled to the fees
enumerated in the Engagement Letter Agreement if a
Disposition is consummated:
-- during the term of Variant Capital's engagement;
-- during the 12 months following the termination or
expiration of Variant Capital's engagement with any
person or entity (or any other person or entity formed by
or affiliated with such person or entity) identified to
the Companies by Variant Capital or involving a person or
entity as to which Variant Capital has performed services
during the period of its engagement; or
-- which results from an agreement in principle or a
definitive agreement to effect the Transaction (or any
part thereof) which is entered into during the term of
Variant Capital's engagement or the 12 months following
termination or expiration of Variant Capital's engagement
identified to the Companies by Variant Capital or
involving a person or entity as to which Variant Capital
has performed services during the period of its
engagement.
f. Reasonableness of Fees: The Companies acknowledge and agree
that the fees payable to Variant Capital hereunder are
reasonable. The Companies and Variant Capital acknowledge
and agree that the time worked, results achieved and
ultimate benefit to the Companies of the work performed in
connection with this engagement may be variable, all of
which has been fully considered and factored into
establishing the fees.
g. Payment of Fees and Expenses: The Companies will pay all
fees and expenses via wire transfer.
For the sake of complete disclosure, the Official Unsecured
Creditors Committee appointed in the case did file an application
with the Court to employ Conway Mackenzie, Inc., as Financial
Advisors to the Committee. The Committee's application to employ
was approved on Dec. 12, 2012, on condition Conway MacKenzie's
engagement by the Committee be terminated as of that date, and for
the sole purpose of giving Conway MacKenzie an opportunity to file
a first and final fee application.
Variant Capital believes that it does not have any interest
adverse to the Debtor or its estate as that term is used in
Section 327(a) of The Bankruptcy Code. Variant Capital also
believes that it is a disinterested person as that term is defined
in Sec. 101(14).
About Crawfordsville
Crawfordsville, LLC, and three affiliates sought Chapter 11
protection (Bankr. S.D. Iowa Lead Case No. 12-03748) in Council
Bluffs, Iowa, on Dec. 7, 2012.
Crawfordsville filed schedules disclosing $5.17 million in assets
and $32.2 million in liabilities, including $19.6 million owed to
secured creditors. The Debtor owns parcels of land in Montgomery
County, Indiana.
A debtor-affiliate, Brayton LLC, disclosed assets of $14.2 million
and liabilities of $27.8 million in its schedules. The Debtor
owns the 20-acre of land and buildings known as Goldfinch Place in
Audobon County, Iowa, which is valued at $1.68 million. The
schedules say the company has $10.5 million in claims for
disgorgement and damages resulting from fraudulent conveyances and
preferential payments to dissociated partners.
Crawfordsville, et al., are subsidiaries of hog raiser Natural
Pork Production II, LLP, which filed for Chapter 11 bankruptcy
(Bankr. S.D. Iowa Case No. 12-02872) on Sept. 11, 2012, in Des
Moines.
CRAWFORDSVILLE LLC: Hires Frost PLLC as Tax Accountants
-------------------------------------------------------
Crawfordsville, LLC asks the U.S. Bankruptcy Court for permission
to employ Daniel M. Peregrin, CPA, and Frost, PLLC as its Tax
Accountants to assist the Debtor with its corporate tax analysis,
tax accounting and tax reporting obligations.
The Debtor has engaged Frost since 2005 as its tax accountants and
independent auditors, it has considerable knowledge and expertise
in these matters, has engaged primarily in tax planning and
compliance particularly in animal agriculture and food processing,
has experience before the Bankruptcy Court, and is fully aware of
the Debtor's activities.
Postpetition, the Debtor requires the services of Frost to render
professional services to assist the Debtor with its corporate tax
analysis, tax accounting and tax reporting obligations, including
consultation and advice on past and future partnership tax
returns, tax-related issues arising from or in connection with
transactions and the pending adversary proceedings, and assistance
with providing adequate information in any Disclosure Statement
regarding Federal Tax consequences of any plan, as required under
11 U.S.C. Section 1125(a)(1).
The Debtor proposes to engage Frost at its regular hourly rates:
Professional Rates
------------ -----
Senior Partners $325 - $487
Junior Partners $290 - $300
Associates $150 - $210
Bookkeepers $90 - $110
Assistants $65
Frost has not received any retainer. The Debtor seeks authority
to give Frost a $12,500 post-petition retainer to guaranty payment
of its post-petition services and costs in connection with this
Chapter 11 case.
As of the Petition Date, the Debtor owed Frost $10,776 for pre-
petition services, but Frost has waived its prepetition bill, and
therefore, will not file a claim or seek compensation for its pre
petition work.
The firm believes that it is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
About Crawfordsville
Crawfordsville, LLC, and three affiliates sought Chapter 11
protection (Bankr. S.D. Iowa Lead Case No. 12-03748) in Council
Bluffs, Iowa, on Dec. 7, 2012.
Crawfordsville filed schedules disclosing $5.17 million in assets
and $32.2 million in liabilities, including $19.6 million owed to
secured creditors. The Debtor owns parcels of land in Montgomery
County, Indiana.
A debtor-affiliate, Brayton LLC, disclosed assets of $14.2 million
and liabilities of $27.8 million in its schedules. The Debtor
owns the 20-acre of land and buildings known as Goldfinch Place in
Audobon County, Iowa, which is valued at $1.68 million. The
schedules say the company has $10.5 million in claims for
disgorgement and damages resulting from fraudulent conveyances and
preferential payments to dissociated partners.
Crawfordsville, et al., are subsidiaries of hog raiser Natural
Pork Production II, LLP, which filed for Chapter 11 bankruptcy
(Bankr. S.D. Iowa Case No. 12-02872) on Sept. 11, 2012, in Des
Moines.
CRAWFORDSVILLE LLC: Can Hire Davis Brown as Special Counsel
-----------------------------------------------------------
Crawfordsville, LLC sought and obtained permission from the U.S.
Bankruptcy Court to employ John C. Pietila, Esq. and Davis, Brown,
Koehn, Shors & Roberts, P.C., as its special corporate counsel.
Davis Brown is comprised, in part, of attorneys who practice in
Agribusiness, Bankruptcy/Reorganization, Business Organizations &
Transactions, Banking, Environmental Law, Securities and Tax Law,
and are qualified to represent the Debtor in proceedings of this
nature. It is anticipated that John C. Pietila, Esq., will be lead
counsel and will primarily provide legal services to the Debtor.
The firm, will among other things, provide these services:
a. structuring, negotiating and drafting appropriate business
and real estate transactions;
b. advising Debtor with respect to ongoing business operations,
including contractual and regulatory matters; and
c. advising Debtor with respect to general partnership/
corporate, real estate, regulatory, tax and other legal
matters which may arise during the pendency of the
Chapter 11 case.
Davis Brown's hourly rates are:
Professional Rates
------------ -----
John C. Pietila $250
Gary M. Myers $295
Jana M. Luttenegger $180
Margaret McKelvey $112.50
The firm believes that it is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
Davis Brown can be reached at:
John C. Pietila, Esq.
DAVIS, BROWN, KOEHN, SHORS & ROBERTS P.C.
215 10th St., Suite 1300
Des Moines, IA 50309
Tel: (515) 288-2500
Fax: (515) 243-0654
E-mail: johnpietila@davisbrownlaw.com
About Crawfordsville
Crawfordsville, LLC, and three affiliates sought Chapter 11
protection (Bankr. S.D. Iowa Lead Case No. 12-03748) in Council
Bluffs, Iowa, on Dec. 7, 2012.
Crawfordsville filed schedules disclosing $5.17 million in assets
and $32.2 million in liabilities, including $19.6 million owed to
secured creditors. The Debtor owns parcels of land in Montgomery
County, Indiana.
A debtor-affiliate, Brayton LLC, disclosed assets of $14.2 million
and liabilities of $27.8 million in its schedules. The Debtor
owns the 20-acre of land and buildings known as Goldfinch Place in
Audobon County, Iowa, which is valued at $1.68 million. The
schedules say the company has $10.5 million in claims for
disgorgement and damages resulting from fraudulent conveyances and
preferential payments to dissociated partners.
Crawfordsville, et al., are subsidiaries of hog raiser Natural
Pork Production II, LLP, which filed for Chapter 11 bankruptcy
(Bankr. S.D. Iowa Case No. 12-02872) on Sept. 11, 2012, in Des
Moines.
CSD LLC: Wayne Newton Museum Property to Be Sold at Auction
-----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the property that was to become a museum in Las Vegas
for memorabilia regarding singer Wayne Newton will be sold at
auction on May 31.
According to the report, the owner said that relations with Newton
deteriorated to the point where going ahead with the museum wasn't
feasible. Consequently, the bankruptcy court approved sale
procedures last week. Bids are due May 15. An auction among
qualified bidders will take place May 31. A hearing to approve
the sale is tentatively scheduled for June 7.
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.
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 Mr. Newton on the acreage. The new home hasn't
been built, so Mr. 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 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.
CUMULUS MEDIA: Dimensional Fund Holds 1.7% of Class A Shares
------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that
as of Dec. 31, 2012, it beneficially owns 2,695,498 shares of
Class A common stock of Cumulus Media Inc. representing 1.7% of
the shares outstanding. Dimensional Fund previously reported
beneficial ownership of 2,129,758 Class A shares or a 1.66% equity
stake as of Dec. 31, 2011. A copy of the amended filing is
available at http://is.gd/FL9wKe
About Cumulus Media
Founded in 1998, Atlanta, Georgia-based Cumulus Media Inc.
(NASDAQ: CMLS) -- http://www.cumulus.com/-- is the second largest
operator of radio stations, currently serving 110 metro markets
with more than 525 stations. In the third quarter of 2011,
Cumulus Media purchased Citadel Broadcasting, adding more than 200
stations and increasing its reach in 7 of the Top 10 US metros.
Cumulus also acquired the Citadel/ABC Radio Network, which serves
4,000+ radio stations and 121 million listeners, in the
transaction
The Company's balance sheet at June 30, 2012, showed $3.91 billion
in total assets, $3.51 billion in total liabilities, $118.23
million in total redeemable preferred stock, and $278.50 million
total stockholders' equity.
Cumulus Media said in its annual report for the year ended
Dec. 31, 2011, that lenders under the 2011 Credit Facilities have
taken security interests in substantially all of the Company's
consolidated assets, and the Company has pledged the stock of
certain of its subsidiaries to secure the debt under the 2011
Credit Facilities. If the lenders accelerate the repayment of
borrowings, the Company may be forced to liquidate certain assets
to repay all or part of such borrowings, and the Company cannot
assure that sufficient assets will remain after it has paid all of
the borrowings under those 2011 Credit Facilities. If the Company
was unable to repay those amounts, the lenders could proceed
against the collateral granted to them to secure that indebtedness
and the Company could be forced into bankruptcy or liquidation.
Cumulus Media put AR Broadcasting Holdings Inc. and three other
units to Chapter 11 protection (Bankr. D. Del. Lead Case No.
11-13674) in 2011 after struggling to pay off debts that topped
$97 million as of June 30, 2011. Holdings estimated debts between
$50 million and $100 million but said assets are worth less than
$50 million. AR Broadcasting operated radio stations in Missouri
and Texas.
* * *
Standard & Poor's Ratings Services in October 2011 affirmed is 'B'
corporate credit rating on Cumulus Media.
"The ratings reflect continued economic weakness and higher post-
acquisition leverage than we initially expected," said Standard &
Poor's credit analyst Jeanne Shoesmith. "They also reflect the
combined company's sizable presence in both large and midsize
markets throughout the U.S."
As reported by the TCR on Nov. 20, 2012, Moody's Investors Service
affirmed the B1 Corporate Family Rating of Cumulus Media. The
company's B1 corporate family rating is forward looking and
reflects Moody's expectation that management will continue to
reduce debt balances with free cash flow resulting in net debt-to-
EBITDA ratios of less than 6.0x (including Moody's standard
adjustments, and treating preferred shares as 75% debt) over the
rating horizon, with further improvement thereafter consistent
with management's 4.0x reported leverage target.
DELUXE ENTERTAINMENT: Vanguard Has 6.1% Equity Stake at Dec. 31
---------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, The Vanguard Group disclosed that, as of
Dec. 31, 2012, it beneficially owns 3,114,065 shares of common
stock of Deluxe Corp. representing 6.11% of the shares
outstanding. A copy of the filing is available for free at:
http://is.gd/LbAab3
About Deluxe Corporation
Deluxe is a growth engine for small businesses and financial
institutions. Over four million small business customers access
Deluxe's wide range of products and services including customized
checks and forms, as well as web-site development and hosting,
search engine marketing, search engine optimization, logo design
and business networking. For financial institutions, Deluxe
offers industry-leading programs in checks, customer acquisition,
fraud prevention and profitability. Deluxe is also a leading
printer of checks and accessories sold directly to consumers. For
more information, visit the Company at www.deluxe.com,
www.facebook.com/deluxecorp or www.twitter.com/deluxecorp.
* * *
As reported by the TCR on Jan. 11, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Hollywood, Calif.-
based media and entertainment services company Deluxe
Entertainment Services Group Inc. to 'B' from 'B-'.
"We raised the corporate credit rating to 'B' from 'B-' because
the refinancing improved the company's liquidity by pushing out
near-term maturities," said Standard & Poor's credit analyst Tulip
Lim.
Deluxe Entertainment Services Group, Inc., carries a B1 Corporate
Family Rating from Moody's Investors Service.
DETROIT, MI: Mayor to Make Final Pitch to Avoid Takeover of City
----------------------------------------------------------------
Steve Neavling, writing for Reuters, reported that Detroit Mayor
Dave Bing, a former professional basketball player, may have to
hit the equivalent of a last-second shot during a speech on
Wednesday to avoid losing much of his authority to a state
takeover of the city's financial affairs.
Reuters said Mr. Bing will deliver his annual "state of the city"
speech as Michigan Governor Rick Snyder has compiled a "short
list" of people who could be named emergency financial manager of
the destitute city within weeks. This may be Mr. Bing's last
chance to publicly outline a strategy to persuade the state from
seizing control, according to the report.
"He has to lay out a framework of how the Detroit city government
on its own is going to fix this financial crisis," city council
member Kenneth Cockrel Jr., a former mayor himself, told Reuters
on Tuesday.
Reuters related that a report due out soon by a review team
appointed by Snyder could recommend an emergency financial manager
for Michigan's biggest city. If appointed, that manager could in
turn recommend the city file for bankruptcy, which would be the
biggest ever Chapter 9 municipal bankruptcy in the United States.
According to Reuters, the city's outstanding rated debt of around
$8.2 billion would make Detroit the largest municipal bankruptcy
in U.S. history, almost double the 2011 filing by Alabama's
Jefferson County, which involves $4.2 billion in debt.
DEWEY & LEBOEUF: Objections Pile Up Against Ch. 11 Plan
-------------------------------------------------------
Andrew Strickler of BankruptcyLaw360 reported that defunct
megafirm Dewey & LeBoeuf LLP was hit with another round of
objections to its proposed liquidation plan Wednesday, including
one from former employees who said the proposal fails to ensure
they're compensated for being laid off without proper notice.
The report related that about 550 former employees already engaged
in a class action against the firm filed an objection arguing the
plan fails to address their claims under the federal Worker
Adjustment and Retraining Notification Act, which requires
employers to provide 60 days advance written notice of mass
layoffs.
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.
Dewey filed a Chapter 11 Plan of Liquidation and an accompanying
Disclosure Statement on Nov. 21, 2012. It filed amended plan
documents on Dec. 31, in an attempt to address objections lodged
by various parties. A second iteration was filed Jan. 7, 2013.
The plan is based on a proposed settlement between secured lenders
and Dewey's official unsecured creditors' committee. It also
incorporates a settlement approved by the bankruptcy court in
October where 440 former partners will receive releases in return
for $71.5 million in contributions.
DIALOGIC INC: Nick Jensen Resigns from Board of Directors
---------------------------------------------------------
Nick Jensen resigned from the Board of Directors of Dialogic Inc.
effective as of Feb. 8, 2013. Mr. Jensen's resignation was not
the result of any disagreement with the Company on any matter
relating to the Company's operations, policies or practices.
Has 6.9MM Outstanding Shares
The Company provided information to update the investing public
regarding the Company's total and publicly held shares
outstanding. Following the resignation of Mr. Jensen, and the
resultant reclassification of shares held by Mr. Jensen and his
affiliates into the public float, the Company now reports
6,903,643 publicly held shares outstanding. Accordingly, based on
the consolidated closing bid price of $2.37 per share on Feb. 8,
2013, the Company's market value of publicly held shares increased
to $16,361,633.
As previously disclosed on Dec. 28, 2012, the Company was notified
by The NASDAQ Stock Market that it did not satisfy NASDAQ Listing
Rule 5810(c)(3)(D), which requires the Company to maintain a
minimum of $15 million in market value of its publicly held
shares, and the Company has requested and been granted a hearing
before the NASDAQ Listing Qualifications Panel to present its plan
to remedy the deficiency.
About Dialogic
Milpitas, Calif.-based Dialogic Inc. provides communications
platforms and technology that enable developers and service
providers to build and deploy innovative applications without
concern for the complexities of the communication medium or
network.
The Company reported a net loss of $54.81 million in 2011,
following a net loss of $46.71 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $126.69
million in total assets, $140.69 million in total liabilities and
a $13.99 million total stockholders' deficit.
Bankruptcy warning
The Company has said in regulatory filings that, "In the event of
an acceleration of our obligations under the Term Loan Agreement
or Revolving Credit Agreement and our failure to pay the amounts
that would then become due, the Revolving Credit Lender or Term
Lenders could seek to foreclose on our assets. As a result of
this, we would likely need to seek protection under the provisions
of the U.S. Bankruptcy Code and/or our affiliates might be
required to seek protection under the provisions of applicable
bankruptcy codes. In that event, we could seek to reorganize our
business, or we or a trustee appointed by the court could be
required to liquidate our assets."
DIALOGIC INC: Gets Add'l $4MM Under Amended Term Loan Agreement
---------------------------------------------------------------
Dialogic Corporation, a wholly owned subsidiary of Dialogic Inc.,
entered into a Third Amendment to the Third Amended and Restated
Credit Agreement with Obsidian, LLC, as agent and collateral
agent, and Special Value Expansion Fund, LLC, Special Value
Opportunities Fund, LLC and Tennenbaum Opportunities Partners V,
LP, as lenders. On Feb. 7, 2013, Dialogic Corporation also
entered into a Waiver and Twentieth Amendment to the Credit
Agreement dated as of March 5, 2008, as amended, with Wells Fargo
Foothill Canada ULC, as administrative agent, and certain lenders.
Pursuant to the Third Amendment, the Company and the Term Lenders
have agreed to provide for additional borrowing of up to
$4,000,000 under the Term Loan Agreement. In consideration of
this additional borrowing, the Company agreed to issue an amount
of common stock to the Term Lenders equal to the market value of
10.0% of the outstanding shares of the common stock of the Company
based on the closing price of the Company's common stock
immediately prior to that issuance pursuant to a Subscription
Agreement.
Additionally, pursuant to the Third Amendment, the minimum EBITDA
financial covenant was amended and its application was postponed
until the fiscal quarter ending March 31, 2014. Previously, the
minimum EBITDA financial covenant would have commenced in the
fiscal quarter ending June 30, 2013. Pursuant to the Third
Amendment, the other financial covenants, including the minimum
liquidity covenant, are no longer applicable under the Term Loan
Agreement.
Lastly, the definition of Maturity Date in the Term Loan Agreement
was amended to provide that it will be extended to March 31, 2016,
upon the earlier to occur of (i) the receipt by the Company of Net
Equity Proceeds (as defined in the Term Loan Agreement) in an
aggregate amount of at least $5,000,000 or (ii) a Change in
Control.
Pursuant to the Twentieth Amendment, the Revolving Credit
Agreement was also amended to postpone the application of the
minimum EBITDA financial covenant until the fiscal quarter ending
March 31, 2014. Previously, the minimum EBITDA financial covenant
would have commenced in the fiscal quarter ending June 30, 2013.
Additionally, pursuant to the Twentieth Amendment, a definition of
"Availability Block" was added to the Credit Agreement in the
amount of $500,000, which amount will increase by an additional
$100,000 on July 1, 2013, and on the first day of each fiscal
quarter thereafter. The Revolving Credit Agreement was also
amended to reduce the Borrowing Base by the Availability Block at
all times.
In connection with the Third Amendment, the Company entered into a
Subscription Agreement with the Term Lenders dated Feb. 7, 2013,
whereby the Company agreed to issue to the Term Lenders an amount
of common stock equal to the market value of 10.0% of the
outstanding shares of the Company based on the closing bid price
immediately prior to that issuance as set out in the Subscription
Agreement. On Feb. 7, 2013, a total of 1,442,172 shares of common
stock were issued to the Term Lenders under the terms of the
Subscription Agreement.
The Company and the Term Loan Lenders also entered into a
Registration Rights Agreement with the Term Loan Lenders dated
Feb. 7, 2013, pursuant to which the Company agreed to file one or
more registration statements registering for resale the shares of
common stock issued under the Subscription Agreement within 90
days of that issuance.
A copy of the Third Amendment is available at:
http://is.gd/B1gLz3
A copy of the Twentieth Amendment is available at:
http://is.gd/F4ax8x
About Dialogic
Milpitas, Calif.-based Dialogic Inc. provides communications
platforms and technology that enable developers and service
providers to build and deploy innovative applications without
concern for the complexities of the communication medium or
network.
The Company reported a net loss of $54.81 million in 2011,
following a net loss of $46.71 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $126.69
million in total assets, $140.69 million in total liabilities and
a $13.99 million total stockholders' deficit.
Bankruptcy warning
The Company has said in regulatory filings that, "In the event of
an acceleration of our obligations under the Term Loan Agreement
or Revolving Credit Agreement and our failure to pay the amounts
that would then become due, the Revolving Credit Lender or Term
Lenders could seek to foreclose on our assets. As a result of
this, we would likely need to seek protection under the provisions
of the U.S. Bankruptcy Code and/or our affiliates might be
required to seek protection under the provisions of applicable
bankruptcy codes. In that event, we could seek to reorganize our
business, or we or a trustee appointed by the court could be
required to liquidate our assets."
DOUBLE VISION: Strip Club Files Ch.11 Bankruptcy in Albany, NY
--------------------------------------------------------------
Larry Rulison, writing for Times Union, reports that the Double
Vision strip club filed for Chapter 11 bankruptcy protection on
Feb. 14. The nightclub, which features up to 20 exotic dancers a
night, reported in its filing in U.S. Bankruptcy Court in Albany,
N.Y., that the state tax and labor departments are trying to
collect more than $124,000 from the business. The club disputes
those claims.
The club is owned by Matthew Spagnola of Saratoga Springs.
DYNASIL CORP: Reports $0.4 Million Net Loss in Fiscal 1st Quarter
-----------------------------------------------------------------
Dynasil Corporation of America on Feb. 13 reported financial
results for the fiscal 2013 first quarter ended December 31, 2012.
"Our first-quarter results underscore our focus on right-sizing
the cost structure of our various businesses as we work to
conserve cash, work through our debt issues and achieve
profitability," said Dynasil Chairman and Interim CEO Peter
Sulick. "In the first quarter of fiscal 2013 we were able to
reduce operating expenses to their lowest level in five quarters,"
said Dynasil Chairman and Interim CEO Peter Sulick. "Total
operating expenses decreased from the first quarter of 2012 and
were down 5.5% on a sequential basis. General and administrative
expenses, which represent a significant component of our total
operating expenses, have declined by over $300,000 as compared to
the first quarter of fiscal year 2012."
Net revenue for the first quarter of fiscal 2013 was $10.6
million, compared with $12.1 million for the first quarter of
fiscal 2012.
Gross profit for the first quarter of 2013 totaled $4.6 million,
or 43.8% of net revenue, compared with $5.1 million, or 42.3% of
revenue for the first quarter of fiscal 2012.
Total operating expenses for the first quarter of fiscal 2013
declined to $4.8 million from $4.9 million for the same period of
2012.
Dynasil reported a net loss for the fiscal 2013 first quarter of
$0.4 million, or $0.03 per share, compared with net income of $0.4
million, or $0.02 per diluted share, for the same period of 2012.
On December 31, 2012, the Company announced it is in default of
certain financial covenants set forth in the terms of its
outstanding indebtedness with respect to its fiscal year ended
September 30, 2012. The Company continues to be current with all
principal and interest payments due on all its outstanding
indebtedness and management expects to continue discussions with
its lenders to address the financial covenant situation. However,
the Company cannot predict when or whether a resolution of this
situation will be achieved.
About Dynasil
Watertown, Mass.-based Dynasil Corporation of America (NASDAQ:
DYSL) -- http://www.dynasil.com/-- develops and manufactures
detection and analysis technology, precision instruments and
optical components for the homeland security, medical and
industrial markets.
The Company reporting a net loss of $4.30 million on $47.88
million of net revenue for the year ended Sept. 30, 2012, compared
with net income of $1.35 million on $46.95 million of net revenue
during the prior fiscal year.
Dynasil's balance sheet at Sept. 30, 2012, showed $37.46 million
in total assets, $18.62 million in total liabilities and $18.84
million in total stockholders' equity.
Going Concern Doubt
McGladrey LLP, in Boston, Massachusetts, issued a "going concern"
qualification on the consolidated financial statements for the
year ended Sept. 30, 2012, citing default with the financial
covenants under the Company's outstanding loan agreements and a
loss from operations which factors raise substantial doubt about
the Company's ability to continue as a going concern.
Default
The Company is in default of the financial covenants under the
terms of its outstanding indebtedness with Sovereign Bank, N.A.,
and Massachusetts Capital Resource Company for its fiscal fourth
quarter ended Sept. 30, 2012. These covenants require the Company
to maintain specified ratios of earnings before interest, taxes,
depreciation and amortization (EBITDA) to fixed charges and to
total/senior debt. A default gives the lenders the right to
accelerate the maturity of the indebtedness outstanding.
Furthermore, Sovereign Bank, the Company's senior lender has an
option option to impose a default interest rate with respect to
the senior debt outstanding, which is 5% higher than the current
rate. None of the lenders has has taken any actions as of January
15.
The Company had approximately $9 million of indebtedness with
Sovereign Bank and $3.0 million of indebtedness with Massachusetts
Capital, which is subordinated to the Sovereign Bank loan, as of
as of Sept. 30, 2012. The Company said it is current with all
principal and interest payments due on all its outstanding
indebtedness, through January 15.
"If our lenders were to accelerate our debt payments, our assets
may not be sufficient to fully repay the debt and we may not be
able to obtain capital from other sources at favorable terms or at
all. If additional funding is required, this funding may not be
available on favorable terms, if at all, or without potentially
very substantial dilution to our stockholders. If we do not raise
the necessary funds, we may need to curtail or cease our
operations, sell certain assets and/or file for bankruptcy, which
would have a material adverse effect on our financial condition
and results of operations," the Company said in the regulatory
filing
DJO GLOBAL: Unit Posts $47-Mil. Net Loss for 4th Quarter 2012
-------------------------------------------------------------
DJO Global, Inc. on Feb. 13 reported financial results for its
public reporting subsidiary, DJO Finance LLC ("DJOFL"), for the
fourth quarter and fiscal year ended December 31, 2012.
DJOFL achieved record net sales for the fourth quarter of 2012 of
$290.5 million, reflecting growth of 2.2 percent compared to net
sales of $284.2 million for the fourth quarter of 2011. Net sales
for the fourth quarter of 2012 were unfavorably impacted by $1.5
million related to changes in foreign currency exchange rates
compared to the rates in effect in the fourth quarter of 2011.
Excluding the impact of changes in foreign currency exchange rates
from rates in effect in the prior year period ("constant
currency"), net sales for the fourth quarter of 2012 increased 2.8
percent compared to net sales for the fourth quarter of 2011.
For the fourth quarter of 2012, DJOFL reported a net loss
attributable to DJOFL of $47.0 million, compared to a net loss of
$148.2 million for the fourth quarter of 2011. As detailed in the
attached financial tables, the results for the current and prior
year fourth quarter periods were impacted by significant non-cash
items, non-recurring items and other adjustments, although such
adjustments were significantly lower in the current year period
than in the prior year period.
The Company defines Adjusted EBITDA as net (loss) income
attributable to DJOFL plus interest expense, net, income tax
provision (benefit), and depreciation and amortization, further
adjusted for certain non-cash items, non-recurring items and other
adjustment items as permitted in calculating covenant compliance
under the Company's amended senior secured credit facility and the
indentures governing its 8.75% second priority senior secured
notes, its 9.875% and 7.75% senior notes and its 9.75% senior
subordinated notes. Reconciliation between net loss and Adjusted
EBITDA is included in the attached financial tables.
Adjusted EBITDA for the fourth quarter of 2012 was $71.6 million,
or 24.7 percent of net sales, reflecting a decrease of 3.9 percent
compared with Adjusted EBITDA of $74.5 million, or 26.2 percent of
net sales, for the fourth quarter of 2011. Adjusted EBITDA for
the fourth quarter of 2012 was unfavorably impacted by $0.4
million related to changes in foreign currency exchange rates
compared to the rates in effect in the fourth quarter of 2011.
Adjusted EBITDA for the fourth quarter of 2011 included a $4.2
million benefit related to an adjustment to reduce deferred gross
profit from intercompany sales of inventory. In constant currency
and excluding the $4.2 million adjustment recorded in the fourth
quarter of 2011, Adjusted EBITDA for the current quarter was $72.0
million, reflecting an increase of 2.4 percent compared with
Adjusted EBITDA of $70.3 million for the fourth quarter of 2011.
Year-to-Date Results
DJOFL achieved record net sales of $1,129.4 million for the year
ended December 31, 2012, reflecting growth of 5.1% compared to net
sales of $1,074.8 million for the year ended December 31, 2011.
Net sales for 2012 were unfavorably impacted by changes in foreign
currency exchange rates aggregating $15.3 million compared to the
rates in effect in 2011. In constant currency, net sales for 2012
increased by 6.5% compared to net sales for 2011.
DJOFL's net sales for 2012 included net sales from businesses
acquired in 2011. On a pro forma basis, as if the acquisitions of
Circle City Medical, acquired in February 2011, and Dr. Comfort,
acquired in April 2011, had both closed on January 1, 2011, net
sales would have reflected growth of 4.5% on the basis of constant
currency over pro forma net sales of $1,095.4 million for 2011.
For the year ended December 31, 2012, DJOFL reported a net loss
attributable to DJOFL of $119.2 million, compared to a net loss
attributable to DJOFL of $214.5 million for the year ended
December 31, 2011. As detailed in the attached financial tables,
the results for the years ended December 31, 2012 and 2011 were
impacted by significant non-cash items, non-recurring items and
other adjustments. For the year ended December 31, 2012, DJOFL
achieved operating income of $92.9 million, reflecting significant
improvement compared to an operating loss of $92.3 million for the
year ended December 31, 2011.
Adjusted EBITDA for the year ended December 31, 2012 was $271.0
million, or 24.0% of net sales, reflecting an increase of 2.5%
compared with Adjusted EBITDA of $264.3 million, or 24.6% of net
sales, for the year ended December 31, 2011. Adjusted EBITDA for
2012 was unfavorably impacted by $3.2 million related to changes
in foreign currency exchange rates compared to the rates in effect
in 2011. In constant currency and pro forma for the acquisitions
discussed above and excluding the $4.2 million adjustment recorded
in the fourth quarter of 2011, Adjusted EBITDA for the year ended
December 31, 2012 was $274.2 million, reflecting growth of 2.4%
compared with pro forma Adjusted EBITDA of $267.9 million for the
year ended December 31, 2011.
Including $1.6 million of preacquisition Adjusted EBITDA and $1.4
million of anticipated future cost savings related to recently
acquired businesses, Adjusted EBITDA was $274.0 million, or 24.3
percent of net sales for the year ended December 31, 2012.
"We are pleased to end 2012 with full year constant currency
growth in net sales of 4.5% compared to pro forma net sales for
2011. Our successful new product launches and improving
commercial execution continue to drive strong momentum across most
of our businesses and provide a solid foundation for incremental
growth in 2013," said Mike Mogul, DJO's president and chief
executive officer. "I want to especially congratulate our Bracing
and Vascular, Surgical Implant and International teams, for
delivering strong organic growth of 8.2%, 12.4% and 5.7%,
respectively, in 2012. Although we continue to face market
challenges in our Recovery Sciences business unit, with sales
declining 2.3% in 2012 compared to 2011, the strength of the sales
results from our other businesses compensated for those headwinds
in 2012. As expected, our fourth quarter growth rates were
impacted by the anniversary of the October 2011 launch of Exos and
the first full quarter impact of the recent non-coverage decision
by Medicare for TENS used to treat chronic low back pain ("CLBP").
We were very pleased to see average daily sales in the fourth
quarter accelerate from average daily sales in the third quarter
for all business segments, including Recovery Sciences.
"We were very excited to complete the acquisition of Exos right at
year end and we welcome the Exos team to the DJO Global family.
Because we were already the exclusive distribution partner for
Exos, the merger will not impact our reported net sales, but is
expected to increase our operating margins and operating income
from the sale of Exos products, and importantly, permit us to
participate more comprehensively in planning and executing many
exciting new product development opportunities incorporating the
Exos technology.
"We are also pleased to report strong constant currency Adjusted
EBITDA results in the fourth quarter at 24.7% of net sales, the
highest quarterly margin in 2012, in spite of our continuing
investments in new product development and launch activities and
to expand and strengthen our commercial organization.
"Having just finished a highly successful global sales meeting, we
continue to be very optimistic about incremental opportunities to
add value to our customers and to further accelerate DJO's revenue
growth. While it's great that we are achieving our short-term
revenue growth targets of mid-single digits, we remain very keenly
focused on continuing to enhance our customers' experience by
developing and launching innovative new products and by striving
for continuous improvement in our commercial execution.
"We have a very exciting slate of new products for 2013 that we
will begin to launch late in the first quarter. We expect these
new products and other ongoing commercial initiatives to drive
incremental top line growth beginning in the second quarter of
2013, and we are targeting total company full year revenue growth
rates of at least 5% for the full 2013 year. As it relates
specifically to the first quarter of 2013, we expect total company
revenue growth rates to continue to be somewhat muted by the
impact of the Medicare CLBP decision and the anniversary dates of
certain new products launched in 2012.
"For the full 2013 year, we expect to absorb the impact of both
the Medicare CLBP decision and the new Medical Device Excise Tax
("MDET") and still deliver growth in Adjusted EBITDA that is at
least as high as our revenue growth. For the first quarter,
however, we expect Adjusted EBITDA and Adjusted EBITDA margins to
contract modestly from the prior year amounts, due to the impact
of the MDET and the Medicare CLBP decision, along with increased
operating expense investments related to upcoming product launches
planned for the meeting of the American Academy of Orthopedic
Surgeons in March."
Sales by Business Segment
Net sales for DJO's Bracing and Vascular segment were $112.2
million in the fourth quarter of 2012, reflecting growth of 5.6%,
compared to the fourth quarter of 2011, driven by strong
contribution from the sales of new products and improving sales
execution. For the full year of 2012, net sales for the Bracing
and Vascular segment increased 8.2% on a pro forma basis over the
full year of 2011.
Net sales for the Recovery Sciences segment contracted by 5.2%
compared to the fourth quarter of 2011 to $84.7 million, primarily
reflecting the effects of the Medicare CLBP decision on the EMPI
business unit and slow market conditions for capital equipment
sold by our Chattanooga business. For the full year of 2012, net
sales for the Recovery Sciences segment contracted 2.3% from net
sales for the full year of 2011.
Fourth quarter net sales within the International segment were
$73.9 million, reflecting an increase of 2.8% from the prior year
period including the impact of $1.5 million of unfavorable changes
in foreign currency exchange rates from rates in effect in the
fourth quarter of 2011. In constant currency, growth in net sales
from the prior year fourth quarter was 4.9% for the International
segment. For the full year of 2012, net sales for the
International segment increased 5.7% on a constant currency basis
over pro forma sales for the full year of 2011.
Net sales for the Surgical Implant segment were $19.8 million in
the fourth quarter, reflecting an increase of 18.1% over net sales
in the fourth quarter of 2011, driven by strong sales of the
Company's shoulder products and other new products and strong
sales execution. For the full year of 2012, net sales for the
Surgical Implant segment increased 12.4% over 2011.
As of December 31, 2012, the Company had cash balances of $31.2
million and available liquidity of $97.0 million under its
revolving line of credit. As previously announced, during the
third quarter of 2012, the Company commenced a comprehensive
refinancing which closed early in the fourth quarter. The
refinancing included the issuance of $100.0 million tack-on 8.75%
second priority senior secured notes due 2018, as well as $440.0
million of new 9.875% senior unsecured notes due 2018. The
proceeds of the new issues were used: (1) to repay all amounts
outstanding on DJOFL's revolving line of credit at the closing
date, (2) to repay a portion of DJOFL's $465 million of 10.875%
senior unsecured notes which were tendered to DJOFL prior to the
closing date and (3) to pay premiums and expenses incurred in
connection with the refinancing. DJOFL redeemed all remaining
outstanding 10.875% senior unsecured notes on November 15, 2012.
On December 28, 2012, DJOFL increased the term loans outstanding
under its amended Senior Secured Credit Facility by $25 million.
The Company used the proceeds of this incremental term loan and
cash on hand to finance the completion, on December 28, 2012, of
the Exos acquisition previously announced.
For the year ended December 31, 2012, DJOFL generated cash flow
from operating activities of $44.6 million, after cash interest
payments of $162.6 million. For the year ended December 31, 2011,
DJOFL generated cash flow from operating activities of $23.6
million, after cash interest payments of $151.2 million. Cash
flow from operations before cash interest of $207.2 million for
2012 reflected an increase of 18.5% over cash flow from operations
before cash interest of $174.8 million for 2012.
About DJO Global
DJO Global -- http://www.DJOglobal.com-- is a global developer,
manufacturer and distributor of medical devices that provide
solutions for musculoskeletal health, vascular health and pain
management. The Company's product lines include rigid and soft
orthopedic bracing, hot and cold therapy, bone growth stimulators,
vascular therapy systems and compression garments, therapeutic
shoes and inserts, electrical stimulators used for pain management
and physical therapy products. The Company's surgical division
offers a comprehensive suite of reconstructive joint products for
the hip, knee and shoulder. DJO Global's products are marketed
under a portfolio of brands including Aircast(R), Chattanooga,
CMF(TM), Compex(R), DonJoy(R), Empi(R), ProCare(R), DJO(R)
Surgical, Dr. Comfort(R) and Exos(TM).
* * *
As reported by the Troubled Company Reporter on Sept. 14, 2012,
Standard & Poor's Ratings Services lowered its rating on the
second priority senior secured notes co-issued by DJO Finance LLC
(DJOFL) and DJO Finance Corp. (DJOFC) to 'B-' from 'B'. The
issuers are subsidiaries of Vista, Calif.-based DJO Global Inc., a
manufacturer of medical devices. "We lowered our rating on this
second-lien debt because the size of the debt class will increase
significantly relative to our estimate of DJO's value in the event
of default. We revised our recovery rating on this debt to '3',
indicating our expectation of meaningful recovery (50% to 70%) of
principal in the event of default, from '2', indicating
substantial (70% to 90%) recovery of principal in the event of
default," S&P said.
EASTMAN KODAK: Makes $30.6 Million From Eyeglass Trademarks
-----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Eastman Kodak Co. will generate $30.6 million in cash
by giving Signet Armorlite Inc. the right to use the Kodak
trademark on prescription eyeglass lenses through 2029.
According to the report, Kodak granted Signet the right to use the
Kodak name on lenses in 1992. The current agreement expires at
the end of 2014. From now to termination, Signet will have paid
about $11 million in additional royalties.
Signed, the report relates, offered to pay $30.6 million cash for
the right to use the trademarks through the end of 2029. Kodak
accepted the offer. The bankruptcy judge will consider approval at
a Feb. 20 hearing.
Kodak's $400 million in 7% convertible notes due in 2017 last
traded Feb. 12 for 12.25 cents on the dollar, up from 10.5 cents
on Dec. 12, 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.
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.
The Retirees Committee has hired Haskell Slaughter Young &
Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC,
as Bankruptcy Consultants and Financial Advisors; and the Segal
Company, as Actuarial Advisors.
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.
Kodak completed the $527 million sale of digital imaging
technology on Feb. 1 and expects to file a Chapter 11 plan by the
end of May. The Rochester, New York-based company intends on
emerging from bankruptcy focusing on the commercial printing
business. Other businesses are being sold or shut down.
EASTMAN KODAK: Taps Harter Secrest as Special Counsel
-----------------------------------------------------
Eastman Kodak Company, et al., ask the U.S. Bankruptcy Court for
the Southern District of New York for permission to employ Harter
Secrest & Emery LLP as special counsel to provide continuity on a
number of general matters on which HSE advised the Debtors prior
to the Petition Date, including:
1. consultation and legal services in respect to addressing
environmental issues, disputes, remediation, and regulatory
matters concerning assets located primarily in the Northeast
geographic region;
2. consultation and legal services related to obtaining and
maintaining the visas and permits for employment for foreign
personnel who are employees of the Debtors in the United
States of America;
3. consultation and legal services in respect to addressing
leasehold interests, the disposition of real property
interests and related matters;
4. consultation and legal services in respect to the
Debtors' sale of assets and divestitures (outside of the
ordinary course of business) in conjunction with other
professionals, including Debtors' general bankruptcy
counsel;
5. legal services in respect to registering and/or maintaining
the Debtors' patents, trademarks, copyrights and other
intellectual property and also involvement with asset
divestitures;
6. consultation and legal services, as requested, to Debtors'
in house counsel and human resources management team in
respect to employment issues, including representation in
administrative proceedings;
7. advising the Debtors in respect to prepetition benefit
plans, compliance matters, and updating plans where
applicable; and
8. legal representation in respect to specific pre-petition
litigation with a significant vendor.
The Debtors relate that attorneys employed have well-defined
roles, and Sullivan & Cromwell, LLP, Young Conaway Stargatt &
Taylor, LLP, and the ordinary course professionals will not
duplicate the services that HSE will provide to the Debtors as
special counsel.
Raymond L. Fink, a partner at HSE, tells the Court that Kodak was
and is a valued and significant client of HSE, the prepetition
hourly rates were discounted from HSE's standard hourly rates.
For 2013, HSE will continue to provide services at the 2012
postpetition rates, except for the immigration practice. HSE's
engagement as immigration counsel is handled differently than the
other practice areas.
To the best of the Debtors' knowledge, HSE does not hold an
interest adverse to the Debtors or their estates with respect to
the matters for which HSE is to be employed.
A Feb. 20, 2013, hearing at 11 a.m. has been set. Objections, if
any, were due Feb. 13, at 4 p.m.
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.
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.
The Retirees Committee has hired Haskell Slaughter Young &
Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC,
as Bankruptcy Consultants and Financial Advisors; and the Segal
Company, as Actuarial Advisors.
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.
Kodak intends to reorganize by focusing on the commercial printing
business. Other businesses are being sold or shut down.
EASTMAN KODAK: Wants Until May 31 to Propose Chapter 11 Plan
------------------------------------------------------------
Eastman Kodak Company, et al., ask the U.S. Bankruptcy Court for
the Southern District of New York to extend their exclusive
periods to file a proposed chapter 11 plan until May 31, 2013, and
solicit acceptances for that plan until July 31, respectively.
The Debtors in their third request for a an extension say they see
three primary challenges as they prepare for emergence. First,
the Debtors must complete their ongoing strategic processes
relating to the disposition of the personalized imaging and
document imaging business. Second, the Debtors must make further
progress in resolving claims, including those relating to the KPP.
Third, the Debtors must develop an acceptable equity capital
structure for the reorganized company and prepare a plan of
reorganization and disclosure statement describing the Debtors'
future businesses.
In this relation, the requested extension will facilitate
completion of the work in which the Debtors have invested enormous
effort thus far and will encourage all parties to move toward
consensus.
A Feb. 20, hearing at 11 a.m., has been set. Objections, if any,
were due Feb. 13, at 4 p.m.
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.
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.
The Retirees Committee has hired Haskell Slaughter Young &
Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC,
as Bankruptcy Consultants and Financial Advisors; and the Segal
Company, as Actuarial Advisors.
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.
Kodak intends to reorganize by focusing on the commercial printing
business. Other businesses are being sold or shut down.
EDIETS.COM INC: CEO Resigns; Kevin Richardson Named PEO
-------------------------------------------------------
Jennifer Hartnett notified eDiets.com, Inc., of her decision to
resign as chief executive officer and as an employee of the
Company effective Feb. 5, 2013. The Company's Board of Directors
has accepted the resignation of Ms. Hartnett.
Effective Feb. 6, 2013, the Board has appointed Kevin A.
Richardson, II, to perform the functions of Principal Executive
Officer until completion of the Company's previously announced
acquisition by As Seen On TV, Inc. Mr. Richardson currently
performs the functions of Principal Financial Officer and
Principal Accounting Officer. Mr. Richardson, 44, has also served
as Chairman of the Company's Board of Directors since 2006. He is
the managing member of Prides Capital LLC, the general partner of
Prides Capital Fund I, L.P., the Company's largest stockholder.
He was formerly a partner at Blum Capital Partners, an investment
firm, an analyst with Tudor Investment Corporation, an investment
management firm, and an assistant portfolio manager of the
Fidelity Contra Fund, a registered investment company.
Mr. Richardson will not receive additional compensation in
connection with his assumption of these additional
responsibilities. There are no family relationships between Mr.
Richardson and any of the Company's directors or executive
officers.
About eDiets
eDiets.com, Inc. is a leading provider of personalized nutrition,
fitness and weight-loss programs. eDiets currently features its
award-winning, fresh-prepared diet meal delivery service as one of
the more than 20 popular diet plans sold directly to members on
its flagship site, http://www.eDiets.com
Following the 2011 financial results, Ernst & Young LLP, 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 incurred recurring operating losses,
was not able to meet its debt obligations in the current year and
has a working capital deficiency.
The Company's balance sheet at Sept. 30, 2012, showed
$1.76 million in total assets, $5.23 million in total liabilities
and a $3.46 million total stockholders' deficit.
Bankruptcy Warning
On Oct. 31, 2012, the Company entered into an Agreement and Plan
of Merger with ASTV, eDiets Acquisition Company, a Delaware
corporation and a wholly owned subsidiary of ASTV ("Merger Sub"),
and certain other individuals named therein. Pursuant to the
Merger Agreement, Merger Sub will merge with and into the Company,
and the Company will continue as the surviving corporation and a
wholly-owned subsidiary of ASTV.
"Both before and after consummation of the transactions, and if
the Merger is never consummated, the continuation of the Company's
business is dependent upon raising additional financial support.
In light of the Company's results of continuing operations,
management has and intends to continue to evaluate various
possibilities. These possibilities include: raising additional
capital through the issuance of common or preferred stock,
securities convertible into common stock, or secured or unsecured
debt, selling one or more lines of business, or all or a portion
of the Company's assets, entering into a business combination,
reducing or eliminating operations, liquidating assets, or seeking
relief through a filing under the U.S. Bankruptcy Code," the
Company said in its quarterly report for the period ended
Sept. 30, 2012.
EDMENTUM INC: Loan Upsizing No Impact on Moody's 'B2' CFR
---------------------------------------------------------
Moody's Investors Service said that Edmentum, Inc.'s proposed
re-pricing and concurrent upsizing of the first lien term loan is
credit positive, but does not impact the company's B2 corporate
family rating, instrument ratings, or the stable ratings outlook.
Headquartered in Bloomington, Minnesota, Edmentum is a provider of
online instruction, curriculum management, assessment, and related
services to K-12 schools, community colleges, and other
educational institutions.
EFD LTD: Chapter 11 Reorganization Case Dismissed
-------------------------------------------------
The Hon. Craig A. Gargotta of the U.S. Bankruptcy Court for the
Western District of Texas entered early this month an order
dismissing the Chapter 11 case of EFD, Ltd. The Debtor said
dismissal is in the best interest of the creditors because of the
foreclosure sale of the collateral pledged to Capital Farm Credit,
the absence of any significant equity on the real estate pledged
to Dale and Rita Steitle, the lack of any other material assets,
and the limited number of remaining creditors.
About EFD, Ltd.
Austin, Texas-based EFD, Ltd., dba Blanco San Miguel, fdba Blanco
San Miguel, Ltd., filed for Chapter 11 bankruptcy protection
(Bankr. W.D. Tex. Case No. 11-10846) on April 5, 2011. Eric J.
Taube, Esq., at Hohmann Taube & Summers, LLP, in Austin, Texas,
serves as the Debtor's bankruptcy counsel. The Company disclosed
$128,207,835 in assets and $30,395,205 in liabilities as of the
Chapter 11 filing.
The Debtor has withdrawn its Plan of Reorganization dated Aug. 12,
2011. Secured creditor and party-in-interest Capital Farm Credit,
FLCA, asked the Court to deny the confirmation of Debtor's Plan
because the Debtor's Plan violates various provisions of both
sections 1129(a) and 1129(b) of the Bankruptcy Code or other
applicable authority.
The U.S. Trustee has not yet appointed an official committee of
unsecured creditors. The U.S. Trustee reserves the right to
appoint such a committee should interest developed among the
creditors.
ENERGY SOLUTIONS: Moody's Reviews Ratings for Possible Upgrade
--------------------------------------------------------------
Moody's Investors Service, placed the Caa1 CFR and Caa1-PD PDR
ratings of Energy Solutions LLC on review for possible upgrade due
to the material debt reduction planned in context of the company's
pending acquisition by an affiliate of Energy Capital Partners.
The review is anticipated to conclude around mid-2013, the
anticipated closing date.
Ratings
Corporate Family Rating: to Caa1/review for possible upgrade
from Caa1
Probability of Default Rating: to Caa1-PD review for possible
upgrade from Caa1-PD
$105 million revolving line of credit due 2015: to B2/LGD2-29%
review for possible upgrade from B2/ LGD2-29%
$527 million term loan due 2016: to B2/LGD2-29% /review for
possible upgrade from B2/LGD2-29%
$300 million 10.75% notes due 2018: to Caa3/LGD-5-84% review
for possible upgrade from Caa3/LGD-5-84%
Speculative grade liquidity unchanged at SGL-3
Ratings Rationale
On January 7, 2013, Energy Solutions announced an agreement to be
sold to Rockwell Acquisitions Corp, an affiliate of ECP, for $3.75
a share, with the buyer's stated goal to reduce Energy Solutions'
debt from $827 million on 9/30/12 to $675 million, or about 1 turn
of debt/EBITDA leverage at closing. Energy Solutions is a well-
established operator in the US, European, and Asian nuclear
service industries who has experienced credit deterioration with
adjusted leverage increasing from 4.6x in 2010 to 7.2x in the
twelve months ending 9/30/12 due to the combination of weak
industry disposal volumes and performance of the challenging Zion
Nuclear Station decommissioning project. The review will consider
the post-acquisition leverage and capital structure, as well as
performance of the business following implementation of the 2012
cost reduction initiatives. Moody's will also consider ECP's
financial policy for Energy Solutions following the acquisition.
Moody's recognizes meaningful acquisition hurdles remain,
including attaining shareholder and regulatory (notably, the US
Nuclear Regulatory Commission) approval, in addition to the
uncertainty of the capital structure's exact composition. Still,
the conclusion of the 'go shop' period, the launch of the bank
loan amendment process, the conclusion of the HSR review by the
Department of Justice with 'no action' recommended, increase the
likely success of ECP's bid. The detailed debt target outlined in
regulatory filings increases Moody's confidence this level will be
achieved.
Energy Solutions' liquidity was adequate with $88 million
unrestricted cash on hand, about $54 million available for
revolver draw as of September 30, 2012 and a range of $40-70
million annual cash from operations generated from 2010 through
the latest twelve months ending September 30, 2012, compared to
about $5 million annual term loan amortization and just under $30
million annual capex.
The principal methodology used in this rating 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.
Energy Solutions, Inc., headquartered in Salt Lake City, Utah, is
the parent holding company of Energy Solutions LLC. ES provides a
range of services to the nuclear industry that are centered on the
nuclear fuel cycle. Revenues for the last twelve months ended
September 30, 2012 were $1.8 billion.
EUROFRESH INC: Test Case for Loan-To-Own Scheme
-----------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that according to Kenneth Rosen, the newly-appointed
lawyer for the official creditors' committee in debtor Eurofresh
Inc.'s cases, the Debtor's reorganization will become a test for
whether a lender can use secured debt to buy a bankrupt competitor
and in the process utilize Chapter 11 for its sole benefit,
The report recounts that an affiliate of NatureSweet Ltd., a
competing tomato grower, purchased about $52 million of first-lien
debt just before bankruptcy. Eurofresh said in a court filing
that it intends to hold an auction where NatureSweet will make the
first bid of $51.2 million, using debt rather than cash as
currency for the sale.
Mr. Rosen, from Lowenstein Sandler PC in Roseland, New Jersey,
said in an interview with Bloomberg that bankruptcy "isn't
supposed to solely benefit the secured lender," particularly so
when a competitor bought the debt in a "classic loan-to-own
situation" with the purpose of conducting a "cleansing sale"
through the bankruptcy court.
Mr. Rosen explained that NatureSweet instead could foreclose in
state court. In that instance, however, there wouldn't be the
same protection for the buyer from suits or claims brought by
unsecured creditors.
The bankruptcy court in Phoenix will hold a hearing on Feb. 22 to
consider auction and sale procedures.
About EuroFresh Inc.
EuroFresh is America's largest greenhouse grower spanning 318 aces
of glass covered facilities. EuroFresh grows premium quality,
great tasting, certified pesticide residue free greenhouse
tomatoes and cucumbers year-round. The 274-acre flagship facility
in Willcox, Arizona, is the world's largest. There's also a
second 44-acre acre property in Snowflake, Arizona. EuroFresh has
964 employees.
EuroFresh, Inc., filed a Chapter 11 petition (Bankr. D. Ariz. Case
No. 13-01125) on Jan. 27, 2013, to complete a sale of the business
to NatureSweet Limited, absent higher and better offers.
NatureSweet and EuroFresh Farms are two of the leading producers
of high-quality tomatoes in North America.
EuroFresh Inc. first filed for Chapter 11 protection (Bankr. D.
Ariz. Lead Case No. 09-07970) on April 21, 2009. Eurofresh exited
bankruptcy in November 2009 following a deal with majority of
their existing debt holders to convert more than $200 million of
debt into equity.
In the new Chapter 11 case, Frederick J. Petersen, Esq., and Isaac
D. Rothschild, Esq., at Mesch, Clark & Rothschild, P.C., serve as
counsel to the Debtors.
An official committee of unsecured creditors was appointed. The
creditors' committee includes International Paper Co. and
Southwest Gas Corp.
EXCEL DIRECTIONAL: Texas Drilling Firm Files Bankruptcy
-------------------------------------------------------
Robert Grattan, writing for Austin Business Journal, reports that
Austin, Tex.-based oil drilling company Excel Directional
Technologies LLC has filed a Chapter 11 bankruptcy petition,
listing $5.1 million in assets and $4.1 million in debt.
According to the report, majority of the assets, about $4.5
million, are listed as machinery and business supplies. Court
documents also show an unknown amount of leased equipment in
Nigera.
Excel was founded in 2005 by President Tim Tarver. The company
lists clients such as Royal Dutch Shell Plc and Whiting Petroleum
Corp on its website, as well as drilling sites that range from
Texas to North Dakota.
The report says Wells Fargo Equipment Finance Inc is the largest
creditor with a more than $1.1 million secured claim. The largest
unsecured creditor is Stabil Drill with a claim of more than
$697,000. Hunt Energy Enterprises, with $420,000 at stake, is the
second-largest unsecured creditor. Excel also owes the IRS and
the Texas State Comptroller about $100,000 each in taxes,
according to court documents.
Barbara Barron, Esq., at Barron & Newburger PC serves as
bankruptcy counsel.
FAMOUS DAVE'S: In Discussions with Bank Over Covenant Waiver
------------------------------------------------------------
Famous Dave's of America, Inc. on Feb. 13 reported financial
results for its fourth quarter and 2012 fiscal year end.
Highlights for the fourth quarter of 2012 as compared to the
fourth quarter of 2011 include:
-- Revenue decreased to $36.3 million from $37.5 million
-- Comparable restaurant sales for Company-owned restaurants open
24 months or more decreased 6.0% compared to an increase of 3.6%
for the fourth quarter of 2011
-- Comparable restaurant sales for franchise-operated restaurants
decreased 4.0%
-- Franchise royalty revenue was $4.0 million for both periods,
reflecting the opening of a net two new franchise restaurants and
a comparable sales decrease of 4.0%
-- Net income increased to $750,000 from $414,000
-- Diluted net income per share was $0.10, compared to $0.05 in
2011 which primarily reflected the cumulative impact from a
favorable tax rate adjustment for employment tax credits, for two
open tax years, equal to approximately $0.04 per diluted share
Highlights for the year ended December 30, 2012 as compared to the
year ended January 1, 2012 include:
-- Revenue increased to $155.0 million from $154.8 million
-- Comparable restaurant sales for Company-owned restaurants open
24 months or more decreased 1.8% compared to an increase of 1.5%
in 2011
-- Comparable restaurant sales for franchise-operated restaurants
decreased 2.0%
-- Franchise royalty revenue was $17.4 million, an increase from
$16.6 million, reflecting the opening of a net two new franchise
restaurants, partially offset by the decrease in franchise-
operated comparable sales
-- Net income decreased to $4.4 million from $5.6 million
-- Diluted net income per share was $0.57, compared to $0.68, in
2011
-- Diluted net income per share for fiscal 2012 and 2011 reflected
$0.04 and $0.05 of non-cash charges, respectively. Earnings for
December 30, 2012, reflected the cumulative impact from a
favorable tax rate adjustment for employment tax credits, for four
open tax years, equal to approximately $0.07 per share
-- Diluted adjusted net income per share was $0.61, a decrease
from $0.73 for 2011
-- Adjusted EBITDA was $12.6 million, a decrease from $15.5
million for 2011
John Gilbert, CEO, commented, "Since becoming CEO of Famous Dave's
in October, 2012, I have been working closely with the Board and
the senior management team to implement new strategies for
delivering reliable and sustainable revenue and earnings growth.
And while our 2012 results fell short of expectations, I am
confident in our ability to accelerate performance in the future
through a more customer-centric organization.
The weak performance in 2012 was a reflection of a continued
challenging economic environment, an increasingly competitive
landscape and a difficult commodity environment. These
challenges, coupled with my joining the Company as its new CEO,
created an opportunity for us to review our infrastructure and
practices in order to become more focused on the activities that
generate the best value for our guests and investors.
Over the last quarter we began the process of realigning Dave's
core operating infrastructure and reallocating capital to ensure
we are delivering our award winning BBQ in a way that optimizes
the guest experience at each point of interaction: dine-in, to-go,
catering and retail. We further strengthened our leadership with
seasoned management, realigned our organizational structure,
introduced a Digital Services Group to support what we believe
will become an industry-leading social architecture, and
established key operating metrics to help us manage more
effectively with individual accountability.
Despite the challenging consumer environment, we are confident
that we have taken the right organizational steps and have made
the appropriate investments to set us up well for the future. And
as a result, Famous Dave's is positioned well for growth.
Yet, we know there is more work to be done, and the real work is
in changing the results -- regardless of the consumer environment.
Going forward, we will drive results through smarter pricing
decisions, data-driven promotional tactics, and improved cost
management, and we will drive sensible brand expansion through
food excellence, a new restaurant prototype and prudent capital
allocation."
Common Share Repurchases
The company did not repurchase any shares during the fourth
quarter of 2012, as compared to the fourth quarter of fiscal 2011,
in which it repurchased 304,036 shares of common stock at an
average price of $8.68 per share, excluding commissions, for
approximately $2.6 million. During fiscal 2012, the company used
approximately $5.9 million to repurchase 539,596 shares at an
average price of $10.68, excluding commissions, under its current
share repurchase program and the recently completed previous share
repurchase program. As of the end of fiscal 2012, the company had
repurchased 323,862 shares under its current 1.0 million share
authorization at an average price of $10.49 per share, excluding
commissions, for a total of approximately $3.4 million. The
company repurchased 610,166 shares of common stock during fiscal
2011 at an average price of $9.42 per share, excluding
commissions, for a total of approximately $5.8 million.
Credit Facility Covenant Compliance
The company was in compliance with its adjusted leverage ratio and
cash flow covenants associated with its credit facility at the end
of the fourth quarter of 2012. However, as a result of working
collaboratively with a franchise partner on a payment plan on
amounts owed, we were not in compliance with the royalty covenant
at the end of the fourth quarter. The credit facility requires
that the amount of franchise royalties aged past 30 days not
exceed 25%, and at the end of the fourth quarter, the Company's
aging was at 26%. The company is currently in discussions with
the bank regarding an amendment or a waiver with regard to this
covenant.
Marketing and Development
Starting in mid-February and running through March, the company
will be featuring the return of our popular Sweetwater Catfish, as
both an entree and an appetizer, which will remain on the menu as
a regular menu item after this special re-introduction.
During the fourth quarter, Famous Dave's opened four new
franchise-operated restaurants in South Coast Metro, California,
Overland Park, Kansas, Ft. Myers, Florida and Casper, Wyoming and
one company-owned restaurant as a fast casual format in Evergreen
Park, Illinois. A company-owned restaurant closed in Lombard,
Illinois at the end of its natural lease term, and three
franchise-operated restaurants closed in Lahaina, Hawaii, Abilene,
Texas, and Baxter, Minnesota during the quarter. Famous Dave's
ended the quarter with 188 restaurants, including 53 company-owned
restaurants and 135 franchise-operated restaurants, located in 34
states and 1 Canadian Province. Subsequent to year end, a
franchise-operated restaurant in Burnsville, Minnesota closed and
is expected to be relocated in early 2013.
Outlook
"We are uniquely positioned to capitalize on what Famous Dave's
has always been, the category defining leader in BBQ," said
Gilbert. "Our growth will come through new locations, new
franchise partners, new prototypical designs and new markets. We
plan to open approximately 17 new locations in 2013, including our
first location in Puerto Rico that will allow us to surpass 200
restaurants, and over a half billion in sales, system-wide.
Additionally, we will grow in terms of profitability through sales
leverage and through strategic investments, such as those that
will help us optimize our menu through defined pricing strategies.
We see an unprecedented amount of opportunity for 2013 and for the
long term, and believe that the strategy that we have put in place
and the investments we have made will soon translate into a
stronger brand."
About Famous Dave's
Famous Dave's of America, Inc. develops, owns, operates and
franchises barbeque restaurants. As of today, the company owns 53
locations and franchises 134 additional units in 34 states and 1
Canadian Province.
FIELD FAMILY: Wells Fargo Objects to Use of Cash Collateral
-----------------------------------------------------------
Wells Fargo Bank, N.A., objects to the motion of Field Family
Associates, LLC, for authority to use cash collateral on a final
basis.
Jami B. Nimeroff, Esq., representing Wells Fargo, tells the Court
that the Debtor's counsel advised them that the operating budget
contemplated for the period beginning February 4, 2013 and ending
the week of April 29, 2013, was not yet available. Consequently,
the Senior Lender has not had an opportunity to review, comment
upon, and approve the Budget. The Senior Lender filed a limited
objection to preserve all of its rights to review, comment upon,
and approve the Budget.
In addition, counsel for the Debtor and the Senior Lender have
been negotiating over the form of a proposed fourth interim order
to approve the continued use of cash collateral and hope to
resolve all related issues. The Senior Lender reserves the right
to object to any unresolved or objectionable portions of such
proposed order.
Ms. Nimeroff said the Court should not permit the Debtor to
operate unless the Senior Lender has had an opportunity to review,
comment upon, and approve the Budget, and the form of order
authorizing the continued use of cash collateral is acceptable to
the Senior Lender.
Wells Fargo Bank is represented by:
Jami B. Nimeroff, Esq.
BROWN STONE NIMEROFF LLC
Two Commerce Square, Suite 3420
2001 Market Street
Philadelphia, PA 19103
Tel: (267) 861-5330
Fax: (267) 350-9050
Email: jnimeroff@bsnlawyers.com
As reported in the Troubled Company Reporter, Field Family won
authority to use its lender's cash collateral until Jan. 28, 2013,
in accordance with an approved budget. As adequate protection,
the lender was granted replacement liens in all property of the
Debtor; provided the replacement liens will not include causes of
action held by the Debtor's estate or related proceeds.
Wells Fargo Bank, N.A., serves as Trustee for the Registered
Holders of J.P. Morgan Chase Commercial Mortgage Securities Trust
2007-CIBC18, Commercial Mortgage Pass-Through Certificates, Series
2007-CIBC18). Wells Fargo said that as of July 2, 2012, it is
owed not less than $38.9 mililion under the loan documents.
About Field Family
Five creditors filed an involuntary Chapter 11 bankruptcy petition
against King of Prussia, Pa.-based Field Family Associates, LLC
(Bankr. E.D. Pa. Case No. 12-16331) on July 2, 2012. On Sept. 6,
2012, a sixth creditor filed a Joinder in the involuntary Chapter
11 Petition. The Court entered an order for relief on Sept. 12,
2012. The Debtor owns and operates a 216-room hotel located at
144-10 135th Steet, in Jamaica, New York.
Judge Stephen Raslavich presides over the case. Catherine G.
Pappas, Esq., Lawrence G. McMichael, Esq., and Peter C. Hughes,
Esq., at Dilworth Paxson LLP, in Philadelphia, Pa., represent the
Alleged Debtor as counsel. Ashely M. Chan, Esq., at Hangley
Aronchick Segal & Pudlin, in Philadelphia, Pa., represents the
petitioning creditors as counsel.
The U.S. Trustee appointed a three-member creditors committee.
Hangley Aronchick Segal Pudline & Schiller represents the
Committee.
FIRST PLACE: Dimensional Owns 3.9% of Shares at Dec. 31
-------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it beneficially owns 671,211 shares of common
stock of First Place Financial representing 3.95% of the shares
outstanding. A copy of the filing is available at:
http://is.gd/vRjou6
About First Place
First Place Financial Corp. is a $3.1 billion financial services
holding company, based in Warren, Ohio. The First Place bank
subsidiary isn't in bankruptcy.
First Place filed a Chapter 11 petition (Bankr. D. Del. Case No.
12-12961) in Delaware on Oct. 28, 2012, to sell its bank unit to
Talmer Bancorp, Inc., absent higher and better offers.
The Debtor declared $175 million in total assets and $65.6 million
in total liabilities as of Oct. 26, 2012.
The Debtor has tapped Patton Boggs LLP and The Bayard Firm, PA as
legal counsel, and FTI Consulting, Inc., as financial advisor.
Donlin, Recano & Company, Inc. -- http://www.donlinrecano.com/--
is the claims and notice agent.
The Official Committee of Trust Preferred Securities tapped to
retain Kirkland & Ellis as counsel; Klehr Harrison Harvey
Branzburg as co-counsel; Holdco Advisors as financial advisor; and
Rothschild as investment banker and financial advisor.
FLEXIBLE FLYER: Suddenly Ended Loan Excuses WARN Act Compliance
---------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that a lender's decision to terminate financing excused a
company from complying with the Worker Adjustment and Retraining
Notification Act, a federal law requiring 60 days' notice before a
mass firing.
The report relates that an appeal came to the U.S. Court of
Appeals in New Orleans in the wake of the bankruptcy of Flexible
Flyer, an acquisition in 1997 by Cerberus Capital Management LP.
Two days after the working capital lender shut off financing,
Flexible Flyer filed under Chapter 11 and shut down. Workers sued
for violation of the WARN Act.
According to the report, the bankruptcy judge found that the
shutdown was the result of "unforeseeable business circumstances"
resulting from an "abrupt unavailability of operating funds." The
lower court judge was persuaded by testimony that the "sudden lack
of funds was completely unanticipated."
Persuaded that the "mass layoffs were not planned, proposed or
foreseeable," the bankruptcy judge dismissed the suit. On the
first appeal, the district court upheld dismissal. On the second
appeal, the Fifth Circuit in an unsigned opinion upheld the
bankruptcy court on Feb. 11, saying the findings of fact weren't
clearly erroneous, according to the report.
The case is Angles v. Flexible Flyer Liquidating Trust (In re
Flexible Flyer Liquidating Trust), 12-60242, U.S. Court of Appeals
for the Fifth Circuit (New Orleans).
A copy of the Fifth Circuit's Feb. 11 decision is available at
http://is.gd/kpZytBfrom Leagle.com.
About Flexible Flyer
Flexible Flyer manufactured swing sets, hobby horses, go-carts,
utility vehicles, fitness equipment, and related products that
were sold to Wal-Mart, Toys-R-Us, K-Mart, Sam's Club, as well as,
other large and small retailers.
Flexible Flyer filed a voluntary Chapter 11 bankruptcy petition
(Bankr. N.D. Miss. 05-16187) on Sept. 9, 2005, after CIT Group
Commercial Systems, LLC, canceled the parties' financing
arrangement, and Cerberus Capital Management Corporation, Flexible
Flyer's parent company, refused to infuse capital.
GATEHOUSE MEDIA: Expects $125.6 Million Revenues in 4th Quarter
---------------------------------------------------------------
GateHouse Media, Inc., reported preliminary unaudited financial
results for the fourth quarter and full year ended Dec. 30, 2012.
GateHouse Media has not finalized its financial closing process or
the audit of its consolidated financial statements for the year
ended Dec. 30, 2012, and may identify items that would require
adjustments to these preliminary financial results. GateHouse
Media expects to release final results on March 7, 2013, after
market hours.
For the fourth quarter, GateHouse Media expects total revenues of
approximately $125.6 million, GAAP operating income of
approximately $9.5 million to $10.5 million and As Adjusted EBITDA
of approximately $22.3 million to $23.3 million. On a same store
basis, adjusting for an extra week in the fourth quarter of 2011
and the sale of a group of weekly publications in Chicago on
Oct. 1, 2012, total revenue is expected to decline 6.1% in the
fourth quarter of 2012.
For the full year, GateHouse Media expects total revenues of
approximately $491 million, GAAP operating income of approximately
$28 million to $29 million and As Adjusted EBITDA of approximately
$80 million to $81 million. On a same store basis, adjusting for
an extra week in the fourth quarter of 2011 and the sale of a
group of weekly publications in Chicago on Oct. 1, 2012, total
revenue is expected to decline 4.2% for the full year.
The same store fourth quarter results are expected to be driven by
strong digital revenue growth of 22.4% offset by declines in print
advertising. Total advertising revenue in the fourth quarter is
expected to decline 9.1% on a same store basis as growth in
digital advertising should be more than offset by an expected
11.4% decline in total print advertising. The print declines are
expected to be primarily from local and classified advertising,
down 8.2% and 16.7%, respectively. Circulation revenue is
expected to be relatively flat compared to the prior year as price
increases offset volume declines.
The expected revenue declines in the fourth quarter were slightly
worse than recent quarterly reports and there were several factors
that influenced the quarter that the Company believes are
primarily temporary in nature. First, new Massachusetts
legislation has altered and slowed the foreclosure process leading
to large delays in the timing of foreclosure revenues, which has
negatively impacted classified revenues. Second, a soft economic
climate for small businesses in the quarter combined with
uncertainty surrounding the fiscal cliff caused local small
businesses to pull back on advertising spend, particularly in mid
to late December. Finally, the Company continued to invest in
opportunistic top line growth opportunities, including digital
service offerings and audience extension products. These
investments resulted in operating expense increases, particularly
for sales force hiring and training. The Company believes it will
be better positioned to capture future top line growth as a result
of these investments and opportunities.
About GateHouse Media
GateHouse Media, Inc. -- http://www.gatehousemedia.com/--
headquartered in Fairport, New York, is one of the largest
publishers of locally based print and online media in the United
States as measured by its 97 daily publications. GateHouse Media
currently serves local audiences of more than 10 million per week
across 21 states through hundreds of community publications and
local Web sites.
The Company reported a net loss of $22.22 million for the year
ended Jan. 1, 2012, a net loss of $26.64 million for the year
ended Dec. 31, 2010, and a net loss of $530.61 million for the
year ended Dec. 31, 2009.
The Company's balance sheet at Sept. 30, 2012, showed
$480.43 million in total assets, $1.30 billion in total
liabilities, and a $829.10 million total stockholders' deficit.
Bankruptcy Warning
According to the Form 10-K for the year ended Dec. 31, 2011, the
Company's ability to make payments on its indebtedness as required
depends on its ability to generate cash flow from operations in
the future. This ability, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory
and other factors that are beyond the Company's control.
There can be no assurance that the Company's business will
generate cash flow from operations or that future borrowings will
be available to the Company in amounts sufficient to enable it to
pay its indebtedness or to fund our other liquidity needs.
Currently the Company does not have the ability to draw upon its
revolving credit facility which limits its immediate and short-
term access to funds. If the Company is unable to repay its
indebtedness at maturity the Company may be forced to liquidate or
reorganize its operations and business under the federal
bankruptcy laws.
GENE CHARLES: Plan to Pay Unsecured Creditors Over Time
-------------------------------------------------------
Gene Charles Valentine Trust's Chapter 11 Plan dated Feb. 8, 2013,
provides for the auction of the leasing rights of, or ownership
rights to, certain of the Debtor's subsurface assets located
underneath the Debtor's Peace Point Farms Equestrian Facility and
its surrounding parcels.
According to the Disclosure Statement, the Debtor proposes to pay
a total of $1 million to its creditor Gulf Coast Bank & Trust
Company from the Auction proceeds in full settlement of Gulf
Coast's claims relating to Loan 808 and Loan 860. Remaining
Auction proceeds will be used to cure the default on the United
States Department of Agriculture's Loan 807, as well as fund
payment of additional Allowed Claims pursuant to this Plan. The
USDA will reinstate the maturity of Loan 807 and retain its liens
on the remaining unsold Peace Point Assets. The Auction will take
place in advance of the Plan confirmation hearing in this Chapter
11 case. The Debtor will also fund the Plan with contributions
from the Debtor's Trustee Mr. Gene Charles Valentine, as well as
from income the Debtor's businesses.
The Disclosure Statement that needs to be approved by the Court
before the Debtor can schedule a confirmation hearing.
The Allowed Administrative Claims presently are estimated to be
approximately $200,000 in total. The Allowed Unsecured Claims
presently are estimated to be approximately $11,430,392 in total.
The Debtor intends to pay in full all Allowed Administrative
Claims over time. Allowed Unsecured Claimants will be paid over a
period of 25 months.
Under the Plan, Class 1 (USDA Claim), Class 4 (U.S. Bank); Class 5
(Main Street Bank); Class 6 (First National Bank - Loan 1); Class
7 (First National bank ? Loan 2); Class 8 (First National Bank ?
Loan 3); Class 9 (Richard McCreary); Class 11 (Wes Banco); Class
12 (Mark Bergeron); Class 13 (Priority Claims-Non-Tax); Class 15
(Interest Holders) are not impaired under the Plan, are deemed to
accept the Plan and therefore are not entitled to vote to accept
or reject the Plan. The Interest Holders will retain their
interest in the Debtor.
Class 2 (Gulf Coast Bank), Class 3 (Catholic Financial Life),
Class 10 (Jim Davis and Shirley Oakes); Class 14 (Unsecured
Creditors); and Class 16 (Litigation Settlement Claimants) are
impaired under the Plan and are entitled to vote to accept or
reject the Plan.
A copy of the Disclosure Statement is available at:
http://bankrupt.com/misc/genecharles.doc448.pdf
About Gene Charles Valentine
A business trust created by investment advisor and broker-dealer
agent Gene Charles Valentine sought Chapter 11 bankruptcy
protection (Bankr. N.D. W.Va. Case No. 12-01078) in Wheeling, West
Virginia on Aug. 9, 2012. The Gene Charles Valentine Trust owns
commercial and real estate properties in West Virginia, the
Financial West Group, the Peace Point Equestrian Center and the
Aspen Manor. The Trust also has extensive subsurface oil, gas and
mineral rights underneath numerous parcels of its property near
Aspen Manor and the Peace Point Equestrian Center. The value of
such subsurface assets is unknown at this time but is substantial.
The Debtor disclosed in its schedules $34,101,393 in total assets
and $22,623,554 in total liabilities.
Financial West Investment Group, Inc., doing business as Financial
West Group -- http://www.fwg.com/-- is a firm with more than 340
registered representatives supervised by 44 Offices of Supervisory
Jurisdiction throughout the United States. Financial West Group
is a FINRA, and SIPC member and SEC Registered Investment Advisor
(over $1 billion under control) that offers a full range of
financial products and services. Its corporate office 32 member
staff is dedicated to providing registered representatives quality
service and technology to allow them to focus on best servicing
their investors needs.
Aspen Manor -- http://www.aspenmanorresort-- is a resort that
claims to be the "The Jewel of the Ohio Valley." Along with its
architectural artistry, including hand-carved ceilings, the Manor
is filled will original art, statues, historic furniture and
artifacts.
Bankruptcy Judge Patrick M. Flatley oversees the case. The Trust
hired MazurKraemer Business Law as lead and local counsel, and
Weir & Partners LLP as co-counsel.
GRAPHIC PACKAGING: Moody's Lifts CFR to 'Ba2', Outlook Stable
-------------------------------------------------------------
Moody's Investors Service upgraded Graphic Packaging
International's corporate family rating to Ba2 from Ba3 and
probability of default rating to Ba2-PD from Ba3-PD. Moody's also
upgraded Graphic's ratings on the secured credit revolver and term
loan to Ba1 from Ba2, and senior unsecured debt ratings to Ba3
from B2. The rating outlook is stable.
The rating upgrade reflects Moody's expectation that Graphic
Packaging's credit measures will continue to improve over the next
12 to 18 months from a combination of earnings growth as the
company integrates the two European businesses it acquired at the
end of 2012, and debt reduction. Moody's expects that the
company's application of its cash flow towards debt reduction will
result in leverage of around 3.5x over the next 18 months.
Graphic Packaging, headquartered in Atlanta, Georgia, is a leading
provider of paperboard packaging solutions. The company
manufactures and supplies folding cartons and multi-pack beverage
carriers, coated unbleached kraft paperboard, coated recycled
board, and machinery-based packaging systems for the food and
beverage industry. The company is also a leading supplier of
flexible packaging, including multi-wall bags and plastics.
Graphic Packaging generated approximately $4.3 billion in revenue
in 2012.
Ratings Rationale
Graphic Packaging's Ba2 corporate family rating reflects expected
adjusted leverage of about 3.5x and steady operating performance
that benefits from providing packaging for the relatively stable
food and beverage segment. The rating is supported by the
company's relatively low cost vertically integrated asset base and
the company's leading industry position in the North American
folding cartons packaging industry. The rating is constrained by
the company's exposure to volatile fiber and energy costs and the
expectation of continued acquisitions.
Graphic Packaging's SGL-2 liquidity rating indicates good
liquidity. This is supported primarily by more than $600 million
of availability under the company's $1 billion senior secured
revolving credit facility that matures in March 2017 and
approximately $52 million of cash on-hand (as of December 2012).
Moody's estimates that Graphic Packaging will generate more than
$200 million of annual free cash flow and will remain in
compliance with its debt covenants over the next 12 months. The
company has modest near-term debt maturities of about $60 million.
Senior unsecured debt rating of Ba3 (one notch below CFR) and
secured debt rating of Ba1 (one notch above CFR) reflect their
relative seniority positions within the company's capital
structure. The double notch upgrade on the senior unsecured debt
reflects the change in expected loss in the event of default at
the higher CFR level under Moody's loss given default methodology.
The stable outlook reflects Moody's expectation that the company
will continue to generate strong financial and operating results,
and will not undertake meaningful debt financed acquisitions or
significant shareholder return activities in the near future.
Moody's also expects the company will benefit from continued debt
reduction, improved productivity and growing geographic
diversification through the integration of its recently acquired
European operations. The outlook also acknowledges integration
risks surrounding their recent acquisitions.
Moody's could upgrade the ratings if Graphic Packaging is able to
maintain a good liquidity position and sustain normalized (RCF-
Capex)/Debt towards 12% and Debt/EBITDA of less than 3.0x
(including Moody's standard adjustments).
The ratings could be downgraded should the company face
significant price and volume deterioration, material deterioration
in liquidity arrangements, (RCF-Capex)/Debt of around 5%, or if
Debt/ EBITDA remain above 4.0x on a sustained basis.
The principal methodology used in this rating was the Global Paper
& Forest Products Industry Methodology published in September
2009. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
GRAY TELEVISION: Caspian Ownership at 5.4% as of Dec. 31
--------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Caspian Capital LP disclosed that, as of Dec. 31,
2012, it beneficially owns 2,756,174 shares of common stock of
Gray Television, Inc., representing 5.36% of the shares
outstanding. A copy of the filing is available for free at:
http://is.gd/RrEscw
About Gray Television
Formerly known as Gray Communications System, Atlanta, Georgia-
based Gray Television, Inc., is a television broadcast company.
Gray currently operates 36 television stations serving 30 markets.
Each of the stations are affiliated with either CBS (17 stations),
NBC (10 stations), ABC (8 stations) or FOX (1 station). In
addition, Gray currently operates 38 digital second channels
including 1 ABC, 4 Fox, 7 CW, 16 MyNetworkTV and 1 Universal
Sports Network affiliates plus 8 local news/weather channels and 1
"independent" channel in certain of its existing markets.
The Company's balance sheet at Sept. 30, 2012, showed
$1.27 billion in total assets, $1.11 billion in total liabilities,
$13.19 million in series D perpetual preferred stock, and
$149.94 million in total stockholders' equity.
* * *
As reported by the TCR on Sept. 26, 2012, Moody's Investors
Service upgraded Gray Television, Inc.'s Corporate Family Rating
(CFR) and Probability of Default Rating (PDR) each to B3 from
Caa1. The upgrades reflect Moody's expectations for the company
to benefit from strong political revenue demand through November
2012 resulting in improved credit metrics combined with
management's commitment to reduce leverage.
In the April 9, 2012, edition of the TCR, Standard & Poor's
Ratings Services raised its corporate credit rating on Atlanta,
Ga.-based TV broadcaster Gray Television Inc. to 'B' from 'B-'.
"The 'B' rating reflects company's still-high debt leverage and
weak discretionary cash flow, as well as our expectation that the
company will maintain adequate headroom with its financial
covenants in the absence of any further tightening of covenant
thresholds. The stable rating outlook reflects our expectation
that Gray will maintain lease-adjusted debt to average trailing-
eight-quarter EBITDA below 7.5x. We also expect the company to
generate modest positive discretionary cash flow in 2012," S&P
said.
HEMCON MEDICAL: Seeks Valuation of BofA's Interests
---------------------------------------------------
HemCon Medical Technologies, Inc., asks the U.S. Bankruptcy Court
for the District of Oregon to determine the value of Bank of
America's interests in the estate's interests in the purchased
assets sold by the Debtor to Bard Access Systems, Inc., as
authorized by the order authorizing (A) the Debtor's sale of its
GuardIVa(R) trademark, and (B) the Debtor's authorization of the
execution by HemCon Medical Technologies, Europe, Limited and
subsidiary to execute and perform its obligations under asset
purchase agreement.
The Debtor relates that Bank of America has a perfected security
interest in the GuardIVa(R) trademark and Debtor's interests in
the assigned distribution agreements. The value of those
assets represent a small portion of the purchase price.
About HemCon Medical Technologies
Portland, Oregon-based HemCon Medical Technologies Inc., fdba
HemCon, Inc. filed a Chapter 11 bankruptcy petition (Bankr. D.
Ore. Case No. 12-32652) on April 10, 2012, estimating up to
$50 million in assets and liabilities. Founded in 2001, HemCon --
http://www.hemcon.com/-- maintains a a 32,000 square-foot
manufacturing facility in Portland for the manufacture of its
chitosan-based wound care products and LyP for clinical trials.
HemCon also holds 100% of the outstanding stock of Castlerise
Investment Limited, which is the holding company of its wholly-
owned subsidiary, HemCon Medical Technologies Europe, Ltd.,
headquartered in Dublin, Ireland.
The bankruptcy filing comes after an en banc decision by the U.S.
Court of Appeals for the Federal Circuit on March 15, 2012, which
affirmed an award of $34.2 million in damages to Marine Polymer
Technologies Inc. in a patent infringement case initiated in 2006.
HemCon's European subsidiary is not subject to the Chapter 11
proceedings.
Judge Elizabeth L. Perris presides over the case. Attorneys at
Tonkon Torp LLP represent the Debtor. The petition was signed by
Nick Hart, CFO.
The First Amended Chapter 11 Plan of Reorganization provides
that the Debtor will reorganize into two companies. All of the
existing assets and liabilities will remain within Debtor with the
exception of those assets and rights that relate to Debtor's
lyophilized human plasma program ("LyP") Product and certain cash
funds. These LyP assets and rights whether licensed or owned,
including all respective IP, will be assigned into a new company,
NewCo, which will be independent to HemCon and the Reorganized
Debtor.
Robert D. Miller Jr., U.S. Trustee for Region 18 appointed three
unsecured creditors to serve on the Official Committee of
Unsecured Creditors of HemCon Medical Technologies, Inc. The
Committee has appointed Marine Polymer as its chair.
HOMER CITY: Moody's Assigns 'Caa1' Rating to $673MM Senior Notes
----------------------------------------------------------------
Moody's Investors Service assigned a Caa1 rating to Homer City
Generation L.P. (Homer City or Project) $673 million senior
secured notes, which were initially rated Caa1 on a provisional
basis. Homer City's rating outlook is stable.
Rating Rationale
The rating assignment reflects Homer City emergence from
bankruptcy, the closing of all financial conditions in December
2012, and Moody's view that Homer City's main credit drivers
remain substantially unchanged. As of December 2012, the project
reports that construction of the new flue gas desulfurization
equipment is progressing on schedule and on budget. The rating
also acknowledges Edison Mission Energy's December 2012 bankruptcy
has not adversely affected EME's trading affiliate from fulfilling
its role as energy manager. Furthermore, Moody's understands that
the project has utilized its payment in kind feature for its April
2013 interest payment.
The main credit drivers of the Caa1 rating on Homer City's senior
secured notes are the Project's emergence from bankruptcy with no
reduction in debt, full merchant energy exposure, and the ability
of the owner, an affiliate of General Electric Capital Corporation
to terminate the construction of the new FGD on Units 1 & 2 of
Homer City at its discretion. The project's credit quality is also
negatively affected by expected debt service coverage ratios that
are less than 1.0 times in two of the next three years under
management's base case, a history of operating problems,
diminished competitive position in a challenging market
environment, and limited project finance protections. The Caa1
rating further recognizes that an affiliate of EME acts as energy
manager for Homer City while EME, the affiliate's parent, operates
in bankruptcy.
The rating acknowledges the considerable expected equity
contribution of around $700 million to $750 million by a GECC
affiliate to fund construction costs for new FGD equipment on
Units 1 & 2, access to relatively attractive markets in PJM, and
existing cash balance at the project of around $85 million at
September 30, 2012. This investment by the GECC affiliate enhances
recovery prospects for senior secured Homer City creditors.
Additional considerations in assigning the rating include the
known capacity prices through May 2016, NRG Energy, Inc.'s role as
operations and maintenance provider, and a $75 million uncommitted
revolving credit facility provided by GECC.
Moody's also recognizes that a payment default on the senior
secured notes should not occur before the first mandatory debt
service payment on October 1, 2014 since principal payments during
this period are deferred with the project having a payment in kind
feature for interest payments. While this greatly reduces default
risk until October 2014, the debt balance at Homer City is likely
to increase by $111 million to $751 million from $640 million
(pre-bankruptcy amount), a 17% increase, if the project utilizes
its PIK feature. The higher debt balance also incorporates the
deferred October 1, 2012
Homer City's stable outlook reflects the expected large investment
by GECC and the expectation that the FGD will be built on time and
on budget. The stable outlook further considers the reduced
prospects for payment default occurring until October 2014 given
the terms of the restructuring, which defers principal repayments
and gives Homer City the ability to PIK interest expense.
In light of the challenging power market, the likely increase in
total indebtedness at Homer City, and the ongoing construction of
the required FGDs, limited prospects exist for a rating upgrade in
the near term. Positive trends that could lead to an upgrade
include completion of the FGD for Units 1 & 2, implementation of a
meaningful energy hedging program, and if debt service coverage
ratio can exceed 1.1 times on a sustained basis.
The rating could be downgraded if the Project does not build the
FGD, if the $75 million working capital facility is no longer
available or if GECC substantially sells off its interest in the
project.
The principal methodology used in this rating was Power Generation
Projects methodology published in December 2012.
Moody's removed the provisional designation on Homer City
Generation's (Homer City) Caa1 rating on its senior secured bonds.
The rating outlook is stable.
Homer City Generation is a special purpose company that owns a
1,884 MW coal-fired plant in Homer City, PA. Homer City Generation
is indirectly owned by General Electric and Metlife.
HOSTESS BRANDS: Pedersen & Houpt OK'd as Retiree Panel's Counsel
----------------------------------------------------------------
The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York authorized the Official Committee of
Retired Employees in the Chapter 11 cases of Hostess Brands, Inc.,
et al., to retain Pedersen & Houpt as its counsel.
As reported in the TCR on Jan. 25, 2013, P&H is expected to, among
other things:
a. counsel the Retiree Committee with respect to the
administration of the bankruptcy estates, advising the
Retiree Committee members with respect to their fiduciary
duties, communications with the retiree constituency and the
like;
b. investigate the acts, conduct, assets, liabilities and
financial condition of the Debtors and the Debtors' non-
debtor affiliates, and any other matters relevant to the
case or to the formulation of a plan of liquidation; and
c. analyze any proposals made by the Debtors with respect to
their assertions as to the necessity and/or extent of
reduction of retiree benefits and developing counteroffers
to such proposals.
The hourly rates of P&H's personnel are:
Partners $360 - $600
Associates $210 - $320
Legal Assistants/Paralegals: $130 - $200
To the best of the Debtors' knowledge, P&H is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
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. DHostess Brands disclosed
assets of $982 million and liabilities of $1.43 billion as of the
Chapter 11 filing.
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).
In the new Chapter 11 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.
The official committee of unsecured creditors 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.
Hostess Brands in mid-November opted to pursue the orderly wind
down of its business and sale of its assets after the Bakery,
Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a
nationwide strike. The Debtor failed to reach an agreement with
BCTGM on contract changes. Hostess Brands said it intends to
retain approximately 3,200 employees to assist with the initial
phase of the wind down. Employee headcount is expected to decrease
by 94% within the first 16 weeks of the wind down. The entire
process is expected to be completed in one year.
ICON HEALTH: Moody's Lowers CFR to 'B2', Outlook Negative
---------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family rating
of Icon Health & Fitness to B2 from B1 and probability of default
rating to B2-PD from B1-PD. The outlook remains negative.
The downgrade of Icon's CFR to B2 reflects Moody's expectation
that credit metrics, including leverage of approximately 6.6 times
(including Moody's standard accounting adjustments), will not
sufficiently improve over the next 12 months despite the company's
efforts to diversify its distribution away from its largest
customer, Sears. While the company continues to demonstrate modest
growth in other channels, such as Dick's Sporting Goods and online
outlets such as Amazon, these efforts are being outpaced by the
combined impact of lower consumer demand for its products and
weakness at Sears.
The downgrade also reflects the Icon's weakening cash flow
profile. The company was free cash flow negative as of December 1,
2012 and Moody's expects that Icon will only be modestly free cash
flow positive by the end of calendar year 2014. The company should
benefit from initiatives focused on inventory management. However,
the ultimate level of cash generation will not be significant
enough to have a material impact on debt reduction.
Ratings downgraded include the following:
Corporate Family Rating to B2 from B1;
Probability of default rating to B2-PD from B1-PD;
$205 million of 11.875% senior secured notes due October 2016
to B3 (LGD 4, 64%) from B2 (LGD 4, 60%)
The outlook is negative.
Ratings Rationale
The B2 Corporate Family Rating reflects Icon's weak credit
metrics, relatively small size, lack of product diversification
beyond fitness equipment, its revenue concentration within North
America and with key customers, and the vulnerability of revenues
to cyclical swings in consumer spending. Moody's expects that
earnings and cash flow will continue to be pressured due to lower
sales at the company's largest distributor, Sears. Nevertheless,
the company has a leading market position within the fitness
equipment sector and strong brands such as NordicTrack.
The negative outlook reflects Icon's weak credit metrics and
constrained free cash flow. The negative outlook also reflects
that, while the company is growing its distribution with other
retailers such as Dick's Sporting Goods and online distribution
channels, it will be a slow process and is unlikely to grow at a
pace fast enough to offset weak sales at its largest distributor,
Sears.
A downgrade could occur if Icon's credit metrics remain at current
weak levels as a result of softness in the company's core business
or if margin pressure continues. Specifically, the rating could be
downgraded if debt/EBITDA remains above 6 times, if EBITA/interest
remains below 1.5 times, or if there is a weakening in liquidity.
An upgrade in Icon's ratings is unlikely in the near-term due to
the company's weak soft operating performance and weak credit
metrics. An improvement in credit metrics such that debt to EBITDA
is sustained around 4.5 times and EBITDA to interest approaches
2.5 times, an upgrade could be considered.
The principal methodology used in this rating was the Global
Consumer Durables 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.
INVENTIV HEALTH: Appoints Michel Dubery as EU Managing Director
---------------------------------------------------------------
inVentiv Health, Inc. on Feb. 13 disclosed that Michel Dubery will
lead the European arm of the company's global communications
division. Ranked by Advertising Age as the world's second largest
healthcare agency network, inVentiv Health Communications (iHC)
employs 1,800 professionals across the globe.
Mr. Dubery brings more than 30 years of broad, global healthcare
industry experience to iHC, including specialized expertise in
consumer and patient communication, relationship marketing, brand
strategy development and business modeling. As Managing Director
of inVentiv Health Communications/Europe (iHCE), he will oversee
the agency's advertising and public relations offerings.
"iHCE's goal is to form strategic partnerships with clients that
provide them with the necessary support to quickly maneuver in a
complex world," said Bob Chandler, President, inVentiv Health
Communications and Senior Vice President, Marketing and
Communications, inVentiv Health. "Mounting pressures to limit
healthcare costs across Europe are creating new communication
challenges for our clients. Michel's vast knowledge of the market
on a regional and global level will enhance our ability to help
clients navigate this complicated landscape and reach patients and
healthcare professionals in meaningful ways. We are delighted
that he is joining us."
With operational headquarters in London that serves as a hub for
all European offices, iHCE designs relevant, targeted and flexible
marketing solutions for the pharmaceutical industry and
organizations with a healthcare focus, helping clients excel in a
challenging and rapidly changing environment. As part of iHC,
iHCE operates under a "Done as One" business model that enables
the convergence of inVentiv's best-in-class advertising, public
relations, public policy, market access, medical communications,
media, creative, branding and digital services. The model allows
clients to bring their challenges to iHCE, which then assembles
the cross-disciplinary expertise, services and team needed to
deliver successful solutions.
Prior to joining iHCE, Dubery served as Managing Director, Europe
at Grey Healthcare Group. Under his leadership, the company's
European business margins improved considerably, with the London
office experiencing five-fold growth in less than four years.
From 2007 to 2009, Dubery served as Chief Strategy Officer, Europe
at DDB Health Group, where he redeveloped the agency's strategic
offerings, including new tools and workshops. In addition to his
role as Senior Planning Partner at WWAV Rapp Collins, Dubery has
held several marketing positions at leading healthcare companies,
including Novartis, Sandoz, Hoechst-Roussel and Astra
Pharmaceuticals. Earlier in his career, Dubery was a staff nurse
specializing in orthopedics at Burnley General Hospital in
Lancashire, England.
About inVentiv Health Communications/Europe
inVentiv Health Communications/Europe (iHCE) is the European arm
of inVentiv Health Communications, the inVentiv Health division
dedicated to delivering exceptional global, multichannel
communications for organizations focused on health and wellness.
iHCE provides relevant, targeted and flexible marketing solutions
for the pharmaceutical industry and organizations with a
healthcare focus, enabling clients to excel in a rapidly changing
environment. The company's unified offer brings together inVentiv
Health's advertising, public relations, public policy, market
access, medical education, marketing, digital and branding
services. iHCE is based in Switzerland with operational
headquarters in London.
About inVentiv Health
inVentiv Health, Inc. -- http://www.inventivhealth.com-- is a
global provider of clinical, commercial and consulting services to
companies. inVentiv clients include more than 550 pharmaceutical,
biotech and life sciences companies, as well as companies that now
see health as part of their mission. inVentiv Health, Inc. is
privately owned by inVentiv Group Holdings, Inc., an organization
sponsored by affiliates of Thomas H. Lee Partners, L.P., Liberty
Lane Partners and members of the inVentiv management team.
inventive employs 13,000 employees in 40 countries around the
world.
* * *
As reported by the Troubled Company Reporter on Nov. 28, 2012,
Moody's Investors Service downgraded the Corporate Family Rating
of inVentiv Health, Inc. to Caa1 from B3. Moody's also downgraded
the ratings on the senior secured credit facilities to B2 from B1.
There is no change to the Caa2 rating on InVentiv's unsecured
notes. Concurrently Moody's lowered inVentiv's liquidity rating
to SGL-4 from SGL-3, reflecting Moody's concerns about weakening
liquidity and the heightened risk of a covenant breach over the
next 12 months. Moody's said the outlook remains negative.
J & J DEVELOPMENT: Hires Curt Sittenauer as Accountant
------------------------------------------------------
J&J Developments, Inc., asks the U.S. Bankruptcy Court for
permission to employ Curt A. Sittenauer, CPA, PA as accountant.
The professional services rendered by Curt A. Sittenauer include,
primarily, the preparation of the 2012 corporate income tax
returns of the Debtor.
The hourly rate charged by Curt Sittenauer is $100 per hour.
The Debtor submits that the employment of Curt Sittenauer would be
in the best interest of the Debtor and its estate.
About J & J Developments
J & J Developments Inc. is a real estate holding company holding
title to real estate in more than 20 locations in Kansas. Many of
those locations contain convenience stores.
J & J Developments filed a Chapter 11 petition (Bankr. D.
Kan. Case No. 12-11881) in Wichita, Kansas, on July 12, 2012.
John E. Brown signed the petition as president and chief executive
officer. The Debtor is represented by Edward J. Nazar, Esq., at
Redmond & Nazar, LLP, in Wichita, Kansas. Judge Robert E. Nugent
presides over the case. According to the petition, the Debtor has
scheduled assets of $18.7 million and scheduled liabilities of
$34,933.
JEFFERSON COUNTY: Moody's Cuts Ratings on Revenue Warrants to Ca
----------------------------------------------------------------
Moody's Investors Service has downgraded to Ca from Caa3 the
rating on Jefferson County (AL) $3.14 billion in outstanding sewer
revenue warrants; the outlook remains negative. The warrants are
secured solely by revenues of the sewer system available after
paying the sewer system's operating and maintenance expenses. The
county has filed for bankruptcy protection and has been in default
on certain sewer warrants since 2008.
Ratings Rationale
The downgrade of Jefferson County Sewer's revenue rating to Ca
reflects an increase in expected loss on the warrants, due to the
Bank of New York Mellon's (long-term rating Aa1 stable) suspension
of all payments on the outstanding warrants, as well the likely
degree of insufficiency of sewer revenues relative to debt
service. The Ca category is consistent with a recovery rate on
defaulted bonds in the range of 35% to 65%. The negative outlook
reflects the possibility that the ultimate recovery rate could
fall below 35%. The Ca is an underlying rating and does not
incorporate payments from financial guarantors that have insured
portions of the debt.
Strengths
- Continuing revenue from sewer system sufficient to pay a
portion of debt service.
- Recent sewer rate increase.
Challenges
- Trustee's recent suspension of all payments on the bonds.
- Uncertain timing and extent of ultimate recovery to
bondholders.
Outlook
The negative outlook reflects the possibility that ultimate
recovery to bondholders will decline further.
What Could Make The Rating Go Up
Increase in net sewer revenue or other actions by involved parties
that would cause recovery to increase above 65%.
What Could Make The Rating Go Down
Decrease in net sewer revenue or other actions by involved parties
that would cause recovery to decrease below 35%.
The principal methodology used in this rating was Analytical
Framework For Water And Sewer System Ratings published in August
1999.
JRT LEASING: Case Summary & 2 Unsecured Creditors
-------------------------------------------------
Debtor: JRT Leasing, Inc.
11331 I-10 East
Baytown, TX 77523
Bankruptcy Case No.: 13-30887
Chapter 11 Petition Date: February 13, 2013
Court: United States Bankruptcy Court
Southern District of Texas (Houston)
Judge: Karen K. Brown
Debtor's Counsel: Richard L Fuqua, II, Esq.
FUQUA & ASSOCIATES, PC
5005 Riverway, Ste. 250
Houston, TX 77056
Tel: (713) 960-0277
E-mail: fuqua@fuquakeim.com
Scheduled Assets: $1,725,914
Scheduled Liabilities: $3,154,737
A copy of the Company's list of its two largest unsecured
creditors is available for free at
http://bankrupt.com/misc/txsb13-30887.pdf
The petition was signed by Jeffrey Pitsenbarger, president.
Affiliate that filed separate Chapter 11 petition:
Petition
Debtor Case No. Date
------ -------- ----
Transport, Inc. 12-36195 08/19/2012
K-V PHARMACEUTICAL: Has Until July 16 to Solicit Plan Approval
--------------------------------------------------------------
The Honorable Allan L. Gropper issued an order further extending
the Debtors' exclusive periods to file plan of reorganization to
June 17, 2013, and solicit acceptances of that Plan to July 16,
2013.
As reported by the TCR on Jan. 16, 2013, K-V Pharmaceutical filed
a Chapter 11 reorganization plan where first-lien lenders will
receive 82% of the stock along with a $50 million second-lien term
loan. A group of the lenders making a $85 million loan to finance
the plan will receive 15% of the new stock.
Delays Q4 Form 10-Q
The filing of the Company's Form 10-Q for the three months ended
Dec. 31, 2012, is being delayed due to extensive effort and
expense required to restructure the Company's financial
obligations under the protection of the Bankruptcy Court, meet the
reporting requirements of the Bankruptcy Court and the Bankruptcy
Code and to other parties to the bankruptcy and the realignment of
personnel and responsibilities due to significant staff
reductions. The Company requires additional time for management
to complete its procedures and financial analysis associated with
the Consolidated Financial Statements and applicable disclosures.
The Chapter 11 filings require the Company to make extensive
changes to the financial and other disclosures that would
otherwise be included in its Form 10-Q for the three months ended
Dec. 31, 2012. As a result, the Company was not able to complete
the Form 10-Q by the filing deadline of Feb. 11, 2013, without
unreasonable effort and expense.
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, 2012, 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 employed 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 tapped
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. Kristopher M. Hansen, Esq.,
Erez E. Gilad, Esq., and Matthew G. Garofalo, Esq., at Stroock &
Stroock & Lavan LLP, represent the Creditors Committee.
Weil, Gotshal & Manges LLP's Robert J. Lemons, Esq., and Lori R.
Fife, Esq., represent an Ad Hoc Senior Noteholders Group.
The Plan provides that in full satisfaction, settlement, release.
LACY STREET: Court Dismisses Chapter 11 Case
--------------------------------------------
The U.S. Bankruptcy Court has approved the motion filed by Lacy
Street Venture Ltd. to dismiss its chapter 11 case.
In its emergency motion seeking dismissal, the Debtor confirmed
that it has $10.3 million available in escrow to pay East West
Bank pursuant to a forbearance agreement executed by the parties.
EWB demanded it receive $10.3 million by no later than Dec. 14,
2012. Otherwise, it would refuse to give the Debtor a discount of
approximately $500,000 contemplated in the forbearance agreement.
The bank also threatened to seek relief from stay as soon as
possible.
According to the Debtor, the party advancing the funds would not
allow $10.3 million to be released to EWB on account of the
forbearance agreement if the Bankruptcy Case is not dismissed.
The third party financier threatened to withdraw the $10.3 million
from escrow if the Bankruptcy Case is not promptly dismissed.
The Court's order dismissing the case, entered in December,
provides that unless EWB's secured claim has been paid in full or
in accordance with a settlement agreement between the parties:
a. The Debtor is barred from filing a petition for a period of
365 days from the date of entry of the Dismissal Order;
b. No Bankruptcy Case may be filed by or against the Debtor for
a period of 365 days from the date of entry of the order,
and the Clerk of the Court shall not accept any involuntary
petition filed against the Debtor during this period;
The Dismissal Order also said the United States Trustee is granted
a judgment in the amount of $325 for quarterly fees due and unpaid
in the case. Quarterly fees continue to accrue until an order is
entered and are assessed interest pursuant to 31 U.S.C. Sec. 3717
if not paid timely.
About Lacy Street
Lacy Street Venture Ltd., LP, filed a Chapter 11 petition (Bankr.
C.D. Calif. Case No. 12-19804) on March 20, 2012, in Los Angeles,
estimating assets of at least $1 million and liabilities of at
least $10 million. During the course of the Chapter 11 case, the
Debtor entered into a forbearance agreement with East West Bank,
which requires the Debtor to pay $10.3 million in full
satisfaction of EWB's claim. The agreement was approved in July
2012, and the case was dismissed with a 365-day bar as to
commencing a subsequent bankruptcy.
Lacy Street Venture was subject to an involuntary Chapter 11
petition filed by alleged creditors on Nov. 6, 2012 (Bankr. S.D.
Calif. Case No. 12-47208). The creditors are represented by Gail
J. Higgins, Esq., at Higgins Law Firm, in Beverly Hills,
California. The creditors were Flex Electrical, Hilrock Corp, KR
Electric, DAS Heating, which all assert claims on account of
construction debt. On Dec. 11, 2012, the Court ruled that an
order for relief would be entered against the Debtor.
Lacy Street is represented by:
Blake Lindemann, Esq.
Attorney-At-Law
433 N. Camden Drive, 4th Floor
Beverly Hills, CA 90210
Telephone: (310) 279-5269
Facsimile: (310) 279-5240
E-mail: Blake@lawbl.com
LATISYS CORP: Moody's Rates New $200-Mil. Debt Facility 'B3'
------------------------------------------------------------
Moody's Investors Service has assigned a first-time B3 Corporate
Family Rating and B3-PD Probability of Default Rating to Latisys
Corp. Moody's has also assigned a B3 (LGD3, 48%) rating to the
company's proposed $200 million senior secured credit facility,
which consists of a $180 million senior secured term loan B due
2019 and $20 million senior secured revolver due 2018. The
proceeds from the new term loan will be used primarily to repay
existing debt. The ratings are contingent on review of final
documentation and no material change in the terms and conditions
of the debt as advised to Moody's. The outlook is stable.
Issuer: Latisys Corp.
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
US$180M Senior Secured Term Loan B, Assigned B3 (LGD3, 48%)
US$20M Senior Secured Revolving Credit Facility, Assigned B3
(LGD3, 48%)
Outlook, Stable
Ratings Rationale
Latisys's B3 rating reflects Moody's expectations of negative free
cash flow generation over the rating horizon as a result of
Latisys's high capital intensity and the risk of price competition
in the highly competitive markets in which the company operates.
The rating also reflects the company's small scale and high
leverage. These limiting factors are offset by Latisys's stable
base of contracted recurring revenues and the strong market demand
for colocation services.
The data center industry continues to attract investment due to
its growth profile and inherent operating leverage. The retail
colocation market remains extremely fragmented and characterized
by smaller, regional players. In this sense, Latisys's small scale
is less of a disadvantage than it would be in other, more mature
segments of the communications industry. The company's strong
operating record and decade of experience are important factors in
its ability to attract and retain customers. However, data center
operators that do not offer unique connectivity options or
advanced services are vulnerable to competition, despite their
current first-mover advantage. Moody's believes that Latisys's
facilities are located in key markets where the demand for data
center space is robust, but where competition is very intense. Any
material change in the current overall supply-demand balance could
impact future growth and cash flow.
The proposed $200 million senior secured credit facility is rated
B3 (LGD3, 48%), in line with the CFR. The rating reflects Moody's
expectations for an average recovery in a distress scenario
despite the all-bank debt structure, due to the lack of
restrictive covenants in the proposed credit agreement.
Moody's expects Latisys to have weak liquidity over the next
twelve months. Moody's expects the company to use the cash from
this refinancing as well as draw upon its revolver to fund capital
expenditures and interest payments. Moody's does not expect the
company to generate positive free cash flow over the rating
horizon, primarily due to capital investments to support growth.
The stable outlook reflects Moody's view that Latisys will
continue to produce strong revenue and EBITDA growth that will
allow the company to delever from approximately 6x at year end
2013 towards 5x by year end 2015 (both on a Moody's adjusted
basis).
Downward rating pressure could develop if liquidity is strained
further or Moody's adjusted leverage increases above 7x as a
result of business deterioration or debt-funded acquisitions.
While unlikely, Moody's could consider a ratings upgrade if the
company generated free cash flow equal to at least 5% of debt and
leverage were to trend towards 4x (both on a Moody's adjusted
basis).
The principal methodology used in rating Latisys was the Global
Communications Infrastructure 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.
Headquartered in Englewood, CO, Latisys Corp., provides data
center, managed hosting and cloud services. The company currently
operates eight data centers in Irvine, California; Englewood,
Colorado; Oak Brook, Illinois; and Ashburn, Virginia.
LATISYS CORP: S&P Assigns 'B' Corp. Credit Rating
-------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Denver-based Latisys Corp. The outlook is
stable.
S&P also assigned its 'B' issue-level rating to the company's
$200 million senior secured credit facilities. The proposed
facilities consist of a $180 million term loan due 2019 and a
$20 million revolving credit facility due 2018. The '3' recovery
rating on this debt indicates S&P's expectation for meaningful
(50% to 70%) recovery for lenders in the event of a payment
default. The company will use proceeds to refinance existing
indebtedness and pay transaction fees, with the remaining going to
the balance sheet.
"The ratings reflect our assessment of the company's 'highly
leveraged' financial profile and 'weak' business risk profile,"
said Standard & Poor's credit analyst Michael Weinstein. Pro
forma for the proposed refinancing transaction, S&P expects its
adjusted measure of leverage (including a debt adjustment of
approximately $35 million for the present value of operating
leases) for the company to be in the high-7x area at the end of
2012 under our base-case scenario. However, S&P expects healthy
revenue and EBITDA growth over the next couple of years, fueled
primarily by increased utilization of existing assets and a
secular trend toward outsourcing IT functions.
S&P's assessment of the company's business risk profile takes into
account the company's small scale with limited business diversity,
and exposure to economically sensitive midsized enterprise
business customers. In S&P's view, these risks more than offset
the company's multiyear contracts, its focus on less-competitive
markets, and a modest utilization rate that will allow for high-
margin incremental growth.
Latisys is a data center operator that provides colocation,
managed hosting, and cloud services primarily to medium and large-
sized enterprise customers with facilities in Ashburn, Va.;
Chicago; Denver; and Irvine, Calif.; giving the company a solid
national presence across each time zone in the U.S. Formed in
2007, the company has grown through a series of acquisitions and
organic growth. It now operates eight data centers in four
markets, with plans to expand sellable capacity in a few of its
facilities over the next year. The company's customer base is
relatively well diversified, with its largest customer accounting
for approximately 3% of total revenue, and the top 20 customers
generating around 31%. Customers are well-diversified by
industry, led by customers in the Internet and business services
verticals.
The stable rating outlook reflects S&P's expectation for roughly
20% organic EBITDA growth in 2013, largely due to favorable
supply-demand dynamics in core markets and increased IT
outsourcing, which will lead to a reduction in leverage to the
mid-6x area by the end of 2013.
S&P could lower ratings if an unfavorable shift in the supply-
demand dynamics in its core data center markets over the next
couple of years results in slower-than-expected EBITDA growth, and
leverage (excluding preferred stock) is sustained above 7x.
Alternatively, if the company issues additional debt for an
acquisition which does not have as favorable profit
characteristics as its core business, S&P could lower the rating
if prospects for debt reduction become more limited.
LIGHTSQUARED INC: Strikes Ch. 11 Deal, Keeps 4G Hopes Alive
-----------------------------------------------------------
Jonathan Randles of BankruptcyLaw360 reported that LightSquared
Inc. has reached an agreement with lenders to extend its exclusive
right to file a Chapter 11 plan until July, a deal that could give
it breathing room in ongoing talks with federal regulators over a
make-or-break plan to launch a terrestrial 4G network, it said
Wednesday.
The report related that the deal, which must receive court
approval, would extend for six months LightSquared's right to file
its own plan before other parties can begin floating their own.
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.
LCI HOLDING: Suzanne Koenig Appointed as Health Care Ombudsman
--------------------------------------------------------------
Roberta A. DeAngelis, U.S. Trustee for Region 3, asked the U.S.
Bankruptcy Court for the District of Delaware to approve the
appointment of:
Suzanne Koenig
SAK Management Services, LLC
One Northfield Plaza, Suite 480
Northfield, IL 60093
as patient care ombudsman in the Chapter 11 cases of LCI Holding
Company, Inc. et al., pursuant to Section 333 of the Bankruptcy
Code and the Court's order dated Jan. 23, 2013, directing the
appointment of a health care ombudsman.
To the best of the Trustee's knowledge, Ms. Koenig is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
As reported in the Troubled Company Reporter on Jan. 21, 2013, the
U.S. Trustee noted that under the Bankruptcy Assistance Consumer
Protection Act of 2005 added Section 333 to the Bankruptcy Code.
The provision requires the court to appoint a patient care
ombudsman within 30 days of a petition being commenced. The PCO
will represent the interests of the patients unless the court
finds the appointment is not necessary based upon the facts of the
case.
The U.S. Trustee explained that the Debtors' patients are entirely
dependent upon the Debtors for their care and sustenance. Any
sudden reduction in staffing or equipment could result in death or
serious injury to a patient. The appointment of a PCO is not
intended to be remedial, but preventive. Cost must be relegated
to second place when lives are at risk.
About LifeCare
LCI Holding Company, Inc., and its affiliates, doing business as
LifeCare Hospitals, operate eight "hospital within hospital"
facilities and 19 freestanding facilities in 10 states. The
hospitals have about 1,400 beds at facilities in Louisiana, Texas,
Pennsylvania, Ohio and Nevada. LifeCare is controlled by Carlyle
Group, which holds 93.4 percent of the stock following a
$570 million acquisition in August 2005.
LCI Holding Company, Inc., and its affiliates, including LifeCare
Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead
Case No. 12-13319) on Dec. 11, 2012, with plans to sell assets to
secured lenders.
Ken Ziman, Esq., and Felicia Perlman, Esq., at Skadden, Arps,
Slate Meagher & Flom LLP, serve as counsel to the Debtors.
Rothschild Inc. is the financial advisor. Huron Management
Services LLC will provide the Debtors an interim chief financial
officer and certain additional personnel; and (ii) designate
Stuart Walker as interim chief financial officer.
The steering committee of lenders is represented by attorneys at
Akin Gump Strauss Hauer & Feld LLP and Blank Rome LLP. The agent
under the prepetition and postpetition secured credit facility is
represented by Simpson Thacher & Barlett LLP.
The Debtors disclosed assets of $422 million and liabilities
totaling $575.9 million as of Sept. 30, 2012. As of the
bankruptcy filing, total long-term obligations were $482.2 million
consisting of, among other things, institutional loans and
unsecured subordinated loans. A total of $353.4 million is owing
under the prepetition secured credit facility. A total of
$128.4 million is owing on senior subordinated notes.
LEHMAN BROTHERS: Barclays Owes Ex-Director $20M, 2nd Circ. Hears
----------------------------------------------------------------
Richard Vanderford of BannkruptcyLaw360 reported that a former
Lehman Brothers Holdings Inc. managing director on Wednesday asked
the Second Circuit to resurrect a $19.6 million lawsuit over
severance that Barclays Capital Inc. allegedly owes him, arguing
Barclays assumed Lehman's employee contract obligations when it
bought part of the failing firm.
The report related that an employment agreement between onetime
director Maximilian Coreth and Lehman became Barclay's obligation
under the asset purchase agreement that governs Barclays' 2008
purchase of Lehman, a lawyer for Coreth told a panel of judges at
oral arguments.
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: To Sell Midtown Manhattan Building
---------------------------------------------------
Ilaina Jonas, writing for Reuters, reported that Lehman Brothers
Holdings Inc has agreed to sell 237 Park Avenue, a 21-story
Midtown Manhattan office building, to RXR Realty and Walton Street
Capital LLC, the winning bidders said on Tuesday. The purchase
price is $820 million, two sources familiar with deal said,
according to Reuters.
Reuters noted that the pending sale comes just months after Lehman
agreed to sell its biggest property holding, apartment owner
Archstone, to AvalonBay Communities Inc and Equity Residential for
$6.5 billion plus the assumption of debt. Lehman, which collapsed
in 2008, emerged from bankruptcy in March 2012 and is selling
assets to repay creditors.
Reuters related that Lehman originally was the lender to Broadway
Partners, which used the $1.23 billion loan in 2007 to buy the
building as part of a larger purchase of a portfolio of
properties. When Broadway defaulted on part of the mortgage,
Lehman was allowed by the bankruptcy court in 2010 to buy a junior
part of the mortgage for up to $255.4 million. Lehman paid roughly
85 percent of the face value of that and took control of the
property.
All told, after repaying the senior mortgage and factoring the
price paid for the junior slice, Lehman stands to net about $185
million, Reuters said. Lehman has also been recouping the payments
on the junior mortgage.
The 1.25-million square foot building is on Park Avenue between
45th and 46th streets, close to Grand Central Terminal, and is 80
percent occupied, RXR and Walton Street said in a statement,
Reuters cited. RXR, one of the biggest owners of New York City
property and Walton Street, a private real estate investment
company, plan to renovate the building. The plans, according to
Reuters, include new entrances, a redesigned atrium and new
elevator cabs. They also plan to install a new glass facade
enclosure on the two top floors, allowing for floor-to-ceiling
windows.
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: Asks Court to Approve Deal With SprintCom
-----------------------------------------------------------
LightSquared Inc. asked the U.S. Bankruptcy Court for the Southern
District of New York to approve an agreement, which calls for the
settlement of claims with SprintCom Inc. and Sprint Nextel.
Sprint Nextel asserts a claim in the sum of $11,757 for wireless
telecommunications services it provided to LightSquared under a
2011 master services agreement. Meanwhile, SprintCom has claims
against LightSquared and LightSquared LP, which stemmed from the
termination of the MSA.
Under the terms of the settlement, both sides agreed that the
appropriate allocation of the remaining advance payment under the
MSA requires a payment of $1,011,371 to LightSquared LP.
Meanwhile, SprintCom will retain an amount equal to $2,726,233 in
return for the withdrawal of the claims.
The settlement agreement is available without charge at
http://is.gd/isPth4
A court hearing is scheduled for Feb. 27. Objections are due by
Feb. 20.
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.
LIGHTSQUARED INC: Lenders Agree to Extend Exclusivity Thru May 31
-----------------------------------------------------------------
Joseph Checkler, writing for Dow Jones Newswires, reports that
Judge Shelley C. Chapman of U.S. Bankruptcy Court in Manhattan
approved a settlement that gives LightSquared until May 31 to file
a plan of reorganization. The deal LightSquared struck with
lenders was filed with the bankruptcy court Wednesday night, and
calls for LightSquared to only propose a reorganization plan that
the lender group supports or that pays the group in full, in cash,
along with other creditors. The lender group, owed about $1.1
billion, can file its own plan if LightSquared doesn't consult
with it or if the company breaches the terms of an agreement that
allows it to use cash secured by the lenders' loans.
Dow Jones notes the settlement includes two confidential
provisions that LightSquared would only say are related to Phil
Falcone's Harbinger Capital Partners, which controls
LightSquared's equity and has battled the lenders throughout the
Chapter 11 case. The lender group is seeking Judge Chapman's
approval to go after Mr. Falcone and Harbinger, saying a loan made
to LightSquared before it filed for Chapter 11 was actually an
equity investment disguised as a loan. The judge has yet to rule
on that matter. The agreement also contains wording that would
allow Harbinger to access more money from its bankruptcy lenders,
a group represented by a unit of U.S. Bancorp.
LIN TV: Moody's Reviews 'B2' CFR for Possible Upgrade
-----------------------------------------------------
Moody's Investors Service placed the credit ratings of LIN
Television Corporation on review for upgrade following the
company's announcement that it entered into an agreement with
Comcast Corporation and General Electric Company that transferred
ownership of LIN's 20% interest in a joint venture that operates
two NBC affiliates in Dallas and San Diego (the "NBC JV") to
Comcast and eliminated LIN's guarantee of the $815.5 million NBC
JV note. The guarantee of the JV note has been an overhang on
LIN's credit ratings and elimination of the guarantee is credit
positive.
Placed on review for upgrade:
Issuer: LIN Television Corporation
Corporate Family Rating: Placed on Review for Upgrade,
currently B2
Probability of Default Rating: Placed on Review for Upgrade,
currently B2-PD
$75 million 1st lien sr secured revolver due 2017 (roughly $26
million outstanding): Placed on Review for Upgrade, currently
Ba2, LGD2 -- 18%
1st lien sr secured term loan A due 2017 ($124.6 million
outstanding): Placed on Review for Upgrade, currently Ba2, LGD2
-- 18%
1st lien sr secured term loan B due 2018 (roughly $315 million
outstanding, increased from $255 million): Placed on Review for
Upgrade, currently Ba2, LGD2 -- 18%
$200 million of 8.375% sr notes due 2018: Placed on Review for
Upgrade, currently B3, LGD5 -- 75%
$290 million of 6.375% sr notes due 2021: Placed on Review for
Upgrade, currently B3, LGD5 -- 75%
Affirmed:
Issuer: LIN Television Corporation
Speculative Grade Liquidity (SGL) Rating: Affirmed SGL - 2
Outlook Actions:
Issuer: LIN Television Corporation
Outlook, Placed on review
Ratings Rationale
LIN announced it recently entered into an agreement with Comcast
and GE that transferred LIN's 20% interests in the NBC JV and
eliminated its guarantee of the JV's note totaling $815.5 million.
As part of the transaction, LIN's subsidiary, LIN Television of
Texas, L.P., which held the 20% interest in the JV, funded a $100
million capital contribution to the JV and reduced the amount due
under the note held by General Electric Capital Corporation to
$715.5 million. LIN TV Corp., a parent of LIN, was released from
its guarantee upon LIN TX selling its JV interest to Comcast for
nominal consideration. The $100 million contribution along with
related fees were funded by roughly $21 million of balance sheet
cash, $60 million of incremental term loan B advances, and $26
million of revolver borrowings. Comcast purchased the JV note for
$602 million with the remaining $113.5 million of the note balance
being written off by GECC.
The release of LIN's guarantee is expected to result in a taxable
gain of $715.5 million ($815.5 million note less $100 million
capital contribution) which the company expects to offset with
existing NOL's plus recognized losses. Simultaneously with the
closing of the JV transaction, LIN TV Corp. entered into an
agreement to merge LIN TV Corp. into a newly created LLC
subsidiary whereby the LLC will be the surviving entity. As a
result of the merger and use of NOL's, management expects tax
liabilities to be minimal and anticipates finalizing the
transactions in four to six months upon completion of the SEC's
review.
"Moody's review of ratings will focus on LIN's credit metrics
post-elimination of the NBC JV guarantee, the absence of the need
to fund additional shortfall loans to support the JV, the increase
in debt balances, and the potential for LIN becoming a full tax
payer. The review will also consider Moody's expectations for the
operating performance of LIN's television stations, the potential
for additional acquisitions, and financial policies given current
42% economic ownership and voting control by a financial sponsor,"
said Carl Salas, Moody's Vice President and Senior Analyst. For
the nine months ended September 30, 2012, LIN recorded 24% growth
in net revenues driven by significant increases in political
advertising as well local revenues. Moody's expects a marked
increase in revenues for the remainder of FY2012 given high demand
for political advertising at LIN's stations as well as for those
of recently acquired New Vision Television.
The principal methodology used in rating LIN Television was the
Global Broadcast and Advertising Related Industries 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.
LIN Television Corporation is headquartered in Providence, RI, and
owns or operates 43 television stations plus 7 digital channels in
23 mid-sized U.S. markets ranked #22 to #189 reaching 10.5% of
U.S. television households. In addition, LIN TV Corp., the
company's parent, owns 20% of KXAS-TV in Dallas, TX and KNSD-TV in
San Diego, CA, through a joint venture with NBCUniversal Media,
LLC ("NBC JV"). HM Capital Partners LLC ("HMC") holds an
approximate 42% economic interest in LIN and approximately 70% of
voting control is held by HMC and Mr. Royal Carson III, a LIN
director and advisor for HMC. The company generated $469 million
of net revenues for LTM September 2012 (excludes results from New
Vision Television which was acquired in October 2012).
LIN TV: S&P Raises Corp. Credit Rating to 'B+'; Outlook Positive
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on
Providence, R.I.-based U.S. TV broadcaster LIN TV Corp., including
the corporate credit rating to 'B+' from 'B'. The outlook is
positive.
The rating action follows the company's announcement that it
executed a transaction with Comcast Corp. and General Electric Co.
to unwind its NBC joint venture. As part of the transaction, the
company will make a $100 million capital contribution to the joint
venture to be released from its guarantee obligation of the joint
venture's outstanding debt.
"This action alleviates, in our opinion, a significant financial
risk for the company," said Standard & Poor's credit analyst
Naveen Sarma.
Historically, S&P consolidated a portion of the joint venture debt
in determining LIN's credit measures. S&P added $296 million in
incremental debt, which is the present value of the guaranteed
debt ($815.5 million senior unsecured note due 2023), less an
assumption of joint venture station sale proceeds based on a
conservative 6.5x multiple (relating to a hypothetical joint
venture distressed scenario) of trailing eight-quarters' joint
venture EBITDA. As a result of this transaction, S&P estimates
that adjusted leverage, as of the end of 2012, will decline from
about 7.7x debt-to-trailing-eight-quarters EBITDA to about 6x.
S&P's rating on LIN reflects its assessment of the company's
business risk profile as "fair" and its financial risk profile as
"aggressive," based on its criteria. S&P views LIN's business
risk profile as fair based on its sizable portfolio of TV stations
in midsize markets, strong position in local news, and an EBITDA
margin comparable to its peers. S&P assess LIN's financial risk
profile as aggressive as S&P expects leverage, on a trailing-
eight-quarters EBITDA basis, to decline to the mid-5x area by the
end of 2013 and to be below 5x in 2014. S&P estimates current
leverage, on a trailing-eight-quarters basis, to be about 7.7x.
LIN, a midsize TV broadcaster, operates or services 50 broadcast
network affiliate stations in 23 markets, reaching 10.6% of U.S.
TV households. Its recent acquisition of 18 New Vision TV
stations confers increased geographic diversity, particularly in
the western U.S. markets. LIN's station affiliations are
diversified across the four major U.S broadcast networks,
shielding it from the risk of individual network underperformance.
Most of the company's stations are ranked first or second in local
news--an important competitive edge for building loyal local
viewing and attractive political advertising. Additionally, its
duopoly positions in a number of its markets provide cost savings,
enhancing cash flow. LIN's EBITDA margin of about 30% is average
among its broadcasting peers and significantly lags its larger,
more efficient competitors, whose EBITDA margins are in the high-
30% area.
LINDSAY GENERAL: Section 341(a) Meeting Scheduled for March 20
--------------------------------------------------------------
A meeting of creditors in the bankruptcy case of Lindsay General
Insurance Agency, LLC, will be held on March 20, 2013, at 1:00
p.m. at Hearing Room 367, Atlanta.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Duluth, Georgia-based Lindsay General Insurance Agency, LLC, filed
a bare-bones Chapter 11 bankruptcy petition (Bankr. N.D. Ga. Case
No. 13-52732) in Atlanta on Feb. 7, 2013. The Debtor estimated
assets and debts of $10 million to $50 million. The Debtor is
represented by Evan M. Altman, Esq., in Atlanta.
LONESTAR INTERMEDIATE: S&P Affirms 'B+' Counterparty Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it has affirmed its
'B+' counterparty credit ratings on Lonestar Intermediate Super
Holdings LLC (Lonestar), itself a wholly owned subsidiary of
NEWAsurion Corp., and Asurion LLC. The outlook is stable. At the
same time, S&P assigned its 'B+' issue rating to Asurion's
proposed $2.6 billion incremental tranche B-1 senior secured term
loan due May 2019. The company expects to use $1.9 billion of
this to repay a portion of its exiting first-lien loan and
$700 million to prepay its outstanding second-lien loan. The
recovery rating is '3', indicating S&P's expectation for a
meaningful (50%-70%) recovery for lenders in the event of a
payment default.
"We also revised our recovery rating on Asurion's existing senior
first-lien secured credit facilities to '3' from '2'. As a
result, we lowered our ratings on the company's first-lien loan to
'B+' from 'BB-' in accordance with our notching criteria for a
recovery rating of '3'. We also affirmed our 'B-' senior
unsecured debt rating on Lonestar's senior unsecured term loan
facilities. The recovery rating on these facilities remains '6',
indicating our expectation of a negligible (0%-10%) recovery for
lenders in the event of a payment default," S&P said.
"The rating affirmations on Lonestar and Asurion reflect the fact
that, upon completion the proposed transaction, their credit
profile will not materially change," said Standard & Poor's credit
analyst Polina Chernyak. "The rating action on Asurion's first-
lien senior credit facility is based on our recovery rating of
'3', reflecting the increased in the first-lien facilities
following the proposed $700 million incremental term loan. We
expect the group overall leverage position expected to remain
unchanged following the proposed transaction."
The 'B+' counterparty credit ratings on Lonestar and Asurion
reflect NEWAsurion's significant leverage and fluctuating credit
metrics featuring a highly leveraged balance sheet that is, in
addition to the company's financial management strategy, a rating
weakness. NEWAsurion's dependence on new subscribers and contract
renewals could challenge the sustainability of its leading
competitive position. NEWAsurion's operating performance, which
is a key strength to the rating, its leading competitive position,
and cash-generating capabilities (as measured by revenue and
EBITDA), which support the company's deleveraging capabilities
despite difficult market conditions, offset these weaknesses.
NEWAsurion also has a well-integrated and effective business model
and an experienced and knowledgeable management team with a long
and effective track record in the warranty and handset protection
industry.
The stable outlook reflects S&P's view that the company will
continue to generate solid cash flow and be able to service its
debt adequately. S&P believes the company's cash-flow generating
ability and EBITDA growth result largely from its successful
international expansion, strong attachment rates, solid
competitive position in the handset protection and extended
service warranty market, and the value it offers to its clients
and customers, and that these factors will enable the company to
sustain favorable operating performance despite the weak economy.
"The stable outlook also reflects our expectation that extended
service warranty and handset protection coverage will remain a
growing business for parent NEWAsurion," Ms. Chernyak continued.
"We believe NEWAsurion's solid client relationships will enable
the company to generate cash flow that supports the current rating
over the next 12 months. We believe the company will continue to
expand its products and services successfully around the world and
to gain additional market share through market penetration. We
expect projected cash flows to support the rating and allow the
company to maintain adequate debt leverage for the current rating.
The outlook also incorporates our belief that NEWAsurion's credit
metrics could be pressured by the company's financial management
strategy, which we consider to be a weakness. Therefore, it's
unlikely that we would raise the rating in the next 12 months
because of financial profile constraints. We could take a
negative rating action if the company cannot maintain its current
operating performance, or debt leverage and EBITDA coverage that
are appropriate for the rating level."
Note: NEWAsurion is a private company and doesn't publicly release
its financial results.
MARINA BIOTECH: Extends Maturity of Secured Notes to April 30
-------------------------------------------------------------
Marina Biotech, Inc., entered into a Fifth Amendment to the Note
and Warrant Purchase Agreement originally dated as of Feb. 10,
2012, and the 15% secured promissory notes that the Company
issued.
The Company and the purchasers agreed that if the Company, at any
time prior to April 30, 2013, effects any merger or consolidation
of the Company whereby the holders of the issued and outstanding
shares of the common stock of the Company immediately prior to the
consummation of that transaction hold less than 50% of the issued
and outstanding shares of the voting securities of the surviving
corporation immediately following the consummation of that
transaction, the Companies will have fully satisfied their
obligations to repay the entire unpaid principal balance under the
Notes and all accrued and unpaid interest thereon through the
issuance to the Purchasers of an aggregate number of shares of
Common Stock calculated by converting the then total outstanding
principal and interest under the Notes at a value of $0.28 per
share of Common Stock.
As further consideration for the Fifth Amendment, the Company
agreed to issue to the Purchasers, warrants to purchase up to an
aggregate of 1,000,000 shares of common stock. The Warrants will
have an initial exercise price of $0.28 per share, which is
subject to adjustment, will be exercisable for a period of five
years beginning six months and one day following the issuance of
the Warrants, and otherwise have substantially the same terms and
conditions as the warrants that were issued to the Purchasers upon
the closing of the Note Purchase Agreement.
Immediately upon the issuance to the Purchasers of all of the
consideration described in the Fifth Amendment, the Notes will be
deemed cancelled and of no further force and effect, and any
obligations of the Companies to the Purchasers pursuant to the
Notes will be deemed satisfied in full.
In addition, the Companies agreed in the Fifth Amendment that at
any time prior to the automatic conversion of the Notes, the
Purchasers will have the right, on notice to the Companies, to
convert the Notes to an aggregate number of shares of Common Stock
calculated by converting the then total outstanding principal and
interest under the Notes by the Conversion Price in effect at that
time.
Pursuant to the Fifth Amendment, the Purchasers agreed to extend
the maturity date of the Notes from Dec. 31, 2012, to April 30,
2013.
A copy of the Fifth Amendment is available for free at:
http://is.gd/J12f3a
About Marina Biotech
Marina Biotech, Inc., headquartered in Bothell, Washington, is a
biotechnology company focused on the discovery, development and
commercialization of nucleic acid-based therapies utilizing gene
silencing approaches such as RNA interference ("RNAi") and
blocking messenger RNA ("mRNA") translation. The Company's goal
is to improve human health through the development, either through
its own efforts or those of its collaboration partners and
licensees, of these nucleic acid-based therapeutics as well as the
delivery technologies that together provide superior treatment
options for patients. The Company has multiple proprietary
technologies integrated into a broad nucleic acid-based drug
discovery platform, with the capability to deliver novel nucleic
acid-based therapeutics via systemic, local and oral
administration to target a wide range of human diseases, based on
the unique characteristics of the cells and organs involved in
each disease.
On June 1, 2012, the Company announced that, due to its financial
condition, it had implemented a furlough of approximately 90% of
its employees and ceased substantially all day-to-day operations.
Since that time substantially all of the furloughed employees have
been terminated. As of Sept. 30, 2012, the Company had
approximately 11 remaining employees, including all of its
executive officers, all of whom are either furloughed or working
on reduced salary. As a result, since June 1, 2012, its internal
research and development efforts have been minimal, pending
receipt of adequate funding.
KPMG LLP, in Seattle, expressed substantial doubt about Marina
Biotech's ability to continue as a going concern following the
2011 financial results. The independent auditors noted that the
Company has ceased substantially all day-to-day operations,
including most research and development activities, has incurred
recurring losses, has a working capital and accumulated deficit
and has had recurring negative cash flows from operations.
The Company reported a net loss of $29.42 million in 2011,
compared with a net loss of $27.75 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $8.01
million in total assets, $10.36 million in total liabilities and a
$2.35 million total stockholders' deficit.
"The market value and the volatility of our stock price, as well
as general market conditions and our current financial condition,
could make it difficult for us to complete a financing or
collaboration transaction on favorable terms, or at all. Any
financing we obtain may further dilute the ownership interest of
our current stockholders, which dilution could be substantial, or
provide new stockholders with superior rights than those possessed
by our current stockholders. If we are unable to obtain
additional capital when required, and in the amounts required, we
may be forced to modify, delay or abandon some or all of our
programs, or to discontinue operations altogether. Additionally,
any collaboration may require us to relinquish rights to our
technologies. These factors, among others, raise substantial
doubt about our ability to continue as a going concern."
"Although we have ceased substantially all of our day-to-day
operations and terminated substantially all of our employees, our
cash and other sources of liquidity may only be sufficient to fund
our limited operations until the end of 2012. We will require
substantial additional funding in the immediate future to continue
our operations. If additional capital is not available, we may
have to curtail or cease operations, or take other actions that
could adversely impact our shareholders," the Company said in its
quarterly report for the period ended Sept. 30, 2012.
MARKETING WORLDWIDE: Delays Form 10-Q for Dec. 31 Quarter
---------------------------------------------------------
Marketing Worldwide Corporation notified the U.S. Securities and
Exchange Commission it will be delayed in filing its quarterly
report on Form 10-Q for the period ended Dec. 31, 2012, because it
was awaiting information from outside third parties to complete
the Form 10-Q.
About Marketing Worldwide
Based in Howell, Michigan, Marketing Worldwide Corporation
operates through the holding company structure and conducts its
business operations through its wholly owned subsidiaries
Colortek, Inc., and Marketing Worldwide, LLC.
Marketing Worldwide, LLC, is a complete design, manufacturer and
fulfillment business providing accessories for the customization
of vehicles and delivers its products to large global automobile
manufacturers and certain Vehicle Processing Centers primarily in
North America. MWW operates in a 23,000 square foot leased
building in Howell Michigan.
Colortek, Inc., is a Class A Original Equipment painting facility
and operates in a 46,000 square foot owned building in Baroda,
which is in South Western Michigan. MWW invested approximately
$2 million into this paint facility and expects the majority of
its future growth to come from this business.
Marketing Worldwide incurred a net loss of $11.11 million for the
year ended Sept. 30, 2012, compared with a net loss of $2.27
million during the prior year.
Marketing Worldwide's balance sheet at Sept. 30, 2012, showed
$1.19 million in total assets, $16.24 million in total liabilities
and a $15.05 million total deficiency.
RBSM, LLP, in New York, issued a "going concern" qualification on
the consolidated financial statements for the year ended Sept. 30,
2012. The independent auditors noted that the Company has
generated negative cash flows from operating activities,
experienced recurring net operating losses, is in default of
certain loan covenants, and is dependent on securing additional
equity and debt financing to support its business efforts which
factors raise substantial doubt about the Company's ability to
continue as a going concern.
MAXXAM INC: Dimensional No Longer Shareholder as of Dec. 31
-----------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it does not beneficially own any shares of
common stock of Maxxam Inc. Dimensional Fund previously reported
beneficial ownership of 1,140 common shares or a 6.33% equity
stake as of Dec. 31, 2011. A copy of the amended filing is
available for free at http://is.gd/QM06wR
About MAXXAM Inc.
Houston, Texas-based MAXXAM Inc. (NYSE Amex: MXM) conducts the
substantial portion of its operations through its subsidiaries,
which operate in two industries -- Residential and commercial real
estate investment and development (primarily in second home or
seasonal home communities), through MAXXAM Property Company and
other wholly owned subsidiaries of the Company, as well as joint
ventures; and racing operations, through Sam Houston Race Park,
Ltd. a Texas limited partnership wholly owned by the Company,
which owns and operates a Texas Class 1 pari-mutuel horse racing
facility in the greater Houston metropolitan area, and a pari-
mutuel greyhound racing facility in Harlingen, Texas.
At Sept. 30, 2009, MAXXAM had $361.6 million in total assets,
$778.0 million in total liabilities, and a $416.4 million
stockholders' deficit.
Going Concern Doubt
As reported by the Troubled Company Reporter on April 7, 2009,
Grant Thornton LLP said the uncertainty surrounding the real
estate industry and the ultimate outcome of proceedings involving
MAXXAM Inc.'s former unit, Pacific Lumber Company, and their
effect on the Company, as well as the Company's operating losses
raise substantial doubt about the ability of the Company to
continue as a going concern.
MENDOCINO COAST HEALTH: Cuts 20 Employees to Save $1.5MM Per Year
-----------------------------------------------------------------
Cathy Bussewitz, writing for The Press Democrat, reports that
Mendocino Coast District Hospital has laid off 20 employees in an
effort to save $1.5 million per year in wages and benefits. The
cuts, effective Feb. 12, were based on seniority, and affected
employees will receive severance pay.
The report says the layoffs followed losses of nearly $1.9 million
during the first six months of the hospital's fiscal year.
"The reductions will not compromise patient quality and/or
safety," hospital CEO/CFO Wayne Allen said in a statement,
according to the report. "I do not expect additional cuts in the
foreseeable future."
About Mendocino Coast Health Care District
The Mendocino Coast Health Care District operates a 25-bed acute-
care hospital in Fort Bragg, California. It 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. It filed for bankruptcy when it failed to
reach agreement with the union in mediation.
Andrea T. Porter, Esq., at Friedman and Springwater LLP, serves as
counsel to the Chapter 9 Debtor. The petition showed that assets
and debt both exceed $10 million.
MERENDON INC: Trustee Prevails Over Leaders of $300M Ponzi Scam
---------------------------------------------------------------
Carolina Bolado of BankruptcyLaw360 reported that the Chapter 7
trustee of Merendon Mining Inc. on Wednesday was granted judgment
against the architects of an alleged $300 million Ponzi scheme run
through the company, allowing her to go after the company's Latin
American assets.
The report related that when the defendants, Milowe Brost and Gary
Allen Sorenson, failed to show up to a hearing Wednesday, U.S.
Bankruptcy Judge A. Jay Cristol granted trustee Marcia T. Dunn's
motion to enter judgment against them and several of their Latin
American mining assets in an adversary proceeding she had filed.
MF GLOBAL: Customers Oppose New Injunction Provision
----------------------------------------------------
A group of commodities customers led by Sapere Wealth Management
LLC is blocking efforts by MF Global Holdings Ltd. to win court
approval of its proposed disclosure statement.
The group's lawyer, John Witmeyer III, Esq., at Ford Marrin
Esposito Witmeyer & Gleser LLP, in New York, said the disclosure
statement for MF Global's liquidation plan contains a new
provision that "would enjoin actions against third party non-
debtors" upon its approval.
"The provision itself is overbroad on its face," the lawyer said,
arguing it protects officers, directors and managers of MF Global
in their capacities prior to the bankruptcy filing.
"Any injunction provision should only be for post-petition
activities related to the reorganization of debtor," he said.
Mr. Witmeyer also said the disclosure statement contains no
information about how MF Global's bankruptcy case "is rare or
unusual" so as to warrant a broad injunction provision.
Earlier, MF Global revised the disclosure statement and the
liquidation plan to take into account demands from creditor
JPMorgan Chase Bank N.A. and other parties.
Judge Honorable Martin Glenn of the U.S. Bankruptcy Court for the
Southern District of New York was slated to hold a hearing Feb. 14
to consider approval of the disclosure statement.
Separately, JPMorgan, which arranged a $1.2 billion loan for MF
Global, requested that a case management or scheduling conference
be held in connection with today's hearing.
Chapter 11 Plan
Louis Freeh, the trustee for MF Global Holdings Ltd., and the
creditors filed a jointly proposed Chapter 11 plan on Feb. 2.
The joint disclosure statement predicts a recovery of 13.4% to
38.9% for holders of $1.16 billion in unsecured claims against the
parent holding company. Bank lenders would have the same recovery
on their $1.15 billion claim against the holding company. The
predicted recovery is 14.2% to 33.6% for holders of $1.9 billion
in unsecured claims against MF Global Finance USA Inc., one of the
companies under the umbrella of the holding company trustee. Bank
lenders are scheduled for the same percentage recovery on their
$1.15 billion claim.
The plan deals only with creditors of the holding company, not
customers and creditors of the brokerage.
The plan takes into account the settlement announced in December
among the MF Global parent, the brokerage subsidiary, and the U.K.
affiliate. The settlement with the U.K. affiliate was approved
last week in bankruptcy court. The MF Global Inc. brokerage is
under control of James Giddens, a separate trustee appointed under
the Securities Investor Protection Act.
About MF Global
New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/--
is one of the world's leading brokers of commodities and listed
derivatives. MF Global provides access to more than 70 exchanges
around the world. The firm is 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. It is easily the largest bankruptcy filing so far
this year.
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.
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.
U.S. regulators are investigating about $633 million missing from
MF Global customer accounts, a person briefed on the matter said
Nov. 3, according to Bloomberg News.
MF GLOBAL: JPM Seeks Approval to Prosecute Claims vs. Finance
-------------------------------------------------------------
JPMorgan Chase Bank N.A. filed with the Bankruptcy Court a motion
seeking approval to prosecute claims against MF Global Holdings
Ltd. on behalf of its finance unit.
The bank arranged for a $1.2 billion liquidity facility for MF
Global, of which about $928 million was transferred to MF Global
Finance in the days leading up to the holdings company's
bankruptcy in October 2011.
The transfer resulted in the finance unit owing money to both the
holding company and the lenders, including JPMorgan.
JPMorgan said the finance unit's claims against MF Global would
"avoid, subordinate or disallow" at least $928 million of the
holding company's claim against the finance unit.
The claims, if successfully pursued, would materially increase the
recovery for the finance unit's creditors, the bank said.
About 30% of the finance unit's claims pool ($928 million of about
$3.07 billion) is caused by the double liability. Eliminating
this double liability would increase the finance unit's recoveries
by an additional 6.1%, and possibly as much as 26.3% or more,
according to court filings.
JPMorgan said it is the appropriate party to pursue the claims on
behalf of the finance unit since it is not burdened by a "conflict
of interest" unlike the trustee for MF Global and the committee of
unsecured creditors.
About MF Global
New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/--
is one of the world's leading brokers of commodities and listed
derivatives. MF Global provides access to more than 70 exchanges
around the world. The firm is 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. It is easily the largest bankruptcy filing so far
this year.
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.
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.
U.S. regulators are investigating about $633 million missing from
MF Global customer accounts, a person briefed on the matter said
Nov. 3, according to Bloomberg News.
MIRION TECHNOLOGIES: Rising Debt Cues Moody's to Lower CFR to B2
----------------------------------------------------------------
Moody's Investors Service downgraded Mirion Technologies, Inc.'s
Corporate Family Rating and Probability of Default Rating to B2
and B3-PD, respectively, from B1 and B2-PD. The rating agency also
lowered the rating of the company's secured credit facility to B2
from B1.
Moody's concurrently assigned a B2 rating to the $80 million
upsizing of the credit facility. The proceeds from the upsizing
will be used to repurchase approximately $77 million of
convertible preferred stock held by Mirion's sponsor, American
Capital. Moody's views the transaction as having the
characteristics of a distribution to shareholders. The rating
outlook is stable.
Ratings Rationale
The downgrade of Mirion's CFR to B2 and its PDR to B3-PD reflects
the increased leverage caused by the $80 million issuance to just
under 5 times, per Moody's adjustments. The rating also reflects
the company's small revenue base, seasonality, niche product
focus, and high levels of intangibles. Moody's views the repayment
of the preferred shares with the proceeds of newly-issued debt as
a more aggressive financial policy that will increase the
company's cash pay interest burden. The rating benefits from the
company's high margins and recurring revenues as well as the
company's diversified products and customer base. The rating also
considers Mirion's strong market position within a highly
regulated nuclear industry with large barriers to entry.
Downgrades:
Issuer: Mirion Technologies, Inc.
Probability of Default Rating, Downgraded to B3-PD from B2-PD
Corporate Family Rating, Downgraded to B2 from B1
Senior Secured Bank Credit Facility Downgraded to B2 LGD3, 33%
from B1, LGD3, 32%
Assigned:
$80 Term Loan - tack-on rated B2, LGD3, 33%
The rating outlook is stable.
The B2 rating on the company's credit facility reflects its first
lien secured position in the capital structure. The facility is
guaranteed by the company's wholly owned domestic subsidiaries.
The ratings could be downgraded if leverage exceeds 5.5 times and
was anticipated to deteriorate further, or if EBITDA coverage of
interest was expected to fall below 2 times and expected to
deteriorate further, or if Mirion's recurring revenues as a
percent of total revenues were to decrease meaningfully. A more
aggressive acquisition strategy that results in greater leverage
could also result in a ratings downgrade.
A ratings or positive outlook is unlikely until leverage falls
below 3.5 times and free cash flow to debt was 8% or higher on a
sustainable basis.
The company's stable outlook reflects its significant recurring
revenue base with good visibility, positive end market outlook and
defensible industry position. Additionally, its stable outlook
incorporates Moody's view that Mirion's credit metrics are
unlikely to improve sufficiently over the next 12 months to
warrant a different rating but should strengthen enough to better
position the company in its current rating category.
The principal methodology used in this rating was the Global
Manufacturing 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.
Mirion is a global provider of radiation detection, measurement,
analysis and monitoring products and services to the nuclear,
defense, and medical end markets. The company's products and
services include: dosimeters; contamination & clearance monitors;
detection & identification instruments; radiation monitoring
systems; electrical penetrations; instrumentation & control
equipment and systems; dosimetry services; imaging systems; and
related accessories, software and services. Moody's anticipates
2012 calendar year total revenue of approximately $270 million.
MIRION TECHNOLOGIES: S&P Affirms 'B' Corp. Credit Rating
--------------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed its
ratings on San Ramon, Ca.-based Mirion Technologies Inc.,
including the 'B' corporate credit rating. The outlook is
stable.
At the same time, S&P affirmed its 'B' issue rating on the
company's senior secured credit facilities, which comprise a
$25 million revolver and a $280 million first-lien term loan
(including the proposed $80 million add-on). The recovery rating
on this debt is '3', indicating S&P's expectation that lenders
would receive meaningful (50% to 70%) recovery in a default
scenario.
S&P's ratings on Mirion reflect the company's "highly leveraged"
financial risk profile and "weak" business risk profile.
"We expect mid-to-high single-digit revenue growth to continue in
the next 12 months because of predictable replacement cycles of
Mirion's installed base, coupled with increasing new nuclear power
plant construction in Asia and Eastern Europe," said Standard &
Poor's credit analyst Svetlana Olsha. S&P expects Mirion to
maintain good EBITDA margins of about 20%, reflecting a relatively
stable operating environment.
Mirion provides radiation detection and monitoring products and
services globally to nuclear, defense, medical, and industrial end
markets. The company's weak business profile reflects its limited
product diversity and participation in fragmented and competitive
niche markets, and S&P don't expect this to change meaningfully in
the next couple of years. Partly offsetting these factors are the
company's leading positions as the No. 1 player in many of the
markets it serves, good geographic diversity with about two-thirds
of its revenue coming from outside the U.S., and meaningful
recurring revenue, which should help provide stability to
operating performance. In fiscal 2012, only about 20% of the
company's total revenue came from new plant construction, while
about 80% came from recurring revenues, including retrofits and
upgrades. S&P expects recurring sales to account for a majority
of revenues going forward. S&P's assessment is that the company's
management and governance is "fair."
S&P considers Mirion's financial risk profile to be highly
leveraged. S&P gives no formal equity credit to the convertible
preferred stock that the private equity sponsor owns under its
hybrid criteria for financial ratio analysis. S&P expects pro
forma lease-adjusted debt to EBITDA excluding preferred stock to
be about 4.8x as of Dec. 31, 2012, but about 6.7x when including
the convertible preferred stock. However, the absence of a
maturity date on the preferred stock, its deep subordination, and
the absence of any cash dividends provide the company with
financial flexibility. The company's credit metrics should
improve slightly in 2013, reflecting S&P's expectation of modest
EBITDA growth and some debt repayment. S&P expects Mirion to
maintain total leverage commensurate with S&P's expectations for
the rating of 5x to 6x in the next 12 to 18 months.
The outlook is stable. S&P expects modest revenue growth and
stable EBITDA margins should allow the company to continue to
operate within credit measures commensurate for the rating in
2013; these include total leverage of 5x to 6x.
S&P could lower the ratings if weaker-than-expected demand in the
nuclear end market results in a revenue decline of 5% to 10% or if
the EBITDA margin declines to a mid-teens percentage. S&P could
also lower ratings if additional debt hurts liquidity or results
in a meaningful deterioration of credit measures--for example, if
debt to EBITDA remains significantly higher than 6x for an
extended period or if S&P expects covenant headroom to be less
than 10%.
On the other hand, S&P could raise the ratings if the company
improves its credit metrics--for instance, to a total leverage
ratio of 4x to 5x--and S&P expects Mirion to sustain this
improvement. S&P believes Mirion could achieve this through
revenue growth, stable operating margins, and debt reduction
using free cash flow. For an upgrade, S&P would also need to
believe the company would adhere to a financial policy consistent
with a higher rating.
MODERN PRECAST: Can Access M&t Bank Cash Collateral Until April 26
------------------------------------------------------------------
The Bankruptcy Court has authorized Modern VCW Precast Concrete,
Inc., f/k/a Modern Precast Concrete, Inc., West North, LLC, and
West Family Associates, LLC, to use cash collateral of M&T Bank,
from Jan. 26, 2013, through the date which is the earliest to
occur of (a) April 26, 2013; or (b) an Event of Default, strictly
pursuant to the Budget.
As of the Petition Date, the Debtors are indebted in the principal
amount of not less than $13,524,208.30 plus accrued and unpaid
interest in the amount of $105,188.28, plus fees and costs,
including without limitation fees relating to interest rate swap
obligations.
As adequate protection, the Bank is granted, subject to the Carve-
Out (for fees to the Bankruptcy Court and the United States
Trustee, and the fees of retained professionals), replacement
liens in all present and after acquired property of the Debtors,
which liens will not include Avoidance Actions. As further
adequate protection, the Bank is granted allowed superpriority
administrative expense claims in the cases, junior only to the
Carve-Out. As additional adequate protection, the Debtors will
make (i) monthly payments of cash-pay interest of $5,000 towards
the West Term Loan, and (ii) monthly payments in the approximate
amount of $13,000 with respect to the Debtors' interest rate swap
obligations.
About Modern Precast
Modern Precast Concrete, Inc. filed a Chapter 11 petition
(Bankr. E.D. Penn. Case No. 12-21304) on Dec. 16, 2012, in
Reading, Pennsylvania. Aaron S. Applebaum, Esq. and Barry D.
Kleban, Esq., at McElroy Deutsch Mulvaney & Carpenter LLP, in
Philadelphia, serve as counsel to the Debtor. The Debtor
estimated up to $50 million in both assets and liabilities. West
Family Associates, LLC (Case No. 12-21306) and West North, LLC
(Case No. 12-21307) also sought Chapter 11 protection. The
petitions were signed by James P. Loew, chief financial officer.
Founded in 1946 as Woodrow W. Wehrung Excavating, Modern Precast
is a leading manufacturer and distributor of precast concrete
structures, pipes and related products. Modern also purchases and
resells related products. Modern operates from two facilities, a
91,010 square-foot facility in Easton, Pennsylvania and a 43,784
square-foot facility in Ottsville, Pennsylvania.
Modern is a single source supplier of virtually every precast
concrete product needed for residential, commercial/industrial,
Department of Transportation and municipality projects.
Modern, on a consolidated basis, generated revenues of
$23.4 million and $19.4 million and operating EBITDA of
$1.4 million and ($382,000) for years 2010 and 2011, respectively.
The Debtors have tapped Beane Associates, Inc. as financial
restructuring advisor and McElroy, Deutsch, Mulvaney & Carpenter,
LLP as attorneys.
MPG OFFICE: Responds to Unusual Market Activity
-----------------------------------------------
MPG Office Trust, Inc. on Feb. 13 responded to unusual market
activity.
In view of the unusual market activity in the company's stock, the
New York Stock Exchange has contacted the company in accordance
with its usual practice.
The Company stated that its policy is not to comment on unusual
market activity.
About MPG Office Trust
MPG Office Trust, Inc., fka Maguire Properties Inc. --
http://www.mpgoffice.com/-- is the largest owner and operator of
Class A office properties in the Los Angeles central business
district and is primarily focused on owning and operating high-
quality office properties in the Southern California market. MPG
Office Trust is a full-service real estate company with
substantial in-house expertise and resources in property
management, marketing, leasing, acquisitions, development and
financing.
The Company has been focused on reducing debt, eliminating
repayment and debt service guarantees, extending debt maturities
and disposing of properties with negative cash flow. The first
phase of the Company's restructuring efforts is substantially
complete and resulted in the resolution of 18 assets, relieving
the Company of approximately $2.0 billion of debt obligations and
potential guaranties of approximately $150 million.
The Company reported net income of $98.22 million in 2011,
compared with a net loss of $197.93 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$1.86 billion in total assets, $2.59 billion in total liabilities,
and a $729.16 million total deficit.
MURRAY HOTEL: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Murray Hotel, LLC
200 West Broadway Street
Silver City, NM 88061
Bankruptcy Case No.: 13-10393
Chapter 11 Petition Date: February 13, 2013
Court: United States Bankruptcy Court
New Mexico (Albuquerque)
Judge: David T. Thuma
Debtor's Counsel: Denise J. Trujillo, Esq.
GEORGE GIDDENS, PC
10400 Academy Rd NE Ste. 350
Albuquerque, NM 87111
Tel: (505) 271-1053
Fax: (505) 271-4848
E-mail: djtrujillo@giddenslaw.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its 20 largest unsecured
creditors, filed together with the petition, is available for free
at http://bankrupt.com/misc/nmb13-10393.pdf
The petition was signed by Kurt Albershardt, managing member.
NEW ENGLAND COMPOUNDING: Panel Centers Meningitis Cases in Mass.
----------------------------------------------------------------
Greg Ryan of BankruptcyLaw360 reported that a federal judicial
panel centralized litigation against the New England Compounding
Center over a deadly nationwide meningitis outbreak in
Massachusetts on Tuesday, rejecting two plaintiffs' push to move
the lawsuits and the company's bankruptcy proceedings to
Minnesota.
The report related that the U.S. Judicial Panel on Multidistrict
Litigation ruled the lawsuits against the NECC should be
transferred to Massachusetts because the pharmacy is headquartered
there, the contamination that allegedly led to the outbreak
occurred there and the pharmacy's bankruptcy is based there, among
other reasons.
About New England Compounding
New England Compounding Pharmacy Inc., filed a Chapter 11 petition
(Bankr. D. Mass. Case No. 12-19882) in Boston on Dec. 21, 2012.
Daniel C. Cohn, Esq., at Murtha Cullina LLP, serves as counsel.
Verdolino & Lowey, P.C. is the financial advisor.
The Debtor estimated assets and liabilities of at least $1
million. The Debtor owns and operates the New England Compounding
Center is located in Framingham, Mass.
The company said at the outset of bankruptcy that it would work
with creditors and insurance companies to structure a Chapter 11
plan dealing with personal injury claims.
The outbreak linked to the pharmacy has killed 39 people and
sickened 656 in 19 states, though no illnesses have been reported
in Massachusetts. In October, the company recalled all its
products, not just those associated with the meningitis outbreak.
An official unsecured creditors' committee was formed to represent
individuals with personal-injury claims. The members selected
Brown & Rudnick LLP to be the committee's lawyers.
NORTEL NETWORKS: Seeks Approval of Settlement with Travelers
------------------------------------------------------------
BankruptcyData reported that Nortel Networks filed with the U.S.
Bankruptcy Court a motion for approval of a settlement agreement
with Travelers Indemnity Company.
The report related that under the agreement Nortel Networks will
pay Travelers Indemnity Company $5,300,000 in full satisfaction of
past, present and future financial obligations under the Debtors'
insurance program and all agree to mutual releases.
The Court scheduled a March 5, 2013 hearing on the motion.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation and
its various affiliated entities provided next-generation
technologies, for both service provider and enterprise networks,
support multimedia and business-critical applications. Nortel did
business in more than 150 countries around the world. Nortel
Networks Limited was the principal direct operating subsidiary of
Nortel Networks Corporation.
On Jan. 14, 2009, Nortel Networks Inc.'s ultimate corporate parent
Nortel Networks Corporation, NNI's direct corporate parent Nortel
Networks Limited and certain of their Canadian affiliates
commenced a proceeding with the Ontario Superior Court of Justice
under the Companies' Creditors Arrangement Act (Canada) seeking
relief from their creditors. Ernst & Young was appointed to serve
as monitor and foreign representative of the Canadian Nortel
Group. That same day, the Monitor sought recognition of the CCAA
Proceedings in U.S. Bankruptcy Court (Bankr. D. Del. Case No.
09-10164) under Chapter 15 of the U.S. Bankruptcy Code.
That same day, NNI and certain of its affiliated U.S. entities
filed voluntary petitions for relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 09-10138).
In addition, the High Court of England and Wales placed 19 of
NNI's European affiliates into administration under the control of
individuals from Ernst & Young LLP. Other Nortel affiliates have
commenced and in the future may commence additional creditor
protection, insolvency and dissolution proceedings around the
world.
On May 28, 2009, at the request of administrators, the Commercial
Court of Versailles, France, ordered the commencement of secondary
proceedings in respect of Nortel Networks S.A. On June 8, 2009,
Nortel Networks UK Limited filed petitions in U.S. Bankruptcy
Court for recognition of the English Proceedings as foreign main
proceedings under Chapter 15.
U.S. Bankruptcy Judge Kevin Gross presides over the Chapter 11 and
15 cases. Mary Caloway, Esq., and Peter James Duhig, Esq., at
Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as
Chapter 15 petitioner's counsel.
In the Chapter 11 case, James L. Bromley, Esq., at Cleary Gottlieb
Steen & Hamilton, LLP, in New York, serves as the U.S. Debtors'
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The United States Trustee appointed an Official Committee of
Unsecured Creditors in respect of the U.S. Debtors. An ad hoc
group of bondholders also was organized.
Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, in
New York, and Christopher M. Samis, Esq., at Richards, Layton &
Finger, P.A., in Wilmington, Delaware, represent the Official
Committee of Unsecured Creditors.
An Official Committee of Retired Employees and the Official
Committee of Long-Term Disability Participants tapped Alvarez &
Marsal Healthcare Industry Group as financial advisor. The
Retiree Committee is represented by McCarter & English LLP as
Delaware counsel, and Togut Segal & Segal serves as the Retiree
Committee. The Committee retained Alvarez & Marsal Healthcare
Industry Group as financial advisor, and Kurtzman Carson
Consultants LLC as its communications agent.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of Sept. 30, 2008, Nortel Networks Corp. reported consolidated
assets of $11.6 billion and consolidated liabilities of $11.8
billion. The Nortel Companies' U.S. businesses are primarily
conducted through Nortel Networks Inc., which is the parent of
majority of the U.S. Nortel Companies. As of Sept. 30, 2008, NNI
had assets of about $9 billion and liabilities of $3.2 billion,
which do not include NNI's guarantee of some or all of the Nortel
Companies' about $4.2 billion of unsecured public debt.
Since the commencement of the various insolvency proceedings,
Nortel has sold its business units and other assets to various
purchasers. Nortel has collected roughly $9 billion for
distribution to creditors. Of the total, $4.5 billion came from
the sale of Nortel's patent portfolio to Rockstar Bidco, a
consortium consisting of Apple Inc., EMC Corporation,
Telefonaktiebolaget LM Ericsson, Microsoft Corp., Research In
Motion Limited, and Sony Corporation. The consortium defeated a
$900 million stalking horse bid by Google Inc. at an auction. The
deal closed in July 2011.
Nortel has filed a proposed plan of liquidation in the U.S.
Bankruptcy Court. The Plan generally provides for full payment on
secured claims with other distributions going in accordance with
the priorities in bankruptcy law.
NORTHWESTERN STONE: Third Amended Reorganization Plan Confirmed
---------------------------------------------------------------
The Hon. Robert D. Martin has confirmed the third amended plan of
reorganization filed by Northwestern Stone, LLC.
Under the third amended plan, the Debtor will continue to be
operated by its owners, Richard and Sharel Bakken, who will
continue to be compensated at a rate of $3,000 and $1,473.23 per
week. Michael Bakken will continue to be employed as the Debtor's
Operations Manager and will continue to be compensated at his pre-
petition rate of $2,807.69 per week. To effectuate the proposed
Plan upon confirmation the Debtor will utilize rents profits,
revenues, income from operations and cash on hand on the Effective
Date.
The Plan proposes 15 classes of creditors including secured
creditors, taxing authorities, unsecured creditors, and equity
holders. It proposes to pay these creditors in full within five
years of confirmation. To effectuate the Plan, some creditors are
to be paid out of the reorganized Debtor's revenues, while others
are to be paid from the proceeds of the sale of a quarry located
in Middleton, Wisconsin.
Within 5 days of the Effective date the Debtor will grant to the
Liquidating Trust for the benefit of all allowed unsecured claim,
the note and mortgage and lien. The Debtor has listed the
Middleton Quarry for sale. Although the Debtor has not been able
to sell the property, the Debtor, McFarland State Bank, and
members of the official Creditors Committee believe market
conditions continue to improve and that the Debtor will be able to
liquidate the quarry, in whole or in part, within three years of
the Confirmation Date, and that by doing so, pay claims as called
for by the Plan in full.
Upon receiving any Offer to Purchase and upon the removal of all
contingencies, the Reorganized Company will notify the Trustee of
the impending sale of the Middleton Quarry. The Trustee will then
calculate the amount owed to each allowed Class 14 claimant to the
anticipated date of closing. That total will be provided to the
Reorganized Company so as to allow that amount to be paid directly
to the Trustee at closing, subject to senior liens. The Trustee
shall in turn pay the amount due to each Class 14 claimant. If
the amount available for payment is less than 100%, then the costs
and fess of the Liquidating Trust and the Liquidating Trustee
shall be paid in full, and all allowed claims of the beneficiaries
of the Liquidating Trust shall be paid pro rata.
On the Effective Date, the Liquidating Trust will be created
pursuant to the Liquidating Trust Agreement, and the Liquidating
Trustee will be Claire Ann Resop. The Liquidating Trust will be
organized for the purposes of making the distributions required
under the Plan.
On the Effective Date, the Debtors will grant the Liquidating
Trust a lien against the Debtor's Middleton quarry, Mt. Horeb
quarry, machinery and equipment, excluding titled motor vehicles,
to secure payment of the full amount of all allowed Class 14
Claimants and costs of the Liquidating Trust.
A copy of the third amended plan is available for free at:
http://bankrupt.com/misc/NORTHWESTERN_STONE_plan_3amended.pdf
Earlier in the case, the Court authorized the Official Committee
of Unsecured Creditors to retain Claire Ann Resop and Steinhilber,
Swanson & Resop as counsel for the Committee, nunc pro tunc to
Sept. 1, 2012. The professionals and paraprofessionals who are
working on the case, on the Committee's behalf, and their hourly
rates are:
Claire Ann Resop Partner $360
Paul W. Swanson Partner $380
John W. Menn Associate $210
Jean M. Steele Paralegal $150
About Northwestern Stone
Middleton, Wisconsin-based Northwestern Stone, LLC, operates a
gravel quarry business at four separate locations: one in
Sauk County (Swiss Valley Road, Prairie de Sac), and three in Dane
County (4373 Pleasant View Road, Middleton, 6166 Ramford Court,
Springfield, and 3060 Getz Road, Springdale). It filed for
Chapter 11 bankruptcy protection (Bankr. W.D. Wis. Case No.
10-19137) on Dec. 16, 2010. The Debtor disclosed $25,238,172 in
assets and $12,080,628 in liabilities as of the Chapter 11 filing.
Nicole I. Pellerin, Esq., and Timothy J. Peyton, Esq., at Kepler &
Peyton, in Madison, Wisconsin, serve as the Debtor's bankruptcy
counsel. Grobe & Associates, LLP, serves as the Debtor's
accountants.
On Jan. 26, 2011, the U.S. Trustee appointed the Official
Committee of Unsecured Creditors. Claire Ann Resop, Esq., and
Eliza M. Reyes, Esq., at von Briesen & Roper, s.c., in Madison,
Wisconsin, represent the Committee as counsel.
OCALA FUNDING: Cadwalader Pays $125,000, Waives $1.6+MM Claim
-------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Ocala Funding LLC, a subsidiary of previously
bankrupt Taylor Bean & Whitaker Mortgage Corp., negotiated a
settlement where law firm Cadwalader Wickersham & Taft LLP will
pay $125,000 and give up a claim for more than $1.6 million.
The report recounts that lawyers from Cadwalader, based in New
York, represented Taylor Bean before bankruptcy. Ocala followed
Taylor Bean by filing its own Chapter 11 petition in July.
Although listing Cadwalader as being owed $1.6 million for legal
services, Ocala said it might have claims against the firm for
work done before bankruptcy.
According to the report, deciding that claims against the firm
"would be difficult to prove," Ocala decided to settle. At a
hearing on March 6 in U.S. Bankruptcy Court in Jacksonville,
Florida, the judge will decide if it's sufficient for Cadwalader
to waive the $1.6 million claim and pay $125,000.
Ocala filed a proposed Chapter 11 plan this month to implement an
agreement reached before bankruptcy with holders of almost all of
Ocala's $1.5 billion in secured and $800 million in unsecured
claims. The plan will create a trust to prosecute lawsuits on
behalf of creditors with more than $2.5 billion in claims. The
explanatory disclosure statement is scheduled for approval at the
March 6 hearing.
About Ocala Funding
Orange, Florida-based Ocala Funding, LLC, a funding vehicle once
controlled by mortgage lender Taylor Bean & Whitaker Mortgage
Corp., filed a Chapter 11 petition (Bankr. M.D. Fla. Case No.
12-04524) in Jacksonville on July 10, 2012.
Ocala Funding used to be the largest originator and servicer of
residential loans. Ocala was created by Taylor Bean to purchase
loans originated by TBW and selling the loans to third parties,
Freddie Mac. In furtherance of this structure Ocala raised money
from noteholders Deutsche Bank AG and BNP Paribas Mortgage Corp.
and other financial institutions, as secured lenders through sales
of asset-backed commercial paper. Ocala disclosed $1,747,749,787
in assets and $2,650,569,181 in liabilities as of the Chapter 11
filing.
Taylor Bean was forced to file for Chapter 11 relief (Bankr. M.D.
Fla. Case No. 09-07047) on Aug. 24, 2009, amid allegations of
fraud by Taylor Bean's former CEO Lee Farkas and other employees.
Mr. Farkas is now serving a 30-year prison term for 14 counts of
conspiracy and fraud for being the mastermind of a $2.9 billion
bank fraud. Mr. Farkas allegedly directed the sale of more than
$1.5 billion in fake mortgage assets to Colonial Bank and
misappropriated more than $1.5 billion from Ocala. TBW's
bankruptcy also caused the demise of Colonial Bank, which for
years was TBW's primary bank.
TBW and its joint debtor-affiliates confirmed their Second Amended
Joint Plan of Liquidation on July 21, 2011, and the TBW Plan
became effective on Aug. 10, 2011. The TBW Plan established the
TBW Plan Trust to marshal and distribute all remaining assets of
TBW.
Neil F. Lauria, as CRO for TBW and trustee of the TBW Plan Trust,
signed the Chapter 11 petition of Ocala.
Ocala holds 252 mortgage loans with an unpaid balance of $42.3
million as of May 31, 2012. The Debtor also holds five "real
estate owned" properties resulting from foreclosures. The Debtor
also holds $22.4 million in proceeds of mortgage loans previously
owned by it that are on deposit in an account in the Debtor's name
at Regions Bank. It also has an interest in $75 million in cash,
consisting of proceeds of mortgage loans previously owned by the
Debtor, that are in an account maintained by Bank of America, N.A.
as prepetition indenture trustee for the benefit of the
Noteholders. The Debtor also holds a claim in the current amount
of $1.6 billion against the estate of TBW.
The largest unsecured creditors include the Federal Deposit
Insurance Corp., owed $898,873,958; and Cadwalader, Wickersham &
Taft LLP, owed $1,632,385.
Judge Jerry A. Funk presides over Ocala's case. Proskauer Rose
LLP and Stichter, Riedel, Blain & Prosser, serve as Ocala's
counsel. Neil F. Lauria at Navigant Capital Advisors, LLC, serves
as the Debtor's Chief Restructuring Officer.
OILSANDS QUEST: Vanguard Stake Down to 1% as of Dec. 31
-------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, The Vanguard Group disclosed that, as of
Dec. 31, 2012, it beneficially owns 3,775,854 shares of common
stock of Oilsands Quest Inc. representing 1.08% of the shares
outstanding. The Vanguard Group previously reported beneficial
ownership of 24,117,153 common shares or a 6.91% equity stake as
of Dec. 31, 2011. A copy of the amended filing is available for
free at http://is.gd/A8LYNM
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.
OLD SECOND BANCORP: Dimensional Stake at 6.66% as of Dec. 31
------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it beneficially owns 937,558 shares of common
stock of Old Second Bancorp Inc. representing 6.66% of the shares
outstanding. A copy of the regulatory filing is available at:
http://is.gd/LqhzSh
About Old Second
Old Second Bancorp, Inc., is a financial services company with its
main headquarters located in Aurora, Illinois. The Company is the
holding company of Old Second National Bank, a national banking
organization headquartered in Aurora, Illinois and provides
commercial and retail banking services, as well as a full
complement of trust and wealth management services. The Company
has offices located in Cook, Kane, Kendall, DeKalb, DuPage,
LaSalle and Will counties in Illinois.
For the year ended Dec. 31, 2012, the Company incurred a net loss
available to common stockholders of $5.05 million, compared with a
net loss available to common stockholders of $11.22 million during
the preceding year.
The Company's balance sheet at Dec. 31, 2012, showed $2.04 billion
in total assets, $1.97 billion in total liabilities and $72.55
million in total stockholders' equity.
ORLEANS HOMEBUILDERS: Dimensional Owns "Less Than 1%" at Dec. 31
----------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it beneficially owns 76,000 shares of comm on
stock of Orleans Homebuilders Inc. representing 0.4% of the shares
outstanding. A copy of the filing is available for free at:
http://is.gd/Emhbf4
About Orleans Homebuilders
Orleans Homebuilders, Inc. -- aka FPA Corporation, OHB, Parker &
Lancaster, Masterpiece Homes, Realen Homes and Orleans --
develops, builds and markets high-quality single-family homes,
townhouses and condominiums. From its headquarters in suburban
Philadelphia, the Company serves a broad customer base including
first-time, move-up, luxury, empty-nester and active adult
homebuyers. The Company currently operates in these 11 distinct
markets: Southeastern Pennsylvania; Central and Southern New
Jersey; Orange County, New York; Charlotte, Raleigh and
Greensboro, North Carolina; Richmond and Tidewater, Virginia;
Chicago, Illinois; and Orlando, Florida. The Company's Charlotte,
North Carolina operations also include adjacent counties in South
Carolina. Orleans Homebuilders employs approximately 300 people.
The Company filed for Chapter 11 bankruptcy protection on March 1,
2010 (Bankr. D. Del. Case No. 10-10684). Cahill Gordon & Reindell
LLP is the Debtor's bankruptcy and restructuring counsel. Curtis
S. Miller, Esq., and Robert J. Dehney, Esq., at Morris, Nichols,
Arsht & Tunnell, are the Debtor's Delaware and restructuring
counsel. Blank Rome LLP is the Debtor's special corporate
counsel. Garden City Group Inc. is the Debtor's claims and notice
agent. Gerard S. Catalanello, Esq., and James J. Vincequerra,
Esq., at Duane Morris LLP, in New York; Lawrence J. Kotler, at
Duane Morris LLP, in Philadelphia, Pennsylvania; and Richard W.
Riley, Esq., and Sommer L. Ross, Esq., at Duane Morris LLP, in
Wilmington, Delaware, serve as counsel to the Official Committee
of Unsecured Creditors.
The Company estimated assets and debts at $100 million to
$500 million as of the Petition Date.
Orleans Homebuilders, Inc., in February 2011 completed its
financial reorganization and emerged from Chapter 11 protection as
a newly reorganized company. Orleans emerged with $160 million in
new financing, including a $30 million revolving credit facility.
* * *
As reported in the Troubled Company Reporter on Feb. 18, 2011,
Standard & Poor's Ratings Services raised its corporate credit
rating on Orleans Homebuilders Inc. to 'B-' from 'D' and assigned
a 'B-' issue-level rating to the company's $130 million secured
term loan. S&P also assigned a '3' recovery rating on the secured
term loan, indicating its expectation for a meaningful (50%-70%)
recovery in the event of a payment default. The outlook is
stable.
OVERLAND STORAGE: Southwell a 6.7% Owner as of Dec. 31
------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Southwell Partners, L.P., and its affiliates
disclosed that, as of Dec. 31, 2012, they beneficially own
1,566,694 shares of common stock of Overland Storage, Inc.,
representing 6.7% of the shares outstanding. Southwell Partners
previously reported beneficial ownership of 1,531,662 common
shares or a 5.5% equity stake as of June 21, 2012. A copy of the
amended filing is available at http://is.gd/AKFm4g
About Overland Storage
San Diego, Calif.-based Overland Storage, Inc. (Nasdaq: OVRL) --
http://www.overlandstorage.com/-- is a global provider of unified
data management and data protection solutions designed to enable
small and medium enterprises (SMEs), corporate departments and
small and medium businesses (SMBs) to anticipate and respond to
change.
The Company incurred a net loss of $16.16 million for the fiscal
year 2012, compared with a net loss of $14.49 million for the
fiscal year 2011.
The Company's balance sheet at Sept. 30, 2012, showed $32.08
million in total assets, $32.62 million in total liabilities and a
$537,000 total shareholders' deficit.
Moss Adams LLP, in San Diego, California, issued a "going concern"
qualification on the consolidated financial statements for the
year ended June 30, 2012. The independent auditors noted that the
Company's recurring losses and negative operating cash flows raise
substantial doubt about the Company's ability to continue as a
going concern.
OVERSEAS SHIPHOLDING: Hit for $463M in Taxes as CEO Resigns
-----------------------------------------------------------
Lance Duroni of BankruptcyLaw360 reported that the Internal
Revenue Service slapped bankrupt Overseas Shipholding Group Inc.
with a $463 million claim for back taxes on Monday -- the same day
the oil tanker giant's CEO resigned.
The report related that the OSG, which entered Chapter 11 in
Delaware in November, owes the government corporate income taxes
for five separate years since 2004, including $200 million each in
2010 and 2011, according to a claim filed with Kurtzman Carson
Consultants. The tax bill was tabbed as an unsecured priority
claim, though the documents did not explain the basis of the
classification, the report added.
About Overseas Shipholding
Overseas Shipholding Group, Inc., headquartered in New York, is
one of the largest publicly traded tanker companies in the world,
engaged primarily in the ocean transportation of crude oil and
petroleum products. OSG owns or operates 111 vessels that
transport oil and petroleum products throughout the world.
Overseas Shipholding Group and 180 affiliates filed voluntary
Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-20000) on
Nov. 14, 2012. Bankruptcy Judge Peter J. Walsh oversees the case.
Greylock Partners LLC Chief Executive John Ray serves as chief
reorganization officer. Cleary Gottlieb Steen & Hamilton LLP
serves as OSG's Chapter 11 counsel, while Chilmark Partners LLC
serves as financial adviser. Kurtzman Carson Consultants LLC will
provide certain administrative services.
The Debtors disclosed $4.15 billion in assets and $2.67 billion in
liabilities as of June 30, 2012. Liabilities include $1.49
billion on an unsecured credit agreement with DNB Bank ASA as
agent. In addition to the secured Chinese loan, there is $518
million in unsecured notes and debentures plus $267 million on
ship mortgages taken down to finance nine vessels.
The Export-Import Bank of China, owed $312 million used for the
construction of five tankers, is represented by Louis R. Strubeck,
Jr., Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski
LLP in Dallas; David L. Barrack, Esq., and Beret Flom, Esq., at
Fulbright & Jaworski in New York; and John Knight, Esq., and
Christopher Samis, Esq., at Richards Layton & Finger PA. Chilmark
Partners, LLC serves as financial and restructuring advisor.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed a
five-member official committee of unsecured creditors in the case
of Overseas Shipholding Group Inc.
OVERSEAS SHIPHOLDING: Vanguard No Longer Owns Shares at Dec. 31
---------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, The Vanguard Group disclosed that, as of
Dec. 31, 2012, it does not beneficially own any shares of common
stock of Overseas Shipholding Group Inc. A copy of the filing is
available for free at http://is.gd/lh3r2r
About Overseas Shipholding
Overseas Shipholding Group, Inc., headquartered in New York, is
one of the largest publicly traded tanker companies in the world,
engaged primarily in the ocean transportation of crude oil and
petroleum products. OSG owns or operates 111 vessels that
transport oil and petroleum products throughout the world.
Overseas Shipholding Group and 180 affiliates filed voluntary
Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-20000) on
Nov. 14, 2012. Bankruptcy Judge Peter J. Walsh oversees the case.
Greylock Partners LLC Chief Executive John Ray serves as chief
reorganization officer. Cleary Gottlieb Steen & Hamilton LLP
serves as OSG's Chapter 11 counsel, while Chilmark Partners LLC
serves as financial adviser. Kurtzman Carson Consultants LLC will
provide certain administrative services.
The Debtors disclosed $4.15 billion in assets and $2.67 billion in
liabilities as of June 30, 2012. Liabilities include $1.49
billion on an unsecured credit agreement with DNB Bank ASA as
agent. In addition to the secured Chinese loan, there is $518
million in unsecured notes and debentures plus $267 million on
ship mortgages taken down to finance nine vessels.
The Export-Import Bank of China, owed $312 million used for the
construction of five tankers, is represented by Louis R. Strubeck,
Jr., Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski
LLP in Dallas; David L. Barrack, Esq., and Beret Flom, Esq., at
Fulbright & Jaworski in New York; and John Knight, Esq., and
Christopher Samis, Esq., at Richards Layton & Finger PA. Chilmark
Partners, LLC serves as financial and restructuring advisor.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed a
five-member official committee of unsecured creditors in the case
of Overseas Shipholding Group Inc.
OVERSEAS SHIPHOLDING: Dimensional Has 5.6% Stake at Dec. 31
-----------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it beneficially owns 1,749,560 shares of
common stock of Overseas Shipholding Group representing 5.66% of
the shares outstanding. A copy of the filing is available for
free at http://is.gd/hjxo8y
About Overseas Shipholding
Overseas Shipholding Group, Inc., headquartered in New York, is
one of the largest publicly traded tanker companies in the world,
engaged primarily in the ocean transportation of crude oil and
petroleum products. OSG owns or operates 111 vessels that
transport oil and petroleum products throughout the world.
Overseas Shipholding Group and 180 affiliates filed voluntary
Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-20000) on
Nov. 14, 2012. Bankruptcy Judge Peter J. Walsh oversees the case.
Greylock Partners LLC Chief Executive John Ray serves as chief
reorganization officer. Cleary Gottlieb Steen & Hamilton LLP
serves as OSG's Chapter 11 counsel, while Chilmark Partners LLC
serves as financial adviser. Kurtzman Carson Consultants LLC will
provide certain administrative services.
The Debtors disclosed $4.15 billion in assets and $2.67 billion in
liabilities as of June 30, 2012. Liabilities include $1.49
billion on an unsecured credit agreement with DNB Bank ASA as
agent. In addition to the secured Chinese loan, there is $518
million in unsecured notes and debentures plus $267 million on
ship mortgages taken down to finance nine vessels.
The Export-Import Bank of China, owed $312 million used for the
construction of five tankers, is represented by Louis R. Strubeck,
Jr., Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski
LLP in Dallas; David L. Barrack, Esq., and Beret Flom, Esq., at
Fulbright & Jaworski in New York; and John Knight, Esq., and
Christopher Samis, Esq., at Richards Layton & Finger PA. Chilmark
Partners, LLC serves as financial and restructuring advisor.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed a
five-member official committee of unsecured creditors in the case
of Overseas Shipholding Group Inc.
P.AGUILERA & ASSOCIATES: Case Summary & Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: P.Aguilera & Associates, Inc.
P.O. Box 366263
San Juan, PR 00936-6263
Bankruptcy Case No.: 13-01048
Chapter 11 Petition Date: February 13, 2013
Court: United States Bankruptcy Court
District of Puerto Rico (Old San Juan)
Debtor's Counsel: Teresa M Lube Capo, Esq.
LUBE & SOTO LAW OFFICES PSC
1130 Ave FD Roosevelt
San Juan, PR 00920-2906
Tel: (787) 722-0909
Fax: (787) 977-1709
E-mail: lubeysoto@gmail.com
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Company's 20 largest unsecured creditors, filed
together with the petition, is available for free at
http://bankrupt.com/misc/prb13-01048.pdf
The petition was signed by Pascual Aguilera Aldamuy, president.
PARK SIDE: Section 341(a) Meeting Scheduled for March 6
-------------------------------------------------------
A meeting of creditors in the bankruptcy case of Park Side
Estates, LLC, will be held on March 6, 2013, at 1:00 p.m. at Room
243A, White Plains.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
About Park Side Estates
Monsey, New York-based Park Side Estates, LLC, sought Chapter 11
bankruptcy protection (Bankr. S.D.N.Y. Case No. 13-22198) in White
Plains on Feb. 7, 2013, estimating assets and liabilities in
excess of $10 million.
The Debtor owns the real property located at 143-159 Classon
Avenue, Brooklyn, New York, improved by two buildings with 37
residential units, commercial units and parking. It said that its
principal asset is located at 143-159 Classon Avenue, in Brooklyn.
The Debtor sought bankruptcy to trigger the automatic stay to stop
the auction.
The petition was signed by Moshe Junger as managing member.
Robinson Brog Leinwand Greene Genovese & Gluck, P.C., serves as
the Debtor's counsel. The Debtor estimated assets and debts of at
least $10 million as of the Petition Date. Judge Robert D. Drain
presides over the case.
PATRIOT COAL: Court Gives Claim-Settlement Authority
----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Patriot Coal Corp. has court approval of streamlined
procedures for settling claims, some without creditor or court
involvement or notice.
The report relates that under procedures approved Feb. 13, Patriot
by itself can settle unsecured claims up to $1 million so long as
the amount of the compromise is 10% or less of the claim. When
the claim or compromise is larger, Patriot must give notice to the
lenders, the U.S. Trustee, and the creditors' committee. Absent
objection, Patriot can complete the settlement on its own, without
court approval.
According to the report, for secured or priority claims, there
must also be notice to the other main parties in the case. If
there are objections, the bankruptcy judge becomes the arbiter.
Patriot's $200 million in 3.25% senior convertible notes due 2013
last traded on Feb. 12 for 12.06 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 at 12:50 p.m. Feb. 13 for 48.123 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 U.S. Trustee appointed a seven-member creditors committee.
Kramer Levin Naftalis & Frankel LLP serves as its counsel.
Houlihan Lokey Capital, Inc., serves as its financial advisor and
investment banker. Epiq Bankruptcy Solutions, LLC, serves as its
information agent.
On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's
bankruptcy case to St. Louis. The order formally sending the
reorganization to Missouri was signed December 19 by the
bankruptcy judge. The New York Judge in a Jan. 23, 2013 order
denied motions to transfer the venue to the U.S. Bankruptcy Court
for the Southern District of West Virginia.
PATRIOT COAL: Vanguard Ceases to Own Shares as of Dec. 31
---------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, The Vanguard Group disclosed that, as of
Dec. 31, 2012, it does not beneficially own any shares of common
stock of Patriot Coal Corp. A copy of the filing is available for
free at http://is.gd/iBCxWp
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 U.S. Trustee appointed a seven-member creditors committee.
Kramer Levin Naftalis & Frankel LLP serves as its counsel.
Houlihan Lokey Capital, Inc., serves as its financial advisor and
investment banker. Epiq Bankruptcy Solutions, LLC, serves as its
information agent.
On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's
bankruptcy case to St. Louis. The order formally sending the
reorganization to Missouri was signed December 19 by the
bankruptcy judge. The New York Judge in a Jan. 23, 2013 order
denied motions to transfer the venue to the U.S. Bankruptcy Court
for the Southern District of West Virginia.
PATRIOT COAL: Miners Protest Benefit Cuts
-----------------------------------------
Lance Duroni of BankruptcyLaw360 reported that more than 1,000
miners protested Wednesday in St. Louis over potential benefit
cuts for Patriot Coal Corp. retirees, one day after the bankrupt
coal company proposed paying more than $5 million in retention
bonuses to key employees.
The report related that 10 people were arrested at the
demonstration outside the headquarters of Patriot's former parent,
Peabody Energy Corp., according to a statement from the United
Mine Workers of America union, which organized the protest.
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 U.S. Trustee appointed a seven-member creditors committee.
Kramer Levin Naftalis & Frankel LLP serves as its counsel.
Houlihan Lokey Capital, Inc., serves as its financial advisor and
investment banker. Epiq Bankruptcy Solutions, LLC, serves as its
information agent.
On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's
bankruptcy case to St. Louis. The order formally sending the
reorganization to Missouri was signed December 19 by the
bankruptcy judge. The New York Judge in a Jan. 23, 2013 order
denied motions to transfer the venue to the U.S. Bankruptcy Court
for the Southern District of West Virginia.
PHOENIX FOOTWEAR: Dimensional No Longer Shareholder as of Dec. 31
-----------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it does not beneficially own any shares of
common stock of Phoenix Footwear Group Inc. A copy of the filing
is available for free at http://is.gd/cQa4CL
About Phoenix Footwear
Based in Carlsbad, California, Phoenix Footwear Group, Inc. (NYSE
Amex: PXG) specializes in quality comfort women's and men's
footwear with a design focus on fitting features. Phoenix
Footwear designs, develops, markets and sells footwear in a wide
range of sizes and widths under the brands Trotters(R),
SoftWalk(R), and H.S. Trask(R). The brands are primarily sold
through department stores, leading specialty and independent
retail stores, mail order catalogues and internet retailers and
are carried by approximately 650 customers in more than 900 retail
locations throughout the U.S. Phoenix Footwear has been engaged
in the manufacture or importation and sale of quality footwear
since 1882.
The Company reported a net loss of $1.70 million on $17.26 million
of net sales for the year ended Jan. 1, 2011, compared with a net
loss of $6.99 million on $18.76 million of net sales during the
prior year.
The Company's balance sheet at Jan. 1, 2011 showed $10.74 million
in total assets, $7.90 million in total liabilities and $2.84
million in total stockholders' equity.
As reported by the TCR on April 18, 2011, Mayer Hoffman McCann
P.C., San Diego, Calif., expressed substantial doubt about the
Company's ability to continue as a going concern, following the
2010 financial results. The independent auditors noted that the
Company has suffered recurring losses and negative cash flows from
continuing operations.
PIPELINE DATA: U.S. Trustee Wants Case Converted to Chapter 7
-------------------------------------------------------------
Marie Beaudette at Dow Jones' DBR Small Cap reports that now that
former credit card-processing company Pipeline Data Inc. has sold
off its assets, the Justice Department is asking a bankruptcy
judge to convert the company's Chapter 11 case to a Chapter 7
liquidation.
Pipeline Data was authorized in January to sell the business for
$9.85 million to Applied Merchant Systems West Coast Inc. Applied
Merchant was forced to raise the bid during auction. The contract
signed before the auction was for $8 million.
About Pipeline Data
Pipeline Data Inc., a processor of debit and credit cards for
smaller retailers, filed a Chapter 11 petition (Bankr. D. Del.
Case No. 12-13123) on Nov. 19, 2012, in Delaware with plans for
selling the business as a going concern.
Alpharetta, Georgia-based Pipeline Data provided credit and debit
card payment processing services to approximately 15,000
merchants.
Attorneys at Whiteford Taylor Preston LLC, in Wilmington,
Delaware, and Kirkland & Ellis L.L.P. serve as counsel.
AlixPartners L.L.P. is the financial advisor. Dragonfly Capital
Partners L.L.C. is the investment banker.
The Debtor estimated assets of $1 million to $10 million and debts
of $50 million to $100 million. Pipeline, which sought bankruptcy
together with affiliates, owes $66.6 million in principal and
interest to first-lien creditors who have liens on all assets.
In its schedules, Pipeline Data disclosed $4,491,699 in total
assets and $61,595,942 in total liabilities.
Ten affiliates of the Debtor filed separate petitions for
Chapter 11 (Bankr. D. Del. Case Nos. 12-13124 to 12-13131; Case
No. 12-13133 and 12-13134). The cases are jointly administered
under Case No. 12-13123).
PMI GROUP: Dimensional Ceases to Own Shares as of Dec. 31
---------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it does not beneficially own any shares of
common stock of PMI Group Inc. A copy of the filing is available
for free at http://is.gd/JLqFRs
About The PMI Group
The PMI Group, Inc., is an insurance holding company whose stock
had, until Oct. 21, 2011, been publicly-traded on the New York
Stock Exchange. Through its principal regulated subsidiary, PMI
Mortgage Insurance Co., and its affiliated companies, the Debtor
provides residential mortgage insurance in the United States.
The PMI Group filed for Chapter 11 bankruptcy (Bankr. D. Del. Case
No. 11-13730) on Nov. 23, 2011. In its schedules, the Debtor
disclosed $167,963,354 in assets and $770,362,195 in liabilities.
Stephen Smith signed the petition as chairman, chief executive
officer, president and chief operating officer.
The Debtor said in the filing that it does not have the financial
resources to pay the outstanding principal amount of the 4.50%
Convertible Senior Notes, 6.000% Senior Notes and the 6.625%
Senior Notes if those amounts were to become due and payable.
The Debtor is represented by James L. Patton, Esq., Pauline K.
Morgan, Esq., Kara Hammond Coyle, Esq., and Joseph M. Barry, Esq.,
at Young Conaway Stargatt & Taylor LLP.
The Official Committee of Unsecured Creditors appointed in the
case retained Morrison & Foerster LLP and Womble Carlyle Sandridge
& Rice, LLP, as bankruptcy co-counsel. Peter J. Solomon Company
serves as the Committee's financial advisor.
POLYCONCEPT INVESTMENTS: S&P Assigns 'B' CCR; Outlook Stable
------------------------------------------------------------
Polyconcept Investments B.V. Assigned 'B' Rating, Stable Outlook;
Proposed Senior Secured Debt Issues Also Rated
NEW YORK (Standard & Poor's) Feb. 13, 2013
Standard & Poor's Rating Services said it has assigned its 'B'
corporate credit rating on Netherlands-based Polyconcept
Investments B.V., a leading manufacturer, designer, and marketer
of promotional products for distributors throughout North America
and Europe. The outlook is stable.
At the same time, S&P assigned a 'BB-' issue-level rating to
subsidiary Polyconcept Finance B.V.'s proposed $100 million super-
priority senior secured revolving credit facility due 2018. The
recovery rating is '1', indicating S&P's expectation that lenders
would receive very high (90% to 100%) recovery of principal in the
event of a payment default. S&P also assigned a 'B' issue-level
rating to Polyconcept Finance's proposed $440 million senior
secured term loan due 2020, with a recovery rating of '4',
indicating S&P's expectation of average (30% to 50%) recovery in
the event of a default. All ratings are subject to review upon
S&P's receipt of final documentation.
Polyconcept will use proceeds from the new $440 million term loan,
along with cash on hand, to repay existing debt and pay
transaction fees and expenses. At the close of the transaction,
S&P estimates Polyconcept will have about $460 million in total
debt outstanding.
The ratings on Polyconcept reflect S&P's view that the company has
a "vulnerable" business risk profile and a "highly leveraged"
financial risk profile, both as defined in S&P's criteria. Key
credit factors S&P considered in its assessment of the business
risk profile were Polyconcept's narrow business focus in a highly
competitive and fragmented industry, and vulnerability to reduced
discretionary spending on promotional products in an economic
downturn. Other key credit factors were Polyconcept's breadth of
product offerings, geographic and customer diversification, and
scale as one of the largest promotional products suppliers in
North America and Europe.
"Our view of Polyconcept's financial risk profile reflects our
estimate that credit measures following the transaction will be in
line with the ratios indicative of a highly leveraged financial
risk profile, which includes adjusted leverage of more than 5x and
funds from operations (FFO) to total debt of less than 12%. Our
adjusted credit measures include approximately $575 million in
preference shares, which we treat as debt according to our
criteria. We estimate that pro forma for the proposed refinancing
transaction, credit measures will be weak," S&P said.
Polyconcept's sales and profitability have been affected by
weakness in its European operations in recent quarters. However,
the company has taken steps to lower costs and eliminate
unprofitable product lines in its European operations, and S&P
believes Polyconcept's credit measures will strengthen as
profitability improves and the company repays debt.
Polyconcept, with more than $870 million in sales for the 12
months ended Sept. 30, 2012, is one of the largest companies in
the world in the highly fragmented promotional products industry,
which is estimated to be about $18 billion in the U.S. and
$10 billion in Europe. The company supplies a wide range of
promotional, lifestyle, and gift products to a variety of
companies and organizations, from local sports teams to global
corporations. S&P views the company as having good geographic
diversification, as it serves more than 100 countries, with 33% of
its sales from the U.S., 9% from Canada, 51% from Europe, and 7%
from other countries. However, it is S&P's opinion that
Polyconcept and the global industry are vulnerable to economic
downturns, when large corporations may scale back discretionary
spending on promotional products. This was evident during the
most recent recession in the U.S., when industry sales fell nearly
20% from 2007 to 2009.
The outlook on Polyconcept is stable, reflecting S&P's expectation
that the company will maintain adequate liquidity and improve
operating performance and cash flows during the next year while
strengthening credit measures as profitability improves and the
company repays debt.
S&P could consider lowering the rating if the company experiences
operating difficulties such that credit measures deteriorate and
liquidity is materially pressured, or if the covenant cushion
under the new credit agreement falls below 15%. For the latter
condition to occur, S&P estimates operating performance would need
to weaken such that adjusted EBITDA declined by more than 10%
(assuming no significant change in debt from pro forma levels).
An upgrade is not likely during the next year, given the company's
vulnerable business risk position and highly leveraged capital
structure. Over the longer term, an upgrade would require that
the company diversify its business risk position more and reduce
leverage.
POLYONE CORP: Moody's Rates New $600-Mil. Senior Notes 'Ba3'
------------------------------------------------------------
Moody's Investors Service affirmed PolyOne Corporation's Corporate
Family Rating Ba2 and rated the proposed $600 million Senior
Unsecured Notes due 2023 Ba3. Proceeds from the notes will be used
to fund the acquisition of Spartech Corporation, make a $50
million voluntary pension contribution, and repay the $300 million
Term Loan B. PolyOne is also contemplating increasing its existing
$300 million ABL revolving credit facility (unrated) by $100
million. The $50 million unsecured notes due 2015 will be ratably
and equitably secured by the same collateral as the ABL revolving
facility and are upgraded to Baa2 as a result of their anticipated
priority position relative to the larger amount of unsecured debt.
PolyOne's existing $360 million senior unsecured notes due 2020
were affirmed at Ba3 as a result of being junior relative to the
ABL revolving facility and the 2015 notes. The outlook is stable.
"The rating reflects the prospect of continued sustainable
operating income generated over the next several years," Said Bill
Reed Moody's Vice President. " Also considered in the rating is
the pending acquisition of Spartech, which is expected to add
breadth to PolyOne's product offerings."
Ratings Assigned:
$600 million Senior Unsecured Notes due 2023 at Ba3, LGD4, 62%
Ratings Upgraded:
7.5% Debentures due 2015 to Baa2, LGD1, 9% from Ba1, LGD2, 24%
Ratings Affirmed:
Issuer: PolyOne Corporation
Corporate Family Rating Ba2
Probability of Default Rating Ba2-PD
7.375% Senior Unsecured Notes due 2020 to Ba3, LGD4, 62%
$300 million Term Loan B, Ba1, LGD2, 24%*
Outlook Stable
* Ratings on the $300 million Term Loan B (Ba1, LGD2, 24%) will
be withdrawn upon issuance of the $600 million Senior Unsecured
Notes due 2023.
Ratings Rationale
PolyOne's Ba2 CFR is supported by its current credit metrics, with
low leverage, adequate interest coverage, and healthy margins
(Debt/EBITDA of 3.4x, EBITDA/Interest of 4.4x, and EBITDA margin
of 10.4%). The rating reflects the prospect of continued
sustainable operating income generated over the next several
years. Also considered in the rating is the pending acquisition of
Spartech, which is expected to add breadth to PolyOne's product
offerings. Spartech has had a number of operating challenges over
the last several years and will require a meaningful restructuring
effort to achieve the expected synergies; however, PolyOne's
history of successful restructuring programs and improvements
since 2009 is supportive of their integration plans.
The pending friendly acquisition of Spartech, for a purchase price
of $393 million, was financed with both debt and equity. Spartech
has annual revenues of $1.2 billion, operates through three
business segments: Custom Sheet and Rollstock, Packaging
Technologies, and Color and Specialty Compounds, and runs 30
plants in the United States, Mexico, Canada, and France. The
company generates 94% of revenues in North America and has market-
leading positions in 60% of its businesses. Spartech has
technologies that serve specialty end-markets such as aerospace,
security, and specialized packaging and offers customer solution
services. Spartech's adjusted EBITDA for the LTM ending August 4,
2012 was $53 million (excluding a goodwill impairment of $28
million).
PolyOne's Speculative Grade Liquidity Rating of SGL-2 is a result
of its good liquidity position, which includes a significant cash
balance, no significant near-term maturities, and no covenant
concerns. The increased size of the ABL facility will enhance its
liquidity as it provides additional flexibility.
There is limited upside to the ratings while the Spartech and
Glasforms acquisitions are being integrated. However, should
PolyOne achieve sustainable EBITDA margins above 14%, maintain
Retained Cash Flow / Debt above 20%, and reliably achieve Debt /
EBITDA of less than 2.5x on an adjusted basis, Moody's could
consider the appropriateness of a higher rating. Moody's could
reassess the appropriateness of the rating and outlook if PolyOne
is unable to achieve the expected synergies or experiences
unexpected challenges as they integrate Spartech, if Debt / EBITDA
rises above 4.5x on a sustained basis or if the company's excess
liquidity declines below $50 million, or if shareholder friendly
activities stretch liquidity.
The principal methodology used in rating PolyOne Corporation was
the Global Chemical 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.
PolyOne Corporation, headquartered in Avon Lake, Ohio, provides
specialized polymer materials, services and solutions with
revenues of approximately $3.0 billion for the LTM ending December
31, 2012.
POLYONE CORP: S&P Affirms 'BB-' CCR; Rates $600MM Notes 'BB-'
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned a 'BB-' issue-level
rating (the same as the corporate credit rating) and '4' recovery
rating to Ohio-based PolyOne Corp.'s proposed $600 million senior
unsecured notes due 2023. S&P affirmed the 'BB-' corporate credit
rating on PolyOne Corp. The outlook is stable.
At the same time, S&P raised the issue-level rating on the
company's existing 7.375% senior unsecured notes due 2020 to 'BB-'
from 'B+' and revised S&P's recovery rating to '4' from '5'. The
'4' recovery rating reflects S&P's expectation of average recovery
(30% to 50%) in the event of a payment default.
S&P also raised its issue-level rating on the company's
$50 million 7.5% debentures due 2015 to 'BB+' from 'BB-' and
revised its recovery rating to '1' from '4'. The '1' recovery
rating reflects S&P's expectation of very high recovery (90% to
100%) in the event of a payment default.
"The ratings on PolyOne reflect an aggressive financial policy,
modest operating margins, some volatility in earnings, and a
meaningful exposure to cyclical end markets," said Standard &
Poor's credit analyst Seamus Ryan.
The company's leading market positions in several plastic product
lines, increased focus on specialty products, and good growth
prospects partly offset these risks. S&P characterizes PolyOne's
business risk profile as "weak" and its financial risk profile as
"aggressive."
The stable outlook reflects S&P's assessment that operating cash
flow generated by Spartech will partially offset the increase in
debt PolyOne incurred to acquire it and that the economy and end-
market demand should support profitability over the next several
quarters. The outlook also reflects S&P's opinion that management
will support sustainable credit quality by maintaining a prudent
approach to funding growth and shareholder rewards.
"Based on our scenario forecasts, we could raise the ratings if
better-than-expected earnings boost FFO to adjusted debt to about
25%, even as the company pursues growth objectives. This could
occur if EBITDA margins increase by about 150 basis points, with
even modest organic revenue growth. Such a scenario could result
from continued growth in PolyOne's higher-margin specialty
businesses, a more rapid recovery in key housing and auto end
markets, or greater-than-expected synergies from the Spartech
acquisition. We could also raise ratings if continued growth in
PolyOne's specialty business leads us to reassess our business
risk profile, including our view of the company's industry risk
and profitability," S&P said.
The ratings could come under pressure if credit measures
deteriorate and S&P expects FFO to debt to decline to 15% or less
without indications of near-term improvement. Additional debt-
funded acquisitions over the next year could lead to such a
decline. Based on S&P's scenario forecasts, this could stem from
problems with the Spartech integration, deterioration in
profitability, or negative trends in key housing and auto end
markets that result in leverage beyond S&P's expectations. In
this scenario, margins would drop by more than 250 basis points
from current levels with minimal revenue growth.
POWELL STEEL: Files for Chapter 11 in Philadelphia
--------------------------------------------------
Powell Steel Corporation filed a bare-bones Chapter 11 petition
(Banrk. E.D. Pa. Case No. 13-11275) in Philadelphia on Feb. 13,
estimating at least $10 million in assets and liabilities.
The Debtor is represented by attorneys at Ciardi Ciardi & Astin,
P.C., in Philadelphia.
Counsel for the Debtor posted a document containing a list of
parties with interest in the Debtor's cash collateral:
1. M&T Bank
c/o Carol Slocum, Esquire
Klehr Harrison
457 Haddonfield Road, Ste. 510
Cherry Hill, NJ 08002-2220
M&T Bank
c/o Anthony P. Tabasso, Esquire
Klehr Harrison
1835 Market St., Ste. 1400
Philadelphia, PA 19103
2. Pennsylvania Minority Business Development Authority
4548 Market Street
Philadelphia, PA 19139
3. Internal Revenue Service
Centralized Insolvency Operation
PO Box 7346
Philadelphia, PA 19101-7346
4. Pennsylvania Dept. of Revenue
Bankruptcy Division
PO BOX 280946
Harrisburg, PA 17128-0946
PREMIERWEST BANCORP: Seeks Shareholder Approval for Merger
----------------------------------------------------------
PremierWest, parent company of PremierWest Bank, on Feb. 13
outlined the primary reasons for its Board of Directors'
recommendation to the company's shareholders to vote "FOR" the
proposals in its proxy statement for the upcoming Special Meeting
of shareholders. This meeting will be held on Tuesday, February
19, 2013 at 1:00 p.m. Pacific Time at the Rogue Valley Country
Club located at 2660 Hillcrest Road, Medford, Oregon 97504. At
the Special Meeting the shareholders are being asked to consider
and vote on the approval of the Agreement and Plan of Merger,
dated October 29, 2012, among PremierWest, Starbuck Bancshares,
Inc. ("Starbuck") and Pearl Merger Sub Corp, pursuant to which
PremierWest will merge with and into Pearl Merger Sub Corp., with
Pearl Merger Sub Corp. as the surviving entity.
The Board of Directors of PremierWest determined that the proposed
merger is in the best interests of PremierWest and its
shareholders and recommends a vote "FOR" the proposed merger, in
part, for the following reasons:
-- PremierWest needs to substantially increase its capital
base to meet regulatory requirements, resolve remaining credit
issues and remain competitive;
-- Efforts to raise capital from private equity and
institutional investors have not been acceptable to the US
Treasury as our preferred shareholder through the TARP program and
any capital raise would be highly dilutive to existing
shareholders;
-- Despite significant efforts, no other acquirer stepped
forward with an offer to acquire PremierWest at a value that was
higher than that being offered by Starbuck; and
-- Starbuck will pay-off or assume PremierWest's
obligations under its $30.9 million of junior subordinated
debentures issued in connection with its trust preferred
securities ("TruPS"). If the merger is not completed, the twenty
quarter permissible deferral period for payments on the TruPS will
expire in the fourth quarter of 2014, and if the Company's Consent
Order with state and federal regulators remains in effect and it
is unable to obtain consent from our regulators to pay accrued
interest at the end of the permissible deferral period, we would
default on the TruPS.
PremierWest shareholders are urged to read the full definitive
proxy statement filed by PremierWest with the U.S. Securities and
Exchange Commission on January 4, 2013 and previously sent to
shareholders for additional information regarding the proposed
merger.
"If you haven't already voted, we encourage you to vote.
Shareholders of record may vote in person at the Special Meeting.
Please note: If you hold your shares at a brokerage firm, and you
wish to vote in person, you must obtain a legal proxy document
from your firm and present it at the time you vote at the meeting.
Contact your brokerage firm for instructions on how to obtain a
legal proxy. Ballots will be available at the meeting for those
shareholders whose shares are not held at a brokerage firm or who
hold a valid legal proxy."
If you have any questions or need any assistance voting your
shares, please call Georgeson Inc., PremierWest's proxy solicitor,
toll-free at 1-877-278-9670.
As reported by the Troubled Company Reporter on April 16, 2012,
PremierWest Bancorp filed its annual report on Form 10-K,,
reporting a net loss of $15.05 million on $49.91 million of net
interest income (before provision for loan losses) for the fiscal
year ended Dec. 31, 2011, as compared to a net loss of
$4.95 million on $55.96 million of net interest income (before
provision for loan losses) for the fiscal year ended Dec. 31,
2010.
The Company's balance sheet at Dec. 31, 2011, showed
$1.266 billion in total assets, $1.182 billion in total
liabilities, and stockholders' equity of $84.36 million.
The Company said, "Although the Bank meets the quantitative
guidelines set forth above to be deemed "well-capitalized", the
Bank remains subject to the Agreement with the FDIC and,
therefore, is deemed to be "adequately capitalized." Pursuant to
the Agreement with the FDIC, as discussed in Note 2 -- "Regulatory
Agreement, Economic Condition, and Management Plan", the Bank was
required to increase and maintain its Tier 1 capital in such an
amount as to ensure a leverage ratio of 10% or more by Oct. 3,
2010, well in excess of the 5% requirement set forth in regulatory
guidelines. The 10% leverage ratio was not achieved by Oct. 3,
2010."
A copy of the Form 10-K is available for free at:
http://is.gd/K7zCKV
PremierWest Bancorp is a bank holding company headquartered in
Medford, Oregon. The Company operates primarily through its
principal subsidiary, PremierWest Bank, which offers a variety of
financial services.
PT BERLIAN: Moves to Dismiss Involuntary Chapter 11
---------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that PT Berlian Laju Tanker Tbk is asking the U.S.
Bankruptcy Court in New York to dismiss the involuntary Chapter 11
bankruptcy reorganization filed on Dec. 13 by three creditors with
a combined $125.5 million in debt.
In March, PT Berlian put about a dozen subsidiaries into Chapter
15 proceedings in Manhattan to complement a bankruptcy
reorganization in Indonesia, where the companies are based. In
April the U.S. Bankruptcy Judge determined that Indonesia is home
to the foreign main proceeding for the operating subsidiaries. In
June Indonesian bank PT Bank Mandiri (Persero) Tbk began
involuntary bankruptcy proceedings in Indonesia against the PT
Berlian parent.
According to the report, the parent is arguing that the U.S.
involuntary Chapter 11 should be dismissed because the petition
wasn't filed by the required three creditors. The company
contends that the three petitioning creditors are affiliated alter
egos of one another and should be considered as one creditor.
Alternatively, the company wants U.S. Bankruptcy Judge Stuart
Bernstein to abstain, or refuse to move forward with the
involuntary Chapter 11 and in effect defer to the proceedings in
Indonesia.
The company, the report relates, said in papers filed Feb. 12 that
the creditors filing the involuntary petition in the U.S. have
been "active participants" in the Indonesian bankruptcies. The
reasons for dismissal are unclear because the company filed all
the dismissal papers under seal. Judge Bernstein scheduled a
hearing on Feb. 26 to decide whether some or all of the dismissal
papers should be unsealed.
About PT Berlian
Creditors of PT Berlian Laju Tanker Tbk filed an involuntary
Chapter 11 bankruptcy petition in U.S. Bankruptcy Court against
the Indonesian ship operator (Bankr. S.D.N.Y. Case No. 12-14874)
on Dec. 13, 2012.
The petition was filed by Gramercy Distressed Opportunity Fund II,
Gramercy Distressed Opportunity Fund, and Gramercy Emerging
Markets Fund. The creditors, all located in Greenwhich, Conn.,
are allegedly owed $125.5 million.
PT Berlian Laju Tanker Tbk is the largest Indonesian shipping
company, focusing on liquid bulk cargo, with operations primarily
in Asia with some expansion into the Middle East and Europe.
Indonesia-based PT Berlian Laju Tanker Tbk filed Chapter 15
bankruptcy petitions in New York for subsidiaries (Bankr.
S.D.N.Y. Lead Case No. 12-11007) on March 14, 2012, to prevent
creditors from seizing the company's vessels when they call on
U.S. ports. Cosimo Borrelli, appointed vice president for
restructuring for PT Berlian, signed the Chapter 15 petitions for
Chembulk New York Pte Ltd and 12 other entities.
The Berlian group operates 72 vessels, of which 50 are owned.
In January 2012, the Berlian Group violated covenants under a $685
million loan agreement. Creditors took steps to arrest certain
vessels operated by companies in the Berlian Group.
In order to prevent ship arrests and other collection efforts,
the Berlian Group initiated proceedings in the High Court of the
Republic of Singapore on March 12, 2012. The Singapore court
entered orders prohibiting for three months any arrest of vessels
or collection effort.
The Berlian Group filed the Chapter 15 petitions to obtain entry
of an order enjoining creditors from seizing vessels that are at
port in the United States. The Debtors do not have assets in the
U.S. other than the transitory basis vessels that are in the U.S.
The U.S. Bankruptcy Judge in April 2012 ruled that Indonesia is
the home to the so-called foreign main proceeding.
QUALTEQ INC: Trustee Files Plan With Shareholder Recovery
---------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the trustee for Qualteq Inc., previously a provider
of production services for direct marketing firms, filed a
liquidating Chapter 11 plan last week where unsecured creditors
with about $9 million in claims may be paid in full from a
liquidating trust.
According to the report, there will be a March 13 hearing for
approval of the explanatory disclosure statement. Absent delays,
the Chapter 11 trustee is aiming for an April 24 confirmation
hearing for approval of the plan.
The report notes that the unknown factor at present is the
recovery by lenders with mortgages on real estate securing more
than $35 million in debt. The bankruptcy judge in Chicago
previously scheduled an auction on Feb. 25 to sell eight remaining
parcels of real estate. The outcome will determine the mortgage
holders' recovery.
The plan was made possible by the sale of the business which was
completed in November. The buyer, Valid USA Inc., paid
$51.2 million. The price included $46.1 million in cash plus the
assumption of liabilities.
The disclosure statement reveals a projected $9.3 million left
over for the company's owners after creditors are paid.
About QualTeq Inc.
South Plainfield, New Jersey-based QualTeq, Inc., engages in the
design, manufacture, and personalization of plastic cards in the
United States. The company manufactures magnetic, contact, and
dual interface smart cards.
Qualteq Inc. and 17 affiliated companies filed for Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12572) on
Aug. 14, 2011. Eric Michael Sutty, Esq., and Jeffrey M. Schlerf,
Esq., at Fox Rothschild LLP, serve as local counsel to the
Debtors. K&L Gates LLP is the general bankruptcy counsel.
Eisneramper LLP is the accountants and financial advisors.
Scouler & Company is the restructuring advisors. Lowenstein
Sandler PC is counsel to the Committee. Avadamma LLC disclosed
$38,491,767 in assets and $36,190,943 in liabilities as of the
Petition Date.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed four
unsecured creditors to serve on the Official Committee of
Unsecured Creditors. Lowenstein Sandler PC represents the
Committee. Eisneramper LLP serves as its accountants and
financial advisors.
The case was transferred to Chicago from Delaware in February
2012. At the request of Bank of America NA, the bankruptcy judge
appointed a Chapter 11 trustee in May 2012.
In November 2012, the Qualteq trustee completed the sale of the
business for $51.2 million to Valid USA Inc. The price included
$46.1 million in cash plus the assumption of liabilities.
Fred C. Caruso, the Chapter 11 Trustee, tapped Hilco Real Estate,
LLC, as real estate advisors.
RADIAN GROUP: Board Approves Regular Quarterly Dividend
-------------------------------------------------------
Radian Group Inc. on Feb. 13 disclosed that the company's Board of
Directors approved a regular quarterly dividend on its common
stock in the amount of $0.0025 per share, payable on March 6,
2013, to stockholders of record as of February 25, 2013.
About Radian Group
Headquartered in Philadelphia, Radian Group Inc. --
http://www.radian.biz-- provides private mortgage insurance and
related risk mitigation products and services to mortgage lenders
nationwide through its principal operating subsidiary, Radian
Guaranty Inc. These services help promote and preserve
homeownership opportunities for homebuyers, while protecting
lenders from default-related losses on residential first mortgages
and facilitating the sale of low-downpayment mortgages in the
secondary market.
* * *
As reported by the Troubled Company Reporter on Oct. 17, 2012,
Standard & Poor's Rating Services raised its long-term issuer
credit ratings on Radian Group Inc. (RDN) to 'CCC+' from 'CCC-'
and MGIC Investment Corp. (MTG) to 'CCC+' from 'CCC'. The
financial strength ratings for both RDN's and MTG's respective
operating companies are unchanged. The outlook on both companies
is negative.
"The outlook for each company is negative, reflecting the
continuing risk of significant adverse reserve development; the
current trajectory of operating performance; and the expected
impact ongoing losses will have on their capital positions," S&P
said in October 2012. "We expect operating performance to
deteriorate for the rest of the year for both companies,
reflecting the affect of normal adverse seasonality on new notices
of delinquency and cure rates, and the lack of greater improvement
in the job markets."
RADIOSHACK CORP: Vanguard Group Ownership at 5.3% as of Dec. 31
---------------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, The Vanguard Group disclosed that, as of Dec. 31,
2012, it beneficially owns 5,313,850 shares of common stock of
RadioShack Corp representing 5.33% of the shares outstanding.
A copy of the filing is available for free at:
http://is.gd/ObNbH3
About Radioshack
RadioShack sells consumer electronics and peripherals, including
cellular phones. It operates roughly 4,700 stores in the U.S. and
Mexico. It also operates about 1,500 wireless phone kiosks in
Target stores. The company also generates sales through a network
of 1,100 dealer outlets worldwide. Revenues for the last 12
months' period ending June 30, 2012, were roughly $4.4 billion.
The Company's balance sheet at Sept. 30, 2012, showed $2.23
billion in total assets, $1.57 billion in total liabilities and
$662.4 million in total stockholders' equity.
* * *
As reported by the TCR on Nov. 23, 2012, Standard & Poor's Ratings
Services lowered its corporate credit and senior unsecured debt
ratings on Fort Worth, Texas-based RadioShack Corp. to 'CCC+' from
'B-'. The outlook is negative.
"The downgrade of RadioShack reflects our view that it will be
very difficult for the company to improve its gross margin in the
fourth quarter of this year, given the highly promotional nature
of year-end holiday retailing in the wireless and consumer
electronic categories," said Standard & Poor's credit analyst
Jayne Ross.
In the July 27, 2012, edition of the TCR, Fitch Ratings has
downgraded its long-term Issuer Default Rating (IDR) for
RadioShack Corporation to 'CCC' from 'B-'. The downgrade reflects
the significant decline in RadioShack's profitability, which has
become progressively more pronounced over the past four quarters.
RADIOSHACK CORP: Donald Smith a 10% Owner as of Dec. 31
-------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Donald Smith & Co., Inc., and its affiliates disclosed
that, as of Dec. 31, 2012, they beneficially own 9,982,652 shares
of common stock of RadioShack Corp. representing 10.03% of the
shares outstanding. A copy of the filing is available at:
http://is.gd/hOM3B0
About Radioshack
RadioShack sells consumer electronics and peripherals, including
cellular phones. It operates roughly 4,700 stores in the U.S. and
Mexico. It also operates about 1,500 wireless phone kiosks in
Target stores. The company also generates sales through a network
of 1,100 dealer outlets worldwide. Revenues for the last 12
months' period ending June 30, 2012, were roughly $4.4 billion.
The Company's balance sheet at Sept. 30, 2012, showed $2.23
billion in total assets, $1.57 billion in total liabilities and
$662.4 million in total stockholders' equity.
* * *
As reported by the TCR on Nov. 23, 2012, Standard & Poor's Ratings
Services lowered its corporate credit and senior unsecured debt
ratings on Fort Worth, Texas-based RadioShack Corp. to 'CCC+' from
'B-'. The outlook is negative.
"The downgrade of RadioShack reflects our view that it will be
very difficult for the company to improve its gross margin in the
fourth quarter of this year, given the highly promotional nature
of year-end holiday retailing in the wireless and consumer
electronic categories," said Standard & Poor's credit analyst
Jayne Ross.
In the July 27, 2012, edition of the TCR, Fitch Ratings has
downgraded its long-term Issuer Default Rating (IDR) for
RadioShack Corporation to 'CCC' from 'B-'. The downgrade reflects
the significant decline in RadioShack's profitability, which has
become progressively more pronounced over the past four quarters.
REOSTAR ENERGY: Court Confirms Plan of Reorganization
-----------------------------------------------------
The Bankruptcy Court has confirmed debtors ReoStar Energy
Corporation, et al.'s Third Amended Joint Plan of Reorganization
as proposed by the Debtors and Equity Purchaser Russco Energy,
LLC.
The Plan provides for the restructuring of the Debtors and their
emergence from bankruptcy as reorganized privately held entities.
Entities identified as the "BTMK Released Parties" will have
$7.5 million in claims paid in full on the effective date,
pursuant to a global settlement.
All non-insider holders of allowed general unsecured claims will
receive their pro rata share of (a) 100% of the net proceeds, if
any, from all Estate Actions pursued by the Creditor Trust, and
(b) 20% of their allowed general unsecured claim amounts over 36
equal monthly payments, without interest.
Insider holders of allowed general unsecured claims will be
entitled only to payment of 20% of their allowed general unsecured
claim amounts over 36 equal monthly payments, without interest.
All existing interests in the Debtors will be canceled. New
interests will be sold to interest purchaser Russco Energy LLC for
100% of the new interests in the Reorganized Debtors for (a)
payment to the Debtors on the Effective Date of the remaining
balance of $2.16 million, and (b) the receipt and confirmation of
working capital commitments with funds to be available immediately
on and after the Effective Date sufficient to fund the Plan
payment obligations.
A copy of the Third Amended Plan is available at:
http://bankrupt.com/misc/reostar.doc614.pdf
About ReoStar Energy
Fort Worth, Texas-based ReoStar Energy Corporation is engaged in
the exploration, development and acquisition of oil and gas
properties, primarily located in the state of Texas. The Company
owns roughly 9,000 acres of leasehold, which include 5,000 acres
of exploratory and developmental prospects as well as 4,000 acres
of enhanced oil recovery prospects. ReoStar filed for Chapter 11
bankruptcy protection (Bankr. N.D. Tex. Case No. 10-47176) on
Nov. 1, 2010.
Bankruptcy Judge D. Michael Lynn presides over the case. Bruce W.
Akerly, Esq., and Arthur A. Stewart, Esq., at Cantey Hanger LLP,
in Dallas, represent the Debtors in their restructuring efforts.
Greenberg Taurig, LLP, serves as special corporate/securities
counsel. Reostar Energy disclosed $15.3 million in assets and
$16.4 million in liabilities.
ReoStar Energy's bankruptcy case is jointly administered with
ReoStar Gathering, Inc., ReoStar Leasing, Inc., and ReoStar
Operating, Inc. ReoStar Energy is the lead case.
No trustee was appointed in the Debtors' cases. On Jan. 10, 2011,
Michael McConnell was appointed as Chapter 11 examiner.
ReoStar filed for bankruptcy a few weeks after BT and MK Energy
and Commodities LLC, a Delaware Limited Liability Corporation
comprised of two members, BancTrust International, Inc., and MK
Oil Ventures LLC, accelerated a Union Bank note and issued a
foreclosure notice. BTMK acquired full interest in ReoStar's $25
million line of credit from Union Bank. Earlier in 2010, BT and
MK Capital expressed interested in investing in ReoStar and in
acquiring the line of credit for that purpose. Roughly
$10.8 million of the Union Bank loan were then outstanding, and
Union Bank assigned the loan to BTMK for roughly $5.4 million.
The Plan provides that holders of general unsecured claims in each
of the Debtors will have 100% of the net proceeds from all estate
actions, and 20% of their allowed claim amounts over 36 equal
monthly payments, without interest. According to the July 20
Plan, BT & MK has an estimated unsecured claim of $185,000 against
each of the Debtors only for voting purposes. Unsecured creditors
are impaired. Holders of existing interests won't receive
anything. New interests will be sold to Russco Energy LLC.
RESIDENTIAL CAPITAL: Proposes Lewis Kruger as CRO
-------------------------------------------------
Residential Capital, LLC, and its debtor affiliates seek
permission from Judge Martin Glenn of the U.S. Bankruptcy Court
for the Southern District of New York to appoint Lewis Kruger as
chief restructuring officer pursuant to Section 363(b) of the
Bankruptcy Code.
The CRO, according to the Debtors' counsel, Gary S. Lee, Esq., at
Morrison & Foerster LLP, in New York, will head a management team
that will carry out the Debtors' goals of (i) reaching and
confirming a consensual Chapter 11 plan, (ii) resolving major
disputed proofs of claim, (iii) managing the monetization of the
Debtors' remaining regulated loan portfolio and other remaining
assets, which collectively have a book value of approximately
$1 billion, (iv) compliance with certain governmental servicing-
related obligations, and (v) managing the transition of
information and personnel following the sales of the Debtors'
major assets.
Mr. Kruger -- lkruger@stroock.com -- a partner and co-chair of the
financial restructuring group at Stroock & Stroock & Lavan LLP,
will complement, and not duplicate, the efforts being done by the
Debtors' management team, Mr. Lee tells the Court. According to
Mr. Lee, Mr. Kruger will withdraw as partner and co-chair of the
financial restructuring group at Stroock upon appointment as the
Debtors' CRO.
Mr. Kruger will be paid an hourly rate of $895 and reimbursed for
all reasonable and necessary expenses incurred in connection with
his duties as CRO. In addition, Mr. Kruger will have the right to
earn a fee for the successful completion of his engagement
although Mr. Lee says Mr. Kruger and the Debtors' Board are still
in the process of negotiating the amount of the Success Fee and
the targets required to be achieved in order to earn the Success
Fee.
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.
The Bankruptcy Court in November 2012 approved ResCap's sale of
its mortgage servicing and origination platform assets to Ocwen
Loan Servicing, LLC and Walter Investment Management Corporation
for $3 billion; and its portfolio of roughly 50,000 whole loans to
Berkshire Hathaway for $1.5 billion. The sale of the assets,
subject to satisfaction of customary closing conditions including
certain third party consents, is expected to close in the first
quarter of 2013.
The partnership of Ocwen and Walter defeated the last bid of $2.91
billion from Fortress Investment Group's Nationstar Mortgage
Holdings Inc., which acted as stalking horse bidder, at an auction
that began Oct. 23, 2012. 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.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Ally No Longer Authorizes Use of Loan
----------------------------------------------------------
Residential Capital LLC and Ally Financial Inc. ask the Court to
approve a stipulation agreeing that all commitments related to the
AFI Debtor-in-Possession Financing are terminated and the AFI DIP
and Cash Collateral Order is amended to state that the Debtors are
no longer authorized to borrow money pursuant to the AFI DIP Loan.
The AFI DIP and Cash Collateral Order is also amended to provide
that the Debtors, the Junior Secured Parties, the AFI Lender, and
the Official Committee of Unsecured Creditors will continue to
negotiate in good faith to enter in an agreement, to be subject to
Court approval, by March 18, 2013 or as soon as practicable
thereafter on a revised expense allocation methodology that will
become effective following March 18, 2013.
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.
The Bankruptcy Court in November 2012 approved ResCap's sale of
its mortgage servicing and origination platform assets to Ocwen
Loan Servicing, LLC and Walter Investment Management Corporation
for $3 billion; and its portfolio of roughly 50,000 whole loans to
Berkshire Hathaway for $1.5 billion. The sale of the assets,
subject to satisfaction of customary closing conditions including
certain third party consents, is expected to close in the first
quarter of 2013.
The partnership of Ocwen and Walter defeated the last bid of $2.91
billion from Fortress Investment Group's Nationstar Mortgage
Holdings Inc., which acted as stalking horse bidder, at an auction
that began Oct. 23, 2012. 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.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Resolves Wells Fargo Objection to Sale
-----------------------------------------------------------
Residential Capital LLC and its affiliates and Wells Fargo Bank,
N.A., ask the Court to approve a stipulation they entered into in
order to resolve Wells Fargo's objection to the sale of the
Debtors' assets. Pursuant to the stipulation, the Debtors will
reimburse Wells Fargo for all pending advances that are currently
due and owing under servicing agreements between the two parties.
The Debtors will place in a segregated account an amount of $1
million for payment of any Pending Servicing Advances.
In a separate stipulation, the Debtors and Digital Lewisville,
LLC, agreed that their lease agreement will be assigned to Ocwen
Financial Corporation on the effective date of the sale of the
Debtors' assets. Until the effective date of the asset sale, the
Debtors will remain fully liable for the payment and for
performance of all of the terms under the lease.
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.
The Bankruptcy Court in November 2012 approved ResCap's sale of
its mortgage servicing and origination platform assets to Ocwen
Loan Servicing, LLC and Walter Investment Management Corporation
for $3 billion; and its portfolio of roughly 50,000 whole loans to
Berkshire Hathaway for $1.5 billion. The sale of the assets,
subject to satisfaction of customary closing conditions including
certain third party consents, is expected to close in the first
quarter of 2013.
The partnership of Ocwen and Walter defeated the last bid of $2.91
billion from Fortress Investment Group's Nationstar Mortgage
Holdings Inc., which acted as stalking horse bidder, at an auction
that began Oct. 23, 2012. 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.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Homeowner Sues for RICO Claims
---------------------------------------------------
Wendy Alison Nora filed an adversary complaint against the Debtors
alleging that she is one of thousands of victims of violations of
the Racketeer Influenced and Corrupt Organizations Act and the
Fair Debt Collections Practices Act by the Debtors, who have
conspired to and engaged in actions to deceive and defraud
homeowners of their homes in foreclosure proceedings initiated
without evidence that the foreclosing entity has the promissory
note and lawfully-assigned mortgage, rendering the debts upon
which foreclosure is commenced unsecured.
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.
The Bankruptcy Court in November 2012 approved ResCap's sale of
its mortgage servicing and origination platform assets to Ocwen
Loan Servicing, LLC and Walter Investment Management Corporation
for $3 billion; and its portfolio of roughly 50,000 whole loans to
Berkshire Hathaway for $1.5 billion. The sale of the assets,
subject to satisfaction of customary closing conditions including
certain third party consents, is expected to close in the first
quarter of 2013.
The partnership of Ocwen and Walter defeated the last bid of $2.91
billion from Fortress Investment Group's Nationstar Mortgage
Holdings Inc., which acted as stalking horse bidder, at an auction
that began Oct. 23, 2012. 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.
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).
RHYTHM AND HUES: Hollywood Visual Effects Provider in Chapter 11
----------------------------------------------------------------
Hollywood visual effects and computer-generated animation provider
Rhythm And Hues, Inc., filed a Chapter 11 petition (Bankr. C.D.
Calif. Case No. 13-13775) in Los Angeles on Feb. 13, 2013.
R&H has provided visual effects and animation for more than 150
feature films and has received Academy Awards for Babe and the
Golden Compass, an Academy Award nomination for The Chronicles of
Narnia and Life of Pi.
R&H has a 135,000 square-foot facility in El Segundo, California.
It has more than 460 employees.
The Debtor immediately filed with the Bankruptcy Court a motion to
assume three executory service contracts with non-debtor
affiliates. The non-debtor affiliates from Vancouver, Canada,
India, Malaysia, and Taiwan have 600 employees who provide
computer-generated graphics and software development services
under those contracts.
Without those services, the Debtor says it will be unable to
finish existing projects for some of its most significant
customers and thus maintain the continuity of its operations.
Road to Bankruptcy
The gross revenues for 2009 to 2011 were $108.9 million, $86.7
million and $121.4 million, respectively. Revenue in 2012 was
down to $95.0 million, leading to the net loss of $22.5 million
The decline in revenue in 2012 was partly due to a decrease in
feature film work, driven predominately by a slight decrease in
film production at Fox and Universal, historically two of R&H's
largest customers.
The Debtor established a facility in Vancouver, Canada in
September of 2011. But as projects award about a year before
delivery, it was too late to take advantage of the subsidies on
most of its projects delivering in 2012 and 2013.
The Debtor also said that the strong U.S. dollar also hurts U.S.
companies that compete internationally. Compared to 2008, the
dollar is about 20% stronger versus the pound. This is
effectively an additional 20% discount for U.K. based productions
providing a strong incentive for the film producers to do their
work and provide jobs in the U.K. rather than in Los Angeles.
Chapter 11 Case
Since opening the Vancouver office in September 2011, it has now
become widely known that the Company has a facility in a
government-subsidized location, and the Company has been included
in considerably more requests for bids as a result. Furthermore,
because R&H's Asian facilities are very efficient economically due
to the lower labor costs, the Company has been able to further
lower costs and hence increase its profits as it increases the
amount of work it does in Asia. R&H is actively bidding on
projects for 2013 and beyond. All of this will enable it to emerge
from Chapter 11 protections and continue in business as a
reorganized entity.
The Debtor is represented by attorneys at Greenberg Glusker.
According to the docket, the Debtor's schedules of assets and
liabilities and statement of financial affairs are due Feb. 27,
2013. The Debtor has filed a motion to extend the deadline to
file those documents.
RSI HOME: Moody's Rates New $525-Mil. Senior Secured Notes 'B1'
---------------------------------------------------------------
Moody's Investors Service assigned a first-time B1 Corporate
Family Rating and B1-PD Probability of Default Rating to RSI Home
Products, Inc. Moody's also assigned a B1 rating to the company's
proposed $525 million 2nd lien senior secured notes. Proceeds from
the notes will enable management to buy out Onex Equity, which
currently owns 50% of RSI, for about $320 million, and to pay off
an existing $185 million term loan. The remaining balance will be
used to increase the cash balance and to pay related fees and
expenses. The rating outlook is stable.
The following ratings will be affected by this action:
Corporate Family Rating assigned B1;
Probability of Default Rating assigned B1-PD; and,
2nd Lien Senior Secured Notes due 2018 assigned B1 (LGD4, 55%)
Ratings Rationale
RSI's B1 Corporate Family Rating incorporates Moody's view that
the company's healthy operating margins are a key credit strength.
Margin performance is aided by low-cost manufacturing, ongoing
improvements to operating efficiency, and an ability to mitigate
cost increases. Moody's also believes the company's variable cost
structure gives it added flexibility to size its work force
relatively quickly to meet changing demands and to maintain its
margins. RSI should also reap some benefits from future growth
prospects in the repair and remodeling market, the primary driver
of RSI's revenues. Pro forma debt leverage is reasonable relative
to the rating, even though RSI will have a more levered capital
structure following the buy-out of Onex Equity. In addition,
interest coverage will likely remain weak over the near term but
Moody's projects a gradual improvement by the end of 2014, based
on Moody's expectations for increased demand and gradual debt
reduction.
However, RSI's business profile is the greatest constraint on its
rating. The company relies on what Moody's views as a single line
of business. The big box retailers account for virtually all of
the company's sales, representing a significant distribution
channel concentration. Also, Moody's projects adjusted debt-to-
book capitalization to exceed 250%, a trait more in line with much
lower-rated entities. Balance sheet debt is doubling upon
consummation of the proposed transaction. The sizeable lack of
equity and significant negative tangible net worth result from
prior leveraged buyouts and dividends. Also, Ronald S. Simon,
RSI's founder, Chairman and majority owner of RSI, is not
investing any personal capital as part of the management buyout.
The stable rating outlook incorporates Moody's view that RSI's
operating performance will continue to improve, resulting in
credit metrics that are more supportive of the current corporate
family rating. RSI's good liquidity profile and the absence of any
near-term maturities also give the company some financial
flexibility to contend with potential disruption with the big box
retailers, and to contend with the fragile recovery in the repair
and remodeling end market.
The B1 rating assigned to the $525 million 2nd lien senior secured
notes due 2018 issued by RSI Home Products Inc. is the same as the
corporate family rating, as the notes comprise the preponderance
of debt in RSI's capital structure. The notes are secured by a
second lien on substantially all of the company's assets and stock
of subsidiaries. However, Moody's views these notes as virtually
unsecured debt, since the benefits from the residual value of the
second lien collateral will be minimal in a distressed scenario.
Positive rating actions over the intermediate term are unlikely.
However, over the long term if RSI's maintains its robust
operating margins such that EBITA-to-interest expense is sustained
above 3.0 times, debt-to-EBITDA approaches 3.5 times, or debt-to-
book capitalization is trending towards 60% (all ratios include
Moody's standard adjustments), then positive ratings actions could
be considered. Also, significant amount of permanent debt
reductions would also support positive rating movement.
Negative rating actions may occur if RSI's operating performance
falls below Moody's expectations or if the company experiences a
weakening in financial performance due to a decline in demand for
cabinets. EBITA-to-interest expense below 2.5 times, debt-to-
EBITDA sustained above 5.0 times (all ratios incorporate Moody's
standard adjustments), a deteriorating liquidity profile or large
dividends could pressure the ratings.
The principal methodology used in this rating was the Global
Manufacturing Industry 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.
RSI Home Products, Inc., headquartered in Anaheim, CA, is a
domestic manufacturer and distributor of stock and made-to-order
bathroom and kitchen cabinets and cultured marble tops to mainly
the big box retailers. Ronald S. Simon, Founder and Chairman, is
the majority owner of RSI, and management holds a minority
interest in the company. Revenues for the 12 months through
December 29, 2012 totaled approximately $451 million.
SAN BERNARDINO, CA: Police, Firefighters Seek to Sue City
---------------------------------------------------------
Tim Reid, writing for Reuters, reported that San Bernardino's
police and firefighters unions will ask a judge to let them sue
the bankrupt city over pay and benefit cuts, arguing that
officials have abused bankruptcy laws to impose concessions on
safety workers.
Reuters said a lawyer for the city's police union, Ron Oliner, on
Tuesday told the federal judge overseeing the case, Meredith Jury,
that after recent cuts to police pay, pension benefits and
staffing levels, morale in the force was at a "low ebb" and they
had no alternative but to try to sue the city in state court.
The report added that an attorney for the stricken city's
firefighters union, Corey Glave, said they would do the same, in
coordination with the police union.
According to Reuters, the large and growing burden of public
pension debt, in addition to salaries and overtime -- particularly
for San Bernardino's safety workers -- has become a prominent
issue in the city's bankruptcy as it seeks to cut costs. Earlier
this month arbitrated negotiations between the city and the unions
for the police, firefighters and public employees broke down,
Reuters recalled. The following day the city council voted to
impose pay and benefit cuts on the workers.
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 joined 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.
SCHMIDT'S BAKERY: Files for Chapter 7 Bankruptcy
------------------------------------------------
Pat Ferrier, writing for The Coloradoan, reported that Schmidt's
Bakery & Delicatessen filed for Chapter 7 liquidation, claiming
$44,200 in assets and $814,000 in liabilities. Bankruptcy
documents claim former pastry chef Emmanuel Vollmar is owed $980,
although the bakery said it might be $2,000.
The report related that Vollmar is one of 40 employees listed
among 95 creditors for The Bakery Inc., which owns the iconic and
now shuttered Loveland bakery. Schmidt's filed for Chapter 7
bankruptcy last week, claiming The employees are owed back wages
of nearly $24,000, according to U.S. Bankruptcy Court in Denver.
Other creditors include the city of Loveland, the state of
Colorado and the Internal Revenue Service, which is owed $190,000
in payroll witholding taxes. Creditors, including employees, have
been invited to a meeting of creditors on March 5.
The bakery, according to the report, was closed in January when
officials from the Colorado Department of Revenue seized the
property for nonpayment of back taxes.
According to the report, Schmidt's has a history of tax issues and
has been shut down by Department of Revenue officials over the
years. The January shutdown was Schmidt's third closure in four
years due to nonpayment of taxes to either the city of Loveland or
the state. In the past two closures, the bakery reopened after
paying the back taxes or making arrangements to pay them.
SCHOOL SPECIALTY: Committee Blasts Speedy Ch. 11 Sale
-----------------------------------------------------
Jamie Santo of BankruuptcyLaw360 reported that School Specialty
Inc.'s creditors committee asked a Delaware bankruptcy judge
Wednesday to withhold approval of the company's proposed bidding
procedures, saying the rushed sale process would function more
like a foreclosure by private equity firm Bayside Finance Inc.
than a competitive auction.
The report related that the unnecessarily hasty schedule set out
in the motion stems not from a well-formulated sales plan but
rather from conditions imposed by Bayside, which is the company's
debtor-in-possession lender, secured creditor and proposed
stalking horse bidder, according to the committee's objection.
As reported by the TCR on Feb. 7, 2013, the Debtors have signed an
asset purchase agreement dated Jan. 28, 2013, with Bayside School
Specialty LLC, a company formed by prepetition term loan lenders.
Bayside's offer will be $95 million in the form of a credit bid in
an amount of the outstanding obligation under the prepetition term
loan and the DIP
loans.
The original procedures provided that, to participate in the
auction, interested parties' initial offers must exceed Bayside's
stalking horse offer by at least $4.5 million. The revised
procedures reduce the overbid amount to $1.65 million
from $4.5 million.
The Debtors, however, have retained the quick sale timeline they
originally proposed. The Debtors propose that the deadline for
initial bids be set March 19 and the auction be set for March 25
at the offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP, in
New York. The Debtors will obtain approval of the sale to the
winning bidder by March 27.
About School Specialty
Based in Greenville, Wisconsin, School Specialty is a supplier of
educational products for kindergarten through 12th grade. Revenue
in 2012 was $731.9 million through sales to 70 percent of the
country's 130,000 schools.
School Specialty and certain of its subsidiaries filed voluntary
petitions for reorganization under Chapter 11 (Bankr. D. Del. Lead
Case No. 13-10125) on Jan. 28, 2013, to facilitate a sale to
lenders led by Bayside Financial LLC, absent higher and better
offers.
Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as
counsel to the Debtors. Alvarez & Marsal North America LLC is the
restructuring advisor and Perella Weinberg Partners LP is the
investment banker. Kurtzman Carson Consultants LLC is the claims
and notice agent.
The Debtor disclosed assets of $494.5 million and debt of
$394.6 million in its petition.
SEAHORSE INVESTMENTS: Case Summary & 9 Unsecured Creditors
----------------------------------------------------------
Debtor: Seahorse Investments, LLC
229 16th Street
Virginia Beach, VA 23451
Bankruptcy Case No.: 13-70491
Chapter 11 Petition Date: February 13, 2013
Court: United States Bankruptcy Court
Eastern District of Virginia (Norfolk)
Judge: Frank J. Santoro
Debtor's Counsel: Karen M. Crowley, Esq.
CROWLEY, LIBERATORE, RYAN & BROGAN, P.C.
Town Point Center, Suite 300
150 Boush Street
Norfolk, VA 23510
Tel: (757) 333-4500
Fax: (757) 333-4501
E-mail: kcrowley@clrbfirm.com
Scheduled Assets: $3,702,960
Scheduled Liabilities: $3,913,466
A copy of the Company's list of its nine largest unsecured
creditors, filed together with the petition, is available for free
at http://bankrupt.com/misc/vaeb13-70491.pdf
The petition was signed by Richard Kowalewitch, managing member.
SELECT MEDICAL: S&P Cuts Rating on First Lien Debt to 'B+'
----------------------------------------------------------
Standard & Poor's Ratings Services revised the recovery rating on
Mechanicsburg, Penn.-based Select Medical Corp.' senior secured
term loan to '3', indicating S&P's expectation for meaningful
(50%-70%) recovery for lenders in the event of a payment default,
from '2' (70%-90% recovery expectation), after the company
announced it will issue a $250 million tack-on to its existing
term loan B. The issue-level rating has been lowered to 'B+' from
'BB-', in accordance with S&P's notching criteria.
At the same time, S&P is assigning the proposed $250 million
incremental term loan B due 2016 a 'B+' issue-level rating, with a
recovery rating of '3' (50%-70% recovery expectation).
S&P's 'B+' corporate credit rating remains unchanged. The outlook
is stable.
The ratings on Select Medical Corp. are based on Standard & Poor's
Ratings Services' assessment of its business risk profile as
"weak," reflecting regulatory and reimbursement risks and market
competition. S&P considers the financial risk profile
"aggressive," reflecting its expectation that leverage will remain
above 4x, and that the use of free cash flow for share repurchases
will take priority over debt reduction. Select Medical operates
111 long-term acute care hospitals and 12 acute medical
rehabilitation hospitals in 28 states, and 965 outpatient
rehabilitation clinics in 32 states and the District of Columbia.
Including its medical rehabilitation services that it provides on
a contractual basis to nursing homes, hospitals, assisted living
and senior care centers, schools, and work sites, the company
operates in 44 states and the District of Columbia.
"We expect Select Medical to remain subject to significant
reimbursement risk, particularly from the government as Medicare
generates about half of the company's total revenues," said
Standard & Poor's credit analyst David Peknay.
"We expect Select Medical's total revenue to increase by about 3%
to 3.5% in 2012. We expect low-single-digit increases in both
admissions and rates to drive 3% growth in specialty hospital
division revenue, and growth in the company's contract service
business to contribute to an estimated 4% growth in outpatient
rehabilitation revenue. We expect the company's lease-adjusted
EBITDA margin to decrease about 30 basis points from its present
level, to 14.8% in 2013, to reflect increased infrastructure
investments and the difficulty of managing operating costs to meet
relatively low rate increases," S&P said.
SIMMONS FOOD: S&P Affirms 'CCC+' Corp. Credit Rating
----------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on Siloam
Springs, Ark.-based Simmons Foods Inc., including the 'CCC+'
corporate credit rating. S&P also revised the outlook to
developing from negative. Simmons Foods had about $436 million of
reported debt outstanding as of Sept. 30, 2012.
The outlook revision to developing reflects S&P's belief that the
company will maintain its improved operating performance into 2013
despite higher projected feed costs in its poultry segment.
Moreover, S&P believes the performance at its pet food operations
has stabilized, which could lead to a modest earnings rebound in
that segment. S&P believes the improving performance of these two
key segments will allow the company to be free cash flow positive
in 2012 and 2013, which, in S&P's opinion, bolsters its ability to
obtain covenant relief. Still, S&P is projecting a financial
covenant breach in the company's fixed-charge coverage ratio in
the coming months, which could lead to a lower rating if the
company is not able to obtain covenant relief.
SUN COUNTRY: CEO Gadek Exits, Fredericksen Steps In
---------------------------------------------------
David Phelps, writing for Star Tribune, reports that Stan Gadek,
who guided MN Airlines, which does business as Sun Country
Airlines, from bankruptcy to profitability, left the company
Wednesday in a "stunning and publicly unforeseen development."
According to the report, in a brief, late-afternoon statement, the
board of MN Airlines, said Mr. Gadek was being replaced on an
interim basis by vice president and general counsel John
Fredericksen, a 10-year veteran of the Mendota Heights-based
operation.
"The board wishes Mr. Gadek well, and appreciates the many good
works he performed in his nearly five-year term as the leader of
Sun Country Airlines," the airline said in a statement.
"This came as a complete surprise, totally out of the dark," said
Jake Yockers, spokesman for the Sun Country Air Line Pilots
Association, according to the report.
About Petters Group Worldwide
Based in Minnetonka, Minn., Petters Group Worldwide LLC is named
for founder and chairman Tom Petters. The group is a collection
of some 20 companies, most of which make and market consumer
products. It also works with existing brands through licensing
agreements to further extend those brands into new product lines
and markets. Holdings include Fingerhut (consumer products via
its catalog and Web site), SoniqCast (maker of portable, WiFi MP3
devices), leading instant film and camera company Polaroid
(purchased for $426 million in 2005), Sun Country Airlines
(acquired in 2006), and Enable Holdings (online marketplace and
auction for consumers and manufacturers' overstock inventory).
Petters formed the company in 1988.
Petters Company, Inc. is the financing and capital-raising unit of
Petters Group Worldwide, LLC. Petters Company, Inc. and Petters
Group Worldwide, LLC, filed separate petitions for Chapter 11
relief on Oct. 11, 2008 (Bankr. D. Minn. Case No. 08-45257 and
08-45258, respectively). James A. Lodoen, Esq., at Lindquist &
Vennum P.L.L.P., represents the Debtors as counsel. In its
petition, Petters Company, Inc. estimated debts of between
$500 million and $1 billion, while its parent, Petters Group
Worldwide, LLC, estimated debts of not more than $50,000.
As reported in the Troubled Company Reporter on Oct. 7, 2008,
Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed for Chapter 11 bankruptcy protection with the U.S.
Bankruptcy Court for the District of Minnesota on Oct. 6, 2008
(Lead Case No. 08-45136). Petters Aviation, LLC, is a wholly
owned unit of Thomas Petters Inc. and owner of MN Airline
Holdings, Inc., Sun Country's parent company.
Sun Country Airlines won confirmation of its plan of
reorganization on Sept. 13, 2010. The plan provides for cash
payments to certain creditors, as well as a distribution of equity
in the reorganized company to other creditors.
Polaroid Corp., which was owned by Petters since 2005, filed its
second voluntary petition for Chapter 11 protection on Dec. 18,
2008 (Bankr. D. Minn., Lead Case No. 08-46617). PLR Acquisition
LLC, a joint venture composed of Hilco Consumer Capital L.P. and
Gordon Brothers Brands LLC, acquired most of Polaroid's assets --
including the Polaroid brand and trademarks -- in May 2009. They
paid $87.6 million for the brand. Debtor Polaroid Corp. was
renamed to PBE Corp. following the sale. The case was converted
to Chapter 7 on Aug. 31, 2009, and John R. Stoebner serves as the
Chapter 7 Trustee.
THOMPSON CREEK: Mackenzie Stake at 7.97% as of Dec. 31
------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Mackenzie Financial Corporation disclosed that, as of
Dec. 31, 2012, it beneficially owns 13,440,946 shares of common
stock of Thompson Creek Metals Company, Inc., representing 7.97%
of the shares outstanding. A copy of the filing is available for
free at http://is.gd/2jn1wb
About Thompson Creek Metals
Thompson Creek Metals Company Inc. is a growing, diversified North
American mining company. The Company produces molybdenum at its
100%-owned Thompson Creek Mine in Idaho and Langeloth
Metallurgical Facility in Pennsylvania and its 75%-owned Endako
Mine in northern British Columbia. The Company is also in the
process of constructing the Mt. Milligan copper-gold mine in
central British Columbia, which is expected to commence production
in 2013. The Company's development projects include the Berg
copper-molybdenum-silver property and the Davidson molybdenum
property, both located in central British Columbia. Its principal
executive office is in Denver, Colorado and its Canadian
administrative office is in Vancouver, British Columbia. More
information is available at http://www.thompsoncreekmetals.com
The Company's balance sheet at Sept. 30, 2012, showed
$3.61 billion in total assets, $1.71 billion in total liabilities
and $1.90 billion in shareholders' equity.
* * *
As reported by the TCR on Aug. 14, 2012, Standard & Poor's Ratings
Services lowered its long-term corporate credit rating on Denver-
based molybdenum miner Thompson Creek Metals Co. to 'CCC+' from
'B-'. "These rating actions follow Thompson Creek's announcement
of weaker production and higher cost expectations through next
year," said Standard & Poor's credit analyst Donald Marleau.
In the May 9, 2012, edition of the TCR, Moody's Investors Service
downgraded Thompson Creek Metals Company Inc.'s Corporate Family
Rating (CFR) and probability of default rating to Caa1 from B3.
Thompson Creek's Caa1 CFR reflects its concentration in
molybdenum, relatively small size, heavy reliance currently on two
mines, and the need for favorable volume and price trends in order
to meet its increasingly aggressive capital expenditure
requirements over the next several years.
TASTY BAKING: Dimensional No Longer Shareholder as of Dec. 31
-------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it does not beneficially own any shares of
common stock of Tasty Baking Co. A copy of the filing is
available for free at http://is.gd/56tVSc
About Tasty Baking Company
Tasty Baking Company (NasdaqGM: TSTY) -- http://www.tastykake.com/
-- founded in 1914 and headquartered in Philadelphia, Pa., is one
of the country's leading bakers of snack cakes, pies, cookies, and
donuts. The company has manufacturing facilities in Philadelphia
and Oxford, Pa. The company offers more than 100 products under
the Tastykake brand name.
The Company reported a net loss of $45.18 million on $171.67
million of net sales for the 52 weeks ended Dec. 25, 2010,
compared with a net loss of $3.39 million on $180.56 million of
net sales for the 52 weeks ended Dec. 26, 2009.
The Company's balance sheet at March 26, 2011, showed $153.32
million in total assets, $172.18 million in total liabilities and
a $18.86 million total shareholders' deficit.
PricewaterhouseCoopers LLP, in Philadelphia, Pennsylvania, noted
that that the Company's cumulative losses, substantial
indebtedness that is due June 30, 2011, in addition to its current
liquidity situation, raise substantial doubt about its ability to
continue as a going concern.
Forbearance Agreement,
Going Concern Doubt
On Jan. 5, 2011, Tasty Baking obtained initial two-week waiver
agreements from several of its creditors, which waived certain
payments that were due and certain financial covenant
requirements. The Company said it was experiencing extremely
tight liquidity due to (i) certain production difficulties during
the optimization of its new Philadelphia bakery that caused the
Company to not achieve the expected operational cash savings from
this bakery during the fourth quarter of 2010; (ii) the impact of
the recent bankruptcy filing by The Great Atlantic & Pacific Tea
Company, Inc.; and (iii) a sharp rise in commodity costs.
At the conclusion of the two-week waiver period, on Jan. 14, 2011,
the Company entered into arrangements with certain creditors,
including: (i) a Seventh Amendment to the Company's Bank Credit
Facility; (ii) a Forbearance and Amendment Agreement with the
PIDC Local Development Corporation, which also included a new
$2 million loan from PIDC; (iii) a letter agreement with the
Machinery and Equipment Fund of the Department of Community and
Economic Development of the Commonwealth of Pennsylvania, along
with a new $1 million loan from MELF; and (iv) a letter agreement
with the Company's landlords at the Philadelphia Navy Yard for its
bakery and offices. Also on Jan. 14, 2011, the Company issued
$3.5 million of unsecured 12% promissory notes due Dec. 31, 2011
to a group of accredited investors.
The Creditor Amendments generally permit the Company to delay
certain payments to PIDC, MELF and Liberty Property until June 30,
2011. The Creditor Amendments also generally provide that the
creditor will waive certain specified defaults, but not any other
defaults that may occur in the future that are not specifically
waived in the Creditor Amendments. In addition, the Bank
Amendment, among other things, (i) changed the maturity date of
the Bank Credit Facility to June 30, 2011; (ii) reduced the letter
of credit limit to the aggregate amount of letters of credit
currently outstanding, while not permitting the Company to issue
new letters of credit or extend outstanding letters of credit; and
(iii) set new financial covenants, a breach of which could cause a
default to occur prior to June 30, 2011. The Bank Amendment also
required that the Company engage in a process -- pursuant to an
agreed upon timeline with milestones -- to consummate a sale of
the Company before June 30, 2011 in an amount sufficient to pay
all obligations of the Company under the Bank Credit Facility and
all transaction costs.
The Company has delayed the filing of its 2010 annual report on
Form 10-K. The Company anticipates that the Form 10-K for fiscal
year ended Dec. 25, 2010, will include an explanatory paragraph
from the Company's independent registered public accounting firm
expressing substantial doubt about the Company's ability to
continue as a going concern.
THQ INC: Seeks Great American Auction of Remaining Assets Feb. 21
-----------------------------------------------------------------
BankruptcyData reported that THQ Inc. filed with the U.S.
Bankruptcy Court a motion for approval of the sale at auction of
the miscellaneous assets including inventory, equipment and
machinery located at the Debtors' corporate headquarters free and
clear of all liens, claims and encumbrances.
The report related that the Debtors seek to retain Great American
Group to conduct a live Webcast auction for the sale of the assets
on or about Feb. 21, 2013.
The Court scheduled a Feb.. 19, 2013 hearing on the matter.
About THQ Inc.
THQ Inc. (NASDAQ: THQI) -- http://www.thq.com/-- is a worldwide
developer and publisher of interactive entertainment software.
The Company develops its products for all popular game systems,
personal computers, wireless devices and the Internet.
Headquartered in Los Angeles County, California, THQ sells product
through its network of offices located throughout North America
and Europe.
THQ Inc. and its affiliates sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 12-13398) on Dec. 19, 2012.
Attorneys at Young Conaway Stargatt & Taylor, LLP and Gibson, Dunn
& Crutcher LLP serve as counsel to the Debtors. FTI Consulting
and Centerview Partners LLC are the financial advisors. Kurtzman
Carson Consultants is the claims and notice agent.
Before bankruptcy, Clearlake signed a contract to buy Agoura THQ
for a price said to be worth $60 million. After a 22-hour auction
with 10 bidders, the top offers brought a combined $72 million
from several buyers who will split up the company. Judge Walrath
approved the sales in January. Some of the assets didn't sell,
including properties the company said could be worth about
$29 million.
THQ INC: Vanguard Ceases to Own Shares as of Dec. 31
----------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, The Vanguard Group disclosed that, as of
Dec. 31, 2012, it does not beneficially own any shares of common
stock of THQ Inc. A copy of the filing is available for free at:
http://is.gd/QssrZ1
About THQ Inc.
THQ Inc. (NASDAQ: THQI) -- http://www.thq.com/-- is a worldwide
developer and publisher of interactive entertainment software.
The Company develops its products for all popular game systems,
personal computers, wireless devices and the Internet.
Headquartered in Los Angeles County, California, THQ sells product
through its network of offices located throughout North America
and Europe.
THQ Inc. and its affiliates sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 12-13398) on Dec. 19, 2012.
Attorneys at Young Conaway Stargatt & Taylor, LLP and Gibson, Dunn
& Crutcher LLP serve as counsel to the Debtors. FTI Consulting
and Centerview Partners LLC are the financial advisors. Kurtzman
Carson Consultants is the claims and notice agent.
Before bankruptcy, Clearlake signed a contract to buy Agoura THQ
for a price said to be worth $60 million. After a 22-hour auction
with 10 bidders, the top offers brought a combined $72 million
from several buyers who will split up the company. Judge Walrath
approved the sales in January. Some of the assets didn't sell,
including properties the company said could be worth about $29
million.
TIDEWATER OIL: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Tidewater Oil & Gas Company LLC
110 16th Street, Suite 405
Denver, CO 80202
Bankruptcy Case No.: 13-11981
Chapter 11 Petition Date: February 13, 2013
Court: United States Bankruptcy Court
District of Colorado (Denver)
Judge: Elizabeth E. Brown
Debtor's Counsel: David M. Miller, Esq.
KUTNER MILLER BRINEN, P.C.
303 E. 17th Ave., Ste. 500
Denver, CO 80203
Tel: (303) 832-2400
E-mail: dmm@kutnerlaw.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its 20 largest unsecured creditors
is available for free at http://bankrupt.com/misc/cob13-11981.pdf
The petition was signed by James S. Jones, manager.
TOUSA INC: Feb. 26 Status Conference in Connection with Mediation
-----------------------------------------------------------------
The Hon. John K. Olson of the U.S. Bankruptcy Court for the
Southern District of Florida Tousa, Inc., et al., scheduled on
Feb. 26, 2013, at 9:30 a.m., a status conference in connection
with mediation regarding the Joint Plan of Liquidation of Tousa,
Inc., et al.
As reported in the TCR on July 26, 2010, the Court told counsel to
the major parties in TOUSA, Inc.'s bankruptcy cases that in light
of the filing by the official committee of unsecured creditors of
a liquidating Chapter 11 plan, he would direct mandatory mediation
of plan issues among the various active constituencies in the
cases. The mediation participants would include the Committee,
the Debtors and their lenders.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA, Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A.
Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P.,
TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder
in the United States, operating in various metropolitan markets in
10 states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West.
The Debtor and its debtor-affiliates filed for separate
Chapter 11 protection on Jan. 29, 2008 (Bankr. S.D. Fla. Case
No. 08-10928). Richard M. Cieri, Esq., M. Natasha Labovitz,
Esq., and Joshua A. Sussberg, Esq., at Kirkland & Ellis LLP, in
New York, N.Y.; and Paul S. Singerman, Esq., at Berger Singerman,
in Miami, Fla., represent the Debtors in their restructuring
efforts. Lazard Freres & Co. LLC is the Debtors' investment
banker. Ernst & Young LLP is the Debtors' independent auditor and
tax services provider. Kurtzman Carson Consultants LLC acts as
the Debtors' Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008
(Bankr. S.D. Fla. Case No. 08-20746). It estimated assets and
debts of $1 million to $10 million in its Chapter 11 petition.
The official committee of unsecured creditors has filed a proposed
chapter 11 liquidating plan for Tousa. However, the committee
said it would no longer pursue approval of its liquidation plan
because of the pending appeal of its fraudulent transfer case in
the U.S. Court of Appeals for the Eleventh Circuit. A district
court in February 2011 held that the bankruptcy judge was wrong in
ruling that lenders who were paid off received fraudulent
transfers when Tousa gave liens on subsidiaries' properties to
bail out and refinance a joint venture. Daniel H. Golden, Esq.,
and Philip C. Dublin, Esq., at Akin Gump Strauss Hauer & Feld LLP,
in New York, N.Y., represent the creditors committee.
The Tousa committee filed a Chapter 11 plan in July 2010 based on
an assumption it would win the appeal.
TRAINOR GLASS: Creditors' Investigation Period Extended to Feb. 25
------------------------------------------------------------------
Trainor Glass Company, the Official Committee of Unsecured
Creditors and First Midwest Bank have entered into a stipulation
agreement extending for the seventh time, to Feb. 25, 2012, the
committee's so-called Investigation Period as provided in the Cash
Collateral Order.
The Court issued the Cash Collateral Order on April 12, 2012,
which sets forth a 120-day period -- beginning on the Petition
Date -- in which the Committee or any party-in-interest may
challenge the amount, validity, or enforceability of First
Midwest's security interest in the Debtor's property.
About Trainor Glass
Trainor Glass Company, doing business as Trainor Modular Walls,
Trainor Solar, and Trainor Florida, filed for Chapter 11
bankruptcy (Bankr. N.D. Ill. Case No. 12-09458) on March 9, 2012.
Trainor was founded in 1953 by Robert J. Trainor Sr. to pursue a
residential glass business in Chicago, Illinois. Trainor's
business model was focused on quality fabrication, design,
engineering, and installation of glass products and framing
systems in virtually every architectural application, including
(a) new construction, (b) green-building solutions, (c) building
rehabilitation, (d) storefronts and entrances, (e) tenant
interiors, and (f) custom-specialty work.
The Hon. Carol A. Doyle oversees the Chapter 11 case. David A.
Golin, Esq., Michael L. Gesas, Esq., and Kevin H. Morse, Esq., at
Arnstein & Lehr LLP, serve as the Debtor's counsel. High Ridge
Partners, Inc., serves as its financial consultant. The Debtor
has tapped Cole, Martin & Co., Ltd., to render certain auditing
services related to the Debtor's 401(k) and profit sharing plan.
The Debtor scheduled $14,276,745 in assets and $64,840,672 in
liabilities.
A three-member official committee of unsecured creditors has been
appointed in the case. The committee retained Sugar Felsenthal
Grais & Hammer LLP as counsel.
TRAINOR GLASS: Can Continue Using Cash Collateral Thru April 12
---------------------------------------------------------------
U.S. Bankruptcy Judge Carol A. Doyle has extended the final order
authorizing Trainor Glass Company to use the cash collateral and
incur postpetition debt to April 12, 2013.
Under the Final Cash Collateral/DIP Financing Order, dated April
20, 2012, as amended by order dated Oct. 4, 2012, the Debtor's
authorization to use cash collateral was slated to expire Jan. 11,
2013.
First Midwest Bank, as Postpetition Lender, has agreed to the
requested extension. The Official Committee of Unsecured
Creditors supports approval of the motion.
About Trainor Glass
Trainor Glass Company, doing business as Trainor Modular Walls,
Trainor Solar, and Trainor Florida, filed for Chapter 11
bankruptcy (Bankr. N.D. Ill. Case No. 12-09458) on March 9, 2012.
Trainor was founded in 1953 by Robert J. Trainor Sr. to pursue a
residential glass business in Chicago, Illinois. Trainor's
business model was focused on quality fabrication, design,
engineering, and installation of glass products and framing
systems in virtually every architectural application, including
(a) new construction, (b) green-building solutions, (c) building
rehabilitation, (d) storefronts and entrances, (e) tenant
interiors, and (f) custom-specialty work.
The Hon. Carol A. Doyle oversees the Chapter 11 case. David A.
Golin, Esq., Michael L. Gesas, Esq., and Kevin H. Morse, Esq., at
Arnstein & Lehr LLP, serve as the Debtor's counsel. High Ridge
Partners, Inc., serves as its financial consultant. The Debtor
has tapped Cole, Martin & Co., Ltd., to render certain auditing
services related to the Debtor's 401(k) and profit sharing plan.
The Debtor scheduled $14,276,745 in assets and $64,840,672 in
liabilities.
A three-member official committee of unsecured creditors has been
appointed in the case. The committee retained Sugar Felsenthal
Grais & Hammer LLP as counsel.
TRIUS THERAPEUTICS: Brian Atwood Stake at 8.3% as of Dec. 31
------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Brian G. Atwood and his affiliates disclosed
that, as of Dec. 31, 2012, they beneficially own 3,281,141 shares
of common stock of Trius Therapeutics, Inc., representing 8.33% of
the shares outstanding. Mr. Atwood previously reported beneficial
ownership of 3,269,141 common shares or a 8.48% equity stake as of
Dec. 31, 2011. A copy of the amended filing is available at:
http://is.gd/OKDZq1
About Trius Therapeutics
San Diego, Calif.-based Trius Therapeutics, Inc. (Nasdaq: TSRX) --
http://www.triusrx.com/-- is a biopharmaceutical company focused
on the discovery, development and commercialization of innovative
antibiotics for serious, life-threatening infections. The
Company's first product candidate, torezolid phosphate, is an IV
and orally administered second generation oxazolidinone being
developed for the treatment of serious gram-positive infections,
including those caused by MRSA. In addition to the company's
torezolid phosphate clinical program, it is currently conducting
two preclinical programs using its proprietary discovery platform
to develop antibiotics to treat infections caused by gram-negative
bacteria.
In the Form 10-K for the year ended Dec. 31, 2011, the Company
said it has incurred losses since its inception and it anticipates
that it will continue to incur losses for the foreseeable future.
As of Dec. 31, 2011, the Company had an accumulated deficit of
$95.4 million. The Company has funded, and plan to continue to
fund, its operations from the sale of securities, through research
funding and from collaboration and license payments, including
payments under the Bayer collaboration. However, the Company has
generated no revenues from product sales to date.
The Company's balance sheet at Sept. 30, 2012, showed
$80.25 million in total assets, $18.90 million in total
liabilities and $61.34 million in total stockholders' equity.
TWN INVESTMENT: Files for Chapter 11 in San Jose, California
------------------------------------------------------------
TWN Investment Group, LLC, filed a Chapter 11 petition in its
home-town in San, Jose California (Bankr. N.D. Calif. Case No.
13-50821) on Feb. 13, 2013.
The Company disclosed assets of $58.2 million and liabilities of
$53.4 million in its schedules. The Company owns partially
developed real estate located at 909-9999 Story Road, in San Jose.
The property is the company's sole assets and secures a $48.1
million debt to East West Bank.
According to the statement of financial affairs, the Debtor has
not generated income from the property. There's a pending lawsuit
filed by East West Bank in Los Angeles County Superior Court
(#GC045116) for breach of contract. The Debtor is also defendant
to a lawsuit filed by Capex in Santa Clara County Superior Court
(#112CV219021) on account of money due.
A copy of the schedules and statement of financial affairs
attached to the petition is available at
http://bankrupt.com/misc/canb13-50821.pdf
The Debtor is represented by Charles B. Greene, Esq., at Law
Offices of Charles B. Greene, in San Jose.
TWN INVESTMENT: Sec. 341(a) Meeting on March 13
-----------------------------------------------
There's a meeting of creditors in the Chapter 11 case of TWN
Investment Group, LLC, on March 13, 2013 at 10:30 a.m. at San Jose
Room 268 in Bankruptcy Court in San Jose.
Proofs of claim are due June 11, 2013, according to the notice of
the creditors meeting.
The meeting, which is required under Section 341(a) of the
Bankruptcy Code, offers creditors a one-time opportunity to
examine a bankrupt company's representative under oath about its
financial affairs and operations that would be of interest to the
general body of creditors.
About TWN Investment
TWN Investment Group, LLC, filed a Chapter 11 petition in its
home-town in San, Jose California (Bankr. N.D. Calif. Case No.
13-50821) on Feb. 13, 2013.
The Company disclosed assets of $58.2 million and liabilities of
$53.4 million in its schedules. The Company owns partially
developed real estate located at 909-9999 Story Road, in San Jose.
The property is the company's sole assets and secures a $48.1
million debt to East West Bank.
The Debtor is represented by Charles B. Greene, Esq., at Law
Offices of Charles B. Greene, in San Jose.
TWN INVESTMENT: Proposes Charles B. Greene as Counsel
-----------------------------------------------------
TWN Investment Group LLC seeks Bankruptcy Court approval to employ
the Law Office of Charles B. Greene as bankruptcy counsel.
The firm will, among other things, provide legal advise and
counsel to the Debtor with respect to the Debtors' obligations
under the Chapter 11 proceeding.
Charles B. Greene, Esq., will charge $450 per hour for legal
services rendered.
The firm has not been retained by the Debtor for previous legal
services. It represents no interest adverse to the Debtor or the
estate.
The Debtor prepetition paid the firm $10,000, including $1,213 for
the filing fee.
About TWN Investment
TWN Investment Group, LLC, filed a Chapter 11 petition in its
home-town in San, Jose California (Bankr. N.D. Calif. Case No.
13-50821) on Feb. 13, 2013.
The Company disclosed assets of $58.2 million and liabilities of
$53.4 million in its schedules. The Company owns partially
developed real estate located at 909-9999 Story Road, in San Jose.
The property is the company's sole assets and secures a $48.1
million debt to East West Bank.
The Debtor is represented by Charles B. Greene, Esq., at Law
Offices of Charles B. Greene, in San Jose.
UNIVERSAL HEALTH: Makes Argument to Stay in Chapter 11
------------------------------------------------------
Stephanie Gleason at Dow Jones' DBR Small Cap reports that Florida
Medicare and Medicaid provider Universal Health Care Group Inc. is
arguing for the right to stay in Chapter 11 bankruptcy against the
wishes of its secured lender.
As reported by the TCR on Feb. 14, BankUnited, N.A., has filed an
emergency motion for the dismissal of Universal Health's Chapter
11 case, or in the alternative, relief from the automatic stay.
BankUnited, the administrative agent for lenders owed $36.5
million, explains that Universal's assets and the bank's
collateral are the equity interests in insurance company Universal
Health Care Insurance Co., Inc. -- UHCIC -- and health maintenance
organizations Universal Health Care, Inc. -- UHC -- Universal HMO
of Texas, Inc., and Universal Health Care of Nevada.
The bank claims that the Debtor's bankruptcy filing was designed
to disrupt the bank's scheduled sale of the equity interests under
Article 9 of the Florida Uniform Commercial Code, which was set
Feb. 19.
As a result of the Debtor's Chapter 11 filing, however, Florida
regulators has commenced two separate state court proceedings in
Leon County, Florida, which seek to place both UHC and UHCIC into
receivership. Similarly, regulators in Texas and Nevada are
expected to follow suit with regards to the two other HMOs.
BankUnited notes that regulators' authority over the insurance
company and the HMOs is not impacted by the Debtor's filing.
Accordingly, the bank wants the Chapter 11 case of the holding
company dismissed so it can complete foreclosure of the operating
companies. The bank says that if it forecloses, it may be able to
stop the receivership of the operating companies, sell the
businesses, and thus preserve some of its collateral.
About Universal Health Care
Universal Health Care Group, Inc., owns an insurance company and
three health-maintenance organizations that provide managed care
services for government sponsored health care programs, focusing
on Medicare and Medicaid.
Universal Health was founded in 2002 by Dr. A.K. Desai and grew
its operations of offering Medicare plans to more than 37,000
members to over 20 states.
Universal Health filed a Chapter 11 bankruptcy protection (Bankr.
M.D. Fla. Case No. 13-01520) on Feb. 6, 2013, after Florida
regulators moved to put two of the company's subsidiaries in
receivership.
Universal Health Care estimated assets of up to $100 million and
debt of less than $50 million in court filings in Tampa, Florida.
Harley E. Riedel, Esq., at Stichter Riedel Blain & Prosser, in
Tampa, serves as counsel to the Debtor.
USEC INC: Vanguard Ownership Down to 3.11% as of Dec. 31
--------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, The Vanguard Group disclosed that, as of
Dec. 31, 2012, it beneficially owns 3,862,970 shares of common
stock of USEC Inc. representing 3.11% of the shares outstanding.
Vanguard Group previously reported beneficial ownership of
6,369,912 common shares or a 5.22% equity stake as of Dec. 31,
2011. A copy of the amended filing is available at:
http://is.gd/8MqBT5
About USEC Inc.
Headquartered in Bethesda, Maryland, USEC Inc. (NYSE: USU) --
http://www.usec.com/-- supplies enriched uranium fuel for
commercial nuclear power plants.
The Company reported a net loss of $540.70 million in 2011,
compared with net income of $7.50 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$3.76 billion in total assets, $3.11 billion in total liabilities,
and $652.2 million in stockholders' equity.
Bankruptcy Warning
"A delisting of our common stock by the NYSE and the failure of
our common stock to be listed on another national exchange could
have significant adverse consequences. A delisting would likely
have a negative effect on the price of our common stock and would
impair shareholders' ability to sell or purchase our common stock.
As of September 30, 2012, we had $530 million of convertible notes
outstanding. A "fundamental change" is triggered under the terms
of our convertible notes if our shares of common stock are not
listed for trading on any of the NYSE, the American Stock
Exchange, the NASDAQ Global Market or the NASDAQ Global Select
Market. Our receipt of a NYSE continued listing standards
notification ... did not trigger a fundamental change. If a
fundamental change occurs under the convertible notes, the holders
of the notes can require us to repurchase the notes in full for
cash. We do not have adequate cash to repurchase the notes. In
addition, the occurrence of a fundamental change under the
convertible notes that permits the holders of the convertible
notes to require a repurchase for cash is an event of default
under our credit facility. Accordingly, our inability to maintain
the continued listing of our common stock on the NYSE or another
national exchange would have a material adverse effect on our
liquidity and financial condition and would likely require us to
file for bankruptcy protection," according to the Company's
quarterly report for the period ended Sept. 30, 2012.
* * *
USEC Inc. carries 'Caa1' corporate and probability of default
ratings, with "developing" outlook, from Moody's.
As reported by the TCR on Aug. 17, 2012, Standard & Poor's Ratings
Services lowered its ratings on Bethesda, Md.-based USEC Inc.,
including the corporate credit rating to 'CCC' from 'CCC+'.
"The downgrade reflects our assessment of USEC's long-term
viability after the company publicly stated that it will be
difficult to continue enrichment operations at the Paducah Gaseous
Diffusion Plant after a one-year multiparty agreement to extend
operations expires in May 2013," said Standard & Poor's credit
analyst Maurice S. Austin.
USEC INC: Dimensional Stake at 6.1% as of Dec. 31
-------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Dimensional Fund Advisors LP disclosed that,
as of Dec. 31, 2012, it beneficially owns 7,633,804 shares of
common stock of USEC Inc. representing 6.15% of the shares
outstanding. Dimensional Fund previously reported beneficial
ownership of 8,402,845 common shares or a 6.89% equity stake as of
Dec. 31, 2011. A copy of the amended filing is available at:
http://is.gd/YXW9oa
About USEC Inc.
Headquartered in Bethesda, Maryland, USEC Inc. (NYSE: USU) --
http://www.usec.com/-- supplies enriched uranium fuel for
commercial nuclear power plants.
The Company reported a net loss of $540.70 million in 2011,
compared with net income of $7.50 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$3.76 billion in total assets, $3.11 billion in total liabilities,
and $652.2 million in stockholders' equity.
Bankruptcy Warning
"A delisting of our common stock by the NYSE and the failure of
our common stock to be listed on another national exchange could
have significant adverse consequences. A delisting would likely
have a negative effect on the price of our common stock and would
impair shareholders' ability to sell or purchase our common stock.
As of September 30, 2012, we had $530 million of convertible notes
outstanding. A "fundamental change" is triggered under the terms
of our convertible notes if our shares of common stock are not
listed for trading on any of the NYSE, the American Stock
Exchange, the NASDAQ Global Market or the NASDAQ Global Select
Market. Our receipt of a NYSE continued listing standards
notification ... did not trigger a fundamental change. If a
fundamental change occurs under the convertible notes, the holders
of the notes can require us to repurchase the notes in full for
cash. We do not have adequate cash to repurchase the notes. In
addition, the occurrence of a fundamental change under the
convertible notes that permits the holders of the convertible
notes to require a repurchase for cash is an event of default
under our credit facility. Accordingly, our inability to maintain
the continued listing of our common stock on the NYSE or another
national exchange would have a material adverse effect on our
liquidity and financial condition and would likely require us to
file for bankruptcy protection," according to the Company's
quarterly report for the period ended Sept. 30, 2012.
* * *
USEC Inc. carries 'Caa1' corporate and probability of default
ratings, with "developing" outlook, from Moody's.
As reported by the TCR on Aug. 17, 2012, Standard & Poor's Ratings
Services lowered its ratings on Bethesda, Md.-based USEC Inc.,
including the corporate credit rating to 'CCC' from 'CCC+'.
"The downgrade reflects our assessment of USEC's long-term
viability after the company publicly stated that it will be
difficult to continue enrichment operations at the Paducah Gaseous
Diffusion Plant after a one-year multiparty agreement to extend
operations expires in May 2013," said Standard & Poor's credit
analyst Maurice S. Austin.
VALENCE TECHNOLOGY: Plan Filing Exclusivity Extended to April 8
---------------------------------------------------------------
Bankruptcy Judge Craig. A. Gargotta granted Valence Technology,
Inc. an extension of its exclusive period to propose a Chapter 11
plan until April 8, 2013. The judge also granted an extension of
the Debtors' period to solicit acceptances and to confirm a plan
until June 7, 2013. The order entered January says the extension
is without prejudice to the Debtor's right to seek further
extension.
About Valence Technology
Valence Technology, Inc., filed a Chapter 11 petition (Bankr. W.D.
Tex. Case No. 12-11580) on July 12, 2012, in its home-town in
Austin. Founded in 1989, Valence develops lithium iron magnesium
phosphate rechargeable batteries. Its products are used in hybrid
and electric vehicles, as well as hybrid boats and Segway personal
transporters.
The Debtor disclosed debt of $82.6 million and assets of
$31.5 million as of March 31, 2012. The Debtor disclosed
$24,858,325 in assets and $78,520,831 in liabilities as of the
Chapter 11 filing. Chairman Carl E. Berg and related entities own
44.4% of the shares. ClearBridge Advisors, LLC owns 5.5%.
Valence expects to complete its restructuring during 2012.
Judge Craig A. Gargotta presides over the case. The Company is
being advised by Streusand, Landon & Ozburn, LLP with respect to
bankruptcy matters. The petition was signed by Robert Kanode,
CEO.
On Aug. 8, 2012, the U.S. Trustee for Region 7 appointed five
creditors to serve on the Official Committee of Unsecured
Creditors of the Debtor. Brinkman Portillo Ronk, PC, serves as
its counsel.
WARNER MUSIC: To Buy Parlophone Label for $765MM From Universal
---------------------------------------------------------------
Warner Music Group Corp. has signed a definitive agreement to
acquire the Parlophone Label Group from Universal Music Group, a
subsidiary of Vivendi, for GBP487 million (around $765 million) in
an all-cash transaction.
The Parlophone Label Group, formerly a part of EMI Music, includes
a broad range of some of the world's best-known recordings and
classic and contemporary artists spanning a wide array of musical
genres, as well as some of the industry's leading executive
talent.
Len Blavatnik, Chairman and founder of Access Industries, said,
"This is a very important milestone for Warner Music, reflecting
our commitment to artist development by strengthening our
worldwide roster, global footprint and executive talent."
Stephen Cooper, CEO of Warner Music Group, said, "Having the
Parlophone Label Group become part of our family represents a
unique opportunity for us to join with legendary record labels and
artists that are highly complementary to our existing organization
from a creative, geographic and strategic standpoint. We are
committed to making this a great outcome for Parlophone's artists
and employees, who will find in WMG a similar spirit and culture
that is dedicated to providing the most supportive and innovative
home for recording artists. The continuation of the Parlophone
legacy and brand are central to the future success of this
combination, and we are proud to have them join us."
The Parlophone Label Group is comprised of the historic Parlophone
label and Chrysalis and Ensign labels as well as EMI's recorded
music operations in Belgium, Czech Republic, Denmark, France,
Norway, Portugal, Spain, Slovakia and Sweden. Its artist roster
and catalog of recordings include, among many others, Air,
Coldplay, Daft Punk, Danger Mouse, David Guetta, Deep Purple,
Duran Duran, Edith Piaf, Gorillaz, Iron Maiden, Itzhak Perlman,
Jethro Tull, Kate Bush, Kylie Minogue, Maria Callas, Pet Shop
Boys, Pink Floyd, Radiohead, Shirley Bassey, Tina Turner and Tinie
Tempah.
Warner Music Group has obtained commitments to finance this
transaction through a new term loan facility provided through
Credit Suisse, Barclays, UBS, Macquarie and Nomura. The closing
of the transaction is expected to occur mid-year 2013, subject to
certain regulatory approvals and, as far as the French entities
are concerned, after the consultation procedure with employee
representatives.
Additional information about the transaction is available at:
http://is.gd/nejXbS
About Warner Music Group
Based in New York, Warner Music Group Corp. (NYSE: WMG)
-- http://www.wmg.com/-- was formed by a private equity
consortium of investors on Nov. 21, 2003. The Company is the
direct parent of WMG Holdings Corp., which is the direct parent of
WMG Acquisition Corp. WMG Acquisition Corp. is one of the world's
major music-based content companies and the successor to
substantially all of the interests of the recorded music and music
publishing businesses of Time Warner Inc.
The Company classifies its business interests into two fundamental
operations: Recorded Music and Music Publishing. The Company's
Recorded Music business primarily consists of the discovery and
development of artists and the related marketing, distribution and
licensing of recorded music produced by such artists. The
Company's Music Publishing operations include Warner/Chappell, its
global Music Publishing company, headquartered in New York with
operations in over 50 countries through various subsidiaries,
affiliates and non-affiliated licensees.
In May 2011, Warner Music Group Corp. and Access Industries, the
U.S.-based industrial group, announced the execution of a
definitive merger agreement under which Access Industries will
acquire WMG in an all-cash transaction valued at $3.3 billion.
The purchase includes WMG's entire recorded music and music
publishing businesses.
On July 20, 2011, the Company notified the New York Stock
Exchange, Inc., of its intent to remove the Company's common stock
from listing on the NYSE and requested that the NYSE file with the
SEC an application on Form 25 to report the delisting of the
Company's common stock from the NYSE. On July 21, 2011, in
accordance with the Company's request, the NYSE filed the Form 25
with the SEC in order to provide notification of that delisting
and to effect the deregistration of the Company's common stock
under Section 12(b) of the Securities Exchange Act of 1934, as
amended. On August 2, 2011, the Company filed a Form 15 with the
SEC in order to provide notification of a suspension of its duty
to file reports under Section 15(d) of the Exchange Act. The
Company continues to file reports with the SEC pursuant to the
Exchange Act in accordance with certain covenants contained in the
instruments governing the Company's outstanding indebtedness.
Warner Music incurred a net loss attributable to the Company of
$112 million for the fiscal year ended Sept. 30, 2012, compared
with a net loss attributable to the Company of $31 million for the
period from July 20, 2011, through Sept. 30, 2011.
The Company's balance sheet at Sept. 30, 2012, showed $5.27
billion in total assets, $4.33 billion in total liabilities and
$944 million in total equity.
WILCOX EMBARCADERO: To Present Plan for Confirmation on Feb. 26
---------------------------------------------------------------
The Bankruptcy Court has approved the disclosure statement in
respect of Wilcox Embarcadero Associates, LLC's Plan of
Reorganization, dated Dec. 14, 2012. The confirmation hearing on
the Plan will be at 1:30 p.m. on Feb. 26, 2013.
A critical element of the Plan is the approval of a new loan from
Owens Mortgage Investment Fund, L.P., in the amount of
$2.0 million to fund the bund the build-out of 1035 & 1045 22nd
Avenue into live/work lofts. The terms of the loan are as
follows: $2.0 million at 10% interest, with interest only
payments, and the loan fully paid in 5 years. The new loan will
fund the build-out of 1035 & 1045 22nd Avenue into live/work
lofts.
The Wells Fargo loan will be amortized over 25 years, with
interest at the contract rate of 7.25% with 6 monthly payments of
$24,922; 53 monthly payments of $41,922, plus additional payments
totaling $102,000 in months 18 through 21; and a 60th payment of
the balance owed, approximately $5,304,158. In the event that
Jeffrey A. Wilcox (who will serve as the Reorganized Debtor's
Managing Member) is able to increase his cash infusion from
$30,000 to $200,000, the payments on the Wells loan will be as
follows: 59 monthly payments of approximately $41,922, with a 60th
payment of the balance owed, approximately $5,304,158.
The Owens loan will be interest only, with interest at 10% with 59
monthly payments of approximately $26,667 and a 60th payment of
the balance owed, approximately $3,220,500. Owens has agreed to
accept minimum payments of the Debtor's net positive cash flow,
less a minimum of $3,000 each month for reserves, until such time
as the Debtor's cash flow enables the Debtor to make regular
payments.
General unsecured creditors whose claims are less than $500 will
be paid 100% of their allowed claims without interest. General
unsecured creditors whose claims are greater than $500 and under
$2,500 will be paid 100% of their Allowed Claim without interest
in three equal monthly installments. General unsecured creditors
whose claims are greater than $2,500, or creditors with claims
less than $2,500, who elect treatment under this class, will be
paid 100% of their Allowed Claim with interest at the rate of 9.0%
in six equal monthly installments commencing on the Effective
Date.
General Unsecured Claims of tenants who have paid deposits will
have their claims recognized in full with the funds retained by
the Debtor pursuant to their lease agreements.
A copy of the disclosure statement in respect of the Debtors' Plan
of Reorganization, dated Dec. 14, 2012, is available at:
http://bankrupt.com/misc/wilcoxembarcadero.doc163.pdf
About Wilcox Embarcadero
Wilcox Embarcadero Associates, LLC, filed a Chapter 11 petition in
Oakland (Bankr. N.D. Calif. Case No. 12-40758) on Jan. 26, 2012.
Wilcox operates a commercial building, leasing warehouse,
wholesale, retail and office space. Wilcox operates in the Bay
Area and has been in business for 10 years. The Debtor says it is
a single asset real estate case.
Steele, George, Schofield & Ramos LLP represents the Debtor in its
restructuring efforts.
In its schedules, The Debtor disclosed $10.2 million in assets and
under $8.6 million in liabilities. The Debtor's property
secures an $8.55 million debt to Wells Fargo and Owens Mortgage
Investment Fund, LP.
The Debtor said it incurred financial difficulty when its primary
lender, the holder of the First Deed of Trust, refused to extend,
modify or refinance the loan. The Debtor is in negotiations with
a new lender to take out the lender, but needs more time to
accomplish this task.
WJO INC: Ciardi Firm Wants Case Converted to Chapter 7 Liquidation
------------------------------------------------------------------
Ciardi Ciardi & Astin, former counsel to WJO, Inc., asks the
Bankruptcy Court for entry of an Order converting the Chapter 11
case to a case under Chapter 7 of the Bankruptcy Code.
Albert A. Ciardi, III, Esq., recounts that on July 3, 2012, Alfred
T. Giuliano was appointed as chapter 11 trustee. On July 5, the
Trustee fired William J. O'Brien, III, the Debtor's 100%
shareholder and highest revenue-generating doctor.
Currently, the Debtor only has only two doctors under payroll and
has seen revenue from operations decrease by nearly 50% as
compared to same period in 2011.
Since the Trustee was appointed in July 2012 and Dr. O'Brien was
fired, Mr. Ciardi contends that the Debtor has experienced
negative accounts receivable, increased costs, expenses, and legal
fees, and has failed to put forth a plan of reorganization.
Additionally, the Debtor has failed to conclude a sale which could
permit a plan of reorganization to be confirmed.
Due to factors prohibiting the Debtor's potentially profitable
operation, conversion of this case to a case administered under
chapter 7 is in the best interest of its estate and creditors. In
particular, administrative costs and expenses are increasing and
revenue is decreasing.
Mr. Ciardi believes that there is substantial or continuing loss
to or diminution of the estate and the absence of a reasonable
likelihood of rehabilitation, failure to file a disclosure
statement or plan, and the failure to set forth any plan regarding
the payment of administrative and other expenses to the detriment
of all creditors.
According to Mr. Ciardi, the Debtor is currently losing a
significant amount of money each month. At the same time of
decreased operating income, the Trustee has failed to put forth
any new evidence of a deal or negotiations for the sale of the
business or accounts receivables. Furthermore, since being
appointed to the matter, the Debtor has spent or incurred over
$200,000 in fees to the Trustee, attorneys, and accounting.
About WJO Inc.
Bristol, Pennsylvania-based WJO, Inc., operates six family
practices located in Newtown, Bristol, Bensalem, Bustleton, South
Philadelphia, and Bethlehem, Pennsylvania and consists of Board
Certified Osteopathic Physicians specializing in Family Medicine.
Prior to the petition date, and to allow the Company to
restructure effectively, HyperOx Inc., HyperOx I, LP, HyperOx
III, LP, and East Coast TMR, Inc., were merged into WJO.
WJO filed for Chapter 11 bankruptcy protection (Bankr. E.D. Pa.
Case No. 10-19894) on Nov. 15, 2010. The Debtor disclosed
$19,923,802 in assets and $6,805,255 in liabilities as of the
Chapter 11 filing.
Holly Elizabeth Smith, Esq., and Thomas Daniel Bielli, Esq., at
Ciardi Ciardi & Astin, P.C., serve as the Debtor's bankruptcy
counsel. Pond Lehocky Stern Giordano serves as the Debtor's
special counsel to represent it in worker's compensation
proceedings pertaining to the Therapeutic Magnetic Resonance
treatments. Patrick Yun serves as the Debtor's financial advisor.
Attorneys at Keifer & Tsarouhis LLP serve as counsel to the
official committee of unsecured creditors. ParenteBeard LLC
serves as the Committee's accountant and financial advisor.
The United States Trustee has appointed David Knowlton as patient
care ombudsman in the case. The Ombudsman is represented in the
case by Karen Lee Turner, Esq., at Eckert Seamans Cherin &
Mellott, LLC, as counsel.
Tristate Capital Bank, the cash collateral lender, is represented
in the case by lawyers at Benesch Friedlander Coplan & Aronoff
LLP.
On July 3, 2012, Roberta A. DeAngelis, U.S. Trustee for Region 3,
obtained permission from the Hon. Jean K. Fitzsimon of the U.S.
Bankruptcy Court for the Eastern District of Pennsylvania to
appoint Alfred T. Giuliano as Chapter 11 trustee of the bankruptcy
estate of WJO, Inc. Maschmeyer Karalis P.C. serves as the Chapter
11 Trustee's general bankruptcy counsel.
WKI HOLDING: Bank Facility Re-Launch No Impact on Moody's B2 CFR
----------------------------------------------------------------
Moody's Investors Service announced that the B2 Corporate Family
Rating and B2-PD Probability of Default Rating for WKI Holding
Company Inc. are unchanged following the company's re-launch of
the syndication of its credit facilities.
The credit facilities will contain the same terms and conditions
as those originally contemplated at the time the ratings were
assigned on November 30, 2012, though the term loan will now be
$180 million instead of the originally proposed $200 million. The
minimal impact of the incremental debt reduction, coupled with the
company's stable fourth quarter performance, do not meaningfully
alter WKI's credit profile. As such, both the ratings and the
outlook remain unchanged.
The following ratings are affirmed at WKI Holding Company, Inc. :
- Corporate Family Rating at B2;
- Probability of Default Rating at B2-PD;
World Kitchen, LLC:
- $90 million senior secured revolving credit facility expiring
February 2018, at B1 (LGD 3, 41%)
- $180 million senior secured first lien term loan due February
2019, at B1 (LGD 3, 41%)
The outlook is stable.
Ratings Rationale
The B2 Corporate Family Rating for WKI reflects the company's
relatively modest margins, weak credit metrics, and small scale.
Moody's expects modest growth in the US market as the sector is
mature and intensely competitive and that the company will rely on
its smaller but higher margin Asia business for growth.
Furthermore, heavy investment in the business will constrain debt
reduction and leverage will remain high. However, the rating also
reflects the company's diverse portfolio of longstanding, well-
known houseware brands across a wide range of product categories,
coupled with an impressive global footprint spanning North
America, Europe and Asia.
The rating outlook is stable, based upon Moody's expectation that
the company will continue to grow in international markets (Asia
in particular), which will more than offset any softness in Europe
and North America. The outlook also reflects the company's diverse
portfolio of well recognized houseware brands and good geographic
distribution.
The ratings could be downgraded if operating performance were to
deteriorate such that the company becomes cash flow negative for a
sustained period. Any major disruptions to its supply chain or
manufacturing operations that would meaningfully damage the
company's earnings would also contribute to a downgrade. Credit
metrics driving a potential downgrade include debt to EBITDA
sustained above 5.5 times or sustained consumption of cash.
The ratings could be upgraded if debt-to-EBITDA is sustained below
4.5 times while improving profitability and maintaining good
liquidity. Other factors that could contribute to an upgrade
include improved scale, broader geographic diversity, and the
ability to manufacture key brands such as Corelle in multiple
locations.
The principal methodology used in this rating was the Global
Consumer Durables 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.
* Fraud Suit Upheld for Foreclosure Without Mortgage Documents
--------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that a Massachusetts homeowner's fraud lawsuit against a
mortgage lender was allowed to survive by the U.S. Court of
Appeals in Boston because a document transferring the mortgage
wasn't signed until after foreclosure.
The report recounts that the homeowner, acting as her own lawyer,
filed suit in state court against U.S. Bank NA, as trustee for a
trust holding securitized mortgages, and Select Portfolio
Servicing Inc., the servicer. The defendants removed the lawsuit
to federal court. The district judge dismissed the suit, saying
the homeowner couldn't lay out a "plausible" claim.
According to the report, the First Circuit in Boston reinstated
the lawsuit Feb. 12 in a 27-page opinion written by Circuit Judge
Juan R. Torruella. The appeal revolved around a technical point
of Massachusetts real estate law requiring the foreclosing party
to own the mortgage before foreclosure. The document assigning the
mortgage to the bank was dated after foreclosure, allowing the
homeowner to argue that the bank didn't have the right to
foreclose. The bank argued that the document was merely
confirming an assignment that already had taken place.
Judge Torruella, the report discloses, said if it were
confirmatory, there still had to be something in writing before
foreclosure showing the mortgage was assigned. The prior writing
need not be in recordable form, Judge Torruella said. The appeals
court reinstated the lawsuit, saying there must be discovery to
search for evidence of an assignment of the mortgage before
foreclosure. For now, the appeals court allowed the homeowner's
claims to survive for fraud and for violation of Massachusetts law
barring deceptive practices.
Mr. Rochelle points out that the opinion shows how courts
sometimes require rigorous compliance with foreclosure law even
when a homeowner admitted defaulting on the mortgage.
"U.S. Bank had no involvement in the servicing or foreclosure of
this loan," Teri Charest, a spokeswoman for the bank, said in an
e-mailed statement. Select Portfolio was "responsible for all
actions on individual properties, including foreclosure," she
said.
The case is Juarez v. Select Portfolio Servicing Inc.,
11-2431, U.S. Court of Appeals for the First Circuit (Boston).
* Investors Buying Junk Bonds With Weaker Covenants
---------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News, relays
that according to a report from Moody's Investors Service,
investors are willing to buy junk-rated debt with weak covenants.
Moody's covenant quality index weakened in January to 4.08, a
"marked deterioration" from December's 3.55, according to the
report. The index measure the strength of covenants where 1
represents the tightest covenants and 5 is the loosest. Moody's
said that the weakening of covenants in newly issued bonds began
in July.
Covenants are provisions in bond indentures where the holders can
call a default even if payments are made on time. Covenants can
be violated if specified financial ratios or tests aren't met.
The prospect of a covenant violation obliges an issuer to
negotiate with the debt holders for a change in covenants or a
waiver, often requiring payment of fees or changes in the loan
agreement.
* American and US Mergers Could Affect Hub Operations, Fitch Says
-----------------------------------------------------------------
Fitch Ratings has published a new special report titled 'American
and US Mergers Could Affect Hub Operations'. The report provides
an update on issues affecting airports currently providing large
scale connecting traffic operations for the two carriers.
A merger of two of the largest U.S. based carriers, American
Airlines and US Airways, would be the fourth major consolidation
of domestic airlines during the past five years. In Fitch's view,
such events are material to the U.S. airport sector from a credit
perspective as consolidation allows for opportunities to make
changes in route networks and hub arrangements. As seen in recent
mergers, some hub airports will likely be strengthened through
industry consolidation while others are weakened.
To the extent a merger consummates between American and US
Airways, the combined carrier would effectively maintain six hub
airports in Dallas-Ft. Worth, Miami, Chicago, Philadelphia,
Charlotte and Phoenix. Separately, the combined carrier would
maintain a sizable presence in markets like New York, Los Angeles
and San Francisco. While geographic location and separation helps
support a rationale for hubs, it is still fair to ask whether
maintaining as many as six hub airports at the same level of
operations will be necessary to maintain an efficient single
network.
* Late-Payment Rate on U.S. Mortgages Hits 4-Year Low
-----------------------------------------------------
The Associated Press reported that homeowners who took on
mortgages well after the housing bubble burst are doing a better
job in keeping up with payments, a trend that has helped push the
national rate of late payments on home loans to the lowest level
in four years.
AP, citing reporting agency TransUnion, said percentage of
mortgage holders at least two months behind on their payments fell
in the fourth quarter to 5.19 percent from 6.01 percent a year
earlier. The rate hasn't been that low since December 2008, a
time when home prices were sliding, the U.S. economy was in
recession and many adjustable-rate mortgages taken out by
homebuyers with less-than-perfect credit were in the process of
resetting to a higher rate, according to AP.
AP noted that those ARM resets triggered higher payments that many
borrowers couldn't afford, sending late payment rates higher into
2009. In addition, the national unemployment rate was on an upward
trajectory in 2008 that would extend well into the following year.
Those are some of the reasons the mortgage delinquency rate didn't
hit its peak of nearly 7 percent until the fourth quarter of 2009,
according to TransUnion, the report related.
TransUnion, according to AP, said the number of mortgages gone
unpaid two months or more climbed 54 percent in 2007 from the
previous year, increased 53 percent in 2008 and rose 50 percent in
2009. The decline has been far slower, with mortgage delinquency
levels falling 7 percent in 2010 from the year before, 6 percent
in 2011 and 14 percent last year, the firm said. All told the 40
percent of all mortgages taken out by borrowers since 2009 only
make up 10 percent of home loans that have gone unpaid.
AP said that's partly due to lenders tightening the criteria
needed to qualify for a loan, including larger down payments. And
even with mortgage rates hovering near all-time lows, borrowers
are typically getting fixed-rate, 30-year mortgages these days.
AP, however, said that even at a 4-year low, the mortgage
delinquency rate is still well above the 1 percent to 2 percent
average historical range, an indication that many homeowners still
are struggling to make their payments. Before the housing bust,
mortgage delinquencies were running at less than 2 percent
nationally.
At the state level, Florida led the nation in the fourth quarter
with the highest mortgage delinquency rate of any state at 12.47
percent, according to TransUnion. It was followed by Nevada at
10.45 percent; New Jersey at 7.72 percent; and, Maryland at 6.88
percent. The states with the lowest delinquency rate were North
Dakota at 1.53 percent; South Dakota at 1.97 percent; Nebraska at
2.20 percent; and, Alaska at 2.20 percent.
* Moody's Sees More Hedge Fund Activism in 2013
-----------------------------------------------
The next year is likely to see even more shareholder activism than
in 2012 as cash-heavy balance sheets, ready funding and increased
risk appetite boosts investor attention, says Moody's Investors
Service in its new special comment "Activist Hedge Funds Poised
for Another Busy Year of Strong Boardroom Influence."
"The current environment also means that shareholder activists are
seeking even larger targets, and size has become less of a
barrier," said Christian Plath, a Moody's Vice President and
author of the report. "In 2012, activists took positions in
several firms with $10 billion or more in market capitalization --
a trend that's likely to continue."
Moody's notes that these developments have potentially mixed
implications from a creditor's perspective, pointing out that
shareholder-focused strategic and policy changes, as well as debt-
funded share repurchases and divestitures of cash generating
assets may all be risks to creditors. However, activism may result
in credit-positive actions such as better strategy, operational
efficiencies and improvements in corporate governance, says the
report.
In addition, shareholder nominees are increasingly present on
corporate boards, and seeking goals through negotiations rather
than costly and disruptive proxy contests, says Moody's.
Companies vulnerable to activist pressure include those with poor
financial and stock performance relative to their peers, issuers
with multiple business lines that could be spun off or sold to
unlock value, and those that the activists believe have entrenched
boards and managements, says Moody's.
These companies are often found in the technology, industrial
goods, consumer goods, basic materials, pharmaceuticals and energy
sectors, says Moody's, and are at the greatest risk from being
targeted by activist hedge funds in 2013.
* Moody's Notes Rising U.S. Real Estate Prices in 2012
------------------------------------------------------
US commercial real estate prices increased by 8.1% on a composite
basis during 2012, according to this month's Moody's/RCA
Commercial Property Price Indices, which captures pricing trends
for all of 2012.
Central business district or CBD office and apartment were the
hottest sectors, with price increases of 19.1% and 11.2%,
respectively, for the year. Suburban office was the only sector to
see a price decline in 2012, edging down by 0.8%.
"The CBD office sector has been a leader in the post-crisis
recovery, and both its major and non-major market components
posted double-digit returns in 2012," said Moody's Director of
Commercial Real Estate Research Tad Philipp, lead author of the
report. "The performance of apartments in major markets was just
'warm' during 2012 but the results from non-majors was enough to
make it a 'hot' sector overall."
To put last year's results in perspective, he said, commercial
property prices at year-end 2012 stood 33% above the January 2010
real estate trough and 20% below the industry's November 2007
peak.
"Even though suburban office was the only sector to experience a
price decrease during the year, it ended 2012 on a positive note
by gaining 2.7% in the fourth quarter," said Philipp.
Retail and industrial real estate sectors had modest gains for the
year, increasing by 5.0% and 3.7%, respectively. Retail ended the
year with strong momentum, up 6.9% in the fourth quarter while
industrial prices declined by 0.6% in the same quarter.
The major markets of Boston, Chicago, Los Angeles, New York, San
Francisco and Washington, DC, as a group saw a price gain of 9.6%
during 2012, outpacing the 6.9% increase in non-major markets.
Major markets ended the year 9% below its peak level, while non-
major markets finished the year 28% below peak.
"Major market CBD office and major market apartment were the only
two indices to finish 2012 above peak levels, said Philipp. "Major
market apartment topped its previous peak by 1.3% while major
market CBD office topped its former peak by 0.6%."
At approximately 1,200, the fourth quarter saw the highest level
of repeat sales observations since the inception of the price
indices in 2000, reflecting a surge of year-end transaction
volume.
"The share of distressed transactions declined at year-end 2012 to
approximately 18%, roughly half the level of distress seen at the
first quarter 2010 high water mark," said Philipp. "Apartment had
the lowest share of distressed transactions at just above 11%
while suburban office had the highest at 28%."
Composed of a suite of 20 indices, the Moody's/RCA Commercial
Property Price Indices measure price changes in US commercial real
estate through advanced repeat-sale regression analytics. The
indices use transaction data from Real Capital Analytics (RCA) and
a methodology developed by David Geltner, a professor at MIT, in
conjunction with Moody's and RCA.
Provided by CBRE Econometric Advisors, the forecasts in the
February report are consistent with those used in Moody's
commercial mortgage metrics.
* Texas, 7 Other States Join Challenge to Dodd-Frank
----------------------------------------------------
Jeff Overley of BankruptcyLaw360 reported that eight states
including Texas joined a lawsuit Wednesday challenging the Dodd-
Frank financial overhaul, denouncing as unconstitutional the power
to liquidate banks, the authority to deem certain institutions
more important than others and the sweeping oversight granted to
the U.S. Consumer Financial Protection Bureau.
The report related that Alabama, Georgia, Kansas, Montana,
Nebraska, Ohio, Texas and West Virginia added their voices to the
complaint, originally launched in July by three private entities
and later joined by Michigan, Oklahoma and South Carolina in hopes
of crippling the CFPB and the Financial Stability Oversight
Council.
* Big Banks Told to Review Own Foreclosures
-------------------------------------------
Jessica Silver-Greenberg and Ben Protess, writing for The New York
Times' DealBook blog, reported that Washington is seeking help
from an unlikely group in its effort to distribute billions of
dollars to struggling homeowners in foreclosure: the same banks
accused of abusing homeowners with shoddy foreclosure practices.
In doing so, the regulators are trying to speed the process after
a flawed, independent foreclosure review delayed relief for
millions of borrowers, according to people briefed on the matter,
but housing advocates worry that the banks, eager to end the
costly process, could take shortcuts as they comb through loan
files for potential errors, in some cases diverting aid from the
neediest homeowners, the DealBook said.
The report related that regulators say they will check the work
and banks have already agreed to pay a fixed amount to troubled
homeowners, creating another backstop.
DealBook, citing officials involved in the process, who spoke
anonymously because the matter is not public, the regulators had
few alternatives.
According to the DealBook, the decision to tap the banks for
support is the latest twist in the review of more than four
million foreclosures, a process that has incensed lawmakers and
ensnared the nation's largest lenders. Regulators are eager to
make the payments to homeowners, who have languished for more than
a year.
* Bill Aimed at Reducing Size of "Too-Big-to-Fail" Banks Offered
----------------------------------------------------------------
Cheyenne Hopkins, writing for Bloomberg News, reported that
legislation intended to shrink too-big- to-fail banks by requiring
them to hold more capital including long-term debt will be
introduced by lawmakers, including Rep. John Campbell, a
Republican from California.
Bloomberg related that Rep. Campbell said the proposal will make
big banks add a new layer of capital of at least 15% of
subordinated long-term bonds, a move that could force "too big to
fail" banks to contract. Rep. Campbell, speaking with Peter Cook
on Bloomberg Television's "In the Loop," also talks about the
outlook for automatic spending cuts set to begin March 1, if
Congress can't agree on a deficit-reduction plan.
"Being big is not a problem in and of itself, but being big in a
sense that it creates a competitive disadvantage and a systemic
problem is a bad thing," Rep. Campbell, a California Republican,
said in the interview with Bloomberg Government. "If you want to
stay big that's fine, you can stay big. But it's going to be
rather expensive."
According to Bloomberg, three of the four largest U.S. banks --
JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co.
-- are bigger today than they were in 2007, heightening the risk
of economic damage if one gets into trouble. Bloomberg said banks
typically fund their longer-term assets with short- term debt,
making a profit on the interest-rate difference between the two.
In a bank failure, stockholders typically are wiped out, and
short-term debt can evaporate quickly as creditors refuse to renew
commercial paper and short-term notes, Bloomberg added.
The bill, Bloomberg added, calls for banks to be placed into
receivership if credit-default swaps on the new long-term
subordinated debt closes at an average of more than 100 basis
points, or 1 percentage point, over 30 days.
* BOOK REVIEW: Legal Aspects of Health Care Reimbursement
---------------------------------------------------------
Authors: Robert J. Buchanan, Ph.D., and James D. Minor, J.D.
Publisher: Beard Books
Softcover: 300 pages
List Price: $34.95
Review by Henry Berry
With Legal Aspects of Health Care Reimbursement, Buchanan, a
professor in the School of Public Health at Texas A&M, and Minor,
an attorney, have come up with an invaluable resource for lawyers
and anyone else seeking an introduction to the legal and social
issues related to Medicare and Medicaid. The administrative
costs of Medicare and Medicaid reimbursement have been a heated
topic of debate among public officials and administrators of
provider healthcare organizations, especially health maintenance
organizations. Although inflation and the use of costly medical
technology are key factors in the rise in Medicare and Medicaid
costs, some control can be gained through appropriate compliance,
using more efficient procedures and better detection of fraud.
This work is a major guide on how to go about doing this.
Though mostly a legal treatise, Legal Aspects of Health Care
Reimbursement, first published in 1985, also offers commentary
through legislative and regulatory analyses, thereby explaining
how healthcare reimbursement policies affect the solvency and
effectiveness of the Medicare and Medicaid programs.
In discussing how legislation and regulations affect the solvency
and effectiveness of government-provided healthcare, the authors
offer insight into the much-publicized and much-discussed issue
of runaway healthcare costs. Buchanan and Minor do not deny that
healthcare costs are out of control and are onerous for the
government and ruinous for many individuals. But healthcare
reimbursement policies are not the cause of this, the authors
argue. To make their case, they explain how the laws and
regulations in different areas of the Medicare and Medicaid
programs create processes that are largely invisible to the
public, but make the programs difficult to manage financially.
The processes are not well thought out nor subject to much
quality control, with the result that fraud is chronic and
considerable.
The areas of Medicare covered in the book are inpatient hospital
reimbursement, long-term care, hospice care, and end-stage renal
disease. The areas of Medicaid covered are inpatient hospital
and long-term care plus abortion and family planning services.
For each of these areas, the authors discuss the conditions for
receiving reimbursement, the legislation and regulations
regarding reimbursement, the procedures for being reimbursed, the
major areas of reimbursement (for example, capital-related costs,
dietetic services, rental expenses); and court cases, including
appeals. Reimbursement practices of selected states are covered.
For each of the major areas of interest, the chapters are
organized in a manner that is similar to that found in reference
books and professional journals for attorneys and accountants.
Laws and regulations are summarized and occasionally quoted with
expert background and commentary supplied by the authors. With
regard to court cases and rulings pertaining to Medicare and
Medicaid, passages from court papers are quoted, references to
legal records are supplied, and analysis is provided. Though the
text delves into legal issues, it is accessible to administrators
and other lay readers who have an interest in the subject matter.
Clear chapter and subchapter titles, a table of cases following
the text, and a detailed index enable readers to use this work as
a reference.
The value of this book is reflected in the authors' ability to
distill great amounts of data down to one readable text. It
condenses libraries of government and legal documents into a
single work. Answers to questions of fundamental importance to
healthcare providers -- those dealing with qualifications,
compliance, reimbursable costs, and appeals -- can be found in
one place. Timely reimbursement depends on proper application of
the rules, which is necessary for a provider's sound financial
standing. But the authors specify other reasons for writing this
book, to wit: "Providers should have a general knowledge of the
law and should not rely on manuals and regulations exclusively."
By summarizing, commenting on, and citing cases relating to
principal provisions of Medicare and Medicaid, the authors
accomplish this objective.
The authors also cover the topic of fraud with respect to both
Medicare and Medicaid, offering both a legal treatment and
commentary. At the end of each chapter is a section titled
"Outlook," which contains a discussion of government studies,
changes in healthcare policy, or other developments that could
affect reimbursement. Although this work was published over two
decades ago, much of this discussion is still relevant today.
Finally, the book is a call for change. The authors remark in
their closing paragraph: "Given the increasing for-profit
orientation of the major segments of the health care industry,
proprietary providers should be particularly responsive to new
efficiency incentives" in reimbursement. In relation to this,
"policymakers [should] develop reimbursement methods that will
encourage providers to become more efficient."
Robert J. Buchanan is currently a professor in the Department of
Health Policy and Management in the School of Rural Public Health
at the Texas A&M University System Health Sciences Center. James
D. Minor, a former law professor at the University of
Mississippi, has his own law practice.
*********
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
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related conferences are encouraged. Send announcements to
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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
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available at your local bookstore or through Amazon.com. Go to
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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
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