/raid1/www/Hosts/bankrupt/TCR_Public/130218.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, February 18, 2013, Vol. 17, No. 48
Headlines
AFA INVESTMENT: 2nd Lien Agent Consents to Cash Use Until Feb. 21
AFA INVESTMENT: FTI Monthly Fees Reduced During Wind-Down
AMERICAN AIRLINES: Plan Filing Exclusivity Extended to April 15
AMERICAN AIRLINES: American Eagle Merger or Spinoff Possible
AMERICAN AIRLINES: Atty-Client Privilege Waived for Fee Examiner
AMERICAN AIRLINES: Orbitz Loses Bid to Enforce Settlement
AMERICAN AIRLINES: Make-Whole Appeal May Go to Circuit Court
AMERICAN AIRLINES: Travelport Seeks to Amend Counterclaim
AMERICAN AIRLINES: TAMC Inches Closer to Filing for Election
AMERICAN AXLE: Fitch Rates $400MM Senior Unsecured Notes 'B-'
AMERICAN AXLE: Moody's Rates New $400MM Senior Notes 'B2'
AMERICAN AXLE: S&P Rates $400MM Sr. Unsecured Notes Due 2023 'B'
AMERICAN GENERAL: Fitch Affirms 'BB+' Preferred Securities Rating
AMERICAN NATURAL: Paul Ross Control Hiked 73.4% at Dec. 31
AMERICAN VIATICAL: Case Summary & 18 Largest Unsecured Creditors
AMWINS GROUP: Moody's Assigns 'B1' Rating to New $715MM Term Loan
API TECHNOLOGIES: Incurs $148.7 Million Net Loss in Fiscal 2012
ARAMARK CORP: Moody's Assigns 'Ba3' Rating to New Secured Debt
ASSOCIATED BANC-CORP: Fitch Affirms 'BB+' Subordinated Rating
ASSURAMED HOLDING: Moody's Places All Ratings on Upgrade Review
AVANTAIR INC: Incurs $1.5 Million Net Loss in Fourth Quarter
AXION INTERNATIONAL: Judy Lerner Is 5% Shareholder as of Jan. 29
B.C.A. AND CHILD: Voluntary Chapter 11 Case Summary
BAKERCORP INTERNATIONAL: Moody's Rates Secured Loans 'Ba3'
BEECHCRAFT HOLDINGS: Moody's Rates New $375-Mil. Term Loan 'B1'
BERNARD L MADOFF: Judge Rakoff Departs from Prior Katz Ruling
BOWLES SUB A: Exclusive Solicitation Period Extended to March 1
BROADCAST INTERNATIONAL: AllDigital May Terminate Merger Pact
BURLINGTON COAT: Moody's Rates New $300MM Senior Notes 'Caa2'
BURLINGTON COAT: S&P Assigns 'CCC' Rating to $300MM Toggle Notes
CASTLETON PLAZA: New Value Theory for Insider Purchase Nixed
CATALENT PHARMA: Loan Repricing No Impact on Moody's 'B2' CFR
CATHAY GENERAL: Fitch Hikes LT Issuer Default Rating to 'BB+'
CCC ATLANTIC: Court Dismisses Chapter 11 Case
CENTRAL EUROPEAN: ING Otwarty Is 6.5% Shareholder at Dec. 31
CEREPLAST INC: IBC Funds No Longer A Shareholder at Feb. 6
CHARLIE N MACGLAMRY: Files Third Amended Chapter 11 Plan
CHEROKEE SIMEON: Has Interim OK to Obtain Zeneca $75,000 DIP Loan
CHEROKEE SIMEON: Has Final OK to Obtain Up to $200,000 in Loans
CINEDIGM DIGITAL: Moody's Reviews Ba1-Rated Debt for Upgrade
CLEAR CHANNEL: Bank Debt Trades at 14% Off in Secondary Market
CLUB AT SHENANDOAH: Can Access GE Cash Until Feb. 26 Final Hearing
CLUB AT SHENANDOAH: Files Schedules of Assets and Liabilities
COLLECTIVE BRANDS: Moody's Reviews B1-Rated Debt for Downgrade
COMARCO INC: Obtains $1.5-Mil. Loan, Sells $1-Mil. Common Shares
COMMUNITY FINANCIAL: Amends 19.6-Mil. Shares Resale Prospectus
COMPETITIVE TECHNOLOGIES: J. Finley Has 6.3% Stake at Dec. 31
COMPREHENSIVE CARE: Lloyd Miller Has 8.9% Stake at Dec. 31
CONSTELLATION BRANDS: Moody's Alters Ratings Outlook to Negative
CONSTELLATION BRANDS: S&P Affirms 'BB+' Corporate Credit Rating
CONTINUITYX SOLUTIONS: Fraud Discovery Prompts Ch. 7 Liquidation
COVENANT BANK: Closed; Liberty Bank & Trust Assumes All Deposits
DETROIT, MI: Worker Bonuses Approach Records on Rising Profits
DEWEY & LEBOEUF: New Dissenters Challenge Partners Settlement
DEX ONE: Robert Mead An 8.6% Shareholder at Dec. 31
DIMMITT CORN: Voluntary Chapter 11 Case Summary
EAGLE POINT: To Present Plan for Confirmation on Feb. 21
EAST WEST: Fitch Affirms 'BB-' Trust Preferred Securities Rating
EASTMAN KODAK: Cash Flow to Be Negative $176-Mil. for 9 Months
ELEPHANT TALK: Vanguard Ownership at 5.5% as of Dec. 31
EPICEPT CORP: Amends Merger Pact with Immune Pharmaceuticals
EPICEPT CORP: Forsakringsaktiebolaget Has 11.4% Stake at Dec. 31
EVERGREEN SOLAR: Suspends Filing of Reports with SEC
EXTENDED STAY: US Bank's $100M Suit Over Loan Revived
FIRST CONNECTICUT: Case Summary & 19 Largest Unsecured Creditors
FIRST HORIZON: Fitch Affirms 'B' Preferred Stock Rating
FIRST NATIONAL: Fitch Raises Subordinated Debt Rating From 'BB+'
FIRST NIAGARA: Fitch Affirms 'B' Preferred Stock Rating
FIRSTMERIT CORP: DBRS Assigns 'BB(high)' Preferred Stock Rating
FLEXERA SOFTWARE: Moody's Lifts CFR to 'B2', Outlook Stable
FLEXERA SOFTWARE: S&P Raises CCR to 'B+'; Outlook Stable
FRASURE CREEK MINING: Sent to Chapter 11 by Creditors
FRASURE CREEK: Involuntary Chapter 11 Case Summary
FULTON FINANCIAL: Fitch Cuts Preferred Stock Rating to 'BB-'
GABRIEL TECHNOLOGIES: Files for Ch. 11 After Losing to Qualcomm
GABRIEL TECHNOLOGIES: Sec. 341(a) Meeting on March 12
GATEHOUSE MEDIA: Bank Debt Trades at 65% Off in Secondary Market
GENELINK INC: Bernard Kasten Assumes Interim CFO Position
GENESIS ENERGY: Moody's Assigns 'B1' Rating to $300MM Sr. Notes
GRUBB & ELLIS: Forward Mgt. No Longer Shareholder as of Dec. 31
HABERSHAM BANCORP: Knight Equity Stake Hiked to 9.5% as of Dec. 31
HARTFORD FINANCIAL: Moody's Affirms 'Ba1' Rating on Junior Notes
HEALTHWAREHOUSE.COM INC: Karen Singer Has 12.9% Stake at Feb. 1
HEARTHSTONE HOMES: Court Rules on Wells Fargo Lien Priority
HERCULES OFFSHORE: Posts $4.3 Million Net Income in 4th Quarter
HERITAGE EQUITY: Balks at Lift Stay, Says Property Value to Rise
HOMER CITY: Palmer, et al., Have No Standing to Object to Plan
HOSTESS BRANDS: More Auctions Scheduled for March 15
HOVNANIAN ENTERPRISES: Royce Owns 8.9% of Pref. Shares at Dec. 31
INSPIREMD INC: Michael Berman Joins InspireMD Board
INTEGRATED HEALTHCARE: Incurs $13.4-Mil. Net Loss in 4th Quarter
INTEGRATED HEALTHCARE: Silver Point Stake at 27.3% as of Feb. 7
IMAGEWARE SYSTEMS: Revelation Has 5.9% Stake at Dec. 31
IMAGEWARE SYSTEMS: Jon Gruber Has 10.5% Stake as of Dec. 31
INFUSYSTEM HOLDINGS: Standstill Provision Waived to Meson
INFUSYSTEM HOLDINGS: Ryan Morris Is 8% Owner as of Nov. 30
INSPIRATION BIOPHARMA: Court OKs Add'l Services of Ropes & Gray
INSPIRATION BIOPHARMA: DIP Financing Extended Until March 12
ISC8 INC: Amends Report on Bivio Software Business Acquisition
J.C. PENNEY: Bondholder Dispute No Impact on Moody's 'B3' CFR
JASON INC: Moody's Rates Proposed $260MM Senior Debt Facility B1
JEFFERSON COUNTY: Reduces Debt on Some School System Bonds
JOHN L SMITH: Creditors Allege Fraud
JUMP OIL: Phillips 66 Gas Stations in Chapter 11 to Sell
JUMP OIL: Proposes $300,000 of DIP Financing From Colonial
JUMP OIL: Hiring Goldstein & Pressman as Counsel
KINBASHA GAMING: Files Q3 Results; In Debt Talks with Lenders
LANDRY'S INC: Debt Facility Changes No Impact on Moody's Ratings
LEHMAN BROTHERS: Wants Testimony From JPMorgan's London Whale
LEVEL 3: Incurs $56 Million Net Loss in Fourth Quarter
LIBERATOR INC: Signs $17 Million TENGA Distribution Agreement
LIGHTSQUARED INC: Chapter 11 Plan to Require Support of Lenders
LIGHTSQUARED INC: Seeks More Time to Assume or Reject BDC Lease
LIN TV: S&P Rates $60MM 5-Yr. Incremental Term Loan 'BB'
LOW CARBON: In Debt of CNSX Requirements; Gets Suspension Order
LUXEYARD INC: Amends 13.7 Million Common Shares Prospectus
MARTIN MIDSTREAM: Moody's Rates New $250MM Sr. Unsecured Notes B3
MCCLATCHY CO: BlackRock Has 5.4% Ownership at Dec. 31
MEDICAL ALARM: Incurs $244,000 Net Loss in Dec. 31 Quarter
MF GLOBAL: Hits Two Snags in Quick Plan Confirmation
MF GLOBAL: Drops Fight with Koch Unit Over $20M Claim
MGM RESORTS: William Grounds Elected to Board of Directors
MISSION NEWENERGY: Corrects Disclosure on Top 20 Shareholders
NAVISTAR INTERNATIONAL: Franklin Ownership at 18.2% at Dec. 31
NEOVIA LOGISTICS: Moody's Rates New $125MM Notes Issue 'Caa2'
NEOVIA LOGISTICS: S&P Lowers CCR to 'B'; Outlook Stable
NEXSTAR BROADCASTING: Closes Offering of 3-Mil. Class A Shares
NEXSTAR BROADCASTING: Renaissance Owns 5.1% at Dec. 17
NORTEL NETWORKS: Has 1st Approval for Disabled Retiree Settlement
NORTEL NETWORKS: Manitoba Regulator Issues Cease Trade Orders
ODYSSEY PICTURES: Delays Form 10-Q for Dec. 31 Quarter
OLD COLONY: Finalizing Plan Settlement With Wells Fargo
OPTIMA SPECIALTY: Moody's Affirms 'B2' CFR; Outlook Negative
ORCHARD SUPPLY: Obtains Waiver From Term Loan Lenders
OVERLAND STORAGE: Pinnacle Stake Hiked to 9% at Dec. 31
OVERSEAS SHIPHOLDING: Bonds Fall on Filing of $463-Mil. Tax Claim
PBP LP: Case Summary & 4 Largest Unsecured Creditors
PATIENT SAFETY: Amends Supply Agreement with Cardinal Health
PINNACLE AIRLINES: Board Gets Approval to Appoint New Directors
PONCE TRUST: Confirms Plan of Reorganization via Cramdown
POWELL STEEL: Case Summary & 20 Largest Unsecured Creditors
POWERWAVE TECHNOLOGIES: Silver Lake Stake at 6.3% as of Dec. 31
PS&G BC: Voluntary Chapter 11 Case Summary
QUALITY DISTRIBUTION: Expects $215MM Revenue in Fourth Quarter
RAE-BECK HOLDING: Case Summary & 4 Largest Unsecured Creditors
REAL MEX: Parties-in-Interest Balk at Motion to Dismiss Case
REALOGY GROUP: Moody's Rates New Debt Issue B1; Outlook Positive
REALOGY GROUP: S&P Raises CCR to'B+'; Rates New Secured Debt 'BB-'
RESIDENTIAL CAPITAL: Seeks 3rd Expansion of Plan Exclusivity
RESIDENTIAL CAPITAL: Completes Sale of Servicing Platform Assets
REVEL ATLANTIC: Moody's Cuts Corporate Family Rating to 'Caa3'
REVLON CONSUMER: Moody's Ups CFR to Ba3; Rates New Notes Offer B1
RHYTHM AND HUES: Case Summary & 20 Largest Unsecured Creditors
SAC CAPITAL: A Quarter of Outside Investor Funds Up For Redemption
SCHOOL SPECIALTY: Artisan No Longer Shareholder as of Dec. 31
SINCLAIR BROADCAST: Vanguard Stake at 6.5% as of Dec. 31
SOUTHERN OAKS: Approved to Auction Interbank Collateral
SPIRIT REALTY: Goldentree Is 6.5% Owner as of Sept. 20
SPRINT NEXTEL: Franklin Has 3.7% of Series 1 Stock at Dec. 31
SPANISH BROADCASTING: Renaissance Reports 5.7% of Class A Shares
STANFORD INT'L: Accountants Face 20 Years in Prison
STARZ LLC: Moody's Assigns 'Ba2' Rating to $150MM Debt Add-on
SYNOVUS FINANCIAL: Fitch Affirms 'BB-' LT IDR; Outlook Negative
TALVIVAARA MINING: Mulls EUR260MM Rights Issue to Avert Default
TCF FINANCIAL: Fitch Lowers Preferred Stock Rating to 'B'
THQ INC: Unloads Assets That Look More Like Liabilities
THQ INC: Andrews Kurth Approved as Creditors Committee Counsel
THQ INC: Centerview Partners Approved as Investment Banker
THQ INC: $0 Carve-Out as Sale Proceeds Exceed DIP Loans
TIGER MEDIA: Non-Participating Warrants to Expire Tomorrow
TITAN ENERGY: Michael Epstein Reports 7% Stake at Feb. 14
TOP HAT: Case Summary & 20 Largest Unsecured Creditors
TRANSDIGM INC: Moody's Rates New $2.5-Bil. Debt Facility 'Ba2'
TWN INVESTMENT: Case Summary & 20 Largest Unsecured Creditors
TXU CORP: 2017 Debt Trades at 35% Off in Secondary Market
TXU CORP: 2014 Debt Trades at 29% Off in Secondary Market
UNI-PIXEL INC: Revelation No Longer Shareholder at Dec. 31
UNIVERSAL HEALTH: Aims for Auction by Feb. 27
US AIRWAYS: Fitch Puts 'B-' IDR on Watch Pos. on AMR Merger Deal
US AIRWAYS: AMR Corp. Merger No Impact on Moody's 'B3' CFR
VIPER POWERSPORTS: Precious Issues Notice of Balancing Default
VISION INDUSTRIES: Enters Into Loan Pact with QIF Malta
VITRO SAB: Bondholder Accord Elusive; "Government" Claim Filed
WARNACO GROUP: S&P Withdraws Ratings As Loan Get Repaid in Full
WATERSCAPE RESORT: Court Wants Reasonableness Hearing on Accords
WEBSTER FINANCIAL: Fitch Affirms 'B+' Preferred Stock Rating
WEST CORP: Credit Facility Amendment No Impact on Moody's B2 CFR
WEST PENN: Moody's Affirms '(PA)Ca' Bond Rating
WESTWAY GROUP: Moody's Rates $300MM Senior Debt Facilities 'Ba3'
WM SIX FORKS: To Auction Apartment Complex on March 20
WMG HOLDINGS: Parlophone Purchase No Impact on Moody's 'B1' CFR
WPCS INTERNATIONAL: Iroquois Capital Stake at 9.9% as of Dec. 31
WYNN RESORTS: Moody's Hikes Corp. Family Rating to 'Ba1'
ZOGENIX INC: Federated Has 28.2% Equity Stake at Dec. 31
* EV Key to Creditor Recoveries in Bankruptcies, Fitch Says
* Fitch Says Texas School District Ruling May Affect Funding
* Moody's Outlook for US States Sector Still Negative in 2013
* Moody's Reports Stable Outlook for US Office Market and REITs
* Moody's Cautions Wise Use of Cash for Canada's Broadband Firms
* FHA Might Avoid Taxpayer Subsidy This Year
* U.S. Foreclosures Down 7% in January 2013, RealtyTrac Says
* Visa, MasterCard Win Dismissal of ATM Group's Lawsuit
* 25-Year Bankruptcy Vet From K&L Gates Joins Polsinelli Shughart
* Brian Linscott Rejoins Huron Consulting as Managing Director
* J. Austin Moves From Paul Hastings to King & Spalding
* Kirkland & Ellis Adds Two Attorneys to Corporate Practice
* BOND PRICING -- For Week From Feb. 11 to 15, 2013
*********
AFA INVESTMENT: 2nd Lien Agent Consents to Cash Use Until Feb. 21
-----------------------------------------------------------------
AFA Investment Inc., et al., notified the U.S. Bankruptcy Court
District of Delaware that the second lien agent has consented to
further extension of the termination date under the cash
collateral order until Feb. 21, 2013.
The Court earlier authorized, on an interim basis, the Debtors to
use the cash collateral to operate their business postpetition.
As adequate protection from any diminution value of the lenders'
collateral, the Debtor will grant the second lien lenders adequate
protection liens and superpriority administrative expense claim,
subject to carve out on certain expenses.
About AFA Foods
King of Prussia, Pennsylvania-based AFA Foods Inc. was one of the
largest processors of ground beef products in the United States.
The Company had five processing facilities and two ancillary
facilities across the country with annual processing capacity of
800 million pounds. AFA had seven facilities capable of producing
800 million pound of ground beef annually. Revenue in 2011 was
$958 million.
Yucaipa Cos. acquired the business in 2008 and currently owns 92%
of the common stock and all of the preferred stock.
AFA Foods, AFA Investment Inc. and other affiliates filed for
Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-11127) on
April 2, 2012, after recent changes in the market for its ground
beef products and the impact of negative media coverage related to
boneless lean beef trimmings (BLBT) affected sales.
Judge Mary Walrath presides over the case. Lawyers at Jones Day
and Pachulski Stang Ziehl & Jones LLP serve as the Debtors'
counsel. FTI Consulting Inc. serves as financial advisors and
Imperial Capital LLC serves as marketing consultants. Kurtzman
Carson Consultants LLC serves as noticing and claims agent.
As of Feb. 29, 2012, on a consolidated basis, the Debtors' books
and records reflected approximately $219 million in assets and
$197 million in liabilities. AFA Foods, Inc., disclosed
$615,859,574 in assets and $544,499,689 in liabilities as of the
Petition Date.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven
members to the official committee of unsecured creditors in the
Chapter 11 cases of AFA Investment Inc., AFA Foods and their
debtor-affiliates. The Committee has obtained approval to hire
McDonald Hopkins LLC as lead counsel and Potter Anderson &
Corroon LLP serves as co-counsel. The Committee also obtained
approval to retain J.H. Cohn LLP as its financial advisor, nunc
pro tunc to April 13, 2012.
AFA, in its Chapter 11 case, sold plants and paid off the first-
lien lenders and the loan financing the Chapter 11 effort.
Remaining assets are $14 million cash and the right to file
lawsuits.
General Electric Capital Corp. and Bank of America Corp. provided
about $60 million in DIP financing. The loan was paid off in
July.
In October 2012, the Bankruptcy Court denied a settlement that
would have released Yucaipa Cos., the owner and junior lender to
AFA Foods, from claims and lawsuits the creditors might otherwise
bring, in exchange for cash to pay unsecured creditors' claims
under a liquidating Chapter 11 plan. Under the deal, Yucaipa
would receive $11.2 million from the $14 million, with the
remainder earmarked for unsecured creditors. Asset recoveries
above $14 million would be split with Yucaipa receiving 90% and
creditors 10%. Proceeds from lawsuits would be divided roughly
50-50.
AFA INVESTMENT: FTI Monthly Fees Reduced During Wind-Down
---------------------------------------------------------
AFA Investment Inc., et al., ask the U.S. Bankruptcy Court for the
District of Delaware for an order modifying the terms of
engagement of FTI Consulting, Inc., to reduce the amount of the
monthly fee payable to FTI for so long as the Chapter 11 cases
remain pending under chapter 11 of the Bankruptcy Code, nunc pro
tunc as of Jan. 1, 2013, consistent with an agreement between the
parties.
The Court on April 24, 2012, entered an order granting the relief
requested in the retention application and approving the terms of
the Debtors' retention of FTI, including the monthly fee.
Pursuant to the order, FTI provided David J. Beckman as the chief
restructuring officer and additional personnel for the Debtors.
FTI would receive a fixed monthly fee in the aggregate amount of
$350,000 for providing Mr. Beckman's services as CR0 and the
restructuring services of other professionals in addition to
reimbursement of reasonable and customary out-of-pocket expenses.
The Debtors anticipate that, as they continue to wind down their
businesses, they will require reduced services from FTI in the
future. Accordingly, FTI has agreed that its approved monthly fee
of $350,000 will conclude as of Dec. 31, 2012, and a revised
monthly fee schedule will take effect as of Jan. 1, 2013, for so
long as these cases remain pending.
The revised monthly fee structure provides for:
a) reduced monthly $100,000 for the months of January 2013 and
February 2013;
b) $50,000 per month for the months of March 2013 and
April 2013; and
c) $10,000 per month for all months after April 2013.
A hearing on Feb. at 10:30 a.m. has been set. Objections, if any,
are due Feb. 14, at 4 p.m.
The bankruptcy judge at the Feb. 21 hearing will also consider the
Debtors' motion for an order authorizing rejection of payroll
agreement between AFA Foods, Inc. and ADP, Inc.
About AFA Foods
King of Prussia, Pennsylvania-based AFA Foods Inc. was one of the
largest processors of ground beef products in the United States.
The Company had five processing facilities and two ancillary
facilities across the country with annual processing capacity of
800 million pounds. AFA had seven facilities capable of producing
800 million pound of ground beef annually. Revenue in 2011 was
$958 million.
Yucaipa Cos. acquired the business in 2008 and currently owns 92%
of the common stock and all of the preferred stock.
AFA Foods, AFA Investment Inc. and other affiliates filed for
Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-11127) on
April 2, 2012, after recent changes in the market for its ground
beef products and the impact of negative media coverage related to
boneless lean beef trimmings (BLBT) affected sales.
Judge Mary Walrath presides over the case. Lawyers at Jones Day
and Pachulski Stang Ziehl & Jones LLP serve as the Debtors'
counsel. FTI Consulting Inc. serves as financial advisors and
Imperial Capital LLC serves as marketing consultants. Kurtzman
Carson Consultants LLC serves as noticing and claims agent.
As of Feb. 29, 2012, on a consolidated basis, the Debtors' books
and records reflected approximately $219 million in assets and
$197 million in liabilities. AFA Foods, Inc., disclosed
$615,859,574 in assets and $544,499,689 in liabilities as of the
Petition Date.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven
members to the official committee of unsecured creditors in the
Chapter 11 cases of AFA Investment Inc., AFA Foods and their
debtor-affiliates. The Committee has obtained approval to hire
McDonald Hopkins LLC as lead counsel and Potter Anderson &
Corroon LLP serves as co-counsel. The Committee also obtained
approval to retain J.H. Cohn LLP as its financial advisor, nunc
pro tunc to April 13, 2012.
AFA, in its Chapter 11 case, sold plants and paid off the first-
lien lenders and the loan financing the Chapter 11 effort.
Remaining assets are $14 million cash and the right to file
lawsuits.
General Electric Capital Corp. and Bank of America Corp. provided
about $60 million in DIP financing. The loan was paid off in
July.
In October 2012, the Bankruptcy Court denied a settlement that
would have released Yucaipa Cos., the owner and junior lender to
AFA Foods, from claims and lawsuits the creditors might otherwise
bring, in exchange for cash to pay unsecured creditors' claims
under a liquidating Chapter 11 plan. Under the deal, Yucaipa
would receive $11.2 million from the $14 million, with the
remainder earmarked for unsecured creditors. Asset recoveries
above $14 million would be split with Yucaipa receiving 90% and
creditors 10%. Proceeds from lawsuits would be divided roughly
50-50.
AMERICAN AIRLINES: Plan Filing Exclusivity Extended to April 15
---------------------------------------------------------------
The U.S. Bankruptcy Court in Manhattan granted the request of AMR
Corp. and the committee of unsecured creditors to further extend
their exclusive right to file a Chapter 11 plan and solicit votes
from creditors.
In a February 14 decision, the bankruptcy court extended the
deadline for filing the plan to April 15, 2013, and for
soliciting votes from creditors to June 17, 2013.
The extension bars creditors and other parties from filing rival
plans and maintains AMR's control over its restructuring.
Merger Plans
AMR Corporation and US Airways Group, Inc., on Feb. 14, 2013
announced that their boards of directors 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. The
combined airline will offer more than 6,700 daily flights to 336
destinations in 56 countries.
The deal is subject to clearance by U.S. and foreign regulators
and by the bankruptcy judge overseeing AMR's bankruptcy case.
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.
AMR has entered into a support agreement with certain unsecured
creditors holding approximately $1.2 billion of prepetition
unsecured claims against the Debtors.
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.
Reports from BankruptcyLaw360 said the AMR-US Airways merger will
face little to no resistance and the two companies are likely to
enjoy a mostly smooth ride through AMR's bankruptcy proceedings
after months spent diffusing any potential opposition to the
plan. BLaw360 also said experts note that the merger is likely
to satisfy antitrust regulators despite creating the world's
largest carrier.
Experts said the two airlines are likely to enjoy a mostly smooth
ride through AMR's bankruptcy proceedings after months spent
diffusing any potential opposition to the plan, according to
BankruptcyLaw360. American Airlines has said the $11 billion
joinder could potentially provide a full recovery for its
creditors.
Experts say is likely to satisfy antitrust regulators despite
creating the world's largest carrier, according to Liz Hoffman of
BankruptcyLaw360. The BLaw report said that the all-stock deal
provides a clear path out of bankruptcy for American and builds
the company to compete with rivals like United Continental
Holdings Inc. and Delta Air Lines Inc., which have bulked up
through mergers of their own.
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.
AMR Corporation and US Airways Group, Inc., on Feb. 14, 2013
announced that their boards of directors 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. The
deal is subject to clearance by U.S. and foreign regulators and by
the bankruptcy judge overseeing AMR's bankruptcy case.
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: American Eagle Merger or Spinoff Possible
------------------------------------------------------------
Dow Jones Newswires' Doug Cameron reports that the CEO of AMR
Corp.'s American Eagle commuter unit, Chief Executive Dan Garton,
said the U.S. regional-airline industry could be set for more
consolidation in the wake of deal-making among network carriers.
Mr. Garton said a long-planned spinoff of American Eagle also
remains a possibility even after the planned merger of American
Airlines parent AMR and US Airways Group Inc., though he said the
initial priorities are developing a new aircraft-fleet plan and
exploring how the partners' regional operations can be "blended."
"I would be very surprised if we were done with regional
consolidation," said Mr. Garton in an interview, citing the
potential economies of scale from purchasing aircraft and cutting
overheads, according to the report.
US Airways owns two commuter units, PSA Airlines and Piedmont
Airlines, and also outsources flying to other companies using the
US Airways Express brand. The report notes US Airways has said it
would retain PSA and Piedmont and keep them separate from American
Eagle, though eventually use the Eagle brand for all regional
flying.
Dow Jones relates Mr. Garton said it wasn't necessary to combine
the three commuter units straight away. According to the report,
Mr. Garton also said Friday that a decision whether to spin off
Eagle was "down the road" following a broader review of the
enlarged American's regional business. While it was not
"infeasible" a decision could be made this year -- the merger is
due to close in the third quarter -- issues such as the need for
regulatory filings would likely push any separation beyond that
timeframe.
Dow Jones relates a person with direct knowledge of US Airways'
plans said thoughts of spinning off Eagle were not "dead."
AMERICAN AIRLINES: Atty-Client Privilege Waived for Fee Examiner
----------------------------------------------------------------
The U.S. Bankruptcy Court in Manhattan issued a protective order
authorizing AMR Corp. to turn over confidential information
without waiving the attorney-client privilege.
AMR sought for a protective order after Robert Keach, the lawyer
appointed to review the fees of its bankruptcy professionals,
asked for information regarding fee applications filed by AMR
attorneys that is protected from public disclosure.
The attorneys represent the company in two separate lawsuits it
brought against Sabre, Travelport and Orbitz Worldwide LLC in
federal courts in Texas.
In its February 14 order, the bankruptcy court prohibited the fee
examiner from sharing the information to any person other than
the employees, shareholders or associates of his legal counsel,
Bernstein Shur Sawyer & Nelson P.A., who are responsible for the
review and evaluation of the fee applications.
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.
AMR Corporation and US Airways Group, Inc., on Feb. 14, 2013
announced that their boards of directors 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. The
combined airline will offer more than 6,700 daily flights to 336
destinations in 56 countries. The deal is subject to clearance by
U.S. and foreign regulators and by the bankruptcy judge overseeing
AMR's bankruptcy case.
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: Orbitz Loses Bid to Enforce Settlement
---------------------------------------------------------
Orbitz Worldwide Inc. lost a bid for a court order compelling
American Airlines Inc. to honor an alleged agreement to settle an
antitrust lawsuit filed by the airline, Bloomberg News reported.
Orbitz filed court papers under seal last month, asking U.S.
District Judge Terry Means to order American Airlines to abide by
an agreement it said it had with the airline.
At a February 12 hearing, Orbitz lawyer Christopher Yates told
the judge that "there was an offer" and "there was acceptance,"
referring to the agreement American Airlines allegedly sent to
his client in August.
Mr. Yates further said the deal called for no payment to either
party and mutual releases from liability in exchange for the
dismissal of the lawsuit against Orbitz.
American Airlines lawyer Paul Yetter disputed Orbitz's assertion
of an accord, saying the deal was never completed.
"It was very clear in their discussions: All agreements had to be
in writing," Mr. Yetter told the judge. "The key thing is the 'I
accept.'"
After hearing the arguments from both sides, Judge Means issued a
sealed order agreeing with American Airlines' position.
"While this court certainly encourages settlement agreements, it
simply is disinclined to enforce anything short of a final,
signed agreement," the judge said in a public docket entry
referencing e-mails between the parties.
The case is American Airlines (AMR1) v. Travelport Ltd., 11- cv-
00244, U.S. District Court, Northern District of Texas (Fort
Worth).
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.
AMR Corporation and US Airways Group, Inc., on Feb. 14, 2013
announced that their boards of directors 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. The
combined airline will offer more than 6,700 daily flights to 336
destinations in 56 countries. The deal is subject to clearance by
U.S. and foreign regulators and by the bankruptcy judge overseeing
AMR's bankruptcy case.
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: Make-Whole Appeal May Go to Circuit Court
------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports the indenture trustee for holders of $1.32 billion in
bonds secured by aircraft owned by AMR Corp. is asking the
bankruptcy judge for a stay pending appeal from a Jan. 17 opinion
allowing the parent of American Airlines Inc. to pay off the bonds
without paying a so-called make-whole premium.
According to the report, AMR, recognizing the importance of the
underlying legal issue, filed papers Feb. 14 asking the bankruptcy
judge to send the appeal directly to the U.S. Court of Appeals,
overstepping an intermediate appeal in federal district court.
AMR's papers say the appeal should go directly to the Court of
Appeals because no other court has ruled on the issue.
The report relates that in papers filed Feb. 13, indenture trustee
U.S. Bank NA said it's afraid the appeal will be dismissed as moot
if AMR completes a refinancing and pays off the existing bonds
before the appeal is decided. The bank is asking U.S. Bankruptcy
Judge Sean H. Lane in Manhattan to halt refinancing during an
expedited appeal. The bondholders want a stay without filing a
bond to protect AMR if interest rates rise on the new financing
while the appeal is pending.
The report notes that U.S. Bank points to Judge Lane's courtroom
statement, "I may be right, I may be wrong, I'll let somebody on
appeal tell me that." The statement, according to the bank, shows
Judge Lane's admission that one of the grounds for a stay has been
satisfied because the appeal "presents significant legal issues
that remain ripe for further litigation."
The bank argues that Judge Lane turned Section 1110 of the
Bankruptcy Code "on its head." The bank says the section, designed
to protect lenders, was used "offensively to eliminate the
contractual rights of aircraft financiers."
There was a conference with the bankruptcy judge slated for
Feb. 15 on the question of when to hold hearings about a stay and
direct appeal.
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.
AMR Corporation and US Airways Group, Inc., on Feb. 14, 2013
announced that their boards of directors 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. The
combined airline will offer more than 6,700 daily flights to 336
destinations in 56 countries. The deal is subject to clearance by
U.S. and foreign regulators and by the bankruptcy judge overseeing
AMR's bankruptcy case.
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: Travelport Seeks to Amend Counterclaim
---------------------------------------------------------
Travelport has filed a motion seeking court approval to amend its
counterclaim in an antitrust lawsuit brought by American Airlines
Inc. against the travel company.
The move came after AMR Corp.'s regional carrier allegedly turned
down Travelport's proposal that they file a motion, which if
approved, would permit the travel company to prosecute an amended
counterclaim.
Travelport said the airline rejected its request despite an
earlier agreement permitting the travel company to seek leave to
file additional counterclaims.
The agreement was embodied in a motion, which the companies
jointly filed last year to stay the antitrust lawsuit. The joint
motion was approved on January 9 by the district court overseeing
the case, according to court filings.
Travelport said American Airlines is using the automatic stay to
control which counterclaims the travel company may or may not
bring in the lawsuit.
U.S. Bankruptcy Judge Sean Lane will hold a hearing on the matter
February 26. Objections are due by February 15.
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: TAMC Inches Closer to Filing for Election
------------------------------------------------------------
On Feb. 16, 2013, the Teamsters Airline Division and the Teamsters
Aviation Mechanics Coalition (TAMC) disclosed that at many
maintenance stations across the country, American Airlines
mechanics and related workers have reached a majority of cards
signed for Teamster representation.
With a majority of cards at the major hubs in hand, the Teamsters
Union is nearing majority support throughout the system and is one
step closer to filing for an election with the National Mediation
Board. The union has received the majority of cards in Tulsa, OK,
Fort Worth, TX, Los Angeles, Miami, San Francisco, Newark, NJ,
Tampa, Atlanta, Washington, DC, Las Vegas, San Antonio, Phoenix,
New York's Kennedy airport and DWH in Texas.
"With 11,000 workers spread out across the country, this has been
a major undertaking that has been led by AA mechanics from the
beginning," said Chris Moore, a representative of the Teamsters
Airline Division and Chairman of the TAMC. "It is their passion
and desire to improve their representation that drove this
campaign and enabled us to get to this point in such a relatively
short time."
In Sept. 2012, the AA mechanics kicked off their campaign to seek
industry-leading representation with the Teamsters Union. While
facing the challenges of bankruptcy and a merger with US Airways,
the AA mechanics in conjunction with the TAMC and the Teamsters
Airline Division have been working tirelessly to gain majority
support for the union.
"This is a huge step in the right direction in a short amount of
time," said Joe Moberly, 24-year American Airlines mechanic at the
Tulsa hub. "We are well on our way to being a part of the union
that represents more aviation mechanics than any other in the
nation - the Teamsters."
In addition to the announcement, Teamster organizers, Teamster
mechanics from other airlines, AA mechanics and US Airways
mechanics will engage in door-to-door canvassing over the weekend
to gather even more cards.
Founded in 1903, the International Brotherhood of Teamsters
represents more than 80,000 workers throughout the airline
industry in every craft and class, including 18,000 airline
mechanics and related at 10 carriers -- more than any other union.
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.
AMR Corporation and US Airways Group, Inc., on Feb. 14, 2013
announced that their boards of directors 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. The
combined airline will offer more than 6,700 daily flights to 336
destinations in 56 countries. The deal is subject to clearance by
U.S. and foreign regulators and by the bankruptcy judge overseeing
AMR's bankruptcy case.
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: Fitch Rates $400MM Senior Unsecured Notes 'B-'
-------------------------------------------------------------
Fitch Ratings has assigned a rating of 'B-/RR6' to American Axle &
Manufacturing, Inc.'s proposed issuance of $400 million in senior
unsecured notes due 2021. AAM is the principal operating
subsidiary of American Axle & Manufacturing Holdings, Inc.
Fitch's Issuer Default Rating (IDRs) for both AXL and AAM is 'B+'
and the Rating Outlook for both is Positive.
The proposed new notes will be guaranteed by AXL and each of its
subsidiaries that also guarantee AAM's 6.625% senior unsecured
notes and certain future subsidiaries of the company. If the notes
are rated investment grade by certain rating agencies, AAM may
request to have the guarantees released. AAM intends to use the
proceeds from the new notes to redeem its $300 million in 7.875%
senior unsecured notes due 2017 and for general corporate
purposes. Concurrent with the offering of the proposed notes, AAM
has made a tender offer for all of the 7.875% notes outstanding.
Although the proposed notes will result in a net increase in debt
following the 7.875% note redemption, the transaction will reduce
the principal amount of bond debt maturing in 2017 to $340 million
from a relatively heavy $640 million, as only the remaining 2017
note maturity will be the company's 9.25% senior secured notes.
Fitch notes that AAM has an opportunity to prepay an additional
$42.5 million in principal on the 9.25% notes later this year.
Key Rating Drivers
The ratings for AXL and AAM continue reflect the strengthening of
the drivetrain and driveline supplier's credit profile over the
past several years as conditions in the global light vehicle
market have improved. In particular, the company has benefited
from relatively strong pickup and sport-utility vehicle (SUV)
production at its two largest customers, General Motors Company
(GM) and Chrysler Group LLC, and its margin performance continues
to be among the strongest in the auto supplier industry, despite
some recent weakening tied to the start of new product programs.
Fundamentally, AXL's book of business continues to strengthen as
the companies diversifies its revenue base away from a heavy
reliance on U.S. light truck production. Its $1.25 billion backlog
of new business for the 2013 through 2015 timeframe is heavily
weighted toward passenger cars and crossover vehicles. AXL also
continues to increase the geographical diversity of its revenue
base, with new business wins from an increasing number of non-U.S.
manufacturers. Notably, however, the company's exposure to the
weak European market remains small, at only about 3% of 2012
revenue.
Despite its increased revenue diversification, in the near term,
AXL's ratings will continue to be weighed down by its continued
heavy exposure to GM's light truck platform, although new versions
of that truck projected to go on sale in the second quarter of
this year could boost AXL's near-term sales. Also weighing on the
ratings is Fitch's expectation that near-term free cash flow will
be limited by the company's need to continue making investments to
support the significant growth in its business expected over the
longer term. There is also a heightened risk of increased costs
tied to production inefficiencies as a large number of new product
programs ramp up over the next several years. In the second half
of 2012, AXL experienced several of these sorts of issues, which
led to a decline in the company's margin performance that could
persist into early 2013. Going forward, Fitch expects AXL's
margins to be a little lower than their historical level, but
still relatively strong, as the company's product portfolio
becomes more diversified.
The positive outlook on AXL and AAM reflects Fitch's expectation
that the company's credit profile will strengthen over the
intermediate term, as business levels grow and revenue becomes
more diversified. Fitch expects free cash flow and cash liquidity
to rise on higher vehicle production volumes and increased
penetration, while higher earnings are also likely to contribute
to declining leverage, which could fall below 3.5x by year-end
2013. Following $225 million in contributions to its pension plans
in 2012, a portion of which was debt-financed, Fitch expects the
company's pension funding requirements to be minimal over the next
several years. Longer term, Fitch expects the company to continue
taking a relatively conservative approach to financial management,
with a focus on reducing leverage while maintaining a strong
liquidity position.
The Recovery Rating of 'RR6' on AAM's senior unsecured notes,
including the proposed notes, reflects the significant amount of
secured debt in the company's capital structure (assuming a fully
drawn revolving credit facility) that is senior to the company's
unsecured obligations. This drives Fitch's estimated recovery
prospects for the company's unsecured notes into the 0% to 10%
range in a distressed scenario.
AXL's leverage (debt/Fitch-calculated EBITDA) increased during
2012 to 4.1x from 3.1x as the company debt-financed certain
contributions to its pension plans above required minimums and as
EBITDA was pressured by costs associated with new product
programs. Overall, debt rose to $1.5 billion from $1.2 billion
while Fitch-calculated EBITDA (adjusted for restructuring
expenses) declined to $352 million from $383 million. Free cash
flow for the year was negative $383 million, but this included
$115 million of special pension contributions related to plant
closures and an estimated $75 million of voluntary pension
contributions. The negative free cash flow also included $89
million of other non-recurring cash items, such as restructuring
costs, debt refinancing costs and a change in payment terms to GM.
Fitch expects free cash flow to improve significantly in 2013,
although it will remain pressured by elevated capital expenditures
and other costs tied to new product programs. Despite the negative
free cash flow in 2012, AXL's liquidity position at year-end was
adequate, with $62 million in cash and $415 million in
availability on the company's secured revolver.
Rating Sensitivities
Positive: Future developments that may, individually or
collectively, lead to a positive rating action include:
-- Continued diversification of the company's revenue base;
-- Positive free cash flow generation;
-- A decline in leverage;
-- Ongoing margin performance near top of the auto supplier
industry.
Negative: The current Rating Outlook is Positive. As a result,
Fitch's sensitivities do not currently anticipate developments
with a material likelihood, individually or collectively, leading
to a rating downgrade.
AMERICAN AXLE: Moody's Rates New $400MM Senior Notes 'B2'
---------------------------------------------------------
Moody's Investors Service assigned a B2 rating to American Axle &
Manufacturing, Inc.'s new $400 million of senior unsecured notes.
In a related action Moody's affirmed the B1 Corporate Family
Rating and B1-PD Probability of Default Rating of American Axle &
Manufacturing Holdings, Inc.'s ("Holdings"), affirmed the rating
of American Axle's senior secured notes at Ba1, and affirmed the
ratings of the existing senior unsecured notes at B2. The
Speculative Grade Liquidity Rating was affirmed at SGL-3. The
rating outlook is Stable.
American Axle's proposed $400 million of senior unsecured notes
are expected to be used to fund the announced tender offer of its
7.875% $300 million senior unsecured notes and for general
corporate purposes, including the repayment of outstanding
indebtedness.
Ratings assigned:
American Axle & Manufacturing, Inc.
New $400 million senior unsecured notes due 2021, B2 (LGD4 66%);
Ratings affirmed:
American Axle & Manufacturing Holdings, Inc.
Corporate Family Rating, at B1;
Probability of Default Rating, at B1-PD;
Speculative Grade Liquidity Rating, SGL-3.
American Axle & Manufacturing, Inc.
$340 million senior secured guaranteed note, at Ba1 (LGD2 11%);
$200 million senior unsecured notes due 2019, at B2 (LGD4 66%)
$550 million senior unsecured notes due 2022, at B2 (LGD4 66%);
$300 million senior unsecured notes due 2017, at B2 (LGD4 66%);
The rating of these notes will be withdrawn upon their repayment.
Rating Rationale
American Axle & Manufacturing Holdings, Inc.'s B1 Corporate Family
Rating and stable outlook incorporates the company's sizable
position as a driveline systems manufacturer and its $1.25 billion
three-year backlog of new business launching from 2013 through
2015. American Axle's revenue growth in 2012 has been supported by
recovering automotive industry conditions in North America and the
company's growth in backlog of new business. This trend is
expected to continue into 2013 and further support annual growth
of about 10%. Included in the company's backlog is new business
which further diversifies the company's geographic revenues and
customer base. Management has affirmed guidance for 2013 which
reflects higher revenues and stronger operating profitability
related to its new business growth despite cost increases
experienced in the second half of 2012 caused by high new platform
launches and some individual plant issues. Moody's expects the
company's credit metrics to strengthen in 2013.
American Axle is expected to have an adequate liquidity profile
over the next twelve months supported by cash balances and
availability under its revolving credit facility. As of December
31, 2012 cash on hand was approximately $62 million. The revolving
credit facility includes $72.8 million of commitments which mature
on June 30, 2013, and $365 million of commitments maturing June
30, 2016. At December 31, 2012, $414.6 million was available under
the revolving credit facility, which reflected a reduction of
$23.2 million for standby letters of credit. American Axle is
expected to be modestly cash flow positive in 2013 reflecting
improvement in operating performance as startup costs subside.
Principal financial covenants under the revolving credit facility
include a secured net debt/EBITDA test and an EBITDA/cash interest
expense test. Moody's expects the company to have sufficient
covenant cushion to access the majority of the revolving credit
facility over the near-term. The security provided to the lenders
as part of the bank credit facility limits the company's alternate
sources of liquidity.
An upward change in the outlook or rating is unlikely over the
near-term as the company manages through higher platform launch
levels. Consideration for a positive outlook or higher ratings
could arise if the company is able to sustained EBIT/Interest
coverage over 2.5x, Debt/EBITDA below 3.0, and sustained positive
free cash flow.
Downward rating migration would arise if industry conditions were
to deteriorate without sufficient offsetting restructuring actions
or savings by the company. The rating also could be pressured if
American Axle is unable demonstrate profitability levels
consistent with its announced guidance for the first half of 2013.
A lower outlook or rating could result if EBIT/Interest, inclusive
of launch costs, is maintained below 1.4x in either of the first
two quarters of 2013. A deterioration in liquidity could also
result in a lower rating or outlook.
The principal methodology used in this rating was the Global
Automotive Supplier Industry Methodology published in January
2009. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
American Axle & Manufacturing, Inc., headquartered in Detroit, MI,
is a world leader in the manufacture, design, engineering and
validation of driveline systems and related components and
modules, chassis systems, and metal formed products for light
truck, SUV's and passenger cars. The company has manufacturing
locations in the USA, Mexico, the United Kingdom, Brazil, China,
Thailand, Poland, and India. The company reported revenues of $2.9
billion in 2012.
AMERICAN AXLE: S&P Rates $400MM Sr. Unsecured Notes Due 2023 'B'
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned to
American Axle & Manufacturing Holdings Inc.'s new $400 million
senior unsecured notes due 2023 an issue-level rating of 'B'
and recovery rating of '6', indicating S&P's expectation that
lenders would receive negligible (0%-10%) recovery in the event of
a default. The corporate credit rating remains unchanged at 'BB-'
and the outlook is stable.
The ratings on Detroit-based American Axle & Manufacturing
Holdings Inc. reflect the company's "weak" business risk profile
and "aggressive" financial risk profile.
"Standard & Poor's Ratings Services expects the company's credit
measures to move in line with expectations during 2013, as
American Axle benefits from increasing North American auto demand
and new business wins in countries such as Brazil, China, India,
and Thailand," said Standard & Poor's credit analyst Lawrence
Orlowski. "Resolving recent operational issues which have raised
costs will also be important."
S&P's rating outlook on American Axle is stable. For the current
rating, S&P assumes adjusted leverage will fall to 3.5x in 2013.
S&P also expects the company to be able to generate positive cash
flow, with a ratio of free cash flow to adjusted debt of about 5%.
S&P could lower the rating if the current increase in North
American light-vehicle demand weakens, or if GM's share of the
light-truck market declines and it appears leverage would stay
above 3.5x on a sustained basis. This could occur if revenue were
flat in 2013 versus 2012 and gross margins were below 16%. The
failure to manage launch costs properly, resulting in weakened
profitability, could also be a factor in a downgrade. Also, S&P
could lower the rating if it came to believe that the company
could not generate enough free cash flow to be in line with S&P's
expectations for the current rating.
Longer term, S&P could raise its rating if light-vehicle demand
continued to increase, GM's share in the full-size pickup and
large SUV markets at least remained intact, and non-GM sales began
to represent a substantial percentage of total sales, contributing
to lower business risk. The latter will take time, however.
Under such scenarios, S&P could raise the rating if leverage fell
and remained less than 3x. This could occur, for example, if
revenue growth rose more than 15% and gross margins were greater
than 18% in 2013. Moreover, S&P would expect the ratio of free
cash flow to adjusted debt to stay at least 10%. Because of
American Axle's significant exposure to GM's sales, S&P also
consider its corporate credit rating on GM in S&P's analysis of
American Axle; for now, S&P would not expect to have a higher
rating on Axle than on GM.
AMERICAN GENERAL: Fitch Affirms 'BB+' Preferred Securities Rating
-----------------------------------------------------------------
Fitch Ratings has upgraded the Insurer Financial Strength (IFS)
ratings of American International Group, Inc.'s U.S. life
insurance subsidiaries led by AGC Life Insurance Company to 'A+'
from 'A'. Fitch has also affirmed the 'A' IFS ratings of AIG's
rated property/casualty insurance subsidiaries, as well as AIG's
Issuer Default Rating (IDR) of 'BBB+' and senior debt rating of
'BBB'. The Rating Outlook is Stable.
Key Rating Drivers
The upgrade of the life insurance subsidiaries is driven by
continued improvement in AIG's Life & Retirement subsidiaries
statutory capital position, recovery of investment values over
time and return to stronger operating profits and earnings
stability. Fitch believes the company has largely recovered from
the effects of the financial crisis and is capable of consistently
generating approximately $4 billion of annual run-rate operating
earnings. Surrender activity has stabilized and is currently at or
below historical levels and is now reflective of the low interest
rate environment rather than AIG-specific issues. Net investment
spreads have improved as a result of an increase in base yields
due to the reinvestment of cash and short-term investments in 2011
combined with lower interest credited. These positive factors are
offset somewhat by concerns as to the effect of continued very low
interest rates on product performance and future profitability.
All ratings reflect AIG's success in restructuring and
deleveraging efforts over the last four years. AIG has been
restored as an independent publicly held corporation. All previous
government borrowings and other support have been repaid and the
remaining 15.9% U.S. Department of the Treasury ownership in AIG's
common stock was sold in December 2012. The organization more
closely represents a traditional insurance holding company with an
operating focus on global property/casualty insurance and domestic
life insurance and retirement products. These efforts will further
advance with the pending sale of 90% of AIG's ownership of
aircraft leasing firm International Lease Finance Corporation
(ILFC) which is expected to close by midyear 2013.
The company's financial leverage as measured by the ratio of
financial debt and preferred securities to total capital
(excluding operating and ILFC debt and the impact of FAS 115)
declined from 31% at year-end 2010 to approximately 22% currently.
Fitch's Total Financial Commitment (TFC) ratio, while still high
compared to most insurance peers, has improved from 2.5x at year-
end 2010 to a current level of 1.3x. Elimination of ILFC debt and
airline purchase commitments will further reduce financial
leverage and TFC. AIG has also created an adequate liquidity
position and has demonstrated access to capital markets through
execution of several recent financing transactions.
AIG property/casualty subsidiary ratings consider the company's
unique market position in the global insurance market given its
absolute size, product capabilities and geographic scope.
Operating and underwriting performance has lagged peer and
industry norms over the last five years. AIG has taken significant
measures recently to reposition the business mix and invest in
underwriting and claims technology. These activities, coupled with
favorable pricing trends in the last 18 months have started to
generate some loss ratio improvement. However, year-end 2012
underwriting results will be marred significantly by losses from
Hurricane Sandy that AIG previously estimated at $2 billion pre-
tax ($1.3 billion post-tax).
AIG reported significantly improved profitability in the first
nine months of 2012, with net income of $7.6 billion relative to a
modest net loss in the prior year period. This earnings
improvement was largely attributable to investment income growth,
as well as better underwriting performance within AIG's
property/casualty insurance operations. The property/casualty
combined ratio improved to 103.2% in the first nine months of 2012
from 109.3% in 2011 largely due to sharply lower catastrophe
losses. Life & Retirement pre-tax income improved by 22% in the
same period versus the prior year. Core operating subsidiary
interest coverage on financial debt was 4.9x in the first three
quarters of 2012.
Rating Sensitivities
Key triggers that could lead to future rating upgrades include:
-- Demonstration of higher and more consistent earnings within
Property/Casualty or Life & Retirement operating segments that
translate into average earnings-based interest coverage above
7.0x; This would correspond with operating earnings of
approximately $11 billion;
-- Further improvement in AIG's capital structure and leverage
metrics that reduce the company's TFC ratio to below 0.7x;
-- A shift toward consistent underwriting profits would promote
positive movement in the property/casualty subsidiary
financial strength ratings.
Key triggers that could lead to a future rating downgrade include:
-- Increases in financial leverage as measured by financial debt
to total capital to a sustained level above 30%, or a material
increase in the TFC ratio from current levels;
-- Large underwriting losses and/or heightened reserve volatility
of the company's non-life insurance subsidiaries that Fitch
views as inconsistent with that of comparably-rated peers and
industry trends;
-- Deterioration in the company's domestic life subsidiaries'
profitability trends;
-- Material declines in RBC ratios at either the domestic life
insurance or the non-life insurance subsidiaries, and/or
failure to achieve the above noted capital structure
improvements.
Fitch has withdrawn the following ratings, since the companies
were merged into American General Life Insurance Co. effective
Dec. 31, 2012 and no longer exist:
American General Life Insurance Company of Delaware
American General Life and Accident Insurance Company
Western National Life Insurance Company
SunAmerica Annuity and Life Assurance Company
SunAmerica Life Insurance Company
Fitch has upgraded these ratings:
AGC Life Insurance Company
American General Life Insurance Company
The Variable Annuity Life Insurance Company
United States Life Insurance Company in the City of New York
-- IFS ratings upgraded to 'A+' from 'A'; Stable Outlook.
Fitch has affirmed the following ratings:
AIU Insurance Company
American Home Assurance Company
Chartis Casualty Company
Chartis MEMSA Insurance Company Limited
Chartis Overseas Limited
Chartis Property Casualty Company
Chartis Specialty Insurance Company
Commerce & Industry Insurance Company
Granite State Insurance Company
Illinois National Insurance Company
Insurance Company of the State of Pennsylvania
Lexington Insurance Company
National Union Fire Insurance Company of Pittsburgh, PA
New Hampshire Insurance Company
-- IFS ratings at 'A'; Stable Outlook.
American International Group, Inc.
-- Long-term IDR at 'BBB+' Outlook Stable;
AIG International, Inc.
-- Long-term IDR at 'BBB+', Outlook Stable.
SunAmerica Financial Group, Inc.
-- Long-term IDR at 'BBB+'; Outlook Stable.
American General Capital II
-- USD300 million of 8.50% preferred securities due July 1, 2030
at 'BB+'.
American General Institutional Capital A
-- USD500 million of 7.57% capital securities due Dec. 1, 2045
at 'BB+'.
American General Institutional Capital B
-- USD500 million of 8.125% capital securities due March 15, 2046
at 'BB+'.
American International Group, Inc.
-- Various senior unsecured note issues at 'BBB';
-- USD$1.5 billion of 4.875% senior unsecured notes due June 2022
at 'BBB'.
-- USD1.2 billion of 4.250% senior unsecured notes due Sept. 15,
2014 at 'BBB';
-- USD800 million of 4.875% senior unsecured notes due Sept. 15,
2016 at 'BBB';
-- EUR420.975 million of 6.797% senior unsecured notes due
Nov. 15, 2017 at 'BBB';
-- GBP323.465 million of 6.765% senior unsecured notes due
Nov. 15, 2017 at 'BBB';
-- GBP338.757 million of 6.765% senior unsecured notes due
Nov. 15, 2017 at 'BBB';
-- USD256.161 million of 6.820% senior unsecured notes due
Nov. 15, 2037 at 'BBB'.
-- USD250 million of 2.375% subordinated notes due 2015 at
'BBB-';
-- EUR750 million of 8.00% series A-7 junior subordinated
debentures due May 22, 2038 at 'BB+';
-- USD1.960 billion 5.67% series B-1 junior subordinated
debentures due Feb. 15, 2041 at 'BB+';
-- USD1.960 billion of 5.82% series B-2 junior subordinated
debentures due May 1, 2041 at 'BB+';
-- USD1.960 billion of 5.89% series B-3 junior subordinated
debentures due Aug. 1, 2041 at 'BB+';
-- USD 4 billion of 8.175% series A-6 junior subordinated
debentures due May 15, 2058 at 'BB+';
-- USD 1.1 billion of 7.700% series A-5 junior subordinated
debentures due Dec. 18, 2062 at 'BB+';
-- GBP309.850 million of 5.75% series A-2 junior subordinated
debentures due March 15, 2067 at 'BB+';
-- EUR409.050 million of series A-3 junior subordinated
debentures due March 15, 2067 at 'BB+';
-- GBP900 million of 8.625% series A-8 junior subordinated
debentures due May 22, 2068 at 'BB+';
-- USD750 million of 6.45% series A-4 junior subordinated
debentures due June 15, 2077 at 'BB+';
-- USD687.581 million of 6.25% series A-1 junior subordinated
debentures due March 15, 2087 at 'BB+'.
AIG International, Inc.
-- USD175 million of 5.60% senior unsecured notes due July 31,
2097 at 'BBB'.
Sun America Financial Group, Inc.
-- USD150 million of 7.50% senior unsecured notes due July 15,
2025 at 'BBB';
-- USD150 million of 6.625% senior unsecured notes due Feb. 15,
2029 at 'BBB'.
ASIF II Program
ASIF III Program
ASIF Global Financing
-- Program ratings at 'A'.
AMERICAN NATURAL: Paul Ross Control Hiked 73.4% at Dec. 31
----------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Paul Alexander Ross and his affiliates
disclosed that, as of Dec. 31, 2012, they beneficially own
63,400,000 shares of common stock of American Natural Energy
Corporation representing 73.4% of the shares outstanding. Mr.
Ross previously reported beneficial ownership of 5,597,057 common
shares or a 19.9% equity stake as of July 31, 2012. A copy of the
amended filing is available at http://is.gd/eD2qdx
About American Natural
American Natural Energy Corporation is a Tulsa, Oklahoma based
independent exploration and production company with operations in
St. Charles Parish, Louisiana.
The Company's balance sheet at Sept. 30, 2012, showed
$20.2 million in total assets, $13.3 million in total liabilities,
and stockholders' equity of $6.9 million.
As reported in the TCR on April 3, 2012, MaloneBailey, LLP, in
Houston, Texas, expressed substantial doubt about American
Natural's ability to continue as a going concern. The
independent auditors noted that the Company incurred a net loss in
2011 and has a working capital deficiency and an accumulated
deficit at Dec. 31, 2011.
AMERICAN VIATICAL: Case Summary & 18 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: American Viatical Services, LLC
dba AVS Underwriting, LLC
175 Town Park Drive, Suite 400
Kennesaw, GA 30144
Bankruptcy Case No.: 13-52989
Chapter 11 Petition Date: February 12, 2013
Court: U.S. Bankruptcy Court
Northern District of Georgia (Atlanta)
Judge: Mary Grace Diehl
Debtor's Counsel: J. Robert Williamson, Esq.
SCROGGINS AND WILLIAMSON, P.C.
1500 Candler Building
127 Peachtree Street, N.E.
Atlanta, GA 30303
Tel: (404) 893-3880
E-mail: rwilliamson@swlawfirm.com
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its 18 largest unsecured creditors
filed with the petition is available for free at:
http://bankrupt.com/misc/ganb13-52989.pdf
The petition was signed by Philip R. Loy, president.
AMWINS GROUP: Moody's Assigns 'B1' Rating to New $715MM Term Loan
-----------------------------------------------------------------
Moody's Investors Service affirmed the B2 corporate family and
probability of default ratings of AmWINS Group, LLC and has
assigned a B1 rating to AmWINS' proposed new first-lien term loan
being issued to refinance the existing first-lien and second-lien
term loans.
The rating agency has also downgraded the company's existing
revolving credit facility to B1 from Ba2, consistent with the new
first-lien term-loan and reflecting the removal of uplift from a
second-lien term loan. The rating outlook for AmWINS is stable.
Ratings Rationale
"AmWINS' ratings reflect its strong presence in wholesale and
specialty insurance brokerage and its profitable growth over the
past several years," said Bruce Ballentine, Moody's lead analyst
for AmWINS. "The proposed refinancing is credit positive because
it reduces the company's interest expense, although the credit
profile is still constrained by high financial leverage."
AmWINS benefits from broad product and geographic diversification
and from its expertise in purchasing and integrating small and
mid-sized firms. These strengths are tempered by the company's
significant financial leverage, integration risk associated with
acquisitions, and exposure to errors and omissions, a risk
inherent in professional services.
Based on Moody's estimates, which incorporate AmWINS' increased
borrowings to fund two acquisitions at the end of 2012 as well as
the subordinated loan from New Mountain Capital, the company's
adjusted debt-to-EBITDA ratio is in the range of 6x-6.5x. The
rating agency views such leverage as aggressive for the rating
category and expects it to drop below 6x over the next 12 months.
Factors that could lead to an upgrade of AmWINS' ratings include:
(i) adjusted (EBITDA - capex) coverage of interest exceeding 2.5x,
(ii) adjusted free-cash-flow-to-debt ratio exceeding 6%, and (iii)
adjusted debt-to-EBITDA ratio below 4.5x.
Factors that could lead to a rating downgrade include: (i)
adjusted (EBITDA - capex) coverage of interest below 1.5x, (ii)
adjusted free-cash-flow-to-debt ratio below 3%, or (iii) adjusted
debt-to-EBITDA ratio above 6.5x.
Moody's has taken the following actions on AmWINS' ratings (and
loss given default (LGD) assessments):
Affirmed corporate family rating at B2;
Affirmed probability of default rating at B2-PD;
Assigned rating to new $715 million first-lien term loan at B1
(LGD3, 40%);
Downgraded rating of $75 million first-lien revolving credit
facility to B1 (LGD3, 40%) from Ba2 (LGD2, 16%).
Upon closing of the refinancing, Moody's expects to withdraw the
ratings from AmWINS existing term loans (Ba2 rating on existing
first-lien term loan and B3 rating on existing second-lien term
loan) as these facilities will be repaid and terminated.
The principal methodology used in this rating was Moody's Global
Rating Methodology for Insurance Brokers and Service Companies
published in February 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.
Based in Charlotte, North Carolina, AmWINS is a wholesale
distributor of specialty insurance products and services. The firm
operates through four divisions: Brokerage, Underwriting, Group
Benefits and International. AmWINS generated total revenues of
$501 million for the 12 months through September 2012.
API TECHNOLOGIES: Incurs $148.7 Million Net Loss in Fiscal 2012
---------------------------------------------------------------
API Technologies Corp. filed with the U.S. Securities and Exchange
Commission its annual report on Form 10-K disclosing a net loss of
$148.70 million on $280.82 million of net revenue for the year
ended Nov. 30, 2012, as compared with a net loss of $26.21 million
on $108.27 million of net revenues for the year ended May 31,
2011.
The Company's balance sheet at Nov. 30, 2012, showed $396.29
million in total assets, $231.74 million in total liabilities,
$25.58 million in redeemable preferred stock, and $138.97 million
in shareholders' equity.
A copy of the Form 10-K is available for free at:
http://is.gd/uNDoUc
About API Technologies Corp.
API Technologies designs, develops and manufactures electronic
systems, subsystems, RF and secure solutions for technically
demanding defense, aerospace and commercial applications. API
Technologies' customers include many leading Fortune 500
companies. API Technologies trades on the NASDAQ under the symbol
ATNY. For further information, please visit the Company Web site
at www.apitech.com.
The Company's balance sheet at Aug. 31, 2012, showed US$399.68
million in total assets, US$223.66 million in total liabilities,
US$25.92 million in preferred stock, net of discounts, and
US$150.09 million in shareholders' equity.
* * *
As reported by the TCR on Feb. 14, 2013, Moody's Investors Service
has withdrawn all ratings of API Technologies Corp., including its
Caa1 Corporate Family Rating. On February 6, 2013, API
Technologies Corp. completed a refinancing of its previously
outstanding rated bank debt. All ratings of API have been
withdrawn since the company has no rated debt outstanding.
In the Feb. 12, 2013, edition of the TCR, Standard & Poor's
Ratings Services said that it placed its 'B' corporate credit
rating on API Technologies Corp. on CreditWatch with negative
implications.
"The CreditWatch placement reflects weaker-than-expected credit
metrics resulting from less-than-expected improvements in
operating performance and higher debt, including a modest increase
from the recent refinancing," said Standard & Poor's credit
analyst Chris Mooney.
ARAMARK CORP: Moody's Assigns 'Ba3' Rating to New Secured Debt
--------------------------------------------------------------
Moody's Investors Service assigned a Ba3 to ARAMARK Corporation's
proposed new 6.5 year $1 billion senior secured term loan and
senior secured revolving credit facility. Moody's affirmed the B1
Corporate Family rating, B1-PD Probability of Default rating, Ba3
secured and B3 unsecured debt ratings and SGL-2 Speculative Grade
Liquidity rating. The ratings outlook is stable.
Ratings Rationale
The B1 corporate family rating reflects ARAMARK's scale and
recurring revenue stream, leading to expectations for modestly
improved EBITDA driving debt to EBITDA down to 5.5 times and
EBITDA less capital expenditures to interest up to about 1.7 times
in 2013. Debt to EBITDA is high for a B1 rated service company at
about 5.8 times. The stable ratings outlook reflects Moody's
expectation for low single digit revenue growth and modest
improvement in EBITDA over the next year. This is based on slowly
improving conditions across most service lines and a continued
focus on aggressive cost management and business process
improvements. The ratings could be downgraded if, as a result of
some combination of poor results from operations, acquisitions or
shareholder-friendly actions, Moody's does not expect debt to
EBITDA to be maintained at or below 5.5 times or free cash flow to
debt is expected to be sustained below 2%. The ratings could be
upgraded if the company achieves sustained revenue and
profitability growth and demonstrates conservative financial
policies such that Moody's expects debt to EBITDA to be sustained
at about 4.5 times.
Structural Considerations
Proceeds of the new secured term loan will be used to repay a
portion of ARAMARK's $1.28 billion of 8.5% unsecured notes due
2015. ARAMARK's secured debt is rated at Ba3, one notch higher
than the B1 corporate family rating. That lift reflects the
portion of unsecured debt and claims in ARAMARK's total liability
structure, which would provide for a higher expected recovery for
the secured debt. However, a higher proportion of secured debt in
ARAMARK's capital structure than is contemplated by the $1 billion
secured term loan could result in the secured debt rating being
lowered to be in line with the corporate family rating at B1.
Ratings Assigned:
ARAMARK Corporation
Senior Secured Term Loan due 2020, Ba3 (LGD3, 42%)
Senior Secured Revolving Credit Facility due 2017, Ba3 (LGD3,
42%)
Ratings Affirmed (LGD point estimates revised):
ARAMARK Corporation
Senior Secured Term Loan Facility due 2016, Ba3 (LGD3, 42% from
LGD3 34%)
Synthetic Letter of Credit Facilities due 2014 & 2016, Ba3
(LGD3, 42% from LGD3 34%)
Senior Unsecured 8.5% Notes due 2015, B3 (LGD5, 87% from LGD5,
81%)
Senior Unsecured Floating Rate Notes due 2015, B3 (LGD5, 87%
from LGD5, 81%)
ARAMARK Holdings Corporation
Corporate Family, B1
Probability of Default, B1-PD
Speculative Grade Liquidity, SGL-2
Senior Unsecured Notes due 2016, B3 (LGD6, 95%)
ARAMARK is a leading provider of a broad range of managed services
to business, educational, healthcare and governmental institutions
and sports, entertainment and recreational facilities, and the
second largest uniform and career apparel business in the United
States. ARAMARK is owned by a consortium of affiliates of private
equity sponsors (GS Capital Partners, CCMP Capital Advisors, J.P.
Morgan Partners, Thomas H. Lee Partners and Warburg Pincus) and
the company's management team.
The principal methodology used in rating ARAMARK was the Global
Business and Consumer Service Industry Methodology published in
October 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
ASSOCIATED BANC-CORP: Fitch Affirms 'BB+' Subordinated Rating
-------------------------------------------------------------
Fitch Ratings has affirmed the long-term and short-term Issuer
Default Ratings (IDRs) of Associated Banc-Corp. and its
subsidiaries at 'BBB-/F3'. The Rating Outlook remains Positive.
Fitch reviewed Associated Banc-Corp. as part of a peer review that
included 16 mid-tier regional banks. The banks in the peer review
include: Associated Banc-Corp., Bank of Hawaii Corporation, BOK
Financial Corporation, Cathay General Bancorp, Cullen/Frost
Bankers, Inc., East West Bancorp, Inc., First Horizon National
Corporation, First National of Nebraska, Inc., First Niagara
Financial Group, Inc., Fulton Financial Corporation, Hancock
Holding Company, People's United Financial, Inc, Synovus Financial
Corp., TCF Financial Corporation, UMB Financial Corp., Webster
Financial Corporation. Refer to the release titled 'Fitch Takes
Rating Actions on Its Mid-Tier Regional Bank Group Following
Industry Peer Review' for a discussion of rating actions taken on
the entire mid-tier regional bank group.
The mid-tier regional group is comprised of banks with total
assets ranging from $10 billion to $36 billion. IDRs for this
group is relatively dispersed with a low of 'BB-' and a high of
'A+'. Mid-tier regional banks typically lag their large regional
bank counterparts by asset size, geographic footprint and
product/revenue diversification. As such mid-tier regional banks
are more susceptible to idiosyncratic risks such as geographic or
single name concentrations.
Fitch's mid-tier regional bank group has fairly homogenous
business strategies. The institutions are mostly reliant on spread
income from loans and investments. With limited opportunity to
improve fee-based income in the near term, Fitch expects that mid-
tier banks will continue to face greater earnings headwinds in
2013 than larger institutions with greater revenue
diversification.
Share repurchases is common theme amongst the mid-tier banks. As
mid-tier banks face earnings headwinds, institutions have begun
repurchasing common shares to improve shareholder returns. Fitch
anticipates continued repurchase activity in 2013 as the return on
equity lags historical norms for the group.
In addition to share repurchases, Fitch has observed that some
mid-tier banks have looked to their investment portfolio to
improve returns. Most notably, CLOs and CMBS have become more
popular amongst mid-tier banks. Although such securities are
beneficial to yields and returns, Fitch notes that such purchases
can be a negative ratings driver if the risks are not properly
measured, monitored and controlled.
Asset quality continues to improve throughout the banking sector.
Both nonperforming assets (NPAs) and net charge-offs (NCOs) are
down significantly year over year. Fitch anticipates further asset
quality improvement as nonperforming loan (NPL) inflow slows.
Reserve levels have also declined as asset quality improves, which
has been beneficial to earnings in 2012. Fitch expects further
reserve releases in 2013 but at a slower pace.
Rating Action and Rationale
Associated Banc-Corp.'s (ASBC) ratings were affirmed at 'BBB-'.
The Rating Outlook remains Positive. The affirmation and continued
Positive Outlook reflect the progress ASBC has made in rebuilding
balance sheet strength while improving operating performance.
Fitch notes ASBC's sustained positive trends in asset quality
metrics, reporting NPAs of around 2.77% at fourth quarter of 2012
(4Q'12), significantly down from a year prior. Further, the
company has maintained a strong capital base, especially relative
to similarly rated institutions as risk on the balance sheet has
been lessened. The company reported an 81 basis points (bps)
return on assets (ROA) for 2012, a 16 bps improvement from 2011.
While Fitch expects similar results over the next 12 to 18 months,
Fitch notes that performance has been augmented through
artificially low provision expense and a historically high level
of mortgage banking income. ASBC has taken just $3 million in
allowance provisions since 4Q'11. Moreover, earnings have been
boosted over the last year through the rally in mortgage rates
which has added over $50 million of incremental pre-tax mortgage
banking income to the bottom line relative to the year prior. The
level of earnings, which are below some higher rated institutions,
represents the main hurdle for upwards rating momentum over the
intermediate term.
RATING DRIVERS AND SENSITIVITIES - IDRs and VRs
Over the more medium term, ratings could benefit from controlled,
strategic balance sheet growth, combined with costs savings
realized through efficiency measures. Conversely, a sharp reverse
in asset quality trends, particularly in the growing C&I book,
could negatively impact both ASBC's rating and outlook. Further,
more aggressive capital management at bank or holding company
level could lead to negative rating actions.
RATING DRIVERS AND SENSITIVITIES - Support Ratings and Support
Floor Ratings:
All of the mid-tier regional banks in the peer group have Support
Ratings of '5' and Support Floor Ratings of 'NF'. In Fitch's view,
the mid-tier banks are not considered systemically important and
therefore, Fitch believes the probability of support is unlikely.
IDRs and VRs do not incorporate any government support for any of
the banks in the mid-tier regional bank peer group.
RATING DRIVERS AND SENSITIVITIES - Subordinated Debt and Other
Hybrid Securities:
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
RATING DRIVERS AND SENSITIVITIES - Holding Company:
All of the entities reviewed in the mid-tier regional bank group
have a bank holding company structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent holding
company supporting equalized ratings between bank subsidiaries and
bank holding companies. IDRs and VRs are equalized with those of
its operating companies and banks reflecting its role as the bank
holding company, which is mandated in the U.S. to act as a source
of strength for its bank subsidiaries.
RATING DRIVERS AND SENSITIVITIES - Subsidiary and Affiliated
Company Rating:
All of the entities reviewed in the mid-tier regional bank group
factor in a high probability of support from parent institutions
to its subsidiaries. This reflects the fact that performing parent
banks have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has affirmed these ratings:
Associated Banc-Corp.
-- Long-term IDR at 'BBB-'; Outlook Positive;
-- Senior unsecured debt at 'BBB-';
-- Viability at 'bbb-'.
-- Subordinated at from 'BB+';
-- Preferred stock at 'B';
-- Short-term IDR at 'F3';
-- Commercial paper at 'F3';
-- Support at '5';
-- Support floor at 'NF'.
Associated Bank, NA
-- Long-term IDR at 'BBB-'; Outlook Positive;
-- Viability at 'bbb-';
-- Long-term deposits at 'BBB';
-- Long-term senior debt at 'BBB-';
-- Short-term IDR at 'F3';
-- Support at '5';
-- Support floor at 'NF';
-- Short-term deposits at 'F2'.
Associated Trust Company, NA
-- Long-term IDR at 'BBB-'; Outlook Positive;
-- Viability at 'bbb-';
-- Short-term IDR at 'F3'
-- Support at '5';
-- Support floor at 'NF'.
ASSURAMED HOLDING: Moody's Places All Ratings on Upgrade Review
---------------------------------------------------------------
Moody's Investors Service placed all the ratings of AssuraMed
Holding, Inc. under review for upgrade following the announcement
that the company has agreed to be purchased by Cardinal Health,
Inc. The total value of the transaction is estimated to be around
$2 billion and is expected to be funded with a combination of debt
and cash.
The review will focus on the ultimate outcome of the transaction.
The transaction, if closed as currently proposed, is considered to
be a credit positive for AssuraMed because it will become part of
a larger and more diversified company.
The following ratings were placed under review for upgrade:
Corporate family rating, B2;
Probability of default rating, B2-PD;
$100 million secured revolving credit facility, due 2017, B1;
$465 million first lien term loan, due 2019, B1;
$195 million second lien term loan, due 2020, Caa1.
The following loss-given-default indicators were changed:
$100 million secured revolving credit facility, LGD changed to
LGD3, 37% from LGD3, 36%;
$465 million first lien term loan, due 2019, LGD changed to LGD3,
37% from LGD3, 36%;
$195 million second lien term loan, due 2020, LGD changed to LGD5,
88% from LGD3, 87%.
Ratings Rationale
The review will focus on the ultimate outcome of the transaction.
Moody's notes that AssuraMed's first and second lien credit
facilities are expected to be terminated at the close of the
transaction per the change of control provision in the credit
agreements. Should the transaction not close as planned, the
company's ratings could be taken off review and reinstated at B2.
The principal methodology used in this rating was the Global
Distribution & Supply Chain Services published in November 2011.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
AssuraMed Holding, Inc. is a marketer and distributor of
disposable medical supplies. The company operates two segments:
Edgepark Medical Supplies and Independence Medical. The company is
majority owned by affiliates of Clayton, Dubilier & Rice LLC and
GS Capital Partners.
AVANTAIR INC: Incurs $1.5 Million Net Loss in Fourth Quarter
------------------------------------------------------------
Avantair, Inc., reported a net loss of $1.56 million on
$35.49 million of total revenue for the three months ended Dec.
31, 2012, as compared with a net loss of $916,000 on
$42.94 million of total revenue for the same period during the
prior year.
For the six months ended Dec. 31, 2012, the Company incurred a net
loss of $2.53 million on $78.36 million of total revenue, as
compared with a net loss of $3.09 million on $85.92 million of
total revenue for the same period a year ago.
The Company's balance sheet at Dec. 31, 2012, showed $81.56
million in total assets, $120.25 million in total liabilities,
$14.84 million in series A convertible preferred stock, and a
$53.53 million total stockholders' deficit.
"The results this quarter were impacted by the voluntary stand
down of our fleet," said Steven Santo, chairman and chief
executive officer. "We were successful in getting our fleet
operational following these measures and since then, have offered
to recall all of our remaining furloughed pilots. We also
completed the process of outsourcing our maintenance and the sale
of our Camarillo, California FBO operations. We have made changes
within management including adding several new members to our
management team, comprised of highly experienced industry leaders
and operational experts, who we believe will assist in delivering
the leadership necessary to take us to the next level. We closed
on over $3.5 million of our capital raise, primarily supported by
our Board of Directors and program owners. I am encouraged by
these developments, as well as the improvements in our service
levels, and I am confident the Company will be well positioned to
achieve its operating plans."
A copy of the press release is available for free at:
http://is.gd/pz2lEk
About Avantair Inc.
Headquartered in Clearwater, Fla., Avantair, Inc. (OTC BB: AAIR)
-- http://www.avantair.com/-- sells fractional ownership
interests in, and flight hour card usage of, professionally
piloted aircraft for personal and business use, and the management
of its aircraft fleet. According to AvData, Avantair is the fifth
largest company in the North American fractional aircraft
industry.
Avantair also operates fixed flight based operations (FBO) in
Camarillo, California and in Caldwell, New Jersey. Through these
FBOs and its headquarters in Clearwater, Florida, Avantair
provides aircraft maintenance, concierge and other services to its
customers as well as to the Avantair fleet.
AXION INTERNATIONAL: Judy Lerner Is 5% Shareholder as of Jan. 29
----------------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Judy Lenkin Lerner Revocable Trust and Judy Lenkin
Lerner disclosed that, as of Jan. 29, 2013, they beneficially own
1,514,814 shares of common stock of Axion International Holdings,
Inc., representing 5% of the shares outstanding. A copy of the
filing is available for free at http://is.gd/iJ9uIQ
About Axion International
New Providence, N.J.-based Axion International Holdings, Inc. (OTC
BB: AXIH) - http://www.axionintl.com/-- is the exclusive licensee
of patented and patent-pending technologies developed for the
production of structural plastic products such as railroad
crossties, pilings, I-beams, T-Beams, and various size boards
including a tongue and groove design that are utilized in multiple
engineered design solutions such as rail track, rail and tank
bridges (heavy load), pedestrian/park and recreation bridges,
marinas, boardwalks and bulk heading to name a few.
RBSM LLP, in New York, the auditor, issued a going concern
qualification each in the Company's financial statements for the
years ended Dec. 31, 2010, and 2011. RBSM LLP noted that the
Company has incurred significant operating losses in current year
and also in the past. These factors, among others, raise
substantial doubt about the Company's ability to continue as a
going concern, it said.
Axion International reported a net loss of $9.93 for the 12 months
ended Dec. 31, 2011, compared with a net loss of $7.10 million for
the 12 months ended Sept. 30, 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$6.97 million in total assets, $8.10 million in total liabilities,
$5.86 million in 10% convertible preferred stock, and a
$6.99 million total stockholders' deficit.
B.C.A. AND CHILD: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: B.C.A. and Child Care Center, Inc.
220 West Upsal Street
Philadelphia, PA 19119
Bankruptcy Case No.: 13-11234
Chapter 11 Petition Date: February 12, 2013
Court: U.S. Bankruptcy Court
Eastern District of Pennsylvania (Philadelphia)
Judge: Magdeline D. Coleman
Debtor's Counsel: David A. Scholl, Esq.
LAW OFFICE OF DAVID A. SCHOLL
512 Hoffman Street
Philadelphia, PA 19148
Tel: (610) 550 1765
E-mail: judgescholl@gmail.com
Estimated Assets: $500,001 to $1,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Company did not file a list of creditors together with its
petition.
The petition was signed by Dr. Karen R.S. Jenkins, executive
administrator.
BAKERCORP INTERNATIONAL: Moody's Rates Secured Loans 'Ba3'
----------------------------------------------------------
Moody's earlier this month assigned a Ba3 rating to BakerCorp
International, Inc.'s senior secured revolver and term loan.
Moody's has also assigned a Speculative-Grade Liquidity rating of
SGL-3 to BakerCorp reflecting the expectation for adequate
liquidity. Moody's has affirmed the company's corporate family
rating of B2, probability of default rating of B2-PD, and senior
unsecured notes rating of Caa1. The stable rating outlook was also
affirmed.
These ratings reflect the launch of a repricing and maturity
extension of the company's credit facilities. As part of this
transaction, the revolver and term loan maturities are expected to
extend to February 2018 and February 2020 (springing ahead of the
8.25% Senior Notes if the notes are not refinanced), respectively.
Pricing on the term loan is expected to decrease. In addition, the
company is amending certain other terms including negative
covenants.
The following ratings were assigned:
Issuer: BakerCorp International, Inc.
Senior Secured Revolver, Assigned Ba3 (LGD-2, 28%)
Senior Secured Term Loan, Assigned Ba3 (LGD-2, 28%)
Speculative-Grade Liquidity, Assigned SGL-3
The following ratings were affirmed:
Issuer: BakerCorp International, Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Secured Revolver, Affirmed Ba3 (LGD-2, 28%) (Existing
facility rating to be withdrawn at close of refinancing)
Senior Secured Term Loan, Affirmed Ba3 (LGD-2, 28%) (Existing
facility rating to be withdrawn at close of refinancing)
Senior Unsecured Notes, Affirmed Caa1 (LGD-5, 83%)
Outlook, Affirmed Stable
Ratings Rationale
BakerCorp's B2 Corporate Family Rating reflects the Company's
established position as a provider of liquid and solid containment
solutions used in industrial and other applications. Although the
company's market niche constrains its scale in terms of revenue
and earnings, demand for its services is supported by longer-term
growth dynamics in its end markets including the oil and gas
markets, as well as regulations surrounding water, waste water,
and other fluid management. Revenues are largely driven by rental
of temporary storage tanks, but the company has sought to further
expand into adjacencies such as pumps, filtration and other
equipment, and has broadened its geographic presence into certain
European markets. The combination of new tank additions and the
expansion of its pumps and related businesses have resulted in
elevated levels of capital investment, which Moody's expects will
continue in 2013. While average daily rental rates have held
during the fiscal year ended January 2012 and for the nine months
ended October 31, 2012, average utilization has declined
meaningfully due to the combination of increased fleet levels and
weaker than anticipated demand.
The rating considers the company's high leverage with Debt/EBITDA
of 5.0x and weak free cash flow to debt metrics. Moody's
anticipates that continued high levels of fleet investment will
constrain the company's ability to meaningfully improve these
metrics during the near term. Interest coverage metrics are
supportive of the assigned ratings, with EBIT/Interest of about
1.4x and EBITDA/Interest of 2.8x, both for the LTM period ended
October 31, 2012.
Moody's SGL-3 rating reflects expectation for adequate liquidity.
Although continued high capital expenditure levels could constrain
free cash flow generation, the company has flexibility to dial
back spending in order to support liquidity. The SGL rating is
supported by the company's $45 million revolver that is
anticipated to have good availability throughout 2013, and has
significant room under its covenants. The company is believed to
have limited alternative liquidity because most assets are pledged
in support of the senior secured credit facilities.
What Could Change The Ratings -- Down
The ratings could be downgraded if EBITDA to interest expense were
expected to decline below 2.0x or debt to EBITDA were anticipated
to be sustained at or above 5.5x, both on a Moody's adjusted
basis. The Company's ratings could also be adversely impacted if
the company's growth capital expenditures remain at levels in
excess of cash flow generation ultimately resulting in an
increased need for external funding and correspondingly higher
leverage.
What Could Change The Ratings -- Up
Given BakerCorp's small size and product concentration, the
ability to achieve a higher rating will be heavily linked to its
ability to successfully execute its aggressive capital investment
initiatives and sustain or improve equipment utilization and
rental rates. Other factors that could contribute to positive
traction include, on a Moody's adjusted basis, debt to EBITDA
decreasing below 3.5x and EBITDA to interest expense increasing
above 4.0x , both on a sustained basis.
Rating Outlook
The stable outlook reflects Moody's expectation for relatively
stable performance during the next 12-18 months resulting in flat
credit metrics. While the Company is positioning itself for an
increase in demand which could have a positive impact on
utilization, should current operating and macroeconomic conditions
continue in the near-term, free cash flow, rental fleet
utilization and other metrics could be adversely impacted from
continued large growth capital expenditures.
The principal methodology used in this rating was the Global
Equipment and Automobile Rental Industry Methodology published in
December 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
BakerCorp International, Inc., headquartered in Seal Beach,
California, provides liquid and solid containment solutions. The
majority of its revenues come from the rental of equipment with
the balance from services and equipment sales. As of October 31,
2012, the Company had a fleet of more than 23,000 units. The
Company is controlled by funds advised by Permira Advisors L.L.C.
which acquired it in June 2011 from a group of which the primary
shareholder was Lightyear Capital, LLC. Revenues for the LTM
period ended October 31, 2012 were $316 million.
BEECHCRAFT HOLDINGS: Moody's Rates New $375-Mil. Term Loan 'B1'
---------------------------------------------------------------
Moody's Investors Service earlier this month assigned a B1
corporate family rating to Beechcraft Holdings, LLC and a B1
rating to the company's proposed $375 million term loan. The
rating outlook is stable. Proceeds from the term loan issuance
will serve as exit financing used to fund Beechcraft's planned
emergence from Chapter 11 bankruptcy.
Specifically, proceeds from the term loan will be used to repay
the debtor-in-possession facility, fund a portion of its claim
settlement with the Pension Benefit Guaranty Corporation (PBGC),
make cure payments, and pay certain fees and expenses. Upon
emergence, Moody's anticipates that the company will have shed
over $2.5 billion of pre-petition debt, discontinued the operation
of its Hawker Jet business, the PBGC will have become the
statutory trustee of the company's salaried and base pension plans
and the warranty and service agreements associated with the
Premier and Hawker 4000 jets will have been rejected. The post-
emergence Beechcraft will continue to administer the Hourly
pension plan, which is frozen.
The following ratings have been assigned:
B1 Corporate family rating (CFR);
B1-PD Probability of Default Rating; and
B1 (LGD3, 48%) to the $375 million first lien exit term loan
maturing in 2020.
The ratings anticipate the company's successful emergence from
Chapter 11 with terms substantially similar to the existing plan
of reorganization.
Ratings Rationale
The B1 CFR favorably reflects the significant reduction in both
debt and pension obligation following emergence from Chapter 11
and the company's exit from its unprofitable Hawker Jet business
and related warranties. Beechcraft remains the industry leading
manufacturer of twin engine turbo-prop aircraft and benefits from
its sole provider status for basic trainer aircraft to the US Air
Force and Navy (JPATS Program). Beechcraft's parts and services
operations provide stable, predictable profits and cash flows
given the breadth of Beechcraft's installed base. This stability,
coupled with strength of Beechcraft's post emergence liquidity and
a more efficient manufacturing footprint, should enable the
company to better navigate the highly cyclical nature of its niche
of the new aircraft market.
The combination of weak macro-economic conditions in recent years
coupled with the uncertainty surrounding bankruptcy proceedings
has weighed heavily on both order rates and profitability. Moody's
expects the post-bankruptcy Beechcraft to demonstrate solid near
term order bookings driven by pent-up demand, an improving
economic backdrop and the introduction of product upgrades. In
particular, success of the new AT-6 Attack trainer units is
integral to offsetting the rolling off of the JPATS program in
2015. Moody's expects order growth to translate into an improved
earnings profile and better margin performance, which when coupled
with potential debt reduction, should reduce leverage from roughly
5.0x, on a Moody's adjusted basis at emergence, to the 4.0x to
4.25x range during 2014.
The stable outlook reflects Moody's expectation that improving
order rates will result in the sequential improvement in earnings
and cash flow beginning in late 2013. Margins are expected to
expand as fixed costs are spread over a larger production base and
from improvements made to Beechcraft's manufacturing footprint in
recent years, including its partial shift to lower cost
manufacturing facilities in Mexico. Further, the stable outlook
reflects Moody's expectation that Beechcraft will maintain a good
liquidity profile supported by cash in excess of $100 million and
ABL availability of around $185 million at emergence (after
accounting for expected LC usage).
The B1 rating on the exit term loan maturing in 2020 reflects its
second lien position on domestic accounts receivable, inventory,
and cash behind the $225 million exit ABL (unrated) due 2018 and
its first lien status on substantially all other assets. The
rating garners support from subordinated obligations, particularly
the underfunded position of the hourly employee pension plan of
roughly $265 million. The term loan is expected to contain maximum
capital spending covenants.
The ratings are unlikely to be upgraded prior to a meaningful
improvement in earnings coupled with a reduction in debt. A
ratings upgrade would likely require fully adjusted debt-to-EBITDA
to be reduced below 3.5x while maintaining a good liquidity
profile.
A ratings downgrade would likely occur if cash balances were used
in a manner other than debt reduction or funding of growth related
investment in working capital. Leverage maintained at current
levels for an extended period due to tepid order trends could lead
to a ratings downgrade.
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.
Beechcraft, headquartered in Wichita, Kansas, is a manufacturer of
business and general aviation, special mission, trainer and light
attack aircraft. The company manufactures and markets parts and
aviation products and provides support services for businesses,
governments and individuals worldwide. Signature aircraft
platforms include Baron, Bonanza, King Air, T-6 and the AT-6. At
emergence, roughly 60% of the equity will be owned by affiliates
of Capital Research & Management, Centerbridge Partners, Angelo,
Gordon & Co. and Sankaty Advisors. Revenues for 2012 are expected
to be roughly $1.5 billion.
BERNARD L MADOFF: Judge Rakoff Departs from Prior Katz Ruling
-------------------------------------------------------------
Brian Mahoney of BankruptcyLaw360 reported that the trustee
liquidating Bernard Madoff's firm can use the Bankruptcy Code in
his bid to dodge $2 billion in payouts to investment companies
victimized in Madoff's fraud, a New York federal judge said
Wednesday, departing from his ruling favoring former Madoff
investor and Mets owner Saul Katz.
The report said U.S. District Judge Jed Rakoff said that the
Securities Investor Protection Act does not bar trustee Irving
Picard from attempting to disallow investor claims under Section
502(d) of the Bankruptcy Code, departing from his 2011 Katz
ruling.
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.
BOWLES SUB A: Exclusive Solicitation Period Extended to March 1
---------------------------------------------------------------
The Bankruptcy Court has extended Bowles Sub Parcel A, LLC, and
Fenton Sub Parcel A, LLC's exclusive right to gain acceptance of
its plan of reorganization until March 1, 2013.
On Aug. 1, 2012, Debtors filed a joint disclosure statement and
joint plan of reorganization in each of their cases. On Oct. 4,
2012, the Court approved the disclosure statement.
As reported in the TCR on Oct. 11, 2012, the Joint Chapter 11 Plan
filed by the Debtors anticipates that all property of the estate
will be vested in the Reorganized Debtors. Wells Fargo Bank,
N.A., a trustee for holders of $8.86 million in mortgage debt,
will be paid in full from the income generated by the operation of
the "Pool A Properties" or from the proceeds of the sale of the
properties. Steven B. Hoyt's loan to the properties will be
treated as an unsecured claim. Holders of unsecured claims
totaling $814,000 will receive up to 100% of their claims, with
interest, from distributions from excess cash generated by
postpetition operations and from the sale(s) or refinancing and
operations after the Lender is paid in full. The owners will
retain their equity interests.
A copy of the Disclosure Statement is available for free at:
http://bankrupt.com/misc/Bowles_Sub_DS_092812.pdf
About StoneArch II/WCSE Entities
StoneArch II/WCSE Minneapolis Industrial LLC in 2007 acquired
various limited liability companies, which in turn owned 27
industrial multi-tenant properties located in Minneapolis/St. Paul
in Minnesota. The properties were divided into four separate
pools: A, B, C, and D.
Fenton Sub Parcel D LLC and Bowles Sub Parcel D LLC, which jointly
own the properties in pool D, sought Chapter 11 protection (Bankr.
D. Minn. Case Nos. 11-44430 and 11-44434) on June 29, 2011. A
Chapter 11 plan has been filed for the pool D debtors. The plan,
if approved, would allow the existing owners to maintain operation
of the properties.
Bowles Sub Parcel A, LLC, and five other entities, which jointly
own parcels A, B and C, filed for Chapter 11 protection (Bankr. D.
Minn. Case Nos. 12-42765, 12-42768, 12-42769, 12-42770, 12-42772,
and 12-42774) on May 8, 2012. Each of the May 8 Debtors estimated
$10 million to $50 million in assets. Bowles Sub A disclosed
$11,442,268 in assets and $9,716,342 in liabilities as of the
Chapter 11 filing.
The other May 8 debtors are Fenton Sub Parcel A, LLC, Bowles Sub
Parcel B, LLC, Fenton Sub Parcel B, LLC, Bowles Sub Parcel C, LLC,
and Fenton Sub Parcel C, LLC.
Judge Kathleen H. Sanberg currently oversees the May 8 Debtors'
cases.
The May 8 Debtors tapped Lapp Libra Thomson Stoebner & Pusch as
counsel. Steven B. Hoyt, as chief manager, signed the Chapter 11
petitions.
BROADCAST INTERNATIONAL: AllDigital May Terminate Merger Pact
-------------------------------------------------------------
Broadcast International, Inc., previously announced its entry into
an Agreement and Plan of Merger and Reorganization with AllDigital
Holdings, Inc., and Alta Acquisition Corporation, and a wholly-
owned subsidiary of Broadcast ("Merger Sub") pursuant to which
Merger Sub will be merged with and into AllDigital, and AllDigital
will survive as a wholly-owned subsidiary of Broadcast. The
completion of the Merger is subject to the satisfaction of various
conditions set forth in the Merger Agreement, including that the
representations and warranties made therein by the parties be
accurate as of the date of the Merger Agreement and as of the
closing date of the Merger.
On Feb. 6, 2013, after having conducted further due diligence,
AllDigital notified Broadcast that it believes certain of the
intellectual property representations and warranties made by
Broadcast in the Merger Agreement were inaccurate when made.
AllDigital also outlined its requirements for curing those matters
and notified Broadcast that AllDigital may terminate the Merger
Agreement in accordance with its terms if Broadcast fails to cure
within 30 days of that notice, or if it earlier becomes apparent
that those matters cannot be cured.
Broadcast is working with AllDigital to resolve these matters to
AllDigital's satisfaction. However, if all issues are not
resolved, it is possible that the Merger Agreement will be
terminated prior to closing, either as a result of an alleged
breach or as a result of the inability of one or both parties to
satisfy conditions precedent to closing.
About Broadcast International
Based in Salt Lake City, Broadcast International, Inc., installs,
manages and supports private communication networks for large
organizations that have widely-dispersed locations or operations.
The Company owns CodecSys, a video compression technology to
convert video content into a digital data stream for transmission
over satellite, cable, Internet, or wireless networks, as well as
offers audio and video production services. The Company's
enterprise clients use its networks to deliver training programs,
product announcements, entertainment, and other communications to
their employees and customers.
The Company reported net income of $1.30 million in 2011, compared
with a net loss of $18.66 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$3.15 million in total assets, $9.45 million in total liabilities,
and a $6.30 million total stockholders' deficit.
BURLINGTON COAT: Moody's Rates New $300MM Senior Notes 'Caa2'
-------------------------------------------------------------
Moody's Investors Service affirmed Burlington Coat Factory
Warehouse Corp.'s B3 Corporate Family Rating and assigned a Caa2
rating to the proposed $300 million Senior PIK Toggle Notes due
2018 to be co-issued by Burlington's indirect parent company,
Burlington Holdings, LLC (Burlington Holdings) and Burlington
Holdings Finance, Inc. Moody's also placed Burlington's senior
secured term loan on review for upgrade. The Speculative Grade
Liquidity rating of SGL-3 remains unchanged. The rating outlook is
stable.
Proceeds from the Proposed Notes will be used to fund a $300
million distribution to its financial sponsor shareholder. The
Proposed Notes will be senior, unsecured obligations of Burlington
Holdings and Burlington Holdings Finance, Inc., and will not be
guaranteed by any entity in the corporate group. Burlington
Holdings and Burlington Holdings Finance, Inc. are required to pay
interest entirely in cash so long as there is restricted payment
capacity for upstream dividends at the Burlington level under the
agreements governing Burlington's existing senior secured credit
facilities and existing senior unsecured notes.
The review for upgrade on Burlington's term loan facility is
consistent with Moody's Loss Given Default Methodology and
reflects the increase in debt cushion in the capital structure as
a result of the proposed issuance of structurally subordinated
Burlington Holdings debt.
The rating is subject to review of final documentation. Upon
completion of the transaction, Burlington's Corporate Family and
Probability of Default ratings will be moved to Burlington
Holdings.
Moody's took the following rating actions for Burlington Holdings,
LLC.:
- Senior unsecured PIK Toggle Notes due 2018 assigned at Caa2
(LGD 6, 94%)
Moody's took the following rating actions for Burlington Coat
Factory Warehouse Corp.:
- Corporate Family Rating affirmed at B3;
- Probability of Default Rating affirmed at B3-PD;
- Senior secured bank credit facility due 2017 at B3 (LGD 3,
49%) place on review for upgrade
- Senior unsecured notes due 2019 affirmed at Caa1 and LGD point
estimates changed to (LGD 5, 74% from 71%)
- Speculative Grade Liquidity rating unchanged at SGL-3
Ratings Rationale
Burlington's B3 Corporate Family Rating reflects its high
financial leverage and aggressive financial policies that stem
from the 2006 acquisition of the company and sizeable dividend
payments to its owner, Bain Capital. The current proposed dividend
of $300 million will reduce the company's financial flexibility,
and follows a $300 million dividend paid in March 2011. The two
combined dividends have more than fully returned the $445 million
of equity originally invested by Bain in the company at the time
of the buyout. Pro forma for the proposed transaction,
Burlington's lease-adjusted debt/EBITDA will increase to about 6.6
times for the latest twelve months ended October 27, 2012, up from
6.0 times. Moody's anticipates that Burlington's financial policy
will continue to favor its financial sponsor shareholder which
constrains the rating.
The rating acknowledges Burlington's competitive position. With
about $4.1 billion in revenues, Burlington is significantly
smaller than the off-price industry two largest competitors, TJX
and Ross Stores. In addition, its operating margin continues to
significantly lag these peers despite improvement. Positive
ratings consideration is given to the more resilient performance
of the off-price retail segment during the economic downturn and
Burlington's adequate liquidity.
The stable outlook reflects that Burlington's operating
performance will modestly improve over the next twelve to eighteen
months but credit metrics will remain weak. The stable outlook
also anticipates that Burlington will be able to maintain adequate
liquidity.
Ratings could be upgraded should sales and operating margins
improve such that debt to EBITDA will be sustained below 6.0 times
and EBITA to interest expense remains above 1.5 times. In
addition, an upgrade would require Burlington's financial policies
to be such that it demonstrates a willingness to maintain credit
metrics within these targets. An upgrade would also require
Burlington to maintain adequate liquidity including sufficient
cushion around its financial covenants.
Ratings could be downgraded if Burlington's liquidity weakens,
profitability deteriorates, or comparable store sales remain
negative. Specifically, ratings could be downgraded if EBITA to
interest expense approaches 1.0 time.
The principal methodology used in this rating was the Global
Retail Industry Methodology published in June 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Burlington Coat Factory Warehouse Corp., headquartered in
Burlington, New Jersey, is a nationwide off-price apparel retailer
that operates about 500 stores in 44 states and Puerto Rico.
Annual revenues are approximately $4.1 billion. Burlington
Holdings, LLC is an indirect parent of Burlington. Both entities
are wholly owned by Bain Capital.
BURLINGTON COAT: S&P Assigns 'CCC' Rating to $300MM Toggle Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'CCC'
issue-level rating to the $300 million senior unsecured PIK toggle
notes issued by Burlington Holdings LLC with a recovery rating of
'6'. At the same time, S&P raised the issue-level rating on
Burlington Coat Factory Warehouse Corp.'s (BCF) term loan to 'B+'
from 'B', and revised the recovery rating to '1' from '2'. The
upgrade reflects the meaningful debt repayment since S&P's
previous recovery analysis.
Concurrently, S&P affirmed all other ratings and outlook on BCF,
including its 'B-' corporate credit rating. The outlook is
stable. According to the company, all of the proceeds of the new
holding company senior unsecured notes will be used to fund a
shareholder dividend.
The ratings on BCF, a specialty off-price apparel and home goods
retailer, reflect Standard & Poor's Ratings assessment of its
"vulnerable" business risk profile and "highly leveraged"
financial risk profile. The business risk profile incorporates
our opinion of the company's participation in the intensely
competitive and highly fragmented off-price apparel and home goods
industry. In addition, the business risk profile reflects S&P's
view of the company's small size, substantial seasonality, and
weak operating measures when compared with its peers.
S&P's stable rating outlook reflects its assessment of BCF's
adequate liquidity position and S&P's expectation that the
business will generate sufficient cash flow from modestly
improving operating performance.
"We expect that credit measures may improve slightly over the next
year from pro forma levels, but that they will remain commensurate
with a highly leveraged financial risk profile," said Standard &
Poor's credit analyst David Kuntz.
"We expect the company to have a cushion of at least 25% under its
most restrictive term loan covenants over the next year. If the
covenant cushion declines to less than 15%, we could consider a
negative rating action. Although unlikely, we could consider a
negative action if the sluggish U.S. economy or merchandise
missteps hurt BCF's profitability and credit measures deteriorate,
with EBITDA interest coverage declining to about 1.5x or less. We
estimate that if sales decline in the mid-single digits and
margins erode by more than 100 basis points (bps) or more, then
EBITDA interest coverage would fall to about this level," S&P
added.
Conversely, S&P could consider a positive rating action if
business conditions improve such that operating performance
(including comparable-store sales) remains positive and credit
measures also strengthen, including total debt to EBITDA sustained
below 6x or less despite the company's expansion plans. For
this to occur, S&P estimates that sales growth would be in the
mid-single digits and EBITDA margins would need to increase by
about 25 bps, leading to EBITDA growth in the upper teens.
CASTLETON PLAZA: New Value Theory for Insider Purchase Nixed
------------------------------------------------------------
U.S. Circuit Judge Frank Easterbrook wrote an opinion in substance
precluding confirmation of any reorganization plan where insiders
retain the equity, even with a new value contribution, if a
secured lender objects and demands an auction to buy the
reorganized equity.
The report recounts a closely held single-asset real estate owner
proposed a plan cutting down the mortgage, extending maturity and
lowering the interest rate. The wife of the owner sponsored the
plan and proposed to invest $370,000 to purchase the reorganized
equity. The report relates that the lender objected and demanded
there be an auction where it would bid at least $600,000 for the
equity and pay unsecured creditors in full.
According to the report, U.S. Bankruptcy Judge Basil H. Lorch III
in Indianapolis denied the objection and confirmed the plan. The
appeal went directly to the Seventh Circuit in Chicago. Judge
Easterbrook reversed, saying that "an impaired lender who objects
to any plan that leaves insiders holding the equity is entitled"
to an auction to determine who will pay the most for ownership.
The opinion is replete with numerous other vintage Judge
Easterbrook quotations.
The report notes that Judge Easterbrook drew his authority from
the Supreme Court's decision in 203 North LaSalle from 1999 and
last year's RadLax decision from the high court. Judge
Easterbrook didn't fall for the ruse that no auction is required
under 203 North LaSalle because the equity wasn't being purchased
by the current owner. He showed how having the owner's wife buy
the property in bankruptcy would benefit the owner. He said that
"plans giving insiders preferential access to investment
opportunities in the reorganized debtor should be subject to the
same opportunity for competition as plans in which existing claim-
holders put up the new money."
The case is In re Castleton Plaza LP, 12-2639, U.S. Court
of Appeals for the Seventh Circuit (Chicago).
About Castleton Plaza
Castleton Plaza, LP, filed for Chapter 11 protection (Bankr. S.D.
Ind. Case No. 11-01444) in Indianapolis, Indiana, on Feb. 16,
2011. Paul T. Deignan, Esq., at Taft Stettinius & Hollister LLP,
in Indianapolis, serves as counsel to the Debtor.
Castleton Plaza, the owner of the Castleton Plaza strip mall in
Indianapolis, disclosed total assets of nearly $7.6 million
including more than $6.8 million in real property, and total debts
of $10.4 million. Castleton Plaza LP is a subsidiary of
Indianapolis-based Broadbent Co.
CATALENT PHARMA: Loan Repricing No Impact on Moody's 'B2' CFR
-------------------------------------------------------------
Moody's Investors Services said that Catalent Pharma Solutions,
Inc.'s proposed term loan debt amendment is marginally positive
since the savings from lower interest expense and extension of the
debt maturity should boost Catalent's liquidity profile. However
the amendment does not impact the B2 Corporate Family Rating or
stable outlook. Existing debt ratings remain unchanged. The
company announced plans to re-price its USD senior secured term
loans, primarily to achieve lower pricing. Concurrently, the
company will issue a $60 million add-on to its US dollar term loan
due 2017 to refinance the remaining EUR term loan due 2014.
Based in Somerset, New Jersey, Catalent provides advanced dose
form and packaging technologies, and development, manufacturing
and packaging services for pharmaceutical, biotechnology, and
consumer healthcare companies. The company reported revenue of
approximately $1.69 billion for the twelve months ended December
31, 2011. Catalent is a privately held company, owned by
affiliates of The Blackstone Group.
CATHAY GENERAL: Fitch Hikes LT Issuer Default Rating to 'BB+'
-------------------------------------------------------------
Fitch Ratings has upgraded the long-term Issuer Default Ratings
(IDR) of Cathay General Bancorp and its lead subsidiary, Cathay
Bank, to 'BB+' from 'BB'. The Rating Outlook has been revised to
Stable from Positive.
Fitch reviewed CATY as part of a peer review that included 16 mid-
tier regional banks. The banks in the peer review include:
Associated Banc-Corp., Bank of Hawaii Corporation, BOK Financial
Corporation, Cathay General Bancorp, Cullen/Frost Bankers, Inc.,
East West Bancorp, Inc., First Horizon National Corporation, First
National of Nebraska, Inc., First Niagara Financial Group, Inc.,
Fulton Financial Corporation, Hancock Holding Company, People's
United Financial, Inc., Synovus Financial Corp., TCF Financial
Corporation, UMB Financial Corp., Webster Financial Corporation.
Refer to the release titled 'Fitch Takes Rating Actions on Its
Mid-Tier Regional Bank Group Following Industry Peer Review' for a
discussion of rating actions taken on the entire mid-tier regional
bank group.
The mid-tier regional group is comprised of banks with total
assets ranging from $10 billion to $36 billion. IDRs for this
group is relatively dispersed with a low of 'BB-' and a high of
'A+'. Mid-tier regional banks typically lag their large regional
bank counterparts by asset size, geographic footprint and
product/revenue diversification. As such mid-tier regional banks
are more susceptible to idiosyncratic risks such as geographic or
single name concentrations.
Fitch's mid-tier regional bank group has fairly homogenous
business strategies. The institutions are mostly reliant on spread
income from loans and investments. With limited opportunity to
improve fee-based income in the near term, Fitch expects that mid-
Tier banks will continue to face greater earnings headwinds in
2013 than larger institutions with greater revenue
diversification.
Share repurchases is common theme amongst the mid-tier banks. As
mid-tier banks face earnings headwinds, institutions have begun
repurchasing common shares to improve shareholder returns. Fitch
anticipates continued repurchase activity in 2013 as the return on
equity lags historical norms for the group.
In addition to share repurchases, Fitch has observed that some
mid-tier banks have looked to their investment portfolio to
improve returns. Most notably, CLOs and CMBS have become more
popular amongst mid-tier banks. Although such securities are
beneficial to yields and returns, Fitch notes that such purchases
can be a negative ratings driver if the risks are not properly
measured, monitored and controlled.
Asset quality continues to improve throughout the banking sector.
Both nonperforming assets (NPAs) and net charge-offs (NCOs) are
down significantly year over year. Fitch anticipates further asset
quality improvement as nonperforming loan (NPL) inflow slows.
Reserve levels have also declined as asset quality improves, which
has been beneficial to earnings in 2012. Fitch expects further
reserve releases in 2013 but at a slower pace.
Rating Action and Rationale
Today's action reflects CATY's good earnings, as measured by
return on assets (ROAs), as well as a continuation in improving
asset quality and capital trends. However, ratings are constrained
by the company's weak funding profile, which predominantly
represents time-deposits greater than $100K.
CATY, which has a strong presence in the niche Asian American
demographic, has experienced solid ROAs over the last several
quarters. Fitch notes that CATY's earnings performance included
the impact of reserve releases, but nonetheless, Fitch expects
operating performance to remain solid over the medium term.
Asset quality in CATY's loan book has largely improved, with the
company reporting lower levels of NPAs in absolute terms, and
experiencing significantly less charge-off activity in 2012. NPAs,
including accruing TDRs, were 4.46% as of the fourth quarter of
2012 (4Q'12) compared to 5.81% a year earlier. Although these
levels remain elevated compared to the mid-tier peer group, NPAs
are considered commensurate with the rating. Fitch also notes that
charge-offs have significantly reduced with 2012 NCOs at 25 basis
points (bps) compared to 95bps for 2011.
The company reports strong capital levels with a tangible common
equity (TCE) ratio of 10% at year-end 2012 (YE12). Fitch
recognizes that if CATY were to repay TARP, it would result in
reduced levels of regulatory capital. The current rating
incorporates the expectation that core capital, as measured by its
Fitch Core Capital (FCC) of 12.5%, will continue to be managed at
current levels.
Despite having a loyal deposit base, Fitch considers CATY's
funding profile to be weaker than the mid-tier peer average. Time
deposits greater than $100K account for 50% of the deposit base,
and high cost structured repo funding accounts for 15% of total
funding. The noted funding profile has resulted in a more
expensive funding base relative to mid-tier banks, as CATY's cost
of funds were 1.20%, compared to 50bps for the mid-tier peer
group. Further, Fitch also considers liquidity to be weaker with a
loan to deposit ratio of 100%.
Cathay Bank's regulatory Memorandum of Understanding (MOU) was
lifted in 4Q'12, and Fitch anticipates that the holding company
MOU will be lifted, with the repayment of the TARP preferred stock
expected sometime in the first half of 2013 (1H'13). The
aforementioned are expected to take place, and have already been
incorporated in today's rating action.
RATING DRIVERS AND SENSITIVITIES - IDRs and VRs
With today's action, upward movement of the company's ratings is
now considered limited absent significant improvement made to the
company's funding profile. CATY's concentration to commercial real
estate also represents a constraining factor on the company's
rating. Similar to others in the industry, CATY has been
originating residential mortgage loans, some of which have been
held on balance sheet. Fitch remains cautious about the growth in
this portfolio, which is predominantly 30 year mortgages and its
ramifications on interest rate risk.
Conversely, the ratings could experience pressure if capital
management is aggressive once the MOU is settled and TARP repaid,
or if earnings and asset quality experience a reversal in trends.
RATING DRIVERS AND SENSITIVITIES - Support Ratings and Support
Floor Ratings:
All of the mid-tier regional banks in the peer group have Support
Ratings of '5' and Support Floor Ratings of 'NF'. In Fitch's view,
the mid-tier banks are not considered systemically important and
therefore, Fitch believes the probability of support is unlikely.
IDRs and VRs do not incorporate any government support for any of
the banks in the mid-tier regional bank peer group.
RATING DRIVERS AND SENSITIVITIES - Subordinated Debt and Other
Hybrid Securities:
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
RATING DRIVERS AND SENSITIVITIES - Holding Company:
All of the entities reviewed in the mid-tier regional bank group
have a bank holding company structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent holding
company supporting equalized ratings between bank subsidiaries and
bank holding companies. IDRs and VRs are equalized with those of
its operating companies and banks reflecting its role as the bank
holding company, which is mandated in the U.S. to act as a source
of strength for its bank subsidiaries.
RATING DRIVERS AND SENSITIVITIES - Subsidiary and Affiliated
Company Rating:
All of the entities reviewed in the mid-tier regional bank group
factor in a high probability of support from parent institutions
to its subsidiaries. This reflects the fact that performing parent
banks have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has taken these rating actions:
Cathay General Bancorp
-- Long-term IDR upgraded to 'BB+' from 'BB';
-- Short-term IDR affirmed at 'B';
-- Viability Rating upgraded to 'bb+' from 'bb';
-- Preferred stock upgraded to 'B-' from 'CCC';
-- Support Floor affirmed at 'NF'
-- Support affirmed at '5'.
Cathay Bank
-- Long-term IDR upgraded to 'BB+' from 'BB';
-- Long-term deposit upgraded to 'BBB-' from 'BB+'
-- Short-term IDR affirmed at 'B'
-- Short-term deposit upgraded to 'F3' from 'B';
-- Viability Rating upgraded to 'bb+' from 'bb';
-- Support Floor affirmed at 'NF';
-- Support affirmed at '5'.
The Ratings Outlook is Stable.
CCC ATLANTIC: Court Dismisses Chapter 11 Case
---------------------------------------------
Judge Christopher S. Sontchi entered orders on Feb. 8, 2013,
dismissing CCC Atlantic, LLC's Chapter 11 case upon the motion of
C-III Asset Management, LLC, as Specia Servicer of Wells Fargo
Bank, N.A., as Trustee for the Registered Holders of Credit Suisse
First Boston Mortgage Securities Corp., Commercial Mortgage Pass-
Through Certificates, Series 2007-C5.
As reported in the TCR on Feb. 11, 2013, C-III said that the case
was initiated solely as a tactical ploy by the Debtor to frustrate
Wells Fargo in the foreclosure action that it filed at a New
Jersey federal court, within hours of a hearing for the
appointment of a receiver.
About CCC Atlantic
Based in Linwood, New Jersey, CCC Atlantic, LLC, filed for Chapter
11 protection (Bankr. D. Del. Case No. 12-13290) on Dec. 6, 2012.
The Debtor owns and maintains two commercial office condominiums
in Linwood, New Jersey. The Debtor has scheduled assets totaling
$48,890,617 and liabilities of $41,568,640 as of the Petition
Date.
The Debtor won approval to hire Cross & Simon, LLC, as Delaware
counsel and Silverang & Donohoe, LLC, as general bankruptcy
counsel, nunc pro tunc to the Petition Date.
CENTRAL EUROPEAN: ING Otwarty Is 6.5% Shareholder at Dec. 31
------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, ING Otwarty Fundusz EmeryTalny represented by
ING Powszechne Towarzystwo EmeryTalne S.A. disclosed that, as of
Dec. 31, 2012, it beneficially owns 5,309,203 shares of common
stock of Central European Distribution Corporation representing
6.51% of the shares outstanding. A copy of the filing is
available for free at http://is.gd/MyPn7t
About CEDC
Mt. Laurel, New Jersey-based Central European Distribution
Corporation is one of the world's largest vodka producers and
Central and Eastern Europe's largest integrated spirit beverages
business with its primary operations in Poland, Russia and
Hungary.
Ernst & Young Audit sp. z.o.o., in Warsaw, Poland, expressed
substantial doubt about Central European's ability to continue as
a going concern, following the Company's results for the fiscal
year ended Dec. 31, 2011. The independent auditors noted that
certain of the Company's credit and factoring facilities are
coming due in 2012 and will need to be renewed to manage its
working capital needs.
The Company's balance sheet at Sept. 30, 2012, showed
$1.98 billion in total assets, $1.73 billion in total liabilities,
$29.44 million in temporary equity, and $210.78 million in total
stockholders' equity.
Liquidity
The Company's Convertible Senior Notes are due on March 15, 2013.
The Company has said its current cash on hand, estimated cash from
operations and available credit facilities will not be sufficient
to make the repayment of principal on the Convertible Notes and,
unless the transaction with Russian Standard Corporation is
completed the Company may default on them. The Company's cash
flow forecasts include the assumption that certain credit and
factoring facilities coming due in 2012 would be renewed to manage
working capital needs. Moreover, the Company had a net loss and
significant impairment charges in 2011 and current liabilities
exceed current assets at June 30, 2012. These conditions, the
Company said, raise substantial doubt about its ability to
continue as a going concern.
* * *
As reported by the TCR on Aug. 10, 2012, Standard & Poor's Ratings
Services kept on CreditWatch with negative implications its 'CCC+'
long-term corporate credit rating on U.S.-based Central European
Distribution Corp. (CEDC), the parent company of Poland-based
vodka manufacturer CEDC International sp. z o.o.
"The CreditWatch status reflects our view that uncertainties
remain related to CEDC's ongoing accounting review and that
CEDC's liquidity could further and substantially weaken if there
was a breach of covenants which could lead to the acceleration of
the payment of the 2016 notes, upon receipt of a written notice
of 25% or more of the noteholders," S&P said.
As reported by the TCR on Jan. 16, 2013, Moody's Investors Service
has downgraded the corporate family rating (CFR) and probability
of default rating (PDR) of Central European Distribution
Corporation (CEDC) to Caa3 from Caa2.
"The downgrade follows CEDC announcement on the 28 of December
that it had agreed with Russian Standard a revised transaction to
repay its $310 million of convertible notes due March 2013 which,
in Moody's view, has increased the risk of potential loss for
existing bondholders", says Paolo Leschiutta, a Moody's Vice
President - Senior Credit Officer and lead analyst for CEDC.
CEREPLAST INC: IBC Funds No Longer A Shareholder at Feb. 6
----------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, IBC Funds LLC and its affiliates disclosed
that, as of Feb. 6, 2013, they do not beneficially own any shares
of common stock of Cereplast, Inc. As of Feb. 4, 2013, IBC Funds
beneficially owns 17,482,928 common shares. IBC Funds previously
reported beneficial ownership of 4,782,928 common shares or a 2.5%
equity stake as of Feb. 1, 2013. A copy of the amended filing is
available for free at http://is.gd/qjGwXu
About Cereplast
El Segundo, Calif.-based Cereplast, Inc., has developed and is
commercializing proprietary bio-based resins through two
complementary product families: Cereplast Compostables(R) resins
which are compostable, renewable, ecologically sound substitutes
for petroleum-based plastics, and Cereplast Sustainables(TM)
resins (including the Cereplast Hybrid Resins product line), which
replaces up to 90% of the petroleum-based content of traditional
plastics with materials from renewable resources.
The Company's balance sheet at Sept. 30, 2012, showed
$25.4 million in total assets, $22.1 million in total liabilities,
and stockholders' equity of $3.3 million.
Bankruptcy Warning
"We have incurred a net loss of $16.3 million for the nine months
ended September 30, 2012, and $14.0 million for the year ended
December 31, 2011, and have an accumulated deficit of $73.2
million as of September 30, 2012. Based on our operating plan,
our existing working capital will not be sufficient to meet the
cash requirements to fund our planned operating expenses, capital
expenditures and working capital requirements through December 31,
2012 without additional sources of cash.
In order to provide and preserve the necessary working capital to
operate, we have successfully completed the following transactions
in 2012:
* Entered into an Exchange Agreement with Magna Group LLC
pursuant to which we agreed to issue to Magna convertible
notes, in the aggregate principal amount of up to $4.6
million, in exchange for repayment of our Term Loan with
Compass Horizon Funding Company, LLC.
* Obtained a Forbearance Agreement on our semi-annual coupon
payment due on June 1, 2012 with certain holders of our
Senior Subordinated Notes to defer payment until December 1,
2012.
* Reduced future interest payments through executing an
Exchange Agreement for $2.5 million with certain holders of
our Senior Subordinated Notes for conversion of their Notes
and accrued interest into shares at an exchange rate of one
share of our common stock for each $1.00 amount of the Note
and accrued interest.
* Issued 6,375,000 shares of our common stock to an
institutional investor in settlement of approximately $1.3
million of our outstanding accounts payable balances.
* Completed a Registered Direct offering to issue 1,000,000
shares of common stock at $0.50 per share for gross proceeds
of $0.5 million.
* Obtained unsecured short-term convertible debt financing of
$0.6 million with additional availability of approximately
$0.6 million at the lender's sole discretion.
* Returned unused raw materials to our suppliers in exchange
for refunds net of restocking charges of approximately $0.3
million.
Our plan to address the shortfall of working capital is to
generate additional financing through a combination of sale of our
equity securities, additional funding from our new short-term
convertible debt financings, incremental product sales into new
markets with advance payment terms and collection of outstanding
past due receivables. We are confident that we will be able to
deliver on our plans, however, there are no assurances that we
will be able to obtain any sources of financing on acceptable
terms, or at all.
If we cannot obtain sufficient additional financing in the short-
term, we may be forced to curtail or cease operations or file for
bankruptcy," the Company said in its quarterly report for the
period ended Sept. 30, 2012.
CHARLIE N MACGLAMRY: Files Third Amended Chapter 11 Plan
--------------------------------------------------------
Charlie N. McGlamry, et al.'s Third Amended Chapter 11 Plan dated
Feb. 7, 2013, provides that the Debtors intend to settle and
satisfy claims of unsecured claims holders by payment of a pro-
rata distribution of available cash by the Plan Trustee from time
to time in the sole discretion of the Plan Trustee.
On the Effective Date, all of Debtor's non-exempt assets will be
transferred to and will vest in the McGlamry Liquidating Trust for
the benefit of the Debtor's creditors pursuant to the terms of the
Plan and the McGlamry Liquidating Trust Agreement.
The Plan will be funded through the post-effective date
liquidation of the assets transferred to the McGlamry Liquidating
Trust, payments of interest made by the W P Trust to the Plan
Trustee in the event the Plan Trustee elects to accept the W P
Trust Note or liquidation of the properties transferred from the W
P Trust and payment of certain amounts regarding AAA Asphalt
Products, Inc. in the event the Plan Trustee elects to accept the
properties and amounts in lieu of the W P Trust Note, payments of
Postpetition Disposable Income made by Debtor and the proceeds, if
any, of the recoveries from the prosecution of avoidance actions
by the Plan Trustee against third parties.
A copy of the Amended Plan is available for free at:
http://bankrupt.com/misc/CHARLIE_N_MCGLAMRY_plan_3amended.pdf
About Charlie N. McGlamry
Centerville, Georgia-based real estate developer Charlie N.
McGlamry filed a petition for Chapter 11 protection, along with
his 14 companies, in Macon, Georgia on May 9, 2012.
Over the past 44 years, Mr. McGlamry has managed to successfully
develop numerous real estate developments in and around Houston
County, Georgia. Mr. McGlamry continues to operate his real
estate development business through sole proprietorship McGlamry
Properties -- http://www.mcglamryproperties.com-- and USA Land
Development Inc. Mr. McGlamry individually owns, through his sole
proprietorship, approximately, 74 acres of undeveloped commercial
property at the intersection of Russell Parkway and Corder Road in
Houston County, Georgia. Mr. McGlamry established a number of
single member limited liability companies and sole shareholder
corporations to own and develop specific tracts of land.
Mr. McClamry and his affiliated companies sought joint
administration of their Chapter 11 cases and have Mr. McGlamry's
as the lead case (Bankr. M.D. Ga. Case No. 12-51197). Judge James
P. Smith oversees the case.
Cohen Pollock Merlin & Small, PC, serves as the Debtors' Chapter
11 counsel. Nichols, Cauley & Associates, LLC, serves as their
accountant.
Mr. McGlamry, as sole shareholder or member, signed Chapter 11
petitions for USA Land Development (Case No. 12-51198); Barrington
Hall Development Corp. (12-51199); Bear Branch LLC; By-
Pass/Courthouse LLC (12-51201); Chinaberry Place, LLC (12-51202);
Eagle Springs LLC (12-51203); Elmdale Development, LLC (12-51204);
Gurr/Kings Chapel Road, LLC (12-51205); Jaros Development LLC
(12-51206); Lake Joy Development, LLC (12-51207); Old Hawkinsville
Road, LLC (12-51208); South Houston Development, LLC (12-51209);
The Villages at Nunn Farms, LLC (12-51210); and Houston-Peach
Investments LLC (12-51212).
Mr. McGlamry estimated up to $50 million in assets and up to
$100 million in liabilities in his Chapter 11 filing. The Debtors
tapped Cohen Pollock Merlin & Small, PC, as bankruptcy counsel
CHEROKEE SIMEON: Has Interim OK to Obtain Zeneca $75,000 DIP Loan
-----------------------------------------------------------------
The Bankruptcy Court has entered an interim order authorizing
Cherokee Simeon Venture, I, LLC, to obtain super-priority secured
post-petition financing not of up to $75,000 from Zeneca Inc., as
DIP Lender.
A copy of the Interim DIP Order is available at:
http://bankrupt.com/misc/cherokee.doc100.pdf
Cherokee Simeon Venture, I, LLC, is an AstraZeneca Plc affiliate
that owns a contaminated former acid-factory site in Richmond,
California. Cherokee Simeon sought Chapter 11 protection (Bankr.
D. Del. Case No. 12-12913) on Oct. 23, 2012. Cherokee Simeon
disclosed $33,600,000 in assets and $17,954,851 in debts in its
schedules. Rafael Xavier Zahralddin-Aravena, Esq., at Elliott
Greenleaf represents the Debtor.
CHEROKEE SIMEON: Has Final OK to Obtain Up to $200,000 in Loans
---------------------------------------------------------------
On Jan. 28, 2012, the Bankruptcy Court entered a final order
authorizing Cherokee Simeon Venture, I, LLC, to obtain super-
priority secured postpetition financing of up to $75,000 and
additional sums, in an aggregate amount not to exceed $200,000
from Zeneca Inc.
As security for the DIP loans, the DIP Lender is granted super-
priority liens in all tangible and intangible property of the
Debtor, now existing or hereafter acquired, subject only to the
Carve-Out for fees required to be paid to the Clerk of the
bankruptcy Court and the United States Trustee and to the
reasonable fees and expenses of professional of any committee of
unsecured creditors, if one is appointed.
The key provisions of the DIP Term Sheet are:
Borrower : Cherokee Simeon Venture I, LLC
Lender : Zeneca Inc.
Loan Amount : Up to $75,000 upon entry of the Interim
Order. Debtor can seek additional loans not
to exceed $25,000 on a monthly basis on the
same or similar terms. If a Debtor seeks a
loan of more than $25,000, it will be subject
to Court approval.
Purpose : To fund working capital requirements of the
Debtor in accordance with the terms of the
Budget and to pay fees and expenses of the DIP
Lender related to the DIP Loan and the
Debtor's Chapter 11 case.
Interest Rate : 5.75% payable in arrears.
Default Interest : Applicable rate plus 2%.
Term: : The DIP Loan will be repaid in full 90 days
after the entry of the Interim Order or any
subsequent order of the Court, unless earlier
terminated upon the occurrence of an Event of
Default.
A copy of the DIP Final Order is available at:
http://bankrupt.com/misc/cherokee.doc111.pdf
Cherokee Simeon Venture, I, LLC, is an AstraZeneca Plc affiliate
that owns a contaminated former acid-factory site in Richmond,
California. Cherokee Simeon sought Chapter 11 protection (Bankr.
D. Del. Case No. 12-12913) on Oct. 23, 2012. Cherokee Simeon
disclosed $33,600,000 in assets and $17,954,851 in debts in its
schedules. Rafael Xavier Zahralddin-Aravena, Esq., at Elliott
Greenleaf represents the Debtor.
CINEDIGM DIGITAL: Moody's Reviews Ba1-Rated Debt for Upgrade
------------------------------------------------------------
Moody's Investors Service has placed on review for possible
upgrade the Ba1 (sf) assigned to the Term Loan Facility (the TLF)
extended to Cinedigm Digital Funding I, LLC (Borrower), an
indirect subsidiary of Cinedigm Digital Cinema Corp. (Cinedigm),
as a result of the pending execution of a backup servicer
agreement. This transaction is a securitization of cash flows
consisting primarily of virtual print fees (VPFs) payable by
motion picture distributors. Cinedigm acts as the manager of the
transaction and in that capacity has the obligation to perform
various administrative and managerial duties. However the TLF
itself is an obligation of the Borrower and is not guaranteed by
Cinedigm. If executed, the backup management agreement will
provide for another qualified party, Christie Digital Systems USA,
Inc. (Christie) to replace Cinedigm if Cinedigm defaults on its
obligations as the manager.
Issuer: Cinedigm Digital Funding I, LLC - Term Loan
Term Loan Facility, Ba1 (sf) Placed Under Review for Possible
Upgrade; previously on May 12, 2010 Definitive Rating Assigned
Ba1 (sf)
Ratings Rationale
The key change to the transaction structure is the proposal to
execute a backup servicer agreement pursuant to which Christie
will serve as the backup servicer in case Cinedigm defaults on its
obligations as the manager. Christie is a wholly-owned subsidiary
of Ushio, Inc. of Japan, which is a manufacturer of specialty and
general illumination lighting solutions and is publicly traded on
the Nikkei-Dow (Tokyo). Moody's views the proposal to have
Christie as the backup servicer credit positive for this
transaction because this will significantly reduce the operational
risk to this transaction, as described in Moody's publication
"Global Structured Finance Operational Risk Guidelines: Moody's
Approach to Analyzing Performance Disruption Risk", June 2011
(SF243145) . Moody's views Christie as having sufficient
experience to perform as the manager if the need arises.
Other key amendments to the credit agreement include: increasing
the facility size to $130 mm from $90 mm; extending the expected
maturity by appx. 1.25 years to September 2016 from June 2015;
extending the legal final by appx. 1.75 years to February 2018
from May 2016; revised pricing; revised financial covenants; and
revised servicing fee structure with the inclusion of an incentive
fee and also a penalty if PSY declines below 12.25x. These
potential amendments were also factored into Moody's credit
analysis.
Cinedigm, founded in 2000, provides services and software
solutions to distributors and exhibitors of digital content,
primarily movie theater exhibitors as well as markets and
distributes independent film and alternative content to
exhibitors, and digital, video-on-demand and physical goods in
home entertainment markets. These services include technology and
software services, and financing, administrative and deployment
services for digital cinema projection systems. As part of its
Phase I deployment, approximately 3,724 cinema screens in the US
owned by a specific group of exhibitors (the Exhibitor Group),
were upgraded from 35mm projectors to digital projection systems.
The exhibitors participating in Phase I include Carmike Cinemas,
Inc. (B2), AMC (B2) and Marquee Cinemas, Inc. (NR) among others.
Carmike theater screens represent about 65% of the pool while no
other single exhibitor exceeds 5%. The TLF is secured by the
rights to VPFs payable by film distributors for all digital prints
exhibited at the Phase I theaters where the digital cinema
projectors are installed. By converting exhibition to digital,
film distributors cut costs considerably since the cost of
distribution is much lower for digital prints than for 35mm
prints. In addition, fees from the exhibition of non-film content,
such as special concerts or live sporting events, are an
additional, albeit minor, source of income.
Principal Rating Methodology
Moody's approach to rating this transaction relies primarily on
analysis of major film distributors ability to pay VPFs and the
risk of theater closures by the Exhibitor Group, plus an
assessment of the digital projection equipment and technology.
Monte Carlo simulations are run to analyze the debt structure
using key input parameters plus qualitative judgments are also
used to determine the final rating.
Major Film Distributors. For an initial release of a 35mm film, a
motion picture studio must create hundreds (or thousands) of
physical 35mm reels and distribute them to each cinema. This
initial "print" cost will now be replaced by a VPF which will
allow for digital transmission via satellite or delivery of hard-
disk to the cinema. For this new digital delivery, the print cost
is substantially reduced for film distributors. To help finance
this conversion to digital, many of the major motion picture
studios have agreements to pay a declining VPF for a fixed number
of years (after which the VPF is $0). Furthermore, the studios are
committed to release films in digital format while the exhibitors
are required to play them digitally if the screens are available.
Other distributors not under contract may be charged a higher VPF.
A VPF is generated each time a film is released and booked to be
played on a screen, similar to the cost of physical print which
would incur a one-time cost when created. For example, if a movie
scheduled for release to 200 digital screens domestically for the
opening weekend, 200 VPF's would be generated. Then to generate
more VPF's, new films must be released while the previous films
move on to the post-box office phase. This measure is the screen
turnover rate which is the number of films played per screen per
year.
General data suggests that the turnover for all screens can be
from 12x to 15x on average (that is, 12 to 15 different films per
screen per year). This is a difficult factor to predict and
simulation is run with a wide ranging distribution for values
based on the factors mentioned above. Also, examining trends in
the movie industry is important to predict the screen turnover.
Studios have been moving to shorten the theatrical cycle, while
widening the initial box office release, moving more quickly to
television and DVD which would increase screen turnover.
Additionally, the number of films released has increased since
2000 which would also imply shorter theater run-time. However,
economic conditions have required film studios to reduce the
number of film projects recently so this also must be considered.
For simulation, a base screen turnover of 14x was assumed, and
Moody's also run sensitivity on the PSY by examining various
levels of PSY from 14x to 10x.
Exhibitor Group. The Exhibitor Group consists of a number of
companies and Moody's cash flow model reflects the six major
exhibitors with the remaining exhibitors modeled as one additional
exposure. Current exhibitor ratings notched down one notch were
used for simulating exhibitor default. Where no rating was
available, B3 was assumed. Upon a simulation default, a uniformly
distributed theater closure rate upon default of 15% to 35% was
applied. This estimate was established using history of theater
industry bankruptcies in the 1990's. Upon exhibitor default, the
defaulted projectors were assumed to be liquidated for $2,500 in
the period of default. Additionally, non-film content was assumed
to be $20 per screen per quarter, and equipment salvage value
(applied at maturity for screens in service) was assumed to be
$2,500 per system. Additional stressed scenarios were run which
assumed no non-film content and zero equipment salvage value.
Equipment and Technology. Each installation includes a digital
projector, player, computer server, and software. The digital
projection system must meet the Digital Cinema Initiative (DCI)
specification. This DCI specification was established by a
consortium of movie studios to develop a standard for digital
cinema file format, data transmission, projector resolution, among
many other details. Once a system meets this specification, the
exhibitor is under contract to ensure proper maintenance. In
Moody's view there is little exposure to technology risk once a
system meets this spec and begins generating VPFs. Cinedigm has a
substantial stake in the transaction (both financially and through
its related business lines and continuing Phase II deployment),
the underlying technological specifications represent an industry
standard achieved after years of development, and the Exhibitors
are getting the equipment without paying for it whereas any
alternative would involve cost.
CLEAR CHANNEL: Bank Debt Trades at 14% Off in Secondary Market
--------------------------------------------------------------
Participations in a syndicated loan under which Clear Channel
Communications, Inc., is a borrower traded in the secondary market
at 86.04 cents-on-the-dollar during the week ended Friday, Feb.
15, 2013, a drop of 0.23 percentage points from the previous week
according to data compiled by LSTA/Thomson Reuters MTM Pricing and
reported in The Wall Street Journal. The Company pays 365 basis
points above LIBOR to borrow under the facility. The bank loan
matures on Jan. 30, 2016, and carries Moody's Caa1 rating and
Standard & Poor's CCC+ rating. The loan is one of the biggest
gainers and losers for the week ended Friday among 221 widely
quoted syndicated loans with five or more bids in secondary
trading.
About Clear Channel
San Antonio, Texas-based CC Media Holdings, Inc. (OTC BB: CCMO) --
http://www.ccmediaholdings.com/-- is the parent company of Clear
Channel Communications, Inc. CC Media Holdings is a global media
and entertainment company specializing in mobile and on-demand
entertainment and information services for local communities and
premier opportunities for advertisers. The Company's businesses
include radio and outdoor displays.
For the six months ended June 30, 2012, the Company reported a net
loss attributable to the Company of $182.65 million on
$2.96 billion of revenue. Clear Channel reported a net loss of
$302.09 million on $6.16 billion of revenue in 2011, compared with
a net loss of $479.08 million on $5.86 billion of revenue in 2010.
The Company had a net loss of $4.03 billion on $5.55 billion of
revenue in 2009.
The Company's balance sheet at June 30, 2012, showed $16.45
billion in total assets, $24.31 billion in total liabilities, and
a $7.86 billion total shareholders' deficit.
Bankruptcy Warning
At March 31, 2012, the Company had $20.7 billion of total
indebtedness outstanding. The Company said in its quarterly
report for the period ended March 31, 2012, that its ability to
restructure or refinance the debt will depend on the condition of
the capital markets and the Company's financial condition at that
time. Any refinancing of the Company's debt could be at higher
interest rates and increase debt service obligations and may
require the Company and its subsidiaries to comply with more
onerous covenants, which could further restrict the Company's
business operations. The terms of existing or future debt
instruments may restrict the Company from adopting some of these
alternatives. These alternative measures may not be successful
and may not permit the Company or its subsidiaries to meet
scheduled debt service obligations. If the Company and its
subsidiaries cannot make scheduled payments on indebtedness, the
Company or its subsidiaries, as applicable, will be in default
under one or more of the debt agreements and, as a result the
Company could be forced into bankruptcy or liquidation.
* * *
As reported in the TCR on Oct. 17, 2012, Fitch Ratings has
affirmed the 'CCC' Issuer Default Rating (IDR) of Clear Channel
Communications, Inc. The Rating Outlook is Stable.
Fitch's ratings concerns center on the company's highly leveraged
capital structure, with significant maturities in 2016; the
considerable and growing interest burden that pressures FCF;
technological threats and secular pressures in radio broadcasting;
and the company's exposure to cyclical advertising revenue. The
ratings are supported by the company's leading position in both
the outdoor and radio industries, as well as the positive
fundamentals and digital opportunities in the outdoor advertising
space.
CLUB AT SHENANDOAH: Can Access GE Cash Until Feb. 26 Final Hearing
------------------------------------------------------------------
The Bankruptcy Court has continued the final hearing on The Club
at Shenandoah Springs Village, Inc.'s emergency motion to use cash
collateral of General Electric Capital Corporation from Jan. 29,
2013, at 2:00 p.m., to Feb. 26, 2013, at 2:00 p.m.
To allow the Debtor time to further its negotiations with General
Electric regarding the Debtor's business operations, prospects for
reorganization, and the consensual use of cash collateral, General
Electric has consented to the Debtor's continued use of cash
collateral for an additional period until the continued Final
Hearing Date.
The Club At Shenandoah Springs Village, Inc., owns The Club At
Shenandoah Springs Village, a golf and leisure resort in Thousand
Palms, a desert region of central California. It filed for
Chapter 11 protection (Bankr. C.D. Calif. Case No. 12-36723) on
Dec. 3, 2012. The Debtor estimated both assets and liabilities of
between $10 million and $50 million. Judge Mark D. Houle presides
over thee case. Daniel A. Lev, Esq., at Sulmeyerkupetz,
represents the Debtor.
CLUB AT SHENANDOAH: Files Schedules of Assets and Liabilities
-------------------------------------------------------------
The Club at Shenandoah Springs Village, Inc., filed with the
Bankruptcy Court its schedules of assets and liabilities,
disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $29,500,000
B. Personal Property $1,780,992
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $11,648,970
E. Creditors Holding
Unsecured Priority
Claims $0
F. Creditors Holding
Unsecured Non-priority
Claims $1,191,984
----------- -----------
TOTAL $31,280,992 $12,840,954
A copy of the SAL is available at:
http://bankrupt.com/misc/clubatshenandoah.SAL.pdf
The Club At Shenandoah Springs Village, Inc., owns The Club At
Shenandoah Springs Village, a golf and leisure resort in Thousand
Palms, a desert region of central California. It filed for
Chapter 11 protection (Bankr. C.D. Calif. Case No. 12-36723) on
Dec. 3, 2012. The Debtor estimated both assets and liabilities of
between $10 million and $50 million. Judge Mark D. Houle presides
over thee case. Daniel A. Lev, Esq., at Sulmeyerkupetz,
represents the Debtor.
COLLECTIVE BRANDS: Moody's Reviews B1-Rated Debt for Downgrade
--------------------------------------------------------------
Moody's Investors Service revised Collective Brands Inc.'s rating
outlook to negative from stable and also placed the B1 rating
assigned to the company's senior secured term loan due October,
2019 on review for possible downgrade. The company's B2 Corporate
Family Rating and B2-PD Probability of Default Rating were
affirmed.
The following ratings were affirmed:
Corporate Family Rating at B2
Probability of Default Rating at B2-PD
The following rating was placed on review for possible downgrade
(LGD assessments are subject to change):
Senior secured term loan due 2019 at B1
Rating Rationale
The revision in the rating outlook to negative from stable reflect
Collective's proposed $175 million add-on to the company's
existing $305 million senior secured term loan, with proceeds to
be used to fund a distribution to the company's owners. The
proposed distribution represents more than 50% of the sponsor's
initial equity investment made at the time of the October, 2012
LBO of Collective Brands. As a result, Moody's considers the
company's financial policies to be more aggressive than initially
expected.
The negative rating outlook also considers that while Collective
Brands has seen some improvement in same store sales and improved
gross margins (reflecting lower markdowns), the business has shown
longer term negative trends. 2012 is the first year in which the
company has reported positive comparable store sales growth since
2006. Moody's thinks some recent initiatives, such as a greater
focus on more value oriented products, resonate with the company's
core customer. However the competition in value oriented footwear
remains intense and Moody's believes the core consumer is likely
to see pressures on their discretionary spending over the course
of 2013 primarily due to the expiration of the payroll tax
holiday. The company's ability to absorb negative pressure is
significantly diminished following payment of the proposed
distribution.
The review for downgrade of the secured term loan reflects the
incremental secured debt in the company's capital structure
resulting from the proposed transaction, without any corresponding
increase in any junior capital support. Should the transaction
conclude substantially on the terms proposed, Moody's anticipates
the rating on the secured term loan would be lowered by one notch
to B2.
Collective's B2 Corporate Family Rating takes into consideration
its recent trend of positive same store sales and improved
operating margins at its domestic business, as well as the
company's aggressive financial policies evidenced by the proposed
shareholder distribution. The B2 CFR reflects the company's high
financial leverage following the acquisition with debt/EBITDA
(incorporating Moody's standard analytical adjustments) in excess
of 6 times, the still low operating margins of its domestic
Payless ShoeSource business and a strained economic situation for
its core customer base. The rating benefits from the company's
good overall liquidity profile, as Moody's expects the company
will remain cash flow positive and will have access to a $250
million (unrated) asset based revolver. The ratings take into
consideration Payless still strong brand equity notwithstanding
recent operating challenges, its scale in the footwear retail
segment, and a meaningful and growing international presence.
Ratings could be upgraded if Collective can sustain positive
results from their domestic business while experiencing continued
positive growth in their international markets. Quantitatively
ratings could be upgraded if EBITA/interest expense is sustained
above 1.75 times, and debt / EBITDA is sustained below 5.25 times.
The rating outlook could be stabilized if over the course of 2013
the company demonstrates revenue and operating margin stability
while maintaining debt/EBITDA near 6 times.
Ratings could be downgraded if the company's good liquidity
profile were to erode, if recent positive trends in sales and
margins were to reverse, or financial policies become more
aggressive. Quantitatively, ratings could be lowered if
debt/EBITDA is sustained above 6.25 times or if EBITA/interest
expense fell below 1.25 times.
The principal methodology used in this rating was the Global
Retail Industry Methodology published in June 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Headquartered in Topeka, KS, Collective Brands owns the "Payless
ShoeSource" franchise which operates more than 4,400 stores
(including joint-ventures and franchisees) in more than 30
countries. LTM revenues are approximately $2.4 billion. The
company is controlled by funds affiliated with Golden Gate Capital
and Blum Capital.
COMARCO INC: Obtains $1.5-Mil. Loan, Sells $1-Mil. Common Shares
----------------------------------------------------------------
Comarco, Inc., has consummated a $2.5 million debt and equity
financing transaction with Elkhorn Partners Limited Partnership,
an existing shareholder of the Company. In that transaction,
Elkhorn has made a $1.5 million secured loan to the Company
maturing on Nov. 30, 2014, and has purchased a total of 6,250,000
shares of the Company's common stock, at a price of $0.16 per
share, generating an additional $1 million of cash for the
Company.
As a result of the sale to Elkhorn of the 6,250,000 shares of
Company common stock, Elkhorn's ownership has increased to
approximately 49%, from approximately 9%, of the Company's
outstanding shares, making Elkhorn the Company's largest
shareholder.
The Company has used approximately $2.1 million of the proceeds
from these transactions to repay the entire principal amount of
and all interest on a $2 million secured six month term loan that
the Company had obtained from Broadwood Partners L.P. at the end
of July 2012. The anticipated sale of 3 million shares of Company
common stock to Broadwood, the proceeds of which were to have been
used to repay the Broadwood loan, was not consummated.
The balance of the proceeds from the Elkhorn loan and equity
transactions are expect to be used by the Company primarily for
working capital purposes.
Elkhorn Loan and Security Agreements
The $1.5 million loan made to us by Elkhorn bears interest at 7%
for the first 12 months of the loan, increasing to 8.5% thereafter
and continuing until the loan is paid in full. The loan matures
on November 30, 2014; however, the Company has the right, at its
option, to prepay the Elkhorn Loan, in whole or in part, without
penalty or premium.
Under the terms of the Elkhorn loan, if and to the extent the
Company does not repay the loan in full by its maturity date (or
upon acceleration of the loan after the occurrence of an event of
default), then, Elkhorn will have the right, at its option (but
not the obligation), to convert the then unpaid balance of the
loan, in whole or in part, into shares of Company common stock at
a conversion price of $0.25 per share, which will be subject to
possible adjustment on certain events, such as stock splits, stock
dividends and any reclassifications of the Company's outstanding
shares, certain mergers and, subject to certain exceptions, sales
by the Company of shares of its common stock at a price lower than
$0.25 per share. The conversion price of $0.25 per share
represents a premium of more than 70% over the average of the
closing prices of the Company's shares in the over-the-counter
market for the five trading days preceding the making of the loan
by Elkhorn to the Company.
The payment of, and the performance by the Company of its other
obligations to Elkhorn with respect to, the loan are secured by
first priority security interests granted to Elkhorn in
substantially all of the assets of the Company and its wholly-
owned subsidiary, Comarco Wireless Technologies, Inc., and a
pledge of all of CWT's shares by the Company to Elkhorn.
Sale of Common Stock to Elkhorn
The sale by the Company to Elkhorn of the 6,250,000 shares of
common stock was made concurrently with and as a condition to the
making by Elkhorn of the loan to the Company. The purchase price
of $0.16 per share paid by Elkhorn for those shares was determined
by arms-length negotiations between Elkhorn and the members of a
special committee of the Company's Board of Directors, comprised
of three of the directors who have no affiliation with Elkhorn and
no financial interest, other than their interests solely as
shareholders of the Company, in either the loan or share
transactions with Elkhorn. That per share purchase price was
determined based on a number of factors, including the inability
of the Company, notwithstanding its best efforts, to raise
additional capital from other prospective institutional investors
during the six months ended Jan. 25, 2013, and the recent trading
prices of the Company's shares in the over-the-counter market,
which averaged $0.14 per share during the five trading days
immediately preceding the sale of the shares to Elkhorn, and
$0.158 per share over the 29 trading days that that began on
Jan. 2, 2013, and ended on Feb. 8, 2013.
Additional information can be obtained at http://is.gd/VPw5ts
About Comarco Inc.
Based in Lake Forest, California, Comarco, Inc. (OTC: CMRO)
-- http://www.comarco.com/-- is a provider of innovative,
patented mobile power solutions that can be used to power and
charge notebook computers, mobile phones, and many other
rechargeable mobile devices with a single device.
Going Concern Doubt
As reported by the Troubled Company Reporter on December 28, 2012,
after auditing the fiscal 2012 financial results, Squar, Milner,
Peterson, Miranda & Williamson, LLP, in Newport Beach, California,
expressed substantial doubt about the Comarco's ability to
continue as a going concern. The independent auditors noted that
the Company has suffered recurring losses and negative cashflow
from operations, has had declining working capital and
uncertainties surrounding the Company's ability to raise
additional funds.
Comarco reported a net loss of $5.31 million for the year ended
Jan. 31, 2012, compared with a net loss of $5.97 million during
the prior year.
The Company's balance sheet at Oct. 31, 2012, showed $3.95 million
in total assets, $7.98 million in total liabilities and a $4.03
million total stockholders' deficit.
COMMUNITY FINANCIAL: Amends 19.6-Mil. Shares Resale Prospectus
--------------------------------------------------------------
Community Financial Shares, Inc., filed with the U.S. Securities
and Exchange Commission an amended Form S-1 relating to the offer
and sale of up to 19,684,700 shares of the Company's common stock
by SBAV LP, Ithan Creek Investors USB, LLC, Ithan Creek Investors
II USB, LLC, et al.
On Dec. 21, 2012, Community Financial Shares, Inc. issued to
investors in a private placement offering 133,411 shares of voting
Series C Convertible Noncumulative Perpetual Preferred Stock at
$100.00 per share, 56,708 shares of nonvoting Series D Convertible
Noncumulative Perpetual Preferred Stock at $100.00 per share and
6,728 shares of nonvoting Series E Convertible Noncumulative
Perpetual Preferred Stock at $100.00 per share. Pursuant to the
terms of a Registration Rights Agreement we entered into with the
Selling Shareholders on Nov. 13, 2012, in connection with the
private placement offering, the Company is registering the Shares,
13,341,100 of which are issuable to the Selling Shareholders upon
the conversion of the shares of Series C Preferred Stock,
5,670,800 of which are issuable to Selling Shareholders upon the
conversion of the shares of Series D Preferred Stock and 672,800
of which are issuable to the Selling Shareholders upon the
conversion of the shares of Series E Preferred Stock that the
Selling Shareholders acquired in the private placement offering.
The Company's common stock is quoted on the OTCQB under the
trading symbol "CFIS." The last reported sales price of the
Company's shares of common stock on [ ], 2013 was $[ ]
per share.
A copy of the amended prospectus is available for free at:
http://is.gd/N2Mv84
About Community Financial
Glen Ellyn, Illinois-based Community Financial Shares, Inc., is a
registered bank holding company. The operations of the Company
and its banking subsidiary consist primarily of those financial
activities common to the commercial banking industry. All of the
operating income of the Company is attributable to its wholly-
owned banking subsidiary, Community Bank-Wheaton/Glen Ellyn.
BKD, LLP, in Indianapolis, Indiana, issued a going concern
qualification on the consolidated financial statements for the
year ended Dec. 31, 2011. The independent auditors noted that the
Company has suffered recurring losses from operations and is
undercapitalized.
The Company reported a net loss of $11.01 million on net interest
income (before provision for loan losses) of $10.77 million in
2011, compared with a net loss of $4.57 million on net interest
income (before provision for loan losses) of $10.40 million in
2010.
The Company's balance sheet at Sept. 30, 2012, showed $334.17
million in total assets, $328.69 million in total liabilities and
$5.48 million in total shareholders' equity.
COMPETITIVE TECHNOLOGIES: J. Finley Has 6.3% Stake at Dec. 31
-------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Joseph M. Finley disclosed that, as of
Dec. 31, 2012, he beneficially owns 955,988 shares of common stock
of Competitive Technologies, Inc., representing 6.27% of the
shares outstanding. Mr. Finley previously reported beneficial
ownership of 861,288 common shares or a 5.8% equity stake as of
Nov. 29, 2011. A copy of the amended filing is available at:
http://is.gd/ieUfD7
About Competitive Technologies
Fairfield, Conn.-based Competitive Technologies, Inc. (OTC QX:
CTTC) -- http://www.competitivetech.net/-- was established in
1968. The Company provides distribution, patent and technology
transfer, sales and licensing services focused on the needs of its
customers and matching those requirements with commercially viable
product or technology solutions. Sales of the Company's
Calmare(R) pain therapy medical device continue to be the major
source of revenue for the Company.
After auditing the 2011 results, Mayer Hoffman McCann CPAs, in New
York, expressed substantial doubt about the Company's ability to
continue as a going concern. The independent auditors noted that
the Company has incurred operating losses since fiscal year 2006.
The Company reported a net loss of $3.59 million in 2011. The
Company reported a net loss of $2.40 million on $163,993 of
product sales for the five months ended Dec. 31, 2010.
The Company's balance sheet at Sept. 30, 2012, showed $4.70
million in total assets, $8.06 million in total liabilities and a
$3.35 million total shareholders' deficit.
"The Company incurred operating losses for the past six quarters,
having produced marginal net income in the first quarter of 2011,
after having incurred operating losses each quarter since fiscal
2006. The Company has taken steps to significantly reduce its
operating expenses going forward and expects revenue from sales of
Calmare medical devices to grow. However, even at the reduced
spending levels, should the anticipated increase in revenue from
sales of Calmare devices not occur the Company may not have
sufficient cash flow to fund operating expenses beyond the first
quarter of calendar 2013. These conditions raise substantial
doubt about the Company's ability to continue as a going concern,"
the Company said in its quarterly report for the period ended
Sept. 30, 2012.
COMPREHENSIVE CARE: Lloyd Miller Has 8.9% Stake at Dec. 31
----------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Lloyd I. Miller, III, disclosed that, as of
Dec. 31, 2012, he beneficially owns 5,723,100 shares of common
stock of Comprehensive Care Corporation representing 8.9% of the
shares outstanding. Mr. Miller previously reported beneficial
ownership of 5,399,914 common shares or a 8.4% equity stake as of
Dec. 31, 2011. A copy of the amended filing is available at:
http://is.gd/peGlpF
About Comprehensive Care
Tampa, Fla.-based Comprehensive Care Corporation provides managed
care services in the behavioral health, substance abuse, and
psychotropic pharmacy management fields.
Following the 2011 results, Mayer Hoffman McCann P.C., in
Clearwater, Florida, expressed substantial doubt about the
Company's ability to continue as a going concern. The independent
auditors noted that the Company has suffered recurring losses from
operations and has not generated sufficient cash flows from
operations to fund its working capital requirements.
Comprehensive Care reported a net loss of $14.08 million in 2011,
compared with a net loss of $10.47 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $15.97
million in total assets, $29.35 million in total liabilities and a
$13.37 million deficit.
CONSTELLATION BRANDS: Moody's Alters Ratings Outlook to Negative
----------------------------------------------------------------
Moody's affirmed Constellation Brands' Ba1 rating but changed the
outlook to negative after the announcement by Anheuser-Busch InBev
and Constellation of a revised agreement concerning the Modelo
business in the US. The speculative grade liquidity rating was
also lowered to SGL-3 from SGL-2.
Ratings Rationale
The new agreement establishes Constellation Brands as the full
owner, not only of the Crown distribution business which was
contemplated in the $1.85 billion deal reached last summer, but of
the entire US business of Modelo in the US, by expanding the deal
to include 1) the purchase of the Mexican Brewery that produces
beer for the US market and 2) a perpetual license for the US
brands. The rating outlook was changed to negative reflecting the
meaningful increase in leverage at Constellation that will result
from the revised purchase price of about $4.75 billion, as well as
greater integration risk as Constellation takes on the role of
brewer as well as distributor.
"The purchase of the Piedras Negras brewery in Northern Mexico as
well as the perpetual rights to the Modelo brands in the US for a
total of $2.9 billion (subject to a post-closing adjustment), is a
long term positive for Constellation as it secures the number
three position in the US beer market behind ABI and Molson Coors
in the attractive and fast growing premium import beer segment"
said Linda Montag, Moody's Senior Vice President. As before, the
transaction removes uncertainty about Constellation's role in the
Crown joint venture which was subject to potential termination in
2016, but places Constellation in a much more secure position than
even in the previous agreement by making the license perpetual
instead of being renewable every 10 years. Moody's also expects
that operating margins will improve as compared with the previous
agreement as Constellation will now benefit from the producer
margin.
However, Moody's expects that leverage will increase from the mid-
4 times range that was expected with the purchase of the remaining
50% of the Crown joint venture, to the mid-5 times range on a pro-
forma basis for the new transaction which is very high for the
rating level. De-levering will also take place more slowly than in
the previous scenario due in part to the need to expand capacity
at the brewery, which currently supplies just 60% of the US needs.
In addition to higher leverage over a longer period of time, the
negative outlook reflects Moody's view that the new transaction
results in greater integration risk. Becoming the new owner of
Mexican production assets could introduce new geopolitical and
other risks, and raises concerns over the company's ability to
integrate and operate full-fledged brewery operations.
Nevertheless, Constellation has a consistent track record of
reducing debt after acquisitions, and already operates more than
30 production facilities in its wine segment, which share some of
the same procurement and efficiency challenges that the company
will face in Mexico.
There is currently no certainty that the changes to the deal will
satisfy the DOJ's objections or avoid protracted litigation.
Bridge facilities are already in place to finance the transaction.
Permanent financing will likely consist of new bond issuance, term
loan facilities, revolver borrowings and securitization facility
usage. The lowering of the SGL rating reflects the fact that
covenants are likely to be somewhat tighter in the near term than
previously expected, and that revolver availability will be
limited if it is drawn as part of the funding for the transaction.
Should the deal fail to close by year end, Constellation will be
able to call the debt that it issued in connection with the
transaction.
Constellation's Ba1 CFR and facility ratings reflect its
meaningful scale, which will double with the transaction, as well
as good product diversification, including an extensive portfolio
of brands covering the premium wine, spirits and imported beer
categories, all sub segments that are strongly positioned for
growth within their respective segments. The rating also reflects
the franchise strength, efficiency, and solid profitability of the
company. The full ownership of the Crown Joint Venture will
provide better transparency in financial results since the
business will be consolidated rather than accounted for under the
equity method. Moody's believes that comparable operating margins
will improve from already strong double digit levels. Management's
commitment to return leverage to the 3 to 4 times range over time
is a key assumption in the rating affirmation. The negative
outlook reflects the increase in leverage, which is expected to
remain higher than the target range and high for the rating
category for 2 to3 years after closing, as well as heightened
integration risk.
A downgrade could occur if operating performance were to weaken,
integration of the Modelo business was more difficult than
expected, or if the company failed to reduce leverage to below 5
times within twelve to 18 months following closing and to be
approaching 4 times within 2 to 3 years. Failure to reduce
leverage, EBITA margin sustained below 15% or EBIT to Interest
materially below 2.5 times could also lead to a downgrade.
An upgrade is not likely in the near term. However the outlook
could be stabilized once there is evidence of successful
integration of the brewing operations and that leverage is well on
the way to returning to the target 3 to 4 times range. An upgrade
is more remote, but could result over the long term if the company
sustains strong operating performance, shows continued improvement
in profitability and leverage, and if management shows a firm
commitment to a more conservative financial management strategy
than its current one, including setting financial targets that
permanently reduce leverage levels such that Debt to EBITDA is
maintained under 3.5 times and EBIT to Interest remains above 3.5
times, per Moody's definitions. Furthermore, there would need to
be a clearly articulated commitment by management to being
investment grade.
The principal methodology used in this rating was the Global
Alcoholic Beverage Rating Methodology published in September 2009.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Headquartered in Victor, New York, Constellation Brands, Inc. is a
leading international wine company with a broad portfolio of
premium brands across the wine, spirits and imported beer
categories. Major brands in the company's current portfolio
include Robert Mondavi, Clos du Bois, Ravenswood, Blackstone,
Nobilo, Kim Crawford, Inniskillin, Jackson Triggs, and SVEDKA
vodka. It imports Corona through the Crown Imports Joint Venture.
Reported net revenue for fiscal 2012 was approximately $2.7
billion. Pro forma for the acquisition, revenue would be
approximately $5.4 billion.
CONSTELLATION BRANDS: S&P Affirms 'BB+' Corporate Credit Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed all of
its ratings on Victor, N.Y.-based Constellation Brands Inc.,
including its 'BB+' corporate credit rating, following the
announcement that Constellation Brands and Anheuser-Busch InBev
N.V./S.A. (ABI) have revised their agreement to complete the
divestiture of Grupo Modelo S.A.B. de C.V.'s U.S. business.
In June 2012, Constellation Brands signed a definitive agreement
with ABI to purchase the remaining 50% interest in Crown Imports
LLC for $1.85 billion (representing about 8.5x multiple of 50% of
Crown's EBIT) when ABI completes its proposed acquisition of Grupo
Modelo. Constellation Brands currently owns 50% of Crown, a 50-50
joint venture with Grupo Modelo. Crown is a leading marketer of
imported beer in the U.S., primarily Modelo's beer brands.
Constellation Brands' existing agreement to buy the remaining 50%
interest in Crown for $1.85 billion remains. However, under the
revised agreement ABI's prior right, exercisable every 10 years,
to terminate the importer agreement with Crown has been removed.
In addition, Constellation Brands will now also purchase the
Piedras Negras brewery and receive perpetual rights for Corona
and Modelo brands in the U.S. for $2.9 billion, subject to a post-
closing adjustment. The revised agreement remains conditioned on
the completion of the acquisition of Modelo by ABI, as well as
regulatory approvals in the U.S. and Mexico and other customary
closing conditions. The state of the art brewery in Piedras
Negras utilizes top-of-the-line technology and was built to be
readily expanded to increase capacity, fulfilling about 60% of
Crown's current demand.
ABI and Constellation Brands have also agreed on a three-year
transition services agreement, which will enable Constellation
Brands to expand the Piedras Negras facility so it supplies 100%
of Crown's needs in the U.S. Constellation Brands has disclosed
it has fully committed bridge financing in place to complete this
transaction, but expects permanent financing to consist of a
combination of senior notes and term loans, with the remainder of
the funding coming from the company's existing revolving credit
facility, accounts receivable securitization facility, and
available cash.
CONTINUITYX SOLUTIONS: Fraud Discovery Prompts Ch. 7 Liquidation
----------------------------------------------------------------
ContinuityX Solutions Inc., a cloud computing host and disaster
backup services provider, filed a petition for Chapter 7
liquidation Feb. 14 in New York (Bankr. S.D.N.Y. Case No. 13-
10455).
The Company provided consulting services and management of
business continuity, virtual/Cloud hosting, managed equipment and
storage, monitoring, VoIP and voice needs. According to Bloomberg
News, the Metamora, Illinois-based company halted operations "as a
result of the fraudulent activities discovered by the company,"
according to a regulatory filing this month.
Financial statements for Sept. 30 disclosed assets of $25.6
million and liabilities totaling $21.5 million. Revenue of $7.4
million for the quarter ended Sept. 30 resulted in a $394,000 net
loss.
The Debtor is represented by:
Jeffrey M. Traurig, Esq.
Allen G. Kadish, Esq.
DICONZA TRAURIG LLP
630 Third Avenue, 7th Floor
New York, NY 10017
Tel: (212) 682-4940
Fax: (212) 682-4942
E-mail: jtraurig@dtlawgroup.com
akadish@dtlawgroup.com
BankruptcyData related that on Feb. 6, 2013, ContinuityX's board
removed David Godwin from his position as a director of the
Company as a result of a report by counsel for a special committee
of the board that had been formed to investigate various financial
irregularities.
Documents filed with the U.S. Securities and Exchange Commission
explain, "In its report, counsel for the Special Committee
summarized a meeting of the Special Committee at which the Special
Committee concluded that various fraudulent activities had been
committed including the forgery of numerous orders for services
from the Company," the report cited.
SEC documents further state, "As a result of the fraudulent
activities discovered by the Company and the Special Committee,
the Company has currently ceased conducting any material business
activities and, in the view of the Board of Directors, is unlikely
to be able to continue as a going concern," the report further
cited.
The BankruptcyData report also related that on February 7, 2013,
Brian Wasserman resigned from his positions as interim president,
interim C.E.O., C.F.O., corporate secretary and all other offices
with the Company. On February 11, 2013, the board appointed
Michael Neiberg to serve as interim president and interim C.E.O.
COVENANT BANK: Closed; Liberty Bank & Trust Assumes All Deposits
----------------------------------------------------------------
Covenant Bank of Chicago, Ill., was closed on Friday, Feb. 15,
2013, by the Illinois Department of Financial and Professional
Regulation - Division of Banking, which appointed the Federal
Deposit Insurance Corporation as receiver. To protect the
depositors, the FDIC entered into a purchase and assumption
agreement with Liberty Bank and Trust Company of New Orleans, La.,
to assume all of the deposits of Covenant Bank.
The sole branch of Covenant Bank will reopen during normal
business hours as a branch of Liberty Bank and Trust Company.
Depositors of Covenant Bank will automatically become depositors
of Liberty Bank and Trust Company. Deposits will continue to be
insured by the FDIC, so there is no need for customers to change
their banking relationship in order to retain their deposit
insurance coverage up to applicable limits. Customers of Covenant
Bank should continue to use their current branch until they
receive notice from Liberty Bank and Trust Company that systems
conversions have been completed to allow full-service banking at
all branches of Liberty Bank and Trust Company.
As of Dec. 31, 2012, Covenant Bank had around $58.4 million in
total assets and $54.2 million in total deposits. In addition to
assuming all of the deposits of the failed bank, Liberty Bank and
Trust Company agreed to purchase essentially all of the assets.
Customers with questions about the transaction should call the
FDIC toll-free at 1-800-830-4732. Interested parties also can
visit the FDIC's Web site at
http://www.fdic.gov/bank/individual/failed/covenant-il.html
The FDIC estimates that the cost to the Deposit Insurance Fund
will be $21.8 million. Compared to other alternatives, Liberty
Bank and Trust Company's acquisition was the least costly
resolution for the FDIC's DIF. Covenant Bank is the 3rd FDIC-
insured institution to fail in the nation this year, and the first
in Illinois. The last FDIC-insured institution closed in the
state was Citizens First National Bank, Princeton, on Nov. 2,
2012.
DETROIT, MI: Worker Bonuses Approach Records on Rising Profits
--------------------------------------------------------------
Keith Naughton, writing for Bloomberg News, reported that U.S.
automakers are close to handing out record profit-sharing checks,
bringing new meaning to the term "bonus baby" for Ford Motor Co.
hourly workers.
According to Bloomberg, thanks to record North American profits,
the Detroit automakers plan to hand out checks totaling more than
$750 million to about 122,000 workers. Besides Ford's $8,300, the
most ever by a Detroit automaker, Chrysler Group LLC is paying
hourly workers $2,250. For new Ford hires, who are paid about half
what senior workers make, $8,300 adds 23 percent to their annual
compensation of $36,000, Bloomberg noted.
If General Motors Co.'s payout surpasses $7,325 when it reports
year-end earnings Feb. 14, that would top the cumulative record of
$17,875 set in 1999, when Detroit was awash in sport-utility
vehicle profits, Kristin Dziczek, director of the labor and
industry group at the Center for Automotive Research, told
Bloomberg.
In Michigan alone, the checks will contribute $350 million to the
economy and generate 3,500 jobs, Donald Grimes, a senior research
specialist at the University of Michigan, who studies labor and
the economy, told Bloomberg. "This is a much bigger deal than the
tax refunds people get," Grimes said. "It's a much bigger check."
DEWEY & LEBOEUF: New Dissenters Challenge Partners Settlement
-------------------------------------------------------------
Sara Randazzo, writing for The The Am Law Daily, reported that
less than a week after a group of retired Dewey & LeBoeuf partners
appeared to pave the way for the swift approval of the defunct
firm's proposed Chapter 11 liquidation plan by settling a dispute
with the Dewey estate, fresh resistance to a key component of that
plan has emerged in the form of objections raised by six former
Dewey partners.
The report related that in a series of filings made ahead of a
Wednesday deadline, the former partners in question -- two
individuals and a pair of two-person teams -- argue that U.S.
Bankruptcy Judge Martin Glenn should not approve the Chapter 11
plan, which serves as a blueprint for how the Dewey estate expects
to dispose of its assets in order to pay off creditors who say
they are owed a combined total of some $600 million.
Am Law Daily said many of the objections raised in the filings
focus on the so-called partner contribution plan, which is in many
ways the linchpin of the larger liquidation plan and offers those
who have agreed to pay the estate a portion of their 2011 and 2012
Dewey earnings a waiver from future liability related to the firm.
A majority of Dewey's former partners have signed on to the deal,
which, according to court filings, is expected to raise at least
$70 million in amounts ranging from $5,000 to $3.37 million.
The report said former partner Michael Fitzgerald, who joined
Dewey in 2011 from Milbank, Tweed, Hadley & McCloy, is among the
fiercest of the new dissenters. He and his fellow objectors --
including former partners Andrew Fawbush and Elizabeth Sandza, who
filed their joint challenge late Tuesday -- raise an argument that
has been simmering privately and publicly for months: that the
plan benefits partners who strong-armed Dewey management into
paying them their full compensation in 2010 at the expense of
those who were told a portion of that year's earnings would be
deferred until 2011.
According to the report, the objectors assert that bankruptcy
lawyer Martin Bienenstock, along with other unnamed members of
Dewey's executive committee, were the "mastermind[s]" of the plan
and that Bienenstock came up with the idea of insulating all
compensation received in 2010, including the $6 million he
received that year. Bienenstock, now chair of the business
solutions, governance, restructuring and bankruptcy group at
Proskauer Rose, said Thursday that he could not comment because it
is a part of ongoing litigation, Am Law Daily said.
A hearing on the confirmation of the plan is scheduled for
Feb. 27.
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.
DEX ONE: Robert Mead An 8.6% Shareholder at Dec. 31
---------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Robert E. Mead disclosed that, as of Dec. 31,
2012, he beneficially owns 4,399,056 shares of common stock of
Dex One Corporation representing 8.645% of the shares outstanding.
Mr. Mead previously reported beneficial ownership of 3,250,000
common shares or a 6.47% equity stake as of Dec. 31, 2011. A copy
of the amended filing is available at http://is.gd/fKCJ9h
About Dex One
Dex One, headquartered in Cary, North Carolina, is a local
business marketing services company that includes print
directories and online voice and mobile search. Revenue was
approximately $1.1 billion for the LTM period ended Sept. 30,
2010.
R.H. Donnelley Corp. and 19 of its affiliates, including Dex
Media East LLC, Dex Media West LLC and Dex Media Inc., filed for
Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09-
11833 through 09-11852). They emerged from bankruptcy on Jan. 29,
2010. On the Effective Date and in connection with its emergence
from Chapter 11, RHD was renamed Dex One Corporation.
Dex One reported a net loss of $518.96 million in 2011 compared
with a net loss of $923.59 million for the eleven months ended
Dec. 31, 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$2.86 billion in total assets, $2.77 billion in total liabilities,
and $92.03 million in total shareholders' equity.
* * *
As reported by the Troubled Company Reporter on Jan. 31, 2013,
Standard & Poor's Ratings Services revised its 'CCC' rating
outlook on Dex One Corp. to negative from developing. Existing
ratings on the company, including the 'CCC' corporate rating, were
affirmed.
"The outlook revision to negative reflects our view that the
company has sufficient lender support to effectively pursue a
prepackaged reorganization," said Standard & Poor's credit analyst
Chris Valentine.
"It also reflects our expectation, given the large lender group
and the diversity of lender interests, that the company may not
get support from all of its lenders to amend its credit agreement
out-of-court. If Dex One files for bankruptcy, we would lower our
corporate credit rating to 'D' and reassess the corporate credit
rating, business risk, and financial risk of the combined company
after emergence," S&P added.
"Our 'CCC' corporate credit rating reflects Standard & Poor's
Ratings Services' view of the company's strong motivation to use
the bankruptcy court to complete its proposed merger with
SuperMedia, and our assessment of its business risk profile as
"vulnerable" and financial risk profile as "highly leveraged."
Furthermore, the rating reflects continued structural and cyclical
decline in the print directory sector, increased competition from
online and other distribution channels as small business
advertising expands across a greater number of marketing channels,
and the potential for additional subpar debt repurchases. Our
management and governance assessment is fair," S&P noted.
The negative rating outlook reflects S&P's expectation that Dex
One may pursue a voluntary prepackaged bankruptcy reorganization
plan to consummate the merger agreement with SuperMedia. S&P
could also lower its rating if declining business fundamentals
hinder 2014 debt refinancing or if S&P becomes convinced the
company could violate financial covenants as a result of a faster-
than-expected decline in EBITDA.
DIMMITT CORN: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Dimmitt Corn Mill, LLC
2217 Cimmaron Dr.
Plano, TX 75025
Bankruptcy Case No.: 13-20055
Chapter 11 Petition Date: February 15, 2013
Court: United States Bankruptcy Court
Northern District of Texas (Amarillo)
Judge: Robert L. Jones
Debtor's Counsel: David R. Langston, Esq.
MULLIN, HOARD & BROWN
P.O. Box 2585
Lubbock, TX 79408-2585
Tel: (806) 765-7491
E-mail: drl@mhba.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $10,000,001 to $50,000,000
The petition was signed by Richard Bell, president.
The Debtor did not file its list of largest unsecured creditors
when it filed its petition.
EAGLE POINT: To Present Plan for Confirmation on Feb. 21
--------------------------------------------------------
On Dec. 27, 2012, the Bankruptcy Court entered an order approving
the Second Amended Disclosure Statement filed by Arthur C. Galpin
and Eafle Point Developments, LLC, in support of their Second
Amended Joint Plan of Reorganization, dated Sept. 18, 2012.
The hearing on confirmation of the plan, at which testimony will
be received if offered and admissible, will be held on Feb. 21,
2013, at 10:00 a.m.
With respect to EPD, the Debtors have recently obtained an
appraisal of the Eagle Collateral which, although still
conservative in Debtors' opinion, establishes that transfer to US
Bank/SAG of the Eagle Collateral will more than fully satisfy all
indebtedness owed to US Bank/SAG and eliminate any basis for
allowance of an unsecured deficiency or guaranty claim against the
EPD and Galpin estate.
Additional adjustments and modifications of loans of secured
creditors are proposed in the Plan and are intended to track
market conditions. The Plan also disallows disputed, contingent
and unliquidated Guaranty Claims, except those as to which the
Plan specifically provides the applicable secured creditor with
different treatment and such secured creditor accepts such
treatment by voting in favor of the Plan. Due to the value of the
collateral for all guaranteed loans, the Debtors do not believe
any creditor will suffer financial loss as a result of
modification of any loan and/or disallowance of a Guaranty Claim.
Galpin and EPD anticipate, and the Plan provides, for payment in
full of all Allowed Claims.
Class 1 includes the Secured, Deficiency and Guaranty Claims of US
Bank/SAG against EPD and Galpin, as applicable. These Claims will
be satisfied in full by, at US Bank/SAG's option, the Debtors
deeding the Eagle Collateral to US Bank and/or SAG, either
pursuant to the Plan or by the parties' execution of the
Settlement Agreement attached as Exhibit A to the Plan.
Class 2 (EPD HOA Secured Claim) will retain its lien on Eagle
Collateral after the deed of the property to US Bank/SAG as
described above, but will not receive a distribution under the
Plan.
Likewise, with respect to all real property assets covered by the
Plan, the Class 22 Property Tax secured creditors shall
retain their liens on such property with the same priority as such
liens had on the Petition Dates.
The Classes 12-17 Claims of Evergreen have been resolved via a
court approved settlement prior to submission of the Plan. The
Plan contemplates performance of the Evergreen Settlement and
disallowance of any other claims of Evergreen, including, without
limitation, any Unsecured or Guaranty Claims.
The Plan further provides for payment in full of all allowed
general unsecured claims in Classes 25 and 26, overtime, with
interest as provided in the Plan.
Class 27 consists of Galpin's equity interest in EPD, which shall
be retained by Galpin; however, no cash distributions on account
of EPD assets will be made to creditors of the Galpin estate until
Class 25 EPD Unsecured Creditors are paid in full.
A copy of the Second Amended Disclosure Statement is available at:
http://bankrupt.com/misc/eaglepoint.doc188.pdf
About Eagle Point Developments
Eagle Point Developments, in Medford, Oregon, developed the Eagle
Point Golf Course, which was built in 1996. Eagle Point filed for
Chapter 11 bankruptcy (Bankr. D. Ore. Case No. 12-60353) on
Feb. 1, 2012. Judge Thomas M. Renn oversees the case, taking over
from Judge Frank R. Alley III. Sussman Shank LLP serves as
bankruptcy attorneys. The petition was signed by Arthur Critchell
Galpin, managing member.
Eagle Point's case is jointly administered with Mr. Galpin's
personal bankruptcy case (Bankr. D. Ore. Case No. 12-60362), which
is the lead case. In schedules, Mr. Galpin disclosed total assets
of $35.7 million and total liabilities of $51.7 million.
The Plan provides, for payment in full of all Allowed Claims. On
the other hand, with respect to Galpin's estate, in the event of a
Chapter 7 liquidation, unsecured creditors would receive only a
minimal distribution on their claims, possibly under 5%.
The U.S. Trustee said that an official committee has not been
appointed in the bankruptcy cases of the Debtors.
EAST WEST: Fitch Affirms 'BB-' Trust Preferred Securities Rating
----------------------------------------------------------------
Fitch Ratings has affirmed the long-term and short-term Issuer
Default Ratings (IDRs) of East West Bancorp, Inc. and its
subsidiaries at 'BBB/F2'. The Rating Outlook is Stable.
Fitch reviewed East West Bancorp, Inc. as part of a peer review
that included 16 mid-tier regional banks. The banks included in
the peer review include: Associated Banc-Corp., Bank of Hawaii
Corporation, BOK Financial Corporation, Cathay General Bancorp,
Cullen/Frost Bankers, Inc., East West Bancorp, Inc., First Horizon
National Corporation, First National of Nebraska, Inc., First
Niagara Financial Group, Inc., Fulton Financial Corporation,
Hancock Holding Company, People's United Financial, Inc., Synovus
Financial Corp., TCF Financial Corporation, UMB Financial Corp.,
Webster Financial Corporation. Refer to the release titled 'Fitch
Takes Rating Actions on Its Mid-Tier Regional Bank Group Following
Industry Peer Review' for a discussion of rating actions taken on
the entire mid-tier regional bank group.
The mid-tier regional group is comprised of banks with total
assets ranging from $10 billion to $36 billion. IDRs for this
group is relatively dispersed with a low of 'BB-' and a high of
'A+'. Mid-tier regional banks typically lag their large regional
bank counterparts by asset size, geographic footprint and
product/revenue diversification. As such mid-tier regional banks
are more susceptible to idiosyncratic risks such as geographic or
single name concentrations.
Fitch's mid-tier regional bank group has fairly homogenous
business strategies. The institutions are mostly reliant on spread
income from loans and investments. With limited opportunity to
improve fee-based income in the near term, Fitch expects that mid-
tier banks will continue to face greater earnings headwinds in
2013 than larger institutions with greater revenue
diversification.
Share repurchases is common theme amongst the mid-tier banks. As
mid-tier banks face earnings headwinds, institutions have begun
repurchasing common shares to improve shareholder returns. Fitch
anticipates continued repurchase activity in 2013 as the return on
equity lags historical norms for the group.
In addition to share repurchases, Fitch has observed that some
mid-tier banks have looked to their investment portfolio to
improve returns. Most notably, CLOs and CMBS have become more
popular amongst mid-tier banks. Although such securities are
beneficial to yields and returns, Fitch notes that such purchases
can be a negative ratings driver if the risks are not properly
measured, monitored and controlled.
Asset quality continues to improve throughout the banking sector.
Both nonperforming assets (NPAs) and net charge-offs (NCOs) are
down significantly year over year. Fitch anticipates further asset
quality improvement as nonperforming loan (NPL) inflow slows.
Reserve levels have also declined as asset quality improves, which
has been beneficial to earnings in 2012. Fitch expects further
reserve releases in 2013 but at a slower pace.
Rating Action and Rationale
East West Bancorp, Inc.'s ratings were affirmed at 'BBB'. The
Outlook remains Stable. The affirmation of the ratings reflects
EWBC's strong operating performance and improving asset quality.
EWBC's return on assets (ROA) and net interest margins (NIM) are
second highest in the mid-tier group. Fitch makes various
adjustments to EWBC's reported earnings related to purchased loan
accretion, and the indemnification asset. Excluding these items,
the adjusted ROA and NIM are solid at 1.29% and 3.84% for 2012,
respectively. EWBC has managed to lower its cost of funding,
primarily through lower FHLB and time deposit balances; however,
long-dated repo agreements continue to drag the NIM to the tune of
23 basis points (bps). Fitch acknowledges that the NIM could see
some downward pressure as EWBC continues to replace run-off in its
covered loan portfolio with assets originated at lower yields. Any
presumed pressure to EWBC's NIM would be in line with peers.
RATING DRIVERS AND SENSITIVITIES - IDRs and VRs
EWBC's ratings are considered to be at the higher end of their
potential range in the medium term given the reliance on spread
income and aggressive C&I growth. Any upward ratings momentum
would be driven by a mature loan portfolio with performance
history and an increase in fee income to be in line with EWBC's
peer group. EWBC's rating could be downgraded if direct exposure
to China increases, substantial deterioration in asset quality
occurs or earnings come under pressure.
RATING DRIVERS AND SENSITIVITIES - Support Ratings and Support
Floor Ratings:
All of the mid-tier regional banks in the peer group have Support
Ratings of '5' and Support Floor Ratings of 'NF'. In Fitch's view,
the mid-tier banks are not considered systemically important and
therefore, Fitch believes the probability of support is unlikely.
IDRs and VRs do not incorporate any government support for any of
the banks in the mid-tier regional bank peer group.
RATING DRIVERS AND SENSITIVITIES - Subordinated Debt and Other
Hybrid Securities:
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
RATING DRIVERS AND SENSITIVITIES - Holding Company:
All of the entities reviewed in the mid-tier regional bank group
have a bank holding company structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent holding
company supporting equalized ratings between bank subsidiaries and
bank holding companies. IDRs and VRs are equalized with those of
its operating companies and banks reflecting its role as the bank
holding company, which is mandated in the U.S. to act as a source
of strength for its bank subsidiaries.
RATING DRIVERS AND SENSITIVITIES - Subsidiary and Affiliated
Company Rating:
All of the entities reviewed in the mid-tier regional bank group
factor in a high probability of support from parent institutions
to its subsidiaries. This reflects the fact that performing parent
banks have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has affirmed these ratings:
East West Bancorp, Inc.
-- Long-term IDR at 'BBB'; Rating Outlook Stable;
-- Short-term IDR at 'F2';
-- Viability Rating at 'bbb'.
-- Support at '5';
-- Support Floor at 'NF'.
East West Bank
-- Long-term IDR at 'BBB'; Rating Outlook Stable;
-- Long-term deposits at 'BBB+';
-- Short-term IDR at 'F2';
-- Short-term deposits at 'F2';
-- Viability Rating at 'bbb';
-- Support at '5';
-- Support Floor at 'NF'.
East West Capital Statutory Trust III, East West Capital Trust IV,
V, VI, VII, VIII & IX
-- Trust preferred securities at 'BB-'.
EASTMAN KODAK: Cash Flow to Be Negative $176-Mil. for 9 Months
--------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports Eastman Kodak Co. disclosed that operating cash flow
during the first nine months of 2013 will be negative by $176
million for the company undergoing Chapter 11 reorganization.
According to the report, Kodak said Feb. 14 it was making cash
flow projections public at the same time the information was being
supplied to lenders providing junior secured financing for the
reorganization. The projections were contained in a regulatory
filing.
The report notes that the projections don't include about $108
million in cash left over from the sale of intellectual property
after paying down some of the Chapter 11 financing. The
projections, according to Kodak, also don't include proceeds from
other asset sales, payments related to bankruptcy, or proceeds
from new junior financing.
The report relates that January is predicted to have a $43 million
negative operating cash flow. The peak negative cash flow is $69
million in April. Later in the year, cash flow turns positive.
It will be $12 million in June and $9 million in September,
according to the projection.
Kodak previously reported holding $337 million in cash as of
Dec. 31 among the bankrupt companies. Including companies abroad
not in bankruptcy, the companywide cash balance at year's end was
$1.14 billion.
Kodak's $400 million in 7% convertible notes due in
2017 traded Feb. 14 for 13.25 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.
SEC Filing
As part of the ongoing restructuring of Eastman Kodak Company, the
Company provided information to certain of the holders of its
second lien debt securities who have committed, pursuant to the
commitment letter, dated as of Dec. 13, 2012, previously publicly
disclosed by the Company, to provide a junior debtor-in-possession
credit facility to the Company. The Information was prepared in
connection with negotiations between the Company and the
Applicable Lenders to set financial covenant levels for the exit
facility that the Applicable Lenders have agreed to provide to the
Company pursuant to the terms of the Junior DIP, subject to the
satisfaction of certain conditions.
A copy of the Form 8-K is available at http://is.gd/elcWQT
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, 2013. Kodak intends to reorganize by
focusing on the commercial printing business. It expects to file
a Chapter 11 plan by the end of May.
ELEPHANT TALK: Vanguard Ownership at 5.5% 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 6,308,021 shares of common stock of
Elephant Talk Communications Corp. representing 5.49% of the
shares outstanding. A copy of the filing is available at:
http://is.gd/42h1qf
About Elephant Talk
Lutz, Fla.-based Elephant Talk Communications, Inc. (OTC BB: ETAK)
-- http://www.elephanttalk.com/-- is an international provider of
business software and services to the telecommunications and
financial services industry.
Elephant Talk reported a net loss of $25.31 million in 2011, a net
loss of $92.48 million in 2010, and a net loss of $17.29 million
in 2009. The Company reported a net loss of $10.99 million for
the six months ended June 30, 2012.
The Company's balance sheet at Sept. 30, 2012, showed
$42.56 million in total assets, $18.18 million in total
liabilities and $24.37 million in total stockholders' equity.
EPICEPT CORP: Amends Merger Pact with Immune Pharmaceuticals
------------------------------------------------------------
Immune Pharmaceuticals Ltd. and EpiCept Corporation have executed
an amendment to the Merger Agreement and Plan of Reorganization
that they signed on Nov. 7, 2012.
Under the terms of the amendment, Immune may, at any time and from
time to time prior to the effective time of the merger, purchase
new shares of EpiCept common stock directly from EpiCept at a
purchase price of $0.13 per share. Any shares of EpiCept common
stock sold to Immune in such a pre-merger investment will be
cancelled at the effective time of the merger, but the relative
post-closing ownership percentages in the combined company will be
adjusted at the closing such that, for each $100,000 invested by
Immune in EpiCept pursuant to such a pre-merger investment (up to
an aggregate of $500,000), the post-closing ownership percentage
of the pre-closing Immune stockholders in the combined company
will be increased by an additional 0.7%. The amendment results in
values for EpiCept and Immune of $14 million and $61 million,
respectively, for an assumed combined company valuation of
approximately $75 million. The parties will negotiate any further
adjustments to the relative post-closing ownership percentages in
the combined company that may apply to amounts in excess of
$500,000 that Immune invests by purchasing shares of EpiCept
common stock from EpiCept.
The merger agreement was further amended to allow Immune time to
provide its audited 2012 financial statements, which are required
by Feb. 28, 2013.
Daniel Teper, PharmD, CEO of Immune and Robert W. Cook, EpiCept's
Interim President and Chief Executive Officer, jointly commented,
"This amendment was executed primarily to provide EpiCept with
cost effective operating capital while the merger closing process
continues. At the same time, the amendment provides Immune with
time to provide its 2012 GAAP audited financial statements for
inclusion in our proxy statement. As a result of the additional
time allowed for receipt of the audited financial statements, we
currently estimate that the merger transaction will close in the
second quarter of 2013."
About EpiCept Corporation
Tarrytown, N.Y.-based EpiCept Corporation (Nasdaq and Nasdaq OMX
Stockholm Exchange: EPCT) -- http://www.epicept.com/-- is focused
on the development and commercialization of pharmaceutical
products for the treatment of cancer and pain. The Company's lead
product is Ceplene(R), approved in the European Union for the
remission maintenance and prevention of relapse in adult patients
with Acute Myeloid Leukemia (AML) in first remission. In the
United States, a pivotal trial is scheduled to commence in 2011.
The Company has two other oncology drug candidates currently in
clinical development that were discovered using in-house
technology and have been shown to act as vascular disruption
agents in a variety of solid tumors. The Company's pain portfolio
includes EpiCept(TM) NP-1, a prescription topical analgesic cream
in late-stage clinical development designed to provide effective
long-term relief of pain associated with peripheral neuropathies.
In the auditors' report accompanying the financial statements for
year ended Dec. 31, 2011, Deloitte & Touche LLP, in Parsippany,
New Jersey, noted that the Company's recurring losses from
operations and stockholders' deficit raise substantial doubt about
its ability to continue as a going concern.
Epicept reported a net loss of $15.65 million in 2011, a net loss
of $15.53 million in 2010, and a net loss of $38.81 million in
2009.
The Company's balance sheet at Sept. 30, 2012, showed $2.86
million in total assets, $16.03 million in total liabilities and a
$13.16 million in total stockholders' deficit.
EPICEPT CORP: Forsakringsaktiebolaget Has 11.4% Stake at Dec. 31
----------------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Forsakringsaktiebolaget Avanza Pension disclosed that,
as of Dec. 31, 2012, it beneficially owns 9,610,229 shares of
common stock of Epicept Corporation representing 11.4% of the
shares outstanding. A copy of the filing is available at:
http://is.gd/g3Bjgv
About EpiCept Corporation
Tarrytown, N.Y.-based EpiCept Corporation (Nasdaq and Nasdaq OMX
Stockholm Exchange: EPCT) -- http://www.epicept.com/-- is focused
on the development and commercialization of pharmaceutical
products for the treatment of cancer and pain. The Company's lead
product is Ceplene(R), approved in the European Union for the
remission maintenance and prevention of relapse in adult patients
with Acute Myeloid Leukemia (AML) in first remission. In the
United States, a pivotal trial is scheduled to commence in 2011.
The Company has two other oncology drug candidates currently in
clinical development that were discovered using in-house
technology and have been shown to act as vascular disruption
agents in a variety of solid tumors. The Company's pain portfolio
includes EpiCept(TM) NP-1, a prescription topical analgesic cream
in late-stage clinical development designed to provide effective
long-term relief of pain associated with peripheral neuropathies.
In the auditors' report accompanying the financial statements for
year ended Dec. 31, 2011, Deloitte & Touche LLP, in Parsippany,
New Jersey, noted that the Company's recurring losses from
operations and stockholders' deficit raise substantial doubt about
its ability to continue as a going concern.
Epicept reported a net loss of $15.65 million in 2011, a net loss
of $15.53 million in 2010, and a net loss of $38.81 million in
2009.
The Company's balance sheet at Sept. 30, 2012, showed $2.86
million in total assets, $16.03 million in total liabilities and a
$13.16 million in total stockholders' deficit.
EVERGREEN SOLAR: Suspends Filing of Reports with SEC
----------------------------------------------------
Evergreen Solar, Inc., filed a Form 15 with the U.S. Securities
and Exchange Commission relating to the suspension of its duty to
file reports under Section 13 and 15(d) of the Securities Act of
1934 with respect to its common stock. There was no holder of the
common shares as of Feb. 8, 2013.
About Evergreen Solar
Evergreen Solar, Inc. -- http://www.evergreensolar.com/--
developed, manufactured and marketed String Ribbon solar power
products using its proprietary, low-cost silicon wafer technology.
The Marlboro, Mass.-based Company filed for Chapter 11 bankruptcy
(Bankr. D. Del. Case No. 11-12590) on Aug. 15, 2011, before Judge
Mary F. Walrath. The Company's balance sheet at April 2, 2011,
showed $373,972,000 in assets, $455,506,000 in total liabilities,
and a stockholders' deficit of $81,534,000.
Ronald J. Silverman, Esq., and Scott K. Seamon, Esq., at Bingham
McCutchen LLP, serve as general bankruptcy counsel to the Debtor.
Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski
Stang Ziehl & Jones LLP, serve as co-counsel. Hilco Industrial
LLC serves as exclusive marketing and sales agent. Klehr Harrison
Harvey Branzburg serves as special conflicts counsel. Zolfo
Cooper LLC is the financial advisor. UBS Securities, LLC, serves
as investment banker. Epiq Bankruptcy Solutions has been tapped
as claims agent.
In conjunction with the Chapter 11 filing, the Company entered
into a restructuring support agreement with certain holders of
more than 70% of the outstanding principal amount of the Company's
13% convertible senior secured notes. As part of the bankruptcy
process the Company will undertake a marketing process and will
permit all parties to bid on its assets, as a whole or in groups
pursuant to 11 U.S.C. Sec. 363. An entity formed by the
supporting noteholders, ES Purchaser, LLC, entered into an asset
purchase agreement with the Company to serve as a 'stalking-horse"
and provide a "credit-bid" pursuant to the Bankruptcy Code for
assets being sold.
The supporting noteholders are represented by Michael S. Stainer,
Esq., and Natalie E. Levine, Esq., at Akin Gump Strauss Hauer &
Feld LLP, in New York.
An official committee of unsecured creditors has retained Pepper
Hamilton and Kramer Levin Naftalis & Frankel as counsel. The
Committee tapped Garden City Group as communications services
agent.
Evergreen Solar is at least the fourth solar company to seek court
protection from creditors since August 2011. Other solar firms
are start-up Spectrawatt Inc., which also filed in August,
Solyndra Inc., which filed early in September, and Stirling Energy
Systems Inc., which filed for Chapter 7 bankruptcy late in
September.
Evergreen sold the assets piecemeal in three auctions. Max Era
Properties Ltd. from Hong Kong paid $6 million cash and
$3.2 million in stock of China Private Equity Investment Holdings
Ltd. for the company name, intellectual property, and wafermaking
assets. Kimball Holdings LLC paid $3.8 million for solar panel
inventory while the secured lenders exchanged $21.5 million of
their $165 million claim for a $171 million claim against Lehman
Brothers Holdings Inc. Max Era Properties Limited and Sovello AG
bought equipment and machinery located at the Debtor's Devens,
Massachusetts facility for $8.9 million.
The U.S. Bankruptcy Court confirmed Evergreen Solar's Plan of
Liquidation. The Plan became effective on July 16, 2012.
EXTENDED STAY: US Bank's $100M Suit Over Loan Revived
-----------------------------------------------------
Kaitlin Ugolik of BankruptcyLaw360 reported that a New York
appeals court on Thursday restored U.S. Bank NA's claims against
Lightstone Holdings LLC over a $100 million guaranty the real
estate company allegedly owes in connection with a $4.1 billion
loan contract for its purchase of formerly bankrupt Extended Stay
Hotels LLC.
The report said the lower court had ruled in September 2011 that
the junior lenders, not U.S. Bank, were entitled to the guaranty
based on the language of the intercreditor agreement, but the
appeals court found that the language was not clear.
About Extended Stay
Extended Stay is the largest owner and operator of mid-price
extended stay hotels in the United States, holding one of the most
geographically diverse portfolios in the lodging sector with
properties located across 44 states (including 11 hotels located
in New York) and two provinces in Canada. As a result of
acquisitions and mergers, Extended Stay's portfolio has expanded
to encompass over 680 properties, consisting of hotels directly
owned or leased by Extended Stay or one of its affiliates.
Extended Stay currently operates five hotel brands: (i) Crossland
Economy Studios, (ii) Extended Stay America, (iii) Extended Stay
Deluxe, (iv) Homestead Studio Suites, and (v) StudioPLUS Deluxe
Studios.
Extended Stay Inc. and its affiliates filed for Chapter 11 on
June 15, 2009 (Bankr. S.D.N.Y. Case No. 09-13764). Judge James M.
Peck handles the case. Marcia L. Goldstein, Esq., at Weil Gotshal
& Manges LLP, in New York, represents the Debtors. Lazard Freres
& Co. LLC is the Debtors' financial advisors. Kurtzman Carson
Consultants LLC is the claims agent. The Official Committee of
Unsecured Creditors tapped Gilbert Backenroth, Esq., Mark T.
Power, Esq., and Mark S. Indelicato, Esq., at Hahn & Hessen LLP,
in New York, as counsel. Extended Stay had assets of
$7.1 billion and debts of $7.6 billion as of the end of 2008.
Extended Stay Inc. in October successfully emerged from Chapter 11
protection. An investment group including Centerbridge Partners,
L.P., Paulson & Co. Inc. and Blackstone Real Estate Partners VI,
L.P. has purchased 100 percent of the Company for $3.925 billion
in connection with the Plan of Reorganization confirmed by the
Bankruptcy Court in July 2010.
FIRST CONNECTICUT: Case Summary & 19 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: First Connecticut Holding Group, LLC IV
345 Tenth Street
Jersey City, NJ 07302
Bankruptcy Case No.: 13-13090
Chapter 11 Petition Date: February 15, 2013
Court: United States Bankruptcy Court
District of New Jersey (Newark)
Judge: Donald H. Steckroth
Debtor's Counsel: Daniel Stolz, Esq.
WASSERMAN, JURISTA & STOLZ
225 Millburn Ave., Suite 207
P.O. Box 1029
Millburn, NJ 07041-1712
Tel: (973) 467-2700
E-mail: dstolz@wjslaw.com
Scheduled Assets: $12,287,218
Scheduled Liabilities: $68,655,579
The petition was signed by Lorraine Mocco, managing member.
Pending bankruptcy cases of affiliates:
Petition
Debtor Case No. Date
------ -------- ----
Liberty Harbor Holdings, LLC 12-19958 04/17/12
Liberty Harbor North II Urban Renewal 12-19961 04/17/12
Liberty Harbor North, Inc. 12-19964 04/17/12
First Connecticut Holding's List of 19 Largest Unsecured
Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
SWJ Holdings $35,959,833
c/o Ron Israel, Esq.
Wolf & Sampson
One Boland Drive
West Orange, NJ 07052
Wells Fargo, N.A. $9,000,000
c/o Chicago Title-Paul
Schafhurser Esq.
Herrick Feinstein
One Gateway Center
Newark, NJ 07102
First Mutual Bank $9,000,000
c/o Chicago Title-Paul
Schafhurser Esq.
Herrick Feinstein
One Gateway Center
Newark, NJ 07102
U.S. Bank National Assoc. $9,000,000
c/o Chicago Title-Paul
Schafhurser Esq.
Herrick Feinstein
One Gateway Center
Newark, NJ 07102
Scannavino & Son $165,250
Plumbing & Heating
New Jersey Telecomm LLC $125,450
Jomtti Iron Works, LLC $93,600
C&J Electrical $71,300
Contractor Inc.
IPFS Corporation $57,586
Kesylia Mason $45,100
Contractor LLC
Firefighter $18,085
Sprinkler Inc.
Horizon Blue Cross $11,145
Blue Shield
The Hartford $5,307
PSE&G $4,335
Cohen Jason & Foster Unknown
Cynthia Licata Unknown
East Coast Investments Unknown
Elliot Buchman Unknown
James Licata Unknown
FIRST HORIZON: Fitch Affirms 'B' Preferred Stock Rating
-------------------------------------------------------
Fitch Ratings has affirmed the long-term and short-term Issuer
Default Ratings (IDRs) of First Horizon National Corporation and
its subsidiaries at 'BBB-/F3'. The Rating Outlook remains Stable.
Fitch reviewed First Horizon National Corporation as part of a
peer review that included 16 mid-tier regional banks. The banks in
the peer review include: Associated Banc-Corp., Bank of Hawaii
Corporation, BOK Financial Corporation, Cathay General Bancorp,
Cullen/Frost Bankers, Inc., East West Bancorp, Inc., First Horizon
National Corporation, First National of Nebraska, Inc., First
Niagara Financial Group, Inc., Fulton Financial Corporation,
Hancock Holding Company, People's United Financial, Inc, Synovus
Financial Corp., TCF Financial Corporation, UMB Financial Corp.,
Webster Financial Corporation. Refer to the release titled 'Fitch
Takes Rating Actions on Its Mid-Tier Regional Bank Group Following
Industry Peer Review' for a discussion of rating actions taken on
the entire mid-tier regional bank group.
The mid-tier regional group is comprised of banks with total
assets ranging from $10 billion to $36 billion. IDRs for this
group is relatively dispersed with a low of 'BB-' and a high of
'A+'. Mid-tier regional banks typically lag their large regional
bank counterparts by asset size, geographic footprint and
product/revenue diversification. As such mid-tier regional banks
are more susceptible to idiosyncratic risks such as geographic or
single name concentrations.
Fitch's mid-tier regional bank group has fairly homogenous
business strategies. The institutions are mostly reliant on spread
income from loans and investments. With limited opportunity to
improve fee-based income in the near term, Fitch expects that mid-
tier banks will continue to face greater earnings headwinds in
2013 than larger institutions with greater revenue
diversification.
Share repurchases is common theme amongst the mid-tier banks. As
mid-tier banks face earnings headwinds, institutions have begun
repurchasing common shares to improve shareholder returns. Fitch
anticipates continued repurchase activity in 2013 as the return on
equity lags historical norms for the group.
In addition to share repurchases, Fitch has observed that some
mid-tier banks have looked to their investment portfolio to
improve returns. Most notably, CLOs and CMBS have become more
popular amongst mid-tier banks. Although such securities are
beneficial to yields and returns, Fitch notes that such purchases
can be a negative ratings driver if the risks are not properly
measured, monitored and controlled.
Asset quality continues to improve throughout the banking sector.
Both nonperforming assets (NPAs) and net charge-offs (NCOs) are
down significantly year over year. Fitch anticipates further asset
quality improvement as nonperforming loan (NPL) inflow slows.
Reserve levels have also declined as asset quality improves, which
has been beneficial to earnings in 2012. Fitch expects further
reserve releases in 2013 but at a slower pace.
Rating Action and Rationale
First Horizon National Corporation's (FHN) ratings were affirmed
at 'BBB-'. The Rating Outlook remains Stable. Fitch downgraded
FHN's ratings to their current levels in December 2012 reflecting
Fitch's view of FHN's ongoing future performance amidst a
challenging economic environment. Fitch believes that going
forward earnings will be challenged by the expected prolonged
period of low interest rates, along with high credit costs related
to the nonstrategic portfolio. Fitch notes that FHN has made
considerable progress in shifting its strategy over the past few
years, but the progress in terms of returning to stronger levels
of profitability has been delayed, due in part to the weak
economic recovery.
RATING DRIVERS AND SENSITIVITIES - IDRs and VRs
Further, whereas FHN's capital ratios were formerly strong in
relation to peer capital ratios have fallen more in line with
similarly rated banks. Fitch believes that current capital levels
firmly plant FHN at its present rating. Moreover, capital can
sustain up to a 100 basis point hit related to a potential Private
Label Securitization (PLS) charge and still be sufficient to
warrant a 'BBB-' rating, in Fitch's view. Finally, it is Fitch's
expectation that the primary subsidiary, First Tennessee Bank, NA
(FTBNA), will continue to receive regulatory approval to upstream
dividends to the parent in order to cover operating expenses,
service holding company debt and meet the subordinated debt
maturity in May 2013 given the subsidiaries high level of Tier 1
Common capital. The inability of FTBNA to receive regulatory
approval for upstreaming dividends would likely result in negative
rating action.
RATING DRIVERS AND SENSITIVITIES - Support Ratings and Support
Floor Ratings:
All of the mid-tier regional banks in the peer group have Support
Ratings of '5' and Support Floor Ratings of 'NF'. In Fitch's view,
the mid-tier banks are not considered systemically important and
therefore, Fitch believes the probability of support is unlikely.
IDRs and VRs do not incorporate any government support for any of
the banks in the mid-tier regional bank peer group.
RATING DRIVERS AND SENSITIVITIES - Subordinated Debt and Other
Hybrid Securities:
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
RATING DRIVERS AND SENSITIVITIES - Holding Company:
All of the entities reviewed in the mid-tier regional bank group
have a bank holding company structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent holding
company supporting equalized ratings between bank subsidiaries and
bank holding companies. IDRs and VRs are equalized with those of
its operating companies and banks reflecting its role as the bank
holding company, which is mandated in the U.S. to act as a source
of strength for its bank subsidiaries.
RATING DRIVERS AND SENSITIVITIES - Subsidiary and Affiliated
Company Rating:
All of the entities reviewed in the mid-tier regional bank group
factor in a high probability of support from parent institutions
to its subsidiaries. This reflects the fact that performing parent
banks have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has affirmed these ratings:
First Horizon National Corporation
-- Long-term IDR at 'BBB-'; Outlook Stable;
-- Viability at 'bbb-'';
-- Short-term IDR at 'F3';
-- Subordinated debt at 'BB+';
-- Senior at 'BBB-';
-- Preferred stock at 'B';
-- Support at '5';
-- Support Floor at 'NF'.
First Tennessee Bank, N.A.
-- Long-term IDR at 'BBB-'; Outlook Stable;
-- Viability at 'bbb-';
-- Short-term IDR at 'F3';
-- Long-term deposits at 'BBB';
-- Short-term deposits at 'F3';
-- Short-term debt at 'F3';
-- Subordinated debt at 'BB+';
-- Preferred stock at 'B';
-- Support at '5';
-- Support Floor at 'NF'.
First Tennessee Capital II
-- Preferred stock at 'B+'.
FIRST NATIONAL: Fitch Raises Subordinated Debt Rating From 'BB+'
----------------------------------------------------------------
Fitch Ratings has upgraded the long-term Issuer Default Ratings
(IDRs) of First National of Nebraska, Inc. to 'BBB-' from 'BB+'.
The Rating Outlook has been revised to Stable from Positive.
Fitch reviewed FNNI as part of a peer review that included 16 mid-
tier regional banks. The bank's included in the peer review
include: Associated Banc-Corp., Bank of Hawaii Corporation, BOK
Financial Corporation, Cathay General Bancorp, Cullen/Frost
Bankers, Inc., East West Bancorp, Inc., First Horizon National
Corporation, First National of Nebraska, Inc., First Niagara
Financial Group, Inc., Fulton Financial Corporation, Hancock
Holding Company, People's United Financial, Inc, Synovus Financial
Corp., TCF Financial Corporation, UMB Financial Corp., Webster
Financial Corporation. Refer to the release titled 'Fitch Takes
Rating Actions on Its Mid-Tier Regional Bank Group Following
Industry Peer Review' for a discussion of rating actions taken on
the entire mid-tier regional bank group.
The mid-tier regional group is comprised of banks with total
assets ranging from $10 billion to $36 billion. IDRs for this
group is relatively dispersed with a low of 'BB-' and a high of
'A+'. Mid-tier regional banks typically lag their large regional
bank counterparts by asset size, geographic footprint and
product/revenue diversification. As such mid-tier regional banks
are more susceptible to idiosyncratic risks such as geographic or
single name concentrations.
Fitch's mid-tier regional bank group has fairly homogenous
business strategies. The institutions are mostly reliant on spread
income from loans and investments. With limited opportunity to
improve fee-based income in the near term, Fitch expects that mid-
tier banks will continue to face greater earnings headwinds in
2013 than larger institutions with greater revenue
diversification.
Share repurchases is common theme amongst the mid-tier banks. As
mid-tier banks face earnings headwinds, institutions have begun
repurchasing common shares to improve shareholder returns. Fitch
anticipates continued repurchase activity in 2013 as the return on
equity lags historical norms for the group.
In addition to share repurchases, Fitch has observed that some
mid-tier banks have looked to their investment portfolio to
improve returns. Most notably, CLOs and CMBS have become more
popular amongst mid-tier banks. Although such securities are
beneficial to yields and returns, Fitch notes that such purchases
can be a negative ratings driver if the risks are not properly
measured, monitored and controlled.
Asset quality continues to improve throughout the banking sector.
Both nonperforming assets (NPAs) and net charge-offs (NCOs) are
down significantly year over year. Fitch anticipates further asset
quality improvement as nonperforming loan (NPL) inflow slows.
Reserve levels have also declined as asset quality improves, which
has been beneficial to earnings in 2012. Fitch expects further
reserve releases in 2013 but at a slower pace.
Rating Action and Rationale
The action reflects the company's more stable operating
performance, improvements in asset quality ratios, as well as
stronger regulatory capital ratios.
FNNI's earnings profile has improved, as it has recorded fewer
one-time gains and more recent earnings metrics are reflective of
core operations. FNNI's earnings and profitability have improved
as the company has pursued strategic partnerships in its credit
card portfolio, which has allowed it to create alliances with the
largest national and local retailers. The company's PPNR, as a
measure of core performance, has improved 152 basis points (bps)
over the last 12 months.
FNNI's loan portfolio has experienced positive credit trends as
both past due loans and non-accruals loans were down significantly
year-over-year. Absolute levels of NPLs have decreased 60% since
year-end 2009 (YE09), while classified and special mention assets
have also experienced a similar trend. These trends have been
noted throughout FNNI's loan book, including the credit card
portfolio which accounts for roughly 40% of loans. Although NPAs
remain elevated, relative to other mid-tier peers, Fitch expects
asset quality to continue improving, albeit at a slower pace, in
the near-to-medium term. Average 5Q NPAs were 4.08% compared to
the mid-tier average of 3.48%.
Historically, Fitch has considered FNNI's capital management to be
aggressive; however, the company has since improved its capital
ratios which have been boosted through retained earnings, the sale
of FNNI's merchant processing business, and more optimal levels of
risk-weighted assets. FNNI's risk based Tier 1 ratio was in excess
of 13% at fourth quarter of 2012 (4Q'12) compared to 10.50% in
fiscal year 2010 (FY10). Although capital levels are closely
aligned to the mid-tier peer averages, Fitch will closely monitor
any capital erosion resulting from distribution to shareholders.
RATING DRIVERS AND SENSITIVITIES - VRs and IDRs:
With today's action, further upward movement of the company's
ratings are considered limited. Significant improved in asset
quality, and earnings would result in further movement of the
rating, however, Fitch does not anticipate this to be the case in
the medium term.
Alternatively, factors that could negatively weigh on FNNI's
ratings include stagnant operating performance, a reversal of the
currently positive credit trends, as well as any significant
shareholder capital distributions. The latter could put pressure
on FNNI's ratings, if capital build significantly slows or even
cause the company's capital ratios to decline on an absolute
basis.
RATING DRIVERS AND SENSITIVITIES - Support Ratings and Support
Floor Ratings:
All of the mid-tier regional banks in the peer group have Support
Ratings of '5' and Support Floor Ratings of 'NF'. In Fitch's view,
the mid-tier banks are not considered systemically important and
therefore, Fitch believes the probability of support is unlikely.
IDRs and VRs do not incorporate any government support for any of
the banks in the mid-tier regional bank peer group.
RATING DRIVERS AND SENSITIVITIES - Subordinated Debt and Other
Hybrid Securities:
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
RATING DRIVERS AND SENSITIVITIES - Holding Company:
All of the entities reviewed in the mid-tier regional bank group
have a bank holding company structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent holding
company supporting equalized ratings between bank subsidiaries and
bank holding companies. IDRs and VRs are equalized with those of
its operating companies and banks reflecting its role as the bank
holding company, which is mandated in the U.S. to act as a source
of strength for its bank subsidiaries.
RATING DRIVERS AND SENSITIVITIES - Subsidiary and Affiliated
Company Rating:
All of the entities reviewed in the mid-tier regional bank group
factor in a high probability of support from parent institutions
to its subsidiaries. This reflects the fact that performing parent
banks have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has taken these rating actions:
First National of Nebraska, Inc.
-- Long-term IDR upgraded to 'BBB-' from 'BB+'; Outlook Stable;
-- Short-term IDR upgraded to 'F3' from 'B';
-- Viability rating upgraded to 'bbb-' from 'bb+';
-- Support rating affirmed at '5';
-- Support rating floor affirmed at 'NF'.
First National Bank of Omaha
-- Long-term IDR upgraded to 'BBB-' from 'BB+'; Outlook Stable;
-- Short-term IDR upgraded to 'F3' from 'B';
-- Viability rating upgraded to 'bbb-' from 'bb+';
-- Support rating affirmed at '5';
-- Support rating floor affirmed at 'NF';
-- Long-term deposits upgraded to 'BBB' from 'BBB-';
-- Short-term deposits upgraded to 'F2' from 'F3';
-- Subordinated debt upgraded to 'BB+' from 'BB'.
FIRST NIAGARA: Fitch Affirms 'B' Preferred Stock Rating
-------------------------------------------------------
Fitch Ratings has affirmed the long-term and short-term Issuer
Default Ratings (IDRs) of First Niagara Financial Group, Inc. and
its subsidiaries at 'BBB-/F3'. The Rating Outlook remains
Negative.
Fitch reviewed First Niagara Financial Group, Inc. as part of a
peer review that included 16 mid-tier regional banks. The banks in
the peer review include: Associated Banc-Corp., Bank of Hawaii
Corporation, BOK Financial Corporation, Cathay General Bancorp,
Cullen/Frost Bankers, Inc., East West Bancorp, Inc., First Horizon
National Corporation, First National of Nebraska, Inc., First
Niagara Financial Group, Inc., Fulton Financial Corporation,
Hancock Holding Company, People's United Financial, Inc., Synovus
Financial Corp., TCF Financial Corporation, UMB Financial Corp.,
Webster Financial Corporation. Refer to the release titled 'Fitch
Takes Rating Actions on Its Mid-Tier Regional Bank Group Following
Industry Peer Review' for a discussion of rating actions taken on
the entire mid-tier regional groups.
The mid-tier regional group is comprised of banks with total
assets ranging from $10 billion to $36 billion. IDRs for this
group is relatively dispersed with a low of 'BB-' and a high of
'A+'. Mid-tier regional banks typically lag from their large
regional bank counterparts by asset size, geographic footprint and
product/revenue diversification. As such mid-tier regional banks
are more susceptible to idiosyncratic risks such as geographic or
single name concentrations.
Fitch's mid-tier regional bank group has fairly homogenous
business strategies. The institutions are mostly reliant on spread
income from loans and investments. With limited opportunity to
improve fee-based income in the near term, Fitch expects that mid-
tier banks will continue to face greater earnings headwinds in
2013 than larger institutions with greater revenue
diversification.
Share repurchases is common theme amongst the mid-tier banks. As
mid-tier banks face earnings headwinds, institutions have begun
repurchasing common shares to improve shareholder returns. Fitch
anticipates continued repurchase activity in 2013 as the median
return on equity lags historical norms for the group.
In addition to share repurchases, Fitch has observed that some
mid-tier banks have looked to their investment portfolio to
improve returns. Most notably, CLOs and CMBS have become more
popular amongst mid-tier banks. Although such securities are
beneficial to yields and returns, Fitch notes that such purchases
can be a negative ratings driver if the risks are not properly
measured, monitored and controlled.
Asset quality continues to improve throughout the banking sector.
Both nonperforming assets (NPAs) and net charge-offs (NCOs) are
down significantly year over year. Fitch anticipates further asset
quality improvement as nonperforming loan (NPL) inflow slows.
Reserve levels have also declined as asset quality improves, which
has been beneficial to earnings in 2013. Fitch expects further
reserve releases in 2013 but at a slower pace.
Rating Action and Rationale
First Niagara Financial Group, Inc.'s (FNFG) ratings were affirmed
at 'BBB-'. The Rating Outlook remains Negative. The affirmation
and Outlook reflects Fitch's view that FNFG's current capital
position is lean providing limited flexibility should challenges
arise given significant loan growth through acquisitions,
heightened integration risks and the modest increase in risk
profile of the company. FNFG's capital position is much lower than
similarly-rated peers and most of Fitch's U.S. rated financial
institutions from a tangible common equity (TCE) position and a
regulatory capital standpoint. FNFG's Tier 1 Common Ratio, TCE and
Tier 1 RBC totaled 7.45%, 5.77%, and 9.29% for the fourth quarter
of 2012 (4Q')12, respectively.
To-date, asset quality is solid. Despite the credit downturn,
FNFG's NCOs and NPAs (which includes troubled debt restructuring
and acquired loans) stood at 0.18% and 2.03% for 4Q'12. However,
Fitch notes that the company's risk profile has modestly increased
given riskier investment securities such as CLO holdings and the
loan portfolio mix has shifted to more commercially-oriented
loans. The loan portfolio includes exposure to highly leveraged
transactions, asset-based lending, credit cards, indirect auto,
and syndications. Given economic uncertainties, credit losses may
increase from historical standards. Further, Fitch believes the
company's capital build may be prolonged versus its initial
expectations. Although FNFG's core operating revenues continue to
be reasonable, in Fitch's view, forecasted earnings may also be
complicated by the difficult economic and low interest rate
environment.
RATING DRIVERS AND SENSITIVITIES - IDRs and VRs
Positive rating action or a return to a Stable Outlook may ensue
should the company improve its capital position to peer averages,
absent any negative asset quality trends and decline in
profitability measures. Although considered unlikely, a downgrade
would be possible should FNFG announce an acquisition in the near
term, manage its capital more aggressively and/or experience a
change in credit quality trends materially worse than Fitch's
expectations.
RATING DRIVERS AND SENSITIVITIES - Support Ratings and Support
Floor Ratings:
All of the mid-tier regional banks in the peer group have Support
Ratings of '5' and Support Floor Ratings of 'NF'. In Fitch's view,
the mid-tier banks are not considered systemically important and
therefore, Fitch believes the probability of support is unlikely.
IDRs and VRs do not incorporate any government support for any of
the banks in the mid-tier regional bank peer group.
RATING DRIVERS AND SENSITIVITIES - Subordinated Debt and Other
Hybrid Securities:
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
RATING DRIVERS AND SENSITIVITIES - Holding Company:
All of the entities reviewed in the mid-tier regional bank group
have a bank holding company structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent holding
company supporting equalized ratings between bank subsidiaries and
bank holding companies. IDRs and VRs are equalized with those of
its operating companies and banks reflecting its role as the bank
holding company, which is mandated in the U.S. to act as a source
of strength for its bank subsidiaries.
RATING DRIVERS AND SENSITIVITIES - Subsidiary and Affiliated
Company Rating:
All of the entities reviewed in the mid-tier regional bank group
factor in a high probability of support from parent institutions
to its subsidiaries. This reflects the fact that performing parent
banks have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has affirmed these ratings:
First Niagara Financial Group, Inc
-- Long-term IDR at 'BBB-'; Negative Outlook;
-- Short-term IDR at 'F3';
-- Viability at 'bbb-'.
-- Senior unsecured at 'BBB-';
-- Preferred stock at 'B';
-- Subordinated debt at 'BB+';
-- Support at '5';
-- Support Floor at 'NF'.
First Niagara Bank
-- Long-term deposits at 'BBB'; Negative Outlook;
-- Long-term IDR at 'BBB-';
-- Viability at 'bbb-'
-- Short-term deposits at 'F3';
-- Short-term IDR at 'F3';
-- Support at '5';
-- Support Floor at 'NF'.
First Niagara Commercial Bank
-- Long-term deposits at 'BBB'; Negative Outlook;
-- Long-term IDR at 'BBB-';
-- Viability at 'bbb-';
-- Short-term deposits at 'F3';
-- Short-term IDR at 'F3'
-- Support at '5';
-- Support Floor at 'NF'.
FIRSTMERIT CORP: DBRS Assigns 'BB(high)' Preferred Stock Rating
---------------------------------------------------------------
DBRS, Inc. has assigned a BBB (high) rating with a Negative trend
to FirstMerit Corporation's (FirstMerit or the Company) $250
million issuance of subordinated debt and a BB (high) rating with
a Negative trend to its $100 million issuance of non-cumulative
perpetual preferred stock. The subordinated debt is positioned
one notch below FirstMerit's Issuer & Senior Debt rating of A
(low), which carries a Negative trend. Meanwhile, the preferred
stock is positioned four notches below the Company's Issuer &
Senior Debt rating. This notching is consistent with DBRS's
methodologies for subordinated debt and preferred shares.
FLEXERA SOFTWARE: Moody's Lifts CFR to 'B2', Outlook Stable
-----------------------------------------------------------
Moody's Investors Service upgraded Flexera Software LLC's
corporate family rating to B2, from B3, and assigned a B2 rating
to the company's proposed first lien credit facilities comprising
a $25 million revolving credit facility and a $330 million term
loan. The outlook for the ratings is stable.
The upgrade reflects Flexera's good revenue growth prospects and
deleveraging of the balance sheet since the leveraged buyout (LBO)
of the company by Teachers' Private Capital in September 2011.
Flexera plans to use the proceeds from the new term loan to
refinance existing first- and second-lien term loans. The ratings
for existing credit facilities will be withdrawn upon full
repayment and termination of the commitments.
Ratings Rationale
The upgrade of Flexera's corporate family rating considers the
reduction in the company's total debt-to-EBITDA leverage from
approximately 6.0x at the time of the LBO, to about 5.0x pro forma
for the proposed refinancing (excluding a 75% debt attribution to
Flexera's preferred stock, which raises leverage by about 1.7x).
Moody's expects Flexera's operating cash flow to continue to
increase driven by revenue growth in the mid-single digit
percentages over the next 12 to 24 months. Flexera's improved
financial risk profile partially mitigates its high business risks
resulting from small operating scale.
The B2 corporate family rating reflects Flexera's modest operating
scale resulting from its limited product portfolio that is focused
on the niche applications usage management (AUM) segment of the
enterprise software market. Flexera primarily competes with the
AUM solutions that are internally developed by software publishers
and consumers. The B2 rating considers Flexera's challenges in
growing the business by replacing the "home grown" solutions of
its customers and prospects.
The B2 rating incorporates Moody's expectations that Flexera
should manage its debt leverage in the 4.0x to 5.0x range
(excluding debt attribution to the preferred stock), incorporating
potential for small, tuck-in acquisitions, and that the company
should produce free cash flow in excess of 10% of its total debt
over the next 12 to 24 months. The rating is supported by
Flexera's large installed base of customers and well regarded
products in the AUM segment. Flexera's AUM solutions are
reportedly embedded in over 20,000 third-party software
applications. The company's credit profile benefits from high
levels of recurring revenue comprising software maintenance and
subscription revenue with historically high renewal rates.
The stable ratings outlook is based on Moody's expectations that
Flexera will maintain good liquidity and that its revenue and
EBITDA should grow in the mid-single digit percentages in 2013.
What Could Change the Rating - Up
Given Flexera's modest scale and historically high financial risk
tolerance, a ratings upgrade is not anticipated in the
intermediate term. However, Moody's could raise Flexera's ratings
if the company demonstrates solid growth in earnings and pursues
conservative financial policies. Specifically, Flexera's ratings
could be upgraded if Moody's believes that the company could
sustain total debt-to-EBITDA leverage of less than 3.5x and free
cash flow to debt in excess of 15% (both metrics excluding a 75%
debt attribution to Flexera's preferred stock).
What Could Change the Rating - Down
Moody's could downgrade Flexera's ratings if revenue growth
decelerates materially and weak operating performance causes debt
leverage to increase toward 6.0x, and free cash flow remains below
5% of total debt for an extended period of time (both metrics
excluding debt adjustments related to the preferred stock). The
rating could also be downgraded if Flexera's liquidity weakens or
credit profile deteriorates as a result of large debt-financed
acquisitions or shareholder distributions.
Moody's has taken the following ratings actions:
Issuer: Flexera Software LLC
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Affirmed B3-PD
Proposed $25 Million Senior Secured Revolving Credit Facility due
2018 -- Assigned, B2 (LGD3 - 35%)
Proposed $330 Million Senior Secured First Lien Term Loan due 2019
-- Assigned, B2 (LGD3 - 35%)
Outlook: Stable
The following ratings will be withdrawn:
$25 Million Senior Secured Revolving Credit Facility due 2016 --B2
(LGD3 - 34%)
$230 Million Senior Secured First Lien Term Loan due 2017 --B2
(LGD3 - 34%)
$100 Million Senior Secured Second Lien Term Loan due 2018 -- Caa2
(LGD5 - 87%)
The principal methodology used in rating Flexera Software LLC was
the Global Software Industry Methodology published in October
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.
Headquartered in Schaumburg, IL, Flexera Software LLC provides
applications usage management software products and services to
software vendors and enterprise customers.
FLEXERA SOFTWARE: S&P Raises CCR to 'B+'; Outlook Stable
--------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Schaumburg, Ill.-based Flexera Software LLC to 'B+' from
'B'. The outlook is stable.
At the same time, S&P assigned a 'B+' issue-level rating with a
'3' recovery rating to the company's proposed $330 first lien term
loan due 2019 and $25 million revolver due 2018. The '3' recovery
rating indicates S&P's expectation for meaningful (50% to 70%)
recovery in the event of payment default.
In addition, S&P raised the issue-level rating on the company's
existing $230 million first lien term loan due 2017 and
$25 million revolving credit facility due 2016 to 'B+' from 'B'
reflecting the upgrade of the corporate credit rating. The '3'
recovery rating indicates S&P's expectation for meaningful (50% to
70%) recovery in the event of payment default. Finally, S&P
raised the issue-level rating on the company's existing
$100 million second lien term loan due 2018 to 'B-' from 'CCC+'.
The '6' recovery rating indicates S&P's expectation for negligible
recovery in the event of payment default.
The company intends to use the proceeds of the new debt to
refinance its existing first and second lien credit facilities.
Upon the close of the transaction, S&P will withdraw its ratings
on its existing credit facilities.
"The ratings on Flexera Software reflect its "aggressive"
financial risk profile (revised from "highly leveraged") with
adjusted leverage in the high-4x area, and a "weak" business risk
profile, reflecting its narrow product focus and modest operating
scale," said Standard & Poor's credit analyst Christian Frank.
"Nevertheless, S&P expects that the company's good position in its
niche markets and near term growth prospects will result in modest
deleveraging and good free cash flow over the next year," added
Mr. Frank.
Flexera provides application usage management software in three
areas: entitlement and compliance management, software license
optimization, and software installation. These products allow
software publishers and device manufacturers to deploy and enforce
usage entitlements and enterprises to optimize software license
usage, as well as to configure and install software on various
computing devices. Proliferation of idiosyncratic software
licensing arrangements and increasing use of virtualization and
cloud computing are positive industry trends supporting the
company's growth.
FRASURE CREEK MINING: Sent to Chapter 11 by Creditors
-----------------------------------------------------
Frasure Creek Mining, LLC, is facing an involuntary Chapter 11
petition (Bankr. E.D. Ky. Case No. 13-50335) filed by alleged
creditors Austin Powder Company, Whayne Supply Company and Cecil
I. Walker Machinery Co., Inc.
Austin Powder, owned by Davis Mining and Manufacturing, is owed
$11.9 million for the sale of goods. Whayne Supply and Cecil I.
Walker, both 100% owned by Boyd Company LLC, are owed $8.2 million
for unpaid services and parts.
FRASURE CREEK: Involuntary Chapter 11 Case Summary
--------------------------------------------------
Alleged Debtor: Frasure Creek Mining, LLC
4978 Teays Valley Road
Scott Depot, WV 25560
Case Number: 13-50335
Involuntary Chapter 11 Petition Date: February 14, 2013
Court: Eastern District of Kentucky (Lexington)
Petitioners' Counsel: Ellen Arvin Kennedy, Esq.
DINSMORE & SHOHL
250 West Main Street, Ste 1400
Lexington, KY 40507
Tel: (859) 425-1020
E-mail: dsbankruptcy@dinslaw.com
- and -
Suzanne Jett Trowbridge, Esq.
GOODWIN & GOODWIN, LLP
300 Summers St #1500
P.O. Box 2107
Charleston, WV 25328
Tel: (304) 346-7000
E-mail: sjt@goodwingoodwin.com
Alleged creditors who signed the involuntary Chapter 11 petition:
Petitioner Nature of Claim Claim Amount
---------- --------------- ------------
Austin Powder Company Sale of Goods $11,892,525
25800 Science Park Drive
Cleveland, OH 44122
Whayne Supply Company Sale of Services $5,296,101
1400 Cecil Avenue and Parts
Louisville, KY 40211
Cecil I. Walker Sale of Services $2,934,396
Machinery Co. and Parts
P.O. Box 2427
Charleston, WV 25329
FULTON FINANCIAL: Fitch Cuts Preferred Stock Rating to 'BB-'
------------------------------------------------------------
Fitch Ratings has downgraded the long-term and short-term Issuer
Default Ratings (IDRs) of Fulton Financial Corporation and its
subsidiaries to 'BBB+/F2' from 'A-/F1'. The Rating Outlook is
Stable.
Fitch reviewed Fulton Financial Corporation as part of a peer
review that included 16 mid-tier regional banks. The banks in the
peer review include: Associated Banc-Corp., Bank of Hawaii
Corporation, BOK Financial Corporation, Cathay General Bancorp,
Cullen/Frost Bankers, Inc., East West Bancorp, Inc., First Horizon
National Corporation, First National of Nebraska, Inc., First
Niagara Financial Group, Inc., Fulton Financial Corporation,
Hancock Holding Company, People's United Financial, Inc., Synovus
Financial Corp., TCF Financial Corporation, UMB Financial Corp.,
Webster Financial Corporation. Refer to the release titled 'Fitch
Takes Rating Actions on Its Mid-Tier Regional Bank Group Following
Industry Peer Review' for a discussion of rating actions taken on
the entire mid-tier regional bank group.
The mid-tier regional group is comprised of banks with total
assets ranging from $10 billion to $36 billion. IDRs for this
group is relatively dispersed with a low of 'BB-' and a high of
'A+'. Mid-tier regional banks typically lag their large regional
bank counterparts by asset size, geographic footprint and
product/revenue diversification. As such mid-tier regional banks
are more susceptible to idiosyncratic risks such as geographic or
single name concentrations.
Fitch's mid-tier regional bank group has fairly homogenous
business strategies. The institutions are mostly reliant on spread
income from loans and investments. With limited opportunity to
improve fee-based income in the near term, Fitch expects that mid-
tier banks will continue to face greater earnings headwinds in
2013 than larger institutions with greater revenue
diversification.
Share repurchases is common theme amongst the mid-tier banks. As
mid-tier banks face earnings headwinds, institutions have begun
repurchasing common shares to improve shareholder returns. Fitch
anticipates continued repurchase activity in 2013 as return on
equity lags historical norms for the group.
In addition to share repurchases, Fitch has observed that some
mid-tier banks have looked to their investment portfolio to
improve returns. Most notably, CLOs and CMBS have become more
popular amongst mid-tier banks. Although such securities are
beneficial to yields and returns, Fitch notes that such purchases
can be a negative ratings driver if the risks are not properly
measured, monitored and controlled.
Asset quality continues to improve throughout the banking sector.
Both nonperforming assets (NPAs) and net charge-offs (NCOs) are
down significantly year over year. Fitch anticipates further asset
quality improvement as nonperforming loan (NPL) inflow slows.
Reserve levels have also declined as asset quality improves, which
has been beneficial to earnings in 2012. Fitch expects further
reserve releases in 2013 but at a slower pace.
Rating Action and Rationale
Fulton Financial Corporation's (FULT) long-term IDRs and short-
term IDRs were downgraded to 'BBB+/F2' from 'A-/F1'. The Outlook
is Stable. The downgrade primarily reflects FULT's relatively
stagnant charge off rates, challenging economic environment in one
of its core markets and funding costs which exceed most banks in
the mid-tier group.
Although Fitch believes FULT is well reserved, the level of NCOs
has not declined at the rate of other 'A-' rated institutions that
recognized the bulk of their credit costs earlier in the cycle. As
such, FULT's NCO rates remain at elevated levels compared to 'A-'
rated institutions. Moreover, in Fitch's opinion, FULT's Fulton
Bank of New Jersey subsidiary operates in a relatively more
challenging economic environment, which may continue to put
pressure on overall asset quality measures. Currently, the Fulton
Bank of New Jersey has the highest NPA and NCO rates amongst
FULT's six banking subsidiaries.
FULT's has a solid retail branch network throughout mid-Atlantic
region which provides a solid source of funding for the
institution. However, FULT's cost of funds is amongst the highest
of the entire mid-tier group. As such, Fitch views the overall
franchise strength of FULT is better situated at the 'BBB+'
category.
The Stable Outlook incorporates FULTs continued sound operating
performance. FULT has solid earnings with a 0.99% ROAA for the
year, which places them above the median for mid-tier banks. Fitch
expects FULT to continue to post solid earnings in the near term
despite earnings headwinds which will be a challenge throughout
the banking industry.
Fitch regards FULT's capital levels as a ratings strength for the
institution. FULT's tangible capital levels rank near the top of
the mid-tier group with a 9.65% TCE at the end of third quarter
2012. That said, Fitch does not anticipate meaningful capital
growth in the near term given the institution's share repurchase
plan.
RATING DRIVERS AND SENSITIVITIES - IDRs and VRs
Fitch believes FULT is solidly situated at its 'BBB+' rating.
Further ratings improvement is unlikely in the near term given the
level of NPAs, NCOs and overall franchise strength. The
achievement of ratings above the 'BBB+' level in the mid-tier
group typically precludes any operational or financial metrics
which significantly lag peers. Conversely, negative ratings
pressure could occur if credit metrics deteriorate or if tangible
capital levels are significantly reduced.
RATING DRIVERS AND SENSITIVITIES - Support Ratings and Support
Floor Ratings:
All of the mid-tier regional banks in the peer group have Support
Ratings of '5' and Support Floor Ratings of 'NF'. In Fitch's view,
the mid-tier banks are not considered systemically important and
therefore, Fitch believes the probability of support is unlikely.
IDRs and VRs do not incorporate any government support for any of
the banks in the mid-tier regional bank peer group.
RATING DRIVERS AND SENSITIVITIES - Subordinated Debt and Other
Hybrid Securities:
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
RATING DRIVERS AND SENSITIVITIES - Holding Company:
All of the entities reviewed in the mid-tier regional bank group
have a bank holding company structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent holding
company supporting equalized ratings between bank subsidiaries and
bank holding companies. IDRs and VRs are equalized with those of
its operating companies and banks reflecting its role as the bank
holding company, which is mandated in the U.S. to act as a source
of strength for its bank subsidiaries.
RATING DRIVERS AND SENSITIVITIES - Subsidiary and Affiliated
Company Rating:
All of the entities reviewed in the mid-tier regional bank group
factor in a high probability of support from parent institutions
to its subsidiaries. This reflects the fact that performing parent
banks have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has taken these rating actions:
Fulton Financial Corporation
-- Long-term IDR downgraded to 'BBB+' from 'A-'; Stable Outlook;
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Viability Rating downgraded to 'bbb+' from 'a-';
-- Subordinated debt downgraded to 'BBB' from 'BBB+';
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Fulton Bank, N.A.
-- Long-term IDR downgraded to 'BBB+' from 'A-'; Stable Outlook;
-- Long-term deposits downgraded to 'A-' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term deposits downgraded to 'F2' from 'F1';
-- Viability Rating downgraded to 'bbb+' from 'a-'
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
The Columbia Bank
-- Long-term IDR downgraded to 'BBB+' from 'A-'; Stable Outlook;
-- Long-term deposits downgraded to 'A-' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term deposits downgraded to 'F2' from 'F1';
-- Viability Rating downgraded to 'bbb+' from 'a-'
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Lafayette Ambassador Bank
-- Long-term IDR downgraded to 'BBB+' from 'A-'; Stable Outlook;
-- Long-term deposits downgraded to 'A-' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term deposits downgraded to 'F2' from 'F1';
-- Viability Rating downgraded to 'bbb+' from 'a-'
-- Support affirmed affirmed at '5';
-- Support Floor affirmed at 'NF'.
Fulton Bank of New Jersey
-- Long-term IDR downgraded to 'BBB+' from 'A-'; Stable Outlook;
-- Long-term deposits downgraded to 'A-' from 'A';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Short-term deposits downgraded to 'F2' from 'F1';
-- Viability Rating downgraded to 'bbb+' from 'a-'
-- Support affirmed at '5';
-- Support Floor affirmed at 'NF'.
Fulton Capital Trust I
-- Preferred stock downgraded to 'BB-' from 'BB'.
GABRIEL TECHNOLOGIES: Files for Ch. 11 After Losing to Qualcomm
---------------------------------------------------------------
Gabriel Technologies Corporation and a subsidiary sought Chapter
11 protection (Bankr. N.D. Calif. Case No. 13-30340 and 13-30341)
on Feb. 14, 2013 in San Francisco, after losing in a patent
dispute with smartphone chips maker Qualcomm Inc.
Gabriel Technologies, through its debtor-subsidiary Trace
Technologies, LLC, holds significant intellectual property assets
directed toward location-based products and services through
global positioning systems.
Gabriel Technologies disclosed $15 million in assets and $15
million in liabilities as of Jan. 31, 2013.
The Debtors tapped the law firm of Meyers Law Group, P.C. as
general bankruptcy counsel.
Trace, a Nevada limited liability company, was created as a joint
venture between Loc8.net, also known as Locate Networks, Inc., and
Gabriel. Trace subsequently acquired substantially all of the
assets of Locate, including all rights and interests that Locate
maintained under a license agreement with SnapTrack, Inc..
Gabriel then acquired all membership interests in Trace, which
today operates as a wholly-owned subsidiary of Gabriel.
Prior to 2008, Trace provided wholesale location services to
devices supporting wireless assisted-global positioning system
technology in North America. By 2008, however, Trace and Gabriel
had wound down active sales operations, due to a lack of funding
and activities of Qualcomm Incorporated that the Debtors believed
violated intellectual property rights owned by Trace and damaged
those sales operations.
Qualcomm is a large, publicly owned corporation involved in
wireless technology, among other sectors. Qualcomm's
announcements and reports indicate that the company holds a
portfolio of patents relating to its wireless technology, and
licenses those patents to mobile phone manufacturers.
In March 2010, Qualcomm acquired SnapTrack for $1 billion in
stock. The Debtors believe that some of the patents acquired in
the Qualcomm Acquisition were derived from or identical to
intellectual property owned by the Debtors.
Consequently, on Oct. 24, 2008, the Debtors filed a complaint
against Qualcomm, initiating a civil action entitled Gabriel
Technologies Corporation, et al. v. Qualcomm Incorporated, et al.,
case no. 08CV1992 in the United States District Court for the
Southern District of California. The Complaint charged Qualcomm,
SnapTrack and Norman Krasner, a founding member of SnapTrack, with
preparing, prosecuting and procuring domestic and foreign patents
based on intellectual property belonging to the Debtors.
Discovery ensued, and on Sept. 27, 2011, Qualcomm, et al., filed a
motion for partial summary judgment against the Debtors. The
motion was vigorously opposed by the Debtors through Debtors
Counsel, Hughes, Hubbard & Reed, but after multiple hearings, on
or about March 13, 2012, the District Court issued its order
granting in part the Defendants' summary judgment motion.
Thereafter, on Aug. 10, 2012, Qualcomm, et al., filed a second
summary judgment requesting that the District Court grant summary
judgment in their favor as to all remaining claims. Once again,
the motion was vigorously opposed by the Debtors through Debtors'
counsel, Hughes, Hubbard & Reed, but on Sept. 28, 2012, the
District Court issued its order granting the Defendants' second
summary judgment motion, effectively concluding the litigation in
the District Court.
Subsequently, Qualcomm, et al., filed their motion for attorneys'
fees requesting that the District Court award against the Debtors
the sum of $13.5 million for fees allegedly incurred in defending
against the Complaint. On Feb. 1, 2013, prior to the Debtors'
commencement of their chapter 11 cases, the District Court entered
its order against the Debtors granting payment of attorneys' fees
in the amount of $12.4 million.
The Debtors believe that both the Judgment and the Fee Order are
unjust and contrary to applicable law, and the Debtors intend to
vigorously challenge those rulings by appeal to the U.S. Court of
Appeals for the Federal Circuit. The Debtors believe that they
will prevail on appeal, and have retained the same counsel, Hughes
Hubbard & Reed, as represented them before the District Court to
pursue the appeal.
After issuance of the District Court's order and prior to the
Petition Date, the Debtors endeavored to obtain a bond to prevent
enforcement of the Fee Order. However, the Debtors determined
that the cost of the bond would exceed $15 million, an amount far
beyond the Debtors' limited resources.
Therefore, in order to prevent immediate enforcement of the Fee
Order and dismemberment of the Debtors' assets, and to avoid
significant disruption, impediment and injustice to the Debtors'
and their secured and unsecured creditors, the Debtors filed their
voluntary petitions for relief in chapter 11.
As of the Petition Date, the Debtors' primary obligations
consisted of liability under the Fee Order, subject to appeal,
together with secured debt of approximately $4,000,000, and
unsecured debt of approximately $12 million.
The Debtors are seeking joint administration of their Chapter 11
cases.
GABRIEL TECHNOLOGIES: Sec. 341(a) Meeting on March 12
-----------------------------------------------------
There's a meeting of creditors in the Chapter 11 cases of Gabriel
Technologies Corporation and Trace Technologies, LLC, on March 12,
2013 at 9:00 a.m. at the San Francisco U.S. Trustee Office.
Creditors are required to submit proofs of claim by June 10, 2013.
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 Gabriel Technologies
Gabriel Technologies Corporation and a subsidiary sought Chapter
11 protection (Bankr. N.D. Calif. Case No. 13-30340 and 13-30341)
on Feb. 14, 2013 in San Francisco,, after losing in a patent
dispute with smartphone chips maker Qualcomm Inc.
Gabriel Technologies, through its debtor-subsidiary Trace
Technologies, LLC, holds significant intellectual property assets
directed toward location-based products and services through
global positioning systems.
Gabriel Technologies disclosed $15 million in assets and $15
million in liabilities as of Jan. 31, 2013.
The Debtors tapped the law firm of Meyers Law Group, P.C. as
general bankruptcy counsel.
GATEHOUSE MEDIA: Bank Debt Trades at 65% Off in Secondary Market
----------------------------------------------------------------
Participations in a syndicated loan under which GateHouse Media,
Inc., is a borrower traded in the secondary market at 34.07 cents-
on-the-dollar during the week ended Friday, Feb. 15, 2013, a drop
of 3.12 percentage points from the previous week according to data
compiled by LSTA/Thomson Reuters MTM Pricing and reported in The
Wall Street Journal. The Company pays 200 basis points above
LIBOR to borrow under the facility. The bank loan matures on
Feb. 27, 2014, and carries Moody's Ca rating and Standard & Poor's
CCC- rating. The loan is one of the biggest gainers and losers
for the week ended Friday among 221 widely quoted syndicated loans
with five or more bids in secondary trading.
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.
Gatehouse Media, Inc., filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $9.41 million on $120.79 million of total revenues for the
three months ended Sept. 30, 2012, compared with a net loss of
$5.16 million on $125.02 million of total revenues for the three
months ended Sept. 25, 2011.
For the nine months ended Sept. 30, 2012, the Company reported a
net loss of $25.65 million on $365.39 million of total revenues,
in comparison with a net loss of $28.42 million on $374.95 million
of total revenues for the nine months ended Sept. 25, 2011.
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.
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.
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.
GENELINK INC: Bernard Kasten Assumes Interim CFO Position
---------------------------------------------------------
GeneLink, Inc., accepted the resignation of Susan Hunt as Interim
Chief Financial Officer of the Company effective as of Feb. 8,
2013. Ms. Hunt will continue to provide consulting services
through the filing of Form 10-K for the year ended Dec. 31, 2012.
Bernard L. Kasten, Jr., M.D., the CEO and President will assume
the duties of interim CFO until such time as the Company hires a
replacement CFO.
About Genelink
Based in Orlando, Fla., GeneLink, Inc., is a solution provider in
the genetically customized nutritional and personal care
marketplace.
Hancock Askew & Co., LLP, in Savannah, Georgia, expressed
substantial doubt about GeneLink's ability to continue as a going
concern, following the Company's results for the fiscal year ended
Dec. 31, 2011. The independent auditors noted that the Company
has a working capital deficit of $436,310, has incurred recurring
operating losses since inception including a loss of $3.8 million
in 2011 and had an accumulated deficit at Dec. 31, 2011, of
$24,560,315.
The Company's balance sheet at Sept. 30, 2012, showed $2.69
million in total assets, $5.59 million in total liabilities and a
$2.89 million total shareholders' deficit.
GENESIS ENERGY: Moody's Assigns 'B1' Rating to $300MM Sr. Notes
---------------------------------------------------------------
Moody's Investors Service has assigned a B1 rating to Genesis
Energy L.P.'s proposed issuance of $300 million of senior
unsecured notes due 2023. Genesis will use the proceeds from the
issuance to repay a portion of the borrowings under its revolving
credit facility. Moody's also upgraded to B1 from B2 the company's
outstanding $350 million senior unsecured notes due 2018, and
affirmed its Ba3 Corporate Family Rating and SGL-3 Speculative
Grade Liquidity rating. The rating outlook is stable.
"This debt issuance will increase available liquidity under its
revolver in the immediate term and the flexibility to fund its
future capex and acquisitions," commented Arvinder Saluja, Moody's
Analyst. "However, we expect Genesis to out-spend its internally
generated cash flow in 2013 for growth projects, which would
preclude material improvement in its near term leverage profile,"
he added.
Issuer: Genesis Energy L.P.
Rating assigned:
$300 million Senior Unsecured Notes due 2023, B1 (LGD5, 79%)
Rating Upgraded:
$350 million Senior Unsecured Notes due 2018, B1 (LGD5, 79%)
from B2 (LGD5, 86%)
Ratings Affirmed:
Corporate Family Rating, Ba3
Probability of Default Rating, Ba3-PD
Speculative Grade Liquidity (SGL) rating, SGL-3
Outlook - Stable
Ratings Rationale
The Ba3 CFR of Genesis is supported by its predominantly fee-based
cash flows, an unusually high degree of asset and business line
diversification for a company of its size, vertical integration
among its various assets, and leverage that is appropriate for the
rating level. The rating also recognizes that despite outspending
cash flows and the potential increase in leverage in 2013 because
of a heavy capex schedule, Moody's expects Genesis's leverage and
cash flow profile to improve in 2014 as it begins to realize the
earnings potential of the acquired assets. Despite a short track
record under the GP's private ownership, Genesis has produced
consistent cash flows through its logistics and pipeline services
for crude transportation, and maintains a very strong market
position as a producer of NaHS, a chemical used in many industries
including mining, paper, and pharmaceuticals. The rating is
limited by the company's geographic concentration and small scale
relative to similarly rated midstream peers. The ratings also take
into account the risks inherent in the business model for growth-
oriented MLPs.
The B1 rating on the proposed $300 million senior notes reflects
both Genesis' overall probability of default, to which Moody's
assigns a PDR of Ba3-PD, and a loss given default of LGD 5 (79%).
Genesis also has $350 million of senior notes due 2018. Both the
new and existing senior notes are unsecured and therefore
subordinated to the senior secured credit facility's priority
claim to the company's assets. The size of the potential senior
secured claims relative to the proforma unsecured notes
outstanding results in the senior notes being notched one rating
below the Ba3 CFR under Moody's Loss Given Default Methodology.
Pro-forma for the notes offering, Genesis will have roughly $750
million available under its $1 billion senior secured revolving
credit facility. The company does not have significant cash
balances, and based on a high level of growth capex and cash
distributions to unit holders, it is expected to over-spend
internally generated cash flow in 2013.
The financial covenants under the facility are maximum Debt /
EBITDA of 5.0x, Senior Secured Debt / EBITDA of 3.75x, and minimum
EBITDA / Interest of 3.0x. The required ratios are temporarily
adjusted to 5.5x, 4.25x, and 2.75x, respectively, following
certain transactions, including material acquisitions. Moody's
expects Genesis to remain in compliance with these covenants
during 2013. There are no debt maturities prior to 2017 when the
credit facility matures. Substantially all of Genesis' assets are
currently pledged as security under the revolver, which limits the
amount of assets that could be sold to provide a source of
additional liquidity, if needed.
The stable outlook reflects the expectation that leverage (per
Moody's standard adjustments) will not increase significantly
above 4.5x on a sustainable basis, that future acquisitions will
be funded with a sufficient amount of equity, that the company's
future expansions will not significantly increase the portion of
operating income exposed to direct commodity price risk, and that
the underlying fundamentals of Genesis' various business lines
will remain strong.
Moody's could upgrade the CFR if it expect Debt / EBITDA to be
sustained below 3.5x, or if Genesis significantly increases its
diversification or proportion of cash flows from fee-based assets.
However, an increase in leverage with Debt / EBITDA above 5.0x on
a sustained basis, significant deterioration in core business
fundamentals, significant execution issues on growth projects, or
acquisitions of assets with a higher risk business profile could
result in negative rating actions.
The principal methodology used in this rating was the Global
Midstream Energy 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.
Genesis Energy, L.P. is a master limited partnership headquartered
in Houston, Texas.
GRUBB & ELLIS: Forward Mgt. No Longer Shareholder as of Dec. 31
---------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Forward Management, LLC, and its affiliates
disclosed that, as of Dec. 31, 2012, they do not beneficially own
any shares of common stock of Grubb & Ellis Co. The reporting
persons previously disclosed beneficial ownership of 14,584,591
common shares or a 11.44% equity stake as of Oct. 31, 2011. A
copy of the amended filing is available at http://is.gd/uSO2vu
About Grubb & Ellis
Grubb & Ellis Company -- http://www.grubb-ellis.com/-- is a
commercial real estate services and property management company
with more than 3,000 employees conducting throughout the United
States and the world. It is one of the oldest and most recognized
brands in the industry.
Grubb & Ellis and 16 affiliates filed for Chapter 11 bankruptcy
(Bankr. S.D.N.Y. Lead Case No. 12-10685) on Feb. 21, 2012, to sell
almost all its assets to BGC Partners Inc. The Santa Ana,
California-based company disclosed $150.16 million in assets and
$167.2 million in liabilities as of Dec. 31, 2011.
Judge Martin Glenn presides over the case. The Debtors have
engaged Togut, Segal & Segal, LLP as general bankruptcy counsel,
Zuckerman Gore Brandeis & Crossman, LLP, as general corporate
counsel, and Alvarez & Marsal Holdings, LLC, as financial advisor
in the Chapter 11 case. Kurtzman Carson Consultants is the claims
and notice agent.
BGC Partners, Inc., and its affiliate, BGC Note Acquisition Co.,
L.P., the DIP lender and Prepetition Secured Lender, are
represented in the case by Emanuel C. Grillo, Esq., at Goodwin
Procter LLP.
On March 27, 2012, the Court approved the sale to BCG. An auction
was cancelled after no rival bids were submitted. Pursuant to the
term sheet signed by the parties, BGC would acquire the assets for
$30.02 million, consisting of a credit bid the full principal
amount outstanding under the (i) $30 million credit agreement
dated April 15, 2011, with BGC Note, (ii) the amounts drawn under
the $4.8 million facility, and (iii) the cure amounts due to
counterparties. BGC would also pay $16 million in cash because
the sale was approved by the March 27 deadline. Otherwise, the
cash component would have been $14 million.
Approval of the sale was simplified when BGC settled with
unsecured creditors by increasing their recovery. Grubb & Ellis
Co. was renamed Newmark Grubb Knight Frank following the sale.
As reported by the TCR on Nov. 20, 2012, Grubb & Ellis filed a
liquidating Chapter 11 plan which gives unsecured creditors an
expected recovery between 1.7% and 4.7%. The Court approved the
explanatory disclosure materials in January 2013. The
confirmation hearing for approval of the Plan will be on March 6.
HABERSHAM BANCORP: Knight Equity Stake Hiked to 9.5% as of Dec. 31
------------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Knight Capital Americas, LLC, disclosed that,
as of Dec. 31, 2012, it beneficially owns 266,542 shares of common
stock of Habersham Bancorp, INC., representing 9.46% based on
outstanding shares reported in the Company's Form 10-Q filed with
the SEC for the period ending Sept. 30, 2010. Knight Capital
previously reported beneficial ownership of 159,902 common shares
or a 5.67% equity stake as of Dec. 30, 2011. A copy of the
amended filing is available at http://is.gd/9rSGjD
About Habersham Bancorp
Cornelia, Ga.-based Habersham Bancorp (OTC BB: HABC) owns all of
the outstanding stock of Habersham Bank and an inactive
subsidiary, The Advantage Group, Inc. The Company's continuing
primary business is the operation of banks in rural and suburban
communities in Habersham, White, Cherokee, Warren, Stephens, and
Hall counties in Georgia.
The Company's balance sheet as of Sept. 30, 2010, showed
$396.3 million in total assets, $386.6 million in total
liabilities, and stockholders' equity of $9.7 million.
As reported in the Troubled Company Reporter on April 5, 2010,
Porter Keadle Moore, LLP, in Atlanta, Ga., expressed substantial
doubt about the Company's ability to continue as a going concern,
following its 2009 results. The independent auditors noted that
at Dec. 31, 2009, Habersham Bank's total capital to risk-weighted
assets and Tier I capital to average assets ratios are below the
required levels as established by regulation. In addition, the
Bank has suffered recurring operating losses.
* * *
The Georgia Department of Banking and Finance closed Habersham
Bancorp's subsidiary bank, Habersham Bank, and appointed the
Federal Deposit Insurance Corporation (FDIC) as receiver.
Habersham Bancorp is no longer the parent of Habersham
Bank. In a virtually simultaneous transaction, SCBT National
Association acquired the operations and all deposits and purchased
essentially all assets of the Bank in a loss-share transaction
facilitated by the FDIC and will continue to operate the Bank.
HARTFORD FINANCIAL: Moody's Affirms 'Ba1' Rating on Junior Notes
----------------------------------------------------------------
Moody's Investors Service has affirmed the debt ratings of The
Hartford Financial Services Group, Inc. (NYSE: HIG, senior debt
Baa3) following the company's announcement that it intends to
retire about $1 billion of debt and repurchase $500 million of
shares.
The company also announced that it received approval for a $1.2
billion extraordinary dividend from its Connecticut domiciled life
insurance companies and would receive about $300 million from
dissolving its Vermont life reinsurance captive to fund the
capital management plan.
Moody's also affirmed the insurance financial strength ratings of
the company's P&C insurance operating subsidiaries and two of the
life insurance operating subsidiaries. Moody's downgraded the IFS
rating of Hartford Life and Annuity to Baa2 from A3 as this entity
contains most of HIG's runoff Life business, including US and
international annuities (including variable annuity), and private
placement life insurance. The outlook for all of the ratings is
stable.
Ratings Rationale
Commenting on The Hartford's action, Moody's analyst Paul Bauer
said, "We believe that The Hartford's capital plan balances the
competing priorities of debt holders and equity holders in a way
that will maintain strong financial flexibility and support the
organization's overall credit profile." The analyst added that,
"the capital plan will result in a moderate positive impact on the
company's financial leverage and interest coverage metrics."
Moody's said that the company's debt ratings are primarily based
on support from its P&C operating subsidiaries. Moody's does not
consider the organization's life insurance operating subsidiaries
to be a supporter of the parent company over the medium term due
to continued potential for capital volatility at the life
operation under a stress scenario.
Life Insurance Group
Moody's affirmation of the A3 IFS rating on Hartford Life, Inc.'s
(HLI) primary U.S. life insurance operating companies -- Hartford
Life and Accident Insurance Co. ("HLA") and Hartford Life
Insurance Co. (HLIC) -- and the Baa3 senior debt rating for HLI
are based upon their continued, combined strong market position in
group insurance and The Hartford's recognizable brand name. The
downgrade of Hartford Life & Annuity Insurance Company (ILA) to
Baa2 from A3 reflects the runoff status of the Individual
Annuities business and the sale of the Individual Life business,
which diminishes the entity's market position, as well as the
entity's highly volatile risk profile. The rating agency added
that as a result of the sale of the life business, ILA is
concentrated in variable annuities, and no longer writes any
"core" business. The public A3 IFS ratings of HLA and HLIC are
each raised one notch from their standalone credit profiles
because of the implicit support of HIG. The public Baa2 IFS rating
of ILA is raised two notches reflecting implicit support from HIG.
Hartford retains its name on ILA's legal entity and due to the
stacked organizational structure, any capital deterioration in ILA
would affect the other life entities. The stable outlook on all of
the entities reflects Moody's expectation that there will be
improvement in the profitability of the group benefits business
and that HIG will continue to make progress in its variable
annuity hedging program.
The rating agency said the following could place upward pressure
on the key life subsidiary ratings: (1) immunizing HLI and HLA
from a downward scenario at ILA would place upward pressure on
those two upstream companies; (2) minimizing the volatility
associated with stress scenarios for the legacy block of variable
annuities; (3) statutory earnings more in line with GAAP earnings
(adjusting for movement in hedges).
Conversely, the following could place downward pressure on the
life group's ratings: 1) unanticipated regulatory capital
volatility and/or RBC ratio levels fall below 275%; 2) annual
credit impairments projected to be in excess of $1.0 billion pre-
tax and pre-DAC in the life companies; 3) HLIC's IFS rating could
be lowered if this entity is considered less core to HIG; i.e., if
they no longer use this entity to write New York group benefit
business.
P&C Insurance Group
The A2 IFS ratings on the primary members of The Hartford's P&C
Insurance Group are based on the group's significant market
presence, strong brand name recognition, excellent product and
geographic diversification, historically conservative underwriting
standards, and reasonably positioned investment portfolio. These
strengths are offset by exposure to catastrophes, pressure on
earnings from a competitive P&C insurance market, a risk of
adverse development on run-off reserves which include significant
asbestos and environmental liabilities, and the continued implied
support of the group's affiliated life businesses even as these
operations are downsized. Additionally, given earnings and capital
volatility at the life operations, and the company's intention to
deemphasize these lines, the P&C group is the primary supporter of
the parent company's credit profile, which could place additional
capital pressure on the P&C group.
The proposed plan would reduce financial leverage and parent
company interest expenses, which are obligations Moody's believes
are primarily supported by the P&C group. As these parent company
obligations are reduced, the associated burden on the dividend
capacity of the P&C companies would also be reduced.
The financial flexibility benefit, however, is somewhat offset by
the removal of capital from the Life insurance group. "To the
extent that a significant dividend is removed from the life group,
the risk still exists that the P&C group may have to be called
upon to support its affiliated life insurance subsidiaries in a
stress scenario," said Bauer.
The rating agency said the following could place upward pressure
on the P&C group's ratings: (1) sustained consolidated earnings
coverage of interest above 6x; (2) resolution of the company's
asbestos liabilities such that its inherent volatility is
substantially reduced; (3) long term reduction in gross
underwriting leverage (e.g. less than 3.5x, excluding affiliated
investments from capital) coupled with sustained strong risk
adjusted capital; (4) reduction in the long term risk associated
with the group's affiliated life operation. Conversely, the
following could place downward pressure on the P&C group's
ratings: (1) further deterioration in the stand-alone credit
profile of the life companies increasing the risk that support
could be needed from the P&C group; (2) excessive dividends from
the P&C operations to support the life companies; (3) sustained
gross underwriting leverage above 4x; (4) annual operating losses
from either catastrophes or investments resulting in shareholders'
equity declining 10% or more; (5) consolidated earnings coverage
of interest below 4x.
Holding Company
Moody's believes that the proposed capital management plan will
have a modestly positive impact on holding company financial
flexibility, moderately lowering The Hartford's debt-to-capital
ratio and increasing interest coverage metrics.
Factors that could result in an upgrade of The Hartford's debt
ratings include an upgrade of the financial strength ratings of
the company's lead operating P&C or life companies, and sustained
consolidated earnings coverage of interest above 6x. Conversely,
factors that could result in a downgrade of the company's debt
ratings include a downgrade of the financial strength ratings of
the company's lead operating P&C or life companies, financial
leverage greater than 40%, or earnings coverage of interest below
4x.
The following ratings were affirmed with a stable outlook:
Hartford Financial Services Group, Inc. -- senior long-term
unsecured debt at Baa3; junior subordinated notes at Ba1;
provisional senior unsecured debt shelf at (P)Baa3;
provisional subordinated debt shelf at (P)Ba1; provisional
preferred shelf at (P)Ba2; short-term rating for commercial
paper at Prime-3;
Hartford Life, Inc. -- senior long-term unsecured debt at Baa3;
Glen Meadow Pass-Through Trust -- senior secured debt at Ba1;
Hartford Life & Accident Insurance Company -- insurance
financial strength at A3;
Hartford Life Insurance Company -- insurance financial strength
at A3; short-term insurance financial strength at Prime-2;
senior unsecured medium term note program at Baa1;
Hartford Life Global Funding Trusts -- senior secured funding
agreement-backed notes at A3;
Hartford Life Institutional Funding -- senior secured funding
agreement-backed notes at A3;
Hartford Fire Insurance Company -- insurance financial strength
at A2;
Hartford Accident & Indemnity Co. -- insurance financial
strength at A2;
Hartford Casualty Insurance Co. -- insurance financial strength
at A2;
Trumbull Insurance Company -- insurance financial strength at
A2;
Hartford Insurance Company of Illinois -- insurance financial
strength at A2;
Hartford Insurance Company of Midwest -- insurance financial
strength at A2;
Hartford Insurance Company of Southeast -- insurance financial
strength at A2;
Hartford Lloyd's Insurance Company -- insurance financial
strength at A2;
Hartford Underwriters Insurance Company -- insurance financial
strength at A2;
Nutmeg Insurance Company -- insurance financial strength at A2;
Pacific Insurance Company, Limited -- insurance financial
strength at A2;
Property & Casualty Ins. Company of Hartford -- insurance
financial strength at A2;
Sentinel Insurance Company -- insurance financial strength at
A2;
Twin City Fire Insurance Company -- insurance financial
strength at A2;
First State Insurance Co. -- insurance financial strength at
Baa2;
New England Insurance Co. -- insurance financial strength at
Baa2;
New England Reinsurance Corp. -- insurance financial strength
at Baa2.
The following rating was downgraded, and has a stable outlook:
Hartford Life & Annuity Insurance Company -- insurance
financial strength to Baa2, from A3.
The principal methodologies used in this rating were Moody's
Global Rating Methodology for Life Insurers published in May 2010
and Moody's Global Rating Methodology for Property and Casualty
Insurers published in May 2010.
The Hartford is an insurance and financial services organization
that offers a wide variety of property and casualty insurance,
financial services, and life insurance products. The company
reported total revenue of $26.4 billion and net income of $350
million for 2012. Shareholders' equity was $22.8 billion at
December 31, 2012. In March, 2012, HIG announced plans to shift
its strategic focus to its P&C operations, group benefits, and
mutual fund businesses. In 2012 and January 2013, the company put
its annuity business into runoff and sold its Woodbury Financial
Services business to AIG, its individual life business to
Prudential, and its retirement plans business to Mass Mutual.
HEALTHWAREHOUSE.COM INC: Karen Singer Has 12.9% Stake at Feb. 1
---------------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Karen Singer and Lloyd I. Miller, III,
disclosed that, as of Feb. 1, 2013, they beneficially own
2,174,117 shares of common stock of HealthWarehouse.com, Inc.,
representing 12.9% of the shares outstanding. Ms. Singer
previously reported beneficial ownership of 1,972,889 common
shares or a 15% equity stake as of Jan. 15, 2013. A copy of the
amended filing is available at http://is.gd/GGsLFr
About HealthWarehouse.com
HealthWarehouse.com, Inc., headquartered in Florence, Kentucky, is
a U.S. licensed virtual retail pharmacy ("VRP") and healthcare e-
commerce company that sells brand name and generic prescription
drugs as well as over-the-counter ("OTC") medical products.
The Company's balance sheet at June 30, 2012, showed $2.24 million
in total assets, $6.82 million in total liabilities, $752,226 in
redeemable preferred stock, and a $5.33 million total
stockholders' deficiency.
The Company reported a net loss of $5.71 million in 2011, compared
with a net loss of $3.69 million in 2010.
"Since inception, the Company has financed its operations
primarily through product sales to customers, debt and equity
financing agreements, and advances from stock holders. As of
June 30, 2012 and December 31, 2011, the Company had negligible
cash and working capital deficiency of $5,724,914 and $2,404,464,
respectively. For the six months ended June 30, 2012, cash flows
included net cash used in operating activities of $581,948, net
cash provided by investing activities of $138,241 and net cash
provided by financing activities of $443,846. Additionally, all
of the Company's outstanding convertible notes payable mature at
the end of December 2012 and outstanding notes payable mature in
January 2013. These conditions raise substantial doubt about the
Company's ability to continue as a going concern," the Company
said in its quarterly report for the period ended June 30, 2012.
In the auditors' report accompanying the consolidated financial
statement for the year ended Dec. 31, 2011, Marcum LLP, in New
York, expressed substantial doubt about HealthWarehouse.com's
ability to continue as a going concern. The independent auditors
noted that the Company has incurred significant losses and needs
to raise additional funds to meet its obligations and sustain its
operations.
HEARTHSTONE HOMES: Court Rules on Wells Fargo Lien Priority
-----------------------------------------------------------
HILLER ELECTRIC COMPANY, Plaintiff, v. C. RANDEL LEWIS, Chapter 11
Trustee; WELLS FARGO BANK, N.A.; and AA AMERICAN HEATING AND AIR
CONDITIONING, INC., Defendants, No. A12-8079-TLS (Bankr. D. Nev.),
asks the Bankruptcy Court to determine lien priority with respect
to certain real estate sale proceeds related to the Chapter 11
case of Hearthstone Homes, Inc. Wells Fargo filed a motion for
summary judgment asserting that its deed of trust liens are the
first and prior liens against the proceeds and that it is entitled
to all of the remaining proceeds since its remaining loan balance
far exceeds the remaining proceeds.
In a Feb. 13, 2013 Order available at http://is.gd/bJ9081from
Leagle.com, the Court granted Wells Fargo's motion for summary
judgment, overruled Hiller Electric's objection to Wells Fargo's
motion, and denied Hiller Electric's motion to compel discovery
and another motion to defer ruling on the summary judgment pending
additional discovery.
At the time it filed for bankruptcy, Hearthstone owed Wells Fargo
pursuant to the terms of a Dec. 10, 2010, promissory note in the
amount of $17,500,000. The note was secured by a perfected
security interest in, among other things, various real estate lots
and the improvements thereon.
About Hearthstone Homes
Hearthstone Homes, Inc., filed a Chapter 11 petition in Omaha,
Nebraska (Bankr. D. Neb. Case No. 12-80348) on Feb. 24, 2012.
ketv.com reported that Hearthstone Homes sought bankruptcy
protection after a deal to sell the company fell through.
Hearthstone Homes' principal business activities have been the
purchase, development and sale of residential real property for
40 years.
Chief Judge Thomas L. Saladino presides over the case. The Debtor
is represented by Robert F. Craig, P.C. Hearthstone estimated
assets and debts of $10 million to $50 million as of the Chapter
11 filing.
Wells Fargo N.A., the primary lender, is represented by lawyers at
Croker Huck Kasher DeWitt Anderson & Gonderinger LLC.
The Official Committee of Unsecured Creditors was appointed on
March 2, 2012. Gross & Welch, P.C., L.L.O., represents the
Committee.
On March 9, 2012, Wells Fargo Bank filed a motion to appoint a
Chapter 11 trustee, saying the Debtor had no unencumbered assets,
no cash, and no present source of income. On March 13, an order
was entered granting the motion to appoint a Chapter 11 trustee.
The U.S. Trustee, through consultation with creditors, selected
C. Randel Lewis to be the Chapter 11 trustee, which was approved
by the Court on March 21, 2012.
HERCULES OFFSHORE: Posts $4.3 Million Net Income in 4th Quarter
---------------------------------------------------------------
Hercules Offshore, Inc., reported net income of $4.26 million on
$202.63 million of total Company revenue for the three months
ended Dec. 31, 2012, as compared with a net loss of $21.48 million
on $162.78 million of total Company revenue for the same period
during the prior year.
For the 12 months ended Dec. 31, 2012, the Company incurred a net
loss of $127 million on $709.79 million of total Company revenue,
as compared with a net loss of $76.12 million on $655.35 million
of total Company revenue during the prior year.
The Company's balance sheet at Dec. 31, 2012, showed $2.01 billion
in total assets, $1.13 billion in total liabilities and $882.76
million in commitments and contingencies.
John T. Rynd, chief executive officer and President of Hercules
Offshore stated, "Market fundamentals in the U.S. Gulf of Mexico
strengthened throughout 2012, to levels that, in many respects,
are the best they have been in the long history of drilling in the
region. This momentum continues through to today. As we begin
2013, the visibility in our core domestic business is unsurpassed,
with customer discussions already focusing on 2014 demand. Given
the limited availability of rigs and strong interest from
customers, we have embarked on our first rig reactivation.
Additional reactivations, as well as further growth in backlog and
dayrates, are contingent on commodity prices, rig availability,
and customer demand. We will remain disciplined in our capital
allocation decisions, however, we are optimistic regarding our
growth prospects based on current market dynamics in the U.S. Gulf
of Mexico."
A copy of the press release is available for free at:
http://is.gd/vgIV09
About Hercules Offshore
Hercules Offshore Inc. (NASDAQ: HERO) --
http://www.herculesoffshore.com/-- provides shallow-water
drilling and marine services to the oil and natural gas
exploration and production industry in the United States, Gulf of
Mexico and internationally. The Company provides these services
to integrated energy companies, independent oil and natural gas
operators and national oil companies. The Company operates in six
business segments: Domestic Offshore, International Offshore,
Inland, Domestic Liftboats, International Liftboats and Delta
Towing.
The Company reported a net loss of $76.12 million in 2011, a
net loss of $134.59 million in 2010, and a net loss of
$91.73 million in 2009.
The Company's balance sheet at Sept. 30, 2012, showed $2.02
billion in total assets, $1.15 billion in total liabilities and
$877.24 million stockholders' equity.
* * *
The Troubled Company Reporter said on March 23, 2012, that
Moody's Investors Service upgraded Hercules Offshore, Inc.,
Corporate Family Rating (CFR) and Probability of Default Rating
(PDR) to B3 from Caa1 contingent upon the completion of its
recently announced recapitalization plan.
Hercules' B3 CFR reflects its jackup fleet, which consists
primarily of standard specification rigs with an average age of
about 30 years. Its rigs are geographically concentrated in the
Gulf of Mexico (GoM), a market that experienced a slow-down after
the Macondo well incident. However, over the last year a pick-up
in permitting and activity levels in the GoM, has led to higher
dayrates. For Hercules, the improving market conditions have
stabilized its cash flow from operations, which are expected
continue to improve for at least the next 18 to 24 months as old
contracts roll into new contracts with higher dayrates. These
improving market conditions support the decision to upgrade
Hercules' CFR at this time.
As reported by the TCR on Nov. 6, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Houston-based
Hercules Offshore Inc. to 'B' from 'B-'.
"The upgrade reflects the improving market conditions in the Gulf
of Mexico and our expectations that Hercules' fleet will continue
to benefit," said Standard & Poor's credit analyst Stephen
Scovotti.
HERITAGE EQUITY: Balks at Lift Stay, Says Property Value to Rise
----------------------------------------------------------------
VNB New York Corp. filed a motion for relief from the automatic
stay with respect to debtor Heritage Equity & Realty LLC's real
property at 2 Heritage Place, 4 Heritage Place, and 6 Heritage
Place, Tappan New York, or to dismiss the Debtor's Chapter 11
case.
Heritage Equity & Realty LLC objected to the lift stay motion. It
says that given time, the properties will rise in value and
provide the means to pay its creditors and provide a return to its
principals.
In this relation, the Debtor has retained intermediaries to
negotiate a settlement with VNB. The intermediaries have told the
Debtor that they have successfully brokered settlements with VNB
with respect to the other properties. Although no settlement has
been reached in connection with Heritage Place, the Debtor
believes that, it can reach a settlement with VNB.
Additionally, the Debtor believes that a new appraisal of the
properties is needed. A new appraisal would give a current value
to the properties and allow the parties to have meaningful
discussions leading to a settlement.
In the event that after a reasonable period of time, the Debtor is
unable to reach a settlement with VNB, the Debtor would be willing
to sell the properties in the Bankruptcy Court.
VNB holds a note dated Dec. 13, 2006, in the original principal
amount of $1,800,000, which is secured by a mortgage and security
agreement. The loan originally was made by LibertyPointe Bank,
L.L.C. and when the note became due the Debtor and the guarantor
defaulted on their obligations thereunder.
About Heritage Equity & Realty LLC
Three creditors filed an involuntary Chapter 11 Petition against
Brooklyn, New York-based Heritage Equity & Realty LLC (Bankr.
E.D.N.Y Case No. 12-46807) in Brooklyn on Sept. 23, 2012. Judge
Carla E. Craig presides over the case. Boris Kogan & Associates,
represents the Petitioners as counsel. The petitioning creditors,
are Cong. Soro B'Ohel Inc., allegedly owed $20,000 for money
loaned; Shaya Krausz, allegedly owed $100,000 for money loaned;
and B. Kogan PLLC, allegedly owed $26,000 for unpaid services.
Bruce Weiner, Esq., at Rosenberg Musso & Weiner LLP, in Brooklyn,
serves as counsel to the Debtor.
The Debtor disclosed $1,354,112 in assets and $3,347,992 in
liabilities as of the Chapter 11 filing.
HOMER CITY: Palmer, et al., Have No Standing to Object to Plan
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware denied the
request of Richard Palmer, Glen Orner and Harry Peedicord for
clarification of order, or alternatively, to reject Homer City
Funding LLC's plan of reorganization.
The Court in its order, determined that the retiree movants lack
standing to challenge the order confirming the plan of
reorganization. The Court noted that retiree movants are not
creditors or security holders of the Debtor or Reorganized Debtors
but, instead, of non-affiliate EME Homer City.
Homer City Generation, L.P., as (i) the successor in interest to
Homer City Funding LLC, stated, in its objection, that certain
retirees of an entirely different entity -- EME Homer City, the
former operator and lessee of the facility -- have no standing to
participate in the case, object to the Plan, or ask the Court to
grant any relief for their benefit. The EME Homer City retirees
are simply barking up the wrong tree.
The Confirmed Plan
As reported in the TCR on Dec. 14, 2012, the reorganization plan
was accepted and approved by creditors before the Chapter 11
filing Nov. 6, one month to the day before confirmation. The plan
was accepted before bankruptcy by the required majorities of $640
million in bonds.
The project is operated under a lease by an affiliate of
independent power producer Edison Mission Energy and is owned by
an entity 90%-controlled by an affiliate of General Electric
Capital Corp. The remaining 10% is in the hands of an affiliate
of MetLife Inc.
The plan transfers ownership to an entity controlled by GECC and
MetLife. The new owner will issue new bonds in exchange for the
existing bonds. The new bonds will be in a principal amount equal
to the outstanding principal and unpaid interest on the old bonds
at the non-default rate. The new bonds have the same interest
rates. Interest on the new bonds can be paid by issuing more
bonds through April 2014. The new bonds have the same maturities.
The $466 million in 8.734% secured bonds due in 2026 traded on
Dec. 3 for 111.25 cents on the dollar, to yield 7.1%, according to
Trace, the bond-price reporting system of the Financial Industry
Regulatory Authority.
About Homer City Funding
Homer City Funding LLC, a special-purpose entity created to
finance a coal-fired electric generating facility 45 miles
(72 kilometers) from Pittsburgh, initiated a prepackaged Chapter
11 reorganization (Bankr. D. Del. Case No. 12-13024) on Nov. 5,
2012, to transfer ownership of the plant. The project is operated
under a lease by an affiliate of power producer Edison Mission
Energy. The project's owner is an entity that is 90%-controlled
by an affiliate of General Electric Capital Corp. and 10% by an
affiliate of MetLife Inc.
Upon confirmation of the Plan, ownership will transfer to an
entity controlled by GECC and MetLife. The new owner will issue
new bonds in exchange for the existing bonds.
Judge Kevin Gross oversees the case. Paul Noble Heath, Esq., and
Zachary I Shapiro, Esq., at Richards, Layton & Finger, serve as
the Debtor's counsel. Epiq Bankruptcy Solutions serves as claims
agent.
In its petition, Homer City estimated $500 million to $1 billion
in both assets and debts. The petition was signed by Thomas M.
Strauss, authorized officer.
The petition listed two unsecured creditors: The Bank of New York
Mellon, as trustee for the $465,976,000 in 8.734% Senior Secured
Bond maturing in 2026; and BNY Mellon, as trustee for the
$174,000,000 in 8.137% Senior Secured Bond maturing in 2019. BNY
Mellon is represented by Glenn E. Siegel, Esq. --
glenn.siegel@dechert.com -- at Dechert LLP.
GE Capital is represented by Debra A. Dandeneau, Esq,. at Weil
Gotshal & Manges LLP in New York. MetLife is represented by its
chief counsel of securities investments.
A group of PSA bondholders is represented by George A. Davis,
Esq., at Cadwalader Wickersham & Taft LLP in New York.
On Dec. 6, the Bankruptcy Court confirmed the Debtor's plan of
reorganization. The plan was accepted prepetition by the required
majorities of the holders of $640 million in bonds. An affiliate
of General Electric Capital Corp. holds $103 million, or 16%, of
the bonds. Under the Plan, ownership will transfer to an entity
controlled by GECC and Metropolitan Life Insurance Company. The
new owner will issue new bonds in exchange for the existing bonds.
The new bonds will be in a principal amount equal to the
outstanding principal and unpaid interest on the old bonds at the
non-default rate. The new bonds will have the same interest rates
and maturities. Interest on the new bonds can be paid by issuing
more bonds through April 2014. GECC will provide the project with
a $75 million secured credit on emergence from Chapter 11. Equity
interests in the Debtor is cancelled under the Plan.
HOSTESS BRANDS: More Auctions Scheduled for March 15
----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Hostess Brands Inc. will hold auctions on March 15 to
learn if $56.35 million is the most to be earned from selling some
of the remaining bread businesses and the Drakes cakes operation.
Under sale procedures approved Feb. 13, competing bids are due on
March 12. A hearing to approve the sales will take place April 9.
According to the report, closely held United States Bakery is
under contract to make the first bid of $28.85 million at auction
for the Sweetheart, Standish Farms, Grandma Emilie's and Eddy's
bread brands along with four plants and 14 depots in Alaska,
Montana, Utah, Washington, Idaho and North Dakota. McKee Food
Corp. will make the first bid of $27.5 million for the Drakes
business including Coffee Cakes, Devil Dogs, Ring Dings and
Yodels.
The report notes that the bankruptcy court previously set March 13
as the auction date for the snack cake business where the opening
bid of $410 million cash will come from affiliates of Apollo
Global Management LLC and C. Dean Metropoulos & Co. A Feb. 28
auction was also approved to see if there is an offer to top the
$390 million opening bid from Flowers Foods Inc. for most of the
Hostess bread business.
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. Hostess 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 2012 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 was expected to be completed in one year.
HOVNANIAN ENTERPRISES: Royce Owns 8.9% of Pref. Shares at Dec. 31
-----------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Royce & Associates, LLC, disclosed that, as
of Dec. 31, 2012, it beneficially owns 307,600 conv. preferred
shares of Hovnanian Enterprises, Inc., representing 8.92% of the
shares outstanding. Royce & Associates previously reported
beneficial ownership of 368,100 convertible preferred shares
as of Dec. 31, 2011. A copy of the amended filing is available
for free at http://is.gd/mqd4lU
About Hovnanian Enterprises
Red Bank, New Jersey-based Hovnanian Enterprises, Inc. (NYSE: HOV)
-- http://www.khov.com/-- founded in 1959 by Kevork S. Hovnanian,
is one of the nation's largest homebuilders with operations in
Arizona, California, Delaware, Florida, Georgia, Illinois,
Kentucky, Maryland, Minnesota, New Jersey, New York, North
Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and
West Virginia. The Company's homes are marketed and sold under
the trade names K. Hovnanian Homes, Matzel & Mumford, Brighton
Homes, Parkwood Builders, Town & Country Homes, Oster Homes and
CraftBuilt Homes. As the developer of K. Hovnanian's Four Seasons
communities, the Company is also one of the nation's largest
builders of active adult homes.
For the 12 months ended Oct. 31, 2012, the Company reported a net
loss of $66.19 million on $1.48 billion of total revenues,
compared with a net loss of $286.08 million on $1.13 billion of
total revenues for the same period a year ago.
The Company's balance sheet at Oct. 31, 2012, showed $1.68 billion
in total assets, $2.16 billion in total liabilities and a $485.34
million in total deficit.
* * *
As reported by the TCR on Nov. 7, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Hovnanian
Enterprises Inc. to 'CCC+' from 'CCC-' and removed it from
CreditWatch positive.
"We raised our corporate credit rating to reflect operating
performance that is better than we expected, resulting in
narrowing pretax losses," said credit analyst George Skoufis. "It
also reflects improved liquidity following the recent debt
issuances that will extend the bulk of the company's 2016
maturities to 2020 and reduce its overall interest burden."
In the Dec. 11, 2012, edtiiton of the TCR, Fitch Ratings has
affirmed the ratings for Hovnanian Enterprises, Inc. (NYSE: HOV),
including the company's Issuer Default Rating (IDR), at 'CCC'.
The rating for HOV is influenced by the company's execution of its
business model, land policies, and geographic, price point and
product line diversity. The rating additionally reflects the
company's liquidity position, substantial debt and high leverage.
Hovnanian carries 'Caa2' corporate family and probability of
default ratings from Moody's.
Moody's said in April 2012 that the Caa2 corporate family rating
reflects Hovnanian's elevated debt leverage weak gross margins,
continued operating losses, negative cash flow generation, and
Moody's expectation that the conditions in the homebuilding
industry over the next one to two yeas will provide limited
opportunities for improvement in the company's operating and
financial metrics. In addition, the ratings consider Hovnanian's
negative net worth position, which Moody's anticipates will be
further weakened by continuing operating losses and impairment
charges. As a result, adjusted debt leverage, currently standing
at 149%, is likely to increase further.
INSPIREMD INC: Michael Berman Joins InspireMD Board
---------------------------------------------------
Michael Berman joined InspireMD, Inc.'s board of directors.
Mr. Berman previously served as a Senior Vice President of Boston
Scientific Corp., Group President of its cardiology businesses,
and a member of the Executive Committee.
Since leaving Boston Scientific, Mr. Berman co-founded or was a
founding director of seven medical technology companies, three of
which were sold for more than $350 million, plus $100 million in
contingent payments. He currently serves on the board of eight
other medical industry companies.
Mr. Berman's career-long experience in the field of interventional
cardiology began in 1986 when he joined Scimed (now part of Boston
Scientific in the U.S.) and led its global marketing efforts
during a dynamic growth phase of the company.
In 1995, after Scimed's merger with Boston Scientific, Mr. Berman
was named President of the merged company, Boston
Scientific/Scimed. By then, Scimed's annual revenues had grown
from zero in 1986 to $300 million. Under his leadership as
President, the company increased worldwide sales five-fold to $1.5
billion.
"We are delighted to welcome Mike to our board," said Sol J.
Barer, PhD, Chairman of the Board of InspireMD. "He's been an
incredibly successful executive and entrepreneur in the field of
medical devices and interventional cardiology and he has the kind
of skill sets, experience and wisdom we all feel will bring
valuable insights in strengthening and advancing our strategic
focus."
"I am also delighted Mike has joined our board as we near an
inflection point for the company in both the commercial and
clinical dimensions of our business," added Alan Milinazzo,
InspireMD's CEO. "Mike brings a wealth of firsthand experience in
building global medical device businesses. Further, having
previously worked directly with and for Mike, I know his
contributions to growing our business will be both immediate and
impactful."
Mr. Berman earned a BS degree in Industrial and Labor Relations
and an MBA at Cornell University. He and his wife Judith, a
professor of molecular genetics at the University of Minnesota,
reside in Minneapolis and have two sons.
Mr. Berman has been involved with a number of trade and business
associations including the American-Israel Chamber of Commerce,
Memorial Blood Centers Business Advisory Group, and the University
of Minnesota Institute of BioMedical Engineering.
In addition, he served as Chairman of the Minneapolis Jewish
Community Foundation from 2002-2005, a board member of the
Minneapolis Jewish Day School, a member of the American Heart
Association Executive Leadership team in 2006-2007, and Corporate
Chair of the Juvenile Diabetes Association 1997 Walkathon.
About InspireMD
InspireMD, Inc., was organized in the State of Delaware on
Feb. 29, 2008, as Saguaro Resources, Inc., to engage in the
acquisition, exploration and development of natural resource
properties. On March 28, 2011, the Company changed its name from
"Saguaro Resources, Inc." to "InspireMD, Inc."
Headquartered in Tel Aviv, Israel, InspireMD, Inc., is a medical
device company focusing on the development and commercialization
of its proprietary stent platform technology, Mguard. MGuard
provides embolic protection in stenting procedures by placing a
micron mesh sleeve over a stent. The Company's initial products
are marketed for use mainly in patients with acute coronary
syndromes, notably acute myocardial infarction (heart attack) and
saphenous vein graft coronary interventions (bypass surgery).
The Company's balance sheet at Sept. 30, 2012, showed
$13.6 million in total assets, $14.4 million in total liabilities,
and a stockholders' deficit of $756,000.
InspireMD reported a net loss of US$17.59 million on US$5.35
million of revenue for the year ended June 30, 2012, compared with
a net loss of US$6.17 million on US$4.67 million of revenue during
the prior year.
Kesselman & Kesselman, in Tel Aviv, Israel, issued a "going
concern" qualification on the consolidated financial statements
for the year ended June 30, 2012. The independent auditors noted
that the Company has had recurring losses, negative cash flows
from operating activities and has significant future commitments
that raise substantial doubt about its ability to continue as a
going concern.
The Company said the following statement in its quarterly report
for the period ended Dec. 31, 2012:
"The Company has had recurring losses and negative cash flows from
operating activities and has significant future commitments. For
the six months ended December 31, 2012, the Company had losses of
approximately $9.4 million and negative cash flows from operating
activities of approximately $5.8 million. The Company's
management believes that its financial resources as of December
31, 2012 should enable it to continue funding the negative cash
flows from operating activities through the three months ended
September 30, 2013. Furthermore, commencing October 2013, the
Company's senior secured convertible debentures (the "2012
Convertible Debentures") are subject to a non-contingent
redemption option that could require the Company to make a payment
of $13.3 million, including accrued interest. Since the Company
expects to continue incurring negative cash flows from operations
and in light of the cash requirement in connection with the 2012
Convertible Debentures, there is substantial doubt about the
Company's ability to continue operating as a going concern. These
financial statements include no adjustments of the values of
assets and liabilities and the classification thereof, if any,
that will apply if the Company is unable to continue operating as
a going concern."
The Company's balance sheet at Dec. 31, 2012, showed US$11.59
million in total assets, US$11.39 million in total liabilities and
a US$204,000 in total equity.
INTEGRATED HEALTHCARE: Incurs $13.4-Mil. Net Loss in 4th Quarter
----------------------------------------------------------------
Integrated Healthcare Holdings, Inc., filed with the U.S.
Securities and Exchange Commission its quarterly report on Form
10-Q disclosing a net loss attributable to the Company of $13.37
million on $101.02 million of patient service revenues for the
three months ended Dec. 31, 2012, as compared with net income
attributable to the Company of $12.54 million on $123.03 million
of patient service revenues for the same period during the prior
year.
For the nine months ended Dec. 31, 2012, the Company incurred a
net loss attributable to the Company of $14.26 million on $331.98
million of patient service revenues, as compared with net income
attributable to the Company of $10.17 million on $306.39 million
of patient service revenues for the same period a year ago.
The Company's balance sheet at Dec. 31, 2012, showed $163.99
million in total assets, $191.77 million in total liabilities and
a $27.78 million total stockholders' deficiency.
A copy of the Form 10-Q is available for free at:
http://is.gd/PY7R6x
Amendment to Credit Agreement with Silver Point
On Feb. 7, 2013, Integrated Healthcare and its subsidiaries WMC-A,
Inc., WMC-SA, Inc., Chapman Medical Center, Inc., and Coastal
Communities Hospital, Inc., entered into an "Amendment and
Restatement to the Credit Agreement" with SPCP Group IV, LLC, SPCP
Group, LLC, and Silver Point Finance, LLC, as the Lender Agent,
Pacific Coast Holdings Investment, LLC, and Ganesha Realty, LLC.
Under the Amendment, the $80,000,000 Credit Agreement, dated as of
Oct. 9, 2007, as amended, to which IHHI and the Silver Point
Entities are parties was amended and restated in its entirety in
the form of the "Amended and Restated Credit Agreement
($47,277,000 Term Loan)". The Restated Credit Agreement reflects
changes to the terms of the Credit Agreement that were previously
made under various amendments entered into by the Company since
inception of the Credit Agreement in October 2007.
In addition, the following new amendments were made to the Credit
Agreement and reflected in the Restated Credit Agreement:
* The Stated Maturity Date was extended to April 13, 2016. The
Credit Agreement was previously due to mature on April 13,
2013.
* The annual interest rate applicable to the loans under the
Credit Agreement was modified from the previous fixed rate of
14.5% to LIBOR plus 10%, with the LIBOR floor set at 2% (the
effective interest rate is currently 12%), except upon an
Event of Default. The Company may elect from one, two or
three months LIBOR interest periods, except in an Event of
Default when the interest period may not exceed one month.
* The principal balance under the Credit Agreement was
increased from $46,350,000 to $47,277,000 to reflect new
borrowings by the Company under the Restated Credit
Agreement.
* The Company repaid all amounts owing to SPCP Group IV, LLC,
under the Credit Agreement, consisting of a principal balance
of $8,119,634 plus accrued interest of $19,622, and increased
the principal amount owing to SPCP Group, LLC, under the
Credit Agreement by $9,046,634 to reflect the repayment to
SPCP Group IV, LLC and other new borrowings.
* The financial covenants applicable to the Company under the
Credit Agreement were amended, including the covenants
requiring the Company to maintain minimum levels of EBITDA.
* Upon receipt by the Company of enhanced federal matching
funds from Medi-Cal under the Quality Assurance Fee Program,
the Company is required to make certain prepayments of
principal under its Revolving Loan Agreement with MidCap
Financial, LLC.
* A prepayment fee was established for voluntary prepayments
under the Credit Agreement equal to 5% for prepayments made
on or prior to Dec. 31, 2013, and 2% for prepayments made
after Jan. 1, 2014, and before Dec. 31, 2014.
Warrant Transactions
In connection with the Amendment, on Feb. 7, 2013, IHHI entered
into the following transactions involving warrants:
IHHI entered into a Warrant Repurchase Agreement with SPCP Group
IV, LLC, pursuant to which IHHI repurchased the outstanding Common
Stock Warrant issued to SPCP Group IV, LLC on or about April 13,
2010. The Cancelled Warrant entitled the holder to purchase an
aggregate of 16,817,365 shares of IHHI Common Stock at an exercise
price of $0.07 per share. The Cancelled Warrant was repurchased
by IHHI for a purchase price of $0.12 per share minus the exercise
price of $0.07 per share, or a net purchase price of $0.05 per
share, multiplied by 16,817,365 shares exercisable under the
Warrant, or an aggregate purchase price of $840,868.
Immediately following the warrant repurchase, IHHI issued a new
Common Stock Warrant to SPCP Group, LLC for a price of $0.05 per
share, on the same terms as the Cancelled Warrant entitling the
holder to purchase an aggregate of 16,817,365 shares of Common
Stock at an exercise price of $0.07 per share, except that the new
warrant expires on April 13, 2016.
Simultaneous with the transactions, IHHI also extended the
expiration date from April 13, 2013, to April 13, 2016, for (i)
the warrant held by SPCP Group, LLC, to purchase 79,182,635 shares
at an exercise price of $0.07 per share, (ii) the warrant held by
Dr. Kali P. Chaudhuri, M.D. to purchase 170,000,000 shares at an
exercise price of $0.07 per share, and (iii) the warrant held by
KPC Resolution Company, LLC, to purchase 139,000,000 shares at an
exercise price of $0.07 per share. The extension of the warrant
expiration date was intended to conform the term of the warrants
to that of the Restated Credit.
Amendment to Revolving Loan Facility with MidCap
On Feb 7, 2013, the Company entered into "Amendment No. 4 to
Credit and Security Agreement and Limited Consent" with MidCap
Funding IV, LLC and Silicon Valley Bank, as lenders, and MidCap
Financial, LLC, as agent.
The Revolving Loan Amendment amends the Credit and Security
Agreement, dated as of Aug. 30, 2010, as amended, to which the
Company, the Lenders and the Agent are parties, to reflect the
following changes:
* The maximum face amount of the Letter of Credit Liabilities
permitted under the Revolving Loan Agreement was increased to
$760,755, and the Lenders consented to the issuance of a
Letter of Credit in the same amount by Wells Fargo Bank,
National Association.
* The Commitment Expiry Date under the Revolving Loan Agreement
was amended to allow for an extension from Aug. 30, 2013, to
Jan. 31, 2014, at Agent's and Lenders' sole option, which
option can be exercised at any time prior to March 31, 2013.
* The period during which the Prepayment Fee of 1% is
applicable was extended from three years from the original
closing date to the Commitment Expiry Date (if it is extended
by the Agent and Lenders).
* The Agent and Lenders consented to the Company's entry into
the Amendment with the Silver Point Entities and the Restated
Credit Agreement thereunder.
About Integrated Healthcare
Headquartered in Santa Ana, Calif., Integrated Healthcare
Holdings, Inc. (OTC BB: IHCH) -- http://www.ihhioc.com/ -- owns
and operates four community-based hospitals located in southern
California.
INTEGRATED HEALTHCARE: Silver Point Stake at 27.3% as of Feb. 7
---------------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Silver Point Capital, L.P., and its
affiliates disclosed that, as of Feb. 7, 2013, they beneficially
own 96,000,000 shares of common stock of Integrated Healthcare
Holdings, Inc., representing 27.3% of the shares outstanding. A
copy of the filing is available for free at http://is.gd/mOpLWp
About Integrated Healthcare
Headquartered in Santa Ana, Calif., Integrated Healthcare
Holdings, Inc. (OTC BB: IHCH) -- http://www.ihhioc.com/ -- owns
and operates four community-based hospitals located in southern
California.
The Company's balance sheet at Dec. 31, 2012, showed $163.99
million in total assets, $191.77 million in total liabilities and
a $27.78 million total stockholders' deficiency.
IMAGEWARE SYSTEMS: Revelation Has 5.9% Stake at Dec. 31
-------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Revelation Special Situations Fund Ltd
disclosed that, as of Dec. 31, 2012, they beneficially own
2,671,342 shares of common stock and 2,015,280 shares of common
stock issuable upon exercise of Warrants of ImageWare Systems,
Inc., representing 5.97% of the shares outstanding. Revelation
previously reported beneficial ownership of 3,500,000 common
shares or a 7.5% of the shares outstanding as of Dec. 20, 2011. A
copy of the amended filing is available for free at:
http://is.gd/hmQDAF
About ImageWare Systems
Headquartered in San Diego, California, ImageWare Systems, Inc.,
is a leader in the emerging market for software-based identity
management solutions, providing biometric, secure credential, law
enforcement and enterprise authorization. Its "flagship" product
is the IWS Biometric Engine. Scalable for small city business or
worldwide deployment, the Company's biometric engine is a multi-
biometric platform that is hardware and algorithm independent,
enabling the enrollment and management of unlimited population
sizes. The Company's identification products are used to manage
and issue secure credentials, including national IDs, passports,
driver licenses, smart cards and access control credentials. Its
law enforcement products provide law enforcement with integrated
mug shot, fingerprint LiveScan and investigative capabilities.
The Company also provides comprehensive authentication security
software.
The Company reported a net loss of $3.18 million in 2011,
compared with a net loss of $5.05 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $10.49
million in total assets, $8.35 million in total liabilities and
$2.14 million in total shareholders' equity.
IMAGEWARE SYSTEMS: Jon Gruber Has 10.5% Stake as of Dec. 31
-----------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Jon D. Gruber and his affiliates disclosed that, as of
Dec. 31, 2012, they beneficially own 8,003,515 shares of common
stock of representing 10.5% of the shares outstanding. A copy of
the filing is available at http://is.gd/tON3Nx
About ImageWare Systems
Headquartered in San Diego, California, ImageWare Systems, Inc.,
is a leader in the emerging market for software-based identity
management solutions, providing biometric, secure credential, law
enforcement and enterprise authorization. Its "flagship" product
is the IWS Biometric Engine. Scalable for small city business or
worldwide deployment, the Company's biometric engine is a multi-
biometric platform that is hardware and algorithm independent,
enabling the enrollment and management of unlimited population
sizes. The Company's identification products are used to manage
and issue secure credentials, including national IDs, passports,
driver licenses, smart cards and access control credentials. Its
law enforcement products provide law enforcement with integrated
mug shot, fingerprint LiveScan and investigative capabilities.
The Company also provides comprehensive authentication security
software.
The Company reported a net loss of $3.18 million in 2011,
compared with a net loss of $5.05 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $10.49
million in total assets, $8.35 million in total liabilities and
$2.14 million in total shareholders' equity.
INFUSYSTEM HOLDINGS: Standstill Provision Waived to Meson
---------------------------------------------------------
InfuSystem Holdings, Inc., previously entered into a settlement
agreement with investors, directors David Dreyer and Wayne Yetter,
the directors who resigned from the Company's board of directors
on April 24, 2012, and the directors who were appointed to the
Board on April 24, 2012. Section 2.2 of the Settlement Agreement
provides in its entirety as follows:
"Section 2.2 Standstill Provisions. Each of the Investors
agrees that, except as otherwise provided in this Agreement,
during the Standstill Period, such Investor will not, and he
or it will cause each of such Investor's Affiliates and
Associates, agents or other persons acting on such Investor's
behalf not to:
(a) acquire, offer or propose to acquire, or agree or seek to
acquire, by purchase or otherwise, (i) more than five percent
(5%) of the outstanding shares of Common Stock, including
direct or indirect rights or options to acquire more than
five percent (5%) of the outstanding shares of Common Stock
or (ii) any other securities of the Company or any subsidiary
of the Company, including direct or indirect rights or
options to acquire any of the foregoing;
(b) submit any stockholder proposal (pursuant to Rule 14a-8
promulgated by the SEC under the Exchange Act or otherwise)
or any notice of nomination or other business for
consideration, or nominate any candidate for election to the
Board, other than as set forth in this Agreement;
(c) form, join in or in any other way participate in a
"partnership, limited partnership, syndicate or other group"
within the meaning of Section 13(d)(3) of the Exchange Act
with respect to the Common Stock or deposit any shares of
Common Stock in a voting trust or similar arrangement or
subject any shares of Common Stock to any voting agreement
or pooling arrangement, other than solely with such
Investor's Affiliates or with respect to the Common Stock
currently owned or to the extent such a group may be deemed
to result with the Company or any of its Affiliates as a
result of this Agreement;
(d) solicit proxies, agent designations or written consents
of stockholders, or otherwise conduct any nonbinding
referendum with respect to Common Stock, or make, or in any
way participate in, any "solicitation" of any "proxy" within
the meaning of Rule 14a-1 promulgated by the SEC under the
Exchange Act to vote, or advise, encourage or influence any
person with respect to voting, any shares of Common Stock
with respect to any matter, or become a "participant" in any
contested "solicitation" for the election of directors with
respect to the Company (as such terms are defined or used
under the Exchange Act and the rules promulgated by the SEC
thereunder), other than a "solicitation" or acting as a
"participant" in support of all of the nominees of the Board
at the 2012 Annual Meeting and the 2013 Annual Meeting;
(e) seek to call, or to request the call of, a special
meeting of the stockholders of the Company, or seek to make,
or make, a stockholder proposal at any meeting of the
stockholders of the Company or make a request for a list of
the Company's stockholders (or otherwise induce, encourage
or assist any other person to initiate or pursue such a
proposal or request);
(f) effect or seek to effect (including, without limitation,
by entering into any discussions, negotiations, agreements
or understandings with any third person), offer or propose
(whether publicly or otherwise) to effect, or cause or
participate in, or in any way assist or facilitate any other
person to effect or seek, offer or propose (whether publicly
or otherwise) to effect or cause or participate in (i) any
acquisition of any material assets or businesses of the
Company or any of its subsidiaries, (ii) any tender offer or
exchange offer, merger, acquisition or other business
combination involving the Company or any of its
subsidiaries, or (iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction
with respect to the Company or any of its subsidiaries;
(g) publicly disclose, or cause or facilitate the public
disclosure (including without limitation the filing of any
document or report with the SEC or any other governmental
agency or any disclosure to any journalist, member of the
media or securities analyst) regarding any intent, purpose,
plan, action or proposal with respect to the Board, the
Company, its management, strategies, policies or affairs or
any of its securities or assets or this Agreement that is
inconsistent with the provisions of this Agreement,
including any intent, purpose, plan, action or proposal that
is conditioned on, or would require waiver, amendment, or
consent under, any provision of this Agreement;
(h) seek election or appointment to, or representation on, or
nominate or propose the nomination of any candidate to the
Board; or seek the removal of any member of the Board, in
each case other than as set forth in this Agreement;
(i) (i) knowingly sell, transfer or otherwise dispose of any
shares of Common Stock to any Person who or that is (or will
become upon consummation of such sale, transfer or other
disposition) a beneficial owner of fifteen percent (15%) or
more of the outstanding Common Stock; or (ii) without the
prior written consent of the Company (acting through the
Board), on any single day, sell, transfer or otherwise
dispose of more than five percent (5%) of the outstanding
shares of Common Stock through the public markets;
(j) enter into any arrangements, understandings or agreements
(whether written or oral) with, or advise, finance, assist or
encourage, any other person that engages, or offers or
proposes to engage, in any of the foregoing; or
(k) take or cause or induce or assist others to take any
action inconsistent with any of the foregoing.
On Feb. 9, 2013, the Board, approved the waiver of the application
of these standstill provisions provided in Section 2.2 to Meson
Capital Partners LP, Meson Capital Partners LLC and Ryan J.
Morris, each an Investor or affiliate of an Investor under the
Settlement Agreement.
C. Gillman Won't Seek Reelection
On Feb. 7, 2013, director Charles Gillman notified the Board that
he has declined to stand for re-election to the Board at the
Company's 2013 annual meeting of stockholders. Mr. Gillman
indicated that he does not have any disagreement with the
Company's management or the Board. The Company currently has not
set a date for the Annual Meeting.
Employment Agreemetn wtih CEO
The Board previously appointed Dilip Singh to the position of
Interim Chief Executive Officer and President of the Company,
effective April 24, 2012. In connection therewith, the Company
entered into an Employment Agreement with Mr. Singh which provided
for an initial employment term of six months. Also, the Company
entered into an amendment to the Singh Employment Agreement,
effective Oct. 24, 2012, further extending Mr. Singh's employment
six months.
On Feb. 9, 2013, upon the recommendation of the Compensation
Committee and approval by the Board, the Company and Mr. Singh
entered into, effective Feb. 24, 2013 , an amended and restated
employment agreement with the Company which further amends the
Singh Employment Agreement in the following ways:
(i) the Term of the Second Amendment extends Mr. Singh's
employment to April 23, 2013, continuing his salary which
is equal to $300,000 per annum from the Effective Date;
(ii) Mr. Singh will be paid his performance bonus of
$166,666 for the Oct. 24, 2012, to Feb. 23, 2012,
employment term on Feb. 24, 2013, without any conditions
and regardless of whether he is still employed by the
Company at that time;
(iii) Mr. Singh is eligible for a severance payment in the
amount of $83,333, with said payment to be determined in
the sole and absolute discretion of the Compensation
Committee of the Board of Directors of the Company,
payable to Mr. Singh on April 24, 2013; and
(iv) Mr. Singh will have a period of 18 months following the
later of April 24, 2013 or his termination of service in
which to exercise any vested stock options.
Consulting Agreement with J. Foster
As previously disclosed, the Board appointed Jonathan P. Foster to
the position of Chief Financial Officer of the Company, effective
March 16, 2012. In connection therewith, the Company entered into
a Consulting Agreement with Mr. Foster. The Consulting Agreement
was amended effective as of Aug. 14, 2012, which provided an
extension of Mr. Foster's Consulting Agreement through March 16,
2013.
On Feb. 9, 2013, upon the recommendation of the Compensation
Committee and approval by the Board, the Company and Mr. Foster
entered into an amendment to the First Amendment, which amends the
First Amendment in the following ways:
(i) Mr. Foster will continue to serve as Chief Financial
Officer as a consultant of the Company through June 30,
2013, which Term is renewable automatically for successive
one month periods until the Company provides at least 60
days advance written notice of termination of the Foster
Amendment to Mr. Foster;
(ii) Mr. Foster's consulting fee will continue to be paid
$25,000 on the 15th day and the last day of each month
during the Term, and Mr. Foster will receive a one-time
payment of $20,000 on March 16, 2013; and
(iii) the Company will reimburse Mr. Foster for legal expenses
incurred up to $3,500 for negotiating the Foster Amendment.
About InfuSystem Holdings
InfuSystem Holdings, Inc., operates through operating
subsidiaries, including InfuSystem, Inc., and First Biomedical,
Inc. InfuSystem provides infusion pumps and related services.
InfuSystem provides services to hospitals, oncology practices and
facilities and other alternate site healthcare providers.
Headquartered in Madison Heights, Michigan, InfuSystem delivers
local, field-based customer support, and also operates pump
service and repair Centers of Excellence in Michigan, Kansas,
California, and Ontario, Canada.
After auditing the Company's 2011 financial statements, Deloitte &
Touche LLP, in Detroit, Michigan, said that the possibility of a
change in the majority representation of the Board and consequent
event of default under the Credit Facility, which would allow the
lenders to cause the debt of $24.0 million to become immediately
due and payable, raises substantial doubt about the Company's
ability to continue as a going concern.
The Company reported a net loss of $45.44 million in 2011,
compared with a net loss of $1.85 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $74.02
million in total assets, $34.68 million in total liabilities and
$39.33 million in total stockholders' equity.
INFUSYSTEM HOLDINGS: Ryan Morris Is 8% Owner as of Nov. 30
----------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Ryan J. Morris and his affiliates disclosed
that, as of Feb. 9, 2013, they beneficially own 1,775,043 shares
of common stock of InfuSystem Holdings, Inc., representing 8% of
the shares outstanding. Mr. Morris previously reported beneficial
ownership of 1,754,210 common shares or a 7.9% equity stake as of
Nov. 30, 2012. A copy of the amended filing is available at:
http://is.gd/QMnUT1
About InfuSystem Holdings
InfuSystem Holdings, Inc., operates through operating
subsidiaries, including InfuSystem, Inc., and First Biomedical,
Inc. InfuSystem provides infusion pumps and related services.
InfuSystem provides services to hospitals, oncology practices and
facilities and other alternate site healthcare providers.
Headquartered in Madison Heights, Michigan, InfuSystem delivers
local, field-based customer support, and also operates pump
service and repair Centers of Excellence in Michigan, Kansas,
California, and Ontario, Canada.
After auditing the Company's 2011 financial statements, Deloitte &
Touche LLP, in Detroit, Michigan, said that the possibility of a
change in the majority representation of the Board and consequent
event of default under the Credit Facility, which would allow the
lenders to cause the debt of $24.0 million to become immediately
due and payable, raises substantial doubt about the Company's
ability to continue as a going concern.
The Company reported a net loss of $45.44 million in 2011,
compared with a net loss of $1.85 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $74.02
million in total assets, $34.68 million in total liabilities and
$39.33 million in total stockholders' equity.
INSPIRATION BIOPHARMA: Court OKs Add'l Services of Ropes & Gray
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts
authorized Inspiration Biopharmaceuticals, Inc., to expand the
scope of retention of Ropes & Gray LLP as special corporate
counsel to include certain additional services related to and
necessary to consummate the Debtor's sale of certain assets.
On Dec. 3, 2012, the Court approved the employment of Ropes & Gray
as special corporate counsel to provide legal advice with respect
to, among other things, the Debtor's sales of assets in the
Chapter 11 case. At the recent auction for certain assets in the
Chapter 11 case, the winning bidder submitted a bid contingent
upon receiving approval from the appropriate regulatory
authorities pursuant to Hart-Scott-Rodino Act.
In addition to R&G's current role, R&G would provide additional
services, including:
1. assisting and advising the Debtor in preparing and filing
various forms with the Federal Trade Commission;
2. assisting and advising the Debtor in preparing and
responding to agency information requests;
3. interfacing with the FTC to advance the process, including
preparing and providing presentations to the FTC regarding
the assets to be sold and the therapeutic categories
implicated.
The FTC's initial HSR review is expected to be a 15 to 30 day
process, after which the FTC will decide to either approve the
transaction or request additional information before reaching a
decision. If the FTC decides to request for additional after
information after the review, it is typical for the FTC to engage
in an intensive review of large amounts of additional information
and documents and to take several month to complete the review
process.
The principal attorneys designated to provide additional services
to the Debtor and their standard hourly rates are:
Michael S. McFalls $845
Michael D. Laufert $536
About Inspiration Biopharmaceuticals
Inspiration Biopharmaceuticals Inc. develops recombinant blood
coagulation factor products for the treatment of hemophilia.
Inspiration, based in Cambridge, Massachusetts, has two products
in what the company calls "advanced clinical development." Two
other products are in "pre-clinical development." None of the
products can be marketed as yet.
Inspiration filed for voluntary Chapter 11 reorganization (Bankr.
D. Mass. Case No. 12-18687) on Oct. 30, 2012, in Boston.
Bankruptcy Judge William C. Hillman oversees the case. Mark
Weinstein and Michael Nolan, at FTI Consulting, Inc., serve as the
Debtor's Chief Restructuring Officers. The Debtor is represented
by Harold B. Murphy of Murphy & King.
The petition shows assets and debt both exceed $100 million.
Assets include patents, trademarks and the products in
development. Liabilities include $195 million owing to Ipsen
Pharma SAS, which is also a 15.5% shareholder. Ipsen --
http://www.ipsen.com/-- is also owed $19.4 million in unsecured
debt. There is another $12 million in unsecured claims. Ipsen is
pledged to provide $18.3 million in financing. The Debtor
disclosed $20,383,300 in assets and $241,049,859 in liabilities.
Ipsen is represented in the case by J. Eric Ivester, Esq., at
Skadden Arps.
The Official Committee of Unsecured Creditors tapped Jeffrey D.
Sternklar and Duane Morris LLP as its counsel, and The Hawthorne
Consulting Group, LLC as its financial advisor.
INSPIRATION BIOPHARMA: DIP Financing Extended Until March 12
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts
approved Inspiration Biopharmaceuticals, Inc.'s Amended and
Restated Senior Secured Superpriority Debtor-in-Possession Loan
Promissory Note between the Debtor and Ipsen Pharma, S.A.S.
On Dec. 19, 2012, the Court entered a final order approving the
DIP borrowing motion and the senior secured superpriority Debtor-
in-Possession Promissory Note. The final order authorized the
advance of up to $18,300,000 under the loan facility. The loan
facility had a maturity date of Feb. 27, 2013, subject to earlier
termination if one of the several events of default were to occur.
The Debtor and Ipsen agreed to a budget until Jan. 31, 2013, in
connection with entry of the final order.
On Jan. 24, 2013, the Court authorized the sale of the OBI-1
hemophilia product line to Baxter Healthcare Corporation, Baxter
Internation, Inc., and Baxter Healthcare, S.A., subjcet to entry
of an order to be submitted by the parties.
Because of necessary regulatory approval, closing on the sale of
the OBI-1 assets to Baxter will be delayed.
The principal changes from the note to the amended note are:
1. The maturity date is extended from Feb. 27, to March 12;
2. The total availability under the loan facility is increased
from $18,300,000 to $23,642,474; and
3. Events of default under the Amended Note include: (i) the
failure to obtain entry of an order approving the sale of
the OBI-1 assets to Baxter by Jan. 31; and (ii) the failure
to obtain entry of an order approving the sale of the Factor
IX assets by Feb. 11.
About Inspiration Biopharmaceuticals
Inspiration Biopharmaceuticals Inc. develops recombinant blood
coagulation factor products for the treatment of hemophilia.
Inspiration, based in Cambridge, Massachusetts, has two products
in what the company calls "advanced clinical development." Two
other products are in "pre-clinical development." None of the
products can be marketed as yet.
Inspiration filed for voluntary Chapter 11 reorganization (Bankr.
D. Mass. Case No. 12-18687) on Oct. 30, 2012, in Boston.
Bankruptcy Judge William C. Hillman oversees the case. Mark
Weinstein and Michael Nolan, at FTI Consulting, Inc., serve as the
Debtor's Chief Restructuring Officers. The Debtor is represented
by Harold B. Murphy of Murphy & King.
The petition shows assets and debt both exceed $100 million.
Assets include patents, trademarks and the products in
development. Liabilities include $195 million owing to Ipsen
Pharma SAS, which is also a 15.5% shareholder. Ipsen --
http://www.ipsen.com/-- is also owed $19.4 million in unsecured
debt. There is another $12 million in unsecured claims. Ipsen is
pledged to provide $18.3 million in financing. The Debtor
disclosed $20,383,300 in assets and $241,049,859 in liabilities.
Ipsen is represented in the case by J. Eric Ivester, Esq., at
Skadden Arps.
The Official Committee of Unsecured Creditors tapped Jeffrey D.
Sternklar and Duane Morris LLP as its counsel, and The Hawthorne
Consulting Group, LLC as its financial advisor.
ISC8 INC: Amends Report on Bivio Software Business Acquisition
--------------------------------------------------------------
As previously announced, on Oct. 12, 2012, pursuant to the terms
of the Foreclosure Sale Agreement between ISC8 Inc. and GF
AcquisitionCo. 2012, LLC, dated Oct. 4, 2012, the Company acquired
substantially all of the assets of the NetFalcon and Network
Content Control System Business of Bivio Networks, Inc., and
certain of its subsidiaries. The purchase price of those assets
was $600,000 payable in cash to GFAC, and the issuance to GFAC of
a warrant to purchase capital stock of the Company. In addition,
the Company will assume certain liabilities, including accounts
payable, contractual obligations, reclamation obligations and
other liabilities related to the Bivio Software Business.
The Company has amended the report in order to make available (i)
the audited financial statements of the Bivio Software Business as
of Jan. 31, 2011, and 2012 and for the years then ended, (ii) the
unaudited financial statements of the Bivio Software Business as
of Sept. 30, 2011, and 2012 and for the eight-month periods then
ended and (iii) the pro forma financial statements of the Company
as of Sept. 30, 2012, and for the twelve months then ended, which
give effect to the Acquisition.
Copies of the financial statements are available at:
http://is.gd/bjFbyp
http://is.gd/pjLWNu
http://is.gd/pjLWNu
http://is.gd/wMg275
About ISC8 Inc.
Costa Mesa, California-based ISC8 Inc. is engaged in the design,
development, manufacture and sale of a family of security
products, consisting of cyber security solutions for commercial
and U.S. government applications, secure memory products, some of
which utilize technologies that the Company has pioneered for
three-dimensional ("3-D") stacking of semiconductors, systems in a
package ("Systems in a Package" or "SIP"), and anti-tamper
systems.
Squar, Milner, Peterson, Miranda & Williamson, LLP, in Newport
Beach, California, expressed substantial doubt about ISC8 Inc.'s
ability to continue as a going concern. The independent auditors
noted that as of Sept. 30, 2012. The Company has negative working
capital of $10.1 million and a stockholders' deficit of
$35.4 million.
The Company reported a net loss of $19.7 million on $4.2 million
of revenues in fiscal 2012, compared with a net loss of
$15.8 million on $5.2 million of revenues in fiscal 2011.
The Company's balance sheet at Sept. 30, 2012, showed $6.1 million
in total assets, $41.5 million in total liabilities, and a
stockholders' deficit of $35.4 million.
J.C. PENNEY: Bondholder Dispute No Impact on Moody's 'B3' CFR
-------------------------------------------------------------
Moody's Investors Service earlier this month reported that J.C.
Penney Company, Inc.'s B3 Corporate Family Rating and negative
outlook remain unchanged at the present time following JCP's
announcement that it was disputing a Notice of Default received
from a law firm representing more than 50% of its 7.4% Debentures
due 2037.
The principal methodology used in this rating was the Global
Retail Industry Methodology published in June 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
J.C. Penney Company, Inc. is one of the U.S.'s largest department
store operators with about 1,100 locations in the United States
and Puerto Rico. Revenues are about $14 billion.
JASON INC: Moody's Rates Proposed $260MM Senior Debt Facility B1
----------------------------------------------------------------
Moody's Investors Service has assigned a B1 Corporate Family
Rating to Jason Incorporated and a B1 rating to its proposed $260
million senior secured credit facilities. The rating outlook is
stable.
Proceeds from the proposed $225 million term loan will be used to
repay existing debt and finance a $48 million dividend to its
sponsor, Saw Mill Capital Partners. The balance of the credit
facilities will be in the form of an unused $35 million revolving
credit facility.
The following ratings have been assigned subject to review of
final documentation:
B1 Corporate Family Rating;
B2-PD Probability of Default Rating (PDR);
B1 (LGD3,30%) to the proposed $35 million revolving credit
facility due 2018; and
B1 (LGD3,30%) to the proposed $260 million senior secured term
loan due 2019.
Rating Rationale
The B1 rating reflects Jason's moderately high adjusted leverage,
4.6x proforma at close, exposure to end market cyclicality,
regional concentration in North America and adequate liquidity
profile. Given that many of the company's customers are in
industries currently in the midst of a broad recovery, Moody's
believes that Jason is poised for near-term improvement in
profitability and overall financial metrics.
The rating further reflects the company's solid market position in
its diverse, yet niche businesses and cyclical growth prospects
over the near term. As the company is believed to be the domestic
or global leader in the majority of its sales, Moody's expects
that Jason should benefit from positive trends in a number of the
company's key end markets including automobile, construction
manufacturing, rail, and lawn and garden equipment. Over the next
12 -- 24 months, provided that the nascent recovery within these
and other markets continues, Moody's expects Jason's operating
performance to experience modest margin growth and improving cash
generation. Additionally, pro forma for the issuance of the
proposed bank facilities, Jason will have minimal interest and
principal payment requirements (around $15 to $20 million
annually), resulting in strong cash interest coverage metrics,
which should provide financial flexibility during cyclical
downturns.
The stable rating outlook reflects Moody's expectation that Jason
will benefit from increased activity within a number of key end
markets and among its key customers, including Harley-Davidson,
Chrysler, Black & Decker, and John Deere resulting in a reduction
in financial leverage and improvement in its liquidity profile.
The B1 rating on the senior credit facility reflect its first lien
on substantially all real and personal property of Jason and its
guarantor subsidiaries. In addition, the rating reflects a 65%
overall family recovery rate which benefits from a substantially
all first lien capital structure.
Given Jason's focus on relatively small and cyclical end market in
North America, an upgrade in the near term is unlikely. To the
extent that Jason is able to meaningfully increase its scale
without a deterioration in its leverage profile or liquidity, an
upgrade would be possible. Moody's would expect adjusted debt-to-
EBITDA to be sustained below 4.0x prior to an upgrade.
Although Moody's believes Jason to have an adequate liquidity
profile, a ratings downgrade would occur if weak operating
performance were to constrain the company's near-term liquidity,
either through revolver usage or covenant tightening. Interest
coverage below 2.0 times, leverage above 5.0x or negative free
cash flow would likely result in negative rating action.
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.
Jason Incorporated, headquartered in Milwaukee, Wisconsin, is a
diversified industrial manufacturing company serving finishing
(industrial and maintenance brushes, buffs, and compounds),
Seating (static seating to motorcycle, construction, agriculture
equipment and lawn and turf care equipment), Acoustics (fiber
based insulation products to the auto industry) and Components
(producer of metal products, rail safety products and subassembly
of electric smart meters). Jason is owned by Saw Mill Capital
Partners. Revenue for 2012 was roughly $655 million.
JEFFERSON COUNTY: Reduces Debt on Some School System Bonds
----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that a county commissioner said in an interview that
Jefferson County, Alabama, agreed with holders of some of the $814
million in school system bonds to lower the interest rate, saving
$1 million a year. The bonds, held by Depfa Bank Plc, had the
highest interest rate among the school system debt.
About Jefferson County
Jefferson County has its seat in Birmingham, Alabama. It has a
population of 660,000.
Jefferson County filed a bankruptcy petition under Chapter 9
(Bankr. N.D. Ala. Case No. 11-05736) on Nov. 9, 2011, after an
agreement among elected officials and investors to refinance
$3.1 billion in sewer bonds fell apart.
John S. Young Jr. LLC was appointed as receiver by Alabama Circuit
Court Judge Albert Johnson in September 2010.
Jefferson County's bankruptcy represents the largest municipal
debt adjustment of all time. The county said that long-term debt
is $4.23 billion, including about $3.1 billion in defaulted sewer
bonds where the debt holders can look only to the sewer system for
payment.
The county said it would use the bankruptcy court to put a value
on the sewer system, in the process fixing the amount bondholders
should be paid through Chapter 9.
Judge Thomas B. Bennett presides over the Chapter 9 case. Lawyers
at Bradley Arant Boult Cummings LLP and Klee, Tuchin, Bogdanoff &
Stern LLP, led by Kenneth Klee, represent the Debtor as counsel.
Kurtzman Carson Consultants LLC serves as claims and noticing
agent. Jefferson estimated more than $1 billion in assets. The
petition was signed by David Carrington, president.
The bankruptcy judge in January 2012 ruled that the state court-
appointed receiver for the sewer system largely lost control as a
result of the bankruptcy. Before deciding whether Jefferson County
is eligible for Chapter 9, the bankruptcy judge will allow the
Alabama Supreme Court to decide whether sewer warrants are the
equivalent of "funding or refunding bonds" required under state
law before a municipality can be in bankruptcy.
U.S. District Judge Thomas B. Bennett ruled in March 2012 that
Jefferson County is eligible under state law to pursue a debt
restructuring under Chapter 9. Holders of more than $3 billion in
defaulted sewer debt had challenged the county's right to be in
Chapter 9.
JOHN L SMITH: Creditors Allege Fraud
------------------------------------
Brent Schrotenboer, writing for USA TODAY Sports, reported that
former Arkansas and Michigan State football coach John L. Smith
has been accused of using his employment contracts with the
Razorbacks to defraud several of his creditors, according to two
complaints filed this week in U.S. Bankruptcy Court.
The report related that Smith filed for Chapter 7 bankruptcy last
year, claiming more than $40 million in liabilities stemming from
failed real estate deals around Louisville. By doing so, Smith
hoped to have those debts discharged so he can move on with his
life. But the creditors are trying to prevent that by filing
complaints that are tantamount to civil lawsuits.
USA Today said the bankruptcy arm of the U.S. Department of
Justice also has investigated Smith for potential fraud and abuse
of the bankruptcy system but has not filed a complaint, according
to court filings. Smith made a series of transactions "with the
intent to hinder, delay, or defraud creditors," said one of the
complaints filed Monday.
The creditors, the report said, cite his unusual contract with the
Razorbacks last year, in which 71% of his $850,000 salary was
deferred until right after the 2012 season. In general, the
bankruptcy estate controls assets acquired by a debtor before the
date of the bankruptcy filing, which was Sept. 6 in Smith's case.
Debtors generally can keep what they earn after the filing date.
The complaint also says Smith transferred several valuable assets
in recent years to his daughter and a trust in his wife's name,
USA Today said. By doing so, the creditors allege he was
concealing money owed them.
JUMP OIL: Phillips 66 Gas Stations in Chapter 11 to Sell
--------------------------------------------------------
Jump Oil Company filed a Chapter 11 petition (Bankr. E.D. Mo.) on
Feb. 14, 2013, in St. Louis, Missouri.
Jump Oil owns 42 parcels of real property throughout the state of
Missouri, on which gas and service stations are operated by
various third-party lessees pursuant to lease agreements with
Debtor. The gas stations are Phillips 66 branded stations,
pursuant to a branding and licensing agreement between Debtor and
Phillips 66.
The Debtor's combined indebtedness as of the Petition Date, both
secured and unsecured, is $22.5 million. Colonial Pacific Leasing
Station is owed $17.9 million secured by a perfected security
interest and liens 37 of the gas stations. CRE Venture 2011-1,
LLC is owed $716,000 secured by in three of the Debtor's sites.
Lindell Bank is owed $347,000 secured by interest in two of the
Debtor's sites.
The Debtor has arranged $300,000 of DIP financing from Colonial,
which funds will be used to make the Debtor compliant with
Phillips 66 standards and requirements concerning the receipt and
transmission of customer debit/credit card information. The
Debtor said that it needs keep its gas stations as Phillips 66
branded sites to maximize the Debtor's value in a Sec. 363 sale of
its principal assets.
To bring the Gas Stations into PCI Compliance, the Debtor is
seeking approval to enter into a contract with Mid-State Petroleum
Equipment, Inc., which will perform the necessary work on the gas
stations.
The Debtor on the petition date filed applications to employ
Goldstein & Pressman, P.C. as counsel; HNWC as financial
consultants; Matrix Private Equities, Inc. as financial advisor;
Mariea Sigmund & Browning, LLC as special counsel; and Wolff &
Taylor, PC as accountants.
The Debtor said that as part of its plans to sell all or a portion
of its gas stations pursuant to 11 U.S.C. Section 363, it has
tapped Matrix to provide valuation, marketing, merger and
acquisition services, and other financial advisory services.
JUMP OIL: Proposes $300,000 of DIP Financing From Colonial
----------------------------------------------------------
To maintain its branding rights and license with Phillips 66 for
its gas stations, Jump Oil Company is required to make certain
updates and improvements to the gas stations to bring them into
compliance with Phillips 66 standards and requirements concerning
the receipt and transmission of customer debit/credit card
information.
Three secured creditors assert first priority interests in the
Debtor's gas stations: Colonial Pacific Leasing Station, owed
$17.9 million, asserts liens in 37 of the gas stations; CRE
Venture 2011-1, LLC, owed $716,000, asserts liens in three sites;
and Lindell Bank, owed $347,000, asserts interests in two.
The Debtor requests that the Court approve a DIP Loan Agreement
between Debtor and Colonial, as DIP Lender. The DIP Loan
Agreement would allow the Debtor to borrow on a secured basis up
to an additional sum of $300,000 which would be used for the
specific and limited purpose of bringing the Colonial Sites into
PCI Compliance. The DIP Loan is also a protective advance under
the existing loan documents which, pursuant to applicable state
law, would be prior to any junior liens.
According to the Debtor, it is essential to avoid immediate and
irreparable harm to the Debtor's business, cash flows inventory,
and customer base that the Borrower obtain the requested cash to
meet these needs. Any disruptions to, or elimination of the
Debtor's Gas Stations as Phillips 66 branded sites, would
irreparably hinder Debtor's operations and would impair the
Debtor's ability to maximize its value in a Section 363 sale of
its principal assets.
The DIP loan would bear interest at 12%. The loan will mature
upon: six months following the financing order is entered; the
date on which the sale of the Colonial collateral closes; or the
date which Colonial declares all DIP obligations due and payable
on account of the occurrence of an event of default.
About Jump Oil Company
Jump Oil owns 42 parcels of real property throughout the state of
Missouri, on which gas and service stations are operated by
various third-party lessees pursuant to lease agreements with
Debtor. The gas stations are Phillips 66 branded stations,
pursuant to a branding and licensing agreement.
Jump Oil Company filed a Chapter 11 petition (Bankr. E.D. Mo.) on
Feb. 14, 2013, in St. Louis, Missouri to sell its gas stations
pursuant to 11 U.S.C. Sec. 363.
JUMP OIL: Hiring Goldstein & Pressman as Counsel
------------------------------------------------
Jump Oil Company is seeking to employ Goldstein & Pressman, P.C.,
as Chapter 11 counsel.
The hourly rate of the firm's shareholders is $345 for Steven
Goldstein and $325 per hour for Norman W. Pressman.
In the year prior to the Petition Date, the firm received $43,300
for services rendered in preparation for the Chapter 11 filing.
The firm represents no interest adverse to the Debtor in the
matters for which Goldstein & Pressman is to be retained.
About Jump Oil Company
Jump Oil owns 42 parcels of real property throughout the state of
Missouri, on which gas and service stations are operated by
various third-party lessees pursuant to lease agreements with
Debtor. The gas stations are Phillips 66 branded stations,
pursuant to a branding and licensing agreement.
Jump Oil Company filed a Chapter 11 petition (Bankr. E.D. Mo.) on
Feb. 14, 2013, in St. Louis, Missouri to sell its gas stations
pursuant to 11 U.S.C. Sec. 363.
Pursuant to the lease agreements, the Debtor collects rents from
the tenants. The Debtor is the exclusive provider of gasoline to
the tenants and obtains the gasoline through a distribution
agreement with a third-party.
KINBASHA GAMING: Files Q3 Results; In Debt Talks with Lenders
-------------------------------------------------------------
Kinbasha Gaming International, Inc. has filed its quarterly report
with the SEC and released its financial results for the three and
nine months ended December 31, 2012.
For the three months ended December 31, 2012, net revenues
decreased from $26.0 million to $23.6 million, due primarily to
the sale of the business rights to our three remaining restaurants
on July 1, 2012. Net gaming revenues decreased slightly to $23.2
million from $23.4 million solely as a result of a 4.7% decrease
in the yen/dollar exchange rate. When expressed in yen, net
gaming revenues actually increased 4.2% for the three months ended
December 31, 2012 compared to the same quarter in 2011.
For the nine months ended December 31, 2012, net revenues
increased to $73.0 million from $68.6 million in the nine months
ended December 31, 2011. This increase was due to an increase in
net gaming revenues from $62.0 million to $70.2 million.
Net income improved to $7.3 million in the three months ended
December 31, 2012 as compared to net income of $1.4 million in the
same period of 2011. Likewise, net income improved to $4.9
million in the nine months ended December 31, 2012 as compared to
a net loss of $8.7 million in the same period of 2011.
These improvements to the bottom line are generally attributed to
enhanced market conditions, an increase in total wagers due to the
reopening of a pachinko parlor in April 2012 that had been closed
due to earthquake damage, and a non-recurring $3.0 million gain
resulting from a change in the Company's policy for employment
termination benefits. Net income also increased as a result of
improved payout ratios due to a shift in the mix of pachinko
machines and the positive effects of Kinbasha's marketing programs
to promote more cost effective prize payouts.
"Kinbasha is pleased to report another productive quarter," said
Masatoshi Takahama, Chief Executive Officer of Kinbasha. "As we
execute our strategic growth initiatives, we believe the decisions
we have made will position Kinbasha to continue to grow in our
proven markets while also reducing expenses and reducing debt. We
continue to negotiate with our lenders to restructure our loans in
default, including the restructuring of one loan in particular, in
the principal amount of $6.5 million."
Mr. Takahama continued, "As the only Japanese pachinko company
that is SEC-reporting we also look forward to pursuing a listing
on the OTCQX and working with our relationships in the US markets
to raise capital for our expansion initiatives in greater
metropolitan areas such as Tokyo."
About Kinbasha Gaming
Westlake Village, California-based Kinbasha Gaming International,
Inc., owns and operates retail gaming centers, commonly called
"pachinko parlors," in Japan. These parlors, which resemble
Western style casinos, offer customers the opportunity to play the
games of chance known as pachinko and pachislo. Pachinko gaming
is one of the largest entertainment business segments in Japan.
These operations are conducted predominately through Kinbasha's
98% owned Japanese subsidiary, Kinbasha Co. Ltd. ("Kinbasha
Japan"). Kinbasha Japan has been in this business since 1954. As
of September 30, 2012, the Company operated 21 pachinko parlors,
of which 18 were in the Japanese prefecture of Ibaraki, two were
in the Tokyo metropolis, and one was in the Chiba prefecture.
For the six months ended Sept. 30, 2012, the Company had a net
loss of $2.3 million on $49.3 million of net revenues, compared
with a net loss of $10.0 million on $41.7 million of net revenues
for the six months ended Sept. 30, 2011.
The Company's balance sheet at Sept. 30, 2012, showed
$150.0 million in total assets, $201.9 million in total
liabilities, and a stockholders' deficit of $51.9 million.
Going Concern Doubt
Marcum LLP, in Los Angeles, Calif., expressed substantial doubt
about Kinbasha's ability to continue as a going concern following
their audit of the Company's financial statements for the fiscal
year ended March 31, 2012. The independent auditors noted that
the Company has incurred substantial losses, its current
liabilities exceeds its current assets and the Company is
delinquent on the repayment of its capital lease obligations.
LANDRY'S INC: Debt Facility Changes No Impact on Moody's Ratings
----------------------------------------------------------------
Moody's Investors Service reports that Landry's, Inc.'s amendment
to its bank credit facility is credit neutral and the company's
ratings and stable rating outlook are currently unaffected. The
proposed amendment includes a favorable re-pricing of the facility
as well as changes to incurrence tests and reporting requirements
governing permitted acquisitions and permitted indebtedness.
Landry's Inc. owns and operates mostly casual dining restaurants
under the trade names Landry's Seafood House, Chart House,
Saltgrass Steak House, Rainforest Cafe, Bubba Gump, and McCormick
& Schmicks, Claim Jumper, and Morton's Restaurants, Inc. Landry's
Inc. also owns and operates the Golden Nugget hotel and casino in
Las Vegas, Nevada. Annual revenue of the restaurant group is
approximately $2.0 billion.
LEHMAN BROTHERS: Wants Testimony From JPMorgan's London Whale
-------------------------------------------------------------
Lehman Brothers Holdings Inc. wants to question Bruno Iksil, the
former JPMorgan Chase & Co. trader Bruno Iksil, who acquired the
moniker "the London Whale" for his outsized bets and large sale of
credit default swaps that helped undo Lehman.
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Lehman wants his testimony under oath with regard to
claims that the bank made unnecessary collateral calls before
bankruptcy in 2008.
Lehman, according to BankruptcyLaw360, told the court that it
wanted to question Iksil on issues including a $273 million
derivatives margin dispute between the companies that stemmed from
Iksil's allegedly mismarked trades in JPMorgan's chief investment
office.
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)
LEVEL 3: Incurs $56 Million Net Loss in Fourth Quarter
------------------------------------------------------
Level 3 Communications, Inc., reported a net loss of $56 million
on $1.61 billion of revenue for the three months ended Dec. 31,
2012, as compared with a net loss of $163 million on $1.57 billion
of revenue for the same period during the prior year.
For the year ended Dec. 31, 2012, the Company incurred a net loss
of $422 million on $6.37 billion of revenue, as compared with a
net loss of $756 million on $4.33 billion of revenue during the
prior year.
The Company's balance sheet at Dec. 31, 2012, showed $13.30
billion in total assets, $12.13 billion in total liabilities and
$1.17 billion in stockholders' equity.
A copy of the press release is available at http://is.gd/KoASlH
About Level 3 Communications
Headquartered in Broomfield, Colorado, Level 3 Communications,
Inc., is a publicly traded international communications company
with one of the world's largest communications and Internet
backbones.
* * *
As reported by the TCR on April 2, 2012, Fitch Ratings upgraded
Level-3 Communications' Issuer Default Rating to 'B' from 'B-' on
Oct. 4, 2011, and assigned a Positive Outlook. The rating action
followed LVLT's announcement that the company closed on its
previously announced agreement to acquire Global Crossing Limited
(GLBC) in a tax-free, stock-for-stock transaction.
In the July 20, 2012, edition of the TCR, Moody's Investors
Service affirmed Level 3 Communications, Inc.'s corporate family
and probability of default ratings at B3. The Company's B3
ratings are based on expectations that net synergies from the
recently closed acquisition of Global Crossing Ltd. will reduce
expenses sufficiently such that Level 3 will be modestly cash flow
positive (on a sustained basis) by late 2013.
Level 3 carries a 'B-' corporate credit rating from Standard &
Poor's Ratings Services.
LIBERATOR INC: Signs $17 Million TENGA Distribution Agreement
-------------------------------------------------------------
Liberator, Inc., signed a new three-year, $17 million exclusive
marketing and distribution agreement with TENGA Co., Ltd.
OneUp Innovations, Inc., the operating company of Liberator, has
been the exclusive U.S. distributor for Tokyo-based Tenga since
2010. Under the new agreement, OneUp Innovations has agreed to
purchase JPY 1.25 billion of TENGA products for sale and
distribution in the United States over the next three years. At
current exchange rates and at current selling prices, this
represents approximately $17 million in wholesale sales revenue
for Liberator.
"The Tenga line of male masturbators is the number one selling
male sex toy in Japan and we believe Liberator is the best partner
to continue our expansion in North America," said Mr. Koichi
Matsumoto, CEO of Tenga.
"We are extremely pleased that TENGA has decided to continue our
partnership as we work with them to reach the next level of
success in the U.S.," stated Louis Friedman, CEO of Liberator,
Inc. "Over the last three years we have greatly expanded the
sales and distribution of TENGA products through traditional adult
channels as well as drug store, mass market and other mainstream
channels including emerging internet flash sites. We expect this
trend to gain momentum as more and more mainstream adult male
consumers begin to appreciate the sexual wellness benefits of the
full line of TENGA products."
The TENGA male sexual enhancement devices are innovative in their
function and product design, shaped and sized in such a way that
they look and feel like any other toiletry a man would normally
carry or use while at home or on the road.
About Liberator
Atlanta, Georgia-based Liberator is a vertically integrated
manufacturer that designs, develops and markets products and
accessories that enhance intimacy. Liberator is also a nationally
recognized brand trademark, brand category and a patented line of
products commonly referred to as sexual positioning shapes and sex
furniture.
The Company reported a net loss of $782,417 fiscal 2012, compared
with a net loss of $801,252 in fiscal 2011.
Webb & Company, P.A., in Boynton Beach, Fla., expressed
substantial doubt about Liberator's ability to continue as a going
concern following the fiscal 2012 financial results. The
independent auditors noted that the Company has a net loss of
$782,417, a working capital deficiency of $1.6 million, an
accumulated deficit of $7.8 million, and negative cash flow from
continuing operations of $464,800.
The Company's balance sheet at Sept. 30, 2012, showed $3.20
million in total assets, $4.50 million in total liabilities and a
$1.30 million in total stockholders' deficit.
LIGHTSQUARED INC: Chapter 11 Plan to Require Support of Lenders
---------------------------------------------------------------
Judge Shelley Chapman of the U.S. Bankruptcy Court for the
Southern District of New York approved LightSquared Inc.'s
agreement with lenders to further extend its exclusive right to
file a Chapter 11 plan and solicit votes from creditors.
The agreement extends LightSquared's exclusive right to file its
own plan and solicit votes until July 15, 2013, barring creditors
and other parties from filing rival plans and maintains
LightSquare's control over its restructuring.
The six-month extension allows LightSquared and the lenders to
negotiate regarding the terms of the plan. If the parties,
however, fail to reach an agreement, LightSquared or any party may
file a plan after July 15.
Prior to the termination of its exclusive right, LightSquared will
only be permitted to file a plan that proposes to pay certain pre-
bankruptcy obligations, and that has been consented to by lenders,
U.S. Bank N.A. and MAST Capital Management, LLC, according to the
agreement. The agreement is available for free at
http://is.gd/CMrolr
The deal requires the lenders to direct and cause UBS AG Stamford
Branch, as administrative agent under a credit agreement dated
October 1, 2010, to consent to the amendment of the cash
collateral order entered on June 13, 2012.
The amendment would allow LightSquared to continue to use the cash
collateral through December 31, 2013. A copy of the proposed
amended cash collateral order is available for free at
http://is.gd/he6FUz
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
recounts that the lenders were resisting LightSquared's efforts to
extend the exclusive right to propose a Chapter 11 plan. The
settlement provides that so-called exclusivity will end once and
for all on July 15, when the lenders or anyone else can file a
plan. In the meantime, the warring factions are supposed to
engage in "good faith negotiations regarding the terms of a
consensual Chapter 11 plan."
In return for the exclusivity extension to July, the interest rate
on the loan rises to 12.5% and maturity is extended to Dec. 31.
In addition, the agreement precludes LightSquared from filing a
plan without consent from the lenders, unless the plan pays the
debt in full when the plan is implemented. Secured claims more
senior in priority also must be paid in full, absent consent.
The lenders, the report discloses, sought to terminate
exclusivity, based on allegations that Harbinger was misusing
LightSquared's bankruptcy for its benefit. The lenders contend
they found defects in loans and security interests in favor of
Harbinger, the owner.
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, 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.
Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to
the Debtors. Alvarez & Marsal North America, LLC, is the
financial advisor. Kurtzman Carson Consultants LLC serves as
claims and notice agent.
LIGHTSQUARED INC: Seeks More Time to Assume or Reject BDC Lease
---------------------------------------------------------------
LightSquared Inc. asked the U.S. Bankruptcy Court for the Southern
District of New York for additional time to decide on whether to
assume or reject a lease with BDC Parkridge LLC.
The company wants the deadline to assume or reject the lease
extended to the earlier of December 31, 2013, or the date upon
which a Chapter 11 plan is confirmed in its bankruptcy case.
LightSquared entered into the contract to lease an office space
located at 10800-10802 Parkridge Boulevard, in Reston, Virginia.
A court hearing is scheduled for Feb. 27.
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.
LIN TV: S&P Rates $60MM 5-Yr. Incremental Term Loan 'BB'
--------------------------------------------------------
Standard & Poor's Ratings Services assigned LIN Television Corp.'s
$60 million five-year incremental term loan under its tranche B-2
term facility its 'BB' issue-level rating and '1' recovery rating,
indicating S&P's expectation for very high (90%-100%) recovery
in the event of a payment default. LIN Television Corp. is a
wholly owned subsidiary of Providence, R.I.-based LIN TV Corp.
(LIN).
LIN used the proceeds, along with cash on hand and borrowings
under its $75 million revolving credit facility, to make a
$100 million capital contribution to its NBC joint venture. As a
result, LIN was released from its guarantee obligation of the
joint venture's outstanding debt.
"Our rating on LIN reflects our assessment of the company's
business risk profile as "fair" and its financial risk profile as
"aggressive," based on our criteria. We view 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. We assess LIN's financial risk
profile as aggressive as we expect 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. We estimate current leverage, on
a trailing-eight-quarters basis, to be about 7.7x," S&P said.
RATINGS LIST
LIN TV Corp.
Corporate Credit Rating B+/Positive/--
New Rating
LIN Television Corp.
$60M five-year term loan BB
Recovery Rating 1
LOW CARBON: In Debt of CNSX Requirements; Gets Suspension Order
---------------------------------------------------------------
LCTI Low Carbon Technologies International Inc. is in default of
CNSX requirements. Effective immediately, LCTI Low Carbon
Technologies is suspended pursuant to CNSX Policy 3. The
suspension is considered a Regulatory Halt as defined in National
Instrument 23-101 Trading Rules.
LCTI Low Carbon Technologies International Inc., formerly EnCap
Investments Inc., is focused on acquiring operating businesses,
real estate and low carbon energy technologies.
LUXEYARD INC: Amends 13.7 Million Common Shares Prospectus
----------------------------------------------------------
Luxeyard, Inc., filed an amended Form S-1 with the U.S. Securities
and Exchange Commission, covering the sale by Black Mountain
Equities, Inc., Heights Capital Management, Cranshire Capital
Master Fund, Ltd., et al., of up to (i) 6,868,570 shares of common
stock issuable upon conversion of the selling stockholders that
own 8% Convertible Perpetual Preferred Stock, par value $0.0001
per share, and (ii) 6,868,570 shares of the Company's common stock
issuable upon exercise of Series C warrants held by the selling
stockholders at an exercise price of $0.50 per share. The shares
being sold by the selling stockholders were issued to them in
private placement transactions which were exempt from the
registration and prospectus delivery requirements of the
Securities Act of 1933, as amended.
The Company will not receive any proceeds from sales of shares of
its common stock or warrants by the selling stockholders.
However, to the extent the warrants are exercised for cash, if at
all, the Company will receive the exercise price of the warrants.
The Company will pay the expenses incurred in connection with the
offering described in this prospectus, with the exception of
brokerage expenses, fees, discounts and commissions, which will be
paid by selling stockholders.
The Company's common stock is presently traded on the OTCQB under
the symbol LUXR. On Feb. 11, 2013, the last sale price of the
Company's shares as reported by the OTCQB was $0.012 per share.
A copy of the amended prospectus is available at:
http://is.gd/ZWrgnM
About Luxeyard, Inc.
Los Angeles, California-based Luxeyard, Inc., a Delaware
Corporation, is an internet company selling luxury goods on a
flash Web site. Luxeyard, Inc., is the parent company of the
wholly owned subsidiaries, LY Retail, LLC, incorporated under the
laws of the State of Texas on April 20, 2011, and LY Retail, LLC,
incorporated in the State of California on Nov. 8, 2011.
The Company's balance sheet at Sept. 30, 2012, showed $1.5 million
in total assets, $5.8 million in total liabilities, and a
stockholders' deficit of $4.3 million.
"As of Sept. 30, 2012, we have generated minimal revenues since
inception. We expect to finance our operations primarily through
our existing cash, our operations and any future financing.
However, there exists substantial doubt about our ability to
continue as a going concern because we will be required to obtain
additional capital in the future to continue our operations and
there is no assurance that we will be able to obtain such capital,
through equity or debt financing, or any combination thereof, or
on satisfactory terms or at all. Additionally, no assurance can
be given that any such financing, if obtained, will be adequate to
meet our capital needs. If adequate capital cannot be obtained on
a timely basis and on satisfactory terms, our operations would be
materially negatively impacted. Therefore, there is substantial
doubt as to our ability to continue as a going concern."
An Involuntary Petition for bankruptcy, entitled In re Luxeyard,
Inc. (Case No. 12-bk-51986-BR), was filed against LuxeYard, Inc.,
by three creditors of the Company. The petition was filed in the
United States Bankruptcy Court, Central District of California.
The date that jurisdiction was assumed was Dec. 27, 2012. The
Petitioners have claimed that they have debts totaling $66,220.
MARTIN MIDSTREAM: Moody's Rates New $250MM Sr. Unsecured Notes B3
-----------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to Martin Midstream
Partners L.P.'s proposed issuance of $250 million senior unsecured
notes due 2021. Net proceeds from the new notes offering will be
used to repay borrowings under MMLP's senior secured revolving
credit facility. Moody's also affirmed the company's B1 Corporate
Family Rating, B1-PD Probability of Default Rating and the B3
rating on its outstanding $175 million senior unsecured notes due
2018. The SGL-3 Speculative Grade Liquidity rating is unchanged.
The outlook is stable.
"This proposed debt issuance will provide incremental liquidity
under Martin Midstream Partners' revolver, which was utilized to
incur debt in connection with its Cross specialty lubricant
product, Redbird Gas Storage, and Talen's marine terminal
acquisitions in the fourth quarter of 2012. However, we do not
expect MMLP's leverage profile to improve through 2014 as its
internally generated cash flows could fall short of growth related
capital expenditures," commented Arvinder Saluja, Moody's Analyst.
Issuer: Martin Midstream Partners L.P.
Rating Assigned:
US$250 million Senior Unsecured Notes due 2021, B3 (LGD5, 76%)
Ratings Affirmed:
Corporate Family Rating, B1
Probability of Default rating, B1-PD
US$175 million Senior Unsecured Notes due 2018, B3 (LGD5, 76%)
Speculative Grade Liquidity Rating, SGL-3
Outlook, stable
Ratings Rationale
The B1 CFR is restrained by MMLP's small scale, geographic
concentration, and relatively high leverage. Moody's anticipates
the company's Debt / EBITDA as of December 31, 2012, pro-forma for
the notes offering, to be just north of 4.5x, which is somewhat
higher than the peer group B1 median Debt/EBITDA of 4.2x. The
rating is supported by the diversification within MMLP's business
line, the high proportion of fee-based cash flows within its
business segments, and Moody's expectation of continued support
from its general partner, Martin Resource Management Corporation.
The company made three acquisitions in the fourth quarter 2012
totaling over $320 million, which were largely funded with
drawings under the company's revolver; however an equity issuance
in November helped manage that burden. Moody's expects MMLP to
begin realizing a greater portion of the acquired assets cash flow
in 2013 and 2014.
The B3 rating on the proposed $250 million senior notes reflects
both MMLP's overall probability of default, to which Moody's
assigns a PDR of B1-PD, and a loss given default of LGD 5 (76%).
MMLP also has $175 million of senior notes due 2018. Both the new
and existing senior notes are unsecured and are, therefore,
structurally subordinated to the senior secured credit facility's
priority claim on the company's assets. The senior notes are rated
two notches below the B1 CFR given Moody's expectation that MMLP
will continue to incur debt, primarily in the form of revolver
borrowings, to finance future growth projects and will not
experience improvement in leverage over the intermediate term. The
size of the potential senior secured claims relative to the
unsecured notes results in a B3 rating for notes under Moody's
Loss Given Default Methodology.
Pro forma for the notes offering, MMLP is expected to have roughly
$350 million available under its $400 million senior secured
revolver, which matures in 2016. However, due to the anticipated
growth capital expenditures and outspending of cash flow, Moody's
expects the availability to be reduced to around $200 million over
the next four quarters. The financial covenants under the facility
require that MMLP maintain a maximum Debt / EBITDA ratio of 5x, a
maximum secured Debt / EBITDA ratio of 3.25x, and an interest
coverage ratio of 2.5x. The company is expected to remain in
compliance with all three ratios throughout 2013. The speculative
grade liquidity rating of SGL-3 reflects the expectation that
internally generated cash flow will not be sufficient to fund the
planned capital budget, and therefore there is a high degree of
reliance on the revolver.
The stable outlook assumes that debt / EBITDA will be sustained
around 4.5x. Growth capital expenditures in 2013 will be high as
the company grows and makes expansions within the acquired assets.
Moody's could upgrade the ratings if scale and/or business risk
profile materially improve and if debt / EBITDA is expected to be
sustained below 4.0x. Moody's could downgrade the ratings if it
appears that debt / EBITDA will be sustained above 5.0x, if the
business risk profile deteriorates as a result of significant
growth into riskier business lines, or if there is a deterioration
in the credit profile of MRMC which, in addition to MMLP's GP,
owns all incentive distribution rights and 19% of the limited
partner interests of MMLP.
The principal methodology used in rating Martin Midstream was the
Global Midstream 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.
Martin Midstream Partners L.P. is a public, midstream Master
Limited Partnership headquartered in Kilgore, Texas.
MCCLATCHY CO: BlackRock Has 5.4% Ownership at Dec. 31
----------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, BlackRock, Inc., disclosed that, as of
Dec. 31, 2012, it beneficially owns 3,315,525 shares of common
stock of representing 5.43% of the shares outstanding. BlackRock
previously reported beneficial ownership of 3,289,711 common
shares or a 5.47% equity stake as of Dec. 31, 2010. A copy of the
amended filing is available for free at http://is.gd/RUcqas
About The McClatchy Company
Sacramento, Calif.-based The McClatchy Company (NYSE: MNI)
-- http://www.mcclatchy.com/-- is the third largest newspaper
company in the United States, publishing 30 daily newspapers, 43
non-dailies, and direct marketing and direct mail operations.
McClatchy also operates leading local Web sites in each of its
markets which extend its audience reach. The Web sites offer
users comprehensive news and information, advertising, e-commerce
and other services. Together with its newspapers and direct
marketing products, these interactive operations make McClatchy
the leading local media company in each of its premium high growth
markets. McClatchy-owned newspapers include The Miami Herald, The
Sacramento Bee, the Fort Worth Star-Telegram, The Kansas City
Star, The Charlotte Observer, and The News & Observer (Raleigh).
For the year ended Dec. 30, 2012, the Company reported a net loss
of $144,000 on $1.23 billion of revenue, as compared with net
income of $54.38 million on $1.26 billion of revenue for the year
ended Dec. 25, 2011.
The Company's balance sheet at Sept. 23, 2012, showed
$2.88 billion in total assets, $2.67 billion in total liabilities,
and $210.29 million in stockholders' equity.
* * *
McClatchy carries a 'Caa1' corporate family rating from Moody's
Investors Service. In May 2011, Moody's changed the rating
outlook from stable to positive following the company's
announcement that it closed on the sale of land in Miami for
$236 million. The outlook change reflects Moody's expectation
that McClatchy will utilize the net proceeds to reduce debt,
including its underfunded pension position, which will reduce
leverage by approximately half a turn and lower required
contributions to the pension plan over the next few years.
McClatchy Co. carries a 'B-' Corporate Credit Rating from
Standard & Poor's Ratings Services.
MEDICAL ALARM: Incurs $244,000 Net Loss in Dec. 31 Quarter
----------------------------------------------------------
Medical Alarm Concepts Holding, Inc., incurred a net loss of
$820,307 on $573,472 of revenue for the fiscal year ended June 30,
2012, as compared with a net loss of $825,078 on $452,110 of
revenue during the prior fiscal year.
For the quarter ended Dec. 31, 2012, the Company incurred a net
loss of $244,430 on $102,280 of revenue.
The Company's balance sheet as of Dec. 31, 2012, showed $879,451
in total assets and $4.13 million in total liabilities.
A copy of the report is available at http://is.gd/ECrx0z
About Medical Alarm
Plymouth Meeting, Pa.-based Medical Alarm Concepts Holding, Inc.,
utilizes new technology in the medical alarm industry to provide
24-hour personal response monitoring services and related products
to subscribers with medical or age-related conditions.
The Company's balance sheet at March 31, 2011, showed
$1.40 million in total assets, $3.41 million in total liabilities,
and a $2 million total stockholders' deficit. As of March 31,
2011, the Company had $0 in cash.
The Company said in its quarterly report for the period ended
March 31, 2011, "We believe we cannot satisfy our cash
requirements for the next twelve months with our current cash and,
unless we receive additional financing, we may be unable to
proceed with our plan of operations. We do not anticipate the
purchase or sale of any significant equipment. We also do not
expect any significant additions to the number of our employees.
The foregoing represents our best estimate of our cash needs based
on current planning and business conditions. Additional funds are
required, and unless we receive proceeds from financing, we may
not be able to proceed with our business plan for the development
and marketing of our core services. Should this occur, we will
suspend or cease operations."
"We anticipate incurring operating losses in the foreseeable
future. Therefore, our auditors have raised substantial doubt
about our ability to continue as a going concern."
The Company has not filed its succeeding financial reports after
the March 31, 2011, Form 10-Q.
MF GLOBAL: Hits Two Snags in Quick Plan Confirmation
----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that MF Global Holdings Ltd. creditors hit two snags
Feb. 14 in their attempt at having a Chapter 11 reorganization
plan approved in bankruptcy court by April 5.
According to the report, Feb. 14 was the hearing for approval of
disclosure materials explaining the Chapter 11 plan initially
filed by a group of creditors. Louis Freeh, the Chapter 11
trustee for the MF Global holding company, joined the plan as a
co-proponent early this month.
The report relates that one obstacle is an objection raised by the
bankruptcy judge. U.S. Bankruptcy Judge Martin Glenn faulted the
plan for proposing to reimburse the creditors for their expenses
and lawyers' fees. By giving the creditors immunity from
lawsuits, he also said the plan violates bankruptcy law
prohibitions against releases in favor of non-bankrupt third
parties.
According to the report, Judge Glenn scheduled another hearing on
the disclosure statement for Feb. 20. The judge said he might
give creditors their expenses related to the plan, although not
reimbursement for all costs since the bankruptcy began. The
creditors said they would file a revision of the disclosure
statement Feb. 15.
The second obstacle is litigation begun Feb. 14 by JPMorgan Chase
Bank NA that, if successful, could increase the recovery by
creditors of the finance subsidiary by 6.1% to 26.3% or perhaps
more, by knocking out a $928 million claim against the finance
subsidiary.
JPMorgan, as agent for lenders owed $1.2 billion, filed papers
Feb. 14 seeking court permission to attack the validity of $928
million in claims against finance subsidiary MF Global Finance USA
Inc. If the claim falls, the distribution to JPMorgan and other
creditors of the finance subsidiary would materially increase, the
bank said in its court papers. The bank arranged a March 6
hearing for permission to sue.
JPMorgan's argument is based on loan transactions in the days
before bankruptcy when the MF Global holding company borrowed
$931 million and downstreamed $928 million to the finance
company. The loan was structured in a way so the finance company
is liable twice for the same $928 million, once to the bank and a
second time to the holding company. JPMorgan wants to eliminate
the debt to the parent based on several theories. The bank
previously said their theories would increase the recovery against
the finance subsidiary to a range of 25.3% to 59.6%.
The creditors' disclosure statement predicts a recovery of
13.4% to 39.1% for holders of $1.134 billion in unsecured claims
against the parent holding company. Bank lenders would have the
same recovery on their $1.148 billion claim against the holding
company. The predicted recovery is 14.7% to 34% for holders of
$1.19 billion in unsecured claims against MF Global Finance USA
Inc., one of the companies under the umbrella of the holding
company trustee. Bank lenders' claims against the finance
subsidiary are scheduled for the same percentage recovery on their
$1.148 billion claim. The plan deals only with creditors of the
MF Global holding company, not with customers and creditors of the
brokerage.
Creditors proposing the plan last month include Deutsche
Bank Securities Inc., an affiliate of Citigroup Inc., Knighthead
Master Fund LP, Royal Bank of Scotland Plc, an affiliate of Blue
Mountain Capital Inc., and Waterstone Capital Management LP.
About MF Global
New York-based MF Global -- http://www.mfglobal.com/-- was 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 also was one of 22 primary dealers authorized to
trade U.S. government securities with the Federal Reserve Bank of
New York. MF Global's roots go back nearly 230 years to a sugar
brokerage on the banks of the Thames River in London.
MF Global Holdings Ltd. and MF Global Finance USA Inc. filed
voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059
and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive
Brokers Group collapsed. As of Sept. 30, 2011, MF Global had
$41,046,594,000 in total assets and $39,683,915,000 in total
liabilities.
Judge Honorable Martin Glenn presides over the Chapter 11 case.
J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric
Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve
as bankruptcy counsel. The Garden City Group, Inc., serves as
claims and noticing agent. The petition was signed by Bradley I.
Abelow, Executive Vice President and Chief Executive Officer of MF
Global Finance USA Inc.
Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy
cases of MF Global Holdings Ltd. and its affiliates. The Chapter
11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as
investigative counsel; (ii) FTI Consulting Inc., as restructuring
advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel;
and (iv) Pepper Hamilton as special counsel.
An Official Committee of Unsecured Creditors has been appointed
in the case. The Committee has retained Capstone Advisory Group
LLC as financial advisor.
The Securities Investor Protection Corporation commenced
liquidation proceedings against MF Global Inc. to protect
customers. James W. Giddens was appointed as trustee pursuant to
the Securities Investor Protection Act. He is a partner at Hughes
Hubbard & Reed LLP in New York.
Jon Corzine, the former New Jersey governor and co-CEO of
Goldman Sachs Group Inc., stepped down as chairman and chief
executive officer of MF Global just days after the bankruptcy
filing.
MF GLOBAL: Drops Fight with Koch Unit Over $20M Claim
-----------------------------------------------------
Jamie Santo of BankruptcyLaw360 reported that Koch Supply &
Trading LP and MF Global Inc.'s liquidating trustee buried the
hatchet in their dispute over an expired $20 million letter of
credit meant for the now-bankrupt brokerage, according to a
stipulation filed Thursday in New York federal court.
The report said James W. Giddens, the appointed liquidating
trustee, asserted that the $20 million draft was an asset of the
defunct firm's estate while KS&T countered it was a dead letter,
not a live debt, and the issue had been hotly contested.
About MF Global
New York-based MF Global -- http://www.mfglobal.com/-- was 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 also was one of 22 primary dealers authorized to
trade U.S. government securities with the Federal Reserve Bank of
New York. MF Global's roots go back nearly 230 years to a sugar
brokerage on the banks of the Thames River in London.
MF Global Holdings Ltd. and MF Global Finance USA Inc. filed
voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059
and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive
Brokers Group collapsed. As of Sept. 30, 2011, MF Global had
$41,046,594,000 in total assets and $39,683,915,000 in total
liabilities.
Judge Honorable Martin Glenn presides over the Chapter 11 case.
J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric
Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve
as bankruptcy counsel. The Garden City Group, Inc., serves as
claims and noticing agent. The petition was signed by Bradley I.
Abelow, Executive Vice President and Chief Executive Officer of MF
Global Finance USA Inc.
Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy
cases of MF Global Holdings Ltd. and its affiliates. The Chapter
11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as
investigative counsel; (ii) FTI Consulting Inc., as restructuring
advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel;
and (iv) Pepper Hamilton as special counsel.
An Official Committee of Unsecured Creditors has been appointed
in the case. The Committee has retained Capstone Advisory Group
LLC as financial advisor.
The Securities Investor Protection Corporation commenced
liquidation proceedings against MF Global Inc. to protect
customers. James W. Giddens was appointed as trustee pursuant to
the Securities Investor Protection Act. He is a partner at Hughes
Hubbard & Reed LLP in New York.
Jon Corzine, the former New Jersey governor and co-CEO of
Goldman Sachs Group Inc., stepped down as chairman and chief
executive officer of MF Global just days after the bankruptcy
filing.
MGM RESORTS: William Grounds Elected to Board of Directors
----------------------------------------------------------
MGM Resorts International (NYSE: MGM) announced that its Board of
Directors has elected William Grounds to serve as a member of its
Board of Directors.
Chairman and CEO Jim Murren said, "We welcome Bill Grounds and
look forward to working with him as a member of our Board of
Directors. Bill has tremendous international development
experience. He has demonstrated his strong business background
serving as the Las Vegas representative of Infinity World, while
working with us during the development and opening phases of our
CityCenter joint venture."
Mr. Grounds is a Director and President of Infinity World
Development Corp. (Infinity World), an affiliate of Dubai World.
He serves as a member of the Board of Directors for CityCenter
Holdings, LLC; Infinity World; and Grand Avenue LA. Prior to
joining Infinity World, Mr. Grounds served as CEO of Property and
Finance for MFS Group and has held various senior positions in
real estate management throughout his career.
Infinity World Investments LLC and its affiliates currently own
approximately 5.3% of the outstanding common stock of the Company.
MGM Resorts and Infinity World each own a 50% interest in
CityCenter in Las Vegas.
Bylaws Amendment
On Feb. 8, 2013, the Board approved and adopted amendments to the
Company's Amended and Restated Bylaws, effective as of that date,
revising Section 12 of Article II, and deleting Sections 1 through
6 of Article VII.
Revisions to Section 12 of Article II amend the Company's
advancement obligations in connection with the indemnification of
directors to provide for discretionary, rather than mandatory,
advancement of expenses incurred by a director in defending any
proceeding if (i) such director was nominated pursuant to
contractual right or agreement and (ii) the material allegations
giving rise to the proceeding relate to breaches of that
director's fiduciary duties to the Company and its stockholders in
favor of, or in furtherance of the interests of, the nominating
entity or person.
Sections 1 through 6 of Article VII, which pertain to the
establishment of the Executive Committee, were deleted to reflect
that the Executive Committee was discontinued by the Company as of
June 14, 2011.
About MGM Resorts
MGM Resorts International (NYSE: MGM) --
http://www.mgmresorts.com/-- has significant holdings in gaming,
hospitality and entertainment, owns and operates 15 properties
located in Nevada, Mississippi and Michigan, and has 50%
investments in four other properties in Nevada, Illinois and
Macau.
The Company reported net income of $3.23 billion in 2011 and a net
loss of $1.43 billion in 2010.
MGM's balance sheet at Sept. 30, 2012, showed $27.83 billion in
total assets, $18.56 billion in total liabilities, and
$9.26 billion in total stockholders' equity.
Bankruptcy Warning
In the Form 10-K for the year ended Dec. 31, 2011, the Company
said that any default under the senior credit facility or the
indentures governing the Company's other debt could adversely
affect its growth, its financial condition, its results of
operations and its ability to make payments on its debt, and could
force the Company to seek protection under the bankruptcy laws.
* * *
As reported by the TCR on Nov. 14, 2011, Standard & Poor's Ratings
Services raised its corporate credit rating on MGM Resorts
International to 'B-' from 'CCC+'. In March 2012, S&P revised
the outlook to positive from stable.
"The revision of our rating outlook to positive reflects strong
performance in 2011 and our expectation that MGM will continue to
benefit from the improving performance trends on the Las Vegas
Strip," S&P said.
In March 2012, Moody's Investors Service affirmed its B2 corporate
family rating and probability of default rating. The affirmation
of MGM's B2 Corporate Family Rating reflects Moody's view that
positive lodging trends in Las Vegas will continue through 2012
which will help improve MGM's leverage and coverage metrics,
albeit modestly. Additionally, the company's declaration of a $400
million dividend ($204 million to MGM) from its 51% owned Macau
joint venture due to be paid shortly will also improve the
company's liquidity profile. The ratings also consider MGM's
recent bank amendment that resulted in about 50% of its
$3.5 billion senior credit facility being extended one year from
2014 to 2015.
As reported by the TCR on Oct. 15, 2012, Fitch Ratings has
affirmed MGM Resorts International's (MGM) Issuer Default Rating
(IDR) at 'B-' and MGM Grand Paradise, S.A.'s (MGM Grand Paradise)
IDR at 'B+'.
MISSION NEWENERGY: Corrects Disclosure on Top 20 Shareholders
-------------------------------------------------------------
Mission NewEnergy Limited refers to the list of its top 20
shareholders as at Oct. 18, 2012, set out on the second last page
of its 2012 Annual Report as released to ASX on Oct. 23, 2012.
It has come to Mission's attention that the entry shown as "USA
Register Control" did not correctly describe the legal holder of
shares for that entry. Mission understands that the legal holder
of the relevant shares is, in fact, Cede & Co, which is the entity
which holds the legal title to all shares on Mission's US
register.
A revised top 20 shareholder list (as at Oct. 18, 2012)
incorporating this change is available at http://is.gd/rM6RPU
In a separate filing, the Company disclosed quaterly report for
entities admitted on the basis of commitments. For the quarter
ended Dec. 31, 2012, the Company reported receipts from customers
of A$367,000. Mission NewEnergy had A$690,000 cash at the end of
the quarter. A copy of the Report is available for free at:
http://is.gd/5m6et2
About Mission NewEnergy
Based in Subiaco, Western Australia, Mission NewEnergy Limited is
a producer of biodiesel that integrates sustainable biodiesel
feedstock cultivation, biodiesel production and wholesale
biodiesel distribution focused on the government mandated markets
of the United States and Europe.
The Company is not operating its biodiesel refining segment. The
refineries are being held in care and maintenance either awaiting
a return to positive operating conditions or the sale of assets.
The Company has materially diminished its Jatropha contract
farming operation and the company is now focused on divesting the
remaining Indian assets. The Company intends to cease all Indian
operations.
The Company's balance sheet at June 30, 2012, showed
A$10.7 million in total assets, A$35.1 million in total
liabilities, resulting in an equity deficiency of A$24.4 million.
Grant Thornton Audit Pty Ltd, in Perth, Australia, expressed
substantial doubt about the Company's ability to continue as a
going concern. The independent auditors noted that the Company
incurred operating cash outflows of A$4.9 million during the year
ended June 30, 2012, and, as of that date, the consolidated
entity's total liabilities exceeded its total assets by
A$24.4 million.
The Company reported a net loss of A$6.1 million on A$38.3 million
of revenue in fiscal 2012, compared with a net loss of
$21.7 million on A$16.4 million of revenue in fiscal 2011.
NAVISTAR INTERNATIONAL: Franklin Ownership at 18.2% at Dec. 31
--------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Franklin Resources, Inc., and its affiliates
disclosed that, as of Dec. 31, 2012, they beneficially own
14,588,520 shares of common stock of Navistar International
Corporation representing 18.2% of the shares outstanding.
Franklin Resources previously reported beneficial ownership of
12,911,268 common shares or a 18.8% equity stake as of June 30,
2012. A copy of the amended filing is available at:
http://is.gd/uZgit9
About Navistar International
Navistar International Corporation (NYSE: NAV) --
http://www.Navistar.com/-- is a holding company whose
subsidiaries and affiliates subsidiaries produce International(R)
brand commercial and military trucks, MaxxForce(R) brand diesel
engines, IC Bus(TM) brand school and commercial buses, Monaco RV
brands of recreational vehicles, and Workhorse(R) brand chassis
for motor homes and step vans. It also is a private-label
designer and manufacturer of diesel engines for the pickup truck,
van and SUV markets. The Company also provides truck and diesel
engine parts and service. Another affiliate offers financing
services.
Navistar incurred a net loss attributable to the Company of $3.01
billion for the year ended Oct. 31, 2012, compared with net income
attributable to the Company of $1.72 billion during the prior
year.
The Company's balance sheet at Oct. 31, 2012, showed $9.10 billion
in total assets, $12.36 billion in total liabilities and a $3.26
billion total stockholders' deficit.
* * *
In the Aug. 3, 2012, edition of the TCR, Moody's Investors Service
lowered Navistar International Corporation's Corporate Family
Rating (CFR), Probability of Default Rating (PDR), and senior note
rating to B2 from B1. The downgrade of Navistar's ratings
reflects the significant challenges the company will face during
the next eighteen months in re-establishing the profitability and
competitiveness of its US and Canadian truck operations in light
of the failure to achieve EPA certification of its EGR emissions
technology, the significant reductions in military revenues and
substantially higher engine warranty reserves.
As reported by the TCR on June 13, 2012, Standard & Poor's Ratings
Services lowered its ratings on Navistar International Corp.,
including the corporate credit rating to 'B+', from 'BB-'. "The
downgrade and CreditWatch placement reflect the company's
operational and financial setbacks in recent months," said
Standard & Poor's credit analyst Sol Samson.
As reported by the TCR on Jan. 24, 2013, Fitch Ratings has
affirmed the Issuer Default Ratings (IDR) for Navistar
International Corporation and Navistar Financial Corporation at
'CCC' and removed the Negative Outlook on the ratings. The
removal reflects Fitch's view that immediate concerns about
liquidity have lessened, although liquidity remains an important
rating consideration as NAV implements its selective catalytic
reduction (SCR) engine strategy. Other rating concerns are already
incorporated in the 'CCC' rating.
NEOVIA LOGISTICS: Moody's Rates New $125MM Notes Issue 'Caa2'
-------------------------------------------------------------
Moody's Investors Service has assigned a B3 corporate family
rating to Neovia Logistics Intermediate Holdings, LLC ('Neovia
Intermediate Holdings'), and assigned a Caa2 rating to the
company's proposed issuance of $125 million of senior unsecured
notes due 2018. In addition, Moody's has withdrawn the B2 CFR of
Neovia Logistics, LLC, and affirmed the B2 rating of Neovia's
existing senior unsecured notes due 2020. Neovia is a wholly-owned
subsidiary of Neovia Intermediate Holdings. The assignment of a B3
CFR to Neovia Intermediate Holdings, which is none notch lower
than the B2 CFR that had been assigned to Neovia, reflects the
increased leverage that will result from the company's planned use
of a substantial portion of the proceeds from the contemplated
notes offering to fund a distribution to its shareholders. The
ratings outlook is stable.
Ratings Rationale
The B3 corporate family rating assigned to Neovia Intermediate
Holdings - one notch below the B2 CFR previously assigned to
Neovia- reflects the material increase in debt that the company
will undertake to fund a sizeable cash distribution to
shareholders. On February 14, 2013, Neovia announced its plans to
issue $125 million in senior unsecured notes at Neovia
Intermediate Holdings, with essentially the entirety of the
proceeds to be used to fund a distribution to shareholders.
Moody's believes this transaction, which raises funded debt by
over 20%, represents a willingness by the company to undertake an
aggressive shareholder return policy.
Credit metrics, which are currently appropriate for a B2 rating,
will deteriorate as a result of this transaction to levels more
closely associated with B3-rated companies. Debt to EBITDA is
estimated to increase from approximately 5.4 times at December
2012 to over 6 times pro forma for the newly issued notes. EBIT to
Interest will decline from approximately 1.3 times to about 1.1
times. Moody's views the planned debt-funded distribution as an
aggressive shareholder return initiative that removes capital from
the company that could otherwise be used for growth or protection
against a potential business downturn. The rating agency also
notes that this transaction is occurring less than six months
after the sale of Neovia by Caterpillar Inc. to private equity
investors and the company is continuing the process of
transitioning to stand-alone operations. Consequently, the timing
of the distribution to shareholders further aggravates Neovia's
risk profile.
Partially offsetting the high leverage, Moody's recognizes the
strong underlying third-party logistics franchise that Caterpillar
has created under this business unit prior to its sale in July
2012 to Platinum Equity. Moody's expects that Neovia will preserve
these strengths as a stand-alone operation. The company employs a
service parts logistics business model that should allow it to
enjoy a relatively stable revenue base, supported by long term
relationships with customers on multi-year contracts. In addition,
Moody's estimates Neovia's operating margins to be superior to
those typically earned by many of its competitors. The stability
of Neovia's revenue base and margins will be an important factor
in its ability to generate cash flow and improve its credit
metrics over time. However, this also heightens the importance of
the company executing this strategy as a stand-alone operation.
Any degradation in services levels, particularly where large,
long-term customers are concerned, might contribute to a
deterioration in Neovia's contract renewal rates, a weakening in
revenue growth, and a decline in margins.
Neovia's $450 million senior secured notes are rated B2- one notch
above the CFR. Within Moody's Loss Given Default (LGD) waterfall,
these notes have a senior claim relative to approximately $121
million in unsecured, non-debt liabilities (including pensions and
lease obligations), as well as the proposed $125 million HoldCo
note. However, these notes are ranked below the company's $75
million senior secured, first lien revolving credit facility
(unrated). The first-out payment provision of the revolver affords
it a superior position relative to the notes, and lowers the
implied recovery of the notes. The proposed $125 million Neovia
Intermediate Holdings notes are rated Caa2, two notches below the
CFR, reflecting the substantial amount of debt and other
liabilities that rank senior to these notes.
The stable ratings outlook reflects Moody's expectation that the
company will be able to maintain a steady revenue base over the
near term, renew contracts with long term customers as they
expire, and garner a modest amount of new business, while
maintaining operating margins. This should allow Neovia to
maintain credit metrics at current pro forma levels through 2013,
and to generate sufficient free cash flow over the longer term.
Ratings could be revised downward if the company fails to meet its
operating plans, possibly due to unexpected weakness in economic
conditions affecting its key markets. There could also be pressure
if it undertakes additional distributions to shareholders over the
near term, resulting in deteriorating profitability and weaker
credit metrics. Specifically, a downgrade could be warranted if:
EBIT to Interest were sustained below 1.2 times, FFO to Debt were
to fall below 10%, or Debt to EBITDA increases to above 7 times. A
weakened liquidity condition, possibly characterized by increased
reliance on use of the credit facility to make up for cash
shortfalls or tightness to prescribed financial covenants, could
also result in a ratings downgrade.
Since debt is not likely to be reduced materially over the medium
term, ratings are not expected to be upgraded over the near term.
However, over the longer term, operating improvements or de-
leveraging that would result in Debt to EBITDA of less than 5
times and EBIT to Interest of over 1.8 times along with positive
free cash flow generation to bolster liquidity would be factors
that could lead to upward rating consideration. Additionally, the
company would need to demonstrate more prudent financial policies
over a prolonged period, with no material further debt-funded
distributions to shareholders.
Assignments:
Issuer: Neovia Logistics Intermediate Holdings, LLC
Probability of Default Rating, Assigned B3-PD
Corporate Family Rating, Assigned B3
Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD6,
92%)
Outlook Actions:
Issuer: Neovia Logistics, LLC
Outlook, Changed To Rating Withdrawn From Stable
Affirmations:
Issuer: Neovia Logistics Services, LLC.
Senior Secured Regular Bond/Debenture Aug 1, 2020, Affirmed B2
Withdrawals:
Issuer: Neovia Logistics, LLC
Probability of Default Rating, Withdrawn , previously rated B2-
PD
Corporate Family Rating, Withdrawn , previously rated B2
The principal methodology used in this rating was the Global
Business and 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.
Neovia Logistics, LLC, headquartered in Downers Grove, IL, is a
global provider of service parts logistics.
NEOVIA LOGISTICS: S&P Lowers CCR to 'B'; Outlook Stable
-------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Neovia Logistics LLC to 'B' from 'B+'. The outlook is
stable. S&P also lowered its senior secured rating to 'B' from
'B+'. S&P assigned a 'B' corporate credit rating to parent
company Neovia Logistics Intermediate Holdings LLC and a 'CCC+'
issue rating to its $125 million senior notes due 2018. S&P
assigned the notes a recovery rating of '6', indicating its
expectation that lenders would receive negligible recovery
(0-10%) in the event of a payment default.
The downgrade reflects pro forma credit metrics that no longer
support the previous ratings after factoring in Neovia's planned
debt-financed dividend to 65%-owner Platinum Equity. "Credit
measures are also under pressure from higher-than-expected near-
term cash outlays related to last year's spinoff from Caterpillar,
as well as somewhat weaker-than-expected operating results,"
said Standard & Poor's credit analyst Lisa Jenkins. The downgrade
also reflects the company's adoption of a more aggressive
financial policy than the one S&P factored into its previous
ratings.
NEXSTAR BROADCASTING: Closes Offering of 3-Mil. Class A Shares
--------------------------------------------------------------
Nexstar Broadcasting Group, Inc., on Feb. 12, 2013, announced the
closing of the previously announced underwritten offering of 3
million shares of Class A common stock of the Company by the
selling stockholders, funds affiliated with ABRY Partners, LLC.
The Company did not sell any shares in the offering and did not
receive any proceeds from the offering.
The selling stockholders have granted the underwriter a 30-day
option to purchase up to an additional 450,000 shares of Class A
common stock on the same terms and conditions. BofA Merrill Lynch
acted as sole underwriter of the offering.
On Feb. 6, 2013, Nexstar Broadcasting entered into an underwriting
agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated
and ABRY Broadcast Partners II, L.P., and ABRY Broadcast Partners
III, L.P., pursuant to which the Selling Stockholders agreed to
sell 3,000,000 shares of the Company's Class A common stock, par
value $0.01 per share, to the Underwriter at a price of $13.75 per
share. The Company did not receive any of the proceeds from the
Selling Stockholders' sale of the Firm Shares.
A copy of the Underwriting Agreement is available for free at:
http://is.gd/Yl0REM
About Nexstar Broadcasting Group
Irving, Texas-based Nexstar Broadcasting Group Inc. currently
owns, operates, programs or provides sales and other services to
62 television stations in 34 markets in the states of Illinois,
Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania,
Louisiana, Arkansas, Alabama, New York, Rhode Island, Utah and
Florida. Nexstar's television station group includes affiliates
of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches
approximately 13 million viewers or approximately 11.5% of all
U.S. television households.
The Company reported a net loss of $11.89 million in 2011, a net
loss of $1.81 million in 2010, and a net loss of $12.61 million in
2009.
The Company's balance sheet at Sept. 30, 2012, showed
$611.35 million in total assets, $771.63 million in total
liabilities and a $160.27 million total stockholders' deficit.
* * *
As reported by the TCR on Oct. 26, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Irving, Texas-based
Nexstar Broadcasting Group Inc. and on certain subsidiaries to
'B+' from 'B'. "The rating action reflects our view that the
stations that Nexstar will acquire from Newport will improve the
company's business risk profile and that trailing-eight-quarter
leverage will improve to 6x or less over the intermediate term,"
said Standard & Poor's credit analyst Daniel Haines.
In the Oct. 26, 2012, edition of the TCR, Moody's Investors
Service upgraded the corporate family and probability of default
ratings of Nexstar Broadcasting, Inc. (Nexstar) to B2 from B3.
The upgrade and positive outlook incorporate expectations for
continued improvement in the credit profile resulting from both
the transaction and Nexstar's operating performance.
NEXSTAR BROADCASTING: Renaissance Owns 5.1% at Dec. 17
------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Renaissance Technologies LLC and Renaissance
Technologies Holdings Corporation disclosed that, as of Dec. 17,
2012, they beneficially own 798,993 shares of Class A Common Stock
of Nexstar Broadcasting Group, Inc., representing 5.10% of the
shares outstanding. A copy of the filing is available at:
http://is.gd/oNRKl3
About Nexstar Broadcasting Group
Irving, Texas-based Nexstar Broadcasting Group Inc. currently
owns, operates, programs or provides sales and other services to
62 television stations in 34 markets in the states of Illinois,
Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania,
Louisiana, Arkansas, Alabama, New York, Rhode Island, Utah and
Florida. Nexstar's television station group includes affiliates
of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches
approximately 13 million viewers or approximately 11.5% of all
U.S. television households.
The Company reported a net loss of $11.89 million in 2011, a net
loss of $1.81 million in 2010, and a net loss of $12.61 million in
2009.
The Company's balance sheet at Sept. 30, 2012, showed
$611.35 million in total assets, $771.63 million in total
liabilities and a $160.27 million total stockholders' deficit.
* * *
As reported by the TCR on Oct. 26, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Irving, Texas-based
Nexstar Broadcasting Group Inc. and on certain subsidiaries to
'B+' from 'B'. "The rating action reflects our view that the
stations that Nexstar will acquire from Newport will improve the
company's business risk profile and that trailing-eight-quarter
leverage will improve to 6x or less over the intermediate term,"
said Standard & Poor's credit analyst Daniel Haines.
In the Oct. 26, 2012, edition of the TCR, Moody's Investors
Service upgraded the corporate family and probability of default
ratings of Nexstar Broadcasting, Inc. (Nexstar) to B2 from B3.
The upgrade and positive outlook incorporate expectations for
continued improvement in the credit profile resulting from both
the transaction and Nexstar's operating performance.
NORTEL NETWORKS: Has 1st Approval for Disabled Retiree Settlement
-----------------------------------------------------------------
Nortel Networks Inc. received preliminary approval from the
bankruptcy judge for a $28 million settlement with retirees who
have medical disabilities.
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the retirees will be given notice of the proposed
settlement and an opportunity to object. There will be a final
hearing in the Delaware bankruptcy court on April 30 for approval
of the settlement.
BankruptcyLaw360 said that at a court hearing in Wilmington on
Thursday, U.S. Bankruptcy Judge Kevin Gross signed off on the
first step in a two-part approval process for the deal, which
gives 215 long-term disabled employees a $28 million general
unsecured claim in the case to compensate them for the
termination.
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.
NORTEL NETWORKS: Manitoba Regulator Issues Cease Trade Orders
-------------------------------------------------------------
Nortel Networks Corporation (NNC) and Nortel Networks Limited
(NNL) announced that they have received notice from the Manitoba
Securities Commission that the MSC has issued cease trade orders,
dated January 25, 2013, in respect of the securities of NNC and
NNL.
Unlike the CTOs issued in December 2012 by the Ontario Securities
Commission and the Autorite des marches financiers, which orders
remain in effect, the CTOs issued by the MSC do not contain any
permitted trading exceptions for tax loss trades or trades to
purchasers who are accredited investors as defined under
applicable Canadian securities laws. Accordingly, all trading in
Manitoba in securities of both NNC and NNL is prohibited with
effect as of January 25, 2013.
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.
ODYSSEY PICTURES: Delays Form 10-Q for Dec. 31 Quarter
------------------------------------------------------
Odyssey Pictures Corporation has not been able to compile all of
the requisite formatted financial data and narrative information
necessary for it to have sufficient time to complete its quarterly
report on Form 10-Q for the interim period ended Dec. 31, 2012,
without unreasonable effort or expense. The Form 10-Q will be
filed as soon as reasonably practicable and in no event later than
Feb. 19, 2013.
About Odyssey
Plano, Tex.-based Odyssey Pictures Corp., during the nine months
ended March 31, 2012, realized revenues from the sale of branding
and image design products and media placement services. The
Company's ongoing operations have consisted of the sale of these
branding and image design products, increasing media inventory,
productions in progress and development of IPTV Technology and
related services.
The Company reported net income to the Company of $34,775 for the
year ended June 30, 2012, compared with net income to the Company
of $60,400 during the prior fiscal year.
Patrick Rodgers, CPA, PA, in Altamonte Springs, Florida, issued a
"going concern" qualification on the consolidated financial
statements for the year ended June 30, 2012. The independent
auditors noted that the Company may not have adequate readily
available resources to fund operations through June 30, 2013,
which raises substantial doubt about the Company's ability to
continue as a going concern.
The Company's balance sheet at Sept. 30, 2012, showed
$1.45 million in total assets, $4.02 million in total liabilities,
and a $2.56 million total stockholders' deficiency.
OLD COLONY: Finalizing Plan Settlement With Wells Fargo
-------------------------------------------------------
The Bankruptcy Court has entered an order continuing generally the
interim pre-confirmation deadlines established in the First
Modification Motion, other than the Dec. 18, 2012 voting and
objection deadlines for parties other than Wells Fargo Bank, N.A.,
and retaining the currently scheduled dates for submission of fee
applications, as requested in the Second Modification Motion of
Old Colony, LLC, its co-proponent Molokai Partners, LLC, and
Secured Creditor Wells Fargo, N.A.. The Plan confirmation hearing
will go forward as scheduled (Feb. 25 and 26, 2013).
Pursuant to the First Modification Motion, as approved on Dec. 18,
2012, the agreed upon modified scheduling dates for discovery and
other matters relation to confirmation of the Plan are:
12/18/2012 -- Deadline to file objections to Plan and for the
submission of ballots to accept or reject the Plan
(except with respect to Wells Fargo);
1/21/2013 -- Deadline to serve expert reports and documents
relied upon by experts in arriving at their
opinions;
1/28/2013 -- Deadline for service of deposition notices upon
expert witnesses and for plan proponents to certify
results of balloting;
2/11/2013 -- Discovery concludes; deadline for filing motions in
limine, witness and exhibit lists to be filed, and
proposed exhibits exchanged, deadline for filing of
objection to confirmation of Plan by Wells Fargo;
2/18/2013 -- Deadline to file response to objections to Plan, for
filing fee applications and objections to motions in
limine, and proposed witnesses and exhibits;
2/25/2013 -- Confirmation hearing commences at 10:00 a.m. in
Springfield, MA; deadline for filing objections to
fee applications;
2/26/2013 -- Confirmation hearing continues at 10:00 a.m. in
Springfield, MA.
According to papers filed with the Court, Old Colony, together
with Molokai, LLC, a co-proponent of the Plan, and Wells Fargo
have reached an agreement in principle regarding the terms of a
consensual plan of reorganization, and the parties have been
focusing their efforts on finalizing the prospective agreement
preparing a modified plan. The parties wish to continue
finalizing same without the necessity of the continuing accrual of
substantial litigation expense which would otherwise be
unavoidable absent approval of the requested modification.
The Plan Proponents filed the Second Amended Joint Plan Of
Reorganization together with the Second Amended Disclosure
Statement For Joint Plan Of Reorganization.
No objections to the confirmation of the Plan were filed on or
before the Dec. 18, 2012 deadline, and the one impaired class of
claims entitled to vote on the Plan (other than Wells Fargo) has
voted to accept the terms of the Plan.
On Nov. 16, 2012, the Bankruptcy Court approved the adequacy of
the second amended disclosure statement filed by the Debtor and
Molokai.
On the Effective Date, Molokai will advance to the Debtor to fund
the Plan and the cash needs of the Reorganized Debtor up to the
sum of $1,000,000. On the Effective Date, the New Membership
Interests will be issued to Molokai and Molokai will designate a
new Managing Member of the Debtor.
Under the Plan, Wells Fargo will receive 180 consecutive equal
monthly payments of principal and interest based on a 30 year
amortization schedule, except for the final payment. The entire
unpaid interest and principal balance will be due and payable in
full with a balloon payment on the remaining principal balance on
the fifteen year anniversary of the Effective Date.
As Wells Fargo has elected treatment under 11 U.S.C. Section
1111(b), it will receive no distribution on its Class 2 Unsecured
Claim and will not be entitled to vote.
Each holder of an unsecured claim against the Debtor (including
Rejection Damages Claims, the JH Lending Trust Claim, trade and
other unsecured claims, exclusive of Wells Fargo) will receive an
unsecured claim distribution in an amount equal to 5% of the
amount of its Allowed Class 3 Unsecured Claim.
Interests in the Debtor will be canceled and extinguished and no
property will be retained by or distributed to Interests under the
Plan.
A copy of the second amended disclosure statement is available at:
http://bankrupt.com/misc/oldcolony.doc168.pdf
About Old Colony, LLC
Saugus, Massachusetts-based Old Colony, LLC, is a limited
liability company organized under the laws of the State of Wyoming
on or about May 11, 2007. Roughly 73.14% of the ownership
interests in Old Colony are held by Joseph Cuzzupoli and John
Bullock. The Debtor owns and operates an 83-room mountainside
hotel located at 3345 West Village Drive, Teton Village,
Wyoming, doing business under the name ?Inn at Jackson Hole?.
Additionally, the Debtor leases premises to a third party operator
of an on-site 60-seat restaurant and bar doing business as ?Masa
Sushi.?
As of the Petition Date, the Inn was encumbered by mortgages held
by Wells Fargo and JH Lending Trust. Wells Fargo asserts that as
of the Petition Date, the amount due to it which was secured by a
mortgage against the Inn was $17,783,019.99. JH Lending Trust
alleges that the amount of $3,414,999.60 was outstanding as of the
Petition Date and secured by its mortgage against the Inn.
Old Colony filed for Chapter 11 bankruptcy protection (Bankr. D.
Mass. Case No. 10-21100) on Oct. 11, 2010. Donald F. Farrell,
Jr., Esq., at Anderson Aquino LLP; James M. Liston, Esq., at
Bartlett Hackett Feinberg, Esq.; and Jeffrey D. Ganz, Esq., at
Reimer & Braunstein LLP, assist the Debtor in its restructuring
effort. In its schedules, the Debtor disclosed $2,571,684 in
assets and $21,363,064 in liabilities.
OPTIMA SPECIALTY: Moody's Affirms 'B2' CFR; Outlook Negative
------------------------------------------------------------
Moody's Investors Service revised Optima Specialty Steel's rating
outlook to negative from stable and affirmed the B2 corporate
family rating, B2-PD probability of default rating and B2 rating
on Optima's existing $175 million senior secured notes.
Ratings Rationale
The change in outlook reflects the company's recent history of
acquiring small, lower margin niche steel producers and the
increase in leverage and reduced liquidity resulting from these
acquisitions. The company recently completed the acquisition of
Kentucky Electric Steel for $112.5M, which was funded with $35
million of 16% senior unsecured notes, borrowings on the company's
ABL facility, a portion of the company's cash balance and
additional equity provided by Optima Acquisitions, LLC. This
acquisition increases the company's leverage ratio to
approximately 3.5x on a pro forma basis for the trailing 12 months
ended September 30, 2012 including Moody's standard adjustments
for operating leases. It also reduces the company's pro forma
liquidity to approximately $23 million including $8 million of
cash and $15 million of availability on its asset-based revolving
credit facility. The company will still have a relatively weak pro
forma interest coverage ratio of approximately 1.7x, as measured
by EBIT/Interest expense.
Optima's B2 corporate family and probability of default ratings
reflect Optima's small size, elevated leverage, low interest
coverage, moderate liquidity and exposure to volatile steel
prices. The ratings also reflect the company's acquisitive history
and the possibility of further debt financed acquisitions, which
reduces the likelihood of substantial deleveraging. Optima's
ratings are supported by the company's above average margins and
returns relative to other rated steel companies and its positive
free cash flow, which should enable the company to pay down the
majority of its ABL facility borrowings within the next 12 months.
The ratings would be considered for a downgrade if the company
does not successfully integrate the acquisition of KES or
experiences deteriorating operating results, pursues additional
debt financed acquisitions or shareholder distributions that
result in a leverage ratio above 5.0x or an interest coverage
ratio below 1.5x. A reduction in borrowing availability or
liquidity could also result in a downgrade.
The ratings are not likely to experience upward pressure in the
near term. However, the ratings would be considered for an upgrade
if the company successfully integrates the acquisition of Kentucky
Electric Steel, returns to well above average EBIT margins and
achieves improved credit metrics. This would include maintaining a
leverage ratio below 4.0x and raising the interest coverage above
2.0x on a sustainable basis.
The principal methodology used in this rating was the Global Steel
Industry Methodology published in October 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.
Optima Specialty Steel, Inc., headquartered in Miami, FL, is a
domestic value-added manufacturer of Special Bar Quality and
Merchant Bar Quality steel products and a processor of seamless
tubing and specialty Cold Finished Steel Bars through three
distinct business segments. Michigan Seamless Tube produces carbon
and alloy seamless pressure and mechanical tubing primarily used
in the oil and gas, power generation and industrial sectors.
Niagara LaSalle Corporation produces specialty Cold Finished Steel
Bars used in the automotive, construction and agricultural
equipment and oil & gas sectors. Kentucky Electric Steel is a
value-added manufacturer of Special Bar Quality and Merchant Bar
Quality steel products for a variety of niche markets. Optima
generated pro forma sales including the operations of KES of
approximately $655 million for the trailing twelve month period
ended September 30, 2012. Optima Specialty Steel is owned by
affiliates of Optima Acquisitions, LLC.
ORCHARD SUPPLY: Obtains Waiver From Term Loan Lenders
-----------------------------------------------------
Orchard Supply Hardware Stores Corporation on Feb. 15 provided an
update on the Company's efforts to refinance or modify its Term
Loan debt and otherwise work to improve its capital structure.
Additionally, Orchard provided an update on select preliminary
fourth quarter fiscal 2012 financial performance and reiterated
the Company's commitment to its repositioning strategy, including
opening new and renovating existing stores. The Company's updates
include the following:
-- On February 11, 2013, the Company expanded its existing Senior
Secured Credit Facility with Wells Fargo Capital Finance and Bank
of America, N.A., increasing total borrowing capacity to $145.0
million through the addition of a $17.5 million last-in-last-out
supplemental term loan tranche.
-- As of February 12, 2013, the Company had cash and available
credit of $40.0 million, including $32.0 million available to
borrow on the Senior Secured Credit Facility. This liquidity will
be used for general working capital purposes, including paying
vendors in the ordinary course of business as part of the
Company's customary spring inventory build-up.
-- On February 14, 2013, the Company obtained a waiver from its
current Term Loan lenders related to compliance with the leverage
ratio covenant for the fiscal quarter ended February 2, 2013, and
the fiscal quarter ending May 4, 2013, which means that the next
applicable measurement date for the leverage covenant is August 3,
2013, subject to the Company's continued compliance with the terms
and conditions set forth in the waiver.
-- The Company continues to work with Moelis & Co. toward the
refinancing or modification of its Senior Secured Term Loan to
achieve an outcome that is in the best interests of the Company
and all of its stakeholders. In addition to seeking an agreement
with our Term Loan holders to refinance or modify the Senior
Secured Term Loan, the Company continues to explore several
actions designed to restructure its balance sheet for a
sustainable capital structure, including seeking new long term
debt and/or equity.
-- As previously reported, since October 2011, the Company has
generated proceeds and secured tenant improvement allowances
through multiple sale-leaseback transactions and has reduced term
loan debt by more than $90 million.
-- Preliminary net sales for the fourth quarter ended February 2,
2013 (14 weeks) were $153.4 million compared to net sales of
$141.6 million in the fourth quarter of fiscal 2011 (13 weeks),
and preliminary net sales for fiscal 2012 (53 weeks) were $657.6
million compared to net sales of $660.5 million in fiscal 2011 (52
weeks). The additional week in the fiscal 2012 periods
contributed net sales of approximately $9.5 million. Comparable
store sales(1) for the fourth quarter of fiscal 2012 increased
1.6% on a 13-week to 13-week basis, and for fiscal 2012 were
essentially flat, decreasing 0.2%, on a 52-week to 52-week basis.
Sales growth at the Company's newly remodeled locations continued
to outpace the balance of its stores. While the Company continued
to experience merchandise margin pressure in the fourth quarter,
merchandise margin improved sequentially over the course of the
quarter. The Company expects to report final fiscal 2012
financial results in late April.
Mark Baker, President and Chief Executive Officer, stated, "As we
begin 2013, we remain committed to our repositioning strategy. We
have taken a number of steps in the past year to drive long-term
improvement in Orchard's operating results and to strengthen our
financial position. We are very pleased to have expanded our
credit facility, as planned, and improved our financial
flexibility, both of which provide additional liquidity as we
enter our peak spring selling season. We are gratified by the
ongoing support of our lenders as we continue our work with Moelis
& Co. and our financial partners to achieve a sustainable capital
structure that will best position the Company for long-term
success."
Mr. Baker continued, "We have made significant strides in
transforming the Orchard brand and our business since December
2011 when we became an independent public company. At the same
time, we recognize that we did not achieve all of our objectives
of the past year and that we continue to face challenges ahead.
Our team remains highly focused on our five strategic priorities,
with particular emphasis on the execution of our merchandising,
marketing and store operations initiatives during the important
spring season. We currently have 10 stores in our more productive
neighborhood format and we are pleased with the sales growth we
have seen to date at these stores, including results in the fourth
quarter which were improved from earlier in the year. We look
forward to bringing our new format to another 10 stores in fiscal
2013 through remodels and new store openings. Importantly, we
believe we have established the right business strategy to deliver
long-term improved sales and profitability."
About Orchard Supply
San Jose, Calif.-based Orchard Supply Hardware Stores Corporation
operates neighborhood hardware and garden stores focused on paint,
repair and the backyard. As of Oct. 27, 2012, the Company had 89
stores in California.
* * *
As reported by the Troubled Company Reporter on December 13, 2012,
Standard & Poor's Ratings Services lowered its corporate credit
rating on San Jose, Calif.-based home and garden retailer Orchard
Supply Hardware LLC to 'CCC' from 'B-'. The outlook is negative.
"We are also lowering our rating on the company's term loan to
'CCC' from 'B-' in conjunction with the downgrade. The recovery
rating remains '4' recovery rating, indicating our expectation for
average (30% to 50%) recovery in the event of a payment default,"
S&P said.
"The ratings on Orchard Supply reflects Standard & Poor's Ratings
Services' assessment of its financial risk profile as 'highly
leveraged,' which incorporates near-term potential for
noncompliance with financial covenants and significant debt
refinancing risks. Our view of its business risk profile as
'vulnerable' considers the company's small size relative to the
highly competitive home improvement segment of the retail industry
and its exposure to housing market conditions in California," S&P
said.
OVERLAND STORAGE: Pinnacle Stake Hiked to 9% at Dec. 31
-------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Pinnacle Family Office Investments, L.P., and
Barry M. Kitt disclosed that, as of Dec. 31, 2012, they
beneficially own 2,575,280 shares of common stock of Overland
Storage, Inc., representing 9% of the shares outstanding.
Pinnacle Family previously reported beneficial ownership of
1,864,750 common shares or a 7.9% equity stake as of Dec. 31,
2011. A copy of the amended filing is available at:
http://is.gd/xV4fiJ
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: Bonds Fall on Filing of $463-Mil. Tax Claim
-----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that bonds of ship owner Overseas Shipholding Group Inc.
plunged Feb. 13 on revelation that the Internal Revenue Service
filed a claim for $463 million in taxes and interest. The IRS
contends the claim is entitled to priority in bankruptcy, meaning
payment if the claim is valid would come ahead of unsecured
creditors and unsecured bondholders.
According to the report, the $300 million in 8.125% senior
unsecured notes due 2018, which last traded on Feb. 12 at 40.5
cents on the dollar, fell as low as 30 cents in Feb. 13 trading,
according to Trace, the bond-price reporting system of the
Financial Industry Regulatory Authority. The notes last traded
Feb. 13 at 32.5 cents, for a loss of almost 20%.
OSG's Chapter 11 filing in November came on the heels of the
company's withdrawal of three years' financial statements as
a result of "tax issues."
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, disclosing $4.15 billion in assets and $2.67
billion in liabilities.
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 is
the claims and notice agent.
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.
Akin Gump Strauss Hauer & Feld LLP, and Pepper Hamilton LLP, serve
as co-counsel to the official committee of unsecured creditors.
FTI Consulting, Inc., is the financial advisor and Houlihan Lokey
Capital, Inc., is the investment banker.
PBP LP: Case Summary & 4 Largest Unsecured Creditors
----------------------------------------------------
Debtor: PBP, LP
1475 Saratoga Avenue, #250
San Jose, CA 95129
Bankruptcy Case No.: 13-50807
Chapter 11 Petition Date: February 12, 2013
Court: U.S. Bankruptcy Court
Northern District of California (San Jose)
Judge: Arthur S. Weissbrodt
Debtor's Counsel: Patrick Calhoun, Esq.
LAW OFFICE OF PATRICK CALHOUN
10797 Ridgeview Way
San Jose, CA 95127
E-mail: calhounonekgatty@aol.com
Scheduled Assets: $8,800,000
Scheduled Liabilities: $3,974,378
A copy of the Company's list of its four largest unsecured
creditors filed with the petition is available for free at:
http://bankrupt.com/misc/canb13-50807.pdf
The petition was signed by Jeff Curran, authorized manager.
PATIENT SAFETY: Amends Supply Agreement with Cardinal Health
------------------------------------------------------------
Patient Safety Technologies, Inc., on Jan. 31, 2013, entered into
the Second Amendment to Supply and Distribution Agreement with
Cardinal Health 200, LLC, effective as of Jan. 1, 2013. The
Second Amendment amends the Supply and Distribution Agreement
between the Company and Cardinal Health dated Nov. 19, 2009, and
the First Amendment to the Supply Agreement that was effective
beginning March 1, 2011.
The Second Amendment amends a number of terms under the Supply
Agreement and the First Amendment including but not limited to
adding certain provisions regarding target inventory levels of the
Company's products held by Cardinal Health, and extending the
termination date of the Supply Agreement from Dec. 31, 2015, to
Dec. 31, 2016.
Under the terms of the Second Amendment, Cardinal Health is
required to maintain any inventory in excess of set target
inventory levels up through to Dec. 31, 2013, and the Company
agrees to pay a monthly fee to Cardinal Health throughout 2013
based on the amount of any excess inventory held each month by
Cardinal Health. The Company will continue to have the right to
buy back any such excess inventory from Cardinal Health at any
time.
Beginning Jan. 1, 2014, Cardinal Health may use any remaining
excess inventory to partially meet customer demand according to a
formula set forth in the First Amendment which limits the use of
any excess inventory over a 12 month time period. Should there be
any excess inventory during 2014, the Company will continue to pay
Cardinal Health a monthly fee on the excess inventory up through
to Dec. 31, 2014, and if there is any excess inventory held by
Cardinal Health after Dec. 31, 2014, Cardinal Health will have the
right to use that excess inventory to meet customer demand of the
Company's products. Management currently estimates that any fees
paid to Cardinal Health under the Second Amendment will not have a
material impact on the Company's financial results (currently
estimated to range from 1% to 3% of reported revenue for the
Company during the years 2013 and 2014), and that any additional
growth the Company experiences during 2013 and 2014 will minimize
the impact of any fees paid. Additionally, the Second Amendment
provides that the Supply Agreement is terminable by Cardinal
Health upon a change of control of the Company.
About Patient Safety Technologies
Patient Safety Technologies, Inc. (OTC: PSTX) --
http://www.surgicountmedical.com/-- through its wholly owned
operating subsidiary SurgiCount Medical, Inc., provides the
Safety-Sponge(TM) System, a system designed to improve the
standard of patient care and reduce health care costs by
preventing the occurrence of surgical sponges and other retained
foreign objects from being left inside patients after surgery.
RFOs are among one of the most common surgical errors.
Patient Safety reported a net loss of $1.89 million in 2011,
compared with net income of $2 million during the prior year.
The Company's balance sheet at Sept. 30, 2012, showed
$19.98 million in total assets, $7.51 million in total liabilities
and $12.47 million in total stockholders' equity.
PINNACLE AIRLINES: Board Gets Approval to Appoint New Directors
---------------------------------------------------------------
Pinnacle Airlines Corp.'s board of directors obtained approval
from the U.S. Bankruptcy Court for the Southern District of New
York to appoint four new board members.
The appointment is part of a restructuring support agreement that
Pinnacle signed with Delta Air Lines Inc., which committed to
provide up to $30 million to fund the operations of the airline
until it emerges from bankruptcy.
The agreement contemplates a restructuring plan, under which Delta
will become Pinnacle's sole stockholder, and will appoint the
members of the board of the reorganized airline.
The four new directors, all of whom were proposed by Delta, will
replace those directors who will be resigning from their posts.
The four are Ryan Gumm, Donald Bornhorst, Loren Neuenschwander,
and Barry Wilbur.
Mr. Gumm is Pinnacle's current chief operating officer and was
former executive vice-president at Delta Private Jets. The three
others currently hold key positions at Delta.
The appointment of new directors is only one of the steps taken by
Pinnacle as preparation for transitioning its operations into
Delta's flying network.
Last month, Pinnacle announced that its headquarters will move to
Minnesota to save costs and to better coordinate day-to-day
operations with Delta. On February 4, Pinnacle hired Mr. Gumm as
chief operating officer who, the airline said, will run the
reorganized airline as chief executive officer.
About Pinnacle Airlines
Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/--
a $1 billion airline holding company with 7,800 employees, is the
parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.;
and Colgan Air, Inc. Flying as Delta Connection, United Express
and US Airways Express, Pinnacle Airlines Corp. operating
subsidiaries operate 199 regional jets and 80 turboprops on more
than 1,540 daily flights to 188 cities and towns in the United
States, Canada, Mexico and Belize. Corporate offices are located
in Memphis, Tenn., and hub operations are located at 11 major U.S.
airports.
Pinnacle Airlines Inc. and its affiliates, including Colgan Air,
Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East
Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr.
S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012.
Judge Robert E. Gerber presides over the case. Lawyers at Davis
Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve
as the Debtors' counsel. Barclays Capital and Seabury Group LLC
serve as the Debtors' financial advisors. Epiq Systems Bankruptcy
Solutions serves as the claims and noticing agent. The petition
was signed by John Spanjers, executive vice president and chief
operating officer.
As of Oct. 31, 2012, the Company had total assets of
$800.33 million, total liabilities of $912.77 million, and total
stockholders' deficit of $112.44 million.
Delta Air Lines, Inc., the Debtors' major customer and post-
petition lender, is represented by David R. Seligman, Esq., at
Kirkland & Ellis LLP.
The official committee of unsecured creditors tapped Morrison &
Foerster LLP as its counsel, and Imperial Capital, LLC, as
financial advisors.
The U.S. Bankruptcy Court in New York will hold a hearing March 7
for approval of the explanatory disclosure statement in connection
with the reorganization plan of Pinnacle Airlines Corp.
PONCE TRUST: Confirms Plan of Reorganization via Cramdown
---------------------------------------------------------
Ponce Trust, LLC, won confirmation of its Third Amended Plan of
Reorganization dated Dec. 14, 2012, which proposes to pay
creditors from four sources: (1) cash flow received from rent
revenue; (2) the sale to C&T Charters, Inc., (3) condominium sales
and (4) the approximately $200,000 to $250,000 New Value
Contribution from the Debtor's current equity holders.
Under the Plan, the Debtor will retain and operate the property --
a luxury residential condominium development located at 1300 Ponce
de Leon Blvd., Coral Gables, Florida -- to maximize net rental
revenue. Currently, the Debtor is generating approximately
$112,000 in monthly rent revenue and anticipates generating
approximately $1,600,541 in rent revenue during the first year of
the Third Amended Plan based upon existing leases and generating
new leases. Furthermore, the Third Amended Plan will be funded
through condominium sales at a conservative rate of 1 unit sold
per month for 60 months of the Third Amended Plan and 2 units sold
per month for 12 months of the Third Amended Plan.
Prior equity interests will be voided and canceled effective on
the Effective Date.
A copy of the Third Amended Plan is available for free at
http://bankrupt.com/misc/PONCE_TRUST_plan_3amended.pdf
Cramdown
The Court, in its order, overruled the objections file by the
secured creditor; said that the effective date of the Plan will be
Feb. 1, 2013; and ruled that the receivership will be terminated
upon entry of the order and all funds being in control of the
receiver, net of his fees as awarded by ECF 264, will be turned
over to the Debtor.
The Plan noted that the receiver is paying the monthly Condominium
Association fees on a monthly basis from the rental proceeds
received. Other administrative expenses include professional fees
incurred by the Debtor and the Receiver's fees and are presently
estimated to be approximately $150,000.
The Court entered a separate order granting the Debtor's motion
for cramdown of its proposed plan of reorganization.
The Debtor sought an order (1) confirming the Plan notwithstanding
the rejection by the secured lender 1300 Ponce Holdings, LLC. The
Debtor noted that the Plan does not discriminate against the
secured lender as it is (i) retaining its lien on the property
post-confirmation and (ii) is receiving deferred cash payments
totaling the amount of its claim through the Plan.
About Ponce Trust
Ponce Trust LLC, the developer and owner of the luxury residential
condominium development known as 1300 Ponce, in Coral Gables,
Florida, filed for Chapter 11 bankruptcy (S.D. Fla. Case No.
12-14247) on Feb. 22, 2012. Judge Robert A. Mark presides over
the case. Andrea L. Rigali, Esq., Joel L. Tabas, Esq., and Mark
S. Roher, Esq., at Tabas, Freedman, Soloff, Miller & Brown, P.A.,
serve as the Debtor's counsel. The petition was signed by Luis
Lamar, vice president and manager.
Ponce Trust sought Chapter 11 because of (a) the declining real
estate market, (b) its inability to reduce condominium prices in
response to changing market conditions, and (c) its inability, due
to circumstances beyond the Debtor's control, to renew, repay, or
refinance its secured mortgage debt owed to MUNB Loan Holdings,
LLC, which matured in 2011.
Prior to the Petition Date, MUNB initiated a foreclosure action
against the Property in the Circuit Court of the 11th Judicial
Circuit in and for Miami-Dade County, Florida. On July 21, 2011,
the State Court entered an Order Appointing Receiver, which inter
alia appointed Jeremy S. Larkin as receiver. Mr. Larkin is the
President of NAI Miami Commercial Real Estate Services, Worldwide.
1300 Ponce contains 125 residential condominium units. As of the
bankruptcy filing date, the Debtor has a remaining inventory of
about 83 units and rented about 40 of those units. The Debtor
intends to market the remaining Condominium Units for both sale
and rental. The Debtor disclosed $22,734,532 in assets and
$46,999,376 in liabilities as of the Chapter 11 filing.
The residential condominium unit is worth $19 million. MUNB is
owed $37.3 million.
1300 Ponce Holdings LLC, assignee of MUNB, is represented by
Carlton Fields, P.A.
The Court confirmed the Third Amended Chapter 11 Plan on Dec. 26,
2012. Joel L. Tabas named as disbursing agent. Status hearing
scheduled for March 14, 2013 at 2 p.m.
Under the Plan, 300 Ponce Holdings, which made an election under
11 U.S.C. Sec. 1111(b) to have one secured claim in the amount of
$38,174,090, will be paid a stream of payments equal to or greater
than its total claim from unit sales revenues and rental income.
Unsecured creditors will be paid in monthly installments over
seven years in graduated payments through the life of the Plan
starting in November 2017.
In April 2012, the U.S. Trustee said an official committee of
unsecured creditors has not been appointed.
POWELL STEEL: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Powell Steel Corporation
625 Baumgardner Road
Lancaster, PA 17603
Bankruptcy Case No.: 13-11275
Chapter 11 Petition Date: February 13, 2013
Court: U.S. Bankruptcy Court
Eastern District of Pennsylvania (Philadelphia)
Judge: Magdeline D. Coleman
Debtor's Counsel: Albert A. Ciardi, III, Esq.
CIARDI CIARDI & ASTIN, P.C.
One Commerce Square
2005 Market Street, Suite 1930
Philadelphia, PA 19103
Tel: (215) 557-3550
Fax: (215) 557-3551
E-mail: aciardi@ciardilaw.com
- and ?
Nicole Marie Nigrelli, Esq.
CIARDI CIARDI & ASTIN, P.C.
One Commerce Squire
2005 Market Street, Suite 1930
Philadelphia, PA 19103
Tel: (215) 557-3550
E-mail: nnigrelli@ciardilaw.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $10,000,001 to $50,000,000
The petition was signed by Stephen L. Powell, president.
Debtor's List of Its 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service Payroll Taxes 1 $833,684
Centralized Insolvency Operation
P.O. Box 7346
Philadelphia, PA 19101-7346
Infra-Metals-Atlanta Remit -- $659,496
New Millennium -- $341,396
Pennsylvania Department of Revenue Payroll Taxes $228,580
Fisher Realty Co. -- $162,438
City of Lancaster -- $83,836
Whitney Bailey Cox & Magnani -- $63,870
Namasco (Kloeckner Metals) -- $63,293
Maryland Dept. of Revenue Sales and Use $48,225
Payroll
IPFS Corporation -- $34,110
BendTec -- $32,085
Ebert Iron Works -- $31,335
Cohen Selias Pallas -- $30,884
Kenilworth Steel -- $30,541
Direct Energy Business -- $26,511
Scully Welding Supply -- $24,923
Penn Manor Real Estate Taxes $19,638
Tipton Crane, LLC -- $19,070
Weinstock Brothers Corp. -- $17,461
Bushwick-Koons -- $17,091
POWERWAVE TECHNOLOGIES: Silver Lake Stake at 6.3% as of Dec. 31
---------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Silver Lake Group, L.L.C., and its affiliates
disclosed that, as of Dec. 31, 2012, they beneficially own
2,129,623 shares of common stock of Powerwave Technologies, Inc.,
representing 6.28% of the shares outstanding. A copy of the
filing is available for free at http://is.gd/xA3x2a
About Powerwave Technologies
Powerwave Technologies Inc. (NASDAQ: PWAV) filed for Chapter 11
bankruptcy (Bankr. D. Del. Case No. 13-10134) on Jan. 28, 2013.
Powerwave Technologies, headquartered in Santa Ana, Calif., is a
global supplier of end-to-end wireless solutions for wireless
communications networks. The Company has historically sold the
majority of its product solutions to the commercial wireless
infrastructure industry.
The Company's balance sheet at Sept. 30, 2012, showed $213.45
million in total assets, $396.05 million in total liabilities and
a $182.59 million total shareholders' deficit.
Aside from a $35 million secured debt to P-Wave Holdings LLC, the
Debtor owes $150 million in principal under 3.875% convertible
subordinated notes and $106 million in principal under 2.5%
convertible senior subordinated notes where Deutsche Bank Trust
Company Americas is the indenture trustee. In addition, as of the
Petition Date, the Debtor estimates that between $15 and $25
million is outstanding to its vendors.
The Debtor is represented by attorneys at Proskauer Rose LLP and
Potter Anderson & Corroon LLP.
PS&G BC: Voluntary Chapter 11 Case Summary
------------------------------------------
Debtor: PS&G BC Connector, Inc.
dba Philly Steak & Gyro
Philly Steaks
8500 Essington Avenue
Philadelphia, PA 19153
Bankruptcy Case No.: 13-11222
Chapter 11 Petition Date: February 12, 2013
Court: U.S. Bankruptcy Court
Eastern District of Pennsylvania (Philadelphia)
Judge: Jean K. FitzSimon
Debtor's Counsel: Raheem S. Watson, Esq.
THE SMYLER FIRM
109 S. 22nd Street
Philadelphia, PA 19103
Tel: (215) 568-6090
E-mail: rwatson@smylerlaw.com
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
The Company did not file a list of creditors together with its
petition.
The petition was signed by Andrew Cosenza, Jr., president.
Affiliates that simultaneously filed Chapter 11 petitions:
Entity Case No.
------ --------
PSGI Airport, Inc. 13-11223
Bassetts T&S Airport E, Inc. 13-11225
Phillys Phreshest Airport 13-11226
Bassetts B Terminal Inc. 13-11228
AVA/AC TRE 13-11229
QUALITY DISTRIBUTION: Expects $215MM Revenue in Fourth Quarter
--------------------------------------------------------------
Quality Distribution, Inc., said that for the three-month period
ended Dec. 31, 2012, Quality expects its total revenue to be
approximately $215 million, operating income to be within the
range of $9.9 million to $10.6 million, and adjusted EBITDA to be
within the range of $20 million to $20.7 million.
For the three-month period ended Dec. 31, 2012, Quality expects
revenue from its chemical logistics business to be approximately
$145 million, revenue from its energy logistics business to be
approximately $39 million and revenue from its intermodal business
to be approximately $31 million.
Cash and total debt at Dec. 31, 2012, were approximately $2.7
million and $418.8 million, respectively. Borrowing availability
under the Company's asset-based revolving credit facility was
$55.2 million at Dec. 31, 2012.
"Our preliminary fourth quarter results were in line with the
overall expectations we shared during our third quarter conference
call,' stated Gary Enzor, chief executive officer. "Our revenues
across the board were solid, although margins in our Energy
segment contracted more than anticipated as we continue to address
asset utilization issues and other challenges within certain shale
operations. We have restructured managerial responsibilities
within Energy, which we expect to deliver improvements over the
coming quarters."
"During the fourth quarter, we successfully contained capital
spending while simultaneously selling idle, excess and under-
utilized equipment and real estate," said Joe Troy, chief
financial officer. "Elevated asset sale activity, combined with
our free cash flow, provided sufficient resources to repurchase
shares under our open market program, which has continued into our
first quarter of 2013."
Quality intends to release its full fourth quarter and fiscal 2012
financial results after the market closes on Wednesday, Feb. 20,
2013. Quality will host a conference call for equity analysts and
investors to discuss these results on Thursday, Feb. 21, 2013, at
10:00 a.m. Eastern Time. The toll free dial-in number is 888-278-
8459; the toll number is 913-312-1466; the passcode is 1356467. A
replay of the call will be available through March 23, 2013, by
dialing 888-203-1112; the passcode is 1356467. A webcast of the
conference call may be accessed in the Investor Relations section
of Quality's Web site.
A copy of the press release is available for free at:
http://is.gd/4kjhN8
About Quality Distribution
Quality Distribution, LLC, and its parent holding company, Quality
Distribution, Inc., are headquartered in Tampa, Florida. The
company is a transporter of bulk liquid and dry bulk chemicals.
The company's 2010 revenues are approximately $686 million.
Apollo Management, L.P., owns roughly 30% of the common stock of
Quality Distribution, Inc.
The Company reported net income of $23.43 million in 2011,
compared with a net loss of $7.40 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $513.05
million in total assets, $532.79 million in total liabilities and
a $19.74 million total shareholders' deficit.
Bankruptcy Warning
In its Form 10-K for 2011, the Company noted that it had
consolidated indebtedness and capital lease obligations, including
current maturities, of $307.1 million as of Dec. 31, 2011. The
Company must make regular payments under the New ABL Facility and
its capital leases and semi-annual interest payments under its
2018 Notes.
The New ABL Facility matures August 2016. However, the maturity
date of the New ABL Facility may be accelerated if the Company
defaults on its obligations. If the maturity of the New ABL
Facility or such other debt is accelerated, the Company does not
believe that it will have sufficient cash on hand to repay the New
ABL Facility or such other debt or, unless conditions in the
credit markets improve significantly, that the Company will be
able to refinance the New ABL Facility or such other debt on
acceptable terms, or at all. The failure to repay or refinance
the New ABL Facility or such other debt at maturity will have a
material adverse effect on the Company's business and financial
condition, would cause substantial liquidity problems and may
result in the bankruptcy of the Company or its subsidiaries. Any
actual or potential bankruptcy or liquidity crisis may materially
harm the Company's relationships with its customers, suppliers and
independent affiliates.
RAE-BECK HOLDING: Case Summary & 4 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Rae-Beck Holding, L.L.C.
1200 W. Hamlin Road
Rochester, MI 48309
Bankruptcy Case No.: 13-42462
Chapter 11 Petition Date: February 12, 2013
Court: U.S. Bankruptcy Court
Eastern District of Michigan (Detroit)
Judge: Steven W. Rhodes
Debtor's Counsel: Todd M. Halbert, Esq.
24359 Northwestern Highway, Suite 250
Southfield, MI 48075
Tel: (248) 356-6204
E-mail: toddmhalbert@msn.com
Estimated Assets: $500,001 to $1,000,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its four largest unsecured
creditors filed with the petition is available for free at:
http://bankrupt.com/misc/mieb13-42462.pdf
The petition was signed by Elizabeth Bazinski, member.
REAL MEX: Parties-in-Interest Balk at Motion to Dismiss Case
------------------------------------------------------------
Parties-in-interest filed with the U.S. Bankruptcy Court for the
District of Delaware their objections to Real Mex Restaurants,
Inc., et al.'s motion to dismiss their Chapter 11 cases.
Claimants Hsiung Fu Chen and Hsung Tai Chen said, in their
objection that their administrative claim of $15,000 will be lost
if the Chapter 11 cases are dismissed. The claimants stated that
their claim will be preserved if the case are converted to Chapter
7 or if the cases remain in Chapter 11.
Custom Gaskets NW asserted that the if the Debtors were allowed to
sell assets then they need to pay supplier for services performed
on their behalf. Custom Gaskets said in its motion that the
Debtors owe $979.
As reported in the TCR on Jan. 30, 2013, according to court
filings, "In order to expedite the wind down process, the Debtors
propose to dismiss the cases of each Debtor at this time, except
for the case of Chevys Restaurants, LLC. Chevys Restaurants
remains involved in efforts to complete the transfer of certain
liquor licenses to the Purchaser, which will require it to remain
in chapter 11 for what is expected to be a brief, additional
period of time."
The Court scheduled a Feb. 19, 2013 hearing on the dismissal
request.
About Real Mex
Based in Cypress, California, Real Mex Restaurants, Inc., owns and
operates restaurants, primarily through its major subsidiaries El
Torito Restaurants, Inc., Chevys Restaurants, LLC, and Acapulco
Restaurants, Inc. It has 178 restaurants, with 149 in California.
There are also 30 franchised locations. It acquired Chevys Inc.
for $90 million through confirmation of Chevy's Chapter 11 plan in
2004.
Real Mex Restaurants and 16 of its affiliates filed for Chapter 11
bankruptcy protection (Bankr. D. Del. Case Nos. 11-13122 to 11-
13138) on Oct. 4, 2011. Judge Brendan Linehan Shannon oversees
the case. Judge Peter Walsh was initially assigned to the case.
The Debtors are represented by Mark Shinderman, Esq., Fred
Neufeld, Esq., and Haig M. Maghakian, Esq., at Milbank, Tweed,
Hadley & McCloy LLP; and Laura Davis Jones, Esq., and Curtis A.
Helm, Esq., at Pachulski Stang Ziehl & Jones LLP as counsel. The
Debtors' financial advisors are Imperial Capital, LLC. The
Debtors' claims, noticing, soliciting and balloting agent is Epiq
Bankruptcy Solutions, LLC.
Assets are $272.2 million while debt totals $250 million,
according to the Chapter 11 petition. The petitions were signed
by Richard P. Dutkiewiez, chief financial officer and executive
vice president.
The Court has approved that certain asset purchase agreement
between the Debtors and RlvI Opco LLC dated as of Feb. 10, 2012,
for the sale of substantially all of the Debtors' assets.
Counsel to GE Capital Corp., the DIP Agent and the Prepetition
First Lien Secured Agent, are Jeffrey G. Moran, Esq., and Peter P.
Knight, Esq., at Latham & Watkins LLP; and Kurt F. Gwynne, Esq.,
at Reed Smith LLP as counsel.
Counsel to the Prepetition Secured Second Lien Trustee are Mark F.
Hebbeln, Esq., and Harold L. Kaplan, Esq., at Foley & Lardner LLP.
Counsel to the Majority Prepetition Second Lien Secured
Noteholders are Adam C. Harris, Esq., and David M. Hillman, Esq.,
at Schulte Roth & Zabel LLP; and Russell C. Silberglied, Esq., at
Richards Layton & Finger.
Z Capital Management LLC, which holds nearly 70% of the Opco term
loan, is represented by Derek C. Abbott, Esq., and Chad A. Fights,
Esq., at Morris Nichols Arsht & Tunnell LLP; and Lee R. Bogdanoff,
Esq., and Whitman L. Holt, Esq., at Klee Tuchin Bogdanoff & Stern
LLP.
The Official Committee of Unsecured Creditors tapped Kelley Drye &
Warren LLP as its counsel; Cole, Schotz, Meisel, Forman & Leonard
P.A. as its co-counsel, and Duff & Phelps Securities, LLC as its
financial advisor.
Early this year, the Bankruptcy Court authorized Real Mex to sell
substantially all of their assets to RM Opco, LLC, an entity
formed by a group of its bondholders. Pursuant to the Jan. 27,
2012 purchase agreement, the purchaser made a written offer to
acquire the assets in exchange for (i) an $80,000 credit bid, (ii)
$53,569,000 in cash, and (iii) the assumption of the assumed
liabilities.
REALOGY GROUP: Moody's Rates New Debt Issue B1; Outlook Positive
----------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Realogy Group
LLC's proposed new $1.8 billion senior secured term loan facility
and $600 million senior secured revolving credit facility, revised
the ratings outlook to positive from stable and raised the
Speculative Grade Liquidity Rating to SGL-2 from SGL-3. All other
existing ratings were affirmed.
Ratings Rationale
The positive ratings outlook reflects Moody's expectation for
continued debt repayments driven by annual free cash flow of over
$300 million, as well as the potential that Realogy outperforms
Moody's expectation for 4% to 5% revenue growth. If Realogy does
outperform, EBITDA could be considerably higher than the $800
million level Moody's expects because of the operating leverage in
Realogy's business model, and would drive more rapid than
anticipated financial deleveraging. However, Moody's notes that
current Debt to EBITDA of over 7 times remains elevated for the B3
rating category.
The upgrade to a Speculative Grade Liquidity Rating of SGL-2
reflects the $50 million of additional internal liquidity sources
from the reduction in interest expense and higher than expected
4th quarter cash balance, as well as materially improved external
liquidity from the proposed $600 million revolver, which is
substantially larger than the existing $363 million facility.
The ratings could be upgraded if Moody's expects debt to EBITDA to
be sustained at well less than 6 times and free cash flow to debt
to be above 5%, respectively. The outlook can be stabilized if the
company fails to generate enough free cash flow to reduce debt to
EBITDA towards 6 times by the end of 2013 or uses free cash flow
to return cash to shareholders. The ratings could be lowered if
weaker than expected existing home sale market conditions results
in declining revenues, profitability or free cash flow, or if
Realogy does not continue to make steady progress to reduce
financial leverage towards levels consistent with other companies
at the B3 rating level. A downgrade could occur if Moody's comes
to expect debt to EBITDA to be sustained at about 7.0 times and
free cash flow to debt to remain near 0%.
The following ratings were assigned:
Senior Secured Revolving Credit Facility; B1 (LGD2, 26%)
Senior Secured Term Loan Facility, B1 (LGD2, 26%)
The following rating was upgraded:
Speculative grade liquidity, to SGL-2 from SGL-3
The following ratings were affirmed (point estimates revised):
Corporate Family, B3
Probability of Default, B3-PD
Senior Secured Letter of Credit Facilities, B1 (LGD2, 26%)
Senior secured first lien notes due 2020, B1 (to LGD2, 26%)
Senior secured notes (one and half lien) due 2020, Caa1 (to
LGD5, 72%)
Senior secured (one and half lien) notes due 2019, Caa1 (to
LGD5, 72%)
11.5% senior unsecured notes due 2017, Caa2 (to LGD5, 89%)
12% senior unsecured notes due 2017, Caa2 (to LGD5, 88%)
12.375% senior subordinated notes due 2015 to Caa2 (LGD6, 95%)
The principal methodology used in this rating was the Global
Business and Consumer Service Industry Methodology published in
October 2010. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Realogy Group LLC is a global provider of real estate and
relocation services, mostly in the US. The company operates in
four segments: real estate franchise services, company owned real
estate brokerage services, relocation services and title and
settlement services.
REALOGY GROUP: S&P Raises CCR to'B+'; Rates New Secured Debt 'BB-'
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Realogy Corp. to 'B+' from 'B', and raised all issue-
level ratings one notch. The rating outlook is stable.
At the same time, S&P assigned the company's proposed senior
secured credit facilities (consisting of a $600 million revolver
due 2018 and a $1.82 billion term loan due 2020) its 'BB-' issue-
level rating with a recovery rating of '2', indicating S&P's
expectation for substantial (70% to 90%) recovery for lenders in
the event of a payment default.
Realogy plans to use the proceeds to refinance its existing
revolver and term loan facilities.
The one notch upgrade in the corporate credit rating to 'B+'
reflects an increase in our expectation for operating performance
at Realogy in 2013, and S&P's expectation that total lease
adjusted debt to EBITDA will improve to the low-6x area and funds
from operations (FFO) to total adjusted debt will be improve to
the high-single-digits percentage area in 2013, mostly due to
EBITDA growth in the low- to mid-teens percentage area in 2013.
In addition, S&P's economists are increasingly confident the U.S.
residential housing market is experiencing a sustained recovery in
terms of existing home sales and price improvement. Furthermore,
S&P believes that Realogy's EBITDA coverage of interest will
improve to the low-2x area in 2013. Given S&P's assessment of the
company's business risk profile as "satisfactory," S&P believes
these credit measures are in line with a 'B+' corporate credit
rating for Realogy, although S&P's assessment of Realogy's
financial risk profile remains "highly leveraged," according to
our criteria.
The Realogy reported significant outperformance in terms of
transaction units and price increases in its franchising and owned
brokerage units in the fourth quarter, with total combined
transaction volume up 35% and EBITDA up over 60%. Combined
transaction volume increased 17% in the franchising segment, 18%
in the owned brokerage unit, and EBITDA increased 30% in 2012.
The company also said momentum in the first quarter of 2013 is
good, and it expects a 14% to 16% increase in transaction volume.
RESIDENTIAL CAPITAL: Seeks 3rd Expansion of Plan Exclusivity
------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Residential Capital LLC, the mortgage-servicing
subsidiary of non-bankrupt Ally Financial Inc., is in a tiff with
the official creditors' committee over whether advice from lawyers
can play a role at the March 18 hearing for approval of a proposed
$8.7 billion settlement of claims for selling substandard
mortgages into 392 securitization trusts from 2004 to 2007.
Separately, ResCap will go to court a third time seeking an
expansion of the exclusive right to propose a Chapter 11 plan.
If approved by the bankruptcy judge at Feb. 28 hearing, so-called
exclusivity will be pushed out to May 29, according to the report.
The report relates that ResCap says it's entitled to longer
exclusivity "now that plan negotiations have begun in earnest."
ResCap filed bankruptcy having already worked out a proposed plan
with parent Ally that failed to garner universal creditor support.
On issue about lawyers, the committee recites in papers filed with
the bankruptcy court in New York on Feb. 13 how ResCap blocked
factual inquiries into communications with its lawyers on the
ground that advice of counsel wouldn't be used to justify approval
of the settlement. The committee arranged a Feb. 27 hearing when
ResCap did an about-face by filing papers on Feb. 1 claiming that
the settlement was recommended and negotiated by counsel.
To prevent the so-called attorney-client privilege from being both
shield and a sword, the committee at the Feb. 27 hearing will ask
the judge to preclude ResCap from introducing evidence on March 18
relating to advice of counsel.
In a court filing this month, the committee said it was "dismayed"
to learn that structuring the settlement was dominated by and for
the benefit of Ally.
ResCap's $2.1 billion in third-lien 9.625% secured notes due in
2015 last traded on Feb. 12 for 108.75 cents on the dollar,
according to Trace, the bond-price reporting system of the
Financial Industry Regulatory Authority. The $473.4 million of
ResCap senior unsecured notes due in April last traded on Feb. 13
for 30.5 cents on the dollar, a 30% increase since Dec. 19,
according to Trace.
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: Completes Sale of Servicing Platform Assets
----------------------------------------------------------------
Residential Capital, LLC (ResCap) has completed the sale of the
servicing platform assets to Ocwen Loan Servicing, LLC, the
mortgage servicing arm of Ocwen Financial Corporation. The United
States Bankruptcy Court, Southern District of Manhattan had
approved the sale of the assets last November.
"[Fri]day marks an important step in what has been a successful
sale process for ResCap," said ResCap Chief Executive Officer
Thomas Marano. "Since the Court's approval of the deal, our focus
has been to ensure a smooth transition for homeowners and preserve
value for our creditors."
The sale of ResCap's originations and capital markets platform to
Walter Investment Management Corp., and the sale of a whole loan
portfolio to Berkshire Hathaway were recently completed. The
three sale transactions, in the aggregate, generated more than $4
billion in proceeds for the benefit of ResCap's creditors and
preserved more than 3,800 U.S. jobs.
"This complex transaction was settled in three components with
three distinct purchasers, in cooperation with eight government
agencies or regulatory authorities -- all while keeping the
business operating as a going concern," Mr. Marano said. "This
successful outcome is a direct result of the hard work our
employees, leadership and advisors have dedicated over the last
year."
Centerview Partners LLC and FTI Consulting are acting as financial
advisors to ResCap. Morrison & Foerster LLP is acting as legal
advisor to ResCap. Morrison Cohen LLP is advising ResCap's
independent directors.
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).
REVEL ATLANTIC: Moody's Cuts Corporate Family Rating to 'Caa3'
--------------------------------------------------------------
Moody's Investors Service earlier this month lowered Revel
Atlantic City LLC's ratings. The company's Corporate Family Rating
was lowered to Caa3 from Caa2 and its Probability of Default
Rating was lowered to Caa3-PD from Caa2-PD. Revel's $890 million
term loan 2017 was lowered to Caa2 from Caa1, and the Caa1 rating
on Revel's $100 million revolver was withdrawn. The rating outlook
is negative.
This rating action concludes the review process that was initiated
on August 23, 2012.
The downgrade and negative rating outlook consider Moody's view
that despite Revel's ability to obtain additional liquidity, the
company's significant leverage coupled with an unfavorable
earnings outlook suggests that Revel's capital structure is not
sustainable in its current form, and will require a restructuring
that involves some level of impairment. Ratings would be lowered
if Revel pursues a recapitalization that Moody's considers to be a
distressed exchange.
Ratings lowered:
Corporate Family Rating to Caa3 from Caa2
Probability of Default Rating to Caa3-PD from Caa2-PD
$890 million term loan due 2017 to Caa2 (LGD 3, 38%) from Caa1
(LGD 3, 38%)
Ratings withdrawn:
$100 million senior secured first lien credit facility due 2014
rated Caa1
Ratings Rationale
Although Revel was able to obtain additional liquidity in December
2012 -- the company amended its existing revolver agreement to
increase its limit by $25 million to a total of $125 million (not-
rated) and add a new $125 million term loan (not-rated) -- Moody's
continues to believe that the company will not be able to achieve
targeted business volumes and earnings necessary to cover its
fixed charge burden, and that the additional liquidity obtained is
not enough to ensure the company's longer-term viability.
Revel has not yet generated a profit. EBITDA was negative $69
million for the nine month period ended September 30, 2012. While
Moody's believes the additional liquidity provides Revel enough
cash to cover this EBITDA deficit and its fixed charges for short
period of time, the monthly gaming revenue results for the
Atlantic City gaming market suggest that the company will not be
able to generate positive EBITDA in the foreseeable future.
Moody's expects that additional gaming supply scheduled for the
Northeast in the next two years will put further pressure on the
revenue and earnings of Revel and other Atlantic City casinos.
Additionally, gaming demand, already negatively impacted by
Hurricane Sandy, relative weak demand trends, and a significant
increase in gaming supply in neighboring jurisdictions, will be
further negatively impacted by a reduction in consumer
discretionary income resulting from higher taxes. Other
significant challenges specific to Revel that Moody's believes
puts the sustainability of Revel's current capital structure in
doubt include the company's ability to maintain covenant
compliance along with its ability to service the interest on its
second lien notes when Revel is required to make cash interest
payments beginning September 2014.
Revel Atlantic City, LLC is a privately held company that
developed Revel Resort, a $2.4 billion entertainment resort and
casino located on the Boardwalk in the south inlet of Atlantic
City, NJ. Revel had its grand opening on Memorial Day weekend, May
25, 2012.
The principal methodology used in rating Revel Entertainment was
the Global Gaming 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.
REVLON CONSUMER: Moody's Ups CFR to Ba3; Rates New Notes Offer B1
-----------------------------------------------------------------
Moody's Investors Service has upgraded the Corporate Family Rating
and Probability of Default Rating of Revlon Consumer Products
Corporation to Ba3 and Ba3-PD, respectively. Moody's also upgraded
the company's $800 million senior secured term loan to Ba2 and its
Speculative Grade Liquidity Rating to SGL-1. A B1 rating was also
assigned to Revlon's $400 million proposed senior unsecured notes
offering due February 2021. The ratings of Revlon's existing 9
3/4% senior secured notes due 2015 will be withdrawn upon
successful completion of the tender offer which expires on
February 26, 2013. The outlook is stable.
The upgrade of Revlon's Corporate Family Rating to Ba3 reflects
its track record of strong positive free cash flow, sustained
profitability and solid organic growth over the last several
years. Moody's expects Revlon to further delever over the next 12
to 18 months with leverage expected to decline and be sustained
below 4.5 times.
The following ratings of Revlon were upgraded:
- Corporate Family Rating to Ba3 from B1;
- Probability of Default rating to Ba3-PD from B1-PD;
- $800 million senior secured term loan facility due November
2017 to Ba2 (LGD 2, 26%) from Ba3 (LGD 3, 30%); and
- Speculative Grade Liquidity Rating to SGL-1 from SGL-2.
The following ratings of Revlon were assigned:
- $400 million senior unsecured notes due 2021 at B1 (LGD 5,
80%)
The following ratings will be withdrawn upon successful completion
of the tender offer:
- $330 million 9 3/4% Senior Secured Notes due November 2015 at
B2 (LGD 5, 72%)
Outlook is stable.
Ratings Rationale:
Revlon's Ba3 Corporate Family Rating reflects the company's global
brand franchises, strong geographic and product diversification
for a number of well-known beauty brands and sustained strong
profitability and consistent free cash flow generation (EBIT
margins of approximately 16%; free cash flow-to-debt of over 6%).
Revlon's ratings are constrained by its limited scale in the
highly competitive cosmetics category characterized by deep-
pocketed, global competitors. The company's liquidity profile is
very good with no material debt maturities, ample availability
under a committed and long-dated $140 million revolving credit
facility (unrated) and maintenance of significant cash balances.
Moody's expects the company's recent operating and financial
improvements to be sustained despite the ongoing macroeconomic
challenges especially in Europe and potential for slow growth in
key emerging markets such as China. Continued weakness of its
Almay color cosmetics brand will likely continue and require
additional investment in brand development and promotion.
Despite these challenges, Moody's expects the company's
profitability to remain relatively stable. More importantly,
having improved its financial profile over the last several years,
Revlon has sufficient financial flexibility to maintain its
investment in product development, required display spending and
necessary brand promotion and advertising needed to maintain its
market share and drive organic growth. Although cash flow will be
impacted in 2013 by costs associated with the company's
operational realignment and to settle litigation; Moody's expects
free cash flow to be strong and provide for modest deleveraging
over the next 12 to 18 months.
"Revlon is well positioned to build on the sales momentum across
all major geographies and for its core Revlon brands, including
its mature U.S. business, generating continued strong organic
growth at least in line with the industry," says Moody's Senior
Vice President Janice Hofferber, CFA. "This sustained operating
performance combined with its multi-year deleveraging and very
good liquidity profile should provide significant financial
flexibility to support new product development and brand awareness
critical in the highly competitive global cosmetics category,"
adds Ms. Hofferber.
Revlon's ratings could be upgraded if the company is able to
maintain an above average organic growth rate, improved market
share for its core Revlon and Almay brands and sustain credit
metrics including debt-to-EBITDA well below 4.0 times and EBIT-to-
interest expense of at least 3.0 times.
Revlon's ratings could be downgraded if the company's operating
performance deteriorates such that EBIT margins drop below 12%,
debt-to-EBITDA is sustained above 5.0 times or EBIT-to-interest
expense drops below 2.0 times. Any shift in the financial policy
of Revlon or of its majority-owner, M&F, towards debt-financed
acquisitions and share repurchases, could also result in a
downgrade.
The principal methodology used in rating Revlon was the Global
Packaged Goods published in December 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.
Headquartered in New York, Revlon Consumer Products Corporation is
a worldwide cosmetics, skin care, fragrance, and personal care
products company. The company is a wholly-owned subsidiary of
Revlon, Inc., which is majority-owned by MacAndrews & Forbes,
which is in turn wholly-owned by Ronald O. Perelman. Revlon's
principal brands include Revlon, Almay, Sinful Colors, Pure Ice,
Charlie, Jean Nate, Mitchum, Gatineau, and Ultima II. Revlon's net
sales for the fiscal year ended December 31, 2012 were nearly $1.4
billion.
RHYTHM AND HUES: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Rhythm And Hues, Inc.
aka Rhythm and Hues Studios Inc.
Rhythm & Hues Studios, Inc.
Rhythm & Hues Inc.
2100 East Grand Avenue
El Segundo, CA 90245
Bankruptcy Case No.: 13-13775
Chapter 11 Petition Date: February 13, 2013
Court: U.S. Bankruptcy Court
Central District of California (Los Angeles)
Judge: Neil W. Bason
About the Debtor: 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.
Debtor's Counsel: Brian L. Davidoff, Esq.
GREENBERG GLUSKER
1900 Avenue of the Stars, 21st Floor
Los Angeles, CA 90067
Tel: (310) 201-7530
Fax: (310) 402-5026
E-mail: bdavidoff@greenbergglusker.com
- and ?
C. John M Melissinos, Esq.
GREENBERG GLUSKER
1900 Avenue of the Stars, 21st Floor
Los Angeles, CA 90067
Tel: (310) 201-7536
Fax: (310) 402-5026
E-mail: bdavidoff@greenbergglusker.com
- and ?
Claire E. Shin, Esq.
GREENBERG GLUSKER
1900 Avenue of the Stars, 21st Floor
Los Angeles, CA 90067
Tel: (310) 201-7530
Fax: (310) 402-5026
E-mail: bdavidoff@greenbergglusker.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $50,000,001 to $100,000,000
The petition was signed by John Patrick Hughes, president and CFO.
Debtor's List of Its 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Warner Bros. Pictures Contract $2,257,261
c/o Kaufman Astoria Studios, 3rd Floor
34-12 36th Street
Astoria, NY 11106
300 Pictures, Inc. Contract $1,350,164
Attn: Tricia Mulgrew
4000 Warner Boulevard, Bldg. 5
Burbank, CA 91522
New Line Productions, Inc. Contract $1,297,757
"Black Sky"
c/o Warner Bros Studios
4000 Warner Boulevard, Bldg 5, Rm 108
Burbank, CA 91522-0001
GGX Productions, Inc. Contract $780,000
Attn: Accounting
12233 Olympic Boulevard, Suite 360
Los Angeles, CA 90064
Lee Berger Wages and Benefits $231,298
Ivan Neulander Wages and Benefits $190,126
Richard Hollander Wages and Benefits $161,731
Sei Nakashima Wages and Benefits $148,484
Hideki Okano Wages and Benefits $144,672
Kenneth Roupenian Wages and Benefits $140,628
Bell Technologies, Inc. -- $136,231
Walid Harmoush Wages and Benefits $135,494
Douglas Smith Wages and Benefits $117,486
City of El Segundo -- $115,796
Markus Kurtz Wages and Benefits $114,680
Gautham Krishnamurti Wages and Benefits $107,887
Jason Bayever Wages and Benefits $107,284
Michael Meaker Wages and Benefits $98,856
Stacy L. Burstin Wages and Benefits $90,868
Toshiaki Kato Wages and Benefits $90,065
SAC CAPITAL: A Quarter of Outside Investor Funds Up For Redemption
------------------------------------------------------------------
Jenny Strasburg and Juliet Chung, writing for The Wall Street
Journal, report that clients of SAC Capital Advisors LP moved to
pull $1.7 billion from the hedge-fund firm, or roughly a quarter
of outside investors' money, as an insider-trading investigation
weighed on confidence in the money manager.
SAC manages roughly $6 billion in outside capital, according to
people familiar with its operation. According to WSJ, people
familiar with the matter said SAC will pay out about $660 million
next month to investors who had requested withdrawals ahead of
Thursday's deadline. The sources also said the firm will return
the remaining money over the course of 2013.
WSJ recounts a federal insider-trading investigation has ensnared
six former SAC employees, and the firm said in November it might
face civil charges from securities regulators. SAC has said that
both the firm and its founder, Steven A. Cohen, have acted
appropriately and that it will cooperate with the probe.
WSJ notes SAC managed more than $15 billion at the start of this
year, according to a person familiar with the matter. The money
manager added more than $270 million a month, on average, last
year in investment gains, SAC executives have told people close to
the firm.
According to WSJ, people with knowledge of the discussions said
that for two months, SAC executives have been talking frequently
with clients to gauge their plans for pulling out or staying put,
as well as seeking to raise money from other potential investors.
The Wall Street Journal reported in January that SAC was bracing
for some $1 billion in redemptions, weeks before the deadline for
investors to give notice if they wanted to pull money.
SCHOOL SPECIALTY: Artisan No Longer Shareholder as of Dec. 31
-------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Artisan Partners Holdings LP and its
affiliates disclosed that, as of Dec. 31, 2012, they do not
beneficially own any shares of common stock of School Specialty,
Inc. A copy of the filing is available for free at:
http://is.gd/R3rMcm
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 petition estimated assets of $494.5 million and debt of
$394.6 million.
SINCLAIR BROADCAST: Vanguard Stake at 6.5% 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 3,422,697 shares of common
stock of Sinclair Broadcast Group Inc. representing 6.54% of the
shares outstanding. Vanguard Group previously reported beneficial
ownership of 3,310,659 common shares or a 6.36% equity stake as of
Dec. 31, 2011. A copy of the amended filing is available at:
http://is.gd/z9NBid
About Sinclair Broadcast
Based in Baltimore, Maryland, Sinclair Broadcast Group, Inc.
(Nasdaq: SBGI) -- http://www.sbgi.net/-- one of the largest and
most diversified television broadcasting companies, currently owns
and operates, programs or provides sales services to 58 television
stations in 35 markets. The Company's television group reaches
roughly 22% of U.S. television households and includes FOX,
ABC, CBS, NBC, MNT, and CW affiliates.
The Company said in the Form 10-Q for the quarter ended March 31,
2012, that any insolvency or bankruptcy proceeding relating to
Cunningham, one of its LMA partners, would cause a default and
potential acceleration under a Bank Credit Agreement and could,
potentially, result in Cunningham's rejection of the Company's
seven LMAs with Cunningham, which would negatively affect the
Company's financial condition and results of operations.
For the 12 months ended Dec. 31, 2012, the Company reported net
income of $144.95 million on $1.06 billion of total revenues, as
compared with net income of $76.17 million on $765.28 million of
total revenues during the prior year.
The Company's balance sheet at Dec. 31, 2012, showed $2.72 billion
in total assets, $2.82 billion in total liabilities and a $100.05
million total stockholders' deficit.
* * *
As reported by the TCR on Feb. 24, 2011, Standard & Poor's Ratings
Services raised its corporate credit rating on Hunt Valley, Md.-
based TV broadcaster Sinclair Broadcast Group Inc. to 'BB-' from
'B+'. The rating outlook is stable. "The 'BB-' rating on
Sinclair reflects S&P's expectation that the company could keep
its lease-adjusted debt to EBITDA below historical levels
throughout the election cycle, absent a reversal of economic
growth, meaningful debt-financed acquisitions, or significant
shareholder-favoring measures," explained Standard & Poor's credit
analyst Deborah Kinzer.
In September 2010, Moody's raised its ratings for Sinclair
Broadcast and subsidiary Sinclair Television Group, Inc.,
including the Corporate Family Rating and Probability-of-Default
Rating, each to Ba3 from B1, and the ratings for individual debt
instruments. Moody's also assigned a B2 (LGD 5, 87%) rating to
the proposed $250 million issuance of Senior Unsecured Notes due
2018 by STG. The Speculative Grade Liquidity Rating remains
unchanged at SGL-2. The rating outlook is now stable.
SOUTHERN OAKS: Approved to Auction Interbank Collateral
-------------------------------------------------------
The Hon. Nile Jackson of the U.S. Bankruptcy Court for the Western
District of Oklahoma authorized Southern Oaks of Oklahoma, LLC, to
sell the collateral of InterBank at an auction.
The Court also ordered that the net sale proceeds will
be paid to InterBank.
The Debtor and InterBank have negotiated a global resolution and
settlement of their disputes and the indebtedness. Essentially,
the Debtor will cause substantially all of InterBank's collateral
to be liquidated through section 363 Motions approved by the Court
with the proceeds thereof being paid to InterBank in full
satisfaction of the debt. In exchange, the Debtor will retain two
properties free and clear of InterBank's liens and the Debtor and
guarantors will be released from any other claims by InterBank.
A list of properties for sale is available for free at
http://bankrupt.com/misc/SOUTHERNOAKS_sale_order.pdf
As reported in the Troubled Company Reporter on Dec. 19, 2012,
InterBank is a secured lender of Debtor holding a first priority
lien on all of the Properties mortgaged to InterBank except one,
which is a second priority lien. As of the Petition Date,
InterBank's Proof of Claim asserts indebtedness owed of
$8,557,364. For purposes of use of cash collateral, the
Bankruptcy Court has held that InterBank has adequate protection
in the form of an equity cushion. Thus, InterBank would be
entitled to post petition interest, fees and expenses to the
extent the value of the Properties exceeded its claim.
About Southern Oaks
Southern Oaks of Oklahoma, LLC, owns a 126 unit apartment complex
in south Oklahoma City, 115 single family residences, 10
residential duplexes and 4 commercial properties in the Oklahoma
City Metro area and a 100 unit apartment complex in Pryor,
Oklahoma. The Company operates the non-apartment properties by
and through an affiliate property management company, Houses For
Rent of OKC, LLC, who advertises, leases, collects rents, pays
expenses, provides equipment, labor and materials for maintenance,
repairs and makeready services.
The Company filed for Chapter 11 bankruptcy (Bankr. W.D. Okla.
Case No. 12-10356) on Jan. 31, 2012. Judge Niles L. Jackson
presides over the case. Ruston C. Welch, Esq., at Welch Law Firm
P.C., serves as the Debtor's counsel. It scheduled $14,788,414 in
assets and $15,352,022 in liabilities. The petition was signed by
Stacy Murry, manager of MBR.
Affiliates that filed separate Chapter 11 petitions are
Charlemagne of Oklahoma, LLC (Bankr. W.D. Okla. Case No. 10-13382)
on July 2, 2010; and Brookshire Place, LLC (Bankr. W.D. Okla. Case
No. 11-10717) on Feb. 23, 2011.
Southern Oaks owns a 126-unit apartment complex in south Oklahoma
City, 115 single family residences, 10 residential duplexes and 4
commercial properties in the Oklahoma City Metro area and a 100
unit apartment complex in Pryor, Oklahoma. Southern Oaks operates
the non-apartment Properties by and through an affiliate property
management company, Houses For Rent of OKC LLC, who advertises,
leases, collects rents, pays expenses, provides equipment, labor
and materials for maintenance, repairs and make ready services.
On Jan. 12 and 27, 2012, the Debtor's ownership and operation of
the Properties was consolidated by the merger of various affiliate
entities with the Debtor being the surviving entity. Those
entities are Southern Oaks Of Oklahoma, LLC; Quail 12, LLC; Quail
13, LLC; 1609 N.W. 47th, LLC; 2233 S.W. 29th, LLC; 400 S.W. 28th,
LLC; South Robinson, LLC; 9 on S.E. 27th, LLC; Southside 10, LLC;
QCB 08, LLC; and Prairie Village of Oklahoma, LLC.
SPIRIT REALTY: Goldentree Is 6.5% Owner as of Sept. 20
------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Goldentree Asset Management LP and its affiliates
disclosed that, as of Sept. 20, 2012, they beneficially own
5,522,264 shares of common stock of Spirit Realty Capital Inc.
representing 6.51% of the shares outstanding. A copy of the
filing is available for free at http://is.gd/22XmPB
About Spirit Realty
Spirit Finance Corporation (now known as Spirit Realty Capital,
Inc.) headquartered in Phoenix, Arizona, is a REIT that acquires
single-tenant, operationally essential real estate throughout
United States to be leased on a long-term, triple-net basis to
retail, distribution and service-oriented companies.
The Company's balance sheet at Sept. 30, 2012, showed $3.20
billion in total assets, $1.98 billion in total liabilities and
$1.22 billion in total stockholders' equity.
* * *
As reported by the TCR on Oct. 9, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Spirit Realty
Capital Inc. (Spirit) to 'B' from 'CCC+'. "The upgrade reflects
Spirit Realty Capital Inc.'s successful completion of an IPO of
its common stock, which raised $465 million of net proceeds," said
credit analyst Elizabeth Campbell.
In the Jan. 30, 2013, edition of the TCR, Standard & Poor's
Ratings Services placed its 'B' corporate credit rating on Spirit
Realty Capital Inc. (Spirit) on CreditWatch with positive
implications.
"The CreditWatch placement follows the announcement that Spirit
will merge with Cole Credit Property Trust II (unrated), a
nontraded REIT, in a stock-for-stock exchange," said credit
analyst Elizabeth Campbell. "The merged company, which will
retain the name Spirit, will become the second-largest publicly
traded triple-net-lease REIT in the U.S. with a pro forma
enterprise value of approximately $7.1 billion."
In the Sept. 15, 2011, edition of the TCR, Moody's Investors
Service affirmed the corporate family rating of Spirit Finance
Corporation at Caa1.
"This rating action reflects Spirit's consistent compliance with
its term loan covenants throughout the downturn (despite
relatively thin cushion at certain times), as well as the recent
debt paydown which, in Moody's view, will help Spirit remain in
compliance within the stated covenant limits going forward."
SPRINT NEXTEL: Franklin Has 3.7% of Series 1 Stock at Dec. 31
-------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Franklin Resources, Inc., disclosed that, as
of Dec. 31, 2012, they beneficially own 111,032,637 shares of
Series 1 common stock of Sprint Nextel Corporation representing
3.7% of the shares outstanding. A copy of the filing is available
for free at http://is.gd/SCfy1x
About Sprint Nextel
Overland Park, Kan.-based Sprint Nextel Corp. (NYSE: S)
-- http://www.sprint.com/-- is a communications company offering
a comprehensive range of wireless and wireline communications
products and services that are designed to meet the needs of
individual consumers, businesses, government subscribers and
resellers.
The Company incurred a net loss of $4.32 billion on $35.34 billion
of net operating revenues for the year ended Dec. 31, 2012, as
compared with a net loss of $2.89 billion on $33.67 billion of net
operating revenues during the prior year.
The Company's balance sheet at Dec. 31, 2012, showed $51.57
billion in total assets, $44.48 billion in total liabilities and
$7.08 billion in total shareholders' equity.
* * *
As reported by the TCR on Oct. 17, 2012, Standard & Poor's Ratings
Services said its ratings on Overland Park, Kan.-based wireless
carrier Sprint Nextel Corp., including the 'B+' corporate credit
rating, remain on CreditWatch. "The CreditWatch update follows
the announcement that Sprint Nextel has agreed to sell a majority
stake to Softbank," said Standard & Poor's credit analyst Allyn
Arden.
In the Oct. 17, 2012, edition of the TCR, Moody's Investors
Service has placed all the ratings of Sprint Nextel, including its
B1 Corporate Family Rating, on review for upgrade following the
announcement that the Company has entered into a series of
definitive agreements with SOFTBANK CORP.
As reported by the TCR on Aug. 8, 2012, Fitch Ratings affirms,
among other things, the Issuer default rating (IDR) of Sprint
Nextel and its subsidiaries at 'B+'. The ratings for Sprint
reflect the ongoing execution risk both operationally and
financially regarding several key initiatives that the company
expects will improve cash generation, network performance and
longer-term profitability.
SPANISH BROADCASTING: Renaissance Reports 5.7% of Class A Shares
----------------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Renaissance Technologies LLC and Renaissance
Technologies Holdings Corporation disclosed that, as of Feb. 2,
2012, they beneficially own 238,020 shares of Class A common stock
Spanish Broadcasting System, Inc., representing 5.71% of the
shares outstanding. A copy of the filing is available at:
http://is.gd/3FXeE0
About Spanish Broadcasting
Headquartered in Coconut Grove, Florida, Spanish Broadcasting
System, Inc. -- http://www.spanishbroadcasting.com/-- owns and
operates 21 radio stations targeting the Hispanic audience. The
Company also owns and operates Mega TV, a television operation
with over-the-air, cable and satellite distribution and affiliates
throughout the U.S. and Puerto Rico. Its revenue for the twelve
months ended Sept. 30, 2010, was approximately $140 million.
The Company's balance sheet at Sept. 30, 2012, showed
$473.83 million in total assets, $427.51 million in total
liabilities, $92.34 million in cumulative exchangeable redeemable
preferred stock, and a $46.03 million total stockholders' deficit.
* * *
In November 2010, Moody's Investors Service upgraded the corporate
family and probability of default ratings for Spanish Broadcasting
System, Inc., to 'Caa1' from 'Caa3' based on improved free cash
flow prospects due to better than anticipated cost cutting and the
expiration of an unprofitable interest rate swap agreement.
Moody's said Spanish Broadcasting's 'Caa1' corporate family rating
incorporates its weak capital structure, operational pressure in
the still cyclically weak economic climate, generally narrow
growth prospects (though Spanish language is the strongest growth
prospect) given the maturity and competitive pressures in the
radio industry, and the June 2012 maturity of its term loan
magnify this challenge.
In July 2010, Standard & Poor's Ratings Services raised its
corporate credit rating on Miami, Fla.-based Spanish Broadcasting
System Inc. to 'B-' from 'CCC+', based on continued improvement in
the company's liquidity position. "The rating action reflects
S&P's expectation that, despite very high leverage, SBS will have
adequate liquidity over the intermediate term to meet debt
maturities, potential swap settlements, and operating needs until
its term loan matures on June 11, 2012," said Standard & Poor's
credit analyst Michael Altberg.
STANFORD INT'L: Accountants Face 20 Years in Prison
---------------------------------------------------
Laurel Brubaker Calkins, writing for Bloomberg News, reported that
R. Allen Stanford's former chief accounting officer, Gilbert
Lopez, 70, and his former controller, Mark Kuhrt, 40, were
sentenced to 20 years in prison for helping to conceal Stanford's
$7 billion Ponzi scheme.
Bloomberg related that U.S. District Judge David Hittner imposed
the sentences on Feb. 14 in Houston. The men were convicted in
November of conspiring to hide the fraud.
The fraud was built on bogus certificates of deposit at Antigua-
based Stanford International Bank Ltd., prosecutors said,
according to Bloomberg. Lopez and Kuhrt were the last two Stanford
executives to be criminally tried for their roles in the scheme.
Bloomberg said the men were each found guilty of nine of 10 wire
fraud counts and one count of conspiracy to commit wire fraud.
They have been jailed in downtown Houston pending sentencing.
Bloomberg related that Lopez's lawyer, Jack Zimmermann, said the
verdict and sentence will be appealed arguing that the
government's recommendation of 25 years "overstates the gravity of
conduct of Gil Lopez."
In sentencing Lopez and Kuhrt, the judge said he deviated downward
from the advisory federal guidelines sentence of, in effect, life
behind bars to avoid unwarranted disparities with other executives
and their "lesser culpability and gain from this fraud" compared
with others', according to Bloomberg. He calculated the sentences
for both men after determining they lied during his trial
testimony, as the government claimed, the judge said. Besides the
prison term, Lopez's punishment includes a $25,000 fine.
The case is U.S. v Lopez, 4:09-cr-0342, U.S. District Court,
Southern District of Texas (Houston).
About Stanford International Bank
Domiciled in Antigua, Stanford International Bank Limited --
http://www.stanfordinternationalbank.com/-- is a member of
Stanford Private Wealth Management, a global financial services
network with US$51 billion in deposits and assets under
management or advisement. Stanford Private Wealth Management
serves more than 70,000 clients in 140 countries.
On Feb. 16, 2009, the United States District Court for the
Northern District of Texas, Dallas Division, signed an order
appointing Ralph Janvey as receiver for all the assets and
records of Stanford International Bank, Ltd., Stanford Group
Company, Stanford Capital Management, LLC, Robert Allen Stanford,
James M. Davis and Laura Pendergest-Holt and of all entities they
own or control. The February 16 order, as amended March 12,
2009, directs the Receiver to, among other things, take control
and possession of and to operate the Receivership Estate, and to
perform all acts necessary to conserve, hold, manage and preserve
the value of the Receivership Estate.
STARZ LLC: Moody's Assigns 'Ba2' Rating to $150MM Debt Add-on
-------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Starz, LLC's
proposed $150 million add-on to its $500 million senior unsecured
notes due September 2019. Starz plans to utilize the net proceeds
from the proposed notes to pay down borrowings under its revolver
and for general corporate purposes. The rating outlook is stable.
Assignments:
Issuer: Starz, LLC
Senior Unsecured Regular Bond/Debenture due 2019 (upsized to
$650 million from $500 million), rated Ba2, LGD4 - 52%
Ratings Rationale
The note offering is moderately credit positive as it extends the
maturity of $150 million of debt by approximately three years (the
revolver expires in November 2016) at a roughly $5 million
increase in cash interest expense that is manageable within
Starz's free cash flow. Moody's projects Starz will generate free
cash flow of at least $150 million over the next 12 months and
debt-to-EBITDA leverage (estimated 2.4x LTM 9/30/12 incorporating
Moody's standard adjustments, programming costs on a cash basis,
and transactions related to Starz's January 2013 separation from
Liberty Media Corporation) is not affected by the proposed
refinancing.
The Ba2 rating and LGD4 - 52% assessment on Starz's 2019 notes
reflects the guarantee from Starz Entertainment, LLC (SEL).
Starz's new finance subsidiary, Starz Finance Corp., is a joint
and several co-issuer of the notes. Starz's $1 billion revolver
has the same guarantee from SEL but also a pledge of the stock of
SEL and Starz, LLC. Because Moody's believes the stock pledge is a
weaker claim than the guarantee, a 100% deficiency claim is
utilized for the revolver in Moody's loss given default model.
The revolver and notes are thus viewed as having similar claims at
present, which results in the notes being rated equal to the Ba2
Corporate Family Rating. However, the credit facility contains
maintenance covenants (not present in the notes) that could
improve the recovery prospects relative to the notes. Maintenance
covenants provide bank lenders an ability to modify the credit
facility terms, which could result in repayment of the bank debt
and/or higher interest margins as a condition to amending the
facility. The note indenture also allows Starz to pledge
collateral to a credit facility up to an amount equal to the
greater of $1.5 billion and 3.0x secured leverage. An actual or
potential difference in the collateral position, or other
provisions that could drive a meaningful difference in recovery
for the notes relative to the credit facility and lead to a lower
rating.
Starz' Ba2 CFR reflects the company's good cash flow generated
from its family of premium cable networks, technology-driven long-
term risks associated with the premium cable network business,
heavy supplier/distributor concentration, moderate leverage, and
event risks related to substantive control by John Malone. Moody's
believes the company will continue to generate good cash flow over
the intermediate term supported by movie output deals with Sony
and Disney and an increase in original programming investment, but
long-term business risks and Dr. Malone's substantive control
warrant a speculative-grade rating. Starz's 3.0x or lower target
debt-to-OIBDA leverage (company definition), positive projected
free cash flow and very good liquidity position the company at the
upper end of the speculative-grade rating scale. Starz is
initially below the top end of its leverage target range
(estimated 2.6x LTM 9/30/12 incorporating transactions related to
the separation from Liberty Media Corporation. Moody's expects
Starz will manage within its leverage target over time with share
repurchases and acquisitions potential uses of incremental debt if
earnings grow. Moody's believes Starz has sufficient free cash
flow to manage to its leverage target over the next few years.
Moody's believes several recent developments highlight Starz's
vulnerability in the evolving content distribution landscape and
could create downward pressure on Starz's ratings. Netflix, Inc.'s
(Netflix; Ba3 stable) announcement in December 2012 that it signed
an exclusive agreement with The Walt Disney Company (Disney; A2
stable) will result in the loss of an important source of
programming for Starz upon expiration of its agreement with
Disney. That agreement provides Starz exclusive pay TV window
rights to Disney's studio content covering theatrical films
released through 2015. Finding replacement theatrical film content
could be difficult or expensive given that most of the major
studios are aligned with or have licensing agreements with other
pay-TV providers. The loss of Disney's studio content creates
greater pressure on Starz to successfully execute its plan to
increase original programming and renew its existing licensing
agreement with Sony. Starz also indicated that recent extensions
to distribution affiliation agreements (covering approximately 30%
of Starz's revenue) include less favorable financial terms that
would have resulted in an approximate 3% reduction in Starz's pay-
TV channel revenue for the nine months ended September 2012.
The stable rating outlook reflects Moody's expectation that Starz
will maintain access to high quality programming for the next 12-
24 months, steadily increase its original programming investment,
and maintain and renew distribution agreements with multichannel
video suppliers near current economic terms such that revenue and
earnings are stable or growing over the next two years. Moody's
also anticipates in the stable rating outlook that Starz will
manage within its 3.0x target leverage level.
The ratings are currently constrained by Starz's target leverage
and the long-term business risk. However, maintaining access to
high quality content and sustaining distribution agreements such
that revenue and earnings grow notwithstanding technology-driven
changes in the television industry, along with debt-to-EBITDA
sustained below 2.25x and free cash flow-to-debt sustained in a
high teens percentage range or better could lead to an upgrade.
Starz would also need to maintain a good liquidity position and be
able to absorb any event-driven transactions within the
aforementioned credit metrics to be considered for an upgrade.
Starz's ratings could be downgraded if it does not maintain cost-
effective access to high quality programming. This could occur if
it is unable to renew studio output deals at reasonable terms,
find replacement programming that appeals to consumers in the
event an existing studio output deal is not renewed, or if its
original programming strategy is not successful. Adverse changes
in distribution agreements could also create downward rating
pressure. Starz could also be downgraded if liquidity
deteriorates, or if it does not adhere to its stated financial
policies and leverage target, completes acquisitions, or
distributes cash to shareholders such that debt-to-EBITDA is not
maintained in a low 3x range or lower or free cash flow-to-debt is
not sustained comfortably above 10%.
The principal methodology used in rating Starz 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.
Starz, headquartered in Englewood, Colorado, supplies television
and movie programming to U.S. multichannel video distributors
including cable, direct broadcast satellite, and telecommunication
service providers. Primary operations consist of the Starz and
Encore premium cable networks. Starz Media operates home video and
theatrical distribution businesses as well as other programming-
related services including managing for a distribution fee the
ancillary revenue and expenses of Starz's original programming
content. Revenue for the 12 months ended September 2012 was
approximately $1.6 billion.
SYNOVUS FINANCIAL: Fitch Affirms 'BB-' LT IDR; Outlook Negative
---------------------------------------------------------------
Fitch Ratings has affirmed the long-term and short-term Issuer
Default Ratings (IDRs) of Synovus Financial Corp. and its
subsidiaries at 'BB-/B'. The outlook has been revised to Positive
from Negative.
Fitch reviewed Synovus Financial Corp. as part of a peer review
that included 16 mid-tier regional banks. The banks in the peer
review include: Associated Banc-Corp., Bank of Hawaii Corporation,
BOK Financial Corporation, Cathay General Bancorp, Cullen/Frost
Bankers, Inc., East West Bancorp, Inc., First Horizon National
Corporation, First National of Nebraska, Inc., First Niagara
Financial Group, Inc., Fulton Financial Corporation, Hancock
Holding Company, People's United Financial, Inc., Synovus
Financial Corp., TCF Financial Corporation, UMB Financial Corp.,
Webster Financial Corporation. Refer to the release titled 'Fitch
Takes Rating Actions on Its Mid-Tier Regional Bank Group Following
Industry Peer Review' for a discussion of rating actions taken on
the entire mid-tier regional bank group.
The mid-tier regional group is comprised of banks with total
assets ranging from $10 billion to $36 billion. IDRs for this
group is relatively dispersed with a low of 'BB-' and a high of
'A+'. Mid-tier regional banks typically lag their large regional
bank counterparts by asset size, geographic footprint and
product/revenue diversification. As such mid-tier regional banks
are more susceptible to idiosyncratic risks such as geographic or
single name concentrations.
Fitch's mid-tier regional bank group has fairly homogenous
business strategies. The institutions are mostly reliant on spread
income from loans and investments. With limited opportunity to
improve fee-based income in the near term, Fitch expects that mid-
tier banks will continue to face greater earnings headwinds in
2013 than larger institutions with greater revenue
diversification.
Share repurchases is common theme amongst the mid-tier banks. As
mid-tier banks face earnings headwinds, institutions have begun
repurchasing common shares to improve shareholder returns. Fitch
anticipates continued repurchase activity in 2013 as the return on
equity lags historical norms for the group.
In addition to share repurchases, Fitch has observed that some
mid-tier banks have looked to their investment portfolio to
improve returns. Most notably, CLOs and CMBS have become more
popular amongst mid-tier banks. Although such securities are
beneficial to yields and returns, Fitch notes that such purchases
can be a negative ratings driver if the risks are not properly
measured, monitored and controlled.
Asset quality continues to improve throughout the banking sector.
Both nonperforming assets (NPAs) and net charge-offs (NCOs) are
down significantly year over year. Fitch anticipates further asset
quality improvement as nonperforming loan (NPL) inflow slows.
Reserve levels have also declined as asset quality improves, which
has been beneficial to earnings in 2012. Fitch expects further
reserve releases in 2013 but at a slower pace.
Rating Action and Rationale
The long-term and short-term ratings of SNV have been affirmed at
'BB-'. The Outlook has been revised to Positive from Negative. The
Outlook revision to Positive from Negative reflects Fitch's view
that credit risk has stabilized and that management will continue
to address its elevated level of problem credits in the
intermediate term. Further, Fitch believes that capital levels are
now sufficient to absorb future credit losses as they occur and
are adequate relative to the company's rating level. The ratings
affirmation reflects the company's high level of NPAs (inclusive
of accruing TDRs) in both relative and absolute terms as well as a
weak earnings profile going forward.
Fitch notes that SNV management has made modest progress in
addressing the company's high risk profile and stabilizing its
balance sheet through loan sales, loan workouts and equity raises
over the last 12 to 24 months which will likely lead to more
positive operating results going forward. This is evidenced by
management's reversal of $800 million in reserves held against the
company's deferred tax asset (DTA) which significantly boosted
core capital at year-end 2012. However, SNV's asset quality
remains noticeably worse than other higher rated credits in the
peer group reviewed and continues to be a negative rating driver.
Further, in Fitch's view, core earnings performance will continue
to lag peer institutions as credit costs will continue to weigh on
the bottom line.
RATING DRIVERS AND SENSITIVITIES - IDRs and VRs
SNV reported NPAs at just over of 7% at fourth quarter of 2012
(4Q'12), a moderate improvement from previous quarters due to a
4Q'12 bulk loan sale but still considerably higher than most
others in the peer group. Fitch notes that NPL inflows, while
still high in both relative and absolute terms, have been trending
down consistently since 2011. Given the company's level of
accruing substandard loans, inflows could spike up over coming
quarters similar to in 4Q'12 when one relationship moved to
nonperforming. However, Fitch expects the general improving trend
in NPL inflows to continue going forward along with other AQ
metrics. Fitch does remain relatively concerned about the
sustained high level of construction A&D loans located in the
southeastern region of the U.S. relative to the loan book as well
as to capital.
Capital levels are now stable and have even shown some improvement
through one-time items as well as nominal earnings retention. Core
capital levels (TCE) increased over 225 basis points (bps) as the
result of the aforementioned Deferred Tax Asset (DTA) allowance
reversal and are sufficient to absorb future credit losses, in
Fitch's view. Moreover, regulatory capital ratios, aided by around
$1 billion of TARP funds have remained at appropriate with Tier 1
leverage of nearly 11% and comfortably above minimums outlined in
the MOU with state and federal regulators. Management has not
wavered in its previous guidance that TARP funds will likely be
paid back before the dividend rate reset date in the fourth
quarter of 2012 with a combination of holding company cash, a
dividend upstream from the bank sub (subject to regulatory
approval),a debt issuance and potentially a preferred or common
equity issuance. This action would likely be viewed positively by
Fitch.
Fitch believes SNV's earnings are adequate at the company's rating
level but will continue to be relatively weak in the intermediate
term given its level of credit costs and NPAs. While the company
reported a large profit for the year 2012 due to the reversal of a
DTA allowance, it had reported modest profitability of just 53 bps
through 3Q'12 with very little noise associated with the results.
Fitch expects a similar level of profitability to continue
throughout 2013, marginally improving in 2014 and notes that the
level is considerably lower than other higher rated credits within
the mid-tier peer group.
Fitch notes that sustained positive AQ trends leading to
consistently positive earnings performance and capital
augmentation could result in positive rating action in the
intermediate term. Fitch expects the outstanding MOU to be
terminated as well as CPP preferred shares being paid off in 2013.
As communicated in the past by Fitch, both of these events could
result in positive rating action. Conversely, a sharp reversal in
AQ trends resulting in negative earnings performance and capital
deterioration would likely result in adverse rating action.
Further, any abnormal delay in paying back TARP prior to the
dividend rate reset rate could cause Fitch to reevaluate SNV's
ratings or Outlook.
RATING DRIVERS AND SENSITIVITIES - Support Ratings and Support
Floor Ratings:
All of the mid-tier regional banks in the peer group have Support
Ratings of '5' and Support Floor Ratings of 'NF'. In Fitch's view,
the mid-tier banks are not considered systemically important and
therefore, Fitch believes the probability of support is unlikely.
IDRs and VRs do not incorporate any government support for any of
the banks in the mid-tier regional bank peer group.
RATING DRIVERS AND SENSITIVITIES - Subordinated Debt and Other
Hybrid Securities:
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
RATING DRIVERS AND SENSITIVITIES - Holding Company:
All of the entities reviewed in the mid-tier regional bank group
have a bank holding company structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent holding
company supporting equalized ratings between bank subsidiaries and
bank holding companies. IDRs and VRs are equalized with those of
its operating companies and banks reflecting its role as the bank
holding company, which is mandated in the U.S. to act as a source
of strength for its bank subsidiaries.
RATING DRIVERS AND SENSITIVITIES - Subsidiary and Affiliated
Company Rating:
All of the entities reviewed in the mid-tier regional bank group
factor in a high probability of support from parent institutions
to its subsidiaries. This reflects the fact that performing parent
banks have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has affirmed these ratings and revised the Outlook to
Positive from Negative:
Synovus Financial Corporation; Positive Outlook;
-- Long-term IDR at 'BB-';
-- Short-Term IDR at 'B';
-- Viability Rating at 'bb-';
-- Subordinated Debt at 'B+';
-- Senior Unsecured at 'BB-';
-- Preferred at 'CCC';
-- Support Floor at 'NF'
-- Support at '5'.
Synovus Bank
-- Long-term IDR at 'BB-'; Positive Outlook;
-- Long-term Deposit at 'BB';
-- Short-Term IDR at 'B';
-- Viability Rating at 'bb-';
-- Support Floor 'at NF';
-- Support at '5'.
TALVIVAARA MINING: Mulls EUR260MM Rights Issue to Avert Default
---------------------------------------------------------------
Talvivaara Mining Company Plc on Feb. 14 announced a proposal to
raise gross proceeds of EUR260 million through a rights issue.
Highlights
- The proposed rights issue aims to:
- Secure liquidity for continued ramp-up of operations towards
full capacity;
- Provide an appropriate capital structure to enable refinancing
or repayment of short-term and medium-term indebtedness, including
the convertible bonds due in May 2013; and
- Satisfy a condition subsequent under an amended revolving credit
facility
- Underwritten through a combination of irrevocable subscription
commitments from Pekka Pera, Solidium and Varma, and standby
underwriting commitments from J.P. Morgan Securities plc, Nordea
Bank Finland Plc, BofA Merrill Lynch, BNP PARIBAS and Danske Bank
A/S Helsinki Branch
- Announcement of terms of the proposed rights issue expected to
take place on March 8, 2013
- Amended revolving credit facility for EUR100 million (of which
EUR70 million is drawn), which, among other things, amends the
financial and production covenants in the previous credit facility
to reflect Talvivaara's current business
- Talvivaara is convening an Extraordinary General Meeting
expected to take place on March 8, 2013 in order to obtain a
resolution authorizing the Board to issue up to 26 billion new
shares in the rights issue
- Interim financing arrangements agreed with Nyrstar and Cameco
amounting to EUR12 million and USD10 million, respectively
- Talvivaara's annual results review as well as the financial
statements and the related review of the Board for the financial
year ended 31 December 2012 has also been released on Feb. 14.
Tapani Jarvinen, Chairman of Talvivaara, said: "While Talvivaara
has encountered a number of significant challenges recently,
reflected in the Company's current liquidity position and the
necessity of the proposed capital raise, the Board is confident in
Talvivaara's long-term potential, with its significant sulphide
nickel resources and cost effective bioheapleaching process
following ramp-up, and in the long-term fundamentals of the nickel
industry.
However, the production challenges suffered over the course of
2012 have underlined the need to focus on stabilizing and
improving Talvivaara's production processes in order to return to
a sustainable ramp-up towards the targeted full capacity of 50,000
tonnes of nickel per year. Talvivaara is implementing a number of
measures to resolve its near-term operational challenges, but the
full effect of these actions will only materialize over time.
Through the financing transactions announced today, we are putting
in place a strong capital structure to allow Talvivaara to
overcome its prevailing challenges and continue the successful
ramp-up of its operations.
Furthermore, the production shortfalls Talvivaara has experienced
combined with a weak nickel price environment have resulted in a
strained liquidity position, which the Board expects to be further
exacerbated in 2013 due to the production impact caused by the
prevailing water balance issues. The Board therefore believes
that Talvivaara will need to strengthen its liquidity position to
secure sufficient working capital and enable repayment or
refinancing of short-term and medium-term indebtedness, including
the convertible bonds due in May 2013.
Notwithstanding prevailing operational challenges and the work
required to overcome them, the Board remains confident of
Talvivaara's future as a Finnish mining champion of international
significance. The primary focus of the Board continues to be on
preserving and enhancing value for all Talvivaara's shareholders.
We are confident the proposed EUR 260 million rights issue is in
the best interests of the Company's shareholders as a whole."
Background and reasons for the rights issue
Talvivaara has faced a number of operational challenges during the
ramp-up of its operations. These challenges have resulted in
Talvivaara not achieving its original production targets for 2010,
2011 and 2012. In particular, over the course of 2012, Talvivaara
faced increasing challenges with the water balance of the mine, as
rapid snow melting in the spring and historically heavy rainfall
in the spring and summer materially increased the amount of excess
water that had been accumulating at the mine site. The
challenging water balance forced Talvivaara to temporarily cease
the production of new ore as of September 2012, diluted metal
grades in leach solution leading to reduced metals production and
culminated in a leakage of the gypsum pond in November 2012.
These issues have underlined the need to focus on stabilising and
improving Talvivaara's production processes in order to return to
a sustainable ramp-up path towards the targeted full capacity of
50,000 tonnes of nickel per year. Talvivaara's results of
operations in 2012 were further negatively affected by the
prevailing low nickel price environment. The Board believes that
Talvivaara's strained liquidity position is likely to be
exacerbated in 2013 by the production impact caused by the
prevailing water balance issues as well as the maturity of the
remaining EUR76.9 million convertible bonds due in May 2013.
Talvivaara is implementing a number of measures to overcome its
near-term operational challenges, including:
- Removing excess water from the Talvivaara mine site;
- Implementing steps to achieve a closed water circulation system;
- Improving bioheapleaching performance; and
- Further improving and maintaining the stability already achieved
across Talvivaara's production processes.
However, the full effect of these actions will only materialize
over time, and Talvivaara currently expects material production
ramp-up only from the second half of 2013. With prevailing nickel
price uncertainty and expected short-term production volumes,
Talvivaara believes that it will need to strengthen its liquidity
position to secure sufficient working capital and enable repayment
or refinancing of short-term and medium-term indebtedness,
including the convertible bonds due 2013.
Talvivaara has concluded that raising additional equity is the
best approach to secure liquidity for continued ramp-up of
operations towards full capacity and achieve an appropriate
capital structure to enable refinancing or repayment of short-term
and medium-term indebtedness. Receipt of the proceeds from the
proposed rights issue will also satisfy a condition subsequent
under the amended revolving credit facility as discussed below.
Interim financing arrangements
In order to ensure that it has liquidity until it receives the
proceeds from the proposed rights issue, Talvivaara has entered
into amendment agreements with Cameco and Nyrstar. Under the
agreement with Cameco, the amount of the up-front investment that
Cameco is to pay to Talvivaara for the construction of the uranium
extraction facility was increased by USD10 million to USD70
million, and the duration of the amendment agreement extended to
December 31, 2017 and commercial terms revised accordingly. Under
the agreement with Nyrstar, Talvivaara receives an up-front
payment of EUR12 million in return for agreeing not to charge
Nyrstar the EUR350 per tonne extraction and processing fee on the
next 38,000 tonnes of zinc in concentrate delivered to Nyrstar as
was agreed in the original zinc in concentrate streaming
agreement.
Rights issue and the amended revolving credit facility
On February 13, 2013, Talvivaara entered into the amended credit
facility agreement, which, among other things, amends the
financial and production covenants in the previous credit facility
agreement to reflect Talvivaara's current business and, therefore,
reduces Talvivaara's risk in relation to compliance with its
covenants.
The proposed rights issue is conditional upon the Board proposal
on the rights issue being passed by shareholders at the
Extraordinary General Meeting. Therefore, if such resolutions are
not passed at the Extraordinary General Meeting, the proposed
rights issue will not proceed. If Talvivaara does not receive net
proceeds of at least EUR240 million from the proposed rights issue
by April 30, 2013, an event of default would immediately occur
under the amended revolving credit facility agreement. An event
of default could cause a significant portion of Talvivaara's
borrowings to become repayable on demand. Furthermore, without
securing additional funds through the proposed rights issue,
Talvivaara will likely run out of cash and not be able to finance
its planned operations or repay its debts, including the
convertible bonds due in May 2013. Such events may require the
sale of the Talvivaara mine, Talvivaara or Talvivaara's 84 per
cent shareholding in Talvivaara Sotkamo, which owns the Talvivaara
mine, and result in the insolvency and, ultimately, liquidation of
the Company.
Underwriting and subscription commitments
The proposed rights issue is underwritten through a combination of
irrevocable subscription commitments and standby underwriting.
The Company has received irrevocable undertakings from its three
largest shareholders, Mr. Pekka Pera, Solidium and Varma Mutual
Pension Insurance Company, to vote in favor of the resolutions in
respect of 104,181,306 Shares in aggregate, representing
approximately 38.3 per cent of the shares in issue on the date of
this announcement.
Mr. Pekka Pera, representing approximately 20.7 per cent of the
shares in issue on the date of this announcement, has irrevocably
committed to subscribe for such number of new shares based on a
total subscription price equal to (i) EUR5 million plus (ii) 76
per cent of any net proceeds received by him from the sale of (A)
any subscription rights during the subscription period of the
proposed rights issue and (B) any shares at any time prior to the
end of such subscription period as well as agreed to a lock-up
undertaking with respect to his shares that will be in force for
90 days after the completion of the proposed rights issue.
Mr. Pekka Pera has agreed to use his reasonable best efforts to
raise funds on terms that are reasonably acceptable to him,
whether through borrowing, the sale of shares, the sale of
subscription rights, or other means, in order to subscribe for new
shares in excess of his commitment to subscribe new shares based
on a total subscription price of EUR5 million referred to above.
Solidium, representing approximately 8.9 per cent of the shares in
issue on the date of this announcement, has irrevocably committed
to subscribe in full for new shares on the basis of the
subscription rights allocated to it. In addition, Solidium has
agreed to subscribe for any new shares not otherwise subscribed
and paid for pursuant to subscription rights or in the secondary
subscription up to an aggregate subscription price of EUR 30
million.
Varma Mutual Pension Insurance Company, representing approximately
8.7 per cent of the shares in issue on the date of this
announcement, has irrevocably committed to subscribe in full for
new shares on the basis of the subscription rights allocated to
it.
J.P. Morgan Securities plc, Nordea Bank Finland Plc, BofA Merrill
Lynch, BNP PARIBAS and Danske Bank A/S Helsinki Branch have
entered into a standby underwriting letter with Talvivaara
pursuant to which they have severally agreed, subject to certain
terms and conditions, to underwrite the portion of the proposed
rights issue that is not subject to such shareholder commitments.
Under the standby underwriting letter, the Company has agreed to a
lock-up undertaking that will be in force for 180 days after the
completion of the proposed rights issue.
The Board expects that the terms of the proposed rights issue will
be announced on or around March 8, 2013, and the full details of
the proposed rights issue, including the terms, pricing and
expected net proceeds of the proposed rights issue, will be
included in a prospectus to be published, subject to approval by
the Finnish Financial Supervisory Authority, on or around
March 13, 2013. Talvivaara expects that the proposed rights issue
will seek to raise approximately EUR260 million in gross proceeds.
The subscription price is expected to be in euros and to be set
with reference to a discount to the theoretical ex-rights price,
which will be in line with similar rights issues undertaken in the
UK and Finnish markets, and having regard to, amongst other
things, investor feedback, Talvivaara's operational performance,
market conditions, any relevant requirements of the Listing Rules
and the market price of the shares over the five days preceding
the determination of the subscription price. The number of new
shares to be issued pursuant to the proposed rights issue will be
determined on the date the Board resolves upon the proposed rights
issue on the basis of the rights issue authorization having been
approved at the Extraordinary General Meeting and will depend on
the subscription price determined at the same time by the Board.
In order for Talvivaara to proceed with the proposed rights issue,
a resolution authorising the Board to resolve to issue up to 26
billion new shares in the rights issue will be proposed by the
Board at the Extraordinary General Meeting.
Talvivaara Mining Company Plc
Finland-based Talvivaara Mining Company --
http://www.talvivaara.com-- is an internationally significant
base metals producer with its primary focus on nickel and zinc
using a technology known as bioheapleaching to extract metals out
of ore. Bioheapleaching makes extraction of metals from low grade
ore economically viable. The Talvivaara deposits comprise one of
the largest known sulphide nickel resources in Europe. The ore
body is estimated to support anticipated production for several
decades. Talvivaara has secured a 10-year off-take agreement for
100 per cent of its main output of nickel and cobalt to Norilsk
Nickel and entered into a long-term zinc streaming agreement with
Nyrstar NV. Talvivaara is listed on the London Stock Exchange
Main Market and NASDAQ OMX Helsinki.
TCF FINANCIAL: Fitch Lowers Preferred Stock Rating to 'B'
---------------------------------------------------------
Fitch Ratings has downgraded the long-term and short-term Issuer
Default Ratings (IDRs) of TCF Financial Corporation and its
subsidiaries to 'BBB-/F3'. The Outlook remains Negative.
Fitch reviewed TCF Financial Corporation as part of a peer review
that included 16 mid-tier regional banks. The banks in the peer
review include: Associated Banc-Corp., Bank of Hawaii Corporation,
BOK Financial Corporation, Cathay General Bancorp, Cullen/Frost
Bankers, Inc., East West Bancorp, Inc., First Horizon National
Corporation, First National of Nebraska, Inc., First Niagara
Financial Group, Inc., Fulton Financial Corporation, Hancock
Holding Company, People's United Financial, Inc., Synovus
Financial Corp., TCF Financial Corporation, UMB Financial Corp.,
Webster Financial Corporation. Refer to the release titled 'Fitch
Takes Rating Actions on Its Mid-Tier Regional Bank Group Following
Industry Peer Review' for a discussion of rating actions taken on
the entire mid-tier regional bank group.
The mid-tier regional group is comprised of banks with total
assets ranging from $10 billion to $36 billion. IDRs for this
group is relatively dispersed with a low of 'BB-' and a high of
'A+'. Mid-tier regional banks typically lag their large regional
bank counterparts by asset size, geographic footprint and
product/revenue diversification. As such mid-tier regional banks
are more susceptible to idiosyncratic risks such as geographic or
single name concentrations.
Fitch's mid-tier regional bank group has fairly homogenous
business strategies. The institutions are mostly reliant on spread
income from loans and investments. With limited opportunity to
improve fee-based income in the near term, Fitch expects that mid-
tier banks will continue to face greater earnings headwinds in
2013 than larger institutions with greater revenue
diversification.
Share repurchases is common theme amongst the mid-tier banks. As
mid-tier banks face earnings headwinds, institutions have begun
repurchasing common shares to improve shareholder returns. Fitch
anticipates continued repurchase activity in 2013 as the return on
equity lags historical norms for the group.
In addition to share repurchases, Fitch has observed that some
mid-tier banks have looked to their investment portfolio to
improve returns. Most notably, CLOs and CMBS have become more
popular amongst mid-tier banks. Although such securities are
beneficial to yields and returns, Fitch notes that such purchases
can be a negative ratings driver if the risks are not properly
measured, monitored and controlled.
Asset quality continues to improve throughout the banking sector.
Both nonperforming assets (NPAs) and net charge-offs (NCOs) are
down significantly year over year. Fitch anticipates further asset
quality improvement as nonperforming loan (NPL) inflow slows.
Reserve levels have also declined as asset quality improves, which
has been beneficial to earnings in 2012. Fitch expects further
reserve releases in 2013 but at a slower pace.
Rating Action and Rationale
The long-term and short-term ratings of TCB have been downgraded
to 'BBB-/F3'. The Outlook remains Negative. The downgrade of TCB's
long-term and short-term ratings primarily reflects the company's
sustained weak asset quality and consumer-oriented, higher-risk
balance sheet compared to other mid-tier regional banks. More
specifically, Fitch remains concerned about the company's level of
exposure to consumer real estate relative to capital that has been
thinned out through strategic balance sheet restructurings as well
as the relatively lower level of readily available liquidity on
balance sheet. Further, the downgrade better aligns the TCB's
ratings with peers of similar condition and performance. Fitch has
maintained the Rating Outlook at Negative reflecting its view that
further negative rating action could take place if credit risk is
not stabilized over the near-to-mid-term causing negative earnings
performance and capital deterioration or if the bank's relatively
new strategies do not favorably impact TCB's operating results and
financial condition.
RATING DRIVERS AND SENSITIVITIES - IDRs and VRs
TCB's weak asset quality continues to be a primary negative
ratings driver. TCB reported a NPA ratio (inclusive of accruing
TDRs) of nearly 7.50% at year-end 2012 up from 7.26% a year ago,
and the worst NPA ratio within the mid-tier regional group.
Continued asset quality deterioration has primarily been driven by
a high level of consumer-related problem loans. In fact, at third
quarter 2012 (3Q'12), over 40% of total NPAs were consumer-related
accruing TDRs. Therefore, Fitch expects NPAs to remain at an
elevated level in both relative and absolute terms over the
intermediate term due to the lifetime TDR status of residential
TDRs.
Fitch also expects NCOs, with an annualized quarterly average in
excess of 125 basis points (bps) over the last 20 quarters even
when excluding the impact of new regulatory guidance issued in
3Q'12, to continue to exceed others in the mid-tier group going
forward. These trends in asset quality remains at odds with peer
institutions that are largely experiencing significant
improvements in the levels of NPAs, NCOs and provisioning while
TCB's trends remain negative overall.
As noted above, Fitch expects TCB's profitability to be weighed
down by credit costs going forward but be commensurate with its
rating category of 'BBB-'. TCB generates a relatively high PPNR/AA
due to high spread income and a low cost of funds. Fitch expects
an elevated level of PPNR given the company's business strategy
and balance sheet structure that has resulted in a loan to deposit
ratio of nearly 110%, a ratio relatively high for TCB's rating
level. However, Fitch also expects overall earnings performance to
continue to be adversely impacted by the need to take higher
provisions to maintain reasonable reserve levels leading to
operating results in line with other 'BBB-' rated institutions.
Fitch notes that capital levels thinned out during TCB's balance
sheet restructuring at beginning of 2012 and have remained
relatively weak for its rating level. The company had a Fitch Core
Capital to Risk Weighted Assets of 9.31% at 3Q'12 higher than just
two banks in the peer group. This level of capital is likely
adequate for the company in the near term but could be strained if
credit trends worsen or growth in the bank's national lending
portfolio becomes excessive relative to Fitch's expectations.
In the long term, if legacy credits show improving trends TCB's
ratings or Outlook could be positively impacted. Conversely, TCF's
ratings are sensitive to asset quality trends, which, if remain
volatile and negative, could result in adverse rating action.
Further, if the company's relatively new national lending
strategies such as near-prime auto lending fail to positively
impact the company's operating results and overall financial
condition, Fitch could take negative rating action.
RATING DRIVERS AND SENSITIVITIES - Support Ratings and Support
Floor Ratings:
All of the mid-tier regional banks in the peer group have Support
Ratings of '5' and Support Floor Ratings of 'NF'. In Fitch's view,
the mid-tier banks are not considered systemically important and
therefore, Fitch believes the probability of support is unlikely.
IDRs and VRs do not incorporate any government support for any of
the banks in the mid-tier regional bank peer group.
RATING DRIVERS AND SENSITIVITIES - Subordinated Debt and Other
Hybrid Securities:
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
RATING DRIVERS AND SENSITIVITIES - Holding Company:
All of the entities reviewed in the mid-tier regional bank group
have a bank holding company structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent holding
company supporting equalized ratings between bank subsidiaries and
bank holding companies. IDRs and VRs are equalized with those of
its operating companies and banks reflecting its role as the bank
holding company, which is mandated in the U.S. to act as a source
of strength for its bank subsidiaries.
RATING DRIVERS AND SENSITIVITIES - Subsidiary and Affiliated
Company Rating:
All of the entities reviewed in the mid-tier regional bank group
factor in a high probability of support from parent institutions
to its subsidiaries. This reflects the fact that performing parent
banks have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has taken these rating actions:
TCF Financial Corporation
-- Long-term IDR to 'BBB-' from 'BBB'; Negative Outlook
maintained;
-- Viability to 'bbb-' from 'bbb';
-- Short-term IDR to 'F3' from 'F2';
-- Preferred stock to 'B' from 'B+'.
-- Support affirmed at '5';
-- Support floor affirmed at 'NF'.
TCF National Bank
-- Long-term IDR to 'BBB-' from 'BBB'; Negative Outlook
maintained;
-- Viability to 'bbb-' from 'bbb';
-- Short-term IDR to 'F3' from 'F2';
-- Short-term deposits to 'F3' from 'F2';
-- Subordinated debt to 'BB+' from 'BBB-';
-- Long-term deposits to 'BBB' from 'BBB+'.
-- Support affirmed at '5'
-- Support floor affirmed at 'NF'.
THQ INC: Unloads Assets That Look More Like Liabilities
-------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that when video-game developer THQ Inc. auctioned the
assets in January, there were no bidders for a contract to develop
games under license with World Wrestling Entertainment Inc.
The report relates that THQ has worked out back-to-back deals
avoiding perhaps $65 million in claims if the WWE agreement were
simply terminated under the bankruptcy process known as rejection
of executory contracts. The situation was further complicated
because THQ had an agreement for Yuke's Co. to develop the games
for WWE. THQ owns 14% of Yuke's stock. Were the WWE business
simply dumped, THQ anticipated that WWE would have a damage claim
for perhaps $45 million while Yuke's claim could be in the
neighborhood of $20 million.
Take-Two Interactive Software Inc. arrived on the scene as the
potential savior. Although unwilling to take on the existing
contracts, Take-Two would negotiate new arrangements with both
WWE and Yuke's. Pursuant to the settlement, both WWE and Yuke's
will waive their claims against THQ. Take-Two will take back the
stock that THQ owns. THQ will pay about $1 million total for
royalties and other liabilities arising to WWE and Yuke's during
bankruptcy.
The settlement is coming up for approval at a Feb. 19 hearing in
U.S. Bankruptcy Court in Delaware.
THQ's unsecured notes last traded Feb. 13 for 43.5 cents on the
dollar, about double the price on Jan. 11, according to Trace, the
bond-price reporting system of the Financial Industry Regulatory
Authority. The notes almost quintupled in price since December.
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 2013. Some of the assets didn't
sell, including properties the company said could be worth about
$29 million.
THQ INC: Andrews Kurth Approved as Creditors Committee Counsel
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
the Official Committee of Unsecured Creditors, in the Chapter 11
cases of THQ Inc., et al. to retain Andrews Kurth LLP as its
counsel.
The hourly rates of AK's personnel are:
Attorneys $275 to $1,090
Paralegals $90 to $330
To the best of the Committee's knowledge, AK does not represent
any adverse interest to the Committee.
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.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed five
persons to serve in the Official Committee of Unsecured Creditors.
The Committee tapped Houlihan Lokey Capital as its financial
advisor and investment banker, Landis Rath & Cobb as co-counsel
and Andrews Kurth as counsel.
THQ INC: Centerview Partners Approved as Investment Banker
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
THQ Inc., et al., to employ Centerview Partners LLC as investment
banker.
As reported in the Troubled Company Reporter on Feb. 6, 2013,
Centerview Partners will provide general financial advisory and
investment banking services, restructuring services, and financing
services.
Centerview Partners' fee structure includes, among other things:
-- an initial advisory fee of $200,000;
-- a monthly financial advisory fee of $125,000
-- a transaction fee of $2,500,000
-- a $250,000 WWE sale fee if World Wrestling Entertainment,
Inc. and THQI consummates the sale of license agreement
To the best of the Debtors' knowledge, Centerview Partners is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
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.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed five
persons to serve in the Official Committee of Unsecured Creditors.
The Committee tapped Houlihan Lokey Capital as its financial
advisor and investment banker, Landis Rath & Cobb as co-counsel
and Andrews Kurth as counsel.
THQ INC: $0 Carve-Out as Sale Proceeds Exceed DIP Loans
-------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware signed a
stipulation that would amend the prior orders in connection with
the DIP financing for THQ Inc., et al.
Given that the collective purchase price for the Debtors' assets
in the sales approved in January significantly exceeds the
outstanding loan balances under the DIP credit documents the
carve-out and corresponding obligations are unnecessary.
Accordingly, on Feb. 1, the Debtors, Wells Fargo Capital Finance,
LLC, as DIP lender and DIP agent, Clearlake Capital Partners III
(Master), L.P., as DIP Lender, and the Official Committee of
Unsecured Creditors, entered into a stipulation that provides
that:
1. the DIP Collateral, the DIP liens, the DIP superpriority
claims, the adequate protection priority claims, the primed
liens and the pari passu liens will not be subject to any
carve-out; and
2. the Debtors will retain cash collateral in the amount of
$1,000,000 in a segregated, designated bank account at a
financial institution under the name of the Debtors.
A copy of the stipulated order is available for free at
http://bankrupt.com/misc/THQINC_dipfinancing_order.pdf
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.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed five
persons to serve in the Official Committee of Unsecured Creditors.
The Committee tapped Houlihan Lokey Capital as its financial
advisor and investment banker, Landis Rath & Cobb as co-counsel
and Andrews Kurth as counsel.
TIGER MEDIA: Non-Participating Warrants to Expire Tomorrow
----------------------------------------------------------
Tiger Media, Inc., provided holders of certain of its warrants the
opportunity to exercise up to one-third of their warrants at a
reduced exercise price and to extend the expiration date of a
participating holder's remaining warrants, equal to two times the
number of warrants exercised until Dec. 26, 2013. The offer to
exercise warrants at a reduced price began on Dec. 5, 2012, and
ended at 5:00 p.m. Eastern Time on Dec. 26, 2012. Warrants that
did not participate in the offer remained outstanding in
accordance with their terms, including the exercise price of $6.00
per share for the Public and Insider Warrants and $7.00 per share
for the Underwriter Warrants.
Tiger Media reminds holders of Non-Participating Warrants that
those warrants expire, in accordance with their terms, on Feb. 19,
2013. Furthermore, the NYSE MKT has notified Tiger Media that
trading in the Non-Participating Warrants on the NYSE MKT will be
suspended after the close of business Feb. 12, 2013, to ensure all
trades in the Non-Participating Warrants settle in time to allow
the purchasers of such Non-Participating Warrants to exercise on
or before Feb. 19, 2013. Approximately 5.8 million
Non-Participating Warrants remain outstanding.
A holder can obtain further information on exercising Non-
Participating Warrants by contacting his or her broker or
Continental Stock Transfer & Trust Company, the Company's transfer
agent. Brokers are encouraged to contact DTC in advance of the
Expiration Date to confirm the procedures for exercising Non-
Participating Warrants.
Any Non-Participating Warrant that remains unexercised on the
Expiration Date will expire worthless and the holder thereof will
not receive any shares of Tiger Media ordinary shares for those
Non-Participating Warrants.
About Tiger Media
Tiger Media -- http://www.tigermedia.com-- is a multi-platform
media company based in Shanghai, China. Tiger Media operates a
network of high-impact LCD media screens located in the central
business district areas in Shanghai. Tiger Media's core LCD media
platforms are complemented by other digital media formats that it
is developing including transit advertising and traditional
billboards, which together enable it to provide multi-platform,
"cross-over" services for its local, national and international
advertising clients.
Marcum Bernstein & Pinchuk LLP, in New York, issued a "going
concern" qualification on the company's consolidated financial
statements for the year ended Dec. 31, 2011. The independent
auditors noted that the Company has suffered recurring losses and
has a working capital deficiency of roughly $31,000,000 at
Dec. 31, 2011, which raises substantial doubt about its ability to
continue as a going concern.
Searchmedia Holdings reported a net loss of $13.45 million
in 2011, a net loss of $46.63 million in 2010, and a net loss of
$22.64 million in 2009.
The Company's balance sheet at Sept. 30, 2012, showed
US$39.88 million in total assets, US$35.41 million in total
liabilities, $979,000 in minority interest, and US$3.49 million in
total shareholders' equity.
TITAN ENERGY: Michael Epstein Reports 7% Stake at Feb. 14
---------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Michael Epstein disclosed that, as of Feb. 14, 2013,
he beneficially owns 4,968,000 shares of common stock of Titan
Energy Worldwide, Inc., representing 7.02% of the shares
outstanding. A copy of the filing is available at:
http://is.gd/hjZu5d
About Titan Energy
New Hudson, Mich.-based Titan Energy Worldwide, Inc., is a
provider of onsite power generation, energy management and energy
efficiency products and services.
The Company's balance sheet at Sept. 30, 2012, showed $6.87
million in total assets, $10.26 million in total liabilities and a
$3.39 million total stockholders' deficit.
"At September 30, 2012, the Company had an accumulated deficit of
$34,521,705. These conditions raise substantial doubt as to the
Company's ability to continue as a going concern."
TOP HAT: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor: Top Hat, Inc.
dba Top Hat 430, Inc.
Be Iced Jewelers
Be Iced Diamond Exchange
Gold Stop
Bidx
12805 Highway 55, Suite 304
Plymouth, MN 55441
Bankruptcy Case No.: 13-40651
Chapter 11 Petition Date: February 12, 2013
Court: U.S. Bankruptcy Court
District of Minnesota (Minneapolis)
Judge: Gregory F. Kishel
Debtor's Counsel: Steven B. Nosek, Esq.
STEVEN B. NOSEK, P.A.
2855 Anthony Lane S, Suite 201
St. Anthony, MN 55418
Tel: (612) 335-9171
Fax: (612) 789-2109
E-mail: snosek@visi.com
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its 20 largest unsecured creditors
filed with the petition is available for free at:
http://bankrupt.com/misc/mnb13-40651.pdf
The petition was signed by David R. Pomije, president.
TRANSDIGM INC: Moody's Rates New $2.5-Bil. Debt Facility 'Ba2'
--------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to TransDigm
Inc.'s new $2.5 billion senior secured credit agreement, comprised
of a $310 million first lien revolver and $2.2 billion first lien
term loan. Proceeds from the refinancing will repay the existing
$2.2 billion term loan and replace the existing $310 million
revolver. All other ratings, including the B1 corporate family
rating (CFR), have been affirmed. The rating outlook is stable.
The following ratings have been assigned (subject to review of
final documentation):
Ba2 (LGD2, 24%) to the $310 million first lien revolving credit
facility due February 2018; and
Ba2 (LGD2, 24%) to the $2.2 billion first lien term loan due
February 2020.
The following ratings have been affirmed:
B1 corporate family rating;
B1-PD probability of default rating;
Ba2 (LGD2, 24%) on the existing first lien bank credit
facility;
B3 (LGD5, 80% from 79%) on the $1.6 billion senior subordinated
notes due 2018;
B3 (LGD5, 80% from 79%) on the $550 million add-on senior
subordinated notes due 2020; and
SGL-1 speculative grade liquidity rating
The ratings on the existing first lien bank credit facility will
be withdrawn upon close of the proposed refinancing.
Ratings Rationale
The Ba2 rating on the new term loan and revolver reflect their
seniority in the capital structure relative to the subordinated
notes, upstream guarantees from operating subsidiaries and their
first lien security interest in substantially all assets of the
company and its guarantor subsidiaries. Terms of the new facility
are expected to have an unlimited restricted payments basket (if
net leverage is below 5.75x, the revolver is undrawn and cash is
greater than $200 million), allow for an AR securitization basket
of $250 million, eliminate the interest coverage covenant and
covenant step downs related to the net leverage covenant; all of
which weaken covenant restrictions relative to the existing
facility.
The B1 CFR continues to reflect TransDigm's long track record of
revenue growth and operating profitability supported by its
portfolio of high margin, niche products, the stability provided
by its aftermarket focus, positioning on most aircraft platforms,
and the proprietary and sole source nature of most of its product
offerings. TransDigm's strong operating performance, robust
margins, and demonstrated free cash flow generation enable the
company to support its significant levels of funded debt. The
ratings are constrained by TransDigm's high leverage, roughly
5.3x, its use of acquisitions as a major driver in its growth
strategy, and the company's history of a shareholder friendly
financial policy of re-leveraging. The aggressiveness of its
growth and shareholder activities are somewhat mitigated by its
willingness to maintain a very good liquidity profile supported by
high cash balances and meaningful revolver availability.
The stable rating outlook considers both an aggressive financial
policy and a robust acquisition appetite that will together
sustain debt to EBITDA within the 4.0x to 6.0x range.
Upward rating momentum would depend on expectation of Debt to
EBITDA be sustained around 4.0x and Retained Cash Flow to Debt
sustained above 15%. Downward rating pressure would follow a
decline in operating margin and operating cash flow, leading to
Debt to EBITDA sustained above 6x or Free Cash Flow to Debt below
2%.
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.
TransDigm Inc., headquartered in Cleveland, Ohio, is a
manufacturer of engineered aerospace components for commercial
airlines, aircraft maintenance facilities, original equipment
manufacturers and various agencies of the US Government. TransDigm
Inc. is the wholly-owned subsidiary of TransDigm Group
Incorporated. Revenues for the last 12 month period ending
December 31, 2012 were approximately $2 billion.
TWN INVESTMENT: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: TWN Investment Group, LLC
380 N. First Street
San Jose, CA 95112
Bankruptcy Case No.: 13-50821
Chapter 11 Petition Date: February 13, 2013
Court: U.S. Bankruptcy Court
Northern District of California (San Jose)
Judge: Stephen L. Johnson
About the Debtor: 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.
Debtor's Counsel: Charles B. Greene, Esq.
LAW OFFICES OF CHARLES B. GREENE
84 W. Santa Clara Street, #740
San Jose, CA 95113
Tel: (408) 279-3518
E-mail: cbgattyecf@aol.com
Scheduled Assets: $58,210,001
Scheduled Liabilities: $53,373,041
The petition was signed by Lap T. Tang, managing member.
Debtor's List of Its 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Hung Nguyen Purchase Deposit $615,000
Hong Hang
1302 Isengard Court
San Jose, CA 95121
Tam Minh Tran Purchase Deposit $360,000
3615 Deer Trail Drive
Danville, CA 94526
Xuannhi Thi Huynh Purchase Deposit $360,000
3331 Heritage Estate Drive
San Jose, CA 95148
David Lee Purchase Deposit $300,000
Hoc Ngo & Can Nguyen Purchase Deposit $300,000
991 Montague Expressway, #210
Milpitas, CA 95035
Hung M. Nguyen Purchase Deposit $300,000
Phuong Thi Mai Dang
7391 Forsum Road
San Jose, CA 95138
Lexann Tran Purchase Deposit $300,000
3273 Delta Road
San Jose, CA 95135
Hai Truong Purchase Deposit $200,000
David & Kay Yim Purchase Deposit $170,100
Alan Thuy Tran Purchase Deposit $150,000
Diem Thi Hang Purchase Deposit $150,000
Helen Chan Purchase Deposit $150,000
Huan Trong Tran Purchase Deposit $150,000
Lexann Tran & Truc Tran Purchase Deposit $150,000
Loc Ngueyn Purchase Deposit $150,000
Stephanie Nguyen Purchase Deposit $150,000
Tam Tran Purchase Deposit $150,000
Wendy Nguyen Purchase Deposit $150,000
Le Tuan Purchase Deposit $149,125
Toan Chi Do Purchase Deposit $145,000
TXU CORP: 2017 Debt Trades at 35% Off in Secondary Market
---------------------------------------------------------
Participations in a syndicated loan under which TXU Corp., now
known as Energy Future Holdings Corp., is a borrower traded in the
secondary market at 65.44 cents-on-the-dollar during the week
ended Friday, Feb. 15, 2013, a drop of 0.25 percentage points from
the previous week, according to data compiled by LSTA/Thomson
Reuters MTM Pricing and reported in The Wall Street Journal. The
Company pays 450 basis points above LIBOR to borrow under the
facility. The bank loan matures on Oct. 10, 2017, and carries
Moody's 'Caa1' rating and Standard & Poor's 'CCC' rating. The
loan is one of the biggest gainers and losers for the week ended
Friday among 221 widely quoted syndicated loans with five or more
bids in secondary trading.
About Energy Future
Energy Future Holdings Corp., formerly known as TXU Corp., is a
privately held diversified energy holding company with a portfolio
of competitive and regulated energy businesses in Texas. Oncor,
an 80%-owned entity within the EFH group, is the largest regulated
transmission and distribution utility in Texas.
The Company delivers electricity to roughly three million delivery
points in and around Dallas-Fort Worth. EFH Corp. was created in
October 2007 in a $45 billion leverage buyout of Texas power
company TXU in a deal led by private-equity companies Kohlberg
Kravis Roberts & Co. and TPG Inc.
The Company's balance sheet at Dec. 31, 2011, showed $44.07
billion in total assets, $51.83 billion in total liabilities, and
a $7.75 billion total deficit.
Energy Future had a net loss of $1.91 billion on $7.04 billion of
operating revenues for the year ended Dec. 31, 2011, compared with
a net loss of $2.81 billion on $8.23 billion of operating revenues
during the prior year.
* * *
In late January 2012, Moody's Investors Service changed the rating
outlook for Energy Future Holdings Corp. (EFH) and its
subsidiaries to negative from stable. Moody's affirmed EFH's Caa2
Corporate Family Rating (CFR), Caa3 Probability of Default Rating
(PDR), SGL-4 Speculative Grade Liquidity Rating and the Baa1
senior secured rating for Oncor.
EFH's Caa2 CFR and Caa3 PDR reflect a financially distressed
company with limited flexibility. EFH's capital structure is
complex and, in our opinion, untenable which calls into question
the sustainability of the business model and expected duration of
the liquidity reserves.
TXU CORP: 2014 Debt Trades at 29% Off in Secondary Market
---------------------------------------------------------
Participations in a syndicated loan under which TXU Corp., now
known as Energy Future Holdings Corp., is a borrower traded in the
secondary market at 70.83 cents-on-the-dollar during the week
ended Friday, Feb. 15, 2013, an increase of 0.73 percentage points
from the previous week according to data compiled by LSTA/Thomson
Reuters MTM Pricing and reported in The Wall Street Journal. The
Company pays 350 basis points above LIBOR to borrow under the
facility. The bank loan matures on Oct. 10, 2014. The loan is
one of the biggest gainers and losers for the week ended Friday
among 221 widely quoted syndicated loans with five or more bids in
secondary trading.
About Energy Future
Energy Future Holdings Corp., formerly known as TXU Corp., is a
privately held diversified energy holding company with a portfolio
of competitive and regulated energy businesses in Texas. Oncor,
an 80%-owned entity within the EFH group, is the largest regulated
transmission and distribution utility in Texas.
The Company delivers electricity to roughly three million delivery
points in and around Dallas-Fort Worth. EFH Corp. was created in
October 2007 in a $45 billion leverage buyout of Texas power
company TXU in a deal led by private-equity companies Kohlberg
Kravis Roberts & Co. and TPG Inc.
The Company's balance sheet at Dec. 31, 2011, showed $44.07
billion in total assets, $51.83 billion in total liabilities, and
a $7.75 billion total deficit.
Energy Future had a net loss of $1.91 billion on $7.04 billion of
operating revenues for the year ended Dec. 31, 2011, compared with
a net loss of $2.81 billion on $8.23 billion of operating revenues
during the prior year.
* * *
In late January 2012, Moody's Investors Service changed the rating
outlook for Energy Future Holdings Corp. (EFH) and its
subsidiaries to negative from stable. Moody's affirmed EFH's Caa2
Corporate Family Rating (CFR), Caa3 Probability of Default Rating
(PDR), SGL-4 Speculative Grade Liquidity Rating and the Baa1
senior secured rating for Oncor.
EFH's Caa2 CFR and Caa3 PDR reflect a financially distressed
company with limited flexibility. EFH's capital structure is
complex and, in our opinion, untenable which calls into question
the sustainability of the business model and expected duration of
the liquidity reserves.
UNI-PIXEL INC: Revelation No Longer Shareholder at Dec. 31
----------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Revelation Special Situations Fund Ltd and
its affiliates disclosed that, as of Dec. 31, 2012, they do not
beneficially own any shares of common stock of Uni-Pixel Inc.
Revelation Special previously reported beneficial ownership of
534,411 common shares or a 7.48% equity stake as of Dec. 31, 2011.
A copy of the amended filing is available at http://is.gd/gzksKl
About Uni-Pixel Inc.
The Woodlands, Tex.-based Uni-Pixel, Inc. (OTC BB: UNXL)
-- http://www.unipixel.com/-- is a production stage company
delivering its Clearly Superior(TM) Performance Engineered Films
to the Lighting & Display, Solar and Flexible Electronics market
segments.
The Company reported a net loss of $8.57 million in 2011 compared
to a net loss of $3.82 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$16.39 million in total assets, $103,588 in total liabilities and
$16.29 million in total shareholders' equity.
UNIVERSAL HEALTH: Aims for Auction by Feb. 27
---------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Universal Health Care Group Inc. is fending off a
lender's effort at dismissing the newly filed bankruptcy by asking
the U.S. Bankruptcy Court in Tampa, Florida, to hold an auction on
Feb. 27 for the operating companies consisting of an insurance
company and three health-maintenance organizations.
The St. Petersburg, Florida-based company is facing a motion for
dismissal filed by secured lenders owed $36.5 million. BankUnited
NA, agent for the lenders, wants dismissal so it can foreclose
before insurance regulators take over the operating insurance
company and HMOs.
Papers to set up a sale were filed Feb. 14. If the bankruptcy
isn't dismissed and the judge goes along with the schedule, other
bids would be due initially on Feb. 26, followed by the Feb. 27
auction and a hearing on March 1 for approval of the sale.
The company, in opposition to dismissal, says that foreclosure
would benefit no one other than the lenders. Universal has
located a buyer willing to purchase the subsidiaries for enough to
pay off the lenders, not to exceed $38 million. The price, though,
would be paid in annual installments over 14 years, with interest
at 2 percentage points higher than the London interbank offered
rate. The sale gives the lenders several alternatives. One is a
cash payment of $18 million in lieu of an extended payout. Court
papers don't identify the buyer other than to say its name is
Universal Health Acquisition Corp. The sale would entail the
bankrupt parent company's waiver of $8 million owing by the
subsidiaries.
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.
US AIRWAYS: Fitch Puts 'B-' IDR on Watch Pos. on AMR Merger Deal
----------------------------------------------------------------
Fitch Ratings has placed the ratings for US Airways Group, Inc.
and US Airways Inc. on Rating Watch Positive following the
announcement of the merger agreement with AMR Corporation. Fitch
will complete a full review of the ratings following the
completion of the merger. The rating for AMR ('D') will be
unaffected while the company remains under the protection of the
bankruptcy court.
The Rating Watch Positive reflects the potential benefits from the
combined airline's route structure, leading positions in key U.S.
markets, and potential cost and revenue synergies. The merger will
expand the reach of both airlines' individual networks, as the two
currently have relatively little overlap in their route
structures. Importantly, the expanded network will bolster the
ability to feed passengers into the combined airline's
international network. The merger will also create the U.S.'s
largest airline, completing the cycle of consolidation that has
occurred in the industry over the past decade. Industry
consolidation could support future pricing actions as well as the
ability to rationalize capacity, promoting continued improvement
in profitability.
Merger concerns include integration challenges, including those
related to IT functions, the size of one-time merger costs, and
the timing of the realization of potential cost and revenue
synergies. In Fitch's view the merger also does little to address
the relative weakness of the combined airline in Asia, currently
the aviation sector's fastest-growing market. Integration risks
are partially mitigated by the fact that both airlines have
managed through mergers in the past, and Fitch estimates that the
airlines could face lesser labor integration issues than some
previous airline combinations. The merger requires approval of the
bankruptcy court and the Department of Justice, but Fitch does not
anticipate anti-trust issues will be a significant obstacle at
this time due to the small amount of route overlap between LCC and
AMR.
Fitch's full rating review following the completion of the merger
will focus on the combined capital structure, a more detailed
analysis of proposed cost and revenue synergies, and the strategic
position of the new airline.
Rating Sensitivities:
The Positive Watch for US Airways indicates that a near-term
positive rating action is possible following a successful
completion of the US Airways/AMR merger after further analysis of
the merger's potential benefits. Fitch expects the possible
upgrade would most likely be one to two notches, depending on the
credit profile of the combined airline. The ratings could be
affirmed at the current levels if the merger is not completed, or
if Fitch considers the merger's potential benefits and risks to be
insufficient to raise the credit profile. A negative rating action
is not anticipated at this time absent a drastic and sustained
fuel shock or other unexpected severe drop in demand for air
travel.
Fitch has placed the following ratings on Rating Watch Positive:
US Airways Group, Inc.
-- IDR 'B-';
-- Senior Secured Term Loan Due 2014 'BB-/RR1';
-- Senior Unsecured Convertible Notes due 2014 and
2020 'CCC/RR6'.
US Airways Inc.
-- IDR 'B-'
US AIRWAYS: AMR Corp. Merger No Impact on Moody's 'B3' CFR
----------------------------------------------------------
Moody's Investors Service said that the planned merger between US
Airways Group, Inc. (B3 stable) and AMR Corporation (debtor-in-
possession, unrated), parent of American Airlines, Inc. and
American Eagle Airlines, Inc. should strengthen the credit profile
of US Airways. The current B3 Corporate Family rating of US
Airways and the ratings Moody's assigns to certain of its other
debt or enhanced equipment trust certificates are unaffected at
this time. The transaction also facilitates AMR's emergence from
bankruptcy and is supportive of the Baa3 ratings Moody's assigns
to the senior tranches of American's EETCs.
The announcement culminates a long effort by US Airways to reach
an agreement with American and marks the beginning of what will be
a multi-year process to merge the operations of the two airline
operating companies. The merger will form the foundation of the
plan of reorganization that American will submit for Bankruptcy
Court and creditors' approval.
US Airways, based in Tempe, Arizona, along with US Airways Shuttle
and US Airways Express, operates more than 3,200 flights per day
and serves more than 200 communities in the U.S., Canada, Mexico,
Europe, the Middle East, the Caribbean, Central and South America.
AMR Corporation, based in Fort Worth, Texas, and most of its
subsidiaries including American Airlines, Inc. filed for
bankruptcy on November 29, 2011. American Airlines, American Eagle
and the AmericanConnection carriers serve approximately 260
airports in more than 50 countries and territories with, on
average, more than 3,500 daily flights.
VIPER POWERSPORTS: Precious Issues Notice of Balancing Default
--------------------------------------------------------------
Viper Powersports Inc. on Feb. 14 disclosed that on February 13,
2013, Precious Capital LLC issued a notice related to the April
24, 2012 Loan and Security Agreement between Viper Motorcycle
Company ("Viper") and Precious. The notice stated that a
Balancing Default to the Agreement exists and provided for 10
business days to cure the issue before an Event of Default will
occur.
Viper and Precious have been working to restructure the agreement
to achieve an equitable capital structure for all of Viper's
stakeholders. In parallel with the restructuring discussions,
Viper has been actively seeking financial alternatives and will
vigorously continue to pursue all viable options.
About Viper Powersports
Viper Powersports Inc., headquartered in Auburn, Alabama, develops
and produces proprietary premium motorcycle products targeted to
consumers who can afford to purchase upscale luxury products.
For the nine months ended Sept. 30, 2012, the Company had a net
loss of $4.4 million on $655,073 of revenue, compared with a net
loss of $3.2 million on $204,901 of revenue for the prior year
period.
The Company's balance sheet at Sept. 30, 2012, showed $4.8 million
in total assets, $4.1 million in total liabilities, and
stockholders' equity of $662,309.
The Company has a positive working capital position of $621,424 as
of Sept. 30, 2012. "However, future current cash and cash
available may not be sufficient to fund operations beyond a short
period of time," the company said.
Going Concern Doubt
Child, Van Wagoner & Bradshaw, PLLC, in Salt Lake City, Utah,
expressed substantial doubt about Viper Powersports' ability to
continue as a going concern, following their audit of the
Company's financial statements for the fiscal year ended Dec. 31,
2011. The independent auditors noted that the Company has
incurred losses from operations, has a liquidity problem, and
requires additional funds for its operational activities.
VISION INDUSTRIES: Enters Into Loan Pact with QIF Malta
-------------------------------------------------------
To fund the build out of 24 zero-emission demonstration trucks for
the Department of Energy, Vision Industries Corp. has entered into
a Loan Agreement with a current shareholder and debt-holder, QIF
Malta 1 Ltd.
As reported in the Company's Report on Form 10-Q for the period
ended Sept. 30, 2012, for value received, on Sept. 12, 2012, the
Company entered into an agreement with QIF Malta 1 Ltd. to pay the
principal sum of US$500,000 at a yearly rate of 8% simple interest
due Sept. 12, 2013, pursuant to a Loan Agreement. The outstanding
principal balance of the Loan bore interest at the rate of 8% per
annum with interest accruing on the actual number of days elapsed
based upon a 365-day year and did not specify a conversion
feature. The Loan was scheduled to mature on Sept. 12, 2013.
Subsequently, on Feb. 4, 2013, the Company entered into a new
agreement to pay QIF the principal sum of US$1,290,000, plus the
previous Loan amount of US$500,000, plus outstanding interest,
pursuant to a new Loan Agreement. The outstanding principal
balance of the New Loan bears interest at the rate of 8% per annum
with interest accruing on the actual number of days elapsed based
upon a 365-day year and did not specify a conversion feature. The
New Loan amount is to be disbursed to the Company over a three
month period as follows: two tranches of $90,000 in February 2013,
two tranches of $260,000 in March 2013, and two tranches of
$295,000 in April 2013. Thereafter, the total amount of due of
US$1,790,000, plus outstanding interest, is payable to QIF in
three equal installments on October 31, 2013, Nov. 30, 2013, and
June 30, 2014. The New Loan also includes a non-dilution clause,
applied to QIF and to five other entities that collectively hold a
57% majority interest in Vision.
A copy of the Loan Agreement is available for free at:
http://is.gd/HQHQSs
About Vision Industries
Torrance, Calif.-based Vision Industries Corp. is focused on
marketing zero-emission vehicles to a variety of alternative
energy and green-minded individuals, OEM dealer networks, as well
as for sale to end-user consumers.
Drake & Klein CPAs, in Clearwater, Florida, expressed substantial
doubt about Vision Industries' ability to continue as a going
concern, following the Company's results for the fiscal year ended
Dec. 31, 2011. The independent auditors noted that the Company's
cash and available credit are not sufficient to support its
operations for the next year.
The Company's balance sheet at Sept. 30, 2012, showed
$1.1 million in total assets, $1.5 million in total liabilities,
and a stockholders' deficit of $395,543.
VITRO SAB: Bondholder Accord Elusive; "Government" Claim Filed
--------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Vitro SAB and U.S. bondholders told the bankruptcy
judge in Dallas Feb. 14 that they still haven't wrapped up a
settlement of disputes resulting from a $1.2 billion bond default
in May 2009.
According to the report, the principal stumbling block appears to
be a claim made by what the lawyers described in court Feb. 14 as
a "governmental agency." They didn't say whether it was the
Mexican or U.S. government.
The bankruptcy judge scheduled another hearing on Feb. 21 for an
update on the settlement, the report discloses.
The U.S. Trustee, the report notes, is opposing delays and asking
the bankruptcy judge to install a Chapter 11 trustee who would
take over Vitro subsidiaries' bankruptcies in the U.S. The U.S.
Trustee's request for a trustee is based on allegations made by
bondholders that Vitro and its subsidiaries were engaged in
fraudulent transfers before and during bankruptcies in both the
U.S. and Mexico.
The report notes that the possibility of settlement appeared in
late January when Vitro agreed to an injunction prohibiting the
company and subsidiaries from transferring assets outside of the
ordinary course of business. The injunction stays in place as
talks progress.
About Vitro SAB
Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV:
VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases
Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global
glass producer, serving the construction and automotive glass
markets and glass containers needs of the food, beverage, wine,
liquor, cosmetics and pharmaceutical industries.
Vitro is the largest manufacturer of glass containers and flat
glass in Mexico, with consolidated net sales in 2009 of MXN23,991
million (US$1.837 billion).
Vitro defaulted on its debt in 2009, and sought to restructure
around US$1.5 billion in debt, including US$1.2 billion in notes.
Vitro launched an offer to buy back or swap US$1.2 billion in
debt from bondholders. The tender offer would be consummated
with a bankruptcy filing in Mexico and Chapter 15 filing in the
United States. Vitro said noteholders would recover as much as
73% by exchanging existing debt for cash, new debt or convertible
bonds.
Concurso Mercantil & Chapter 15 Proceedings
Vitro SAB on Dec. 13, 2010, filed its voluntary petition for a
pre-packaged Concurso Plan in the Federal District Court for
Civil and Labor Matters for the State of Nuevo Leon, commencing
its voluntary concurso mercantil proceedings -- the Mexican
equivalent of a prepackaged Chapter 11 reorganization. Vitro SAB
also commenced parallel proceedings under Chapter 15 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan
on Dec. 13, 2010, to seek U.S. recognition and deference to its
bankruptcy proceedings in Mexico.
Early in January 2011, the Mexican Court dismissed the Concurso
Mercantil proceedings. But an appellate court in Mexico
reinstated the reorganization in April 2011. Following the
reinstatement, Vitro SAB on April 14, 2011, re-filed a petition
for recognition of its Mexican reorganization in U.S. Bankruptcy
Court in Manhattan (Bankr. S.D.N.Y. Case No. 11-11754).
The Vitro parent received sufficient acceptances of its
reorganization by using the US$1.9 billion in debt owing to
subsidiaries to vote down opposition by bondholders. The holders
of US$1.2 billion in defaulted bonds opposed the Mexican
reorganization plan because shareholders could retain ownership
while bondholders aren't being paid in full.
Vitro announced in March 2012 that it has implemented the
reorganization plan approved by a judge in Monterrey, Mexico.
In the present Chapter 15 case, the Debtor seeks to block any
creditor suits in the U.S. pending the reorganization in Mexico.
Chapter 11 Proceedings
A group of noteholders opposed the exchange -- namely Knighthead
Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc.,
Davidson Kempner Distressed Opportunities Fund LP, and Brookville
Horizons Fund, L.P. Together, they held US$75 million, or
approximately 6% of the outstanding bond debt. The Noteholder
group commenced involuntary bankruptcy cases under Chapter 11 of
the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D.
Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010.
Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation
counsel to analyze the potential rights that Vitro may exercise
in the United States against the ad hoc group of dissident
bondholders and its advisors.
A larger group of noteholders, known as the Ad Hoc Group of Vitro
Noteholders -- comprised of holders, or investment advisors to
holders, which represent approximately US$650 million of the
Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not
among the Chapter 11 petitioners, although the group has
expressed concerns over the exchange offer. The group says the
exchange offer exposes Noteholders who consent to potential
adverse consequences that have not been disclosed by Vitro. The
group is represented by John Cunningham, Esq., and Richard
Kebrdle, Esq. at White & Case LLP.
A bankruptcy judge in Fort Worth, Texas, denied involuntary
Chapter 11 petitions filed against four U.S. subsidiaries. On
April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro
America LLC and three other U.S. subsidiaries -- that were
subject to the involuntary petitions into voluntary Chapter 11.
The Texas Court on April 21 denied involuntary petitions against
the eight U.S. subsidiaries that didn't consent to being in
Chapter 11.
Kurtzman Carson Consultants is the claims and notice agent to
Vitro America, et al. Alvarez & Marsal North America LLC, is the
Debtors' operations and financial advisor.
The official committee of unsecured creditors appointed in the
Chapter 11 cases of Vitro America, et al., has selected Sarah
Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in
Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq.,
and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP,
in New York, as counsel. Blackstone Advisory Partners L.P.
serves as financial advisor to the Committee.
The U.S. Vitro companies sold their assets to American Glass
Enterprises LLC, an affiliate of Sun Capital Partners Inc., for
US$55 million.
U.S. subsidiaries of Vitro SAB are having their cases converted
to liquidations in Chapter 7, court records in January 2012 show.
In December, the U.S. Trustee in Dallas filed a motion to convert
the subsidiaries' cases to liquidations in Chapter 7. The
Justice Department's bankruptcy watchdog said US$5.1 million in
bills were run up in bankruptcy and hadn't been paid.
On June 13, 2012, U.S. Bankruptcy Judge Harlin "Cooter" Hale in
Dallas entered a ruling that precluded Vitro from enforcing
its Mexican reorganization plan in the U.S. Vitro's appeal is
pending.
In November, the U.S. Court of Appeals Judge Carolyn King ruled
that Vitro SAB won't be permitted to enforce its bankruptcy
reorganization plan in the U.S. She said that Vitro "has not
shown that there exist truly unusual circumstances necessitating
the release" preventing bondholders from suing subsidiaries.
WARNACO GROUP: S&P Withdraws Ratings As Loan Get Repaid in Full
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on New York City-based Warnaco Group Inc.
to 'BB+' from 'BBB-'.
S&P's 'BBB-' issue level rating on Warnaco Inc.'s $200 million
senior secured term loan due 2018 is unchanged.
S&P removed the ratings from CreditWatch, where they were placed
with negative implications on Nov. 1, 2012. The outlook is
stable.
Subsequently, S&P is withdrawing all ratings on Warnaco, as the
term loan has been repaid in full and the company has requested
that S&P withdraw the corporate credit rating.
The rating action follows the closing of the company's acquisition
by PVH Corp. on Feb. 13, 2013. The downgrade reflects the
equalization of Warnaco's ratings with those on PVH Corp.
WATERSCAPE RESORT: Court Wants Reasonableness Hearing on Accords
----------------------------------------------------------------
Bankruptcy Judge Stuart M. Bernstein deferred ruling on the
request of debtor Waterscape Resort LLC for approval of its
settlements with three mechanics lienors, Parkview Plumbing &
Heating Inc., Concrete Industries One Corp., and Atlantic Hoisting
and Scaffolding, LLC. The mechanics lienors were hired by
Waterscape's general contractor, Pavarini McGovern, LLC, to work
on a project owned by Waterscape. Pavarini objects to the
settlement. Judge Bernstein overruled Pavarini's objections
except to the extent that the Court will conduct an evidentiary
hearing to determine the reasonableness of the settlements.
Waterscape is to contact chambers to obtain a hearing date.
Pavarini filed a proof of secured claim in the amount of
$10,833,132.59, (Claim no. 38-1), and most if not all of the
subcontractors also filed proofs of claim based on their mechanics
liens.
Waterscape, as owner, constructed a building in Manhattan. It
hired Pavarini to act as the general contractor, and Pavarini
hired subcontractors, including Atlantic, Concrete and Parkview,
to do the actual work. Disputes arose and Waterscape fired
Pavarini when the job was essentially complete. Pavarini claimed
that Waterscape still owed it substantial sums. Because Pavarini,
not Waterscape, was in contractual privity with the subcontractors
and obligated to pay them for their work, the majority of
Pavarini's claim against Waterscape was based on the amounts
Pavarini owed the subcontractors.
Pavarini filed a mechanics lien on Dec. 17, 2010 in the amount of
$10,674,440.59, but now claims Waterscape owes $10,833,132.59,
plus interest. Pavarini's claim consists of two components: (a)
$8,581,289 that it owes its subcontractors, and (b) $2,251,783.59
that Pavarini contends Waterscape owes it under their contract.
The subcontractors also filed mechanics liens against the Property
for their unpaid work, and these liens, for the most part,
duplicated the portion of the Pavarini mechanics lien that
included their unpaid claims.
In addition to its rights as a mechanics lienor, Pavarini also had
rights against Waterscape as a trust fund beneficiary under
Article 3-A of the New York Lien Law. Although the rights
differed, both were designed to enable Pavarini to recover the
amounts Waterscape owed under their contract. In this sense, they
represented overlapping remedies for the same injury. The
subcontractors had direct rights against Pavarini as trust fund
beneficiaries; their rights against Waterscape to trust funds were
derivative of Pavarini's rights.
Waterscape confirmed its Second Amended Plan of Reorganization on
July 21, 2011. The Plan represented the product of substantial
negotiation and comment from Pavarini and U.S. Bank, Waterscape's
secured lender, and the involvement of the Court. The Plan placed
the mechanics lien and trust fund claims of Pavarini and the
subcontractors in Class 3, and established an $11 million trust
fund to secure the payment of the Class 3 claims although payment
was not limited to the amount in the Trust Fund. The amount of $11
million was selected because it represented a rounding up of
Pavarini's claim, and was deemed sufficient to satisfy all of the
trust fund and mechanics liens claims in Class 3. The funding of
the Trust Fund resulted in the release and discharge of Pavarini's
mechanics lien, but did not affect the mechanics liens filed by
the subcontractors.
All Class 3 claims were deemed to be disputed, and the Class 3
claimants would continue to litigate their rights primarily in
non-bankruptcy fora. Once the amount of a Class 3 claim was
determined and allowed by settlement or otherwise, Waterscape was
required to pay the allowed Class 3 claim from either the Trust
Fund, the Secured Claim Reserved Account also established under
the Plan, new financing or general funds. After all disputed Class
3 claims were resolved and paid in full, "any funds remaining in
the Trust Fund Reserve Account shall be transferred by the Debtor
to the Secured Claims Reserve Account and administered in
accordance with section 5.2(a) and section 6.4 of this Plan." The
Plan also vested Waterscape with the authority to settle Class 3
claims subject to the notice and hearing required under Bankruptcy
Rule 9019.
Waterscape's settlements with Atlantic, Concrete and Parkview,
respectively, require the Debtor to pay them $360,000, $40,000 and
$225,000 from the Trust Fund. In each case, the settlement amount
is less than the debt Pavarini listed in its Verified Statement
and included in its mechanics lien and Class 3 claim.
A copy of the Court's Memorandum Decision and Order dated Feb. 11
is available at http://is.gd/3jZA4afrom Leagle.com.
About Waterscape Resort
Waterscape Resort LLC, aka Cassa NY Hotel and Residences, filed
for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No.
11-11593) on April 5, 2011. Waterscape acquired property
consisting of three contiguous buildings at 66, 68 and 70 West
45th Street in Manhattan, for the sum of $20 million, and
developed the property into a 45-storey condominium project
including a luxury hotel, a restaurant and luxury residential
apartments. The purchase was financed with a $17 million
acquisition loan and mortgage from U.S. Bank Association. The
Cassa NY Hotel and Residences features 165 hotel rooms, and above
the hotel units, 57 residences.
Brett D. Goodman, Esq., and Lee William Stremba, Esq., at Troutman
Sanders LLP represent the Debtor as Bankruptcy Counsel. Holland &
Knight LLP serves as its special litigation counsel. The Debtor
disclosed $214,285,027 in assets and $158,756,481 in liabilities
as of the Chapter 11 filing.
A 3-member Official Committee of Unsecured Creditors has been
appointed in the Debtor's Chapter 11 case. Schiff Hardin LLP,
serves as the Committee's counsel.
U.S. Bankruptcy Judge Stuart Bernstein confirmed Waterscape's
reorganization plan on July 22, 2011, which calls for repaying
much of the company's debt with proceeds from the $128 million
sale of the hotel section of the development. The Plan was filed
on May 6, 2011.
WEBSTER FINANCIAL: Fitch Affirms 'B+' Preferred Stock Rating
------------------------------------------------------------
Fitch Ratings has affirmed the long-term and short-term Issuer
Default Ratings (IDRs) of Webster Financial Corporation and its
subsidiaries at 'BBB/F2'. The Outlook remains Stable.
Fitch reviewed Webster Financial Corporation as part of a peer
review that included 16 mid-tier regional banks. The banks in the
peer review include: Associated Banc-Corp., Bank of Hawaii
Corporation, BOK Financial Corporation, Cathay General Bancorp,
Cullen/Frost Bankers, Inc., East West Bancorp, Inc., First Horizon
National Corporation, First National of Nebraska, Inc., First
Niagara Financial Group, Inc., Fulton Financial Corporation,
Hancock Holding Company, People's United Financial, Inc., Synovus
Financial Corp., TCF Financial Corporation, UMB Financial Corp.,
Webster Financial Corporation. Refer to the release titled 'Fitch
Takes Rating Actions on Its Mid-Tier Regional Bank Group Following
Industry Peer Review' for a discussion of rating actions taken on
the entire mid-tier regional bank group.
The mid-tier regional group is comprised of banks with total
assets ranging from $10 billion to $36 billion. IDRs for this
group is relatively dispersed with a low of 'BB-' and a high of
'A+'. Mid-tier regional banks typically lag their large regional
bank counterparts by asset size, geographic footprint and
product/revenue diversification. As such mid-tier regional banks
are more susceptible to idiosyncratic risks such as geographic or
single name concentrations.
Fitch's mid-tier regional bank group has fairly homogenous
business strategies. The institutions are mostly reliant on spread
income from loans and investments. With limited opportunity to
improve fee-based income in the near term, Fitch expects that mid-
tier banks will continue to face greater earnings headwinds in
2013 than larger institutions with greater revenue
diversification.
Share repurchases is common theme amongst the mid-tier banks. As
mid-tier banks face earnings headwinds, institutions have begun
repurchasing common shares to improve shareholder returns. Fitch
anticipates continued repurchase activity in 2013 as return on
equity lags historical norms for the group.
In addition to share repurchases, Fitch has observed that some
mid-tier banks have looked to their investment portfolio to
improve returns. Most notably, CLOs and CMBS have become more
popular amongst mid-tier banks. Although such securities are
beneficial to yields and returns, Fitch notes that such purchases
can be a negative ratings driver if the risks are not properly
measured, monitored and controlled.
Asset quality continues to improve throughout the banking sector.
Both nonperforming assets (NPAs) and net charge-offs (NCOs) are
down significantly year over year. Fitch anticipates further asset
quality improvement as nonperforming loan (NPL) inflow slows.
Reserve levels have also declined as asset quality improves, which
has been beneficial to earnings in 2012. Fitch expects further
reserve releases in 2013 but at a slower pace.
RATING ACTION AND RATIONALE
Webster Financial Corporation's (Webster) ratings were affirmed at
'BBB'. The Outlook remains Stable. The affirmation is supported by
Webster's improving profitability and asset quality trends in line
with Fitch's expectations. The Stable Outlook reflects Fitch's
view that Webster's asset quality measures will continue to
improve in the near term, credit losses will remain manageable and
tangible common equity will not be reduced by more than 25 basis
points (bps) from third quarter 2012 levels.
RATING DRIVERS AND SENSITIVITIES - IDRs and VRs
Webster's tangible common capital ratio is near the lower end of
its rated peers. At current levels, Fitch views Webster's
capitalization as a constraint for further positive ratings
action. Conversely, , stagnant or deteriorating asset quality
metrics such as NPAs or charge off rates could result in negative
ratings pressure.
RATING DRIVERS AND SENSITIVITIES - Support Ratings and Support
Floor Ratings:
All of the mid-tier regional banks in the peer group have Support
Ratings of '5' and Support Floor Ratings of 'NF'. In Fitch's view,
the mid-tier banks are not considered systemically important and
therefore, Fitch believes the probability of support is unlikely.
IDRs and VRs do not incorporate any government support for any of
the banks in the mid-tier regional bank peer group.
RATING DRIVERS AND SENSITIVITIES - Subordinated Debt and Other
Hybrid Securities:
Subordinated debt and hybrid capital instruments issued by the
banks are notched down from the issuers' VRs in accordance with
Fitch's assessment of each instrument's respective non-performance
and relative loss severity risk profiles, which vary considerably.
The ratings of subordinated debt and hybrid securities are
sensitive to any change in the banks' VRs or to changes in the
banks' propensity to make coupon payments that are permitted but
not compulsory under the instruments' documentation.
RATING DRIVERS AND SENSITIVITIES - Holding Company:
All of the entities reviewed in the mid-tier regional bank group
have a bank holding company structure with the bank as the main
subsidiary. All subsidiaries are considered core to parent holding
company supporting equalized ratings between bank subsidiaries and
bank holding companies. IDRs and VRs are equalized with those of
its operating companies and banks reflecting its role as the bank
holding company, which is mandated in the U.S. to act as a source
of strength for its bank subsidiaries.
RATING DRIVERS AND SENSITIVITIES - Subsidiary and Affiliated
Company Rating:
All of the entities reviewed in the mid-tier regional bank group
factor in a high probability of support from parent institutions
to its subsidiaries. This reflects the fact that performing parent
banks have very rarely allowed subsidiaries to default. It also
considers the high level of integration, brand, management,
financial and reputational incentives to avoid subsidiary
defaults.
Fitch has affirmed these ratings:
Webster Financial Corporation
-- Long-term IDR at 'BBB', Stable Outlook;
-- Senior unsecured at 'BBB';
-- Viability Rating at 'bbb';
-- Preferred Stock at 'B+'
-- Short-term IDR at 'F2';
-- Support at '5';
-- Support Floor at 'NF'.
Webster Bank, NA
-- Long-term IDR at 'BBB', Stable Outlook;
-- Long-term deposits at 'BBB+';
-- Viability Rating at 'bbb';
-- Short-term IDR at 'F2';
-- Short-term Deposits at 'F2';
-- Support at '5';
-- Support Floor at 'NF'
WEST CORP: Credit Facility Amendment No Impact on Moody's B2 CFR
-----------------------------------------------------------------
Moody's Investors Service has said West Corporation's proposed
amendment to its credit facility has no impact on the B2 Corporate
Family Rating, SGL-1 Speculative Grade Liquidity Rating or stable
outlook; however, the amendment is credit positive as it aims to
reduce pricing on the term loans by 150 bps.
West Corporation provides technology-driven and agent-based
communication services. Major shareholders are Thomas H. Lee
Funds, Quadrangle Group Funds, Gary L. West, Mary E. West, and
members of management. Annual revenues are approximately $2.6
billion.
WEST PENN: Moody's Affirms '(PA)Ca' Bond Rating
-----------------------------------------------
Moody's Investors Service has affirmed West Penn Allegheny Health
System's (PA) Ca bond rating, affecting $726 million of Series
2007 fixed rate bonds issued through the Allegheny County Hospital
Development Authority. At this time, Moody's is revising the
outlook to developing from negative.
Summary Rating Rationale
The developing outlook reflects the possibility of a rating
upgrade or downgrade, depending on the outcome of the announced
tender process and magnitude of the loss relative to the original
par value of the bonds. In January, WPAHS announced plans for a
tender of the Series 2007 bonds. WPAHS executed an amended
affiliation agreement with Highmark and a non-binding term sheet
with respect to the bonds that provides for a cash tender by
Highmark for all bonds at a tender price of 87.5% in outstanding
par amount of the tendered bonds, to occur no later than April 30,
2013.
Upon completion of the tender Moody's will determine whether the
events constitute a debt default under Moody's definition. Four
events constitute a debt default under Moody's definition, one of
which is a distressed exchange whereby (1) an obligor offers
creditors a new or restructured debt, or a new package of
securities, cash or assets that amount to a diminished financial
obligation relative to the original obligation and (2) the
exchange has the effect of allowing the obligor to avoid a
bankruptcy or payment default in the future.
The Ca rating reflects the severity of the financial status of the
System and execution risks related to completing the tender.
WPAHS's operating loss in fiscal year 2012 (based upon unaudited
financial information) was very high at $113 million, exceeding
the loss in fiscal year 2011. WPAHS's weak unrestricted investment
and cash position of $273 million as of June 30, 2012 effectively
has been supported by payments from Highmark. WPAHS has received a
total of approximately $232 million in grants, loans and other
advances and capital support since 2011. WPAHS needs to complete
several steps prior to the tender including receiving Pennsylvania
Insurance Department approval with conditions acceptable to
Highmark as well as other required approvals.
Challenges
- Risks related to completing the steps necessary to complete
the tender process
- Very large operating loss in fiscal year 2012 of $113 million,
exceeding the fiscal year 2011 operating loss of $75 million
(excluding a large non-recurring positive item) primarily
driven by a 1% revenue decline
- Continued decline in acute discharges of 6% in fiscal year
2012 (3% decline including observation cases), largely due to
the closure and downsizing of services at West Penn Hospital
in December 2010 and then, upon reopening of the emergency
department on February 14, 2012 and the return of full medical
and surgical services at West Penn Hospital, volumes have
exceeded expectations at West Penn Hospital; however, volume
shortfalls in the latter half of fiscal year 2012 for the
System as a whole were reportedly due to Highmark's extension
of a contract with University of Pittsburgh Medical Center
(UPMC), which retained patient volumes that were anticipated
to shift to WPAHS upon termination of the contract
- Weak unrestricted cash position of $273 million or 62 days of
cash on hand as of June 30, 2012; Highmark has provided $200
million in payments under the agreement as well as other
advances and capital support, suggesting that, without such
support, WPAHS would have largely depleted its cash
- As of fiscal yearend 2012, underfunded status of pension plan
was large at $279 million, an $82 million increase since
fiscal yearend 2011 due to the decline in the discount rate
- Heavy competition from UPMC (Aa3/positive), which is the
largest health system in the region and owns a large managed
care plan, enabling UPMC to influence health plan membership
and volumes; UPMC opened a new hospital competing with WPAHS's
Forbes Regional Hospital in July 2012, which has resulted in a
significant decline in volumes at that facility, though the
decline was less than expected
- High leverage relative to operating performance with 57% debt-
to-operating revenues; peak debt service coverage is zero
based upon Moody's methodology.
- Challenging demographic service area with declining population
trends in the primary service area and an aging patient base
Strengths
- Significant financial support received from Highmark
- Favorable debt structure with all fixed rate debt and no
interest rate derivatives
- System's prominence as the second largest healthcare system in
Pittsburgh with 56,000 acute discharges
Outlook
The developing outlook reflects the possibility of a rating
upgrade or downgrade, depending on the outcome of the announced
tender process and magnitude of the loss relative to the original
par value of the bonds.
What Could Make The Rating Go Up:
Loss to bondholders less than 35% relative to par value
What Could Make The Rating Go Down:
Loss to bondholders greater than 65% relative to par value
The principal methodology used in this rating was Not-For-Profit
Healthcare Rating Methodology published in March 2012.
WESTWAY GROUP: Moody's Rates $300MM Senior Debt Facilities 'Ba3'
----------------------------------------------------------------
Moody's Investors Service earlier this month assigned a Ba3 rating
to the $300 million senior secured credit facilities to be issued
by Westway Group, LLC. The $300 million in credit facilities is
made up of a $270 million 7-year Senior Secured Term Loan B, due
2020, and a $30 million 5-year Revolving Credit Facility, due
2018. Westway is owned by an affiliate of EQT Infrastructure II.
The rating outlook is stable.
EQT Infrastructure completed the acquisition of Westway on
February 1, 2013, using 100% Sponsor equity via a tender offer.
The loan proceeds will be used to reimburse the Sponsor for a
portion of its equity, fund a capex reserve of $35 million and to
pay transaction costs. The revolving credit facility will be used
for general corporate purposes and to fund a 6-month debt service
reserve letter of credit.
EQT Infrastructure II is a EUR1.9 billion (approximately $2.6
billion) infrastructure fund formed by EQT Partners, a leading
European based investment advisor. EQT Infrastructure targets
existing infrastructure companies located primarily in Europe and
North America.
Westway is a leading provider of bulk liquid storage and related
value-added services. The Company is a global business with
locations at key port and terminal sites throughout North America
and Western Europe. Westway's infrastructure includes a network of
19 terminals offering approximately 331 million gallons of bulk
liquid storage capacity to manufacturers and consumers of
agricultural and industrial liquids. Westway has maintained a
long-term presence in a number of highly strategic, deep water
ports around the world. This locational advantage provides the
Company's international customer base with access to these
strategic storage locations, as well as related service for these
important markets. The facility's existing infrastructure also
offers customers multiple inbound/outbound logistics options at
many of its terminals, including: deepwater ship, ocean barge,
inland barge, truck and rail access. Westway also provides
ancillary services such as blending and heating.
The Ba3 rating reflects a degree of stability and predictability
of the cash flows, the low operating risk associated with
Westway's storage assets and the diversification of products and
contract counterparties across 19 terminals globally. The rating
also considers several qualitative elements including Westway's
established business profile, low operating risk and customer base
support. However, the rating also reflects the leverage on the
enterprise, which is over 6.0x Debt to EBITDA in 2013.
The Ba3 senior secured rating for Westway considers the following
strengths:
1. Revenues are supported by contracts on a take-or-pay basis
with fixed rate capacity charges, providing a degree of
stability to the cash flows
2. No direct commodity risk; Westway does not take title to the
inventory being stored in its facilities
3. Westway's established strategic locations combined with
supporting infrastructure provide barriers to entry
4. Long tenured relationships with many of its customers
5. Product and contract diversity
6. Low business and operating risk profile
7. Management team is strong and well experienced; EQT is a
strong sponsor
8. Existing tanks can easily be converted to support other
products should it be necessary
The rating also reflects the following areas of credit concern:
1. Refinancing risk at Westway
2. Managing growth; management will need to manage the challenges
of growth capital expenditure of about $80 million over the
next several years for infill projects at existing terminal
sites
3. There is a lag in the receipt of the cash flows associated
with the growth capital expenditures after the expenditures
have been made
4. Contracts are not long term and will need to be renewed at
differing intervals, but customers have historically renewed
at higher rates
The credit facilities will be secured by a perfected first
priority security interest in all the capital stock and
substantially all tangible and intangible assets of the Borrower
and its subsidiaries, including the hard terminal assets.
Moody's also considered structural features in the term loan
agreement, including a cash sweep of 100%, subject to leverage
step downs. The transaction provides for only a 1% required annual
amortization, with additional amortization to be based upon the
cash flow sweep mechanism. There is a 6-month debt service reserve
covering forward interest and scheduled debt service, which will
be funded in cash or via a letter of credit to be provided by the
revolver and a set of financial and other covenants that restrict
the business and financial activities of the Borrower. There will
be a prohibition on any debt at the subsidiary level, which
protects lenders against the risk of structural subordination.
There are also limitations on additional debt at Westway up to $40
million and subject to a pro forma leverage test.
The stable outlook reflects the expectation that the diversified
portfolio of contracts will be renewed on a timely and favorable
basis and will generate relatively stable and predictable cash
flows, as the cash flows are derived from contracts with long-
standing customers.
Positive trends that could lead Moody's to consider an upgrade
would include satisfactory completion of the growth capital
expenditures and realization of the higher levels of cash flow and
metrics that the company forecasts. Other factors that could lead
to positive rating pressure would be more rapid paydown of debt
than currently projected and better than projected base case
financial performance.
Negative trends that could lead Moody's to consider a downgrade
would include too rapid growth in terminal expansion without the
projected improvement in the cash flows. Other factors that could
lead to negative rating pressure would be substantial financial
and/or operating performance difficulties that result in a
meaningful loss of cash flow available for debt service.
The rating is predicated upon final documentation in accordance
with Moody's current understanding of the transaction and final
debt sizing consistent with initially projected credit metrics.
The methodologies used in this rating were Generic Project Finance
Methodology published in December 2010, and Global Midstream
Energy published in December 2010.
WM SIX FORKS: To Auction Apartment Complex on March 20
------------------------------------------------------
WM Six Forks, LLC on Feb. 15 disclosed that its Manor Six Forks
apartment complex in Raleigh, NC is being sold pursuant to a
confirmed Chapter 11 bankruptcy Plan of Liquidation.
The 5 story complex with multilevel parking garage is located at
900 East Six Forks Road inside the Raleigh Beltline. The
apartments are 90% + occupied and the Complex contains 14,000+/-
sq. ft of unfinished retail space. Construction of the Complex
was completed in March of 2010.
All real property and personal property (other than cash)
comprising the Complex is under contract for sale, "as is/where
is" and subject to higher and better offers, to Lenox Mortgage
XVII LLC ("Lenox"), holder of the construction lender's first
priority lien on the Complex. The purchase price in the Lenox
contract is a "stalking horse" credit bid of $37,100,000, and to
be considered a "qualified bid," a competing bid must be a cash
bid of not less than $37,200,000 and must conform to other
requirements set forth in court approved Bidding Procedures. If
one or more "qualified bids" are timely received, the "qualified
bidders," including Lenox, will participate in an auction in order
to determine the highest and best bid for the Complex. At the
auction, Lenox may credit bid up to the amount of its allowed
secured claim, which is not less than $39,027,860. A hearing to
approve the sale to the prevailing bidder will be held on
March 21, 2013 at 2:00 p.m.
The Bid Deadline is March 18, 2013 at 4:00 p.m. The auction, if
any, will be conducted on March 20, 2013 at a time and place to be
determined. For further information, including copies of the
Bidding Procedures and the Lenox contract, go to
http://www.manorsixforks.comor contact counsel for WM Six Forks,
LLC.
About WM Six Forks
WM Six Forks LLC is the owner of an apartment and retail/office
complex in Raleigh, North Carolina, known as Manor Six Forks,
which opened in March 2010. The property includes 298 residential
apartments and roughly 14,000 square feet of retail/office space
on the ground floor. As of the bankruptcy filing date, all the
retail/office space is vacant and roughly 95% of the residential
apartments are subject to existing leases.
WM Six Forks filed a Chapter 11 petition (Bankr. E.D.N.C. Case No.
12-05854) on Aug. 12, 2012. The Debtor said in court papers the
Manor is valued at $32.54 million. The Debtor also owns a 15.15-
acre property, the value of which is not yet determined. The
Debtors' property serves as collateral to a $39 million debt to
Lenox Mortgage XVI, LLC. A copy of the schedules filed together
with the petition is available at http://bankrupt.com/misc/nceb12-
05854.pdf
Bankruptcy Judge J. Rich Leonard oversees the case. The Debtor
hired Northen Blue, LLP as counsel. The petition was signed by
William G. Garner, manager of WM6F Completion & Performance
Assoc., LLC. Dawn Barnes has been assigned as case manager.
The Bankruptcy Administrator for the Eastern District of North
Carolina Bankruptcy notified that it was unable to form a
creditors committee in the Chapter 11 case of WM Six Forks, LLC.
WMG HOLDINGS: Parlophone Purchase No Impact on Moody's 'B1' CFR
---------------------------------------------------------------
Moody's Investors Service said WMG Holdings' B1 Corporate Family
Rating and stable outlook are not immediately affected by the
recent announcement that its parent, Warner Music Group Corp., has
signed a definitive agreement to purchase the Parlophone Label
Group from Universal Music Group (a subsidiary of French mass
media and telecommunications conglomerate Vivendi SA) (Baa2
stable) for GBP487 million in cash (approximately US$765 million).
However, the expected increase in secured debt will likely result
in a one-notch downgrade of the senior credit facilities and
secured notes to Ba3 from Ba2.
WMG Holdings Corp.'s ratings were assigned by evaluating factors
that Moody's considers relevant to the credit profile of the
issuer, such as the company's (i) business risk and competitive
position compared with others within the industry; (ii) capital
structure and financial risk; (iii) projected performance over the
near to intermediate term; and (iv) management's track record and
tolerance for risk. Moody's compared these attributes against
other issuers both within and outside WMG Holdings Corp.'s core
industry and believes WMG Holdings Corp.'s ratings are comparable
to those of other issuers with similar credit risk.
With headquarters in New York, NY, WMG Holdings Corp. is a wholly-
owned subsidiary of Warner Music Group Corp. ("WMG"), a leading
music content provider operating domestically (about 40% of
revenue) and overseas (60%). Recorded music accounts for roughly
80% of revenue while music publishing accounts for 20%.
WPCS INTERNATIONAL: Iroquois Capital Stake at 9.9% as of Dec. 31
----------------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, Iroquois Capital Management L.L.C. and its affiliates
disclosed that, as of Dec. 31, 2012, they beneficially own 761,164
shares of common stock of WPCS International Incorporated
representing 9.99% of the shares outstanding. A copy of the
filing is available for free at http://is.gd/3Q4ug9
About WPCS International
Exton, Pennsylvania-based WPCS International Incorporated provides
design-build engineering services that focus on the implementation
requirements of communications infrastructure. The Company
provides its engineering capabilities including wireless
communication, specialty construction and electrical power to the
public services, healthcare, energy and corporate enterprise
markets worldwide.
As reported by the TCR on Dec. 8, 2011, WPCS International and its
United Stated based subsidiaries, previously entered into a loan
agreement, dated April 10, 2007, as extended, modified and amended
several times, with Bank of America, N.A. The Company is seeking
alternative debt financing and has conducted discussions with
other senior lenders to replace the Loan Agreement. The Company
may not be successful in obtaining alternative debt financing or
additional financing sources may not be available on acceptable
terms. If the Company is required to repay the Loan Agreement,
the Company has sufficient working capital to repay the
outstanding borrowings.
J.H. COHN LLP, in Eatontown, New Jersey, issued a "going concern"
qualification on the consolidated financial statements for the
fiscal year ended April 30, 2012. The independent auditors noted
that the Company is in default of certain covenants of its credit
agreement and has incurred operating losses, negative cash flows
from operating activities and has a working capital deficiency as
of April 30, 2012. These matters raise substantial doubt about
the Company's ability to continue as a going concern.
WPCS reported a net loss attributable to the Company of
$20.54 million for the year ended April 30, 2012, compared to a
net loss attributable to the Company of $36.83 million during the
prior fiscal year.
The Company's balance sheet at Oct. 31, 2012, showed $21.47
million in total assets, $14.69 million in total liabilities and
$6.78 million in total equity.
"At October 31, 2012, the Company had cash and cash equivalents of
$921,206 and working capital of $1,265,636, which consisted of
current assets of $15,897,614 and current liabilities of
$14,631,978, and on December 4, 2012, repaid the existing loan
with Sovereign. However, the Company's outstanding obligations
under the Zurich Agreement and Indemnity Agreement raise
substantial doubt about the Company's ability to continue as a
going concern," according to the Company's Form 10-Q for the
period ended Oct. 31, 2012.
WYNN RESORTS: Moody's Hikes Corp. Family Rating to 'Ba1'
--------------------------------------------------------
Moody's Investors Service earlier this month raised Wynn Resorts
Limited's Corporate Family Rating to Ba1 from Ba2 and Probability
of Default Rating to Ba1-PD from Ba2-PD. The Ba2 rating on Wynn
Las Vegas, LLC's $1.32 billion 7.75% first mortgage notes due 2020
was confirmed. Wynn Las Vegas, LLC is a 100% wholly-owned
subsidiary of Wynn Resorts Limited that owns and operates the
company's Las Vegas resort and casino properties. The rating
outlook is stable.
This rating action concludes the review process that was initiated
on September 21, 2012.
Wynn Resorts Limited ratings raised:
Corporate Family Rating to Ba1 from Ba2
Probability of Default Rating to Ba1-PD from Ba2-PD
Wynn Las Vegas, LLC rating confirmed and LGD assessment revised:
$1.32 bil. 7.75% first mortgage notes due 2020 at Ba2 (LGD 4,
64%) from (LGD 4, 51%)
The upgrade of Wynn's CFR to Ba1 from Ba2 reflects Moody's
expectation that continued, albeit slower, growth at the company's
Macau, China subsidiary will support the company's ability to
maintain net debt/EBITDA at 3.0 times or below over the long-term
despite the likelihood of continued large annual shareholder
distributions and the company's development plans. The Ba1 CFR
considers Moody's view that there will likely be periods where
Wynn's leverage experiences periods of short-term increases due to
partially debt-financed, future development projects. However,
Moody's views Wynn as a well-established global gaming developer
and operating company that has a successful development track
record. It is for this reason that Moody's expects the company
will likely pursue development projects for which there is a high
degree of certainty that the project will result in a cash flow-
producing asset with a rate of return equal to or higher than the
company's historical rates of return.
Wynn's net debt/EBITDA for the fiscal year ended Dec. 31, 2012 was
about 2.7 times. Cash flow after interest and capital
expenditures, and balance sheet cash was substantial, at about $1
billion and $2 billion, respectively. Wynn did make approximately
$1 billion cash dividends. And while this dividend is considerable
and the company's history of shareholder friendly activities
remain a credit concern, Moody's believes Wynn's operating
performance over the next several years can support this level of
dividend at a Ba1 CFR rating level.
Wynn is in the early stages constructing a resort and casino on
the Cotai Strip in Macau that will take several years to complete
and has an estimated project cost in the range of $3.5 billion to
$4.0 billion. Despite this large investment, Moody's expects the
project will contribute further to the company's long-term
consolidated free cash profile and liquidity that, in turn, will
allow the company to manage its net debt/EBITDA at 3.0 times or
below.
The confirmation of Wynn Las Vegas, LLC's first mortgage notes due
2020 considers that in September 2012, the liens on the assets of
Wynn Las Vegas and its subsidiaries securing these notes was
released. The notes are now unsecured, except by a pledge of the
equity interests of Wynn Las Vegas and are not guaranteed by any
of the Wynn Las Vegas subsidiaries.
Ratings Rationale
Wynn's Ba1 CFR reflects the strong operating performance of Wynn's
Macau subsidiary and Moody's expectation that the Macau gaming
market will continue to experience growing visitation and consumer
demand trends. Macau accounts for a significant majority of Wynn's
consolidated revenues and EBITDA. Positive rating consideration is
given to the quality, popularity, and favorable reputation of
Wynn's casino properties -- a factor that continues to distinguish
the company from most other gaming operators. Historically, the
company's properties generated higher EBITDA margins than many of
their competitors demonstrating strong operational expertise,
which also support the ratings.
Key credit concerns include Moody's view that Wynn's
diversification remains limited despite the fact that it is one of
the largest U.S. gaming operators in terms of revenue. The
company's revenues and cash flow are concentrated in only two
gaming markets -- Las Vegas, Nevada and Macau, China-- which makes
it highly susceptible to specific market, economic, and regulatory
trends. Also constraining the rating is Moody's expectation that
Wynn will continue shareholder friendly activity in the form of
significant cash dividends and distributions.
Wynn's ratings reflect a consolidated rating approach, whereby
Moody's views all of the operations of Wynn as a single enterprise
for analytic purposes, regardless of whether or not financing's
for some subsidiaries are done on a stand-alone basis.
The stable rating outlook incorporates Moody's opinion that
favorable gaming demand trends in Macau along with little in the
way of scheduled debt maturities in the next two years will
provide Wynn with ability to absorb any earnings pressure at
Wynn's Las Vegas subsidiary. These factors will also afford Wynn
the opportunity to maintain consolidated net debt/EBITDA at or
below 3.0 times over the long--term.
The stable outlook also considers that the Nevada Gaming Control
Board has informed Wynn that it has concluded its investigation of
allegations made by Mr. Okada, a former shareholder, against Wynn
Resorts regarding an allegedly improper donation made to the
University of Macau by Wynn and determined that Okada's
allegations are unfounded.
Ratings improvement is limited at this time given the highly
secured nature of the company's entire debt capital structure,
which is a characteristic that Moody's does not believe is
consistent with an investment grade rating. While the security has
been released at the company's Las Vegas subsidiary, the debt at
its Macau subsidiary, on a fully drawn basis, currently accounts
for almost half of Wynn's consolidated debt, still remains
secured. Ratings could be lowered if it appears net debt/EBITDA
will, for any reason, rise and remain above 3.5 times on a more
permanent basis.
The principal methodology used in this rating was the Global
Gaming 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.
Wynn Resorts Limited owns and operates casino hotel resort
properties in Las Vegas, Nevada and Macau, China. Consolidated net
revenue for the fiscal year ended Dec. 31, 2012 was about $5.2
billion.
ZOGENIX INC: Federated Has 28.2% Equity Stake at Dec. 31
--------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Federated Investors, Inc., and its affiliates
disclosed that, as of Dec. 31, 2012, it beneficially owns
31,032,213 shares of common stock of Zogenix, Inc., representing
28.18% of the shares outstanding. Federated Investors previously
reported beneficial ownership of 30,450,000 common shares or a
28.37% equity stake as of July 31, 2012.
A copy of the amended filing is available for free at:
http://is.gd/8yDZ5b
About Zogenix Inc.
Zogenix, Inc. (NASDAQ: ZGNX), with offices in San Diego and
Emeryville, California, is a pharmaceutical company
commercializing and developing products for the treatment of
central nervous system disorders and pain.
Ernst & Young LLP, in San Diego, Calif., issued a "going concern"
qualification on the consolidated financial statements for the
year ended Dec. 31, 2011, citing recurring losses from operations
and lack of sufficient working capital.
The Company reported a net loss of $83.90 million in 2011, a net
loss of $73.56 million in 2010, and a net loss of $45.88 million
in 2009.
The Company's balance sheet at Sept. 30, 2012, showed $91.30
million in total assets, $78.01 million in total liabilities and
$13.28 million in total stockholders' equity.
* EV Key to Creditor Recoveries in Bankruptcies, Fitch Says
-----------------------------------------------------------
Fundamental estimates of reorganization enterprise value (EV) or
negotiated settlement values used in U.S. bankruptcy
reorganization plans are critical to the success of an issuer's
reorganization process, as discussed in a Fitch Ratings analysis
of corporate bankruptcies.
This is the second edition of Fitch's series of bankruptcy case
studies that provide valuation information and ultimate recoveries
on claims by seniority. The median EV/forward EBITDA
reorganization multiple was 6.1x for the sample. The case outcomes
inform and validate Recovery-Rating analysis assumptions and
provide information to market participants.
On average, the 75 defaulted issuers in Fitch's sample eliminated
68% of pre-petition debt through their bankruptcy processes, with
debt reduction in 73 of 75 cases. Fifteen companies emerged with
no debt outstanding due to being completely liquidated or emerging
as going concerns with no debt.
The average debt/forward EBITDA leveraged ratio was 4.5x for the
60 companies for which a bankruptcy emergence leverage multiple
was available. Fitch notes, however, that eight companies in the
sample emerged with debt to EBITDA of 6x or higher. Insufficient
debt reduction raises the risk of a second default.
Relative position in the capital structure was also a key
determinant of recovery. First-lien creditors fared much better
than junior creditors in terms of ultimate recoveries: 54% of the
99 secured claims (all priorities) received plan distributions
that resulted in recoveries of at least 91% of the claim amounts.
Creditor recoveries on unsecured debt were more widely
distributed: 43% of the 71 unsecured issues received distributions
of 10% or less of their claim amount and 16% recovered at least
91%.
Enterprise value is central to Fitch's speculative-grade rating
process. For rated-entities with Issuer Default Ratings (IDRs) of
'B+' and below, Fitch performs a custom valuation analysis that
results in a recovery estimate for each class of debt obligations.
The full report 'Case Studies in Bankruptcy Enterprise Values and
Creditor Recoveries - Volume 2' is available at
'www.fitchratings.com.' The report provides valuation and recovery
cases studies for 35 issuers and draws statistics from 75 cases in
the U.S. corporate ultimate recovery database.
* Fitch Says Texas School District Ruling May Affect Funding
------------------------------------------------------------
Fitch believes a state district court ruling earlier this month
that Texas' school finance system is unconstitutional may
ultimately result an increased funding and financial flexibility
for school districts in the state, strengthening their credit
profile. The judge found the current funding formula "inefficient,
inequitable, and unsuitable and arbitrarily funds districts at
different levels below the constitutionally required level of the
general diffusion of knowledge." The ruling also cites inadequate
funding as a flaw in the current system that violates the state
constitution.
"We expect the state of Texas to appeal this ruling to the state
Supreme Court. If the Supreme Court upholds the lower court's
decision, it will direct the state legislature to make revisions
to the system to restore its constitutionality. These changes
likely will address funding levels in general, property tax rates,
and the distribution of funding among wealthy and less prosperous
districts. Any increase in school funding would be a positive
credit consideration, as the legislature reduced the education
budget by $5.4 billion for the current two-year funding cycle,"
Fitch says.
"If the court decides the current funding methodology is
constitutional, we would expect no credit impact on the districts
we currently rate due to these events."
* Moody's Outlook for US States Sector Still Negative in 2013
-------------------------------------------------------------
Moody's Investors Service continues to have a negative outlook on
the US states sector because of uneven employment and tax revenue
growth and spending pressures from Medicaid and pensions, despite
signs of economic stabilization across the country. Repercussions
from possible reductions in the federal deficit, which could
damage economic growth, are also a risk for states.
"States are experiencing a slow recovery, but still face economic
and fiscal challenges," says Moody's Assistant Vice President and
Analyst Kimberly Lyons, main author of the report "US States
Sector Outlook Remains Negative."
"Despite these risks, the US states sector is supported by broad
and diverse economies, low debt burdens compared to other global
sectors, and strong fiscal flexibility to mitigate economic
risks," says Moody's Lyons.
Moody's says a weaker US economic outlook has diminished hopes of
a robust economic recovery, which would buoy state finances. The
economy -- and in turn state finances -- remain susceptible to
additional pressure from implementation of federal deficit
reduction measures.
State tax revenues continue to grow, but collections are slower
than forecasted and some states have revised their estimates
downward. At the end of the second quarter of fiscal 2013 revenue
growth had fallen short of budgeted forecasts in nine states.
States are rebuilding reserves, but for the most part these
resources are still below their pre-recession levels, with many
states still behind their pre-recession peak levels.
To return to a stable outlook, Moody's says several factors would
need to occur, including: sustained national economic growth; a
return to structurally balanced state fiscal plans; and a more
muted impact of federal spending cuts on state economies and
finances than Moody's currently expects.
Moody's sector outlook for the states has been negative since
2008. The outlook expresses Moody's expectations for the
fundamental credit conditions in the sector over the next 12 to 18
months. It does not speak to expectations for individual rating
changes and is not a prediction of the expected balance of rating
changes during this time frame.
* Moody's Reports Stable Outlook for US Office Market and REITs
---------------------------------------------------------------
The outlook is stable for both the fundamentals of the office
sector of the US real estate market and for Moody's ratings of US
office REITs, said the rating agency in a report earlier this
month.
"We expect office market fundamentals to mirror the economy, which
still must contend with stifled growth because of ongoing
uncertainty about US fiscal policy," says Vice President -Senior
Credit Officer Karen Nickerson, author of the report. "Assuming
policies are ironed out regarding the debt ceiling and scheduled
'sequestration' budget cuts, the office market recovery is likely
to pick up momentum in the second half of the year."
If that is the case, she said, Moody's would view leveraged
acquisitions as the biggest risk to balance sheets in 2013, albeit
a relatively low risk given the demonstrated preference to issue
equity to fund growth.
"Supply and demand dynamics for the office sector are improving in
select markets, particularly those driven by energy and
technology," said Ms. Nickerson. "Core earnings for office REITs
are likely to trend slightly upward in 2013, as they remain
focused on achieving occupancy gains, especially those invested in
suburban markets."
With construction of new office space at historically low levels,
US office REITs will grow in 2013 primarily through asset
acquisitions, according to Moody's. Given the shortage of new
supply over the past decade, development pipelines will begin to
grow toward the end of 2013 but will remain within expected bands
incorporated into current individual ratings.
"Moody's-rated office REITs are well positioned to absorb any
negative shift in economic trends and will continue to outperform
their market peers," says Ms. Nickerson. "Our stable ratings
outlook assumes that rated office REITs will continue to
conservatively manage their balance sheets and their liquidity and
funding needs."
This approach will likely remain in place, she explained, even as
REITs are poised for growth once business confidence reemerges.
"As for any rating actions this year, they are likely to be
because of issuer-specific circumstances such as growth and
diversity of property portfolios rather than sector-wide changes,"
said Ms. Nickerson.
* Moody's Cautions Wise Use of Cash for Canada's Broadband Firms
----------------------------------------------------------------
Canadian broadband companies' capital investment rates will remain
steady this year as they seek to maintain their sophisticated
networks, Moody's Investors Service says in a new report,
"Canadian Broadband Communications: Modest Growth, Consistent
Strategies for 2013." Cash flow generation will slow, however, and
challenge the dividend growth promised to shareholders.
"Increased competition among the incumbents, maturing products and
tepid economic growth will slow cash flow expansion for Canadian
broadband companies in the year ahead," says Senior Vice President
and author of the report, Bill Wolfe. "But we do not expect them
to respond to these pressures by increasing leverage or making
significant acquisitions."
The companies will still generate more than enough cash to fund
their operations, Wolfe says. The challenge will be in how they
chose to spend the excess. "Canadian broadband companies are
mindful of events in the US, where Nextel Corp.'s courtship of
Softbank Corp. and the T-Mobile USA--MetroPCS Inc. combination
have shown that competitive capital investment is required for
sustained operational success."
Moody's-rated Canadian companies Bell Canada, Rogers
Communications, TELUS Corp., Shaw Communications and Quebecor
Media are therefore expected to maintain consistent capital
intensity in the year ahead. "Indeed, the most significant risk
for each company is prolonged under-investment, which erodes
network capabilities and financial performance," says Moody's
Wolfe.
Broadband communications requires both scale and the financial
capacity to invest in and maintain competitive networks, but among
the companies that dominate broadband communications in Canada
there are no realistic combinations that address those issues.
Moody's therefore expects smaller deals, such as the Rogers/Shaw
asset swap, or deals that focus on higher-growth, non-legacy
businesses, such as Rogers' and Bell Canada's joint investment in
Maple Leaf Sports and Entertainment.
Canadian broadband companies' efforts to remain competitive mean
they will not reduce capital spending to boost shareholder
returns, Wolfe says. While in the US AT&T has said it will take on
more debt to expand its capital investment and repurchase shares,
Canadian companies do not have as much flexibility to raise
leverage and remain comfortably investment grade, as AT&T did,
though its rating was lowered by a notch following its
announcement.
* FHA Might Avoid Taxpayer Subsidy This Year
--------------------------------------------
Clea Benson & Cheyenne Hopkins, writing for Bloomberg News,
reported that the head of the U.S. Federal Housing Administration
downplayed a coming budget estimate that is expected to show the
agency will need taxpayer aid for the first time since it was
founded in the 1930s.
Bloomberg said FHA could avoid taking Treasury aid even if the
budget President Barack Obama releases next month shows it has a
shortfall, FHA Commissioner Carol Galante said at a hearing of the
House Financial Services Committee on Feb. 14. The committee's
chairman, Texas Republican Jeb Hensarling, questioned Galante's
numbers, and said the agency is "flat broke."
Bloomberg added that FHA will take additional steps this year to
avoid foreclosures on loans that have defaulted and raise the fees
it charges borrowers to insure their loans against default,
Galante said. Those and other measures could be enough to offset
any shortfall the budget shows, she said. FHA has until Sept. 30
to determine whether it needs aid.
"The ultimate need will be borne out in the actual performance of
the FHA single-family program over the course of the fiscal year,
and will be impacted by the steps FHA takes over the course of the
year to increase revenue or reduce losses," Galante said,
according to Bloomberg.
Bloomberg noted that an independent actuary said in November that
FHA could need a subsidy of as much as $16.3 billion due to
defaults on loans it insured as the housing market crashed. The
agency is required to keep enough funds on hand to cover all
projected future losses. The president's budget will contain an
updated estimate.
* U.S. Foreclosures Down 7% in January 2013, RealtyTrac Says
------------------------------------------------------------
RealtyTrac(R) on Feb. 14 released its U.S. Foreclosure Market
Report(TM) for January 2013, which shows foreclosure filings --
default notices, scheduled auctions and bank repossessions -- were
reported on 150,864 U.S. properties in January, a decrease of 7
percent from the previous month and down 28 percent from January
2012. The report also shows one in every 869 U.S. housing units
with a foreclosure filing during the month.
"The U.S. foreclosure landscape in January was profoundly altered
by the effects of new legislation that took effect in California
on the first of the year," said Daren Blomquist, vice president at
RealtyTrac. "Dubbed the Homeowners Bill of Rights, this
legislation extends many of the principles in the national
mortgage settlement -- including a prohibition on so-called dual
tracking and requiring a single point of contact for borrowers
facing foreclosure -- to all mortgage servicers operating in
California. In addition the new law imposes fines of up to $7,500
per loan for filing of multiple unverified foreclosure documents.
As a result, the downward foreclosure trend in California
accelerated into hyper speed in January, decisively shifting the
balance of power when it comes to the nation's foreclosure
activity.
"For the first time since January 2007 California did not have the
most properties with foreclosure filings of any state. Instead
that dubious distinction went to Florida, where January
foreclosure activity increased on an annual basis for the 11th
time in the last 13 months."
High-level findings from the report:
-- U.S. foreclosure starts were down 11 percent from the
previous month and down 28 percent from a year ago to the lowest
level since June 2006 -- a 79-month low.
-- U.S. bank repossessions (REO) decreased 5 percent from
the previous month and were down 24 percent from January 2012 to
the lowest level since February 2008.
-- The national decrease in foreclosure starts was caused
in large part by a sharp drop in California notices of default
(NOD) in January, down 62 percent from December and down 75
percent from January 2012 to the lowest level since October 2005.
-- Scheduled foreclosure auctions increased from the
previous month in 26 states and the District of Columbia, hitting
12-month or more highs in several key judicial foreclosure states,
including Florida, Illinois, Pennsylvania, and New Jersey,
although foreclosure starts were down on a year-over-year basis in
Florida, Illinois and Pennsylvania.
-- Some of the biggest year-over-year increases in
foreclosure starts came in non-judicial foreclosure states where
legislation or court rulings stalled foreclosure actions last
year: Arkansas (539 percent increase), Washington (179 percent
increase), and Nevada (87 percent increase).
-- Florida posted the nation's highest state foreclosure
rate for the fifth month in a row in January, and also had the
highest number of properties with foreclosure filings for the
month, marking the first month since January 2007 that California
has not had the highest number of properties with foreclosure
filings.
Florida, Nevada, Illinois post highest state foreclosure rates The
Florida foreclosure rate ranked highest among the states for the
fifth month in a row. One in every 300 Florida housing units had
a foreclosure filing in January -- more than twice the national
average. A total of 29,800 Florida properties had a foreclosure
filing during the month, up 12 percent from the previous month and
up 20 percent from January 2012.
With one in every 344 housing units with a foreclosure filing in
January, Nevada posted the nation's second highest foreclosure
rate for the fourth consecutive month. Overall Nevada foreclosure
activity decreased 43 percent from a year ago, but foreclosure
starts (NODs) increased 19 percent from the previous month and
were up 87 percent from January 2012 to a 16-month high.
A 32 percent month-over-month jump in scheduled foreclosure
auctions helped the Illinois foreclosure rate rise to third
highest among the states in January. One in every 375 Illinois
housing units had a foreclosure filing during the month.
Other states with foreclosure rates among the nation's 10 highest
were Arizona (one in 501 housing units with a foreclosure filing),
Georgia (one in 513 housing units), Ohio (one in 612 housing
units), Washington (one in 674 housing units), California (one in
753 housing units), Indiana (one in 784 housing units), and
Michigan (one in every 837 housing units).
Florida cities account for six of top 10 metro foreclosure rates
With one in every 223 housing units with a foreclosure filing in
January, the Ocala, Fla., metro area posted the nation's highest
foreclosure rate in January among metropolitan statistical areas
with a population of 200,000 or more.
Five other Florida metro areas documented foreclosure rates in the
top 10: Miami at No. 2 (one in 228 housing units with a
foreclosure filing); Orlando at No. 3 (one in 241 housing units);
Jacksonville at No. 8 (one in 301 housing units); Tampa at No. 9
(one in 307 housing units); and Lakeland at No. 10 (one in 332
housing units).
Other cities with foreclosure rates in the top 10 were Rockford,
Ill., at No. 4 (one in every 265 housing units with a foreclosure
filing); Stockton, Calif., at No. 5 (one in every 277 housing
units); Las Vegas at No. 6 (one in 283 housing units); and Chicago
at No. 7 (one in 293 housing units).
The RealtyTrac U.S. Foreclosure Market Report is the result of a
proprietary evaluation of information compiled by RealtyTrac; the
report and any of the information in whole or in part can only be
quoted, copied, published, re-published, distributed and/or re-
distributed or used in any manner if the user specifically
references RealtyTrac as the source for said report and/or any of
the information set forth within the report.
Data Licensing and Custom Report Order Investors, businesses and
government institutions can contact RealtyTrac to license bulk
foreclosure and neighborhood data or purchase customized reports.
We can provide you with nationwide, regional or local data and
reports dating back to 2005 for both internal use and resale. For
more information contact our Data Licensing Department at
800.462.5193 or datasales@realtytrac.com.
About RealtyTrac Inc.
RealtyTrac -- http://www.realtytrac.com-- is the leading supplier
of U.S. real estate data, with more than 1.5 million active
default, foreclosure auction and bank-owned properties, and more
than 1 million active for-sale listings on its website, which also
provides essential housing information for more than 100 million
homes nationwide. This information includes property
characteristics, tax assessor records, bankruptcy status and sales
history, along with 20 categories of key housing-related facts
provided by RealtyTrac's wholly-owned subsidiary, Homefacts(R).
RealtyTrac's foreclosure reports and other housing data are relied
on by the Federal Reserve, U.S. Treasury Department, HUD, numerous
state housing and banking departments, and investment funds as
well as millions of real estate professionals and consumers, to
help evaluate housing trends and make informed decisions about
real estate.
* Visa, MasterCard Win Dismissal of ATM Group's Lawsuit
-------------------------------------------------------
Tom Schoenberg, writing for Bloomberg News, reported that Visa
Inc. and MasterCard Inc., the world's biggest payment networks,
won dismissal of a price-fixing lawsuit brought by a group
representing operators of automated teller machines.
Bloomberg related that U.S. District Judge Amy Berman Jackson in
Washington on Feb. 14 also threw out two related suits, ruling
that all the plaintiffs failed to show the companies conspired to
restrict independent ATM operators from charging varying prices
for customers using alternative networks such as STAR, Shazam Inc.
or TransFund.
"Plaintiffs have not set forth sufficient facts to support their
claim that there was a horizontal conspiracy," Jackson wrote in
her 39-page opinion, according to Bloomberg. "Notably absent from
each of the complaints are facts showing the existence of an
agreement, the essential element of any conspiracy."
Bloomberg said the dismissal of the suit leaves ATM operators
grappling with the same alleged anti-competitive landscape that
they claimed prevents them from attracting customers by offering a
discount by making a transaction over less expensive networks.
The allegations in the lead case were made by the National ATM
Council Inc., a trade group based in Jacksonville, Florida, and 13
operators of ATMs in nine states, according to Bloomberg. The
group sought to represent the 350 non-bank ATM operators
nationwide and asked for triple damages.
Bloomberg added that the ATM operators claim that the
"overwhelming" majority of so-called PIN debit cards used for ATM
transactions are branded by Visa or MasterCard. Under a uniform
agreement, the operators can't charge less for transactions over a
network that competes with Visa and MasterCard, according to the
complaint.
The lead case is National ATM Council v. Visa Inc., 11- cv-1803,
U.S. District Court, District of Columbia (Washington).
* 25-Year Bankruptcy Vet From K&L Gates Joins Polsinelli Shughart
-----------------------------------------------------------------
Polsinelli Shughart said in a press release dated Feb. 14, 2013,
that bankruptcy veteran Edward M. Fox joined the firm as a
shareholder to its New York office where he will assist clients
with bankruptcy and financial services needs. Fox comes to the
firm with more than 25 years experience, and has served as partner
and head of the bankruptcy departments at several major law firms.
"With Ed's arrival we will have taken the next important step in
building a strong core financial services and bankruptcy practice
in New York," said Dan Flanigan, who heads the firm's Financial
Services & Real Estate Department and is managing partner of
Polsinelli Shughart's New York office.
Fox's experience is primarily in all aspects of bankruptcy,
corporate reorganizations, and financial restructuring. He also
has significant experience in derivatives, securitization, and
structured finance. He represents debtors, creditors committees,
indenture trustees, landlords and other creditors in some of the
country's largest bankruptcy cases. He has also represented banks,
pension funds, labor unions and other creditors in numerous
Chapter 11 reorganization cases involving newspaper publishers,
shipping lines, retailers, hotel and motel properties, office
buildings, casinos, and other businesses.
"Dan Flanigan and Polsinelli presented an opportunity to join them
on the ground floor and continue aggressively building an
exceptional firm in New York and nationally," said Fox. "I'm
excited to be a part of it, especially here in New York where we
are growing strategically based on the firm's strengths and our
clients' needs."
Fox has spoken on bankruptcy topics at seminars around the country
and has chaired day-long Bankruptcy CLE Seminars for the New York
University School of Continuing and Professional Studies. Fox
earned his law degree magna cum laude from Boston University
School of Law in 1985 and his B.A. from Columbia University in
1982.
In March 2012, the New York office of Polsinelli Shughart located
to Third Avenue and 50th Street in anticipation of growth in
financial services, real estate, and intellectual property. This
office is already at capacity and the firm will be announcing a
move in the near very future. Look for future releases on the
continued growth of Polsinelli Shughart and the New York office.
Mr. Fox may be reached at:
Edward M. Fox, Esq.
POLSINELLI SHUGHART PC
805 Third Avenue, Suite 2020
New York, NY 10022
Tel: (646) 289-6516
Email: efox@polsinelli.com
For more information, contact:
Matt Yemma
o2 GROUP PUBLIC RELATIONS
Tel: (212) 600-0886
Email: matt@o2group.com
Heather McMichael
Public Relations Manager
POLSINELLI SHUGHART PC
Tel: (816) 223-8780
Email: hmcmichael@polsinelli.com
About Polsinelli Shughart
Serving corporations, institutions, entrepreneurs, and
individuals, our attorneys build enduring relationships by
infusing legal counsel with business insight to help clients
achieve their objectives. This commitment to our clients'
businesses has helped us become the fastest-growing, full-service
law firm in America*. With more than 600 attorneys in 16 cities,
our national law firm is a recognized leader in the industries
driving our growth, including health care, financial services,
real estate, life sciences and technology, energy and business
litigation. The firm can be found online at www.polsinelli.com.
Polsinelli Shughart PC. In California, Polsinelli Shughart LLP.
* Brian Linscott Rejoins Huron Consulting as Managing Director
--------------------------------------------------------------
Huron Consulting Group on Feb. 14 disclosed that Brian Linscott
has rejoined the Company as a managing director in its Huron
Financial Consulting practice focused on restructuring and
turnaround.
"The number of companies facing financial challenges as the U.S.
economy recovers from recession is large and Huron's restructuring
and turnaround experts are uniquely positioned to help clients
identify and work through their financial priorities," said John
DiDonato, managing director and practice leader for Financial
Consulting, Huron Consulting Group. "We are pleased to welcome
Brian back to Huron and are confident our clients will benefit
from his tremendous expertise."
Mr. Linscott rejoins Huron from The Sun Times Media, LLC where he
served as chief financial officer and senior vice president,
managing and executing the company's restructuring plan. He is
one of the original founding members of Huron and will be advising
clients on financial advisory, restructuring and bankruptcy.
Previously, Mr. Linscott counseled companies in the airline,
automotive and media industries on some of the most prominent
bankruptcies in the country.
About Huron Consulting Group
Huron Consulting Group -- http://www.huronconsultinggroup.com--
helps clients in diverse industries improve performance, comply
with complex regulations, reduce costs, recover from distress,
leverage technology, and stimulate growth. The Company teams with
its clients to deliver sustainable and measurable results. Huron
provides services to a wide variety of both financially sound and
distressed organizations, including healthcare organizations,
Fortune 500 companies, leading academic institutions, medium-sized
businesses, and the law firms that represent these various
organizations.
* J. Austin Moves From Paul Hastings to King & Spalding
-------------------------------------------------------
On the heels of the expansion of its financial institutions
practice with the addition of four lawyers, King & Spalding has
recruited Jesse H. Austin, III as a partner in that practice. Mr.
Austin, a lending-side bankruptcy and restructuring lawyer, comes
to King & Spalding from Paul Hastings. He joins partners Chris D.
Molen and J. Craig Lee, who arrived at King & Spalding from
Austin's former firm last week, along with senior associate
Chadwick M. Werner and associate Maria Danielle Merritt.
"Jess is a widely respected and well-seasoned bankruptcy lawyer
with extensive experience representing lending clients in
significant restructurings. His arrival, plus the addition
earlier this month of partners Chris Molen and Craig Lee, and two
associates, significantly increases our bench strength for serving
our leveraged-lending clients," said Richard T. Marooney, co-
leader of King & Spalding's financial institutions practice. "We
have practiced with and against Jess for years and have long
admired his skill, intellect and creativity in solving difficult
problems. We are delighted he is part of our team."
Mr. Austin focuses primarily on the representation of
institutional senior secured lenders in syndicated credit
facilities and has specific experience in debtor-in-possession
lending and in the health care, media, retail, energy and gaming
industries. He is ranked as a leading bankruptcy lawyer by
Chambers USA and Legal 500. He is a fellow in the American
College of Bankruptcy. Mr. Austin received J.D. and M.B.A degrees
from Emory University and a B.S.B.A. degree from the University of
North Carolina at Chapel Hill.
King & Spalding's financial institutions practice is comprised of
more than 100 lawyers worldwide with expertise in complex
financings, private equity, fund formation, litigation,
investigations, Islamic finance, real estate capital markets, tax
and regulatory matters. King & Spalding was ranked 6th in the
United States for lender representations in 2012, according to
Thomson Reuters. The firm's class action and real estate capital
markets practices were each named by Law360 as one of 2012's top
five practices in the United States in their respective practice
areas. King & Spalding's project finance practice received a
tier-one ranking in U.S. News & World Report's 2013 "Best Law
Firm" survey.
About King & Spalding
Celebrating more than 125 years of service, King & Spalding --
http://www.kslaw.com-- is an international law firm that
represents a broad array of clients, including half of the Fortune
Global 100, with 800 lawyers in 17 offices in the United States,
Europe, the Middle East and Asia. The firm has handled matters in
over 160 countries on six continents and is consistently
recognized for the results it obtains, uncompromising commitment
to quality and dedication to understanding the business and
culture of its clients.
* Kirkland & Ellis Adds Two Attorneys to Corporate Practice
-----------------------------------------------------------
Kirkland & Ellis LLP announced the expansion of its West Coast
corporate practice with the hiring of leading attorneys Michael S.
Ringler and Rick C. Madden. Mr. Ringler will join the Firm as a
partner in the San Francisco office and was previously a mergers
and acquisitions partner in the San Francisco office of Wilson
Sonsini Goodrich & Rosati. Mr. Madden will join as a partner in
the Firm's Los Angeles office and was previously a corporate
partner in the Los Angeles office of Skadden, Arps, Slate, Meagher
& Flom LLP.
Mr. Ringler is recognized for his many years of broad public
company transactional experience in Northern California, with a
particular focus on the technology sector. Mr. Madden focuses his
Los Angeles-based practice on high-profile mergers and
acquisitions for public and private companies and private equity
firms, out-of-court restructurings, and securities offerings. The
two lawyers add significant new capabilities to the Firm's leading
West Coast corporate practice, which currently includes private
equity lawyers in San Francisco, Los Angeles and Palo Alto.
"These two senior hires strategically strengthen our West Coast
presence," said Jeffrey C. Hammes, Chairman of Kirkland's Global
Management Executive Committee. "Kirkland is firmly established
as a premier legal advisor for West Coast private equity firms, as
well as for technology companies engaged in complex intellectual
property litigation. Mike and Rick bring a broad range of
experience that will significantly expand our offerings to clients
involved in the technology sector, and across a wide array of
other industries."
Mr. Ringler represents clients on an extensive range of M&A
transactions, including strategic mergers, tender and exchange
offers, company acquisitions and sales, business acquisitions and
divestitures, leveraged buyouts and other going-private
transactions, hostile takeovers, unsolicited acquisition proposals
and other contests for corporate control, and joint ventures and
other strategic partnering arrangements. He recently represented
Meraki, Inc. in its $1.2 billion sale to Cisco Systems, Inc.;
salesforce.com in its $750 million acquisition of Buddy Media,
Inc.; Taleo Corporation in its $2.1 billion sale to Oracle
Corporation; F5 Networks, Inc. in its $140 million acquisition of
Traffix Systems; Adobe Systems Incorporated in its $400 million
acquisition of Efficient Frontier; and LSI Corporation in its $400
million acquisition of SandForce, Inc.
Mr. Madden represents private equity firms as well as public and
private companies in connection with acquisitions and other
transactions. He also represents initial purchasers, underwriters
and issuers in connection with sales of securities in private and
public offerings. His significant representations include Joltid
Limited, a member of the investor group in Skype Global S.a r.l.,
in connection with Microsoft Corporation's $8.5 billion
acquisition of Skype; Centro Properties Group in its $9.4 billion
sale of its U.S. shopping centers to The Blackstone Group L.P. and
the acquisition and restructuring of the operations of certain of
its affiliated funds; Leonard Green & Partners, L.P. and Texas
Pacific Group in connection with their acquisition of PETCO Animal
Supplies, Inc.; Apollo Advisors, L.P. in its acquisition of the K-
12 education business of Sylvan Learning Systems, Inc. and the
subsequent representation of Educate, Inc. in connection with its
initial public offering; The Gores Group, LLC and its portfolio
company, Stock Building Supply Holdings, LLC, in Stock Building
Supply's approximately $45 million acquisition of substantially
all of the assets of Bison Building Holdings, Inc. and its
subsidiaries as part of Bison Building's Chapter 11 bankruptcy
proceedings; and Metro-Goldwyn-Mayer Inc. (MGM) in a $4 billion
prepackaged bankruptcy.
"Mike and Rick are the latest in a select group of talented,
energetic partners who have joined the Firm to further build our
global M&A team. They both add geographical and industry
experience to our group and complement the multidisciplinary M&A
practice that we have been building at the Firm," said David Fox,
a partner in the New York office and member of Kirkland's Global
Management Executive Committee. "We continue to have the fastest
growing and busiest practice, and pride ourselves on providing
clients with creative solutions for the most challenging
transactions."
The Firm recently added corporate M&A partner Sarkis Jebejian and
private equity partner Taurie Zeitzer to its New York office.
Kirkland has one of the most active and highly regarded
international corporate practices, representing many of the
world's largest public companies and more than 300 private equity
firms on complex multi-jurisdictional transactions in every major
market around the globe.
Mr. Ringler was named one of the Daily Journal's top 100
California lawyers in 2012, and was recognized as a 2010 attorney
of the year by The Recorder for his work on 3PAR's acquisition by
Hewlett-Packard. He has been recognized as a leading attorney in
his field by Chambers & Partners, Legal 500, Best Lawyers in
America, Super Lawyers and Who's Who Legal, and also as among the
"next generation of deal makers" in the New York Times in 2007.
Mr. Ringler holds a J.D. from Georgetown University Law Center,
and a B.S., magna cum laude, from the University of Michigan. He
is a member of the editorial board of The M&A Lawyer.
Mr. Madden's transaction for the Centro Properties Group was
recognized in the Financial Times' 2011 "U.S. Innovative Lawyers"
report, and received the "Turnaround of the Year (Large Market),"
"Distressed M&A Deal of the Year (Upper Middle Market)" and "Real
Estate Deal of the Year ($500 million and over)" awards at the
sixth annual M&A Advisor Turnaround Awards. His work for MGM was
named in 2011 as "Media, Entertainment or Telecom Deal of the
Year" by The M&A Advisor.
Mr. Madden also holds a J.D. from Georgetown University Law
Center, and a B.A. from the University of California, San Diego.
Kirkland & Ellis LLP is a 1,600-attorney law firm representing
global clients in complex corporate and tax, restructuring,
litigation and dispute resolution/arbitration, and intellectual
property and technology matters. The Firm has offices in San
Francisco, Los Angeles, Chicago, Hong Kong, London, Munich, New
York, Palo Alto, Shanghai and Washington, D.C.
* BOND PRICING -- For Week From Feb. 11 to 15, 2013
---------------------------------------------------
Company Coupon Maturity Bid Price
------- ------ -------- ---------
1ST BAP CHUR MEL 7.500 12/12/2014 5.000
AES EASTERN ENER 9.000 1/2/2017 1.750
AES EASTERN ENER 9.670 1/2/2029 4.125
AGY HOLDING COR 11.000 11/15/2014 50.500
AHERN RENTALS 9.250 8/15/2013 58.835
ALASKA COMM SYS 5.750 3/1/2013 98.893
ALION SCIENCE 10.250 2/1/2015 47.827
AMBAC INC 6.150 2/7/2087 13.500
ATP OIL & GAS 11.875 5/1/2015 3.625
ATP OIL & GAS 11.875 5/1/2015 3.625
ATP OIL & GAS 11.875 5/1/2015 3.375
BUFFALO THUNDER 9.375 12/15/2014 31.000
CENGAGE LEARN 12.000 6/30/2019 34.875
CHAMPION ENTERPR 2.750 11/1/2037 0.500
DELTA AIR 1992B2 10.125 3/11/2015 30.000
DOWNEY FINANCIAL 6.500 7/1/2014 64.250
DYN-RSTN/DNKM PT 7.670 11/8/2016 4.500
EASTMAN KODAK CO 7.000 4/1/2017 13.500
EASTMAN KODAK CO 7.250 11/15/2013 12.286
EASTMAN KODAK CO 9.200 6/1/2021 12.500
EASTMAN KODAK CO 9.950 7/1/2018 10.862
EDISON MISSION 7.500 6/15/2013 48.875
ELEC DATA SYSTEM 3.875 7/15/2023 95.000
FAIRPOINT COMMUN 13.125 4/1/2018 1.000
FAIRPOINT COMMUN 13.125 4/1/2018 1.000
FAIRPOINT COMMUN 13.125 4/2/2018 1.000
FIBERTOWER CORP 9.000 11/15/2012 3.000
FIBERTOWER CORP 9.000 1/1/2016 28.000
FULL GOSPEL FAM 8.400 6/17/2031 10.067
GEOKINETICS HLDG 9.750 12/15/2014 51.750
GEOKINETICS HLDG 9.750 12/15/2014 53.000
GLB AVTN HLDG IN 14.000 8/15/2013 21.000
GLOBALSTAR INC 5.750 4/1/2028 63.000
GMX RESOURCES 4.500 5/1/2015 55.000
HAWKER BEECHCRAF 8.500 4/1/2015 9.000
HAWKER BEECHCRAF 8.875 4/1/2015 16.000
HORIZON LINES 6.000 4/15/2017 30.000
JAMES RIVER COAL 4.500 12/1/2015 41.099
JEHOVAH-JIREH 7.800 9/10/2015 10.000
LAS VEGAS MONO 5.500 7/15/2019 21.000
LBI MEDIA INC 8.500 8/1/2017 26.125
LEHMAN BROS HLDG 0.250 12/12/2013 21.875
LEHMAN BROS HLDG 0.250 1/26/2014 21.875
LEHMAN BROS HLDG 1.000 10/17/2013 21.875
LEHMAN BROS HLDG 1.000 3/29/2014 21.875
LEHMAN BROS HLDG 1.000 8/17/2014 21.875
LEHMAN BROS HLDG 1.000 8/17/2014 21.875
LEHMAN BROS HLDG 1.250 2/6/2014 21.875
MASHANTUCKET PEQ 8.500 11/15/2015 7.500
MASHANTUCKET PEQ 8.500 11/15/2015 7.500
MASHANTUCKET TRB 5.912 9/1/2021 7.500
MF GLOBAL LTD 9.000 6/20/2038 80.000
ONCURE HOLDINGS 11.750 5/15/2017 32.801
OVERSEAS SHIPHLD 8.750 12/1/2013 41.500
PENSON WORLDWIDE 12.500 5/15/2017 24.375
PENSON WORLDWIDE 12.500 5/15/2017 41.500
PLATINUM ENERGY 14.250 3/1/2015 51.500
PLATINUM ENERGY 14.250 3/1/2015 65.200
PMI CAPITAL I 8.309 2/1/2027 0.125
PMI GROUP INC 6.000 9/15/2016 32.000
POWERWAVE TECH 1.875 11/15/2024 3.750
POWERWAVE TECH 1.875 11/15/2024 3.750
POWERWAVE TECH 3.875 10/1/2027 4.000
POWERWAVE TECH 3.875 10/1/2027 3.750
RESIDENTIAL CAP 6.875 6/30/2015 29.500
SAVIENT PHARMA 4.750 2/1/2018 25.750
SCHOOL SPECIALTY 3.750 11/30/2026 44.500
SLMA-CALL03/13 6.100 9/15/2021 98.316
TERRESTAR NETWOR 6.500 6/15/2014 10.000
TEXAS COMP/TCEH 10.250 11/1/2015 16.750
TEXAS COMP/TCEH 10.250 11/1/2015 16.375
TEXAS COMP/TCEH 10.250 11/1/2015 19.500
TEXAS COMP/TCEH 15.000 4/1/2021 27.000
TEXAS COMP/TCEH 15.000 4/1/2021 26.250
THQ INC 5.000 8/15/2014 43.500
TL ACQUISITIONS 10.500 1/15/2015 35.000
TL ACQUISITIONS 10.500 1/15/2015 23.000
UAL 1991 TRUST 10.020 3/22/2014 11.250
USEC INC 3.000 10/1/2014 39.600
VERSO PAPER 11.375 8/1/2016 42.968
VGR-CALL03/13 11.000 8/15/2015 104.540
VGR-CALL03/13 11.000 8/15/2015 104.250
WCI COMMUNITIES 4.000 8/5/2023 0.375
WCI COMMUNITIES 4.000 8/5/2023 0.375
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers"
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors" Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Carmel
Paderog, Meriam Fernandez, Ronald C. Sy, Joel Anthony G. Lopez,
Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman,
Editors.
Copyright 2013. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000 or Nina Novak at 202-241-8200.
*** End of Transmission ***