/raid1/www/Hosts/bankrupt/TCR_Public/140430.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, April 30, 2014, Vol. 18, No. 118
Headlines
710 LONG RIDGE: NLRB Bid for Plan Clarification Denied
AS SEEN ON TV: CEO and President Quits, Replacement Named
BAY CLUB PARTNERS: Gets Court Nod to Hire Maginnis as Accountant
CAESARS ENTERTAINMENT: OKs Issuance of 3MM Shares Under Plan
BON-TON STORES: Incurs $3.5 Million Net Loss in Fiscal 2014
BIOLIFE SOLUTIONS: Reports Preliminary Revenue of $2-Mil. in Q1
CARRIZO OIL: S&P Revises Outlook to Positive & Affirms 'B' CCR
CB3 ACQUISITIONS: Ch.11 Case Moved to Connecticut Bankr. Court
CB3 ACQUISITION: Sec. 341 Creditors' Meeting Set for May 6
CCU ESCROW: Moody's Rates Proposed $400MM Senior Notes 'Ca'
CAESARS ENTERTAINMENT: Unit Reports $638 Million Loss in 2013
CENTURY COMMUNITIES: Moody's Assigns B3 Corporate Family Rating
CENTURY COMMUNITIES: S&P Assigns 'B' Corp. Credit Rating
CHARTER COMMUNICATIONS: Moody's Confirms Ba3 CFR; Outlook Stable
CIMAREX ENERGY: Moody's Affirms 'Ba1' Corp. Family Rating
CLEAR CHANNEL: S&P Affirms CCC+ Corp. Credit Rating; Outlook Neg
COOPER-BOOTH: Can Access Cash Collateral Until June 28
COTTONWOOD ESTATES: Disclosure Statement Hearing on May 13
DIOCESE OF HELENA: Wants Court to Set July 24 as Claims Bar Date
DIOCESE OF HELENA: Michael Hogan Named as Victims Representative
DIOCESE OF HELENA: Can Hire Patterson Buchanan as Special Counsel
DIOCESE OF HELENA: Gets Court OK to Pay Adequate Protection to FIB
DIOCESE OF HELENA: Can Sell 520 Virginia Residential Property
EMPIRE DIE: Unsecured Creditors Vote in Favor of EDC Plan
ENDO INTERNATIONAL: S&P Assigns 'B' Rating to Sr. Unsecured Notes
ENERGY EQUITY: Moody's Affirms Ba2 CFR & Sr. Secured Debt Rating
ENERGY FUTURE: Files for Bankruptcy to Reduce $40-Bil. Debt
ENERGY FUTURE: Jr. Noteholders Want Cases in Dallas, Probe
ENERGY FUTURE: To Pay $40-Mil. to Critical Vendors
ENERGY FUTURE: Case Summary & 50 Largest Unsecured Creditors
ENERGY TRANSFER: S&P Affirms 'BB' Rating, Outlook Stable
ERF WIRELESS: Incurs $7.3 Million Net Loss in 2013
EVENT RENTALS: Has Final Approval of $20MM DIP Loans
FAIRMONT GENERAL: Still Seeking Buyer
FLETCHER INT'L: United Community Banks Settlement Approved
FLETCHER INT'L: Trustee Wins Approval of Chapter 11 Plan
FREE LANCE-STAR: Court OKs Hunton & Williams as Panel's Counsel
GARDA WORLD: Fitch Assigns 'B+' Issuer Default Rating
GENCO SHIPPING: Plan, Disclosure Statement Hearing Set for June 3
GENCO SHIPPING: Has Interim Authority to Use Cash Collateral
GENCO SHIPPING: Can Hire GCG as Claims & Noticing Agent
GENCO SHIPPING: Inks Commitment Agreement with Lenders, Holders
GENIUS BRANDS: Reports $7.2 Million 2013 Net Loss
GO DADDY: Moody's Affirms B1 CFR & Changes Outlook to Negative
GREEN BALLAST: Foreclosure Auction Set for May 8
INSIGHT PHARMA: Prestige Brand Deal No Impact on Moody's B2 CFR
INTERFAITH MEDICAL: ToneyKorf Partners' Steven Korf Okayed as CRO
INTERFAITH MEDICAL: Bid to Appoint Ch. 11 Trustee Has Support
IPALCO ENTERPRISES: Fitch Affirms 'BB+' Issuer Default Ratings
IRISH BANK: Objections to Sale of U.S. Loan Assets Due May 6
JVMW PROPERTIES: May 6 Hearing to Approve Disclosure Statement
LEVI STRAUSS: Moody's Hikes Corp. Family Rating to 'Ba2'
MFM DELAWARE: Can Hire Davie Kaplan for Accounting Services
MONEY CENTERS: Ojibwe Tribe Seeks Trustee
MOONLIGHT APARTMENTS: Taps Marsh & Company as Accountant
MOUNTAIN COUNTRY: Court OKs Elliott Davis as Trustee's Accountant
NET ELEMENT: Incurs $48.3 Million Net Loss in 2013
PALM BEACH COMMUNITY: Court Approves CBRE as Real Estate Broker
PETTERS COMPANY: Trustee Intends on Suing in 26 Countries
PRESTIGE BRANDS: Moody's Puts 'B1' CFR on Review for Downgrade
PROMMIS HOLDINGS: Claims Agent Deal With Donlin Recano Cancelled
RESTORA HEALTHCARE: Sells Assets to Creditors in Exchange for Debt
REVSTONE INDUSTRIES: Has Until May 6 to File Chapter 11 Plan
SBARRO LLC: Cancels Auction; To Seek Plan Approval on May 19
SCOTTSDALE VENETIAN: Plan Hearing Continued to June 25
SERVICE CORP: Moody's Rates New Sr. Unsecured Notes Due 2024 'B1'
SERVICE CORP: S&P Rates New $550MM Sr. Unsecured Notes 'BB-'
SHELL POINT: S&P Revises Outlook on 'BB+' Rating to Positive
SILVERADO STREET: Court Dismisses Chapter 11 Case
SIMPLEXITY LLC: Files Schedules of Assets and Liabilities
SMART TECHNOLOGIES: S&P Alters Outlook to Pos. & Affirms 'B' CCR
STOCKBRIDGE/SBE INVESTMENT: S&P Affirms 'B-' CCR; Outlook Negative
SUNCOKE ENERGY: Moody's Rate $250MM Sr. Unsecured Notes 'B1'
TAYLOR, MI: Fitch Affirms 'BB' Rating on Gen. Obligation Bonds
TOUSA INC: Dist. Court Bars Morrison's Interlocutory Appeal
TRITON AVIATION: Fitch Cuts Rating on Class A-1 Note to 'CCsf'
TRIZETTO CORP: S&P Revises Outlook to Positive & Affirms 'B-' CCR
US ECOLOGY: S&P Assigns Preliminary 'BB' CCR; Outlook Stable
VELTI INC: Liquidating Plan Slated for May 29 Confirmation
WENNER MEDIA: S&P Affirms 'B' Corp. Credit Rating, Outlook Stable
WINFREE ACADEMY: S&P Lowers Rating on $8MM 2009 Bonds to 'BB'
WOODSIDE HOMES: Fitch Assigns 'B/RR4' Rating to $40MM Notes
ZOGENIX INC: TRO Issued on Ban of Zohydro Capsules
* No Jurisdiction Over Trustee as Pension-Plan Administrator
* March Bankruptcies Jump; Total for Year Still Down
* Bankrupt New Yorkers May Lose Rent-Stabilized Apartments
* Province & Solution Trust Merge to Expand National Footprint
*********
710 LONG RIDGE: NLRB Bid for Plan Clarification Denied
------------------------------------------------------
Bankruptcy Judge Donald H. Steckroth denied the request of The
National Labor Relations Board, which seeks clarification of the
Court's Opinion dated March 5, 2014 and Order dated March 6, 2014
confirming the First Amended Joint Plan of Reorganization of 710
Long Ridge Road Operating Company, II, LLC and its affiliated
debtors. Judge Steckroth said he has no jurisdiction over the
matter since the NLRB has taken an appeal from the Confirmation
Order to the New Jersey District Court.
"Once an appeal has been docketed, however, the Court does not
believe it can modify or clarify its Confirmation Order because
jurisdiction at that point lies in the appellate court," the Judge
said.
Both the NLRB and the New England Health Care Employees Union,
District 1199, S.E.I.U., have challenged the Plan's confirmation
and the approval of third-party releases and injunction in the
Plan.
The NLRB requests that the Confirmation Order be "clarified" to
indicate that nothing in the Plan or the Court's Confirmation
Order will operate to prevent the NLRB from continuing its
administrative case against Care One Realty, LLC, Care One LLC,
and Healthbridge Management, LLC, in order to find them to be a
single integrated enterprise and/or joint employer with the
Debtors, nor shall the Confirmation Order operate to prevent the
NLRB from obtaining prospective injunctive relief.
The Motion is opposed by the joint response of the Debtors and
Affiliates. They initially argue that the NLRB's appeal of the
Confirmation Order was a jurisdictionally significant event that
precludes the Bankruptcy Court's consideration of a request to
reconsider or modify the provisions that are the subject of the
NLRB's appeal, which is presently pending before the New Jersey
District Court.
A copy of Judge Steckroth's April 24 Opinion is available at
http://is.gd/9wSy1ffrom Leagle.com.
The National Labor Relations Board is represented by Abby Propis
Simms, Esq., Nancy E. Kessler Platt, Esq., Dawn L. Goldstein,
Esq., and Paul Thomas, Esq., in Washington, D.C.
Cole Schotz Meisel Forman & Leonard, P.A.'s Michael D. Sirota,
Esq., Gerald H. Gline, Esq., David M. Bass, Esq., and Ryan T.
Jareck, Esq., represent the Debtors.
Okin Hollander & DeLuca, L.L.P.'s Paul S. Hollander, Esq., and
Margreta M. Morgulas, Esq., represent Healthbridge Management,
LLC.
Gibbons, P.C.'s Michael Griffinger, Esq., argues for Care Realty,
LLC.
Critchley Kinum & Vazquez LLC's Michael Critchley, Esq., argues
for Care One LLC.
About 710 Long Ridge Road Operating Company II
710 Long Ridge Road Operating Company II, LLC and four affiliates
own sub-acute and long-term nursing care facilities for the
elderly in Connecticut. The facilities, which are managed by
HealthBridge Management LLC, are Long Ridge of Stamford, Newington
Health Care Center, Westport Health Care Center, West River Health
Care Center, and Danbury Health Care Center.
710 Long Ridge Road Operating Company II and its affiliates sought
Chapter 11 protection (Bankr. D.N.J. Case Nos. 13-13653 to 13-
13657) on Feb. 24, 2013, to modify their collective bargaining
agreements with the New England Health Care Employees Union,
District 1199, SEIU.
The Debtors owe $18.9 million to M&T Bank and $7.99 million on
loans from the U.S. Department of Housing and Urban Development
Federal Housing Administration.
Michael D. Sirota, Esq., Gerald Gline, Esq., David Bass, Esq., and
Ryan T. Jareck, Esq., serve as counsel to the Debtors. Logan &
Company, Inc. is the claims and notice agent. Alvarez & Marsal
Healthcare Industry Group, LLC, is the financial advisor.
Porzio, Bromberg & Newman, P.C.'s Robert M. Schechter, Esq., and
Rachel Segall, Esq., represents the Official Committee of
Unsecured Creditors. The Committee retained EisnerAmper LLP as
accountant.
Levy Ratner's Suzanne Hepner, Esq., and Ryan J. Barbur, Esq.,
represent the New England Health Care Workers, District 1199 SEIU.
Abby Propis Simms, Esq., Julie L. Kaufman, Esq., Nancy E. Kessler
Platt, Esq., Dawn L. Goldstein, Esq., Paul Thomas, Esq., and John
McGrath, Esq., at the National Labor Relations Board Special
Litigation Branch in Washington, D.C., argue for the National
Labor Relations Board.
On March 6, 2014, Judge Steckroth entered a findings of fact,
conclusions of law and order confirming 710 Long Ridge Road
Operating Company II, LLC, et al.'s First Amended Joint Chapter 11
Plan of Reorganization. In accordance with the Plan, the Debtors
have declared March 7, 2014, as the Effective Date of the Plan. A
full-text copy of Judge Steckroth's March 6 Order is available
for free at http://bankrupt.com/misc/710LONGRIDGEplanmemo0306.pdf
The Plan provides for the combination of concessions and a cash
infusion of approximately $67 million from affiliated entities,
and was accepted by the overwhelming majority of the Centers'
creditors. Under the Plan, the Centers' creditors are entitled to
a recovery of up to 75 percent on their claims and there will be
no disruption in operations or services.
The bankruptcy plan pertains only to the five unionized
Connecticut Centers and does not apply to the other health care
centers managed by HealthBridge Management, LLC. Each of the five
centers is a sub-acute and long-term nursing care facility for the
elderly in Connecticut. The facilities are: Long Ridge of
Stamford, Newington Health Care Center, Westport Health Care
Center, West River Health Care Center, and Danbury Health Care
Center.
AS SEEN ON TV: CEO and President Quits, Replacement Named
---------------------------------------------------------
Following the merger pursuant to which Infusion Brands, Inc.
("Infusion") became a wholly owned subsidiary of As seen On TV,
Inc., completed on April 2, 2014, Ronald C. Pruett, Jr., resigned
as president and chief executive officer of As Seen on TV, Inc.,
effective as of April 10, 2014. Mr. Pruett remains a salaried
employee of the Company.
On April 10, 2014, the board of directors of the Company made two
new executive officer appointments. First, the board appointed
Robert DeCecco, age 46, as chief executive officer of the Company.
Since 2010, Mr. DeCecco has served as president and chief
executive officer of Infusion Brands International, Inc.,
("INBI"),formerly the parent company of Infusion, a company that
produces and sells consumer products. Mr. DeCecco has also served
as chief financial officer of INBI since 2009. Mr. DeCecco still
holds his positions with INBI, although the Company has now
acquired all of the business and assets of Infusion. In addition,
INBI is now a controlling shareholder of the Company.
Second, the board appointed Allen Clary, age 43, as president of
the Company. Prior to his appointment, Mr. Clary has served as
chief operating officer of INBI since 2011, and maintains that
position. He also served in this capacity from July 2009 to May
2010, before pursuing and founding the personal productivity
website jibidee.com.
Each of Messrs. DeCecco and Clary is party to an employment
agreement with INBI, each of which was assigned to Infusion in
connection with the Company's acquisition of Infusion. The
agreements provide for base salaries in the amount of either
$260,000 (for Mr. DeCecco) or $185,000 (for Mr. Clary), but are
otherwise identical. Each agreement provides for ordinary
executive benefits and perquisites, and imposes standard non-
competition and non-solicitation covenants. The agreements
contain a provision which provides that for 360 days following any
change in control, the termination or resignation of the officer
will be treated as a termination without cause. As such, the
officer would be entitled to severance compensation equal to the
greater of (i) two years' compensation or (ii) the remaining
compensation left for the term of his agreement, and all unvested
stock, stock equivalents or stock options would immediately vest
in full, free of Company-imposed restrictions. In connection with
the Company's acquisition of Infusion, each of Messrs. DeCecco and
Clary has executed an amendment to their employment agreement to
set the expiration date of the employment agreements at June 15,
2018, and waive for 360 days any right to change in control
payments to which they might otherwise be entitled upon
resignation or termination for cause following that acquisition.
About As Seen on TV
Clearwater, Fla.-based As Seen On TV, Inc., is a direct response
marketing company. It identifies, develops, and markets consumer
products.
As reported by the TCR on Nov. 6, 2012, As Seen On TV entered into
an Agreement and Plan of Merger with eDiets Acquisition Company
("Merger Sub"), eDiets.com, Inc., and certain other individuals.
Pursuant to the Merger Agreement, Merger Sub will merge with and
into eDiets.com, and eDiets.com will continue as the surviving
corporation and a wholly-owned subsidiary of the Company. The
Merger Agreement was completed on April 2, 2014.
As Seen On TV disclosed net income of $3.69 million on $10.10
million of revenues for the year ended March 31, 2013, as compared
with a net loss of $8.07 million on $8.16 million of revenues
during the prior year.
EisnerAmper LLP, in Edison, New Jersey, issued a "going concern"
qualification on the consolidated financial statements for the
year ended March 31, 2013. The independent auditors noted that
the Company's recurring losses from operations and negative cash
flows from operations raise substantial doubt about its ability to
continue as a going concern.
The Company's balance sheet at Dec. 31, 2013, showed $6.51 million
in total assets, $4.22 million in total liabilities and $2.29
million in total shareholders' equity.
Bankruptcy Warning
"We have undertaken, and will continue to implement, various
measures to address our financial condition, including:
* Significantly curtailing costs and consolidating operations,
where feasible.
* Seeking debt, equity and other forms of financing, including
funding through strategic partnerships.
* Reducing operations to conserve cash.
* Deferring certain marketing activities.
* Investigating and pursuing transactions with third parties,
including strategic transactions and relationships.
There can be no assurance that we will be able to secure the
additional funding we need. If our efforts to do so are
unsuccessful, we will be required to further reduce or eliminate
our operations and/or seek relief through a filing under the U.S.
Bankruptcy Code. These factors, among others, raise substantial
doubt about our ability to continue as a going concern," the
Company said in the Quarterly report.
BAY CLUB PARTNERS: Gets Court Nod to Hire Maginnis as Accountant
----------------------------------------------------------------
Bay Club Partners-472, LLC sought and obtained permission from the
U.S. Bankruptcy Court for the District of Oregon to employ
Maginnis & Carey LLP as accountant.
The Debtor wants to employ Maginnis & Carey to assist with
accounting and tax issues in the Chapter 11 case, including the
preparation and filing of the Debtor's 2013 and 2014 tax returns.
The professional services Maginnis & Carey includes preparing and
reviewing the Debtor's 2013 and 2014 tax returns and assisting
with other tax and accounting issues that may arise in the case.
Maginnis & Carey will be paid at these hourly rates:
Mark Johnson $250
John Dindia $215
Melissa Stern $112
Maginnis & Carey will also be reimbursed for reasonable out-of-
pocket expenses incurred.
On Dec. 9, 2013, Maginnis & Carey received $3,450 from the Debtor.
On Jan. 27, 2014, Maginnis & Carey received $3,300 from the
Debtor.
Mark Johnson, partner of Maginnis & Carey, assured the Court that
the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtors and their estates.
Maginnis & Carey can be reached at:
Mark A. Johnson
MAGINNIS & CAREY LLP,
220 NW 2nd Avenue # 1000
Portland, OR 97209
Tel: (503) 227-0519
Fax: (503) 295-1019
E-mail: mjohnson@maginnis-carey.com
About Bay Club
Bay Club Partners-472, LLC, was formed to renovate and operate the
residential property at 2121 W. Main St., Mesa, Arizona, known as
Midtown on Main Street. The property has 470 rental units and
offers residents amenities including a fitness center, spa,
clubhouse, three swimming pools, a covered play area, assigned
parking, and 24-hour emergency maintenance services. As of the
bankruptcy filing, the Debtor has leased 91% of the apartments.
Bay Club filed a Chapter 11 bankruptcy petition (Bankr. D. Ore.
Case No. 14-30394) on Jan. 28, 2014. The Debtor disclosed
$28,247,787 in assets and $27,311,084 in liabilities as of the
Chapter 11 filing. The case has been assigned to Judge Randall L.
Dunn. Attorneys at Tonkon Torp LLP serve as counsel to the
Debtor.
The U.S. Trustee has not appointed a committee of unsecured
creditors.
CAESARS ENTERTAINMENT: OKs Issuance of 3MM Shares Under Plan
------------------------------------------------------------
The Board of Directors of Caesars Entertainment Corporation
adopted the Caesars Acquisition Company Equity-Based Compensation
Plan, which provides the Company's officers, employees,
consultants, advisors, contractors and other service providers,
including the Company's named executive officers, the opportunity
to receive equity-based compensation, settled in the form of
shares of Class A common stock, par value $0.001 per share, of the
Company's joint venture partner, Caesars Acquisition Company.
Awards under the CAC Plan will be dollar-denominated, but settled
in shares of CAC Common Stock. The CAC Plan authorizes the grant
of awards representing the right to receive a number of shares of
CAC Common Stock with a maximum aggregate value of $25,000,000.
Each grant vests in three equal installments, on October 21 of
each of 2014, 2015 and 2016, generally subject to a participant's
continued employment or service. The Human Resources Committee of
the Board will administer the CAC Plan.
When it approved the CAC Plan, the Board also adopted a form award
agreement for awards that may be granted under the CAC Plan,
though no such awards have yet been granted. At the same time,
the Board consented, as required under the Amended and Restated
Limited Liability Company Agreement of Caesars Growth Partners,
LLC, a Delaware limited liability company and joint venture
between the Company and Caesars Acquisition Company, to the
issuance by Caesars Acquisition Company of a number of shares of
CAC Common Stock having an aggregate value of $25,000,000. Under
the terms of the Growth Partners LLC Agreement, the issuance of
the CAC Common Stock under the CAC Plan will cause an immaterial
dilution of CEC's interest in GCP.
On April 13, 2014, the Board consented to the issuance by Caesars
Acquisition Company of 3,000,000 shares of CAC Common Stock
pursuant to Caesars Acquisition Company's 2014 Performance
Incentive Plan, as adopted by the Board of Directors of Caesars
Acquisition Company on April 9, 2014, subject to approval by its
stockholders. The PIP authorizes Caesars Acquisition Company to
grant officers, employees, directors, individual consultants and
advisors of Caesars Acquisition Company and its subsidiaries
equity-based compensation awards settled in or valued by reference
to shares of CAC Common Stock. The PIP does not provide for
equity-based compensation awards to employees of the Company or
its subsidiaries. CAC was required to seek the Board's consent
under the terms of the Growth Partners LLC Agreement, because the
issuance of the CAC Common Stock under the PIP will cause dilution
of CEC's interest in GCP.
A copy of the Caesars Acquisition Company Equity-Based
Compensation Plan is available at http://is.gd/8wkbe8
A copy of the Equity Compensation Grant Agreement under the
Caesars Acquisition Company Equity-Based Compensation Plan
is available for free at http://is.gd/WSd2K5
About Caesars Entertainment
Las Vegas-based Caesars Entertainment Corp., formerly Harrah's
Entertainment Inc. -- http://www.caesars.com/-- is one of the
world's largest casino companies. Harrah's announced its re-
branding to Caesar's in mid-November 2010.
Caesars Resorts Properties, LLC is a subsidiary of Caesars
Entertainment Corporation that owns 6 casinos properties and
Project Linq. Caesars Entertainment Operating Company is a
subsidiary of CEC and sister subsidiary to CERP.
As of Dec. 31, 2013, the Company had $24.68 billion in total
assets, $26.59 billion in total liabilities and a $1.90 billion
total deficit.
* * *
In April 2014, Standard & Poor's Ratings Services lowered its
corporate credit ratings on Caesars Entertainment Corp. (CEC) and
wholly owned subsidiaries, Caesars Entertainment Operating Co.
(CEOC) and Caesars Entertainment Resort Properties (CERP), as well
as the indirectly majority-owned Chester Downs and Marina, to
'CCC-' from 'CCC+'. The downgrade reflects S&P's expectation that
Caesars' capital structure is unsustainable, and the amount of
cash the company will burn in 2014 and 2015 creates conditions
under which S&P believes a restructuring of some form is
increasingly likely over the near term absent an unanticipated
significantly favorable change in operating performance.
S&P expects Caesars to use substantial cash to meet interest
expense, capital expenditures, and debt maturities over the next
year and forecast that the company will burn more than $1.2
billion in cash in 2014 to meet approximately $3 billion in fixed
charges. S&P do not expect that Caesars will have sufficient
liquidity in 2015 to meet its estimate of fixed charges, absent
additional asset sales or access to the capital markets. S&P
estimates fixed charges, including interest, capital expenditures,
and debt maturities, will approximate $3.5 billion in 2015.
In March 2014, Moody's downgraded CEOC's Corporate Family rating
to Caa3 and Probability of Default rating to PD-Caa3; and affirmed
CERP's B3 CFR and B3-PD, first lien term loan at B2, and second
lien notes at Caa2. The downgrade reflects Moody's concern that
the loss of EBITDA from the proposed sale of four casinos to
Caesars Growth Partners Holdings ("CGPH") will cause CEOC's
already high leverage to increase as well as reduce bondholders'
recovery prospects. Despite the approximate $1.8 billion of cash
that will be received by CEOC and may be used to repay a small
amount of debt and fund operating losses for a period of time, in
Moody's opinion, the proposed sale significantly heightens CEOC's
probability of default along with the probability that the company
will pursue a distressed exchange or a bankruptcy filing.
CGPH is a wholly owned indirect subsidiary of Caesars Growth
Partners, LLC ("CGP"). CGP is owned and controlled by Caesars
Acquisition Company which is owned by CEC and affiliates of
private equity firms Apollo and TGP.
BON-TON STORES: Incurs $3.5 Million Net Loss in Fiscal 2014
-----------------------------------------------------------
The Bon-Ton Stores, Inc., filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K disclosing
a net loss of $3.55 million on $2.77 billion of net sales for the
fiscal year ended Feb. 1, 2014, as compared with a net loss of
$21.55 million on $2.91 billion of net sales for the year ended
Feb. 2, 2013. The Company had a net loss of $12.12 million for
the year ended Jan. 28, 2012.
As of Feb. 1, 2014, the Company had $1.57 billion in total assets,
$1.44 billion in total liabilities and $127.95 million in total
shareholders' equity.
A copy of the Form 10-K is available for free at:
http://is.gd/4x5LvR
About Bon-Ton Stores
The Bon-Ton Stores, Inc., with corporate headquarters in York,
Pennsylvania and Milwaukee, Wisconsin, operates 273 department
stores, which includes 10 furniture galleries, in 25 states in the
Northeast, Midwest and upper Great Plains under the Bon-Ton,
Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman,
Herberger's and Younkers nameplates and, in the Detroit, Michigan
area, under the Parisian nameplate.
* * *
As reported by the TCR on May 15, 2013, Moody's Investors Service
upgraded The Bon-Ton Stores, Inc.'s Corporate Family Rating to B3
from Caa1 and its Probability of Default Rating to B3-PD from
Caa1-PD.
"The upgrade of Bon-Ton's Corporate Family Rating considers the
company's ability to drive modest same store sales growth as well
as operating margin expansion beginning in the second half of 2012
and that these positive trends have continued, with the company
reporting that its same store were positive, and EBITDA margins
expanded, in the first fiscal quarter of 2013," said Moody's Vice
President Scott Tuhy.
As reported by the TCR on May 17, 2013, Standard & Poor's Ratings
Services affirmed the 'B-' corporate credit rating on The Bon-Ton
Stores Inc.
BIOLIFE SOLUTIONS: Reports Preliminary Revenue of $2-Mil. in Q1
---------------------------------------------------------------
BioLife Solutions, Inc., reported preliminary revenue of $2
million for the first quarter of 2014. Proprietary product
revenue shipments were $1.13 million, representing 71 percent
growth over the same period in 2013.
Mike Rice, BioLife's chief executive officer, commented, "In the
first quarter we achieved significant growth in sales of our
proprietary HypoThermosol(R) and CryoStor(R) biopreservation media
products. In addition, we received confirmation of adoption of
our products in several new customer cell and tissue storage,
shipping, freezing, and clinical delivery processes, increasing
our share of the market for clinical grade biopreservation media
products."
Total revenue was roughly flat with Q1 2013, which benefited from
one-time and other license fees of $609,000.
The recently published visiongain Translational Regenerative
Medicine market research report forecasts that the regenerative
medicine market comprised of cell and gene therapies and tissue-
engineered products will grow to more than $23 billion by 2024.
BioLife expects to participate in this market growth by providing
biopreservation media and precision thermal packaging products
used to store, freeze, ship, and administer clinical cells and
tissues to patients. To date, BioLife's proprietary
biopreservation media products have been incorporated into over
100 hospital-approved and clinical trial stage regenerative
medicine products and therapies.
Rice continued, "As previously disclosed, during this quarter, we
also executed several strategic and financial transactions to
better position BioLife for growth. These included closing a
$15.4 million registered stock offering, eliminating all debt via
conversion to common shares at the offering terms, and
successfully uplisting from the OTCQX to the NASDAQ Capital
Market(R). We have started recruiting for additional sales
representatives and application scientists to more quickly
penetrate the high growth regenerative medicine market."
BioLife Solutions is sponsoring the 20th ISCT Annual Meeting,
April 23-26, 2014 in Paris, France, with presentations by Chief
Technology Officer Aby J. Mathew, Ph.D., and CEO Mike Rice.
COO Promotion
Joseph Annicchiarico has been promoted to chief operating officer
of the Company by the Board of Directors.
Mr. Annicchiarico, age 39, had most recently served as vice
president, Manufacturing since September 2012 and as director of
Manufacturing from December 2011 through August 2012. Prior to
joining the Company, Mr. Annicchiarico served in various roles at
Mediquest Therapeudics, Inc., from May 2005 through September
2011, including Scientist, Formulation Manager, and most recently,
as Director of Manufacturing and Clinical Supplies. From January
2004 through September 2005, Mr. Annicchiarico worked in specialty
chemical sales at Drummond American and prior to that, he spent
four years as a formulation development Chemist.
The Company intends to amend its existing employment agreement
with Mr. Annicchiarico, which agreement will be filed with the SEC
when available. Mr. Annicchiarico will receive an annual base
salary of $220,000. In connection with the promotion, Mr.
Annicchiarico was granted 35,000 options to purchase common shares
of the Company at an exercise price of $3.77 per share pursuant to
the Company's 2013 Stock Incentive Plan. 8,750 of the options
vest on April 14, 2015; thereafter, 729 options vest on the 14th
of each month for the next 35 months, with 735 options vesting on
April 14, 2018. The options will expire on April 14, 2024.
There is no arrangement or understanding between Mr. Annicchiarico
and any other persons pursuant to which he was selected as an
officer.
About BioLife Solutions
Bothell, Washington-based BioLife Solutions, Inc., develops and
markets patented hypothermic storage and cryo-preservation
solutions for cells, tissues, and organs, and provides contracted
research and development and consulting services related to
optimization of biopreservation processes and protocols.
BioLife Solutions incurred a net loss of $1.08 million in 2013,
a net loss of $1.65 million in 2012, and a net loss of $1.95
million in 2011. As of Sept. 30, 2013, the Company had $3.20
million in total assets, $16.06 million in total liabilities and a
$12.85 million total shareholders' deficiency.
CARRIZO OIL: S&P Revises Outlook to Positive & Affirms 'B' CCR
--------------------------------------------------------------
Standard & Poor's Ratings Services said it revised its rating
outlook to positive from stable on Houston-based Carrizo Oil & Gas
Inc. and affirmed its 'B' corporate credit rating and 'B-' debt
rating on the company. The recovery ratings on the company's
senior unsecured notes remain unchanged at '5', indicating S&P's
expectation for modest (10% to 30%) recovery in the event of a
payment default.
The positive outlook reflects the likelihood of an upgrade if
Carrizo successfully expands its reserves size and the percentage
of proved developed reserves to a level closer to its 'B+' rated
peers, while keeping debt to EBITDA below 3x and FFO to debt above
30% on average. By drilling its Eagle Ford acreage, Carrizo
successfully increased its oil production by almost 50% in 2013,
and S&P believes that the company's crude production is likely to
grow by 50% again in 2014, averaging 17,000 barrels per day. The
company used a combination of new equity and asset sales in the
past couple of years to fund its large capital spending program
and FFO to debt at year-end 2013 was healthy at 38%. S&P expects
leverage to remain stable, or even decrease, if Carrizo increases
oil production meaningfully again in 2015.
"We could revise the outlook to stable if Carrizo did not
meaningfully increase reserves and production or if the company
were to materially increase debt funding such that leverage
exceeded 3x on a sustained basis," said Standard & Poor's credit
analyst Christine Besset.
CB3 ACQUISITIONS: Ch.11 Case Moved to Connecticut Bankr. Court
--------------------------------------------------------------
Delaware Bankruptcy Judge Christopher S. Sontchi declined to rule
on a request to dismiss the Chapter 11 case of CB3 Acquisitions
LLC or, in the alternative, converting the case to Chapter 7,
opting instead to transfer the venue of the case to the U.S.
Bankruptcy Court for the District of Connecticut. All related
adversary proceedings are also transferred to the Connecticut
District Court.
Richard M. Coan, the Chapter 7 Trustee of First Connecticut
Consulting Group Inc., filed the motion to transfer the venue of
CB3's case.
The United States Trustee sought dismissal of CB3's case or, in
the alternative, conversion of the case to Chapter 7.
Motion to Transfer Venue
As reported by the Troubled Company Reporter on March 7, 2014,
Kevin J. Mangan, Esq., at Womble Carlyle Sandridge & Rice, LLP, in
Wilmington, Delaware, on behalf of Mr. Coan, the Chapter 7 trustee
of First Connecticut Consulting, said CB3's bankruptcy filing is a
blatant attempt at forum shopping and an effort to "game" the
judicial system. Mr. Mangan explained that the CB3 bankruptcy
case is inextricably intertwined with two bankruptcy cases in the
Connecticut Bankruptcy Court -- In re First Connecticut Consulting
Group, Inc., Bankruptcy Case No. 02-50852, and In re James J.
Licata, Bankruptcy Case No. 02-51167. The Trustee for James J.
Licata case is Ronald Chorches.
Mr. Mangan pointed out that CB3's sole assets and claims are
claims to assets owned by the Connecticut bankruptcy estates. Mr.
Mangan added that there is a pending trial in the Superior Court
of New Jersy in the Mocco, et al., v. Licata, et al., Case No.
ESX-C-397-99, and a motion to compromise, which is tentatively
scheduled for March 11, 2014. The New Jersey litigation is an
ownership dispute that has been pending for 15 years.
As reported by the TCR, Bruce J. Duke, Esq., in Mount Laurel, New
Jersey, on behalf of CB3, asked the Delaware Bankruptcy Court to
deny the Chapter 7 Trustee's Motion to Transfer Venue, arguing
that the judge presiding over the state court litigation has
advised that the trial in the Mocco case will not be moving
forward on the March 11 date, and that the motion to compromise
before the Connecticut Bankruptcy Court violates the automatic
stay as to CB3, and it too will have to be adjourned as well.
In a supplemental objection dated March 28, the Debtor insisted it
has properly filed the case in the District of Delaware. The
Debtor explained it has chosen the Delaware District as the proper
and appropriate forum for it to proceed with its reorganization.
Venue lies properly in the Delaware District, therefore the burden
to transfer venue lies on the Chapter 7 Trustee to establish that
the interests of justice and convenience of the parties call for a
venue change. The Debtor believes that this case remaining in
Delaware is in the best interests and convenience of the parties.
The Debtor intends to move quickly and expeditiously to not only
consummate this transaction, but to resolve this underlying
chapter 11 bankruptcy case.
The Chapter 7 Trustee filed a reply, insisting that judicial
economy requires that the case be transferred to Connecticut, and
that Judge Alan H.W. Shiff, the presiding judge in the Connecticut
bankruptcy cases of First Connecticut and James Licata, has first
hand knowledge of the many events involving the cases. The
Chapter 7 Trustee said, "There is no reason why [the Delaware]
Court should make any effort to learn the factual background of
the twelve-year old Connecticut bankruptcy cases. The Connecticut
Bankruptcy Court not only knows all of these facts, it has first-
hand knowledge of many of them." The Chapter 7 Trustee also
pointed out that the convenience of the parties require a transfer
of venue.
Bid to Dismiss or Convert
Roberta A. DeAngelis, U.S. Trustee for Region 3, filed papers on
March 28 asking the Delaware Court to dismiss the Chapter 11 case
or, alternatively, convert the case to Chapter 7. "Although the
Debtor's case has been pending for a month, the only documents it
has filed in the case are a bare petition and an unverified
creditor matrix. The Debtor has failed to meet numerous filing
and other obligations under the Bankruptcy Code, the Bankruptcy
Rules, the Local Rules of this Court, and the Guidelines of the
U.S. Trustee. The Debtor has failed to file the list of its top
20 unsecured creditors, a statement of its equity holders, or the
corporate resolution authorizing the bankruptcy filing, all of
which were due with its petition. The Debtor has also failed to
file documents that subsequently became due, such as its Schedules
and Statement of Financial Affairs."
The U.S. Trustee also noted that no official committee has yet
been appointed in the case. The Office of the U.S. Trustee has
been unable to solicit unsecured creditors in the case to
determine interest in forming an unsecured creditors committee,
because the Debtor has not filed its list of its 20 largest
unsecured creditors, as required by Bankruptcy Rule 1007(d).
First Connecticut Deal,
Road to Bankruptcy
The Trustees for the First Connecticut and Licata cases entered
into an Option and Purchase Agreement dated July 2, 2013, with CB3
pursuant to which the Trustees agreed to sell all of the assets of
both estates to CB3 for $12.6 million. The Debtor deposited an
initial non-refundable deposit of $75,000.
On July 30, 2013, following the requisite publication of the
Trustees' motion to approve this sale and the notice of sale, a
hearing was held before the Connecticut Bankruptcy Court. After
the submission of a competing bid, the Debtor made the highest bid
of $12.6 million.
On Aug. 6, 2013, the Connecticut Bankruptcy Court entered an order
approving the Option and Purchase Agreement, which authorized the
Trustees to sell the assets to the Debtor. Thereafter, the
Trustees and the Debtor executed the sale agreement and the Debtor
made the non-refundable deposit of $75,000. The order approving
the sale of assets to the Debtor eventually became a final binding
order.
Following approval of the sale, more discussions occurred between
the Trustees and the Debtor regarding the proposed closing of the
acquisition of the assets and the status of the Debtor's funding
for the acquisition of the assets. The Trustees were informed and
understood that the only conditions of the agreement to provide
the Debtor with the funding for the sale was the review and
approval of the proposed sale order, the list of assets to be sold
and the closing documents by counsel for the funding group.
The Trustees and the Debtor also agreed that the closing would
take place conditioned on two events taking place:
1. 30 days prior to the commencement of the trial of the New
Jersey State Court Litigation, Mocco, et al. v. Licata et al.,2
(Case No. ESX-C-397-99), in which the Trustees, representing the
interests of said estates, and the Mocco parties are the principal
contestants in that civil litigation; and
2. upon a final binding resolution of the claims to certain
assets that the Trustees proposed to sell to the Debtor made by
another party, SWJ Management, LLC, which establishes that the
claims of SWJ Management, LLC have been denied and that the
Trustees are entitled to sell the assets to the Debtor as agreed
and approved by the Connecticut Bankruptcy Court.
The Superior Court in New Jersey has postponed trial in the New
Jersey State Court Litigation, most recently to an unspecified
date in the in the summer of 2014. In addition, ownership claims
to certain of the assets made by SWJ Management in the fall of
2013 have had to be resolved before the Trustees could sell the
assets. The claims of SWJ Management were addressed before Judge
Shiff in the Connecticut Bankruptcy Court at a hearing held on
March 11, 2014.
While Judge Shiff reviewed SWJ Management's claims in detail and
ruled that SWJ Management had no legal or enforceable claims
against any of the assets, that ruling is subject to the right of
an appeal and is not a final binding court order that is required
before the Trustees are entitled to sell the assets free of those
claims.
During the hearing in the Connecticut Bankruptcy Court held on
Feb. 26, 2014, Judge Shiff directed the Trustees to prepare the
list of assets to be sold to the Debtor and the proposed 363 sale
order approving the sale so that CB3 and its funding group would
know what CB3 was acquiring. The final documents were not prepared
and submitted to the Court until March 10, 2014, 11 days after the
Trustees expected to receive an additional deposit of $100,000.
The closing date for the acquisition of the assets was necessarily
postponed as a result of (i) the trial in the New Jersey State
Court Litigation being indefinitely postponed; (ii) there is not a
final binding court order dismissing the claims of SWJ Management,
LLC to some of the assets; and (iii) the final proposed list of
assets and 363 sale order were not prepared and submitted until
March 10, 2014.
The majority of the assets, which are the subject of the Option
and Purchase Agreement, were acquired by the Licata estates
pursuant to a final binding order issued by the District of New
Jersey Bankruptcy Court in Peter Mocco's Chapter 11 bankruptcy
case. That occurred in September 1996 when Bankruptcy Judge Gindin
confirmed the Peter Mocco's Chapter 11 Plan of reorganization
approving the transfer of real estate assets and mortgage
obligations to Licata's designated companies.
Title to the assets and mortgages were transferred to Licata's
companies under the confirmed plan of reorganization, which the
Mocco parties and the principal creditors agreed to, in exchange
for substantial capital provided by Licata to prevent Mocco's
conversion to Chapter 7 and obtain the approval of the Plan.
After confirmation of the Mocco plan of reorganization, Mocco and
James Licata entered into a joint venture which dealt with
substantial assets that are part of the assets described in the
Option and Purchase agreement.
In 2005, the Federal Bankruptcy Court in Connecticut approved a
section 363 sale of the assets free and clear of all liens, claims
and encumbrances. The Purchaser, SWJ Management, defaulted on its
agreement to pay the Licata estates the balance of the purchase
price, which was $11,200,000. The Trustees then foreclosed on the
assets and reacquired the assets. The Trustees now hold those
assets under the terms and conditions of the 363 sale order which
approved that sale.
The Connecticut Bankruptcy Court scheduled a hearing on Feb. 26,
2014 to consider the proposed "Compromise of Claims" between the
Trustees and the Mocco parties and objections thereto.
The funding source of the asset purchase by the Debtor, ICDS
Global, LLC, had previously assured the Trustees that they had
deposited $12.6 million in an account with a major financial
institution for the benefit of CB3 to be used for the acquisition
of the assets. The Trustees were aware that the only conditions
to funding the acquisition was that they and their counsel wanted
to review and approve the proposed list of assets, the proposed
363 sale order and all closing documents.
During the hearing on Feb. 26, 2014, the attorney for Trustee Coan
read an email from ICDS Global, LLC to the Trustee's attorney in
which it was reaffirmed that ICDS Global LLC had arranged and set
aside $12.6 million to fund the Debtor's acquisition of the
assets. In response to the email, and without the submission of
the asset list or the terms of the proposed 363 sale order, the
Connecticut Bankruptcy Court directed the Debtor to advance an
additional 100,000 by the end of that afternoon and another
$400,000 by the following Monday, March 3.
As the documentation for the proposed section 363 sale had not
been prepared or submitted to the funding group, the Court
required the Trustees to prepare the documentation and required
the Debtor to advance the initial $100,000 by the following day.
The Debtor said it would use its best efforts and would forward
the documentation to its funding source and its counsel as soon as
the documents were prepared. The following day, Feb. 27, 2014,
the Trustees prepared a list of assets which did not conform to
what had been agreed to in the Option and Purchase agreement. The
Trustees were advised of the issues by the Debtor and its attorney
and did not correct or revise the documents.
When advised that the Debtor's funding source wanted to have its
counsel review final complete documents in order to comply with
the Court's request to advance additional funds, the Trustees
informed the Debtor's Connecticut counsel that if the funds were
not received by 11:59 p.m. that evening that the Debtor's rights
to acquire the assets would terminate and that the Trustees would
proceed to complete the settlement of all interest in the assets
of the estates by accepting settlement with Mocco that would
provide the estates with $175,000 in cash and another $325,000 on
some contingent basis, with three final installments of totaling
an additional $1,000,000.
For a total of $1.5 million, the Trustees proposed to effectively
divest both estates of any further interest in the assets of the
estates, which of course the Trustees were prepared to sell to the
Debtor for $12.6 million.
Given this ultimatum by the Trustees and without being able to
provide its funding source with the documentation for its review
and approval, the Debtor filed for Chapter 11 to protect its very
valuable contract right to purchase the assets from the Trustees.
According to the Debtor, the Trustees have engaged in a series of
actions that conflict with their obligations to protect the assets
of the estates and to make every reasonable effort to maximize the
value of the assets for the benefit of the remaining creditors of
these. The Debtor noted that the potential of the proposed 363
sale of the assets to the Debtor, which the Trustees have
previously agreed upon, is of enormous value to those estates.
Yet, the Trustees have recently to forego the deal with the Debtor
to pursue an agreement with the Mocco parties that is 1/10th of
the value of the Debtor's proposal. Although the Trustees have
not appraised any of the assets, they propose to enter into a
settlement which if approved will divest the Licata estates of
their substantial interests in the assets and effectively attempt
to render the Option and Purchase Agreement with the Debtor null
and void without the benefit of the Debtor adequately and
appropriately pursuing this transaction.
The Debtor noted that it has no business dealings with James
Licata, Richard Annunziata, SWJ Holdings LLC and SWJ Management
LLC, both of which are in Chapter 11 bankruptcy. The Debtor said
it is the Trustees who recommended that the Debtor interact with
James Licata for the purpose of due diligence for the sale, and
evaluating the assets and claims.
Delaware Judge Sontchi also has granted Mr. Coan's motions to
transfer the venue of the SWJ entities' cases to Connecticut
bankruptcy court; and continued the U.S. Trustee's motion to
dismiss the SWJ case and denied her motion to dismiss the Holdings
case.
Richard M. Coan, the Chapter 7 trustee of First Connecticut
Consulting, is represented by:
Kevin J. Mangan, Esq.
WOMBLE CARLYLE SANDRIDGE & RICE, LLP
222 Delaware Avenue, Suite 1501
Wilmington, DE 19801
Tel: 302-252-4361
Fax: 302-661-7729
- and -
Timothy D. Miltenberger, Esq.
COAN, LEWENDON, GULLIVER & MILTENBERGER, LLC
495 Orange Street
New Haven, CT 06511
Tel: 203-624-4756
Fax: 203-865-3673
E-mail: tmiltenberger@coanlewendon.com
The U.S. Trustee is represented by:
Roberta A. DeAngelis
UNITED STATES TRUSTEE
Juliet Sarkessian, Esq.
Timothy J. Fox, Jr., Esq.
Trial Attorneys
Office of the United States Trustee
J. Caleb Boggs Federal Building
844 King Street, Suite 2207
Wilmington, DE 19801
Tel: (302) 573-6491
Fax: (302) 573-6497
E-mail: Juliet.M.Sarkessian@usdoj.gov
Timothy.Fox@usdoj.gov
About CB3 Acquisition
CB3 Acquisition, LLC, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.Del. Case No. 14-10416) on Feb. 27,
2014). The Debtor has estimated assets ranging from $10 million
to $50 million and estimated debts ranging from $1 million to $10
million. The petition was signed by Michael Staisil, member.
The case was initially assigned to Bankruptcy Judge Peter J.
Walsh, but was transferred to Judge Christopher S. Sontchi on
March 10, 2014.
The Debtor was initially represented by:
Bruce Duke, Esq.
BRUCE J. DUKE, LLC
4201 Grenwich Lane
Mount Laurel, NJ 08054
On March 31, Bruce Duke stepped down and was substituted by:
David M. Klauder, Esq.
Shannon J. Dougherty, Esq.
O'KELLY ERNST & BIELLI, LLC
901 N. Market Street, Suite 1000
Wilmington, DE 19801
Tel: (302) 778-4000
Fax: (302) 295-2873
E-mail: dklauder@oeblegal.com
sdougherty@oeblegal.com
CB3 ACQUISITION: Sec. 341 Creditors' Meeting Set for May 6
----------------------------------------------------------
A meeting of creditors pursuant to 11 U.S.C. Sec. 341(a) has been
scheduled in the Chapter 11 case of CB3 Acquisition LLC for May 6,
2014, at 3:00 p.m. at Office of the UST.
This new schedule was installed following the order transferring
the Debtor's case to the District of Connecticut bankruptcy court.
The case was originally filed in Wilmington, Delaware bankruptcy
court.
During the Delaware phase of the case, the Sec. 341 creditors
meeting was set for April 7 at 2:00 p.m. The order moving the
venue of the case was enterd on April 4.
Proofs of claim are due by Aug. 4, 2014, according to a notice
posted on the Connecticut court's case docket.
About CB3 Acquisition
CB3 Acquisition, LLC, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.Del. Case No. 14-10416) on Feb. 27,
2014). The Debtor has estimated assets ranging from $10 million
to $50 million and estimated debts ranging from $1 million to $10
million. The petition was signed by Michael Staisil, member.
The case was initially assigned to Bankruptcy Judge Peter J.
Walsh, but was transferred to Judge Christopher S. Sontchi on
March 10, 2014.
The Debtor was initially represented by Bruce Duke, Esq., in Mount
Laurel, NJ. He was later replaced by David M. Klauder, Esq., and
Shannon J. Dougherty, Esq., at O'Kelly Ernst & Bielli, LLC.
CCU ESCROW: Moody's Rates Proposed $400MM Senior Notes 'Ca'
-----------------------------------------------------------
Moody's Investors Service assigned a Ca rating to the proposed
notes of CCU Escrow Corporation, a newly formed entity that was
created solely to issue the notes. The proceeds of the notes are
expected to be used to redeem Clear Channel Communications, Inc.'s
(Clear Channel) 2014 senior notes. Clear Channel's existing Caa2
corporate family rating (CFR), debt ratings and stable ratings
outlook remain unchanged.
The $400 million senior notes due January 2018 will initially be
issued by CCU Escrow Corporation (Escrow Issuer), which is created
solely to issue the notes. Proceeds of the notes will be deposited
into a segregated escrow account and used along with cash on hand
from Clear Channel to redeem $408.6 million of Clear Channel's
5.5% senior notes due 2014 in addition to accrued interest and
fees and expenses related to the transaction. Upon the
consummation of the redemption of the 2014 legacy notes, the
Escrow Issuer will merge with and into Clear Channel, with Clear
Channel continuing as the surviving corporation. Clear Channel
will assume all of the Escrow Issuer obligations under the notes
and the notes will be senior unsecured obligations of Clear
Channel. Unlike the legacy notes which have an equal and ratable
clause and could under certain conditions become secured in the
future, the new Escrow Issuer notes will not have an equal and
ratable clause. The Ca rating reflects their subordinate position
to a substantial amount of secured and guaranteed debt and will
likely suffer a material loss in the event of default. If the
proceeds from the notes are not released from escrow on or prior
to the date that is 60 days from the date of issue, the Escrow
Issuer will redeem all of the notes at 100% of principal and pay
accrued interest.
The redemption of the 2014 legacy notes will push out a portion of
the company's debt maturities and provide Clear Channel with a
longer time period to improve EBITDA and free cash flow
generation. However, as in past maturity extensions, the interest
rate will be materially higher than the existing legacy notes and
will lead to approximately $20 million in higher interest rate
expense depending on the final coupon rate.
CCU Escrow Corporation senior notes due January 2018, assigned
a Ca (LGD5-76%)
Outlook, Stable
Clear Channel Communications, Inc
Corporate Family Rating, unchanged at Caa2
Probability of Default Rating, unchanged at Caa3-PD
Outlook, unchanged at Stable
Ratings Rationale
Clear Channel's Caa2 corporate family rating (CFR) reflects the
very high leverage levels of 12.2x on a consolidated basis as of
Q1 2014 (excluding Moody's standard lease adjustments), weak free
cash flow, and interest coverage of 1.1x which will be further
pressured by higher interest rates from refinancing or extensions
of its debt maturities. While the extensions and exchanges
completed by the company of a substantial amount of debt in 2013
is positive, the increase in interest rates will leave the company
vulnerable to a slowdown in the economy given the heightened
sensitivity that its radio and outdoor businesses have to consumer
ad spending. The combination of higher interest rates and lower
EBITDA in the event of a future economic downturn could materially
impair its interest coverage and liquidity position. In addition,
there are secular pressures on its terrestrial radio business that
could weigh on results as competition for advertising dollars and
listeners are expected to increase going forward. Also
incorporated in the rating, is the expectation that leverage will
remain high over the rating horizon compared to the underlying
asset value of the firm.
In 2013, CCU issued $8.7 billion of debt to extend the 2014 and
2016 debt maturities and reduced its 2016 debt maturity wall from
$10.1 billion to $2.4 billion. Relatively minimal amounts of near
term debt maturities and the substantial progress made increase
dramatically the probability that the company will be able to
extend or refinance the remaining amount of 2016 debt. Despite the
company's highly leveraged balance sheet, Clear Channel possesses
significant share, geographic diversity and leading market
positions in most of the 150 markets in which the company
operates. The credit also benefits from its 88% ownership stake in
Clear Channel Outdoor (CCO) which is one of the largest outdoor
media companies in the world, although it is not a guarantor to
Clear Channel's debt. Its outdoor assets generate attractive
EBITDA margins, good free cash flow, and could benefit from
digital billboards that offer higher revenue and EBITDA margins
than static billboards. The company has devoted considerable
resources to growing national ad sales in radio and outdoor, so
recent weakness experienced in its Americas Outdoor business due
to lower national sales is a negative and it will be important for
the company to quickly improve results in this business. Moody's
expects that leverage will remain high over the next several years
and the company will remain poorly positioned to withstand another
economic downturn in the future.
The SGL-3 liquidity rating reflects the company's adequate
liquidity profile. Clear Channel benefits from its $661 million
cash balance as of Q1 2014 (which includes $270 million held at
CCO) and the absence of any material near-term debt maturities.
While Moody's expect free cash flow to be negative in 2014, the
company could reduce its capex if necessary and has additional
liquidity options if needed. While the company put in place a $75
million revolver at CCO that freed up additional cash, it could
issue additional debt at that entity. Through its unrestricted
subsidiaries, the company continues to own approximately $200
million of 2021 senior notes that could be sold to raise liquidity
if needed ($227 million were sold in Q1 2014 to boost liquidity).
Given the size and diverse range of assets as well as the
flexibility of its debt agreements, there are a wide range of
other levers the company can exercise to generate added liquidity.
Other options include selling shares of CCO, or other radio and
outdoor assets ($221 million was generated in Q1 2014 from the
sale of a 50% ownership position in Australian radio assets).
While a sale of domestic radio assets would likely increase
leverage given the multiples that radio assets trade for, it would
still be a source of liquidity if conditions warranted. The
company is working to improve the working capital efficiency of
the firm that could also help its liquidity. Clear Channel
benefits from its Corporate Services Agreement with CCO that
allows for free cash flow generated at CCO to be up streamed to
Clear Channel. There is a revolving promissory note due from Clear
Channel to CCO of $908 million as of Q1 2014, but a settlement
with some shareholders required a $200 million repayment of the
loan in 2013. CCU received 88% of the proceeds through its
holdings in CCO. While still a source of liquidity for CCU, the
settlement reduces the attractiveness of the revolving promissory
note and increases the odds that balances over $1 billion could
lead to an additional repayment with 12% of the repayment being
paid out to CCO's public shareholders.
Clear Channel's $535 million ABL revolver matures in December
2017, but the maturity date will change to October 31, 2015 if
greater than $500 million of the term loan facilities are
outstanding one day prior to that date. There is no balance
outstanding on the facility as of Q1 2014 after a $247 million
repayment was made. Clear Channel has a substantial cushion under
its secured leverage covenant of 9x as of Q1 2014 (which excludes
the senior notes at Clear Channel Worldwide Holdings, Inc (CCW)).
The covenant level steps down to 8.75x at the end of December 2014
and the current secured leverage metric defined by the terms of
the credit agreement, is calculated net of cash, at 6.3x as of Q1
2014. This represents a cushion of 39% compared to the senior
secured leverage covenant even after the covenant steps down to
8.75x at the end of 2014. The company has the ability to buy back
its term loans through a Dutch auction and repurchase up to $200
million of junior debt which matures before January 2016. A
unrestricted subsidiary bought back $61.9 million of 2014 and 2015
junior debt in Q1 2014 that would reduce the amount of the $200
million basket available.
The stable outlook reflects Moody's expectation for modest revenue
and EBITDA growth in the low single digits in 2014 which will
allow Clear Channel to delever modestly below 12x (excluding
Moody's standard lease adjustments) by the end of 2014. The near
term maturity schedule is manageable despite weak free cash flow
given the liquidity options available to a firm of this size so
Moody's don't foresee any near term issues for the company barring
a material decline in the economy or a dramatic secular change in
the radio industry.
A sustained improvement in revenue, EBITDA, and free cash flow
that led to a reduction in leverage to well under 10x with
improved enterprise values could lead to an upgrade. Additional
progress extending the 2016 debt maturities would also be needed
so that the company was well positioned to address its debt
maturity profile.
The rating could be lowered if EBITDA were to materially decline
due to economic weakness or if secular pressures in the radio
industry escalate so that leverage increases back above 13x.
Ratings would also be lowered if a default or debt restructuring
is imminent due to inability to extend or refinance material
amounts of the company's debt. A deterioration in its liquidity
position could also lead to negative rating pressure.
Clear Channel Communications, Inc. with its headquarters in San
Antonio, Texas, is a global media and entertainment company
specializing in mobile and on-demand entertainment and information
services for local communities and for advertisers. The company's
businesses include digital music, radio broadcasting and outdoor
displays (via the company's 88% ownership of Clear Channel Outdoor
Holdings Inc. ("CCO")). Clear Channel's consolidated revenue for
the LTM period ending Q1 2014 was approximately $6.2 billion.
CAESARS ENTERTAINMENT: Unit Reports $638 Million Loss in 2013
-------------------------------------------------------------
Caesars Entertainment Resort Properties, a subsidiary of Caesars
Entertainment Corporation, filed with the U.S. Securities and
Exchange Commission its annual report for the year ended Dec. 31,
2013. The Company reported a net loss of $638.2 million on $1.97
billion of net revenues in 2013 as compared with net income of
$43.4 million on $2 billion of net revenues in 2012.
As of Dec. 31, 2013, the Company had $7.37 billion in total
assets, $6.21 billion in total liabilities and $1.15 billion in
total stockholders' equity.
A copy of the Form 10-K is available for free at:
http://is.gd/gLyQZe
About Caesars Entertainment
Las Vegas-based Caesars Entertainment Corp., formerly Harrah's
Entertainment Inc. -- http://www.caesars.com/-- is one of the
world's largest casino companies. Harrah's announced its re-
branding to Caesar's in mid-November 2010.
Caesars Resorts Properties, LLC is a subsidiary of Caesars
Entertainment Corporation that owns 6 casinos properties and
Project Linq. Caesars Entertainment Operating Company is a
subsidiary of CEC and sister subsidiary to CERP.
As of Dec. 31, 2013, the Company had $24.68 billion in total
assets, $26.59 billion in total liabilities and a $1.90 billion
total deficit.
* * *
In April 2014, Standard & Poor's Ratings Services lowered its
corporate credit ratings on Caesars Entertainment Corp. (CEC) and
wholly owned subsidiaries, Caesars Entertainment Operating Co.
(CEOC) and Caesars Entertainment Resort Properties (CERP), as well
as the indirectly majority-owned Chester Downs and Marina, to
'CCC-' from 'CCC+'. The downgrade reflects S&P's expectation that
Caesars' capital structure is unsustainable, and the amount of
cash the company will burn in 2014 and 2015 creates conditions
under which S&P believes a restructuring of some form is
increasingly likely over the near term absent an unanticipated
significantly favorable change in operating performance.
S&P expects Caesars to use substantial cash to meet interest
expense, capital expenditures, and debt maturities over the next
year and forecast that the company will burn more than $1.2
billion in cash in 2014 to meet approximately $3 billion in fixed
charges. S&P do not expect that Caesars will have sufficient
liquidity in 2015 to meet its estimate of fixed charges, absent
additional asset sales or access to the capital markets. S&P
estimates fixed charges, including interest, capital expenditures,
and debt maturities, will approximate $3.5 billion in 2015.
In March 2014, Moody's downgraded CEOC's Corporate Family rating
to Caa3 and Probability of Default rating to PD-Caa3; and affirmed
CERP's B3 CFR and B3-PD, first lien term loan at B2, and second
lien notes at Caa2. The downgrade reflects Moody's concern that
the loss of EBITDA from the proposed sale of four casinos to
Caesars Growth Partners Holdings ("CGPH") will cause CEOC's
already high leverage to increase as well as reduce bondholders'
recovery prospects. Despite the approximate $1.8 billion of cash
that will be received by CEOC and may be used to repay a small
amount of debt and fund operating losses for a period of time, in
Moody's opinion, the proposed sale significantly heightens CEOC's
probability of default along with the probability that the company
will pursue a distressed exchange or a bankruptcy filing.
CGPH is a wholly owned indirect subsidiary of Caesars Growth
Partners, LLC ("CGP"). CGP is owned and controlled by Caesars
Acquisition Company which is owned by CEC and affiliates of
private equity firms Apollo and TGP.
CENTURY COMMUNITIES: Moody's Assigns B3 Corporate Family Rating
---------------------------------------------------------------
Moody's assigned first-time B3 corporate family and B3-PD
probability of default ratings to Century Communities, Inc, as
well as a B3 rating on the company's proposed senior unsecured
notes. Proceeds of this proposed transaction will primarily be
used to repay borrowings under the revolving credit facility and
to replenish cash, which were used to finance the recent
acquisition of Dunhill Homes Las Vegas Operations, a private
builder and land developer in Las Vegas. The balance will be used
for fees and added to working capital. The rating outlook is
stable.
The following ratings were assigned:
B3 Corporate Family Rating
B3-PD Probability of Default Rating
$200 million proposed senior unsecured notes rated B3 (LGD4,
50%)
Rating Rationale
The B3 corporate family rating reflects Century's very small size
and scale and limited geographical diversity. In addition, Moody's
anticipate that Century will be free cash flow negative in 2014,
owing to its land investments, and the company's expansion goals
will likely keep free cash flow negative in later years as well.
Counterbalancing these risk factors, Century has a moderate debt
leverage profile out of the box (with a pro forma adjusted
debt/capitalization ratio of 43.3%), generates solid financial
metrics, made it through the downturn intact, and is located in
two healthy homebuilding markets and has just recently entered a
third one (Las Vegas).
The B3 rating assigned to the proposed senior unsecured notes is
in line with the corporate family rating due to the predominance
of the notes in the capital structure. The notes will be pari
passu with the company's senior unsecured revolver (unrated) and
will be guaranteed by the company's principal operating
subsidiaries.
Moody's regards Century's liquidity as adequate, reflecting the
company's pro forma cash balance at December 31, 2013 of
approximately $140 million, its approximately $96 million of pro
forma availability under its proposed senior unsecured revolver
due 2017 (net of approximately $4 million of outstanding letters
of credit), and its lack of significant debt maturities until
[2021/2022]. At the same time, however, Moody's expectation of
Century's negative free cash flow generation in 2014 and beyond,
the limited alternate liquidity resources that Century possesses
(e.g., receivables that could be monetized), and the necessity for
it to comply with financial maintenance covenants in its revolver
constrain its liquidity position.
The stable rating outlook is based on Moody's expectations of the
company's continued strong financial performance, acceptable debt
leverage, and adequate liquidity.
Since Century is strongly placed within its B3 rating category, an
upgrade might be considered in the future if the company were to
grow its size and scale considerably while maintaining prudent
debt leverage and reasonable liquidity.
A downgrade could occur if the company burns through its liquidity
options, raises debt leverage beyond 60%, generates EBIT interest
coverage below 1.5x, and/or suffers a decrease in gross margins
below 18%.
Century Communities, Inc., founded in 2002 and headquartered in
Greenwood Village, CO, engages in all aspects of homebuilding,
including land acquisition and development, entitlements,
construction, marketing and sales currently within major
metropolitan markets in Colorado and Central Texas, and now in Las
Vegas as well. The company designs single-family attached and
detached homes targeting entry-level, first/second-time move-up
and move-down buyers. Century completed a 144a equity offering in
2013 after which the founding family maintained a one-third
ownership stake in the company, with the remaining two-thirds
controlled by numerous institutional investors. In 2013, the
company generated approximately $171 million in total revenues and
$12.4 million net income.
CENTURY COMMUNITIES: S&P Assigns 'B' Corp. Credit Rating
--------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Century Communities Inc. The outlook is stable.
At the same time, S&P assigned a 'B' issue-level rating and a '3'
recovery rating to the company's proposed $200 million senior
unsecured notes. The '3' recovery rating indicates prospects for
a meaningful (50% to 70%) recovery for senior unsecured
noteholders in the event of a payment default. The company will
use proceeds from the proposed offering to repay credit facility
borrowings, which were used to fund the $165 million acquisition
of land in Las Vegas. The remaining funds, net of transaction
costs, will be used for general corporate purposes, including
future land acquisition, development, and home construction costs.
"Our ratings on Century Communities reflect our assessment of the
company's 'vulnerable' business risk profile based on the
company's small size and geographic concentration relative to
other rated homebuilders," said Standard & Poor's credit analyst
Jaime Gitler. Century is the smallest homebuilder S&P rates and
operations are limited to the Colorado, Texas, and Las Vegas
markets. S&P expects that the company will grow dramatically in
2014, partly as a result of an acquisition in Las Vegas, yet it
will still remain much smaller than rated peers. S&P also takes
into consideration Century's historical track record of remaining
profitable during the recent housing downturn of 2008-2009, but
pro forma for the acquisition the company will be substantially
larger and in different markets then it was during the downturn.
We view the company's financial risk profile as "aggressive".
Although Century reported minimal debt as of Dec. 31, 2013, S&P
forecasts debt leverage to increase to about 5.0x by the end of
2014, and debt to capital to increase to 44% taking into account
the proposed issuance of debt. S&P also consider the company's
low EBITDA base relative to peers which makes leverage and credit
metrics susceptible to quick transitions depending on either
potential debt issuance or volatile near-term quarterly
performance.
Denver-based Century Communities Inc. is a builder of single-
family detached, townhome and condominium attached homes.
Century's product diversity includes first-time, first move-up,
second move-up, and move-down homes. For the year ended 2013 the
company delivered 448 homes, ranking among the top 100
homebuilders nationally. The company sold common shares in an IPO
in May of 2013, raising $241 million of 144A equity. The current
ownership group includes the founding brothers, who own 33% of the
company as of Dec. 31, 2013.
The stable outlook reflects S&P's view that Century will grow
significantly in 2014. S&P believes that the company will be able
to manage to a significantly larger platform in new markets. S&P
expects revenues and EBITDA to increase substantially in 2014 as
recent acquisitions in Las Vegas and Austin, paired with growth in
existing markets, propel higher delivery growth. S&P expects that
debt to EBITDA will be about 5.0x and EBITDA interest coverage
will be 2.5x to 3.0x in 2014 with modest improvement expected in
2015.
S&P could consider lowering the ratings if operating performance
deteriorates or if the company enters into a debt-financed
acquisition that causes debt to EBITDA to exceed 5.0x on a
sustained basis.
Although S&P considers an upgrade unlikely in the near term, it
could raise the rating if Century is able to successfully manage a
very high growth trajectory and integrate the new Las Vegas
division and if operating performance were to exceed S&P's
forecast such that company is able to sustain adjusted debt to
EBITDA below 2.5x.
CHARTER COMMUNICATIONS: Moody's Confirms Ba3 CFR; Outlook Stable
----------------------------------------------------------------
Moody's Investors Service confirmed the Ba3 Corporate Family
Rating of Charter Communications, Inc. following its announced
agreement with Comcast Corporation whereby Charter will acquire
approximately 1.4 million existing Time Warner Cable (TWC)
subscribers from the combined Comcast-TWC entity following
completion of Comcast's previously announced merger with TWC.
Comcast and Charter will also each transfer approximately 1.6
million customers, and Charter will acquire an approximately 33%
ownership stake in a new publicly-traded cable provider (SpinCo)
to be spun-off from Comcast serving approximately 2.5 million
customers. This concludes the review begun on January 14, 2014.
The outlook is stable.
Charter Communications Inc.
Corporate Family Rating, Confirmed at Ba3
Probability of Default Rating, Confirmed at Ba3-PD
Outlook, Changed To Stable From Rating Under Review
CCO Holdings, LLC
Senior Unsecured Bonds, Confirmed at B1, LGD adjusted to LGD4,
67% from LGD4, 68%
Senior Secured Bank Credit Facility (CCO stock only), Upgraded
to Ba1, LGD2, 25%, from Ba2, LGD2, 27%
Outlook, Changed To Stable From Rating Under Review
Charter Communications Operating, LLC
Senior Secured First Lien Bank Credit Facility, Confirmed at
Baa3, LGD adjusted to LGD2, 10% LGD2, 11%
Outlook, Changed To Stable From Rating Under Review
Ratings Rationale
Moody's confirmed Charter's Ba3 CFR based on expectations that the
incremental debt incurred by Charter in conjunction with the
acquisition will result in leverage of approximately 5.5 times
debt-to-EBITDA, even without incorporating potential synergies
from the acquisition and asset swap and the potential for
incremental EBITDA growth and debt reduction prior to the
transaction close. These factors should lower leverage. The pro
forma leverage profile is consistent with a Ba3 CFR, and Moody's
believes Charter would benefit from enhanced scale and improved
geographic clustering, offsetting some execution risk, assuming
the transaction occurs as proposed. Furthermore, the agreed upon
deal creates clarity on Charter's expansion strategy over the next
few years thereby reducing event risk. Charter would also benefit
from its ownership stake in SpinCo through management fees and
expanded scale. Moody's assumes that the agreement will restrict
Charter from purchasing any shares in SpinCo for at least two
years and that any SpinCo debt will be non-recourse to Charter.
Moody's also upgraded the rating on the term loan at CCO Holdings
($350 million outstanding, matures September 2014, security
package consists of stock only, not assets) to Ba1 from Ba2. Over
time the company has increased senior unsecured bonds junior to
this instrument, resulting in a greater cushion of junior capital
to absorb loss in a restructuring scenario.
Charter's moderate leverage of approximately 4.8 times debt-to-
EBITDA poses risk considering the pressure on revenue from its
increasingly mature core video offering (which comprises about
one-half of total revenue) and the intensely competitive
environment in which it operates, incorporated in its Ba3 CFR.
Furthermore, leverage could rise to close to 5.5 times assuming
the company succeeds in its proposed acquisition of subscribers
from Comcast. Moody's expects Charter's initiatives to enhance its
product set, especially the video offering, and to implement
changes to its selling strategy and organizational structure will
keep operating and capital expenditures elevated, pressuring free
cash flow over at least the next year, but greater penetration of
all products and continued expansion of the commercial business
should yield more EBITDA. Also, capital intensity will likely
moderate, albeit at a level higher than peers, which could
facilitate free cash flow expansion. The company's substantial
scale and Moody's expectations for operational improvements and
growth in high speed data and commercial phone customers, along
with the meaningful perceived asset value associated with its
sizeable (6 million) customer base, support the rating, as does
the company's good liquidity.
Charter's stable outlook incorporates expectations for leverage
below 5.5 times debt-to-EBITDA, positive free cash flow and
maintenance of good liquidity.
Moody's would likely downgrade ratings if a debt funded
acquisition, ongoing basic subscriber losses, declining
penetration rates, and/or a reversion to more aggressive financial
policies contributed to expectations for sustained leverage above
6 times debt-to-EBITDA and / or low single digit or worse free
cash flow-to-debt.
Moody's would consider an upgrade with continued improvements in
both financial and operating metrics and a commitment to a better
credit profile. Specifically, Moody's could upgrade the CFR based
on expectations for sustained leverage below 4.5 times debt-to-
EBITDA and free cash flow-to-debt in excess of 5%, along with
maintenance of good liquidity. A higher rating would require
clarity on fiscal policy, as well as product penetration levels
more in line with industry averages and growth in revenue and
EBITDA per homes passed.
One of the largest domestic cable multiple system operators
serving approximately 4.2 million residential video customers (6
million customers in total), Charter Communications, Inc.
maintains its headquarters in Stamford, Connecticut. Its annual
revenue (pro forma for the acquisition of Bresnan) is
approximately $8.6 billion.
CIMAREX ENERGY: Moody's Affirms 'Ba1' Corp. Family Rating
---------------------------------------------------------
Moody's Investors Service changed Cimarex Energy Co.'s rating
outlook to positive from stable. At the same time, Moody's
affirmed Cimarex's Ba1 Corporate Family Rating and SGL-2
Speculative Grade Liquidity Rating.
"Cimarex's positive rating outlook reflects expected continued
growth in production and reserves at competitive costs and while
maintaining conservative financial leverage and a high level of
capital discipline," commented Gretchen French, Moody's Vice
President. "While Cimarex remains smaller than its investment-
grade rated E&P peers and is using debt to fund its heavy capital
spending program, Moody's expect the company's size to be more in
line with a Baa3 rating and its spending gap to narrow by 2015."
Debt List: Cimarex Energy Co.
Outlook: Changed to Positive from Stable
Senior unsecured notes, Affirmed at Ba1 (LGD 4, 51%)
Corporate Family Rating, Affirmed at Ba1
Probability of Default Rating, Affirmed at Ba1-PD
Speculative Grade Liquidity Rating, Affirmed at SGL-2
Ratings Rationale
Cimarex's Ba1 Corporate Family Rating is supported by the
company's successful track record in growing production and
reserves at competitive costs, while maintaining highly
conservative financial policies. In addition, the rating reflects
the company's disciplined drilling strategy, high level of
financial flexibility, strong management team, and historically
conservative reserve booking policy.
The company's ratings remain restrained by its moderate size and
limited basin and geographic diversification, the high capital
spending needs in excess of cash flow for the development of its
Permian Basin and Woodford-Cana plays and, despite growing oil
production, still significant exposure to weaker natural gas and
ethane prices.
Cimarex's ratings could be upgraded if the company continues to
successfully grow its property base, including successful results
from the drilling of its Wolfcamp acreage position in the Permian
Basin, while maintaining solid returns and reasonably low
financial leverage. In particular, production maintained above 140
thousand barrels of oil equivalent per day could support an
upgrade.
Cimarex's ratings could be downgraded if the company exhibits poor
capital productivity from its drilling program. In addition, the
ratings could be pressured by a sizable increase in financial
leverage. While Moody's expect the company's leverage could
continue to increase, Moody's expect leverage to remain below the
peer group average.
Cimarex's SGL-2 rating reflects a high degree of flexibility in
its capital program, considerable headroom under financial
covenants and an unsecured debt structure. The SGL rating is
restrained by the expectation that capital expenditures will
exceed operating cash flow over the near-term, resulting in
elevated usage of its revolving credit facility. Moody's expects
Cimarex to outspend operating cash flow by over $500 million
during 2014, with the shortfall funded with drawings under its $1
billion bank credit facility due July 2016 ($174 million
outstanding at year-end 2013). Cimarex's bank credit facility is
unsecured, leaving significant alternative methods to raise cash
if needed.
Cimarex Energy Co. is an independent exploration and production
company headquartered in Denver, Colorado.
CLEAR CHANNEL: S&P Affirms CCC+ Corp. Credit Rating; Outlook Neg
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its corporate credit
rating on Texas-based Clear Channel Communications Inc. (CCU) and
CC Media Holdings Inc. at 'CCC+'. The outlook is negative. CCU
is an operating subsidiary of CC Media, and S&P analyzes the
companies on a consolidated basis.
At the same time, S&P assigned a 'CCC+' corporate credit rating
with a negative outlook to subsidiary CCU Escrow Corp. to match
our rating and outlook on CCU and CC Media. S&P also assigned CCU
Escrow's proposed senior notes due 2018 an issue-level rating of
'CCC-', with a recovery rating of '6', indicating S&P's
expectation for negligible (0% to 10%) recovery in the event of a
payment default.
S&P expects the company will use issuance proceeds to repay debt
maturing in 2014, reducing near term maturities.
S&P derives the 'CCC+' corporate credit rating on CC Media from
its "fair" business risk and "highly leveraged" financial risk
profile assessments for the company, the application of S&P's
'CCC' criteria in light of the company's significant refinancing
risk and uncertainty about the viability of its capital structure.
S&P's negative rating outlook reflects CC Media's high debt
leverage and low interest coverage metrics, which S&P believes
results in significant refinancing risk and uncertainty about the
long-term viability of its capital structure.
COOPER-BOOTH: Can Access Cash Collateral Until June 28
------------------------------------------------------
The Hon. Magdeline D. Coleman of the U.S. Bankruptcy Court for the
Eastern District of Pennsylvania issued a "fourth final
stipulation and order" authorizing Cooper-Booth Wholesale Company
and its debtor-affiliates to use cash collateral of PNC Bank,
National Association, and PNC Equipment Finance and Zurich
American Insurance Company, until June 28, 2014, pursuant to a
budget.
The Debtors said they require the use of cash collateral for the
purpose of funding their operations and to operate during the
pendency of the bankruptcy cases.
The Debtors granted to the banks replacement liens on and security
interests in all of their existing and acquired real and personal
property and assets, and all cash and non-cash proceeds.
A full-text copy of the cash collateral budget is available for
free at http://is.gd/TshvB0
About Cooper-Booth Wholesale
Cooper-Booth Wholesale Company, L.P. and two affiliates sought
Chapter 11 protection (Bankr. E.D. Pa. Lead Case No. 13-14519) in
Philadelphia on May 21, 2013, after the U.S. government seized the
Company's bank accounts to recover payments made by a large
customer caught smuggling Virginia-stamped cigarettes into New
York.
Serving the mid-Atlantic region, Cooper is one of the top 20
convenience store wholesalers in the country. Cooper supplies
cigarettes, snacks, beverages and other food items from Hershey's,
Lellogg's, Bic, and Mars to convenience stores. Cooper has been
in the wholesale distribution business since 1865 when the Booth
Tobacco Company was incorporated in Lancaster, Pennsylvania. The
Company has been family owned and operated for three generations.
Aris J. Karalis, Esq., and Robert W. Seitzer, Esq., at Maschmeyer
Karalis, P.C., in Philadelphia, serve as the Debtors' bankruptcy
counsel. Executive Sounding Board Associates, Inc., is the
financial advisor. SSG Advisors, LLC, serves as investment
bankers. Blank Rome LLP represents the Debtor in negotiations
with federal agencies concerning the seizure warrant.
Cooper-Booth Wholesale Company, L.P., and its affiliates filed
a joint disclosure statement in respect of its plan of
reorganization dated Feb. 28, 2014. The Plan provides for the
reorganization of the Debtors and their continued existence after
the Effective Date as Reorganized Debtors. The Plan provides for
the payment of 100% of the Allowed Claims in each Class. The
funds to make the Distributions required under the Plan will be
comprised of cash on hand and the loan proceeds from an exit
financing facility, which is a senior credit facility in an
aggregate amount of $35 million to be provided by an Exit
Financing Lender.
COTTONWOOD ESTATES: Disclosure Statement Hearing on May 13
----------------------------------------------------------
Cottonwood Estates Development, LLC, will ask the U.S. Bankruptcy
Court for the District of Utah at a hearing on May 13, 2014, at
3:00 p.m. to approve the disclosure statement accompanying its
proposed reorganization plan.
The Debtor on March 28, 2014, filed a proposed Plan of
Reorganization that provides for the continued marketing and sale
of the Debtor's real estate project located in Big Cottonwood
Canyon, in Salt Lake County. Under the Plan, creditors will be
paid from the sale proceeds.
The Debtor will seek judicial determination of the claim of
America First Federal Credit Union, and pay the allowed amount of
the claim according to the lot release schedule attached to the
Plan. Additional sales proceeds will be deposited into a Plan
Fund, and distributions to unsecured creditors will be made from
the Plan Fund on a quarterly basis.
The Debtor has a real estate broker in place to market and sell
lots in the Tavaci Project, and already filed a motion to sell Lot
3 to MW Resources, L.L.C. The Debtor anticipates that motion will
be heard and decided upon by the Bankruptcy Court before the Plan
is confirmed.
The Debtor and its real estate broker, Summit Sotheby's
International Real Estate, have been aggressively marketing the
Tavaci Project including print media, websites, and open houses.
Significant buyer interest is being generated in the Tavaci
Project as a result of these efforts. The Debtor expects to pay
all allowed claims in full through the sale of lots in the Tavaci
Project.
According to the Disclosure Statement, the Plan proposes to treat
claims as follows:
-- Secured claim of Salt Lake County Treasurer (Impaired). The
claim will be paid in full through the earlier to occur of the
following: (1) payment of equal quarterly installments over a term
of not more than five years, with interest accruing thereon at the
rate allowed pursuant to Utah law, and the first payment shall be
made on the Effective Date; or (2) the sale of the Tavaci Project.
-- Secured claim of America First Federal Credit Union
(Impaired). The allowed amount of the claim will be paid through
annual installments over a five-year period.
-- General unsecured claims (Impaired). Each holder of a
general unsecured claim will be paid, pro rata, and to the extent
possible, from the proceeds of the Plan Fund.
-- Interests (Impaired). Interest holders will retain their
interests in the Debtor but will not be entitled to receive
distributions pending payment of all allowed claims.
A copy of the Disclosure Statement dated March 28, 2014, is
available for free at:
http://bankrupt.com/misc/Cottonwood_Estates_Plan_Outline.pdf
About Cottonwood Estates
Cottonwood Estates Development, LLC's primary asset is a real
estate project located in Big Cottonwood Canyon, Salt Lake County,
Utah, referred to as the Tavaci Project. The Tavaci Projects
consists of 39 single family residence lots which are finished and
ready for construction of homes thereon. Four lots were sold
before the bankruptcy filing.
Cottownwood Estates filed a Chapter 11 bankruptcy petition (Bankr.
D. Utah Case No. 13-34298) on Dec. 30, 2013, in Salt Lake City,
Utah. The Debtor estimated up to $50 million in both assets and
debts.
The Debtor has tapped Miller Guymon, PC, in Salt Lake City, as
bankruptcy counsel, Parr Brown Gee & Loveless as special counsel
for real estate transaction matters, J. Philip Cook as appraiser,
and Daines Goodwin as accountant.
DIOCESE OF HELENA: Wants Court to Set July 24 as Claims Bar Date
----------------------------------------------------------------
Roman Catholic Diocese of Helena asks the U.S. Bankruptcy Court
for the District of Montana to set July 24, 2014, as deadline for
creditors to file proofs of sexual abuse claim.
According to the Debtor, it will undertake extensive efforts to
publicize the deadline. The July 24 deadline affects all sexual
abuse survivors including sexual abuse survivors who filed and had
lawsuit pending against the Debtor.
About the Diocese of Helena
The Roman Catholic Bishop of Helena, Montana, a Montana Religious
Corporation Sole (a/k/a Diocese of Helena) sought protection
under Chapter 11 of the Bankruptcy Code on Jan. 31, 2014, to
resolve more than 350 sexual-abuse claims. The Chapter 11 case
(Bankr. D. Mont. Case No. 14-60074) was filed in Butte, Montana.
Attorneys at Elsaesser Jarzabek Anderson Elliott & MacDonald,
Chtd., serve as counsel to the Debtor.
Several Roman Catholic dioceses in the U.S. have filed for
bankruptcy to settle claims from current and former parishioners
who say they were sexually molested by priests.
The Roman Catholic Bishop of Helena filed its schedules of assets
and liabilities, which show assets with a value of more than
$16.037 million against debt totaling $33.6 million. The filings
also showed that the diocese has $4.7 million in secured debt.
Creditors of the diocese assert $28.89 million in unsecured
non-priority claims.
Gail Brehm Geiger, the U.S. Trustee for Region 18, appointed
seven creditors to serve on the Official Committee of Unsecured
Creditors.
DIOCESE OF HELENA: Michael Hogan Named as Victims Representative
----------------------------------------------------------------
The Roman Catholic Bishop of Helena, Montana, obtained approval
from the U.S. Bankruptcy Court to employ Michael R. Hogan as the
legal representative in this case for these persons holding Claims
against the Debtor.
As reported in the Troubled Company Reporter on March 26, 2014,
persons holding Claims against the Debtor resulting or arising, in
whole or in part, from any actual or alleged sexual conduct or
misconduct, sexual abuse or molestation, indecent assault and/or
battery, rape, lascivious behavior, undue familiarity, pedophilia,
ephebophilia, or sexually-related physical, psychological, or
emotional harm, or contacts or interactions of a sexual nature
between a child and an adult, or a nonconsenting adult and another
adult, assault, battery, corporal punishment, or other act of
physical, psychological, or emotional abuse, humiliation, or
intimidation or any other misconduct and seeking monetary damages
or any other relief, under any theory of liability, including
vicarious liability, any negligence-based theory or other theory
based on any acts or failures to act by the Debtor or any other
person who the Debtor is allegedly responsible for, who neither
timely file nor are deemed to have timely filed (e.g., due to
excusable neglect) a proof of claim on or before the Claims Bar
Date or files a proof of claim after the Claims Bar Date; and:
(a) are under 18 years of age before the Claims Bar Date;
(b) neither discovered nor reasonably should have discovered
Before the Claims Bar Date that his or her injury was caused
by an act of childhood abuse; or
(c) have a claim that was barred by the applicable statute of
Limitations as of the Claims Bar Date but is no longer barred
by the applicable statute of limitations for any reason,
including for example the passage of legislation that revives
such claims.
Michael R. Hogan attested that it is a "disinterested person" as
the term is defined in Section 101(14) of the Bankruptcy Code.
About the Diocese of Helena
The Roman Catholic Bishop of Helena, Montana, a Montana Religious
Corporation Sole (a/k/a Diocese of Helena) sought protection
under Chapter 11 of the Bankruptcy Code on Jan. 31, 2014, to
resolve more than 350 sexual-abuse claims. The Chapter 11 case
(Bankr. D. Mont. Case No. 14-60074) was filed in Butte, Montana.
Attorneys at Elsaesser Jarzabek Anderson Elliott & MacDonald,
Chtd., serve as counsel to the Debtor.
Several Roman Catholic dioceses in the U.S. have filed for
bankruptcy to settle claims from current and former parishioners
who say they were sexually molested by priests.
The Roman Catholic Bishop of Helena filed its schedules of assets
and liabilities, which show assets with a value of more than
$16.037 million against debt totaling $33.6 million. The filings
also showed that the diocese has $4.7 million in secured debt.
Creditors of the diocese assert $28.89 million in unsecured
non-priority claims.
Gail Brehm Geiger, the U.S. Trustee for Region 18, appointed
seven creditors to serve on the Official Committee of Unsecured
Creditors.
DIOCESE OF HELENA: Can Hire Patterson Buchanan as Special Counsel
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Montana authorized
Roman Catholic Bishop of Helena, Montana, a Montana Religious
Corporation Sole (Diocese of Helena) to employ Michael Patterson,
Scott Jamieson, Keith Talbot and the firm Patterson Buchanan Fobes
& Leitch Inc., P.S. as special counsel.
As reported in the Troubled Company Reporter on April 8, 2014, the
firm has represented the Company for three years on various sexual
abuse claim terms. The Debtor said the firm will provide legal
advice and assistance as needed as to matters requiring legal
advice and counsel relating to the sexual abuse claims against the
Debtor. The Debtor said the services provided by the firm will
not overlap the services with the counsel Elsaesser Larzabek
Anderson Elliot & Macdonald, Chtd.
The hourly rates of the firm's personnel are:
Mr. Patterson $200
Mr. Jamieson $200
Mr. Talbot $200
To the best of the Debtor's knowledge, the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About the Diocese of Helena
The Roman Catholic Bishop of Helena, Montana, a Montana Religious
Corporation Sole (a/k/a Diocese of Helena) sought protection
under Chapter 11 of the Bankruptcy Code on Jan. 31, 2014, to
resolve more than 350 sexual-abuse claims. The Chapter 11 case
(Bankr. D. Mont. Case No. 14-60074) was filed in Butte, Montana.
Attorneys at Elsaesser Jarzabek Anderson Elliott & MacDonald,
Chtd., serve as counsel to the Debtor.
Several Roman Catholic dioceses in the U.S. have filed for
bankruptcy to settle claims from current and former parishioners
who say they were sexually molested by priests.
The Roman Catholic Bishop of Helena filed its schedules of assets
and liabilities, which show assets with a value of more than
$16.037 million against debt totaling $33.6 million. The filings
also showed that the diocese has $4.7 million in secured debt.
Creditors of the diocese assert $28.89 million in unsecured
non-priority claims.
Gail Brehm Geiger, the U.S. Trustee for Region 18, appointed
seven creditors to serve on the Official Committee of Unsecured
Creditors.
DIOCESE OF HELENA: Gets Court OK to Pay Adequate Protection to FIB
------------------------------------------------------------------
Judge Terry L. Myers approved a stipulation between the Roman
Catholic Bishop of Helena, Montana, and First Interstate Bank
whereby the parties agree that the Debtor will pay adequate
protection to the Bank in the amount of $20,636 per month
commencing on March 1, 2014, and each month thereafter until
further Court order or payment in full of the Debtor's loan to the
Bank.
Shortly after the Court entered the order on April 9, 2014, the
parties sought an amendment of the stipulation order in accordance
with some feedback they got from the Official Committee of
Unsecured Creditors.
In lieu of filing an objection to the Adequate Protection
Stipulation, counsel to the Creditors Committee requested that
certain terms be included in the Order, namely that:
(a) The Debtor may withdraw the stipulation at any time after
90 days by filing a 10-day notice of termination of
stipulation for adequate protection and serving the notice
on First Interstate Bank; and
(b) The adequate protection payments to the Bank do not receive
administrative expense status.
The stipulating parties thus stipulate that the changes can be
made as requested and pursuant to a proposed Amended Order.
John H. Grant, Esq., of Jackson, Murdo & Grant, P.C., serve as
attorneys to First Interstate Bank.
Bruce A. Anderson, Esq., of Elsaesser Jarzabek Anderson Elliott &
MacDonald, Chtd., serves as attorney to the Debtor.
About the Diocese of Helena
The Roman Catholic Bishop of Helena, Montana, a Montana Religious
Corporation Sole (a/k/a Diocese of Helena) sought protection
under Chapter 11 of the Bankruptcy Code on Jan. 31, 2014, to
resolve more than 350 sexual-abuse claims. The Chapter 11 case
(Bankr. D. Mont. Case No. 14-60074) was filed in Butte, Montana.
Attorneys at Elsaesser Jarzabek Anderson Elliott & MacDonald,
Chtd., serve as counsel to the Debtor.
Several Roman Catholic dioceses in the U.S. have filed for
bankruptcy to settle claims from current and former parishioners
who say they were sexually molested by priests.
The Roman Catholic Bishop of Helena filed its schedules of assets
and liabilities, which show assets with a value of more than
$16.037 million against debt totaling $33.6 million. The filings
also showed that the diocese has $4.7 million in secured debt.
Creditors of the diocese assert $28.89 million in unsecured
non-priority claims.
The U.S. Trustee for Region 18 appointed seven creditors to serve
on the Official Committee of Unsecured Creditors.
DIOCESE OF HELENA: Can Sell 520 Virginia Residential Property
-------------------------------------------------------------
Bankruptcy Judge Terry Myers authorized the Roman Catholic Bishop
of Helena, Montana, to sell a residential real property located at
520 S. Virginia, Conrad, MT 59425.
The contract for sale was entered into before the Debtor filed for
bankruptcy. The parties have however amended their agreement
post-bankruptcy, including the agreement to close on or before May
1, 2014.
In connection with the sale, the Debtor is also permitted to pay
at closing certain itemized taxes and closing costs. The Court
however does not authorize the payment of a realtor without
compliance with the Code and Rules governing the employment and
compensation of professionals.
All proceeds from the sale, other than taxes and closing cots,
will be held by the Debtor in a segregated amount. No proceeds
will be disposed of without further Court order.
About the Diocese of Helena
The Roman Catholic Bishop of Helena, Montana, a Montana Religious
Corporation Sole (a/k/a Diocese of Helena) sought protection
under Chapter 11 of the Bankruptcy Code on Jan. 31, 2014, to
resolve more than 350 sexual-abuse claims. The Chapter 11 case
(Bankr. D. Mont. Case No. 14-60074) was filed in Butte, Montana.
Bruce A. Anderson, Esq., at Elsaesser Jarzabek Anderson Elliott &
MacDonald, Chtd., serve as counsel to the Debtor.
Several Roman Catholic dioceses in the U.S. have filed for
bankruptcy to settle claims from current and former parishioners
who say they were sexually molested by priests.
The Roman Catholic Bishop of Helena filed its schedules of assets
and liabilities, which show assets with a value of more than
$16.037 million against debt totaling $33.6 million. The filings
also showed that the diocese has $4.7 million in secured debt.
Creditors of the diocese assert $28.89 million in unsecured
non-priority claims.
The U.S. Trustee for Region 18 appointed seven creditors to serve
on the Official Committee of Unsecured Creditors.
EMPIRE DIE: Unsecured Creditors Vote in Favor of EDC Plan
---------------------------------------------------------
E.D.C. Liquidating, Inc., formerly known as Empire Die Casting Co,
Inc., has gained overwhelming support of its Chapter 11 plan from
unsecured creditors, the lone class of creditors voting on the
Chapter 11 plan.
The First Amended Joint Chapter 11 Plan of Liquidation, which
provides for an orderly liquidation of any remaining assets of the
Debtor, and providing the means for distribution to unpaid
creditors, was co-sponsored by the Official Committee of Unsecured
Creditors.
In December 2013, the Debtor sold substantially all assets to
American Light Metals, LLC, for a purchase price in excess of
$12.75 million. A total of $9.25 million of the net proceeds were
disbursed to FirstMerit.
Thirty-seven creditors out of 44 who submitted ballots conveyed
support for the Plan. The creditors that have submitted "yes"
votes have claims totaling $11.7 million, constituting 99.15% of
the total claims of the voting creditors.
The secured creditor, First Merit, was deemed to accept the Plan
as it received the net proceeds of the sale in full satisfaction
of its claim. Unsecured creditors will each receive a pro rata
share of the liquidation trust to be established under the Plan.
The equity holders won't be receiving any distributions and thus
were deemed to reject the Plan.
The Court on March 28 granted conditional approval of the
Disclosure Statement and slated an April 29 combined hearing on
the Plan and Disclosure Statement.
As of April 29, the bankruptcy judge has not yet entered an order
confirming the Plan.
A copy of the Disclosure Statement is available for free at:
http://bankrupt.com/misc/Empire_Die_DS_1st_Am_Plan.pdf
About Empire Die
Macedonia, Ohio-based Empire Die Casting Co., Inc., sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D.
Ohio Case No. 13-52996) on Oct. 16, 2013. The Debtor estimated
assets of $10 million to $50 million and liabilities of $1 million
to $10 million. The petition was signed by Robert Hopkins,
president. The case is before Judge Marilyn Shea-Stonum.
The Debtor tapped Brouse McDowell, LPA, in Akron, Ohio, as
bankruptcy counsel, Amherst Consulting, LLC, as restructuring
consultant and Amherst Partners as investment banker. The Debtor
also tapped the law firms of Roetzel & Andress, LP and Stites &
Harbison, PLLLC as special counsel in connection with a claim in
the Chapter 11 case of Oreck Manufacturing Corp.
The Official Committee of Unsecured Creditors is represented by
Freeborn & Peters LLP.
FirstMerit Bank, N.A. is represented by Scott N. Opincar, Esq., at
McDonald Hopkins LLC, in Cleveland, Ohio.
On Dec. 19, 2013, the Court approved the sale of substantially all
of the Debtor's assets to American Light Metals, LLC, the designee
of SRS International Holdings Inc., the successful bidder at the
Dec. 18 auction. In connection with the sale, the Debtor sold its
name, Empire Die Casting Co, Inc., to ALM. The sale closed on
Dec. 31, 2013.
ENDO INTERNATIONAL: S&P Assigns 'B' Rating to Sr. Unsecured Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'B'
credit rating and '6' recovery rating to the senior unsecured
notes to be issued by Endo Finance LLC and Endo Finco Inc.,
subsidiaries of Dublin, Ireland-based pharmaceutical company Endo
International PLC (Endo). The new notes will be issued in
exchange for similar outstanding notes of Endo Health Solutions
Inc. S&P's 'BB-' corporate credit rating on Endo is unchanged.
The rating on Endo reflects S&P's "fair" assessment of its
business risk profile, with still-significant product and
therapeutic concentrations. S&P's assessment of Endo's financial
risk profile as "aggressive" incorporates its expectation that
adjusted leverage will rise to and remain above 4x, as a result of
both declining EBITDA (adjusted for non-recurring items) and debt-
financed acquisitions. The rating tolerates adjusted leverage
between 4x and 5x. As of Dec. 31, 2013, adjusted leverage was
3.1x.
RATINGS LIST
Endo International PLC
Corporate credit rating BB-/Stable/--
Endo Finance LLC
Endo Finco Inc.
Senior Unsecured
7.25% sr nts due 2022 B
Recovery rating 6
7.00% sr nts due 2019 B
Recovery rating 6
7.00% sr nts due 2020 B
Recovery rating 6
ENERGY EQUITY: Moody's Affirms Ba2 CFR & Sr. Secured Debt Rating
----------------------------------------------------------------
Moody's Investors Service affirmed Energy Transfer Partners,
L.P.'s (ETP) Baa3 rating with a stable outlook. Moody's also
affirmed Energy Transfer Equity, L.P.'s (ETE) Ba2 Corporate Family
Rating (CFR) and its Ba2 senior secured debt rating with a stable
outlook. These actions are in response to ETP's announcement that
it has entered into a definitive merger agreement to acquire
Susser Holdings Corporation (SUSS, not rated) for approximately
$1.8 billion in cash and units. This transaction enables ETP to
monetize and ultimately exit its non-core retail business and
subsequently reduce leverage.
SUSS is the general partner (GP) of Susser Petroleum Partners LP
(SUSP, not rated), a wholesale motor fuels distributor, and owns
100% of SUSP's incentive distribution rights (IDRs) together with
approximately 50% of SUSP's limited partnership (LP) units. SUSS
is a major owner/operator of retail gasoline and convenience store
locations throughout Texas and several adjoining states. The
transaction is expected to close in 2014's third quarter.
Issuer: Energy Transfer Partners, L.P.
Outlook Actions:
Issuer: Energy Transfer Partners, L.P.
Outlook, Remains Stable
Affirmations:
Junior Subordinated Bond/Debenture, Affirmed Ba1
Senior Unsecured Regular Bond/Debenture, Affirmed Baa3
Issuer: Energy Transfer Equity, L.P.
Outlook, Remains Stable
Affirmations:
Probability of Default Rating, Affirmed Ba2-PD
Speculative Grade Liquidity Rating, Affirmed SGL-3
Corporate Family Rating, Affirmed Ba2
Senior Secured Bank Credit Facility, Affirmed Ba2
Senior Secured Regular Bond/Debenture, Affirmed Ba2
Ratings Rationale
"While Moody's has concerns regarding the structural complexity of
the SUSS acquisition, it is recognized that one of ETP's
objectives through this transaction is to separate the Sunoco
retail business from ETP, doing so in a tax-efficient manner,"
commented Andrew Brooks, Moody's Vice President. "This transaction
is intended to achieve that objective, although it does so over a
multi-year process that stalls recent progress made towards
rationalizing ETP's organizational structure and reducing debt
leverage across the Energy Transfer complex."
ETP anticipates dropping its existing Sunoco retail business in
its entirety and SUSS into SUSP, in exchange for cash and SUSP LP
units, creating a large standalone retail fuels and convenience
store business that remains publicly traded. SUSP's GP and IDRs
are subsequently expected to be contributed by ETP to ETE as part
of this process. Moody's expects the combined businesses to be
capably operated under the Sunoco and SUSS management team,
realizing operating synergies and generating future growth.
Through the monetizing of its SUSP holdings, ETP expects to fully
accomplish its exit from the retail business over a period of
several years, while also raising significant cash proceeds from
the sale of the SUSP units for debt reduction at ETP, an important
derivative result of this transaction.
ETP's Baa3 rating reflects its sizable $44 billion, diversified
asset base of midstream energy infrastructure that generates a
largely stable, largely fee-based cash flow stream. However,
elevated financial leverage across the Energy Transfer complex,
exacerbated by recent acquisitions and heavy growth capital
spending, remains of a concern to Moody's. Notwithstanding the
relatively balanced use of debt and equity to finance its growth
and acquisitions, ETP remains aggressively leveraged on a 2014 pro
forma basis at over 5.0x debt/EBITDA on a proportionately
consolidated basis (including Moody's standard adjustments).
Moody's regards ETP's monetization of its SUSP LP units holdings
as a key source of liquidity with which to fund debt reduction at
ETP, dropping debt leverage towards 4.5x. With about half of the
SUSS acquisition to be equity financed, together with SUSP
monetization proceeds, Moody's looks at the structuring of the
SUSS acquisition ultimately as a deleveraging transaction. ETP
maintains a $2.5 billion unsecured revolving credit facility,
which is scheduled to mature in October 2017. At December 31, $65
million was outstanding under the revolver, leaving ample
liquidity for the funding the cash portion of the SUSS
acquisition, as well as ongoing growth capital spending.
ETP's stable outlook reflects the extensive scope and quality of
its midstream asset base, its record of equity issuance to support
growth projects and acquisitions, and Moody's expectation of
continuing EBITDA growth. ETP's ratings could be downgraded if it
fails to reduce and sustain debt leverage of 4.5x. Additionally,
should ETE pressure ETP for a higher level of cash distributions,
a downgrade would be considered. While an upgrade is considered
unlikely, reducing debt leverage to the 4.0x area could prompt
such consideration.
ETE's stable outlook reflects the diversified distribution streams
derived from its subsidiary interests, and the quality of their
respective assets. ETE's ratings could be downgraded should
consolidated leverage on a permanent basis increase over 6x
EBITDA. Furthermore, should cash distributions to ETE be
compromised through higher leverage or weakness in distributable
cash flows at partnership and subsidiary levels, ratings could be
downgraded. A ratings upgrade could be considered to the extent
consolidated is sustained below 5.0x and should the transparency
of ETE's overall organizational structure become more clarified
through additional rationalization of its partnership and
subsidiary holdings.
Energy Transfer Partners, L.P. is a midstream MLP headquartered in
Dallas, Texas, whose general partner is Energy Transfer Equity,
L.P., also headquartered in Dallas, Texas.
ENERGY FUTURE: Files for Bankruptcy to Reduce $40-Bil. Debt
-----------------------------------------------------------
Energy Future Holdings Co., the former TXU Corp., filed for
Chapter 11 bankruptcy protection on April 29 to rework more than
$40 billion in debt, seven years after taken private by Henry
Kravis and David Bonderman in a record $45 billion leveraged
buyout.
EFH said in a statement that it has entered into an agreement with
certain of its key financial stakeholders to reduce its
approximately $40 billion of debt, lower its annual cash interest
costs, access significant additional capital and create a
sustainable capital structure for the future.
To implement this pre-arranged restructuring plan, Energy Future
Holdings Corp. and certain of its subsidiaries, including Texas
Competitive Electric Holdings Company LLC (TCEH) (the holding
company for EFH's competitive businesses, including Luminant and
TXU Energy) and Energy Future Intermediate Holding Company LLC
(EFIH) (the holding company for EFH's regulated business, Oncor
Electric Delivery Company), have filed voluntary petitions for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
Bankruptcy Court for the District of Delaware. Oncor is not a
part of the Chapter 11 filing.
"We are pleased to have the support of our key financial
stakeholders for a consensual restructuring," said John Young,
president and chief executive officer of EFH. "With this
restructuring plan, we now have a path to a sustainable capital
structure that would put EFH and its family of companies in an
even stronger position over the long term to deliver for all of
our stakeholders, including our customers, our employees and our
business partners. This restructuring is focused on our balance
sheet, not our operations. We fully expect to continue normal
business operations during the reorganization. As always,
Luminant will continue to provide safe, reliable energy and TXU
Energy will continue to provide best-in-class customer service and
innovative energy solutions. We will maintain our commitment to
operational excellence in a competitive energy market."
Over the past six years, the company has fulfilled its commitments
to Texas on pricing, environmental responsibility and investment
totaling more than $10 billion in the state's infrastructure and
in the company's energy generation facilities. The company added
1,900 jobs and consistently posted top-tier operational
performance.
Overview of Proposal
Under the terms of the proposed restructuring agreement, upon
emergence, transactions would be implemented to eliminate certain
debt at EFH and certain of its subsidiaries.
TCEH and its subsidiaries would separate from EFH without
triggering any material tax liability, and TCEH's first lien
lenders would receive all of the equity in the reorganized TCEH
and the cash proceeds from the issuance of new debt at the
reorganized TCEH in exchange for eliminating approximately $23
billion of TCEH's funded debt.
At EFIH, the proposed transaction would eliminate approximately
$2.5 billion of EFIH's funded debt through, among other things, a
capital infusion of up to $1.9 billion from certain EFIH unsecured
noteholders. This capital would convert, along with all EFH and
EFIH unsecured notes, into equity in the reorganized EFH upon the
completion of the company's reorganization. In addition, certain
EFIH unsecured noteholders will receive cash consideration as a
part of the reorganization.
At EFH, the proposed transactions would eliminate approximately
$600 million of EFH's funded debt. The reorganized EFH would
continue to own EFIH, and EFIH would continue to retain its
interest in Oncor.
The agreement contemplates the confirmation of the proposed plan
of reorganization within approximately nine months and exit from
the restructuring within approximately eleven months, in each
case, from the petition date. In addition, the agreement has
substantial support from the TCEH first lien lenders, the EFIH
unsecured creditors, the EFIH first and second lien lenders, EFH
unsecured creditors, and the three private equity holders of EFH.
The company will work to obtain additional support for the
agreement during the reorganization process.
Operations Continue as Usual
The company fully expects that normal day-to-day operations will
continue during the Chapter 11 reorganization, including:
* Wages and benefits for employees, with full protection under
U.S. federal law for qualified retirement plans -- both defined-
benefit pension and 401(k) savings plans.
* Qualified retirement plan payments and medical benefits for
retirees.
* Excellent customer service while honoring all retail
customer agreements and actively competing in the marketplace.
* Compliance with all regulatory and tax obligations.
* Payment to vendors, suppliers and trading counterparties in
the normal manner for all goods and services provided after the
date of the Chapter 11 filing.
* Commitment to sustainable business practices, from a
community partner whose family of companies has a 130-year history
in Texas.
New Financing Commitments
In conjunction with the filing, TCEH and EFIH have secured
commitments for new capital totaling up to $4.475 billion and $7.3
billion, respectively, in debtor-in-possession (DIP) financing.
Subject to Court approval, these financial resources will be made
available in order to, among other things, help support normal
business operations during the Chapter 11 process.
The TCEH financing is also expected to permit TCEH subsidiary
Luminant Mining Company LLC to grant the Railroad Commission of
Texas a collateral bond in an amount equal to or in excess of
Luminant Mining's current reclamation bond obligations. Finally,
EFIH and TCEH each have reached an agreement with secured lenders
that permits the continued use of cash flow from operations to
fund ongoing business and meet obligations in the normal course
during the reorganization process.
First Day Motions
Mr. Young continued, "Our existing capital structure has become
unsustainable. We expect that, with the support of our financial
stakeholders, our restructuring can proceed expeditiously as we
seek to strengthen our balance sheet and position the company for
the future."
EFH has made customary filings, including first day motions, with
the Bankruptcy Court, which, if granted, will help ensure a smooth
transition to Chapter 11 without business disruption. The motions
are expected to be addressed by the Court within 48 hours of the
filing.
The company intends to file a plan of reorganization to implement
the proposed restructuring agreement in the near term. The
consummation of the plan of reorganization will entail certain
regulatory approvals, including, among others, the approval of the
tax-free transaction by the Internal Revenue Service and approvals
by the Public Utility Commission of the State of Texas and the
U.S. Nuclear Regulatory Commission.
EFH's legal advisor for the Chapter 11 proceedings is Kirkland &
Ellis LLP, its financial advisor is Evercore Partners and its
restructuring advisor is Alvarez & Marsal. The TCEH first lien
lenders supporting the restructuring agreement are represented by
Paul, Weiss, Rifkind, Wharton & Garrison, LLP as legal advisor,
and Millstein & Co., LLC, as financial advisor. The EFIH
unsecured creditors supporting the restructuring agreement are
represented by Akin Gump Strauss Hauer & Feld LLP, as legal
advisor, and Centerview Partners, as financial advisor. The EFH
equity holders supporting the restructuring agreement are
represented by Wachtell, Lipton, Rosen & Katz, as legal advisor,
and Blackstone Advisory Partners LP, as financial advisor.
As noted, the restructuring agreement is also supported by certain
EFIH first lien creditors, EFIH second lien creditors, and EFH
unsecured creditors. One of these creditors is represented by
Fried, Frank, Harris, Shriver & Jacobson, as legal advisor, and
Perella Weinberg Partners, as financial advisor.
One of Largest Bankruptcies
Mike Spector, Emily Glazer and Rebecca Smith, writing for The Wall
Street Journal, reported that the biggest leveraged buyout ever
has become one of the largest bankruptcies. The DealBook said TXU
Corp., the Texas energy giant, was taken over in a record-
shattering $45 billion buyout in 2007.
According to the Journal, Energy Future reached a deal with
several of its largest creditors in an effort to shorten the
Dallas-based company's time in bankruptcy protection, aiming to
emerge within 11 months. The restructuring plan would hand
control of the company's unregulated subsidiary to its lenders,
while bondholders at another unit would control Energy Future's
regulated electricity-delivery business, the Journal said.
The ambitious effort to navigate one of the largest bankruptcy
case in U.S. history in less than a year could hit roadblocks, the
Journal noted, as the reorganization plan will need approval from
additional creditors, some of whom could file suit in opposition.
Parts of the plan also are subject to regulatory approval, the
Journal said.
Any delay promises to rack up hefty fees for the lawyers, bankers
and turnaround specialists working on the case. Emily Glazer,
writing for The Wall Street Journal, said an estimated cost of
around $270 million for the army of lawyers, bankers and
consultants working on the case. Using the UCLA-LoPucki
Bankruptcy Research Database, fees will be $267.1 million, the
Journal said. A separate Journal report, citing people familiar
with the situation said the following firms snagged assignments so
far in the case:
* Kirkland & Ellis LLP: the company
* Evercore Partners: the company
* Alvarez & Marsal: the company
* Wachtell, Lipton, Rosen & Katz: KKR, TPG and other owners
* Blackstone Group LP: KKR, TPG and other owners
* Paul, Weiss, Rifkind, Wharton & Garrison LLP: First lien
creditors at Texas Competitive Electric Holdings, which include
Apollo Global Management LLC, Oaktree Capital Management LP and
Centerbridge Partners LP
* Millstein & Co.: First lien creditors at Texas Competitive
Energy Holdings, which include Apollo Global Management LLC,
Oaktree Capital Management LP and Centerbridge Partners LP
* Moelis & Co.: Apollo Global Management LLC
* O'Melveny & Meyers LLP: Apollo Global Management LLC
* Centerview Partners: unsecured creditors at Energy Future
Intermediate Holding, including Avenue Capital Group, York Capital
Management, Third Avenue Management LLC and GSO Capital Partners
* Akin Gump Strauss Hauer & Feld LLP: unsecured creditors at
Energy Future Intermediate Holding, including Avenue Capital
Group, York Capital Management, Third Avenue Management LLC and
GSO Capital Partners
* Houlihan Lokey: unsecured creditors at Texas Competitive
Electric Holdings
* White & Case LLP: unsecured creditors at Texas Competitive
Electric Holdings
* Rothschild Inc.: second lien creditors of Energy Future
Intermediate Holding
* Ropes & Gray LLP and Drinker Biddle & Reath LLP: indenture
trustee of Energy Future Intermediate Holding first lien bonds
* Capstone Advisory Group: indenture trustee of Energy Future
Intermediate Holding first lien bonds
* Brown Rudnick LLP: second lien creditors for Texas
Competitive Electric Holdings
* Peter J. Solomon Co.: second lien creditors for Texas
Competitive Electric Holdings
* Fried, Frank, Harris, Shriver & Jacobson LLP: Fidelity
Investments
* Perella Weinberg Partners: Fidelity Investments
* Milbank, Tweed, Hadley & McCloy LLP: Citibank, leading the
TCEH debtor-in-possession loan
* Shearman & Sterling LLP: Deutsche Bank, leading the EFIH
debtor-in-possession loan
* Patterson Belknap Webb & Tyler LLP: Law Debenture Trust
Company of New York, the indenture trustee for unsecured notes
issued by TCEH
According to Mark Chediak and Harry R. Weber, writing for
Bloomberg News, reported that Energy Future's bankruptcy will
leave 1.7 million retail electricity customers ripe for poaching
in a state that consumes the most power in the U.S.
Losing customers would drain value from TXU Energy, Energy
Future's biggest revenue-generating unit, representing one of the
main risks for creditors if there is a prolonged reorganization,
the Bloomberg said. TXU has lost about 400,000 customers since
2008 as its parent has sought to ward off a bankruptcy, Bloomberg
noted.
The retail unit may lose more subscribers ?if a lengthy and
protracted bankruptcy plays out in the media,? Jim Hempstead, an
analyst at Moody's Investors Service, said in a March interview,
Bloomberg related.
About Energy Future Holdings, fka TXU Corp.
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 percent-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 claims agent maintains a Web site at
http://www.efhcaseinfo.com/
ENERGY FUTURE: Jr. Noteholders Want Cases in Dallas, Probe
----------------------------------------------------------
Energy Future Holdings Corp. and its affiliates commenced
bankruptcy cases with a deal with senior creditors that would
reduce debt by $23 billion but Wilmington Savings Fund Society,
FSB, the successor trustee for the second-lien noteholders owed
about $1.6 billion, wants (i) a probe into previous transactions
by Energy Future and (ii) to move the Chapter 11 cases to Dallas,
Texas.
On the day Energy Future sought bankruptcy protection, Wilmington
Savings promptly filed a motion asking the bankruptcy court in
Delaware to order a venue transfer of the Chapter 11 cases to the
Northern District of Texas.
Wilmington Savings points out that the Debtors' only connection to
Delaware is that certain of the Debtors were formed under Delaware
law. On the other hand, the Debtors' operations and customers are
all in Texas. It notes that the Debtors' headquarters in Energy
Plaza in Dallas is merely a 9-minute walk from the Bankruptcy
Court in Dallas. By contrast, Energy Plaza, where substantially
all of the Debtors' key management members are located, is
approximately 1,436 miles from the Bankruptcy Court in Wilmington.
Counsel for Wilmington Savings, William P. Bowden, Esq., at Ashby
& Geddes, P.A., avers that the facts and circumstances of the
Chapter 11 cases make clear that transfer to the Northern District
of Texas would benefit substantially all parties in interest other
than, perhaps, professionals or senior lenders based in the
Northeast, who would incur modest additional travel burdens.
Mr. Bowden argues that if the Chapter 11 cases remain in Delaware,
critical management personnel will be required to spend extended
periods away from their offices when they should be focused on
addressing business issues critical to maximizing value for all
creditors (not just senior lenders with whom management has
elected to negotiate).
The Debtors, Wilmington Savings points out, are the largest
provider of electric power in North Texas, are subject to numerous
Texas regulatory regimes, have litigated (and continue to
litigate) often in Texas courts, and have potentially significant
environmental clean-up obligations in Texas, which have come under
increasing scrutiny in recent months by regulators and Texas
citizen watch groups.
Rule 2004 Discovery
Aside from balking at the venue of the bankruptcy cases,
Wilmington Savings filed a motion under Rule 2004 of the Federal
Rules of Bankruptcy Procedure for an order directing discovery
relating to, inter alia:
(a) historic and ongoing mismanagement of the Debtors;
(b) disabling conflicts of interest affecting management and
the Chapter 11 cases; and
(c) potential efforts by the Debtors' senior management, for
the benefit of senior lenders, to artificially depress
enterprise value for restructuring purposes -- at the
expense of holders of second liens and other parties in
interest.
The Debtors are the product of the $45 billion 2007 leveraged
buyout of TXU Corporation -- the largest leveraged buyout
transaction in this country's history -- led by GS Capital
Partners, TPG Capital and KKR & Co., L.P. That transaction was
predicated on acquisition indebtedness that was acknowledged at
the time as record-breaking and has proved to be unsustainable.
Since the close of the LBO, and despite TCEH's admitted
insolvency, the Sponsor Group and management have materially
increased the Debtors' risks through their subsequent actions and
inactions, Wilmington Savings tells the Court.
According to Wilmington Savings, through negotiating a series of
debt amendments and extensions that have further increased debt,
the Debtors are now devoting virtually all free cash from
operations to debt service and have a record level of debt per
megawatt of nameplate capacity. In addition, the Debtors'
management has, inter alia, failed (a) to effectively address a
significant decline post-LBO in the Debtors' once commanding
retail market share (where even relatively modest recoveries would
result in meaningful improvements to cash flows and a resulting
increase of measurable enterprise value); and (b) to take prudent
and necessary steps to bring overhead in line with comparable
metrics (including by shedding the approximate $50 million/year in
fees paid to the Sponsor Group). The failure to resolve these
business imperatives has resulted in lost cash flow and, coupled
with the current debt burden, impairs the Debtors' competitive
posture and potentially, long term viability.
"Having ineptly 'kicked the can down the road' for the past six
years, management has now steered the Debtors into chapter 11 with
pending deals with Senior Lenders and creditors of the Debtors'
regulated business segment. These Debtors effectively wasted
nearly a year and many hundreds of millions of dollars pursuing
their doomed 'Project Olympus,' a proposal aimed at retaining
value for the Sponsor Group by keeping the Debtors' merchant power
and transmission businesses together under the EFH banner. With
the failure of that effort and faced with the inevitable split of
the regulated business from the non-regulated business, the
Sponsors and the Debtors' management have shifted gears and appear
to have refused to meaningfully consider any restructuring that
would expose EFH (the Sponsors' investment vehicle) to tax
liabilities that might result from a separation of the merchant
power and transmission business, despite the unambiguous economic
interests of subsidiary creditor groups. This refusal appears
designed to avoid the reputational repercussions to the Sponsors
from having massive tax liabilities go unfunded at EFH. Instead of
addressing fiduciary responsibility of TCEH's management to TCEH's
creditors, the Debtors now appear, with the approval of Senior
Lenders, intent on saddling TCEH with future tax liabilities --
via a 'tax free spinoff' of the unregulated business that would be
to the direct detriment of the Second Liens and other junior
creditors largely excluded from restructuring discussions to date.
With expected recoveries in excess of their claims, the Senior
Lenders appear all too willing to accept such future tax liability
in exchange for a quick trip through Chapter 11 that would
extinguish junior interests," Mr. Bowden argues.
Wilmington Savings is represented by:
ASHBY & GEDDES, P.A.
William P. Bowden, Esq.
Gregory A. Taylor, Esq.
500 Delaware Avenue
P.O. Box 1150
Wilmington, DE 19899
Telephone: (302) 654-1888
Facsimile: (302) 654-2067
- and -
BROWN RUDNICK LLP
Edward S. Weisfelner, Esq.
Seven Times Square
New York, NY 10036
Telephone: (212) 209-4800
Facsimile: (212) 209-4801
- and -
Jeffrey L. Jonas, Esq.
Andrew P. Strehle, Esq.
Jeremy B. Coffey, Esq.
One Financial Center
Boston, MA 02111
Telephone: (617) 856-8200
Facsimile: (617) 856-8201
- and -
Howard L. Siegel, Esq.
185 Asylum Street
Hartford, CT 06103
Telephone: (860) 509-6500
Facsimile: (860) 509-6501
About Energy Future Holdings, fka TXU Corp.
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 percent-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.
On April 29, 2014, Energy Future Holdings and 70 affiliated
companies sought Chapter 11 bankruptcy protection (Bankr. D. Del.
Lead Case No. 14-10979) after reaching a deal with some key
financial stakeholders to keep its businesses operating while
reducing its roughly $40 billion in debt.
The Debtors' cases have been assigned to Judge Christopher S.
Sontchi (CSS). The Debtors are seeking to have their cases
jointly administered for procedural purposes.
As of Dec. 31, 2013, EFH Corp. reported total assets of $36.4
billion in book value and total liabilities of $49.7 billion. The
Debtors have $42 billion of funded indebtedness.
EFH's legal advisor for the Chapter 11 proceedings is Kirkland &
Ellis LLP, its financial advisor is Evercore Partners and its
restructuring advisor is Alvarez & Marsal. The TCEH first lien
lenders supporting the restructuring agreement are represented by
Paul, Weiss, Rifkind, Wharton & Garrison, LLP as legal advisor,
and Millstein & Co., LLC, as financial advisor. The EFIH
unsecured creditors supporting the restructuring agreement are
represented by Akin Gump Strauss Hauer & Feld LLP, as legal
advisor, and Centerview Partners, as financial advisor. The EFH
equity holders supporting the restructuring agreement are
represented by Wachtell, Lipton, Rosen & Katz, as legal advisor,
and Blackstone Advisory Partners LP, as financial advisor.
Epiq Systems is the claims agent. The claims agent maintains a
Web site at http://www.efhcaseinfo.com/
ENERGY FUTURE: To Pay $40-Mil. to Critical Vendors
--------------------------------------------------
Energy Future Holdings Corp. and its affiliates ask the bankruptcy
court for approval to pay, in the ordinary course of business,
certain prepetition claims held by critical trade vendors that are
essential to the Debtors' ongoing business operations.
The Debtors purchase goods and services from more than 6,700
third-party vendors. The Debtors estimate that they owe
approximately $507 million to their third-party vendors as of the
Petition Date.
The Debtors reviewed their vendor lists to identify those vendors
critical to the continued operation of their businesses. The
Debtors estimate that they approximately $40 million to critical
vendors on account of foods and services delivered before the
Petition Date. These amounts represent 8.0% of the Debtors'
outstanding trade debt and 0.1% of the total funded indebtedness.
The Debtors seek authority to pay $30 million following entry of
an interim order and $40 million pursuant to a final order.
About Energy Future Holdings, fka TXU Corp.
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 percent-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.
On April 29, 2014, Energy Future Holdings and 70 affiliated
companies sought Chapter 11 bankruptcy protection (Bankr. D. Del.
Lead Case No. 14-10979) after reaching a deal with some key
financial stakeholders to keep its businesses operating while
reducing its roughly $40 billion in debt.
The Debtors' cases have been assigned to Judge Christopher S.
Sontchi (CSS). The Debtors are seeking to have their cases
jointly administered for procedural purposes.
As of Dec. 31, 2013, EFH Corp. reported total assets of $36.4
billion in book value and total liabilities of $49.7 billion. The
Debtors have $42 billion of funded indebtedness.
EFH's legal advisor for the Chapter 11 proceedings is Kirkland &
Ellis LLP, its financial advisor is Evercore Partners and its
restructuring advisor is Alvarez & Marsal. The TCEH first lien
lenders supporting the restructuring agreement are represented by
Paul, Weiss, Rifkind, Wharton & Garrison, LLP as legal advisor,
and Millstein & Co., LLC, as financial advisor. The EFIH
unsecured creditors supporting the restructuring agreement are
represented by Akin Gump Strauss Hauer & Feld LLP, as legal
advisor, and Centerview Partners, as financial advisor. The EFH
equity holders supporting the restructuring agreement are
represented by Wachtell, Lipton, Rosen & Katz, as legal advisor,
and Blackstone Advisory Partners LP, as financial advisor.
Epiq Systems is the claims agent. The claims agent maintains a
Web site at http://www.efhcaseinfo.com/
ENERGY FUTURE: Case Summary & 50 Largest Unsecured Creditors
------------------------------------------------------------
Affiliates filing Chapter 11 bankruptcy petitions:
Debtor Case No.
------ --------
Energy Future Holdings Corp. 14-10979
4Change Energy Company 14-10980
4Change Energy Holdings LLC 14-10981
Big Brown 3 Power Company LLC 14-10983
Big Brown Lignite Company LLC 14-10986
Big Brown Power Company LLC 14-10988
Brighten Energy LLC 14-10991
Brighten Holdings LLC 14-10995
Collin Power Company LLC 14-10998
Dallas Power & Light Company, Inc. 14-11000
DeCordova II Power Company LLC 14-11003
DeCordova Power Company LLC 14-10982
Eagle Mountain Power Company LLC 14-10984
EBASCO SERVICES OF CANADA LIMITED 14-10987
EEC Holdings, Inc. 14-10990
EECI, Inc. 14-10992
EFH Australia (No. 2) Holdings Company 14-10994
EFH CG Holdings Company LP 14-11047
EFH CG Management Company LLC 14-11048
EFH Corporate Services Company 14-10996
EFH Finance (No. 2) Holdings Company 14-10999
EFH FS Holdings Company 14-11004
EFH Renewables Company LLC 14-11006
EFIH FINANCE INC. 14-11001
Energy Future Competitive Holdings Company 14-11005
LLC
Energy Future Intermediate Holding 14-11008
Company LLC
Generation Development Company LLC 14-11017
Generation MT Company LLC 14-11021
Generation SVC Company 14-11025
Lake Creek 3 Power Company LLC 14-11029
Lone Star Energy Company, Inc. 14-11031
Lone Star Pipeline Company, Inc. 14-11036
LSGT Gas Company LLC 14-11039
LSGT SACROC, Inc. 14-11012
Luminant Big Brown Mining Company LLC 14-11018
Luminant Energy Company LLC 14-11023
Luminant Energy Trading California Company 14-11026
Luminant ET Services Company 14-11030
Luminant Generation Company LLC 14-11032
Luminant Holding Company LLC 14-11037
Luminant Mineral Development Company LLC 14-11040
Luminant Mining Company LLC 14-11042
Luminant Renewables Company LLC 14-11044
Martin Lake 4 Power Company LLC 14-11010
Monticello 4 Power Company LLC 14-11011
Morgan Creek 7 Power Company LLC 14-11014
NCA Development Company LLC 14-11016
NCA Resources Development Company LLC 14-11019
Oak Grove Management Company LLC 14-11022
Oak Grove Mining Company LLC 14-11024
Oak Grove Power Company LLC 14-11027
Sandow Power Company LLC 14-11033
Southwestern Electric Service Company, Inc. 14-11035
TCEH Finance, Inc. 14-11028
Texas Competitive Electric Holdings 14-10978
Company LLC
Texas Electric Service Company, Inc. 14-11034
Texas Energy Industries Company, Inc. 14-11038
Texas Power & Light Company, Inc. 14-11041
Texas Utilities Company, Inc. 14-11043
Texas Utilities Electric Company, Inc. 14-11045
Tradinghouse 3 & 4 Power Company LLC 14-11046
Tradinghouse Power Company LLC 14-10985
TXU Electric Company, Inc. 14-10989
TXU Energy Receivables Company LLC 14-10993
TXU Energy Retail Company LLC 14-10997
TXU Energy Solutions Company LLC 14-11002
TXU Receivables Company 14-11007
TXU Retail Services Company 14-11009
TXU SEM Company 14-11013
Valley NG Power Company LLC 14-11015
Valley Power Company LLC 14-11020
Type of Business: Power Company
Chapter 11 Petition Date: April 29, 2014
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Judge: Hon. Christopher S. Sontchi
Debtors' General
Counsel: Richard M. Cieri, Esq.
Edward O. Sassower, P.C.
Stephen E. Hessler, Esq.
Brian E. Schartz, Esq.
KIKRLAND & ELLIS, LLP
601 Lexington Avenue
New York, NY 10022
http://www.kirkland.com
Tel: (212) 446-4800
Fax: (212) 446-4900
Email: edward.sassower@kirkland.com
stephen.hessler@kirkland.com
brian.schartz@kirkland.com
- and -
James H.M. Sprayregen, P.C.
Chad J. Husnick, Esq.
Steven N. Serajeddini, Esq.
KIRKLAND & ELLIS, LLP
300 North LaSalle
Chicago, IL 60654
http://www.kirkland.com
Tel: (312) 862-2000
Fax: (312) 862-2200
Email: james.sprayregen@kirkland.com
chad.husnick@kirkland.com
steven.serajeddini@kirkland.com
Debtors' Local
Counsel: Mark D. Collins, Esq.
Daniel J. DeFranceschi, Esq.
Jason M. Madron, Esq.
RICHARDS, LAYTON & FINGER, P.A.
920 North King Street
Wilmington, DE 19801
http://www.rlf.com
Tel: (302) 651-7700
Fax: (302) 651-7701
Email: collins@RLF.com
defranceschi@rlf.com
madron@rlf.com
Debtors'
Financial
Advisor: EVERCORE PARTNERS, INC.
Debtors'
Restructuring
Advisor: ALVAREZ & MARSAL NORTH AMERICA, LLC
55 W Monroe, Suite 4000
Chicago, IL 60603
http://www.alvarezandmarsal.com
Tel: (312) 601-4220
Fax: (312) 332-4599
Attn: Steve Kotarba
- and -
ALVAREZ & MARSAL
2100 Ross Avenue, 21st Floor
Dallas, TX 75201
http://www.alvarezandmarsal.com
Tel: (214) 438-1000
Fax: (214) 438-1001
Attn: Jeff Stegenga
Debtors' Energy
Consultant: FILSINGER ENERGY PARTNERS, INC.
Debtors' Notice,
Claims and
Balloting Agent: EPIQ BANKRUPTCY SOLUTIONS, LLC
Debtors'
Independent
Auditor: DELOITTE & TOUCHE LLP
Debtors' Tax
Advisor: KPMG LLP
Debtors'
Compensation
Consultants: TOWERS WATSON & CO.
Debtors'
Internal
Auditing
Advisor: PRICEWATERHOUSECOOPERS LLP
Debtors' Tax
Auditing
Advisors: ERNST & YOUNG LLP
Total Assets (on a consolidated basis): $36.4 billion
Total Liabilities (on a consolidated basis): $49.7 billion
The petitions were signed by Anthony R. Horton, senior vice
president, treasurer and assistant secretary.
Consolidated List of Debtors' 50 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- --------------
Law Debenture Trust Company of Unsecured Debt $5,505,163,811
New York
Attn: Frank Godino-vice president
400 Madison Avenue - Suite 4D
New York, NY 10017
USA
Tel: (646) 747-1251
Fax: (212) 750-1361
Email: frank.godino@lawdeb.com
- and -
Patterson Belknap Webb &
Tyler LLP
Re: Law Debenture Trust
Company of New York
Attn: Daniel A. Lowenthal -
Counsel
1133 Avenue of the Americas
New York, NY 10036
USA
Tel: (212)336-2720
Fax: (212)336-1253
Email: dalowenthal@pbwt.com
American Stock Transfer and
Trust Company, LLC
Attn: Paul Kim
General Counsel
6201 15th Street Avenue
Brooklyn, NY 11219
Tel: (718) 921-8183
Fax: (718) 331-1852
Email: pkim@Amstock.com
- and -
Nixon Peabody LLP Unsecured Debt $2,565,874,358
American Stock Transfer
and Trust, LLC
Attn: Amelia M. Charamba- counsel
100 Summer Street
Boston, MA 02110
Tel: (617)345-1041
Fax: (866)244-1527
Email: acharamba@nixonpeabody.com
UMB Bank, N.A. Unsecured Debt $1,649,363,974
Attn: Laura Roberson
Vice president
2 South Broadway, Suite 600
St. Louis, MO 63102
Tel: (314)612-8484
Fax: (314)612-8499
Email: laura.roberson@UMB.com
- and -
Foley & Lardner, LLP
Re: UMB Bank, N.A.
Attn: Harold L. Kaplan,
Mark Hebbeln - counsel
321 N Clark Street, Suite 2800
Chicago, IL 60654
Tel: (312)832-4393,
(312)832-4394
Fax: (312)832-4700
Email: hkaplan@foley.com
mhebbleln@foley.com
The Bank of New York Mellon Unsecured Debt $891,404,403
Trust Company
Attn: Rafael Martinez -
Vice President
601 Travis Street
Houston, TX 77002
Tel: (713) 483-6535
Fax: (713) 483-6954
Email: rafael.martinez@bnymellon.com
- and -
The Bank of New York Mellon Trust
Company
Attn: Thomas Vlahakis - vice president
385 Rifle Camp Road, 3rd Floor
Woodland Park, NJ 07424
Tel: (973) 247-4742
Fax: (713) 483-6954
Holt Cat Trade $11,400,000
Attn: Michael Puryear
General Counsel
3302 S W.W. White Rd
San Antonio, TX 78222
Tel: (210) 648-1111
Fax: (210) 648-0079
Ada Carbon Solutions (Red Trade $10,508,908
River Environmental Products
Attn: Peter O. Hansen
General Counsel
1460 W. Canal Port
Littleton, CO 80120
Tel: (303) 962-1977
Fax: (303) 962-1970
Email: peter.hansen@ada-cs.com;
info@ada-cs.com
Fluor Global Services Trade $9,283,826
Attn: Carlos M. Hernandez -
Executive Vice President,
Chief Legal Officer and
Secretary
6700 Las Calinas Blvd.
Irving, TX 75039
Tel: (469) 398-7000
Fax: (469) 398-7255
Email: carlos.hernandez@fluor.com
BNSF Railway Company Trade $8,353,152
Attn: Roger Nober - Executive VP,
Law and Corporate Affairs
2650 Lou Menk Drive
Fort Worth, TX 76131
Tel: (817) 352-1460
Fax: (817) 352-7111
Email: roger.nober@bnsf.com
HCL America Inc Trade $8,137,238
Attn: Raghu Raman Lakshmanan
General Counsel
330 Potrero Avenue
Sunnyvale, CA 94085
Tel: (408) 523-8331
Fax: (408) 733-0482
Email: rlaksmanan@hcl.com
Shaw Maintenance (CB&I) Trade $6,900,000
Attn: Ricard E. Chandler, Jr.
President and Chief
Executive Officer
c/o CB&I - Once CB & I Plaza
2103 Research Forest Drive
The Woodlands, TX 77380
Tel: (832) 513-1000
Fax: (832) 513-1094
Email: richard.chandler@cbi.com
Westinghouse Electric Co LLC Trade $4,607,855
Attn: Mike Sweeney - Senior
Vice President & General counsel
Legal & Contracts
1000 Westinghouse Drive,
Suite 572A
Cranberry Twonship, PA 16066
Tel: (724) 940-8323
Fax: (724) 940-8518
Email: holtsa@westinghouse.com
Centerpoint Energy Houston Trade $3,433,868
Attn: Mark Schroeder
Senior Vice President and
Deputy General Counsel
1111 Louisiana Street
Houston, TX 77002
Tel: (713) 207-7053
Fax: (713) 207-9233
Email: mark.schroeder@centerpointenergy.com
Asher Media Inc. Trade $3,292,625
Attn: Kalyn Asher - President
15303 Dallas Parkway, Suite 1300
Addison, TX 75001
Tel: (214) 580-8750
Fax: (972) 732-1161
Mine Service Ltd. Trade $2,703,008
Attn: Keith Debault - President
855 E US Highway 79
Rockdale, TX 76567
Tel: (512) 446-7011
Fax: (512) 446-7195
Email: keithdebault@msirockdale.com
Courtney Construction Inc. Trade $2,640,695
Attn: Karlos Courtney - Owner
2617 US Hwy 79N
Carthage, TX 75633
Tel: (903)694-2911
Fax: (903)694-2921
Email: karloscourtney@courtneyconstruction.com
Siemens Power Generation Inc. Trade $2,487,807
Attn: Christopher Ranck
Vice President and General Counsel
4400 N Alafaya Trl
Orlando, FL 32826
Tel: (407) 333-2476
Fax: (972) 550-2101
Email: chris.ranck@siemens.com
Brake Supply Co. Inc. Trade $2,450,000
Attn: David Koch - CEO & Pres.
5501 Foundation Blvd.
Evansville, IN 47725
Tel: (812) 467-1000
Fax: (812) 429-9425
Email: sales@brake.com
Hydrocarbon Exchange Corp. Trade $2,370,303
Attn: R Scott Hopkins
President
5910 N. Central Expy.
Ste 1380
Dallas, TX 75206
Tel: (214) 987-0257
Fax: (214) 987-0670
Email: msavage@hydrocarbonexchange.com
Securitas Security Services USA Trade $2,274,827
Attn: Sonia Jasman - President
2 Campus Drive
Parsipanny, NJ 07054-4400
Tel: (973) 267-5300
Fax: (973) 397-2491
Email: contact@securitasinc.com
Transactel Inc. Trade $2,191,210
Attn: Guillermo Montano
Chief Executive Officer
18 Calle 25-85 Z.10
Torre Transactel Pradera
Guatemala City, Guatemala
Tel: 011 502 2223-0000
Fax: 011 502 2223-0004
Email: gmontano@transactel.net
Merico Abatement Contractors Inc. Trade $2,016,224
Attn: Mike Merritt - President
201 Estes Dr.
Longview, TX 75602-6100
Tel: (903) 757-2656
Fax: (903) 757-8864
Email: Mike@Merritt.net
ALCOA Trade $1,793,501
Attn: Max W. Laun
Vice President and
General Counsel
201 Isabella Street
Pittsburgh, PA 152195858
Tel: (412) 553-4569
Fax: (412) 553-4064
Email: max.laun@alcoa.com
Automatic Systems Inc. Trade $1,724,583
Attn: Michael Hoehn - President
9230 East 47th Street
Kansas City, MO 64133
Tel: (816) 356-0660
Fax: (816) 356-5730
Email: michael@hoehn@asi.com
Ranger Excavating LP Trade $1,630,396
Attn: Jack Carmody - President
5222 Thunder Creek Road
Austin, TX 78759
Tel: (512) 343-9613
Fax: (512) 343-9618
Email: jack.carmody@rangerexcavating.com
Grainger Trade $1,618,371
Attn: John L. Howard
General Counsel
100 Grainger Pkwy
Lake Forest, IL 60045
Tel: (847) 535-1000
Fax: (847) 535-0878
Email: john.howard@grainger.com
Warfab Trade $1,566,782
Attn: Malcolm Clevenstine -
President and CEO
607 Fisher Rd
Longview, TX 75604
Tel: (903) 295-1011
Fax: (903) 295-1982
Email: info@warfabinc.com
Ameco Inc. Trade $1,517,134
Attn: Gary Bernardez - President
2106 Anderson Road
Greensville, SC 29611
Tel: (864) 295-7800
Fax: (864) 295-7962
Email: gary.bernardez@ameco.com
Capgemini North America Inc. Trade $1,481,812
Attn: Isabelle Roux -
International Legal Affairs
623 Fifth Avenue 33rd Floor
New York, NY 10022
Tel: (212) 314-8000
Fax: (212) 314-8001
Email: isabelle.roux-chenu@capgemini.com
Texas-New Mexico Power Company Trade $1,456,189
Attn: Patrick Apodaca - Senior vice Pres.
General Counsel, Secretary
414 Silver Avenue SW
Albuquerque, NM 87102-3289
Tel: (505) 241-2700
Fax: (505) 241-4311
Email: patrick.apodaca@tnmp.com
Generator & Motor Services Inc. Trade $1,400,000
Attn: President
601 Braddock Ave.
Turtle Creek, PA 15145
Tel: (412) 829-7500
Fax: (412) 829-1692
Performance Contracting Inc. Trade $1,399,234
Attn: Chuck William - SVP General
Counsel
16400 College Blvd.
Lenexa, KS 66219
Tel: (913) 888-8600
Fax: (913) 492-7823
Email: info@pcg.com
Benchmark Industrial Services Trade $1,389,644
Attn: Mike Wilcox - Owner
2100 State Highway 31 E
Kilgore, TX 75662
Tel: (903) 983-2951
Fax: (903) 984-0982
Email: mwilcox@benchmarkisi.com
Pierce Construction Inc. Trade $1,357,107
Attn: Kenneth Pierce - Owner
4324 State Hwy 149
Beckville, TX 75631
Tel: (903) 678-3748
Fax: (903) 678-3896
EmaiL: kenneth@pierceconstructioninc.com
Ryan Partnership (Formerly Trade $1,305,595
Solutionset)
Attn: Mary Perry - President
440 Polaris Parkway
Westerville, OH 43082
Tel: (614) 844-3973
Fax: (614) 436-6640
Email: mary.perry@ryanpartnership.com
Team Excavating Trade $1,266,986
Attn: Wayne Yost - Owner - President
815 N Main Street
Wrens, GA 30833
Tel: (706) 547-6554
Fax: (706) 547-6553
Email: wyost2teamexcavatingco.com
Sitel LLC Trade $1,262,603
Attn: David Beckman -
General Counsel
3102 West End Avenue
Nashville, TN 37203
Tel: (615) 301-7100
Fax: (615) 301-7252
Email:david.beckman@sitel.com
TPUSA Trade $1,236,218
Attn: John Warren May - Chief Legal
Officer
1991 South 4650 West
Salt Lake City, UT 84104
Tel: (801) 257-5811
Fax: (801) 257-6246
Email: john.may@teleperformance.com
Kansas City Southern Railway (KCS) Trade $1,231,792
Attn: William Wochner - Chief
Legal Officer
427 West 12th Street
Kansas City, MO 64105
Tel: (816) 983-1303
Email: (816) 783-1501
Email: wwochner@kcsouthern.com
Headwaters Resources Inc. Trade $1,215,760
Attn: Harlan M. Hatfield -
Vice President, Secretary
& General Counsel
10701 S. River Front Parkway
Suite 300
South Jordan, UT 84095
Tel: (801) 984-9400
Fax: (801) 984-9410
Email: hhatfield@headwaters.com
Trent Wind Farm L.P. Trade $1,188,168
Attn: President and General Counsel
Trint Wind Farm
1423 CR 131
Trent, TX 79561
Tel: (614) 583-7035
Fax: (614) 583-1691
Email: clmcgarvey@aep.com
Lower Colorado River Authority Trade $1,167,381
Attn: Phil Wilson Services Corp.
Transmission Services Corp.
Austin, TX 78703
Tel: (512) 473-3200
Fax: (512) 578-3520
Email: general.manager.lcra.org
Frisco Construction Services Trade $1,097,597
Attn: Clay Thomas - Chief Executive
Officer
9550 John W. Elliott Drive,
Suite 106
Frisco, TX 75033
Tel: (214) 975-0808
Fax: (214) 975-0811
Email: cthomas@friscocs.com
Crane Nuclear Inc. Trade $1,062,900
Attn: President and General Counsel
2825 Cobb International Blvd NW
Kennesaw, GA 30152
Tel: (770) 429-4600
Fax: (770) 429-4750
Email: cinfo@cranevs.com
AEP Texas North Company Trade $1,032,018
Attn: Mr. Charles Patton
President and Chief
Operating Officer
1 Riverside Plaza
Columbus, OH 43215-2372
Tel: (614) 716-1000
Fax: (614) 716-1823
Email: Mmiller@apgellc.com
J & S Construction LLC Trade $969,154
Attn: Jeff Grodel - Owner
10823 N US Highway 75
Buffalo, TX 75831
Tel: (903) 322-4942
Fax: (903) 322-1940
FL Smidth Airtech Inc. Trade $945,329
Attn: Mark Brancato
General Counsel
Cement Projects Americas
2040 Avenue C
Beothlehem, PA 18017
Tel: (610) 264-6011
Fax: (610) 264-6170
Email: Mark.Brancato@flsmidth.com
Northeast Texas Power Ltd. Trade $853,744
Attn: David Petty - President
3163 Fm 499
Cumby, TX 75433
Tel: (903) 994-4200
Fax: (903) 994-2747
Taggart Global LLC Trade $828,978
Attn: John Luke - General Counsel
& Corp. Secretary
c/o Forge Group Ltd.
4000 Town Center Boulevard
Canonsburg, PA 15317
Tel: (724) 754-9800
Fax: (724) 754-9801
Email: Info@forgegroup.com
Data Systems & Solutions LLC Trade $822,000
(Rolls Royce)
Attn: Miles Cowdry - President
Rolls-Royce Civil Nuclear
994-A Explorer Blvd.
Huntsville, AL 35806
Tel: (800) 632-5126
Fax: (317) 230-4699
Email: Miles.Cowdry@rolls-royce.com
Pension Benefit Guaranty Pension Unknown
Corporation
Attn: Israel Goldowitz
Office of the Chief Counsel
1200 K Street, NW
Washington, DC 20005-4026
Tel: (202) 326-4020
Fax: (202) 326-4112
Email: Goldowitz.Israel@pbgc.gov
ENERGY TRANSFER: S&P Affirms 'BB' Rating, Outlook Stable
--------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its 'BBB-'
rating on Energy Transfer Partners L.P. (ETP) and maintained the
stable outlook following the announced acquisition of Susser
Holdings Corp. S&P affirmed the 'BBB-' rating on Sunoco Logistics
Partners L.P. (SXL) and Panhandle Eastern Pipe Line Co. L.P. and
maintained their stable outlooks. S&P also affirmed the 'BB'
ratings on Energy Transfer Equity L.P. (ETE) and maintained its
stable outlook. As of Dec. 31, 2013, ETP and its subsidiaries had
about $16.5 billion of reported debt.
S&P believes the Susser transaction will only have a slight
negative effect on ETP's credit quality. The acquisition
marginally worsens ETP's business risk profile as it grows the
proportion of cash flows from the higher risk retail fuel
marketing business to roughly 13% from about 8%. S&P maintained
ETP's business risk score of "strong", however, because it do not
expect ETP to further grow the retail fuel marketing business.
The transaction slightly increases S&P's expectation of ETP's debt
leverage to about 4.5x in 2014 from 4.25x, which is mainly due to
the incremental debt to fund the Susser transaction. S&P believes
this debt leverage is appropriate for ETP's rating given its
business mix, although toward the upper end of our expectations.
The stable outlook on ETP reflects S&P's expectation that its debt
to EBITDA ratio will be about 4.5x in 2014. S&P also expects the
partnership to manage and finance its capital spending program
while keeping an adequate liquidity position.
ERF WIRELESS: Incurs $7.3 Million Net Loss in 2013
--------------------------------------------------
ERF Wireless, Inc., filed with the U.S. Securities and Exchange
Commission its annual report on Form 10-K disclosing a net loss
attributable to the Company of $7.26 million on $7.15 million of
total sales for the year ended Dec. 31, 2013, as compared with a
net loss attributable to the Company of $4.81 million on $7.32
million of total sales during the prior year. The Company
incurred a net loss attributable to the Company of $3.37 million
in 2011.
As of Dec. 31, 2013, the Company had $5.07 million in total
assets, $12.06 million in total liabilities and a $6.98 million
total shareholders' deficit. At Dec. 31, 2013, the Company's
current assets totaled $2.08 million (including cash and cash
equivalents of $42,000) total current liabilities were $6.58
million, resulting in negative working capital of $4.50 million.
A copy of the Form 10-K is available for free at:
http://is.gd/msE5Wx
About ERF Wireless
Based in League City, Texas, ERF Wireless, Inc., provides secure,
high-capacity wireless products and services to a broad spectrum
of customers in primarily underserved, rural and suburban parts of
the United States.
EVENT RENTALS: Has Final Approval of $20MM DIP Loans
----------------------------------------------------
Event Rentals, Inc., et al., obtained final authority from the
U.S. Bankruptcy Court for the District of Delaware to tap senior
secured postpetition financing in an aggregate principal amount
not to exceed $20 million from Ableco Finance LLC, as
administrative agent for a consortium of lenders, and use cash
collateral securing their prepetition indebtedness.
A full-text copy of the Final DIP Order with Budget is available
at http://bankrupt.com/misc/EVENTRENTALdipord0401.pdf
The Debtors have notified the Court that they have selected the
bid of Apollo Capital Management, L.P., on behalf of investment
funds managed by it or any of its affiliates, as the successful
bid, and the bid of CPR Acquisition Holdings, LLC, the stalking
horse bidder, as the back-up bid. Apollo topped CPR, an entity
affiliated with the Debtors' prepetition secured lenders, with a
bid of $125.3 million in cash. The lenders will take the
company's business in exchange for $124 million in secured debt.
Apollo's bid is subject to a definitive agreement and Court
approval.
The Debtors, the Official Committee of Unsecured Creditors, and
S.A.C. Offshore Capital Funding, Ltd., S.A.C. Domestic Capital
Funding, Ltd., JPM Mezzanine Capital, LLC, Quad-C Partners VII,
L.P., Quad-C Principals LLC, Quad-C Management, Inc., and Quad-C
VII Management Corp. -- which own all or substantially all of the
equity interests in Special Event Holding, Inc. -- entered into a
compromise and settlement agreement under which the parties agreed
to negotiate in good faith the provisions of a Chapter 11 plan,
which will contain customary broad and mutual release provisions
among the Debtors, the Creditors' Committee, the Liquidity
Parties, the Lenders, and other participating creditors relating
to the Debtors or their businesses, these Chapter 11 cases, and
other obligations and transactions.
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports also related that so the creditors? committee wouldn?t
oppose the sale, the lenders worked out a settlement before the
auction where they agreed to release $600,000 in cash. If the
creditors don?t use the entire budget for their fees, up to
$150,000 more can go into the pot for creditors, the Bloomberg
report said.
The Debtors are represented by Jeffrey M. Schlerf, Esq., John H.
Strock, Esq., and L. John Bird, Esq., at Fox Rothschild LLP, in
Wilmington, Delaware; and John K. Cunningham, Esq., at WHITE &
CASE LLP, in Miami, Florida; and Craig H. Averch, Esq., at WHITE &
CASE LLP, in Los Angeles, California.
The Creditors' Committee is represented by Bradford J. Sandler,
Esq., at PACHULSKI STANG ZIEHL & JONES, LLP, in Wilmington,
Delaware; and John D. Fiero, Esq., at PACHULSKI STANG ZIEHL &
JONES, LLP, in San Francisco, California.
About Event Rentals
Event Rentals Inc., the largest event-rental provider in the U.S.,
filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case
No. 14-bk-10282) on Feb. 13, 2014.
Event Rentals, which sought bankruptcy protection with affiliates,
including Classic Midwest, Inc., has 39 locations across 22
markets. The company has the largest offering of event equipment,
value-added event services, and temporary structure assets, and
provide services for over 145,000 events for approximately 55,000
customers annually. The company taps 2,500 employees throughout
the year and has total annual revenues of $235 million.
Assets were listed for $148 million, with debt of $246 million.
The Debtors owe $175 million in outstanding principal under a
senior secured credit agreement; $36 million in outstanding
principal under certain unsecured and subordinated liquidity
notes; $5.5 million in outstanding principal under certain
unsecured and subordinated seller financing relating to business
acquisitions; and trade debt, as of Dec. 26, 2013, totaling $16.6
million.
The Debtors have tapped Jeffrey M. Schlerf, Esq., and John H.
Strock, Esq., at Fox Rothschild LLP as local counsel; John K.
Cunningham, Esq., and Craig H. Averch, Esq., at White & Case LLP
as bankruptcy counsel; Jefferies LLC as financial advisor; and
Kurtzman Carson Consultants LLC as claims and noticing agent.
The Debtors sought bankruptcy protection as they seek a new owner
to take over the business.
Existing lenders led by Ableco Finance LLC, as administrative
agent, have agreed to finance the bankruptcy with a DIP financing
facility of up to $20 million.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven
creditors to serve on the Official Committee of Unsecured
Creditors for the Debtors' Chapter 11 cases.
The Debtors disclosed that funds managed by Apollo Global
Management, LLC submitted the winning offer to acquire
substantially all of the Debtors' business at the April 21
auction. A hearing to approve the sale is set for April 29. The
Debtors intend to complete the sale by the end of May.
FAIRMONT GENERAL: Still Seeking Buyer
-------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Fairmont General Hospital Inc., a 207-bed acute-care
facility in Fairmont, West Virginia, said it expects to find a
buyer or investor in time for it to file a Chapter 11
reorganization plan by June.
According to the report, the hospital for a second time sought an
extension of its exclusive right to propose a plan. Absent an
objection within three weeks, the new filing deadline will be
June 30.
The hospital is also seeking court approval of a modified labor
agreement with District 1199 West Virginia/Kentucky/Ohio Service
Employees International Union, which, according to the hospital,
allows it to save approximately $2 million. The expiration of the
modified labor agreement, which covers 303 employees, will be
extended until Oct. 31, 2016. The modified labor agreement also
modifies the pension plan from a 6% defined contribution by the
Debtor to a 3% defined contribution.
About Fairmont General Hospital Inc.
Fairmont General Hospital Inc. and Fairmont Physicians, Inc.,
which operate a 207-bed acute-care facility in Fairmont, West
Virginia, sought Chapter 11 bankruptcy protection (Bankr. N.D.
W.Va. Case No. 13-01054) on Sept. 3, 2013. The fourth-largest
employer in Marion County, West Virginia, filed for bankruptcy as
it looks to partner with another hospital or health system.
The Debtors are represented by Rayford K. Adams, III, Esq., and
Casey H. Howard, Esq., at Spilman Thomas & Battle, PLLC, in
Winston-Salem, North Carolina; David R. Croft, Esq., at Spilman
Thomas & Battle, PLLC, in Wheeling, West Virginia, and Michael S.
Garrison, Esq., at Spilman Thomas & Battle, PLLC, in Morgantown,
West Virginia. The Debtors' financial analyst is Gleason &
Associates, P.C. The Debtors' claims and noticing agent is Epiq
Bankruptcy Solutions. Hammond Hanlon Camp, LLC, has been engaged
as investment banker and financial advisor.
UMB Bank is represented by Nathan F. Coco, Esq., and Suzanne Jett
Trowbridge, Esq., at McDermott Will & Emery LLP.
The Committee of Unsecured Creditors is represented by Andrew
Sherman, Esq., and Boris I. Mankovetskiy, Esq., at Sills Cummis &
Gross P.C. and Kirk B. Burkley, Esq., Bernstein Burkley, P.C.
Janet Smith Holbrook, Esq., at Huddleston Bolen LLP, represents
the Committee as local counsel.
The Bankruptcy Court has named Suzanne Koenig at SAK Management
Services, LLC, as patient care ombudsman. Ms. Koenig has hired
her own firm as medical operations advisor; and Greenberg Traurig,
LLP, as her counsel.
The Debtors are engaged in the process of locating a buyer or
strategic partner for the hospital, through the Debtors'
investment bankers. The Debtors believe that by the end of
March 2014 that process will be complete and a plan can be filed.
The Debtors have scheduled $48,568,863 in total assets and
$54,774,365 in total liabilities.
FLETCHER INT'L: United Community Banks Settlement Approved
----------------------------------------------------------
U.S. Bankruptcy Judge Robert E. Gerber has approved Fletcher
International, Ltd.'s settlement with United Community Banks, Inc.
and its subsidiary United Community Bank.
Pursuant to the settlement, United will purchase the outstanding
warrant to purchase United's common stock previously issued to
Fletcher and settle any and all claims that could be asserted by
Fletcher.
United will deliver 640,000 shares of its common stock and cash
that, together with the common stock, will have a combined fair
value of $12 million for the purchase of the Fletcher warrant and
release of all claims by Fletcher. United said in a statement
that the final cash payment due to Fletcher will be an amount
equal to the difference between the value of United's common stock
on such date and $12 million, which was previously reserved for at
the time of the 2013 settlement with FILB Co-Investments LLC for
potential claims that Fletcher might make against United, which
are the subject of this settlement.
According to bankruptcy court order, the Chapter 11 trustee is
authorized to pay the Seaport Group its commission.
The Trustee will not distribute $4 million -- Restricted
Settlement Proceeds -- of the proceeds received on account of, or
pursuant to, the Settlement Agreement without providing 45 days'
written notice to these parties:
(a) Corinne Ball, not individually but solely in her capacity
as chapter 11 trustee for (i) Soundview Elite Ltd., (ii) Soundview
Premium, Ltd., (iii) Soundview Star Ltd., (iv) Elite Designated,
(v) Premium Designated and (vi) Star Designated;
(b) Jones Day, as counsel to the Soundview Trustee (Attn:
Veerle Roovers);
(c) The Solon Group, in its capacity as sole director for (i)
Richcourt Euro Strategies Inc., (ii) Richcourt Allweather Fund
Inc., and (iii) America Alternative Investments Ltd. (Attn:
Deborah Hicks Midanek); and
(d) Ostad PLLC, as counsel to the BVI Funds (Attn: Karen
Ostad).
The Trustee will be free to use the non-restricted settlement
proceeds as provided in the Trustee's Second Amended Plan of
Liquidation provided that it is confirmed by this Court and
provided also that the Trustee will not make any distribution of
the non-Restricted Settlement Proceeds prior to May 16, 2014.
Upon receipt of a DISTRIBUTION NOTICE, the Soundview Trustee and
the BVI Funds each will have 45 days to contest, object to or
otherwise seek relief from the Court with respect to, a
distribution of the Restricted Settlement Proceeds, including to
assert any claims to or interests in some or all of the Restricted
Settlement Proceeds. The Trustee will not make any distributions
of the Restricted Settlement Proceeds during the objection period.
About Fletcher International
Fletcher International, Ltd., filed a Chapter 11 petition (Bankr.
S.D.N.Y. Case No. 12-12796) on June 29, 2012, in Manhattan. The
Bermuda exempted company estimated assets and debts of $10 million
to $50 million. The bankruptcy documents were signed by its
president and director, Floyd Saunders.
David R. Hurst, Esq., at Young Conaway Stargatt & Taylor, LLP, in
New York, serves as counsel and Appleby (Bermuda) Limited serves
as special Bermuda counsel. The Debtor disclosed $52,163,709 in
assets and $22,997,848 in liabilities as of the Chapter 11 filing.
Fletcher International Ltd. was managed by the investment firm of
Alphonse "Buddy" Fletcher Jr.
Fletcher Asset Management was founded in 1991. During its initial
four years, FAM operated as a broker dealer trading various debt
and equity securities and making long-term equity investments.
Then, in 1995, FAM began creating and managing a family of private
investment funds.
The Debtor is a master fund in the Fletcher Fund structure. As a
master fund, it engages in proprietary trading of various
financial instruments, including complex, long-term, illiquid
investments.
The Debtor is directly owned by Fletcher Income Arbitrage Fund and
Fletcher International Inc., which own roughly 83% and 17% of the
Debtor's common shares, respectively. Arbitrage's direct parent
entities are Fletcher Fixed Income Alpha Fund and FIA Leveraged
Fund, both of which are incorporated in the Cayman Islands and are
subject to liquidation proceedings in that jurisdiction, and which
own roughly 76% and 22% of Arbitrage's common stock, respectively.
The Debtor currently has a single subsidiary, The Aesop Fund Ltd.
After filing for Chapter 11 protection, Fletcher immediately
started a lawsuit in bankruptcy court to stop the involuntary
bankruptcy in Bermuda. Judge Gerber at least temporarily halted
liquidators appointed in the Cayman Islands from moving ahead with
proceedings in Bermuda. The lawsuit to halt the Bermuda
liquidation is Fletcher International Ltd. v. Fletcher Income
Arbitrage Fund, 12-01740, in the same court.
Richard J. Davis, Chapter 11 trustee appointed in the case, has
hired Michael Luskin, Esq., Lucia T. Chapman, Esq., and Stephanie
E. Hornung, Esq., at Luskin, Stern & Eisler LLP as his
counsel.
FLETCHER INT'L: Trustee Wins Approval of Chapter 11 Plan
--------------------------------------------------------
U.S. Bankruptcy Judge Robert E. Gerber has confirmed the Second
Amended Plan of Liquidation of Fletcher International Ltd. The
liquidating plan was proposed by Richard J. Davis, the Chapter 11
Trustee.
Holders of general unsecured claims (Class 3) and joint operating
liquidators of the feeder funds (Class 4), the two classes
entitled to vote on the Plan, all submitted "yes" votes.
The linchpin of the Trustee's Plan is a settlement among the
Debtor, its primary feeder funds (Fletcher Income Arbitrage, Ltd.,
FIA Leveraged Fund, Ltd., and Fletcher Income Alpha Fund, Ltd.,
and their respective joint official liquidators, and Alpha's sole
investor, the Massachusetts Bay Transportation Authority
Retirement Fund, pursuant to which the parties have agreed to
settle all litigation between them (actual and threatened) in
exchange for, among other things, allowed claims in the bankruptcy
and an agreement to pool any claims that each has against third-
parties, including insiders and service providers.
The BVI Funds and the trustee for Soundview Elite Ltd. filed
objections but later reached an agreement which provides for the
trustee and the BVI Funds to file new or amended proofs of claim
post confirmation. The only objection that was not resolved was
the objection filed by Stewart A. Turner.
The bankruptcy judge overruled the Turner objection on the merits.
Under the Plan:
* Holders of administrative claims, priority tax claims and
secured claims are unimpaired and will recover 100% of their
claims.
* General unsecured creditors are impaired and each will have
the option of receiving (a) a pro rata share of the
"liquidation recoveries" or (ii) cash in full payment for
its allowed claim of $10,000 or less.
* Pursuant to the Investor Settlement, claims held by these
parties will be compromised, settled, and allowed in these
amounts:
Claimant Amount
-------- ------
Arbitrage and the Arbitrage JOLs $110.0 million
Leveraged and the Leveraged JOLs $5.0 million
Alpha and the Alpha JOLs $1.6 million
* Claims of the Louisiana Pension Funds will be allowed in the
amount of $3 million, provided that the Funds vote to accept
the Plan.
* All insider claims will be extinguished.
* All equity interests in the Debtor will be cancelled and
extinguished.
A copy of the Second Amended Plan of Liquidation is available for
free at:
http://bankrupt.com/misc/Fletcher_2nd_Am_Plan.pdf
A copy of the findings of fact, conclusions of law and order
confirming the Plan is available for free at:
http://bankrupt.com/misc/Fletcher_Plan_Order.pdf
About Fletcher International
Fletcher International, Ltd., filed a Chapter 11 petition (Bankr.
S.D.N.Y. Case No. 12-12796) on June 29, 2012, in Manhattan. The
Bermuda exempted company estimated assets and debts of $10 million
to $50 million. The bankruptcy documents were signed by its
president and director, Floyd Saunders.
David R. Hurst, Esq., at Young Conaway Stargatt & Taylor, LLP, in
New York, serves as counsel and Appleby (Bermuda) Limited serves
as special Bermuda counsel. The Debtor disclosed $52,163,709 in
assets and $22,997,848 in liabilities as of the Chapter 11 filing.
Fletcher International Ltd. was managed by the investment firm of
Alphonse "Buddy" Fletcher Jr.
Fletcher Asset Management was founded in 1991. During its initial
four years, FAM operated as a broker dealer trading various debt
and equity securities and making long-term equity investments.
Then, in 1995, FAM began creating and managing a family of private
investment funds.
The Debtor is a master fund in the Fletcher Fund structure. As a
master fund, it engages in proprietary trading of various
financial instruments, including complex, long-term, illiquid
investments.
The Debtor is directly owned by Fletcher Income Arbitrage Fund and
Fletcher International Inc., which own roughly 83% and 17% of the
Debtor's common shares, respectively. Arbitrage's direct parent
entities are Fletcher Fixed Income Alpha Fund and FIA Leveraged
Fund, both of which are incorporated in the Cayman Islands and are
subject to liquidation proceedings in that jurisdiction, and which
own roughly 76% and 22% of Arbitrage's common stock, respectively.
The Debtor currently has a single subsidiary, The Aesop Fund Ltd.
After filing for Chapter 11 protection, Fletcher immediately
started a lawsuit in bankruptcy court to stop the involuntary
bankruptcy in Bermuda. Judge Gerber at least temporarily halted
liquidators appointed in the Cayman Islands from moving ahead with
proceedings in Bermuda. The lawsuit to halt the Bermuda
liquidation is Fletcher International Ltd. v. Fletcher Income
Arbitrage Fund, 12-01740, in the same court.
Richard J. Davis, Chapter 11 trustee appointed in the case, has
hired Michael Luskin, Esq., Lucia T. Chapman, Esq., and Stephanie
E. Hornung, Esq., at Luskin, Stern & Eisler LLP as his
counsel.
The Chapter 11 trustee filed a proposed liquidating Plan in
November 2013. The disclosure statement was approved on Jan. 17,
2014.
FREE LANCE-STAR: Court OKs Hunton & Williams as Panel's Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Virginia
authorized the Official Committee of Unsecured Creditors appointed
in the Chapter 11 cases of The Free Lance-Star Publishing Co. of
Fredericksburg, Va., et al., to retain Hunton & Williams LLP as
Committee counsel, effective Feb. 20, 2014.
As reported in the Troubled Company Reporter on March 26, 2014,
the Committee requires Hunton & Williams to:
(a) assist, advise and represent the Committee in consultations
with the Debtors regarding the administration of the
Bankruptcy Case;
(b) assist, advise and represent the Committee in analyzing the
Debtors' assets and liabilities, including any mortgages,
liens and other security interests in the Debtors'
property, and participating in and reviewing any proposed
asset sales, any asset dispositions, financing arrangements
and cash collateral issues in connection with these
proceedings;
(c) assist, advise and represent the Committee in any manner
relevant to reviewing and determining the Debtors' rights
and obligations under its leases and executory contracts;
(d) assist, advise and represent the Committee in investigating
the acts, conduct, assets, liabilities and financial
condition of the Debtors, the Debtors' operations and the
desirability of the continuance of any portion of those
operations, and any other matters relevant to the
Bankruptcy Case or to the formation of a plan;
(e) assist, advise and represent the Committee in its
participation in the negotiation, formulation and drafting
of a plan of liquidation or reorganization;
(f) assist, advise and represent the Committee in understanding
its powers and its duties under the Bankruptcy Code and the
Bankruptcy Rules and in performing other services in the
interests of those represented by the Committee;
(g) assist, advise and represent the Committee in the
evaluation of claims and on any litigation matters,
including avoidance actions; and
(h) provide such other services to the Committee as may be
necessary or appropriate in the Debtors' Bankruptcy Case.
Hunton & Williams will be paid at these hourly rates:
Tyler P. Brown, Partner $695
Jason W. Harbour, Partner $585
Justin F. Paget, Associate $400
Shannon E. Daily, Associate $365
Matthew A. Lambert, Paralegal $205
Hunton & Williams will also be reimbursed for reasonable out-of-
pocket expenses incurred.
Tyler P. Brown, Esq., a partner at Hunton & Williams, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtors and their estates.
Hunton & Williams can be reached at:
Tyler P. Brown, Esq.
HUNTON & WILLIAMS LLP
951 East Byrd Street
Richmond, VA 23219
Tel: (804) 788-8674
Fax: (804) 788-8218
About The Free Lance-Star Publishing
The Free Lance-Star Publishing Co. of Fredericksburg, Va., is a
publishing, newspaper, radio and communications company based in
Fredericksburg, Virginia and owned by the family of Josiah P. Rowe
III. FLS's single, seven-day a week newspaper, The Free Lance-
Star was first published in 1885 when a group of local
Fredericksburg merchants and businessmen created the paper to
serve the news and advertising needs of the community. FLS also
owns radio stations WFLS-AM, FLS-FM, and WVBX. FLS owns the
community and news portal http://www.fredericksburg.com/
FLS filed a Chapter 11 bankruptcy petition (Bankr. E.D. Va. Case
No. 14-30315) in Richmond, Virginia, on Jan. 23, 2014. William
Douglas Properties, L.L.C., a related entity that owns a portion
of the land pursuant to which FLS operates certain aspects of its
business, also sought bankruptcy protection.
Judge Keith L. Phillips was initially assigned to the cases, but
the cases were reassigned to Judge Kevin R. Huennekens on the
Petition Date.
The Debtors have tapped Tavenner & Beran, PLC, as counsel; and
Protiviti, Inc., as financial advisor.
Judge A. Robbins, U.S. Trustee for Region 4, appointed three
members to the official committee of unsecured creditors.
GARDA WORLD: Fitch Assigns 'B+' Issuer Default Rating
-----------------------------------------------------
Fitch Ratings has assigned an initial Issuer Default Rating (IDR)
to Garda World Security Corporation (Garda) of 'B+'. In addition,
Fitch has assigned a rating of 'BB+/RR1' to Garda's senior secured
credit facility and a rating of 'B-/RR6' to its senior unsecured
notes. The Rating Outlook is Stable. Approximately CAD1.4 billion
of outstanding debt is covered by Fitch's ratings. A full rating
list follows at the end of this release.
The recent USD140 million add-on to Garda's 7.25% senior unsecured
notes due 2021 will be used to finance a dividend to the company's
private equity owners (Apax Partners LLP and The Cretier Group).
This is the first such dividend payout to the owners since Garda's
buyout in 2012. Although Apax has a recent history of debt-funded
dividends, they are typically completed early in its investment
and are one-time events. Any further debt-funded dividends could
materially affect Garda's ratings, but Fitch does not believe this
is likely in the near term.
Key Rating Drivers
Garda's ratings reflect the company's leading position in the
North American cash logistics and Canadian security solutions
businesses and its solid operating margins, set against a backdrop
of relatively high leverage (Total Debt/EBITDA), and an aggressive
acquisition strategy. Recent acquisitions are expected to lead to
gradually improving operating margins, which could reach levels
not realized since fiscal 2011. Fitch expects leverage to decline
somewhat as cash flows increase, but will remain elevated as the
company targets cash toward further acquisitions and other new
business opportunities, rather than debt reduction. Additional
acquisitions would likely require additional debt given Fitch's
expectations for near term cash levels.
Rating strengths include expected positive free cash flow (FCF)
generation following the integration of G4S Cash Solutions
(Canada) Ltd. (G4S) and the Bank of America (BofA) contract, the
stable reoccurring nature of Garda's revenues and operating
profits for both of its segments, and leading market share in
nearly every one of its business lines. The recent acquisition of
G4S will boost Garda's market share in cash logistics, making it
the leader in cash logistics in North America. Fitch expects
profitability to improve from synergies in overlapping markets and
customers related to the G4S acquisition. Fitch-calculated EBITDA
margins are expected to be between 11-12% in the near term.
Rating concerns include Garda's continued appetite for additional
leverage through debt-funded acquisitions and dividends, its
concentrated customer base, its high leverage, and its relatively
low FCF margin. A trend of recurring dividends, especially debt
funded, would pressure credit metrics and reduce the likelihood of
material debt reduction in the near to intermediate term. Customer
concentration is also a concern. Garda's top 11 customers
represent approximately 31% of the company's revenue (including
the Canadian Transportation Security Administration [CATSA]). The
loss of a significant customer would have a material impact on
Garda's revenue, although Fitch notes the company's flexible cost
structure would help to minimize the effect on margins.
The strength of Garda's business profile provides somewhat of an
offset to the relatively elevated leverage in the company's credit
profile. Also, the recurring nature of the company's revenues,
long customer contracts, and relatively stable operating margins
are features of higher rating categories. In general, Garda is
characterized by a more stable operating profile than other
issuers in the 'B+' rating category. Although high leverage and
debt service costs will continue to be the largest intermediate
term risk, modestly positive FCF will, to a certain degree, offset
them.
Fitch expects leverage and coverage (EBITDA/Gross Interest
Expense) ratios will remain elevated in the intermediate term and
will be managed within a 5.0-6.0x range. This may decrease to
near 5.0x within the next few years if FCF is stronger than
Fitch's expectations. Weak FCF will make some debt reduction
possible, but Fitch expects leverage to remain elevated. Fitch
expects Garda will primarily deploy excess cash on growth
opportunities, particularly acquisitions. Recent refinancing
activity will also benefit cash flows going forward, as it has
materially reduced financing costs. Fitch expects pro forma
leverage, including the new debt issuance and acquisition profits
and synergies, to be about 6.1x, compared to 7.3x at year end
fiscal 2014. Fitch expects pro forma coverage to be 2.3x compared
to 2.7x at year end fiscal 2014.
Following a number of one-time costs in fiscal 2014 and 2015,
Fitch expects Garda to produce modestly positive FCF going forward
with stable capital expenditures. Low annual capital expenditures
are due to the asset-light nature of the security solutions
segment and Garda's use of leasing for its armored vehicles fleet,
which allows for continued flexibility for dividends,
acquisitions, and debt reduction. The current maturity schedule is
favorable with no material debt maturities until 2020, when Gard's
term loans become due.
Garda's cash logistics business has two national competitors in
the U.S., as well as one large regional firm. In Canada it has
one primary national competitor, following Garda's recent
acquisition of G4S's Canadian operations. Currently, Garda does
have cash logistics operations in other geographical regions where
some of its competitors operate. There has been no discussion
surrounding geographic expansion, however it could be expected
given the company's current growth strategy. Garda's operations
outside North America make up approximately 12% of its
consolidated revenues and involve security concerns in high-risk
areas such as Iraq and Afghanistan. This piece of Garda's
business has performed well and Fitch expects it to continue
growing, particularly as its energy-related clients expand
operations in these regions.
Garda maintains solid liquidity, with an adequate cash balance of
CAD60 million at fiscal year-end 2014 and availability on its $200
million multi-currency secured revolving credit facility less the
USD50 million draw for the Bank of America vault contract. Fitch
expects the revolver will be used from time to time for
acquisitions and other general corporate purposes. The company
has no significant debt maturities until 2020 when the balloon
payment on its USD and CAD term loans comes due. Cash balances
are expected to revert back to approximately CAD15-30 million, in
line with historical levels, following the acquisition integration
costs and the funding of the dividend to the parent company.
Rating Sensitivities:
Positive: Future developments that may, individually or
collectively, lead to a positive rating action include:
-- Maintaining EBITDA leverage below 5.0x;
-- Maintaining FCF margin between 4-5%;
-- Maintaining an EBITDA margin above 12%;
-- Successfully integrating the G4S acquisition and the Bank of
America contract.
Negative: Future developments that may, individually or
collectively, lead to a negative rating action include:
-- Continued debt-funded dividend payouts to private equity
owners;
-- A decline in the company's EBITDA margins to below 10%;
-- An increase in EBITDA leverage to above 6.5x for an extended
period;
-- Producing persistently negative FCF;
-- Loss of material contract or customer.
Fitch assigns the following rating to Garda:
-- IDR 'B+';
-- Secured revolving credit facility rating 'BB+/RR1';
-- Secured USD term loan B rating 'BB+/RR1';
-- Secured CAD term loan B rating 'BB+/RR1';
-- Senior unsecured notes rating 'B-/RR6';
The Rating Outlook is Stable.
GENCO SHIPPING: Plan, Disclosure Statement Hearing Set for June 3
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
will convene a hearing on June 3, 2014, at 11:00 a.m. (prevailing
New York time) to consider, among other things, approval of the
solicitation procedures, the adequacy of the disclosure statement,
and confirmation of Genco Shipping & Trading Limited, et al.'s
Prepackaged Chapter 11 Plan of Reorganization.
Any objections to the Solicitation Procedures, Disclosure
Statement or confirmation of the Prepack Plan must be filed with
the Court and served so as to be actually received by May 22, at
4:00 p.m. (prevailing New York time), unless otherwise agreed to
by the Company in its sole discretion. The Company's Reply
Deadline is set for May 30.
The deadline by which (i) holders of General Unsecured Claims in
excess of $50,000 that are either (a) not listed on the Debtors'
schedules of assets and liabilities, (b) listed as disputed,
contingent, or unliquidated on the Debtors' schedules of assets
and liabilities, or (c) listed in amounts that the holders of
those General Unsecured Claims believe are inaccurate on the
Debtors' schedules of assets and liabilities, in each case other
than claims paid by the Debtors pursuant to an order of the Court,
and (ii) holders of claims (x) arising from the rescission of a
purchase or sale of a security of the debtor, (y) for damages
arising from the purchase or sale of such a security, or (z) for
reimbursement or contribution allowed under Bankruptcy Code
Section 502 on account of such a claim, must file proofs of claim
against the Debtors is May 22. The deadline by which governmental
units holding Applicable Claims must file proofs of claim is
October 20.
As previously reported by The Troubled Company Reporter, before
filing for bankruptcy, Genco Shipping negotiated a prepackaged
plan with its secured lenders and major unsecured creditor
constituency and completed the solicitation of votes on the plan
in order to complete its reorganization on an expedited timeframe.
The Plan, which will eliminate $1.2 billion in debt, is premised
upon a negotiated settlement with the Company's secured lenders
and major unsecured creditor constituency, that will substantially
deleverage the Company's financial obligations, and provide the
Company with new liquidity through a fully backstopped $100
million rights offering.
Parties to the restructuring support agreement ("RSA") are certain
of the lenders under the Debtor's $1.1 billion secured credit
facility entered into in 2007, its $253 million secured credit
facility, and its $100 million secured credit facility, as well as
certain holders of the Company's 5.00% Convertible Senior Notes
due Aug. 15, 2015.
The Court authorized the Debtor to assume the RSA on April 25 and
overruled the objections filed by Och-Ziff Capital Management and
the Ad Hoc Consortium of Equity Holders, joined by entities
managed by Aurelius Capital Management, LP.
About Genco Shipping & Trading
New York-based Genco Shipping & Trading Limited (NYSE: GNK)
transports iron ore, coal, grain, steel products and other drybulk
cargoes along worldwide shipping routes. Excluding Baltic Trading
Limited's fleet, Genco Shipping owns a fleet of 53 drybulk
vessels, consisting of nine Capesize, eight Panamax, 17 Supramax,
six Handymax and 13 Handysize vessels, with an aggregate carrying
capacity of approximately 3,810,000 dwt. In addition, Genco
Shipping's subsidiary Baltic Trading Limited currently owns a
fleet of 13 drybulk vessels, consisting of four Capesize, four
Supramax, and five Handysize vessels.
Genco Shipping & Trading sought bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 14-11108) on April 21, 2014, to implement a
prepackaged financial restructuring that is expected to reduce the
Company's total debt by $1.2 billion and enhance its financial
flexibility. The company's subsidiaries other than Baltic Trading
Limited (and related entities) also sought bankruptcy protection.
Genco, owned and controlled by Peter Georgiopoulos, disclosed
assets of $2.448 billion and debt of $1.475 billion as of Feb. 28,
2014.
Kramer Levin Naftalis & Frankel LLP serves as the bankruptcy
counsel and Blackstone Advisory Partners, L.P., is the financial
advisor. GCG Inc. is the claims and notice agent.
GENCO SHIPPING: Has Interim Authority to Use Cash Collateral
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave Genco Shipping & Trading Limited, et al., interim authority
to use property constituting cash collateral and grant adequate
protection on account of the Debtors' use of cash collateral and
any diminution in value of the prepetition secured parties'
interests in the collateral.
The Debtors, prior to the Petition Date, are indebted to several
parties through various financing packages, including: (i) the
2007 credit facility obligations in the principal amount of
$1,377,000,000; (i) the DB Term Loan Obligations in the principal
amount of $253,000,000; and (iii) the CA Term Loan Obligations in
the principal amount of $100,000,000.
The Cash Collateral will be used for working capital purpose,
other general corporate purposes of the Debtors, and the
satisfaction of the costs and expenses of administering the
Chapter 11 cases.
A full-text copy of the Interim Cash Collateral Order with Budget
is available at http://bankrupt.com/misc/GENCOcashcol0423.pdf
The final hearing on the motion will be on May 14, 2014, at 10:30
a.m. Any objections must be filed on or before May 7.
About Genco Shipping & Trading
New York-based Genco Shipping & Trading Limited (NYSE: GNK)
transports iron ore, coal, grain, steel products and other drybulk
cargoes along worldwide shipping routes. Excluding Baltic Trading
Limited's fleet, Genco Shipping owns a fleet of 53 drybulk
vessels, consisting of nine Capesize, eight Panamax, 17 Supramax,
six Handymax and 13 Handysize vessels, with an aggregate carrying
capacity of approximately 3,810,000 dwt. In addition, Genco
Shipping's subsidiary Baltic Trading Limited currently owns a
fleet of 13 drybulk vessels, consisting of four Capesize, four
Supramax, and five Handysize vessels.
Genco Shipping & Trading sought bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 14-11108) on April 21, 2014, to implement a
prepackaged financial restructuring that is expected to reduce the
Company's total debt by $1.2 billion and enhance its financial
flexibility. The company's subsidiaries other than Baltic Trading
Limited (and related entities) also sought bankruptcy protection.
Genco, owned and controlled by Peter Georgiopoulos, disclosed
assets of $2.448 billion and debt of $1.475 billion as of Feb. 28,
2014.
Kramer Levin Naftalis & Frankel LLP serves as the bankruptcy
counsel and Blackstone Advisory Partners, L.P., is the financial
advisor. GCG Inc. is the claims and notice agent.
GENCO SHIPPING: Can Hire GCG as Claims & Noticing Agent
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Genco Shipping & Trading Limited, et al., to appoint
GCG, Inc., as claims and noticing agent to, among other things,
(i) distribute required notices to parties-in-interest, (ii)
receive, maintain, docket and otherwise administer the proofs of
claim filed in the Company's Chapter 11 Cases, and (iii) provide
other administrative services.
About Genco Shipping & Trading
New York-based Genco Shipping & Trading Limited (NYSE: GNK)
transports iron ore, coal, grain, steel products and other drybulk
cargoes along worldwide shipping routes. Excluding Baltic Trading
Limited's fleet, Genco Shipping owns a fleet of 53 drybulk
vessels, consisting of nine Capesize, eight Panamax, 17 Supramax,
six Handymax and 13 Handysize vessels, with an aggregate carrying
capacity of approximately 3,810,000 dwt. In addition, Genco
Shipping's subsidiary Baltic Trading Limited currently owns a
fleet of 13 drybulk vessels, consisting of four Capesize, four
Supramax, and five Handysize vessels.
Genco Shipping & Trading sought bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 14-11108) on April 21, 2014, to implement a
prepackaged financial restructuring that is expected to reduce the
Company's total debt by $1.2 billion and enhance its financial
flexibility. The company's subsidiaries other than Baltic Trading
Limited (and related entities) also sought bankruptcy protection.
Genco, owned and controlled by Peter Georgiopoulos, disclosed
assets of $2.448 billion and debt of $1.475 billion as of Feb. 28,
2014.
Kramer Levin Naftalis & Frankel LLP serves as the bankruptcy
counsel and Blackstone Advisory Partners, L.P., is the financial
advisor. GCG Inc. is the claims and notice agent.
GENCO SHIPPING: Inks Commitment Agreement with Lenders, Holders
---------------------------------------------------------------
Genco Shipping & Trading Limited and certain of its affiliates
entered into an equity commitment agreement with certain lenders
and noteholders pursuant to which the Commitment Parties have
agreed to purchase their pro rata share of any unsubscribed shares
that are issued pursuant to a $100 million rights offering that
the Company expects to conduct under a prepackaged plan of
reorganization under Chapter 11 of the Bankruptcy Code.
Specifically, $80 million of those Rights Offering shares will be
offered to eligible lenders under a 2007 Facility, and $20 million
of such Rights Offering shares will be offered to eligible holders
of the Convertible Notes.
The Commitment Parties comprised of (i) certain lenders under the
Credit Agreement dated as of July 20, 2007, by and among the
Company as borrower, the banks and other financial institutions
named therein as lenders, Wilmington Trust, N.A., as successor
administrative and collateral agent and other parties thereto and
(ii) certain holders of the 5.00 percent Convertible Senior Notes
due Aug. 15, 2014, issued pursuant to that certain Indenture dated
as of July 27, 2010, between the Company as issuer and The Bank of
New York Mellon as trustee, all of whom were parties to the
Restructuring Support Agreement entered into on April 3, 2014.
Under the Equity Commitment Agreement, the Company is obligated to
reimburse or pay the reasonable, actual and documented out-of-
pocket costs and expenses incurred in connection with the Rights
Offering, the equity commitment and other transactions
contemplated in the Equity Commitment Agreement of the named legal
counsel and financial advisors of the Commitment Parties, incurred
prior to the earlier of the termination of the Equity Contribution
Agreement or the effective date of the Plan. The Company is not
obligated to pay a commitment fee.
A copy of the Equity Commitment Agreement is available at:
http://is.gd/XewACd
Amended Shareholder Rights Agreement
On April 14, 2014, the Company entered into a Second Amendment to
Shareholders Rights Agreement with Computershare Shareowner
Services LLC, as Rights Agent. The Second Amendment amends the
Shareholder Rights Agreement, dated as of April 11, 2007, between
the Company and the Rights Agent, which was amended by a First
Amendment to Shareholders Rights Agreement dated as of Oct. 24,
2011. The Second Amendment provides exceptions for transactions
contemplated under the Support Agreement and eliminates certain
outdated exceptions. A copy of the Amended Shareholder Rights
Agreement is available for free at http://is.gd/pTr5wb
Financial Projections
For purposes of the Disclosure Statement to be provided to certain
of the Company's creditors under the Support Agreement, the
Company's management prepared unaudited financial projections.
The Financial Projections are based on the assumption that the
effective date of the Plan will occur on or about June 30, 2014.
If that effective date is significantly delayed, additional
expenses, including professional fees, may be incurred and
operating results may be negatively impacted. It is also assumed
that the Company will conduct operations substantially similar to
its current business.
The Company expects to generate net income of $102 million in 2015
and net income of $9 million in 2016. The Company's projects
$2.32 billion of total assets, $1.47 billion of total liabilities
and $852 million of shareholders' equity at June 30, 2014.
A copy of the Financial Projections is available for free at:
http://is.gd/OKyjZd
Liquidation Analysis
As part of the Disclosure Statement, the Company was additionally
required to include a summary of the liquidation values of the
Company's assets in a hypothetical chapter 7 liquidation where a
trustee appointed by the Bankruptcy Court would liquidate the
assets of the bankruptcy estates of the Company and its
subsidiaries filing Chapter 11 petitions to demonstrate that the
values provided under the Plan are not less than the value that
could be obtained in a chapter 7. A copy of the Liquidation
Analysis is available for free at http://is.gd/1JEvYt
Valuation as of June 30, 2014
The Debtors' financial advisor, Blackstone Advisory Partners LP,
has estimated the post-confirmation enterprise value of the
reorganized Debtors to be approximately $1.48 billion. In
developing this estimate, Blackstone considered, among other
things, vessel appraisals and other valuation methodologies as
well as the reorganized Debtors' equity interests in Baltic
Trading Limited and Jinhui Shipping & Transportation Limited and
the $100 million of cash invested through the Rights Offering.
Given the approximately $250 million of debt projected to be on
the balance sheet of the reorganized Debtors, the implied equity
value of the Reorganized Debtors is approximately $1.23 billion.
The Reorganized Debtors will issue approximately 61.7 million
primary shares of the common stock of reorganized Genco valued at
$20.00 per share (prior to dilution) in order to satisfy claims
pursuant to the Plan.
Under the Plan, holders of equity interests in Genco are entitled
to receive warrants to purchase 6 percent of common stock of
reorganized Genco (subject to dilution). Those warrants, which
are effective for a period of seven years from the effective date
of the Plan, are exercisable at a cash-less strike price of a
total equity value of $1,295 million. This strike prices equates
to approximately $20.99 per share of reorganized Genco common
stock. The estimated value of such warrants is approximately $30
million to $36 million based on the Black-Scholes pricing model.
After accounting for those warrants, the implied share price of
reorganized Genco common stock would range from approximately
$19.42 to $19.52 before accounting for any subsequent dilution
from the Management Incentive Program contemplated under the Plan.
About Genco Shipping & Trading
New York-based Genco Shipping & Trading Limited (NYSE: GNK)
transports iron ore, coal, grain, steel products and other drybulk
cargoes along worldwide shipping routes. Excluding Baltic Trading
Limited's fleet, Genco Shipping owns a fleet of 53 drybulk
vessels, consisting of nine Capesize, eight Panamax, 17 Supramax,
six Handymax and 13 Handysize vessels, with an aggregate carrying
capacity of approximately 3,810,000 dwt. In addition, Genco
Shipping's subsidiary Baltic Trading Limited currently owns a
fleet of 13 drybulk vessels, consisting of four Capesize, four
Supramax, and five Handysize vessels.
Genco Shipping & Trading sought bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 14-11108) on April 21, 2014, to implement a
prepackaged financial restructuring that is expected to reduce the
Company's total debt by $1.2 billion and enhance its financial
flexibility. The company's subsidiaries other than Baltic Trading
Limited (and related entities) also sought bankruptcy protection.
Genco, owned and controlled by Peter Georgiopoulos, disclosed
assets of $2.448 billion and debt of $1.475 billion as of Feb. 28,
2014.
Kramer Levin Naftalis & Frankel LLP serves as the bankruptcy
counsel and Blackstone Advisory Partners, L.P., is the financial
advisor. GCG Inc. is the claims and notice agent.
GENIUS BRANDS: Reports $7.2 Million 2013 Net Loss
-------------------------------------------------
Genius Brands International, Inc., filed with the U.S. Securities
and Exchange Commission its annual report on Form 10-K disclosing
a net loss of $7.21 million on $2.55 million of total revenues for
the year ended Dec. 31, 2013, as compared with a net loss of $2.06
million on $6.57 million of total revenues in 2012. The Company
incurred a net loss of $1.37 million in 2011.
The Company's balance sheet at Dec. 31, 2013, showed $14.59
million in total assets, $3.09 million in total liabilities and
$11.49 million in total stockholders' equity.
A copy of the Form 10-K is available for free at:
http://is.gd/4E9iCt
About Genius Brands
San Diego, Calif.-based Genius Brands International, Inc., creates
and distributes music-based products which it believes are
entertaining, educational and beneficial to the well-being of
infants and young children under its brands, including Baby Genius
and Little Genius.
GO DADDY: Moody's Affirms B1 CFR & Changes Outlook to Negative
--------------------------------------------------------------
Moody's Investors Service affirmed Go Daddy Operating Company,
LLC's B1 corporate family rating (CFR), its B1-PD probability of
default rating, and assigned Ba3 ratings to the company's proposed
$1.25 Billion of senior secured credit facilities comprising a
$150 million revolving credit facility and $1.1 Billion of term
loans. The company will use the proceeds to refinance existing
credit facilities and pay a dividend of $350 million to its
unitholders. Moody's changed Go Daddy's ratings outlook to
negative from stable to reflect the increase in leverage. The Ba3
rating for the company's existing first lien credit facilities
will be withdrawn at the close of the proposed transaction.
Ratings Rationale
The negative outlook reflects Go Daddy's aggressive shareholder-
friendly financial policies and its elevated financial leverage
over the next 12 to 18 months. The proposed debt-funded dividend
will increase Go Daddy's leverage (total adjusted debt/cash flow
from operations plus interest expense) by about 1.5x to near 7.0x.
The dividend recapitalization follows the $100 million of
incremental debt raised in October 2013 to fund acquisitions which
Moody's estimates are currently cash absorptive. Moody's expects
Go Daddy's leverage to remain near the 6.0x level over the next 12
to 18 months, which is at the higher end of the tolerance range
for the B1 corporate family rating. Although Go Daddy will
generate good free cash flow, Moody's expects the company to
prioritize capital allocation to support growth and acquisitions.
The affirmation of B1 corporate family rating reflects Go Daddy's
strong revenue growth. Moody's expects cash EBITDA growth in the
mid teens percentages that should support free cash flow of about
7% to 8% of total debt over the next 12 to 18 months. The B1
corporate family rating is supported by Go Daddy's position as the
largest domain name registrar and a leading web-hosting services
provider. Go Daddy has a strong brand, especially in the generic
top level domain registration market, which has resulted from
years of aggressive marketing and advertising campaigns funded
largely by internally generated cash flow. The company's highly
visible brand and significant marketing spending drive its strong
subscriber growth. Go Daddy generates predictable operating cash
flow as a result of its very good customer retention rates.
At the same time, the company operates in a highly competitive
market for web services which is characterized by low barriers to
entry, modest pricing power for basic products, and the low attach
rates for add-on services that result in low average revenue per
user (ARPU).
Moody's could downgrade Go Daddy's ratings if it believes that
leverage (Moody's adjusted total debt/cash flow from operations
plus interest expense) is unlikely to decline and remain below
6.0x. The rating could be lowered if decelerating revenue growth,
weak business execution or increasing competition could cause
leverage to remain near 6.0x and free cash flow falls to the low
single digit percentages for an extended period of time.
Moody's could stabilize Go Daddy's ratings outlook if the company
maintains good earnings growth and leverage declines and is
expected to remain below 6.0x (Moody's adjusted total debt/cash
flow from operations +interest expense). Go Daddy's ratings could
be raised if the company generates strong operating cash flow
growth and Moody's believes that the company's financial policies
will be more balanced between debt and equity holders. The ratings
could be raised if the company could sustain leverage (Moody's
adjusted total debt/cash flow from operations plus interest
expense) below 4.5x.
Moody's has taken the following ratings actions:
Issuer: Go Daddy Operating Company, LLC
Affirmations:
Probability of Default Rating, B1-PD
Corporate Family Rating, B1
New ratings assigned:
US$150 M Senior Secured Revolving Credit Facility, Ba3,
LGD3 - 39%
US$1,100 M Senior Secured Term Loan , Ba3, LGD3 - 39%
Outlook Actions:
Outlook, Changed To Negative From Stable
The following rating will be withdrawn:
US $75M Senior Secured Revolving Credit Facility -- Ba3,
LGD3 - 36%
US $831 M (Outstanding) Senior Secured Term Loan -- Ba3,
LGD3 - 36%
Headquartered in Scottsdale, AZ, Go Daddy is a leading provider of
domain name registration, web hosting, and on-demand services. The
company reported $1.13 billion in revenue under U.S. GAAP and
about $1.4 billion of bookings for 2013.
GREEN BALLAST: Foreclosure Auction Set for May 8
------------------------------------------------
A foreclosure sale of substantially all of the assets of Green
Ballast Inc. will be held May 8, 2014, at 2:00 p.m. The public
auction will be conducted at the offices of Olshan Frome Wolosky
LLP, counsel to Gemini Strategies LLC, the agent for the the
secured parties.
The secured parties have declared Green Ballast in default under
the parties' Security Agreement dated April 15, 2011. The
Debtor's assets constitute collateral under the agreement.
The secured parties' counsel may be reached at:
Michael S. Fox, Esq.
OLSHAN FROME WOLOSKY LLP
65 East 55th Street, 2nd Floor
New York, NY 10022
Tel: 212-451-2300
E-mail: mfox@olshanlaw.com
Green Ballast, Inc. (OTCMKTS:GBLL) is a development-stage company
that develops, markets and distributes electronic ballasts for
fluorescent fixtures in the commercial lighting industry.
INSIGHT PHARMA: Prestige Brand Deal No Impact on Moody's B2 CFR
---------------------------------------------------------------
Moody's Investors Service said Insight Pharmaceuticals, Inc.'s B2
Corporate Family Rating (CFR) and other ratings are not affected
by Prestige Brands, Inc.'s proposed acquisition of the company for
$750 million. Prestige is acquiring Insight free of debt and cash.
Because Insight's first and second lien secured term loans contain
change of control default provisions, Moody's expects that this
debt will be repaid as part of the acquisition transaction.
Prestige intends to close the transaction in the second or third
calendar quarter. Moody's will withdraw Insight's CFR and other
ratings upon completion of the acquisition if its debt is repaid
as expected.
Insight, headquartered in Trevose, Pennsylvania, owns and markets
a portfolio of branded OTC healthcare products. Key products
include treatments for yeast infections (Monistat), lice (Nix),
sore throats (Sucrets), pain relief (Anacin), eczema (Dermarest)
and motion sickness (Bonine) as well as pregnancy tests (e.p.t.).
SPC Partners IV, L.P. and Teacher's Private Capital, the private
equity affiliate of the Ontario Teachers' Pension Plan, are
Insight's majority owners. Insight generated approximately $179
million in revenue for the 12 months ended September 30, 2013.
INTERFAITH MEDICAL: ToneyKorf Partners' Steven Korf Okayed as CRO
-----------------------------------------------------------------
The Hon. Carla E. Craig of the U.S. Bankruptcy Court for the
Eastern District of New York authorized Interfaith Medical Center,
Inc. to employ ToneyKorf Partners, LLC to provide the firm's
Steven Korf as Debtor's new CEO.
As reported in the Troubled Company Reporter on April 8, 2014,
ToneyKorf will also provide temporary staff to assist the new CEO
in his duties.
Mr. Korf would serve as IMC's chief executive officer, reporting
to the New CRO. The New CEO and any Temporary Staff retained
would provide the following services:
(a) oversee and manage all operations and related assets of
IMC's Hospital and Clinics;
(b) lead communication and negotiation regarding the Debtor's
Hospital and Clinics operations with outside constituents
including but not limited to the regulators, elected
officials, lenders, banks and their respective advisors.
The New CEO shall serve as the principal contact with
IMC's creditors with respect to financial and operational
matters regarding the Debtor's Hospital and Clinics;
(c) review and assess financial information that has been, and
that will be, provided by IMC to its creditors regarding
the Debtor's Hospital and Clinics, including without
limitation its short-term and long-term projected cash
flows and operating performance;
(d) assist in the identification and implementation of cost
reduction and operations improvement opportunities
regarding the Debtor's Hospital and Clinics;
(e) assist other IMC-engaged professionals in developing
possible restructuring plans or strategic alternatives for
maximizing the enterprise value of the IMC's various
business lines;
(f) analyze all strategic options regarding the Debtor's
Hospital and Clinics, including, but not limited to,
mergers, partnerships, closures, or discontinuations of
operations, in whole or in part, as well as
recommendations on all options;
(g) analyze regulatory issues and processes regarding the
Debtor's Hospital and Clinics;
(h) oversee the Hospital and Clinics' financial and treasury
functions regarding the Debtor's Hospital and Clinics
operations, including: (i) strengthening the core
competencies in the finance organization, particularly
cash management, planning, general accounting, financial
reporting and information management; and (ii) identifying
and implementing both short-term and long-term liquidity
generating initiatives;
(i) lead in negotiations with potential transaction parties
regarding the Debtor's Hospital and Clinics operations;
(j) assist in overseeing and driving financial performance
regarding the Debtor's Hospital and Clinics operations in
conformity with IMC's business plan;
(k) lead and manage the Debtor's reorganization professionals
to improve coordination of efforts to be consistent with
IMC's overall restructuring goals regarding the Debtor's
Hospital and Clinics operations;
(l) manage the development of IMC's revised business plan and
such other related forecasts as may be required by the
creditors and DASNY in connection with negotiations
regarding IMC's Hospital and Clinics operations;
(m) supervise the preparation of regular reports required by
the Bankruptcy Court or which are customarily issued by
IMC's Chief Financial Officer regarding the Debtor's
Hospital and Clinics operations, as well as provide
assistance in such areas as testimony before the
Bankruptcy Court on matters that are within ToneyKorf's
areas of expertise;
(n) lead IMC in formulation and negotiation with respect to a
plan of reorganization regarding the future operations of
the Hospital and Clinics;
(o) assist with such other matters as may be requested by
IMC's Board related to the Temporary Staff's services set
forth in the ToneyKorf Engagement Letter that are not
duplicative of work others are performing for IMC; and
(p) endeavor to ensure the quality of patient care as related
to the current and future operations of IMC's Hospital and
Clinics.
The principal economic terms of the ToneyKorf engagement are as
follows:
-- Personnel: ToneyKorf will provide Mr. Korf as the
Debtor's New CEO. ToneyKorf also will provide Temporary
Staff to support the New CEO as and when necessary,
subject to approval of the New CRO. The New CEO will
oversee the work of any Temporary Staff and ToneyKorf
will keep the New CRO informed as to the work of
Temporary Staff.
-- Compensation for New CEO: Mr. Korf will be paid an
hourly rate of $725, not to exceed $130,000 per month
without the prior written approval of DASNY and DOH.
-- Fees for Temporary Staff: The standard hourly rates of
Temporary Staff are as follows:
Partners/Principals $625-$725
Directors/Managing Directors $500-$585
Managers $400-$475
Associate/Senior Associates $225-$295
Paraprofessionals $150
Administrative $65
The aggregate fees of Temporary Staff identified above
other than the New CEO shall be subject to a monthly cap
of $100,000.
-- Reimbursement of Expenses: ToneyKorf will be reimbursed
for all of its personnel's reasonable, out-of-pocket
costs and expenses, such as travel, lodging, postage,
photocopying costs, computer and research charges, and
other charges customarily recoverable as out-of-pocket
expenses, subject to the U.S. Trustee Fee Guidelines,
and not to exceed $7,500 per month without the prior
written approval of DASNY and DOH.
Steven R. Korf, founding member and senior managing director of
ToneyKorf, assured the Court that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code and does not represent any interest adverse to the
Debtors and their estates.
ToneyKorf can be reached at:
Steven R. Korf
TONEYKORF PARTNERS, LLC
1595-14 North Central Avenue
Valley Stream, NY 11580
About Interfaith Medical Center
Headquartered in Brooklyn, New York, Interfaith Medical Center,
Inc., operates a 287-bed hospital on Atlantic Avenue in Bedford-
Stuyvesant and an ambulatory care network of eight clinics in
central Brooklyn, in Crown Heights and Bedford-Stuyvesant.
The Company filed for Chapter 11 protection (Bankr. E.D. N.Y.
Case No. 12-48226) on Dec. 2, 2012. The Debtor disclosed
$111,872,972 in assets and $193,540,998 in liabilities as of the
Chapter 11 filing. Liabilities include $117.9 million owing to
the New York State Dormitory Authority on bonds secured by the
assets.
Alan J. Lipkin, Esq., at Willkie Farr & Gallagher LLP, serves as
bankruptcy counsel to the Debtor. Nixon Peabody LLP is the
special corporate and healthcare counsel. CohnReznick LLP serves
as financial advisor. Donlin, Recano & Company, Inc. serves as
administrative agent.
The Official Committee of Unsecured Creditors tapped Alston & Bird
LLP as its counsel, and CBIZ Accounting, Tax & Advisory of New
York, LLC as its financial advisor.
Eric M. Huebscher, the patient care ombudsman, tapped the law firm
of DiConza Traurig LLP, as his counsel.
INTERFAITH MEDICAL: Bid to Appoint Ch. 11 Trustee Has Support
-------------------------------------------------------------
Julia James, a party in interest in the Chapter 11 case of
Interfaith Medical Center Inc., tells the U.S. Bankruptcy Court
for the Eastern District of New York that she supports the motion
of the U.S. trustee to appoint a Chapter 11 trustee to oversee the
bankruptcy case of IMC because the Debtor and its board of trustee
have been functioning with no legal counsel to represent the
Debtor's interest.
According to Ms. Julia, at a board of trustees meeting in August
2013, Alan Likin of Wilkie Farr & Gallagher, retained as counsel
to the Debtor, unequivocally stated to the Debtor's board of
trustee that "I do not represent you or the hospital. My
fiduciary responsibility is to the creditors."
Mr. Julia adds the Debtor's largest creditor, the Dormitory
Authority of the State of New York, and the Debtor have
conflicting interests.
About Interfaith Medical Center
Headquartered in Brooklyn, New York, Interfaith Medical Center,
Inc., operates a 287-bed hospital on Atlantic Avenue in Bedford-
Stuyvesant and an ambulatory care network of eight clinics in
central Brooklyn, in Crown Heights and Bedford-Stuyvesant.
The Company filed for Chapter 11 protection (Bankr. E.D. N.Y.
Case No. 12-48226) on Dec. 2, 2012. The Debtor disclosed
$111,872,972 in assets and $193,540,998 in liabilities as of the
Chapter 11 filing. Liabilities include $117.9 million owing to
the New York State Dormitory Authority on bonds secured by the
assets.
Alan J. Lipkin, Esq., at Willkie Farr & Gallagher LLP, serves as
bankruptcy counsel to the Debtor. Nixon Peabody LLP is the
special corporate and healthcare counsel. CohnReznick LLP serves
as financial advisor. Donlin, Recano & Company, Inc. serves as
administrative agent.
The Official Committee of Unsecured Creditors tapped Alston & Bird
LLP as its counsel, and CBIZ Accounting, Tax & Advisory of New
York, LLC as its financial advisor.
Eric M. Huebscher, the patient care ombudsman, tapped the law firm
of DiConza Traurig LLP, as his counsel.
IPALCO ENTERPRISES: Fitch Affirms 'BB+' Issuer Default Ratings
--------------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) of
IPALCO Enterprises (IPALCO) at 'BB+' and of Indianapolis Power &
Light (IPL)'s, IPALCO's wholly owned subsidiary, at 'BBB-'.
The Rating Outlook is Stable.
IPALCO's ratings reflect quality of cash flow from its regulated
operating company-IPL, and a highly leveraged capital structure.
IPALCO's cash flows are currently limited to dividends received
from IPL and are subordinated to IPL's debt service and capital
requirements. Legal ownership structure and lack of explicit ring
fencing between IPL and IPALCO are key elements for linking IPL's
IDR to the IDR of IPALCO. Fitch has notched IPL's IDR one notch
higher than IPALCO's IDR given its low-risk business profile and
moderate capital structure. Preapproval of the total debt at IPL
by the Indiana Utility Regulatory Commission (IURC) also supports
a notch difference in the IDRs of IPALCO and IPL.
Key Rating Drivers
High Capex: Current capex cycle (through 2017) is expected to be
high, in Fitch's opinion. IPL's current capex plans include
retrofitting most of its economical coal-fired electricity
generation units with the new emission control equipment and to
build a new natural gas fired power plant as a replacement for its
retiring generating capacity. Fitch expects concurrent recovery
of environmental capex under the 'environmental compliance cost
recovery adjustment' (ECCRA) clause of the Indiana utility
regulations. As of now, IPL has retired about 170MW of its
existing generation capacity and plans to retire additional 470MW
of its generating capacity by 2016. A new 600MW combined cycle
gas turbine plant (CCGT) will replace the retired capacity.
Fitch's capex forecast also includes conversion of IPL's existing
200MW of coal-fired units to natural gas.
Lack of regulatory mechanisms to recover certain operating costs
and costs to replace inefficient generating capacity will require
IPL to request a general rate increase to improve its cash flow
profile. Fitch anticipates erosion in IPL's cash flow measures
without the general rate increase. Equity infusion by AES, to
maintain the regulatory capital structure at IPL, and the
regulatory preapproval of the investment by the IURC will
alleviate the rating concerns arising from high capex cycle, in
Fitch's opinion.
Near-term General Rate Case Likely: The last IURC approved general
rate increase was implemented in 1996. Fitch's rating case model
assumptions include regulatory approval of IPL's general rate case
applications by the IURC. In the past, the company was able to
offset rising costs with strong wholesale electricity margins and
concurrent recovery of environmental costs, including capex.
However, continuously depressed wholesale electricity margin
environment and increase in certain costs will require IPL to
request a general rate increase to support the consolidated credit
profile.
Constrained Cash Flows: IPALCO is a holding company with no
tangible assets, except its investment in IPL. IPALCO relies on
dividends from IPL and it is the sole source of funding for
IPALCO. Fitch expects approximately $500 million of additional
equity infusion in IPL through 2018 to maintain the regulatory
capital structure while executing its elevated capex plan. The
source of new equity proceeds will be IPL's ultimate parent, AES.
A mixture of operating cash flows, equity, and debt will be used
to fund elevated capex and the distributions from IPL.
Consolidated Leverage Based Credit-Profile: IPALCO's IDR reflects
a highly leveraged capital structure with consolidated debt
reaching 96% of the total capital at the end of 2013 under the
pooling of interest accounting convention. Fitch views
consolidated leverage as a key rating driver, along with IPALCO's
reliance on IPL to support debt-service and the subordination of
IPALCO's debt to that of IPL's debt. Stability of upstream cash
flow from IPL and currently a constructive regulatory environment
in Indiana partially alleviate the credit concerns arising from
exceptionally leveraged capital structure.
Credit Metrics Volatility Expected: The affirmation of the ratings
takes into account the expected decline in the credit metrics
through 2015 and recover to reasonable levels by 2018, for both
the issuers. IPL's adjusted debt to fund from operations (FFO)
and FFO-to-interest ratios at the end of 2013 were 3.7x and 4.8x
respectively. These ratios are within Fitch's guidelines for
IPL's current IDR ('BBB-'), but are expected to decline over the
current capex cycle ending in 2017. Fitch projects IPL's credit
metrics to remain constrained until the regulators approve
increase in IPL's retail tariffs, especially to recover its
investment in the new generating capacity. Fitch expects IPL's FFO
based leverage (adjusted-debt-to-FFO) to be around 4x at the end
of 2018 and FFO based interest coverage (FFO-to-interest) is
expected to be around 4.3x at the end of the same period, in line
with Fitch's expectations for the assigned IDR.
IPALCO's 2013 consolidated, adjusted-debt-to-FFO ratio increased
to about 5.9x and FFO-to-interest ratio for the same period
declined to 2.8x. Credit metrics for 2013 reflect debt and
internal cash flow funding of a large capex at IPL. In 2013,
capex increased by 86% over 2012 as the company embarked on over a
$2 billion capital program to install environmental equipment on
its most economical coal units and to replace its inefficient and
non-compliant generating units. Debt funding of the capex and the
lower operating margins adversely affected credit protection
measures in 2013.
Under Fitch's conservative rating case, consolidated, adjusted
debt-to-FFO ratio at IPALCO will increase to over 6x by 2016
before declining to 5.5x in 2018. The forecasted range of
consolidated credit metrics through 2018 is lower than Fitch's
guideline ratios for a 'BB+' rated issuer, but the weakness in
credit protection measures is temporary. Concerns over the
constrained credit protection measures due to elevated capex
levels over the rating horizon (2014-2018) are alleviated by the
regulatory preapproval required for these investments and the
concurrent recovery of environmental capex under the Indiana
regulations. Under Fitch's rating case, the credit protection
measures will begin to improve once the construction cycle is
complete and the IURC approved increase in IPL's retail rates is
implemented to recover new investments along with a reasonable
return on its ratebase.
Environmental Policy Challenges for Coal-fired Generation: IPL's
long-term power generation capacity will be coal based. Even with
the installation of new emission controls, the long-term policy
challenges to coal-fired generation remains a threat to the long-
term viability of these assets. Fitch relies on ECCRA and the
Indiana Senate bills 29 and 251 for the timely recovery of these
investments in assigning the IDR. The Senate bills allow the
recovery of federally mandated environmental compliance costs and
the installation of clean coal technologies reducing airborne
emissions associated with the use of coal.
IDR Not Linked to AES: The terms of IPALCO's $800 million notes
provide a modest degree of separation between IPALCO and its
parent, AES. IPALCO's total debt is limited to $1 billion ($800
million currently outstanding). The ratio of IPALCO's EBITDA to
interest must exceed 2.5x, and debt cannot exceed 67% of total
capitalization on an adjusted basis to make a distribution or
intercompany loan to its parent, according to IPALCO's articles of
incorporation. Changing the articles of incorporation would
require AES approval, IPALCO board approval, and filing the
revision with the secretary of state. IPALCO and IPL maintain
separate identity from AES and do not mingle their cash with that
of AES. These factors separate the ratings of IPALCO or IPL from
the IDR of AES.
Stable Regulatory Environment: IPL benefits from the stable
regulatory environment in Indiana. IPL has minimal commodity
price exposure due to a regulatory pass-through mechanism that
allows the utility to recover fuel and purchased power costs on a
timely basis. Legislative measures exist for IPL to recover
environmental compliance related investments in a timely manner.
The customer base is stable.
Liquidity
Liquidity is adequate, but IPL will depend on external debt to
finance its capex program. IPL maintains a $250 million credit
facility that extends until December 2015. IPALCO has no liquidity
facilities and depends on upstream distributions from IPL to
service its obligations and expenses. There are no significant
debt maturities until 2016 and Fitch expects IPALCO to timely
refinance its debt maturities
Rating Sensitivities
A positive rating action is unlikely over the rating horizon
(2014 - 2018) given the rising capex at IPL that will be partially
debt financed. External financing of increasingly stringent
environmental regulation based investment at IPL will constrain
the credit protection measures over the rating horizon. Fitch's
rating concerns also include increased regulatory risk to IPL's
cash flow given that the management plans to file two general rate
increase applications over the rating horizon.
Fitch will downgrade the IDR of both companies, if, IPL's credit
metrics on a sustainable basis, fail to be within the Fitch's
guidelines for a 'BBB' rated entity. A restrictive regulatory
outcome in the upcoming rate proceedings, if adverse for the
credit protection measures on a sustainable basis, will also
result in a negative rating action.
Fitch will also consider a negative rating action on IPALCO due to
certain adverse regulatory developments: changes that reduce the
likelihood of timely recovery of the operating costs (fuel,
purchased power, or environmental costs) or imputes less than a
full income tax rate in the rates for IPL adversely affecting the
credit protection measures at IPALCO. In addition, an absolute
increase in debt at IPALCO will also result in a negative rating
action at IPALCO.
Fitch has affirmed the following with a Stable Outlook:
IPALCO Enterprises, Inc.
-- Long-term IDR at 'BB+';
-- Senior secured debt at 'BB+'.
Indianapolis Power & Light Co.
-- Long-term IDR at 'BBB-';
-- Senior secured debt at 'BBB+';
-- Secured pollution control revenue bonds at 'BBB+';
-- Preferred stock at 'BB+'.
IRISH BANK: Objections to Sale of U.S. Loan Assets Due May 6
------------------------------------------------------------
The foreign representatives of Irish Bank Resolution Corp., which
was formed to complete the liquidation of Anglo Irish Bank Corp.,
are seeking permission from the U.S. Bankruptcy Court in
Wilmington, Delaware, to approve the sale of certain loan assets
in tranches:
1. tranches 2 through 3 of the Sand loan portfolio, solely
to the extent the asserts pertain to obligors residing
in the United States who may become U.S. citizens or
who may have pledged collateral in the U.S., free and
clear of all liens, to LSF Irish Holdings XLVII Limited
or its designee pursuant to a Loan Sale Deed dated as
of March 28, 2014; and
2. tranche 4 of the Sand loan portfolio solely to the
extent the asserts pertain to the U.S. Obligors, free
and clear of all liens, to Sandalphon Mortgages Limited
or its designee pursuant to a Loan Sale Deed dated as
of March 31, 2014.
The foreign representatives also seek approval of notice
procedures with respect to the U.S. Obligors as well as the form
of notice.
The sale deeds contemplate the sale and transfer of the Sand Loans
to the Purchasers free and clear of liens, claims and
encumbrances. The Purchasers are affiliates of leading private
equity firms that invest globally in distressed assets, and have
the financial resources to consummate the proposed transaction set
forth in the Sale Deeds and to continue servicing all mortgages.
Objections to the sale are due May 6. A hearing on the request is
set for May 13.
According to Edvard Pettersson at Bloomberg News, the loans have
nominal balances totaling more than US$19 billion, and that the
proposed purchasers of the U.S. assets include affiliates of
Goldman Sachs Group Inc., Deutsche Bank AG (DBK) and Lone Star
Funds.
The foreign representatives are represented by:
Van C. Durrerr II, Esq.
Kimberly Jaimez, Esq.
SKADDEN ARPS SLATE MEAGHER & FLOM LLP
300 South Grand Avenue
Los Angeles, CA 90071
Tel: 213-687-5000
E-mail: van.durrer@skadden.com
kimberly.jaimez@skadden.com
About Irish Bank Resolution
Irish Bank Resolution Corp., the liquidation vehicle for what was
once one of Ireland's largest banks, filed a Chapter 15 petition
(Bankr. D. Del. Case No. 13-12159) on Aug. 26, 2013, to protect
U.S. assets of the former Anglo Irish Bank Corp. from being
seized by creditors. Irish Bank Resolution sought assistance
from the U.S. court in liquidating Anglo Irish Bank Corp. and
Irish Nationwide Building Society. The two banks failed and were
merged into IBRC in July 2011. IBRC is tasked with winding them
down and liquidating their assets. In February, when Irish
lawmakers adopted the Irish Bank Resolution Corp., IBRC was
placed into a special liquidation in the Irish High Court to
complete liquidation and distribution of the two banks' assets.
IBRC's principal asset as of June 2012 was a loan portfolio
valued at some EUR25 billion (US$33.5 billion). About 70 percent
of the loans were to Irish borrowers. Some 5 percent of the
portfolio was under U.S. law, according to a court filing. Total
liabilities in June 2012 were about EUR50 billion, according
to a court filing.
Most assets in the U.S. have been sold already. IBRC is involved
in lawsuits in the U.S.
IBRC was granted protection under Chapter 15 of the U.S.
Bankruptcy Code in December 2013.
Kieran Wallace and Eamonn Richardson of KPMG have been named the
special liquidators.
JVMW PROPERTIES: May 6 Hearing to Approve Disclosure Statement
--------------------------------------------------------------
The Bankruptcy Court for the District of Puerto Rico will convene
a hearing on May 6, 2014, at 10:30 a.m. to consider and rule upon
the adequacy of the disclosure statement explaining JVMW
Properties Management Corp.'s planof reorganization.
Objections to the form and content of the disclosure statement
were due April 22.
The Debtor filed the Plan of Reorganization and Disclosure
Statement on Jan. 30, 2014.
The Plan provides for the sale of all of the Debtor's real
property assets to a third party purchaser, Access Group, LLC, for
$10,650,000. The net proceeds to be received by Debtor will be
used exclusively for the payments to be made under the Plan. The
sale of the properties will be free and clear of all pre-effective
date claims, interest, liens, leases and encumbrances.
The Debtor will also provide all funds in its operational accounts
available at the effective date in order to be distributed to all
classes to which the Plan proposes a payment distribution.
Upon the sale of the real properties, the Debtor will cease all
operational and management endeavors which will be assumed and
carried out by the new owner.
The Debtor believes that the interests of the estate, their
creditors and all parties in interest are better served through a
consented sale of the assets contemplated within the Plan inasmuch
it will generate the necessary resources for the proposed
payments, including but not limited, to the full payments of
priority claims.
The Debtor sought bankruptcy protection to stave off foreclosure
attempts by its lender, Westernbank, now Banco Popular De Puerto
Rico. The bank has filed Proof of Claim number 2 for $26,825,349,
and holds a perfected lien with collateral represented by several
mortgage notes which encumber the Debtor's commercial real
properties as well as all other real property, which are owned by
related third party corporations and two daughters of the Debtor's
stockholders, Mr. and Mrs. Julio Blanco D'Arcy. The bank also
holds a perfected secured interest over the proceeds of all lease
agreements by and between the Debtor and the lessees of the West
End Plaza property located at Mayaguez, as well as a personal
guarantee on these obligations from Mr. Blanco D'Arcy and his two
daughters.
The Plan provides that on the effective date or at any different
date consented by the Debtor and BPPR pursuant a settlement
between the parties, the bank will receive a lump sum payment
equal to a determined settlement amount of $10,000,000 in exchange
of all outstanding debts owed by the Debtor, RIB International and
Guaynabo Properties, Inc., to BPPR and the release of all the
guaranties which encumber the properties. The funds necessary to
fulfill the proposed payments will be received pursuant the sale
to Access Group. The $10,000,000 payment to BPPR will also entail
a release of all personal guaranties to which BPPR is currently
entitled.
The unsecured deficiency in the amount of $16,825,350 resulting
from the amount claimed will be considered a general unsecured
claim within Class 4 of general unsecured creditors. However,
BPPR will not receive distribution from the unsecured claims funds
on their unsecured deficiency claim. BPPR is agreeing to certain
carve-outs, as set forth in the Plan to allow for the resolution
of this case and the payments for the administrative expenses,
priority claims, prepetition maintenance fees and general
unsecured creditors.
The BPPR claim is impaired.
The Plan proposes to pay $100,000 to the Mont Blanc Home Owners
Association in full satisfaction of the HOA's secured claim for
$191,066 on account of maintenance fees due by the Debtor in
relation to 15 residential apartments located at MontBlanc
Condominium.
Meanwhile, the Debtor proposes to pay $20,000 to general unsecured
creditors, which are owed about $800,856 in the aggregate.
The equity holders will receive nothing under the Plan.
The Debtor is represented by:
Wigberto Lugo Mender, Esq.
Centro Internacional de Mercadeo
Road 165 Torre 1 Suite 501
Guaynabo, PR 00968
Tel: 787-707-0404
Fax: 787-708-0412
E-mail: wlugo@lugomender.com
About JVMW Properties
JVMW Properties Management Corp filed a Chapter 11 petition
(Bankr. D.P.R. Case No. 13-02532) on April 1, 2013. The petition
was signed by Julio Blanco D'Arcy, as president. The Debtor
scheduled assets of $15,694,947 and liabilities of $25,782,161.
Wigberto Lugo Mender, Esq., at Lugo Mender Group, LLC represents
the Debtor in its restructuring effort.
The Debtor's business entails the development, construction and
management of residential and commercial properties and projects.
LEVI STRAUSS: Moody's Hikes Corp. Family Rating to 'Ba2'
--------------------------------------------------------
Moody's Investors Service upgraded Levi Strauss & Co.'s ("LS&Co")
Corporate Family Rating to Ba2 from Ba3. Moody's also upgraded the
company's various senior unsecured notes to Ba3 from B1. The
company's SGL-1 Speculative Grade Liquidity rating was also
affirmed. The rating outlook is stable.
The rating action considers the company's notice that it will be
redeeming EUR 150 million (approximately US$210 million at the
exchanges rates) of its EUR 300 million senior unsecured notes due
2018. Moody's expect the company will ultimately repay the full
amount from cash on hand, though it may temporarily access its
$850 million asset-based revolver to fund a portion of the tender.
The rating action also considers the company's announced
restructuring plans, which are expected to generate annualized
cost savings in the range of $175 -- 200 million over the next 12
to 18 months. Moody's believe that with the benefits of lower debt
levels and achievement of a meaningful amount of these synergies
will enable the company to reduce debt/EBITDA toward the mid 3
times range by the end of LS&Co.'s current fiscal year end.
The following ratings were upgraded:
Corporate Family Rating to Ba2 from Ba3
Probability of Default Rating to Ba2-PD from Ba3-PD
EUR 300 million senior unsecured notes due 2018 to Ba3 (LGD 4,
69%) from B1 (LGD 4, 64%)
$525 million senior unsecured notes due 2020 to Ba3 (LGD 4, 69%)
from B1 (LGD 4, 64%)
$525 million senior unsecured notes due 2022 to Ba3 (LGD 4, 69%)
from B1 (LGD 4, 64%)
The following rating was affirmed:
Speculative Grade Liquidity Rating at SGL-1
Ratings Rationale
LS&Co's Ba2 rating reflects its moderate leverage -- debt/EBITDA
is expected by Moody's to approach the mid 3 times range by the
end of the company's current fiscal year end -- as the company
utilizes operating cash flow to reduce debt. The rating also
reflects the company good profitability with low double-digit
EBITDA margins, and Moody's expect the company's recent cost
saving initiatives will enable to drive stronger margins in the
near to intermediate term. The ratings reflect the iconic nature
of the Levi's brands, its global reach with sales in over 110
countries and meaningful scale with net revenues near $4.7
billion. The rating is constrained by the company's limited
product diversification with men's slacks accounting for the
significant majority of net revenues and its inconsistent track
record expanding into other product categories, such as women's,
in a meaningful way. Moody's expect the company to maintain
balanced financial policies and that it will maintain dividend
payouts consistent with recent trends. The rating also reflects
the company's exposure to volatile input costs which can have a
meaningful impact on earnings and cash flows.
The stable rating outlook reflects Moody's expectations the
company will maintain revenue stability and that operating margins
will show some improvement over time as cost saving initiatives
are achieved.
Ratings could be upgraded if the company can show sustained
revenue growth, which would evidence that it is maintaining its
market share and has stabilized areas such as its women's
business, and profit margins improve from current levels,
indicating that cost savings measures are effective.
Quantitatively, ratings could be upgraded if debt/EBITDA was
sustained below 3.25 times and EBITA/interest expense was
sustained above 3.25x while maintaining a very good liquidity
profile and balanced financial policies.
Ratings could be downgraded if the company were to see negative
trends in revenue, which would indicated that it is losing market
share, or margins were to erode, which would indicate that its
cost saving programs are not having the expected impact on
profitability. Ratings could be downgraded if the company's
financial policies were to become more aggressive such as
utilizing debt to fund shareholder distributions. Quantitatively
the ratings could be downgraded if Moody's expected debt/EBITDA to
rise above 4 times or interest coverage were to fall below 2.5
times.
Headquartered in San Francisco, California, Levi Strauss & Co.
(":LS & CO") designs and markets jeans, casual wear and related
accessories under the "Levi's", "Dockers", "Signature by Levi
Strauss & Co." and "Denizen" brands. The company sells product in
more than 110 countries through chain retailers, department
stores, online sites and franchised and company-owned stores. Levi
Strauss & Co.'s net revenues are near $4.7 billion.
MFM DELAWARE: Can Hire Davie Kaplan for Accounting Services
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
MFM Delaware, Inc., and MFM Industries, Inc., to employ Davie
Kaplan CPA, P.C., which has been providing accounting and tax
return preparation services to the Debtors since the Petition
Date.
As reported in the Troubled Company Reporter on March 12, 2014,
the Debtors related that they mistakenly thought that payment to
their annual tax preparer was an ordinary course activity for
which no Court order was required. The Debtors now believe that
they must have filed the application for authorization to retain
and pay their tax preparer. Engaging a new firm, at this time, to
complete the tasks would not be as cost effective, as the new firm
would be required to spend additional time to become familiar with
the Debtors' financial conditions and past returns.
The Debtors said DK's fees would be approximately $15,000, plus
reimbursement of normal, reasonable out-of-pocket expenses. The
Debtors sought approval of $5,000 of the amount already paid for
work completed on the FYE 2012 tax returns and permission to pay
the remaining $10,000 (and up to an additional $5,000) upon the
completion of the work required on the FYE 2013 and Stub Period
returns.
David Pitcher, CPA/PFS, a shareholder at DK, told the Court that
DK has received $22,000 in compensation from the Debtors --
$12,000 of which was paid as compensation for preparation of
financial statements and tax returns associated with FYE 2012. DK
has returned $10,000 to the Debtors pending the Court's approval
of DK's retention, the Court's approval of its compensation, and
the completion of the FYE 2013 and Dissolution Period tax returns.
Mr. Pitcher assured the Court that he and DK are "disinterested
persons" as that term is defined in Section 101(14) of the
Bankruptcy Code.
A copy of the agreement with Davie Kaplan is available for free at
http://bankrupt.com/misc/MFMDELAWAREdaviekaplanagreement.pdf
About MFM Industries
Cat litter maker MFM Delaware, Inc., and affiliate MFM Industries,
Inc., sought Chapter 11 protection (Bankr. D. Del. Case No.
13-11359 and 13-11360) on May 28, 2013.
Founded in 1964 as a clay-based absorbents supplier, MFM is
supplier of cat litter in the U.S. The Company produces 100,000
tons of cat litter a year, representing 1 percent of the total
market. Its private label market share is 20 percent. The
company's cat litter products are comprised of a blend of fuller's
earth clay, sodium bentonite and scenting properties. Clay is
supplied from a leased clay mine in Ocala, Florida, and is
transported five miles away to the company's manufacturing plant
in Reddick, Florida. Direct Capital Partners, LLC, acquired a
majority stake in the Company in 1997.
The Rosner Law Group, LLC and King & Spalding LLP represent the
Debtors. Pharus Securities, LLC, serves as the Debtors'
investment banker.
According to the Disclosure Statement filed Jan. 23, 2014, the
Chapter 11 plan does not provide for the substantive consolidation
of the Debtors' estates. The Debtors anticipate that MFM
Industries' creditors will receive a cash distribution and that
certain of MFM Delaware's creditors may, under certain
circumstances, receive a distribution.
The Official Committee of Unsecured Creditors is represented by
Michael J. Barrie, Esq. at Benesch, Friedlander, Coiplan & Aronoff
LLP as its counsel; and Gavin/Solmonese LLC as its financial
advisor.
MONEY CENTERS: Ojibwe Tribe Seeks Trustee
-----------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Money Centers of America Inc. should be taken over by
a trustee or the Chapter 11 reorganization should be converted to
a liquidation under Chapter 7, according the Mille Lacs Band of
Ojibwe Indians.
A provider of cash machines for casinos, Money Centers filed a
barebones Chapter 11 petition on March 21 in Delaware, when the
tribe was on the brink of having a receiver appointed, the report
related.
In court papers filed April 1, the tribe said Money Centers
provided cash machines at its two casinos in Minnesota, the report
further related. The tribe got a $6.7 million judgment and was on
the cusp of having the Minnesota court appoint a receiver when
Money Centers filed for bankruptcy.
The tribe said precluding a receivership was the "sole reason" for
the Chapter 11 filing, according to the report. Since the
petition was filed, little else was submitted to the bankruptcy
court aside from a list of creditors. So far, there have been no
so-called first-day orders to facilitate operation of the
business.
The tribe said the company's owners, Christopher Wolfington and
Mark Wolfington, caused Money Centers to transfer almost all its
assets before bankruptcy, the report said. The tribe also said
the owners had the company pay personal expenses and make
fraudulent transfers.
Money Centers of America, Inc. filed a Chapter 11 petition
(Bankr. D. Del. Case No. 14-10603) on March 21, 2014, in Trenton,
New Jersey. Kevin Scott Mann, Esq., at Cross & Simon, LLC in
Wilmington, in Delaware, serves as counsel to the Debtor. The
Debtor estimated up to $1 million to $10 million in both assets
and liabilities. The petition was signed by Christopher
Wolfington, Chairman & CEO.
MOONLIGHT APARTMENTS: Taps Marsh & Company as Accountant
--------------------------------------------------------
Moonlight Apartments, LLC asks for permission from the U.S.
Bankruptcy Court for the District of Kansas to employ Marsh &
Company to complete and file the Debtor's 2013 tax returns.
The proposed engagement letter sets forth Marsh & Company's
agreement to prepare the return for an estimated fee of $1,250,
without demand for payment for prepetition services.
According to Nancy S. Jochens, the Debtor's attorney, Marsh &
Company is a creditor of the estate for past accounting services
rendered to Debtor, and is therefore not disinterested under
Section 327(a). However, it is in the best interests of the
estate that Marsh prepare the Debtor's 2013 tax returns because of
its familiarity with the Debtor's business as well as access to
Debtor's past financial and tax information.
Marsh & Company can be reached at:
Marsh & Company
6750 W. 93rd Street, Suite 140
Overland Park, KS 66212
Tel: (913) 451-3445
About Moonlight Apartments, LLC
Moonlight Apartments, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. D. Kansas Case No. 14-20172) in Kansas City on Jan. 28,
2014. The Overland Park, Kansas-based company disclosed
$28,631,756 in assets and $26,125,713 in liabilities as of the
Chapter 11 filing.
The Debtor is represented by attorneys at Jochens Law Office,
Inc., in Kansas City.
According to the docket, the Debtor's Chapter 11 plan and
disclosure statement are due May 28, 2014.
No committee of creditors or equity security holders has been
appointed in this case.
MOUNTAIN COUNTRY: Court OKs Elliott Davis as Trustee's Accountant
-----------------------------------------------------------------
Robert L. Johns, the Chapter 11 trustee of Mountain Country
Partners, LLC, sought and obtained permission from the U.S.
Bankruptcy Court for the Southern District of West Virginia to
employ Elliott Davis LLC as accountant.
Elliott Davis will assist the Trustee in:
(a) bringing the books and records of the Debtor current;
(b) preparing tax returns; and
(c) providing other accounting services as may be required by
the Trustee from time to time.
Elliott Davis will charge no more than $15,000 to prepare the 2013
federal and state tax returns.
Kay Biscopink, shareholder of Elliott Davis, assured the Court
that the firm is a "disinterested person" as the term is defined
in Section 101(14) of the Bankruptcy Code and does not represent
any interest adverse to the Debtors and their estates.
Elliott Davis can be reached at:
Kay Biscopink
ELLIOTT DAVIS, LLC
200 East Broad Street
P.O. Box 6286
Greenville, SC 29606-6286
Tel: (864) 250-3941
Fax: (864) 241-5718
E-mail: kbiscopink@elliottdavis.com
About Mountain Country Partners
Seven individual investors filed an involuntary Chapter 11
bankruptcy petition against Jacksonville, Florida-based Mountain
Country Partners, LLC (Bankr. S.D. W.Va. Case No. 12-20094) on
Feb. 17, 2012. Judge Ronald G. Pearson presides over the case.
Joseph W. Caldwell, Esq., at Caldwell & Riffee, represent the
petitioners.
An Order for Relief was entered by the Court on June 25, 2012.
Robert L. Johns was appointed Chapter 11 Trustee on July 6, 2012.
James W. Lane, Jr., at the Law Offices of Jim Lane, Jr.,
represents the Debtor as counsel. The law firm of Turner & Johns,
PLLC, represents the Chapter 11 Trustee as counsel. Kay Biscopink
of Elliot Davis, LLP is the Trustee's accountant.
NET ELEMENT: Incurs $48.3 Million Net Loss in 2013
--------------------------------------------------
Net Element, Inc., filed with the U.S. Securities and Exchange
Commission its annual report on Form 10-K disclosing a net loss of
$48.31 million on $18.74 million of net revenues for the year
ended Dec. 31, 2013, as compared with a net loss of $16.38 million
on $1.38 million of net revenues in 2012.
As of Dec. 31, 2013, the Company had $22.50 million in total
assets, $37.91 million in total liabilities and a $15.40 million
total stockholders' deficit.
BDO USA, LLP, in Miami, Florida, issued a "going concern"
qualification on the consolidated financial statements for the
year ended Dec. 31, 2013. The independent auditors noted that
the Company has suffered recurring losses from operations and has
used substantial amounts of cash to fund its operating activities
that raise substantial doubt about its ability to continue as a
going concern.
A copy of the Form 10-K is available for free at:
http://is.gd/TkPBNQ
About Net Element
Miami, Fla.-based Net Element International, Inc. (formerly Net
Element, Inc.,) currently operates several online media Web sites
in the film, auto racing and emerging music talent markets.
PALM BEACH COMMUNITY: Court Approves CBRE as Real Estate Broker
---------------------------------------------------------------
The Hon. Erik P. Kimball of the U.S. Bankruptcy Court for the
Southern District of Florida authorized Palm Beach Community
Church Inc. to employ CBRE Inc. as real estate broker.
The firm will market and sell a parcel of real property located at
the Northeast quadrant of the Intersection of PGA Boulevard and
Shady Lakes Drive, in the City of Palm Beach Gardens, Florida,
consisting of approximately 9 acres for a period of five months.
The Debtor agreed to pay up to $15,000 to the firm for additional
fees and expenses.
The Debtor assured the Court that the firm is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
Palm Beach Community Church, Inc., filed a Chapter 11 petition
(Bankr. S.D. Fla. Case No. 13-35141) on Oct. 20, 2013. The
petition was signed by Raymond Underwood as president. The Debtor
scheduled total assets of $14.6 million and total liabilities of
$11.43 million.
Palm Beach Community Church won permission to employ Robert C.
Furr and the law firm of Furr and Cohen, P.A., as attorney; and
Roy Wiley and Covenant Financial, Inc. dba SmartPlan Financial
Services as accountants.
In December, the U.S. Trustee informed the Bankruptcy Court that
it was unable to appoint a committee of creditors in the case.
PETTERS COMPANY: Trustee Intends on Suing in 26 Countries
---------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the trustee unraveling the Ponzi scheme orchestrated
by Thomas Petters is stretching his tentacles to no fewer than 26
countries around the globe.
According to the report, Petters was convicted in December 2009 on
20 counts including fraud, conspiracy and money laundering and
given a 50-year prison sentence. After a raid by federal
investigators, a receiver was appointed for Petters's companies.
The receiver put them into Chapter 11 in October 2008.
In a one-month period in 2010, Petters trustee Douglas A. Kelley
sued 382 defendants in 200 separate lawsuits, each based on
fraudulent transfer theories contending the defendants received
stolen funds, the report related. In court papers, Kelley said
bankruptcy and fraudulent transfer laws are designed to "redress
the inherently unfair distribution of stolen funds," the report
further related.
Kelley wants the U.S. Bankruptcy Court in St. Paul, Minnesota, to
authorize him to sue in at least 26 countries around the world,
the report said. Those he sues next will include defendants who
subsequently received allegedly stolen money that was first paid
to someone doing business directly with Petters.
About Petters Company, Inc.
Based in Minnetonka, Minn., Petters Group Worldwide LLC is a
collection of some 20 companies, most of which make and market
consumer products. It also works with existing brands through
licensing agreements to further extend those brands into new
product lines and markets. Holdings include Fingerhut (consumer
products via its catalog and Web site), SoniqCast (maker of
portable, WiFi MP3 devices), leading instant film and camera
company Polaroid (purchased for $426 million in 2005), Sun Country
Airlines (acquired in 2006), and Enable Holdings (online
marketplace and auction for consumers and manufacturers' overstock
inventory). Founder and chairman Tom Petters formed the company
in 1988.
Petters Company, Inc., is the financing and capital-raising unit
of Petters Group Worldwide.
Thomas Petters, the founder and former CEO of Petters Group, has
been indicted and a criminal proceeding against him is proceeding
in the U.S. District Court for the District of Minnesota.
Petters Company, Petters Group Worldwide and eight other
affiliates filed separate petitions for Chapter 11 protection
(Bankr. D. Minn. Lead Case No. 08-45257) on Oct. 11, 2008. In its
petition, Petters Company estimated its debts at $500 million and
$1 billion. Parent Petters Group Worldwide estimated its debts at
not more than $50,000.
Fruth, Jamison & Elsass, PLLC, represents Douglas Kelley, the duly
appointed Chapter 11 Trustee of Petters Company, Inc., et al. The
trustee tapped Haynes and Boone, LLP as special counsel, and
Martin J. McKinley as his financial advisor.
Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed separate petitions for Chapter 11 bankruptcy
protection (Bankr. D. Minn. Case Nos. 08-45136, 08-35197 and
08-35198) on Oct. 6, 2008. Petters Aviation is a wholly owned
unit of Thomas Petters Inc. and owner of MN Airline Holdings, Sun
Country's parent company.
PRESTIGE BRANDS: Moody's Puts 'B1' CFR on Review for Downgrade
--------------------------------------------------------------
Moody's Investors Service placed Prestige Brands, Inc.'s ratings
on review for downgrade including the company's B1 Corporate
Family Rating (CFR), B1-PD Probability of Default Rating, Ba2
senior secured term loan rating, and B2 senior unsecured note
ratings. The review reflects the significant increase in
Prestige's leverage which will result from the proposed $750
million acquisition of Insight Pharmaceuticals, Inc. (Insight; B2,
stable). Moody's also affirmed Prestige's SGL-1 speculative-grade
liquidity rating, and updated the loss given default assessments
on the company's rated debt instruments to reflect the current
debt mix, which is prior to the acquisition financing.
Moody's took the following specific rating actions on Prestige
Brands, Inc.:
Ratings Placed on Review for Downgrade:
Corporate Family Rating, currently B1
Probability of Default Rating, currently B1-PD
Senior Secured Bank Credit Facility Term Loan, currently Ba2
(changed to LGD2, 19% from LGD2, 20%)
Senior Unsecured Regular Bonds/Debentures, currently B2 (changed
to LGD5, 70% from LGD5, 71%)
Ratings Affirmed:
Speculative Grade Liquidity Rating, at SGL-1
Outlook, Changed To Rating Under Review From Stable
Ratings Rationale
Moody's expected in its current ratings that Prestige would pursue
acquisitions, and the purchase of Insight is consistent with the
company's strategy of investing in mature over-the-counter (OTC)
health-care products. The proposed purchase of Insight will
nevertheless significantly increase the company's debt-to-EBITDA
leverage to approximately 6.3x (incorporating Moody's standard
adjustments) from 4.8x.
Moody's anticipates that Prestige will utilize free cash flow to
repay debt over the next 12-18 months in the absence of additional
acquisitions, but is concerned that leverage will remain above the
5x threshold for a downgrade for at least two years. Moody's also
believes that Prestige will continue to pursue acquisitions and
that there is risk of revenue erosion due to Prestige's focus on
mature and highly promotional product categories. These factors
could limit the company's ability to reduce and sustain leverage
below 5x.
Moody's will consider in the review the benefits of the
transaction, including the increased scale and diversity of
Prestige's product portfolio, and the likely increase in cash
flow. The acquisition meaningfully expands Prestige's presence in
feminine care through the addition of Insight's brands such as
Monistat and e.p.t. Moody's will also evaluate projected cost
synergies, the cost savings from Insight's planned 2014 switch of
its Monistat supplier, and the potential for increased investment
in product development and marketing to drive incremental sales.
In addition, Moody's will evaluate Prestige's planned use of free
cash flow and the potential for additional acquisitions.
Moody's believes that a CFR downgrade, if any, would be limited to
one notch. However, Prestige has indicated that the acquisition
will be funded largely with incremental secured term loans. The
resulting change in debt mix would likely result in one notch
downgrades of the Ba2 senior secured and B2 senior unsecured debt
ratings even if Moody's confirms the B1 CFR. Two notch downgrades
of the instrument ratings are likely if Moody's lowers Prestige's
CFR to B2.
Prestige's SGL-1 speculative-grade liquidity rating continues to
reflect its comfortably positive free cash flow, absence of
required debt maturities through 2016, and good cushion within its
credit facility financial maintenance covenants. The SGL rating
and liquidity position are subject to change based on proposed
acquisitions and the terms of the financing.
Prestige, headquartered in Tarrytown, New York, manages and
markets a broad portfolio of branded OTC healthcare and household
cleaning products with the largest categories being cough & cold
(20% of revenue), analgesics (18%), gastrointestinal (15%), and
eye & ear care (14%). Key brands include Chloraseptic, BC,
Goody's, beano, Dramamine, Compound W, Clear Eyes, Little
Remedies, Efferdent, Luden's, Fiber Choice, Comet and Spic and
Span. Revenue for the 12 months ended December 2013 was
approximately $612 million.
PROMMIS HOLDINGS: Claims Agent Deal With Donlin Recano Cancelled
----------------------------------------------------------------
The Hon. Brendan Linehan Shannon of the U.S. Bankruptcy Court for
the District of Delaware has approved an agreement between:
-- Huron Consulting Services LLC, as liquidating trustee
for the Prommis Liquidating Trust, successor to Prommis
Holdings LLC and certain of its affiliates; and
-- Donlin Recano & Company,
terminating the retention as claims and noticing, and
administrative agent.
About Prommis Holdings
Atlanta, Georgia-based Prommis Holdings, LLC, and its 10
affiliates delivered their petitions for voluntary bankruptcy
under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case
No. 13-10551) on March 18, 2013.
Three subsidiaries -- EC Closing Corp., EC Closing Corp. of
Washington, and EC Posting Closing Corp. -- sought Chapter 11
protection (Bankr. D. Del. Case Nos. 13-11619 to 13-11621) on
June 25, 2013.
Prommis Holdings estimated assets between $10 million and $50
million and debts between $50 million and $100 million. Prommis
Solutions, LLC, a debtor-affiliate disclosed $18,488,803 in assets
and $260,232,313 in liabilities as of the Chapter 11 filing.
Judge Brendan Linehan Shannon presides over the case. Steven K.
Kortanek, Esq., at Womble Carlyle Sandridge & Rice, LLP, serves as
the Debtors' counsel, while David S. Meyer, Esq., at Kirkland &
Ellis LLP serves as co-counsel. The Debtors' restructuring
advisor is Huron Consulting Services, LLC. Donlin Recano &
Company, Inc., is the Debtors' claims agent.
According to the Disclosure Statement and Plan of Liquidation
dated Nov. 12, 2013, the Plan contemplates the liquidation of the
Debtors' remaining assets and distribution to creditors. The Plan
designates for the Company 9 classes of claims and interests.
The Official Committee of Unsecured Creditors tapped Saul Ewing
LLP and Hahn & Hessen LLP as its co-counsels, and FTI Consulting,
Inc., as its financial advisor.
RESTORA HEALTHCARE: Sells Assets to Creditors in Exchange for Debt
------------------------------------------------------------------
Restora Healthcare Holdings, LLC, et al., obtained approval from
the U.S. Bankruptcy Court for the District of Delaware to sell
substantially all of their assets, free and clear of all liens,
claims, encumbrances, and other interests, to PHX Hospital
Partners, LLC, an entity formed by several of the Debtors'
creditors and landlords.
An April 22 auction for the Debtors' assets was cancelled after
one other party withdrew its competing bid on the day of the
auction. No other bids, including any qualified bids, were
received prior to the bid deadline. Accordingly, no auction was
held an PHX Hospital, as the stalking horse purchaser, has been
named the successful bidder.
In exchange for the Debtors' two long-term acute-care hospitals,
PHX will provide consideration consisting of (a) $5,000,000
payable in the form of a credit bid, (b) a waiver by the Landlord
of certain cure costs with respect to two real property leases,
and (c) the assumption of certain liabilities and the the payment
of all cure costs relating to executory contracts and unexpired
leases to be assumed and assigned to the Stalking Horse Purchaser.
To resolve the objection raised by the Secretary of the United
States Department of Health and Human Services, and its component
agency, the Centers for Medicare & Medicaid Services, the sale
order directs the Debtors to assume their Medicare provider
agreements and assign those agreements to the Purchaser. The
Court overruled all other objections to the extent not resolved,
including objections and reservations of rights filed by ARHC
RHMESAZ01, LLC, and ARHC RHSUNAZ01, LLC, and Apheresis Care Group,
Inc.
AmerisourceBergen Drug Corporation, which provides pharmaceuticals
essential to the treatment and care of patients, will be paid not
more than $133,859, while Medline Industries, which provides a
significant quantity of medical supplies, will be paid not more
than $119,197 for their claims under Section 503(b)(9) of the
Bankruptcy Code. ABDC and Medline are key suppliers to the
Debtors and are crucial to the continued operations of their
business.
To protect the welfare of patients, Roberta A. DeAngelis, U.S.
Trustee for Region 3, appointed Laura Patt as the patient care
ombudsman pursuant to Section 333 of the Bankruptcy Code.
About Restora Healthcare
Restora Healthcare Holdings, LLC, and two of its affiliates filed
separate Chapter 11 bankruptcy petitions (Bankr. D. Del. Case Nos.
14-10367 to 14-10369) on Feb. 24, 2014. The petitions were signed
by George W. Dunaway as chief financial officer. Restora
Healthcare estimated assets and debts of at least $10 million.
DLA Piper LLP (US) serves as the Debtors' counsel. The Debtors
tapped George D. Pillari, a managing director of Alvarez & Marsal
Healthcare Industry Group, LLC, as chief restructuring officer.
The U.S. Trustee appointed five creditors to serve on the Official
Committee of Unsecured Creditors.
REVSTONE INDUSTRIES: Has Until May 6 to File Chapter 11 Plan
------------------------------------------------------------
The Hon. Brendan L. Shannon of the U.S. Bankruptcy Court for the
District of Delaware extended Revstone Industries, LLC, et al.'s
exclusive periods to file a Chapter 11 Plan until May 6, 2014, and
solicit acceptances for that Plan until July 6, 2014.
About Revstone Industries et al.
Lexington, Kentucky-based Revstone Industries LLC, a maker of
truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case
No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon
oversees the case. Laura Davis Jones, Esq., Timothy P. Cairns,
Esq., and Colin Robinson, Esq., at Pachulski Stang Ziehl & Jones
LLP represent Revstone. In its petition, Revstone estimated under
$50 million in assets and debts.
Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del.
Case No. 12-13263) on Dec. 3, 2012.
Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No.
13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No.
13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013.
Judge Shannon also oversees the cases.
Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy
counsel to Greenwood and US Tool. Greenwood estimated $1 million
to $10 million in assets and $10 million to $50 million in debts.
US Tool & Engineering estimated under $1 million in assets and
$1 million to $10 million in debts. The petitions were signed by
George S. Homeister, chairman.
Metavation, also known as Hillsdale Automotive, LLC, joined parent
Revstone in Chapter 11 on July 22, 2013 (Bankr. D. Del. Case No.
13-11831) to sell the bulk of its assets to industry rival Dayco
for $25 million, absent higher and better offers.
Metavation has tapped Pachulski as its counsel. Pachulski also
serves as counsel to Revstone and Spara. Metavation also has
tapped McDonald Hopkins PLC as special counsel, and Rust
Consulting/Omni Bankruptcy as claims agent and to provide
administrative services. Stuart Maue is fee examiner.
Mark L. Desgrosseilliers, Esq., Ericka Fredricks Johnson, Esq.,
Steven K. Kortanek, Esq., and Matthew P. Ward, Esq., at Womble
Carlyle Sandridge & Rice, LLP, represent the Official Committee of
Unsecured Creditors in Revstone's case.
Boston Finance Group, LLC, a committee member, also has hired as
counsel Gregg M. Galardi, Esq., and Sarah E. Castle, Esq., at DLA
Piper LLP.
SBARRO LLC: Cancels Auction; To Seek Plan Approval on May 19
------------------------------------------------------------
Sbarro LLC's lawyers advised the Bankruptcy Court on Monday that
they won't be proceeding with the so-called Plan overbid process.
At the April 25 omnibus hearing, the Debtors announced that they
did not receive any qualified preliminary indications of interest
by the April 14 deadline established by the Court-approved bidding
procedures. Accordingly, the Debtors, in consultation with their
lenders and the official committee of unsecured creditors, have
decided to proceed directly to confirmation of the pre-negotiated
Plan of Reorganization without continuing the auction process.
A hearing to confirm the Plan has been set for May 19, 2014 at
10:00 a.m. (ET). Objections are due May 12, 2014 at 4:00 p.m.
(ET). At the same hearing, the Court will also consider approval
of the Disclosure statement explaining the Plan.
The Court originally set the Combined Hearing for April 25. That
hearing was adjourned indefinitely to give way to the auction
process.
As reported by the Troubled Company Reporter, Sbarro's Plan is a
pre-packaged, pre-solicited chapter 11 plan that was negotiated
without the input of trade creditors and landlords, the latter of
whom will hold tens of millions of dollars in rejection damage
claims on account of the Debtors' proposed rejection of at least
183 store leases. It provides for debt-for-equity conversion of
the First-Out Loan into substantially all of the equity of the
reorganized Debtors through a $35 million "credit bid." The Plan
provides no recovery to unsecured creditors other than holders of
the fully undersecured Second-Out Loan claims. The Debtors assert
that the Prepetition Secured Lenders, 98% of whom voted to accept
the Chapter 11 Plan, are impaired under the plan. Accordingly,
the Debtors have not solicited acceptances from unsecured
creditors and will seek to confirm the Proposed Chapter 11 Plan
via "cramdown" pursuant to section 1129(b) of the Bankruptcy Code.
Pursuant to the Plan, the holders of the DIP Facility Loans will
be deemed to have made exit loans to the Debtors on the Closing
Date in an aggregate principal amount of $[20,618,556.70]. This
aggregate amount represents a conversion of the $20m DIP loans
(assuming these are fully drawn and not subject to repayments) as
adjusted to reflect 3% OID.
According to The Wall Street Journal, the Plan swaps $140 million
in debt for control of the restructured business. WSJ also noted
that unsecured creditors, which weren't slated to receive a
recovery under the Plan, so far have been able to negotiate a
$100,000 budget to investigate potential legal claims that could
boost their recovery.
According to the TCR report, the bid procedures would have created
an overbid auction process whereby third parties could submit
higher or otherwise better proposals than the Prepackaged Plan
currently on file. The procedures contemplated that if no
preliminary proposals providing for greater creditor recoveries
are received by April 14, Sbarro may proceed to seek confirmation
of the Prepackaged Plan without continuing the sale process.
According to the bid procedures, if the Debtors receive competing
qualified bids, they will conduct an auction May 21 at 10 a.m. at
the New York offices of Kirkland & Ellis, their bankruptcy
counsel.
Through April 21, several entities have filed objections to
Sbarro's April 7-dated notice of proposed assumption of exectory
contracts or unexpired leases, and the proposed cure amounts to be
paid with respect to those contracts or leases. These entities
include:
-- Farmore Realty, Inc.;
-- Taubman Landlords;
-- Jones Lang LaSalle Americas, Inc.;
-- Union Station Investco, LLC;
-- Rouse Properties Inc.;
-- Aventura Mall Venture
-- N. Wasserstrom & Sons Inc.;
-- GGP Limited Partnership and Galleria Mall Investors LP;
-- Simon Property Group Inc.;
-- CBL & Associates Management Inc.;
-- Starwood Retail Partners LLC, The Forbes Company, The
Macerich Company;
-- Glimcher Properties Limited Partnership, Glimcher
Ashland Venture, LLC, PFP Columbus, LLC, Glimcher
Westshore, LLC, and Watercress Associates, LP.
On April 7, the Debtors have filed supplements to the Plan,
including:
Exhibit A: Exit Facility Documentation
Exhibit B: Assumed Executory Contract/Unexpired Lease List
Exhibit C: Rejected Executory Contracts and Unexpired Lease
List
Exhibit D: Shareholders Agreement
Exhibit E: Certificate of Incorporation
Exhibit F: Bylaws
Exhibit G: Members of the New Board
Exhibit H: Transaction Steps to Establish New Franchising
Entity
A copy of the Plan Supplement is available at:
http://bankrupt.com/misc/SbarroPlanSupplement.pdf
About Sbarro
Pizza chain Sbarro sought Chapter 11 bankruptcy protection
together with several affiliated entities (Sbarro LLC, Bankr.
S.D.N.Y. Lead Case No. 14-10557) on March 10, 2014, in Manhattan.
Bankruptcy Judge Martin Glenn presides over the Debtors' cases.
The bankruptcy filing came after Sbarro said in February it would
155 of the 400 restaurants it owns in North America.
Bankruptcy Judge Martin Glenn presides over the 2014 case. Nicole
Greenblatt, Esq., James H.M. Sprayregen, Esq., Edward O. Sassower,
Esq., and David S. Meyer, Esq., at Kirkland & Ellis, LLP,
represent Sbarro. Mark Hootnick, Brian Bacal, Gregory Doyle, and
Roger Wood at Moelis & Company, serve as Sbarro's investment
bankers. Loughlin Management serves as the financial advisors.
Prime Clerk LLC serves as claims and noticing agent, and
administrative advisor.
Melville, N.Y.- based Sbarro LLC listed $175.4 million in total
assets and $165.2 million in total liabilities. The petitions
were signed by Stuart M. Steinberg, authorized individual.
This is Sbarro's second bankruptcy filing in three years. The
corporate entity was then known as Sbarro Inc., which, together
with several affiliates, filed Chapter 11 petitions (Bankr.
S.D.N.Y. Lead Case No. 11-11527) on April 4, 2011, in Manhattan.
Sbarro Inc. disclosed $51,537,899 in assets and $460,975,646 in
liabilities in the 2011 petition.
Bankruptcy Judge Shelley C. Chapman presided over the 2011 case.
In the 2011 case, Edward Sassower, Esq., and Nicole Greenblatt,
Esq., at Kirkland & Ellis, LLP, served as the Debtors' general
bankruptcy counsel; Rothschild, Inc., as investment banker and
financial advisor; PriceWaterhouseCoopers LLP as bankruptcy
consultants; Marotta Gund Budd & Dzera, LLC, as special financial
advisor; Curtis, Mallet-Prevost, Colt & Mosle LLP as conflicts
counsel; Epiq Bankruptcy Solutions, LLC, as claims agent; and Sard
Verbinnen & Co as communications advisor.
Sbarro Inc. emerged from Chapter 11 protection seven months later,
in November 2011, after Judge Chapman confirmed a Plan of
Reorganization that handed ownership of the company to the pre-
bankruptcy first lien lenders. Under the terms of the Plan,
Sbarro reduced debt by approximately 73%, or $295 million (from
approximately $405 million to $110 million, plus any amounts
funded under a new money term loan facility), by converting 100%
of the outstanding amount of the $35 million post-petition debtor-
in-possession financing into an equal amount of a newly issued
$110 million senior secured exit term loan facility; and
converting approximately $173 million in prepetition senior
secured debt held by the Company's prepetition first lien lenders
into the remaining exit term loan facility and 100% of the common
equity of the reorganized company (subject to dilution by shares
issued under a management equity plan); and eliminating all other
outstanding debt.
In January 2014, Standard & Poor's Ratings Services lowered
Sbarro's corporate credit rating further into junk category -- to
'CCC-' from 'CCC+' -- with negative outlook; and The Wall Street
Journal reported pizza chain enlisted restructuring lawyers at
Kirkland & Ellis LLP and bankers at Moelis & Co.
On March 5, 2014, the Debtors commenced solicitation of the
Proposed Joint Prepackaged Chapter 11 Plan of Reorganization. The
Plan received near unanimous support from the Debtors' prepetition
secured lenders, with Holders of approximately 98% of the
outstanding Prepetition Secured Lender Claims in dollar amount
voting to accept the Plan.
On March 26, 2014, the United States Trustee appointed an official
committee of unsecured creditors, consisting of (i) Performance
Food Group, Inc., (ii) PepsiCo Sales, Inc., (iii) GGP Limited
Partnership, (iv) Simon Property Group, Inc., and (v) The Macerich
Company. The Committee is represented by Jay R. Indyke, Esq.,
Cathy $R. Herschopf, Esq., Seth Van Aalten, Esq., and Alex
Velinsky, Esq., at Cooley LLP. Mesirow Financing Consulting, LLC
serves as its financial advisors.
Counsel for the Prepetition Agent and DIP Agent is Milbank, Tweed,
Hadley & McCloy LLP's Evan R. Fleck, Esq.
SCOTTSDALE VENETIAN: Plan Hearing Continued to June 25
------------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona has
continued the hearing to consider confirmation of Scottsdale
Venetian Village LLC's Chapter 11 plan to June 25, 2014 at 9:30
a.m. The Debtor is facing objections by First National Bank of
Hutchinson.
According to the Bank, the Debtor's Plan should not be confirmed
for these reasons:
(1) The Debtor cannot establish that the Plan is feasible
because its projections are completely unrealistic and unsupported
by any evidence to justify the drastic turnaround that this Plan
projects;
(2) The Debtor's treatment of the Bank's claim, with a 4.5%
interest rate and 12-year term, does not reflect a market rate of
interest or term given the high risks associated with the Loans;
(3) The Plan is proposed in bad faith as the sole objective of
this Plan is to cash out an insider, Perez Holdings II, LLC, years
before the rest of the creditors, including over a decade before
paying off the secured creditor; and
(4) Glacier Development Companies LLC has not presented any sort
of business plan or evidence that it can perform under the terms
of the Membership Interest Purchase Agreement with Perez Holdings
or the Plan that it would inherit.
Bank of Hutchinson says the proposed cash infusions from Glacier
Development in the amounts of $500,000 and $1,000,000 are
inadequate, and the Debtors' projections are unobtainable. The
Bank says that based on the fact that the Debtor's projections are
unobtainable, the $1,000,000 reserve will evaporate almost
immediately just to meet its debt service (even at the Debtor's
proposed 4.5% interest rate) and/or the Debtor's ongoing expenses.
According to the Bank, if there are any unexpected or
unanticipated expenses, the cash infusion will be gone and thus
the Debtor will not be able to cover those expenses.
Bank of Hutchinson is represented by:
RYLEY CARLOCK & APPLEWHITE
W. Scott Jenkins, Jr., Esq.
Alissa A. Brice, Esq.
One North Central Avenue, Suite 1200
Phoenix, AZ 85004-4417
Telephone: 602/258-7701
Telecopier: 602/257-9582
E-mail: sjenkins@rcalaw.com
abrice@rcalaw.com
ADOR Agreement
State of Arizona ex rel. Arizona Department of Revenue -- which
asserts a secured claim of $237,000, a priority claim of $54,000
and a general unsecured claim of $3,777 -- says it has reached
with the Debtor basic terms upon which to resolve its objection to
confirmation of the Plan, and the Debtor's objection to its
claims. While a stipulation is in preparation, ADOR filed a
limited objection to preserve its rights and remedies in the event
the agreement is not finalized.
The Chapter 11 Plan
As reported in the March 12, 2014 edition of the TCR, Scottsdale
Venetian Village LLC has won approval of the disclosure statement
explaining its proposed Chapter 11 plan. The bankruptcy judge
approved the disclosure statement after the Debtor resolved the
objection made by First National Bank of Hutchinson.
Scottsdale Venetian Village amended the Plan documents on Feb. 27,
2014, to incorporate terms reached with the buyer for the Debtor's
interests in the Days Hotel in Scottsdale, Arizona.
According to the Fourth Amended Disclosure Statement, after arm's-
length negotiations, Glacier Development Companies, LLC, entered
into a membership interest purchase agreement with the Debtor and
Perez Holdings. Glacier has already deposited $200,000 in escrow
to serve as an earnest deposit.
Pursuant to the Purchase Agreement, Glacier has a 30-day period in
which to conduct its due diligence. During that time, Glacier can
walk away from the sale for any reason. However, if Glacier does
not walk away, the sale is due to close within approximately 30
days of the entry of a final order confirming the Plan. Glacier
has a right to approve the terms of the Plan before confirmation.
If the Purchase Agreement is consummated, several integrated
transactions will occur. Upon closing, Glacier will receive 100%
of the equity interests in the Debtor in exchange for a promissory
note in the amount of $1,500,000 executed in favor of Perez
Holdings. Glacier will deposit in a joint account in the name of
Glacier and the Debtor, an additional $300,000, which when
combined with the current earnest deposit, will make $500,000
available to be used by the Debtor to deal with claims, such as
administrative and priority claims, as well as allowing the Debtor
to offer discounts for cash to those with allowed claims. In
addition, Glacier will deposit in an account an additional
$1,000,000 as additional financial resources to provide further
assurance of the Debtor's financial capability to meet its
operational and Plan obligations post confirmation.
Pursuant to a promissory note executed at closing, one year after
confirmation of the Plan, Glacier will pay Perez Holdings
$1,500,000. In the event that Glacier fails to make the payment
due to Perez Holdings under its promissory note, the Purchase
Agreement provides Perez Holdings the ability to foreclose upon,
and regain, the equity interests in the Debtor.
Additionally, pursuant to the Purchase Agreement, the Reorganized
Debtor will provide bonuses of $115,000 and $30,000, respectively,
to Shahram Sodiefi and Sara Stevens for their key roles in the
operation, and subsequent transition, of the Property.
The Plan proposes to treat claims and interests as follows:
-- First National Bank of Hutchinson will receive full payment
with interest in the form of a promissory note that will
mature and become fully due and payable on the 12th
anniversary of the effective date of the Plan.
-- Maricopa County's secured claims will be paid in full in
installments. If Maricopa County votes in favor of the
Plan, it will receive a cash payment of $5,000 on the
Effective Date that will be applied to outstanding real
property taxes, with the balance to be paid in installments.
-- Holders of allowed unsecured claims will be paid in full,
with interest, in equal quarterly installments commencing
on the Effective Date and concluding on the eight
anniversary of the Effective Date.
-- With respect to equity, if the purchase agreement is not
consummated, the current interest holder(s) will retain
their equity interests. If the purchase agreement is
consummated, the buyer will own all of the equity interests
in the Reorganized Debtor.
A copy of the Fourth Amended Disclosure Statement dated Feb. 27,
2014, is available for free at:
http://bankrupt.com/misc/Scottsdale_Ven_4th_Am_DS.pdf
About Scottsdale Venetian
Scottsdale Venetian Village, LLC, operates the Days Hotel located
at 5101 N. Scottsdale Road, in Scottsdale, Arizona. The Company
also operates Papi Chulo's Mexican Grill & Cantina, located
immediately adjacent to the hotel. The hotel consists of 211
guest rooms and, among other things, facilities for meetings and
banquets.
Scottsdale Venetian Village filed a Chapter 11 petition (Bankr. D.
Ariz. Case No. 13-02150) on Feb. 19, 2013, in Phoenix, estimating
at least $10 million in assets and less than $10 million in
liabilities.
The Debtor is represented by John J. Hebert, Esq., and Wesley D.
Ray at Polsinelli Shughart, P.C., in Phoenix. Charles B. Foley,
CPA, PLLC serves as the Debtor's accountant.
SERVICE CORP: Moody's Rates New Sr. Unsecured Notes Due 2024 'B1'
-----------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Service
Corporation International Inc.'s ("SCI") proposed senior unsecured
notes due 2024.
The proceeds of the proposed notes due 2024, along with balance
sheet cash and revolving credit borrowings, will be used to repay
SCI's senior unsecured notes due 2015 and 2019, Stewart
Enterprises, Inc.'s ("Stewart") senior unsecured notes due 2019
and pay related call premiums, transaction fees and expenses.
Ratings on the repaid notes will be withdrawn upon completion of
the refinancing.
Ratings Rationale
"The new 2024 notes will eliminate near-term bond maturities and
lower annual interest expense by about $6 million per year at the
cost of a slight increase in financial leverage and somewhat less
liquidity as cash and revolver borrowings are also being used to
complete the refinancing," noted Edmond DeForest, Moody's Senior
Analyst.
The Ba3 Corporate Family Rating reflects Moody's expectation that
financial leverage as measured by debt to EBITDA will remain above
4 times and free cash flow to debt could be less than 4% until
2015.
The B1 rating on the proposed notes due 2024 reflects SCI's Ba3-PD
Probability of Default rating and the notes junior position to the
senior unsecured (guaranteed) revolving credit facility due 2018
and amortizing term loan B due 2018.
The stable ratings outlook reflects Moody's expectation that the
company will conclude required asset sales related to its
acquisition of Stewart by the end of the third quarter of 2014,
with forecast operating synergies beginning to be recognized
during 2014. Moody's anticipates diminished near term free cash
flow of about $200 million, but modest revenue and profitability
growth driven by growth in cemetery revenues. The rating outlook
reflects expectations for some further debt-financed acquisitions
and increases in cash returns to shareholders. An upgrade could
occur if through steady to improved operating performance and the
application of free cash flow to debt repayment, Moody's comes to
expect debt to EBITDA to remain below 3.5 times and steady free
cash flow above $300 million, after considering some level of
likely potential future debt-financed acquisitions and shareholder
cash return activities. The ratings could be lowered if through
some combination of unexpectedly poor cemetery, funeral or trust
asset performance or aggressive financial policies, Moody's comes
to expect debt to EBITDA will not be on track to be below 4 times
by year end 2015.
Assignments:
Issuer: Service Corporation International
Senior Notes due 2024, Assigned B1, LGD4, 65%
Revisions:
Issuer: Service Corporation International
Senior Unsecured Bonds, Revised to LGD4, 65% from LGD4, 69%
Issuer: Stewart Enterprises, Inc.
Senior Unsecured Bond/ due Apr 15, 2019, Revised to LGD4, 65%
from LGD4, 69%
SCI is North America's largest provider of funeral, cemetery and
cremation products and services. As of December 31, 2013 the
company operates an industry-leading network of 1,644 funeral
service locations and 514 cemeteries, which includes 283 funeral
service/cemetery combination locations, covering 43 states in the
United States, 8 Canadian Provinces, and Puerto Rico. Moody's
anticipates revenue of about $3 billion in 2014.
SERVICE CORP: S&P Rates New $550MM Sr. Unsecured Notes 'BB-'
------------------------------------------------------------
Standard & Poor's Ratings Services assigned a 'BB-' rating to
Service Corp. International's (SCI's) proposed $550 million senior
unsecured notes. The recovery rating on the new notes is '5',
indicating modest (10%-30%) recovery in the event of default. SCI
will use the proceeds of the notes to redeem a portion of the
company's $137 million notes due 2015, $200 million notes due 2019
issued by Stewart Enterprises (SCI acquired Stewart in late 2013),
and $250 million notes due 2019.
All other ratings, including the 'BB' corporate credit rating, are
unchanged.
The anchor score of 'bb+' reflects S&P's assessment of the
company's "satisfactory" business risk and "significant" financial
risk profiles. The financial policy modifier lowers the anchor
score by one notch as S&P views SCI's financial policy as
negative. This is based on S&P's view that SCI may well continue
to aggregate its growing market position in the highly fragmented
death-care industry through further debt-financed acquisitions
above S&P's base-case expectations.
RATINGS LIST
Service Corp. International
Corporate Credit Rating BB/Stable/--
New Rating
Service Corp. International
$550 mil snr unsecd notes BB-
Recovery rating 5
SHELL POINT: S&P Revises Outlook on 'BB+' Rating to Positive
------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on its
'BB+' rating on Lee County Industrial Development Authority,
Fla.'s series 2006, 2007, and 2011B revenue bonds, issued for
Shell Point Village (SPV), to positive from stable.
The outlook revision to positive reflects Standard & Poor's
assessment of the village's continued solid operating trend
generating improved debt service coverage, very strong demand, and
increasing unrestricted reserves.
"We could raise the rating over the outlook period if a continued
positive operating trend were to generate debt service coverage in
excess of 2.5x, coupled with continued improvement in balance
sheet metrics with an unrestricted reserve to long term debt ratio
greater than 45% and days' cash on hand of more than 350 days'.
We will also assess the effect of the upcoming project on Shell
Point's finances," said Standard & Poor's credit analyst Margaret
McNamara. "We, however, could revise the outlook to stable if,
what we consider, a significant operating performance
deterioration were to result in a debt service coverage decrease
of less than 2x, or if liquidity were to decrease with days' cash
on hand decreasing below 175 days', or if the village does not
complete the project's upcoming Phase I successfully."
Standard & Poor's also affirmed its 'BB+' rating on the debt.
Standard & Poor's believes, what it considers, the village's weak
balance sheet metrics, including high leverage and a low
unrestricted-reserve-to-long-term-debt ratio, somewhat continue to
temper the rating. The rating service also believes additional
credit concerns include SPV's plans to construct a new 50-unit
independent-living facility and commons building.
While Standard & Poor's recognizes SPV is not taking on any long-
term debt related to the project, the rating service understands
SPV will use short-term financing, which management indicates it
plans to pay back with entrance fees; Standard & Poor's, however,
still views this as a credit concern because it relates to the
facility's fill-up and construction risk. The rating service
understands SPV has certain milestones it needs to reach to begin
construction, including 100% presale of the 14 units for Phase I,
which it has met as of Jan. 31, 2014, alleviating some of Standard
& Poor's concerns.
The obligated group's revenue pledge, debt service reserve fund,
and mortgages secure the bonds. The obligated group consists of
SPV and Alliance, a retirement community in Deland that has a
common governance structure with SPV.
SILVERADO STREET: Court Dismisses Chapter 11 Case
-------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of California
dismissed the Chapter 11 case of Silverado Street LLC, citing
failure to appear at the meeting of creditors held on March 4 and
25, 2014.
Silverado Street, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. S.D. Cal. Case No. 14-00574) on Jan. 30, 2014, in San
Diego, California. The company said in its schedules that it has
$22 million to $47 million in total assets and $11 million in
liabilities in total liabilities. The Debtor is represented by
Golmore, Wood, Vinnard & Magness, in Fresno, as counsel.
The company's property -- Lots 18 and 19 in Block 74 of Villa
Tract, La Jolla Park, in San Diego County -- is valued at $12
million and secures debt in the aggregate amount of $11 million
owed to Chase Mortgage, FHR Realty Advisors and Georgiou Trust.
The company also claims to have mineral rights and oil leases
valued at $2 million. The company's remaining asset is on account
of notes/deeds of trust judgments that the Debtor estimates to be
valued at $10 million to $35 million.
SIMPLEXITY LLC: Files Schedules of Assets and Liabilities
---------------------------------------------------------
Simplexity LLC, Simplexity Services LLC, and Adeptio INC Holdings
LLC filed separate summary of schedules of assets and liabilities,
and statements of financial affairs in the U.S. Bankruptcy Court
for the District of Delaware, disclosing:
Company Name Assets Liabilities
------------ ----------- -----------
Simplexity LLC $14,417,331 $61,593,579
Simplexity Services LLC $8,941,387 $36,972,706
Adeptio INC Holdings LLC $105,199 $32,014,086
A full-text copy of Simplexity LLC's schedules and statements is
available for free at http://is.gd/muYOEL
A full-text copy of Simplexity Services LLC's schedules and
statements is available for free at http://is.gd/Z6l3oa
A full-text copy of Adeptio INC Holdings LLC's schedules and
statements is available for free at http://is.gd/lPzZLr
About Simplexity
Simplexity, LLC, sought protection under Chapter 11 of the
Bankruptcy Code on March 16, 2014 (Case No. 14-10569, Bankr.
D.Del.). The case is before Judge Kevin Gross. The Debtors'
counsel is Kenneth J. Enos, Esq., and Robert S. Brady, Esq., at
Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware.
Prime Clerk LLC serves as claims and noticing agent. Simplexity
hired Rutberg & Co. as investment banker.
Simplexity LLC and Simplexity Services LLC both estimated
$10 million to $50 million in assets, and $50 million to $100
million in liabilities.
The U.S. Trustee for Region 3 appointed five members to an
official committee of unsecured creditors. Peter S. Partee, Sr.,
Esq., and Michael P. Richman, Esq., at HUNTON & WILLIAMS LLP, in
New York; and Christopher A. Ward, Esq., and Shanti M. Katona,
Esq., at Polsinelli PC, in Wilmington, Delaware, represent the
Committee.
SMART TECHNOLOGIES: S&P Alters Outlook to Pos. & Affirms 'B' CCR
----------------------------------------------------------------
Standard & Poor's Ratings Services said it revised its outlook on
Calgary, Alta.-based interactive display producer SMART
Technologies Inc. to positive from stable. At the same time,
Standard & Poor's affirmed its 'B' long-term corporate credit
rating on the company, and its '1' recovery rating and 'BB-'
issue-level rating on SMART's US$125 million senior secured term
loan.
"The positive outlook reflects our expectation of lower earnings
volatility owing to cost cuts the company has undertaken in the
past year and the potential for growth in SMART's enterprise and
software businesses to reduce its dependence on choppy and
unpredictable hardware sales to the education market," said
Standard & Poor's credit analyst David Fisher.
The ratings on SMART reflect Standard & Poor's assessment of the
company's "vulnerable" business risk profile and its financial
risk profile as "aggressive".
SMART is a leading provider of touch-sensitive interactive
whiteboards (IWB) and related interactive display technologies,
interactive response systems, and ancillary software, primarily
targeting the kindergarten to grade 12 school education market and
enterprise customers. The company develops and markets hardware
and software products that enable group collaboration and
interactive learning by both local and remote participants. For
the 12 months ended Dec. 31, 2013, it reported revenue and
adjusted EBITDA of US$570 million and US$63 million, respectively.
Standard & Poor's views SMART's business risk profile as
vulnerable owing to the company's dependence on government and
school board funding; relatively small scale, limited product
diversity; and moderate geographic concentration of revenue.
Industrywide IWB sales have slowed in recent years due to
government and school board funding constraints, competition from
alternative classroom technologies (interactive flat panels,
projectors, and tablets), and market saturation in some regions.
These factors are unlikely to abate in the near term.
S&P's assessment of SMART's financial risk profile as aggressive
incorporates the potential for significant earnings volatility as
well as the risks associated with potential debt-funded
acquisitions or shareholder-friendly actions.
SMART's adjusted debt figure at Dec. 31, 2013 includes US$66
million of capital leases and approximately US$25 million in
Standard & Poor's operating lease adjustments.
The positive outlook reflects S&P's expectation that cost cuts
undertaken in the past year, combined with expected growth in
SMART's software and enterprise-related initiatives, will lead to
lower earnings volatility.
"We could raise the ratings in the next 12 months if the
proportion of revenue from SMART's enterprise business increases
to about 25% (from 15%-20% in fiscal 2014) and the business is
profitable, there is evidence that the company's recurring
software monetization efforts are taking hold, and the education
business stabilizes. We would characterize stabilization in the
education business as revenue and EBITDA approximately flat to
modestly down from the previous-year period, with the company
successfully placing volume orders of interactive flat panels.
Should SMART meet these criteria, we believe earnings volatility
would decrease. This would likely result in an upgrade, provided
our leverage expectations remained intact. We could also raise
the rating if our financial policy expectations changed," S&P
said.
S&P could revise the outlook to stable if SMART experiences
further revenue and earnings pressure, possibly as a result of
continued weakness in the education whiteboard market or increased
competition from large flat panel display manufacturers.
STOCKBRIDGE/SBE INVESTMENT: S&P Affirms 'B-' CCR; Outlook Negative
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B-' corporate
credit rating on Las Vegas-based Stockbridge/SBE Investment Co.
LLC. The outlook is negative.
At the same time, S&P revised its recovery rating on the company's
subsidiary Stockbridge/SBE Holdings LLC's $300 million first-lien
term loan ($150 million is now outstanding) due 2017 to a '1' from
a '3', reflecting better recovery prospects as there is less
senior secured debt in the capital structure. As a result of the
change in recovery rating, S&P raised the issue-level rating on
the senior secured facility to a 'B+' from a 'B-', in accordance
with its notching criteria.
The revised recovery and issue-level ratings reflect the repayment
of $150 million of senior debt, when the company raised sufficient
amounts of junior-priority debt. The company was able to raise
two tranches of junior-priority funds from the U.S. Immigrant
Investor Program (the EB-5 program) with commitments estimated to
be around $200 million for each tranche. The interest on these
funding sources is significantly less than the term loan, with
blended cash interest rates not to exceed 6%. The initial $300
million term loan was raised in May 2012.
The EB-5 program allows foreign citizens to potentially obtain
green cards and permanent residence status upon satisfaction of
certain requirements stemming from their investments in new
commercial enterprises, which create jobs for U.S. citizens and
legal residents. SLS Lender LLC and SLS Tranche 1 Lender LLC were
formed for the purpose of pooling EB-5 investor capital to make
loans to the company to complete the redevelopment of the former
Sahara Hotel & Casino to the SLS Las Vegas. Based on the proposed
terms of the EB-5 offering, S&P expects the total blended interest
rate to be around 5% of non-compounding interest with
approximately 4% paid on a current basis and the remainder accrued
and paid at maturity. "In our view, this provides a significant
savings in interest expense relative to market-based rates," said
Standard & Poor's credit analyst Stephen Pagano. "It also improves
the potential that the company will generate cash flow sufficient
to meet fixed charges."
Standard & Poor's corporate credit rating on the company reflects
its assessment of the company's business risk profile as
"vulnerable" and its assessment of its financial risk profile as
"highly leveraged," according to its criteria. No other modifiers
had any impact on the rating.
The negative rating outlook reflects S&P's belief that the company
will be challenged to ramp up cash flow generation at the property
to a level sufficient to service the proposed capital structure.
While the rating incorporates a scenario in which the property
ramps up to the point that EBITDA generation in 2015 meets fixed
charges under the capital structure, this scenario relies not just
on strong execution by the management team, but on continued
modest growth in gaming revenues and RevPAR on the Las Vegas
Strip. Given SLS' disadvantaged northern Strip location, a highly
competitive market with many well-established competitors, and the
vulnerability of new gaming projects to uncertain demand and
difficulties managing initial costs, the negative outlook reflects
the risks in achieving a sufficient ramp up in EBITDA to meet
fixed charges.
SUNCOKE ENERGY: Moody's Rate $250MM Sr. Unsecured Notes 'B1'
------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to approximately
$250 million in senior unsecured notes to be issued by SunCoke
Energy Partners, L.P. (SXCP) and SunCoke Energy Partners Finance
Corp as a co-issuer. All other ratings remain unchanged. The
outlook is stable.
Assignments:
Issuer: SunCoke Energy Partners, L.P.
Senior Unsecured Regular Bond/Debenture Feb 1, 2020, Assigned
B1, LGD4, 68%
Proceeds of the note issue, together with proceeds from the
issuance of common units representing limited partner interests
and general partner units, will be used to acquire an additional
33% interest in the coke making facilities and related assets of
Haverhill Coke Company LLC (Haverhill 1 and Haverhill 2) and
Middletown Coke Company, LLC. (Middletown), which interests are
currently owned by SunCoke Energy, Inc. (SXC). Through its wholly
owned subsidiary Sun Coal & Coke LLC, SXC has a 54.1% limited
partner interest and 2% general partner interest in SXCP. Upon
completion of the transaction, SXCP will own 98% of each of
Haverhill Coke Company LLC and Middletown Coke Company LLC. Under
the announced transaction, SXCP will assume and repay
approximately $271 million of SXC's debt. A portion of the
proceeds will also be used to repay outstandings under SXCP's
revolving credit facility with any residual proceeds held by SXCP
for payment of fees and general corporate expenses. Total
consideration is $365 million
Ratings Rationale
SXCP's Ba3 corporate family rating (CFR) reflects its favorable
business model and the long-term contract nature of its business,
which includes the ability to pass through most material costs,
including coal purchase costs (subject to specified coal-to-coke
yields being met), operating and maintenance costs, and coke
transportation costs among others. All coke production is sold
under take-or-pay contracts which run to 2020 and beyond;
Haverhill 1's contract is with a subsidiary of ArcelorMittal (Ba1
CFR, negative outlook) while Haverhill 2 and Middletown's
contracts are with AK Steel (B3 CFR, stable outlook). This
business construct provides a measure of underlying certainty to
volume levels and a degree of stability to SXCP's expected revenue
streams and earnings generation. The rating also considers the
importance of the operations for which coke is provided to both AK
Steel and Arcelor Mittal.
Although leverage is increasing as a result of this transaction,
it remains within an acceptable level. However, the cushion
currently existing for increased debt capacity has been
diminished. Pro-forma for the debt issuance Moody's estimate
leverage, as measured by the debt/EBITDA ratio at December 31,
2013, increasing to around 2.7x (before income attributable to non
-- controlling interests, ie SXC's current 35% interest), from
reported of 1.3x. Given that SXCP will own 98% of Haverhill Coke
Company and Middletown Coke Company, such attributable amount will
not be applicable going forward. Given the increased debt levels,
and likely flat EBITDA in 2014, Moody's expect that leverage, as
measured by the debt/EBITDA ratio, will range between 2.75x and
3.25x.
The rating is constrained by SXCP's limited diversity and high
customer concentration; AK Steel and ArcelorMittal being the only
two coke supply customers. Although SXCP modestly diversified its
business footprint in 2013 through the acquisition of two
companies involved in coal handling and coal blending, revenues
and earnings from this segment remain small relative to the coke
segment. The rating is also constrained by the nature of the MLP
structure. The partnership agreement requires the distribution of
all available cash, as defined, thereby limiting cash available
for reinvestment in the business. Consequently it is likely that
additional financing will continue to be required for meaningful
strategic growth including further drop downs of SXC's interest in
its remaining coke operations in accordance with SXC's stated
strategic investments. Given the upfront investments required to
construct coke making facilities, this could be substantial.
SXCP's ability to grow while maintaining an appropriate leverage
and liquidity position will be key considerations in the rating
going forward.
Liquidity is currently supported principally by the company's $150
million secured revolving credit facility maturing in January
2018. The company is required under this facility to comply with
financial maintenance covenants, including a maximum leverage
ratio of 4.0 times (stepping down to 3.75 times beginning the
testing period ending March 31, 2015) and minimum interest
coverage ratio of 2.5 times. Moody's expect SXCP to comply with
its covenants with ample cushion over the next four quarters. The
company is in the process of increasing its secured revolving
credit facility to $250 million.
Although the company's liquidity is viewed as able to support
ongoing requirements, growth capital expenditures will need to be
funded externally given that all excess cash will be distributed.
Structural Considerations
The B1 rating on the senior unsecured notes reflects, under
Moody's loss given default methodology reflects their weaker
position in the capital structure relative to the secured revolver
and priority accounts payable.
Rating Outlook
The stable outlook for SXCP reflects Moody's expectation for
consistency in revenues and earnings, notwithstanding the weather
related impact on first quarter 2014 results, due to the contract
nature of the business model and the ability to pass through a
majority of costs. The outlook also reflects the fact that there
may be quarter to quarter volatility given unplanned blast furnace
outages but considers that SXCP and the offtake companies will
preserve the integrity of the contracts over an agreed time
horizon. The outlook also anticipates that SXCP will continue
manage its business in such a way that solid liquidity is
maintained and growth and distribution objectives are balanced
with the use of debt and equity in the capital structure.
What Could Change The Rating -- UP
Given the limited operating history of SXCP and ongoing changes in
its business profile, an upgrade is unlikely over the next 12 to
18 months, particularly as it is likely that over time, further
ownership interests in coke making facilities at SXC will be
dropped down to SXCP with a commensurate increase in debt.
However, if the company is able to achieve and sustain EBIT-to-
interest of 3.75 times, debt-to-EBITDA of no more than 3.75 times
and free cash flow-to-debt of at least 6%, the rating could be
favorably impacted.
What Could Change The Rating -- DOWN
Should the company suffer a customer contract off take loss or
EBIT-to-interest track below 3.0 times, debt-to-EBITDA exceed 4.5
times, free cash flow be consistently negative, all on a
sustainable basis or liquidity tighten, the rating would be
negatively impacted.
SunCoke Energy Partners LP (SXCP) is a Master Limited Partnership
(MLP) formed in January 2013 by its sponsor SunCoke Energy Inc.
(SXC). SXCP currently holds a 65% interest in SXC's coke making
facilities and related assets of Haverhill 1, Haverhill 2 and
Middletown. Haverhill 1 has an offtake agreement with a subsidiary
of ArcelorMittal (Ba1 CFR, negative outlook) while Haverhill 2 and
Middletown have offtake agreements with AK Steel (B3 CFR, stable
outlook). Following completion of the intended drop down of
further partnership interests from SXC, SXCP will hold a 98%
interest in these assets. These facilities have a total coke
making capacity of approximately 1.7 million tons. Coke is a
necessary raw material in the blast furnace production of steel.
SXCP also has coal handling and blending facilities.
TAYLOR, MI: Fitch Affirms 'BB' Rating on Gen. Obligation Bonds
--------------------------------------------------------------
Fitch Ratings affirms the following ratings on Taylor, Michigan's
(the city) general obligation (GO) bonds:
-- $8.8 million limited tax general obligations (LTGOs) series
2004 and 2005 at 'BB';
-- $1.1 million LTGO downtown development (DDA) bonds series
2002 at 'BB';
-- $16.1 million Brownfield Redevelopment Authority (BRDA)
bonds, series 2005 and 2006 at 'BB';
-- Implied unlimited tax general obligation (ULTGO) rating at
'BB+'.
The Rating Outlook is revised to Stable from Negative.
Security
The LTGO bonds are secured by the city's full faith and credit
general obligation and its ad valorem tax pledge, subject to
applicable charter, statutory and constitutional limitations.
The Downtown Development Authority (DDA) TIFA and Brownfield
Development Authority (BRDA) bonds are secured by relevant tax
increment revenues collected within the development area. As
additional security the city has pledged its full faith and credit
subject to applicable constitutional, statutory and charter
limitations.
Key Rating Drivers
Historical Structural Imbalance; Modest Improvement: Four years of
net deficits left the city with a sizable negative unrestricted
general fund balance in fiscal 2012. Implementation of a deficit
elimination plan resulted in drastic expenditure cuts in fiscal
2013 and a sizable surplus. Recurring expenditure savings project
elimination of the deficit by fiscal 2016. However, considerable
budgetary pressures will continue over the near term.
Declining Taxable Value: Taxable value (TV) has declined notably
over the past five years although some stabilization is expected
for fiscal 2015. Significant growth in the base is not expected
in the near term.
Lack Of Revenue Raising Flexibility: Property taxes are the city's
main revenue source and the city is currently at its property tax
cap; revenue raising options are virtually non-existent.
Contingent Obligations: The general fund is obligated to support
contingent obligations whose intended repayment source has not
materialized. General fund support of these obligations is
expected to continue to be needed over the life of the
obligations.
Limited Financial Flexibility: The one notch difference between
the LTGO and the implied ULTGO rating reflects the city's severely
limited financial flexibility, as evidenced by the negative
unrestricted general fund balance combined with the inability to
increase property taxes or other revenues.
Development Bonds Carry Ltgo Pledge: The DDA and BRDA bonds carry
a pledge of both tax increment revenues and the city's LTGO. The
ratings are based upon the LTGO rather than the pledged revenues
due to revenue shortfalls and weak legal protections including the
lack of an additional bonds test.
Rating Sensitivities
Inability To Reduce Accumulated Deficit: Management's inability to
continue the recent trend of budgetary surpluses and progress
toward deficit elimination would place downward pressure on the
city's ratings.
Credit Profile
Taylor is located in Wayne County, MI, approximately 18 miles
southwest of Detroit. The city has experienced a 5.2% population
loss since 2000, with 62,443 residents in 2011.
Progress on Reversing Negative General Fund Balance
The city of Taylor's notable decline in financial flexibility was
due to management's inability to match expenditure reductions to
rapid declines in property tax revenues and state shared revenues.
Audited fiscal 2011 and 2012 results posted the largest of several
annual general fund operating deficits, over $5 million in each
year. This resulted in an unrestricted general fund deficit of
$5.4 million or 11.6% of expenditures.
The city adopted and implemented a deficit elimination plan (DEP)
mid-year in 2012 which included significant expenditure reductions
including personnel cuts and salary and benefit concessions.
Audit results for fiscal 2013 indicate a sizable operating surplus
of $2.9 million (7.3% of spending. The fiscal 2013 surplus is
largely due to the significant recurring expenditure reductions
and modest improvement in state revenues. City property tax
revenues stabilized as a result of improved collections.
Fiscal 2014 cash basis results through January 2014 project
continuation of surplus operations and the achievement of a
positive unrestricted general fund balance by fiscal 2016. As
Taylor is at its maximum property tax rate, TV is expected to be
flat at best, and state shared revenues are likely to increase
only modestly, the return to positive operations will be driven by
recurring expenditure cuts and labor contract savings.
The DEP outlines recurring expenditure savings from the
implementation of a recently-implemented high deductible health
care plan for all employees and staff reductions. Fiscal 2013
staff reductions of approximately 65 positions are expected to
create annual savings of $2.6 million. Fitch believes that these
recurring savings are achievable but that inherent revenue raising
constraints make elimination of the deficit by 2016 a challenge.
In the event that the DEP falls short, the city could seek voter
approval for a dedicated police/fire or deficit-elimination levy
but Fitch believes support could be limited.
Liquidity needs are being met by short-term loans of up to $7.5
million from the city's water and sewer enterprise funds. City
cash flow projections indicate that the general fund will borrow
$7.5 million through June 2014, similar to amounts in the last two
fiscal years. The loan would be repaid using property taxes, no
later than Oct. 31, 2014. Continued improvement in budgetary
balance may reduce the borrowing amount in 2014 and 2015.
Enterprise funds liquidity remains strong with $11.3 million, or
295 days cash on hand in fiscal 2013. Reliance on short-term
borrowing in addition to amounts currently contemplated, could
pressure the rating.
Contingent Obligations Not Self Supporting
Financial operations face additional pressure due to general fund
exposure to the BRDA issues. The 2005 A and B BRDA bonds were
expected to be self-supporting from tax revenue captured from the
building of approximately 200 homes. The housing development was
delayed and only modest development is planned over the next 1-2
years. The city general fund began to subsidize repayment of the
bonds in fiscal 2012 in the amount of approximately $800,000. The
subsidy is expected to continue until development occurs. The
city projects some excess DDA funds will be available in 2017, as
some debt is retired.
The 2006 BRDA bonds were also expected to be self-supporting,
however, two out of the three projects generate insufficient
revenues. Total potential general fund subsidy for all BRDA
issues represents approximately 2% of fiscal 2013 general fund
expenditures.
Local Economic Conditions Remain Unfavorable
Property taxes account for just over one-half of the city's total
general fund revenue and TV has declined by over 26% since 2009.
The city indicated a total decline of 1.8% in 2014 and flat to
slightly increasing values thereafter based on the county
auditor's projections. Fitch believes these projections may be
optimistic given continued weakness in the housing market and the
lagged effect on TV.
Current tax collection rates have been low at approximately 91%
over the past four years. While it is the practice of Wayne
County to reimburse the city for all delinquencies at the end of
each fiscal year, the payment is subject to charge-backs if the
county is unable to collect the delinquent taxes or sell the
property. The city experienced modest improvement in collections
and lower chargebacks in fiscal 2013. The top 10 taxpayers
comprise a moderate 10% of total TV. Some modest development
activity is expected but Fitch expects the city tax base to remain
sluggish over the near term.
Taylor is located in the 'downriver' area of metropolitan Detroit
and has strong ties to the auto industry which has led to a
difficult economic climate. The general slowdown in the housing
market coupled with a significant amount of foreclosures have put
downward pressure on property values. Unemployment has improved
and averaged 8.2% in 2013 which was below the county (10.7%) and
the state (8.7%) but remains above the nation (7.4%). The decline
in unemployment was due partially to a 1.4% reduction in the labor
force over the past decade. Taylor's poverty rate was above
average in 2011 at 19.5%, compared to the state at 15.7%, and the
nation at 14.3%.
PENSION, OPEB & DEBT OBLIGATIONS MANAGEABLE IN NEAR TERM
Overall debt is moderate at $1,976 per capita and 4.5% of market
value. The city has no plans to issue additional debt and
amortization is above average with 65% of total principal retired
within 10 years. Overall carrying costs for direct city and
contingent debt service plus pension and other post-employment
benefits (OPEB) funding are high at 37% of total governmental
expenditures.
The city administers two defined benefit pension plans covering
nearly all police, fire, and general government employees; court
employees are covered by the state-run Municipal Employee
Retirement System (MERS). Using Fitch's 7% rate of return, MERS
was adequately funded at 84% in fiscal 2010 while both the city
administered plans were funded at approximately 60%. OPEBs are
funded on a pay-go basis; the unfunded actuarial accrued liability
is high at 8% of the tax base market value.
TOUSA INC: Dist. Court Bars Morrison's Interlocutory Appeal
-----------------------------------------------------------
In the Chapter 11 case of TOUSA Inc. et al., District Judge
Kenneth A. Marra denied Robert B. Morrison's Amended Motion for
Leave to Appeal. J. Beck and Associates, Inc., as Trustee for
TOUSA Liquidation Trust, filed a response to the Motion.
Mr. Morrison seeks to appeal a Jan. 26, 2014 the bankruptcy court
order holding that under 11 U.S.C. section 365(g) of the
Bankruptcy Code, the Oakmont contract and the Regal Oaks between
TOUSA and Superior Homes and Investments, Inc. were rejected by
TOUSA; Superior was deprived of its specific performance; and by
their express terms, the contracts bar Superior from recovering
money damages as a result of breach by TOUSA. The bankruptcy
court granted the TOUSA Liquidation Trust's motion for summary
judgment as to any claim for money damages and reserved ruling on
the claim for return of contractual deposits.
TOUSA and Superior entered into the Oakmont contract and the Regal
Oaks in 2003 and 2004. In conjunction with the execution of the
Contracts, Superior made deposits of $2,341,002.02 on the Oakmont
contract and $1,929,843.75 on the Regal Oak Contract. The
contracts were executory at the time TOUSA filed its bankruptcy
case. TOUSA rejected the contracts in 2008. The bankruptcy court
approved the rejection, and TOUSA's performance under the
contracts was excused. In 2010, Superior filed its proof of claim
in TOUSA's bankruptcy case in the amount of $33,840.263.67. Two
years later, TOUSA filed an objection to the claim, which was
eventually followed by an amended motion for summary judgment on
the objection.
Judge Marra, however, bars Mr. Morrison from proceeding with the
interlocutory appeal, saying it will not materially advance the
termination of the objection to the claim. As stated in the
bankruptcy court's order, the bankruptcy court left often the
adjudication of how much of the deposits were due to be returned
to the Appellant. Even if the Appellant were to prevail on an
interlocutory appeal and additional monetary remedies became
available to it, the deposit issue would still need to be
addressed by the bankruptcy court and the Appellant might later
seek to appeal an adverse ruling on that issue. The likelihood of
piecemeal appeals is high, Judge Marra said, and the Court does
not see how judicial efficiency would be served by such an
approach.
A copy of the Court's April 23, 2014 Opinion and Order is
available at http://is.gd/rsw2CEfrom Leagle.com.
Robert B. Morrison is represented by Christopher Andrew Roy, Esq.,
at Winderweedle, Haines, Ward & Woodman, PA.
J Beck & Associates, Inc., is represented by Paul Steven
Singerman, Esq., at Berger Singerman LLP.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA, Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A.
Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P.,
TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder
in the United States, operating in various metropolitan markets in
10 states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West.
The Debtor and its debtor-affiliates filed for separate
Chapter 11 protection on Jan. 29, 2008 (Bankr. S.D. Fla. Case
No. 08-10928). Richard M. Cieri, Esq., M. Natasha Labovitz,
Esq., and Joshua A. Sussberg, Esq., at Kirkland & Ellis LLP, in
New York, N.Y.; and Paul S. Singerman, Esq., at Berger Singerman,
in Miami, Fla., represent the Debtors in their restructuring
efforts. Lazard Freres & Co. LLC is the Debtors' investment
banker. Ernst & Young LLP is the Debtors' independent auditor and
tax services provider. Kurtzman Carson Consultants LLC acts as
the Debtors' Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008
(Bankr. S.D. Fla. Case No. 08-20746). It estimated assets and
debts of $1 million to $10 million in its Chapter 11 petition.
Daniel H. Golden, Esq., and Philip C. Dublin, Esq., at Akin Gump
Strauss Hauer & Feld LLP, in New York, N.Y., represent the
creditors committee.
The unsecured creditors committee initially proposed a chapter 11
liquidating plan for Tousa. However, the committee decided not to
pursue approval of its liquidation plan because of a pending
appeal of its fraudulent transfer action in the U.S. Court of
Appeals for the Eleventh Circuit. In May 2012, the Court of
Appeals in Atlanta held that Tousa's bank lenders received
fraudulent transfers exceeding $400 million.
After mediation before Peter L. Borowitz, Tousa and the unsecured
creditors committee, MatlinPatterson Global Advisers and Monarch
Alternative Capital, as investment adviser to Monarch Master
Funding, collectively reached an agreement in principle on a
settlement proposal. The proposal would form the foundation for a
joint bankruptcy-exit plan for the Debtors.
In May 2013, Tousa and the unsecured creditors committee filed a
proposed liquidating Chapter 11 plan.
On July 12, 2013, Tousa won court approval of a $67 million
settlement with several insurance companies allowing the Debtors
to proceed with an Aug. 1 hearing to confirm the plan. The
dispute with the insurance companies involved the pre-bankruptcy
fraudulent transfers. The insurance companies included Federal
Insurance Co., XL Specialty Insurance Co. and Zurich American
Insurance Co.
According to Bloomberg News, in settlement, the insurance
companies will pay $67 million, with $47.9 million going to
creditors of the Tousa companies that were forced to take on debt
improperly. The first-lien lenders receive $7.66 million, while
second-lien lenders take home $11.5 million. Some of the
insurance companies also pay $8.27 million of the directors' and
officers' defense costs.
Bloomberg relates Tousa's Chapter 11 plan has recoveries ranging
from 58 percent for senior noteholders to 5 percent for creditors
with general unsecured claims. The plan was the result of the
decision from the appeals court in May 2012 finding banks received
fraudulent transfers exceeding $400 million. The opinion
reinstated a ruling by U.S. Bankruptcy Judge John K. Olson which
had been set aside on the first appeal in federal district court.
The Court confirmed the Plan on August 6, 2013.
TRITON AVIATION: Fitch Cuts Rating on Class A-1 Note to 'CCsf'
--------------------------------------------------------------
Fitch Ratings takes the following actions on classes of Triton
Aviation Finance (TAF):
-- Class A-1 note downgraded to 'CCsf' from Bsf'; RE 70%;
-- Class B-1, B-2, C-1, and C-2 notes affirmed at 'Csf'; RE0%.
Key Rating Drivers
The downgrade of the class A-1 notes to 'CCsf' from 'Bsf' reflects
Fitch's view that default is considered probable as trust cashflow
has deteriorated due to the aircraft pool's illiquidity and age.
The transaction has also been negatively affected by low
utilization and small returns on aircraft sales or part-outs.
Fitch expects the class to recover 70% (RE 70%) of its current
balance. The affirmation of classes B, C, and D, all with RE0%,
reflects the inevitability of default and the expectation of no
additional payments to those classes.
Rating Sensitivities
If the demand of older aircraft declines quicker than Fitch's
assumption, the cash flow generated will be reduced this may cause
negative rating actions on class A-1 notes. Additionally, many of
the aircraft may reach the end of their useful life quicker than
assumed due to their age, which may cause negative rating actions.
Due to the correlation between the global economic conditions and
the airline industry, the ratings may be impacted by the strength
of the macro-environment over the remaining term of this
transaction. Global economic scenarios that are inconsistent with
Fitch's expectations could lead to further negative rating
actions.
TRIZETTO CORP: S&P Revises Outlook to Positive & Affirms 'B-' CCR
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Trizetto
Corp. to positive from negative. In addition, S&P affirmed its
'B-' corporate credit rating on the company.
At the same time, S&P affirmed its 'B-' issue-level rating on the
company's $650 million first-lien term loan due 2018 and $85
million revolving credit facility due 2016. The '3' recovery
rating is unchanged and reflects S&P's expectation for meaningful
(50% to 70%) recovery in the event of payment default. S&P also
affirmed its 'CCC' issue-level rating on the company's $150
million second-lien term loan due 2019. The '6' recovery rating
is unchanged and reflects S&P's expectation for negligible (0% to
10%) recovery in the event of payment default.
"The outlook revision is based on stronger-than-expected
performance in the fourth quarter of 2013 and our expectation that
TriZetto will continue to achieve stable to positive revenue and
earnings over the next 12 months," said Standard & Poor's credit
analyst Andrew Chang.
The ratings on TriZetto reflect the company's "weak" business risk
profile, with uneven performance in the payer segment and a high
level of management turnover, offset by good recurring revenues
and growing provider segment. S&P believes that the company will
continue to have a "highly leveraged" financial risk profile over
the near term.
US ECOLOGY: S&P Assigns Preliminary 'BB' CCR; Outlook Stable
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'BB'
corporate credit rating to US Ecology Inc. The outlook is stable.
At the same time, based on preliminary terms and conditions, S&P
assigned a preliminary senior secured debt rating of 'BB+' (one
notch higher than the corporate credit rating) and a preliminary
recovery rating of '2' to US Ecology's proposed seven-year $415
million term loan. The proposed five-year $125 million revolving
credit facility is unrated.
S&P expects US Ecology to use the proceeds from the issuance to
acquire EQ-The Environmental Quality Co. and to pay for associated
transaction fees. The deal remains subject to regulatory
approval. We expect to assign final ratings after the transaction
closes.
"The ratings on US Ecology reflect our assessment of its 'fair'
business risk profile and 'significant' financial risk profile,"
said Standard & Poor's credit analyst James Siahaan.
US Ecology is acquiring EQ for about $465 million before
transaction fees and expenses. The acquisition is subject to
regulatory approval as well as other customary closing conditions.
The purchase price represents an approximately 8.6x multiple based
on management's estimate of EQ's fiscal 2013 adjusted EBITDA of
$54 million. The company will finance the transaction with a $465
million term loan along with $69 million of cash on its balance
sheet. In December 2013, US Ecology raised $96 million of
proceeds via equity issuance to pre-fund its acquisition plans.
The parties expect the transaction to close during either the
second or third calendar quarter of 2014.
Boise, Idaho-based US Ecology employs over 450 professionals who
provide radioactive, hazardous, polychlorinated biphenyl (PCB),
and nonhazardous industrial waste management services to
commercial and government entities, such as refineries and
chemical production facilities, manufacturers, electric utilities,
steel mills, medical and academic institutions, and waste brokers.
The company has provided radioactive waste services since 1952 and
hazardous waste services since 1968. Wayne, Michigan-based EQ is
an integrated environmental services company with over 1,250
employees across 26 service centers and 13 treatment and disposal
facilities. It owns certified treatment, disposal, and recycling
facilities and provides remediation, industrial cleaning, and
total waste management services in North America.
The stable outlook reflects S&P's expectation that US Ecology will
be able to integrate its acquisition of EQ without significant
difficulties and obtain its projected level of synergies. S&P
expects the company's pro forma credit measures to remain
appropriate for the "significant" financial risk profile during
the next year, including FFO to debt of 20% to 30%.
S&P could consider an upgrade if the company's integration of EQ
proceeds smoothly and US Ecology either improves its cash flow via
additional waste volumes processed, or reduces its debt to the
extent that its FFO to debt ratio appears likely to increase to
and remain above 30% sustainably. Based on publicly held US
Ecology's history of modest debt leverage, and management's
commitment to adhere to prudent debt usage following the
transaction, the cash flow leverage metrics could strengthen
during the next few years.
S&P could consider a downgrade if the pro forma FFO to debt ratio
remains below 20% without clear prospects of recovery in the
medium term. This may happen if the integration of the acquired
business is not successful, if there is a sharp decline in event
business which is less stable compared with the base business, or
if management chooses to adopt more aggressive financial policies.
VELTI INC: Liquidating Plan Slated for May 29 Confirmation
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware this month
approved the disclosure statement explaining Velti Inc., et al.'s
plan of liquidation and set a May hearing to consider confirmation
of the Plan.
The Court's order approving the disclosure statement dated
April 10, 2014, provides that:
* Motions for an order pursuant to Bankruptcy Rule 3018(a)
temporarily allowing a claim in a different amount are due May 20,
2014, at 5:00 p.m. (EDT).
* Holders of impaired claims as of April 10, 2014, who are
entitled to vote on the Plan, are required to return their ballots
by May 20, 2014 at 5:00 p.m. (EDT).
* Objections to confirmation of the Plan must be filed with
the Bankruptcy Court so as to be received no later than 4:00 p.m.
(EDT) on May 22, 2014.
* The Debtors will reply to confirmation objections on May 26,
2014.
* There will be a hearing to consider confirmation of the
Proposed Plan on May 29, 2014 at 9:30 a.m. (prevailing Eastern
Time), before The Honorable Peter J. Walsh, United States
Bankruptcy Judge, in Courtroom #2 of the United States Bankruptcy
Court for the District of Delaware, 824 North Market Street, 4th
Floor, Wilmington, Delaware 19801.
For more information about the solicitation procedures, contact
the Debtors' counsel by phone at (312) 368-7234, or by e-mail to
jim.irving@dlapiper.com
George L. Miller, the Chapter 7 trustee for Mobclix, Inc., a
subsidiary of Velti, said in a court filing that he has certain
concerns and issues with respect to various provisions and aspects
of Velti's liquidation plan. The trustee's counsel -- Linda
Richenderfer, Esq., at Klehr Harrison Harvey Branzburg LLP --
however has discussed these issues with the Debtors and believes
that a resolution will likely be reached.
Chapter 11 Plan
The Debtors on April 11, 2014, filed a modified version of their
proposed plan of liquidation and accompanying disclosure
statement. Copies of the documents are available for free at:
http://bankrupt.com/misc/Velti_Plan_Apr2014.pdf
http://bankrupt.com/misc/Velti_Plan_Outline_Apr2014.PDF
The Debtors filed a plan of liquidation after completing the sale
of their business to an affiliate of Blackstone Group LP in
January.
GSO acquired the business in exchange for debt, the assumption of
specified debt, and $1.25 million in cash for curing payment
defaults on contracts going along with the sale.
Recovery by creditors and interest holders under the Plan are as
follows:
Approximate
Allowed Percentage
Class Type of Claim Amount Recovery
----- ------------- ----------- ----------
-- Priority Tax Claims Undetermined 100.0%
-- Allowed Other Priority Claims Undetermined 100.0%
1 Allowed Sr. Sec. Loan Claims $42,082,113 0.4%
to 0.9%
2 Allowed Other Secured Claims $47,588 100.0%
3a Allowed Gen. Unsecured Claims $6,750,000 3.3%
to 6.6%
3b GSO Deficiency Claim $41,661,292 0.0%
3c Intercompany Claims $93,827,355 0.0%
4 Equity Interests $0 0.0%
A Litigation Trust will be created under the Plan. Pursuant to a
global settlement between GSO and the Official Committee of
Unsecured Creditors, the Litigation Trust has been pre-funded with
$550,000, of which $300,000 will be distributed to Class 3a
(Allowed General Unsecured Claims) on a Pro Rata basis as soon as
practical after the Effective Date and $250,000 will be held in
reserve for payment of professional fees and expenses of the
Litigation Trust. Additional amounts received, generated or
recovered by the Litigation Trust will be used to pursue Causes of
Action pursuant to the Litigation Trust Agreement, to adjudicate
General Unsecured Claims, to pay the costs and expenses of the
Litigation Trust, and for distribution to the beneficiaries of the
Litigation Trust, at the discretion of the Litigation Trustee in
accordance with the Litigation Trust Agreement.
About Velti Inc.
Velti Inc., a provider of technology for marketing on mobile
devices, sought Chapter 11 protection (Bankr. D. Del. Case No.
13-12878) on Nov. 4, 2013.
Velti Inc., a San Francisco-based unit of Velti Plc, listed assets
of as much $50 million and debt of as much as $100 million. Its
Air2Web Inc. unit, based in Atlanta, also sought creditor
protection.
The parent, Dublin, Ireland-based Velti Plc, which trades on the
Nasdaq Stock Market, isn't part of the bankruptcy process.
Operations in the U.K., Greece, India, China, Brazil, Russia, the
United Arab Emirates and elsewhere outside the U.S. didn't seek
protection and business there will continue as usual.
The Debtors are represented by attorneys Stuart M. Brown, Esq., at
DLA Piper LLP (US), in Wilmington, Delaware; and Richard A.
Chesley, Esq., Matthew M. Murphy, Esq., and Chun I. Jang, Esq., at
DLA Piper LLP (US), in Chicago, Illinois. The Debtors have also
tapped Jefferies LLC as investment banker, Sitrick Brincko Group
LLC, as corporate communications consultants, and BMC Group, Inc.,
as claims and noticing agent.
U.S. Bank, National Association, as administrative agent for GSO
Credit-A Partners, LP, GSO Palmetto Opportunistic Investment
Partners LP and GSO Coastline Partners LP, extended $25 million of
postpetition financing to the Debtors. The DIP Lenders, which are
also the Prepetition Lenders, are represented by Sandy Qusba,
Esq., and Hyang-Sook Lee, Esq., at Simpson Thacher & Bartlett LLP,
in New York.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases. The Committee has tapped McGuireWoods LLP as
lead counsel and Morris, Nichols, Arsht & Tunnell LLP as Delaware
co-counsel. Asgaard Capital LLC serves as financial advisor to
the Committee. Capstone Advisory Group LLC serves as consultant.
WENNER MEDIA: S&P Affirms 'B' Corp. Credit Rating, Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on Wenner Media LLC. The outlook is stable.
At the same time, S&P assigned Wenner Media LLC's $159 million
senior secured credit facility an issue-level rating of 'BB-' (two
notches higher than the 'B' corporate credit rating on the
company), with a recovery rating of '1', indicating S&P's
expectation of very high (90% to 100%) recovery for lenders in the
event of a payment default. The senior secured facility consist
of a $144 million term loan due 2019 and a $15 million revolving
credit due 2018.
S&P revised the recovery rating on the company's senior secured
credit facilities to '1', indicating its expectation for very high
(90% to 100%) recovery in the event of a payment default from '2'
(70%-90%) recovery expectation. S&P subsequently raised its
issue-level rating on this debt to 'BB-' from 'B+'.
The company will use proceeds of the credit facility to refinance
its higher cost $144 million term loan due February 2018 and
replace its $15 million undrawn revolving credit facility due
August 2017, resulting in a $5.3 million (35%) reduction in annual
interest expense.
The 'B' corporate credit rating on Wenner Media reflects S&P's
assessment of the business risk profile as "vulnerable" and the
financial risk profile as "highly leveraged."
"We view the company's business risk profile as "vulnerable,"
based on our criteria, reflecting earnings concentration and
dependence on volatile print advertising revenues and newsstand
magazine sales, both of which are in secular decline," said credit
analyst Hal Diamond. "'US Weekly' is the largest of Wenner's
three magazines, accounting for roughly 85% of EBITDA. Strong
competition from larger, better-capitalized publishers and other
entertainment sources is another key issue. Internet-based
entertainment is steadily increasing, with content often available
free of charge and low barriers to entry. Online advertising
sales growth has recently been sufficient to offset the decline in
print ad revenues, though we do not believe this trend is
sustainable."
The rating outlook is stable, reflecting S&P's expectation that
the company can maintain moderate debt leverage of below 3x over
the intermediate term. S&P believes the company can maintain this
debt leverage despite the secular pressure on magazine advertising
and circulation revenues as debt reduction offsets potential
weakness in operating performance.
Downside scenario
S&P could lower its rating to 'B-' over the intermediate term if
the trend of circulation declines accelerates, and the ad revenues
rebound reverses. S&P believes this would necessitate ongoing
restructuring charges and contribute to shrinkage of EBITDA and
discretionary cash flow, resulting in lease-adjusted debt leverage
approaching 5x. S&P could also lower the rating if it becomes
convinced that the margin of compliance with the leverage covenant
will decline below 15%.
Upside scenario
Although less likely, S&P could raise its rating on the company to
B+' over the intermediate term if S&P becomes convinced that
structural trends will stabilize and erosion of print magazine
revenue markedly abates or if it becomes apparent that growth in
digital revenues will significantly offset print revenue declines,
which S&P regards as unlikely. Another element of an upgrade
scenario would likely be if the company's smaller magazine titles
become larger contributors to revenue and EBITDA, without a
decline in its largest contributor.
WINFREE ACADEMY: S&P Lowers Rating on $8MM 2009 Bonds to 'BB'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term rating on
La Vernia Higher Education Finance Corp., Texas' $8 million series
2009 education revenue bonds, issued on behalf of Winfree Academy
Charter Schools to 'BB' from 'BB+'. The outlook is negative.
"The downgrade reflects our assessment of Winfree's trend of
enrollment declines with a highly transient student population and
limited operational flexibility" said Standard & Poor's credit
analyst Luke Gildner. Also pressuring the rating are the results
of a Texas Education Agency (TEA) investigation regarding abuse of
financial policies that have led to the implementation of a
corrective action plan under the supervision of a TEA monitor.
"We understand the investigation also led to a significant level
of management turnover, which we generally consider a negative
rating factor," added Mr. Gildner. Supporting the rating is an
adequate level of liquidity.
"The negative outlook reflects our view of the schools challenging
enrollment environment due to increased competition resulting in
thin debt service coverage levels," said Mr. Gildner. "A lower
rating is likely if total enrollment continues to decline,
resulting in a drop in liquidity or less than 1x maximum annual
debt service (MADS) coverage. Any further delays in the exit
strategy of the TEA monitor would also be viewed negatively.
S&P do not expect to take a positive rating action during the one-
year outlook period, but, S&P would consider a revision to stable
if the school stabilizes total enrollment and posts positive
operations, at least on a cash basis, generating at least 1x MADS
coverage. Given the modest operations, S&P expects liquidity to
remain strong for the rating at above 60 days' cash on hand during
the one-year outlook period.
WOODSIDE HOMES: Fitch Assigns 'B/RR4' Rating to $40MM Notes
-----------------------------------------------------------
Fitch Ratings has assigned a 'B/RR4' rating to Woodside Homes
Company, LLC's (Woodside) proposed offering of $40 million
principal amount of 6.75% senior unsecured notes due 2021.
This offering is an add-on to the company's existing $220 million
6.75% senior unsecured notes due 2021. Proceeds from the notes
offering will be used for general corporate purposes, including
land acquisitions. The Rating Outlook is Stable.
Key Rating Drivers
The ratings and Outlook for Woodside reflect the company's
execution of its business model in the current housing
environment, improving financial and operating results, customer
and price point diversity, adequate liquidity position, and the
cyclically improving industry outlook for 2014. While the company
has an established presence in Arizona, Nevada, Texas and Utah,
the company's operations remain heavily weighted to California,
albeit spread out through a variety of submarkets.
The Industry
Comparisons are challenging through first-half 2014, and so far
this year most housing metrics seem to have defied expectations
and fallen somewhat from a year ago. Though the severe winter
throughout much of North America has restrained some housing
activity, nonetheless, there is an absence of underlying consumer
momentum this spring, perhaps due to buyer sensitivity to home
prices and finance rates and the slowing of job growth at year
end.
Nevertheless, housing metrics should improve in 2014 due to faster
economic growth, and some acceleration in job growth, despite
somewhat higher interest rates, as well as more measured home
price inflation. However, Fitch has recently tapered its forecast
to reflect the subpar spring selling season. Single-family starts
are now projected to improve 15% to 710,000 as multifamily volume
grows about 9% to 335,000. Thus, total starts this year should
top 1 million. New home sales are forecast to advance about 16% to
500,000, while existing home volume is flat at 5.10 million,
largely due to fewer distressed homes for sale.
Operating Environment
There has been some short-term volatility in certain housing
metrics following the increase in interest rates (and higher home
prices) during the past nine months as well as harsh winter
weather conditions in some parts of the country.
For the public homebuilders in Fitch's coverage, net order gains
substantially slowed or turned negative during the second half of
2013 following strong gains in the first half of the year. On
average, net orders for these builders fell 2.1% during the fourth
quarter of 2013 (4Q'13) compared with a 1.5% increase during
3Q'13, a 16.8% improvement during 2Q'13, and a 28.2% growth during
1Q'13. Fitch expects weak order comparisons continued during the
1Q'14.
The company's new home orders fell 5.3% during the second half of
2013 following a 14.3% increase during the first half of 2013.
Woodside ended 2013 with 386 homes in backlog, a 7.8% improvement
compared with the same period last year. The value of backlog was
27% higher year-over-year.
While there has been some weakness in housing activity so far in
2014, Fitch expects the housing recovery will continue over the
course of the full year 2014. As Fitch noted in the past, the
housing recovery will likely occur in fits and starts.
Liquidity
Woodside currently has adequate liquidity, with $88.1 million of
unrestricted cash on the balance sheet as of Dec. 31, 2013. As of
April 24, 2014, there were no borrowings under its $40 million
unsecured revolving credit facility. The proposed debt issuance
will further enhance the company's liquidity profile, allowing the
company to fund increased land and development spending.
On Jan. 29, 2014, the company entered into a new $30 million
unsecured revolving credit facility that matures on January 29,
2017. The facility has an accordion feature that allows the
revolver to be increased up to $100 million, subject to obtaining
additional lender commitments. In March 2014, the facility was
upsized to $40 million.
Management Strategy
Woodside emerged from bankruptcy at the end of 2009 with a new
senior management team and successfully recapitalized its balance
sheet during the third quarter of 2012, raising $127.7 million of
debt and $75 million of equity. During the third quarter of 2013,
the company issued $220 million of senior unsecured notes due 2021
and repaid $127.7 million of 9.75% senior secured notes due 2017.
Following its emergence from bankruptcy, the management team
focused on the company's core homebuilding operations and
transitioned from a national builder to a western regional
homebuilder, with operations in California, Nevada, Arizona, Utah
and Texas. As part of this process, the company sold projects and
land holdings in five Eastern Divisions in the states of Florida
and Minnesota and in metropolitan Washington DC.
Woodside has a relatively heavy exposure to California, albeit
spread out through a variety of submarkets. The state of
California represented about 55% of 2013 closings. Fitch expects
the reliance on California will remain material in the near to
intermediate term, although its significance is expected to
diminish slightly as the company's land acquisitions during 2012
and 2013 were weighted more heavily to markets outside California.
As of Dec. 31, 2013, Woodside controlled 8,697 lots, of which
5,189 (59.7%) were owned and 3,508 (40.3%) were controlled through
options. On a trailing 12-month basis, Woodside controlled 5.8
years of land and owned 3.4 years of land.
As is the case with other large homebuilders, the company is
rebuilding and enhancing its land position and trying to
opportunistically acquire land at attractive prices. Total lots
controlled as of Dec. 31, 2013 increased 54.4% year-over-year
(yoy), driven by a 180% growth in optioned lots and an 18.5% rise
in owned lots.
Improving Financial Results
The company's financial results and credit metrics improved in
2013 relative to 2012 levels. Woodside reported a 17.9% increase
in home deliveries during 2013 and homebuilding revenues grew
39.4% compared to 2012. Fitch-calculated EBITDA margins improved
480 bps to 12.8% during 2013 compared with 2012
Leverage as measured by debt to Fitch-calculated EBITDA improved
to 3.9x at the end of 2013 from 4.8x at the conclusion of 2012.
On a pro forma basis, assuming the company issues $40 million of
senior notes, leverage will increase to 4.6x. Interest coverage
advanced to 3.9x during 2013 from 2.2x during 2012. Fitch expects
these credit metrics will improve slightly during 2014.
Rating Sensitivities
Future ratings and Outlooks will be influenced by broad housing
market trends as well as company specific activity, such as trends
in land and development spending, general inventory levels,
speculative inventory activity (including the impact of
cancellation rates on such activity), gross and net new order
activity, debt levels, free cash flow trends and uses, and the
company's cash position.
The Outlook or rating for Woodside could be raised in the next 12
months if the company performs in line with Fitch's expectations
(including leverage consistently in the 4.0x-4.5x range and
interest coverage sustaining above 3x), the various housing
metrics are trending towards Fitch's macro forecast and the
company has liquidity (combination of cash and revolver
availability) of at least $75 million.
Negative rating actions could occur if the recovery in housing
dissipates; revenues fall in the 15%-20% range; and Woodside
maintains an overly aggressive land and development spending
program. This could lead to consistent and significant negative
quarterly cash flow from operations and meaningfully diminished
liquidity position (below $40 million).
The 'RR4' Recovery Rating (RR) on the company's unsecured debt
indicates average recovery prospects for holders of these debt
issues. Woodside's exposure to claims made pursuant to
performance bonds and the possibility that part of these
contingent liabilities would have a claim against the company's
assets were considered in determining the recovery for the
unsecured debt holders. Fitch applied a liquidation value
analysis for these RRs.
Fitch currently rates Woodside with a Stable Outlook as follows:
-- Long-term IDR 'B';
-- Senior unsecured notes 'B/RR4'.
ZOGENIX INC: TRO Issued on Ban of Zohydro Capsules
--------------------------------------------------
Zogenix, Inc., announced that, in connection with the previously
disclosed lawsuit that the Company filed in the U.S. District
Court in Massachusetts requesting a temporary restraining order
preventing the implementation of the Commonwealth's ban of
ZohydroTM ER (hydrocodone bitartrate) extended-release capsules,
the Court entered that order on Constitutional grounds. This
order will become effective on April 22, 2014.
Zogenix previously filed a lawsuit in the U.S. District Court in
Massachusetts requesting the court to grant a temporary
restraining order against execution of the executive order
recently announced by Governor Deval Patrick of the Commonwealth
of Massachusetts, which prohibits the prescribing and dispensing
of the Company's prescription pain product, ZohydroTM ER
(hydrocodone bitartrate) extended-release capsules, that was
approved by the U.S. Food and Drug Administration. The lawsuit
argues that the executive order is in direct conflict with the
authority of the FDA to determine on behalf of the public whether
a drug is safe and effective, and to impose the measures necessary
to ensure that the drug will be used safely and appropriately.
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.
Zogenix incurred a net loss of $80.85 million on $33.01 million of
total revenue for the year ended Dec. 31, 2013, as compared with a
net loss of $47.38 million on $44.32 million of total revenue for
the year ended Dec. 31, 2012.
The Company's balance sheet at Dec. 31, 2013, showed $112.50
million in total assets, $94.07 million in total liabilities and
$18.42 million in total stockholders' equity.
Ernst & Young LLP, in San Diego, California, issued a "going
concern" qualification on the consolidated financial statements
for the year ended Dec. 31, 2013. The independent auditors noted
that the Company's recurring losses from operations and lack of
sufficient working capital raise substantial doubt about its
ability to continue as a going concern.
* No Jurisdiction Over Trustee as Pension-Plan Administrator
------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that when a bankruptcy trustee is acting as administrator
of a retirement savings plan, the bankruptcy court doesn't even
have so-called related-to jurisdiction to pay the trustee's
attorney fees from plan assets, U.S. District Judge Sandra J.
Feuerstein in Central Islip, New York, wrote in a March 31
opinion.
According to the report, that lack of jurisdiction leaves the
bankruptcy court unable to confer immunity on the trustee,
rendering the trustee open to lawsuits by plan participants for
violating fiduciary duties.
Judge Feuerstein said courts are split on the jurisdiction issue,
the report related. She reasoned that the trustee's ability to
administer the plan under Section 704(a)(11) of the Bankruptcy
Code doesn't modify the trustee's obligations under the Employee
Retirement Income Security Act of 1974.
Because the trustee's obligations as plan administrator exist
outside bankruptcy, passing on fees is not a "core" matter and
there was no "core" jurisdiction, the judge ruled, the report
further related.
The bankruptcy court also lacks so-called related-to jurisdiction
because the savings plan documents allowed for reasonable fees,
the report added. As a result, a bankruptcy court ruling to
authorize fees would be "superfluous," meaning there's no related-
to jurisdiction for lack of a "conceivable effect" on the bankrupt
estate.
The case is U.S. Labor Department v. Kirschenbaum, 13-cv-2682,
U.S. District Court, Eastern District of New York (Central Islip).
* March Bankruptcies Jump; Total for Year Still Down
----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that bankruptcies jumped in March, representing the most
since May, although the total for the year remains 12 percent
below the first three months of 2013.
The 91,200 bankruptcies of all types in March were 14 percent more
at a daily rate than in February, the Bloomberg report said. Last
month's filings were down 2.7 percent from March 2013, Bloomberg
added, citing data compiled from court records by Epiq Systems
Inc.
Business bankruptcies showed the same trend, according to the
report. The 3,300 commercial filings in March were 7 percent more
than February, although 12 percent fewer than March 2013.
Commercial Chapter 11s, where larger companies reorganize or sell
assets, totaled 565 in March, the report related. March Chapter
11s were 25 percent above the month before and 6 percent fewer
than the same month in 2013, Epiq reported.
The states with the most filings per capita were Tennessee,
Georgia and Alabama, the same lineup as 2013, the report further
related.
* Bankrupt New Yorkers May Lose Rent-Stabilized Apartments
----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that rent-stabilized apartments, whose leases may be
thousands of dollars below market rates, can be the most valuable
assets New Yorkers have, and bankrupts stand to lose those coveted
flats depending on how state and federal appellate courts rule.
According to the report, a rent-stabilized tenant paying $700 a
month for an apartment on East 7th Street filed a Chapter 7
bankruptcy in Manhattan, the report further related.
The landlord offered to buy the lease from the trustee and pay
creditors in full, the report related. The landlord also agreed
to pay the tenant $100,000 for moving out. Alternatively, the
landlord would let the tenant remain for the rest of her life, as
long as she didn't sublet the apartment or allow heirs to take
over the apartment at her death.
The bankrupt rejected both offers, arguing unsuccessfully in
bankruptcy court that her rights under rent-stabilization laws
were exempt from the claims of creditors under Section 522(b) of
the Bankruptcy Code as a form of "public assistance," the report
related.
U.S. District Judge P. Kevin Castel concluded on appeal that the
tenant's rent-stabilization rights were property the trustee could
sell with proceeds going to creditors, the report said. On
further appeal, U.S. Circuit Judge Barrington D. Parker Jr.,
writing for the Court of Appeals in Manhattan on March 31, laid
out complex, undecided issues on which the case will turn,
including the threshold question of the public-assistance
exemption, the report added.
The circuit court case is Santiago-Monteverde v. Pereira (In re
Santiago-Monteverde), 12-4131, U.S. Court of Appeals for the
Second Circuit (Manhattan).
The district court case was Santiago-Monteverde v. Pereira (In re
Santiago-Monteverde), 12-cv-4238, U.S. District Court, Southern
District of New York (Manhattan).
* Province & Solution Trust Merge to Expand National Footprint
--------------------------------------------------------------
Solution Trust, a national firm specializing in corporate
governance, restructuring and trustee-related services and
Province, an industry-leading corporate restructuring and
financial advisory firm, formally announced their merger
yesterday, with all operations now serving under the name
Province, Inc. This union offers a broad spectrum of fiduciary-
related services including interim senior management, debtor and
creditor-side financial advisory and consulting, along with
trustee-related engagements.
The newly merged firm is led by the combination of Paul Huygens'
Big Four CPA experience, Paul Hamilton's corporate leadership
skill set and Peter Kravitz's restructuring "Super Lawyer"
background. This breadth of experience in conjunction with an
extended team of professional service staff with skill sets in
valuation, forensic accounting, risk management, tax, legal,
capital markets and strategy further positions Province as an
industry-leading consulting firm.
Province's track record includes the successful restructuring of
billions of dollars in corporate and asset-backed loans, creditor
fund recovery of billions of dollars from company liquidations,
and tens of thousands of jobs saved by enabling firms to resolve
their issues and avoid liquidation. Original firm principals,
Paul Hamilton and Paul Huygens, have assumed senior management
roles within various high-power firms to expedite and implement
corporate turnaround and stabilization initiatives.
"Our collective goal is to build a world-class advisory shop, so
merging the firms was an obvious decision for all of us," said
Peter Kravitz, Esq., former managing director of Solution Trust
and now a principal at Province. "It's important for both past
and future clients to know we approach each case with a 'bet the
firm' engagement mind-set. We place our reputation on the line
for every matter we take on. Failure is not an option."
Recognized by the M&A Advisor Awards for its restructuring
services, a partial list of the firm's clients include Circuit
City, ResCap, Fleetwood Enterprises, The Greenspun Corporation,
Binion's and Four Queens Casinos, LandSource, National RV, Rhodes
Homes, American West, Tharaldson, and KSL Media.
As recently reported in the Troubled Company Reporter, Mr. Kravitz
serves as:
* liquidating trustee of Friendly Ice Cream Corp.'s estate;
* liquidating trustee of Rhythm and Hues' estate; and
* an independent director for Martifer Solar.
"We bring a broad range of disciplines together to address the
common problems that many businesses face," said Paul Huygens,
principal at Province. "This merger further strengthens our
ability to achieve the best outcome for a firm in any industry."
"I believe our experience, passion and the will to win of our team
is unmatched in the restructuring arena and we look forward to
continuing to demonstrate to our clients why working with Province
is the best decision they can make for their organization," said
Paul Hamilton, principal at Province.
About Province, Inc.
Province, Inc., is an industry-leading, nationally recognized
consulting firm of senior business leaders specializing in
financial advisory, corporate reorganization and trustee-related
services. Our principals are applied to every engagement creating
exceptional value by providing creative, pragmatic solutions that
generate optimal outcomes amid some of the most complex
circumstances imaginable. Province clients have included companies
in real estate, construction, gaming, hospitality, publishing,
media, energy, logistics, e-commerce, finance, and retail.
Province, Inc. is headquartered in Las Vegas with offices in Los
Angeles, New York and Wilmington, Del.
Messrs. Huygens, Hamilton and Kravitz can be reached at:
Paul Hamilton, Principal -- phamilton@provincefirm.com
Paul Huygens, Principal -- phuygens@provincefirm.com
Peter Kravitz, Principal -- pkravitz@provincefirm.com
PROVINCE, INC.
5915 Edmond Street, Suite 102
Las Vegas, NV 89118
Telephone (702) 685-5555
Fax (702) 685-5556
For more information on the services offered by Province, Inc.,
visit http://www.provincefirm.com/or call 702.685.5555.
*********
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 by e-mail.
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 the nation's bankruptcy courts. The
list includes links to freely downloadable of these small-dollar
petitions in Acrobat PDF documents.
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.
*********
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
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Meriam Fernandez, 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 2014. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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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
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are $25 each. For subscription information, contact Peter A.
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*** End of Transmission ***