/raid1/www/Hosts/bankrupt/TCR_Public/150817.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, August 17, 2015, Vol. 19, No. 229
Headlines
220 ADAMS RANCH ROAD: Voluntary Chapter 11 Case Summary
740 REALTY: Case Summary & 9 Largest Unsecured Creditors
800 BUILDING: Locke Lord Approved as Restructuring Counsel
ALLIED SYSTEMS: 2 Board Members Seek to Extend Claims Bar Date
ANNA'S LINEN: Order Approving Liquidators Appealed
BAHA MAR: Hires Milbank Tweed as Lead Bankruptcy Counsel
BAHA MAR: Hires Moelis & Company as Financial Advisor & Banker
BAHA MAR: Maurice Glinton Tapped as Special Bahamian Co-counsel
BAHA MAR: Names Glinton Sweeting as Special Bahamian Counsel
BAHA MAR: Pachulski Stang to Serve as Conflicts Counsel
BAHA MAR: Taps Kobre & Kim as Special Litigation Counsel in London
BDF ACQUISITION: Moody's Hikes Corporate Family Rating to 'B2'
BOMBARDIER INC: Fitch Lowers IDR to 'B'; Outlook Negative
BRIGHTON COURT: Case Summary & 4 Largest Unsecured Creditors
CAM HOLDING: MNP Named as Receiver; Bids Due Sept. 11
COLT DEFENSE: Court Approves O'Melveny & Myers as Attorneys
CRAIGHEAD FAIR: Claims Bar Date Slated for September 14
DIGITAL REALTY: Fitch Assigns BB+ Rating on Serie I Preferred Stock
ELIZABETH CITY, NC: Moody's Cuts 2007 A/B Rev. Bonds Rating to Ba2
EXCO RESOURCES: Moody's Cuts Corporate Family Rating to 'Caa1'
GEORGETOWN MOBILE: Files Amended Schedules of Claims
GRIDWAY ENERGY: Second Partial Closing of Assets Sale Occurs
GUADALUPE REGIONAL: Moody's Cuts 2007 Revenue Bonds Rating to Ba1
LEVEL 3 COMMUNICATIONS: Moody's Hikes Corp Family Rating to 'Ba3'
LSB INDUSTRIES: Moody's Cuts Corporate Family Rating to 'B1'
MIG LLC: Has Until Aug. 24, 2015 to Remove Actions
ONEOK INC: Moody's Cuts Senior Unsecured Notes Rating to Ba1
PIONEER ENERGY: Moody's Cuts Corporate Family Rating to 'B2'
POINT BLANK: Has Until Dec. 31, 2015 to Remove Prepetition Actions
PRECISION DRILLING: Moody's Cuts Corporate Family Rating to Ba2
PREMONT INDEPENDENT: Moody's Affirms Ba1 Rating on GOULT Debt
RADIOSHACK CORP: General Retail Lenders Seek Payment of Costs
REVEL AC: Fox Rothschild Withdraws as Co-Counsel
USI INC: Moody's Affirms 'B3' Corporate Family Rating
YONKERS RACING: Moody's Cuts Corporate Family Rating to 'B2'
*********
220 ADAMS RANCH ROAD: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: 220 Adams Ranch Road, LLC
3580 Wilshire Blvd Ste 1755C
Los Angeles, CA
Case No.: 15-22727
Chapter 11 Petition Date: August 13, 2015
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Judge: Hon. Ernest M. Robles
Debtor's Counsel: David G Epstein, Esq.
THE DAVID EPSTEIN LAW FIRM
POB 4858
Laguna Beach, CA 92652-4858
Tel: 949-715-1500
Fax: 949-715-2570
Email: david@epsteinlitigation.com
Estimated Assets: Not indicated
Estimated Liabilities: Not indicated
The petition was signed by John D. Thomas, manager.
The Debtor did not include a list of its largest unsecured
creditors when it filed the petition.
740 REALTY: Case Summary & 9 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: 740 Realty LLC
5308 New Utrecht Avenue
Brooklyn, NY 11219
Case No.: 15-43754
Chapter 11 Petition Date: August 13, 2015
Court: United States Bankruptcy Court
Eastern District of New York (Brooklyn)
Judge: Hon. Nancy Hershey Lord
Debtor's Counsel: Salvatore LaMonica, Esq.
LAMONICA HERBST AND MANISCALCO, LLP
3305 Jerusalem Ave
Wantagh, NY 11793
Tel: (516) 826-6500
Fax: (516) 826-0222
Email: sl@lhmlawfirm.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Chaim Glanzer, sole member and
secretary.
A list of the Debtor's nine largest unsecured creditors is
available for free at http://bankrupt.com/misc/nyeb15-43754.pdf
800 BUILDING: Locke Lord Approved as Restructuring Counsel
----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
authorized The 800 Building, LLC, to employ Locke Lord LLP, doing
business as Locke Lord Edwards as restructuring counsel, nunc pro
tunc to the Petition Date.
David J. Fischer, a partner of the firm, told the Court that the
Debtor consummated the sale of The 800 Building on June 16, 2015,
yielding net proceeds of approximately $4.3 million. The Debtor's
remaining operating asset consists of the garage. To complete its
Chapter 11 case, the Debtor needed to determine the disposition of
the garage, reach a final settlement with its remaining secured
creditor, International Bank of Chicago, and resolve a disputed
claim filed by Fine Homes, LLC that relates to an ongoing dispute
with the Debtor's members, Leon and Helen Petcov. The Debtor
anticipates, however, that it will have the means to confirm a plan
of reorganization that will pay all allowed unsecured
claims in full.
Locke Lord is expected to, among other things:
a) advise and consult on the conduct of the case, including all
of the legal and administrative requirements of operating in
Chapter 11;
b) attend meetings and negotiate with representatives of
creditors and other parties-in-interest;
c) advise the Debtor in connection with any contemplated sales
of assets, including the negotiation of sale agreements,
formulation and implementation of bidding procedures, evaluation
competing offers, drafting of appropriate corporate documents with
respect to the proposed sales, and counseling the Debtor in
connection with the closing of the costs.
Professionals expected to be responsible in the case are David J.
Fischer and Phillip W. Nelson and their hourly billing rates are
$745 and $530, respectively.
Locke Lord's current hourly rates for other Locke Lord attorneys
and paraprofessionals that may also serve the Debtor are projected
to range as:
Billing Category Range
---------------- -----
Partners $500 - $995
Counsel $275 - $850
Associates $300 - $625
Staff Attorneys $275 - $400
Paraprofessionals $210 - $315
To the best of the Debtor's knowledge, Locke Lord is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About The 800 Building
The 800 Building, LLC, owns and operates two adjacent but related
rental properties in downtown Louisville, Kentucky: (a) a 246-unit
residential apartment building known as The 800 Building, with a
street address of 800 South 4th Street; and (b) a 48-slot parking
garage, with a street address of 820 South 4th Street. The company
is owned by Leon and Helen Petcov and is managed by Leon Petcov.
The 800 Building, LLC sought Chapter 11 protection (Bankr. N.D.
Ill. Case No. 15-17314) on May 15, 2015. The Debtor disclosed
$21,564,298 in assets and $33,706,487 in liabilities as of the
Chapter 11 filing.
The case is assigned to Judge Pamela S. Hollis. The Debtor tapped
Phillip W. Nelson, Esq., at Locke Lord LLP, in Chicago, as
counsel.
ALLIED SYSTEMS: 2 Board Members Seek to Extend Claims Bar Date
--------------------------------------------------------------
Mark J. Genregske and Brian Cullen, members of Allied Systems
Holdings, Inc. board filed a tenth motion with the U.S. Bankruptcy
Court for the District of Delaware to extend until Aug. 28, 2015,
the deadline to file proofs of claim against ASHINC Corporation, et
al.
According to the movants, the Debtors do not oppose the relief
sought by the motion.
On May 29, 2013, the Court entered the order establishing the
deadline for filing proofs of claim and approving the form and
manner of notice thereof, and setting the deadline for Aug. 2,
2013. Between August 2013 and April 2015, the movants filed
several motions to extend the claims bar date, solely for the
movants.
Messrs. Genregske and Cullen are represented by:
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
Erin R. Fay, Esq.
Derek C. Abbott, Esq.
1201 North Market Street
Wilmington, DE 19801
Tel: (302) 658-9200
Fax: (302) 658-3989
- and -
John C. Massaro, Esq.
Ian S. Hoffman, Esq.
ARNOLD & PORTER LLP
555 Twelfth Street, NW
Washington, D.C. 20004-1206
Tel: (202) 942-5000
Fax: (202) 942-5999
E-mail: john.massaro@aporter.com
ian.hoffman@aporter.com
About Allied Systems Holdings
BDCM Opportunity Fund II, LP, Spectrum Investment Partners LP, and
Black Diamond CLO 2005-1 Adviser L.L.C., filed involuntary
petitions for Allied Systems Holdings Inc. and Allied Systems Ltd.
(Bankr. D. Del. Case Nos. 12-11564 and 12-11565) on May 17, 2012.
The signatories of the involuntary petitions assert claims of at
least $52.8 million for loan defaults by the two companies.
Allied Systems, through its subsidiaries, provides logistics,
distribution, and transportation services for the automotive
industry in North America.
Allied Holdings Inc. first filed for chapter 11 protection (Bankr.
N.D. Ga. Case Nos. 05-12515 through 05-12537) on July 31, 2005.
Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represented the
Debtors in the 2005 case. Allied won confirmation of a
reorganization plan and emerged from bankruptcy in May 2007 with
$265 million in first-lien debt and $50 million in second-lien
debt.
The petitioning creditors said Allied defaulted on payments of
$57.4 million on the first lien debt and $9.6 million on the
second. They hold $47.9 million, or about 20% of the first-lien
debt, and about $5 million, or 17%, of the second-lien obligation.
They are represented by Adam G. Landis, Esq., and Kerri K.
Mumford,
Esq., at Landis Rath & Cobb LLP; and Adam C. Harris, Esq., and
Robert J. Ward, Esq., at Schulte Roth & Zabel LLP.
Allied Systems Holdings Inc. formally put itself and 18
subsidiaries into bankruptcy reorganization June 10, 2012,
following the filing of the involuntary Chapter 11 petition.
The Company is being advised by Mark D. Collins, Esq., at
Richards, Layton & Finger, P.A., and Jeffrey W. Kelley, Esq., at
Troutman Sanders, Gowling Lafleur Henderson.
The bankruptcy court process does not include captive insurance
company Haul Insurance Limited or any of the Company's Mexican or
Bermudan subsidiaries. The Company also announced that it intends
to seek foreign recognition of its Chapter 11 cases in Canada.
An official committee of unsecured creditors has been appointed in
the case. The Committee consists of Pension Benefit Guaranty
Corporation, Central States Pension Fund, Teamsters National
Automobile Transporters Industry Negotiating Committee, and General
Motors LLC. The Committee is represented by Sidley Austin LLP.
In January 2014, the U.S. Trustee for Region 3 appointed a three-
member Official Committee of Retirees.
Yucaipa Cos. has 55% of the senior debt and took the position it
had the right to control actions the indenture trustee would take
on behalf of debt holders. The state court ruled in March 2013
that the loan documents didn't allow Yucaipa to vote.
In March 2013, the bankruptcy court gave the official creditors'
committee authority to sue Yucaipa. The suit includes claims that
the debt held by Yucaipa should be treated as equity or
subordinated so everyone else is paid before the Los Angeles-based
owner. The judge allowed Black Diamond to participate in the
lawsuit against Yucaipa and Allied directors.
Yucaipa American Alliance Fund I, L.P., Yucaipa American Alliance
(Parallel) Fund I, L.P., Yucaipa American Alliance Fund II, L.P.,
Yucaipa American Alliance (Parallel) Fund II, L.P., represented by
Michael R. Nestor, Esq., and Edmund L. Morton, Esq., at Young
Conaway Stargatt & Taylor, LLP; and Robert A. Klyman, Esq., at
Gibson, Dunn & Crutcher LLP.
First Lien Agent, Black Diamond Commercial Finance, L.L.C.,
represented by Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at
Landis Rath & Cobb LLP; and Adam C. Harris, Esq., Robert J. Ward,
Esq., and David M. Hillman, Esq., at Schulte Roth & Zabel LLP.
Allied Systems Holdings, Inc., has changed its name to ASHINC
Corporation.
* * *
The Court will hold a hearing to consider confirmation of the Joint
Chapter 11 Plan of Reorganization proposed by ASHINC Corporation
(f/k/a Allied Systems Holdings, Inc.), and its affiliated debtors;
the Official Committee of Unsecured Creditors; and Black Diamond
Commercial Finance, L.L.C., as first lien agent, on Sept. 9, 2015
at 9:30 a.m.
The Bankruptcy Court on July 8 approved the Disclosure Statement
explaining the Plan.
The Plan provides that certain of the Debtors' assets, the
Litigation Trust Assets, will vest in the Allied Litigation Trust,
and the remainder of the Debtors' assets, including the proceeds
from the sale of substantially all of the Debtors' assets, will
either revest in the Reorganized Debtors or be distributed to the
Debtors' creditors.
ANNA'S LINEN: Order Approving Liquidators Appealed
--------------------------------------------------
Creditors P & A Marketing, Inc., and Shewak Lajwanti Home Fashions,
Inc., are appealing an order entered by the U.S. Bankruptcy Court
for the Central District of California approving Anna's Linens,
Inc.'s selection of a joint venture among Hilco Merchant Resources,
LLC and Gordon Brothers Retail Partners, LLC as the Debtor's
exclusive agent to conduct sales of certain FF&E and merchandise.
The appellants want the appeal to be heard by the Bankruptcy
Appellate Panel.
In his July 6, 2015 order, Judge Theodor C. Albert, affirmed the
Debtor, with the assistance of Wunderlich Securities as investment
banker, thoroughly marketed the assets and conducted a bidding
solicitation fairly and conducted a prebankruptcy auction among
national liquidators to produce the highest and best bid.
The July 6 order did not rule with respect to the Debtor's request
for (i) bid protections to be paid to the Tiger/Yellen stalking
horse consisting of a break-up fee of $650,000 and an expense
reimbursement of up to $350,000 for reasonable fees and expenses of
the Tiger/Yellen stalking horse's legal, accounting and financial
advisors and the out-of-pocket costs and expenses incurred by the
Tiger/Yellen stalking horse in connection with conducting due
diligence and the negotiation, documentation and implementation of
the stalking horse agency agreement and the transactions
contemplated thereby and (ii) the break-up fee of $250,000 to be
paid to The Great American Group, LLC. The Court ruled that he'd
consider the proposed bid protections at a subsequent hearing.
The joint venture between Hilco and Gordon Brothers emerged as the
winning bidder at an auction held for the right to liquidate Anna's
Linens' assets, beating out the stalking horse bidder Tiger Capital
Group LLC and Yellen Partners LLC.
The winning bid offers a guaranteed recovery of 111% of the cost
value of Anna's Linens' merchandise with a so-called "merchandise
threshold" of not less than $61.5 million and not more than $67
million, subject to certain adjustments, court filings show.
Anna's Linens' has proposed to pay the stalking horse bidder a
breakup fee of $650,000, plus expense reimbursement of up to
$350,000. Meanwhile, the retailer has proposed to pay $250,000 to
Great American.
Anna's Linens' official committee of unsecured creditors filed in
court an objection to the terms of the sale. The group expressed
concern the deal would leave Anna's Linens' estate
"administratively insolvent," unable to pay millions of dollars of
creditors holding administrative claims. The group also questioned
the proposed payment of breakup fees, saying they "do not meet the
statutory criteria for administrative expenses that can be put
ahead of unsecured creditors."
Anna's Linens' also received an objection from tax authorities in
Texas and from Welcome Industrial Corp., the retailer's largest
unsecured creditor. The tax agencies said they will oppose any
move to distribute proceeds from the sale of their collateral
unless their claims are paid in full. Welcome Industrial meanwhile
sought clarification that any liens asserted by the company will
attach to proceeds from the sale. Both objections have already
been resolved, court filings show.
About Anna's Linens
Anna's Linens is a specialty retailer offering home textiles,
furnishings and decor at attractive prices. Headquartered in
Costa Mesa, California, operates a chain of 268 company owned
retail stores throughout 19 states in the United States (including
Puerto Rico and Washington, D.C.) generates over $300 million in
annual revenue and employs a workforce of over 2,500 associates.
Anna's Linens sought Chapter 11 bankruptcy protection (Bankr. C.D.
Cal. Case No. 15-13008) in Santa Ana, California, on June 14,
2015.
The case is assigned to Judge Theodor Albert. The Debtor tapped
Levene, Neale, Bender, Yoo & Brill LLP as counsel. The Debtor
estimated assets of $50 million to $100 million and debt of $100
million to $500 million.
The U.S. trustee overseeing the Chapter 11 case of Anna's Linens
Inc. appointed seven creditors to serve on the official committee
of unsecured creditors.
BAHA MAR: Hires Milbank Tweed as Lead Bankruptcy Counsel
--------------------------------------------------------
Baha Mar Enterprises Ltd. and its debtor-affiliates seek
authorization from the U.S. Bankruptcy Court for the District of
Delaware to employ Milbank, Tweed, Hadley & McCloy LLP as
attorneys, nunc pro tunc to the June 29, 2015 petition date.
The Debtors require Milbank Tweed to:
(a) advise the Debtors with respect to their rights, powers and
duties as debtors in possession in the continued operation
of their businesses and the management of their properties;
(b) advise and consult on the conduct of the Chapter 11 Cases,
Including all of the legal and administrative requirements
of operating in chapter 11;
(c) attend meetings and negotiate with representatives of
creditors and other parties in interest, including
governmental authorities;
(d) take all necessary actions to protect and preserve the
Debtors' estates, including prosecuting actions on the
Debtors' behalf, defending any action commenced against
Baha Mar, and representing the Debtors in negotiations
Concerning litigation in which Baha Mar is involved,
including objections to claims filed against the Debtors'
estates;
(e) prepare pleadings in connection with the Chapter 11 Cases,
including motions, applications, answers, orders, reports,
and papers necessary or otherwise beneficial to the
administration of the Debtors' estates;
(f) represent the Debtors in obtaining authority to continue
using cash collateral and post-petition financing;
(g) advise the Debtors in connection with any potential sale of
assets;
(h) advise the Debtors concerning potential executory contract
and unexpired lease assumptions, assignments and
rejections;
(i) appear before the Court and any appellate courts to
represent the interests of the Debtors' estates;
(j) advise the Debtors regarding tax matters;
(k) coordinate and oversee the Debtors' efforts to obtain
recognition of the Chapter 11 Cases in the Bahamas, and in
any other proceedings at the Supreme Court of the
Commonwealth of The Bahamas;
(1) take any necessary action on behalf of the Debtors to
obtain approval of a disclosure statement and confirmation
of a chapter 11 plan and all documents related thereto; and
(m) perform all other necessary legal services for the Debtors
in connection with the prosecution of the Chapter 11 Cases,
including: (i) analyzing the Debtors' leases and contracts
and the assumption and assignment or rejection thereof;
(ii) analyzing the validity of liens against the Debtors;
and (iii) advising the Debtors on corporate and litigation
matters.
Milbank Tweed will be paid at these hourly rates:
Partners $985-$1,285
Counsel $940-$1,140
Associates $390-$875
Paraprofessionals $190-$335
Milbank Tweed will also be reimbursed for reasonable out-of-pocket
expenses incurred.
As of June 26, 2015, the Debtors provided Milbank Tweed with an
aggregate advance payment of $2,600,000 to establish a retainer to
pay for legal services rendered or to be rendered in connection
with the Debtors' restructuring efforts. As of the date hereof,
Milbank Tweed holds a retainer in the amount of $91,110.84 (the
"Retainer") that it will hold according to its standard internal
procedures in the same manner as Milbank holds retainers received
from each of its other clients.
Mark Shinderman, partner of Financial Restructuring Group of
Milbank Tweed, 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.
The Court for the District of Delaware will hold a hearing on the
application on Aug. 17, 2015, at 11:00 a.m. Objections were due
Aug. 10, 2015.
Pursuant to the Appendix B Guidelines for Reviewing Applications
for Compensation and Reimbursement of Expenses Filed Under United
States Code by Attorneys in Larger Chapter 11 Cases, the firm
attests that:
-- Milbank Tweed did not agree to a variation of its standard
or customary billing arrangements for this engagement;
-- None of Milbank Tweed's professionals included in this
engagement have varied their rate based on the geographic
location of the Chapter 11 Cases;
-- Milbank Tweed represented the Debtors in the one month prior
to the Petition Date. The billing rates and material
financial terms in connection with such representation have
not changed post-petition, and will not change other than
due to annual and customary firm-wide adjustments to
Milbank's hourly rates in the ordinary course of Milbank's
business; and
-- The Debtors have approved a prospective budget and staffing
plan for Milbank's engagement for the period from June 29,
2015 to Sep. 29, 2015. Consistent with the U.S. Trustee
Guidelines, the budget may be amended as necessary to
reflect changed or unanticipated developments.
Milbank Tweed can be reached at:
Mark Shinderman, Esq.
MILBANK, TWEED, HADLEY & McCLOY LLP
601 S. Figueroa Street, 30th Floor
Los Angeles, CA 90017
Tel: (213) 892-4000
Fax: (213) 629-5063
E-mail: mshinderman@milbank.com
About Baha Mar
Orlando, Florida-based Northshore Mainland Services Inc., Baha Mar
Enterprises Ltd., and their affiliates sought protection under
Chapter 11 of the Bankruptcy Code on June 29, 2015 (Bankr. D.Del.,
Case No. 15-11402). Baha Mar owns, and is in the final stages of
developing, a 3.3 million square foot resort complex located in
Cable Beach, Nassau, The Bahamas.
The case is assigned to Judge Kevin J. Carey.
The Debtors are represented by Paul S. Aronzon, Esq., and Mark
Shinderman, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los
Angeles, California; and Gerard Uzzi, Esq., Thomas J. Matz, Esq.,
and Steven Z. Szanzer, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in New York. The Debtors' Delaware counselare Laura Davis
Jones, Esq., James E. O'Neill, Esq., Colin R. Robinson, Esq., and
Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware. The Debtors' Bahamian counsel is Glinton
Sweeting O'Brien. The Debtors' special litigation counsel is Kobre
& Kim LLP. The Debtors' construction counsel is Glaser Weil Fink
Howard Avchen & Shapiro LLP.
The Debtors' investment banker and financial advisor is Moelis
Company LLC. The Debtors' claims and noticing agent is Prime Clerk
LLC.
BAHA MAR: Hires Moelis & Company as Financial Advisor & Banker
--------------------------------------------------------------
Baha Mar Enterprises Ltd. and its debtor-affiliates seek
authorization from the U.S. Bankruptcy Court for the District of
Delaware to employ Moelis & Company LLC as financial advisor and
investment banker, nunc pro tunc to June 29, 2015 petition date.
The Debtors and their counsel, Milbank, Tweed, Hadley & McCloy, LLP
require Moelis & Company to:
(a) assist Counsel and the Debtors in reviewing and analyzing
the Debtors' results of operations, financial condition and
business plan;
(b) assist Counsel and the Debtors in preparation of customary
financial reports as may be required in connection with the
proposed Restructuring or Capital Transaction; provided,
however that such financial reports shall in all cases be
deemed prepared by, and the ultimate responsibility of, the
Debtors;
(c) assist Counsel in reviewing and analyzing a potential
Restructuring or Capital Transaction;
(d) assist Counsel in negotiating a Restructuring or a Capital
Transaction;
(e) advise Counsel on the Debtors' preparation of an
information memorandum for a potential Capital Transaction;
(f) assist Counsel in identifying and contacting prospective
purchasers of the Capital Transaction, and providing on
behalf of the Debtors such prospective purchasers with the
Information Memo and such information about the Debtors as
may be appropriate and acceptable to Counsel, subject to
customary business confidentiality;
(g) advise Counsel of the terms of securities the Debtors offer
in any potential Capital Transaction;
(h) advise Counsel with respect to valuation and provide
customary expert testimony in the course of a Bankruptcy
Case regarding the same; and
(i) provide such other financial advisory and investment
banking services in connection with a Restructuring or
Capital Transaction.
The Engagement Letter provides for the following compensation to
Moelis & Company by the Debtors:
-- Monthly Fee. A monthly fee of $150,000 per month, payable in
advance each month. Whether or not a Restructuring or
Capital Transaction occurs, Moelis shall credit against
Monthly Fees commencing with the seventh Monthly Fee and
thereafter to the extent such Monthly Fees are actually paid
to Moelis (the "Monthly Fee Credit") against any
Restructuring Fee or Capital Transaction Fees; provided,
that in no event shall any such credit exceed the
Restructuring Fee and/or the Capital Transaction Fee.
-- Restructuring Fee. Subject to the Monthly Fee Credit, a
restructuring fee of $5,500,000 at the closing of a
Restructuring.
-- Capital Transactions Fee. Subject to the Monthly Fee Credit,
at the closing of a Capital Transaction, a non-refundable
cash fee of:
- 4.0% of the aggregate gross amount of face value of new
capital Raised in the Capital Transaction as equity,
equity-linked interests, options, warrants or other rights
to acquire equity interests; plus
- 1.5% of the aggregate gross amount of debt obligations and
other interests Raised in the Capital Transaction.
-- Capital Transactions Fees in a Bankruptcy Case.
Notwithstanding the foregoing, to the extent that the
Capital Transaction constitute debtor-in-possession
financing or exit financing provided in connection with a
Bankruptcy Case, the Capital Transaction Fee - with respect
to that Capital Transaction only - shall be:
- 4.0 % of the aggregate gross amount or face value of new \
capital Raised in the Capital Transaction as equity,
equity-linked interests, options, warrants or other rights
to acquire equity interest; plus
- 1.0% of the aggregate gross amount of senior debt
obligations;
- plus 2.0% of the aggregate gross amount of junior debt
obligations and other interests Raised in the Capital
Transaction.
Further, to the extent the debtor-in-possession financing or exit
financing is committed by the Developer or affiliated entities
under his control, the Capital Transaction Fee with respect to such
amounts shall be reduced by 50% if such Capital Transaction
constitutes exit financing in a Bankruptcy Case, or by 100% if such
Capital Transaction constitutes debtor-in-possession financing in a
Bankruptcy Case.
The maximum aggregate Restructuring Fees and Capital Transaction
Fees payable to Moelis & Company shall not exceed $14,000,000.
Lawrence Y. Kwon, managing director and founding member at Moelis &
Company, 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.
The Court for the District of Delaware will hold a hearing on the
application on Aug. 17, 2015, at 11:00 a.m. Objections were due
Aug. 10, 2015.
Moelis & Company can be reached at:
MOELIS & COMPANY
399 Park Avenue, 5th Floor
New York, NY 10011
Tel: (212) 883-6330
Fax: (212) 880-4260
About Baha Mar
Orlando, Florida-based Northshore Mainland Services Inc., Baha Mar
Enterprises Ltd., and their affiliates sought protection under
Chapter 11 of the Bankruptcy Code on June 29, 2015 (Bankr. D.Del.,
Case No. 15-11402). Baha Mar owns, and is in the final stages of
developing, a 3.3 million square foot resort complex located in
Cable Beach, Nassau, The Bahamas.
The case is assigned to Judge Kevin J. Carey.
The Debtors are represented by Paul S. Aronzon, Esq., and Mark
Shinderman, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los
Angeles, California; and Gerard Uzzi, Esq., Thomas J. Matz, Esq.,
and Steven Z. Szanzer, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in New York. The Debtors' Delaware counselare Laura Davis
Jones, Esq., James E. O'Neill, Esq., Colin R. Robinson, Esq., and
Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware. The Debtors' Bahamian counsel is Glinton
Sweeting O'Brien. The Debtors' special litigation counsel is Kobre
& Kim LLP. The Debtors' construction counsel is Glaser Weil Fink
Howard Avchen & Shapiro LLP.
The Debtors' investment banker and financial advisor is Moelis
Company LLC. The Debtors' claims and noticing agent is Prime Clerk
LLC.
BAHA MAR: Maurice Glinton Tapped as Special Bahamian Co-counsel
---------------------------------------------------------------
Baha Mar Enterprises Ltd. and its debtor-affiliates seek
authorization from the U.S. Bankruptcy Court for the District of
Delaware to employ Maurice O. Glinton & Co. as special Bahamian
co-counsel, nunc pro tunc to July 22, 2015.
Glinton will represent the Debtors in connection with the
winding-up petition and the application for the appointment of a
Provisional Liquidator filed by the Attorney-General fo the Bahamas
to the Supreme Court of the Commonwealth of The Bahamas.
Glinton will be paid at these hourly rates:
Supervising Litigation Counsel $950
Associate Counsel $500
Paralegal Staff $125
In accordance with the Retention Agreement all fees and charges are
subject to a value added tax at the rate of 7.5%.
Glinton will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Glinton holds a retainer in the amount of $100,000 from the
Debtors.
Maurice O. Glinton 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.
The Court for the District of Delaware will hold a hearing on the
application on Aug. 17, 2015, at 11:00 a.m. Objections were due
Aug. 10, 2015.
Consistent with the Guidelines for Reviewing Applications for
Compensation and Reimbursement of Expenses Filed Under 11 U.S.C.
section 330 by Attorneys in Larger Chapter 11 Cases effective as of
Nov. 1, 2013, Glinton attests that:
-- Glinton did not agree to a variation of its standard or
customary billing arrangements for this engagement;
-- None of Glinton's professionals included in this engagement
have varied their rate based on the geographic location of
the Chapter 11 Cases;
-- Glinton did not represent the Debtors in the 12 months prior
to the Petition Date; and
-- The Debtors and Glinton expect to develop a prospective
budget and staffing plan for Glinton's engagement for the
period from July 22, 2015 to Oct. 22, 2015. Consistent with
the U.S. Trustee Guidelines, the budget may be amended as
necessary to reflect changed or unanticipated developments.
Glinton can be reached at:
Maurice O. Glinton, Esq.
MAURICE O GLINTON & CO
Suite B Regent Centre East, Nasau
Paradise Island, Bahamas
Tel: (242) 352-4484
Fax: (242) 352-4526
About Baha Mar
Orlando, Florida-based Northshore Mainland Services Inc., Baha Mar
Enterprises Ltd., and their affiliates sought protection under
Chapter 11 of the Bankruptcy Code on June 29, 2015 (Bankr. D.Del.,
Case No. 15-11402). Baha Mar owns, and is in the final stages of
developing, a 3.3 million square foot resort complex located in
Cable Beach, Nassau, The Bahamas.
The case is assigned to Judge Kevin J. Carey.
The Debtors are represented by Paul S. Aronzon, Esq., and Mark
Shinderman, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los
Angeles, California; and Gerard Uzzi, Esq., Thomas J. Matz, Esq.,
and Steven Z. Szanzer, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in New York. The Debtors' Delaware counselare Laura Davis
Jones, Esq., James E. O'Neill, Esq., Colin R. Robinson, Esq., and
Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware. The Debtors' Bahamian counsel is Glinton
Sweeting O'Brien. The Debtors' special litigation counsel is Kobre
& Kim LLP. The Debtors' construction counsel is Glaser Weil Fink
Howard Avchen & Shapiro LLP.
The Debtors' investment banker and financial advisor is Moelis
Company LLC. The Debtors' claims and noticing agent is Prime Clerk
LLC.
BAHA MAR: Names Glinton Sweeting as Special Bahamian Counsel
------------------------------------------------------------
Baha Mar Enterprises Ltd. and its debtor-affiliates seek
authorization from the U.S. Bankruptcy Court for the District of
Delaware to employ Glinton Sweeting O'Brien as special Bahamian
counsel, nunc pro tunc to June 29, 2015 petition date.
The Debtors require Glinton Sweeting to advise the Debtors in
connection with all aspects of the domestication and enforcement in
The Bahamas of all relevant orders and directions issuing out of
these proceedings and performing the range of services normally
associated with matters such as this as the Debtors' special
Bahamian counsel which Glinton Sweeting is in a position to
provide.
Glinton Sweeting will be paid at these hourly rates:
Partners $800
Associates $500
Law Clerks $60-$110
Glinton Sweeting will also be reimbursed for reasonable
out-of-pocket expenses incurred.
In the one year period preceding the Petition Date, Glinton
Sweeting received payments from the Debtors totaling $200,000 with
respect to services rendered to the Debtors. Since the Petition
Date, Glinton Sweeting submits that it has earned fees and incurred
reimbursable expenses on account of its services to the Debtors in
the aggregate amount of $272,177.19. As of the petition date,
Glinton Sweeting is owed $289,665.75 on account of services
rendered.
Roy W.M. Sweeting, partner of Glinton Sweeting, 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.
The Court for the District of Delaware will hold a hearing on the
application on Aug. 17, 2015, at 11:00 a.m. Objections were due
Aug. 10, 2015.
Pursuant to the Appendix B Guidelines for Reviewing Applications
for Compensation and Reimbursement of Expenses Filed Under United
States Code by Attorneys in Larger Chapter 11 Cases, Glinton
Sweeting attests that:
-- Glinton Sweeting was asked to represent the Debtors on an
urgent basis and to provide a level and quantity of service
that was anticipated to be, and has been, at or near the
maximum capacity of Glinton Sweeting's output therefore
requested hourly rates in excess of its usual rates of $600
per hour for partners and $300-$400 per hour for associates.
-- Glinton Sweeting represented the client for approximately 26
days before the petition date. Glinton Sweeting sought the
rates and an initial retainer of $100,000. Those terms were
agreed and the retainer was provided on June 19, 2015. On
June 29, 2015, Glinton Sweeting received an additional
$100,000 in retainer funds. Glinton Sweeting's rates have
not changed postpetition.
-- In accordance with the 2013 UST Guidelines, the budget may
be amended as necessary to reflect the changed circumstance
or unanticipated developments.
Glinton Sweeting can be reached at:
Roy W.M. Sweeting, Esq.
GLINTON SWEETING O'BRIEN
303 Shirley Street
New Providence
Nassau, 78073, Bahamas
Tel: (242) 238-3500
Fax: (242) 328-8008
About Baha Mar
Orlando, Florida-based Northshore Mainland Services Inc., Baha Mar
Enterprises Ltd., and their affiliates sought protection under
Chapter 11 of the Bankruptcy Code on June 29, 2015 (Bankr. D.Del.,
Case No. 15-11402). Baha Mar owns, and is in the final stages of
developing, a 3.3 million square foot resort complex located in
Cable Beach, Nassau, The Bahamas.
The case is assigned to Judge Kevin J. Carey.
The Debtors are represented by Paul S. Aronzon, Esq., and Mark
Shinderman, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los
Angeles, California; and Gerard Uzzi, Esq., Thomas J. Matz, Esq.,
and Steven Z. Szanzer, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in New York. The Debtors' Delaware counselare Laura Davis
Jones, Esq., James E. O'Neill, Esq., Colin R. Robinson, Esq., and
Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware. The Debtors' Bahamian counsel is Glinton
Sweeting O'Brien. The Debtors' special litigation counsel is Kobre
& Kim LLP. The Debtors' construction counsel is Glaser Weil Fink
Howard Avchen & Shapiro LLP.
The Debtors' investment banker and financial advisor is Moelis
Company LLC. The Debtors' claims and noticing agent is Prime Clerk
LLC.
BAHA MAR: Pachulski Stang to Serve as Conflicts Counsel
-------------------------------------------------------
Baha Mar Enterprises Ltd. and its debtor-affiliates seek
authorization from the U.S. Bankruptcy Court for the District of
Delaware to employ Pachulski Stang Ziehl & Jones LLP as co-counsel
and conflicts counsel, nunc pro tunc to the June 29, 2015 petition
date.
The Debtors require Pachulski Stang to:
(a) provide legal advice regarding local rules, practices, and
procedures;
(b) review and comment on drafts of documents to ensure
compliance with local rules, practices, and procedures;
(c) file documents as requested by Milbank, Tweed, Hadley &
McCloy LLP ("Milbank") and coordinating with the Debtors'
claims agent for service of documents;
(d) prepare agenda letters, certificates of no objection,
certifications of counsel, and notices of fee applications
and hearings;
(e) prepare hearing binders of documents and pleadings,
print documents and pleadings for hearings.
(f) appear in Court and at any meeting of creditors on behalf
of the Debtors in its capacity as Delaware counsel with
Milbank;
(g) monitor the docket for filings and coordinating with
Milbank on pending matters that need responses;
(h) prepare and maintain critical dates memorandum to monitor
pending applications, motions, hearing dates and other
matters and the deadlines associated with same; distribute
critical dates memorandum with Milbank for review and any
necessary coordination for pending matters;
(i) handle inquiries and calls from creditors and counsel to
interested parties regarding pending matters and the
general status of these Cases, and, to the extent required,
coordinate with Milbank on any necessary responses; and
(j) provide additional administrative support to Milbank, as
requested.
(k) serve as conflicts counsel for the Debtors with respect to
any matters for which Milbank may have a conflict.
Pachulski Stang will be paid at these hourly rates:
Laura Davis Jones $1,025
James E. O'Neill $750
Colin R. Robinson $650
Peter J. Keane $525
Lynzy McGee $305
Pachulski Stang will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Pachulski Stang received payments from the Debtors during the year
prior to the Petition Date in the amount of $100,000 including the
Debtors' aggregate filing fees for these cases, in connection with
its prepetition representation of the Debtors.
Laura Davis Jones, partner of Pachulski Stang, 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.
The Court for the District of Delaware will hold a hearing on the
application on Aug. 17, 2015, at 11:00 a.m. Objections were due
Aug. 10, 2015.
Pursuant to the Appendix B Guidelines for Reviewing Applications
for Compensation and Reimbursement of Expenses Filed Under United
States Code by Attorneys in Larger Chapter 11 Cases, Pachulski
Stang attested:
-- Pachulski Stang represented the Debtors for approximately two
weeks during the 12-month period prepetition. The material
financial terms for the prepetition engagement remained the
same as the engagement was hourly-based subject to economic
adjustment. The billing rates and material financial terms
for the post-petition period remain the same as the
prepetition period subject to annual economic adjustment.
-- The Debtors and Pachulski Stang expect to develop a
prospective budget and staffing plan.
Pachulski Stang can be reached at:
Laura Davis Jones, Esq.
PACHULSKI STANG ZIEHL & JONES LLP
919 North Market Street, 17th Floor
Wilmington, DE 19801
Tel: (302) 652-4100
Fax: (302) 652-4400
E-mail: ljones@pszjlaw.com
About Baha Mar
Orlando, Florida-based Northshore Mainland Services Inc., Baha Mar
Enterprises Ltd., and their affiliates sought protection under
Chapter 11 of the Bankruptcy Code on June 29, 2015 (Bankr. D.Del.,
Case No. 15-11402). Baha Mar owns, and is in the final stages of
developing, a 3.3 million square foot resort complex located in
Cable Beach, Nassau, The Bahamas.
The case is assigned to Judge Kevin J. Carey.
The Debtors are represented by Paul S. Aronzon, Esq., and Mark
Shinderman, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los
Angeles, California; and Gerard Uzzi, Esq., Thomas J. Matz, Esq.,
and Steven Z. Szanzer, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in New York. The Debtors' Delaware counselare Laura Davis
Jones, Esq., James E. O'Neill, Esq., Colin R. Robinson, Esq., and
Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware. The Debtors' Bahamian counsel is Glinton
Sweeting O'Brien. The Debtors' special litigation counsel is Kobre
& Kim LLP. The Debtors' construction counsel is Glaser Weil Fink
Howard Avchen & Shapiro LLP.
The Debtors' investment banker and financial advisor is Moelis
Company LLC. The Debtors' claims and noticing agent is Prime Clerk
LLC.
BAHA MAR: Taps Kobre & Kim as Special Litigation Counsel in London
------------------------------------------------------------------
Baha Mar Enterprises Ltd. and its debtor-affiliates seek
authorization from the U.S. Bankruptcy Court for the District of
Delaware to employ Kobre & Kim LLP as special litigation counsel,
nunc pro tunc to June 29, 2015 petition date.
The Debtors require Kobre & Kim to:
(a) prosecute the Completion Guarantee Claim before the High
Court of England & Wales in London;
(b) investigate the nature, extent, and type of potential
claims and defenses against CCA, CC America, CSCEC, and any
of their affiliates based on the Debtors' legal and
equitable rights and remedies arising under certain
contracts or otherwise in connection with the Baha Mar
Project, including by requesting authority under applicable
bankruptcy law to seek and seeking discovery from third
parties regarding such claims and defenses, as well as
prosecuting and enforcing judgments with respect to
such claims and defenses before this Court or another court
of competent jurisdiction during these Chapter 11 Cases, as
directed by the Debtors in the exercise of their fiduciary
duties on behalf of their estates aid, to the extent
required, as authorized by the Cot;
(c) assist the Debtors and other outside counsel, as directed,
in connection with seeking recognition of the Chapter 1l
Cases and implementing any relief obtained thereby in
jurisdictions outside the United States, including, without
limitation, in The Bahamas; and
(d) perform other legal services in connection with the
foregoing as may be reasonably required and subject to
terms of engagement.
Kobre & Kim will be paid at these hourly rates:
Founding Partners and
English Queens Counsel GBP750
Other U.S. Attorneys $560-$825
Non-Lawyer Professionals $185-$375
Kobre & Kim will also be reimbursed for reasonable out-of-pocket
expenses incurred.
According to Kobre & Kim's books and records for the year prior to
the Petition Date, Kobre & Kim has received payment from the
Debtors of approximately $839,374.99 on account of invoices for
legal services performed and expenses incurred in contemplation of,
or in connection with, the Kobre & Kim Matters.
Michael S. Kim, founding partner of Kobre & Kim, 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.
The Court for the District of Delaware will hold a hearing on the
application on Aug. 17, 2015, at 11:00 a.m. Objections were due
Aug. 10, 2015.
Consistent with the Guidelines for Reviewing Applications for
Compensation and Reimbursement of Expenses filed under 11 U.S.C.
section 330 by Attorneys in Larger Chapter 11 cases effective as of
Nov. 1, 2013 (the "U.S. Trustee Guidelines"), Kobre & Kim stated:
-- Kobre & Kim did not agree to a variation of its standard or
customary billing arrangements for this engagement;
-- None of Kobre & Kim's professionals included in this
engagement have varied their rate based on the geographic
location of the Chapter 11 Cases;
-- Kobre &Kim represented the Debtors in the year prior to the
Petition Date. The billing rates and material financial
terms in connection with such representation have not
changed post-petition, and will not change other than due to
annual and customary firm-wide adjustments to Kobre & Kim's
hourly rates in the ordinary course of Kobre & Kim's
business; and
-- The Debtors and Kobre & Kim expect to develop a prospective
budget and staffing plan for Kobre & Kim's engagement for
the period from June 29, 2015 to Sep. 29, 20l 5. Consistent
with the U.S. Trustee Guidelines, the budget may be amended
as necessary to reflect changed or unanticipated
developments.
Kobre & Kim can be reached at:
Michael S. Kim, Esq.
KOBRE & KIM LLP
800 Third Avenue
New York, NY 10022
Tel: (212) 488-1201
Fax: (212) 488-1221
E-mail: michael.kim@kobrekim.com
About Baha Mar
Orlando, Florida-based Northshore Mainland Services Inc., Baha Mar
Enterprises Ltd., and their affiliates sought protection under
Chapter 11 of the Bankruptcy Code on June 29, 2015 (Bankr. D.Del.,
Case No. 15-11402). Baha Mar owns, and is in the final stages of
developing, a 3.3 million square foot resort complex located in
Cable Beach, Nassau, The Bahamas.
The case is assigned to Judge Kevin J. Carey.
The Debtors are represented by Paul S. Aronzon, Esq., and Mark
Shinderman, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los
Angeles, California; and Gerard Uzzi, Esq., Thomas J. Matz, Esq.,
and Steven Z. Szanzer, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in New York. The Debtors' Delaware counselare Laura Davis
Jones, Esq., James E. O'Neill, Esq., Colin R. Robinson, Esq., and
Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware. The Debtors' Bahamian counsel is Glinton
Sweeting O'Brien. The Debtors' special litigation counsel is Kobre
& Kim LLP. The Debtors' construction counsel is Glaser Weil Fink
Howard Avchen & Shapiro LLP.
The Debtors' investment banker and financial advisor is Moelis
Company LLC. The Debtors' claims and noticing agent is Prime Clerk
LLC.
BDF ACQUISITION: Moody's Hikes Corporate Family Rating to 'B2'
--------------------------------------------------------------
Moody's Investors Service upgraded BDF Acquisition Corp.'s
("Bob's") Corporate Family Rating ("CFR") to B2 from B3 and
Probability of Default rating to B2-PD from B3-PD, concluding the
review for upgrade initiated on June 16, 2015. Moody's also
upgraded the company's $180 million first lien term to B1 from B2
and its $80 million second lien term loan to B3 from Caa1. The
rating outlook is stable. BDF Acquisition Corp. is the entity
created to effect the acquisition of Bob's Discount Furniture in
February 2014 by Bain Capital ("Bain"), the company's majority
shareholder.
The upgrade reflects the reduction in adjusted debt attributable to
changes in Moody's approach for capitalizing operating leases. The
updated approach for standard adjustments for operating leases is
explained in the cross-sector rating methodology Financial
Statement Adjustments in the Analysis of Non-Financial
Corporations, published on June 15, 2015. The upgrade also
considers the company's solid recent operating performance and
Moody's expectation that revenue growth from new store expansion
and modest same store sales improvement, combined with relatively
stable EBITDA margins, will result in leverage below 5.0x over the
next 12-24 months. Through the LTM period ended June 28, 2015 Bob's
has grown total revenue in the mid-teens range with positive comp
store sales over the last 3 quarters, improved its EBITDA margin,
and increased Moody's adjusted EBITDA by over 20%.
Moody's took the following rating actions on BDF Acquisition
Corp.:
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
$180 million 1st lien term loan due 2021, Upgraded to B1, LGD-3
from B2, LGD-3
$80 million 2nd lien term loan due 2022, Upgraded to B3, LGD-5 from
Caa1, LGD-5
Outlook, Stable
RATINGS RATIONALE
Bob's B2 CFR reflects the company's high leverage and modest
interest coverage stemming from the January 2014 leveraged buyout
by Bain for $403 million. We estimate lease adjusted Debt/EBITDA
for the last twelve month period ended June 28, 2015 in the low 5
times range (before pro-forma earnings from recently-opened stores)
with interest coverage (EBITA/Interest) in the mid-to-low 1x range.
The rating also reflects Bob's small size and limited geographic
presence as a regionally concentrated retail chain, its limited
product diversification as a specialty furniture retailer, and the
discretionary nature of its product which increases susceptibility
to volatility in discretionary consumer spending.
The rating favorably reflects the strength of the company's "Bob's
Discount Furniture" brand in the regions where it operates, its
credible overall market position and scale within the highly
fragmented U.S. furniture market, and its demonstrated ability to
maintain top line growth through difficult economic conditions,
aided by its value product positioning. The rating also reflects
the company's good liquidity and Moody's expectation for continued
solid operating performance driven by top line revenue growth and
stable EBITDA margins.
Bob's liquidity profile is good, supported by Moody's expectation
that cash generated from operations, undrawn capacity under its $40
million asset-based ("ABL") revolving credit facilities (unrated),
and cash on the balance sheet will be sufficient to cover the
company's cash needs (including growth capex) over the next 12-18
months. Moody's anticipates free cash flow to be negative in FY
2015 and close to breakeven in 2016, however this is largely due to
meaningful investments in the business including a new distribution
center expected to be completed in the second half of 2015 and new
store expansion, which could be scaled back if operating
performance were to weaken. Absent these items, we would anticipate
positive free cash flow in the $15-20 million range over the next
12-18 months.
Bob's term loans do not contain financial maintenance covenants,
however the ABL is subject to a springing 1.0 times minimum fixed
charge coverage covenant which is triggered if excess availability
is less than the greater of 12.5% and $5 million (or if any
overadvance loans are outstanding at any time, as defined by the
credit agreement). The ABL facility was undrawn as of June 28, 2015
and Moody's does not anticipate any meaningful borrowings over the
next 12-18 months. As a result Moody's does not expect the
springing covenant to be tested over the next 12-18 months, but
would anticipate substantial cushion if triggered.
The B1 rating on the company's $180 million first lien senior
secured term loan due 2021 is one notch higher than the CFR and
reflects its senior position in the capital structure relative to
the $80 million second lien term loan due 2022, and other junior
claims including trade payables and leases. The first lien term
loan is secured on a first priority basis by substantially all
tangible and intangible assets of the borrower, except for the ABL
priority collateral on which it has a second lien. The ABL priority
collateral consists of cash, accounts receivable and inventory. The
B3 rating on the second lien senior secured term loan reflects the
junior position behind the ABL and first lien term loan. The second
lien loan is secured by a second - priority lien on substantially
all tangible and intangible assets of the borrower, except for the
ABL priority collateral on which it has a third lien.
The stable rating outlook reflects Moody's expectation that the
company will continue to demonstrate profitable growth while
maintaining stable EBITDA margins and good liquidity. Anticipated
revenue growth, largely through new store expansion combined with
modest same store sales improvement, will result in debt/EBITDA
leverage below 5x and interest coverage (EBITA/Interest Expense)
above 1.5x over the next 12-24 months.
A ratings upgrade would require sustained growth in revenue and
earnings resulting in debt/EBITDA of 4.5 times or lower and
EBITA/interest over 2.0 times. It would also require greater
regional diversification and scale, and a willingness on the part
of the company to maintain a conservative financial policy.
Bob's ratings could be downgraded if operating performance were to
materially decline, or if aggressive financial policies led to
sustained deterioration in credit metrics or weaker liquidity.
Debt/EBITDA above 6.0 times or interest coverage below 1.25 times
would result in downward pressure on the rating.
BDF Acquisition Corp. ("Bob's"), based in Manchester, CT., was
created to acquire a majority stake in Bob's Discount Furniture, a
retailer of value-priced furniture with 61 stores primarily in the
Northeast and Mid-Atlantic states as of June 28, 2015. Revenue for
the latest twelve month period approached $900 million. The company
is majority owned by private equity firm Bain Capital ("Bain").
BOMBARDIER INC: Fitch Lowers IDR to 'B'; Outlook Negative
---------------------------------------------------------
Fitch Ratings has downgraded Bombardier Inc.'s (BBD) Issuer Default
Rating (IDR) to 'B' from 'B+'. Fitch has also downgraded BBD's
long-term debt and bank facility ratings to 'B'/'RR4' from
'B+'/'RR4'. The Rating Outlook is Negative.
KEY RATING DRIVERS
The downgrade of BBD's ratings reflects the company's negative free
cash flow (FCF), which Fitch expects will be more negative than
previously estimated and could be significantly negative through
2017. Development spending remains high for the CSeries, and a
delayed entry into service for the Global 7000 until the last half
of 2018 is likely to increase total development spending for the
program in Fitch's view. Also, BBD has implemented production cuts
for the Global 5000/6000 business jets which generate a meaningful
share of the company's profitability and FCF. There are additional
risks to FCF including aircraft orders that have been weak and the
pace of the production ramp-up for the CSeries, which is expected
to enter service in the first half of 2016.
Fitch conservatively estimates FCF for all of 2015 will not be
materially different compared to negative $1.5 billion generated in
the first half of the year. Fitch expects FCF in the last half of
2015 could be near break-even as high costs for the CSeries are
offset by an anticipated decline in business jet inventory. Fitch
expects FCF could improve in 2016 to approximately negative $800
million due to lower development spending for the CSeries. However,
development spending for the Global 7000/8000 program will
continue, and the CSeries will be dilutive to margins
Fitch expects liquidity will be adequate through at least 2016 but
subsequently could become a concern due to uncertainties associated
with cash usage for CSeries production and the level of business
jet demand. Fitch believes BBD will be careful about cash
deployment and liquidity, but the company could potentially fund
restructuring or actions in the near term. Fitch estimates cash
could decline in 2017 below $2 billion compared to $3.1 billion at
June 30, 2015. Fitch believes BBD can operate temporarily at cash
balances below $2 billion, but the company would be exposed to
negative developments such as weak demand in the aerospace business
or challenges related to the increase in CSeries production that
could reduce liquidity or create concerns about compliance with
covenants under BBD's bank facilities.
Liquidity would improve if BBD completes a planned initial public
offering (IPO) of a minority stake in Bombardier Transportation
(BT). Fitch estimates the IPO could generate $1 billion or more of
cash proceeds. The transaction would help liquidity but would not
address FCF concerns. In the first quarter of 2015, BBD received
significant cash proceeds from the issuance of debt and equity.
Proceeds totaled $2.3 billion, net of early debt repayment in April
2015 that eliminated material scheduled debt repayments prior to
2018. At the beginning of 2015, BBD suspended dividends on common
stock which totaled $160 million in 2014.
The success of the CSeries program is material to BBD's FCF. If
initial production is more challenging than expected, or if
additional demand for the aircraft does not materialize, BBD may
find it difficult to build stronger FCF at a sufficient pace to
preserve the company's operating and financial flexibility. Fitch
believes BBD is on track for certification by the end of 2015 and
first delivery in 2016.
Other concerns include BBD's high leverage, competitive pressure in
each of the company's segments, and the risk of CSeries
cancellations from customers such as Republic Airways which is
contemplating reducing its fleet due to a pilot dispute and other
challenges. BBD's high leverage includes debt/EBITDA of 7x at June
30, 2015, which Fitch anticipates will increase due to negative
margins associated with early production of the CSeries.
BBD's bank facilities contain various leverage and liquidity
requirements for both BBD, including Bombardier Aerospace (BA), and
Bombardier Transportation (BT). Minimum required liquidity at the
end of each quarter is $750 million for the BBD facility and EUR600
million at BT. BBD does not publicly disclose required levels for
other covenants but there is a risk that weaker than expected
operating results or an increase in debt could result in
noncompliance. The lowest levels of covenant compliance typically
occur in the middle of the year instead of at year-end because of
BBD's cash flow profile.
BBD has installed a new senior management team since the beginning
of 2015, including its CEO and presidents of the Commercial
Aircraft and Business Aircraft units. The new management team has
broad experience in the aerospace industry and is conducting a full
review of BBD's businesses that could lead to additional changes in
the company's strategy and operations. BBD has launched a
transformation plan intended to improve performance and cash flow.
Fitch views BBD's strong position in the global business jet market
as a rating strength. However, margins are weak, especially
compared to some other business jet manufacturers such as
Gulfstream, and orders in the first half of 2015 have declined from
the year earlier period. The decline in orders is due partly to
BBD's exposure to emerging markets where demand growth is slowing.
BBD's projected EBIT margin for business jets of 5%-6% in 2015
partly reflects the company's decision to cut production of its
Global 5000/6000 aircraft compared to elevated levels in 2014 and
2015 that were associated with large fleet orders. The reduced
production level would be closer to levels prior to 2014. Fitch
believes BBD's Global jets are responsible for the majority of
profits in the Business Aircraft segment, so any weakening of
industry demand for large jets or in BBD's market position could
hinder the company's profitability and cash flow.
BBD's regional aircraft, including regional jets and turboprops,
are a smaller contributor to BBD's overall profitability than
business jets. Net orders for regional jets were negative in the
second quarter and are a concern although they can be lumpy. BBD
expects to report EBIT in its commercial aircraft segment,
including regional aircraft and the CSeries, of approximately
negative $200 million in 2015 as CSeries production increases ahead
of first delivery anticipated in the first half of 2016.
BBD is among the global market leaders for regional aircraft.
Competition is increasing from new manufacturers which could become
a larger threat over the long term and put pressure on future
values of BA's used regional aircraft. Aircraft built by new
manufacturers, including the Mitsubishi and Sukoi, are primarily
directed toward emerging markets but could become more competitive
over time.
At BT, low margins reflect project complexity and a highly
competitive industry. Margins could improve slightly in 2015, and
Fitch expects the ongoing review by BBD's senior management could
lead to further growth in margins, although the pace of improvement
could be gradual. BT is taking actions to standardize operations
across a relatively decentralized business and is focusing on
higher-margin services and systems revenue. BT has much lower
capital requirements than BBD's aerospace businesses and generates
more stable FCF, but the timing of BT's FCF can vary between
quarters due to the nature of its contracts.
BT has strong positions in its rail markets, particularly in Europe
which represents BT's largest market. The competitive landscape is
evolving, however, including several mergers and acquisitions among
Asian and European equipment manufacturers. These transactions
could exacerbate pricing pressure across the industry and make it
more challenging for BT to build stronger margins, which remain
below its long-term goal of 8%. BBD's planned IPO of a minority
stake in BT could provide flexibility to consider arrangements such
as joint ventures or M&A transactions that may strengthen BT's
industry position and increase access to emerging markets which
will be important to its long term competitiveness.
Rating concerns are mitigated by BBD's diversification and market
positions in the aerospace and transportation businesses and a
portfolio of commercial aircraft and large business jets which the
company has continued to refresh. The company's order backlog at
June 30, 2015 totaled $64 billion, or more than three times annual
sales.
The Recovery Rating (RR) of '4' for BBD's senior unsecured debt and
bank credit facility supports a rating of 'B' and reflects
expectations of average recovery prospects (31 - 50%) in a
distressed scenario. It is based on Fitch's going-concern analysis
of BBD that incorporates the company's established market positions
and backlogs at both the aerospace and transportation businesses.
The RR '6' for subordinated convertible debt and preferred stock
reflects a low priority position relative to BBD's debt.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Negative FCF of approximately $1.5 billion in 2015;
-- Modest margin improvement at BT is offset by near-term
margin pressure in the business aircraft segment and typical
margin dilution at the commercial aircraft segment related
to entry-into-service of the CSeries;
-- CSeries entry-into-service occurs in the first half of 2016;
-- Development spending for the CSeries declines in 2016,
partly offset by continued spending for the Global
7000/8000;
-- Lower orders for large business jets lead to a decline in
aerospace deliveries in 2016;
-- BT generates slow growth, excluding the impact of foreign
currency, and slightly improved EBIT margins.
RATING SENSITIVITIES
Future developments that may, individually or collectively, lead to
a negative rating action include:
-- FCF is more negative than Fitch's estimated levels of
negative $1.5 billion in 2015 and negative $800 million in
2016;
-- Cash balances approach $2 billion before there is a clear
path to reach positive FCF;
-- CSeries production encounters unexpected costs or delays;
-- Low customer advances in the aerospace business contribute
to weak FCF;
-- Operating margins deteriorate consistently at BT.
Future developments that may, individually or collectively, lead to
a stable Rating Outlook include:
-- FCF appears likely to reach a breakeven level within two
years;
-- Steady improvements in segment operating margins, excluding
the expected negative impact of CSeries production;
-- Order rates for business and regional aircraft support high
customer advances;
-- Completion of planned IPO of a minority stake in BT;
-- Consistently lower leverage, including debt/EBITDA below
6.0x.
LIQUIDITY
BBD's liquidity at June 30, 2015 included cash of $3.1 billion and
approximately $1.3 billion of availability under bank facilities.
In addition to a $750 million bank revolver available to BBD and BA
that matures in 2018, BT has a separate EUR500 million revolver
that matures in 2017. Both facilities were unused. BA and BT also
have letter of credit (LC) facilities that are used to support
performance risk and secure advance payments from customers.
Although debt maturities are minimal before 2018, BBD has material
net pension liabilities that totaled $2.1 billion, including $1.35
billion at funded plans. BBD estimates pension contributions at
$320 million in 2015.
In addition to the two committed bank facilities, BBD has other
facilities including a performance security guarantee (PSG)
facility that is renewed annually as well as bilateral agreements
and bilateral facilities with banks and insurance companies. BA
uses committed sale and leaseback facilities ($301 million
outstanding at June 30, 2015) to help finance its trade-in
inventory of used business aircraft. In addition, BT uses
off-balance-sheet, non-recourse factoring facilities in Europe
(approximately $1.2 billion outstanding at June 30, 2015).
FULL LIST OF RATING ACTIONS
Fitch has downgraded BBD's ratings:
-- IDR to 'B' from 'B+';
-- Senior unsecured bank revolver to 'B'/'RR4' from 'B+'/'RR4';
-- Senior unsecured debt to 'B'/'RR4' from 'B+'/'RR4';
-- Preferred stock to 'CCC+'/'RR6' from 'B-'/'RR6'.
The Rating Outlook is Negative.
BBD's debt at June 30, 2015, as calculated by Fitch, totaled
approximately $9.3 billion. The amount includes sale and leaseback
obligations and is adjusted for $347 million of preferred stock
which Fitch gives 50% equity interest. The debt amount excludes
adjustments for interest swaps reported in long-term debt as the
adjustments are expected to be reversed over time.
BRIGHTON COURT: Case Summary & 4 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Brighton Court, LLC
20488 Abbey Drive
Frankfort, IL 60423
Case No.: 15-27617
Nature of Business: Single Asset Real Estate
Chapter 11 Petition Date: August 13, 2015
Court: United States Bankruptcy Court
Northern District of Illinois (Chicago)
Judge: Hon. Carol A. Doyle
Debtor's Counsel: John J Lynch, Esq.
LYNCH LAW OFFICES, P.C.
1011 Warrenville Road, Suite 150
Lisle, IL 60532
Tel: 630-960-4700
Fax: 630-960-4755
Email: jlynch@lynch4law.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by George Venturella, managing member.
A list of the Debtor's four largest unsecured creditors is
available for free at http://bankrupt.com/misc/ilnb15-27617.pdf
CAM HOLDING: MNP Named as Receiver; Bids Due Sept. 11
-----------------------------------------------------
The Court of Queen's Bench of Alberta, in Canada appointed MNP Ltd
as receiver and manager of CAM Holding LP and CAM GP Inc., G.L.M.
Industries LP and G.L.M. Industries Inc., pursuant to an order
dated July 3, 2015.
The receiver will facilitate the sale of the Companies' assets.
The deadline for the submission of an offer to purchase the
Companies' assets is Sept. 11, 2015.
CAM Holding LP designs and makes storage tanks, bins, stacks, silos
and pressure vessels for customers in the oil and gas industry in
Western Canada.
COLT DEFENSE: Court Approves O'Melveny & Myers as Attorneys
-----------------------------------------------------------
Colt Holding Company LLC and its debtor-affiliates sought and
obtained permission from the Hon. Laurie Selber Silverstein of the
U.S. Bankruptcy Court for the District of Delaware to employ
O'Melveny & Myers LLP as attorneys, nunc pro tunc to the June 14,
2015 petition date.
The Debtors require O'Melveny & Myers to:
(a) advise the Debtors of their rights, powers, and duties as
debtors and debtors in possession in the management and
operation of their businesses;
(b) prepare on behalf of the Debtors all necessary and
appropriate applications, motions, draft orders, other
pleadings, notices, schedules, and other documents, and
reviewing all financial and other reports to be filed
in the Debtors' chapter 11 cases;
(c) advise the Debtors on, and preparing responses to,
applications, motions, other plead ings, notices, and
other
papers that may be filed and served in the Debtors' chapter
11 cases;
(d) advise the Debtors on actions that they might take to
collect and recover property for the benefit of their
estates;
(e) advise the Debtors on executory contracts and unexpired
lease assumptions, assignments, and rejections;
(f) assist the Debtors in reviewing, estimating, and resolving
any claims asserted against their estates;
(g) advise the Debtors in connection with potential sales of
assets;
(h) commence and conduct litigation necessary or appropriate to
assert rights held by the Debtors, protect assets of their
estates, or otherwise further the goals of the Debtors'
restructuring;
(i) assist the Debtors in obtaining the Court's approval of the
postpetition debtor in possession financing facilities;
(j) attend meetings and represent the Debtors in negotiations
with representatives of creditors and other parties in
interest;
(k) advise the Debtors on tax matters;
(l) advise and assist the Debtors in connection with the
preparation, solicitation, confirmation, and consummation
of a chapter 11 plan; and
(m) perform all other necessary legal services in connection
with the Debtors' chapter 11 cases and other general
corporate matters concerning the Debtors' businesses.
O'Melveny & Myers will be paid at these hourly rates:
Partners $780-$1,175
Other Attorneys and Counsel $415-$780
Legal Assistants $175-$350
O'Melveny & Myers will also be reimbursed for reasonable
out-of-pocket expenses incurred.
John J. Rapisardi, senior partner and co-chair of the Restructuring
Practice of the firm O'Melveny & Myers LLP, 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.
O'Melveny & Myers can be reached at:
John J. Rapisardi, Esq.
O'MELVENY & MYERS, LLP
Times Square Tower
Seventh Times Square
New York, NY 10036
Tel: (212) 326-2000
Fax: (212) 326-2061
About Colt Defense
Colt Defense LLC is one of the world's oldest and most iconic
designers, developers, and manufacturers of firearms for military,
law enforcement, personal defense, and recreational purposes and
was founded over 175 years ago by Samuel Colt, who patented the
first commercial successful revolving cylinder firearm in 1836 and
began supplying U.S. and international military customers with
firearms in 1847. Colt is incorporated in Delaware and
headquartered in West Hartford, Connecticut.
In 1992, Colt Manufacturing Company, then the principal operating
subsidiary, filed chapter 11 petitions in the U.S. Bankruptcy Court
for the District of Connecticut. An investment by Zilkha & Co.
allowed CMC to confirm a chapter 11 plan and emerge from Bankruptcy
in 1994.
Sometime after 1994, majority ownership of the Company transitioned
from Zilkha & Co. to Sciens Capital Management.
On June 12, 2015, Colt's exchange offer, consent solicitation and
solicitation of acceptances of a prepackaged plan of
reorganization, dated April 14, 2015, as supplemented, with respect
to its $250 million in 8.75% Senior Notes due 2017 expired. The
conditions to the exchange offer, the consent solicitation and the
prepackaged plan of reorganization were not satisfied, and those
conditions were not waived by Colt. Colt's restructuring support
agreement with Marblegate Special Opportunities Master Fund, L.P.
and Morgan Stanley Senior Funding, Inc., the Company's senior
secured term loan lenders, requires it to file for Chapter 11
bankruptcy.
Accordingly, Colt Holding Company LLC and nine affiliates,
including Colt Defense LLC, on June 14, 2015, filed voluntary
petitions (Bankr. D. Del. Lead Case No. 15-11296) for relief under
Chapter 11 of the Bankruptcy Code to pursue a sale of the assets as
a going concern. Colt Defense estimated $100 million to $500
million in assets and debt.
On June 16, 2015, the Court directed the joined administration of
the assets.
The Debtors tapped Richards, Layton & Finger, P.A., and O'Melveny &
Myers LLP, as attorneys, and Kurtzman Carson Consultants LLC as
claims and noticing agent. Perella Weinberg Partners L.P. is
acting as financial advisor of the Company, and Mackinac Partners
LLC is acting as its restructuring advisor.
Wilmington Savings Fund Society, FSB, as agent under the $13.33
million Term DIP Loan Agreement, is represented by Pryor Cashman
LLP's Eric M. Hellige, Esq.; and Willkie Farr & Gallagher LLP's
Leonard Klingbaum, Esq.
Cortland Capital Market Services LLC, as agent under the $6.67
million Senior DIP Credit Agreement, is represented by Holland &
Knight LLP's Joshua M. Spencer, Esq.; Stroock & Stroock & Lavan
LLP's Brett Lawrence, Esq.; and Osler, Hoskin & Harcourt LLP's
Richard Borins, Esq., and Tracy Sandler, Esq.
The U.S. Trustee for Region 3 appointed five creditors of Colt
Defense Inc. and its affiliates to serve on the official committee
of unsecured creditors.
* * *
Colt's equity sponsor, Sciens Capital Management, has agreed to act
as a stalking horse bidder in the proposed asset sale. Details of
the deal were not provided in Colt's news statement announcing the
Chapter 11 filing. Colt, however, said it would be soliciting
competing bids and has appointed an independent committee of its
board of managers to manage the process and evaluate bids. Colt
expects to complete the entire Chapter 11 process in 60-90 days.
Sciens Capital is represented by Skadden, Arps, Slate, Meagher &
Flom LLP's Anthony W. Clark, Esq., and Jason M. Liberi, Esq.
CRAIGHEAD FAIR: Claims Bar Date Slated for September 14
-------------------------------------------------------
The Phyllis M. Jones of the U.S. Bankruptcy Court for the Eastern
District of Arkansas set Sept. 14, 2015, at 5:00 (prevailing
Central Time) as deadline for creditors to file proofs of claim
against Craighead County Fair Association.
All proofs of claim must be filed at:
Clerk of the United States Bankruptcy Court
Little Rock Courthouse
300 West 2nd Street
Little Rock, AR 72201
About Craighead County Fair
Craighead County Fair Association is an Arkansas nonprofit
corporation formed in 1988, with its principal place of business in
Jonesboro, Arkansas. The Debtor operates the annual Northeast
Arkansas District Fair and leases portions of its real property
throughout the year.
Craighead County Fair Association filed a bare-bones Chapter 11
bankruptcy petition (Bankr. E.D. Ark. Case No. 14-15490) in
Jonesboro, Arkansas, on Oct. 13, 2014. The case is assigned to
Judge Audrey R. Evans.
The Debtor disclosed $26.7 million in assets and $9.83 million in
liabilities as of the Petition Date.
The U.S. trustee wasn't able to form a committee of unsecured
creditors due to "lack of interest" of creditors to serve on the
panel.
DIGITAL REALTY: Fitch Assigns BB+ Rating on Serie I Preferred Stock
-------------------------------------------------------------------
Fitch Ratings assigns a rating of 'BB+' to Digital Realty Trust's
(NYSE: DLR) proposed Series I cumulative redeemable preferred stock
issuance. The company expects to use to the net proceeds to fund a
portion of the $1.9 billion acquisition of Telx announced last
month.
KEY RATING DRIVERS
The rating reflects that while the acquisition of Telx moderately
increases leverage in the near term, Fitch expects the company's
metrics to improve in-line with longer-term historical trends, and
consistent with a 'BBB' IDR for a diversified data center real
estate investment trust (REIT). While the Telx transaction adds
more operational intensity and decreases margins, the transaction
has several benefits, including increased tenant and revenue
diversity and complementary business lines.
As the largest data center REIT, Digital Realty exhibits credit
strengths including a global platform, granular tenant base, strong
access to multiple sources of capital, adequate liquidity, and a
deep management bench. The rating takes into account the niche
asset class in which the company operates, resulting in a less
liquid investment market than other commercial property asset
classes and also low unencumbered asset coverage for the rating.
Key Metrics Remain Appropriate for Rating
Fitch estimates pro forma run-rate leverage at 5.5x for the
trailing 12 months (TTM) ended June 30, 2015, compared to 5.1x for
stand-alone DLR. The initial increase in leverage is due to the
company acquiring Telx using approximately 8.6x leverage. Fitch
forecasts that leverage will remain between 5.0x and 5.5x over the
next 12-24 months and DLR has consistently maintained leverage
between 4.4x and 5.6x since 2009. Fitch defines leverage as debt
net of readily available cash divided by recurring operating
EBITDA.
Fixed-charge coverage is good for the rating at 2.8x pro forma,
compared with 2.9x and 2.9x for the years 2014 and 2013,
respectively. Fitch expects DLR's fixed-charge coverage will be
between 2.7x and 2.9x over the next 12-24 months, driven by
same-store net operating income (NOI) growth offset by higher fixed
charges. Fitch defines fixed-charge coverage as recurring
operating EBITDA less straight-line rents divided by total interest
incurred and preferred stock dividends.
Strategy Focused on Improving Unlevered Cash Flow
The lease-up of existing inventory is one of the company's top
priorities. Tenants across the social media, mobility, analytics,
and cloud segments are driving the majority of new demand for
Digital Realty's properties. Portfolio occupancy increased 70
basis points (bps) year over year to 93.5% as of June 30, 2015, and
quarterly stabilized same store year-over-year cash NOI growth
averaged 3.1% for the TTM due primarily to a renewal leasing spread
of 10.3% and a retention rate of 82% for TTM ended June 30, 2015.
During that period, renewal activity represented 58.3% of leased
square footage. Comparisons for renewals were challenging for a
time due to the rolldown of peak rental rates signed prior to the
financial crisis; however, the company has recently been effective
in leasing up its existing properties and maintaining its tenant
base. Over the next several years, Fitch projects 2.5% to 4.7%
same-store NOI growth, driven primarily by developments coming on
line and efficient management of the aggregate portfolio post-close
of the Telx acquisition.
Same-store NOI growth, cash flow from the lease-up of developments,
and increased cash flow from joint ventures, offset by a reduction
of EBITDA from the sale of non-core assets, should drive
fixed-charge coverage in the high 2.0x range over the next two
years, appropriate for a 'BBB' rating given Digital Realty's niche
property focus.
Global Platform
Pro forma for the transaction, Digital Realty will be able to offer
Turn-Key Flex, Powered Base Building, colocation and
interconnection space, and its 132 operated properties, including
103 throughout North America, 23 in Europe, three in Australia and
three in Asia. Top markets as of June 30, 2015 were London (12.7%
of annualized base rent), Northern Virginia (10.9%), Dallas
(10.8%), New York (9.4%), and Silicon Valley (9.4%).
The company also benefits from a granular tenant roster, which
includes IBM (Fitch IDR of 'A+', Stable Outlook) at 7.6% of rent
before effect of the Telx transaction, CenturyLink, Inc. (IDR of
'BB+', Stable Outlook) at 7%, Equinix Operating Company, Inc. at
4%, Facebook, Inc. at 2.4% and AT&T (IDR of 'A-', Stable Outlook)
at 2.1%.
Good Access to Capital but Limited Secured Debt Market for Data
Centers
Since 2006, the company has issued $3.4 billion of common equity,
$1.8 billion of preferred equity including most recent issuance,
$2.5 billion of dollar-denominated unsecured bonds, and GBP700
million of sterling-denominated unsecured bonds. The company's
sterling-denominated bonds function as a natural hedge given the
company's exposure to the United Kingdom.
In September 2014, the company formed a joint venture with an
affiliate of Griffin Capital Essential Asset REIT, Inc. (GCEAR).
This was the company's second large institutional joint venture
following the venture with an investment fund managed by Prudential
Real Estate Investors in September 2013. The GCEAR venture
arranged a $102 million five-year secured bank loan at LIBOR plus
225 basis points, representing a loan-to-value ratio of 55%.
Despite the company's strong access to capital, the availability of
mortgage capital for data centers is not as deep compared with
other commercial real estate property types, limiting the sources
of contingent liquidity.
Deep Management Bench
The company has a strong management team in areas such as real
estate expertise as well as technical acumen, and it continues to
work collaboratively with its business partners such as VMare and
Compunext to provide accommodative data center solutions (e.g.,
direct connections to VMware vCloud Air, creation of the Global
Cloud Marketplace with various cloud service providers). Fitch
expects that most of Telx's employees will join DLR to manage the
colocation and interconnection business.
Less Contingent Liquidity for Data Centers
Data centers are specialized properties and technological
obsolescence over the long term is possible. However, there are
significant barriers to entry and medium-term IT trends are
favorable. Compared with other real estate assets, data centers
have a less liquid investment market with fewer potential buyers,
making these assets potentially more difficult to divest or borrow
against in a depressed market. These market characteristics can
reduce the ability of data centers to serve as a source of
contingent liquidity. Digital Realty's financial metrics are
intrinsically strong for the 'BBB' rating category; however, the
ratings are constrained by the data center properties being a
less-than-mature asset class and the less liquid market for trading
and financing these assets.
Digital Realty is committed to an unsecured funding profile.
However, the company's unsecured debt incurrence has outpaced the
growth of the unencumbered pool. Unencumbered assets (unencumbered
NOI divided by a stressed capitalization rate of 10%) covered net
unsecured debt by 2.1x as of March 31, 2015, which is low for a
'BBB' rating. This ratio further declines to 1.9x pro forma for
the Telx transaction.
Higher Operational Intensity from Telx Transaction
Fitch estimates that pro forma EBITDA margins will decline to 54%
from approximately 57% due to lower Telx margins, and, pro forma
for the transaction Telx's colocation and interconnection business
will represent approximately 10% of DLR's total EBITDA. Telx owns
only two assets, with the remaining seven locations leased from
third-party property owners. As a result, DLR will become a tenant
at these locations, which increases lease renewal risk and adds a
degree of operating risk into the company's business. Fitch's
negative rating sensitivities for leverage may decline if the
company further increases its exposure to business segments with
higher operating risk.
Adequate Liquidity Coverage Ratio
Liquidity coverage (defined as liquidity sources divided by uses)
is adequate at 1.8x for the period from July 1, 2015 to Dec. 31,
2016. Sources of liquidity include unrestricted cash, availability
under the company's unsecured revolving credit facility, and
projected retained cash flows from operating activities after
dividends and distributions. Uses of liquidity include debt
maturities as well as projected recurring capital expenditures and
cost-to-complete future development.
The company's adjusted funds from operations (AFFO) pay-out ratio
was 84.2% in second quarter 2015 (2Q15), compared with 87.6% in
2014 and 83.9% in 2013, all of which are indicative of the
company's ability to generate and retain moderate organic
liquidity. Based on the current AFFO pay-out ratio, the company
retains approximately $90 million annually.
Preferred Stock Notching
The two-notch differential between DLR's IDR and preferred stock
rating is consistent with Fitch's criteria for corporate entities
with an IDR of 'BBB'.
Stable Outlook
The Stable Outlook reflects Fitch's expectation that metrics will
remain appropriate for the rating and that DLR will finance the
Telx transaction on terms currently contemplated by Fitch.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for DLR include:
-- Approximately $900 million of other financing transactions
prior to Telx transaction closing;
-- $850 million of annual development starts;
-- $750 million of annual development deliveries.
RATING SENSITIVITIES
These factors may result in positive momentum in the rating and/or
Outlook:
-- Increased mortgage lending activity in the data center
sector;
-- Fitch's expectation of fixed-charge coverage sustaining
above 3x (TTM fixed-charge coverage was 3.0x, and pro forma
coverage is 2.8x);
-- Fitch's expectation of leverage sustaining below 4.5x (TTM
leverage is 5.1x and pro forma run-rate leverage is 5.5x).
These factors may result in negative momentum in the rating and/or
Outlook:
-- Sourcing the Telx transaction with more than 50% debt;
-- Sustained declines in rental rates and same-property NOI;
-- Fitch's expectation of fixed-charge coverage sustaining
below 2.5x;
-- Fitch's expectation of leverage sustaining above 6x;
-- Base case liquidity coverage sustaining below 1x.
FULL LIST OF RATINGS
Fitch currently rates Digital as:
Digital Realty Trust, Inc.
-- IDR 'BBB';
-- Preferred stock 'BB+'.
Digital Realty Trust, L.P.
-- IDR 'BBB';
-- Unsecured revolving credit facility 'BBB';
-- Senior unsecured term loan facility 'BBB';
-- Senior unsecured notes 'BBB'.
Digital Stout Holding, LLC
-- Unsecured guaranteed notes 'BBB'.
The Rating Outlook is Stable.
ELIZABETH CITY, NC: Moody's Cuts 2007 A/B Rev. Bonds Rating to Ba2
------------------------------------------------------------------
Moody's Investors Service downgrades the rating for Elizabeth City,
NC Multi-Family Housing Revenue Bonds -- Walker Landing 2007 A&B to
Ba2 from Baa3.
SUMMARY RATING RATIONALE
This program is downgraded to Ba2 due to a projected parity
insufficiency in March 2021, less than 6 years away. We also
project a revenue insufficiency in September of 2042. This is the
result of the trustee's recent termination of the DEPFA guaranteed
investment contract (GIC).
OUTLOOK
No Outlook
WHAT COULD MAKE THE RATING GO UP
Improved reinvestment returns that would offset projected
insufficiencies.
WHAT COULD MAKE THE RATING GO DOWN
Deterioration to the asset to debt ratio
Projected revenue or asset to debt insufficiencies
STRENGTHS
High credit quality of the credit enhanced mortgage
CHALLENGES
Performance relies on proper administration and adherence to
mandatory provisions of the trust indenture and financing agreement
by all parties
Little to no additional security is available from outside the
trust estate
EXCO RESOURCES: Moody's Cuts Corporate Family Rating to 'Caa1'
--------------------------------------------------------------
Moody's Investors Service downgraded EXCO Resources, Inc.'s (XCO)
Corporate Family Rating (CFR) to Caa1 from B1, its senior unsecured
notes rating to Caa3 from B3, and its senior secured bank credit
facility to B1 from Ba2. XCO's Speculative Grade Liquidity Rating
was lowered to SGL-4 from SGL-3. The outlook was changed to
negative from stable.
"XCO's downgrade reflects the steady erosion in its credit profile
and increased pressure on liquidity, a function of the impact
chronically weak US natural gas prices has had on its core natural
gas operations," commented Andrew Brooks, Moody's Vice President.
"Notwithstanding XCO's near singular focus on enhancing and
preserving its liquidity position, which began in earnest with its
January 2014 rights offering, sustained natural gas price weakness
leaves the company vulnerable to further production downside and
deterioration in its operating performance."
Issuer: EXCO Resources, Inc.
Ratings Downgraded:
Corporate Family Rating, Downgraded to Caa1 from B1
Probability of Default Rating, Downgraded to Caa1-PD from B1-PD
Senior Unsecured Rating, Downgraded to Caa3(LGD5) from B3(LGD5)
Senior Secured Rating, Downgraded to B1(LGD2) from Ba2(LGD2)
Speculative Grade Liquidity Rating, lowered to SGL-4 from SGL-3
Outlook Actions:
Outlook Changed to Negative from Stable
GEORGETOWN MOBILE: Files Amended Schedules of Claims
----------------------------------------------------
Georgetown Mobile Estates LLC filed with the U.S. Bankruptcy Court
for the Eastern District of Kentucky an amended schedules D and F.
A full-text copies of the amended schedules are available for free
at:
http://is.gd/joWCpY
http://is.gd/LK4Aqs
http://is.gd/D2wOvG
About Georgetown Mobile Estates
Georgetown Mobile Estates, LLC, is a Kentucky corporation with
headquarters in Georgetown, Scott County, Kentucky. Originally
incorporated on Jan. 23, 2006, the Company operates a mobile home
park in three areas on the county line of Scott and Fayette,
Kentucky. The park can take up to 504 customers and, historically,
had an occupancy rate of 92%.
Georgetown Mobile Estates filed a Chapter 11 bankruptcy petition
(Bankr. E.D. Ky. Case No. 15-50945) in Lexington, Kentucky, on May
11, 2015, to take back control of the mobile home park from a
receiver. Daniel E. Sexton, the present owner, signed the
petition.
The bankruptcy case is assigned to Judge Tracey N. Wise. The
Debtor estimated $10 million to $50 million in assets and debt.
The Debtor tapped Bunch & Brock of Lexington, Kentucky, as counsel;
Randy Reynolds of Magnum Capital Consultants, LLC, as financial
advisor; Bradford Burgess of The Thayer Group as financial advisor;
and Glen Dellavalle of Dellavalle Management Group as manager of
business operations.
The U.S. trustee overseeing the Chapter 11 case of Georgetown
Mobile Estates LLC appointed three creditors of the company to
serve on the official committee of unsecured creditors.
GRIDWAY ENERGY: Second Partial Closing of Assets Sale Occurs
------------------------------------------------------------
Gridway Energy Holdings, Inc., et al., notified the U.S. Bankruptcy
Court for the District of Delaware of the second partial asset
transfer closing in connection with the sale of substantially all
of their assets to Agera Energy LLC, the designated buyer of
Platinum Partners Value Arbitrage Fund LP.
On June 17, 2014, the Court authorized (i) the sale of the Debtors'
assets to Platinum Partners pursuant to an asset purchase agreement
by and among Glacial Energy Holdings and Platinum Partners, and
(ii) the assumption and assignment of certain executory contracts
and unexpired leases in connection therewith.
According to the Debtors on June 18, 2014, the economic closing of
the sale occurred, in accordance with the terms of the sale order
and APA. On Feb. 23, 2015, a partial asset transfer closing
occurred, pursuant to which each of Glacial Energy of New York,
Glacial VI, LLC, Gridway Energy Holdings, Inc., and Negawatt
Business Solutions transferred certain of their assets to Agera
Energy, LLC.
On July 13, 2015, a second partial asset transfer closing occurred,
pursuant to which each of Glacial Energy of Texas, Glacial Energy
of Ohio, Inc., Glacial Energy of Pennsylvania, Inc., Glacial Energy
of New England, Inc., and Glacial Natural Gas, Inc. transferred
certain of their assets to Agera.
About Gridway Energy
Gridway Energy Holdings, Inc., and its affiliates, including
Glacial Energy Holdings -- providers of electricity and natural gas
in markets that have been restructured to permit retail competition
-- sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead
Case No. 14-10833) on April 10, 2014.
The Debtors have 200,000 electric residential customers and 55,000
gash residential customers across the U.S. A large portion of the
customers' energy consumption and revenue is generated in the
northeast U.S., Ohio, Illinois and Texas (collectively accounting
for 80% of revenue), with the remaining portion coming from
California and other states.
The Debtors blamed the bankruptcy due to lower revenue brought by
increased market competition, which caused the Debtors to default
on certain of their obligations. Gridway defaulted on $60 million
of debt.
Prepetition, the Debtors negotiated a stock purchase transaction
with an interested buyer. But in March 2014, the purchaser
withdrew from the transaction because of the large amount of debt
that the purchaser would become liable through a stock
transaction.
The Debtors are represented by Michael R. Nestor, Esq., Joseph M.
Barry, Esq., and Donald J. Bowman, Jr., Esq., at Young Conaway
Stargatt & Taylor, LLP; and Alan M. Noskow, Esq., and Mark A.
Salzberg, Esq., at Patton Boggs LLP. They employed Omni Management
Group, LLC, as claims and notice agent.
Gridway Energy estimated assets of $500 million to $1 billion and
debt of more than $1 billion.
The Creditors' Committee is represented by Sharon Levine, Esq., and
Philip J. Gross, Esq., at Lowenstein Sandler LLP; and Frederick B.
Rosner, Esq., and Julia B. Klein, Esq., at The Rosner Law Group
LLC.
Vantage is represented in the case by Ingrid Bagby, Esq., David E.
Kronenberg, Esq., Kenneth Irvin, Esq., and Karen Dewis, Esq., at
Cadwalader, Wickersham & Taft LLP, and Jason M. Madron, Esq., at
Richards, Layton & Finger, P.A.
GUADALUPE REGIONAL: Moody's Cuts 2007 Revenue Bonds Rating to Ba1
-----------------------------------------------------------------
Moody's Investors Service downgrades the rating for Guadalupe
Regional Medical Center, TX's Mortgage Revenue Bonds Series 2007 to
Ba1 from Baa3 following downgrade of DEPFA; This downgrade
concludes the review. The outlook remains stable. Approximately
$87,900,000 of debt affected.
SUMMARY RATING RATIONALE
The mortgage reserve fund of the credit is invested in a DEPFA Bank
plc (Ba1/STA) guaranteed investment contract (GIC). A GIC provider
with a rating of Ba1 cannot support a Baa3 rating on a standalone
bond transaction. The Investment Agreement may be subject to
increased repayment risk as a result of the reduced credit quality
of DEPFA. In the event of a nonpayment of the GIC there may be
insufficient funds to pay debt service at that time.
OUTLOOK
The outlook is stable.
WHAT COULD MAKE THE RATING GO UP
-- An upgrade to the GIC provider
WHAT COULD MAKE THE RATING GO DOWN
-- Deterioration of the program's financial position
-- A downgrade to the GIC provider
LEVEL 3 COMMUNICATIONS: Moody's Hikes Corp Family Rating to 'Ba3'
-----------------------------------------------------------------
Moody's Investors Service upgraded Level 3 Communications, Inc.'s
corporate family rating (CFR) to Ba3 from B2. As part of the same
rating action, which concluded a ratings review initiated on May
11, Moody's also upgraded the company's probability of default
rating (to Ba3-PD from B2-PD), senior secured bank credit facility
rating in the name of Level 3 Financing, Inc. (Level 3 Financing, a
wholly-owned subsidiary of Level 3) to Ba1 from Ba2, senior
unsecured notes in the name of Level 3 Financing and Level 3 Escrow
II, Inc., to B1 from B3), and senior unsecured notes in the name of
Level 3 to B2 from Caa1. The ratings outlook is now stable and
Level 3's speculative grade liquidity rating remains affirmed at
SGL-2 (indicating good liquidity).
The following summarizes the rating actions and Level 3's ratings:
Issuer: Level 3 Communications, Inc.
Corporate Family Rating, Upgraded to Ba3 from B2
Probability of Default Rating, Upgraded to Ba3-PD from B2-PD
Speculative Grade Liquidity Rating, Affirmed at SGL-2
Outlook, Changed to Stable from ratings on Review
Senior Unsecured Regular Bond/Debenture, Upgrade to B2 (LGD6)
from Caa1 (LGD6)
Issuer: Level 3 Financing, Inc.
Senior Secured Bank Credit Facility, Upgraded to Ba1 (LGD2) from
Ba2 (LGD2)
Senior Unsecured Regular Bond/Debenture, Upgraded to B1 (LGD5)
from B3 (LGD5)
Outlook, Changed to Stable from ratings on Review
Issuer: Level 3 Escrow II, Inc.
Senior Unsecured Regular Bond/Debenture, Upgraded to B1 (LGD5)
from B3 (LGD5)
RATINGS RATIONALE
Level 3's Ba3 CFR is based on the company's solidifying business
and financial profiles as it integrates the former tw telecom,
inc., with Moody's anticipating continued margin improvement as
synergies are realized, and as higher margin Internet
Protocol-based services replace legacy services. With the margin
improvement, Moody's anticipates leverage of Debt-to-EBITDA
approaching 4x in 2016, with Free Cash Flow-to-Debt approaching 6%.
The rating is constrained by a lack of forwards earnings
visibility, off-market liquidity arrangements, and expectations
that the company's growth strategy will continue to feature
acquisitions and their attendant execution risks.
Rating Outlook
The outlook is stable based on expectations of a stable business
platform and leverage of Debt-to-EBITDA trending towards 4x through
2016 (5.1x at 30June15).
What Could Change the Rating -- UP
Level 3's CFR could be upgraded if Moody's expected:
Continued solid operating performance and margin expansion
Solid liquidity arrangements
Leverage of Debt-to-EBITDA approaching 3.5x on a sustainable
basis (5.1x at 30June15)
Free Cash Flow-to-Debt approaching 10% on a sustainable basis
(2.9% at 30June15)
What Could Change the Rating -- Down
Level 3's CFR could be downgraded if Moody's expected:
Debt-to-EBITDA sustained above 4.5x (5.1x at 30June15)
Free Cash Flow-to-Debt sustained below 5% (2.9% at 30June15)
Deteriorating business performance including elevated churn and
integration set-backs
Weaker liquidity arrangements
Corporate Profile
Headquartered in Broomfield, Colorado, Level 3 Communications, Inc.
is a publicly traded international communications company with one
of the world's largest long-haul communications and optical
Internet backbones. Level 3's 2016 revenue is expected to be
approximately $8.2 billion and annual (Moody's-adjusted) EBITDA to
be $2.7 billion.
LSB INDUSTRIES: Moody's Cuts Corporate Family Rating to 'B1'
------------------------------------------------------------
Moody's Investors Service downgraded LSB Industries, Inc. Corporate
Family Rating (CFR) to B1 from Ba3. The one notch downgrade results
from unusually weak second quarter earnings, the increased capital
required to complete the ammonia plant at El Dorado and the
expectation that credit metrics will remain very weak through 2016.
In conjunction with the downgrade of the CFR, Moody's also
downgraded the senior secured notes to B1, the Probability of
Default to B1-PD and the Speculative Grade Liquidity rating to
SGL-4 from SGL-2. The outlook is negative.
"Continued operational issues along with the increase in capital
required to complete on-going projects at El Dorado will
substantially weaken net debt credit metrics by the end of the
third quarter," said Lori Harris Associate Vice President and lead
analyst for LSB Industries, Inc. "Moody's expects the company to
raise additional capital by fourth quarter to support its funding
needs through 2016."
Issuer: LSB Industries, Inc.
Ratings downgraded:
Corporate Family Rating -- B1 from Ba3
Probability of Default Rating -- B1-PD from Ba3-PD
Speculative Grade Liquidity Rating - SGL-4 from SGL-2
$425 million guaranteed senior secured notes due 2019 -- B1,LGD4
from Ba3, LGD4
Ratings outlook - Negative
RATINGS RATIONALE
LSB's B1 CFR reflects its modest size (revenues of roughly $700
million), limited product diversity and continued operational
issues that have resulted in a sizable step up in net leverage to
5.6x as of June 30, 2015 from 3.8x at the end of the first quarter
(Debt /EBITDA includes Moody's standard analytical adjustments).
Moreover, Moody's expects net leverage to increase to over 7.0x at
the end of the third quarter of 2015, due to heavy capital spending
on the El Dorado projects; and then remain elevated throughout 2016
due to continued spending to complete these projects. Moody's also
noted that profitability has been challenged at the El Dorado
facility by the loss of a major industrial contract, as well as
additional spending related to the on-going capital projects, which
will likely result in losses at that facility until the new ammonia
plant is operating consistently.
The rating contemplates that once the El Dorado capital projects
are completed, credit metrics will improve and leverage should be
under 5.0x by mid-2017. This assumes some modest additional delays
to the completion of the El Dorado projects.
LSB's rating is supported by its back integration into ammonia
production at two of its facilities - Cherokee and Pryor, which
benefit from low natural gas prices in the US. However, operational
issues have prevented these two facilities from producing
consistent earnings over the past two years. The company enjoys
modest operational diversity as well as earnings and end market
diversity from the combination of its Chemicals and Climate Control
businesses. The Chemicals business has four production facilities
that manufacture nitrogen fertilizers, nitric acid, and ammonium
nitrate for both agricultural and industrial markets. The Climate
Control business manufacturers HVAC and other climate control
equipment for commercial and institutional construction markets.
LSB's SGL-4 reflects the additional cash required to fund cost
overruns and additional spending at El Dorado that go beyond the
company's existing cash balances and revolver. Moody's SGL ratings
do not assume access to additional capital. LSB's current liquidity
is supported by $132.7 million cash balances and $25 million in
short-term investments (as of June 30, 2015), an undrawn $100
million asset-backed revolving credit facility (ABL), and Moody's
expectations that it will be able to generate over $60 million in
cash flow from operations in 2015. LSB's working capital revolver
matures April 13, 2018. The revolver contains a financial covenant
requiring a minimum fixed charge coverage ratio greater than 1.1 to
1.0 anytime availability is less than or equal to $12.5 million.
Moody's expects LSB to be in compliance with this covenant for the
next 12 months.
The El Dorado capital projects are expected to cost an additional
$223-243 million through completion, with start-up planned in the
second quarter of 2016. LSB's $100 million working capital
revolver, which was unused as of June 30, 2015, had $75.3 million
of credit available for borrowing. Moody's expects that LSB will
need to utilize this revolver in the third quarter unless other
financing arrangements are made.
LSB's negative outlook reflects the lack of a consistent operating
history at its Cherokee and Pryor facilities, cost overruns on the
El Dorado projects that will require additional external financing
and the expected delay in the start-up of the new ammonia plant in
El Dorado. Additionally, the outlook incorporates the risk of
further delays in the start-up of its new ammonia plant and the
expectation that LSB's leverage will remain elevated throughout
2016.
LSB's rating would be lowered, if (i) the company does not arrange
incremental financing to complete the El Dorado projects by the
fourth quarter of 2015; (ii) there are significant further delays
in the completion or start-up of the ammonia facility; (iii) LSB
continues to incur significant downtime at its Cherokee or Pryor
facilities; and (iv) Debt/EBITDA is expected to remain above 6.0x
through much of 2017. The negative outlook could be returned to
stable once LSB has arranged for sufficient additional financing to
fund its capital projects at El Dorado, as well as potential
contingencies related to further cost overruns or delays. Moody's
would not consider upgrading the ratings until construction
projects are completed and the company has demonstrated operational
improvements at all of its facilities, which will allow them to run
with minimal unplanned downtime. An upgrade would be contingent on
company raising and maintaining EBITDA to over $200 million and
sustainably reducing leverage below 4.0x.
LSB Industries, Inc., headquartered in Oklahoma City, Oklahoma, is
a producer of commodity chemicals that are derived from ammonia
(nitrogen fertilizers, nitric acid and ammonium nitrate) and a
manufacturer of climate control equipment. LSB has four chemical
facilities, two of which produce low cost ammonia from natural gas
and a third is operated on a contract basis for Bayer. At its
fourth facility, LSB is constructing a new ammonia unit and a new
ammonium nitrate unit to reduce costs and increase capacity. LSB
also has six manufacturing facilities and one distribution
facility, totaling approximately 1 million square feet, which
produce and warehouse its climate control equipment. The company
had revenues of $729 million for the twelve months ending June 30,
2015.
MIG LLC: Has Until Aug. 24, 2015 to Remove Actions
--------------------------------------------------
The U.S. Bankruptcy Court in Delaware established Aug. 24, 2015, as
the deadline for MIG LLC to file notices of removal of lawsuits
under the Bankruptcy Rue 9027(a) involving the company and its
affiliate ITC Cellular LLC.
About MIG LLC
Formerly operating under the name "Metromedia International Group,
Inc.," MIG LLC -- http://www.migllc-group.com/-- owned and
operated and sold dozens of companies in diverse industries,
including entertainment, photo finishing, garden equipment and
sporting goods, until the late 1990s. In 1997 and 1998, MIG
consummated the sale of substantially all of its U.S.-based
entertainment assets and began focusing on expanding into emerging
communications and media businesses. By 2005, all of MIG's
operating businesses were located in the Republic of Georgia and
operated through its subsidiaries.
MIG LLC and affiliate ITC Cellular, LLC, filed for Chapter 11
bankruptcy protection on June 30, 2014. The cases are currently
jointly administered under Bankr. D. Del. Lead Case No. 14-11605.
As of the bankruptcy filing, MIG's sole valuable asset, beyond its
existing cash, is its indirect interest in Magticom Ltd. The cases
are assigned to Judge Kevin Gross. MIG LLC disclosed $15.9 million
in assets and $254 million in liabilities.
Headquartered in Tbilisi, Georgia, Magticom is the leading mobile
telephony operator in Georgia and is also the largest telephone
operator in Georgia. Magticom serves 2.4 million subscribers with
a network that covers 97% of the populated regions in Georgia.
Magticom is owned by International Telcell Cellular, LLC, which is
46% owned by MIG unit ITC Cellular, 51% owned by Dr. George
Jokhtaberidze, and 3% owned by Gemstone Management Ltd.
Formerly known as MIG, Inc., MIG was a debtor in a previous case
(Bankr. D. Del. Case NO. 09-12118). It obtained approval of its
reorganization plan in November 2010.
The Debtors have tapped Greenberg Traurig LLP as counsel, Fox
Rothschild Inc. as financial advisor; Cousins Chipman and Brown,
LLP as conflicts counsel; and Prime Clerk LLC as claims and notice
agent and administrative advisor. The Debtors have retained
Natalia Alexeeva as chief restructuring officer.
A three-member panel has been appointed in these cases to serve as
the official committee of unsecured creditors, consisting of Walter
M. Grant, Paul N. Kiel, and Lawrence P. Klamon.
ONEOK INC: Moody's Cuts Senior Unsecured Notes Rating to Ba1
------------------------------------------------------------
Moody's Investors Service downgraded ONEOK, Inc.'s (OKE) senior
unsecured notes rating to Ba1 from Baa3, assigned OKE a Corporate
Family Rating (CFR) of Ba1, a Probability of Default Rating (PDR)
of Ba1-PD, and a Speculative Grade Liquidity Rating of SGL-2. The
outlook is stable. Moody's also assigned a Ba1 rating to OKE's
proposed $500 million unsecured notes offering. Concurrently,
Moody's affirmed ONEOK Partners, L.P.'s (OKS) Baa2 rating and P-2
commercial paper rating. The outlook was changed to negative from
stable.
The downgrade was prompted by OKE's decision to undertake the
proposed notes offering, which re-leverages OKE as a pure-play
general partner (GP) whose holdings consist solely of the GP
interest, Incentive Distribution Rights (IDRs) and limited
partnership (LP) common units of OKS. Debt proceeds supplemented by
balance sheet cash will be used by OKE to acquire $650 million of
OKS LP units; concurrently, OKS will sell $100 million LP units to
an existing institutional holder in a registered offering. OKS will
use the net proceeds of the combined $750 million for debt
reduction.
"Debt issuance at OKE is at odds with the expectation coincident
with the January 2014 evolution of OKE into a pure-play GP that it
would incur no additional debt, having reduced outstanding debt at
the time by 50% with the proceeds of the spin of its gas utilities
to shareholders," commented Andrew Brooks, Moody's Vice President.
"However, while the re-leveraging of OKE for the purpose of
facilitating debt reduction at OKS reduces balance sheet leverage,
with the unrelenting pressure on energy prices Moody's remains
concerned with execution risk in the context of OKS generating
EBITDA growth sufficient to deliver a reduction in run-rate
leverage to levels conforming to its Baa2 rating, prompting the
outlook change to negative."
Issuer: ONEOK Partners, L.P.
Outlook Actions:
Outlook, Changed To Negative From Stable
Affirmations:
Senior Unsecured Commercial Paper (Local Currency) , Affirmed P-2
Senior Unsecured Regular Bond/Debenture (Local Currency) , Affirmed
Baa2
Issuer: ONEOK, Inc.
Downgrades:
Senior Unsecured Regular Bond/Debenture (Local Currency) ,
Downgraded to Ba1 from Baa3
Assignments:
Probability of Default Rating , Assigned Ba1-PD
Speculative Grade Liquidity Rating , Assigned SGL-2
Corporate Family Rating , Assigned Ba1
Senior Unsecured Regular Bond/Debenture (Local Currency) , Assigned
Ba1 (LGD4)
Outlook Actions:
Outlook, Remains Stable
RATINGS RATIONALE
OKE's Ba1 CFR reflects the re-leveraging of its balance sheet on a
stand-alone basis to about 2.1x (debt/distributions) from levels
that had been trending below 2x, supported by the ongoing magnitude
and quality of cash distributions from OKS. The rating also
considers OKE's structural subordination to the $7.7 billion of
debt at OKS as of June 30, and OKE's standing as a pure-play GP.
OKE debt service is solely reliant on LP and GP distributions,
including the GP's IDRs, from OKS, a distribution stream which is
junior to the substantial financing and operating requirements at
OKS.
OKE's Ba1 unsecured notes rating is equivalent to its CFR,
reflecting the unsecured status of its $300 million revolving
credit facility in accordance with Moody's LGD methodology
OKS's Baa2 rating reflects the integrated nature of its natural gas
and NGL asset base, which has been augmented through approximately
$5.0 billion of growth capital spending over the period 2012-2014.
This investment has generated strong EBITDA growth, the majority of
which is originated from fee-based sources in its Natural Gas
Liquids and Natural Gas Pipelines segments. However, OKS's Natural
Gas Gathering and Processing (G&P) segment, about 20% of operating
income, has exposed it to downside commodity price risk largely
through the percentage-of-proceeds (POP) contract design that in
2014 covered about two-thirds of its natural gas processing
portfolio. The collapse in NGL prices, in particular has led to a
flattening of 2015's EBITDA growth, increased the year's first-half
leverage to 5.1x and driven six-month distribution coverage down to
0.74x (although second-quarter coverage improved markedly to
0.88x).
Leverage consolidated for OKE rose to 5.8x at June 30. Elevated
debt leverage and depressed distribution coverage have weakened
OKS's positioning with respect to its Baa2 rating in contrast to a
number of its larger, more diversified midstream peers. However,
Moody's expects the $750 million in proposed debt reduction,
additional OKS assets being placed in service, continuing volume
growth, reduced growth capital spending and a strong recontracting
effort in G&P designed to improve the fee-based asset mix
collectively beginning to reverse this deteriorating trend in the
second half of 2015.
Based on the low end of OKS's 2015 EBITDA guidance of $1.51-$1.73
billion, whose range was reaffirmed in conjunction with OKS's
August 4 second quarter earnings release, Moody's expects second
half EBITDA to exceed that of the year's first six-months by
upwards of 15%. Volume growth remains intact, with second quarter
acquisition-aided gathered and fractionated NGLs increasing 51% and
7%, respectively, while gathered and processed natural gas volumes
increased 17% and 16%, respectively, over 2014's second quarter. In
G&P, OKS has hedged 72% of its NGL price exposure (excepting
ethane) over the remainder of 2015, and 18% in 2016. Natural gas
exposure has been 88% hedged in 2015, and 69% in 2016.
Consequently, Moody's expects second half 2015 debt leverage on an
annualized basis to approximate 4.4x, and 4.8x for the full year
2015, pro forma for debt reduction, dropping below 4.5x in 2016.
Leverage consolidated for OKE should decline to about 5.25x in
2016. Moody's further expects OKS's LP distribution coverage to be
restored to over 1.0x in early 2016.
OKE's SGL-2 Speculative Grade Liquidity Rating reflects Moody's
view of good liquidity into 2016. With limited administrative
overhead, OKE does not have significant liquidity needs as a
pure-play GP and it should cover pro forma interest expense over
8x. Stand-alone dividend coverage at OKE should continue to range
between 1.2x and 1.4x, enabling OKE to build modest cash balances.
At June 30, OKE held a $173 million cash balance, whose
availability will supplement the proposed note issuance proceeds to
be used to purchase OKS units. OKE maintains a $300 million
unsecured revolving credit facility whose scheduled maturity is
January 2019, and which has seen little utilization.
OKS's revolving credit facility that matures in January 2019 was
increased to $2.4 billion in 2015's first quarter from $1.7
billion. The revolver also serves as a backstop for the company's
commercial paper program, which was also increased to $2.4 billion.
At June 30, there were no borrowings under the revolver, and $870.5
million of commercial paper was outstanding. The $750 million in
proceeds from OKS's sale of LP units will reduce CP outstandings.
The revolving credit facility requires OKS to maintain a ratio of
debt to adjusted EBITDA of no more than 5.0 to 1.0, which can be
increased to 5.5 to 1.0 for three consecutive quarters in the event
of one or more acquisitions whose purchase price exceeds $25
million. Reflecting OKS's Permian acquisition in 2014's fourth
quarter, the allowable ratio of debt to EBITDA was increased to the
5.5x through the second quarter of 2015. At June 30, OKS was in
compliance with all covenants under its credit facility. OKS has
$1.1 billion in two series of notes maturing in 2016, $650 million
in February and $450 million in October, which Moody's assumes will
be refinanced with new debt capital markets financings.
OKE's rating outlook is stable, reflecting historically
conservative financial policies at both OKE and OKS, modest
financial leverage and Moody's expectation that all incremental
financing to fund the growth at OKS will be sourced at the OKS
level. An upgrade is unlikely in the near term, but could be
considered if OKS's rating was upgraded. A downgrade would occur if
OKS is downgraded, or if stand-alone OKE debt leverage grew to
exceed 2.5x.
OKS's negative outlook reflects the negative commodity price
pressure that has prompted weakness in OKS's G&P segment and the
potential execution risk assumed in rebuilding EBITDA growth.
Moody's assumes that OKS's overall business risk profile will
remain modest as it targets and pursues growth opportunities within
and adjacent to its existing operating footprint. Outside of the
commodity price exposure which has weakened its natural gas G&P
segment, the majority of OKS's EBITDA is derived under contractual,
fee-based pricing arrangements which should limit material
downside. Moody's views OKS to be weakly positioned at its Baa2
rating, reflecting the impact commodity price weakness is
inflicting on 2015's EBITDA, leverage metrics and sub-par
distribution coverage. A downgrade would be warranted should debt
to EBITDA exceed 5.0x, however, leverage should improve to 4.5x or
under in 2016 for OKS to be more appropriately positioned at its
Baa2 rating. Additionally, should quarterly distribution coverage
not be restored to and remain over 1x in 2016, a ratings downgrade
would be considered. While size and scale could warrant
consideration of a ratings upgrade, such an upgrade would be
unlikely without debt to EBITDA consistently maintained in the area
of 3x, a level that appears out of bounds with OKS's expected
financial and operating performance in 2015.
ONEOK, Inc. is the publicly traded general partner of publicly
traded master limited partnership (MLP) ONEOK Partners, L.P., both
of which are headquartered in Tulsa, Oklahoma.
PIONEER ENERGY: Moody's Cuts Corporate Family Rating to 'B2'
------------------------------------------------------------
Moody's Investors Service downgraded Pioneer Energy Services
Corp.'s Corporate Family Rating (CFR) to B2 from B1, Probability of
Default Rating (PDR) to B2-PD from B1-PD, and senior unsecured
notes to B3 from B2. In addition, the Speculative Grade Liquidity
(SGL) Rating was downgraded to SGL-4 from SGL-2 and the rating
outlook was changed to negative from stable. Pioneer Energy
provides contract land drilling and various well site services to
upstream oil and gas companies.
"The rating downgrades were driven by our expectations of a
material deterioration in Pioneer Energy's credit metrics due to
the weak demand outlook for drilling and oilfield services," said
Sreedhar Kona, Moody's Senior Analyst. "The negative outlook
reflects the higher likelihood of a covenant breach unless the
company negotiates covenant relief."
Downgrades:
Issuer: Pioneer Energy Services Corp.
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Senior Unsecured Regular Bond/Debenture, Downgraded to B3 (LGD5)
from B2 (LGD4)
Speculative Grade Liquidity Rating, Lowered to SGL-4 from SGL-2
Outlook Actions:
Issuer: Pioneer Energy Services Corp.
Outlook, Changed to Negative from Stable
RATINGS RATIONALE
The downgrade of Pioneer Energy's Corporate Family Rating (CFR) to
B2 from B1 is primarily driven by the potential sharp decline in
cash flow generation due to poor demand for drilling and services
equipment at least through 2016. With no immediate signs of a
commodity price recovery or a meaningful increase in 2016 upstream
capital budgets, Pioneer Energy's debt to EBITDA ratio will
increase to 4x by yearend 2015 and to above 4.5x by yearend 2016,
from 2.1x as of June 30, 2015. Unless the company gets covenant
relief through an amendment to the Credit Agreement, a financial
maintenance covenant breach is imminent in the first quarter 2016.
The company's small scale and limited range of service offerings
compared to other oilfield services peers, as well as customer
concentration constrain the ratings. However, the ratings benefit
from the company's high quality assets.
The B3 rating on Pioneer Energy's $300 million of senior unsecured
notes due 2022 reflects the subordination to the $350 million
senior secured revolving credit facility due 2019 ($110 million
outstanding as of June 30, 2015) and its priority claim to the
company's assets. The size of the revolver relative to Pioneer
Energy's outstanding senior unsecured notes results in the notes
being rated one-notch below the B2 CFR under Moody's Loss Given
Default Methodology.
Pioneer Energy will have weak liquidity through 2016, as indicated
by the SGL-4 Speculative Grade Liquidity Rating. In the absence of
the possible covenant breach, the company's liquidity would likely
be adequate. At June 30, 2015, Pioneer Energy had $62 million of
cash and $219 million of availability under its $350 million
revolving credit facility ($110 million of borrowings and $21
million of letters of credit outstanding). For the full year 2015,
Pioneer Energy's cash interest will be in the range of $22-$26
million and capital spending in the range of $160-$170 million. We
expect the company to either rely on the existing cash on the
balance sheet or borrow from the revolving credit facility to meet
its cash needs, as the EBITDA generated through 2015 may not be
sufficient. The $350 million credit facility expires in September
2019. The financial maintenance covenants under the facility
include a maximum total consolidated leverage ratio of 4x (versus
2.1x reported as of June 30), a maximum senior consolidated
leverage ratio of 2.5x (versus 0.6x reported as of June 30), and a
minimum interest coverage ratio of 2.5x (versus 7.9x reported as of
June 30). Due to the expected decline in cash flow and increase in
funded debt, the company will likely breach the total consolidated
leverage covenant in the first quarter 2016. The company has few
alternate liquidity sources of liquidity as almost all assets are
encumbered and any net proceeds from asset sales have to be used to
repay revolver borrowings within 12 months.
The negative outlook reflects the likelihood for even weaker
financial performance and the possible covenant breach if the
company does not get an amendment from its revolver lenders. The
outlook could be changed to stable if covenant relief is obtained
and the company's drilling rig and service equipment utilization
rates strengthen.
A downgrade could occur if the company does not get covenant relief
by the end of third quarter 2015 or if earnings deteriorate more
than expected, resulting in a debt to EBITDA ratio of above 4x on a
sustained basis.
Ratings are not likely to be upgraded at least through 2016, given
the weak commodity price environment and softness in the drilling
and oilfield services sectors. Should utilization rates and
dayrates start rising contributing to EBITDA growth and debt to
EBITDA sustaining below 2.5x, combined with good liquidity Pioneer
Energy's ratings could be upgraded.
POINT BLANK: Has Until Dec. 31, 2015 to Remove Prepetition Actions
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted SS
Body Armor I, Inc., formerly known as Point Blank Solutions, Inc.,
and its debtor affiliates an extension until Dec. 31, 2015, of the
deadline to remove actions initiated prior to the Petition Date.
In seeking the extension, Laura Davis Jones, Esq., at Pachulski
Stang Ziehl & Jones LLP, in Wilmington, Delaware, stated that the
Debtors believe it is prudent to seek an extension of the time
period to file notices of removal to protect their rights to remove
the actions. Their current efforts are focused on (a) consummating
the settlement with the Class Plaintiffs, which will not only
provide the Debtors with an immediate source of funds for the
chapter 11 plan and an exit strategy for the chapter 11 cases, but
also will resolve long-standing, complex and expensive litigation
in the Court, the Delaware District Court and the EDNY District
Court, and (b) pursuing confirmation of the amended joint Chapter
11 plan proposed by SS Body Armor I, Inc and the Creditors'
Committee, Ms. Jones further stated.
Ms. Jones added that in light of the current status of the Debtors'
Chapter 11 cases, the extension of time for removing actions will
afford them a reasonable and necessary opportunity to make
fully-informed decisions concerning removal of any Action, and will
assure that they do not forfeit valuable rights under Section 1452
with respect to any pending or prospective litigation commenced by
or against them.
About Point Blank
Headquartered in Pompano Beach, Florida, Point Blank Solutions,
Inc. -- http://www.pointblanksolutionsinc.com/-- designs and
produces body armor systems for the U.S. Military, Government and
law enforcement agencies, as well as select international markets.
The Company maintains facilities in Pompano Beach, Florida, and
Jacksboro, Tennessee.
The Company's former chief executive officer and chief operating
officer were convicted in September 2010 of orchestrating a $185
million fraud.
Point Blank Solutions, formerly DHB Industries, filed for Chapter
11 protection (Bankr. D. Del. Case No. 10-11255) on April 14,
2010.
Laura Davis Jones, Esq., Alan J. Kornfeld, Esq., David M.
Bertenthal, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang
Ziehl & Jones LLP, serve as bankruptcy counsel to the Debtor.
Olshan Grundman Frome Rosenweig & Wolosky LLP serves as corporate
counsel. Epiq Bankruptcy Solutions serves as claims and notice
agent.
The U.S. Trustee has appointed an Official Committee of Unsecured
Creditors and a separate Official Committee of Equity Security
Holders in the case. Ian Connor Bifferato, Esq., and Thomas F.
Driscoll III, Esq., at Bifferato LLC; and Carmen H. Lonstein, Esq.,
Andrew P.R. McDermott, Esq., and Lawrence P. Vonckx, Esq., at Baker
& McKenzie LLP, serve as counsel for the Official Committee of
Equity Security Holders. Robert M. Hirsh, Esq., and George P.
Angelich, Esq., at Arent Fox LLP, serve as counsel to the Creditors
Committee, and Frederick B. Rosner, Esq., and Brian L. Arban, Esq.,
at the Rosner Law Group LLC, serve as co-counsel.
In October 2011, the Debtors sold substantially all assets to Point
Blank Enterprises, Inc. The lead debtor changed its name to SS
Body Armor I, Inc., following the sale.
PRECISION DRILLING: Moody's Cuts Corporate Family Rating to Ba2
---------------------------------------------------------------
Moody's Investors Service downgraded Precision Drilling
Corporation's Corporate Family Rating (CFR) to Ba2 from Ba1,
Probability of Default Rating to Ba2-PD from Ba1-PD and senior
unsecured notes rating to Ba2 from Ba1. Moody's affirmed the SGL-1
Speculative Grade Liquidity Rating. The rating outlook remains
stable.
"The downgrade reflects the anticipated decline in Precision's cash
flow in 2015, which will result in Precision's debt to EBITDA
metric rising above 4x," said Paresh Chari, Moody's Analyst. "The
company's revenue is highly concentrated in the North American land
drilling market, which makes Precision vulnerable to the sharp
decline in drilling activity in the continent."
Issuer: Precision Drilling Corporation
Downgrades:
Probability of Default Rating, Downgraded to Ba2-PD from Ba1-PD
Corporate Family Rating, Downgraded to Ba2 from Ba1
Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2(LGD4)
from Ba1(LGD4)
Affirmations:
Speculative Grade Liquidity Rating, Affirmed SGL-1
RATING RATIONALE
Precision's Ba2 Corporate Family Rating (CFR) reflects its
concentration in one market - North America - and the inherent
cyclicality of contract land drilling. The current downturn in
commodity prices has led to a significant decrease in drilling
activity across North America, reducing Precision's 2015 EBITDA by
about 40% and increasing leverage above 4x. While Precision has a
solid market position for more favourable Tier 1 rigs and a broad
geographic footprint in the major North American land drilling
markets, neither has protected the company from the downturn.
Precision entered 2015 with about half of its Tier 1 rigs under
contract, which has helped to somewhat mute the impact of the
downturn as has its increasing exposure to international land
drilling markets. In 2016, Precision will only have about a quarter
of its fleet under contract, but will generate positive free cash
flow as build spending ceases.
The senior unsecured notes are rated at the Ba2 CFR due to the low
amount of priority ranking debt in the form of the US$650 million
revolving credit facility. Moody's believes that the Ba2 rating is
more appropriate for the senior unsecured notes than the Ba3 rating
suggested by Moody's Loss Given Default Methodology based on our
view that Precision will not have any permanent drawings under the
revolver, improving the recovery of the notes. Any permanent
drawings under the revolver will result in a downgrade of the
senior unsecured notes to Ba3.
Precision's SGL-1 liquidity rating reflects very good liquidity
through mid-2016. As of June 30, 2015, Precision had roughly C$434
million of cash and an undrawn US$650 million secured revolving
credit facility due June 2019. We expect roughly C$75 million of
negative free cash flow from June 30, 2015 to June 30, 2016.
Precision should be comfortably in compliance with its three
financial covenants through this period. Alternative sources of
liquidity are limited principally to the sale of Precision's
existing drilling rigs and completion and well service rigs, which
are largely encumbered.
The stable outlook reflects Moody's expectation that EBITDA will
remain flat in 2016 and that leverage will remain around 4x.
The rating could be upgraded if Precision can meaningfully grow
EBITDA while maintaining debt to EBITDA below 3x.
The rating could be downgraded if debt to EBITDA was likely to
remain above 5x.
Precision is a Calgary, Alberta-based corporation engaged in
onshore drilling and providing well completion and production
services to upstream oil and gas companies in North America.
PREMONT INDEPENDENT: Moody's Affirms Ba1 Rating on GOULT Debt
-------------------------------------------------------------
Moody's Investors Service has affirmed the Ba1 rating on Premont
Independent School District's, TX general obligation unlimited tax
(GOULT) debt. The district has a total of $2.7 million
outstanding.
SUMMARY RATING RATIONALE
The Ba1 rating reflects the district's history of poor academic
performance resulting in its accreditation either being warned or
on probation in each year since fiscal year 2010; the current
accreditation status has weakened to "accredited - probation". The
rating also reflects steep enrollment declines, in part driven by
accreditation challenges, as well as a steady reduction in assessed
values with an economy that is centered on oil and gas; certified
assessed values for fiscal year 2016 are flat compared to the prior
year. Positively, the district has reported surplus operations each
year since 2011, that have bolstered reserve levels. Additional
factors considered include a manageable debt burden, and
significantly below median wealth levels.
OUTLOOK
Outlooks are usually not assigned to local government credits with
this amount of debt outstanding.
WHAT COULD MAKE THE RATING GO UP
Returned accredited status from the TEA resulting in improved
enrollment
Sustained operating balance given enrollment growth
Tax base growth and diversification
WHAT COULD MAKE THE RATING GO DOWN
A downgrade from its current accreditation status
Continued declines in enrollment
Significant tax base contraction
A return to structurally imbalanced budgets reducing liquidity
OBLIGOR PROFILE
Premont Independent School District is situated about 80 miles east
of the City of Laredo, and 65 miles southwest of Corpus Christi.
The area is an agricultural and petroleum producing area. The
average daily attendance in fiscal year 2015 was 441.
LEGAL SECURITY
The bonds are secured by a continuing and direct annual ad valorem
tax, levied on all taxable property without legal limitation as to
rate or amount.
RADIOSHACK CORP: General Retail Lenders Seek Payment of Costs
-------------------------------------------------------------
General Retail Holdings L.P. and General Retail Funding LLC and
General Wireless Operations Inc., filed a reservation of rights and
limited objection regarding the RS Legacy Corporation, et al.'s
motion for continued use of cash collateral.
The General Retail Lenders have incurred, and expect to continue to
incur, reimbursable legal costs and expenses in the Chapter 11
cases. They say that the budget attached to the motion does not
appear to make adequate provision for such costs and expenses.
General Wireless has prefunded substantial amounts to the estate
under the Transition Services Agreement (TSA) to cover obligations
of the estate. The budget attached to the motion does not make
provision for the payments.
As reported in the Troubled Company Reporter on July 17, 2015, the
Debtors are seeking authorization to continue to use cash
collateral up to Aug. 29, 2015. Evelyn J. Meltzer, Esq., at Pepper
Hamilton LLP, in Wilmington, Delaware, tells the Court that
following the expiration of the cash collateral stipulation on July
23, 2015, the Debtors will continue to require access to the cash
collateral to complete a variety of tasks associated with the wind
down of the estates, including (i) the collection or monetization
of their remaining assets, (ii) the wind down of their remaining
business operations, and (iii) the pursuit of confirmation of a
plan of liquidation. Ms. Meltzer added that without immediate
access to funds, including any cash collateral, following the
expiration of the Stipulation, the Debtors will be unable to fund
the costs of the cases and unable to pursue a path forward in
completing the wind down that they believe is in the best interests
of their creditors.
About RadioShack Corporation
Headquartered in Fort Worth, Texas, RadioShack (OTCMKTS: RSHCQ) --
http://www.radioshackcorporation.com-- is a retailer of
mobile technology products and services, as well as products
related to personal and home technology and power supply
needs. RadioShack's retail network includes more than 4,300
company-operated stores in the United States, 270 company-operated
stores in Mexico, and approximately 1,000 dealer and other outlets
worldwide.
RadioShack Corporation and affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 15-10197) on Feb. 5, 2015. Judge
Kevin J. Carey presides over the case.
David G. Heiman, Esq., Greg M. Gordon, Esq., Amanda M. Suzuki,
Esq., Jonathan M. Fisher, Esq., Thomas A. Howley, Esq., and Paul
M. Green, Esq., at Jones Day serve as the Debtors' bankruptcy
counsel.
David M. Fournier, Esq., Evelyn J. Meltzer, Esq., and John H.
Schanne, II, Esq., at Pepper Hamilton LLP serve as co-counsel.
Carlin Adrianopoli at FTI Consulting, Inc., is the Debtors'
restructuring advisor. Maeva Group, LLC, is the Debtors'
Turnaround advisor. Lazard Freres & Co. LLC is the Debtors'
investment banker. A&G Realty Partners is the Debtors' real
estate advisor. Prime Clerk is the Debtors' claims and
noticing agent.
In their Petitions, the Debtors disclosed total assets of $1.2
billion, versus total debts of $1.3 billion. RS Legacy Corp, in an
amended schedules, disclosed $1,094,497,280 in assets and
$3,101,098,375 in liabilities.
Quinn Emanuel Urquhart & Sullivan, LLP and Cooley LLP represent the
Official Committee of Unsecured Creditors as co-counsel. Houlihan
Lokey Capital, Inc., serves as financial advisor and investment
banker. The bankruptcy case is assigned to Judge Brendan L.
Shannon.
REVEL AC: Fox Rothschild Withdraws as Co-Counsel
------------------------------------------------
Fox Rothschild LLP has filed a notice with the bankruptcy court
that it has withdrawn as co-counsel to the Revel AC, Inc.,
effective Aug. 8, 2015.
Revel AC previously received approval from U.S. Bankruptcy Judge
Gloria Burns to hire Fox Rothschild as its legal counsel in its
Chapter 11 case.
About Revel AC
Revel AC, Inc. -- http://www.revelresorts.com/-- owns and operates
Revel, a Las Vegas-style, beachfront entertainment resort and
casino located on the Boardwalk in the south inlet of Atlantic
City, New Jersey. Revel AC Inc. and five of its affiliates sought
bankruptcy protection (Bankr. D.N.J. Lead Case No. 14-22654) on
June 19, 2014, to pursue a quick sale of the assets. The Chapter
11 cases of Revel AC LLC and its debtor-affiliates are transferred
to Judge Michael B. Kaplan. The Debtors' cases was originally
assigned to Judge Gloria M. Burns. The Debtors' Chapter 11 cases
are jointly consolidated for procedural purposes. Revel AC
estimated assets ranging from $500 million to $1 billion, and the
same amount of liabilities.
White & Case, LLP, and Fox Rothschild, LLP, serve as the Debtors'
Counsel, and Moelis & Company, LLC, is the investment banker. The
Debtors' solicitation and claims agent is Alixpartners, LLP.
The prepetition first lenders are represented by Cadwalader,
Wickersham & Taft LLP. The prepetition second lien lenders are
represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP. The
DIP agent is represented by Milbank, Tweed, Hadley & McCloy LLP.
This is Revel AC's second trip to bankruptcy. The company first
sought bankruptcy protection (Bankr. D.N.J. Lead Case No. 13-16253)
on March 25, 2013, with a prepackaged plan that reduced debt by
$1.25 billion. Less than two months later on May 15, 2013, the
2013 Plan was confirmed and became effective on May 21, 2013.
* * *
Revel AC, Inc., et al., on April 20, 2015, filed an amended plan of
reorganization and accompanying disclosure statement to incorporate
the terms of a settlement and plan support agreement entered into
with the Official Committee of Unsecured Creditors, and Wells Fargo
Bank, N.A., as DIP Agent, and Wells Fargo Principal Lending, LLC,
as a Prepetition First Lien Lender and DIP Lender. The Settlement
Agreement, among other things, provides that Wells Fargo agrees to
give the general unsecured creditors $1.60 million of its recovery
from the proceeds of the sale of substantially all of the Debtors'
assets to Polo North Country Club, Inc., and to advance $150,000
from its recovery to fund the Debtors' reconciliation of claims and
prosecution of claims or estate causes of actions.
Early in April 2015, U.S. Bankruptcy Judge Gloria Burns approved an
$82 million sale of the Revel Casino Hotel to Polo North Country
Club, Inc., which is owned by Florida developer Glenn Straub,
ending nearly 10 months of contentious legal combat for control of
the Atlantic City, N.J., resort.
USI INC: Moody's Affirms 'B3' Corporate Family Rating
-----------------------------------------------------
Moody's Investors Service has affirmed the B3 corporate family
rating and the B3-PD probability of default rating of USI, Inc.
following the company's announcement of plans to increase its
senior secured term loan by $230 million to approximately $1.4
billion. The company expects to use net proceeds from this
borrowing to pay a dividend to shareholders. Moody's has also
affirmed the B1 rating on USI's senior secured credit facilities
and the Caa2 rating on its senior unsecured notes. The rating
outlook for USI is stable.
RATINGS RATIONALE
"A debt-funded dividend to shareholders is credit negative," said
Bruce Ballentine, Moody's lead analyst for USI, "but USI has
demonstrated its ability to reduce financial leverage, and we
expect leverage to come down in the year ahead."
Moody's said USI's ratings reflect its favorable market position,
good balance of property & casualty and employee benefits business,
and healthy free cash flow. These strengths are offset by the
company's aggressive financial leverage and weak interest coverage
in recent years, exacerbated by acquisitions. Like other insurance
brokers, USI is also exposed to liabilities arising from errors and
omissions.
USI's largest acquisition to date consisted of 40 insurance
brokerage and consulting offices purchased from Wells Fargo during
2014 for upfront cash of $133 million, funded mainly by debt. Given
the challenge of transitioning Wells Fargo employees from their
many former locations to USI's offices and operating systems, this
acquisition has involved significant ongoing costs, constraining
USI's EBITDA growth.
Moody's estimates that USI's debt-to-EBITDA ratio will increase to
just over 8x following the proposed $230 million add-on to its term
loan. The rating agency expects the company to reduce its leverage
below 8x over the next 12 months through organic growth, earnings
from recent acquisitions, and a decline in costs related to the
Well Fargo acquisition.
Factors that could lead to an upgrade of USI's ratings include: (i)
debt-to-EBITDA ratio below 5.5x, (ii) (EBITDA -- capex) coverage of
interest exceeding 2x, and (iii) free-cash-flow-to-debt ratio
consistently exceeding 5%.
Factors that could lead to a rating downgrade include: (i)
debt-to-EBITDA ratio remaining above 8x, (ii) (EBITDA -- capex)
coverage of interest below 1.2x, or (iii) free-cash-flow-to-debt
ratio below 2%.
Moody's has affirmed the following ratings and loss given default
(LGD) assessments:
Corporate family rating B3;
Probability of default rating B3-PD;
$150 million senior secured revolving credit facility maturing
December 2017 rated B1 (LGD3);
$1.4 billion (including $230 million add-on) senior secured term
loan maturing December 2019 rated B1 (LGD3);
$630 million senior unsecured notes due January 2021 rated Caa2
(LGD5).
Based in Valhalla, New York, USI is a major US insurance broker,
distributing property & casualty insurance and employee benefits
products and services to small and mid-sized businesses across the
country. The company generated total revenue of $528 million in the
first half of 2015. Stockholder's equity was $594 million as of
June 30, 2015.
YONKERS RACING: Moody's Cuts Corporate Family Rating to 'B2'
------------------------------------------------------------
Moody's Investors Service downgraded Yonkers Racing Corporation's
Corporate Family Rating to B2, its Probability of Default Rating to
B2-PD, and the rating on its $70 million second lien term loan due
2020 to Caa1. At the same time, Moody's affirmed the Ba3 rating on
the company's $230 million first lien term loan due 2019. The
rating outlook was changed to stable from negative.
Ratings downgraded:
Corporate Family Rating to B2 from B1
Probability of Default Rating to B2-PD from B1-PD
$70 million second lien term loan due 2020 to Caa1 (LGD4) from B3
(LGD4)
Ratings affirmed:
$230 million (outstanding) first lien term loan due 2019 at Ba3
(LGD2)
RATINGS RATIONALE
The downgrade reflects Moody's expectation that despite recent
improvements in monthly gaming revenue and earnings, Yonkers pace
of deleveraging will not be sufficient to lower debt/EBITDA to
materially below 5.0x by the end of 2016 -- a level more in line
with a B1 Corporate Family Rating. Yonkers' debt/EBITDA of 5.8x for
the last 12 month period ended June 30, 2015 -- down from almost
7.0x for the LTM period a year earlier -- is still high relative to
B2 rated peers. Despite the strong demographics in the New York
City gaming market, characterized as having a high adult population
per gaming position and limited competition, Yonkers' leverage has
been outside of the range considered appropriate for a B1 rating
since its fiscal year ended 2013 -- more than a year after the
opening of Resorts World. Resorts World opened in late 2011 and has
maintained an approximate 60% market share for the past 3 years.
The B2 Corporate Family Rating also reflects the company's lack of
geographic diversification -- the company relies on one casino for
all of its earnings and cash flow -- its small size in terms of
revenue and earnings compared to similarly rated peers, and its
high leverage. Positive rating consideration is given to the lack
of new competition expected for at least four years in the New York
City gaming market, the potential introduction of electronic
blackjack in the next year, and the improved US gaming industry
outlook now deemed stable by Moody's. Moody's revised its US gaming
industry sector outlook (ISO) to stable from negative on July 14.
The stable rating outlook reflects Yonkers' good liquidity, our
expectation that its free cash flow will be used for absolute debt
reduction and that its gaming revenue will continue to grow at a
modest pace.
Pursuant to Moody's Loss Given Default methodology, the ratings of
Yonkers' $230 million first lien term loan is rated two notches
above the Corporate Family Rating reflecting the support that debt
receives from the $70 million second lien term loan. The rating of
the second lien term loan is rated two notches below the Corporate
Family Rating reflecting the significant level of senior ranking
first lien secured debt.
The ratings could be downgraded if debt to EBITDA exceeds 6.0 times
and/or EBIT to interest is well below 1.5 times over the next 12 to
18 months. Weakening of the company's liquidity profile could also
pressure the ratings. A ratings upgrade would require debt/EBITDA
approaching 4.5 times and EBIT/interest maintained above 2.5
times.
Yonkers Racing Corporation owns and operates a gaming and
entertainment facility comprised of Empire City Casino -- a 140,000
square-foot casino featuring over 5,000 gaming positions (including
slot machines and electronic table games) -- and Yonkers Raceway --
a harness race track featuring pari-mutuel wagering on live and
simulcast horse races. The facility, which is located in Yonkers,
New York, is owned and operated by the Rooney family of Pittsburgh.
Yonkers is a private company and does not disclose detailed
financial information to the public. The company currently
generates annual net revenue of about $206 million.
*********
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.
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Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
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than a balance sheet solvency test.
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The Sunday TCR delivers securitization rating news from the week
then-ending.
*********
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