/raid1/www/Hosts/bankrupt/TCR_Public/181130.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, November 30, 2018, Vol. 22, No. 333
Headlines
47 HOPS: Trustee Seeks to Hire Southwell & O'Rourke as Counsel
A&K ENERGY: Tracey-Correia Buying Personal Property for $2,000
ACE CASH: S&P Alters Outlook to Positive & Affirms 'B-' ICR
ADVANCED SPORTS: Hires D. A. Davidson as Investment Banker
ADVANCED SPORTS: Hires Kurtzman Carson as Claims Agent
AEGEAN MARINE: Hires Epiq as Administrative Advisor
AESTHETIC DENTISTRY: Seeks to Hire Aldhizer & Weaver as Counsel
ALL AMERICAN OIL: Taps Dykema Gossett as Legal Counsel
ALPHATEC HOLDINGS: Amends Prospectus on $50MM Securities Sale
AMYRIS INC: DSM International Has 24.9% Stake as of Nov. 19
APOLLO INFRA: Moody's Rates $310MM Secured Credit Facilities 'Ba2'
BCP RENAISSANCE: Fitch Affirms BB+ Rating on Sr. Sec. Debt
BLUE RACER: Fitch Assigns BB- LT IDR, Outlook Stable
BOMBARDIER INC: Fitch Lowers Longterm IDR to B-, Outlook Stable
BREVARD COLLEGE: Fitch Affirms BB- Rating on $6.87MM Bonds
C&D TECHNOLOGIES: Moody's Assigns B3 CFR, Outlook Stable
CAESARS ENTERTAINMENT: S&P Revises Outlook to Stable
CAFE HOLDINGS: U.S. Trustee Forms 5-Member Committee
CDW CORP: S&P Assigns 'BB+' Issuer Credit Rating, Outlook Stable
CENTENNIAL RESOURCE: S&P Assigns 'B+' ICR, Outlook Stable
CHAMP ACQUISITION: S&P Assigns 'B' ICR, Outlook Stable
COBB BEAUTY: Seeks to Hire Jones & Walden as Legal Counsel
EXPRESSWAY DELIVERIES: Seeks to Hire Friedman as Legal Counsel
FLOOR & DECOR: Moody's Alters Outlook on B1 CFR to Positive
FORASTERO INC: Court Denies Approval of Disclosure Statement
FR BR HOLDINGS: Fitch Assigns B- LT IDR, Outlook Stable
FRONTERA ENERGY: Fitch Alters Outlook on B+ LT IDR to Negative
GIGA-TRONICS INC: Sells $50,000 Worth of Preferred Stock
HOPEWELL PROMOTIONS: To Pay Secureds in Full Over 84 Mos. at 5.5%
I GOTCHA INC: Seeks to Hire Sheils Winnubst as Legal Counsel
INPIXON: Signs Deal to Extend Maturity of $371,600 Note
J.P. RENTALS: Seeks to Hire Bradshaw Fowler as Legal Counsel
JONES ENERGY: Moves Listing to OTCQX
LATHAM POOL: Moody's Assigns B2 CFR, Outlook Stable
LATHAM POOL: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
LONGFIN CORP: Terminates All Six Directors
MERCER INTERNATIONAL: S&P Rates New US$350MM Sr. Unsec. Notes BB-
NORTHERN OIL: TRT Holdings Has 15.89% Stake as of Nov. 15
PARKPROVO LLC: Seeks to Hire Stoker & Swinton as Legal Counsel
PF RALSTON: S&P Affirms 'B-' Bond Rating, Off CreditWatch Negative
PLASKOLITE PPC: Moody's Assigns B2 CFR, Outlook Negative
PROTECTO HORSE: Jan. 14 Confirmation Hearing
RAGGED MOUNTAIN: Unsecured Claims Total $350K Under New Plan
RENNOVA HEALTH: Will Acquire Jellico Community Hospital, Tennessee
RENTPATH LLC: S&P Cuts Issuer Credit Rating to CCC+, Outlook Neg.
SG PROPERTY: Seeks to Hire Jeffrey M. Sherman as Legal Counsel
SOLBRIGHT GROUP: Formally Changes Name to Iota Communications
SOUTH CAROLINA EPISCOPAL: Fitch Rates Series 2017/2018A Bonds 'BB'
SOUTHCROSS ENERGY: Southcross Holdings Owns 72.4% of Common Units
ST. JUDE NURSING: Taps Grasl PLC as Legal Counsel
STARION ENERGY: Seeks to Hire Gellert Scali as Legal Counsel
SUMAR INTERNATIONAL: Seeks to Hire Fox Law as Legal Counsel
TSC SNOWDEN: Seeks to Hire David W. Cohen as Legal Counsel
VEROBLUE FARMS: Committee Seeks to Hire Nyemaster as Iowa Counsel
*********
47 HOPS: Trustee Seeks to Hire Southwell & O'Rourke as Counsel
--------------------------------------------------------------
Mel Codd, the Chapter 11 trustee for 47 Hops LLC, seeks approval
from the U.S. Bankruptcy Court for the Eastern District of
Washington to hire Southwell & O'Rourke, P.S. as his legal
counsel.
The firm will advise the trustee regarding his duties under the
Bankruptcy Code and will provide other legal services related to
its Chapter 11 case.
Kevin O'Rourke, Esq., and Dan O'Rourke, Esq., the attorneys who
will be representing the trustee, charge $350 per hour and $400 per
hour, respectively.
Southwell & O'Rourke neither holds nor represents any interest
adverse to the Debtor's bankruptcy estate, according to court
filings.
The firm can be reached through:
Kevin O'Rourke, Esq.
Southwell & O'Rourke, P.S.
421 W. Riverside Ave., suite 960
Spokane, WA 99201
Phone: 509-624-0159
Email: kevin@southwellorourke.com
About 47 Hops LLC
Based in Yakima, Washington, 47 Hops LLC -- https://47hops.com/ --
sells aroma and alpha hops to breweries in 38 countries around the
world.
47 Hops LLC sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Wash. Case No. 17-02440) on Aug. 11, 2017. In
the petition signed by Douglas MacKinnon, its president, the Debtor
disclosed $4.3 million in assets and $7.45 million in liabilities.
Judge Frank L. Kurtz presides over the case.
Catherine J Reny, Esq., and Nathan T. Riordan, Esq., at Wenokur
Riordan PLLC, serve as the Debtor's bankruptcy counsel.
The official committee of unsecured creditors tapped Cairncross &
Hempelmann, P.S., as counsel. Marcia A. Frey, the examiner
appointed in the Debtor's case, hired Hillis Clark Martin &
Peterson P.S., as counsel.
Mel R. Codd was appointed Chapter 11 trustee for the Debtor. The
trustee tapped Southwell & O'Rourke, P.S. as his legal counsel.
A&K ENERGY: Tracey-Correia Buying Personal Property for $2,000
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A & K Energy Conservation, Inc., asks the U.S. Bankruptcy Court for
the Middle District of Florida to authorize the sale of personal
property located at 1615 Lakes Parkway, Suite E, Lawrenceville,
Georgia to Lee Tracey-Correia for $2,000.
On Oct. 5, 2018, the Debtor sought permission to reject an
unexpired lease with Shaheen & Co. of non-residential real property
located at the Real Property. A hearing on the Rejection Motion is
scheduled for Dec. 20, 2018, at 3:30 p.m.
The Debtor has personal property, including office furniture and
industrial shelving in the Real Property. The Buyer has offered to
purchase the Personal Property for the sum of $2,000. The Debtor
has not received any other offers for the Personal Property, and
estimates that the cost to move the Personal Property is
approximately $2,000. The sale will be free of liens, claims, and
encumbrances.
PNC Bank, N.A. asserts a lien on all assets of the Debtor, however,
the Debtor believes that the Purchase Price represents the fair
market value of the property. With the consent of PNC, the sale
will be appropriately free and clear of encumbrances.
At the hearing on the Motion, the Debtor will ask that the Court
enters an order waiving the 14-day stay set forth in Rule 6004(h)
of the Federal Rules of Bankruptcy Procedure and allowing the
transaction to close immediately.
A copy of the pictures of the Personal Property attached to the
Motion is available for free at:
http://bankrupt.com/misc/A&K_Energy_422_Sales.pdf
The Creditor:
PNC BANK, N.A.
249 Fifth Ave.
Pittsburgh, PA 15222-2707
About A & K Energy Conservation, Inc.
A&K Energy Conservation, Inc. -- http://www.akenergy.com/-- offers
customized lighting solutions and energy management services,
including energy audits, lighting retrofits, rebate processing,
and
more.
A & K Energy Conservation filed a Chapter 11 petition (Bankr. M.D.
Fla. Case No. 17-03318) on April 19, 2017. William Maloney, chief
restructuring officer, signed the petition. The case is assigned
to Judge Catherine Peek McEwen. The Debtor is represented by Amy
Denton Harris, Esq., and Mark F Robens, Esq., at Stichter, Riedel,
Blain & Postler, P.A. The Debtor estimated assets and liabilities
between $1 million and $10 million.
The Debtor hired Bill Maloney of Bill Maloney Consulting, as chief
restructuring officer; and Wells Houser & Schatzel, P.A., as
certified public accountant.
ACE CASH: S&P Alters Outlook to Positive & Affirms 'B-' ICR
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S&P Global Ratings revised its outlook on ACE Cash Express Inc. to
positive from stable and affirmed its issuer credit rating at
'B-'.
S&P said, "At the same time, we also affirmed our 'B-' issue rating
on the company's senior secured notes due 2022. The recovery rating
on the notes remains unchanged at '3', indicating our expectation
of meaningful (55%) recovery in the event of default.
"Our positive outlook on ACE reflects our expectation of the
company transitioning its product offering to more installment
lending, sustaining existing operating profitability, leverage
remaining below 3.5x, and EBITDA interest coverage over 3.0x over
the next 12 months. The outlook revision also considers a lighter
stance from revised CFPB rules.
"We could raise the rating over the next 12 months if the firm
continues to transition toward longer-term installment loans over
short-term payday, leverage remains below 3.0x, and EBITDA interest
coverage is above 3.0x on a sustained basis.
"A downgrade is unlikely over the next 12 months. We could revise
the outlook to stable if we expect revised final CFPB rules will
lead to increased compliance costs, higher provisions, or decrease
origination volume. We could also revise the outlook if leverage
rises above 3.5x or if EBITDA interest coverage declines below 3.0x
on a sustained basis."
RATINGS LIST
Ratings Affirmed; CreditWatch/Outlook Action
To From
ACE Cash Express Inc.
Issuer Credit Rating B-/Positive/-- B-/Stable/--
Ratings Affirmed
ACE Cash Express Inc.
Senior Secured
Local Currency B-
Recovery Rating 3(55%)
ADVANCED SPORTS: Hires D. A. Davidson as Investment Banker
----------------------------------------------------------
Advanced Sports Enterprises, Inc. and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the Middle District of
North Carolina to hire D. A. Davidson & Co. as investment banker
for the debtors.
The professional services required of D. A. Davidson are:
a. assist the Debtors in the marketing and sale of the
business and assets by identifying, communicating and negotiating
with, and evaluating any offers submitted by potential buyers;
b. advise and assist the Debtors in preparing appropriate
documentation for pursuing a Transaction, and provide analysis and
advice in responding to and negotiating the form, structure, terms
and price of any proposed Transaction;
c. assist with all aspects of any Auction consistent with any
court approved Bid Procedures, including but not limited to
evaluating bids and the desirability of designating one or more
bids as "stalking-horse" bids;
d. perform related services as may be necessary to maximize
the proceeds arising out of any sale of the business and/or assets
as requested by the Debtors.
Compensation for D. A. Davidson are:
a. a Success Fee equal to $1,150,000, plus additional amounts
if the Aggregate Consideration exceeds $75 million and less
$100,000 credit for prepetition retainer payments;
b. a Restructing Fee equal to $300,000; and
c. Reimbursement of actual and necessart out-of-pocket
expenses, including, but not limited to, attorney fees.
Michael Smith, managing director of D. A. Davidson & Co., attests
that his firm represents or holds no interest adverse to the
interest of the estates with respect to the matters on which it is
to be employed, and is disinterested as that term is defined in 11
U.S.C. Sec. 101(14).
The firm can be reached at:
Michael Smith
D. A. Davidson & Co.
701 5th Avenue, Suite 4050
Seattle, WA 98104
Phone:(206) 903-8679
Fax: (206) 389-8023
Email: MSmith@dadco.com
About Advanced Sports Enterprises Inc.
Advanced Sports Enterprises, Inc. designs, manufactures and sells
bicycles and related goods and accessories.
Advanced Sports, Inc. is a wholesale seller of bicycles and
accessories. ASI owns the following bicycle brands and is
responsible for their design manufacture and worldwide
distributions: Fuji, Kestrel, SE Bikes, Breezer, and Tuesday.
Performance Direct, Inc. designs, manufactures and sells bicycles
and related goods and accessories and operates a national
distribution of these goods under the Performance Bicycle brand
through an internet website business via the URL
www.performancebike.com.
Bitech, Inc. operates 104 retail stores across 20 states under the
Performance Bicycle brand related to the sale of bicycles and
related good and accessories. The businesses of Performance and
Bitech operate in conjunction with each other and they share a
number of services and a distribution warehouse.
Nashbar Direct, Inc. designs, manufactures and sells bicycles and
related goods and accessories under the Bike Nashbar brand through
an internet website business via the URL www.bikenashbar.com. The
businesses of Nashbar also operate in conjunction with Performance
and share services and a distribution warehouse.
Advanced Sports Enterprises and its affiliates sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. M.D. N.C. Lead Case
No. 18-80856) on Nov. 16, 2018. In the petitions signed by signed
by Patrick J. Cunnane, president, the Debtors disclosed their
assets and liabilities as follows:
* Advanced Sports Enterprises'
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
* Advanced Sports, Inc.'s
Estimated Assets: $100 million to $500 million
Estimated Liabilities: $50 million to $100 million
* Bitech, Inc.'s
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $50 million to $100 million
* Nashbar Direct's
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
* Performance Direct's
Estimated Assets: $50 million to $100 million
Estimated Liabilities: $100 million to $500 million
The cases have been assigned to Judge Benjamin A. Kahn.
The Debtors tapped Northen Blue, LLP and Flaster/Greenberg P.C. as
their bankruptcy counsel; D.A. Davison & Co. as investment banker;
Clear Thinking Group LLC as financial advisor; and Kurtzman Carson
Consultants LLC as claims, noticing and balloting agent.
ADVANCED SPORTS: Hires Kurtzman Carson as Claims Agent
------------------------------------------------------
Advanced Sports Enterprises, Inc., and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the Middle District of
North Carolina to hire Kurtzman Carson Consultants LLC as claims,
noticing, and balloting agent
for the Debtors.
The firm will give notice of hearings and orders filed in these
chapter 11 cases, the meeting of creditors pursuant to Section 341
of the Bankruptcy Code and claims bar dates; and provide
record-keeping and claims-docketing assistance.
KCC received a retainer in the amount of $30,000.
Evan Gershbein, Senior Vice President of Corporate Restructuring
Services of Kurtzman Carson Consultants LLC, assures the Court that
KCC is a "disinterested person" as that term is defined in Section
101(14) of the Bankruptcy Code, as modified by Section 1107(b) of
the Bankruptcy Code.
The firm can be reached through:
Evan Gershbein
Kurtzman Carson Consultants LLC
2335 Alaska Ave.
El Segundo, CA 90245
Tel: (310) 823-9000
Fax: (3l0) 823-9133
About Advanced Sports Enterprises Inc.
Advanced Sports Enterprises, Inc. designs, manufactures and sells
bicycles and related goods and accessories.
Advanced Sports, Inc. is a wholesale seller of bicycles and
accessories. ASI owns the following bicycle brands and is
responsible for their design manufacture and worldwide
distributions: Fuji, Kestrel, SE Bikes, Breezer, and Tuesday.
Performance Direct, Inc. designs, manufactures and sells bicycles
and related goods and accessories and operates a national
distribution of these goods under the Performance Bicycle brand
through an internet website business via the URL
www.performancebike.com.
Bitech, Inc. operates 104 retail stores across 20 states under the
Performance Bicycle brand related to the sale of bicycles and
related good and accessories. The businesses of Performance and
Bitech operate in conjunction with each other and they share a
number of services and a distribution warehouse.
Nashbar Direct, Inc. designs, manufactures and sells bicycles and
related goods and accessories under the Bike Nashbar brand through
an internet website business via the URL www.bikenashbar.com. The
businesses of Nashbar also operate in conjunction with Performance
and share services and a distribution warehouse.
Advanced Sports Enterprises and its affiliates sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. M.D. N.C. Lead Case
No. 18-80856) on Nov. 16, 2018. In the petitions signed by signed
by Patrick J. Cunnane, president, the Debtors disclosed their
assets and liabilities as follows:
* Advanced Sports Enterprises'
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
* Advanced Sports, Inc.'s
Estimated Assets: $100 million to $500 million
Estimated Liabilities: $50 million to $100 million
* Bitech, Inc.'s
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $50 million to $100 million
* Nashbar Direct's
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
* Performance Direct's
Estimated Assets: $50 million to $100 million
Estimated Liabilities: $100 million to $500 million
The cases have been assigned to Judge Benjamin A. Kahn.
The Debtors tapped Northen Blue, LLP and Flaster/Greenberg P.C. as
their bankruptcy counsel; D.A. Davison & Co. as investment banker;
Clear Thinking Group LLC as financial advisor; and Kurtzman Carson
Consultants LLC as claims, noticing and balloting agent.
AEGEAN MARINE: Hires Epiq as Administrative Advisor
---------------------------------------------------
Aegean Marine Petroleum Network Inc. and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the Southern District
of New York to hire Epiq Corporate Restructuring, LLC, as
administrative advisor to the Debtors.
The Debtors require Epiq to:
(a) assist with, among other things, solicitation, balloting,
and tabulation of votes, and preparing any related reports, as
required in support of confirmation of a chapter 11 plan, and in
connection with such services, process requests for documents from
parties in interest, including, if applicable, brokerage firms,
bank back-offices, and institutional holders;
(b) prepare an official ballot certification and testifying,
if necessary, in support of the ballot tabulation results;
(c) assist with the preparation of the Debtors' schedules of
assets and liabilities and statements of financial affairs and
gathering data in connection therewith;
(d) manage and coordinate any distributions pursuant to a
chapter 11 plan;
(e) generate, provide and assist, if necessary, with claims
reports, claims objections, exhibits, claims reconciliation, and
related matters; and
(f) provide such other claims processing, noticing,
solicitation, balloting, distributions, and other administrative
services described in the Engagement Agreement, but not included in
the Section 156(c) Application, as may be requested from time to
time by the Debtors, the Court, or the Clerk of the Court.
Epiq will charge these hourly rates:
Clerical/Administrative Support $25.00 – $45.00
IT / Programming $65.00 – $85.00
Case Managers $70.00 – $165.00
Consultants/ Directors/Vice Presidents $160.00 – $190.00
Solicitation Consultant $190.00
Executive Vice President, Solicitation $215.00
Executives No Charge
Brian Karpuk, Director, Consulting Services of Epiq Corporate
Restructuring, LLC, 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.
Epiq can be reached at:
Brian Karpuk
EPIQ CORPORATE RESTRUCTURING, LLC
777 3rd Avenue, 12th Floor
New York, NY 10017
Tel: (212) 225-9200
About Aegean Marine Petroleum Network Inc.
Aegean Marine Petroleum Network Inc. -- http://www.ampni.com-- is
an international marine fuel logistics company that markets and
physically supplies refined marine fuel and lubricants to ships in
port and at sea. The Company procures product from various sources
(such as refineries, oil producers, and traders) and resells it to
a diverse group of customers across all major commercial shipping
sectors and leading cruise lines. Currently, Aegean has a global
presence in more than 30 markets and a team of professionals ready
to serve its customers wherever they are around the globe.
Aegean Marine Petroleum Network Inc., et. al., sought bankruptcy
protection on November 6, 2018 (Bankr. D. Del. Lead Case No. Case
No. 18-13374). The jointly administered cases are pending before
Judge Hon. Michael E. Wiles.
The petition was signed by Spyridon Fokas, general counsel and
secretary.
The Debtor has total estimated assets of $1 billion to $10 billion
and total estimated liabilities of $500 million to $1 billion.
The Debtors tapped Kirkland & Ellis International LLP as general
counsel; Moelis & Company as Financial Advisor; Ernst & Young LLP,
as restructuring advisor; Epiq Bankruptcy Solutions, LLC as claims
agent.
William K. Harrington, the U.S. Trustee for Region 2, on November
15, 2018, appointed three creditors to serve on the official
committee of unsecured creditors in the Chapter 11 cases of Aegean
Marine Petroleum Network Inc., et al. The Committee is represented
by Ira S. Dizengoff, Esq., Philip C. Dublin, Esq., and Kevin
Zuzolo, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York.
AESTHETIC DENTISTRY: Seeks to Hire Aldhizer & Weaver as Counsel
---------------------------------------------------------------
Aesthetic Dentistry of Charlottesville, P.C. seeks approval from
the U.S. Bankruptcy Court for the Western District of Virginia to
hire Wharton, Aldhizer & Weaver PLC as its legal counsel.
The firm will advise the Debtor regarding its duties under the
Bankruptcy Code; assist the Debtor in the preparation of a
bankruptcy plan; investigate claims filed against its estate; and
provide other legal services related to its Chapter 11 case.
Aldhizer's hourly rates range from $225 to $275 for attorneys, $295
to $400 for partners. Paralegals charge $110 per hour.
The principal attorneys and paralegal proposed to represent the
Debtor are:
Stephan Milo, Esq. $365 per hour
Lucas Pangle, Esq. $240 per hour
Philip Silling, Paralegal $110 per hour
Stephan Milo, Esq., at Aldhizer, disclosed in a court filing that
his firm is "disinterested" as defined in section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Stephan W. Milo, Esq.
Wharton, Aldhizer & Weaver PLC
100 S. Mason St.
Harrisonburg, VA 22801
Tel: 540-885-0199
Email: smilo@wawlaw.com
- or -
Stephan W. Milo, Esq.
Wharton, Aldhizer & Weaver PLC
The American Hotel
125 S. Augusta St., Suite 2000
Staunton, VA 24401
Tel: 540-885-0199
Email: smilo@wawlaw.com
About Aesthetic Dentistry of Charlottesville
Aesthetic Dentistry of Charlottesville, P.C. --
http://www.cvillesmiles.com– is owner and operator of a dental
clinic in Charlottesville, Virginia. The clinic specializes in
preventive, cosmetic, and restorative dentistry.
Aesthetic Dentistry of Charlottesville sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Va. Case No.
18-62306) on November 26, 2018. At the time of the filing, the
Debtor disclosed $1,588,405 in assets and $1,785,932 in
liabilities.
The case has been assigned to Judge Rebecca B. Connelly.
ALL AMERICAN OIL: Taps Dykema Gossett as Legal Counsel
------------------------------------------------------
All American Oil & Gas Incorporated received approval from the U.S.
Bankruptcy Court for the Western District of Texas to hire Dykema
Gossett PLLC.
The firm will represent the company and its affiliates in their
Chapter 11 cases as legal counsel. The services to be provided by
Dykema include advising the Debtors regarding bankruptcy,
regulatory, licensing, real estate, labor law and intellectual
property; and the prosecution of actions to protect their
bankruptcy estates.
The primary attorneys who will be handling the cases are:
Deborah Williamson Member $735
Patrick Huffstickler Member $565
Danielle Rushing Associate $330
Prior to the petition date, Dykema was paid $92,907.70 in fees and
"wrote-off" or discounted the amount due by $6,850.80. The firm
was also reimbursed $7,092.30 in expenses, including $5,151 in
filing fees. Dykema retains a retainer in the amount of $250,000.
Deborah Williamson, Esq., at Dykema, disclosed in a court filing
that she and her firm are "disinterested" as defined in section
101(14) of the Bankruptcy Code.
The firm can be reached through:
Deborah D. Williamson, Esq.
Dykema Gossett PLLC
Patrick L. Huffstickler, Esq.
Danielle N. Rushing, Esq.
112 East Pecan Street, Suite 1800
San Antonio, TX 78205
Phone: (210) 554-5500
Fax: (210) 226-8395
Email: dwilliamson@dykema.com
Email: phuffstickler@dykema.com
Email: drushing@dykema.com
About All American Oil & Gas Inc.
All American Oil & Gas Inc. -- https://www.aaoginc.com -- is an
independent oil company headquartered in San Antonio, Texas. It
holds and provides shared administrative and accounting services to
its two wholly-owned subsidiaries Kern River Holdings Inc. and
Western Power & Steam, Inc.
KRH is an exploration and production company that utilizes a
state-of-the-art steam flood to extract oil within a 215-acre
leasehold, with 110 acres currently under steam flood, in the Kern
River Oil Field. WPS is a power company that operates a
20-megawatt cogeneration facility, which -- in addition to selling
power to Pacific Gas & Electric -- provides KRH with both
electricity and steam (generated from waste heat) to aid its
extraction of oil.
All American Oil & Gas sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Texas Lead Case No. 18-52693) on
November 12, 2018. At the time of the filing, the Debtors had
estimated assets of $100 million to $500 million and liabilities of
$100 million to $500 million.
The cases have been assigned to Judge Ronald B. King.
The Debtors tapped Dykema Gossett PLLC and Hogan Lovells US, LLP as
legal counsel; Houlihan Lokey as financial advisor; and BMC Group,
Inc. as notice, claims and balloting agent.
ALPHATEC HOLDINGS: Amends Prospectus on $50MM Securities Sale
-------------------------------------------------------------
Alphatec Holdings, Inc. has amended its Form S-3 registration
statement in connection with the proposed sale of up to $50,000,000
in the aggregate of common stock, preferred stock, debt securities,
warrants, and units. Additionally, certain selling stockholders
may offer and sell from time to time, in one or more transactions,
up to an aggregate of 845,000 shares of the Company's common stock,
consisting of shares of its common stock issuable upon the exercise
of certain warrants held by the selling stockholders.
The Company and any selling stockholders may offer and sell the
securities and any prospectus supplement to or through one or more
underwriters, dealers and agents, or directly to purchasers, or
through a combination of these methods. If any underwriters,
dealers or agents are involved in the sale of any of the
securities, their names and any applicable purchase price, fee,
commission or discount arrangement between or among them will be
set forth, or will be calculable from the information set forth, in
the applicable prospectus supplement.
The Company's common stock is listed on The NASDAQ Global Select
Market under the symbol "ATEC." On Nov. 12, 2018, the last
reported sale price of the Company's common stock on The NASDAQ
Global Select Market was $2.99 per share.
A full-text copy of the Form S-1/A as filed with the Securities and
Exchange Commission is available for free at:
https://is.gd/wEjOJh
About Alphatec Holdings
Carlsbad, California-based Alphatec Holdings, Inc., through its
wholly owned subsidiaries, Alphatec Spine, Inc. and SafeOp
Surgical, Inc., is a medical device company that designs, develops,
and markets technology for the treatment of spinal disorders
associated with disease and degeneration, congenital deformities,
and trauma. The Company's mission is to improve lives by providing
innovative spine surgery solutions through the relentless pursuit
of superior outcomes. The Company markets its products in the U.S.
via independent sales agents and a direct sales force.
Alphatec incurred a net loss of $2.29 million in 2017 following a
net loss of $29.92 million in 2016. As of Sept. 30, 2018, the
Company had $131.46 million in total assets, $33.14 million in
total current liabilities, $34.28 million in long-term debt, $16.22
million in other long-term liabilities, $23.60 million in
redeemable preferred stock, and $24.21 million in total
stockholders' equity.
AMYRIS INC: DSM International Has 24.9% Stake as of Nov. 19
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DSM International B.V. and Koninklijke DSM N.V. disclosed in a
Schedule 13D/A filed with the Securities and Exchange Commission
that as of Nov. 19, 2018, they beneficially own 20,943,585 shares
of common stock of Amyris, Inc., representing 24.9 percent of the
shares outstanding. DSM International is a wholly owned subsidiary
of Koninklijke DSM N.V., which is a publicly traded company with
securities listed on the Amsterdam Stock Exchange. Accordingly,
Koninklijke DSM N.V. may be deemed to share beneficial ownership of
the securities held of record by DSM International.
Amyris issued 1,643,991 shares of Common Stock to DSM International
on Nov. 20, 2018 as consideration for certain agreements of DSM
Nutritional Products AG. In addition, on Nov. 19, 2018, DSM
International (i) exercised the anti-dilution warrants issued
pursuant to the Securities Purchase Agreement dated as of May 8,
2017 in exchange for 964,837 shares of Common Stock at a price per
share of $0.0015 and (ii) exercised the anti-dilution warrants
issued pursuant to the Securities Purchase Agreement dated as of
Aug. 2, 2017 in exchange for 1,713,565 shares of Common Stock at a
price per share of $0.0001. The exercise price for the Tranche I
Anti-Dilution Warrants and the Tranche II Anti-Dilution Warrants
was paid from the operating funds of DSM International.
A full-text copy of the regulatory filing is available for free
at:
https://is.gd/s9eTDp
About Amyris, Inc.
Amyris, Inc., Emeryville, California, is an industrial
biotechnology company that applies its technology platform to
engineer, manufacture and sell natural, sustainably sourced
products into the health & wellness, clean skincare, and flavors &
fragrances markets. The Company's proven technology platform
enables the Company to rapidly engineer microbes and use them as
catalysts to metabolize renewable, plant-sourced sugars into large
volume, high-value ingredients. The Company's biotechnology
platform and industrial fermentation process replace existing
complex and expensive manufacturing processes. The Company has
successfully used its technology to develop and produce five
distinct molecules at commercial volumes.
The report from the Company's independent accounting firm KPMG LLP,
the Company's auditor since 2017, on the consolidated financial
statements for the year ended Dec. 31, 2017, includes an
explanatory paragraph stating that the Company has suffered
recurring losses from operations and has current debt service
requirements that raise substantial doubt about its ability to
continue as a going concern.
Amyris incurred net losses of $72.32 million in 2017, $97.33
million in 2016 and $217.95 million in 2016. As of Sept. 30, 2018,
Amyris had $122.68 million in total assets, $323.27 million in
total liabilities, $5 million in contingently redeemable common
stock, and a total stockholders' deficit of $205.59 million.
APOLLO INFRA: Moody's Rates $310MM Secured Credit Facilities 'Ba2'
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Moody's Investors Service assigned a first time Ba2 rating to a
$275 million senior secured term loan due 2025 and a $35 million
senior secured revolving credit facility due 2023 proposed to be
issued by Apollo Infra Equity US Holdco, LLC. The rating outlook is
stable.
On October 5, 2018, Apollo Infra Equity US Intermediate, LLC, the
US parent guarantor of the borrower, and the UK parent guarantor
entered into a purchase and sale agreement with GE Capital Global
Holdings, LLC to acquire an interest in certain equity interests
and/or assets owned by the seller. The portfolio includes 12
projects in the US -- 4 renewables assets, 4 midstream assets, and
4 assets in the natural gas facilities sector; the borrower will
also benefit from guarantees from a UK offshore holding company
that holds interest in 4 Indian renewables projects and 2 Irish
wind farm projects. 16 of the 18 projects are in operations.
The proceeds of the $275 million term loan together with around
$619 million in equity will be used to finance the acquisition of
the portfolio.
The assigned rating assumes that the final documentation for the
senior secured credit facilities will not be materially different
from the reviewed draft term loan documentation and that the
transaction will close as expected by year-end 2018.
RATINGS RATIONALE
The Ba2 senior secured rating benefits from the diversity of the
portfolio across different assets types in the power and energy
sector, across investment types as well as across geographies. The
portfolio consists of interests in 4 US renewables assets, 4 US
midstream assets and 4 US natural gas fired power plants and
benefits from guarantees from the UK offshore holding company that
holds interests in 4 Indian renewables projects and 2 Irish wind
farm projects. 16 of the 18 projects are in operations and 15 of
the 18 assets benefit from purchase power agreements (PPAs) or
minimum volume commitments (MVCs) with various maturities and
mostly creditworthy offtakers. The borrower's ability to service
its debt relies on annual distributions from its interest in these
assets and the top six contracted assets are expected to contribute
more than 60% of the cash flow during the term of the term loan.
Moody's also considers positively the substantial equity
contribution to the project (debt/book capitalization at closing of
31%), the limited financial leverage at the holding company level
on an un-consolidated basis (4.2x debt/cash flow available for debt
service at closing based on a run-rate 2019 CFADS of $65 million)
and the revolving credit facility which provides liquidity at the
holding company level.
Operating costs at the borrower level (holding company level) are
assumed to be minimal as the borrower will benefit from Apollo's
existing resources and technology to manage this portfolio of 18
assets.
The rating is constrained by the limited project finance
protections of the transaction at the borrower level given that
lenders will not benefit from material tangible asset collateral or
PPA contract security of the operating companies, there is the
potential for additional indebtedness under the senior secured
credit facilities, the lenient maintenance financial covenant of
1.1x debt service coverage ratio, a weak excess cash flow sweep
resulting its belief that minimal debt reduction will occur until
maturity of the term loan in 2025, and no debt service reserve or
major maintenance reserve fund requirements. It also considers the
structural subordination of Apollo's equity interests to lenders at
operating company level because 9 of the 18 assets have debt
outstanding at operating company level that is senior to Apollo's
investment . There is also the potential that operating debt at
operating level could increase and thereby, reduce future
distributions to the borrower.
Other constraining factors include the limited track record of
Apollo in managing its interest in these assets, which is partially
mitigated by certain key personnel that are expected to be
transferred from GE, the limited information on operating and
financial history of certain assets that have just started
operations or are expected to start operations in the next 12
months including an Irish renewable asset, thermal assets Fairview
and Lackawanna (two Lackawanna units are already operational), as
well exposure to certain Indian renewables with less creditworthy
counterparties and lower prospects for future distributions.
Liquidity Profile
Apollo Infra's liquidity profile will mostly benefit from access to
the $35 million 5-year senior secured revolving credit facility and
the $50 million super senior letter of credit facility. Outstanding
letters of credit are expected to be around $63 million. Liquidity
also benefits from $75 million of committed but undrawn fund
liquidity which is available at the holding company level if needed
according to Apollo.
The portfolio does not benefit from material amounts of cash on the
balance sheet at financial close or a debt service reserve account
or major maintenance reserve account, which is usually typical for
project finance transactions. Moody's currently expects that the
borrower will likely not hold material amounts of cash on the
balance sheet going forward but will distribute available cash to
its investors. However, Moody's does expect that the Apollo Infra
will hold sufficient amounts of cash on balance sheet as a cushion
against unforeseen liquidity events.
Structural Considerations
The senior facilities lenders as well as any future hedging or cash
management arrangements will be secured on a perfected first
priority basis by all equity interest of the borrowers and
subsidiary guarantors directly held by any parent guarantor, by all
equity interest directly held by the borrower or any subsidiary
guarantor as well as by all material owned tangible and intangible
assets of each borrower and each subsidiary guarantors. Moody's
notes that the interest in most of the 18 assets is in the form of
common or preferred equity and therefore access to tangible assets
as collateral is limited.
The debt structure will also include a $50 million 364 --day super
senior letter of credit facility which will rank ahead of the $275
million 7-year senior secured term loan and the $35 million 5-year
revolving credit facility. Outstanding letters of credit are
expected to be around $63 million for year one, and around $13
million thereafter.
Lenders will benefit from a fairly lenient 1.1x maintenance debt
service coverage ratio (DSCR) requirement, which is tested
quarterly and an excess cash flow sweep which is not triggered
under management's base case. Given the 1% amortization schedule of
the term loan, most of the $275 million term loan would need to be
refinanced at maturity.
The cash flow sweep includes a contracted cash flow sweep which
guarantees that a ratio of contracted cash flow to total debt ratio
on a pro-forma basis is at least 2.5x in first year, 2.25x after
the second anniversary of the closing date, and 2.00x after third
anniversary of the closing date. Second, the cash flow sweep also
requires that 75% of excess cash flow is swept if the ratio of all
funded debt to cash flow available for debt service (total leverage
ratio) is greater than 5x, 50% if total leverage ratio is less than
or equal to 5x, 25% if total leverage ratio is less than or equal
to 4.5x after the first anniversary from closing, and 0% if total
leverage ratio is less than or equal to 4.5x before the first
anniversary of service and 4.0x afterwards. In its view, given the
pro-forma nature of the text, there is a fair degree of latitude
afforded to the issuer in meeting these tests, which limit their
effectiveness under most situations as a de-leveraging tool.
Lenders will not benefit from a debt service reserve account or
major maintenance reserve account. The term loan also allows for
the issuance of additional debt under certain consideration without
requiring a rating affirmation.
Rating Outlook
The stable rating outlook assumes that Apollo will establish a
solid track record in managing its interests in this portfolio of
18 projects and that the borrower will generate a run-rate 2019
cash flow available for debt service (CFADS) of $65 million with
further improvements in the following year, supporting CFO/debt of
around 20% and a DSCR of around 3.00x. Moody's also expects that
the borrower will maintain a solid liquidity cushion on the balance
sheet.
Factors that could lead to an upgrade
The rating could be upgraded if
- there is significantly higher recurring cash flow generation
than anticipated on a sustained basis, resulting in a
non-consolidated DSCR of around 4.0x, CFO/debt of 25%
- A solid liquidity cushion on the balance sheet in addition to
the available $35 million revolving credit facility
Factors that could lead to a downgrade
Downward rating pressure could arise if:
- Annual cash flow distributions from contracted portfolio assets
falls below $65 million on a sustainable period
- Material increases in debt or operational issues at the
operating project level which reduces the prospects for future
expected distributions to the borrower
- Failure to reduce debt/CFDAS to below 3.5x in the next 18-24
months and CFO/debt below 15%
- Failure to maintain an adequate liquidity cushion to cover
operating costs and debt service at borrower level
Issuer Profile
Apollo Infra Equity US Holdco, LLC is a newly created intermediate
holding company and borrower of the senior secured facilities.
Apollo Infra Equity US Intermediate, LLC, the US parent guarantor
of the borrower, and the UK parent guarantor have entered into a
purchase and sale agreement with GE Capital Global Holdings, LLC to
acquire an interest in a portfolio consisting of four US renewable
assets (Arlington Valley, Osage, Sun Power and Tawhiri), four US
midstream assets (Crestwood Jackalope, MOH Holdings, Pipeline
Funding Company, Joliet Bulk, Barge and Rail), four US natural gas
facilities (Caledonia, Lackawanna, Russell City, Fairview), two
Irish wind farm projects (Tullahennel, Derrysallagh) and interests
in four Indian renewable projects (Aspari, Ecoren, RattanIndia
Solar and WPA Clean Energy). The Derrysallagh and the Farview
projects are still under construction. While there are six
investments that are majority owned common equity investments or to
which Apollo has provided a loan, the majority of the holding
company's interests are minority interests in the form of common
equity or preferred equity.
The portfolio is expected to generate an average free cash flow of
around $82 million during the period 2019-2025 excluding one-time
repayments under management's base case and a run-rate free cash
flow of $65 million in 2019.
METHODOLOGY
The principal methodology used in these ratings was Power
Generation Projects published in June 2018.
BCP RENAISSANCE: Fitch Affirms BB+ Rating on Sr. Sec. Debt
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Fitch Ratings has affirmed the debt rating and recovery rating on
the senior secured debt issued by BCP Renaissance Parent, LLC at
BB+.
RATING RATIONALE
The affirmations reflects the completion of the Rover pipeline
construction, start-up operations to provide natural gas
transportation to several natural gas shippers under long-term
contracts, reliance on about one-half of cash flow from weak credit
quality shipping counterparties, and significant refinance risk in
2024.
KEY RATING DRIVERS
Contracted Revenues, Weak Counterparties: Revenue risk primarily
reflects the sub-investment grade credit quality of the shipper
counterparties, with revenues split almost evenly between shippers
rated at or above the 'BB' rating level and those that are rated
either below the 'BB' rating level or not rated by Fitch. The
pricing structure of the take-or-pay agreements provides revenue
stability so long as the shippers remain solvent. In the event that
a shipper is unable to meet its commitments, Rover would be forced
to remarket capacity at prevailing market rates, which may
demonstrate high volatility. The potential for a longer-term
reduction in demand and the prospect of competing pipeline
development could put downward pressure on the pricing of any
remarketed capacity.
First Mover, Strong Economics: Fitch believes Rover should be able
to remarket capacity based on the fundamental economics of the
Marcellus and Utica shale production regions, particularly in the
near to medium term when Rover represents one of the only available
transportation options for the contracted shippers. Rover provides
shippers with access to multiple regions of steady industrial
demand and gas storage locations such that shipper netbacks would
improve considerably versus local markets which are oversupplied
due to a lack of takeaway capacity. The competitive position of
Rover should support full utilization of the pipeline system going
forward, even if pricing is lower than originally contracted
following any potential shipper bankruptcy.
Stable Expected Operating Profile: Operation risk is generally low
based on the favorable evaluation of the independent expert, the
non-complex nature of the asset, the use of conventional
technology, and the operator's extensive experience. Tempering the
otherwise low-risk operating profile is the green-field nature of
the pipeline system and the lack of risk transfer from the Rover
operating company to third parties.
High Leverage, Refinancing Risk: BCP's debt structure includes
initially high leverage, variable interest rate risk, and
refinancing risk. The term loans employ a partially amortizing
structure that triggers a balloon payment at maturity, and BCP's
ability to refinance will be dependent upon the efficacy of a cash
sweep. Financial metrics are generally robust during the seven-year
tenor of the term loans and BCP's project life coverage ratio
(PLCR) through Sept. 30, 2037 exceeds 1x with some cushion under
rating case assumptions. The structural subordination of BCP's
indebtedness is low due to lack of distribution covenants at the
Rover operating company in conjunction with restrictions on
additional indebtedness and capital expenditure activity.
Financial Profile
DSCRs average 1.34x under rating case conditions during the tenor
of the term loans but average more than 2.0x in the
post-refinancing period, reflecting the benefit of the flexible
repayment profile and the long-term value of Rover's contracts.
Leverage starts out high at 10.5x but falls to 7.7x in 2024.
Leverage falls below 4.0x by 2031 based on Fitch's assumption that
debt at maturity is refinanced in a similar structure.
PEER GROUP
Fitch has assigned investment-grade ratings to comparable pipeline
systems, such as Midcontinent Express Pipeline, LLC
(BBB-/Negative), Ruby Pipeline LLC (BBB-/Stable), and Rockies
Express Pipeline, LLC (BBB-/Stable). BCP's initial leverage exceeds
10x, which is considerably weaker than the leverage under 4x
exhibited by these higher rated peers that also generally have a
stronger mix of shipper counterparties and also higher exposure to
take-or-pay contracts roll-off in the next two years. Additionally,
debt at the peer pipelines is directly at the operating level.
Fitch recognizes the potential for BCP to rapidly de-lever under
the term loans, suggesting that BCP has the capacity to improve the
capital structure over time if economic conditions are favorable
and the shipper contracts remain in force.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead to
Negative Rating Action:
-- Increased exposure to merchant risk following a hypothetical
shipper bankruptcy, such that Rover is forced to remarket capacity
at lower-than-contracted pricing.
-- Adverse market conditions that interfere with BCP's ability to
meet target amortization levels and/or refinance the balloon
maturity in 2024, particularly if leverage exceeds 8x.
-- Additional indebtedness at Rover that is not offset by an
increase in revenue, such that cash distributions to BCP fall below
base case levels.
Future Developments That May, Individually or Collectively, Lead to
Positive Rating Action:
-- Financial performance that allows BCP to consistently meet
targeted amortization and reduce leverage below 5.0x.
-- Improvement in the credit quality of the shipper
counterparties to the 'BB' rating category, such that the
proportion of contracted revenue exceeds 75% of total projected
revenue.
TRANSACTION SUMMARY
BCP Renaissance Parent LLC is a special purpose company created to
finance and acquire a minority equity interest in the Rover
pipeline project, which consists of a greenfield 713-mile
interstate pipeline designed to transport 3.25 bcfd of natural gas.
The pipeline is primarily situated in northern Ohio, extending from
the Vector Pipeline interconnection in southeastern Michigan to
Ohio's eastern border, with laterals reaching into West Virginia
and Pennsylvania. The project has contracted 98% of the pipeline's
capacity with nine natural gas producers/shippers under long-term
take-or-pay agreements with 15-20-year terms. An affiliate of ETP
Legacy, LP (ETP) is operating the project.
The $1.25 billion senior secured term loan financed the sponsor's
acquisition of a 32.435% ownership interest in the Rover pipeline
from ETP, the previous majority owner. The proceeds of the
financing funded the acquisition payment, the sponsor's share of
construction costs, interest during construction, and the debt
service reserve.
CREDIT UPDATE
Construction is complete. Rover has completed all major phases of
the main pipeline and lateral works and is able to service all of
its long-haul shipping agreements. Rover continues to add new
laterals in various locations.
The credit agreement was amended in May 2018 to lower the BCP
credit facility interest rate spread by 0.5%, to 3.5%.
Marcellus and Utica production remains solid. The U.S. Energy
Information Agency reports that natural gas production in the
Marcellus increased 16% from September 2017 to September 2018.
Growth in the Utica basin over the same period was 28%. Part of
the reason for the increase is the growth in exports out of the
region by way of new pipeline capacity including Rover and other
new pipes. Given the glut of natural gas production in the
Marcellus, shippers on Rover and other new export pipes are able to
sell their volumes to higher price markets and improve their
netback position which supports increased production.
Rover's market impact is as expected. Market data indicate that
Rover has led to a narrowing of the natural gas price differential
between the Dominion South hub of the Marcellus - Rover's entry
area- and Henry Hub. The differential between other Marcellus hubs
and Henry Hub have not changed since export capacity from those
areas has not built out yet. Additionally, market data indicate
that natural gas volumes from the Marcellus into the Lebanon Hub
from established pipelines have declined significantly since Rover
began operations. These developments confirm Rover's first mover
advantage and currently help to mitigate risk of Rover losing a
weak shipping counterparty.
Considerable pipeline expansion is occurring in the region and more
is expected as long as Marcellus and Utica producers can realize
higher netbacks from remote markets. The more competition, the more
challenge for Rover to extend contracts, which could influence its
ability to refinance debt at maturity on favorable terms. Recent
start-ups include Nexus and Atlantic Sunrise.
Fitch requested but did not receive audited financial statements
for the Rover operating entity. However, Fitch did receive audited
financials for the issuer whose only assets are ownership in Rover,
as well as FERC filings for Rover with corroborating financial and
operating data, which in addition to other publicly available
information were sufficient to maintain ongoing monitoring of the
rating.
FINANCIAL ANALYSIS
Fitch Cases
In its base case, Fitch applies a 10% reduction to spot revenues
and all revenues associated with low speculative-grade shippers.
The reduction recognizes the potential for a shipper bankruptcy and
is approximately equivalent to the loss of all merchant revenues,
or the revenues associated with one of the speculative grade
shippers other than Ascent Utica. In 2024, Fitch assumes an
effective extension of the term facility and the cash sweep at an
all-in average interest rate of 8%. Debt service coverage ratios
(DSCRs) average 1.54x during the tenor of the term facility and
2.98x post-refinancing, as leverage declines to 6.2x in 2024 with a
PLCR of 1.4x.
BCP can absorb significant stress and remain above breakeven on
debt service coverage, including a 204% increase in operating and
maintenance (O&M) costs and a 64% decline in revenues from Ascent.
Fitch's rating case further sensitizes the base case assumptions
through a 10% increase in O&M costs, a further 5% decline in the
low-speculative grade revenue haircut, and another $50 million in
permitted debt. DSCRs average 1.34x during the tenor of the term
loans but average more than 2.0x in the post-refinancing period,
reflecting the benefit of the flexible repayment profile and the
long-term value of Rover's contracts. Leverage starts out high at
10.5x but falls to 7.7x in 2024. Leverage falls below 4.0x by
2031.
Recovery
Fitch referred to the Non-Financial Notching and Recovery Ratings
Criteria to assign a recovery rating of 'RR3' based on a
hypothetical default of the term loans. The instrument rating of
'BB-' was assigned independent of the recovery rating and does not
incorporate recovery prospects given a default. As such, the
instrument rating of the term loans is solely based upon the
methodology detailed in the Rating Criteria for Infrastructure and
Project Finance.
Fitch's recovery analysis assumes a default scenario in which a
combination of lower capacity prices and marketed volumes push
Rover's revenues 60% below sponsor case levels. The debt service
reserve would be depleted such that default occurs at the term
loans' maturity in 2024. The 60% reduction in revenues corresponds
to approximately $85.0 million per year of distributable cash flow
to BCP. This reduced level of cash flow is assumed to persist
indefinitely and represents BCP's EBITDA as a going concern in a
distressed market environment.
Fitch applied a multiple of 8x against the 'going concern' EBITDA
to calculate an enterprise value of $680.7 million for BCP. The
multiple reflects Fitch's internal views and a comparison to
transaction multiples for similar companies detailed in Fitch's
U.S. Leveraged Finance Multiple EV-aluator dated September 2017.
The Corporates group has applied bespoke recovery analyses for
midstream gas companies only in isolated instances, as ratings
within the sector only rarely fall below the 'BB' category. An
EBITDA multiple approach for a going concern was applied in each
case, and an EBITDA multiple of 8x appears reasonable for Rover
compared to the limited pool of peers.
The enterprise value is divided by the $1.19 billion of term loans
outstanding at default to calculate a recovery rate of 51%, which
falls within the 51% - 70% band of recovery rates that correspond
to the 'RR3' recovery rating. This level of recovery is described
as 'Good' on the recovery ratings scale.
BLUE RACER: Fitch Assigns BB- LT IDR, Outlook Stable
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Fitch Ratings has assigned Blue Racer Midstream, LLC a first-time
Long-Term Issuer Default Rating of 'BB-' and a senior unsecured
rating of 'BB-'/'RR4' to Blue Racer's senior unsecured notes due
2022 and 2026. These notes have been co-issued with Blue Racer
Finance Corp. Additionally, Fitch has assigned a 'BB+'/'RR1' senior
secured rating to Blue Racer's $1 billion senior secured revolving
credit facility. The Rating Outlook is Stable.
KEY RATING DRIVERS
Limited Scale and Scope: Blue Racer's ratings recognize the limited
scale and scope of the gathering and processing company. As an
Appalachian basin focused natural gas gathering and processing
operation with limited geographic and business line diversity, the
rating reflects the concern that Blue Racer could be exposed to
concentration risk and outsized event risk should there be a
downturn in commodity production from the Appalachian region where
Blue Racer's producers operate or a significant operating or
production event with one of its major counterparties. The ratings
favorably reflect that the assets are located within some of the
lowest breakeven costs gas production regions in the Appalachian
Basin and should continue to experience growth. Generally, Fitch
views small scale, single basin focused midstream service providers
with high geographic, customer, and business line concentration and
with EBITDA below $500 million as being consistent with 'B' to 'BB'
category IDRs dependent on contract structure, volumetric exposure,
and cash flow profile. Blue Racer's cash flow profile exhibits
relative stability, supported by a contracted volume stream with
365 MMCf/d of processing volumetric commitments, 235,000 dedicated
acres and 240 MMcf/d of first flow commitments.
Counterparty Exposure: The ratings recognize that Blue Racer is
significantly exposed to lower rated or unrated counterparties,
with 83% of revenue as of the 3Q2018 coming from 'B' category or
unrated producers. As such, counterparty and volumetric risks are
over-riding concerns.
Favorable Basin Fundamentals: Somewhat offsetting counterparty and
volumetric concerns are the favorable production dynamics of the
Appalachian basin where Blue Racer operates. Volume growth on Blue
Racer has been robust with 3Q2018 gathering, processing, and
fractionation and transportation volumes up 17%, 9%, and 18%,
respectively on a quarter over sequential quarter basis. Average
volumes for the 3Q2018 gathering, processing, and fractionation and
transportation were up 20%, 7%, and 16% over 3Q2017. Fitch expects
volume growth to continue supported by favorable breakeven
economics and as takeaway capacity in the region for natural gas
and NGLs continues to come online and increase netbacks for
producers.
Reasonable Credit Metrics: Blue Racer's credit metrics are
generally reasonable with Fitch forecasting leverage in 2018
through 2020 in the 4.5x to 5.0x range. Blue Racer's leverage, as
of Sept. 30, 2018, on an LTM basis, was 4.7x. This is better than
other single basin gathering and processing names in the 'B+' and
'BB-' IDR range that Fitch covers with single basin exposure, which
are generally newly created entities where operations, volumes and
cash flows are all in the process of ramping up in support of
production growth largely in the Permian basin. Fitch typically
looks for 'BB' median leverage for midstream service providers in
the 5.0x range, dependent on other factors including, but not
limited to, scale, diversity, business line (with gathering and
processing being on the higher risk end of the business risk
spectrum within midstream, and revenue and counterparty profile).
DERIVATION SUMMARY
The ratings reflect Blue Racer's relatively predictable cash flows,
reasonable credit metrics, and the benefits from the strategic
location of its midstream assets within the Appalachian basin (Rich
Utica, Rich Marcellus, and Dry Gas Utica). The ratings are
supported by expectations for healthy production growth across Blue
Racer's asset base, with volumes expected to grow into 2019 and
beyond. The ratings consider that Blue Racer's system is largely
constructed and operational and volumes across the system have been
supportive of modest EBITDA growth, with 3Q2018 EBITDA +12.5% QOQ
versus 2Q2018 and +12.7% YOY versus 3Q2017 and LTM as of Sept. 30,
2018 +3.1% versus YE 2017. Blue Racer's ratings are limited by the
size and scale of its system. With LTM EBITDA under $500 million
annually expected by Fitch through the forecast period, and its
single-basin focus, the credit profile and rating recommendation
are reflective of its counterparty credit risk and limited
diversity of operations.
The ratings recognize that Blue Racer is significantly exposed to
lower rated or unrated counterparties, with 83% of revenue as of
the 3Q2018 coming from 'B' category or unrated producers. As such,
counterparty and volumetric risks are over-riding concerns.
Additional concerns are focused on the limited size/scale of the
system, a highly competitive midstream environment for gathering
and processing, modest commodity price sensitivity, and limited
capital funding access beyond debt borrowings and sponsor equity.
Refinancing risk is a longer-term concern, but liquidity is
expected to be adequate through the forecast period (2019-2021).
Blue Racer's credit metrics are consistent with 'BB' rated
gathering and processing issuers with Fitch forecasting leverage in
2018 through 2020 in the 4.5x to 5.0x range. Blue Racer's leverage,
as of Sept. 30, 2018, on an LTM basis, was 4.3x. This is better
than other single basin gathering and processing names in the 'B+'
and 'BB-' IDR range with single basin exposure. Relative to
similarly sized Bison Midstream (B+/Stable), a Permian focused name
with gas and crude gathering and processing, Blue Racer's leverage
metrics are slightly better but comparable for 2019 and 2020
between the entities. Fitch views Bison to have more construction
risk and volumetric uncertainty as it needs significant growth to
hit its leverage target, while Blue Racer is largely built out and
is expected to have more modest growth in volumes. From a
counterparty and price exposure, Fitch views Bison to have slightly
less risk given the fully fixed nature of its contract profile
(removing any direct commodity price sensitivity) and a better
rated counterparty portfolio. Relative to 'BB-' rated gathering and
processing peer Lucid Energy, a Permian gas G&P, Blue Racer is
larger in terms of processing capacity with less construction risk.
However, approximately 75% of Lucid's 2018 volumes are supported by
a diversified portfolio of six large-scale, investment-grade
producers with fixed fee, long-term contracts and significant
acreage dedications and minimum volume commitment from its largest
counterparty.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Assume 4Q2018 volumes consistent with current rate seen in
3Q2018. Completion of Natrium III in December 2018;
- Growth capital spending of between $250 million to $500 million
annually;
- Maintenance capital spending of between $15 million to $20
million annually;
- Volume growth moderates in 2019, but increases in 2020;
- 100% of Cash Available for Distribution (CAFD) paid out to
owners;
- Capital spending funding needs borrowed on revolver; revolver
debt termed out in 2021 with long-term note offering.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Improvement to the credit profile of or increased
diversification to Blue Racer's counterparty credit profile, with
leverage maintained below 5.0x on a sustained basis.
- Leverage at or better than 4.0x on a sustained basis, without
any improvement in counterparty credit profile.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Leverage at or above 5.5x on a sustained basis.
- Meaningful deterioration in counterparty credit quality or a
significant event at a major counterparty that impairs cash flow;
- A significant change in cash flow stability profile, driven by
a move away from current majority of revenue being fee-based. If
revenue commodity price exposure were to increase above 25%, Fitch
would likely take a negative rating action.
- A moderation or decline in volumes expected across Blue Racer's
system.
LIQUIDITY
Liquidity Adequate: Blue Racer's liquidity is supported by its $1
billion 1st lien secured revolver, which was undrawn at Sept. 30,
2018. Maturities are manageable with notes due in 2022 and 2026.
Fitch expects any cash needs for growth capital spending will be
funded with borrowings under the revolving credit facility. Blue
Racer as per its operating agreement is required to pay out all of
its cash available for distributions to its JV owners. Cash
available for distribution is defined as cash EBITDA less
maintenance capital expenditures less debt service.
Blue Racer is required to maintain a consolidated total leverage
ratio (as defined in the agreement) not to exceed 5.5x and
consolidated secured debt to EBITDA not to exceed 3.75x.
Additionally, Blue Racer is required to maintain a consolidated
interest coverage ratio of no less than 2.5x. As of Sept. 30, 2018,
Blue Racer was in compliance with these covenants and Fitch expects
that Blue Racer will remain in compliance with these covenants for
the forecast.
FULL LIST OF RATING ACTIONS
Fitch has assigned the following ratings:
Blue Racer Midstream, LLC
-- Long-Term Issuer Default Rating (IDR) 'BB-';
-- Senior unsecured notes (Co-issued with Blue Racer Finance
Corp.) 'BB-'/'RR4';
-- Senior secured revolver 'BB+'/'RR1'.
The Rating Outlook is Stable.
BOMBARDIER INC: Fitch Lowers Longterm IDR to B-, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has downgraded Bombardier Inc.'s Long-Term Issuer
Default Rating to 'B-' from 'B' and affirmed BBD's senior unsecured
debt ratings at 'B' and revised the recovery rating to 'RR3' from
'RR4'. Fitch has withdrawn the bank revolver ratings due to
insufficient information. The Rating Outlook is Stable.
KEY RATING DRIVERS
The downgrade of BBD's IDR incorporates Fitch's expectation that
leverage will decline more slowly than anticipated from elevated
levels, largely due to deterioration in projected FCF in 2018
associated with working capital requirements. The affirmation of
BBD's long-term debt ratings reflects an improved recovery rating
associated with favorable developments including higher operating
margins, maintaining adequate liquidity, effective execution on new
aircraft programs, and reducing execution risk at Bombardier
Transportation. Margins at BT should benefit from a transition to a
higher proportion of service revenue and the use of common
platforms to reduce costs and simplify the project estimation
process.
The sale in mid-2018 of a majority interest in C Series Aircraft
Limited Partnership to Airbus brought Airbus procurement,
marketing, and customer support capabilities. Although BBD received
no up-front cash proceeds and is still investing in the program,
Fitch believes Airbus' involvement improves customer confidence and
the long-term viability of the program. These considerations are
reflected in the Stable Rating Outlook.
FCF in 2018 is likely to be approximately negative $600 million
excluding proceeds from the sale of the Downsview facility. Fitch
estimates debt/EBITDA of 10x at Sept. 30, 2018 will decline but
could remain above 6x into 2020 before BBD's actions to improve
operating results become fully effective including restructuring at
BT and entry into service for new business jet programs. Fitch
originally expected FCF in 2018 would improve significantly from
negative $717 million in 2017 and possibly approach break-even
compared to the revised forecast of approximately negative $600
million. FCF in the near term will be negatively affected by the
production ramp of the Global 7500 and a new $250 million
restructuring program.
FCF in 2019 could be near break-even although it could be positive
if working capital contingencies are not needed. Fitch believes BBD
could achieve its target of at least $750 million of FCF in 2020 as
BBD transitions to an improved revenue mix at BT and capital
expenditures decline from approximately $1.3 billion in 2018 toward
a long run level of approximately $800 million. BBD's cash
deployment includes a commitment to fund CSALP up to $225 million
in 2018, $350 million in 2019 and $350 million in 2020 and 2021
combined.
Liquidity concerns related to negative FCF in 2018 are mitigated by
proceeds from asset sales and a decline in spending on aircraft
programs as they reach completion. The Global 7500 was recently
certified and is expected to enter into service before the end of
2018. The Global 5500 and 6500 are still in development with entry
into service anticipated by the end of 2019. Liquidity was
supported by more than $550 million of net proceeds in June 2018
from the sale of the Downsview facility used for aircraft assembly.
BBD recently agreed to sell the Q Series aircraft program and the
business aircraft training business which are expected to close by
the second half of 2019 for approximately $900 million of combined
net cash proceeds. These amounts are in addition to $475 million
raised from an equity offering earlier this year. BBD is also
considering strategic options for the regional jet business which
currently operates at a loss.
BBD is implementing a new $250 million restructuring program to be
carried out over 12-18 months. The program is projected to reduce
annual costs by $250 million by 2021 and is intended to streamline
BBD's management structure, eliminate 5,000 positions, and realign
the company's engineering resources as it shifts from aircraft
development to production.
Rating concerns include competitive pressure in each of BBD's
businesses, profitability of the A220, and a sizeable pension
deficit. In addition, the minority interest in BT held by Caisse de
depot et placement du Quebec (CDPQ) reduces BBD's share of
long-term earnings and cash flow in the business and could make it
difficult for BBD to reduce leverage over the long term. Starting
in February 2019, BBD has the right to acquire CDPQ's interest in
BT which, if exercised, would give BBD full interest in BT but
could also reduce near term liquidity.
DERIVATION SUMMARY
BBD has well-established positions in its key aerospace and
transportation markets. There is significant competition in all of
BBD's markets, and several competitors are larger, better
capitalized or generate higher margins, putting BBD at a
disadvantage with respect to funding new programs in the aerospace
business and supporting working capital at BT. Following completion
of the pending transaction between Siemens AG (A/Stable) and Alstom
SA, BT will be the third largest competitor in the rail equipment
sector that is expected to see further consolidation. In aerospace,
BBD has a smaller presence than Embraer S.A. (BBB-/Stable) in the
regional jet market and generates lower revenue and margins than
Gulfstream, a subsidiary of General Dynamics Corporation, in
business jets. Airbus' majority interest and control of the A220
provides capabilities for the aircraft to compete against some of
Embraer's aircraft and Boeing's (A/Stable) smaller aircraft models.
BBD's credit profile is weaker than most of its peers due to
significant investment in the A220, which has contributed to high
leverage and negative FCF. BBD's sale of partial interests in its
commercial aerospace and transportation businesses could constrain
its ability to realize benefits from future improvement in
operating and financial performance.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- FCF in 2018 will be approximately negative $600 million
excluding proceeds from the sale of Downsview and improves to a
range within $250 million of break-even in 2019;
-- BBD repurchases at least a portion of the minority interest in
BT from CDPQ as soon as 2019, although any decision is still to be
determined;
-- Capital expenditures decline below $1.0 billion in 2019
compared to approximately $1.3 billion in 2018 as the Global 7500
enters into service by the end of 2018 and the Global 5500 and 6500
enter service by the end of 2019;
-- Business jet deliveries in 2018 are roughly flat at 135
aircraft followed by an increase in deliveries in 2019 as the
business jet market sees a modest recovery;
-- Business aircraft margins decline in 2019 due to the ramp up
of Global 7500 production. Margins improve over the long term due
to cost efficiency associated with higher production rates;
-- BT generates steady to higher profitability as mix improves.
Over the longer term, BT's performance could be pressured by a high
level of competition associated with industry consolidation.
Recovery Rating analysis:
-- The recovery analysis for BBD reflects Fitch's expectation
that the enterprise value of the company, and recovery rates for
creditors, would be maximized as a going concern rather than
through liquidation. Fitch has assumed a 10% administrative claim.
-- Going-concern EBITDA includes the business jet and
aerostructures segments. EBITDA of $584 million after eliminations
represents Fitch's estimated mid-cycle level and incorporates
improvements to underlying operating performance that Fitch
believes are permanent and unrelated to the business cycle. Fitch
does not include an estimate for regional aircraft as BBD has
agreed to sell the Q400 program, and the regional jet business is
unprofitable.
-- An EBITDA multiple of 6x is used to calculate a
post-reorganization valuation, below the 6.7x median for the
industrial and manufacturing sector. The multiple incorporates the
competitive environment, cyclicality, and event risk in the
aerospace sector.
-- In a distress scenario, Fitch assumes BT is separated from BBD
and excluded from bankruptcy as BT is relatively independent of
BBD's aerospace business. Fitch uses a value of $3.6 billion for
BBD's interest in BT based on Caisse de depot et placement du
Quebec's purchase of a 30% interest (currently 27.5%) for $1.5
billion in 2016. The value is reduced by 30% to reflect execution
risk and uncertainty about the long term impact of industry
consolidation. BT is consistently profitable, generates positive
FCF and has a limited amount of outstanding debt other than
factoring and forfaiting.
-- Fitch does not include a value for BBD's interest in CSALP due
to negative cash flow in the near term and uncertainty about the
ultimate level of profitability and customer demand although the
viability of the program improved following the acquisition by
Airbus of a majority interest.
-- Fitch assumes BBD's revolver is fully drawn.
-- The recovery analysis produces a Recovery Rating of 'RR3' for
unsecured debt, reflecting good recovery prospects (51%-70%). The
'RR6' for preferred stock reflects a low priority position relative
to BBD's debt.
RATING SENSITIVITIES
Future developments that may, individually or collectively, lead to
a positive rating action include:
-- EBITDA margins reach 10%;
-- Annual FCF is sustained above $750 million;
-- Consistently lower leverage, including debt/EBITDA below
6.0x.
Future developments that may, individually or collectively, lead to
a negative rating action include:
-- FCF does not improve to at least $500 million in 2020;
-- Year-end cash balances decline below $2 billion before there
is a clear path to reach positive FCF;
-- BT becomes less competitive over time due to industry
consolidation including EBIT margins before special items below 7%;
-- Weak industry demand for business jets leads to production
cuts;
-- EBITDA margins deteriorate compared with 5.9% as of Sept. 30,
2018 on a TTM basis.
LIQUIDITY
BBD's liquidity at Sept. 30, 2018 included cash of $2.3 billion
plus $1.2 billion of availability under bank facilities. A $397
million bank revolver that matures in 2021 is available to BBD and
BA. BT has a separate EUR722 million revolver that matures in 2021.
BA and BT also have letter of credit facilities that are used to
support performance risk and secure advance payments from
customers.
BBD's bank facilities contain various covenants including minimum
liquidity, a minimum fixed-charge ratio, maximum gross debt and
minimum EBITDA, all excluding BT. Covenants in BT's bank facilities
include minimum liquidity, minimum equity, and a maximum
debt/EBITDA ratio, all calculated for BT on a stand-alone basis.
Minimum required liquidity at the end of each quarter is between
$600 million-$850 million for the BBD facility, and EUR600 million
at BT. BBD does not publicly disclose required levels for other
covenants. Financial covenants were all met as of Sept. 30, 2018.
In addition to the two committed bank facilities, BBD has other
facilities including bilateral agreements and bilateral facilities
with insurance companies. BT uses off-balance-sheet non-recourse
factoring facilities in Europe ($1 billion outstanding at Sept. 30,
2018) and forfaiting arrangements with third party advance
providers ($723 million at Sept. 30, 2018) in exchange for rights
to customer payments on long-term contracts at BT.
Scheduled maturities of long-term debt through 2021 total nearly $5
billion and include approximately $850 million due in 2020, $2.3
billion due in 2021 and $1.7 billion due in 2022.
BBD makes significant pension contributions which it estimates will
total $247 million in 2018 compared to $269 million in 2017. Net
pension liabilities totaled $1.8 billion at Sept. 30, 2018.
FULL LIST OF RATING ACTIONS
Fitch has downgraded the following ratings:
-- IDR to 'B-' from 'B';
-- Preferred stock to 'CCC'/'RR6' from 'CCC+'/'RR6'.
Fitch has affirmed the following debt rating and revised the
recovery rating:
-- Senior unsecured debt at 'B'; recovery rating to 'RR3' from
'RR4'.
Fitch has withdrawn the following debt rating:
-- Senior unsecured bank revolver 'B'/'RR4'.
The Rating Outlook is Stable.
BBD's debt at Sept 30, 2018 as calculated by Fitch totaled
approximately $11 billion.
BREVARD COLLEGE: Fitch Affirms BB- Rating on $6.87MM Bonds
----------------------------------------------------------
Fitch Ratings has affirmed the 'BB-' rating on the approximately
$6.87 million series 2007 North Carolina Capital Facilities Finance
Agency educational facilities revenue refunding bonds, issued on
behalf of Brevard College Corporation (Brevard).
The Rating Outlook is Stable.
SECURITY
The bonds are a general obligation of the college, payable from all
legally available funds.
KEY RATING DRIVERS
BALANCED FINANCIAL OPERATIONS: The rating is supported by a history
of positive or near break-even GAAP operating margins, and
improving balance sheet metrics starting in 2017 due to receipt of
a significant bequest.
NET TUITION REVENUE DEPENDENCE: Brevard is highly dependent on
student revenue, and net tuition revenue growth has fluctuated in
recent years. Slow revenue growth may continue with the college's
expanded "Half Tuition" plan, as well as no tuition increases in
recent years. Brevard is slowly increasing enrollment but remains
challenged by high tuition discounts. The college remains
vulnerable to demand pressures and enrollment shifts.
IMPROVED BUT LIMITED BALANCE SHEET: Brevard's fiscal 2017 balance
sheet ratios improved due to receipt of a cash bequest; fiscal 2018
results are expected to improve further from related bequest and
gift income. However, ratios remain slim for the rating category,
and the college expects to spend about half of the roughly $6.0
million in bequest proceeds on strategic programs and capital
initiatives in the next several years.
ABOVE AVERAGE DEBT BURDEN: The college's pro forma maximum annual
debt service (MADS) burden, including a USDA loan for student
housing, is high to moderately high, at 8.3% of fiscal 2017
revenues; it is expected to be similar in fiscal 2018. Positively,
for the last eight fiscal years including fiscal 2017, MADS
coverage from operations has exceeded 1.2x.
RATING SENSITIVITIES
ENROLLMENT DECLINES: Significant enrollment declines at Brevard
College that contribute to limited growth in net tuition revenue
and negative GAAP operating margins could pressure the rating. For
the next several years, Fitch expects some operating volatility as
the college implements a new strategic plan and spends bequest
proceeds.
BALANCE SHEET: Improved but still weak balance sheet ratios
constrain Brevard's rating. Permanent strengthening of the
college's balance sheet ratios, in combination with strong debt
service coverage and positive GAAP margins, could support positive
rating movement over time.
LIMITED DEBT CAPACITY: Brevard's debt burden remains moderately
high, but manageable. The college has limited new debt capacity at
the current rating without consistently stronger operating margins
or significant cash gifts.
CREDIT PROFILE
Brevard is a small, four-year, private, residential liberal arts
college located on 120 acres in Brevard, NC, 140 miles west of
Charlotte, NC and 30 miles southeast of Asheville, NC. All 703 fall
2017 students are undergraduates and most attend full-time. The
college provides a distinctive experiential learning environment.
Brevard is known for its music and performing arts programs,
environmental sciences and its relatively new criminal justice and
agriculture programs.
Brevard was founded in 1853 as a two-year institution, and became a
four-year college in 1995. It is affiliated with the United
Methodist Church. The current 10-year accreditation from Southern
Association of Colleges and School - Commission on Colleges
(SACS-COC) runs through 2021.
The college is nearing completion of a new strategic plan that is
expected to be supported in part by a significant bequest, roughly
$6.0 million overall. The plan is expected to build on Brevard's
experiential learning curriculum, as well as support enrollment
growth, improved retention, and facility improvements.
ENROLLMENT DRIVES OPERATIONS
Brevard's operating revenues rely heavily on student revenues,
around 85% in fiscal 2017, the most current audit available. This
dependence is typical of many liberal arts colleges. Brevard's
enrollment grew modestly in both fall 2017 and 2018, but can be
volatile. Fall 2018 headcount was 703, up from 666 the year before,
and benefitted from a second strong entering freshman class of 311.
In fall 2019 (fiscal 2020) the college is expanding its "Half
Tuition" plan, which will apply to all students from North Carolina
and select counties in South Carolina.
In conjunction with the Half Tuition scholarships, Brevard froze
its base tuition in fiscals 2018, 2019 and likely again in fiscal
2020. Retention remains a strategic focus. The fall 2018
freshman-sophomore retention rate improved to 56%, but remains weak
compared to peers. Management plans to build enrollment to around
950 students by fall 2021, a significant level of growth over the
current 703 headcount.
Fitch views Brevard's ability to consistently grow net tuition
revenue and generate GAAP operating surpluses as determining
long-term operating success.
OPERATING PERFORMANCE
GAAP operating results were positive between fiscal years 2011 and
2016, and slightly negative in fiscal 2017 (negative $370,000, or
-2.l% margin). Fiscal 2018 audited results are not yet available
but may benefit from land sale proceeds and another small bequest.
In comparison, the operating surplus in fiscal 2016 was $1.5
million (8.1%), and in fiscal 2015 was $1.3 million (7.3%). The
college adjusts its operating budget periodically during each
fiscal year, and reports that the fiscal 2019 budget is balanced.
Brevard's margins historically have been pressured by tuition
discounting, and that pressure is expected to continue in fiscals
2018 and 2019 given no or limited tuition increases and the
expanded Half Tuition program. Brevard has, however, increased its
general student fee modestly. The college's institutional discount
rate was a high 53% in fiscal 2017. Consistently growing net
tuition revenue is an ongoing challenge given Brevard's highly
competitive and cost-conscious market.
WEAK BALANCE SHEET
Brevard's balance sheet improved in fiscal 2017, but remains weak
for the rating category. The improvement was largely due to cash
receipts from a large estate ($3.2 million received in fiscal
2017). At May 31, 2017, available funds (AF), defined by Fitch as
cash and investments less permanently restricted net assets, was
$4.2 million, up from $720,000 in fiscal 2016. The college has
about $27.3 million of true endowment, which is restricted and thus
is not reflected in the AF calculation.
Fiscal 2017 AF ratios were 23.7% relative to operating expenses and
27.4% relative to then-outstanding debt ($15.2 million). Additional
income related to the large bequest, and some other gifts, is
expected to further support AF in fiscal 2018. However, the
proposed strategic plan is expected to spend some of the bequest
proceeds over the next three to four years, and as such, balance
sheet ratios will likely decline over time. To date, the board has
designated about $1.5 million of bequest proceeds to endowment and
quasi endowment.
ABOVE AVERAGE DEBT BURDEN
Debt at May 31, 2017 was $15.2 million, including $8.2 million
series 2007 bonds, a $6.38 million USDA loan, and some small
capital leases. No new debt was issued in fiscal 2018, and with
scheduled amortization outstanding debt is about $13.7 million. The
series 2007 bonds are fixed rate with level debt service, maturing
rapidly on Oct. 1, 2026. The USDA loan is also fixed rate, with
level debt service through 2051. The loan funded an 84-bed student
residence hall which opened in fall 2016.
Pro forma MADS is $1.4 million occurring in 2023, and includes
small capital leases. MADS debt burden was 8.3% of fiscal 2017
operating revenues, which Fitch considers high to moderately high.
The college reports no new debt plans at this time.
POSITIVE DEBT SERVICE COVERAGE
Brevard has posted positive debt service coverage for the last
eight fiscal years, including fiscal 2017. Management expects
fiscal 2018 results will be similar to 2017. MADS coverage was 1.2x
in fiscal 2017, down from 2.5x in fiscal 2016. The reduction was
due to a new operating lease for athletic field lights, and lower
than usual operating margins.
C&D TECHNOLOGIES: Moody's Assigns B3 CFR, Outlook Stable
--------------------------------------------------------
Moody's Investors Service assigned ratings to C&D Technologies,
Inc. including a B3 Corporate Family Rating and also to the First
Lien Secured Debt Ratings, and a B3-PD Probability of Default
Rating. Proceeds from the rated term loan and other debt will fund
the acquisition of Trojan Battery Company, LLC and refinance
certain C&D debt. The rating outlook is stable. Trojan Battery's
debt is expected to be repaid at transaction close, at which time
all ratings of Trojan Battery will be withdrawn.
RATING RATIONALE
C&D's ratings reflect the elevated opening financial leverage with
the meaningful near term execution risks, balanced by sound merger
rationale to enhance scale by combining two leaders in different
segments of the battery market - the reserve power sector and
specialty motive market. Pro forma debt to EBITDA is expected to be
around 6x (on a Moody's adjusted basis), and could improve near
term on profit growth based on cost and pricing actions already
taken. In addition, C&D has had some meaningful incremental
investment recently, in inventory and capital spending and should
begin to realize some benefits. Nevertheless, C&D is taking on a
large, debt-funded acquisition that saddles it with high leverage
while it is still in the process of addressing its internal
operational challenges.
The combined company will benefit from recurring revenue, with over
70% of net sales expected to come from replacement batteries. There
are some merger synergies expected from purchasing and overhead
consolidation, although the overall synergies are not significant
as the two companies operate in different segments of the battery
market. EBITDA margin is expected to reach 10% in 2019, supported
by Trojan Battery's already robust margins and benefits from the
recently announced price increases and an improved cost structure,
and some pricing premium at C&D. Despite increasing popularity
surrounding lithium-ion batteries, demand for the more
cost-efficient lead-acid batteries should remain robust through at
least the next three to five years. Over the longer term, Moody's
expects that C&D will make moderately-sized acquisitions to
strengthen its offering vertical and such transaction will likely
be debt-funded.
The stable rating outlook reflects Moody's expectations that the
combined company will benefit from favorable end-markets demand
with mid-single digit revenue growth and significantly improve its
cost structure to drive margin growth through 2019 and into 2020.
Liquidity is considered adequate, mostly because of the large
revolving credit facility and little maturity debt as the company
is expected to have little cash. Free cash flow is expected to be
negative for 2019 before turning positive in 2020 due to cash uses
for integration and working capital. The company has a new $125
million asset-based revolving credit facility maturing in 2023
(unrated) that is anticipated to have $26 million outstanding at
transaction close, and likely to be used in 2019 and 2020.
Nevertheless, Moody's expects that C&D will rely on the ABL
facility at least through 2019, before it becomes cash generative.
The ABL facility is subject to a springing fixed charge coverage
ratio test when availability drops below $12.5 million. The term
loan does not have financial maintenance covenants. There are no
near-term debt maturities with only $4 million of annual
amortization payments required on the first lien term loan.
The B3 rating of the first lien term loan, the same as the CFR,
takes into account that a substantial portion of the liability
claims are at the secured level, with relatively little junior
claims.
The ratings could be upgraded if debt to EBITDA was expected to
remain below 5.5x on a sustainable basis with improving EBITA
margins, and free cash flow to debt in the low single digits
percentage.
The ratings could be downgraded if debt to EBITDA is expected to
exceed 6.5x, or if EBITA to interest was trending below 1.5 times.
Increasing dependence on ABL borrowings beyond 2019 could also
result in a downgrade. The loss of a key customer, with volume not
replaced, could drive negative ratings pressure.
C&D Technologies, Inc., headquartered in Blue Bell, PA, is a
leading designer and manufacturer of lead-acid batteries serving a
broad range of end-markets with the largest being datacenters and
telecom. The company maintains manufacturing facilities in the US,
Mexico and China. C&D is controlled by affiliates of KPS Capital
Partners, LP. Pro forma for the acquisition of Trojan Battery, net
sales for the combined company were estimated to be around $1
billion for the last twelve months ended September 30, 2018.
The principal methodology used in these ratings was Global
Manufacturing Companies published in June 2017.
The following summarizes the rating action:
Assignments:
Issuer: C&D Technologies, Inc.
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Gtd. Senior Secured First Lien Term Loan, Assigned B3 (LGD3)
Outlook Actions:
Issuer: C&D Technologies, Inc.
Outlook, Assigned Stable
CAESARS ENTERTAINMENT: S&P Revises Outlook to Stable
----------------------------------------------------
S&P Global Ratings revised its outlook on Caesars Entertainment
Corp. and its borrower subsidiaries, CEOC LLC and Caesars Resort
Collection LLC, to stable from positive. S&P also affirmed all of
its ratings, including its 'B+' issuer credit rating on Caesars.
S&P said, "The stable outlook reflects our expectation that
Caesars' lease-adjusted leverage will improve to the mid-6x area in
2019 from the high-6x area in 2018, primarily through EBITDA
growth.
"We revised the outlook on Caesars Entertainment Corp. (CZR) to
stable from positive because we expect the company's leverage will
improve more slowly than we previously expected, and that
lease-adjusted leverage will likely remain above our 6x upgrade
threshold over the next two years. Under our revised forecast, we
now anticipate leverage to improve to the mid-6x area in 2019 from
the high-6x area in 2018, which is at least 0.5x higher in both
2018 and 2019 compared to our previous expectation.
"The stable outlook reflects our expectation that CZR's
lease-adjusted leverage will improve to the mid-6x area in 2019
from the high-6x area in 2018, primarily through EBITDA growth.
"We could lower the rating if we expect CZR will sustain leverage
over 7x. Given our base-case operating assumptions and forecasted
credit measures over the next 12-18 months, this would most likely
be the result of a more aggressive approach to acquisitions and
more development opportunities or share repurchases than we
currently expect given the company's financial policy goals.
Leverage could also rise to this level if EBITDA underperformed our
2019 base-case forecast by 5%-10%.
"We could raise the rating one notch to 'BB-' if we believe CZR
will sustain leverage under 6x, factoring in the company's
financial policy and its desire to acquire or develop additional
gaming properties. Under our base-case operating assumptions, we
believe this is unlikely over the next 12-18 months, and would
require EBITDA to meaningfully outperform our assumptions, coupled
with the equity conversion of significant portions of the company's
convertible note. At a notch higher rating, we would also expect
CZR to maintain EBITDA interest coverage of around 2x and
discretionary cash flow (DCF) to debt above 3%."
CAFE HOLDINGS: U.S. Trustee Forms 5-Member Committee
----------------------------------------------------
The U.S. Trustee for Region 4 on Nov. 28 appointed five creditors
to serve on the official committee of unsecured creditors in the
Chapter 11 cases of Cafe Holdings Corp. and its affiliated debtors.
The committee members are:
(1) B&T Sand Co., Inc.
Attn: Joel Tyson
P.O. Box 84007
Lexington, South Carolina 29073
Phone: (803) 356-2351
(2) Koury Corporation
Attn: Douglas M. Heberle
2275 Vanstory St., Suite 200
Greensboro, North Carolina 27407
Phone: (336) 299-9200
(3) Thrift Brothers, Inc.
Attn: Tim Hydrick
1655 Sandifer Blvd.
Seneca, South Carolina 29678
(4) Carolina Childcare Properties, LLC
Attn: Dennis E. Drew
1630 Aztec Lane
Mt. Pleasant, South Carolina
Phone: (843) 801-2860
(5) Store Master Funding V, LLC
Attn: Lyena Hale
8377 E. Hartford Drive, Suite 100
Scottsdale, Arizona 85255
Phone: (480) 256-1199
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at a debtor's
expense. They may investigate the debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent.
About Cafe Holdings Corp.
Cafe Holdings Corp., Cafe Enterprises, Inc., CE Sportz LLC and CES
Gastonia LLC sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. S.C. Lead Case No. 18-05837) on November 15, 2018.
Cafe Enterprises, Inc. -- www.fatz.com -- and its subsidiaries are
privately-owned operators of casual dining restaurant brand, "Fatz
Cafe", with headquarters in Taylors, South Carolina. They operate
38 locations spread across five states. The Debtors employ nearly
1,700 persons. To learn more, visit.
At the time of the filing, the Debtors disclosed $23 million in
assets and $51 million in liabilities.
The cases have been assigned to Judge Helen E. Burris.
The Debtors tapped Haynes and Boone, LLP as their bankruptcy
counsel; McNair Law Firm, PA as local counsel; Loughlin Management
Partners + Company as financial advisor; Duff & Phelps, LLC as
investment banker; and Donlin Recano & Company, Inc. as claims and
noticing agent.
CDW CORP: S&P Assigns 'BB+' Issuer Credit Rating, Outlook Stable
----------------------------------------------------------------
On Nov. 28, 2018, S&P Global Ratings assigns 'BB+' issuer credit
rating to Vernon Hills, Ill.-based integrated IT solutions reseller
CDW Corp.
The rating reflects CDW's position as a leading IT reseller in
North America, its broad product portfolio and deep domain
expertise, and good operating performance, with leverage of 2.4x as
of Sept. 30, 2018. Partially offsetting these strengths is its
highly fragmented and competitive industry and exposure to cyclical
IT spending from its small and midsize customers.
The stable outlook reflects S&P Global Ratings' expectation that
CDW will leverage its market position over the next 12 months to
drive above market revenue and EBITDA growth, and that it will
manage its acquisitions and share repurchases such that it
maintains leverage around 3x.
S&P said, "We could raise the rating if the company revises its
financial policy such that we come to believe it can absorb an
operating decline and pursue its acquisition and shareholder return
objectives while maintaining leverage below 3x, and we come to
believe it is committed to maintaining an investment-grade rating.
"We could lower the rating if a downturn in North American IT
spending, a rapid technological shift, or increased acquisitions or
share buybacks result in leverage approaching 4x. EBITDA would need
to decline 40% from current levels or the company would need to
make a $3 billion debt-funded acquisition assuming a 10x purchase
multiple."
CENTENNIAL RESOURCE: S&P Assigns 'B+' ICR, Outlook Stable
---------------------------------------------------------
S&P Global Ratings assigns its 'B+' issuer credit rating to
Centennial Resource Development Inc., the parent company of
Centennial Resource Production LLC. All S&P's ratings on Centennial
Resource Production LLC are unchanged, including its 'B+' issuer
credit rating on the company, and its 'BB-' issue-level rating on
its senior unsecured notes.
S&P said, "Our rating on Centennial Resource Development Inc.
reflects the company's participation in the cyclical and
capital-intensive oil and gas exploration and production (E&P)
industry, its relatively small proven reserve and production base,
lack of geographic diversity, short track record, and significant
equity ownership by a financial sponsor. These factors are offset
by asset concentration in the prolific, oil-rich Permian Basin,
above-average profitability forecast based on its competitive cost
structure and high proportion of oil in overall production, and
currently low debt leverage. We expect Centennial to increase
overall production by almost 40% in 2019 as it develops its
recently acquired assets. While we forecast the company will
largely outspend cash flow over the next couple of years, we expect
leverage to remain low due to growing EBITDA and cash flows.
"The stable outlook reflects our expectation that Centennial will
continue to grow its reserves and production while maintaining FFO
to debt above 90% and debt to EBITDA at about 1x.
"We could lower the rating if we expected FFO to debt to fall below
20% or debt to EBITDA to exceed 4x with no near-term remedy, or if
liquidity deteriorated. This would most likely occur if commodity
prices significantly weakened, the company did not meet our oil
production growth expectations, or due to a leveraging
transaction."
An upgrade would be possible if the company continued to improve
the scale of its reserves and production to levels more consistent
with 'BB-' rated peers (including increasing the content of its
proved developed reserves), while maintaining adequate liquidity
and FFO to debt above 20%.
CHAMP ACQUISITION: S&P Assigns 'B' ICR, Outlook Stable
------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to
U.S.-based Champ Acquisition Corp., which is the proposed borrower
under the debt facilities and the parent company of Jostens Inc.
The outlook is stable.
S&P said, "At the same time, we assigned our 'BB' issue-level
rating and '1+' recovery rating to the company's proposed $150
million super-priority revolving credit facility. The '1+' recovery
rating indicates our expectation for full recovery (100%) of
principal in the event of a payment default.
"Additionally, we assigned our 'B' issue-level rating and '3'
recovery rating to Champ Acquisition's $750 million first-lien term
loan. The '3' recovery rating indicates our expectation for
meaningful recovery (50%-70%; rounded estimate: 60%) of principal
in the event of a payment default.
"We also assigned our 'CCC+' issue-level rating and '6' recovery
rating to the $150 million senior secured term loan. The '6'
recovery rating indicates our expectation for negligible recovery
(0%-10%; rounded estimate: 0%) of principal."
The company plans to use the proceeds from the proposed facilities,
along with a common equity contribution, to fund its buyout by
Platinum Equity. At the close of the transaction, Champ Acquisition
will have $900 million of funded debt.
Champ Acquisition provides school yearbooks, graduation caps and
gowns, diplomas, school class jewelry, and other scholastic and
graduation-related products to the schools, colleges, and
professional sports segments.
S&P said, "Our rating on Champ Acquisition reflects its small scale
and narrow product focus on yearbooks and scholastic products, its
participation in a niche industry that exhibits very low growth
potential, and its business model, which is characterized by good
revenue visibility supported by long-standing relationships with
its schools and high account retention rates. The rating also
reflects the company's increased debt burden, highly leveraged
capital structure, and meaningfully weaker cash flow following its
acquisition by Platinum Equity.
"The stable outlook on Champ Acquisition reflects our expectation
that the company will achieve modest revenue growth as it benefits
from recurring demand for its products and high account retention
due to its long-standing relationships with schools, allowing it to
maintain debt leverage at or slightly below 5x.
"We could lower our ratings on Champ Acquisition if its leverage
approaches 7x or its free cash flow declines below $20 million
because its profitability is pressured. This could occur if a shift
in industry trends toward digital technology reduces the demand for
the company's products (mainly yearbooks) or if it faces declining
account retention rates due to a service-level disruption or
reputational damage. We would also consider a lower rating if the
company exhibits a more aggressive financial policy with large,
debt-financed acquisitions or shareholder friendly returns that
cause its leverage to increase toward 7x.
"Although unlikely over the next 12 months, we could raise our
ratings on Champ Acquisition if the company successfully
diversifies its product offerings, maintains stable revenue growth,
and realizes cost-savings benefits while sustaining debt leverage
at or below 5x and annual free operating cash flow (FOCF)
generation of over $50 million."
COBB BEAUTY: Seeks to Hire Jones & Walden as Legal Counsel
----------------------------------------------------------
Cobb Beauty College, Inc. seeks approval from the U.S. Bankruptcy
Court for the Northern District of Georgia to hire Jones & Walden,
LLC as its legal counsel.
The firm will advise the Debtor regarding its duties under the
Bankruptcy Code; conduct examination; assist the Debtor in
connection with any proposed bankruptcy plan; and provide other
legal services related to its Chapter 11 case.
The hourly rates for the firm's attorneys range from $200 to $350.
Legal assistants charge $100 per hour. Jones & Walden holds a
$23,413 retainer as of the petition date.
Leslie Pineyro, Esq., a partner at Jones & Walden, disclosed in a
court filing that he and his firm neither hold nor represent any
interest adverse to the Debtor and its bankruptcy estate.
The firm can be reached through:
Leslie M. Pineyro, Esq.
Jones & Walden, LLC
21 Eighth Street, NE
Atlanta, GA 30309
Phone: (404) 564-9300
Email: lpineyro@joneswalden.com
About Cobb Beauty College Inc.
Cobb Beauty College, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ga. Case No. 18-69730) on November 26,
2018. At the time of the filing, the Debtor disclosed that it had
estimated assets of less than $50,000 and liabilities of less than
$500,000.
EXPRESSWAY DELIVERIES: Seeks to Hire Friedman as Legal Counsel
--------------------------------------------------------------
Expressway Deliveries, Inc. seeks approval from the U.S. Bankruptcy
Court for the Central District of California to hire Friedman Law
Group, P.C. as its legal counsel.
The firm will advise the Debtor regarding matters of bankruptcy
law; represent the Debtor in negotiations; assist in the creation
and implementation of a sales platform to maximize the value of the
Debtor's assets; and provide other legal services related to its
Chapter 11 case.
Friedman charges these hourly fees:
J. Bennett Friedman Principal $600
Darren Smith Of Counsel $450
Michael Sobkowiak Associate $420
Jackeline Martinez Paralegal $175
The firm received an initial retainer of $75,000 from the Debtor
prior to its bankruptcy filing.
J. Bennett Friedman, Esq., principal of Friedman, disclosed in a
court filing that his firm is "disinterested" as defined in section
101(14) of the Bankruptcy Code.
The firm can be reached through:
J. Bennett Friedman, Esq.
Friedman Law Group, P.C.
1900 Ave of the Stars 11th Floor
Los Angeles, CA 90067-4409
Tel: 310-552-8210
Fax: 310-733-5442
Email: jfriedman@flg-law.com
About Expressway Deliveries Inc.
Expressway Deliveries, Inc. is a privately-held company in Carson,
California, that operates in the couriers and express delivery
services industry.
Expressway Deliveries sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Calif. Case No. 18-23791) on November
26, 2018. At the time of the filing, the Debtor disclosed $325,345
in assets and $1,045,781 in liabilities.
The case has been assigned to Judge Julia W. Brand.
FLOOR & DECOR: Moody's Alters Outlook on B1 CFR to Positive
-----------------------------------------------------------
Moody's Investors Service affirmed the ratings of Floor and Decor
Outlets of America, Inc. including its B1 Corporate Family Rating,
B1-PD Probability of Default Rating and B1 rated senior secured
term loan B. In addition, Moody's upgraded the Speculative Grade
Liquidity rating to SGL-2 from SGL-3 and changed the ratings
outlook to positive from stable.
"The change in outlook to positive reflects Floor & Decor's steady
improvement in operating performance as same store sales remain
positive and new stores are added as well as funded debt levels
that remain relatively modest which have all driven a continued
improvement in scale and credit metrics" stated Bill Fahy, Moody's
Senior Credit Officer. As a result, leverage improved to about 2.8
times for the LTM period ending September 27, 2018, from around 3.4
times as of year-end December 2017. "The B1 CFR also reflects the
company's competitive position in hard surface flooring and
positive operating trends as well as its modest scale, aggressive
growth strategy, limited geographic diversity and cyclical nature
of its core target market", stated Fahy.
Upgrades:
Issuer: Floor and Decor Outlets of America, Inc.
Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3
Outlook Actions:
Issuer: Floor and Decor Outlets of America, Inc.
Outlook, Changed To Positive From Stable
Affirmations:
Issuer: Floor and Decor Outlets of America, Inc.
Probability of Default Rating, Affirmed B1-PD
Corporate Family Rating, Affirmed B1
Senior Secured Bank Credit Facility, Affirmed B1 (LGD3)
RATINGS RATIONALE
Floor & Decor (B1 positive) benefits from its positive operating
trends as well as its competitive position within the hard surface
flooring sector, management experience, direct sourcing model and
good liquidity. The breadth and depth of its product offerings and
value focused pricing should position it well in the current
economic environment. However, Floor & Decor is constrained by its
modest scale, aggressive growth strategy, limited geographic
diversity and cyclical nature of its core target market -- home
remodeling. Moreover, Floor & Decor's operating profit could be
negatively impacted in the event import tariffs increased to levels
currently being discussed and the company is unable to mitigate
these higher costs.
The positive outlook reflects Floor & Decor improved credit metrics
and Moody's expectation that the company successfully executes its
new store growth strategy while maintaining positive operating
trends that results in a steady improvement scale, earnings and
credit metrics.
Factors that could result in an upgrade include the successful
execution of its store growth strategy that leading to a steady and
meaningful increase in Floor & Decor's scale and geographic
diversification while maintaining positive operating trends at both
existing and new locations. An upgrade would also require a
stronger liquidity profile driven by sustained and material
positive free cash flow. Quantitatively, ratings could be upgraded
if leverage on a debt to EBITDA basis approaching 3.5 times and
EBIT to interest coverage of above 3.5 times on a sustained basis.
Ratings could be downgraded in the event operating performance fell
short of expectations or financial policy were to become more
aggressive in regards to debt financed transactions resulting in
debt to EBITDA sustained above 4.5 times or EBIT to interest of
below 2.5 times. Ratings could also be downgraded if liquidity were
to deteriorate.
Floor & Decor is a leading retailer of hard surface flooring in the
United States with 95 stores. Annual revenues are about $1.7
billion. Collectively, private equity firms Ares Management, L.P.
and Freeman Spogli & Co. own about 39.8% of Floor and Decor.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
FORASTERO INC: Court Denies Approval of Disclosure Statement
------------------------------------------------------------
Judge Robert A. Mark of the U.S. Bankruptcy Court for the Southern
District of Florida held a hearing on November 19, 2018, and denied
the approval of the amended disclosure statement explaining
Forastero, Inc.'s Plan.
The rejection was made without prejudice to reconsideration by
consent of CitiBank, N.A., as Trustee for the Federal Deposit
Insurance Corporation 2010-R1 Trust.
Judge Mark also denied the Debtor’s Motion to Enjoin Foreclosure
Sale Set for December 5, 2018 and the Debtor’s Expedited Motion
Requesting Approval of Sale and Purchase Contract and Authorizing
the Sale of Real Property. Both rejection are made without
prejudice to reconsideration by consent of CitiBank.
About Forastero, Inc.
Forastero, Inc., listed its business as a single asset real estate
as defined in 11 U.S.C. Section 101(51B).
Based in Coral Gables, Florida, Forastero filed a Chapter 11
petition (Bankr. S.D. Fla. Case No. 18-13397) on March 23, 2018.
In the petition signed by Marie C. Vallejo, authorized
representative, the Debtor estimated $10 million to $50 million in
assets and $1 million to $10 million in liabilities.
The case is assigned to Judge Robert A Mark.
Richard R. Robles, Esq., and Nicholas G. Rosoletti, Esq., at the
law firm Richard R. Robles, PA, serve as the Debtor's counsel.
Reiner & Reiner, P.A., is the special counsel. The Law Firm of
Tinelli Fernandez represents the Debtor in the collection of a
property damage insurance claim relating to damage suffered in
Hurricane Irma.
FR BR HOLDINGS: Fitch Assigns B- LT IDR, Outlook Stable
-------------------------------------------------------
Fitch Ratings has assigned FR BR Holdings, LLC a Long-Term Issuer
Default Rating (IDR) of 'B-' and Senior Secured Rating of
'B-'/'RR4' to FR BR's proposed offering of a $500 million senior
secured Term Loan B. The Rating Outlook is Stable.
The ratings reflect the application of Fitch's "Investment Holding
Companies Rating Criteria". FR BR owns a 50% stake in Blue Racer
Midstream, LLC (Blue Racer; Long-Term IDR BB-) and no other assets.
The criteria applies to new and ongoing ratings of corporate
entities whose main activity consists in holding generally
non-controlling stakes in other companies for the purpose of
generating capital gains and dividend income on a long-term basis.
KEY RATING DRIVERS
Significant Structural Subordination: Dividends from Blue Racer are
FR BR's sole source of cash flow in support of its term loan. Fitch
views FR BR's revenue stream as having no diversity, and FR BR's
term loan is effectively subordinate to the operating and cash flow
needs at Blue Racer, any borrowings on Blue Racer's $1.0 billion
revolving credit facility and roughly $1.15 billion in senior
unsecured notes.
Robust Financial Structure: FR BR's financial structure is
relatively robust in a base case scenario with FFO leverage and
coverage consistent with 'BB' or better metrics outlined in Fitch's
Investment Holding Companies Rating Criteria. Fitch forecasts FFO
leverage at FR BR of 4.0x to 4.3x in 2019, declining to 3.4x to
3.7x by 2021. Fitch expects gross interest coverage over that same
period of 2.9x and improving to 3.5x. Additionally, Fitch notes
that the proposed term loan has a cash flow sweep and amortization
covenants that will help FR BR delever, potentially significantly,
over the life of the term loan. These metrics and covenant
protections are relatively robust; however, Fitch's ratings are
more reflective of FR BR's structural subordination and the credit
quality of the cash flow stream from Blue Racer, which is
effectively an equity distribution supported by revenue and cash
flow from small 'B' to 'BB' rated counterparties. Fitch is
concerned that if revenues from Blue Racer are impaired for any
reason, such as increased costs, counterparty performance, volume
underperformance, etc., Blue Racer's distributions could decline
and pressure FR BR.
Dividend Policy/Volatility: Blue Racer is required to pay out all
of its available cash for distributions as distributions, with its
owners requiring unanimous consent to stop any dividend payments.
This provides some assurance that FR BR will continue to receive
dividends. Fitch notes that Blue Racer's owners have recently
reinvested their dividends into Blue Racer to support operations,
and to help lower leverage while pursuing growth capital spending,
which has introduced some volatility in distribution. Fitch does
not expect that Blue Racer will need dividend support from its
owners in the near to intermediate term.
Refinancing Risk: Refinancing is a longer-term significant concern
for FR BR. While the term loan has some mandatory amortization and
a cash flow sweep provision, it will not result in full
amortization by the maturity of the term loan. A refinancing or
sale of assets will be needed to repay the maturing debt. FR BR
could face unfavourable refinancing markets in five years or an
inability to monetize its equity interests in Blue Racer should
there be operating issues at Blue Racer or the dividend stream come
under pressure and negatively impact FR BR's ability to service its
debt.
DERIVATION SUMMARY
In accordance with Fitch's "Investment Holding Companies Rating
Criteria," the most important driver in assessing FR BR's IDR is
the quality of its income stream. Blue Racer is the sole provider
of distributions to FR BR. As such, the Fitch calculated Blended
Income Stream Rating for FR BR is 'B+', consistent with Fitch's
view of Blue Racer's credit profile at 'BB-.' Fitch considers FR BR
dividends from Blue Racer to be subordinated in nature, as they can
be paid only after debt and maintenance capital at the Blue Racer
level has been serviced. Fitch's IDR rating for FR BR has been
notched below Blue Racer's IDR and the Blended Income Stream Rating
to account for the significant structural subordination, the lack
of diversification in dividend streams to FR BR, and relative
illiquidity of FR BR's equity interest in Blue Racer should the
dividend stream come under pressure and negatively impact FR BR's
ability to service its debt. With Blue Racer structured as a
50%/50% joint venture, Fitch views FR BR as having limited control
over Blue Racer's dividend distribution policy; however, it notes
that Blue Racer must distribute all available cash each quarter and
cannot change or withhold dividends without FR BR's consent,
providing some comfort that dividends will continue to be paid.
The closest direct comparable for FR BR within Fitch's midstream
coverage universe is IFM Colonial. IFM's sole source of cash flow
is its quarterly dividend payments from a non-controlling, minority
interest in Colonial Pipeline. IFM Colonial benefits from
Colonial's key position as the leading shipper of refined liquid
petroleum products in the Southeast, Mid-Atlantic and Northeast. It
is the largest refined liquid petroleum products pipeline in the
U.S., and the lowest cost method of moving refined product from the
Gulf Coast to the East Coast with a much stronger credit profile
than Blue Racer. However, one risk that Fitch considers in IFM's
ratings is its structural subordination risk given its cash flow
structure similar to FR BR. Fitch believes IFM has much higher
credit quality for its underlying cash flows from Colonial Pipeline
as compared to Blue Racer.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
-- Base Case distributions to FR BR are consistent with Fitch's
Base Case dividends paid from Blue Racer and account for FR BR's
50% ownership stake.
-- In its recovery analysis, Fitch utilized a going-concern
analysis, with a 6.0x EBITDA multiple for the recovery analysis.
Reorganization multiples in the energy space can vary widely based
upon the commodity price environment upon emergence. There have
been a limited number of bankruptcies and reorganizations within
the midstream sector. Two recent gathering and processing
bankruptcies of companies indicate an EBITDA multiple between 5.0x
and 7.0x, by Fitch's best estimates. Additionally, in its recent
Bankruptcy Case Study Report "Energy, Power and Commodities
Bankruptcy Enterprise Value and Creditor Recoveries" published
March 2018, the median enterprise valuation exit multiple for the
29 Energy cases for which this was available was 6.7x with a wide
range. Fitch notes that recent sales multiples associated with
midstream assets have had significantly higher valuation multiples.
-- Recovery analysis assumes a default driven by the suspension
of distributions from Blue Racer for a 4-quarter period leading to
a default at FR BR and a restructuring of the term loan. The going
concern EBITDA is estimated at roughly $42 million, representative
of the lowest historical level of distributions roughly $85 million
annually.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
-- Positive Rating action at Blue Racer: Absent any changes to
any other factors, Fitch would seek to maintain the three notch
separation between the IDRs.
-- Increased ownership in Blue Racer, by FR BR: This would give
FR BR the ability to control the dividend policy at Blue Racer and
could result in a closer notching of the IDRs.
-- Increased dividend diversification at FR BR without an
increase to current leverage profile.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
-- Negative Ratings action at Blue Racer.
-- A decrease in dividends up to FR BR or an increase in debt at
FR BR that results in FFO leverage increasing to above 6.0x on a
sustained basis.
LIQUIDITY
Liquidity Needs Limited: FR BR is an investment holding company
with little liquidity needs. Its term loan has relatively few
covenant requirements. Fitch expects dividends to FR BR to be more
than enough to support its mandatory 1% amortization and minimum
debt service coverage ratio of 1.1x for the forecast period 2019 -
2022.
FULL LIST OF RATING ACTIONS
Fitch has assigned the following ratings:
FR BR Holdings, LLC
-- Long-term IDR 'B-';
-- Senior Secured Term Loan 'B-'/'RR4';
The Rating Outlook is Stable.
FRONTERA ENERGY: Fitch Alters Outlook on B+ LT IDR to Negative
--------------------------------------------------------------
Fitch Ratings has affirmed Frontera Energy Corporation's Long-Term
Foreign and Local Currency Issuer Default Ratings at 'B+', and has
revised the Rating Outlook to Negative from Stable. Fitch has also
affirmed Frontera's senior unsecured notes at 'B+'/'RR4'.
The Outlook revision follows the completion of Frontera's consent
solicitation to increase allowable restricted payments under the
indenture and to allow asset sale proceeds to be applied to
shareholder distributions. Fitch views management's shift in
financial policy, which prioritizes shareholder distributions over
cash retention and investment, as negative and inconsistent with
the assumptions previously embedded in the company's 'B+' rating.
This strategy could potentially interfere with the medium-term need
to bolster Frontera's post-restructuring operational profile
through upstream exploration and development investments. Fitch
will continue to monitor the company's ability to effectively
invest in improving its reserve life and production profile,
particularly relative to cash flows diverted to shareholders.
KEY RATING DRIVERS
Reserve Concentration: Frontera's production and reserves are
concentrated in a few blocks, most of which are in Colombia, and
its reserve life is short, with 1P reserves (proven reserves) of
4.5 years and 2P reserves of six years as of year-end 2017. The
company's reduced investment capacity due to the low price
environment has forced it to curtail investments in international
assets. Fitch expects Frontera's concentration in Colombia could
increase. The company's most important properties are in Colombia,
approximately 95% of its proved reserves are located there. This
limited diversification exposes it to operational as well as
economic risks associated with small-scale operations. As of
December 2017, the company had net 1P and net proved and probable
(2P) reserves of approximately 115 million and 154 million
barrels.
Production Continues Contracting: Fitch estimates that there have
been moderate improvements in reserve life from 4.5 years at
year-end 2017 to around five years during the first nine months of
2018; however, these reserve life levels are still low relative to
peers. Moreover, in same period, Frontera's production has
contracted by 13% to 63,000 barrels of oil equivalent per day
(boepd) from 72,000 boepd for the 12-month period ended Dec. 31,
2017. This contraction is largely attributed to stoppage in the
Peruvian Block 192, which was constrained by pipeline interruptions
through the first half of 2018. Nevertheless, Fitch's base case
does not anticipate the renewal of the operating contract on that
field beyond 3Q19, emphasizing the need for investments to recover
declining production.
Average Production and Replacement Costs: Frontera's competitive
position is considered average for the oil and gas industry, and
the company's production costs are expected to marginally increase
from recently reported numbers as a result of the expected decline
in production and increased importance of production from frontier
fields. During 2017, Frontera's operating costs increased to
approximately USD26.1/boe from approximately USD23.6/boe yoy. Going
forward, Fitch expects Frontera's operating costs to increase close
to historical levels, primarily as a result of smaller scale of
production as well as the loss of the Piriri-Rubiales production,
which lowered the company's average operating costs.
DERIVATION SUMMARY
Frontera's credit profile compares well among other small
independent oil and gas companies in the region. Frontera
(B+/Stable), GeoPark Limited (B+/Stable), Gran Tierra Energy
International Holdings Ltd (B/Stable) and Compania General de
Combustibles S.A. (CGC: B/Negative) ratings are constrained to the
'B' category given the inherent operational risks associated with
small scale and low diversification of oil and gas production
profile.
Frontera's capital structure and liquidity position after the
reorganization is strong compared to peers in the category. As of
Dec. 31, 2017, the company reported negative net debt, with cash on
hand covering debt by 1.9x resulting in a net leverage of -0.7x. On
the same date, GeoPark's net leverage was 2.2x and cash on hands
cover more than six years of debt repayments while CGC's net
leverage stood at 6.3x and cash on hands covers no more than four
years of debt repayment.
Frontera benefits from its relatively larger production size
compared to peers. Medium-term production expectation are in excess
of 70,000 boe/d, while GeoPark is expected to report an average of
27,500 boe/d in 2017 and CGC marginally above 20,000 boe/d.
Frontera's size advantage is mitigated by a comparatively weak 1P
reserve life of 4.5 years. Geopark's reserve life is 9.5 years, and
its lower-rated peers, Gran Tierra and CGC, have reserve lives of
5.9 years and 6.3 years, respectively.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
-- Fitch's price deck for Brent oil prices of $57.50 on average
through the midterm;
-- Average Production of 65 thousand boed until 2022;
-- Production costs averaging USD31/barrel;
-- Shareholder distributions consistent with conclusion of
consent solicitation;
-- Average annual Capex of USD430 million.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
-- Sustained conservative capital structure with leverage below
2.0x and investment discipline;
-- Increase production size on a sustained basis above 75,000
boe/d, 1P Reserve life closer to 10 years, and a sustainable
strategy for maintaining reserve replacement at that level;
-- Increase in the company's asset diversification.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
-- Sustained deterioration in liquidity and operating profile,
particularly in conjunction with more aggressive dividend
distributions than previously anticipated;
-- A reduction in the reserve replacement ratio that leads to
proved reserve life below 4.0 years.
LIQUIDITY
Strong Liquidity: Fitch views the company's liquidity position as
strong supported by cash on hand and manageable debt amortization
profile. As of December 2017, Frontera reported USD511 million of
cash on hand against post restructuring debt of USD250 million
senior secured notes due 2021 and capital leases of USD19 million.
FULL LIST OF RATING ACTIONS
Frontera Energy Corporation
-- Long Term Foreign Currency Issuer Default Rating affirmed at
'B+';
-- Long Term Local Currency Issuer Default Rating affirmed at
'B+';
-- Senior unsecured rating affirmed at 'B+/RR4'.
The Rating Outlooks have been revised to Negative from Stable.
GIGA-TRONICS INC: Sells $50,000 Worth of Preferred Stock
--------------------------------------------------------
Giga-tronics Incorporated has issued and sold 2,000 additional
shares of its 6.0% Series E senior convertible voting perpetual
preferred stock to one investor in a private placement pursuant to
a securities purchase agreement.
The purchase price for each Series E Share was $25.00, resulting in
total gross proceeds of $50,000. Emerging Growth Equities, Ltd.
served as the Company's exclusive placement agent in connection
with the private placement. Fees payable to Emerging Growth
Equities, Ltd. at completion of the transaction were 5% of gross
proceeds. Proceeds to the Company after fees and expenses will be
approximately $47,500. The Company expects to use the proceeds for
working capital and general corporate purposes.
In a Form Form 8-K report filed with the Securities and Exchange
Commission on March 30, 2018, the Company reported its initial sale
of Series E Shares. New investors purchasing Series E shares also
signed the Investor Rights Agreement to which the other Series E
shareholders are parties. There are now a total of 72,000 Series E
Shares outstanding.
On Nov. 20, 2018, prior to completing the sale of Series E Shares,
the Company filed with the California Secretary of State an
amendment to the Certificate of Determination for the Series E
Shares, increasing the number of preferred shares designated as
Series E Shares from 70,000 to 100,000.
About Giga-tronics
Headquartered in Dublin, California, Giga-tronics Incorporated is a
publicly held company, traded on the OTCQB Capital Market under the
symbol "GIGA". Giga-tronics produces instruments, subsystems and
sophisticated microwave components that have broad applications in
defense electronics, aeronautics and wireless telecommunications.
Giga-Tronics reported a net loss of $3.10 million for the year
ended March 31, 2018, compared to a net loss of $1.54 million for
the year ended March 25, 2017. As of Sept. 29, 2018, the Company
had $6.40 million in total assets, $4.87 million in total
liabilities, and $1.52 million in total shareholders' equity.
Armanino LLP's opinion included in the Company's Annual Report on
Form 10-K for the year ended March 31, 2018 contains a going
concern explanatory paragraph stating that the Company's
significant recurring losses and accumulated deficit raise
substantial doubt about its ability to continue as a going concern.
HOPEWELL PROMOTIONS: To Pay Secureds in Full Over 84 Mos. at 5.5%
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Hopewell Promotions, Inc. filed with the U.S. Bankruptcy Court for
the District of Maryland a plan of reorganization and disclosure
statement.
Under the Plan, the secured creditors will receive payment in full
to be made at the end of the 84-month term based on a 360 month
amortization schedule, with 5.5% interest rate per annum. Such
payments will begin on the first day of the first full month after
the effective date.
The Debtor is undertaking a series of regular payments to pay the
claims of creditors. The sums payable per month under the Plan is
at $4,906.84. The funds required for the implementation of the Plan
shall come from the Debtor's net post-confirmation disposable
income and from funds on hand at confirmation.
A full-text copy of the First Amended Disclosure Statement is
available at:
http://bankrupt.com/misc/mdb17-27167-76.pdf
The Debtor is represented by:
Ronald J. Drescher, Esq.
DRESCHER & ASSOCIATES, P.A.
4 Reservoir Circle, Suite 107
Baltimore, MD 21208
Tel: (410) 484-9000
About Hopewell Promotions
Hopewell Promotions, Inc., is a privately held company based in
Randallstown, Maryland, that operates jewelry stores. Hopewell
Promotions filed a Chapter 11 petition (Bankr. D. Md. Case No.
17-27167) on Dec. 26, 2017. In the petition signed by Harvey
Bernstein, its president, the Debtor estimated $100,000 to $500,000
in assets and $1 million to $10 million in liabilities. Ronald J.
Drescher, Esq., at Drescher & Associates, P.A., serves as
bankruptcy counsel.
I GOTCHA INC: Seeks to Hire Sheils Winnubst as Legal Counsel
------------------------------------------------------------
I Gotcha, Inc. seeks approval from the U.S. Bankruptcy Court for
the Northern District of Texas to hire Sheils Winnubst, P.C. as its
legal counsel.
The firm will advise the Debtor regarding its duties under the
Bankruptcy Code; assist the Debtor in the preparation of a plan of
reorganization; prosecute actions to protect its bankruptcy estate;
and provide other legal services related to its Chapter 11 case.
Sheils Winnubst will charge these hourly fees:
T. Craig Sheils $375
Mark Winnubst $325
Stephanie Wooley $250
Latrice Andrews $225
T. Craig Sheils, Esq., at Sheils Winnubst, disclosed in a court
filing that the firm is "disinterested" as defined in section
101(14) of the Bankruptcy Code.
The firm can be reached through:
T. Craig Sheils, Esq.
Kimberly A. Quirk, Esq.
Sheils Winnubst, P.C.
1701 N. Collins Blvd., Suite 1100
Richardson, TX 75080
Telephone: (972) 644-8181
Telecopier: (972) 644-8180
Email: craig@sheilswinnubst.com
Email: kimberly@sheilswinnubst.com
About I Gotcha Inc.
I Gotcha, Inc. is a privately-held company in Weatherford, Texas,
that owns and operates adult entertainment clubs.
I Gotcha sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. N.D. Tex. Case No. 18-44576) on November 20, 2018. At the
time of the filing, the Debtor disclosed that it had estimated
assets of $1 million to $10 million and liabilities of $1 million
to $10 million.
The case has been assigned to Judge Mark X. Mullin.
INPIXON: Signs Deal to Extend Maturity of $371,600 Note
-------------------------------------------------------
Inpixon and Chicago Venture Partners, L.P. have entered into a
standstill agreement dated as of Nov. 26, 2018.
Inpixon previously issued to Chicago Venture, as lender, a
convertible promissory note dated Nov. 17, 2017 in the initial
principal amount of $1,745,000 pursuant to a Securities Purchase
Agreement dated Nov. 17, 2017 between the Lender and the Borrower.
As of Nov. 26, 2018, the Note has an outstanding principal amount
of $371,600.
Pursuant to the Standstill Agreement, the Note Holder has agreed
that (i) its right to redeem all or any portion of the Note will
not commence until Feb. 28, 2019; and (ii) the maturity date of the
Note will be extended to Feb. 28, 2019. The Company will pay to
the Note Holder a standstill fee of $50,000 as consideration for
the Note Holders consent to enter into the Standstill Agreement.
A full-text copy of the Standstill Agreement is available for free
at https://is.gd/rx59hd
About Inpixon
Headquartered in Palo Alto, California, Inpixon is a technology
company that helps to secure, digitize and optimize any premises
with Indoor Positioning Analytics (IPA) for businesses and
governments in the connected world. Inpixon Indoor Positioning
Analytics is based on new sensor technology that finds all
accessible cellular, Wi-Fi, Bluetooth and RFID signals anonymously.
Paired with a high-performance, data analytics platform, this
technology delivers visibility, security and business intelligence
on any commercial or government premises world-wide. Inpixon's
products, infrastructure solutions and professional services group
help customers take advantage of mobile, big data, analytics and
the Internet of Things (IoT).
Inpixon reported a net loss of $35.03 million on $45.13 million of
total revenues for the year ended Dec. 31, 2017, compared to a net
loss of $27.50 million on $53.16 million of total revenues for the
year ended Dec. 31, 2016. As of Sept. 30, 2018, Inpixon had $12.99
million in total assets, $3.96 million in total liabilities and
$9.02 million in total stockholders' equity.
Marcum LLP, in New York, the Company's auditor since 2012, issued a
"going concern" opinion in its report on the Company's consolidated
financial statements for the year ended Dec. 31, 2017, citing that
the Company has a significant working capital deficiency, has
incurred significant losses and needs to raise additional funds to
meet its obligations and sustain its operations. These conditions
raise substantial doubt about the Company's ability to continue as
a going concern.
Nasdaq Noncompliance
Inpixon received a letter from the Listing Qualifications Staff of
The Nasdaq Stock Market LLC on May 17, 2018, indicating that, based
upon the closing bid price of the Company's common stock for the
last 30 consecutive business days beginning on April 5, 2018 and
ending on May 16, 2018, the Company no longer meets the requirement
to maintain a minimum bid price of $1 per share, as set forth in
Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing
Rule 5810(c)(3)(A), the Company has been provided a period of 180
calendar days, or until Nov. 13, 2018, in which to regain
compliance.
J.P. RENTALS: Seeks to Hire Bradshaw Fowler as Legal Counsel
------------------------------------------------------------
J.P. Rentals, LLC and its affiliates filed separate applications
seeking approval from the U.S. Bankruptcy Court for the Southern
District of Iowa to hire legal counsel in connection with their
Chapter 11 cases.
In their applications, the company and its affiliates Jones Lease
Properties, LLC and J.P. Apartments Cooperative proposed to employ
Bradshaw, Fowler, Proctor & Fairgrave, P.C. to give legal advice
regarding matters of bankruptcy law and assist them in the
preparation and implementation of a bankruptcy plan.
Bradshaw's hourly rates range from $140 to $300 for associates and
from $50 to $125 for paralegals.
Jeffrey Goetz, Esq., and Krystal Mikkilineni, Esq., the attorneys
who will be handling the cases, charge $375 per hour and $210 per
hour, respectively.
J.P. Rentals and the firm agreed to a retainer of $50,000.
Bradshaw received partial payment in the amount $32,500 for its
pre-bankruptcy services. The balance of $17,500 will be paid to
the firm for its post-petition fees and costs.
Bradshaw was paid a retainer of $5,000 by J.P. Apartments
Cooperative. The firm has not received payment from the Debtor for
pre-bankruptcy services.
Meanwhile, Jones Lease and the Debtor agreed to a retainer of
$50,000, of which $37,500 was paid to the firm for its
pre-bankruptcy services. The Debtor will pay the $12,500 balance
owed to the firm for its post-petition fees and costs.
Bradshaw is "disinterested" as defined in section 101(14) of the
Bankruptcy Code, according to court filings.
The firm can be reached through:
Jeffrey D. Goetz, Esq.
Krystal R. Mikkilineni, Esq.
Bradshaw, Fowler, Proctor & Fairgrave, P.C.
801 Grand Avenue, Suite 3700
Des Moines, IA 50309-8004
Tel: (515) 246-5817 / (515) 246-5870
Fax: (515) 246-5808
Email: goetz.jeffrey@bradshawlaw.com
Email: mikkilineni.krystal@bradshawlaw.com
About J.P. Rentals LLC
JP Rentals, LLC and Jones Lease Properties, LLC are a locally owned
and operated rental property companies serving the Quad Cities and
surrounding areas. As the source for rental living, they offer a
wide variety of rental properties including apartment complexes,
single family homes, townhomes, and duplexes.
JP Rentals, Jones Lease Properties, and J.P. Apartments Cooperative
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
S.D. Iowa Case Nos. 18-02569, 18-02568 and 18-02566) on November
26, 2018.
At the time of the filing, J.P. Rentals had estimated assets of
$1,000,001 to $10 million and liabilities of $1,000,001 to $10
million. J.P. Apartments disclosed $4,765,888 in assets and
$4,689,693 in liabilities.
JONES ENERGY: Moves Listing to OTCQX
------------------------------------
Jones Energy, Inc.'s Class A shares will shift to the OTCQX from
the New York Stock Exchange effective at the close of trading on
Nov. 26, 2018 and will begin trading on the OTCQX upon opening of
trading on Nov. 27, 2018. The move will not interrupt the trading
of Class A Shares.
As noted in the Company's filings with the Securities and Exchange
Commission, Jones Energy became non-compliant with the market
capitalization requirement of the NYSE, which required the Company
to maintain a 30-trading day average global market capitalization
of at least $15 million. As such, the Company has chosen to move
its Class A Shares to the OTCQX, which is the highest market tier
operated by the OTC Markets Group, Inc. and provides the highest
level of standards within the OTC Markets for investors.
Jones Energy remains and intends to remain a publicly traded
company and will retain its ticker symbol "JONE". The Company will
continue to make all required SEC filings and will remain subject
to SEC rules and regulations applicable to reporting companies
under the Securities Exchange Act of 1934, as amended. The Company
plans to maintain a majority independent Board of Directors with an
independent Audit Committee and to provide annual financial
statements audited by a Public Company Accounting Oversight Board
(PCAOB) independent registered public accounting firm and unaudited
interim financial reports prepared in accordance with U.S.
generally accepted accounting principles.
Jones Energy intends to apply to relist its Class A Shares on a
national stock exchange in the future upon meeting the applicable
initial listing standards of that exchange.
About Jones Energy
Austin, Texas-based Jones Energy, Inc. --
http://www.jonesenergy.com/-- is an independent oil and natural
gas company engaged in the development and acquisition of oil and
natural gas properties in the Anadarko basin of Oklahoma and Texas.
The Company's Chairman, Jonny Jones, founded its predecessor
company in 1988 in continuation of his family's long history in the
oil and gas business, which dates back to the 1920s.
Jones Energy reported a net loss attributable to common
shareholders of $109.4 million in 2017, a net loss attributable to
common shareholders of $45.22 million in 2016, and a net loss
attributable to common shareholders of $2.38 million in 2015. As
of Sept. 30, 2018, Jones Energy had $1.78 billion in total assets,
$1.24 billion in total liabilities, $93.45 million in series A
preferred stock, and $449.26 million in total stockholders' equity.
LATHAM POOL: Moody's Assigns B2 CFR, Outlook Stable
---------------------------------------------------
Moody's Investors Service, Inc. has assigned new ratings to Latham
Pool Products, IncAssigned ratings are a B2 Corporate Family
Rating, a B2-PD Probability of Default Rating, and B2 ratings on
proposed senior secured bank facilities. The proposed facilities
consist of a $30 million senior secured first-lien revolving credit
facility (undrawn at closing) and a $215 million senior secured
first-lien term loan. The ratings outlook is stable.
Proceeds from the term loan will be used to partially fund the
leveraged buyout of Latham by private equity firm Pamplona Capital
Management and to fund near-term working capital needs. The
remaining amount of the purchase price will be funded primarily
through cash from Pamplona. The primary seller in the transaction
is private equity firm Wynnchurch Capital, LLC., which will retain
a minority equity share.
Ratings assigned:
Latham Pool Products, Inc.
Corporate Family Rating at B2;
Probability of Default Rating at B2-PD;
$30 million senior secured first-lien revolving credit facility
expiring 2023 at B2 (LGD4);
$215 million senior secured first-lien term loan due 2025 at B2
(LGD4);
The outlook on all ratings is stable.
The $245 million of senior secured first-lien instruments are rated
B2, in-line with the B2 Corporate Family Rating. This reflects the
pari-passu position of the credit facility that comprises all of
the material debt in the capital structure.
RATINGS RATIONALE
The B2 Corporate Family Rating reflects the highly cyclical and
seasonal nature of Latham's pool business, narrow product
diversification, and small scale. The rating also reflects the
company's exposure to the North America new single family housing
market, which directly affects new pool starts. This risk is partly
mitigated by Latham's aftermarket business, which represent
approximately 30% of sales. Latham's credit profile is supported by
sustained leadership positions in its core product segments --
fiberglass pools, packaged pools, auto covers, and vinyl liners.
Further support of the rating is provided by Latham's modest
financial leverage (3.9 times debt/EBITDA at closing), attractive
profit margin, and solid free cash flow that provide capacity for
steady deleveraging through debt repayment or reinvestment in
growth initiatives. Finally, the rating is supported by the
significant amount of equity financing being used to fund the
pending buyout. Moody's nevertheless cautions that financial
policies are expected to be aggressive under private equity
ownership and bolt-on acquisitions are likely to be a component of
the company's future growth strategy, which raises event risk if
debt funded, as well as integration risk.
The stable rating outlook reflects Moody's expectation that
moderate North America economic growth and new home starts will
support at least low single digit increases in pool sale volumes
and that Latham will maintain relatively stable operating
performance over the next 12-18 months. Moody's also expects that
Latham will maintain leverage at or below current levels and good
liquidity.
The ratings could be downgraded if deteriorating operating
performance, shareholder distributions or a leveraged acquisition
causes debt/EBITDA to approach 4.5 times. A downgrade also could
occur if the company's liquidity profile deteriorates materially,
for any reason. A rating upgrade is not likely in the foreseeable
future. However, if the company increases its scale to above $500
million in sales, maintains its diversified pool product portfolio
and strong market positions, and sustains debt/EBITDA below 3.5
times, a rating upgrade could be considered.
Company Profile
Headquartered in Latham, New York, Latham Pool Products is the
largest manufacturer of residential swimming pool components and
pool accessories in North America. Latham's products are sold
primarily to the in-ground pool market, both through a wide range
of business-to-business distribution channels in the U.S. and
Canada, and direct to pool builders and dealers. Latham has over 21
locations in the U.S. and Canada. The company has over 1,300
employees and was founded in 1956.
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
LATHAM POOL: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
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S&P Global Ratings assigned its 'B' issuer credit rating to Latham,
the outlook is stable. S&P said, "At the same time, we assigned our
'B+' issue-level and '2' recovery ratings to the company's proposed
$30 million first-lien revolving credit facility maturing 2023 and
$215 million first-lien term loan maturing in 2025. The '2'
recovery rating indicates our expectation for substantial (75%
rounded estimate) recovery in the event of a payment default."
The 'B' issuer credit rating reflects Latham Pool Products Inc.'s
narrow product focus in the cyclical residential pool construction
industry, albeit with strong market shares, healthy margins, a
currently favorable growth outlook, and relatively low leverage.
S&P said, "With our adjusted pro forma debt to EBITDA of 4x, Latham
is not as highly leveraged as several other 'B' rated issuers.
However, because of Latham's narrow product focus and the cyclical
nature of its end markets, we believe the 'B' rating is a better
reflection of the company's overall credit risk.
"The stable outlook reflects our expectation that Latham will
continue to grow sales and EBITDA over the next year given the
currently favorable outlook for new pool construction, including a
healthy backlog of pool orders and still-strong renovation spending
in its key markets. Given the company's minimal capex requirements
we expect it to generate more than $15 million in annual free
operating cash flow, which should allow the company to repay debt
and reduce debt to EBITDA close to 3.5x and FFO to debt near 17%.
"We believe a pronounced and prolonged recession could cause sales
and EBITDA to decline by more than 10% and significantly weaken the
company's cash flow ratios. Therefore, we could lower the rating if
company faces a severe economic slowdown that raises debt to EBITDA
well above 5x and decreases FFO to debt to less than 12% on a
sustained basis.
"Although unlikely given the company's narrow product focus and
exposure to economic cycles, we could raise the rating if the
company can significantly increase its scale and further diversify
its product lines (particularly in the aftermarket segment) while
maintaining leverage near or below 4x. We could also raise the
rating in the unlikely event its financial sponsor owner
relinquishes control of Latham and it continues to delever as
currently projected."
LONGFIN CORP: Terminates All Six Directors
------------------------------------------
Upon the execution and filing of the Assignment for the benefit of
Creditors by Longfin Corp. on Nov. 19, 2018 with the Monmouth
County Clerk, Freehold NJ, the Board ceased to exist, and the
following members of the Board of Directors have been terminated:
1. Vivek Kumar Ratakonda - Director & CFO
2. Linga Murthy Gaddi - Director & CTO
3. Ghanshyam Dass - Director
4. Nichols David James - Director
5. Parker John Carl - Director
6. Avinash Karingam - Director
About Longfin
Longfin Corp (LFIN) is a New York-based finance and technology
company ("FINTECH") that specializes in structured trade finance
(Alternative Finance) solutions and physical commodities finance
(Shadow Banking) solutions. On June 19, 2017, Longfin acquired
100% of the global trade finance technology solution provider,
Longfin Tradex Pte. Ltd. - a Singapore incorporated related party
entity and post-acquisition Longfin Tradex has become a subsidiary
of Longfin. Longfin and its subsidiary Longfin Tradex believe
their business operations do not involve in any activities relating
to securities, as defined in Section 2(a)(1) of the Securities Act.
Longfin has no interest in becoming a market maker to effect
trading in securities requiring registration under the Exchange
Act.
For the period from Feb. 1, 2017 (inception) through Dec. 31, 2017,
Longfin incurred a net loss of $26.36 million. As at June 30,
2018, Longfin had $172.79 million in total assets, $44.91 million
in total liabilities and $127.88 million in total equity.
The report from the Company's independent accounting firm
CohnReznick LLP, in Roseland, New Jersey, on the consolidated
financial statements for the year ended Dec. 31, 2017, includes an
explanatory paragraph stating that the Company has limited
operating history and the continuation of the Company as a going
concern is dependent upon the ability of the Company to obtain
financing and the attainment of profitable operations. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.
SEC Litigation
The Securities and Exchange Commission had obtained a court order
freezing more than $27 million in trading proceeds from allegedly
illegal distributions and sales of restricted shares of Longfin
Corp. stock involving the Company, its CEO, and three other
affiliated individuals. A federal judge in Manhattan unsealed the
SEC's complaint on April 6, 2018.
At the beginning of April 2018, the SEC filed an action, entitled
Securities and Exchange Commission v. Longfin Corp., et al., 18
Civ. 2977 (DLC) before the Federal District Court for the Southern
District of New York. The Company and its CEO, Venkata Meenavalli
are named as defendants, as are three of the Company's stockholders
who made certain sales of Class A Common Stock. The SEC's
complaint alleges that the defendants violated Section 5 of the
Securities Act by either distributing or participating in the
distribution of the Company's securities to the public in
unregistered transactions. In connection with the Litigation, the
SEC moved for a temporary restraining order and asset freeze
relating to the assets of the three defendants who were
stockholders who made certain sales of Class A Common Stock. By
order dated April 23, 2018, the Disctrict Court vacated the
temporary restraining order and asset freeze with respect to the
Company and Mr. Meenavalli. By order dated May 1, 2018, the Court
granted the SEC's request for a preliminary injunction regarding
the assets of the other three defendants. On May 11, 2018, the
Company and Mr. Meenavalli filed a motion to dismiss the SEC's
complaint for failure to state a claim upon which relief can be
granted, and the three other defendants answered the complaint and
denied the allegations of wrongdoing against them. On May 29,
2018, the SEC filed a first amended complaint, which the Company
and Mr. Meenavalli answered on June 8, 2018. The SEC Litigation
has now entered the discovery phase. The Company is unable at this
time to express any opinion as to the outcome of this matter or any
potential remedies that may be sought against the Company or Mr.
Meenavalli at this early stage of the proceedings.
MERCER INTERNATIONAL: S&P Rates New US$350MM Sr. Unsec. Notes BB-
-----------------------------------------------------------------
S&P Global Ratings said it assigned its 'BB-' issue-level rating
and '3' recovery rating to Mercer International Inc.'s proposed
US$350 million senior unsecured notes due 2025. The '3' recovery
rating reflects S&P Global Ratings' expectation for meaningful
(50%-70%; rounded estimate 50%) recovery for Mercer's unsecured
noteholders in its simulated default scenario. The proposed notes
will rank equally with the company's existing senior unsecured
notes outstanding.
S&P said, "We expect the company will use the proceeds from the
proposed notes issuance along with a modest amount of cash from its
balance sheet to fund the US$360 million acquisition of
Daishowa-Marubeni International Ltd. (DMI), announced on Oct. 3,
2018. The proposed notes will replace the unsecured bridge facility
put in place to finance the transaction, with no impact on our
'BB-' issuer credit rating or positive outlook on Mercer."
RECOVERY ANALYSIS
Key analytical factors
S&P said, "We have updated our recovery analysis to reflect the
proposed bond issuance and have incorporated Mercer's acquisition
of DMI. Our '3' recovery rating on Mercer's proposed senior
unsecured notes corresponds with our estimate of meaningful
(50%-70%; rounded estimate 50%) recovery and an issue-level rating
that is the same as the issuer credit rating on the company. The
'3' recovery rating and 'BB-' issue-level rating on the existing
senior unsecured notes outstanding are unchanged, as the increase
in unsecured debt is largely offset by the increase in Mercer's
enterprise value in our simulated default scenario. We value Mercer
on a going-concern basis using a 5x multiple of our projected
emergence EBITDA of about US$160 million. The increase in our
emergence EBITDA proxy from our previous review incorporates
incremental enterprise value that we ascribe to the acquired pulp
mills in our default scenario. We estimate that, for the company to
default, EBITDA would need to sharply decline from pro forma
levels, most likely driven by a sustained deterioration in pulp
prices that erodes liquidity and Mercer's ability to fund its fixed
charges. We assume that, in our hypothetical bankruptcy scenario,
Mercer will draw on 60% of its Celgar mill revolving asset-based
credit facility and 85% of its Rosenthal and Stendal mills'
revolving credit facilities. We also assume 85% drawn on German
subsidiary Mercer Holz's revolving credit facility. Based on these
assumptions, we assume that, in a default scenario, secured lenders
are fully covered and the remaining net enterprise value is almost
exclusively available for senior unsecured note claims."
Simulated default assumptions
-- Simulated year of default: 2022
-- Emergence EBITDA after recovery adjustments: US$160 million
-- EBITDA multiple: 5x
Simplified waterfall
-- Net enterprise value (after 5% administrative expenses): US$755
million
-- Valuation split in % (obligors/non-obligors): 100/0
-- Priority claims: US$210 million
-- Collateral value available to unsecured claims: US$545 million
-- Senior unsecured debt and pari passu claims: US$1,030 million
--Recovery expectations: 50%-70% (rounded estimate 50%)
All debt amounts include six months of prepetition interest.
RATINGS LIST
Mercer International Inc.
Issuer credit rating BB-/Positive/--
Ratings Assigned
Mercer International Inc.
US$350 mil. sr unsecured notes due 2025 BB-
Recovery rating 3 (50%)
NORTHERN OIL: TRT Holdings Has 15.89% Stake as of Nov. 15
---------------------------------------------------------
In a Schedule 13D/A filed with the Securities and Exchange
Commission, TRT Holdings, Inc., et al., disclosed beneficial
ownership in the aggregate of 73,713,619 shares of common stock of
Northern Oil and Gas, Inc. at the close of business on Nov. 15,
2018:
(i) TRT Holdings beneficially owned 61,274,808 shares of
Common Stock held directly by TRT Holdings, which
constitute approximately 15.89% of the Common Stock
outstanding;
(ii) Cresta Investments beneficially owned 7,947,921 shares
of Common Stock held directly by Cresta Investments,
which constitute approximately 2.06% of the Common Stock
outstanding;
(iii) Cresta Greenwood beneficially owned 1,344,223 shares of
Common Stock held directly by Cresta Greenwood, which
constitute approximately 0.35% of the Common Stock
outstanding; and
(iv) Robert B. Rowling beneficially owned all 73,713,619
shares of Common Stock, consisting of the shares of
Common Stock held directly by TRT Holdings, Cresta
Investments and Cresta Greenwood and 3,146,667 shares of
Common Stock held by himself, individually, which
constitute approximately 19.11% of the outstanding
Common Stock (in each case, based on 385,680,827 shares
of Common Stock issued and outstanding as of Nov. 6,
2018, as set forth in the Issuer's Quarterly Report on
Form 10-Q for the quarterly period ended Sept. 30, 2018,
filed with the SEC on Nov. 9, 2018)
Mr. Rowling beneficially owns the shares of Common Stock held
directly by TRT Holdings due to his ownership of all of the shares
of Class B Common Stock of TRT Holdings. Mr. Rowling beneficially
owns the shares of Common Stock held directly by Cresta Investments
and Cresta Greenwood due to his direct and indirect ownership of
100.00% of the ownership interests in those entities.
A full-text copy of the regulatory filing is available for free
at:
https://is.gd/HswD3i
About Northern Oil
Minnetonka, Minnesota-based Northern Oil and Gas, Inc. --
http://www.NorthernOil.com/-- is an independent energy company
engaged in the acquisition, exploration, development and production
of oil and natural gas properties, primarily in the Bakken and
Three Forks formations within the Williston Basin in North Dakota
and Montana.
Northern Oil reported a net loss of $9.19 million in 2017, a net
loss of $293.5 million in 2016, and a net loss of $975.4 million in
2015. As of Sept. 30, 2018, the Company had $1.06 billion in total
assets, $1.05 billion in total liabilities and $11.20 million in
total stockholders' equity.
PARKPROVO LLC: Seeks to Hire Stoker & Swinton as Legal Counsel
--------------------------------------------------------------
Park Provo, LLC seeks approval from the U.S. Bankruptcy Court for
the District of Utah to hire Stoker & Swinton as its legal
counsel.
The firm will advise the Debtor regarding its duties under the
Bankruptcy Code; prepare a plan of reorganization; assist the
Debtor in resolving its disputes with claimants; and provide other
services related to its Chapter 11 case.
The firm will charge an hourly fee of $280 for its services.
Stoker & Swinton does not have connections with the Debtor,
affiliates and creditors that would disqualify the firm from
representing the Debtor, according to court filings.
The firm can be reached through:
Stephen G. Stoker, Esq.
Stoker & Swinton
311 South State Street, Suite 400
Salt Lake City, UT 84111
Telephone: (801) 359-4000
Telecopier: (801) 359-4004
Email: sgstoker@stokerswinton.com
About Parkprovo LLC
Parkprovo, LLC is a privately held company in Provo, Utah, that
owns a water park. Parkprovo sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. D. Utah Case No. 18-22860) on April 23,
2018. In the petition signed by Robert Conte, managing member, the
Debtor estimated assets of $10 million to $50 million and
liabilities of $1 million to $10 million. Judge Kimball R. Mosier
presides over the case. Holland & Hart LLP as Parkprovo's legal
counsel.
PF RALSTON: S&P Affirms 'B-' Bond Rating, Off CreditWatch Negative
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S&P Global Ratings affirmed its 'B-' rating on Columbus Downtown
Development Authority, Ga.'s senior housing rental revenue bonds
(Ralston Tower project), issued for PF Ralston GA LLC and removed
the rating from CreditWatch with negative implications where they
were placed on Aug. 28, 2018. The outlook is negative.
"The negative outlook reflects our view of the project's financial
performance indicated in the project's fiscal 2017 audit and 2018
unaudited financial statements," said S&P Global Ratings credit
analyst Raymond Kim. "The negative outlook also reflects project's
inability to support its debt service obligations without outside
contributions from the property's management." According to the
project's 2017 financial audit, the project had notes outstanding
to PF Holdings LLC, the property manager, of $128,100.
PLASKOLITE PPC: Moody's Assigns B2 CFR, Outlook Negative
--------------------------------------------------------
Moody's Investors Service has assigned a B2 Corporate Family Rating
to Plaskolite PPC Intermediate II LLC, following the company's
change in ownership and proposed debt issuance. At the same time,
Moody's has assigned B2 ratings to Plaskolite's proposed first lien
term loan and revolving credit facility. The ratings outlook is
negative.
On November 12, 2018, PPC Partners announced that it has signed a
definitive agreement to acquire Plaskolite, LLC from an affiliate
of Charlesbank Capital Partners. Plaskolite PPC Intermediate II
LLC, which holds Plaskolite, LLC, will be the borrower of the
proposed $100 million first lien revolving credit facility, $660
million first lien term loan and $190 million second lien term
loan. The proceeds from the term loans will be used to finance the
LBO and related expenses and fees. The existing ratings of
Plaskolite, LLC, will be withdrawn upon transaction completion and
debt repayment.
"Plaskolite's B2 CFR places greater weight on the company's ability
to generate free cash flow and reduce debt than the elevated risks
associated with consolidating a number of recently completed
acquisitions; the company should also benefit from its
significantly larger scale and broader product portfolio in 2019,"
said Jiming Zou, a Moody's Vice President and lead analyst for
Plaskolite.
Assignments:
Issuer: Plaskolite PPC Intermediate II LLC
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
$100 million Senior Secured 1st Lien Revolving Credit Facility due
2023, Assigned B2 (LGD3)
$660 million Senior Secured 1st Lien Term Loan due in 2025,
Assigned B2 (LGD3)
Outlook Actions:
Issuer: Plaskolite PPC Intermediate II LLC
Outlook, Assigned Negative
RATINGS RATIONALE
Plaskolite's B2 CFR reflects its highly leveraged capital
structure, elevated integration risks and modest near-term spending
that will generate significant synergies, but delay debt reduction.
The rating benefits from an asset-lite business model, an expanded
product portfolio and management's demonstrated ability to maintain
good profit margins through product customization.
The negative outlook reflects Plaskolite's high debt leverage after
the proposed LBO by PPC Partners and the execution challenges
associated with integrating several acquired businesses that have
almost doubled its revenue base in the last three quarters.
Plaskolite's pro-forma debt/EBITDA, including recently acquired
businesses, newly proposed debt issuance and Moody's analytical
adjustments, will likely reach a peak level of 6.9x. A deleveraging
towards low 6 times in 2020 looks likely, as Plaskolite will
generate positive free cash flow that will be used for debt
repayment, and transaction-related expenses taper off.
Plaskolite has a low capital intensity and has consistently
generated positive free cash flow, averaging $40 million per annum,
as measured by operating cash flow less capex, over the last five
years. The acquisition of several businesses with additional
expenses for the transactions and business integration needs will
slow free cash flow generation and keep debt leverage elevated in
the next 12 to 18 months. Nevertheless, the acquired businesses,
such as Covestro AG's polycarbonate sheet manufacturing facilities,
Lucite's continuous acrylic sheet business and Rotuba's profile
lighting business, are highly complementary to Plaskolite's
existing acrylics portfolio and will generate synergies thanks to
customer overlap. The company's recent price increases will also
limit the negative impact from higher raw material costs.
Plaskolite's focus on product customization should also lift the
profitability of the acquired businesses.
In addition, the B2 CFR reflects Moody's expectation that
Plaskolite's sponsor will direct free cash flow to fund bolt-on
acquisitions at reasonable multiples or reduce debt, instead of
aggressive shareholder dividends. PPC Partners has a long-term
investment focus and made a substantial equity contribution to
acquire Plaskolite.
Plaskolite's B2 CFR also factors in its relatively small business
scale with customer and supplier concentration, exposure to
propylene-based raw materials, including methyl methacrylate and
polycarbonate, as well as relatively modest organic growth
prospects. However, the company has solid competitive positions in
many of its key transparent thermoplastic sheet products,
particularly extruded acrylics, mirrored products, polycarbonate
and polyethylene terephthalate ("PETG"). Moody's expects that the
company's modest product and end market diversity, combined with
operational flexibility demonstrated during the last economic
downturn and a meaningful proportion of contracts with quarterly
raw material adjustment mechanisms, will support more stable
earnings compared to many rated peers in the chemical industry.
Changes in MMA and polycarbonate pricing and competitive effects
from the company's larger and better-capitalized competitors, such
as Evonik and Arkema, could have a meaningful impact on financial
performance. However, because of management's focus on more
customized applications, Moody's expects that the company will
continue to gain market share, while MMA supply will improve as the
industry adds capacity in Asia.
Plaskolite has good liquidity to support operations for at least
the next four quarters. The company's liquidity is supported by an
expected $9 million cash balance at the close of the LBO
transaction, expected positive free cash flow, and $100 million
proposed revolver. Plaskolite's revolver has a springing
maintenance covenant—first lien net leverage ratio, which is set
at 7.7x and will only be tested once the outstanding principal
amount exceeds 35% ($35 million) of the commitment.
Moody's could upgrade the rating with expectations for adjusted
debt leverage sustained below 5 times, retained cash flow to debt
sustained above 10%, free cash flow to debt sustained above 5% and
a commitment to more conservative financial policies.
Moody's could downgrade the rating with expectations for debt
leverage sustained above 6.5 times, retained cash flow to debt
sustained below 5%, failure to generate positive free cash flow or
a substantive deterioration in liquidity.
Plaskolite's first lien term loan and revolver is rated B2, in line
with the CFR, reflecting their predominance in the company's debt
capital and effective seniority to the second lien term loan. The
second lien term loan is not rated.
The principal methodology used in these ratings was Chemical
Industry published in January 2018.
Plaskolite PPC Intermediate II LLC manufactures acrylic and other
plastic products sold into construction, retail, and other
industrial end markets. Products include consumer displays, kitchen
and bath, lighting, museum glass, signs, and windows/doors. The
company operates manufacturing facilities mainly in the US and has
a distribution center in the Netherlands. Plaskolite is
headquartered in Columbus, Ohio. The company was acquired by PPC
Partners from Charlesbank in November 2018.
PROTECTO HORSE: Jan. 14 Confirmation Hearing
--------------------------------------------
Judge Mark A. Randon of the U.S. Bankruptcy Court for the Eastern
District of Michigan approved the disclosure statement explaining
Protecto Horse Equipment's plan of reorganization.
Januart 7, 2019, is the deadline to return ballots on the plan, as
well as to file objections to final approval of the adequacy of the
information in the disclosure statement and objections to
confirmation of the plan.
Judge Randon further ordered that the hearing on objections to
final approval of the adequacy of the information in the disclosure
statement and confirmation of the plan shall be held on January 14,
2019, at 11:00 a.m.
About Protecto Horse Equipment
Protecto Horse Equipment, Inc. filed a Chapter 11 petition (Bankr.
E.D. Mich. Case No. 18-49787) on July 12, 2018. In the Petition
signed by its authorized representative, Al Terwilliger, the Debtor
estimated assets of less than and debts of less than $50,000. The
Debtor is represented by Elliot G. Crowder, Esq., at Stevenson &
Bullock, P.L.C.
RAGGED MOUNTAIN: Unsecured Claims Total $350K Under New Plan
------------------------------------------------------------
Hurricane Mountain Equipment, LLC and Hurricane Mountain Equipment,
LLC filed with the U.S. Bankruptcy Court for the District of New
Hampshire the first amended disclosure for plan of reorganization.
The Debtors disclosed that the general unsecured claims total at
approximately $350,000.00 and shall be paid from cash flow
commencing January 2019. Payments shall be made in the amount of
$5,000.00 on the Effective Date and $417.00 monthly. Debtor may
reserve the monthly payments and disburse them when there is a
meaningful amount for a dividend, but no more than 90 days.
Payments shall be made over 5 years and total 10% on the dollar.
Meanwhile, one of the Debtors' secured creditors, M & T Bank, holds
a first mortgage in the Building of the Debtor in the amount of
approximately $492,000.00. The Building is worth $400,000.00. M & T
will be paid in the amount of $3,081.00 per month for 20 years
($400,000.00 at 6% interest amortized over 20 years), with a
payment due of the then principal and interest and any charges due
20 years after the effective date of the plan. M & T will retain
its lien. Any remaining portion of M & T's claim will be bifurcated
under Sec. 506(a) and paid as a Class 5 unsecured claim. The post
petition unpaid rent obligation shall be amortized at 6% over 20
years so that the total obligation is $430,000.00.
A full-text copy of the First Amended Disclosure Statement is
available at:
http://bankrupt.com/misc/nhb18-10091-177.pdf
The Debtors are represented by:
Steven M. Notinger, Esq.
NOTINGER LAW PLLC
7A Taggart Drive
Nashua, NH 03060
Tel: 603-417-2158
Email: steve@notingerlaw.com
About Ragged Mountain Equipment
Ragged Mountain Equipment, Inc., doing business as Durable Designs
-- http://raggedmountain.com/-- operates a sporting goods store in
Intervale, New Hampshire. The company offers equipment for
camping, climbing, skiing, and pets such as handwear, gaiters,
headgear, luggage and buckles.
Ragged Mountain Equipment and its affiliate Hurricane Mountain
Equipment LLC filed Chapter 11 petitions (Bank. D.N.H. Case Nos.
18-10091 and 18-10092) on Jan. 25, 2018.
In the petitions signed by Robert D. Nadler, authorized
representative, Ragged Mountain disclosed $627,408 in assets and
$2,060,000 in liabilities; and Hurricane Mountain estimated
$500,000 to $1 million in assets and $500,000 to $1 million in
liabilities.
Steven M. Notinger, Esq., at Notinger Law, PLLC, serves as counsel
to the Debtors.
RENNOVA HEALTH: Will Acquire Jellico Community Hospital, Tennessee
------------------------------------------------------------------
Rennova Health, Inc. has entered into a definitive asset purchase
agreement to acquire an acute care hospital in Jellico, Tenn. and
CarePlus Center in Williamsburg, Ky., an outpatient clinic offering
primary care, diagnostic imaging and laboratory services. The
hospital known as Jellico Community Hospital and its associated
assets are being acquired from Jellico Community Hospital, Inc. and
CarePlus Rural Health Clinic, LLC. The transaction is expected to
close in the first quarter of 2019, subject to customary regulatory
approvals and closing conditions.
Jellico Community Hospital is a fully operational 54-bed acute care
facility that offers comprehensive services, including diagnostic
imaging, radiology, surgery (general, gynecological and vascular),
nuclear medicine, wound care and hyperbaric medicine, intensive
care, emergency care, and physical therapy.
Jellico Community Hospital is accredited by the Center for
Improvement in Healthcare Quality (CIHQ) and the lab within the
hospital is accredited by the Joint Commission and is committed to
high standards of excellence. In 2015, Jellico Community Hospital
was one of 251 hospitals out of 3,500 across the country to receive
a "5-star" rating for patient satisfaction, according to a Hospital
Consumer Assessment of Healthcare Provider and Systems (HCAHPS)
survey conducted by the Centers for Medicare & Medicaid Services.
The CarePlus Center offers sophisticated testing capabilities and
compassionate care, all in a modern, patient-friendly, environment.
Services include Diagnostic Imaging Services, X-ray, Mammography,
Bone Densitometry, Computed Tomography (CT), Ultrasound, Physical
Therapy and Laboratory Services on a walk-in basis.
"This third hospital is situated near our Oneida and Jamestown
based hospitals and further expands our footprint in the rural
hospital sector in keeping with our business strategy," said Seamus
Lagan, CEO of Rennova. "We believe having a number of hospitals in
the same geographic location creates a number of synergies and
efficiencies and we look forward to this acquisition adding to
revenue and value in the first quarter of 2019."
A full-text copy of the Asset Purchase Agreement is available for
free at: https://is.gd/9lh1HS
About Rennova Health
Rennova Health, Inc. -- http://www.rennovahealth.com/-- owns and
operates two rural hospitals in Tennessee and provides diagnostics
and supportive software solutions to healthcare providers,
delivering an efficient, effective patient experience and superior
clinical outcomes. Beginning in 2018, the Company intends to focus
on and operate two synergistic divisions: 1) clinical diagnostics
through its clinical laboratories; and 2) hospital operations
through its Big South Fork Medical Center, which opened on Aug. 8,
2017, and a hospital in Jamestown Tennessee, including a doctor's
practice, the assets of which it expects to acquire in the second
quarter of 2018, pursuant to the terms of a definitive asset
purchase agreement that the Company entered into on Jan. 31, 2018.
Rennova Health reported a net loss attributable to common
shareholders of $108.5 million for the year ended Dec. 31, 2017,
compared to a net loss attributable to common shareholders of
$32.61 million for the year ended Dec. 31, 2016. As of Sept. 30,
2018, the Company had $19.43 million in total assets, $39.76
million in total liabilities, $5.83 million in redeemable preferred
stock I-1, $3.96 million in redeemable preferred stock I-2, and a
total stockholders' deficit of $30.13 million.
The report from the Company's independent accounting firm Green &
Company, CPAs, in Tampa, Florida, the Company's auditor since 2015,
on the consolidated financial statements for the year ended Dec.
31, 2017, includes an explanatory paragraph stating that the
Company has significant net losses, cash flow deficiencies,
negative working capital and accumulated deficit. These conditions
raise substantial doubt about the company's ability to continue as
a going concern.
RENTPATH LLC: S&P Cuts Issuer Credit Rating to CCC+, Outlook Neg.
-----------------------------------------------------------------
S&P Global Ratings lowers its issuer credit rating on RentPath to
'CCC+' from 'B-'. S&P said, "At the same time, we are lowering our
issue-level rating on RentPath's secured first-lien credit
facilities to 'B-' from 'B'. The recovery rating remains '2',
indicating our expectation for substantial recovery (70%-90%;
rounded estimate: 75%) of principal in the event of a payment
default. We are also lowering our issue-level rating on RentPath's
secured second-lien term loan facility to 'CCC-' from 'CCC'. The
recovery rating remains '6', indicating our expectation for
negligible recovery (0%-10%; rounded estimate: 0%)"
S&P said, "The downgrade reflects RentPath's declining sources of
liquidity, its elevated leverage, and our expectation that the
company's FOCF generation will remain negative over the next 12
months due to higher marketing spending in light of declining
subscription revenues, property listings, and average revenue per
property (ARPP). For the 12 months ended Sept. 30, 2018, the
company's leverage increased to 8.8x from 6.5x a year ago."
Competition with CoStar Group Inc., RentPath's largest competitor,
intensified following CoStar's acquisition of ForRent.com (it also
owns apartments.com). RentPath selectively lowered the price of its
subscription packages--which lowered its ARPP--and increased
marketing spending in response to CoStar's much larger marketing
budget. Nevertheless, the company faced higher-than-normal
attrition rates in the first half of 2018. Despite early signs of
improvement in certain operating metrics such as customer
retention, S&P expects that competition against CoStar will likely
remain intense for the foreseeable future. Consequently, RentPath's
credit metrics and liquidity position could deteriorate further if
it keeps up marketing spending for a prolonged period or its
marketing investments do not stem competitive losses.
S&P said, "The negative outlook reflects our expectation that the
competition among online rental apartment listing companies will
remain intense. We expect significant spending on marketing,
promotions, and product enhancements will likely cause the
company's FOCF to remain negative and liquidity to deteriorate over
the next 12 months.
"We could lower our ratings on RentPath if we expect it would
default over the next 12 months due to insufficient liquidity
sources to address its fixed charges, inability to refinance
upcoming maturities, or if we believe the company will look to
restructure its debt via a distressed exchange. This would likely
result from its marketing investments yielding lower-than-expected
returns, or if competitive pressures require the company to
continue increasing marketing spending, keeping FOCF negative over
the next two years.
"We could revise our outlook to stable or raise the rating if
RentPath stabilizes and expands its advertising property base and
revenues, likely resulting from reduced competitive pressure.
Additionally, an upgrade would require EBITDA growth, positive FOCF
generation from good return on the company's marketing investments,
and leverage reduction to below 7x."
SG PROPERTY: Seeks to Hire Jeffrey M. Sherman as Legal Counsel
--------------------------------------------------------------
SG Property Management, Inc. seeks approval from the U.S.
Bankruptcy Court for the Eastern District of Virginia to hire the
Law Offices of Jeffrey M. Sherman as its legal counsel.
The firm will assist the Debtor in the preparation of a bankruptcy
plan; represent the Debtor in negotiations to resolve disputes or
claims by and against its bankruptcy estate; and provide other
legal services related to its Chapter 11 case.
Jeffrey Sherman, Esq., the attorney who will be handling the case,
charges an hourly fee of $500. Paraprofessionals charge $130 per
hour.
Mr. Sherman disclosed in a court filing that he and his firm do not
have any interest adverse to the Debtor and its bankruptcy estate.
The firm can be reached through:
Jeffrey M. Sherman, Esq.
Law Offices of Jeffrey M. Sherman
1600 N. Oak Street, Suite 1826
Arlington, VA 22209
Phone: (703) 855-7394
Email: jeffreymsherman@gmail.com
About SG Property Management Inc.
SG Property Management Inc. sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. E.D. Va. Case No. 18-13473) on October
16, 2018. At the time of the filing, the Debtor had estimated
assets of less than $50,000 and liabilities of less than $1
million. The case has been assigned to Judge Brian F. Kenney.
SOLBRIGHT GROUP: Formally Changes Name to Iota Communications
-------------------------------------------------------------
Solbright Group, Inc. has finalized its formal name change to Iota
Communications, Inc. as well as its ticker symbol change to IOTC,
both of which will be market, effective as of Nov. 26, 2018.
As previously disclosed, the holders of a majority of the
shareholder votes of Solbright Group, Inc. adopted resolutions by
written consent, in lieu of a meeting of stockholders, to amend the
Certificate of Incorporation to change its name to Iota
Communications, Inc. to better reflect the company's expanded focus
as an integrated IoT network connectivity and applications platform
provider.
On Nov. 26, 2018, Solbright Group, Inc. filed its Certificate of
Amendment of the Certificate of Incorporation with the Secretary of
State of the State of Delaware changing the name of the Company to
Iota Communications, Inc., upon which the Company received
notification from the Financial Industry Regulatory Authority, that
as of Nov. 28, 2018 both the name change will be market-effective
and the new symbol of the Company will be "IOTC". Current
shareholders are not required to take any action in relation to
these changes.
"We are pleased to have completed our formal name and ticker symbol
change as it marks a final step in the true integration of our
recent merger," said Barclay Knapp, chairman and chief executive
officer of Iota. "Our new, nationally-available network system and
app platform is allowing customers to improve their businesses and
their everyday lives by interacting with information coming from
their equipment, devices, and processes in ways they never could
before. This month, as we complete our second fiscal quarter --
and our first quarter operating as the merged Iota -- we anticipate
continued revenue growth and margin expansion as we further
leverage the power of our technology and services."
About Iota Communications
Newark, New Jersey-based Iota Communications, Inc. --
https://www.iotacommunications.com -- provides a
nationally-available, wireless network and operating system which
has been purpose-built and optimized for Internet of Things
applications. Iota's is the only IoT-dedicated wireless platform
in the US whose core network operates on FCC-licensed radio
spectrum, and the only one which also connects all standard end
devices transmitting on standard cellular, WiFi, Bluetooth, and
Zigbee protocols. Iota operates an open-interface applications
environment which hosts and distributes both Iota’s and
third-party customer applications. Iota also offers important
additional products and services which facilitate the adoption of
our platform-based services. These include customer connectivity
devices and other pass-through equipment for certain applications,
FCC license application, procurement, and leasing services, and
solar energy, LED lighting, and HVAC conversion and implementation
services.
Solbright reported a net loss of $15.80 million for the year ended
May 31, 2018, compared to a net loss of $3.34 million for the year
ended May 31, 2017. As of Aug. 31, 2018, Solbright had $15.03
million in total assets, $6.38 million in total current liabilities
and $8.64 million in total stockholders' equity.
The audit opinion included in the company's Annual Report on Form
10-K for the year ended May 31, 2018 contains a going concern
explanatory paragraph. RBSM LLP, in New York, the Company's
auditor since 2016, stated that the Company has suffered recurring
losses from operations, will require additional capital to fund its
current operating plan, and has stated that substantial doubt
exists about the Company's ability to continue as a going concern.
SOUTH CAROLINA EPISCOPAL: Fitch Rates Series 2017/2018A Bonds 'BB'
------------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to the expected issuance
of the following South Carolina Jobs-Economic Development Authority
bonds issued on behalf of South Carolina Episcopal Home at Still
Hopes:
-- $69,185,000 Residential Care Facilities Revenue and Revenue
Refunding Bonds Series 2018A.
The bonds are expected to be issued as fixed-rate. Proceeds from
the bonds will be used to refund Still Hopes' series 2014 bonds,
finance an 80 unit independent living unit apartment tower
expansion, fund interest on the series 2018A bonds for
approximately 20 months and pay for the costs of issuance. Bonds
are expected to sell via negotiation the week of Dec. 10.
Fitch has also assigned a 'BB' rating to the $39.3 million South
Carolina Jobs-Economic Development Authority Residential Care
Facilities Revenue Bonds (South Carolina Episcopal Home at Still
Hopes) Series 2017.
The Rating Outlook is Stable.
SECURITY
A gross revenue pledge, mortgage on the community and debt service
reserve fund for both the series 2017 and 2018A bonds.
KEY RATING DRIVERS
Bond Funded Expansion Projects: The 'BB' rating reflects the
construction risks and debt associated with Still Hopes' 80 unit
independent living unit and healthcare expansion. The series 2017
bonds were issued to fund construction for a healthcare expansion
project that will add 22 assisted living apartments and increase
the skilled nursing bed count to 48 from 40. Still Hopes will be
issuing $69 million of 2018A fixed rate bonds as well as $25
million of short-term bank debt that will be paid down with initial
entrance fees from the ILU expansion. Total long-term debt,
assuming pay down of the bank loan, is expected to be approximately
$101 million in FY2023, the first full year of stabilization.
Good Demand: ILU, assisted living unit and skilled nursing facility
occupancies have averaged 95%, 90% and 96%, respectively, over the
last four years. While there is some competition in Still Hopes'
primary service area, demand for the new offerings is strong with
reservations for 21 of the 22 new assisted living apartments that
are expected to open early next year and 78 of 80 new ILUs.
Adequate Operating Profile: Still Hopes has produced consistent
operating metrics that have averaged a 98.0% and 20.8% net
operating margin - adjusted (NOMA) since fiscal 2015, which is
favorable to Fitch's respective 'BB' category medians of 101.6% and
18.3%.
Very Elevated Pro-Forma, Long-Term Liability Profile: A pro-forma
analysis of Still Hopes' long-term liabilities shows maximum annual
debt service of $6.8 million equating to an elevated 25.8% of FY18
(Sept 30 year end) revenues. A pro-forma analysis of Still Hopes'
debt to net available (backing out the $25 million short-term bank
loan) shows a very high 17.7x in FY18. Both of these metrics are
expected to moderate slightly in fiscal 2019 as the healthcare
expansion opens and in fiscal 2021 as the ILU expansion revenues
begin to positively affect revenue growth and performance. The very
large increase in debt will require Still Hopes to complete and
fill the project on time as revenues from the 42% increase in ILUs
on campus are crucial to covering MADS, as fiscal 2018 pro-forma
coverage of MADS is only 0.7x.
RATING SENSITIVITIES
Project Execution: Any significant project execution issues, such
as construction delays, cost overruns, slow fill up of the new
units or service disruptions that adversely affect Still Hopes'
operating and financial profile, could put negative pressure on the
rating. Upward rating movement is not likely during the outlook
period, but Fitch would view successful project completion and pay
down of the short-term debt as positive rating factors.
CREDIT PROFILE
Still Hopes is a South Carolina nonprofit corporation organized in
1975 that owns and operates a single site, Type 'C', continuing
care retirement community (CCRC) located in West Columbia, SC. The
organization also provides home care services to residents on
campus as well as individuals and families in Lexington and
Richland counties. Still Hopes is the only member of the obligated
group. At Sept. 30, 2018, Still Hopes had 191 ILUs (not including
eight cottages awaiting demolition and replacement), 24 dementia
ALUs and 62 skilled nursing beds. Total operating revenues in FY18
(unaudited) were $26.3 million.
Bond Funded Expansion Projects
In Dec. 2016, Still Hopes began implementing a two-phased expansion
of the community's facilities and services. The first phase, called
HealthPointe, consists of a two- and three-story building over a
level of parking that contains 22 ALUs, 48 private skilled nursing
units that will replace 40 existing skilled nursing beds, and
associated support and common space. Construction for Healthpointe
is currently on time and on budget and the building is expected to
open in January 2019. 21 of the 22 new assisted living units are
reserved and current residents of the 40 long-term care skilled
nursing units will be transferred to the 48 new skilled nursing
beds once the facility is open.
The second phase of the expansion, called WellPointe, will commence
once the HealthPointe project is opened as the old skilled nursing
facility must be removed to make room for the site of the
WellPointe project. WellPointe consists of an additional 80 ILUs to
be constructed in a single building above parking as well as new
dining, exercise and leisure spaces. Still Hopes began accepting
deposits for the new Wellpointe ILUs in December 2016 and the units
were 98% presold (78 of 80) as of Nov. 1, 2018. Still Hopes
received a guaranteed maximum price (GMP) for the construction of
both HealthPointe and WellPointe.
HealthPointe was funded with $39.3 million long-term fixed rate
bonds that were issued in September 2017. Funding for WellPointe
includes $41.4 million of long-term fixed rate series 2018A bonds
and $25 million of short-term bank debt. The bank debt is expected
to be paid down from initial entrance fees, which are currently
estimated at approximately $34 million-$35 million.
Fitch expects cash flow from the new ILUs, ALUs and skilled nursing
beds to be accretive to Still Hopes' financial and operating
profiles in the long term. The strong level of reservations for
HealthPointe and WellPointe and Still Hopes' good historical demand
indicators, including success filling 125 new ILUs in two apartment
buildings in 2005, help mitigate concerns regarding fill-up risk.
Good Demand
Still Hopes has shown consistently good demand across the continuum
of care, which is attributed to its quality of services,
longstanding operating history and favorable reputation. Over the
last four fiscal years, Still Hopes' occupancy has averaged 95% in
ILUs, 90% in its dementia ALUs and 96% in its SNF. While Still
Hopes' SNF occupancy has been strong, its reliance on Medicare
revenues from post-acute care short-term services (83% of admits to
the SNF) is a risk. Though Fitch views Still Hopes' high exposure
to government payors and to the post-acute care space negatively,
South Carolina's certificate of need laws and limited competitive
pressures help to moderate these concerns.
Still Hopes' primary service area is somewhat competitive with two
CCRCs within 10 miles as well as rental communities that provide a
mix of independent living and healthcare services. The majority of
the communities in the area have high occupancies, indicating a
good level of demand locally. Still Hopes maintains a 96-person
waitlist that helps fill units quickly once available. Still Hopes
remains competitive by offering units at a variety of sizes and
price points as well as a high level of amenities that include new
additions such as a large atrium, multipurpose room, dining room
and bar, lounges and coffee bar that were completed in 2015. Units
and common spaces are continually renovated as indicated by a 10.6
year average age of plant that will move even lower with the
opening of HealthPointe and WellPointe.
A potential risk to the WellPointe project is the high weighted
average entrance fees of $429,426 for the new ILUs. The new units
are priced higher than the existing apartment units ($275,427) due
to the units having reserved under-building and structured parking
(which is not available for existing units) as well as the larger
sizes of the apartments. The new entrance fees are also above the
median home values in the primary market area (PMA), but this
concern is offset by strong presales and high average net worth of
the potential residents who have already made deposits.
Adequate Operating Performance
The community's operating performance is supported by consistently
high occupancy, particularly in the ILUs and SNF. Still Hopes has
averaged a 98.0% operating ratio and 20.8% NOMA over the last four
fiscal years, which are above the 101.6% and 18.3% below-investment
grade medians, respectively.
Profitability was somewhat weaker in fiscal 2017 and 2018 due to
increased wages and bonuses for recruiting and retention purposes,
a softer ALU census than budgeted and start-up costs related to
HealthPointe. A potential risk to operations is the timing on the
state approval for HealthPointe as management is working to
increase staffing levels in anticipation of the additional ALUs and
SNF beds. However, Fitch believes if occupancy stabilizes in late
January 2019 as anticipated, the resulting revenue from the new
ALUs and SNF beds will prove accretive to Still Hopes' financial
performance.
Weak Liquidity
At fiscal year-end 2018 (unaudited), Still Hopes' $23.5 million in
unrestricted cash and investments equated to 374 days cash on hand
and 35.4% cash to debt. The community's liquidity position
increased from $18.5 million to $23.5 million as a result of good
ILU turnover and operations from fiscal 2015 to fiscal 2018 even in
the midst of higher operating expenses, site work and construction
for the HealthPointe project as well as planning and design for
WellPointe FY 2018. Still Hopes' pro-forma cash to debt is expected
to fall to the 19% to 24% range through the construction and fill
period. Current third-party forecasts show 34% cash to debt in
2023, which will be Still Hopes' first full year of stabilization
of the project.
Once ILU occupancy is stabilized, Still Hopes' liquidity position
should improve as the new project revenues come online and cash
flow from turnover units remains steady. However, a slow fill-up of
the WellPointe project would likely stress Still Hopes' liquidity
position and negatively pressure the rating.
Debt Profile
Following the series 2018A debt issuance, Still Hopes is expected
to have approximately $108 million outstanding in long-term
permanent debt, which includes $69 million in series 2018A bonds
and $39 million in series 2017 bonds. Still Hopes will be drawing
down on funds up to $25 million in temporary bank debt.
Disclosure
Still Hopes covenants to disclose annual reports no later than 120
days after each fiscal year end and quarterly reports no later than
45 days after quarter end. All information is provided via the
Electronic Municipal Market Access System, which is maintained by
the Municipal Securities Rulemaking Board.
SOUTHCROSS ENERGY: Southcross Holdings Owns 72.4% of Common Units
-----------------------------------------------------------------
In a Schedule 13D/A filed with the Securities and Exchange
Commission, these entities reported beneficial ownership of common
units representing Limited Partner Interests of Southcross Energy
Partners, L.P., as of Nov. 12, 2018:
Common Units Percentage
Beneficially of Common
Reporting Person Owned Units
---------------- ------------ ----------
Southcross Holdings GP LLC 58,358,618 72.4%
Southcross Holdings LP 58,358,618 72.4%
Southcross Holdings Intermediary LLC 58,358,618 72.4%
Southcross Holdings Guarantor GP LLC 58,358,618 72.4%
Southcross Holdings Guarantor LP 58,358,618 72.4%
Southcross Holdings Borrower GP LLC 58,358,618 72.4%
Southcross Holdings Borrower LP 58,358,618 72.4%
Southcross Holdings Borrower LP owns 26,492,074 common units
representing limited partner interests, 19,652,831 Class B
convertible units representing limited partner interests and
12,213,713 subordinated units representing limited partner
interests in the Issuer. Borrower is owned of record 100% by
Southcross Holdings Guarantor LP, and its non-economic general
partner interest is held by Southcross Holdings Borrower GP LLC,
which is owned of record 100% by Guarantor. Guarantor is owned of
record 99.8% by Southcross Holdings LP, and its 0.2% general
partner interest is held by Southcross Holdings Guarantor GP LLC,
which is owned of record 99% by Holdings and 1% by Southcross
Holdings Intermediary LLC, which is owned 100% by Holdings.
Southcross Holdings GP LLC is the non-economic general partner of
Holdings. Therefore, Holdings GP may be deemed to indirectly
beneficially own the Common Units, Class B Convertible Units and
Subordinated Units held by Borrower. The Class B Convertible Units
convert into Common Units at the Class B Conversion Rate on the
Class B Conversion Date. The Subordinated Units convert into
Common Units on a one-for-one basis on the expiration of the
Subordination Period (as defined in the Partnership Agreement).
Because such Class B Convertible Units and Subordinated Units were
acquired in connection with transactions having the purpose or
effect of changing or influencing the control of the Issuer, such
Class B Convertible Units and Subordinated Units are considered
converted for purposes of the calculations of the amounts noted
under Rule 13d-3(d)(1)(i) of the Securities Exchange Act of 1934,
as amended.
The Reporting Persons acquired 2,116,400 of the Common Units, Class
B Convertible Units and Subordinated Units as part of the
consideration for Southcross Energy Partners, L.P. ("SXE") to
acquire TexStar's Rich Gas System through the Drop-Down
Contribution and to establish a structure for common ownership and
control of the Common Units, Class B Convertible Units and
Subordinated Units through Holdings, as a new holding company of
SXE, and its general partner Holdings GP, both of which are owned
by SELLC, EIG, and Aggregator. The Reporting Persons acquired an
additional 4,500,000 Common Units as part of the consideration for
SXE to acquire certain assets through the Holdings Drop-Down
Contribution. The Reporting Persons acquired an additional
5,019,831 Class B PIK Units as distributions on the Class B
Convertible Units. The Reporting Persons acquired an additional
8,389,188 Common Units pursuant to the Equity Cure Agreement as an
equity cure. The Reporting Persons acquired an additional
11,486,486 Common Units in connection with the Fifth Amendment and
pursuant to the Equity Cure Agreement.
A full-text copy of the regulatory filing is available at:
https://is.gd/kT6CfV
About Southcross Energy
Southcross Energy Partners, L.P. --
http://www.southcrossenergy.com/-- is a master limited partnership
that provides natural gas gathering, processing, treating,
compression and transportation services and NGL fractionation and
transportation services. It also sources, purchases, transports
and sells natural gas and NGL. Its assets are located in South
Texas, Mississippi and Alabama and include two gas processing
plants, one fractionation plant and approximately 3,100 miles of
pipeline. The South Texas assets are located in or near the Eagle
Ford shale region. Southcross is headquartered in Dallas, Texas.
As of Sept. 30, 2018, the Company had $1.05 billion in total
assets, $604.66 million in total liabilities, and $454.39 million
in total partners' capital. Southcross Energy incurred a net loss
attributable to partners of $67.65 million in 2017 following a net
loss attributable to partners of $94.99 million in 2016.
* * *
In February 2017, S&P Global Ratings said that it affirmed its
'CCC+' corporate credit and senior secured issue-level ratings on
Southcross Energy Partners L.P. The outlook is stable. The rating
action reflects S&P's view that the recent credit agreement
amendment limits the likelihood of a default in the next two years
as the partnership will have an improved liquidity position and
need no longer adhere to its leverage covenants.
Moody's Investors Service downgraded Southcross Energy Partners,
L.P.'s Corporate Family Rating (CFR) to Caa2 from Caa1. "The
downgrade reflects the high degree of uncertainty surrounding
Southcross' business prospects, cash flow recovery and liquidity
following the failed merger with American Midstream," said Sajjad
Alam, Moody's senior analyst, as reported by the TCR on Aug. 2,
2018.
ST. JUDE NURSING: Taps Grasl PLC as Legal Counsel
-------------------------------------------------
St. Jude Nursing Center, Inc. received approval from the U.S.
Bankruptcy Court for the Eastern District of Michigan to hire Grasl
PLC as its legal counsel.
The firm will advise the Debtor regarding its duties under the
Bankruptcy Code and will provide other legal services related to
its Chapter 11 case.
Grasl charges an hourly fee of $350 for the services of its
attorneys. The firm received a post-petition retainer of $12,000.
Jeffrey Grasl, Esq., at Grasl, disclosed in a court filing that his
firm is "disinterested" as defined in section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Jeffrey S. Grasl, Esq.
Grasl PLC
31800 Northwestern Highway, Suite 350
Farmington Hills, MI 48334
Telephone: 248.385.2980
Email: jeff@graslplc.com
About St. Jude Nursing
St. Jude Nursing Center is a privately-owned and licensed long-term
skilled nursing facility located at 34350 Ann Arbor Trail, Livonia,
Michigan. The facility, which consists of 64 licensed beds, offers
services such as skilled nursing care, hospice care, Alzheimer's
and dementia patient care, physical rehabilitation, tracheal and
enteral services, wound care, and short-term respite care.
St. Jude Nursing Center filed a Chapter 11 petition (Bankr. E.D.
Mich. Case No. 18-54906) on November 2, 2018, and is represented by
Jeffrey S. Grasl, Esq., at Grasl PLC, in Farmington Hills,
Michigan. The Debtor previously sought bankruptcy protection on
Feb. 18, 2016 (Bankr. E.D. Mich. Case No. 16-42116) and Feb. 22,
2012 (Bankr. E.D. Mich. Case No. 12-43956).
At the time of filing, the Debtor had $500,000 to $1 million in
estimated assets and $1 million to $10 million in estimated
liabilities. The petition was signed by Bradley Mali, president.
STARION ENERGY: Seeks to Hire Gellert Scali as Legal Counsel
------------------------------------------------------------
Starion Energy, Inc. seeks approval from the U.S. Bankruptcy Court
for the District of Delaware to hire Gellert Scali Busenkell &
Brown, LLC as its legal counsel.
The firm will advise the company and its affiliates regarding debt
restructuring, bankruptcy and asset disposition; prosecute actions
to protect the Debtors' bankruptcy estates; and provide other legal
services related to their Chapter 11 cases.
Gellert will charge these hourly fees:
Michael Busenkell $460
Ronald Gellert $460
Associates/Of Counsel $275 - $300
Paraprofessionals $105 - $210
Ronald Gellert, Esq., a partner at Gellert, disclosed in a court
filing that his firm is "disinterested" as defined in section
101(14) of the Bankruptcy Code.
The firm can be reached through:
Ronald S. Gellert, Esq.
Gellert Scali Busenkell & Brown, LLC
1201 N. Orange Street, Suite 300
Wilmington, DE 19801
Tel: 302.425.5806 / 302.425.5800
Fax: 302.425.5814
Email: rgellert@gsbblaw.com
- and -
Evan Rassman, Esq.
Gellert Scali Busenkell & Brown, LLC
1201 N. Orange Street, Suite 300
Wilmington, DE 19801
Tel: 302-416-3351
Fax: 302-425-5814
Email: erassman@gsbblaw.com
About Starion Energy Inc.
Founded in 2009, Starion Energy -- https://starionenergy.com -- is
a supplier of electricity and natural gas, offering solutions to
residential and business customers in deregulated energy markets.
It has operations in Connecticut, Delaware, District of Columbia,
Illinois, Massachusetts, Maryland, New Jersey, New York, Ohio, and
Pennsylvania. Based in Middlebury, Connecticut, Starion Energy is
a member of the Retail Energy Supply Association (RESA).
Starion Energy and its affiliates, Starion Energy PA, Inc. and
Starion Energy NY, Inc., sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Case No. 18-12608) on November 14,
2018. At the time of the filing, Starion Energy disclosed
$26,888,675 in assets and $6,956,141 in liabilities.
The cases have been assigned to Judge Mary F. Walrath.
SUMAR INTERNATIONAL: Seeks to Hire Fox Law as Legal Counsel
-----------------------------------------------------------
Sumar International, Inc. seeks approval from the U.S. Bankruptcy
Court for the Central District of California to hire Fox Law
Corporation, Inc. as its legal counsel.
Fox Law will advise the Debtor regarding its duties under the
Bankruptcy Code; prepare a plan of reorganization; assist the
Debtor in the collection, sale or refinancing of its assets;
examine claims of creditors; and provide other legal services
related to its Chapter 11 case.
The firm will charge these hourly fees:
Principal $475
Associate $250 - $450
Law Clerk/Paralegal $125
Fox Law was paid $30,000, of which $1,717 was used to pay the
filing fee. The firm received the amount from the former spouse of
Maria Cabrera, the Debtor's chief executive officer.
Steven Fox, Esq., principal of Fox Law, disclosed in a court filing
that the firm and its employees are "disinterested" as defined in
section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Steven R. Fox, Esq.
Fox Law Corporation, Inc.
17835 Ventura Blvd., Suite 306
Encino, CA 91316
Tel: 818-774-3545
Fax: 818-774-3707
Email: emails@foxlaw.com
Email: srfox@foxlaw.com
About Sumar International Inc.
Established in 2007, Sumar International, Inc. --
https://sumarusa.com -- provides in-house electronics for U.S.
hospitality and health and beauty industries. It offers TV wall
mounts, TV stands, audio cables, night lights and lamps, and
accessories under the brands SUMAR, UNO, uMOVE, uBRITE and miffy.
Sumar International is headquartered in Pasadena, California.
Sumar International sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Calif. Case No. 18-23696) on November
21, 2018. At the time of the filing, the Debtor disclosed that it
had estimated assets of less than $1 million and liabilities of $1
million to $10 million.
The case has been assigned to Judge Julia W. Brand.
TSC SNOWDEN: Seeks to Hire David W. Cohen as Legal Counsel
----------------------------------------------------------
TSC/Snowden River North, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Maryland to hire the Law
Office of David W. Cohen as its legal counsel.
The firm will advise the Debtor regarding its duties under the
Bankruptcy Code; represent the Debtor in negotiation with its
creditors; and provide other legal services related to its Chapter
11 case.
Cohen received a retainer of $6,000, plus $1,717 for the filing
fee. The firm will charge an hourly fee of $275 for time extended
in connection with the case.
David Cohen, Esq., disclosed in a court filing that he does not
hold any interest adverse to the Debtor and its creditors and
equity holders.
The firm can be reached through:
David W. Cohen, Esq.
Law Office of David W. Cohen
1 N. Charles St., Ste. 350
Baltimore, MD 21201
Tel: (410) 837-6340
Email: dwcohen79@jhu.edu
About TSC/Snowden River North LLC
TSC/Snowden River North, LLC is a privately-held company engaged in
activities related to real estate. It owns three properties in
River Parkway, Columbia, Maryland, having a total current value of
$1.85 million.
TSC/Snowden River North sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Md. Case No. 18-25519) on November 26,
2018. At the time of the filing, the Debtor disclosed $1,850,400
in assets and $1,321,717 in liabilities.
VEROBLUE FARMS: Committee Seeks to Hire Nyemaster as Iowa Counsel
-----------------------------------------------------------------
The official committee of unsecured creditors of VeroBlue Farms
USA, Inc. seeks approval from the U.S. Bankruptcy Court for the
Northern District of Iowa to hire Nyemaster Goode, P.C.
The firm will represent the committee locally in Iowa and will
serve as co-counsel with Goldstein & McClintock LLLP, the
committee's lead counsel in the Chapter 11 cases of VeroBlue Farms
and its affiliates.
The services to be provided by Nyemaster include advising the
committee regarding Iowa state law; investigating the Debtors'
pre-bankruptcy conduct; and advising the committee regarding the
terms of any proposed bankruptcy plan or sale of the Debtors'
assets.
The billing rate is $175 per hour for the firm's associates and
$500 per hour for shareholders. Nyemaster will cap its rate for
shareholders at $425 per hour.
Kristina Stanger, Esq., a shareholder of Nyemaster and the attorney
expected to represent the committee, charges an hourly fee of
$300.
Ms. Stanger disclosed in a court filing that her firm is
"disinterested" as defined in section 101(14) of the Bankruptcy
Code.
Nyemaster can be reached through:
Kristina M. Stanger, Esq.
Nyemaster Goode, P.C.
700 Walnut, Suite 1600
Des Moines, IA 50309-3899
Phone: 515-283-3100 / 515.283.8009
Fax: 515-283-3108
Email: kmstanger@nyemaster.com
About VeroBlue Farms USA
Headquartered in Webster City, Iowa, VeroBlue Farms USA, Inc. --
http://verobluefarms.com/-- operates a fish farm specializing in
Barramundi, a freshwater fish found in the Indo-Pacific waters of
Australia. It created an innovative aquaculture system that
utilizes the natural elements of air, water and care.
VeroBlue Farms USA, Inc., VBF Operations Inc., VBF Transport Inc.,
VBF IP Inc., and Iowa's First Inc. sought protection under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Iowa Lead Case No. 18-01297)
on Sept. 21, 2018. In the petitions signed by Norman McCowan,
president, VeroBlue estimated assets of less than $50,000 and
liabilities of $50 million to $100 million.
The Debtors tapped Elderkin & Pirnie, PLC and Ag & Business Legal
Strategies, P.C. as their legal counsel; Davis, Brown, Koehn, Shors
& Roberts, P.C. as corporate counsel; and Alex Moglia and his firm
Moglia Advisors as chief restructuring officer.
The Office of the U.S. Trustee appointed an official committee of
unsecured creditors on October 24, 2018. The committee tapped
Goldstein & McClintock LLLP as its lead counsel.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog,
Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa,
Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2018. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
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firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
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*** End of Transmission ***